UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
☐ TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________
Commission file number: 001-38543
OptimizeRx Corporation
(Exact name of registrant as specified in its charter)
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number: 248-651-6568
Securities registered under Section 12(b) of the
Exchange Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Stock, par value $0.001 OPRX NASDAQ Capital Market
Securities registered under Section 12(g) of the
Exchange Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No ☒
Indicate by checkmark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the
registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☐ Large accelerated filer ☐ Accelerated filer
☒ Non-accelerated filer ☒ Smaller reporting company
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked
price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $179,568,360
Indicate the number of shares outstanding of each
of the registrant’s classes of common stock, as of the latest practicable date. 18,490,385 common shares as of March 11, 2025.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant’s definitive
proxy statement, in connection with its 2025 Annual Meeting of Shareholders, to be filed with the Securities and Exchange Commission within
120 days after December 31, 2024, are incorporated by reference into PART III of this Annual Report on Form 10-K.
TABLE OF CONTENTS
Page
PART I
Item 1. Business 1
Item 1A. Risk Factors 5
Item 1B. Unresolved Staff Comments 18
Item 1C. Cybersecurity 18
Item 2. Properties 20
Item 3. Legal Proceedings 20
Item 4. Mine Safety Disclosures 20
Item 4.1. Information about Our Executive Officers 20
PART II
Item 6. Reserved 22
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 30
Item 8. Financial Statements and Supplementary Data 31
Item 9A. Controls and Procedures 32
Item 9B. Other Information 33
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 33
PART III
Item 10. Directors, Executive Officers and Corporate Governance 34
Item 11. Executive Compensation 34
Item 14. Principal Accountant Fees and Services 34
PART IV
Item 15. Exhibits and Financial Statement Schedules 35
i
FORWARD LOOKING STATEMENT
This Annual Report on Form 10-K 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.
For a discussion of some of the specific factors
that could cause actual results to differ materially from the information contained in this report, see the following sections of this
report: Part I, Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” including the disclosures under “Critical Accounting Estimates”. Market projections
are subject to the risks discussed in this report and other risks in the market. OptimizeRx disclaims any intention or obligation to update
publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable
law.
Unless otherwise specified or the context otherwise
requires, when used in this Annual Report on Form 10-K, the terms “we,” “our,” “us,” “OptimizeRx,”
or the “Company” refer to OptimizeRx Corporation and its subsidiaries.
ii
SUMMARY OF RISK FACTORS
An investment in our Company is subject to a number
of risks. Set forth below is a high-level summary of some, but not all, of these risks. You should review and carefully consider the risks
and uncertainties described in more detail in “Part I, Item 1A. Risk Factors” of this Annual Report, which includes a more
complete discussion of the risks summarized below as well as a discussion of other risks related to our business and an investment in
our securities.
Risks Related to Our Financial Position
Risks Related to Our Business: Our Industry,
Operations, and Competition
● We are dependent on a concentrated group of customers.
● Our agreements with eRx and EHR channel partners could be subject to audit.
● Developments in the healthcare industry could adversely affect our business.
Risks Related to Regulatory Matters
Risks Related to Our Intellectual Property
and Technology
● Our business will suffer if our network systems fail or become unavailable.
iii
Risks Related to Managing Our Growth
● If we are unable to manage growth, our operations could be adversely affected.
Risks Related to Inflation, Interest Rates,
and Other Adverse Economic Conditions
General Risks
Risks Relating to Our Common Stock
Risks Related to Being a Public Company
iv
PART 1
Item 1. Business
General
OptimizeRx is a leading healthcare
technology company that is redefining how life sciences brands connect with patients and healthcare providers. OptimizeRx is a
Nevada corporation and was founded in 2006 in Rochester, Michigan as a healthcare technology company delivering various types of
messages, including coupons and co-pays directly to physicians and pharmacists though electronic health record (EHR) systems and
ePrescribing (eRx) platforms. Over time, the demand for different types of communication and marketing solutions among life sciences
organizations, healthcare professionals (HCPs), and patients led us to expand upon our initial solution to increase the variety of
health-related information we deliver, as well as the platforms, technology, and audiences through, and to which we deliver.
By combining artificial intelligence (AI)-driven tools with our original
financial messaging solution, we progressively enhanced our original financial messaging solution. Our current AI-enabled Dynamic Audience
Activation Platform (DAAP) not only identifies precise HCP audiences, but also estimates which HCPs will see brand eligible patients,
and when such brand eligible patients will be seen.
After acquiring
Healthy Offers, Inc. (d/b/a “Medicx” or “Medicx Health”) in 2023, we expanded our capabilities to include direct-to-consumer
(DTC) marketing using our patent-protected Micro-Neighborhood Targeting (MNT) solution. MNT uses de-identified claims data to target not
individual patients, but geographies in which eligible patients live, to better target audiences for brand manufacturers - a
privacy-centric approach to audience creation. With the integration of DTC marketing, our life sciences brand customers can now access
across our omnichannel network to reach both HCP and patient audiences. Today, we offer diverse tech-enabled marketing solutions using
sophisticated machine-learning algorithms to find the best audience 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 DTC marketing campaigns that optimize audiences in real
time to increase the value of treatment information for HCPs and patients. Connecting over two million U.S. healthcare providers and millions
of their patients through an intelligent technology platform embedded within a proprietary omnichannel network, OptimizeRx helps life
sciences organizations engage and support their customers.
Business Strategy
OptimizeRx is at a pivotal moment in its almost 20-year
history. Over the past few months, we have completed an extensive review of our business processes, operations, growth plans, capital
allocation, strategies and opportunities - with the ultimate goal of assessing how we can best create value for our shareholders.
On March 10, 2025, after a rigorous search and selection
process for a new Chief Executive Officer that was conducted by our independent directors with the assistance of a leading executive search
firm, we named Stephen L. Silvestro as our Chief Executive Officer.
As Mr. Silvestro leads the next phase of the
Company’s growth and transformation, many of our business priorities will be the same, such as continuing to focus on customer
centricity and delight, operational excellence, disciplined execution, developing stronger relationships with our valued business
partners, and expanding our unique value proposition with our top-tier pharma customers. However, going forward, a core aspect of
our new value creation strategy will be to drive towards being recognized as a “Rule of 40” company within the next
several years such that our combined annual revenue growth rate and EBITDA margin are 40% or higher. Like other companies aspiring
to be a “Rule of 40” company, we understand the need to effectively balance growth with profitability. As we drive
towards this ambitious financial goal, we plan to develop a re-occurring revenue component to our business as we look to convert our
DAAP customers to a subscription-based model for the data component of our offerings. We believe this will improve our EBITDA
margins over time while substantially enhancing the overall predictability of our revenue streams. We also believe this will enhance
our ability to scale our business and more thoughtfully plan for profitable growth.
While we believe we are executing the right strategy,
our Board of Directors and management team understand the need to regularly review our strategy, assess it against a variety of opportunities
that may create greater value, and ensure that the strategy we are executing is fully aligned with the best interests of our shareholders.
1
Industry Background
Life sciences organizations face a challenging
commercial landscape. The life sciences industry is characterized by rapidly advancing science and technologies, intense competition,
and a strong emphasis on differentiated products.
As a result, life sciences organizations have
increasingly turned to technology solutions to support their commercial strategies. According to industry sources, total pharmaceutical
industry commercial spend in the United States is $30 billion of which approximately $10 billion is attributable to commercial digital
spend.
We believe significant opportunity exists to address
the unmet needs of life sciences organizations as they relate to digital solutions, including omnichannel access to HCPs, for our customers’
biggest commercial challenges. These complex challenges include brand visibility to HCPs which is impacted by a competitive drug environment
with sales representatives losing time in front of prescribers, augmented by the amount of time the HCPs have to spend in front of computers
and in the EHR. Further, EHRs do not often communicate with one another, creating interoperability issues resulting in HCPs not having
all relevant patient information. In addition, expensive specialty medications are becoming more common and involve more complex diagnosis
criteria - factors that contribute to substantial script abandonment by patients. Our solutions are designed to address these and other
commercial challenges faced by our customers.
Principal Solutions
We offer clear, actionable solutions to the challenges
faced by our customers, and our combined HCP and DTC marketing strategies are designed to ensure our customers’ brands are positioned
at the right moment and with the right message, always prioritizing the end result: successful brand engagement to reach both HCPs and
patients, ultimately resulting in improved patient care.
Our principal solutions can be summarized as follows:
Audience Development: DAAP and MNT
Audience Profiling: Profiler
2
Audience Activation and Media Execution
Pharmacy Alerts
Financial Messaging
Sales and Marketing
The go-to-market
strategy for the business aligns sales and marketing efforts while keeping customer engagement at the core. Engaging customers early,
providing value throughout their journey, and nurturing long-term relationships drive sustainable growth and retention. Our sales and
marketing teams include over 25 individuals focused on awareness, adoption and expansion of data and technology solutions designed to
address the digital engagement needs of life sciences brands and their agency partners.
DAAP, our
patent pending patient-centric omnichannel engagement platform combines artificial intelligence (AI) and human intelligence (HI), to determine
the optimal time to engage patients and physicians. We synchronize HCP and DTC marketing across the programmatic and point-of-care channels
to increase brand conversions, streamline therapy starts, and build stronger brand relationships. Our sales and marketing teams
work closely together to cultivate customer relationships. We use a number of methods to market and promote our solutions, including digital
advertising, industry events, trade shows, conferences, media coverage, social media, and email.
Technology
Our proprietary technology platform enables us
to curate privacy safe DTC audiences, dynamic HCP and DTC audiences, and effectively manage digital media campaigns for our advertiser
clients (agencies, and manufacturer/brands) across our channel partner network. Our platform consists of a unified data intelligence technology
stack, multiple cloud-based data warehouses, and in-house applications and application programming interface layers. Collectively, this
platform enables us with a collaborative environment for data engineering, data science, and machine learning, an efficient method to
curate privacy safe DTC audiences, and a scalable means to manage both point-of-care media campaigns and the supply-side inventory request
volume. For the management of point-of-care media campaigns, the platform integrates advanced features of a Supply-Side Platform (SSP),
allowing us to provide seamless access to an expansive range of point-of-care inventory via our strategic partnerships. As an SSP, our
platform enables us to manage and optimize our point-of-care network’s ad inventory, maximizing their revenue. On the demand side,
our platform empowers our account and program managers to efficiently manage our customers’ campaign(s). Our technology is built
on a scalable and secure architecture that supports high-performance data processing, real-time decisioning, and integration with third-party
data providers.
To support our growth and provide maximum security,
scalability, and flexibility, all our systems, including from acquisitions, are now hosted and integrated in the cloud. Our technology
development and systems management core team is in the U.S. and in Croatia, with contractors in India and Ukraine to provide bench depth,
rich skills experience, and business economies. The teams are organized into Centers of Excellence focused on Product Domains, Quality
Assurance, Information Security, Data Warehousing, Business Intelligence, Platform Services, and Internal Systems Support. System enhancements
in 2024 included system and framework upgrades, documentation of processes and procedures, security implementation for ongoing cybersecurity,
Sarbanes Oxley, HIPAA, and customer security assessments, and in achieving both System and Organization
Controls (SOC) 2 Type 1 and Type 2 certifications.
3
Competition
The competitive
landscape within life sciences digital marketing is constantly evolving. Our solutions face competition from numerous other companies.
We compete broadly in the dynamic and ever-evolving
pharmaceutical and life sciences digital marketing industry with healthcare data suppliers, health-focused demand-side platforms, and
health-focused walled garden websites and web platforms, and advertising networks that aggregate traffic from multiple web sites or point-of-care
platforms such as telehealth, EHR, eRx, physician practice management, health information exchanges (HIE), and site-based platforms within
large health systems. Our competitors include large well-known companies with established names, solid market niches, and wide arrays
of product offerings and marketing networks.
As innovators
in the industry, we have patented and patent-pending technologies that provide unique differentiation, including a patient-centric focus
on brand conversion, and value generation for our customers. Our extensive point-of-care network provides our customers with unparalleled
reach to relevant prescribers. We are uniquely able to use DAAP to produce targeted, privacy-safe audiences for both consumers and their
treating HCPs, allowing brand engagement to occur within the likely care window to find brand-eligible patients at the right time for
brand adoption. DAAP leverages the investment in data and AI technologies, combined with human intelligence, in applying brand-specific
strategies to optimize program performance. Our patented MNT technology provides a unique opportunity for pharmaceutical brands to market
to consumers while adhering to HIPAA and state level privacy requirements.
For more information on risks relating to our
competition, see Item 1A. Risk Factors.
Intellectual Property
Historically, we have created intellectual property
or obtained intellectual property through commercial relationships and in connection with acquisitions.
We own patents important to our business, and
we expect to continue to file patent applications to protect our research and development investments in new products. As of December 31,
2024, we held five patents and two pending patent applications, including foreign counterpart patents and foreign applications. For the
United States, patents may last 20 years from the date of the patent’s filing, subject to term adjustments made by the patent office.
In addition, we own registered trademarks in the
United States and other countries. As of December 31, 2024, OPTIMIZERx, OPTIMIZEMD, CareSpeak, DIETWATCH, Innovate4Outcomes, SPRx,
SPx, RMDY, Specialty Express, TELAREP, Medicx, Micro-Neighborhood, and Geomedical Targeting are our registered trademarks.
We also have licenses to intellectual property
for the use and sale of certain of our solutions. In addition, we obtain other intellectual property rights and/or licenses used in connection
with our business when practical and appropriate.
Government Regulation
The healthcare industry and, in particular, our
customers and partners are subject to U.S. federal, state and local laws and regulations, including those governing fraud, abuse, privacy
and security. Many of these laws and regulations are complicated and how they might apply to us, our customers, our partners, or the specific
services and relationships we have with our customers and partners are not always well-defined. Many states have enacted laws regulating
the processing of personal information which may reduce demand for placing digital ads in general, especially when those ads relate to
medications, medical products, or health conditions. Although our solutions address these laws by using publicly available information
and by processing de-identified and aggregated information, and we use this data to target geographies rather than individuals, our customers
and partners in the advertising industry remain subject to these regulatory pressures and may not process personal information in this
same way. Our failure, or perceived failure, to accurately apply, or comply with, these laws and regulations could subject us to significant
fines and liability, result in reputational harm, and adversely affect our business. Any new or amended laws or regulations that impose
significant operational restrictions and compliance requirements may negatively impact our business. See Item 1A. Risk Factors for more
information on the impact of Government Regulations on OptimizeRx.
Human Capital
As of December 31, 2024, we had 106 full-time
employees and 1 part-time employee in the U.S, as well as 22 full-time employees in Croatia. None of our employees are represented by
a labor union or collective bargaining agreement with respect to their employment with us. The majority of our employees work remotely
and are geographically distributed across the United States and Croatia. We supplement our workforce with contractors in the United States
and internationally on an as-needed basis. We consider our relationship with our employees to be good and have not experienced any work
stoppages.
We are dedicated to providing a supportive and
respectful environment for our employees where everyone feels valued, and we celebrate both the differences and similarities among our
people. We also believe that diversity in all areas, including cultural background, experience and thought, is essential to bettering
a professional environment and in making our Company stronger. Our Diversity, Equity, Inclusion & Belonging Committee (DEI&B)
is actively engaged in improving our culture, hiring practices and training. In 2023, we upheld the Parity Pledge – a commitment
made in 2021 to interview and consider at least one qualified woman and one underrepresented minority for every open role, VP or higher.
In addition, the DEI&B Committee sponsored quarterly events, including “Cultural Café”, “Food Waste Awareness”,
“Movement Challenge”, and “Affinity Groups”.
4
We prioritize recruiting, retaining, and incentivizing
a highly qualified, diverse workforce as the success of our Company is dependent on the skills, experience, and efforts of our employees.
A skilled workforce not only improves a company’s performance, but also contributes to overall employee satisfaction and enhances
human capital. We have increased our focus on training and development for our current employees and have implemented a Learning Management
System where current and future training modules will be presented and tracked for reporting purposes. We offer other learning and development
opportunities and resources to support our employees in achieving and enhancing their development objectives. We equip our managers with
the skills and tools to provide ongoing coaching and feedback so employees can maximize their performance and potential, delivering success
for the Company and the employee.
We pay our
employees competitively and offer a broad range of company-paid benefits, which we believe are competitive with others in our industry.
Moreover, we believe our long-term incentives are structured in a manner to provide time-based vesting schedules that are retentive
and we incentivize select employees through the granting of stock-based awards and cash-based performance bonus awards.
Smaller Reporting Company
We are a “smaller reporting company”
as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result, we may take advantage of
certain reduced disclosure obligations available to smaller reporting companies, including the exemption from compliance with the auditor
attestation requirements pursuant to the Sarbanes-Oxley Act of 2022, reduced disclosure about our executive compensation arrangements
and the requirements to provide only two years of audited financial statements in our annual reports and registration statements. We will
continue to be a “smaller reporting company” as long as (1) we have a public float (i.e., the market value of our American
Depositary Shares held by non-affiliates) less than $250 million calculated as of the last business day of our most recently completed
second fiscal quarter, or (2) our annual revenues are less than $100 million for our previous fiscal year and we have either no public
float or a public float of less than $700 million as of the end of that fiscal year’s second fiscal quarter. Decreased disclosures
in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors to analyze our results
of operations and financial prospects.
Corporate Information
On January 31, 2006, Optimizer Systems, L.L.C. was
formed in the State of Michigan and, on October 16, 2007, OptimizeRx Corporation was separately incorporated in Michigan. On October 22,
2007, Optimizer Systems, LLC merged into OptimizeRx Corporation, a Michigan corporation, and the name OptimizeRx Corporation remained
unchanged following the merger.
On April 14, 2008, an alternative reporting company with the OTC Market
Group, Inc., known at the time as RFID Ltd., and formed in the State of Colorado, entered into a share exchange agreement with the stockholders
of OptimizeRx Corporation, pursuant to which the stockholders of OptimizeRx Corporation exchanged all of the issued and outstanding capital
stock of OptimizeRx Corporation for shares of common stock of RFID Ltd. As of April 30, 2008, RFID’s officers and directors
resigned their positions and RFID changed its business to OptimizeRx’s business. On April 15, 2008, RFID Ltd’s
corporate name was changed to OptimizeRx Corporation, a Colorado corporation. On September 4, 2008, the Company then completed a migratory
merger, thereby changing the Company’s state of incorporation from Colorado to Nevada, resulting in OptimizeRx Corporation, a Nevada
corporation becoming the parent corporation of OptimizeRx Corporation, a Michigan corporation. On April 11, 2023, OptimizeRx Corporation,
a Michigan corporation was merged with and into OptimizeRx Corporation, a Nevada corporation.
We conduct our operations through our wholly-owned subsidiaries, Healthy
Offers, Inc. (d/b/a Medicx Health or “Medicx Health”), a Nevada corporation, and CareSpeak Communications, d.o.o., a controlled
foreign corporation incorporated in Croatia.
Our principal executive offices are located at
260 Charles Street Suite 302, Waltham, MA 02453 and our telephone number is (248) 651-6568. Our website address is www.optimizerx.com.
Information contained on or accessible through this website is not incorporated by reference in, or otherwise a part of, this Annual Report
on Form 10-K, and any references to this website are intended to be inactive textual references only.
Available Information
We are subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance therewith, we file reports, proxy
and information statements and other information with the Securities and Exchange Commission (the “SEC”). You can read our
SEC filings over the Internet at the SEC’s website at www.sec.gov. Our filings with the SEC are also available free of charge through
the investor relations section of our website at www.optimizerx.com. Reports are available free of charge as soon as reasonably
practicable after we electronically file them with, or furnish them to, the SEC. From time to time, we also use multiple social media
channels to communicate with the public about OptimizeRx. It is possible that the information we post on social media could be deemed
to be material information. Therefore, we encourage you to review the information we post on the social media channels listed on our investor
relations website, if any.
Information contained on or accessible through
the websites and social media channels referred to above is not incorporated by reference in, or otherwise a part of, this Annual Report,
and any references to these websites and social media channels are intended to be inactive textual references only.
Item 1A. Risk Factors
Risks Related to Our Financial Position
We have a history of losses, and may not
be able to achieve profitability, or, if achieved, sustain profitability.
With the exception of 2021, we have historically
incurred losses as a result of investing in future growth. While we have increased revenues, we have not yet consistently achieved profitability
due to these investments and non-cash expenses. Our ability to achieve consistent profitability depends on our ability to generate sales
through our technology platform and advertising model, while maintaining reasonable expense levels. If we do not achieve sustainable profitability,
it may impact our ability to continue our operations.
5
We may need to raise additional capital
to grow our business and may not be able to do so on favorable terms, if at all.
We may need to raise additional capital in the
future, including to expand our operations and pursue our growth strategies, to respond to competitive pressures, or to meet capital needs
in response to operating losses or unanticipated working capital requirements. Our inability to raise additional capital on acceptable
terms in the future may limit our ability to continue to operate our business and further expand our operations.
Servicing debt and funding other obligations
requires a significant amount of cash, and our ability to generate sufficient cash depends on many factors, some of which are beyond our
control.
Our ability to make payments on and refinance
our indebtedness and to fund our operations and capital expenditures depends on our ability to generate cash flow and secure financing
in the future. Our ability to generate future cash flow depends, among other things, on future operating performance, general economic
conditions, competition, and legislative and regulatory factors affecting our operations and business.
Some of these factors are beyond our control.
There is no assurance that our business will generate cash flow from operations or that future debt or equity financings will be available
to us to enable us to pay our indebtedness or to fund other needs. As a result, we may need to refinance all or a portion of our indebtedness
on or before maturity. There is no assurance that we will be able to refinance any of our indebtedness on favorable terms, or at all.
Any inability to generate sufficient cash flow or refinance our indebtedness on favorable terms could have an adverse effect on our financial
condition.
Restrictions in our Term Loan could adversely
affect our business, financial condition, results of operations, ability to make distributions, and the value of our securities.
Our Term Loan contains customary affirmative covenants,
including, among others, covenants pertaining to the delivery of financial statements; certain financial covenants; notices of default
and certain other material events; payment of obligations; preservation of corporate existence, rights, privileges, permits, licenses,
franchises and intellectual property; maintenance of property and insurance and compliance with laws, as well as customary negative covenants,
including, among others, limitations on the incurrence of liens and entering into capital leases, investments and indebtedness; mergers
and certain other fundamental changes; dispositions of assets; restricted payments; changes in our line of business; transactions with
affiliates and burdensome agreements. These covenants could affect our ability to operate our business, increase the amount of interest
expense we ultimately pay pursuant to the Term Loan, and may limit our ability to take advantage of potential business opportunities as
they arise.
Our ability to comply with the covenants and restrictions
contained in our Term Loan, may be affected by events beyond our control, including prevailing economic, financial, and industry conditions.
If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. A failure to comply with
these provisions could result in a default or an event of default. Upon an event of default, unless waived, the lenders could elect to
terminate their commitments, cease making further loans, cause their loans to become
due and payable in full, foreclose against any assets securing the debt under our Term Loan and force us and our subsidiaries into bankruptcy
or liquidation. If the payment of our debt is accelerated, our assets may be insufficient to repay such debt in full, and the holders
of our stock could experience a partial or total loss of their investment.
Risks Related to Our Business: Our Industry,
Operations, and Competition
Seasonal trends in the pharmaceutical brand
marketing industry could affect our operating results.
In 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.
Developing and implementing new and updated
applications, features and services for our solutions may be more difficult than expected, may take longer and cost more than expected
and may not result in sufficient increases in revenue to justify the costs.
Attracting and retaining users of our solutions
requires us to continue to improve the technology underlying those solutions and to continue to develop new and updated applications,
features and services for those solutions. If we are unable to do so on a timely basis or if we are unable to implement new applications,
features and services without disruption to our existing ones, we may lose potential users and clients. The costs of development of these
enhancements may negatively impact our ability to achieve profitability.
We rely on a combination of internal development,
strategic relationships, licensing and acquisitions to develop our solutions and related applications, features and services. Our development
and/or implementation of new technologies, applications, features and services may cost more than expected, may take longer than originally
expected, may require more testing than originally anticipated and may require the acquisition of additional personnel and other resources.
There can be no assurance that the revenue opportunities from any new or updated technologies, applications, features or services will
justify the amounts spent.
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Any failure to offer high-quality customer
support for our solutions may adversely affect our relationships with our customers and harm our financial results.
Once our solutions are implemented, our customers
use our support organization to resolve technical issues relating to our solutions. Increased demand for our support services may increase
our costs without corresponding revenue, which could adversely affect our operating results. Further, the sale of our solutions is highly
dependent on the ease of use of our solutions, on our business reputation, and on favorable recommendations from our existing customers.
Any failure to maintain high-quality and responsive customer support, or a market perception that we do not maintain high-quality support,
could harm our reputation, cause us to lose customers, adversely affect our ability to sell our solutions to prospective customers, and
harm our business, operating results and financial condition.
We are dependent on a concentrated group
of customers.
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 over 100 pharmaceutical
manufacturers as customers, and our revenues are concentrated in these customers. Loss of one or more of our larger customers could have
a negative impact on our operating results. Our top five customers represented approximately 49% of revenue for the year ended December 31,
2024. In 2024 and 2023, respectively, we had two customers and one customer that represented over 10% of our revenues.
We expect that we will continue to depend upon
a relatively small number of customers for a significant portion of our total revenues for the foreseeable future. The loss of any of
these customers or groups of customers for any reason, or a change of relationship with any of our key customers could cause a material
decrease in our total revenues.
Additionally, mergers or consolidations among
our customers in the healthcare industry could reduce the number of our customers and could adversely affect our revenues and sales. In
particular, if our customers are acquired by entities that are not also our customers, that do not use our solutions or that have more
favorable contract terms with competitors and choose to discontinue, reduce or change the terms of their use of our solutions, our business
and operating results could be materially and adversely affected.
If we are unable to maintain our contracts
with electronic prescription platforms and electronic health record systems, our business will suffer.
We are reliant upon our contracts with leading
electronic prescribing (“eRx”) platforms and electronic health record (“EHR”) systems to generate a portion of
the revenues received from our customers. Such arrangements subject us to a number of risks, including the following:
We generated 57.3% and 55.9% of our revenue through
our two largest channel partners in 2024 and 2023, respectively. As such, the inability to maintain these relationships could adversely
impact our business.
Our agreements with eRx and EHR channel
partners could be subject to audit.
Our agreements with our eRx and EHR channel partners
provide for revenue-sharing payments to them based on the revenue we generate through their platforms and systems. These payments could
be subject to an audit by our channel partners, at their cost, and if there is a dispute as to the calculation, we may be liable for additional
payments. Some agreements would require us to also pay for the cost of the audit if an underpayment is determined to be in excess of a
certain amount.
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If we fail to attract new customers or retain
and expand existing customers, our business and future prospects may be materially and adversely impacted.
We currently work with many leading pharmaceutical
companies, medical device manufacturers, associations, and other companies. While we have experienced customer growth, this growth may
not continue at the same pace in the future or at all. Achieving growth in our customer base may require us to engage in increasingly
sophisticated and costly sales and marketing efforts that may not result in additional customers. We may also need to modify our solution
set and/or pricing model to attract and retain such customers. If we fail to attract new customers or fail to maintain or expand existing
relationships in a cost-effective manner, our business and future prospects may be materially and adversely impacted.
The markets in which we operate are competitive,
continually evolving and, in some cases, subject to rapid change.
Our solutions face competition from numerous other
companies. We compete for revenue from healthcare advertisers and sponsors (pharmaceutical manufacturers) with healthcare data suppliers,
health-focused demand-side platforms, and health-focused walled garden websites and web platforms, and advertising networks that aggregate
traffic from multiple web sites or point-of-care platforms such as telehealth, EHR, eRx, physician practice management, health information
exchanges (HIE), site-based platforms within large health systems, etc.
Many of our competitors have greater financial,
technical, product development, marketing and other resources than we do. These organizations may be better known than we are and have
more customers than we do. We cannot provide assurance that we will be able to compete successfully against these organizations or any
alliances they have formed or may form. Since there are no substantial barriers to entry into the markets in which we participate, we
expect that competitors will continue to enter these markets.
Developments in the healthcare industry
could adversely affect our business.
Most of our revenue is derived from pharmaceutical
manufacturers and could be affected by changes affecting the broader healthcare industry, including decreased spending in the industry
overall.
General reductions in expenditures by healthcare
industry participants could result from, among other things:
● Consolidation of healthcare industry participants;
● Reductions in governmental funding for healthcare; and
Even if general expenditures by industry participants
remain the same or increase, developments in the healthcare industry may result in reduced spending in some or all the specific market
segments that we serve now or may serve in the future. For example, the use of our solutions and services could be affected by:
● A decrease in the number of new drugs or medical devices coming to market; and
The healthcare industry has changed significantly
in recent years, and we expect that significant changes will continue to occur. However, the timing and impact of developments in the
healthcare industry are difficult to predict. We cannot assure you that the demand for our solutions and services will continue to exist
at current levels or that we will have adequate technical, financial and marketing resources to react to changes in the healthcare industry.
Risks Related to Regulatory Matters
Actual or perceived failures to comply with
applicable laws and regulations that affect the healthcare industry, including data protection, privacy and security, fraud and abuse
laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.
The global data protection landscape is rapidly
evolving, and we are or may become subject to numerous state, federal and foreign laws, requirements and regulations governing the collection,
use, disclosure, retention, and security of personal information. In addition, our customers and service providers may be or become subject
to these same rules. This evolution may create uncertainty in our business, affect our ability to operate in certain jurisdictions or
to collect, store, transfer, use and share personal information, necessitate the acceptance of more onerous obligations in our contracts,
result in liability or impose additional costs on us. The cost of compliance with these laws, regulations and standards is high and is
likely to increase in the future. Any failure or perceived failure by us to comply with federal, state or foreign laws or regulation,
our internal policies and procedures or our contracts governing our processing of personal information could result in negative publicity,
government investigations and enforcement actions, claims by third parties, and damage to our reputation, any of which could have a material
adverse effect on our operations, financial performance and business.
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We also may be bound by contractual obligations
and other obligations relating to privacy, data protection, and information security that are more stringent than applicable laws and
regulations. The costs of compliance with, and other burdens imposed by, laws, regulations, standards, and other obligations relating
to privacy, data protection, and information security are significant. Although we work to comply with applicable laws, regulations, and
standards, our contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and
applied in an inconsistent manner from one jurisdiction to another, and may conflict with another or other legal obligations with which
we must comply. Accordingly, our failure, or perceived inability, to comply with these laws, regulations, standards, and other obligations
may limit the use and adoption of our solution, reduce overall demand for our solution, lead to regulatory investigations, breach of contract
claims, litigation, and significant fines, penalties, or liabilities for actual or alleged noncompliance or slow the pace at which we
close sales transactions, any of which could harm our business.
The Health Insurance Portability and Accountability
Act of 1996, or HIPAA, and the rules promulgated thereunder require certain entities, referred to as Covered Entities, to comply with
established standards, including standards regarding the privacy and security of protected health information, or PHI. HIPAA further requires
that Covered Entities enter into agreements meeting certain regulatory requirements with their business associates, as such term is defined
by HIPAA, which, among other things, obligate the business associates to safeguard the covered entity’s PHI against improper use
and disclosure. While we are not a Covered Entity, we have contracted as a business associate of our Covered Entity customers and, as
such, may be regulated by HIPAA and have contractual obligations under such agreements, including to enter into business associate agreements
with our third-party vendors. We, and our Covered Entity customers might face significant contractual liability pursuant to such business
associate agreements if the business associate breaches the agreement or causes the Covered Entity to fail to comply with HIPAA. Additionally,
even if we do not act as a Covered Entity or Business Associate, we process data that has been de-identified according to the expert determination
method under HIPAA’s Privacy Rule. This requires us to take measures to prevent the re-identification of that data and to comply
with HIPAA if that data is re-identified.
In the ordinary course of our business, we collect
and store sensitive data, including intellectual property, proprietary business information and personally identifiable information (including
of our employees, customers, suppliers and business partners). Any data breach may subject us to civil fines and penalties, or regulatory
orders, fines or sanctions under relevant state and federal privacy laws in the United States, including the California Consumer Privacy
Act (“CCPA”) and other laws and regulations. Our failure, or the failure of our third-party vendors, to comply with applicable
laws and regulations relating to data security and our involvement or the involvement of any of our third-party vendors in any data security
incidents could result in legal claims and liability, obligations to report incidents to governmental agencies, regulatory investigations
and penalties, and reputational damage, which could have a material adverse effect on our business, financial condition and results of
operations.
Certain other laws and regulations such as federal
and state anti-kickback and false claims laws may apply to us indirectly through our relationships with our customers and partners. Violations
can result in considerable penalties and sanctions. If we are found to have violated, or to have facilitated the violation of such laws,
we could be subject to significant penalties.
Our operations may be impacted from changes
to current regulations and future legislation.
The current Executive Branch administration and
regulatory agencies may propose policy changes that create uncertainty for our business, including potentially implementing restrictions
on pharmaceutical direct to consumer (“DTC”) marketing.
Additionally, in its June 2024 decision in Loper
Bright Enterprises v. Raimondo (the “Loper decision”), the U.S. Supreme Court overturned the longstanding Chevron doctrine,
under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes.
The Loper decision could result in additional legal challenges to regulations and guidance issued by federal agencies applicable to our
customer’s operations, including those issued by the U.S. Food and Drug Administration (FDA), the U.S. Department of Health &
Human Services, and the U.S. Federal Trade Commission. Additionally, the Loper decision may result in increased regulatory uncertainty,
inconsistent judicial interpretations and other impacts to the agency rule-making process. We cannot predict which additional measures
may be adopted or the impact of current and additional measures on our business, or our customer’s businesses, which could have
a significant impact on our business, financial condition and results of operations.
If our customers, partners, and third-party
providers fail to comply with the extensive and changing landscape of legal and regulatory requirements affecting the pharmaceutical and
healthcare industries, they could face increased costs and/or penalties, which could lead to us losing business.
The FDA, U.S. state licensure bodies, other healthcare
regulators and other comparable agencies in other jurisdictions directly regulate many of the most critical business activities of our
customers, partners, and third-party providers, including R&D for biotechnology and pharmaceutical development, and pharmaceutical
advertising. States increasingly have been placing greater restrictions on the marketing and advertising practices of healthcare companies,
particularly pharmaceutical companies. In addition, pharmaceutical and biotechnology companies have been the target of lawsuits and investigations
alleging violations of government regulations, including claims asserting submission of incorrect pricing information, improper promotion
of pharmaceutical products, payments intended to influence the referral of federal or state healthcare business, submission of false claims
for government reimbursement, antitrust violations, violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar
anti-bribery or anti-corruption laws. Any failure to comply with applicable laws, rules and regulations may result in civil and/or criminal
legal proceedings and lead to fines, damages, mandatory compliance programs and other sanctions and remedies that may materially affect
the business, operations and reputations of our customers, partners and third-party providers which could adversely affect our business.
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Risks Related to Our Intellectual Property