Optimizerx Corp 10-Q Summary: Period Ended September 30, 2009
Business Context and Reporting Period
Optimizerx Corp (Nevada) is a development-stage company operating as a website publisher and marketing firm. Its platform helps patients manage healthcare costs and provides advertising programs for the pharmaceutical industry. The company operates through three main platforms: OptimizeRx (patient savings), OFFERx (manufacturer offers), and ADHERxE (patient engagement). This report covers the quarterly period ended September 30, 2009, and the nine-month period ended on the same date.
Key Financial Metrics
| Metric | Three Months Ended 9/30/09 | Nine Months Ended 9/30/09 | Balance Sheet (9/30/09) |
|---|---|---|---|
| Revenue | $6,908 | $11,628 | N/A |
| Operating Expenses | $534,065 | $2,265,831 | N/A |
| Net Loss | $(522,207) | $(2,225,075) | N/A |
| Cash and Equivalents | N/A | N/A | $1,006,382 |
| Total Assets | N/A | N/A | $1,133,701 |
| Total Liabilities | N/A | N/A | $11,781 |
| Working Capital | N/A | N/A | $1,121,920 |
| Shares Outstanding | 12,609,094 (Wtd Avg) | 12,503,083 (Wtd Avg) | 12,726,117 |
Material Changes vs. Prior Period
- Revenue: Revenue increased 522% for the three-month period ($6,908 vs. $1,111) but decreased 83% for the nine-month period ($11,628 vs. $68,317) compared to the prior year.
- Expenses: Operating expenses surged 228% for the three-month period and 255% for the nine-month period. The nine-month increase was driven by consulting fees ($799,105), advertising ($634,523), and payroll ($352,966).
- Net Loss: The net loss widened significantly to $522,207 for the quarter and $2,225,075 for the nine months, compared to $161,408 and $902,958 in the prior year periods, respectively.
- Liquidity: Cash and cash equivalents decreased by approximately $1.5 million during the nine-month period, dropping from $2,502,656 at year-end 2008 to $1,006,382.
- Liabilities: Current liabilities dropped significantly from $217,797 to $11,781, primarily due to the repayment of a $4,000 related-party note and the reduction of accrued expenses.
Outlook, Risks, and Management Commentary
- Going Concern: The company has sustained substantial losses since inception. Management states that the ability to continue as a going concern is dependent on the growth of revenues and the ability to raise additional capital.
- Revenue Strategy: Management plans to monetize a database of over one million members. There are currently over 10 advertising proposals pending with major pharmaceutical companies (e.g., Lilly, AstraZeneca, Novartis).
- Capital Structure: The company has 35 shares of Series A Preferred Stock outstanding, convertible to 3.5 million common shares, with a cumulative dividend of $197,774 accrued but not declared. These shares are redeemable on September 5, 2010.
- Recent Issuances: During the quarter, the company issued 450,000 warrants and 124,000 shares of common stock for services, exempt under Regulation D.
- Risks: Key risks include the need for additional financing, the development-stage nature of the business, and the concentration of credit risk regarding bank deposits exceeding insured limits.
Investor Verification Checklist
- Cash Runway: Verify if the current cash balance of ~$1 million is sufficient to cover the burn rate of ~$2.2M per nine months without immediate new financing.
- Preferred Stock Redemption: Confirm the company's ability to meet the September 5, 2010 redemption requirement for Series A Preferred Stock.
- Revenue Realization: Assess the status of the 10+ pending advertising proposals to determine if revenue will materialize in the near term.
- Stock-Based Compensation: Review the impact of non-cash stock issuances for services ($921,491 in the nine months) on future cash burn and dilution.
- Accrued Dividends: Monitor the $197,774 in accrued preferred dividends and the potential for cash payout or further dilution upon conversion.