Business Context and Reporting Period
Company: OptimizeRx Corporation (a development stage company)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three months ended March 31, 2010
Business Overview: The Company operates a direct-to-consumer business strategy focused on healthcare cost management. Its platforms include OPTIMIZERx.com (patient savings portal), OFFERx (pharmaceutical offer fulfillment), ADHERxE (patient engagement), and SampleMD (physician sample distribution). The Company is classified as a "smaller reporting company" and a "development stage enterprise."
Key Financial Metrics
| Metric | Q1 2010 | Q1 2009 | YTD Inception (Jan 2006 - Mar 2010) |
|---|---|---|---|
| Gross Revenues | $1,283 | $1,271 | $212,010 |
| Operating Expenses | $263,094 | $1,376,304 | $5,169,184 |
| Net Loss | $(260,967) | $(1,360,723) | $(9,611,286) |
| Net Loss Per Share | $(0.02) | $(0.11) | N/A |
| Cash and Cash Equivalents (End of Period) | $371,412 | $1,822,768 | N/A |
| Total Assets | $633,184 | N/A | N/A |
| Total Liabilities | $13,879 | N/A | N/A |
| Working Capital | $371,583 | N/A | N/A |
Cash Flow Summary (Q1 2010):
- Net cash used in operating activities: $(240,322)
- Net cash used in investing activities: $(44,660) (primarily website development)
- Net cash provided by financing activities: $0
Material Changes vs. Prior Period
- Revenue: Remained nominal, increasing slightly from $1,271 in Q1 2009 to $1,283 in Q1 2010.
- Operating Expenses: Decreased significantly by approximately 81%, from $1.38 million in Q1 2009 to $263,094 in Q1 2010. This reduction was driven largely by a decrease in consulting fees (from $876,795 to $31,644) and advertising expenses (from $307,570 to $34,104).
- Net Loss: Improved substantially, narrowing from a loss of $1.36 million in Q1 2009 to $260,967 in Q1 2010.
- Liquidity: Cash balances decreased by $284,982 during the quarter, dropping from $656,394 at year-end 2009 to $371,412 at March 31, 2010.
Outlook, Risks, and Management Commentary
Management Commentary: Management continues to focus on monetizing a database of over two million members. Significant progress was made with the "SampleMD" platform, including agreements with Health Connect Partners, Dreyer Medical Clinic, and MedAssets Supply Chain Systems. Advertising proposals are pending with major pharmaceutical companies (Lilly, AstraZeneca, Novartis).
Going Concern Risk: The filing explicitly states that the Company has insufficient cash to operate at current levels for the next twelve months or to achieve business goals. Continued operations are dependent on raising additional capital. Management is in negotiations with Vicis Capital Master Fund but has no formal commitments.
Capital Structure:
- Preferred Stock: 35 shares of Series A Convertible Preferred Stock are outstanding, required to be redeemed on September 5, 2010. Cumulative undeclared dividends totaled $547,774 as of March 31, 2010.
- Common Stock: 12,881,156 shares outstanding. 12,000 shares were issued for services in Q1 2010.
Risks: The Company faces risks related to its development stage status, substantial accumulated losses, and the uncertainty of securing future financing. There are no pending legal proceedings.
Investor Verification Checklist
- Cash Runway: Verify the status of negotiations with Vicis Capital Master Fund and the likelihood of securing financing before the September 5, 2010 preferred stock redemption date.
- Revenue Realization: Confirm the status of pending advertising proposals with major pharmaceutical partners to assess if revenue can scale beyond nominal levels.
- Preferred Stock Redemption: Assess the Company's ability to fund the redemption of Series A Preferred Stock and pay cumulative dividends ($547,774) due in September 2010.
- SampleMD Adoption: Monitor the conversion of recent agreements (MedAssets, Health Connect Partners) into actual revenue streams.
- Stock Issuance for Services: Review the valuation and necessity of continued stock issuances for services ($27,960 in Q1 2010) as a cost-saving measure versus cash burn.