OptimizeRx Annual Report 2011

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K [X]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011 [ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ________ Commission file number: 000-53605 OptimizeRx Corporation(Exact name of registrant as specified in its charter)Nevada26-1265381(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 400 Water Street, Ste. 200Rochester, MI 48307(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 className of each exchange on which registerednonenot applicable Securities registered under Section 12(g) of the Exchange Act: Title of each classCommon Stock, par value of $0.001 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] 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 [X] 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 duringthe preceeding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirementsfor the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceeding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes [ ] No [X] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 232.405 of this chapter) is not contained herein, and willnot be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K orany amendment to this Form 10-K. Yes [ ] No [X] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] 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 thecommon 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 recentlycompleted second fiscal quarter. $15,368,178 Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 14,192,496 as of February 15,2012. Table of ContentsTABLE OF CONTENTS PagePART I Item 1.Business3Item 1A.Risk Factors9Item 1B.Unresolved Staff Comments9Item 2.Properties9Item 3.Legal Proceedings9Item 4.Mine Safety Disclosures9 PART II Item 5.Market for Registrant’s Common Equity and Related Stockholder Mattersand Issuer Purchases of Equity Securities10Item 6.Selected Financial Data12Item 7.Management’s Discussion and Analysis of Financial Condition andResults of Operations13Item 7A.Quantitative and Qualitative Disclosures About Market Risk15Item 8.Financial Statements and Supplementary Data15Item 9.Changes In and Disagreements With Accountants on Accounting andFinancial Disclosure16Item 9A(T).Controls and Procedures16Item 9B.Other Information16 PART III Item 10.Directors, Executive Officers and Corporate Governance17Item 11.Executive Compensation20Item 12.Security Ownership of Certain Beneficial Owners and Management andRelated Stockholder Matters22Item 13.Certain Relationships and Related Transactions, and DirectorIndependence23Item 14.Principal Accountant Fees and Services23 PART IV Item 15.Exhibits, Financial Statement Schedules232Table of ContentsPART IItem 1. BusinessCompany Overview Throughout industry and economic discussions we often hear the catch phrase, “The Perfect Storm,” but none is as prevalent as the transitional businessclimate between healthcare providers and pharmaceutical manufacturers. The year 2011 has seen greater pressures on health care providers to increase boththe volume and value of the services they provide to their patients—with fewer resources. This cumulates with their high focus and scrutiny of ways to reduce their drug costs, primarily through decreased utilization of branded medications when ageneric alternative is available. To do this, health systems have restricted pharmaceutical manufacturers’ access to their doctors and no longer accepting drugsamples, along with passing more of the cost of branded medication to patients through increased co-pays. Through electronic prescribing (ePrescribing),health systems now have a way of informing physicians of the coverage differential every time they look up a medication to prescribe. ePrescribing nowrepresents over 450 million prescription that are sent directly to pharmacies and is projected to grow to 2 billion by 2016 due to government incentives andrapid adaption. In turn, these increased pressures and the lack of access pharmaceutical representatives have to doctors have left pharmaceutical manufacturers in need of anew solutions to bridge the gap in promoting their drugs value. Additionally, they’re co-pay and sample vouchers, which increase the likelihood that apatient can better afford to start and stay on their medications, has been difficult to distribute to the doctors and patients needing their help. Thus, OptimizeRx Corp., through its SampleMD™ electronic patient savings and support technology, is poised to provide great impact to each stakeholderby automatically added a savings eCoupon and patient support right within the electronic prescription process. For OPTIMIZERx, 2011 continued to be a centered on completing and commercializing our SampleMD™ solution. Early beta testing within targetedhealthcare systems provided both a test bed and focus group feedback on utilization and user interface requirements. Additionally, the early roll out of theSampleMD™ engine integrated within the Allscripts, the world’s largest ePrescribing application, showed early signs of great potential, but also exposedsome hurdles that needed to be cleared to seamlessly streamline the physician’s workflow and ensure all transactional information is captured. Overall, forboth installed applications, desk top and ePrescribing, clinicians were satisfied with the ease and availability of the SampleMD™ solution. Incorporating the feedback and results we compiled from these early test environments, OPTIMIZERx rolled out our SampleMD™ version 3.0 in the 4thquarter that featured enhanced access to formulary information, a broader search capability and the introduction of our eRep Scheduler, a tool for cliniciansand pharmaceutical representatives to establish a rules-based appointment scheduler to set fixed appointments. OPTIMIZERx also continued to optimize theintegration between the SampleMD™ solution and multiple ePrescribing and Electronic Medical Record providers. The Allscripts ePrescribing integrationcontinues to show increasing results and clinician adoption while we began integration of our new partner NewCrop. NewCrop is an industry leadingelectronic prescribing service that has been deployed in over 150 Electronic Medical Record providers and medical networks since 2003. We also have signed contracts with other ePrescribing platforms that have the potential to triple our reach to over 100,000 physicians in 2012. This clearlyposition us as the market leader in offering physicians a way to automatically add and electronically distribute co-pay coupons, sample vouchers and patienteducation to their patients. Likewise, we are uniquely able to offer pharmaceutical manufacturers one platform to manage, promote and report their patientsupport to physicians- right within their current workflow. In our 3rd and fourth quarter, we secured additional financing to support our continued growth and the recognized need for additional resources within thetechnical, sales and administrative disciplines. We used $1,056,876 to pay back the note to Physicians Interactive, with the balance of the funds allocated tobe used to support the acquisition of additional resources needed to support our growth.3Table of ContentsIn addition to hiring a new Vice President of Eastern Sales we increased our Sales/Marketing staff to assist with supporting the sales organization and beginto build out and coordinate our brand marketing and awareness programs. We have focused on driving our market message and gained significant exposurewhile participating in the Allscripts User Conference in August of 2011. With some 3500 plus attendees, we gained valuable exposure to health systems andpharmaceutical manufacturers. Additionally, we participated within the HIMMS health care technology conference, the Marcus Evan Executive Marketingroundtable and launched an Ad campaign surrounding our SampleMD™ solution and its benefits to the health care provider advertising in PharmaceuticalExecutive Magazine. We also initiated a number of email marketing campaigns as well as initiating a SampleMD™ newsletter. It is our intent to continue todrive market awareness, secure additional sales, align with additional channel partners, and to acquire the necessary resources to support our continuedgrowth. For our year to date performance, OPTIMIZERx generated revenue post launch of the SampleMD™ initiative of $1.11 Million from agreements that representthirteen (13) major pharmaceutical manufacturers, forty six (46) brands and sixty (60) offerings distributed via our heath system widgets and integratedePrescribing channel partners. Eliminating non-cash expenses, these efforts have resulted in great operational improvements, cost controls, and substantiallyreducing the net loss year over year. The sales cycle and medical/legal review is substantially longer than anticipated based introducing new marketingtechnology within the highly regulated pharmaceutical industry. However, we have streamlined this process within key organizations that now recognize and approve the marketing process of SampleMD. Our pipeline andopportunities continue to grow and anticipate significant acceleration of revenue within the 2nd half of 2012. Principal Products and Applications SampleMD - Today, almost 60% of doctors’ offices ban or limit drug representatives and the samples they offer. Although samples are still valuable,many healthcare systems and doctors are looking for an easier, more effective way to increase affordable access and adherence to their prescribedbranded medications which led us during the past year to develop our direct to physician solution called SampleMD.SampleMD is a revolutionary virtual "Patient Support Center" that allows doctors and staff to access a universe of sample vouchers, co-pay couponsand the fulfillment and adjudication of claims directly from their desktops. Doctors and healthcare providers utilize the SampleMD application fromtheir computer desktops or integrate it into their EMR and/or e-Prescribe systems to search, print or electronically dispense drug samples and co-paycoupons through a national network of pharmacies. SampleMD eliminates the need for physicians to manage and store physical drug samples byoffering a more convenient and efficient way to allocate, administer and track samples and co-pay savings provided to their patients. Doctors can alsoreview a branded drug's formulary status within the patients' insurance plan to determine at what level the product is paid/reimbursed. With anintegrated automated communications capability, SampleMD will also provide on-going patient support and delivery of monthly co-pay savings topromote continued drug compliance for chronic conditions such as diabetes, heart disease and asthma.OPTIMIZERx.com – Our Site is a portal to healthcare savings for patients to centrally review and participate in prescription and healthcare savingsand support programs. We strive to provide all the information and guidance that patients undergoing long-term pharmaceutical treatments mayrequire. Patients can search by their medication or their condition in order to access educational information regarding their condition, informationregarding their medication, coupons for instant savings when they purchase their medications, information on free drug trials, and guidance to anyother savings programs available to them.By providing information as well as significant savings opportunities to users of our Site, we hope to become the default medical website for bothpatients and the pharmaceutical industry. We feel that the aging of the baby boom generation, combined with the preponderance of internet usage toaccess information and savings in all areas, has created a large potential market for our Site. We are also developing phone applications which willallow consumers to use right when they are in their pharmacies.4Table of ContentsMarketing and Sales OPTIMIZERx continued to extend its marketing efforts to build both brand and capabilities awareness to the market. As mentioned above, we activelyparticipated in industry and partner events such as exlPharma and the ACE – Allscripts Users Conference. During the course of the year, OPTIMIZERx alsoinitiated and delivered successful email marketing campaigns as well as successful public relations and press release communications initiatives.OPTIMIZERx has enlisted a successful advertising campaign through Pharma Exec magazine that netted several responses and qualified leads. OPTIMIZERx plans to continue these efforts and with our marketing partners, we intend to continue to promote OPTIMIZERx and SampleMD primarilythrough the following: · Industry and Partner eventEmail ComapignsInternet Marketing· Public Relations Campaigns· Physician Offices· Direct to Consumer Marketing· Trade Media Advertising· Pharmacy Partners· Physician Organizations and Associations· Strategic Relationships OPTIMIZERx has also positioned a Vice President of Eastern Sales located in Philadelphia, PA. We continue to look to secure key sales executives tosupport the growth targets of the organization through efforts in direct sales, identify and enlist new strategic partners, and build on the existing client base. Research and Development OPTIMIZERx is keen on the opinions and input that we gain from all stake holders by which our products and solutions cross. From the prescribingclinicians that utilize our solutions to add value to the patients they serve, to the partners we use to leverage their channels for distribution and promotion ofthe services, we are able to greatly assist the pharmaceutical manufacturing clients that depend on our solutions to increase their brand awareness and assistpatients in need of their offerings. This “Voice of the Stake Holder” is a mantra that we leverage in analyzing industry trends and market shifts andidentifying enhancements and new offerings through our SampleMD™ solution. This effort involves all of our officers and directors as part of our continualresearch development team while monitoring new technologies, trends, services, and partnerships that can help us provide additional services and increasedvalue to the healthcare and pharmaceutical industries and to the patients they serve. This year OPTIMIZERx has added a Director of Technology and Director of Software Development to strengthen our core technical team while furtherdeveloping our core portfolio products and solutions, and begin development of new solutions offerings to expand our solutions offerings footprint.OPTIMIZERx also continues to work with the Engineering and Information Technology department of Oakland University in Rochester Michigan. As theUniversity has opened the doors of its new medical school, it also brings highly skilled technology and application developers whom posses a solidknowledge of medical industry IT requirements. OPTIMIZERx continues its commitment to educate both our direct and our extended teams through an understanding of all market dynamics that have thepotential to affect our business in both the short and long term. Our primary goal is to help patients better afford and access the medicines their doctorsprescribe, as well as other healthcare products and services they need. Based on this goal, we continually seek better ways to meet this mission through theuse of improved technology, user feedback, and working closely with the pharmaceutical industry. We are continually seeking new ways we can engage thepharmaceutical industry to provide new support programs to patients in need of their products.5Table of ContentsCompetition Direct to Physician Sampling Environment (SampleMD) SampleMD has faced little competition as it enters the market offering new innovation that ceased to exist. The biggest of challengers was physicians havingphysical samples available on site and within their clinics. Physician Interactive , a technology company who provides a web enabled service allowingphysician to order physical samples online for delivery to their clinics, was the most prevalent of competitors. The OptimizeRx.com website continues to compete in the highly competitive pharmaceutical and healthcare advertising industry that is dominated by largewell-known companies with established names, solid market niches, wide arrays of product offerings and marketing networks. Our largest competitorsinclude a variety of healthcare website publishers and networks that provide online advertising competition to OPTIMIZERx.com, including Quality Health,WebMD, McKesson, and Drugs.com. -Quality Health – Quality Health hosts an interactive website that allows users to research information regarding medical conditions, medications,and treatments. Visitors to their website can also search for doctors or health centers in their area, both generally and specific to their condition.-WebMD – WebMD provides in-depth reference material regarding medical conditions and medicines to users. Individuals can search for a diagnosisvia symptoms or research details regarding their previously diagnosed medical conditions. Online support forums are also hosted for patients withparticularly challenging conditions.-McKesson – McKesson Corporation has been providing health care services in the United States for over 175 years. They act as a distributor forpharmaceutical companies to a network of pharmacies, and have developed online solutions for customers, third-party payors, and manufacturers.McKesson has significantly greater financial resources and brand recognition than we do. Our competitors who have not done so already may be able to enter into the field by developing a website to promote health care offers. However, most maybe limited in their ability to create, promote and manage new and exclusive prescription trials or offers. Additionally, with ADHERxE and the ability tocreate multiple offers activated each month for returning patients who sign up, we believe that we are uniquely positioned with significant barriers to entryfor potential competitors in this area. Intellectual Property All key aspects of our promotional and offer development platforms are pending patent review. However, our business is not predicated on being awardedpatent exclusiveness. Rather, patent protection represents a huge asset and further opportunity upon its receipt. OPTIMIZERx is a licensed trademark.SampleMD is a licensed trademark Our intellectual property is developed significantly each month. Since inception, we have developed and launched OFFERx and ADHERxE, and we arefurther integrating these platforms to provide more robust offerings. OPTIMIZERx.com and OFFERx are patent pending.6Table of ContentsThe following table summarizes the status of our patents and patent applications as of the date hereof: App Number/ Filing DateBrief Summary (Products Covered)StatusS.N. 11/528,292 September 27, 2006System for providing patientsavings and promoting healthcare product salesPatent application pending.S.N. 61/277,161 September 21,2009Virtual Sample Cabinet Systemand Method for Prescribing DrugMarketingPatent application pending Government Regulation Fraud and Abuse Laws Anti-Kickback Statutes The federal healthcare program Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providingremuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the furnishing, arranging for or recommending agood or service for which payment may be made in whole or part under a federal healthcare program such as Medicare or Medicaid. The definition ofremuneration has been broadly interpreted to include anything of value, including for example gifts, discounts, the furnishing of supplies or equipment,credit arrangements, payments of cash and waivers of payments. Several courts have interpreted the statute's intent requirement to mean that if any onepurpose of an arrangement involving remuneration is to induce referrals or otherwise generate business involving goods or services reimbursed in whole or inpart under federal healthcare programs, the statute has been violated. The law contains a few statutory exceptions, including payments to bona fideemployees, certain discounts and certain payments to group purchasing organizations. Violations can result in significant penalties, imprisonment andexclusion from Medicare, Medicaid and other federal healthcare programs. Exclusion of a manufacturer would preclude any federal healthcare program frompaying for its products. In addition, kickback arrangements can provide the basis for an action under the Federal False Claims Act, which is discussed in moredetail below. The Anti-Kickback Statute is broad and potentially prohibits many arrangements and practices that are lawful in businesses outside of thehealthcare industry. Recognizing that the Anti-Kickback Statute is broad and may technically prohibit many innocuous or beneficial arrangements, theOffice of Inspector General of Health and Human Services, or OIG, issued a series of regulations, known as the safe harbors, beginning in July 1991. Thesesafe harbors set forth provisions that, if all the applicable requirements are met, will assure healthcare providers and other parties that they will not beprosecuted under the Anti-Kickback Statute. The failure of a transaction or arrangement to fit precisely within one or more safe harbors does not necessarilymean that it is illegal or that prosecution will be pursued. However, conduct and business arrangements that do not fully satisfy each applicable safe harbormay result in increased scrutiny by government enforcement authorities such as the OIG. Arrangements that implicate the Anti-Kickback Law, and that do notfall within a safe harbor, are analyzed by the OIG on a case-by-case basis. Government officials have focused recent enforcement efforts on, among otherthings, the sales and marketing activities of healthcare companies, and recently have brought cases against individuals or entities with personnel whoallegedly offered unlawful inducements to potential or existing customers in an attempt to procure their business. Settlements of these cases by healthcarecompanies have involved significant fines and/or penalties and in some instances criminal pleas. In addition to the Federal Anti-Kickback Statute, manystates have their own kickback laws. Often, these laws closely follow the language of the federal law, although they do not always have the same exceptionsor safe harbors. In some states, these anti-kickback laws apply with respect to all payors, including commercial health insurance companies.7Table of ContentsFalse Claims Laws Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government orknowingly making, or causing to be made, a false statement to get a false claim paid. Manufacturers can be held liable under false claims laws, even if they donot submit claims to the government, if they are found to have caused submission of false claims. The Federal Civil False Claims Act also includes whistleblower provisions that allow private citizens to bring suit against an entity or individual on behalf of the United States and to recover a portion of anymonetary recovery. Many of the recent highly publicized settlements in the healthcare industry related to sales and marketing practices have been casesbrought under the False Claims Act. The majority of states also have statutes or regulations similar to the federal false claims laws, which apply to items andservices reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Sanctions under these federal and state lawsmay include civil monetary penalties, exclusion of a manufacturer's products from reimbursement under government programs, criminal fines andimprisonment. Privacy and Security The Health Insurance Portability and Accountability Act of 1996, or HIPAA, and the rules promulgated there under require certain entities, referred to ascovered entities, to comply with established standards, including standards regarding the privacy and security of protected health information, or PHI. HIPAAfurther requires that covered entities enter into agreements meeting certain regulatory requirements with their business associates, as such term is defined byHIPAA, which, among other things, obligate the business associates to safeguard the covered entity's PHI against improper use and disclosure. While notdirectly regulated by HIPAA, our customers or distributors might face significant contractual liability pursuant to such an agreement if the business associatebreaches the agreement or causes the covered entity to fail to comply with HIPAA. It is possible that HIPPA compliance could become a substantialregulatory burden and expense to our operations, although we do not believe that this will occur as a general website publisher. Corporate History Optimizer Systems, LLC was formed in the State of Michigan on January 31, 2006. It then became a corporation in the state of Michigan on October 22,2007 and changed its name to OptimizeRx Corporation on October 22, 2007. On April 14, 2008, our company, known at the time as RFID Ltd., entered intoa share exchange agreement with the stockholders of OptimizeRx Corporation, pursuant to which the stockholders of OptimizeRx Corporation exchanged allof the issued and outstanding capital stock of OptimizeRx Corporation for 10,664,000 shares of common stock of RFID Ltd.. As of April 30, 2008, RFID’sofficers and directors resigned their positions and RFID changed its business to OptimizeRx’s business. As a result, the historical discussion and financialstatements included in this annual report are those of OptimizeRx Corporation. On April 15, 2008, RFID Ltd’s corporate name was changed to OptimizeRxCorporation. On September 4, 2008, we then completed a migratory merger, thereby changing our state of incorporation from Colorado to Nevada, resultingin the current corporate structure in which we, OptimizeRx Corporation, a Nevada corporation is the parent corporation, and OptimizeRx Corporation, aMichigan Corporation is our wholly-owned subsidiary. Employees As of December 31, 2011, we had 11 full-time employees and 2 part time / co-op employees in addition to 3 contracted programmers through our establisheda relationship with Oakland University for technical and programming resources. Subsidiaries We conduct our operations through our wholly-owned subsidiary, OptimizeRx Michigan.8Table of ContentsItem 1A. Risk Factors A smaller reporting company is not required to provide the information required by this Item. Item 1B. Unresolved Staff Comments None Item 2. Properties Currently, we do not own any real estate. Our principal executive offices are located at 400 Water Street, Suite 200, , Rochester, Michigan, 48307. We haveentered into a 3 year lease for this 2,886 square foot facility, with a cost of approximately$5,049.25 per month. We believe that our properties are adequatefor our current needs, but growth potential may require larger facilities due to anticipated addition of personnel. We do not have any policies regardinginvestments in real estate, securities or other forms of property. Item 3. Legal Proceedings Aside from the following, we are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers,directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us. On August 18, 2010, we commenced an action against Midtown Partners & Co., LLC (“Midtwon Partners”) in the Circuit Court for the County of Oakland inthe State of Michigan. The action is based on a dispute between our company and Midtown Partners surrounding a placement agent agreement that wasentered into on June 27, 2008. We filed the action seeking declaratory relief that no compensation is due and owing to Midtown Partners in connection withan investment made by Vicis on June 4, 2010. On February 10, 2011, we commenced an action against Beringea, LLC (“Beringea”) with the American Arbitration Association (“AAA”) in Oakland County,Michigan. The action is based on a dispute between our company and Beringea surrounding a capital raising agreement that was entered into on October 15,2009. We have alleged that Beringea has failed to perform under the agreement, misinformed us about “tail” liability, and is wrongfully withholding fundsdue to us. We sought $400,000 in damages. On September 30, 2011 a final arbitration award (the “Award”) was issued by an AAA arbitrator. According to the Award, we are entitled to recover $202,500from Beringea on the claim of gross negligence, and $88,000 for the costs of enforcing the agreement, including attorneys’ fees and expenses. All otherclaims sought in the Demand were denied. On August 18, 2010, we commenced an action against Midtown Partners & Co., LLC (“Midtwon Partners”) in the Circuit Court for the County of Oakland inthe State of Michigan. The action is based on a dispute between our company and Midtown Partners surrounding a placement agent agreement that wasentered into on June 27, 2008. We filed the action seeking declaratory relief that no compensation is due and owing to Midtown Partners in connection withan investment made by on June 4, 2010. Midtown Partners removed the action to the United States District Court for the Eastern District of Michigan. On June 30, 2011, we entered into a settlementagreement with Midtown Partners. Under the settlement agreement, we paid Midtown Partners $57,500 and issued the company 100,000 shares of ourcommon stock. As a result of the settlement, the litigation in the Eastern District of Michigan was dismissed. Item 4. Mine Safety Disclosures Not applicable.9Table of ContentsPART II Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is quoted under the symbol “OPRX” on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and theOTCQB operated by OTC Markets Group, Inc. Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA.Consequently, market makers that once quoted our shares on the OTCBB system may no longer be posting a quotation for our shares. As of the date of thisreport, however, our shares are quoted by several market makers on the OTCQB. The criteria for listing on either the OTCBB or OTCQB are similar andinclude that we remain current in our SEC reporting. Our reporting is presently current and, since inception, we have filed our SEC reports on time. Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained.Therefore, a shareholder may be unable to resell his securities in our company. The following tables set forth the range of high and low prices for our common stock for the each of the periods indicated as reported by the OTCQB. Thesequotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Fiscal Year Ending December 31, 2011Quarter Ended High $ Low $ December 31, 2011 1.37 0.25 September 30,2011 1.44 0.21 June 30, 2011 1.08 0.45 March 31, 2011 1.09 0.60 Fiscal Year Ending December 31, 2010Quarter Ended High $ Low $ December 31, 2010 1.50 0.80 September 30,2010 2.02 0.75 June 30, 2010 2.45 1.26 March 31, 2010 2.65 0 On February 15, 2012, the last sales price per share of our common stock was $0.70. Penny Stock The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securitieswith a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, providedthat current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules requirea broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains adescription of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of thebroker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or otherrequirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and thesignificance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significantterms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, includinglanguage, type size and format, as the SEC shall require by rule or regulation.10Table of ContentsThe broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock;(b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or othercomparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value ofeach penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make aspecial written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of thereceipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitabilitystatement. These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty sellingour securities. Holders of Our Common Stock As of February 15, 2012, we had 14,192,496 shares of our common stock issued and outstanding, held by 312 shareholders of record, not including thoseheld in street name. Dividends We currently intend to retain future earnings for the operation of our business. We have never declared or paid cash dividends on our common stock, and wedo not anticipate paying any cash dividends in the foreseeable future. In the event that a dividend is declared, common stockholders on the record date are entitled to share ratably in any dividends that may be declared fromtime to time on the common stock by our board of directors from funds legally available. There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, doprohibit us from declaring dividends where, after giving effect to the distribution of the dividend: 1.We would not be able to pay our debts as they become due in the usual course of business; or2.Our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders whohave preferential rights superior to those receiving the distribution. Securities Authorized for Issuance under Equity Compensation Plans On March 5, 2008, our Board of Directors adopted the 2008 Company Stock Option Plan. The purpose of this plan is to provide incentives to attract, retainand motivate eligible persons whose present and potential contributions are important to our success, by offering them an opportunity to participate in theour future performance through awards of options, the right to purchase common stock and stock bonuses. We reserved 1,490,000 shares of our CommonStock for awards to be made under the 2008 Plan. The 2008 Plan is administered by a committee of two or more members of the Board of Directors or, if nocommittee is appointed, then by the Board of Directors. The committee, or the Board of Directors if there is no committee, determines who is eligible toreceive awards under the plan, grant awards and interpret the 2008 Plan.11Table of ContentsEquity Compensation Plans as of December 31, 2011 ABCPlan CategoryNumber of securities to beissued upon exercise ofoutstanding options,warrants and rightsWeighted-average exercise price ofoutstanding options, warrants andrightNumber of securitiesremaining available forfuture issuance underequity compensation plans(excluding securitiesreflected in column (A))Equity compensation plansapproved by security holders---Equity compensation plansnot approved by securityholders13,336,1002.12-Total13,336,1002.12- Recent Sales of Unregistered Securities The information set forth below describes our issuance of securities without registration under the Securities Act of 1933, as amended, during the year endedDecember 31, 2011, that were not previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K: During the year ended December 31, 2011, 15 preferred shares were issued to Vicis Capital Master Fund for $1,500,000. The 15 shares are convertible to1,500,000 shares of common stock and bear a 10% cumulative dividend. In addition, there was a warrant issued to purchase 1,000,000 shares of commonstock at an exercise price of $3 for a period of seven years. During the year ended December 31, 2011, we issued 475,820 shares of common stock to satisfy $500,000 of preferred dividends to Vicis. We issued options to purchase 505,000 shares of our common stock to employees at exercise prices of $0.73 and $1.00 per share in 2011. These issuances were deemed to be exempt under rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended, since, among otherthings, the transactions did not involve a public offering, the investors were accredited investors and / or qualified institutional buyers, the investors hadaccess to information about the Company and their investment, the investors took the securities for investment and not resale, and the Company tookappropriate measures to restrict the transfer of the securities. Item 6. Selected Financial Data A smaller reporting company is not required to provide the information required by this Item.12Table of ContentsItem 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, andexpected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the PrivateSecurities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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. We intend such forward-looking statements to be covered by thesafe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement forpurposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject torisks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actualeffect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on aconsolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates,competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statementsand undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements,whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that couldmaterially affect our financial results, is included herein and in our other filings with the SEC. Results of Operations for the Years Ended December 31, 2011 and 2010 Revenues Our total revenue reported for year ended December 31, 2011 was $1,111,520, an increase from $71,065 from the prior year. Our increased revenue for the year ended December 31, 2011 as compared with the prior year is a result of the continued viability of our SampleMD solutionand the setup and integration fees for pharmaceutical manufacturers whom are participating within this offering. Operating Expenses Operating expenses increased to $2,565,497 for the year ended December 31, 2011 from $1,917,297 for the year ended December 31, 2010. Our majorexpenses for the year ended December 31, 2011 were advertising expenses of $544,071, consulting expenses of $185,174, consulting fees for officers of$187,005, depreciation and amortization of $145,513, employee benefits of $111,694, legal and accounting expenses of $281,262, and payroll expenses of$752,961. Our expenses increased in 2011 as compared with 2010 largely as a result of advertising costs, payroll expenses, depreciation and amortization,officer consulting fees, employee benefits and legal and accounting fees. Other Income/Expenses Other expenses were $666,785 for year ended December 31, 2011 an increase from other expenses of $162,793 for same period ended 2010. We had$958,641 in interest expenses in 2011 over only $106,551 in 2010, which mostly accounted for the increase in other expenses. Net Loss Net loss for the year ended December 31, 2011 was $2,120,762, compared to net loss of $ $2,009,025 for the year ended December 31, 2010. Notwithstanding the net loss for the year, we believe that our company is starting to show real signs of improvement. In our fourth quarter 2011, we hadrevenues of $325,910, as compared to revenues of $12,386 for our fourth quarter 2010. If we were to discount all non-cash expenses for the fourth quarter2011, our statement of operations would show a modest net income. Liquidity and Capital Resources As of December 31, 2011, we had total current assets of $1,550,068 and total assets in the amount of $2,892,487. Our total current liabilities as of December31, 2011 were $1,303,317. We had working capital of $246,751 as of December 31, 2011.13Table of ContentsOperating activities used $521,509 in cash for the year ended December 31, 2011. Our net loss of $2,120,762 was the primary component of our negativeoperating cash flow. Investing activities used $239,919 during the year ended December 31, 2011 largely as a result of website developmentcosts. Financing activities provided $442,500 for the year ended December 31, 2011 largely as a result of the sale of our Series B Preferred Stock lesspayments on a note payable. On September 16, 2011, we entered into a Securities Purchase Agreement with Vicis for sale of up to 50 shares of our Series B Preferred Stock and warrants topurchase up to 3,333,334 shares of our common stock with an exercise price of $3.00 per share (the “Vicis Warrants”). We already sold 15 shares of Series B Preferred Stock and a warrant to purchase 1,000,000 shares of our common stock at the above exercise price for$1,500,000. This money was used to pay off a promissory note we had with Physicians Interactive and the balance is for working capital. Thereafter, a subsequent closing may occur at our option commencing on December 1, 2011 for the sale of an additional 15 shares of Series B Preferred Stockand a warrant to purchase an additional 1,000,000 shares of our common stock for $1,500,000. A final subsequent closing may occur at our optioncommencing on May 1, 2012 for the sale of an additional 20 shares of Series B Preferred Stock and a warrant to purchase an additional 1,333,334 shares ofour common stock for $2,000,000. Each share of Series B Preferred Stock is convertible at the option of the holder into that number of shares of our common stock equal to the Stated Value($100,000) divided by a per share price of the common stock of $1.50 per share (the “Conversion Price”). A holder may effect a conversion at any time afterthe earlier of (a) the time that the Securities and Exchange Commission declares effective a registration statement registering the shares of common stock tobe sold by the holder that underlie the shares of Series B Preferred Stock held by such holder (the “Conversion Shares’) and (b) the time such ConversionShares are eligible for resale by the holder pursuant to Rule 144 of the Securities Act of 1933, as amended, (the “Conversion Eligibility Date”). If after the Conversion Eligibility Date the market price for the common stock for any ten consecutive trading days exceeds $2.00 (subject to adjustment forreverse and forward stock splits, stock combinations and other similar transactions of the common stock that may occur) and the average daily tradingvolume for the common stock during such ten day period exceeds 100,000 shares (such period, the “Threshold Period”), the Company may, at any time afterthe fifth trading day after the end of any such period, deliver a notice to the holder (a “Forced Conversion Notice” and the date such notice is received by theholder, the “Forced Conversion Notice Date”) to cause the holder to immediately convert all and not less than all of the Stated Value of the shares held bysuch Holder plus accumulated and unpaid dividends at the then current Conversion Price (a “Forced Conversion”). We may only effect a Forced ConversionNotice if all of the conditions specified in the purchase agreement are met through the applicable Threshold Period until the date of the applicable ForcedConversion and through and including the date such shares of common stock are issued to the holder. The Vicis Warrants are exercisable for a period of seven years at an exercise price of $3.00 per share. The Vicis Warrants are also exercisable on a cashlessbasis. In addition, the Vicis Warrants are subject to anti-dilution adjustments and protections in the event of stock splits and stock dividends, subsequentequity sales entitling persons to acquire shares of common stock at an effective price per share that is lower than the then exercise price of the warrants andsubsequent rights offerings, in the event we issue rights, options or warrant to all holders of common stock and not to the warrant holders, pro ratadistributions of assets or indebtedness and fundamental transactions, such as a merger, consolidation or recapitalization. The anti-dilution adjustment shallapply the lowest sale price as being the adjusted option price or conversion ratio for existing shareholders.14Table of ContentsAs of December 31, 2011 with the current level of financing and cash on hand, we have sufficient cash to operate our business at the current level for the nexttwelve months but insufficient cash to achieve our business goals unless we: a) realize cash revenues on sales generated; b) continue with the sale of ourSeries B Preferred Stock to Vicis; and/or c) obtain additional financing through debt and/or equity based financing arrangements which may be insufficientto fund our capital expenditures, working capital, or other cash requirements. There can be no assurance that such additional financing will be available to uson acceptable terms, or at all. Off Balance Sheet Arrangements As of December 31, 2011, there were no off balance sheet arrangements. Going Concern The accompanying financial statements have been prepared assuming that we will continue as a going concern. We have sustained substantial losses sinceinception. In view of this matter, our ability to continue as a going concern is dependent upon growth of revenues and our ability to raise additional capital.Management believes that our successful ability to raise capital and increases in revenues will provide us the opportunity to continue as a going concern. Critical Accounting Policies In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SECindicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requiresmanagement’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherentlyuncertain. Our critical accounting policies are set forth in Note 2 to the financial statements. Recently Issued Accounting Pronouncements The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results ofoperation, financial position or cash flow. Item 7A. Quantitative and Qualitative Disclosures About Market Risk A smaller reporting company is not required to provide the information required by this Item. Item 8. Financial Statements and Supplementary Data Index to Financial Statements Required by Article 8 of Regulation S-X: Audited Financial Statements: F-1Report of Independent Registered Public Accounting Firm;F-2Consolidated Balance Sheets as of December 31, 2011 and 2010;F-3Consolidated Statements of Operations for the years ended December 31, 2011 and 2010;F-4Consolidated Statement of Stockholders’ Equity as of December 31, 2011;F-5Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010; andF-6Consolidated Notes to Financial Statements. 15Table of ContentsSilberstein Ungar, PLLC CPAs and Business AdvisorsPhone (248) 203-0080Fax (248) 281-094030600 Telegraph Road, Suite 2175Bingham Farms, MI 48025-4586www.sucpas.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of DirectorsOptimizeRx CorporationRochester, Michigan We have audited the accompanying consolidated balance sheets of OptimizeRx Corporation as of December 31, 2011 and 2010, and the related consolidatedstatements of operations, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company hasdetermined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits includedconsideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believethat our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of OptimizeRxCorporation, as of December 31, 2011 and 2010 and the results of their operations and cash flows for the years then ended, in conformity with accountingprinciples generally accepted in the United States. The accompanying consolidated financial statements have been prepared assuming that the OptimizeRx Corporation will continue as a going concern. Asdiscussed in Note 19 to the financial statements, the Company has limited working capital, has received limited revenue from sales of products or services,and has incurred losses from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’splans with regard to these matters are described in Note 19. The accompanying consolidated financial statements do not include any adjustments that mightresult from the outcome of this uncertainty. /s/ Silberstein Ungar, PLLCSilberstein Ungar, PLLC Bingham Farms, MichiganMarch 29, 2012F-1Table of Contents OPTIMIZERx CORPORATIONCONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31, 2011 AND DECEMBER 31, 2010 ASSETS December 31, December 31, 2011 2010Current Assets Cash and cash equivalents $959,166 $1,278,094 Accounts receivable 471,870 226,000 Prepaid expenses 119,032 80,051 Debt discount - current portion -0- 500,000 Total Current Assets 1,550,068 2,084,145 Property and equipment, net 23,931 13,061 Other Assets Patent rights, net 847,941 902,647 Website development costs, net 465,498 332,107 Security deposit 5,049 -0- Debt discount - net of current portion -0- 416,667 Total Other Assets 1,318,488 1,651,421 TOTAL ASSETS $2,892,487 $3,748,627 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable - trade $336,712 $38,409 Accounts payable - related party 570,000 570,000 Accrued expenses 66,000 5,700 Accrued interest -0- 15,000 Deferred revenue 330,605 225,720 Total Current Liabilities 1,303,317 854,829 Long-Term Liabilities Notes payable - investor -0- 1,000,000 Total Liabilities 1,303,317 1,854,829 Stockholders' Equity Common stock, $.001 par value, 500,000,000 sharesauthorized, 14,192,496 shares issued and outstanding(13,606,676 - 2010) 14,192 13,607 Preferred stock, $.001 par value, 10,000,000 sharesauthorized, 65 shares issued and outstanding (50 -2010) -0- -0- Stock warrants 20,826,934 20,281,328 Additional paid-in-capital 5,125,558 3,355,615 Accumulated deficit (24,377,514) (21,756,752)Total Stockholders' Equity 1,589,170 1,893,798 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,892,487 $3,748,627 The accompanying notes are an integral part of these financial statements.F-2Table of Contents OPTIMIZERx CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONSFOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 For the For the year ended year ended December 31, December 31, 2011 2010REVENUE Sales $1,111,520 $71,065 TOTAL REVENUE 1,111,520 71,065 EXPENSES Operating expenses 2,565,497 1,917,297 TOTAL EXPENSES 2,565,497 1,917,297 LOSS FROM OPERATIONS (1,453,977) (1,846,232) OTHER INCOME (EXPENSE) Interest income 1,290 2,842 Other income - lawsuit settlement 290,566 -0- Interest expense (958,641) (106,551)Impairment -0- (59,084) TOTAL OTHER INCOME (EXPENSE) (666,785) (162,793) LOSS BEFORE PROVISION FOR INCOME TAXES (2,120,762) (2,009,025) PROVISION FOR INCOME TAXES -0- -0- NET LOSS $(2,120,762) $(2,009,025) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED 13,921,669 13,231,341 NET LOSS PER SHARE: BASIC AND DILUTED $(0.15) $(0.15) The accompanying notes are an integral part of these financial statements.F-3Table of ContentsOPTIMIZERx CORPORATIONCONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITYAS OF DECEMBER 31, 2011 Additional Total Common Stock Preferred Stock Stock Paid-in Accumulated Stockholders' Shares Amount Shares Amount Warrants Capital Deficit Equity Balance, January 1, 2010 12,826,117 $12,826 35 $-0- $18,139,252 $1,747,962 $(19,047,727) $852,313 Issuance of common stock: for services 161,000 161 200,299 200,460 for preferred dividends 410,520 411 699,589 (700,000) -0- to board of directors 66,000 66 130,614 130,680 Issuance of preferred stock 15 1,500,000 1,500,000 Preferred stock issuance costs (350,000) (350,000) Issuance of stock options: for patent rights 360,000 360,000 to employees 6,203 6,203 Issuance of stock warrants: for services 186,425 186,425 in connection with preferred stock issuance 1,158,900 (1,158,900) -0- Issuance of stock warrants and contingent stock warrants in connection with debt financing 1,007,992 1,007,992 Conversion of stock warrants to common stock 68,039 68 (211,241) 219,923 8,750 Outstanding share adjustment 75,000 75 (75) Net loss for the year (2,009,025) (2,009,025) Balance, December 31, 2010 13,606,676 13,607 50 -0- 20,281,328 3,355,615 (21,756,752) 1,893,798 Outstanding share adjustment 10,000 10 (10) -0- Issuance of common stock: for preferred dividends 475,820 475 499,525 (500,000) -0- for settlement 100,000 100 114,900 115,000 equity issuance costs (172,500) (172,500) Issuance of preferred stock andstock warrants 15 644,540 855,460 1,500,000 Issuance of stock options: for consulting 184,149 184,149 to employees 189,485 189,485 Cancellation of stock warrants: for settlement (98,934) 98,934 -0- Net loss for the year (2,120,762) (2,120,762) Balance, December 31, 2011 14,192,496 $14,192 65 $-0- $20,826,934 $5,125,558 $(24,377,514) $1,589,170 The accompanying notes are an integral part of these financial statements.F-4Table of ContentsOPTIMIZERx CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010 2011 2010CASH FLOWS FROM OPERATING ACTIVITIES: Net loss for the year $(2,120,762) $(2,009,025)Adjustments to reconcile net loss to net cash used byoperating activities Depreciation and amortization 145,315 59,931 Impairment of website asset -0- 59,083 Stock issued for services 83,992 281,140 Stock options issued for compensation 189,485 6,203 Stock options issued for services 100,157 -0- Stock warrants issued for services -0- 186,425 Interest related to issuance of warrants -0- 7,992 Amortization of debt discount 916,667 83,333 Changes in: Accounts receivable (245,870) (211,535)Prepaid expenses (38,981) (21,959)Accounts payable 298,303 3,753 Accrued interest (15,000) 15,000 Accrued expenses 60,300 2,526 Deferred revenue 104,885 225,720 NET CASH USED BY OPERATING ACTIVITIES (521,509) (1,311,413) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (13,100) (1,230)Payment of security deposit (5,049) -0- Website site development costs (221,770) (224,407)NET CASH USED BY INVESTING ACTIVITIES (239,919) (225,637) CASH FLOWS FROM FINANCING ACTIVITIES: Equity issuance costs (57,500) -0- Issuance of common stock -0- 8,750 Net proceeds from sale of preferred stock 855,460 1,150,000 Issuance of warrants in connection with preferred stock 644,540 -0- Payments on loan payable (1,000,000) -0- Proceeds from issuance of notes payable -0- 1,000,000 NET CASH PROVIDED BY FINANCING ACTIVITIES 442,500 2,158,750 NET INCREASE (DECREASE) IN CASH AND CASHEQUIVALENTS (318,928) 621,700 CASH AND CASH EQUIVALENTS - BEGINNING OFPERIOD 1,278,094 656,394 CASH AND CASH EQUIVALENTS - END OF PERIOD $959,166 $1,278,094 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $41,974 $1,793 Cash paid for income taxes $-0- $-0- SUPPLEMENTAL DISCLOSURE OF NONCASHINVESTING AND FINANCING ACTIVITIES: Common stock issued to satisfy dividends related topreferred stock $500,000 $700,000 Stock options issued in connection with acquisition of patent rights $-0- $360,000 Stock warrants issued in connection with preferred stock issuance $-0- $1,158,900 Payable to shareholder to be settled in stock issued in connection with acquisition of patent rights $-0- $570,000 Debt discount related to warrants issued in connectionwith debt financing $-0- $1,000,000 Common stock issued for settlement of equity issuancecosts $115,000 $-0- The accompanying notes are an integral part of these financial statements.F-5Table of ContentsOPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 1 – NATURE OF BUSINESS Optimizer Systems, LLC was formed in the State of Michigan on January 31, 2006. It then became a corporation in the State of Michigan on October 22,2007 and changed its name to OptimizeRx Corporation. On April 14, 2008, RFID, Ltd., a Colorado corporation, consummated a reverse merger by enteringinto a share exchange agreement with the stockholders of OptimizeRx Corporation, pursuant to which the stockholders of OptimizeRx Corporationexchanged all of the issued and outstanding capital stock of OptimizeRx Corporation for 1,256,958 shares of common stock of RFID, Ltd., representing100% of the outstanding capital stock of RFID, Ltd. As of April 30, 2008, RFID’s officers and directors resigned their positions and RFID changed itsbusiness to OptimizeRx’s business. On April 15, 2008, RFID, Ltd.’s corporate name was changed to OptimizeRx Corporation. On September 4, 2008, amigratory merger was completed, thereby changing the state of incorporation from Colorado to Nevada, resulting in the current corporate structure, in whichOptimizeRx Corporation, a Nevada corporation, is the parent corporation, and OptimizeRx Corporation, a Michigan corporation, is a wholly-ownedsubsidiary (together, "OptimizeRx" and "the Company"). The wholly-owned subsidiary, OptimizeRx Corporation, is a technology solutions company targeting the health care industry. Their objective is to bringbetter access to better care through connecting patients, physicians and pharmaceutical manufacturers through technology. Once defined as a marketing andadvertising company through its consumer website, OptimizeRx is maturing as a technology solutions provider as it launched its direct to physician solution,SampleMD. SampleMD allows physicians to search, print and send available sample trial vouchers and/or co-pay coupons on behalf of their patients. TheSampleMD solution can either sit on the doctor’s desktop or can be integrated into the ePrescribing or Electronic Medical Records applications. OptimizeRxsolutions provide pharmaceutical manufacturers either a direct to consumer and/or direct to physician channels for communicating and promoting theirproducts. It provides health care providers a means to provide sampling and coupons without having to physically store samples on site, and it providesbetter access and affordability to the patients. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of PresentationThe financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of Americaand are presented in US dollars. Accounting BasisThe Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). TheCompany has adopted a December 31 fiscal year end. Principles of ConsolidationThe financial statements reflect the consolidated results of OptimizeRx Corporation (a Nevada corporation) and its wholly owned subsidiary OptimizeRxCorporation (a Michigan corporation). All material inter-company transactions have been eliminated in the consolidation. ReclassificationsCertain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements.F-6Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and Cash EquivalentsFor purposes of the accompanying financial statements, the Company considers all highly liquid instruments with an initial maturity of three months or lessto be cash equivalents. Fair Value of Financial InstrumentsThe fair value of cash, accounts receivable, prepaid expenses, accounts payable, accounts payable – related party, accrued expenses and interest and deferredrevenue approximates the carrying amount of these financial instruments due to their short-term nature. The fair value of long-term debt, which approximatesits carrying value, is based on current rates at which the Company could borrow funds with similar remaining maturities. Property and EquipmentThe capital assets are being depreciated over their estimated useful lives, three to seven years using the straight-line method of depreciation for bookpurposes. Revenue RecognitionAll revenue is recognized when it is earned. Revenues are generated either through the Company’s website activities, in which we earn revenue fromadvertising and lead generation activities, or from our SampleMD activities, which include offering setup within the systems and our offers, coupons, andvouchers that enable our customers to save money on medical products and services. The Company’s processes are monitored by third parties who collectrevenues from clients on a per activity basis and report and forward the revenue to the Company’s account. Income TaxesIncome taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities aredetermined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted taxrates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Concentration of Credit RisksThe Company maintains its cash and cash equivalents in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has notexperienced any losses in such accounts; however, amounts in excess of the federally insured limit may be at risk if the bank experiences financialdifficulties. Research and DevelopmentThe Company’s key members are part of a continual research development team and monitor new technologies, trends, services and partnerships that canprovide the Company with additional services, value to healthcare and pharmaceutical industries and to the patients it serves. The Company seeks to educate team members through understanding of all market dynamics that have the potential to affect the business both short term andlonger term. The primary goal is to help patients better afford and access the medicines their doctor prescribes, as well as other healthcare products andservices they need. Based on this, the Company continually seeks better ways to meet this mission through technology, better user experiences and new waysto engage industries to provide new support for patients needing their products. The Company is always seeking new services and solutions to offer. At thistime, the three current platforms provide robust opportunities and growth during the next five years.F-7Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. Estimates and assumptions have been made in determining the depreciable lives of such assets and the allowance fordoubtful accounts receivable. Actual results could differ from these estimates. Earnings Per Common and Common Equivalent ShareThe computation of basic earnings per common share is computed using the weighted average number of common shares outstanding during the year. Thecomputation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus common stockequivalents which would arise from the exercise of warrants outstanding using the treasury stock method and the average market price per share during theyear. Options warrants and convertible preferred stock which are common stock equivalents are not included in the diluted earnings per share calculation forDecember 31, 2011 and 2010, respectively, since their effect is anti-dilutive. Impairment of Long-Lived AssetsThe Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable.When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carryingvalue of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount ofthose assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed ofare reported at the lower of the carrying amount or the fair value less costs to sell. Recently Issued Accounting GuidanceThe Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results ofoperations, financial position or cash flow. NOTE 3 – PREPAID EXPENSES Prepaid expenses consisted of the following as of December 31, 2011 and 2010: 2011 2010Insurance $5,937 $6,111 Website maintenance 17,500 20,000 Investor relations 0 50,000 Consulting 91,811 0 Employee advances 694 940 Advertising 3,090 3,000 Total prepaid expenses $119,032 $80,051 F-8Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 4 – PROPERTY AND EQUIPMENT The Company owned equipment recorded at cost which consisted of the following as of December 31, 2011 and 2010: 2011 2010Computer equipment $20,130 $13,824 Furniture and fixtures 11,088 4,293 Subtotal 31,218 18,117 Accumulated depreciation (7,287) (5,056) Property and equipment, net $23,931 $13,061 Depreciation expense was $2,230 and $1,751 for the years ended December 31, 2011 and 2010, respectively. NOTE 5 – WEBSITE DEVELOPMENT COSTS The Company has capitalized costs in developing their website and web-based products, which consisted of the following as of December 31, 2011 and2010: 2011 2010OptimizeRx web development $154,133 $154,133 SampleMD web development 553,877 332,107 Subtotal, web development costs 708,010 486,240 Accumulated amortization (183,429) (95,050)Impairment (59,083) (59,083) Web development costs, net $465,498 $332,107 The Company began amortizing the OptimizeRx website costs, using the straight-line method over the estimated useful life of 5 years, once it was put intoservice in December of 2007. During the year end December 31, 2009, the Company began a new web-based project and the related programming anddevelopment costs have been capitalized for the SampleMD website. The project was completed in mid-December 2010 and no amortization was recorded in2010. Amortization began on the straight-line method in January 2011 over the period of five years. Although the Project was completed in mid-December,the Company continues to enhance and upgrade the website. Monthly payments for these upgrades have been capitalized and amortization was started byquarter in 2011. The Company determined that the original OptimizeRx website was no longer useful so the remaining unamortized balance of $59,083 wasimpaired as of December 31, 2010. Amortization expense was $88,379 and $30,827 for the years ended December 31, 2011 and 2010, respectively. NOTE 6 – PATENT RIGHTS AND INTANGIBLE ASSETS On April 26, 2010, the Company acquired from an officer and shareholder the technical contributions and assignment of all exclusive rights to and for theSampleMD patent currently in process in exchange for 300,000 shares of common stock to be granted at the discretion of the seller in addition to 200,000stock options valued at $360,000. The shares were valued on the grant date at $570,000 and have been recorded as a payable to the related party.F-9Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 6 – PATENT RIGHTS AND INTANGIBLE ASSETS (CONTINUED) The Company has capitalized costs in purchasing the SampleMD patent, which consisted of the following as of December 31, 2011 and 2010: 2011 2010Patent rights and intangible assets $930,000 $930,000 Accumulated amortization (82,059) (27,353) Patent rights and intangible assets, net $847,941 $902,647 The Company began amortizing the patent, using the straight-line method over the estimated useful life of 17 years, once it was put into service in July 2010.Amortization expense was $54,706 and $27,353 for the years ended December 31, 2011 and 2010, respectively. NOTE 7 – ACCRUED EXPENSES Accrued expenses consisted of the following as of December 31, 2011 and 2010: 2011 2010Accrued payroll taxes $0 $700 Accrued bonuses 60,000 0 Accrued audit fees 6,000 5,000 Total accrued expenses $66,000 $5,700 NOTE 8 – DEFERRED REVENUE The Company has signed several contracts with customers for coupon redemptions on their website. The payments are not taken into revenue until the enduser redeems the coupon. The redemptions are tracked via their website and revenues are recorded as the coupons are redeemed. Additionally, customer setupcontracts that have been paid in full are deferred until the Company has completed the obligations of the contacts. Deferred revenue was $330,605 and$225,720 as of December 31, 2011 and 2010, respectively. NOTE 9 – NOTE PAYABLE On October 5, 2010, the Company issued a secured promissory note of $1,000,000 to an investor. The note accrues interest at 6% per annum, compounded onApril and October each year and will be paid at the earliest of September 12, 2012 or earlier at the Company’s option. No principal or interest payments arerequired until the maturity date. Accrued interest was $15,000 as of December 31, 2010. The terms of the note also granted 1,000,000 stock warrants and1,000,000 contingent stock warrants in connection with the financing. The non-contingent warrants were valued at $1,007,992 with $1,000,000 recorded asdebt discount and $7,992 recorded as interest expense in the December 31, 2010 year. The Company analyzed the assumptions associated with thecontingent warrants and determined that the performance objectives were not likely to occur in 2011. Therefore, no value was recorded for the contingentwarrants. The debt discount derived from the warrant valuation of $1,000,000 was being amortized over the life of the loan using the straight-line method andcharged to interest expense. On September 16, 2011, the Company entered into a Termination Agreement, in conjunction with a Securities Purchase Agreement with another investor.Under the Termination Agreement, the Company paid off the $1,000,000 promissory note, plus all accrued interest to date. Upon payment of the note, thecontingent stock warrants obligation was terminated and the remaining debt discount from the warrant valuation was expensed. See Note 12.F-10Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 10 – COMMON STOCK OptimizeRx Corporation has 500,000,000 shares of $.001 par value common stock authorized as of December 31, 2011. There were 14,192,496 and13,606,676 common shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively. On March 11, 2010, the Company issued 12,000 shares of common stock for services valued at $27,960. On April 20, 2010, the Company issued 66,000 shares to board members for services valued at $130,680. Additionally on May 27, 2010, the Company issued 25,000 for services valued at $42,500. On September 27, 2010, the Company issued 100,000 shares of common stock for services valued at $100,000. On October 14, 2010, the Company issued 24,000 shares to a board member or advisory services valued at $30,000. During the year ended December 31, 2010, the Company issued 410,520 shares of common stock to satisfy $700,000 of preferred dividends. On February 19, 2010, 75,400 stock warrants were exercised for 43,039 shares of common stock in a cashless exchange. On May 19, 2010, 25,000 stock warrants were exercised for 25,000 shares of common stock for total proceeds of $8,750. On April 26, 2010, the Company acquired from an officer and shareholder the technical contributions and assignment of all exclusive rights to and for theSampleMD patent currently in process in exchange for 300,000 shares of common stock to be granted at the discretion of the seller in addition to 200,000stock options valued at $360,000. The shares were valued on the grant date at $570,000 and have been recorded as a payable to the related party. On June 30, 2011, the Company entered into a settlement agreement with Midtown Partners. Under the settlement agreement, the Company will payMidtown Partners $57,500 and grant 100,000 shares of its common stock. The cost of the settlement has been recorded as equity issuance costs. As a result ofthe settlement, the litigation in the Eastern District of Michigan was dismissed. During the year ended December 31, 2011, the Company issued 475,820 shares of common stock to satisfy $500,000 of preferred dividends.F-11Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 11 – PREFERRED STOCK Series A Preferred During the year ended December 31, 2008, 35 preferred shares were issued for $3,500,000. Issuance costs totaled $515,000 resulting in net proceeds of$2,985,000. The 35 shares are convertible to 3,500,000 shares of common stock and bear a 10% cumulative dividend. In addition, there was a warrant issuedto purchase 6,000,000 shares of common stock at an exercise price of $2 for a period of seven years. The holders of the preferred stock are entitled to semi-annual dividends payable on the stated value of the Series A preferred stock at a rate of 10% per annum,which shall be cumulative, and accrue daily from the issuance date. The dividends may be paid in cash or shares of the Company's common stock atmanagement’s discretion. If after the conversion eligibility date, the market price for the common stock for any ten consecutive trading days in which thestock trades for over $2 per share and trading exceeds 100,000 shares per day, the preferred shareholders can be required to convert their shares to commonstock. Each share of Series A preferred stock shall also be convertible at the option of the holder into that number of shares of common stock of the Companyat the stated value of such share at a $1 conversion price. The holder may cause this conversion at the time the shares are eligible for resale by the holder. The conversion price is subject to adjustment as hereinafterprovided, at any time, or from time to time upon the terms and in the manner hereinafter set forth in the shareholder agreement. There is no conversionexpiration date, however, the holder must provide 30 days notice for the registration of the conversion. On May 12, 2010, the Company’s Board declared and issued 236,598 common shares as payment for all cumulative and current semi-annual dividends. OnNovember 16, 2010, the Company’s Board declared and issued 173,922 common shares for its semi-annual dividend payment. On March 25, 2011, theCompany’s Board declared and issued 176,768 common shares for its semi-annual dividend payment. On September 21, 2011, the Company's Board declaredand issued 156,306 common shares for its semi-annual dividend payment. Series B Preferred During the year ended December 31, 2010, 15 preferred shares were issued for $1,500,000. The 15 shares are convertible to 1,500,000 shares of commonstock and bear a 10% cumulative dividend. In addition, there was a warrant issued to purchase 2,000,000 shares of common stock at an exercise price of $3for a period of seven years. The preferred stock was issued for $1,500,000 less associated issuance costs of $350,000 for net proceeds of $1,150,000. Additionally, 3,000,000 commonstock warrants were issued with the preferred stock. Based on the fair values of the preferred stock and common stock warrants on the issue date, $341,100was allocated to preferred stock and $1,158,900 was allocated to the common stock warrants. Equity issuance costs of $350,000 were allocated to thepreferred stock.F-12Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 11 – PREFERRED STOCK (CONTINUED) Series B Preferred (Continued) During the quarter ended September 30, 2011, 15 preferred shares were issued to an investor for $1,500,000. The 15 shares are convertible to 1,500,000 sharesof common stock and bear a 10% cumulative dividend. In addition, there was a warrant issued to purchase 1,000,000 shares of common stock at an exerciseprice of $3 for a period of seven years. Based on the fair values of the preferred stock and common stock warrants on the issue date, $855,460 was allocated topreferred stock and $644,540 was allocated to the common stock warrants. See Note 12. The holders of the preferred stock are entitled to semi-annual dividends payable on the stated value of the Series B preferred stock at a rate of 10% per annum,which shall be cumulative, and accrue daily from the issuance date. The dividends may be paid in cash or shares of the Company's common stock atmanagement’s discretion. If after the conversion eligibility date, the market price for the common stock for any ten consecutive trading days in which thestock trades for over $2 per share and trading exceeds 100,000 shares per day, the preferred shareholders can be required to convert their shares to commonstock. Each share of Series B preferred stock shall also be convertible at the option of the holder into that number of shares of common stock of the Companyat the stated value of such share at a $1.50 conversion price. The holder may cause this conversion at the time the shares are eligible for resale by the holder. The conversion price is subject to adjustment as hereinafterprovided, at any time, or from time to time upon the terms and in the manner hereinafter set forth in the shareholder agreement. On March 25, 2011, theCompany’s Board declared and issued 75,758 common shares for its semi-annual dividend payment. On September 21, 2011, the Company's Board declaredand issued 66,988 common shares for its semi-annual dividend payment. NOTE 12 – STOCK OPTIONS AND WARRANTS The Company accounts for employee stock-based compensation in accordance with the guidance of ASC Topic 718: Compensation - Stock Compensation,which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based ontheir fair values. The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring,or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with ASCTopic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value ofthe services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The fair value of the equityinstrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered. On January 6, 2010, the Company issued 25,000 stock warrants for services to a consultant with an exercise price of $0.35. The warrants were valued on thegrant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 259%, risk-freeinterest rate of 2.6% and expected life of 60 months. The Company recognized consulting expense of $57,425.F-13Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 12 – STOCK OPTIONS AND WARRANTS (CONTINUED) On June 4, 2010, the Company issued 3,000,000 stock warrants in connection with the preferred stock issuance with an exercise price of $3.00. The warrantswere valued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of260%, risk-free interest rate of 2.65% and expected life of 84 months. The Company recorded the stock warrants valued at $5,096,472 in an equitytransaction. On July 1, 2010, the Company issued 100,000 stock warrants for services to a consultant with an exercise price of $2.50. The warrants were valued on thegrant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 241%, risk-freeinterest rate of 1.26% and expected life of 60 months. During the quarter ended September 30, 2011, these warrants were cancelled as part of a settlement withthe consultant. On October 5, 2010, the Company issued 1,000,000 stock warrants and 1,000,000 contingent stock warrants in connection with the Company’s debtfinancing with an exercise price of $2.25. The warrants were valued on the grant date using the Black-Scholes option-pricing model with the followingassumptions: dividend yield of 0%, expected volatility of 241%, risk-free interest rate of 1.83% and expected life of 84 months. The non-contingent warrantswere valued at $1,007,992 with $1,000,000 recorded as debt discount and $7,992 recorded as interest expense in the current period. The company analyzedthe assumptions associated with the contingent warrants and determined that the performance objectives were not likely to occur in 2011. Therefore, no valuewas recorded for the contingent warrants. The Company recorded $250,000 and $83,333 of the debt discount as interest expense in the six months endedJune 30, 2011 and the year ended December 31, 2010. On September 16, 2011, the Company entered into a Termination Agreement and Release with theinvestor. As part of the agreement, the 1,000,000 contingent stock warrants were terminated and the remaining debt discount interest from the warrantvaluation was expensed. See Note 9. On April 26, 2010, the Company issued 200,000 stock options to acquire from an officer and shareholder the technical contributions and assignment of allexclusive rights to and for the SampleMD patent currently in process in exchange for 300,000 shares of common stock to be granted at the discretion of theseller in addition to 200,000 stock options with an exercise price of $1.81. The options were valued on the grant date using the Black-Scholes option-pricingmodel with the following assumptions: dividend yield of 0%, expected volatility of 262%, risk-free interest rate of 2.54% and expected life of 60 months.The Company capitalized $360,000 as patent rights for these options. On October 1, 2010, the Company issued 25,000 stock options to an employee with a vesting period of one year and an exercise price of $1.21. The optionswere valued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of241%, risk-free interest rate of 1.26% and expected life of 60 months. The Company recognized share-based compensation expense of $6,203 during the yearended December 31, 2010 with the remaining balance of $18,610 to be recognized in 2011. $6,203 has been recognized in the year ended SeptemberDecember 31, 2011. On April 27, 2011, the Company issued 100,000 stock options to an individual at an exercise price of $0.73. The options were valued on the grant date usingthe Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 221%, risk-free interest rate of 2.06%and expected life of 60 months. The agreement is for a period of six months. The Company recognized expenses of $83,992 during the year endedDecember 31, 2011.F-14Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 12 – STOCK OPTIONS AND WARRANTS (CONTINUED) On May 31, 2011, the Company issued 285,000 stock options to 3 employees at an exercise price of $1.00. The options were valued on the grant date usingthe Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 218%, risk-free interest rate of 1.68%and expected life of 60 months. The total value of the options was $320,585. The options vest over one year. The Company recognized share-basedcompensation expense of $187,005 during the year ended December 31, 2011. The remaining balance will be recognized over the following five months. During the quarter ended September 30, 2011, there was a warrant issued to purchase 1,000,000 shares of common stock at an exercise price of $3 for a periodof seven years. In addition, 15 preferred shares were issued to an investor for $1,500,000. The 15 shares are convertible to 1,500,000 shares of common stockand bear a 10% cumulative dividend. Based on the fair values of the preferred stock and common stock warrants on the issue date, $855,460 was allocated topreferred stock and $644,540 was allocated to the common stock warrants. See Note 11. During the quarter ended December 31, 2011, the Company issued 20,000 stock options to 2 employees at an exercise price of $1.00. The options werevalued on the grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 204-205%, risk-free interest rate of 0.88-0.93% and expected life of 60 months. The total value of the options was $19,270. The options vest over one year. TheCompany recognized share-based compensation expense of $2,480 during the year ended December 31, 2011. The remaining balance will be recognizedover the following year. On November 21, 2011, the Company issued 100,000 stock options to an individual at an exercise price of $0.73. The options were valued on the grant dateusing the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 205%, risk-free interest rate of0.92% and expected life of 60 months. The Company recognized expenses of $8,346 during the year ended December 31, 2011. The remaining balance willbe recognized over the following year. NOTE 13 – OPERATING LEASES The Company signed a lease for new office space on December 1, 2011 at an approximate rent of $5,000 per month. The new offices are in Rochester,Michigan. The lease is for three years with an option to renew for an additional two years at approximately $5,200 per month with six months advance noticeto exercise the option. Minimum annual rent is as follows for the initial term of the lease: Year ended December 31,2012 $60,591 2013 60,591 2014 55,542 2015 0 Total lease commitment $176,724 F-15Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 14 – RELATED PARTY TRANSACTIONS During the year ended December 31, 2010, the Company acquired from an officer and shareholder the technical contributions and assignment of all exclusiverights to and for the SampleMD patent currently in process in exchange for 300,000 shares of common stock to be granted at the discretion of the seller inaddition to 200,000 stock options valued at $360,000. The shares were valued on the grant date at $570,000 and have been recorded as a payable to therelated party. See Notes 6, 10 and 12. NOTE 15 – MAJOR CUSTOMERS The Company had three major customers that accounted for 47% and 60% of the Company’s revenues for the years ended December 31, 2011 2010,respectively. The Company expects to continue to maintain these relationships with the customers. NOTE 16 – INCOME TAXES For the year ended December 31, 2011, the Company incurred a net loss of approximately $2,120,000 and therefore has no tax liability. The Company beganoperations in 2007 and has previous net operating loss carry-forwards of $11,359,000 through December 31, 2010. The cumulative loss of $13,479,000 willbe carried forward and can be used through the year 2031 to offset future taxable income. In the future, the cumulative net operating loss carry-forward forincome tax purposes may differ from the cumulative financial statement loss due to timing differences between book and tax reporting. The provision for Federal income tax consists of the following for the year ended December 31, 2011 and 2010: 2011 2010Federal income tax benefit attributable to: Current operations $721,000 $386,000 Valuation allowance (721,000) (386,000) Net provision for federal income tax $0 $0 The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of December 31, 2011 and2010: 2011 2010Deferred tax asset attributable to: Net operating loss carryover $4,583,000 $3,862,000 Valuation allowance (4,583,000) (3,862,000) Net deferred tax asset $0 $0 Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $13,479,000 for Federalincome tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as touse in future years.F-16Table of Contents OPTIMIZERx CORPORATIONNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2011 NOTE 17 – OPERATING EXPENSES Operating expenses consisted of the following for the years ended December 31, 2011 and 2010: 2011 2010Advertising $544,071 $130,060 Professional fees 342,503 267,421 Consulting 185,174 355,928 Salaries, wages and benefits 864,655 676,828 Rent 37,868 30,000 General and administrative 591,226 457,060 Total Operating Expenses $2,565,497 $1,917,297 NOTE 18 – OTHER INCOME On February 10, 2011, the Company filed a demand for arbitration (“the Demand”) with the American Arbitration Association (“AAA”) in Oakland County,Michigan based on a dispute between the Company and Beringea surrounding a capital raising agreement that was entered into on October 15, 2009. TheCompany alleged that Beringea failed to perform under the agreement, misinformed it about “tail” liability, and wrongfully withheld funds due to it. TheCompany sought $400,000 in damages. On September 30, 2011 a final arbitration award (“the Award”) was issued by an AAA arbitrator. The Company wasawarded $202,500 from Beringea on the claim of gross negligence, and $88,000 for the costs of enforcing the agreement, including attorneys’ fees andexpenses. All other claims sought in the Demand were denied. On October 24, 2011, the Company received $233,715 for the award. This represents the $290,500 gross award less attorneys’ fees and expenses. The grossaward is included in other income for the year ended December 31, 2011. NOTE 19 – GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has sustainedsubstantial losses since inception. In view of this matter, the ability of the Company to continue as a going concern is dependent upon growth of revenues and the ability of the Company toraise additional capital. Management believes that its successful ability to raise capital and increases in revenues will provide the opportunity for theCompany to continue as a going concern. NOTE 20 – SUBSEQUENT EVENTS In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2011 through the date these financial statements wereissued and has determined that it does not have any material subsequent events to disclose in these financial statements.F-17Table of ContentsItem 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure No events occurred requiring disclosure under Item 307 and 308 of Regulation S-K during the fiscal year ending December 31, 2011. Item 9A(T). Controls and Procedures Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reportsfiled or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periodsspecified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include without limitation, controls andprocedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated andcommunicated to management, including our chief executive officer and treasurer, as appropriate to allow timely decisions regarding required disclosure. As required by Rules 13a-15 and 15d-15 under the Exchange Act, our chief executive officer and chief financial officer carried out an evaluation of theeffectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2011. Based on their evaluation, they concluded thatour disclosure controls and procedures were effective. Management is responsible for establishing and maintaining adequate internal control over our financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control over financial reporting is a process designed by, or under the supervision of, our chief executive officer andchief financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability ofour financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles.Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation ofour financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only inaccordance with the authorization of our board of directors and management; and provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Under the supervision and with the participation of our management, including our chief executive officer, we conducted an evaluation of the effectivenessof our internal control over financial reporting based on the criteria established in Internal Control – Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation under the criteria established in Internal Control – IntegratedFramework, our management concluded that our internal control over financial reporting was effective as of December 31, 2011. This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and ExchangeCommission that permit us to provide only management’s report in this annual report. During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected or isreasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None16Table of ContentsPART III Item 10. Directors, Executive Officers and Corporate Governance The following information sets forth the names, ages, and positions of our current directors and executive officers as of December 31, 2011. Name Age Position(s) and Office(s) HeldDavid Lester 54 President, Chief Executive Officer, Secretary andDirectorDavid A. Harrell 46 Chairman and DirectorTerence J. Hamilton 46 Director and VP of SalesShad Shastney 43 Director Set forth below is a brief description of the background and business experience of each of our current executive officers and directors. David Lester Mr. Lester is a business veteran whom has accumulated over thirty years of executive experience in the areas of business, marketing, sales, operations,technology, and leadership. Prior to accepting his new role with us, Mr. Lester held the title of Director, Consumer & Industrial Products Marketing forDeloitte LLP. During his tenure at Deloitte, he established Deloitte as a leader through innovative programs and strategic partnerships. Prior to Deloitte, heworked with Sun Microsystems as Director, Industry Strategy & Marketing, and Manufacturing Industries. David Lester has worked with Governor Tommy Thompson, former Secretary of Health & Human Services, on health care reform and cost control; partneredwith Governor Tom Ridge, former head of Homeland Security on defending cyber security initiatives; and as a active participant within the NationalAssociation of Manufacturers and the Manufacturing Institute worked with former Michigan Governor John Engler, now President of the NationalAssociation of Manufacturers, on challenges inhibiting the competitiveness of manufacturers like health care reform, trade policy, renewable energy, businesstax reform, and sustainability. David A. Harrell Mr. Harrell founded the Company in January of 2006 and has served as our President and Chief Executive Officer. He became a director when the Companychanged from a limited liability to a corporation in 2007. Mr. Harrell was the Vice President of Development for Meridian Incorporated from 2003-2005 and,prior to that, had been Vice President of Sales and Marketing since 1999 at Advance Graphic Systems. Mr. Harrell has spent two decades leading sales,marketing and business development units within the pharmaceutical and national retail industries. Prior to his work at Advance Graphic Systems, Mr. Harrellserved for ten years at SmithKline Beecham, specializing in the managed markets healthcare segment. As part of the Integrated Health Division, Mr. Harrellwas responsible for contracting and achieving regional revenue growth for SmithKline Beecham's four business units: Pharmaceuticals, Consumer Health,Clinical Labs and Diversified Pharmaceutical Services (PBM). During his tenure with SmithKline Beecham, he was a recipient of numerous national awardsand served as a member of the Division's Strategic Planning Committee. Mr. Harrell graduated from Oakland University with a Bachelor of Science inBusiness Administration.17Table of ContentsTerence J. Hamilton Mr. Hamilton joined the Company as a Director and VP of Sales in February 2008. Prior to that, Mr. Hamilton was Manager at MedImmune since 2005 andwas Senior National Account Manager for Glaxo SmithKline pharmaceuticals for 13 years prior to that. Mr. Hamilton has spent the last 19 years working inthe pharmaceutical and biotech arenas within various sales, marketing and managed markets management positions. He also has held many positions withinthe pharmaceutical and biotech industries, including District Manager, Brand Manager, Managed Market Specialist, Contract Manager, Government AccountManager. Shad Shastney Mr. Stastney is a member of and the chief operating officer for Vicis Capital, LLC, a company he jointly founded in 2004. Mr. Stastney also jointly foundedVictus Capital Management LLC in 2001. From 1998 through 2001, Mr. Stastney worked with the corporate equity derivatives origination group of CreditSuisse First Boston, eventually becoming a Director and Head of the Hedging and Monetization Group, a joint venture between derivatives and equitycapital markets. In 1997, he joined Credit Suisse First Boston’s then-combined convertible/equity derivative origination desk. From 1994 to 1997, he was anassociate at the law firm of Cravath, Swaine and Moore in New York, in their tax and corporate groups, focusing on derivatives. He graduated from theUniversity of North Dakota in 1990 with a B.A. in Political Theory and History, and from the Yale Law School in 1994 with a J.D. degree focusing oncorporate and tax law. Directors Our bylaws authorize two (2) directors unless changed by the Board of Directors. The board has since changed the number of directors authorized, and wecurrently have four (4) Directors. Term of Office Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office inaccordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. Significant Employees We have no significant employees other than our officers and directors. Family Relationships There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executiveofficers. Involvement in Certain Legal Proceedings To the best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director, executive officer, oremployee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time ofthe bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding(excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated,of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type ofbusiness, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities FuturesTrading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.18Table of ContentsAudit Committee We do not have a separately-designated standing audit committee. The entire board of directors performs the functions of an audit committee, but no writtencharter governs the actions of the board of directors when performing the functions of that would generally be performed by an audit committee. The board ofdirectors approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related tofinancial reporting. In addition, the board of directors reviews the scope and results of the audit with the independent accountants, reviews with managementand the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditingand accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor. We do not have an audit committee financial expert because of the size of our company and our board of directors at this time. We believe that we do notrequire an audit committee financial expert at this time because we retain outside consultants who possess these attributes as needed. For the fiscal year ending December 31, 2011, the board of directors: 1. Reviewed and discussed the audited financial statements with management, and2. Reviewed and discussed the written disclosures and the letter from our independent auditors on the matters relating to the auditor's independence.Based upon the board of directors’ review and discussion of the matters above, the board of directors authorized inclusion of the audited financial statementsfor the year ended December 31, 2011 to be included in this Annual Report on Form 10-K and filed with the Securities and Exchange Commission. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than ten percent of a registered classof the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equitysecurities of the Company. Officers, directors and greater than ten percent beneficial shareholders are required by SEC regulations to furnish us with copies ofall Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by us, thefollowing persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act during fiscal year endedDecember 31, 2011: Name and principal position Number of late reports Transactions not timely reported Known failures to file a required formDavid Lester CEO and Director 0 0 0 David A. Harrell Chairman and Director 0 0 0 Terence J. Hamilton VP of Sales and Director 0 0 0 Shad Shastney Director 0 0 0 Richard Kraniak 10% Holder 2 0 0 19Table of ContentsCode of Ethics As of December 31, 2011, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principalfinancial officer, principal accounting officer or controller, or persons performing similar functions. Item 11. Executive Compensation Summary Compensation Table The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended December31, 2011 and 2010. SUMMARY COMPENSATION TABLENameand principalpositionYearSalary($) Bonus($)StockAwards($)OptionAwards($)Non-EquityIncentivePlanCompensation($)NonqualifiedDeferredCompensationEarnings($) All OtherCompensation($)Total ($) David Lester(1) President, CEOand Director20112010157,500164,375-11,000-32,580205,287-------362,787207,955Thomas E. MajerowiczFormerSecretary20112010---30,000---------30,000Terence J. HamiltonVP of Sales and Director(4)20112010157,500164,37515,00025,500-43,440143,420-----31,487-347,407233,315David Harrell,Chairman and DirectorFormer President and CEO(5)20112010163,390165,64020,50020,500-43,440177,165360,000(2)------361,055589,580 (1) Mr. Lester has held office as our Chief Executive Officer since April 1, 2009.(2) This amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year indicated in accordance with ASCTopic 718 – Stock Compensation, Share Based Payments of awards of restricted stock and stock options, as applicable.(3) Supplement.(4) Mr. Hamilton has held office as our VP of Sales since March 1, 2007.(5) Mr. Harrell has held office as our Chairman since April 2008. 20Table of ContentsNarrative Disclosure to the Summary Compensation TableOn April 6, 2009, we entered into an employment agreement with Mr. Lester to serve as our Chief Executive Officer. Under the agreement, we agreed tocompensate Mr. Lester $150,000 annually and we granted him options to purchase 500,000 shares of our common stock, with 25% vesting immediately and25% vesting after the completion of each quarter of hire. Mr. Lester is also eligible for additional quarterly and annual bonus compensation, stock options,and stock grants based on performance metrics outlined by our board of directors. He is entitled to vacation and sick days, and other benefits included in theagreement. On August 1, 2008, we entered into an employment agreement with Mr. Hamilton to serve as our VP of Sales. Under the agreement, we agreed to compensateMr. Hamilton $120,000 annually and we granted him options to purchase 150,000 shares of our common stock in 2009. Mr. Hamilton is also eligible foradditional quarterly and annual bonus compensation, stock options, and stock grants based on performance metrics outlined by our board of directors. He isentitled to vacation and sick days, and other benefits included in the agreement. On March 18, 2010, we entered into an addendum to the employmentagreement to increase his compensation to $150,000 annually. On June 1, 2008, we entered into an employment agreement with Mr. Harrell to serve as our CEO. Mr. Harrell is no longer our CEO, but will be our Chairmanand we intend to enter into an employment agreement with him in that capacity in the near future. The terms of his compensation as our CEO, which is still ineffect, are an annual salary of $144,000 with a 5% cost of living increase on each 12 month anniversary. Mr. Harrell is also eligible for additional quarterlyand annual bonus compensation, stock options, and stock grants based on performance metrics outlined by our board of directors. He is entitled to vacationand sick days, and other benefits included in the agreement. On March 18, 2010, we entered into an addendum to the employment agreement to increase hiscompensation to $152,004 annually. Outstanding Equity Awards at Fiscal Year-End The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officers as ofDecember 31, 2011. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-ENDOPTION AWARDSSTOCK AWARDSNameNumber ofSecuritiesUnderlyingUnexercised Options (#)ExercisableNumber ofSecuritiesUnderlyingUnexercisedOptions (#)UnexercisableEquityIncentivePlanAwards:Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions (#)OptionExercisePrice ($)OptionExpirationDateNumberofSharesor UnitsofStockThatHaveNotVested(#)MarketValueofSharesorUnitsofStockThatHaveNotVested($)EquityIncentivePlanAwards:NumberofUnearnedShares,Units orOtherRightsThatHave NotVested(#)EquityIncentivePlanAwards:Marketor PayoutValue ofUnearnedShares,Units orOtherRightsThatHave NotVested(#)DavidLester,PresidentCEO,CFO andDirector375,000125,00055,000$0.35(1)$0.35(1)$1.0010/1/1412/22/145/31/16DavidHarrell,Chairman,FormerPresidentand CEO100,000200,000102,500$1.00$1.81$1.003/5/144/26/155/31/16Terence J.HamiltonVP ofSales150,000127,500$1.00$1.003/5/145/31/16 (1) These are warrants that were revalued on October 1, 2009 to $0.35 per share.21Table of ContentsThe table below summarizes all compensation of our directors as of December 31, 2011. DIRECTOR COMPENSATIONName Fees EarnedorPaid inCash($) StockAwards($) OptionAwards($)Non-EquityIncentivePlanCompensation($)Non-QualifiedDeferredCompensationEarnings($) AllOtherCompensation($) Total($)Shad Shastney7,200-----7,200 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related The following table sets forth certain information known to us with respect to the beneficial ownership of our Common Stock as of February 15, 2012, by (1)all persons who are beneficial owners of 5% or more of our voting securities, (2) each director, (3) each executive officer, and (4) all directors and executiveofficers as a group. The information regarding beneficial ownership of our common stock has been presented in accordance with the rules of the Securitiesand Exchange Commission. Under these rules, a person may be deemed to beneficially own any shares of capital stock as to which such person, directly orindirectly, has or shares voting power or investment power, and to beneficially own any shares of our capital stock as to which such person has the right toacquire voting or investment power within 60 days through the exercise of any stock option or other right. The percentage of beneficial ownership as to anyperson as of a particular date is calculated by dividing (a) (i) the number of shares beneficially owned by such person plus (ii) the number of shares as towhich such person has the right to acquire voting or investment power within 60 days by (b) the total number of shares outstanding as of such date, plus anyshares that such person has the right to acquire from us within 60 days. Including those shares in the tables does not, however, constitute an admission thatthe named stockholder is a direct or indirect beneficial owner of those shares. Unless otherwise indicated, each person or entity named in the table has solevoting power and investment power (or shares that power with that person’s spouse) with respect to all shares of capital stock listed as owned by that personor entity. Except as otherwise indicated, all shares are owned directly and the percentage shown is based on 14,192,496 shares of common stock issued andoutstanding on February 15, 2012. Except as otherwise indicated, the address of each person named in this table is c/o OptimizeRx Corporation, 400 WaterStreet, Ste. 200, Rochester, MI 48307. Title of className and address of beneficial ownerAmount of beneficialownershipPercent of classExecutive Officers & Directors:CommonDavid Lester(1)573,000 shares3.88%CommonDavid A. Harrell(2)3,538,750 shares24.24%CommonTerence J. Hamilton(3)747,000 shares5.16%CommonShad Shastney0 shares0%Total of All Directors and Executive Officers:4,858,750 shares31.49%More Than 5% Beneficial Owners:CommonCypress Trust(4)808,999 shares5.7%CommonVicis Capital Master Fund(5)896,340 shares6.31% (1)Includes 18,000 shares held in his name and warrants to purchase 555,000 shares of common stock at a price of $0.35 per share.(2)Includes 3,136,250 shares held in his name, options to purchase 202,500 shares of common stock at a price of $1.00 per share, and options topurchase 200,000 shares of common stock at $1.81 per share.(3)Includes 469,500 shares held in his name and options to purchase 277,500 shares of common stock at a price of $1.00 per share.(4)Linwood C. Meehan III has voting and dispositive control over the shares held by Cypress Trust, which is located at 13750 W. Colonial Dr., Ste.250-317, Winter Garden, Florida 34787.(5)As reported on the Schedule 13D filed by the reporting person.22Table of ContentsItem 13. Certain Relationships and Related Transactions, and Director Independence Except as follows, none of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns,directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family(including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction sincethe beginning of our last fiscal year on January 1, 2011 or in any presently proposed transaction which, in either case, has or will materially affect us. Please refer to the section titled Executive Compensation. Item 14. Principal Accounting Fees and Services Below is the table of Audit Fees (amounts in US$) billed by our auditor in connection with the audit of the Company’s annual financial statements for theyears ended: Financial Statements for theYear Ended December 31 Audit Services Audit RelatedFees Tax Fees Other Fees2011 $24,850 $0 $2400 $02010 $24,650 $0 $0 $0 PART IV Item 15. Exhibits, Financial Statements Schedules (a) Financial Statements and SchedulesThe following financial statements and schedules listed below are included in this Form 10-K.Financial Statements (See Item 8) (b) Exhibits Exhibit NumberDescription3.1Articles of Incorporation of OptimizeRx Corporation (the “Company”)1.3.2Amended and Restated Bylaws of the Company1.3.3Certificate of Designation, filed on September 5, 2008, with the Secretary of State of theState of Nevada by the Company1.10.1Termination Agreement and Release, dated September 16, 20112.10.2Securities Purchase Agreement, dated September 16, 20112.10.3Amended and Restated Guarantee Agreement, dated September 16, 20112.10.4Second Amended and Restated Registration Rights Agreement, dated September 16,20112.10.5Third Amended and Restated Security Agreement, dated September 16, 20112.10.6Third Amended and Restated Guarantor Security Agreement, dated September 16, 20112.21.1List of Subsidiaries123.1Consent of Independent Registered Public Accounting Firm31.1Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.2Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 1 Incorporated by reference to the Form S-1, filed by the Company with the Securities and Exchange Commission on November 12, 2008.2 Incorporated by reference to the Form 8-K, filed by the Company with the Securities and Exchange Commission on September 21, 2011.23Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized. OptimizeRx Corporation By:/s/ David LesterDavid LesterChief Executive Officer, Principal Executive Officer,Chief Financial Officer, Principal Financial Officer, Principal Accounting Officer and Director March 30, 2012 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated. By:/s/ David HarrellDavid HarrellTitle:DirectorDate:March 30, 2012 By:/s/ Shad Shastney Shad Shastney Title:DirectorDate:March 30, 2012 By:/s/ Terence J. HamiltonTerence J. HamiltonTitle:DirectorDate:March 30, 2012 24 Silberstein Ungar, PLLC CPAs and Business AdvisorsPhone (248) 203-0080Fax (248) 281-094030600 Telegraph Road, Suite 2175Bingham Farms, MI 48025-4586www.sucpas.com March 30, 2012 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of DirectorsOptimizeRx CorporationRochester, MI To Whom It May Concern: Silberstein Ungar, PLLC hereby consents to the use in the Form 10-K, Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934, filedby OptimizeRx Corporation of our report dated March 29, 2012, relating to the consolidated financial statements of OptimizeRx Corporation, a NevadaCorporation, as of and for the years ending December 31, 2011 and 2010. Sincerely, /s/ Silberstein Ungar, PLLC Silberstein Ungar, PLLC Bingham Farms, MI CERTIFICATIONS I, David Lester, certify that; 1.I have reviewed this annual report on Form 10-K for the year ended December 31, 2011 of OPTIMIZERx Corp (the “registrant”); 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 30, 2012 /s/ David LesterBy: David LesterTitle: Chief Executive Officer CERTIFICATIONS I, David Lester, certify that; 1.I have reviewed this annual report on Form 10-K for the year ended December 31, 2011 of OPTIMIZERx Corp (the “registrant”); 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: March 30, 2012 /s/ David LesterBy: David LesterTitle: Chief Financial OfficerBy:/s/ David LesterName:David LesterTitle:Principal Executive Officer, Principal Financial Officer and DirectorDate:March 30, 2012CERTIFICATION OF CHIEF EXECUTIVE OFFICER ANDCHIEF FINANCIAL OFFICERPURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the annual Report of OPTIMIZERx Corp (the “Company”) on Form 10-K for the year ended December 31, 2011 filed with the Securitiesand Exchange Commission (the “Report”), I, David Lester, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1.The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and 2.The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the datespresented and the consolidated result of operations of the Company for the periods presented. This certification has been furnished solely pursuant to Section 906 of theSarbanes-Oxley Act of 2002.

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