OptimizeRx Corp (OPRX)

Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations

Overview

OptimizeRx is a digital healthcare technology
company that connects over two million HCPs and millions of their patients through an intelligent technology platform embedded within
a proprietary omnichannel network. OptimizeRx helps life sciences organizations engage and support their customers through our combined
HCP and DTC marketing strategies.

OptimizeRx has historically generated revenue
by delivering messages to HCPs via their EHR systems and eRx platforms using our proprietary network of channel partners. We have gradually
expanded our offerings to include audience development, audience creation, and media execution across different messaging types and media
distribution channels.

Overall, we employ a “land and expand”
strategy focused on growing our existing customer base and generating greater and more consistent revenues in part through a continued
shift in our business model toward enterprise level engagements, while also broadening our platform with innovative proprietary virtual
communication solutions such as our patented Micro-Neighborhood Targeting and our AI-powered DAAP, which uses sophisticated machine-learning
algorithms to find the best audiences in the correct channels at the right time.

Our strategy for driving revenue growth is also
expected to work in tandem with our efforts to increase margin and profitability as revenue drivers such as DAAP have inherently higher
margins than most other messaging solutions we offer. In addition, by aiming to transition our DAAP customers to a more predictable subscription-based
model for data services, we believe will further improve margins, increase visibility, and enhance the overall predictability of our revenue
streams over time.

Customer Concentration

Because the pharmaceutical industry is dominated
by large companies with multiple brands, our revenue is concentrated in a relatively small number of companies. We have approximately
100 pharmaceutical companies as customers, and our revenues are concentrated among the largest pharmaceutical companies in the world.
Loss of one of more of our larger customers could have a negative impact on our operating results. Our top five customers represented
approximately 49% and 44% of our revenue for the years ended December 31, 2024 and December 31, 2023, respectively. In 2024
and 2023, we had two customers and one customer, respectively, that represented more than 10% of our revenues.

Seasonality

In general, the pharmaceutical brand marketing
industry spends its advertising budget seasonally. Many pharmaceutical companies allocate the largest portion of their brand marketing
to the fourth quarter of the calendar year. As a result, the first quarter tends to reflect lower activity levels and lower revenue, with
gradual increases in the following quarters. We expect these seasonality trends to continue and our ability to effectively manage our
resources in anticipation of these trends may affect our operating results.

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Impact of Macroeconomic Events

Unfavorable conditions in the economy may negatively
affect the growth of our business and our results of operations. For example, macroeconomic events including rising inflation and the
U.S. Federal Reserve raising interest rates have led to economic uncertainty in the recent past, and threats of multinational tariffs
and retaliatory tariffs provide uncertainty as to heightened inflation in the domestic markets in the next twelve months. In addition,
high levels of employee turnover across the pharmaceutical industry as well as a fewer number of U.S. drug approvals could create additional
uncertainty within our target customer markets. Historically, during periods of economic uncertainty and downturns, businesses may slow
spending, which may impact our business and our customers’ businesses. Adverse changes in demand could impact our business, collection
of accounts receivable and our expected cash flow generation, which may adversely impact our financial condition and results of operations.

Key Performance Indicators

We monitor the following key performance indicators
to help us evaluate our business, measure our performance, identify trends affecting our business and make strategic decisions. We have
updated the definition of “top 20 pharmaceutical manufacturers” in our key performance indicators to be based upon Fierce
Pharma’s most updated list of “The top 20 pharma companies by 2023 revenue”. We previously used “The top 20 pharma
companies by 2022 revenue”. As a result of this change, prior periods have been restated for comparative purposes.

Average revenue per top 20 pharmaceutical manufacturer.
Average revenue per top 20 pharmaceutical manufacturer is calculated by taking the total revenue the company recognized through pharmaceutical
manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2023 revenue” over the last twelve months, divided
by the total number of the aforementioned pharmaceutical manufacturers that our solutions helped support over that time period. The Company
uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical
and believe it also provides investors with a transparent way to chart our progress in penetrating this important customer segment. The
increase in the average in 2024, as compared to 2023, is primarily the result of higher revenue in the Company’s top 5 client accounts,
all of which are included in the average revenue per top 20 pharmaceutical manufacturer KPI calculation. The above mentioned top 5 client
accounts averaged $9.0 million in revenue, which was primarily driven by growth in DAAP and omnichannel messaging expansion.

Percent of top 20 pharmaceutical manufacturers
that are customers. Percent of top 20 pharmaceutical manufacturers that are customers is calculated by taking the number of revenue
generating customers that are pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2023
revenue” over the last 12 months, which is then divided by 20 - which is the number of pharmaceutical manufacturers included in
the aforementioned list. The Company uses this metric to monitor its progress in penetrating key customers within its largest customer
vertical and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

Percent of total revenue attributable to top
20 pharmaceutical manufacturers. Percent of total revenue attributable to top 20 pharmaceutical manufacturers is calculated by taking
the total revenue the company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma
companies by 2023 revenue” over the last twelve months, divided by our consolidated revenue over the same period. The Company uses
this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and
believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment. Our revenue
from customers that are not top 20 pharmaceutical manufacturers stayed relatively consistent year over year.

Net revenue retention. Net revenue retention
is a comparison of revenue generated from all customers in the previous twelve-month period to total revenue generated from the same customers
in the following twelve-month period (i.e., excludes new customer relationships for the most recent twelve-month period). The Company
uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with
a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers. The retention rate in 2024
increased due to increased DAAP related revenue streams from existing clients and full year benefit of the October 2023 acquisition of
Medicx Health.

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Revenue per average full-time employee.
We define revenue per average full-time employee as total revenue over the last twelve months divided by the average number of employees
over the last twelve months (i.e., the average between the number of FTEs at the end of the reported period and the number of FTEs at
the end of the same period of the prior year). The Company uses this metric to monitor the productivity of its workforce and its ability
to scale efficiently over time and believes the metric provides investors with a way to chart our productivity and scalability. Our revenue
rate per employee increased year over year due to revenue growing at a higher rate than the average number of FTEs over the last 12 month
period.

Results of Operations for the Years Ended December 31,
2024 and 2023

The following table sets forth, for the periods
indicated, the dollar value and percentage of total return represented by certain items in our consolidated statements of operations (in
thousands):

Net Revenue

Our net revenue increased 29% to $92.1 million
for the year ended December 31, 2024 from $71.5 million for the year ended December 31, 2023. 66% of the $20.6 million year
over year revenue increase resulted from the October 2023 acquisition of Medicx Health, with the remaining increase being primarily due
to increased DAAP related sales as the Company generated 48 DAAP deals in 2024 compared to 24 DAAP deals in 2023. The increase was partially
offset by a reduction of approximately $4.2 million as a result of the disposal of our non-core Access solutions and the sale of certain
non-core solutions-related contracts in the fourth quarter of 2023.

Cost of Revenues

Our total cost of revenues, composed primarily
of revenue-share expense paid to our channel partners, increased in the year ended December 31, 2024 compared to the year ended December 31,
2023. Our cost of revenues as a percentage of revenue decreased to approximately 36% in the year ended December 31, 2024 from approximately
40% in the year ended December 31, 2023. This decrease in our cost of revenues as a percentage of revenue resulted primarily due
to favorable network utilization.

Gross Margin

Our gross margin, which is the difference between
our revenues and our cost of revenues, increased from 2023 to 2024 and our gross margin percentage increased to 64.5% in 2024 from 60%
in 2023. We had higher revenues in 2024, which increased gross margin. Our gross margin percentage increased for the reasons discussed
above in the cost of revenues section.

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Operating Expenses

Total operating expenses increased to $73.1 million
for the year ended December 31, 2024, from $69.3 million for the year ended December 31, 2023, an increase of approximately
5%.

The detail by major category is reflected in the
table below (in thousands).

Stock-based compensation decreased to $11.5 million
for the year ended December 31, 2024, from $13.7 million for the year ended December 31, 2023 as a result of the lower grant
date fair value of awards due to declines in the Company’s stock price partially offset by the acceleration of the market based restricted
stock units for the former CEO which was fully expensed as of December 31, 2024 upon his resignation.

Depreciation and amortization increased to $4.3
million for the year ended December 31, 2024, from $2.4 million for the year ended December 31, 2023, as a result of the amortization
associated with the identifiable intangibles arising from the Medicx Health acquisition.

Impairment charges increased to $7.5 million for
the year ended December 31, 2024, from $6.7 million for the year ended December 31, 2023. The impairment charge recorded during
2024 represents a goodwill impairment and represents the amount by which the Company’s book value exceeded its estimated fair value.
The impairment charges recorded during 2023 relate to intangible assets, primarily technology and patent and trademarks relating to certain
non-core assets. The Company determined that the carrying value of these long-lived assets was not recoverable on an undiscounted basis
and accordingly, an impairment charge was recognized to the extent fair value exceeds carrying value. The fair value of the assets was
determined based on various estimates and assumptions including internal estimates of cash flows directly attributable to the assets,
the useful life of the assets and residual value, if any.

The loss on disposal of a business for the year
ended December 31, 2023 is discussed in Part II, Item 8. Financials Statements and Supplementary Data; Note 7 - Goodwill and Intangibles.

Transaction related costs for the year ended December 31,
2023 arose due to the acquisition of Medicx Health, discussed in Part II, Item 8. Financials Statements and Supplementary Data; Note 3
- Acquisitions.

Sales general, and administrative expense increased
to $49.6 million for the year ended December 31, 2024, from $39.8 million for the year ended December 31, 2023. There were a
variety of increases, the largest of which was in compensation, which increased by $7.7 million from $24.1 million in 2023 to $31.8 million
in 2024. The increase in 2024 is due to severance expense and the addition of Medicx employees for a full year period increasing compensation
and benefits. This increase was partially offset by savings due to operational synergies generated through the integration of Medicx Health.

Other income (expense)

Other income (expense) was comprised of the following:

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Interest expense increased to $6.2 million for
the year ended December 31, 2024, from $1.5 million for the year ended December 31, 2023. Interest expense represents interest
charges on our Term Loan, which was raised during 2023 to partially fund the acquisition of Medicx Health, together with the amortization
of the related issuance costs, (see Part II, Item 8. Financials Statements and Supplementary Data; Note 12 - Long Term Debt for further
details concerning our Term Loan). The increase year over year is due to 2024 having a full year of interest expense versus three months
of interest expense in 2023.

Other income in 2023 represents the net proceeds
from the sale of customer assets, primarily contracts, while other income in 2024 relates to benefits from legacy vendor contracts.

Interest income decreased to $0.3 million for
the year ended December 31, 2024, from $2.2 million for the year ended December 31, 2023. Interest income represents interest
earned on our short-term investments, which were realized during 2023 in order to partially fund the acquisition of Medicx Health. Interest
earned in 2024 reflects the lower average balance on amounts held in short-term investments during that period.

Income tax (expense) benefit

We recorded an income tax expense of $0.7 million
for the year ended December 31, 2024 compared to an income tax benefit of $7.6 million for the year ended December 31, 2023.
The increase in income tax expense for 2024 compared to 2023 primarily related to having taxable income for the year ended December 31,
2024. The income tax benefit recorded in 2023 represents the partial reversal of our valuation allowance, previously recorded against
the value of our net operating loss (“NOL”) carryforwards. In evaluating our ability to recover our deferred tax assets, in
full or in part, we consider all available positive and negative evidence, including our past operating results, the impact of the Medicx
transaction on our consolidated tax returns, and our forecast of future earnings, future taxable income and prudent and feasible tax planning
strategies.

The assumptions utilized in determining future
taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.
Actual operating results in future years could differ from our current assumptions, judgments and estimates.

Net Income (Loss)

We finished the year ended December 31, 2024
with a net loss of $20.1 million, compared to $17.6 million during the year ended December 31, 2023. The reasons for specific components
are discussed above. Overall, we had an increase in revenue and gross margin partially offset by increased operating expenses. In addition,
the loss in both periods included significant noncash items. We had $24.3 million in noncash operating expenses in 2024 compared to $25.9
million in noncash operating expenses in 2023.

Liquidity and Capital Resources

Historically, our primary sources of liquidity
have been cash receipts from customers and proceeds from equity offerings. On October 11, 2023, we entered into a financing agreement
that provided for a $40.0 million term loan (the “Term Loan”), the proceeds of which were to fund, in part, the acquisition
of Medicx Health. See Part II, Item 8. Financials Statements and Supplementary Data; Note 12 - Long Term Debt.

As of December 31, 2024, we had total current
assets of $54.0 million, compared with current liabilities of $18.7 million, resulting in working capital of $35.3 million and a current
ratio of 3 to 1. This compares with a working capital balance of $36.4 million and a current ratio of 3 to 1 at December 31, 2023.
This decrease in working capital, as discussed in more detail below, is primarily the result of a slight increase in our accounts receivable
driven by higher fourth quarter billings, and a slight increase in our accrued expenses due to severance expenses as of December 31, 2024.

We believe that funds generated from operations,
together with existing cash and cash equivalents, will be sufficient to finance our current operations and planned growth for the next
twelve months. We do not anticipate the need to raise any additional cash to support operations. However, we could require additional
debt or equity financing if we were to make any significant acquisitions for cash during that period. In addition, we believe we can generate
the cash needed to operate beyond the next 12 months from operations.

Cash Flows

Following is a table with summary data from the consolidated statement
of cash flows for the years ended December 31, 2024 and 2023, as presented.

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Our operating activities provided $4.9 million
in the year ended December 31, 2024, as compared with approximately $7.2 million used by operating activities in the year ended December 31,
2023. The net increase in net cash provided by operating activities was mainly attributable to a $6.5 million increase in cash flows from
accounts receivable largely driven by higher fourth quarter billings in fiscal 2024 as compared to fiscal 2023 and a reduction of cash
outflows for deferred tax liabilities. In 2023, as a result of the Medicx Health acquisition, the Company recorded a deferred tax liability
of $7.7 million which was reduced in 2024 for the change in deferred tax liability. This was partially offset by a $2,544 increase in
net loss.

Investing activities used $0.5 million in 2024,
compared with $25.3 million in 2023. In 2024, we incurred capitalized software development costs of $0.3 million, and purchased $0.1 million
of tangible property, primarily personal computers.

During 2023, in addition to the cash payment of
$82.9 million related to the acquisition of Medicx Health, we purchased $162.8 million and redeemed $218.7 million in Treasury bills during
2023. We also incurred capitalized software development costs of $0.8 million, and purchased $0.1 million of tangible property, primarily
personal computers and received $2.5 million from the disposal of our Access products (see Part II, Item 8. Financials Statements and
Supplementary Data; Note 7 - Goodwill and Intangibles).

Financing activities used $4.9 million in 2024,
and provided $28.2 million in 2023. During 2024, in connection with the Term Loan, we have made repayments of approximately $4.0 million.
In addition, during 2024, we paid $0.9 million for employee withholding taxes related to the vesting of restricted stock units.

During 2023, we raised $40.0 million pursuant
to the Term Loan to partially fund the acquisition of Medicx Health. In connection with the Term Loan, we incurred debt issuance costs
of approximately $2.3 million, and made repayments of approximately $1.7 million. In addition, during 2023, we repurchased 526,999 shares
of common stock for $7.5 million.

Term Loan

On October 11, 2023 (the “Loan Date”),
in connection with the acquisition of Medicx Health, we entered into a financing agreement that provided for a $40.0 million term loan.

The outstanding principal amount of the Term Loan
is repayable in quarterly installments on the last business day of each fiscal quarter commencing on December 31, 2023 in an amount equal
to 1.25% of the principal amount. The outstanding unpaid principal amount of the Term Loan, and all accrued and unpaid interest thereon,
shall be due and payable on the earliest of (i) the fourth anniversary of the closing of the financing agreement and funding of the Term
Loan and (ii) the date on which the Term Loan is declared due and payable pursuant to the terms of the financing agreement.  The
Term loan bears interest at a variable rate, which was 13.3% at December 31, 2024.

We incurred debt issuance costs of approximately
$2.3 million, in connection with this Term Loan and made repayments of approximately $4.0 million and $1.7 million for the year ended
December 31, 2024 and 2023, respectively.

As of December 31, 2024, total obligations under
the Term Loan were $34.3 million, with $2.0 million of principal payments due over the next twelve months. We are subject to market risks
arising from changes in interest rates which relate primarily to the Term Loan, which is variable rate debt. We estimate our potential
additional interest expense over the next twelve months that would result from a hypothetical, instantaneous and unfavorable change of
100 basis points in the interest rate on our Term Loan would be approximately $0.3 million on a pre-tax basis.See Part II, Item 8. Financials
Statements and Supplementary Data; Note 12 - Long Term Debt for additional information regarding the Term Loan.

Other Contractual Obligations

We have obligations under our operating leases
for office space. Total obligations under short and long term operating leases were $0.4 million, with $0.2 million due over the next
twelve months. For details regarding short and long term operating lease liabilities, see Part II, Item 8. Financial Statements and Supplementary
Data; Note 13 – Leases in the Consolidated Financial Statements.

We have obligations under our former employee
severance agreements. As of December 31, 2024, total obligations under former employee severance agreements were $1.2 million, with $1.0
million due over the next twelve months.

Off Balance Sheet Arrangements

From time to time, the Company enters into arrangements
with channel partners to acquire minimum amounts of media, data or messaging capabilities. As of December 31, 2024, the Company had
commitments with channel partners for future minimum payments of $19.7 million that will be reflected in cost of revenues during the years
from 2025 through 2029, with $14.4 million due over the next twelve months. See Part II, Item 8. Financial Statements and Supplementary
Data; Note 16 – Commitments.

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Critical Accounting Estimates

Our discussion and analysis of our financial condition
and results of operations are based upon the Consolidated Financial Statements, which have been prepared in accordance with U.S. generally
accepted accounting principles. The preparation of these financial statements requires us to make estimates, judgments and assumptions
that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and
expenses during the periods presented. Actual results could differ from those estimates and assumptions. See Part II, Item 8. Financial
Statements and Supplementary Data; Note 2 - Summary of Significant Accounting Policies, for a discussion of significant accounting policies.
Actual results may differ materially from these estimates due to different assumptions or conditions. The following areas all require
the use of subjective or complex judgments, estimates and assumptions:

Business Combination

Business combinations are accounted for under
the acquisition method. Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their estimated
fair value at the date of acquisition. The excess of purchase price over the amount allocated to the assets acquired and liabilities assumed
is recorded as goodwill. In determining the fair value of assets acquired, including intangible assets, the Company uses a variety of
methods. The method used to estimate the fair values of intangible assets incorporates significant estimates and assumptions regarding
the estimates a market participant would make to evaluate an asset, including a market participant’s use of the asset, future cash inflows
and outflows, probabilities of success, asset lives and the appropriate discount rates. This judgement and determination affects the amount
of consideration paid that is allocated to assets acquired and liabilities assumed in the business purchase transaction. The Company engages
third-party appraisal firms to assist in determining fair value of assets acquired and liabilities assumed when appropriate.

During the remeasurement period, which extends
no later than one year from the acquisition date, the Company may record certain adjustments to the carrying value of the assets acquired
and liabilities assumed with a corresponding offset to goodwill.

Revenue Recognition

Recognition of revenue requires evidence of a
contract, probable collection of proceeds, and completion of substantially all performance obligations. We use a 5-step model to recognize
revenue: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction
price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when or as the performance
obligations are satisfied.

Revenues are primarily generated from content
delivery activities in which we deliver financial, clinical, or brand messaging through a distribution network of e-prescribers and electronic
health record technology providers (channel partners), directly to consumers, or from reselling services that complement the business.
This content delivery for a customer is referred to as a program. Unless otherwise specified, revenue is recognized based on the selling
price to customers.

Our contracts are generally all less than one
year and the primary performance obligation is delivery of messages or other forms of content, but the contract may contain additional
services. Additional services may include program design, which is the design of the content delivery program, set up, and reporting.
We consider set up and reporting services to be complimentary to the primary performance obligation and recognized through performance
of the delivery of content. We consider the design of the programs and related consulting services to be performance obligations separate
from the delivery of messages. Performance obligations which are recognized at a point in time upon delivery to the client include the
development and delivery of NPI target data lists and custom analytic and consulting projects.

As the content is distributed through the platform
and network of channel partners (a transaction), these transactions are recorded, and revenue is recognized, over time as the distributions
occur. Revenue for transactions can be realized based on a price per message, a price per redemption, as a flat fee occurring over a period
of time, or upon completion of the program, depending on the client contract. We recognize setup fees that are required for integrating
client offerings and campaigns into the rule-based content delivery system and network over the life of the initial program, based either
on time, or units delivered, depending upon which is most appropriate in the specific situation. Should a program be cancelled before
completion, the balance of set up revenue is recognized at the time of cancellation, as set up fees are nonrefundable. Additionally, we
also recognize revenue for providing program performance reporting and maintenance, either by our company directly delivering reports
or by providing access to our online reporting portal that the client can utilize. This reporting revenue is recognized over time as the
messages are delivered. Program design, which is the design of the content delivery program, and related consulting services are recognized
as services are performed.

In some instances, we license certain of our software
applications in arrangements that do not include other performance obligations. In those instances, we record license revenue when the
software is delivered for use to the license. In instances where our contracts included Software as a Service, the revenue is recognized
over the subscription period as services are delivered to the customer.

In some instances, we also resell messaging solutions
that are available through channel partners that are complementary to our HCP marketing business and customer base. These channel partner-specific
solutions are frequently similar to our own solutions and revenue recognition for these programs is the same as described above. In instances
where we sell solutions on a commission basis, net revenue is recognized based on the commission-based revenue split that we receive.
In instances where we resell these messaging solutions and have all financial risk and significant operation input and risk, we record
the revenue based on the gross amount sold and the amount paid to the channel partner as a cost of sales.

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Cost of Revenues

The primary costs of revenue are revenue-share
expense and data acquisition costs. Based on the volume of transactions that are delivered through a channel partner network, we provide
a revenue-share to compensate the channel partner for its or their promotion of the campaign. Revenue-shares are a negotiated percentage
of the transaction fees and can also be specific to special considerations and campaigns. In addition, we pay revenue-share to ConnectiveRx
as a result of a 2014 legal settlement in an amount equal to the greater of 10% of financial messaging distribution revenues generated
through our integrated network, or $0.37 per financial message distributed through our integrated network. As our solution mix has expanded
and our revenues have grown, financial messaging has become a smaller percentage of our revenues and these payments to ConnectiveRx, a
smaller portion of our revenue-share. The contractual amount due to the channel partners is recorded as an expense at the time the message
is distributed. Data acquisition costs consist primarily of the costs to acquire data through flat-fee data licensing agreements. Data
acquisition costs are amortized over the period for which we have access to the data.

Intangible Assets

Intangible assets are stated at cost. Finite-lived
assets are being amortized over their estimated useful lives of fifteen to seventeen years for patents, eight years for customer relationships,
fifteen years for tradenames, two to four years for covenants not to compete, and three to ten years for software and websites, all using
the straight-line method.

Intangible assets are reviewed whenever events
or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment of assets with definite-lives
is generally determined by comparing projected undiscounted cash flows expected to be generated by the asset, or asset groups, to its
carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted basis, an impairment
is recognized to the extent fair value exceeds carrying value. Determining the extent of impairment, if any, typically requires various
estimates and assumptions including cash flows directly attributable to the asset, the useful life of the asset and residual value, if
any. When necessary, the Company uses internal cash flow estimates, quoted market prices and appraisals, as appropriate, to determine
fair value. Actual results could vary from these estimates. In addition, the remaining useful life of the impaired asset is revised, if
necessary.

No events or circumstances were noted that would
be indicative of potential impairment during the year ended December 31, 2024. We recorded impairment charges of $6.7 million against
the value of our intangible assets during the year ended December 31, 2023.

Goodwill

Assets and liabilities of acquired businesses
are measured at their estimated fair values at the dates of acquisition. The excess of the purchase price over the estimated fair value
of the net assets acquired, including identified intangibles, is recorded as goodwill. The determination and allocation of fair value
to the assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management
judgment, including estimates based on historical information, current market data and future expectations.

We evaluate goodwill for impairment during our
fiscal fourth quarter, or more frequently if an event occurs or circumstances change. Management performs its annual goodwill impairment
test as of December 31. Goodwill is tested for impairment at the reporting unit level.

An entity is permitted to first assess qualitative
factors to determine if a quantitative impairment test is necessary. If we choose to use qualitative factors and determine that it is
more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment
test would be required. The goodwill impairment test requires the Company to estimate the fair value of the reporting unit and to compare
the fair value of the reporting unit with its carrying amount.

In estimating the reporting unit’s fair
value, the Company performed a valuation analysis, utilizing a discounted cash flow income approach and a guideline public company market
approach. We assigned a probability weighting to each approach of 50%. The determination of the fair value of the reporting unit requires
the Company to make significant estimates and assumptions about the reporting unit’s expected future cash flows. These estimates
and assumptions primarily include, but are not limited to, the discount rate, revenue growth rates, operating margins and multiples of
earnings. These estimates and assumptions were determined in connection with support from a third-party valuation specialist. The discount
rate used is based on the estimated weighted-average cost of capital for companies with profiles similar to our profile and based on an
assessment of the risk inherent in those future cash flows. To forecast the reporting unit’s cash flows, the Company takes into
consideration economic conditions and trends, historical results and recent performance, estimated future operating results, management’s
and a market participant’s view of growth rates, management’s ability to execute on planned future strategic initiatives and
anticipates future economic conditions. The market approach compares the valuation multiples of similar companies to that of the associated
reporting unit. The Company then reconciles the calculated fair values to its market capitalization. The fair value is then compared to
its carrying value including goodwill. If the fair value is in excess of its carrying value, the related goodwill is not impaired. If
the fair value is less than carrying value, an impairment charge is recognized, equivalent to the amount that the carrying value exceeds
the fair value.

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For both the years
ended December 31, 2024 and 2023, our annual reviews determined there was no impairment as our
single reporting unit had a fair value in excess of its carrying value. For both the years ended December 31, 2024 and 2023, our annual
reviews determined that there was no impairment. It was determined that the Company’s single reporting unit was exactly equal to its carrying
value at December 31, 2024. It was determined that the fair value of the Company’s single reporting unit was greater than its carrying
value at December 31, 2023.

During the third quarter of 2024, the Company
experienced a Triggering Event due to a sustained decline in its stock price and overall market capitalization. Accordingly, the Company
conducted a quantitative impairment test of its goodwill at September 30, 2024. The Company estimated the implied fair value of its goodwill
using a combination of a market approach and income approach. A noncash charge of $7.5 million, representing the amount by which the Company’s
book value exceeds its estimated fair value, was recorded as a goodwill impairment in the year ended December 31, 2024.

Assessment
of the potential impairment of goodwill and intangible assets is an integral part of our normal ongoing review of operations. Testing
for potential impairment of these assets is significantly dependent on numerous assumptions and reflects management’s best estimates at
a particular point in time. Estimates based on these assumptions may differ significantly from actual results. Changes in factors and
assumptions used in assessing potential impairments can have a significant impact on the existence and magnitude of impairments, as well
as the time in which such impairments are recognized. Any amount of negative change to the above disclosed key assumptions could
result in future impairment to goodwill.

Goodwill
impairment charges may be recognized in future periods to the extent changes in factors or circumstances occur, including deterioration
in the macro-economic environment or in the equity markets, including a decline in the market value of the Company’s common shares,
deterioration in its performance or its future projections, or changes in its plans for one or more reporting units.

Stock-based
Compensation

We use the fair value method to account for stock-based
compensation. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over
the period during which services are rendered. The fair value of each award is estimated on the date of each grant.

For time-based options, fair value is estimated
using the Black-Scholes option pricing model that uses the following assumptions. Estimated volatilities are based on the historical volatility
of our stock over the same period as the expected term of the options. The expected term of options granted represents the period of time
that options granted are expected to be outstanding. We use historical data to estimate option exercise behavior and to determine this
term. The risk-free rate used is based on the U.S. Treasury yield curve in effect at the time of the grant using a time period equal to
the expected option term. We have never paid dividends and do not expect to pay any dividends in the future.

The Black-Scholes option valuation model and other
existing models were developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully
transferable. These option valuation models require the input of, and are highly sensitive to, subjective assumptions including the expected
stock price volatility. Our stock options have characteristics significantly different from those of traded options, and changes in the
subjective input assumptions could materially affect the fair value estimate.

For restricted stock units, the fair value is
based on the market value of the Company’s common stock on the date of grant. For market based restricted stock units, fair value
is estimated using a Monte Carlo simulation model. This valuation technique includes estimating the movement of stock prices and the effects
of volatility, interest rates and dividends.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards
Board (“FASB”) issued ASU No. 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
ASU 2023-09 addresses investor requests for more transparency about income tax information through improvements to income tax disclosures
primarily related to the rate reconciliation and income taxes paid information. This update also includes certain other amendments to
improve the effectiveness of income tax disclosures. The provisions of ASU 2023-09 are effective for annual periods beginning after December
15, 2024, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2023-09.

In November 2024, the FASB issued ASU 2024-03
(“ASU 2024-03”), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).
ASU 2024-03 requires that public business entities disclose additional information about specific expense categories in the notes to financial
statements at interim and annual reporting periods. The prescribed categories include purchases of inventory, employee compensation, depreciation,
intangible asset amortization, and depletion. This authoritative guidance is effective for annual periods beginning after December 15,
2026 and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect
of this new guidance on its consolidated financial statements.

Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We
are a digital health technology company enabling care-focused engagement between life sciences organizations, healthcare providers, and
patients at critical junctures throughout the patient care journey. Connecting over two million U.S. healthcare providers and millions
of their patients through an intelligent omnichannel technology platform embedded within a proprietary point-of-care network, as well
as mass digital communications channels, OptimizeRx helps life sciences organizations engage and support their customers.

Historically, our revenue was generated primarily
through the facilitation of various types of messages to health care providers via their EHR systems and ERx platforms using the OptimizeRx
proprietary network to solve the ever-increasing communication barriers between pharmaceutical representatives and healthcare providers
that have presented in the rapidly changing healthcare industry. Over time, as the demand for communication of an increasing variety of
different health information between life science companies, providers, and patients continued to rise, our platform has evolved to provide
Audience Development and Audience Creation and Media Execution across numerous different messaging types that leverage our technology
platform and media distribution channels. In addition, the October 2023 acquisition of Medicx Health provided the Company with a significant
footprint for direct-to-consumer healthcare marketing. We employ a “land and expand” strategy focused on growing our existing
client base and generating greater and more consistent revenues in part through the continued shift in our business model toward enterprise
level engagements, while also broadening our platform with innovative proprietary virtual communication solutions such as our AI-powered
DAAP, expanding on previous iterations of the RWD.AI technology, which uses sophisticated machine-learning algorithms to find the best
audiences in the correct channels at the right time. Our strategy for driving revenue growth is also expected to work in tandem with our
efforts to increase margin and profitability as revenue drivers such as DAAP have inherently higher margins than most other messaging
solutions we offer.

22

Customer
Concentration

Because
the pharmaceutical industry is dominated by large companies with multiple brands, our revenue is concentrated in a relatively small number
of companies. We have approximately 100 pharmaceutical companies as customers, and our revenues are concentrated in these customers.
Loss of one of more of our larger customers could have a negative impact on our operating results. Our top five customers represented
approximately 44% and 39% of our revenue for the years ended December 31, 2023 and December 31, 2022, respectively. In each
of 2023 and 2022, we had one customer that each represented more than 10% of our revenues.

Seasonality

In
general, the pharmaceutical brand marketing industry experiences seasonal trends that affect the vast majority of participants in the
pharmaceutical digital marketing industry. Many pharmaceutical companies allocate the largest portion of their brand marketing to the
fourth quarter of the calendar year. As a result, the first quarter tends to reflect lower activity levels and lower revenue, with gradual
increases in the following quarters. We generally expect these seasonality trends to continue and our ability to effectively manage our
resources in anticipation of these trends may affect our operating results.

Impact
of Macroeconomic Events

Unfavorable
conditions in the economy may negatively affect the growth of our business and our results of operations. For example, macroeconomic
events including rising inflation and the U.S. Federal Reserve raising interest rates have led to economic uncertainty. In addition,
high levels of employee turnover across the pharmaceutical industry as well as a fewer number of U.S. drug approvals could create additional
uncertainty within our target customer markets. Historically, during periods of economic uncertainty and downturns, businesses may slow
spending, which may impact our business and our customers’ businesses. Adverse changes in demand could impact our business, collection
of accounts receivable and our expected cash flow generation, which may adversely impact our financial condition and results of operations.

Key
Performance Indicators

We
monitor the following key performance indicators to help us evaluate our business, measure our performance, identify trends affecting
our business and make strategic decisions. We have updated the definition of “top 20 pharmaceutical manufacturers” in our
key performance indicators to be based upon Fierce Pharma’s most updated list of “The top 20 pharma companies by 2022
revenue”. We previously used “The top 20 pharma companies by 2020 revenue”. As a result of this change, prior periods
have been restated for comparative purposes.

Average revenue per top 20 pharmaceutical manufacturer.
Average revenue per top 20 pharmaceutical manufacturer is calculated by taking the total revenue the company recognized through pharmaceutical
manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2022 revenue” over the last twelve months, divided
by the total number of the aforementioned pharmaceutical manufacturers that our solutions helped support over that time period. The Company
uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical
and believe it also provides investors with a transparent way to chart our progress in penetrating this important customer segment. The
increase in the average in 2023 as compared to 2022 is primarily the result of stronger DAAP related revenue streams and the Company’s
October 2023 acquisition of Medicx Health, which added to 2023 revenues and was not included in the 2022 amounts.

23

Percent
of top 20 pharmaceutical manufacturers that are customers. Percent of top 20 pharmaceutical manufacturers that are customers is calculated
by taking the number of revenue generating customers that are pharmaceutical manufacturers listed in Fierce Pharma’s “The
top 20 pharma companies by 2022 revenue” over the last 12 months, which is then divided by 20 - which is the number of pharmaceutical
manufacturers included in the aforementioned list. The Company uses this metric to monitor its progress in penetrating key customers
within its largest customer vertical and believes it also provides investors with a transparent way to chart our progress in penetrating
this important customer segment.

Percent
of total revenue attributable to top 20 pharmaceutical manufacturers. Percent of total revenue attributable to top 20 pharmaceutical
manufacturers is calculated by taking the total revenue the company recognized through pharmaceutical manufacturers listed in Fierce
Pharma’s “The top 20 pharma companies by 2022 revenue” over the last twelve months, divided by our consolidated revenue
over the same period. The Company uses this metric to monitor its progress in “landing and expanding” with key customers
within its largest customer vertical and believes it also provides investors with a transparent way to chart our progress in penetrating
this important customer segment. Our revenue from customers that aren’t top 20 pharmaceutical manufacturers stayed relatively consistent
year over year.

Net
revenue retention. Net revenue retention is a comparison of revenue generated from all customers in the previous twelve-month period
to total revenue generated from the same customers in the following twelve-month period (i.e., excludes new customer relationships for
the most recent twelve-month period). The Company uses this metric to monitor its ability to improve its penetration with existing customers
and believes it also provides investors with a metric to chart our ability to increase our year-over-year penetration and revenue with
existing customers. The retention rate in 2023 increased due to stronger DAAP related revenue streams from existing clients and the Company’s
2023 acquisition of Medicx Health.

Revenue per average full-time employee.
We define revenue per average full-time employee as total revenue over the last twelve months divided by the average number of employees
over the last twelve months (i.e., the average between the number of FTEs at the end of the reported period and the number of FTEs at
the end of the same period of the prior year). The Company uses this metric to monitor the productivity of its workforce and its ability
to scale efficiently over time and believes the metric provides investors with a way to chart our productivity and scalability. Our revenue
rate per employee stayed relatively consistent year over year.

24

Results
of Operations for the Years Ended December 31, 2023 and 2022

The
following table sets forth, for the periods indicated, the dollar value and percentage of total return represented by certain items in
our consolidated statements of operations:

Net
Revenue

Our net revenue increased 15% to $71.5 million
for the year ended December 31, 2023 from $62.5 million for the year ended December 31, 2022. Of the 15% increase, 7.3% resulted
from the acquisition of Medicx Health, in October, with the remaining increase due to stronger DAAP related sales.

Cost
of Revenues

Our total cost of revenues, composed primarily
of revenue-share expense paid to our network partners, increased in the year ended December 31, 2023, compared to the year ended
December 31, 2022. Our cost of revenues as a percentage of revenue increased to approximately 40% in the year ended December 31,
2023, from approximately 38% in the year ended December 31, 2022. This increase in our cost of revenues as a percentage of revenue
resulted primarily due to an unfavorable channel partner mix.

Gross
Margin

Our
gross margin, which is the difference between our revenues and our cost of revenues, increased from 2022 to 2023 but our gross margin
percentage decreased to 60.0% in 2023 from 62% in 2022 We had higher revenues in 2023, which increased gross margin but during 2023,
there was a decrease in the percentage of activity flowing through our lower cost channels compared with 2022.

Operating
Expenses

Total operating expenses increased to $69.3 million
for the year ended December 31, 2023, from $51.3 million for the year ended December 31, 2022, an increase of approximately
35%. The increase includes approximately $6.7 million, related to impairment charges, approximately $4.5 million of transaction costs
associated with the purchase of Medicx Health, and a loss on the disposal of a business of $2.1 million.

The
detail by major category is reflected in the table below.

Stock-based compensation decreased to $13.7 million
for the year ended December 31, 2023, from $15.7 million for the year ended December 31, 2022, as a result of the lower grant
date fair value of awards due to declines in the Company’s stock price.

25

Depreciation and amortization increased to $2.4
million for the year ended December 31, 2023, from $2.0 million for the year ended December 31, 2022, as a result of the amortization
associated with the identifiable intangibles arising from the Medicx Health acquisition.

The
impairment charges recorded during 2023 relate to intangible assets, primarily technology and patent and trademarks relating to certain
non-core products. The Company determined that the carrying value of these long-lived assets was not recoverable on an undiscounted basis
and accordingly, an impairment charge was recognized to the extent fair value exceeds carrying value. The fair value of the assets was
determined based on various estimates and assumptions including internal estimates of cash flows directly attributable to the assets,
the useful life of the assets and residual value, if any.

The
loss on disposal of a business is discussed in Part II, Item 8. Financials Statements and Supplementary Data; Note 7 - Goodwill and Intangibles.

Transaction related costs arose due to the acquisition
of Medicx Health, discussed in Part II, Item 8. Financials Statements and Supplementary Data; Note 3 - Acquisitions.

Other sales, sales general, and administrative
expense increased to $39.8 million for the year ended December 31, 2023 from $33.5 million for the year ended December 31,
2022. The acquisition of Medicx Health increased Operating expense, primarily compensation and amortization, by approximately $2.5 million
year on year. In addition, within the other sales, general and administrative expenses, there were a variety of increases, the largest
of which was in compensation, which increased by $3.3 million from $20.8 million in 2022 to $24.1 million in 2023. The increase is due
to the addition of Medicx Health employees since the acquisition date and higher severance, employee benefit and commission costs.

Other
income (expense)

Other
Income (Expense) was comprised of the following:

Interest expense represents interest charges on
our Term Loan, which was raised during the year to partially fund the acquisition of Medicx Health, together with the amortization of
the related issuance costs, (see Part II, Item 8. Financials Statements and Supplementary Data; Note 12 - Long Term Debt for further details
concerning our Term loan).

Other
income represents the net proceeds from the sale of customer assets, primarily contracts, relating to two non-core products.

Interest income represents interest earned on
our short-term investments, which were realized during 2023 in order to partially fund the acquisition of Medicx Health. Interest earned
in 2022 reflects the shorter period and lower average balance on amounts held in short-term investments during that period.

26

Income
tax benefit

The income tax benefit recorded in 2023 represents
the partial reversal of our valuation allowance, previously recorded against the value of our net operating loss (“NOL”) carryforwards.
In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence,
including our past operating results, the impact of the Medicx Health transaction on our consolidated tax returns, and our forecast of
future earnings, future taxable income and prudent and feasible tax planning strategies.

The assumptions utilized in determining future
taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.
Actual operating results in future years could differ from our current assumptions, judgments and estimates.

Net Income (Loss)

We finished the year ended December 31, 2023
with a net loss of $17.6 million, compared to $11.4 million during the year ended December 31, 2022. The reasons for specific components
are discussed above. Overall, we had an increase in revenue and gross margin partially offset by increased operating expenses. In addition,
the loss in both periods included significant noncash items. We had $25.0 million in noncash operating expenses in 2023 compared to $17.8
million in noncash operating expenses in 2022.

Liquidity and Capital Resources

Historically, our primary sources of liquidity
have been cash receipts from customers and proceeds from equity offerings. On October 11, 2023, we entered into a financing agreement
that provided for a $38 million term loan (the “Term Loan”), the proceeds of which were to fund, in part, the acquisition
of Medicx Health. See Part II, Item 8. Financials Statements and Supplementary Data; Note 12 - Long Term Debt.

As of December 31, 2023, we had total current
assets of $54.3 million, compared with current liabilities of $17.9 million, resulting in working capital of $36.4 million and a current
ratio of 3.0 to 1. This compares with a working capital balance of $90.2 million and a current ratio of 11.7 to 1 at December 31,
2022. This decrease in working capital, as discussed in more detail below, is primarily the result of our common stock buyback program
and the acquisition of Medicx Health, which was funded from a combination of cash on hand, short-term investments and the Term Loan.

We believe that funds generated from operations,
together with existing cash and cash equivalents, will be sufficient to finance our current operations and planned growth for the next
twelve months. We do not anticipate the need to raise any additional cash to support operations. However, we could require additional
debt or equity financing if we were to make any significant acquisitions for cash during that period. In addition, we believe we can generate
the cash needed to operate beyond the next 12 months from operations.

Contractual
Obligations

The
Company’s contractual obligations and cash commitments at December 31, 2023, consisted of long term debt, operating lease
liabilities, and payments to partners to acquire minimum amounts of media, data or messaging capabilities as follows:

[[GREPCENT_TABLE]]

Item 7. Management’s Discussion and Analysis
of Financial Condition and Results of Operations

Overview

We are a digital health technology company enabling
care-focused engagement between life sciences organizations, healthcare providers, and patients at critical junctures throughout the patient
care journey. Connecting over 60% of U.S. healthcare providers and millions of their patients through an intelligent technology platform
embedded within a proprietary point-of-care network, OptimizeRx helps patients start and stay on their medications.

Historically, our revenue was generated primarily
through the facilitation of financial messages to health care providers via their EHR and ePrescribe systems using the OptimizeRx proprietary
network to solve the ever-increasing communication barriers between pharmaceutical representatives and healthcare providers that have
presented in the rapidly changing healthcare industry. Over time, as the demand for communication of an increasing variety of different
health information between life science companies, providers, and patients continued to rise, our platform has expanded to encompass additional
solutions that enable healthcare providers to access information for patients at the point of care. These solutions include brand messaging,
therapeutic support messaging, brand support, and innovative patient engagement services, all of which now make up a significant portion
of our total revenue.

17

We employ a “land and expand” strategy
focused on growing our existing client base and generating greater and more consistent revenues in part through the continued shift in
our business model toward enterprise level engagements, while also broadening our platform with innovative proprietary solutions such
as our TelaRep™ virtual communication solution and our AI-powered real-world evidence solution which uses sophisticated proprietary
algorithms to derive additional revenue from our existing network. In addition, we have continued to expand our team in preparation for
future growth aspirations, which may be supplemented with future acquisitions and other strategic collaborations and investments. Our
strategy for driving revenue growth is also expected to work in tandem with our efforts to increase margin and profitability using the
aforementioned recurring revenue models that have inherently higher margins.

Because the pharmaceutical industry is dominated by large companies
with multiple brands, our revenue is concentrated in a relatively small number of companies. We have approximately 100 pharmaceutical
companies as customers, and our revenues are concentrated in these customers. Loss of one of more of our larger customers could have a
negative impact on our operating results. Our top five customers represented 39% of our revenue for the year ended December 31, 2022.
In each of 2022 and 2021, we had one customer that each represented more than 10% of our revenues.

Seasonality

In general, the pharmaceutical brand marketing
industry experiences seasonal trends that affect the vast majority of participants in the pharmaceutical digital marketing industry. Many
pharmaceutical companies allocate the largest portion of their brand marketing to the fourth quarter of the calendar year. As a result,
the first quarter tends to reflect lower activity levels and lower revenue, with gradual increases in the following quarters. We generally
expect these seasonality trends to continue and our ability to effectively manage our resources in anticipation of these trends may affect
our operating results.

Impact of Macroeconomic Events

Unfavorable conditions in the economy may
negatively affect the growth of our business and our results of operations. For example, macroeconomic events including the COVID-19
pandemic, rising inflation and the U.S. Federal Reserve raising interest rates have led to economic uncertainty. In addition, high
levels of employee turnover across the pharmaceutical industry as well as fewer number of U.S. drug approvals could create
additional certainty within our target customer markets. Historically, during periods of economic uncertainty and downturns,
businesses may slow spending, which may impact our business and our customers’ businesses. Adverse changes in demand could
impact our business, collection of accounts receivable and our expected cash flow generation, which may adversely impact our
financial condition and results of operations.

Key Performance Indicators

We monitor the following key performance indicators
to help us evaluate our business, measure our performance, identify trends affecting our business and make strategic decisions.

Average revenue per top 20 pharmaceutical manufacturer.
Average revenue per top 20 pharmaceutical manufacturer is calculated by taking the total revenue the company recognized through pharmaceutical
manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2020 revenue” over the last twelve months, divided
by the total number of the aforementioned pharmaceutical manufacturers that our solutions helped support over that time period. The Company
uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical
and believe it also provides investors with a transparent way to chart our progress in penetrating this important customer segment. The
decrease in the average in 2022 as compared to 2021 is primarily the result of the convergence of numerous macroeconomic factors that
resulted in our customers slowing their rate of spend, particularly for large and/or new implementations, which we believe prolonged sales
cycles with the top 20 pharmaceutical manufacturers that were existing customers.

18

Percent of top 20 pharmaceutical manufacturers
that are customers. Percent of top 20 pharmaceutical manufacturers that are customers is calculated by taking the number of revenue
generating customers that are pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2020
revenue” over the last 12 months, which is then divided by 20—which is the number of pharmaceutical manufacturers included
in the aforementioned list. The Company uses this metric to monitor its progress in penetrating key customers within its largest customer
vertical and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.
The decrease in 2022 was due to the Company not supporting programs for a smaller revenue customer from 2021 in 2022.

Percent of total revenue attributable to top
20 pharmaceutical manufacturers. Percent of total revenue attributable to top 20 pharmaceutical manufacturers is calculated by taking
the total revenue the company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma
companies by 2020 revenue” over the last twelve months, divided by our consolidated revenue over the same period. The Company uses
this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and
believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment. Our revenue
from customers that aren’t top 20 pharmaceutical manufacturers increased faster than our overall revenue, decreasing the percentage of
our overall revenues from top 20 pharmaceutical manufacturers.

Net revenue retention. Net revenue retention
is a comparison of revenue generated from all customers in the previous twelve-month period to total revenue generated from the same customers
in the following twelve-month period (i.e., excludes new customer relationships for the most recent twelve-month period). The Company
uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with
a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers. The retention rate in 2022
decreased due to the convergence of numerous macroeconomic factors that resulted in our customers slowing their rate of spend, particularly
for large and/or new implementations, which we believe prolonged sales cycles.

Revenue per average full-time employee.
We define revenue per average full-time employee as total revenue over the last twelve months divided by the average number of employees
over the last twelve months (i.e., the average between the number of FTEs at the end of the reported period and the number of FTEs at
the end of the same period of the prior year). The Company uses this metric to monitor the productivity of its workforce and its ability
to scale efficiently over time and believes the metric provides investors with a way to chart our productivity and scalability. Our revenue
rate per employee declined year over year due to slower revenue growth and a higher average number of FTEs over the last 12 month period.

19

Results of Operations for the Years Ended December
31, 2022 and 2021

The following table sets forth, for the periods
indicated, the dollar value and percentage of total return represented by certain items in our consolidated statements of operations:

Net Revenue

Our net revenue increased 2% to $62.5 million
for the year ended December 31, 2022 from $61.3 million for the year ended December 31, 2021. This increase resulted from increases
in sales of our access solutions.

Cost of Revenues

Our total cost of revenues, composed
primarily of revenue share expense paid to our network partners, decreased in the year ended December 31, 2022 compared to the
year ended December 31, 2021. Our cost of revenues as a percentage of revenue decreased to approximately 38% in the year ended
December 31, 2022 from approximately 42% in the year ended December 31, 2021. This decrease in our cost of revenues as a
percentage of revenue resulted primarily due to favorable solution and channel partner mix and increases in the type of services we
provide that are not subject to revenue share.

Gross Margin

Our gross margin, which is the difference between
our revenues and our cost of revenues, increased from 2021 to 2022 as a result of solution mix. In general, during 2022, there was an
increase in the percentage of activity flowing through our lower cost channels compared with 2021. Additionally, revenue increases in
our access solutions includes a much higher percentage of program design, which carries a higher margin than the delivery of the actual
messages. In addition, our gross margin percentage increased to 62% in 2022 from 58% in 2021 for the reasons discussed above in the cost
of revenues section.

Operating Expenses

Operating expenses increased to $51.3 million
for the year ended December 31, 2022, from $35.3 million for the year ended December 31, 2021, an increase of approximately
45%. The increase in sales, general and administrative expense was $5.8 million. The detail by major category is reflected in the table
below.

20

Within the operating expenses, there were a variety
of increases, the largest of which was in stock-based compensation, a non-cash expense, which increased by $10.3 million from $5.5 million
in 2021 to $15.7 million in 2022. Stock-based compensation is awarded to all full-time employees upon their start of employment as well
as to directors, officers and certain key employees to provide an equity-based incentive to maintain and enhance the performance and profitability
of the Company. In the fourth quarter of 2021, we issued a significant market-based grant with a requisite service period of less than
3 years. The expense for the market-based award is amortized over the expected service period. The impact on 2022 expense for such market-based
award in 2022 was $6.1 million.

The increase in other sales, general, and administrative
expense is due to higher salaries, wages, and benefits and other human resources related costs as a result of the expansion of, and investment
in, our team to support additional growth. During 2022, we hired 12 net additional employees.

Net Income (Loss)

We finished the year ended December 31, 2022
with a net loss of $11.4 million, compared to net income of $0.4 million during the year ended December 31, 2021. The reasons for
specific components are discussed above. Overall, we had an increase in revenue and gross margin partially offset by increased operating
expenses. In addition, the income or loss in both periods included significant noncash items. We had $18.0 million in noncash operating
expenses in 2022 compared to $7.6 million in noncash operating expenses in 2021.

Liquidity and Capital Resources

Historically, our primary sources of liquidity have been cash receipts
from customers and proceeds from equity offerings. As of December 31, 2022, we had total current assets of $98.6 million, compared
with current liabilities of $8.4 million, resulting in working capital of $90.2 million and a current ratio of 12 to 1. This compares
with a working capital balance of $105.7 million and a current ratio of 12 to 1 at December 31, 2021. This decrease in working capital,
as discussed in more detail below, is primarily the result of the common stock buyback program.

Following is a table with summary data from the
consolidated statement of cash flows for the years ended December 31, 2022 and 2021, as presented.

Our operating activities provided $10.7 million
in the year ended December 31, 2022, as compared with approximately $0.7 million provided by operating activities in the year ended
December 31, 2021. We had a net loss of $11.4 million for 2022, but non-cash expenses of $18.1 million and working capital generated
by the collection of receivables offset the loss. The cash provided in 2021 was the result of our net income and non-cash expenses, which
together totaled $8.0 million. This was partially offset by the increased working capital, totaling $7.3 million, required to support
higher revenues.

We used $58.2 million in investing activities
in 2022, compared with $0.5 million in 2021. In addition to the $2.0 million investment in EvinceMed technology, we purchased $55.9 million
in Treasury bills in 2022 with maturity dates in 2023. The 2021 amount included $0.4 million of capitalized software development costs
related to our proprietary systems and $0.1 million of tangible property, primarily personal computers.

21

We used $19.0 million in financing activities
in the year ended December 31, 2022. We repurchased 1,214,398 shares of common stock for $20.0 million. This was partially offset
by the collection of $1.1 million related to the exercise of stock options during the period. The cash provided in 2021 was the result
of our underwritten offering in 2021, which generated $70.7 million, as well as from the proceeds of option exercises, which generated
$4.9 million. This was partially offset by the payment of contingent consideration related to previous acquisitions of $1.6 million.

We believe that funds generated from operations,
together with existing cash and short term investments, will be sufficient to finance our current operations and planned growth for the
next twelve months. We do not anticipate the need to raise any additional cash to support operations. However, we could require additional
debt or equity financing if we were to make any significant acquisitions for cash during that period. In addition, we believe we can generate
the cash needed to operate beyond the next 12 months from operations.

Off Balance Sheet Arrangements

As of December 31, 2022, there were no off-balance
sheet arrangements.

Critical Accounting Estimates

Our discussion and analysis of our financial condition
and results of operations are based upon the Consolidated Financial Statements, which have been prepared in accordance with U.S. generally
accepted accounting principles. The preparation of these financial statements requires us to make estimates, judgments and assumptions
that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and
expenses during the periods presented. Actual results could differ from those estimates and assumptions. See Note 2 to the Consolidated
Financial Statements for a discussion of significant accounting policies. Actual results may differ materially from these estimates due
to different assumptions or conditions. The following areas all require the use of subjective or complex judgments, estimates and assumptions:

Revenue
Recognition

Recognition of revenue requires evidence of a
contract, probable collection of proceeds, and completion of substantially all performance obligations. We use a 5-step model to recognize
revenue. These steps are: identify the contract with a customer, identify the performance obligations in the contract, determine the transaction
price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when or as the performance
obligations are satisfied.

Revenues are primarily generated from content
delivery activities in which we deliver financial, clinical, or brand messaging through a distribution network of eprescribers and electronic
health record technology providers (channel partners), directly to consumers, or from reselling services that complement the business.
This content delivery for a customer is referred to as a program. Unless otherwise specified, revenue is recognized based on the selling
price to customers.

Our contracts are generally all less than one
year and the primary performance obligation is delivery of messages or other forms of content, but the contract may contain additional
services. Additional services may include program design, which is the design of the content delivery program, set up, and reporting.
We consider set up and reporting services to be complimentary to the primary performance obligation and recognized through performance
of the delivery of content. We consider the design of the programs and related consulting services to be performance obligations separate
from the delivery of messages.

22

As the content is distributed through the platform
and network of channel partners (a transaction), these transactions are recorded, and revenue is recognized, over time as the distributions
occur. Revenue for transactions can be realized based on a price per message, a price per redemption, as a flat fee occurring over a period
of time, or upon completion of the program, depending on the client contract. We recognize setup fees that are required for integrating
client offerings and campaigns into the rule-based content delivery system and network over the life of the initial program, based either
on time, or units delivered, depending upon which is most appropriate in the specific situation. Should a program be cancelled before
completion, the balance of set up revenue is recognized at the time of cancellation, as set up fees are nonrefundable. Additionally, we
also recognize revenue for providing program performance reporting and maintenance, either by our company directly delivering reports
or by providing access to our online reporting portal that the client can utilize. This reporting revenue is recognized over time as the
messages are delivered. Program design, which is the design of the content delivery program, and related consulting services are recognized
as services are performed.

In some instances, we license certain of our software
applications in arrangements that do not include other performance obligations. In those instances, we record license revenue when the
software is delivered for use to the license. In instances where our contracts included Software as a Service, the revenue is recognized
over the subscription period as services are delivered to the customer.

In some instances, we also resell messaging solutions
that are available through channel partners that are complementary to the core business and client base. These partner specific solutions
are frequently similar to our own solutions and revenue recognition for these programs is the same as described above. In instances where
we sell solutions on a commission basis, net revenue is recognized based on the commission-based revenue split that we receive. There
were no programs recorded on a net basis in the years presented. In instances where we resell these messaging solutions and have all financial
risk and significant operation input and risk, we record the revenue based on the gross amount sold and the amount paid to the channel
partner as a cost of sales.

Cost of Revenues

The primary cost of revenue is revenue share expense.
Based on the volume of transactions that are delivered through the channel partner network, we provide a revenue share to compensate the
partner for their promotion of the campaign. Revenue shares are a negotiated percentage of the transaction fees and can also be specific
to special considerations and campaigns. In addition, we pay revenue share to ConnectiveRx as a result of a 2014 legal settlement in an
amount equal to the greater of 10% of financial messaging distribution revenues generated through our integrated network, or $0.37 per
financial message distributed through our integrated network. As our solution mix has expanded and our revenues have grown, financial
messaging has become a smaller percentage of our revenues and these payments to ConnectiveRx, a smaller portion of our revenue share.
The contractual amount due to the channel partners is recorded as an expense at the time the message is distributed.

Intangible Assets

Intangible assets are stated at cost. Finite-lived
assets are being amortized over their estimated useful lives of fifteen to seventeen years for patents, eight years for customer relationships,
fifteen years for tradenames, two to four years for covenants not to compete, and three to ten years for software and websites, all using
the straight-line method. These assets are evaluated when there is a triggering event. There was no impairment of our intangible assets
in either year presented.

Goodwill

We evaluate goodwill for impairment during our
fiscal fourth quarter, or more frequently if an event occurs or circumstances change. We determined there was no impairment as goodwill
had a fair value comfortably in excess of its carrying value.

23

Stock-based Compensation

We use the fair value method to account for stock-based
compensation. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over
the period during which services are rendered. The fair value of each award is estimated on the date of each grant.

For options, fair value is estimated using the
Black-Scholes option pricing model that uses the following assumptions. Estimated volatilities are based on the historical volatility
of our stock over the same period as the expected term of the options. The expected term of options granted represents the period of time
that options granted are expected to be outstanding. We use historical data to estimate option exercise behavior and to determine this
term. The risk-free rate used is based on the U.S. Treasury yield curve in effect at the time of the grant using a time period equal to
the expected option term. We have never paid dividends and do not expect to pay any dividends in the future.

The Black-Scholes option valuation model and other
existing models were developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully
transferable. These option valuation models require the input of, and are highly sensitive to, subjective assumptions including the expected
stock price volatility. Our stock options have characteristics significantly different from those of traded options, and changes in the
subjective input assumptions could materially affect the fair value estimate.

For restricted stock units, the fair value is
based on the market value of the Company’s common stock on the date of grant. For market based restricted stock units, fair value
is estimated using a Monte Carlo simulation model. This valuation technique includes estimating the movement of stock prices and the effects
of volatility, interest rates and dividends.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to improve consistent application
and simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies
and amends existing guidance. ASU 2019-12 was effective for us as of January 1, 2021. The adoption of this standard did not have a material
effect on our financial position, results of operations, or cash flows.

Not Yet Adopted

ASU Topic 2021-08 Business Combinations (Topic
805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract
liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with
ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. The standard is effective for the Company’s fiscal
year beginning January 1, 2023, with early adoption permitted. The adoption of this standard is not expected to have a material effect
on our financial position, results of operations, or cash flows.

Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We
are a digital health technology company enabling care-focused engagement between life sciences organizations, healthcare providers, and
patients at critical junctures throughout the patient care journey. Connecting over 60% of U.S. healthcare providers and millions of
their patients through an intelligent technology platform embedded within a proprietary point-of-care network, OptimizeRx helps
patients start and stay on their medications.

Historically,
our revenue was generated primarily through the facilitation of financial messages to health care providers via their EHR and ePrescribe
systems using the OptimizeRx proprietary network to solve the ever-increasing communication barriers between pharmaceutical representatives
and healthcare providers that have presented in the rapidly changing healthcare industry. Over time, as the demand for communication
of an increasing variety of different health information between life science companies, providers, and patients continued to rise, our
platform has expanded to encompass additional solutions that enable healthcare providers to access information for patients at the point
of care. These solutions include brand messaging, therapeutic support messaging, brand support, and innovative patient engagement services,
all of which now make up a significant portion of our total revenue.

Our
strategic focus remains on growing our existing client base and generating greater and more consistent revenues in part through our continued
shift in our business model toward enterprise level engagements with recurring revenue streams, while also broadening our platform with
innovative proprietary solutions such as our TelaRep™ virtual communication solution and our AI-powered real-world evidence solution
which uses sophisticated proprietary algorithms to derive additional revenue from our existing network. In addition, we have continued
to expand our team in preparation for future growth aspirations, which may be supplemented with future acquisitions and other strategic
collaborations and investments. Our strategy for driving revenue growth is also expected to work in tandem with our efforts to increase
margin and profitability using the aforementioned recurring revenue models that have inherently higher margins.

As
the business continues to grow, operating expenses are expected to increase much more slowly than revenue.

The
following discussion includes an analysis and comparison of the Company’s 2021 and 2020 fiscal year results of operations, liquidity
and capital resources, and critical accounting policies.

COVID-19
Business Update

The
COVID-19 pandemic created unprecedented challenges in the healthcare industry which increased the demand for unique solutions ranging
from access to accurate and timely information to increasing the accessibility of medications and care management. We also leveraged
our digital platform to provide telehealth capabilities for healthcare providers to adapt to COVID-19 restrictions.

At
the beginning of the pandemic, we transitioned our global workforce to working remotely to maintain the health and safety of our employees.
Governments of cities, states, and countries globally imposed restrictions on travel and business operations, which curtailed various
means of performing business and marketing activities such as the attending of health IT conferences. We are conducting business with
certain modifications to employee travel and employee work locations. In addition, we have implemented health and safety policies in
our offices to enable our employees to safely return to traditional working arrangements. We will continue to actively monitor the situation
and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we
determine are in the best interests of our employees, customers, and shareholders.

18

The
COVID-19 pandemic did not have an adverse impact on our financial condition and results of operations in 2021, and we currently do not
expect the results of future operations and our near-and-long-term financial position and growth prospects to be negatively impacted
by the pandemic given the nature of the business and the increased demand for digital health solutions.

Information
pertaining to risk factors as it relates to the COVID-19 pandemic can be found in Item 1A. Risk Factors.

Key
Performance Indicators

We
developed a number of key performance indicators, and intend to monitor these going forward, to evaluate our business, measure our performance,
identify trends affecting our business and make strategic decisions.

Average
revenue per top 20 pharmaceutical manufacturer. Average revenue per top 20 pharmaceutical manufacturer is calculated by taking the
total revenue the company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies
by 2020 revenue” over the last twelve months, divided by the total number of the aforementioned pharmaceutical manufacturers that
our solutions helped support over that time period. The Company uses this metric to monitor its progress in “landing and expanding”
with key customers within its largest customer vertical and believe it also provides investors with a transparent way to chart our progress
in penetrating this important customer segment. The increase in the average in 2021 as compared to 2020 is primarily the result of our
focus on signing larger and more comprehensive deals.

Percent
of top 20 pharmaceutical manufacturers that are customers. Percent of top 20 pharmaceutical manufacturers that are customers is calculated
by taking the number of revenue generating customers that are pharmaceutical manufacturers listed in Fierce Pharma’s “The
top 20 pharma companies by 2020 revenue” over the last 12 months, which is then divided by 20—which is the number of pharmaceutical
manufacturers included in the aforementioned list. The Company uses this metric to monitor its progress in penetrating key customers
within its largest customer vertical and believes it also provides investors with a transparent way to chart our progress in penetrating
this important customer segment. The increase from 2020 to 2021 reflects continued penetration into this core customer base and reflects
two new top 20 pharma customers in 2021.

19

Percent
of total revenue attributable to top 20 pharmaceutical manufacturers. Percent of total revenue attributable to top 20 pharmaceutical
manufacturers is calculated by taking the total revenue the company recognized through pharmaceutical manufacturers listed in Fierce
Pharma’s “The top 20 pharma companies by 2020 revenue” over the last twelve months, divided by our consolidated revenue
over the same period. The Company uses this metric to monitor its progress in “landing and expanding” with key customers
within its largest customer vertical and believes it also provides investors with a transparent way to chart our progress in penetrating
this important customer segment. Our revenue from this core group of customers grew slightly faster than our overall revenue, enabling
us to maintain a similar percentage of revenues from this group.

Net
revenue retention. Net revenue retention is a comparison of revenue generated from all customers in the previous twelve-month period
to total revenue generated from the same customers in the following twelve-month period (i.e., excludes new customer relationships for
the most recent twelve-month period). The Company uses this metric to monitor its ability to improve its penetration with existing customers
and believes it also provides investors with a metric to chart our ability to increase our year-over-year penetration and revenue with
existing customers. The retention rate in 2020 was increased as a result of unplanned disruption to the industry caused by the Covid-19
pandemic. Our customers shifted funds previously designated for in-person events to digital marketing throughout 2020. By 2021, while
the pandemic continued, there was less disruption and customers shifted some funds back to traditional channels.

Revenue
per average full-time employee. We define revenue per average full-time employee as total revenue over the last twelve months divided
by the average number of employees over the last twelve months (i.e., the average between the number of FTEs at the end of the reported
period and the number of FTEs at the end of the same period of the prior year). The Company uses this metric to monitor the productivity
of its workforce and its ability to scale efficiently over time and believes the metric provides investors with a way to chart our productivity
and scalability. Our revenue rate grew more quickly than our increase in the number of employees, allowing us to achieve more productivity.
We were able to do this by taking advantage of the expandable technology infrastructure that we have built over the years.

20

Results
of Operations for the Years Ended December 31, 2021 and 2020

Net
Revenue

Our
net revenue increased 42% to $61.3 million for the year ended December 31, 2021 from $43.3 million for the year ended December 31, 2020.
This increase resulted from a combination of factors, including the shift to enterprise contracts, increased pharmaceutical brands, an
increased distribution network, and growth in our messaging solutions. We expect continued revenue growth in 2022 as a result of the
foundations laid in 2020 and 2021.

Because
the pharmaceutical industry is dominated by large companies with multiple brands, our revenue is concentrated in a relatively small number
of companies. We have approximately 50 pharmaceutical companies as customers. However, we had only one and three customers that individually
represented more than 10% of our revenues in 2021 and 2020, respectively.

Cost
of Revenues

Our
total cost of revenues, composed primarily of revenue share expense paid to our network partners, increased in the year ended December
31, 2021 compared to the year ended December 31, 2020 due to the increase in revenues. Our cost of revenues as a percentage of revenue
decreased from approximately 44% in the year ended December 31, 2020 to approximately 42% in the year ended December 31, 2021.

This
decrease in our cost of revenues as a percentage of revenue resulted primarily from solution mix, specifically the increase in services
we provide that are not subject to revenue share.

Gross
Margin

Our
gross margin, which is the difference between our revenues and our cost of revenues, increased from 2020 to 2021 as a result of the increased
revenue. In addition, our gross margin percentage increased from 56% in 2020 to 58% in 2021 for the reasons discussed above in the cost
of revenues section. We expect our gross margins to be in the 57% to 60% range in 2022.

Operating
Expenses

Operating
expenses increased to $35.3 million for the year ended December 31, 2021, from $26.2 million for the year ended December 31, 2020, an
increase of approximately 34%. The detail by major category is reflected in the table below. Certain 2020 expenses were reclassified
in the table to be comparable to the 2021 presentation.

The
main drivers for the overall increase in operating expenses in 2021 was our focus on staffing and scaling our company to foster and be
able to support our planned growth.

Within
the operating expenses, there were a variety of increases, the largest of which was in compensation expense as a result of additional
staff added in 2020 and 2021, including related benefits. During 2021, we added to our staff in several key areas, including product
development, sales, and IT, and the addition of our General Counsel and Chief Compliance Officer, and Chief Financial Officer/ Chief
Operating Officer. During 2021 we hired 27 net additional employees. We expect our compensation expense to continue to increase in 2022,
as a result of the full year impact of 2021 hires and new hires in 2022.

21

Stock
based compensation increased by $2.3 million from $3.2 million in 2020 to $5.5 million in 2021 primarily because of more employees and
an increase in our stock price. There is a relationship between the price of the stock at the time of either the option grant or the
RSU grant and the fair value of the option or RSU, resulting in a higher cost when the stock price is higher. Our stock price was higher,
on average, in 2021 than 2020. In addition, we hired 3 high level executives, which tend to have larger awards, and awarded the CEO a
market-based grant with a requisite service period of less than 3 years.

Contractors
and consultants decreased from 2020 to 2021 as we added staff to fill roles previously filled by consultants or contractors.

Professional
fees increased by 16% in 2021 compared with 2020. With the assistance of an outside legal firm, we undertook a comprehensive governance
review of our bylaws, board charters, equity compensation plan, and overall corporate policies. The cost of this review, partially offset
by a reduction in the cost of our audit, accounts for the increase.

Board
compensation increased slightly from 2020 to 2021 due to the full year impact of an increase in the size of our board in 2020. This represents
only the cash portion of the compensation.

Investor
relations increased in 2021as a result of hiring a new investor relations firm, as well as increased activity in the area.

Our
advertising and promotion costs increased from 2020 to 2021 as a result of a resumption in the sponsorship of, and attendance at, conferences.
These activities were drastically reduced in 2020 due to the global pandemic. These activities were increased in 2021 once a Covid vaccine
was developed.

Technology
infrastructure costs increased due to continued investment in our operating systems to facilitate new products as well as the implementation
of additional software products to increase efficiency and information dissemination.

Data
costs increased as we have purchased more data, primarily to aid in our selling effort and allow customers to target their messages more
appropriately based on this data, thereby increasing our ability to charge premium prices for more highly targeted messages.

Integration
and exclusivity costs, which represent payments to partners for access and/or exclusivity, increased because of new agreements signed.
These payments are usually made in lump sums and expensed over the term of the contracts. These expenses are an important part of our
ability to expand our network. These costs increased in 2021, as we signed more contracts and contracts with larger payments.

Depreciation
and amortization in 2021 remained relatively similar to 2020. We expect depreciation and amortization expense in 2022 to increase from
2021 levels as we continue to invest in the growth of our business.

Office,
facility, and other miscellaneous costs increased from 2020 to 2021. The main reason for the change related to a higher level of activity
with more employees, as well as hiring expenses, including recruiter fees.

Travel
increased slightly from 2020 to 2021 as we reopened travel gradually in the second half of the year. In 2020, we had three months of
normal travel pre-pandemic followed by very little the remainder of the year, while 2021 had lower levels than normal spread more throughout
the year.

Net
Income (Loss)

We
finished the year ended December 31, 2021 with net income of $0.4 million, as compared to a net loss of $2.2 million during the year
ended December 31, 2020. The reasons for specific components are discussed above. Overall, we had an increase in revenue and gross margin
partially offset by increased operating expenses.. In addition, the income or loss in both periods included significant noncash items.
We had $5.2 million in noncash operating expenses in 2020 and $7.6 million in noncash operating expenses in 2021.

22

Quarterly
Financial Information

Following
is a table of our quarterly operating results for 2021 for information purposes.

Sum
of four quarterly per share amounts does not equal annual total due to rounding and the mechanics of the weighted average shares outstanding
calculation.

23

Following
is a table of our quarterly operating results for 2020 for information purposes.

Sum
of four quarterly per share amounts does not equal annual total due to rounding and the mechanics of the weighted average shares outstanding
calculation.

Liquidity
and Capital Resources

As
of December 31, 2021, we had total current assets of $115.1 million, compared with current liabilities of $9.4 million, resulting in
working capital of $105.7 million and a current ratio of 12 to 1. This compares with the working capital balance of $22.9 million and
the current ratio of 3.3 to 1 at December 31, 2020. This increase in working capital, as discussed in more detail below, is primarily
the result of a public offering of common stock in 2021.

Following
is a table with summary data from the consolidated statement of cash flows for the years ended December 31, 2021 and 2020, as presented.

Our
operating activities provided $0.7 million in the year ended December 31, 2021, as compared with approximately $6.3 million used in operating
activities in the year ended December 31, 2020. The cash provided in 2021 was the result of our net income and non-cash expenses, which
together totaled $8.0 million. This was partially offset by the increased working capital, totaling $7.3 million, required to support
higher revenues. The cash used in 2020 was primarily the result of the increased working capital required to support higher revenues,
totaling $9.7 million. In addition, we had a net loss of $2.2 million, but non-cash expenses included in that loss of $5.6 million, resulting
in net cash generated of $3.4 million between the two, which offset the investment in working capital.

24

We
used $0.5 million in investing activities in 2021, compared with $0.1 million in 2020, primarily as the result of purchase of both tangible
and intangible assets. The 2021 amount included $0.4 million of capitalized software development costs related to our proprietary systems
and $0.1 million of tangible property, primarily personal computers. The majority of the 2020 investments were in computers, with small
additional amounts of capitalized software.

Financing
activities provided $73.9 million in the year ended December 31, 2021. The cash provided in 2021 was the result of our underwritten offering
in 2021, which generated $70.7 million, as well as from the proceeds of option exercises, which generated $4.9 million. This was partially
offset by the payment of contingent consideration related to previous acquisitions of $1.6 million. We used cash of $1.9 million in 2020
as the result of the payment of contingent consideration related to previous acquisitions of $4.4 million, partially offset by the proceeds
from option exercises of $2.5 million.

We
believe that funds generated from operations, together with existing cash, will be sufficient to finance our current operations and planned
growth for the next twelve months. We do not anticipate the need to raise any additional cash to support operations. However, we could
require additional debt or equity financing if we were to make any significant acquisitions for cash during that period. In addition,
we believe we can generate the cash needed to operate beyond the next 12 months from operations.

Off
Balance Sheet Arrangements

As
of December 31, 2021, there were no off-balance sheet arrangements.

Critical
Accounting Policies

A
“critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and
results, and requires management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates
about the effect of matters that are inherently uncertain.

Our
accounting policies are discussed in detail in the footnotes to our financial statements included in this Annual Report on Form 10-K
for the year ended December 31, 2021; however, we consider our critical accounting policies to be those related to revenue recognition,
calculation of revenue share expense (cost of revenues), stock-based compensation, capitalization and related amortization of intangible
assets and impairment of assets. Following is a summary of those policies.

Revenue
Recognition

Recognition
of revenue requires evidence of a contract, probable collection of proceeds, and completion of substantially all performance obligations.
We use a 5-step model to recognize revenue. These steps are: identify the contract with a customer, identify the performance obligations
in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and
recognize revenue when or as the performance obligations are satisfied.

Revenues
are primarily generated from content delivery activities in which we deliver financial, clinical, or brand messaging through a distribution
network of eprescribers and electronic health record technology providers (channel partners), directly to consumers, or from reselling
services that complement the business. This content delivery for a customer is referred to as a program. Unless otherwise specified,
revenue is recognized based on the selling price to customers.

25

Our
contracts are generally all less than one year and the primary performance obligation is delivery of messages or other forms of content,
but the contract may contain additional services. Additional services may include program design, which is the design of the content
delivery program, set up, and reporting. We consider set up and reporting services to be complimentary to the primary performance obligation
and recognized through performance of the delivery of content. We consider the design of the programs and related consulting services
to be performance obligations separate from the delivery of messages.

As
the content is distributed through the platform and network of channel partners (a transaction), these transactions are recorded, and
revenue is recognized, over time as the distributions occur. Revenue for transactions can be realized based on a price per message, a
price per redemption, as a flat fee occurring over a period of time, or upon completion of the program, depending on the client contract.
We recognize setup fees that are required for integrating client offerings and campaigns into the rule-based content delivery system
and network over the life of the initial program, based either on time, or units delivered, depending upon which is most appropriate
in the specific situation. Should a program be cancelled before completion, the balance of set up revenue is recognized at the time of
cancellation, as set up fees are nonrefundable. Additionally, we also recognize revenue for providing program performance reporting and
maintenance, either by our company directly delivering reports or by providing access to our online reporting portal that the client
can utilize. This reporting revenue is recognized over time as the messages are delivered. Program design, which is the design of the
content delivery program, and related consulting services are recognized as services are performed.

In
some instances, we license certain of our software applications in arrangements that do not include other performance obligations. In
those instances, we record license revenue when the software is delivered for use to the license. In instances where our contracts included
Software as a service, the revenue is recognized over the subscription period as services are delivered to the customer.

In
some instances, we also resell messaging solutions that are available through channel partners that are complementary to the core business
and client base. These partner specific solutions are frequently similar to our own solutions and revenue recognition for these programs
is the same as described above. In instances where we sell solutions on a commission basis, net revenue is recognized based on the commission-based
revenue split that we receive. There were no programs recorded on a net basis in the years presented. In instances where we resell these
messaging solutions and have all financial risk and significant operation input and risk, we record the revenue based on the gross amount
sold and the amount paid to the channel partner as a cost of sales.

Cost
of Revenues

The
primary cost of revenue is revenue share expense. Based on the volume of transactions that are delivered through the channel partner
network, we provide a revenue share to compensate the partner for their promotion of the campaign. Revenue shares are a negotiated percentage
of the transaction fees and can also be specific to special considerations and campaigns. In addition, we pay revenue share to ConnectiveRx
as a result of a 2014 legal settlement in an amount equal to the greater of 10% of financial messaging distribution revenues generated
through our integrated network, or $0.37 per financial message distributed through our integrated network. As our solution mix has expanded
and our revenues have grown, financial messaging has become a smaller percentage of our revenues and these payments to ConnectiveRx,
a smaller portion of our revenue share. The contractual amount due to the channel partners is recorded as an expense at the time the
message is distributed.

Intangible
Assets

Intangible
assets are stated at cost. Finite-lived assets are being amortized over their estimated useful lives of fifteen to seventeen years for
patents, eight years for customer relationships, fifteen years for tradenames, four years for covenants not to compete, and three to
four years for software and websites, all using the straight-line method. These assets are evaluated when there is a triggering event.
There was no impairment of our intangible assets in either year presented.

26

Goodwill

We
evaluate goodwill for impairment during our fiscal fourth quarter, or more frequently if an event occurs or circumstances change. We
determined there was no impairment as goodwill had a fair value comfortably in excess of its carrying value.

Stock-based
Compensation

We
use the fair value method to account for stock-based compensation. The fair value of the equity instrument is charged directly to compensation
expense and additional paid-in capital over the period during which services are rendered. The fair value of each award is estimated
on the date of each grant.

For
options, fair value is estimated using the Black-Scholes option pricing model that uses the following assumptions. Estimated volatilities
are based on the historical volatility of our stock over the same period as the expected term of the options. The expected term of options
granted represents the period of time that options granted are expected to be outstanding. We use historical data to estimate option
exercise behavior and to determine this term. The risk-free rate used is based on the U.S. Treasury yield curve in effect at the time
of the grant using a time period equal to the expected option term. We have never paid dividends and do not expect to pay any dividends
in the future.

The
Black-Scholes option valuation model and other existing models were developed for use in estimating the fair value of traded options
that have no vesting restrictions and are fully transferable. These option valuation models require the input of, and are highly sensitive
to, subjective assumptions including the expected stock price volatility. Our stock options have characteristics significantly different
from those of traded options, and changes in the subjective input assumptions could materially affect the fair value estimate.

For
restricted stock units, the fair value is based on the market value of the Company’s common stock on the date of grant. For market
based restricted stock units, fair value is estimated using a Monte Carlo simulation model. This valuation technique includes estimating
the movement of stock prices and the effects of volatility, interest rates and dividends.

Recently
Issued Accounting Pronouncements

In
December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 is
intended to improve consistent application and simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the
general principles in Topic 740 and clarifies and amends existing guidance. ASU 2019-12 was effective for us as of January 1, 2021. The
adoption of this standard did not have a material effect on our financial position, results of operations, or cash flows.

Not
Yet Adopted

ASU
Topic 2021-08 Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,
which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer
on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. The
standard is effective for the Company's fiscal year beginning January 1, 2023, with early adoption permitted. The Company is currently
evaluating the effect of this pronouncement on its Consolidated Financial Statements, but it is not expected to have a material impact.