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OptimizeRx Corp
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<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Optimizer Systems, LLC was formed in the
State of Michigan on January 31, 2006. It then became a corporation in the State of Michigan on October 22, 2007 and changed its
name to OptimizeRx Corporation. On April 14, 2008, RFID, Ltd., a Colorado corporation, consummated a reverse merger by entering
into a share exchange agreement with the stockholders of OptimizeRx Corporation, pursuant to which the stockholders of OptimizeRx
Corporation exchanged all of the issued and outstanding capital stock of OptimizeRx Corporation for 1,256,958 shares of common
stock of RFID, Ltd., representing 100% of the outstanding capital stock of RFID, Ltd. As of April 30, 2008, RFID’s officers
and directors resigned their positions and RFID changed its business to OptimizeRx’s business. On April 15, 2008, RFID,
Ltd.’s corporate name was changed to OptimizeRx Corporation. On September 4, 2008, a migratory merger was completed,
thereby changing the state of incorporation from Colorado to Nevada, resulting in the current corporate structure, in which OptimizeRx
Corporation, a Nevada corporation, is the parent corporation, and OptimizeRx Corporation, a Michigan corporation, is a wholly-owned
subsidiary (together, "OptimizeRx" and "the Company").</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The wholly-owned subsidiary, OptimizeRx
Corporation, is a technology solutions company targeting the health care industry. Their objective is to bring better access to
better care through connecting patients, physicians and pharmaceutical manufacturers through technology. Once defined as a marketing
and advertising company through its consumer website, OptimizeRx is maturing as a technology solutions provider as it launched
its direct to physician solution, SampleMD. SampleMD allows physicians to search, print and send available sample trial vouchers
and/or co-pay coupons on behalf of their patients. The SampleMD solution can either sit on the doctor’s desktop or can be
integrated into the ePrescribing or Electronic Medical Records applications. OptimizeRx solutions provide pharmaceutical manufacturers
either a direct to consumer and/or direct to physician channels for communicating and promoting their products. It provides health
care providers a means to provide sampling and coupons without having to physically store samples on site, and it provides better
access and affordability to the patients.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Basis of Presentation</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"><font style="letter-spacing: 0pt">The
accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should
be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed
with the SEC as of and for the year ended December 31, 2012. In the opinion of management, all adjustments necessary for the financial
statements to be not misleading for the interim periods presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the full year.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Accounting Basis</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company uses the accrual basis of accounting
and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted
a December 31 fiscal year end.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"><font style="font-weight: normal"><u>Principles
of Consolidation</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The financial statements
reflect the consolidated results of OptimizeRx Corporation (a Nevada corporation) and its wholly owned subsidiary OptimizeRx Corporation
(a Michigan corporation). All material inter-company transactions have been eliminated in the consolidation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: center"><b>OPTIMIZERx CORPORATION</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="letter-spacing: -0.1pt"><b>NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="letter-spacing: -0.1pt"><b>MARCH 31,
2013</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: left"><font style="letter-spacing: 0pt">NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"><font style="font-weight: normal"><u>Cash
and Cash Equivalents</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">For purposes of
the accompanying financial statements, the Company considers all highly liquid instruments with an initial maturity of three months
or less to be cash equivalents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Fair Value of Financial Instruments</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The fair value
of cash, accounts receivable, prepaid expenses, patent rights, web development costs, accounts payable, accounts payable –
related party, accrued expenses and deferred revenue approximates the carrying amount of these financial instruments due to their
short-term nature. The fair value of long-term debt, which approximates its carrying value, is based on current rates at which
the Company could borrow funds with similar remaining maturities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Accounts Receivable and Allowance for
Doubtful Accounts</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accounts receivable are reported at realizable
value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue is recorded.
The Company has a standardized approach to estimate and review the collectability of its receivables based on a number of factors,
including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of
the estimation process related to allowances for doubtful accounts. In addition, the Company regularly assesses the state of its
billing operations in order to identify issues, which may impact the collectability of these receivables or reserve estimates.
Bad debt expense was $0 for the three months ended March 31, 2013 and 2012, respectively. The allowance for doubtful accounts was
$0 as of March 31, 2013 and December 31, 2012, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Property and Equipment</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The capital assets
are being depreciated over their estimated useful lives, three to seven years using the straight-line method of depreciation for
book purposes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Revenue Recognition</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All revenue is recognized when it is earned.
Revenues are generated either through the Company’s website activities, in which we earn revenue from advertising and lead
generation activities, or from our SampleMD activities, which include offering setup within the systems and our offers, coupons,
and vouchers that enable our customers to save money on medical products and services. The Company’s processes are monitored
by third parties who collect revenues from clients on a per activity basis and report and forward the revenue to the Company’s
account.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Research and Development</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company’s
key members are part of a continual research development team and monitor new technologies, trends, services and partnerships that
can provide the Company with additional services, value to healthcare and pharmaceutical industries and to the patients it serves.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.25in 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company seeks
to educate team members through understanding of all market dynamics that have the potential to affect the business both short
term and longer term. The primary goal is to help patients better afford and access the medicines their doctor prescribes, as well
as other healthcare products and services they need. Based on this, the Company continually seeks better ways to meet this mission
through technology, better user experiences and new ways to engage industries to provide new support for patients needing their
products. The Company is always seeking new services and solutions to offer. At this time, the three current platforms provide
robust opportunities and growth during the next five years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: center"><b>OPTIMIZERx CORPORATION</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="letter-spacing: -0.1pt"><b>NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="letter-spacing: -0.1pt"><b>MARCH 31,
2013</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: left"><font style="letter-spacing: 0pt">NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Income Taxes</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Income taxes are computed using the asset
and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on
the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted
tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence,
are not expected to be realized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Concentration of Credit Risks</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company maintains
its cash and cash equivalents in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts; however, amounts in excess of the federally insured limit may be at risk if the bank experiences
financial difficulties.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Use of Estimates</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The preparation
of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Estimates and assumptions have been made in determining the depreciable lives
of such assets and the allowance for doubtful accounts receivable. Actual results could differ from these estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Earnings Per Common and Common Equivalent
Share</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The computation
of basic earnings per common share is computed using the weighted average number of common shares outstanding during the year.
The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year
plus common stock equivalents which would arise from the exercise of warrants outstanding using the treasury stock method and the
average market price per share during the year. Options, warrants and convertible preferred stock which are common stock equivalents
are not included in the diluted earnings per share calculation for March 31, 2013 and 2012, respectively, since their effect is
anti-dilutive.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Impairment of Long-Lived Assets</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company continually
monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable.
When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining
whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the
future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess
of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount
or the fair value less costs to sell.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Recently Issued Accounting Guidance</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company does
not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results
of operations, financial position or cash flow.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Basis of Presentation</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"><font style="letter-spacing: 0pt">The
accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should
be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed
with the SEC as of and for the year ended December 31, 2012. In the opinion of management, all adjustments necessary for the financial
statements to be not misleading for the interim periods presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the full year.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Accounting Basis</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company uses the accrual basis of accounting
and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted
a December 31 fiscal year end.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"><font style="font-weight: normal"><u>Principles
of Consolidation</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The financial statements
reflect the consolidated results of OptimizeRx Corporation (a Nevada corporation) and its wholly owned subsidiary OptimizeRx Corporation
(a Michigan corporation). All material inter-company transactions have been eliminated in the consolidation.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"><font style="font-weight: normal"><u>Cash
and Cash Equivalents</u></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">For purposes of
the accompanying financial statements, the Company considers all highly liquid instruments with an initial maturity of three months
or less to be cash equivalents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Fair Value of Financial Instruments</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The fair value
of cash, accounts receivable, prepaid expenses, patent rights, web development costs, accounts payable, accounts payable –
related party, accrued expenses and deferred revenue approximates the carrying amount of these financial instruments due to their
short-term nature. The fair value of long-term debt, which approximates its carrying value, is based on current rates at which
the Company could borrow funds with similar remaining maturities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Accounts Receivable and Allowance for
Doubtful Accounts</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accounts receivable are reported at realizable
value, net of allowances for doubtful accounts, which is estimated and recorded in the period the related revenue is recorded.
The Company has a standardized approach to estimate and review the collectability of its receivables based on a number of factors,
including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of
the estimation process related to allowances for doubtful accounts. In addition, the Company regularly assesses the state of its
billing operations in order to identify issues, which may impact the collectability of these receivables or reserve estimates.
Bad debt expense was $0 for the three months ended March 31, 2013 and 2012, respectively. The allowance for doubtful accounts was
$0 as of March 31, 2013 and December 31, 2012, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Property and Equipment</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The capital assets
are being depreciated over their estimated useful lives, three to seven years using the straight-line method of depreciation for
book purposes.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Revenue Recognition</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">All revenue is recognized when it is earned.
Revenues are generated either through the Company’s website activities, in which we earn revenue from advertising and lead
generation activities, or from our SampleMD activities, which include offering setup within the systems and our offers, coupons,
and vouchers that enable our customers to save money on medical products and services. The Company’s processes are monitored
by third parties who collect revenues from clients on a per activity basis and report and forward the revenue to the Company’s
account.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Research and Development</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company’s
key members are part of a continual research development team and monitor new technologies, trends, services and partnerships that
can provide the Company with additional services, value to healthcare and pharmaceutical industries and to the patients it serves.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.25in 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company seeks
to educate team members through understanding of all market dynamics that have the potential to affect the business both short
term and longer term. The primary goal is to help patients better afford and access the medicines their doctor prescribes, as well
as other healthcare products and services they need. Based on this, the Company continually seeks better ways to meet this mission
through technology, better user experiences and new ways to engage industries to provide new support for patients needing their
products. The Company is always seeking new services and solutions to offer. At this time, the three current platforms provide
robust opportunities and growth during the next five years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Income Taxes</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Income taxes are computed using the asset
and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on
the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted
tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence,
are not expected to be realized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Concentration of Credit Risks</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company maintains
its cash and cash equivalents in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts; however, amounts in excess of the federally insured limit may be at risk if the bank experiences
financial difficulties.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Use of Estimates</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The preparation
of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Estimates and assumptions have been made in determining the depreciable lives
of such assets and the allowance for doubtful accounts receivable. Actual results could differ from these estimates.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Earnings Per Common and Common Equivalent
Share</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The computation
of basic earnings per common share is computed using the weighted average number of common shares outstanding during the year.
The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year
plus common stock equivalents which would arise from the exercise of warrants outstanding using the treasury stock method and the
average market price per share during the year. Options, warrants and convertible preferred stock which are common stock equivalents
are not included in the diluted earnings per share calculation for March 31, 2013 and 2012, respectively, since their effect is
anti-dilutive.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Impairment of Long-Lived Assets</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company continually
monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable.
When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining
whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the
future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess
of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount
or the fair value less costs to sell.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Recently Issued Accounting Guidance</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company does
not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results
of operations, financial position or cash flow.</p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">Prepaid expenses
consisted of the following as of March 31, 2013 and December 31, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt; width: 54%">Insurance</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">5,617</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">6,437</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 5.4pt">Rent</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5,049</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5,049</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt">Consulting</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">21,670</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">31,672</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; padding-left: 5.4pt">Legal</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">25,000</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">Total prepaid expenses</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">32,336</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">68,158</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt; width: 54%">Insurance</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">5,617</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">6,437</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 5.4pt">Rent</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5,049</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5,049</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt">Consulting</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">21,670</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">31,672</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; padding-left: 5.4pt">Legal</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">25,000</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">Total prepaid expenses</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">32,336</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">68,158</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company owned equipment recorded at
cost which consisted of the following as of March 31, 2013 and December 31, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: center"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; padding-left: 5.4pt; width: 54%">Computer equipment</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">22,360</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">22,360</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">Furniture and fixtures</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">11,088</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">11,088</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt">     Subtotal</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">33,448</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">33,448</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">Accumulated depreciation</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(14,170</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(12,763</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">    Property and equipment, net</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">19,278</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">20,685</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Depreciation expense was $1,407 and $1,300
for the three months ended March 31, 2013 and 2012, respectively.</p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; padding-left: 5.4pt; width: 54%">Computer equipment</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">22,360</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">22,360</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">Furniture and fixtures</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">11,088</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">11,088</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt">     Subtotal</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">33,448</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">33,448</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">Accumulated depreciation</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(14,170</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(12,763</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">    Property and equipment, net</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">19,278</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">20,685</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
1407
1300
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has capitalized costs in developing
their website and web-based products, which consisted of the following as of March 31, 2013 and December 31, 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; padding-left: 5.4pt; width: 54%">OptimizeRx web development</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">154,133</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">154,133</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">SampleMD web development</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">602,517</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">602,517</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; padding-left: 5.4pt">    Subtotal, web development costs</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">756,650</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">756,650</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-left: 5.4pt">Accumulated amortization</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(342,924</td>
<td style="text-align: left">)</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(310,352</td>
<td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 1pt; padding-left: 5.4pt">Impairment</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(59,083</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(59,083</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">    Web development costs, net</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">354,643</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">387,215</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Amortization is recorded using the straight-line
method over a period of five years. The Company determined that the original OptimizeRx website was no longer useful so the remaining
unamortized balance of $59,083 was impaired as of December 31, 2010. Amortization expense for the web development costs was
$32,572 and $31,047 for the three months ended March 31, 2013 and 2012, respectively.</p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; padding-left: 5.4pt; width: 54%">OptimizeRx web development</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">154,133</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">154,133</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">SampleMD web development</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">602,517</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">602,517</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; padding-left: 5.4pt">    Subtotal, web development costs</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">756,650</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">756,650</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-left: 5.4pt">Accumulated amortization</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(342,924</td>
<td style="text-align: left">)</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(310,352</td>
<td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 1pt; padding-left: 5.4pt">Impairment</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(59,083</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(59,083</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">    Web development costs, net</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">354,643</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">387,215</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
P5Y
59083
59083
32572
31047
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 26, 2010, the Company acquired
from an officer and shareholder the technical contributions and assignment of all exclusive rights to and for the SampleMD patent
currently in process in exchange for 300,000 shares of common stock to be granted at the discretion of the seller in addition to
200,000 stock options valued at $360,000. The shares were valued on the grant date at $570,000 and have been recorded as a payable
to the related party.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has capitalized costs in purchasing
the SampleMD patent, which consisted of the following as of March 31, 2013 and December 31, 2012:</p>
<p style="font: 10pt/6pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; padding-left: 5.4pt; width: 54%">Patent rights and intangible assets</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">960,368</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">930,000</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">Accumulated amortization</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(150,896</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(136,764</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">    Patent rights and intangible assets, net</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">809,472</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">793,236</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company began amortizing the patent,
using the straight-line method over the estimated useful life of 17 years, once it was put into service in July 2010. In 2013,
the Company began incurring costs related to defense of the patent. These costs have been capitalized and will be amortized using
the straight-line method over the remaining useful life of the original patent. Amortization expense was $14,132 and $13,676 for
the three months ended March 31, 2013 and 2012, respectively.</p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; padding-left: 5.4pt; width: 54%">Patent rights and intangible assets</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">960,368</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">930,000</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">Accumulated amortization</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(150,896</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(136,764</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">    Patent rights and intangible assets, net</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">809,472</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">793,236</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 14, 2013, the Company hired
a new CEO. The employment agreement requires annual compensation of $175,000 that will be accrued and deferred until at least January
1, 2014. Additionally, the agreement requires the issuance of 2,000,000 options with an exercise price of $1.00 for a term of five
years. The options are not exercisable until at least January 1, 2014. The Company has accrued $43,750, or three months compensation,
at March 31, 2013.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Accrued expenses consisted of the following
as of March 31, 2013 and December 31, 2012:</p>
<p style="font: 10pt/6pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt/6pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; padding-left: 5.4pt; width: 54%">Accrued compensation</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">43,750</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">0</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">Accrued audit fees</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">6,000</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">  Total accrued expenses</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">43,750</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">6,000</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; padding-left: 5.4pt; width: 54%">Accrued compensation</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">43,750</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">0</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">Accrued audit fees</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">6,000</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">  Total accrued expenses</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">43,750</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">6,000</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has signed several contracts
with customers for either the distribution or redemption of coupons. The payments are not taken into revenue until either the coupon
is distributed to a patient or the coupon has been redeemed depending on the specific contract. The distributions and redemptions
are tracked by the company’s administrative tool. Additionally, customer setup contracts that have been paid in full are
deferred until the Company has completed the obligations of the contacts. Deferred revenue was $80,772 and $49,252 as of March 31,
2013 and December 31, 2012, respectively.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">During the year
ended December 31, 2010, the Company acquired from an officer and shareholder the technical contributions and assignment of
all exclusive rights to and for the SampleMD patent currently in process in exchange for 300,000 shares of common stock to be granted
at the discretion of the seller in addition to 200,000 stock options valued at $360,000. The shares were valued on the grant date
at $570,000 and have been recorded as a payable to the related party.</p>
<p style="margin: 0pt"></p>
300000
200000
360000
570000
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">OptimizeRx Corporation has 500,000,000
shares of $.001 par value common stock authorized as of December 31, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There were 14,232,496 and 14,232,496 common
shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 1, 2012, the Company entered
into a consulting agreement with North Coast Advisors, Inc. for various services. The Company agreed to issue 40,000 shares of
common stock as of the date of the contract. However, these shares were not issued until July 12, 2012. The Company also agreed
to issue an additional 40,000 shares every six months in alignment with the agreement renewal up to the two years of the agreement.
The first 40,000 shares were valued at the Company’s common stock price as of the date of the contract, which was $1.12/share
and has been expensed. No additional shares were issued as of March 31, 2013.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Series A Preferred</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended December 31,
2008, 35 preferred shares were issued for $3,500,000. Issuance costs totaled $515,000 resulting in net proceeds of $2,985,000.
The 35 shares are convertible to 3,500,000 shares of common stock and bear a 10% cumulative dividend. In addition, there was a
warrant issued to purchase 6,000,000 shares of common stock at an exercise price of $2 for a period of seven years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The holders of the preferred stock are
entitled to semi-annual dividends payable on the stated value of the Series A preferred stock at a rate of 10% per annum, which
shall be cumulative, and accrue daily from the issuance date. The dividends may be paid in cash or shares of the Company's common
stock at management’s discretion. If after the conversion eligibility date, the market price for the common stock for any
ten consecutive trading days in which the stock trades for over $2 per share and trading exceeds 100,000 shares per day, the preferred
shareholders can be required to convert their shares to common stock. Each share of Series A preferred stock shall also be convertible
at the option of the holder into that number of shares of common stock of the Company at the stated value of such share at a $1
conversion price.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The holder may cause this conversion at
the time the shares are eligible for resale by the holder. The conversion price is subject to adjustment as hereinafter provided,
at any time, or from time to time upon the terms and in the manner hereinafter set forth in the shareholder agreement. There is
no conversion expiration date, however, the holder must provide 30 days notice for the registration of the conversion.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="letter-spacing: -0.1pt"><b>OPTIMIZERx
CORPORATION</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="letter-spacing: -0.1pt"><b>NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="letter-spacing: -0.1pt"><b>MARCH 31,
2013</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: left">NOTE 11 – PREFERRED
STOCK (CONTINUED)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Series A Preferred Continued</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 12, 2010, the Company’s
Board declared and issued 236,598 common shares as payment for all cumulative and current semi-annual dividends. On November 16,
2010, the Company’s Board declared and issued 173,922 common shares for its semi-annual dividend payment. On March 25,
2011, the Company’s Board declared and issued 176,768 common shares for its semi-annual dividend payment. On September 21,
2011, the Company's Board declared and issued 156,306 common shares for its semi-annual dividend payment. The Company has undeclared
dividends that were due in February and September 2012 totaling $350,000 as of December 31, 2012 and undeclared dividends of $175,000
due in February 2013.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><u>Series B Preferred</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended December 31,
2010, 15 preferred shares were issued for $1,500,000. The 15 shares are convertible to 1,500,000 shares of common stock and bear
a 10% cumulative dividend. In addition, there was a warrant issued to purchase 3,000,000 shares of common stock at an exercise
price of $3 for a period of seven years.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preferred stock was issued for $1,500,000
less associated issuance costs of $350,000 for net proceeds of $1,150,000. Additionally, 3,000,000 common stock warrants were issued
with the preferred stock. Based on the fair values of the preferred stock and common stock warrants on the issue date, $341,100
was allocated to preferred stock and $1,158,900 was allocated to the common stock warrants. Equity issuance costs of $350,000 were
allocated to the preferred stock.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the quarter ended September 30,
2011, 15 preferred shares were issued to an investor for $1,500,000. The 15 shares are convertible to 1,500,000 shares of common
stock and bear a 10% cumulative dividend. In addition, there was a warrant issued to purchase 1,000,000 shares of common stock
at an exercise price of $3 for a period of seven years. Based on the fair values of the preferred stock and common stock warrants
on the issue date, $855,460 was allocated to preferred stock and $644,540 was allocated to the common stock warrants. See Note
12.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The holders of the preferred stock are
entitled to semi-annual dividends payable on the stated value of the Series B preferred stock at a rate of 10% per annum, which
shall be cumulative, and accrue daily from the issuance date. The dividends may be paid in cash or shares of the Company's common
stock at management’s discretion. If after the conversion eligibility date, the market price for the common stock for any
ten consecutive trading days in which the stock trades for over $2 per share and trading exceeds 100,000 shares per day, the preferred
shareholders can be required to convert their shares to common stock. Each share of Series B preferred stock shall also be convertible
at the option of the holder into that number of shares of common stock of the Company at the stated value of such share at a $1.50
conversion price.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The holder may cause this conversion at
the time the shares are eligible for resale by the holder. The conversion price is subject to adjustment as hereinafter provided,
at any time, or from time to time upon the terms and in the manner hereinafter set forth in the shareholder agreement. On March 25,
2011, the Company’s Board declared and issued 75,758 common shares for its semi-annual dividend payment. On September 21,
2011, the Company's Board declared and issued 66,988 common shares for its semi-annual dividend payment. The Company has undeclared
dividends that were due in February and September 2012 totaling $150,000 as of December 31, 2012 and undeclared dividends of $75,000
due in February 2013.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for employee stock-based
compensation in accordance with the guidance of ASC Topic 718: Compensation - Stock Compensation, which requires all share-based
payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their
fair values.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company follows ASC Topic 505-50, formerly
EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with
Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance
with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted
for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can
be more clearly determined. 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On May 31, 2011, the Company issued
285,000 stock options to 3 employees at an exercise price of $1.00. The options were valued on the grant date using the Black-Scholes
option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 218%, risk-free interest rate
of 1.68% and expected life of 60 months. The total value of the options was $320,585. The options vest over one year. The Company
recognized share-based compensation expense of $187,005 during the year ended December 31, 2011. The remaining balance of $133,580
was recognized over the first five months of 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the quarter ended December 31,
2011, the Company issued 20,000 stock options to 2 employees at an exercise price of $1.00. The options were valued on the grant
date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of
204-205%, risk-free interest rate of 0.88-0.93% and expected life of 60 months. The total value of the options was $19,270. The
options vest over one year. <font style="color: black; background-color: white"> </font><font style="background-color: white">The
Company<font style="color: black"> recognized share-based compensation expense of $2,480 during the year ended </font>December
31, 2011 a<font style="color: black">nd $4,818 during the </font>quarter ended March 31, 2012<font style="color: black">.
The remaining balance was recognized during the remainder of 2012. </font></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 21, 2011, the Company
issued 100,000 stock options to an individual at an exercise price of $0.73. The options were valued on the grant date using the
Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of 205%, risk-free
interest rate of 0.92% and expected life of 60 months. <font style="background-color: white"> The Company recognized
expenses of $8,346 during the year ended December 31, 2011 and $25,039 during the quarter ended March 31,
2012. The remaining balance was recognized during the remainder of 2012.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the quarter ended March 31,
2012, the Company issued 50,000 stock options to 4 non-employees at an exercise price of $0.89. The options were valued on the
grant date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility
of 198%, risk-free interest rate of 0.65% and expected life of 48 months. The total value of the options was $35,091. The options
vest over 4 months. The Company recognized share-based compensation expense of $17,546 during the three months ended March 31,
2012. The balance was expensed during the three months ended June 30, 2012.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="letter-spacing: -0.1pt"><b>OPTIMIZERx
CORPORATION</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="letter-spacing: -0.1pt"><b>NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><font style="letter-spacing: -0.1pt"><b>MARCH 31,
2013</b></font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: left">NOTE 12 – STOCK
OPTIONS AND WARRANTS (CONTINUED)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the quarter ended December 31,
2012, the Company issued 25,000 stock options to a non-employee at an exercise price of $1.58. The options were valued on the grant
date using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 0%, expected volatility of
200%, risk-free interest rate of 0.67% and expected life of 60 months. The total value of the options was $40,007. The options
vest over 1 year. The Company recognized share-based compensation expense of $8,335 during the three months ended December 31,
2012 and $10,002 during the three months ended March 31, 2013. The remaining balance will be recognized over the remainder of 2013.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had the following options outstanding
as of March 31, 2013:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td colspan="3"> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">Number of Options</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">Weighted average exercise price</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: left; width: 31%; font-size: 10pt"><font style="font-size: 10pt">Outstanding, January 1, 2012</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 31%">405,000</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 30%">1.01</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Granted - 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">75,000</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.17</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Exercised - 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Expired - 2012</font></td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(455,000</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(.98</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">    Balance, December 31, 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">25,000</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.58</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Granted - 2013</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Exercised - 2013</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Expired - 2013</font></td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">    Balance, March 31, 2013</font></td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left"> </td>
<td style="border-bottom: black 2.5pt double; text-align: right">25,000</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">1.58</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company had the following warrants
outstanding as of March 31, 2013:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td colspan="3"> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">Number of Warrants</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">Weighted average exercise price</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: left; width: 31%; font-size: 10pt"><font style="font-size: 10pt">Outstanding, January 1, 2012</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 31%">14,344,434</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 30%">2.41</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Granted - 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Exercised - 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Expired - 2012</font></td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">    Balance, December 31, 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">14,344,434</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2.41</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Granted - 2013</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Exercised - 2013</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Expired - 2013</font></td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">    Balance, March 31, 2013</font></td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left"> </td>
<td style="border-bottom: black 2.5pt double; text-align: right">14,344,434</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">2.41</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td colspan="3"> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">Number of Options</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">Weighted average exercise price</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: left; width: 31%; font-size: 10pt"><font style="font-size: 10pt">Outstanding, January 1, 2012</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 31%">405,000</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 30%">1.01</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Granted - 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">75,000</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.17</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Exercised - 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Expired - 2012</font></td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(455,000</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(.98</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">    Balance, December 31, 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">25,000</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1.58</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Granted - 2013</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Exercised - 2013</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Expired - 2013</font></td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">    Balance, March 31, 2013</font></td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left"> </td>
<td style="border-bottom: black 2.5pt double; text-align: right">25,000</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">1.58</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td colspan="3"> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">Number of Warrants</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">Weighted average exercise price</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: left; width: 31%; font-size: 10pt"><font style="font-size: 10pt">Outstanding, January 1, 2012</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: right; width: 31%">14,344,434</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 30%">2.41</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Granted - 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Exercised - 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Expired - 2012</font></td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">    Balance, December 31, 2012</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">14,344,434</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2.41</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Granted - 2013</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Exercised - 2013</font></td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Expired - 2013</font></td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">    Balance, March 31, 2013</font></td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left"> </td>
<td style="border-bottom: black 2.5pt double; text-align: right">14,344,434</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">2.41</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company signed a lease for new office
space on December 1, 2011 at an approximate rent of $5,000 per month. The new offices are in Rochester, Michigan. The lease is
for three years with an option to renew for an additional two years at approximately $5,200 per month with six months advance notice
to exercise the option. Minimum annual rent is as follows for the initial term of the lease:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 45%">
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: left; width: 68%; font-size: 10pt"><font style="font-size: 10pt"> Year ended December 31, 2013</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 27%">60,591</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left">2014</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">55,542</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left">2015</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Total lease commitment</font></td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">116,133</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 45%">
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; width: 1%"> </td>
<td style="text-align: left; width: 68%; font-size: 10pt"><font style="font-size: 10pt"> Year ended December 31, 2013</font></td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 27%">60,591</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left">2014</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">55,542</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left"> </td>
<td style="text-align: left">2015</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">0</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left"> </td>
<td style="text-align: left; font-size: 10pt"><font style="font-size: 10pt">Total lease commitment</font></td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">116,133</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">The Company had
three major customers that accounted for 72% and four major customers that accounted for 74% of the Company’s revenues for
the three months ended March 31, 2013 and 2012, respectively. The Company expects to continue to maintain these relationships
with the customers.</p>
<p style="margin: 0pt"></p>
0.72
0.74
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the three months ended March 31,
2013, the Company incurred a net loss of approximately $105,000 and therefore has no tax liability. The Company began operations
in 2007 and has previous net operating loss carry-forwards of $13,843,000 through December 31, 2012. The cumulative loss of
$13,948,000 will be carried forward and can be used through the year 2033 to offset future taxable income. In the future, the cumulative
net operating loss carry-forward for income tax purposes may differ from the cumulative financial statement loss due to timing
differences between book and tax reporting.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The provision for Federal income tax consists
of the following for the three months ended March 31, 2013 and 2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: justify"> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Federal income tax benefit attributable to:</td>
<td style="font-family: Arial, Helvetica, Sans-Serif"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; width: 54%">  Current operations</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">36,000</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">102,000</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left">  Valuation allowance</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(36,000</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(102,000</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left">      Net provision for federal income tax</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">0</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">0</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The cumulative tax effect at the expected
rate of 34% of significant items comprising our net deferred tax amount is as follows as of March 31, 2013 and December 31,
2012:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: justify"> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Deferred tax asset attributable to:</td>
<td style="font-family: Arial, Helvetica, Sans-Serif"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; width: 54%">  Net operating loss carryover</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">4,742,000</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">4,706,000</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left">  Valuation allowance</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(4,742,000</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(4,706,000</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left">      Net deferred tax asset</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">0</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">0</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Due to the change in ownership provisions
of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $13,948,000 for Federal income tax reporting
purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited
as to use in future years.</p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: justify"> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Federal income tax benefit attributable to:</td>
<td style="font-family: Arial, Helvetica, Sans-Serif"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; width: 54%">  Current operations</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">36,000</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">102,000</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left">  Valuation allowance</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(36,000</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(102,000</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left">      Net provision for federal income tax</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">0</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">0</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: justify"> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Deferred tax asset attributable to:</td>
<td style="font-family: Arial, Helvetica, Sans-Serif"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td>
<td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="text-align: left; width: 54%">  Net operating loss carryover</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">4,742,000</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">4,706,000</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt; text-align: left">  Valuation allowance</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(4,742,000</td>
<td style="padding-bottom: 1pt; text-align: left">)</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">(4,706,000</td>
<td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 2.5pt; text-align: left">      Net deferred tax asset</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">0</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">0</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
13948000
13843000
2033-01-01
0.34
105000
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 14, 2013, the Company hired
a new CEO. The employment agreement requires annual compensation of $175,000 that will be accrued and deferred until at least January
1, 2014. Additionally, the agreement requires the issuance of 2,000,000 options with an exercise price of $1.00 for a term of five
years. The options are not exercisable until at least January 1, 2014, and are only exercisable after reaching certain financial
terms and conditions. Due to these restrictions, no accrual has been made for the issuance of these options.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Operating expenses consisted of the following
for the three months ended March 31, 2013 and 2012, respectively:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2.5in; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt; width: 54%">Advertising</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">3,340</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">11,270</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-left: 5.4pt">Professional fees</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">53,098</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">38,003</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt">Consulting</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">20,407</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">6,615</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-left: 5.4pt">Salaries, wages and benefits</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">375,071</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">306,895</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt">Rent</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">15,148</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">16,918</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-left: 5.4pt">Depreciation and amortization</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">48,111</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">46,023</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt">Stock-based compensation</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">10,002</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">127,548</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 5.4pt">Revenue share expense</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">40,203</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">General and administrative</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">208,792</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">77,050</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">Total Operating Expenses</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">774,172</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">630,322</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" align="center" style="border-collapse: collapse; font-size: 10pt; width: 65%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2013</td>
<td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; text-align: center">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt; width: 54%">Advertising</td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">3,340</td>
<td style="text-align: left; width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="text-align: left; width: 1%">$</td>
<td style="text-align: right; width: 20%">11,270</td>
<td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-left: 5.4pt">Professional fees</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">53,098</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">38,003</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt">Consulting</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">20,407</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">6,615</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-left: 5.4pt">Salaries, wages and benefits</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">375,071</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">306,895</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt">Rent</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">15,148</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">16,918</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; padding-left: 5.4pt">Depreciation and amortization</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">48,111</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">46,023</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-left: 5.4pt">Stock-based compensation</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">10,002</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">127,548</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 5.4pt">Revenue share expense</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">40,203</td>
<td style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0</td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,204)">
<td style="padding-bottom: 1pt; text-align: left; padding-left: 5.4pt">General and administrative</td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">208,792</td>
<td style="padding-bottom: 1pt; text-align: left"> </td>
<td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: black 1pt solid; text-align: left"> </td>
<td style="border-bottom: black 1pt solid; text-align: right">77,050</td>
<td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 2.5pt; text-align: left; padding-left: 5.4pt">Total Operating Expenses</td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">774,172</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td>
<td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: black 2.5pt double; text-align: left">$</td>
<td style="border-bottom: black 2.5pt double; text-align: right">630,322</td>
<td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; letter-spacing: -0.1pt; text-align: justify">In accordance with
ASC 855-10, the Company has analyzed its operations subsequent to March 31, 2013 through the date these financial statements
were issued and has determined that it does not have any material subsequent events to disclose in these financial statements other
than the events described above.</p>
<p style="margin: 0pt"></p>
5617
6437
5049
5049
21670
31672
0
25000
22360
22360
11088
11088
33448
33448
-14170
-12763
154133
154133
602517
602517
756650
756650
-342924
-310352
354643
387215
960368
930000
-150896
-136764
809472
793236
43750
0
0
6000
43750
6000
25000
405000
25000
1.58
1.01
1.58
0
75000
0
1.17
0
0
0
0
0
-455000
0
-.98
14344434
14344434
14344434
14344434
2.41
2.41
2.41
2.41
0
0
0
0
0
0
0
0
0
0
0
0
60591
55542
0
116133
36000
102000
-36000
-102000
0
0
4742000
4706000
-4742000
-4706000
0
0
3340
11270
53098
38003
20407
6615
375071
306895
15148
16918
10002
127548
208792
77050
40203
0
2006-01-31
2007-10-22
1256958
1.00
0
0
0
0
P3Y
P7Y
P17Y
14132
13676
300000
200000
360000
570000
175000
2014-01-01
P5Y
2000000
1
40000
1.12
40000
P2Y
35
3500000
515000
2985000
3500000
0.10
6000000
3000000
2
3
P7Y
P7Y
236598
173922
176768
156306
15
1500000
1500000
0.10
350000
1150000
3000000
341100
1158900
75758
66988
150000
75000
P1Y
P4M
P1Y
1.58
0.89
1.00
0.73
25000
50000
100000
25039
8346
40007
35091
285000
320585
10002
187005
133580
8335
20000
1.00
19270
5000
5200
P3Y
P2Y
14232496
<p style="margin: 0pt"><font style="font-size: 10pt">On January 10, 2013, the Company entered into a Securities Redemption Option
Agreement with Vicis Capital Master Fund (“Vicis”) that provides the Company with an option to purchase all of the
outstanding shares and derivative securities held by Vicis for total payment of nine million dollars ($9,000,000). The shares
and derivative securities include the Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Common Stock,
and warrants to purchase shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock held by Vicis.
The Company’s option expires on December 31, 2013 and may be extinguished if Vicis sells its securities before the Company
exercises its option.</font></p>
<p style="margin: 0pt"></p>
9000000