What changed in this filing

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Item 1A. Risk Factors

2022-03-28 compared with 2021-03-29 · 1402 added, 1241 removed, 219 unchanged (92% of the section changed)

business is subject to numerous risks and uncertainties, many of which are beyond our control, including those highlighted in the section

titled “Risk Factors” immediately following this summary.

These risks include, among others, the following:

have in the past been adversely affected by COVID-19 and may continue to be adversely affected by COVID-19 and/or governmental responses

thereto, supply chain issues relating thereto;

are currently unprofitable, have recently generated net losses, and we may incur losses in the future;

may need additional financing in the future, which may not be available on favorable terms, if at all;

may not be able to manage our future growth;

of our competitors are better established and have resources significantly greater than we do;

will need to expand our member base or our profit margins to attain profitability;

face risks associated with our operations within the pharmaceutical distribution market;

are dependent on our current management;

rely on third party contracts, which may not be renewed or may be terminated;

are currently facing and may in the future face difficulties in sourcing products and inventory due to a variety of causes;

have in the past, and may in the future, not be able to sell our inventory, at or above the price we acquired such inventory for,

and have in the past, and may in the future, be forced to write-down inventory and certain of our other assets which may have a material

adverse effect on our balance sheet;

have in the past, and may in the future, not receive products or receive refunds for deposited amounts and have experience losses

in connection with such deposits;

may be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could

require us to pay significant damages and limit our ability to operate;

business and operations depend on the proper functioning of information systems, critical facilities and distribution networks and

a disruption, cyber-attack, failure or destruction of such networks, systems, or technologies may disrupt our business or result

in liability;

may be losses or unauthorized access to or releases of confidential information, including personally identifiable information, that

could subject the Company to significant reputational, financial, legal and operational consequences;

face risks associated with our business in the telehealth market, including risks associated with legal challenges, relationships

with third parties and affiliated professionals, our network of qualified providers, competition for services;

new technologies,

failure to develop widespread brand awareness and regulatory risks;

certificate of incorporation limits the liability of our officers and directors and provides for indemnification rights, mandatory

forum selection provisions and limits the ability of stockholders to call special meetings of stockholders;

incur significant costs to ensure compliance with U.S.

and NASDAQ Capital Market reporting and corporate governance requirements;

may not be able to comply with NASDAQ’s continued listing standards;

changes that affect our distribution channels could harm our business;

fraud laws are often vague and uncertain, exposing us to potential liability;

and expanded laws or regulations could have a material adverse effect on our business operations, cash flows or future prospects;

public health crisis involving the abuse of prescription opioid pain medication could have a material negative effect on our business;

Consolidation

healthcare industry may negatively impact our results of operations;

have identified material weaknesses in our internal control over financial reporting and controls and procedures;

may not be sufficient liquidity in the market for our securities in order for investors to sell their shares.

The market price of

our common stock may continue to be volatile;

may experience dilution to future equity sales, the exercise or conversion of outstanding convertible securities or future transactions;

Chief Executive Officer and President are our two largest stockholders and, as a result, they can exert control over us and have

actual or potential interests that may differ from yours;

associated with the JOBS Act and our status as an emerging growth company;

associated with future acquisitions, including unknown liabilities and difficulty integrating such acquisitions;

security attacks and website problems;

litigation, government investigations, and other proceedings that may adversely affect our business and results of operations

should be aware that there are substantial risks for an investment in our common stock.

You should carefully consider these risk

factors before you decide to invest in our common stock.

any of the following risks were to occur, such as our business, financial condition, results of operations or other prospects,

any of these could materially affect our likelihood of success.

If that happens, the market price of our common stock, if any,

could decline, and prospective investors would lose all or part of their investment in our common stock.

You should carefully consider these risk factors

before you decide to invest in our common stock.

any of the following risks were to occur, such as our business, financial condition, results of operations or other prospects, any of

these could materially affect our likelihood of success.

If that happens, the market price of our common stock, if any, could decline,

and prospective investors would lose all or part of their investment in our common stock.

Related to Our Business Operations

business, financial condition and results of operations are subject to various risks and uncertainties, including those described

This section discusses factors that, individually or in the aggregate, could cause our actual results to differ materially

from expected and historical results.

Our business, financial condition or results of operations could be materially adversely

affected by any of these risks.

business, financial condition and results of operations are subject to various risks and uncertainties, including those described below.

This section discusses factors that, individually or in the aggregate, could cause our actual results to differ materially from expected

and historical results.

Our business, financial condition or results of operations could be materially adversely affected by any of these

It is not possible to predict or identify all such factors.

Consequently, the following description

of Risk Factors is not a complete discussion of all potential risks or uncertainties applicable to our business.

have been, and may in the future be, adversely affected by the global COVID-19 pandemic, the duration and economic, governmental

and social impact of which is difficult to predict, which may significantly harm our business, prospects, financial condition

and operating results.

Consequently, the following description of Risk Factors is not a complete

discussion of all potential risks or uncertainties applicable to our business.

have been, and may in the future be, adversely affected by the global COVID-19 pandemic, the duration and economic, governmental and

social impact of which is difficult to predict, which may significantly harm our business, prospects, financial condition and operating

2020 and continuing into 2022, there has been a widespread worldwide impact from the COVID-19 pandemic, and we have been, and may in

the future be, adversely affected as a result.

Numerous government regulations and public advisories, as well as shifting social behaviors,

have temporarily limited or closed non-essential transportation, government functions, business activities, and person-to-person interactions,

and the duration of such trends is difficult to predict.

The outbreak of the COVID-19 coronavirus, the global response to such coronavirus,

including travel restrictions and quarantines that governments are instituting, has adversely affected our operations, may continue to

have an adverse effect on our operations, and/or may have a significant negative impact on our results of operations, the production

of pharmaceuticals and our ability to timely obtain pharmaceuticals for resale.

Currently, we are experiencing reductions to, and interruptions

in, the delivery of supply chain pharmaceuticals that are having a negative impact on our wholesalers and certain technology outsourcing

in India and the Philippines.

The outbreak of the COVID-19 coronavirus, the global response to such coronavirus, including

travel restrictions and quarantines that governments instituted during 2020 and 2021, adversely affected our operations, and future restrictions

or governmental requirements may have an adverse effect on our operations in the future, and/or may have a significant negative impact

on our results of operations, the production of pharmaceuticals and our ability to timely obtain pharmaceuticals for resale.

we are experiencing reductions to, and interruptions in, the delivery of supply chain pharmaceuticals that are having a negative impact

on our wholesalers and certain technology outsourcing in India and the Philippines and we are also having a hard time finding qualified

staff, due to the pandemic.

Notwithstanding the above disruptions, our results of operations have not, to date, been materially adversely

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However, if we continue to experience production difficulties, quality control problems or further shortages

in supply of pharmaceuticals in the future, this could harm our business and results of operations, any of which could have a material

adverse effect on our operations and the value of our securities.

In addition, employee sicknesses and remote working environments, and

the potential negative effect thereof on productivity and internal controls, related to the coronavirus and the federal, state and local

responses to such virus, could materially impact our consolidated results for the year for 2021 and beyond.

in supply of pharmaceuticals or personnel in the future, this could harm our business and results of operations, any of which could have

a material adverse effect on our operations and the value of our securities.

In addition, employee sicknesses and remote working environments,

and the potential negative effect thereof on productivity and internal controls, related to the coronavirus and the federal, state and

local responses to such virus, could materially impact our consolidated results for the year 2022 and beyond.

The COVID-19 outbreak could

also restrict our access to capital such as credit facilities and lead to material nonrecurring charges, write-downs, impairments and

The Company is actively and continually monitoring the pandemic’s effect on our businesses and endeavoring to

adapt quickly in real time to meet the rapidly-changing demands of our Customers and Suppliers.

mitigate the spread of COVID-19, we implemented travel restrictions and remote working arrangements for most of our employees

in order to minimize physical contact, and we implemented additional sanitation and personal protection measures.

Company’s employees started working remotely around March 17, 2020, and as a result, productivity did not drop, if productivity

drops it could impact revenues and profitability.

The Company’s corporate office is closed through June 30, 2021, at the

earliest, unless the current situation improves.

These measures might not fully mitigate COVID-19 risks to our workforce

and we could experience unusual levels of absenteeism that might impair operations and delay delivery of products.

pandemic affects product manufacturing, supply and transport availability and cost.

The pandemic reduces demand for some products

due to delays or cancellations of elective medical procedures, consumer self-isolation and business closures, among other reasons.

The COVID-19 pandemic also influences shortages of some products, with product allocation resulting in delivery delays for customers.

Additionally, as a result of the recent coronavirus outbreak, various states have adopted

price gouging laws.

Our failure to comply with such laws and regulations could subject us to claims, penalties, fines or lawsuits.

The Company is actively and continually monitoring the pandemic’s effect on our businesses and endeavoring to adapt quickly

in real time to meet the rapidly-changing demands of our Customers and Suppliers.

mitigate the spread of COVID-19, we implemented sanitation and personal protection measures.

Company’s corporate office reopened on January 3, 2022, in accordance to Center for Disease Control and Prevention (CDC) guidance,

allowing only management and certain key operational employees to return to the office, while hourly employees remain working remotely

until further notice.

These measures might not fully mitigate COVID-19 risks to our workforce, and we could experience unusual

levels of absenteeism that might impair operations and delay delivery of products.

The COVID-19 pandemic affects product manufacturing,

supply and transport availability and cost.

The pandemic has in the past reduced demand for some products due to delays or cancellations

of elective medical procedures, consumer self-isolation and business closures, among other reasons, which may become issues again in

the future if the number of persons infected does not continue to decline.

The COVID-19 pandemic also influences shortages of some products,

with product allocation resulting in delivery delays for customers.

Additionally, as a result of

the coronavirus outbreak, various states have adopted price gouging laws.

Our failure to comply with such laws and regulations could

subject us to claims, penalties, fines or lawsuits.

have been impacted and may be further impacted by COVID-19 as follows:

a result of COVID-19, various states have adopted price gouging laws.

Our failure to comply with such laws and regulations

could subject us to claims, penalties, fines or lawsuits;

price fluctuations as a result of supply and demand issues caused by COVID-19 have caused values of inventory to decrease,

which has had a direct impact on gross profit and has resulted in a direct write-off of inventory value;

Our failure to comply with such laws and regulations could

subject us to claims, penalties, fines or lawsuits;

price fluctuations as a result of supply and demand issues caused by COVID-19 have caused values of inventory to decrease, which

has had a direct impact on gross profit and has resulted in a direct write-off of certain inventory value;

Terms with customers may be altered or extended, which would have an impact on current ratios and cash flow;

was a material impairment with respect to goodwill and may affect right-of-use assets as the evaluation of the long-term impact

have previously been material impairments with respect to goodwill and may be future material

impairments and/or effects on right-of-use assets as the evaluation of the long-term impact

to delivery of service or physical space assessments changes.

have been shortages in the supply of generic pharmaceuticals which impact our revenues as

our transaction fees revenue rely on the sale of generic pharmaceuticals through our marketplace

have been labor market challenges in hiring staff

may cause further disruptions to our business, including, but not limited to:

one or more of our customers to file for bankruptcy protection or shut down, including

as a result of broader economic disruption;

health system or health plan subscription agreement fees generated, as well as visit

fees, by customers or providers, as a result of funding constraints related to loss of

revenue or employment;

one or more of our customers to file for bankruptcy protection or shut down, including as a result of broader economic disruption;

health system or health plan subscription agreement fees generated, as well as visit fees, by customers or providers, as a result

of funding constraints related to loss of revenue or employment;

impacting collections of accounts receivable;

impacting our ability to facilitate the provision of our telehealth services due to unpredictable

impacting our ability to forecast our business’s financial outlook;

regulatory uncertainty on our telehealth services, if certain restrictions on reimbursement

or the practice of medicine across state lines are reintroduced at some point in the

impacting our ability to facilitate the provision of our telehealth services due to unpredictable demand;

impacting our ability to forecast our business’s financial outlook;

regulatory uncertainty on our telehealth services, if certain restrictions on reimbursement or the practice of medicine across state

lines are reintroduced at some point in the future;

our business, results of operations and financial condition.

ongoing impacts of the pandemic may cause a general economic slowdown or recession in one or more markets, disruptions and volatility

in global capital markets and other broad and adverse effects on the economy, business conditions, commercial activity and the

healthcare industry.

ongoing impacts of the pandemic may cause, or make more likely, a general economic slowdown or recession in one or more markets, disruptions

and volatility in global capital markets and other broad and adverse effects on the economy, business conditions, commercial activity

and the healthcare industry.

The pandemic might impact our business operations, financial position and results of operation in unpredictable

ways that depend on highly-uncertain future developments, such as determining the effectiveness of current or future government

actions to address the public health or economic impacts of the pandemic.

Any of these risks might have a materially adverse impact

on our business operations and our financial position or results of operations.

ways that depend on highly-uncertain future developments, such as determining the effectiveness of current or future government actions

to address the public health or economic impacts of the pandemic.

Any of these risks might have a materially adverse impact on our business

operations and our financial position or results of operations.

were recently unprofitable, we have recently generated net losses, and we may incur losses in the future.

2017, we became profitable for the first time;

in prior years, we were unprofitable and generated a net accumulated deficit of

Our current business model has been in constant and improved development since 2010 with results that culminated in

net income for the years ended December 31, 2017 and 2018 of $288,983 and $9,038, respectively.

generated from our consolidated operations for the years ended December 31, 2020 and 2019 were $17,122,520 and $7,436,264, respectively.

incurred a net loss of $2,536,051 for the year ended December 31, 2020, compared to a net loss of $284,428 for the year

ended December 31, 2019.

We may incur other losses in the foreseeable future due to the significant costs associated with our

business development, including costs associated with maintaining compliance under SEC reporting standards.

We cannot assure you

that our operations will annually generate sufficient revenues to fund our continuing operations or to fully implement our business

plan, and thereafter sustain profitability in any future period.

likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently

encountered in connection with the start and growth of a business, the implementation and execution of our business plan, and

the regulatory environment affecting the distribution of pharmaceuticals in which we operate.

we do not obtain additional financing, our business, prospects, financial condition and results of operations will be adversely

anticipates that we will require additional working capital in the future to pursue continued development of products, services,

and marketing operations.

generated from our consolidated operations for the years ended December 31, 2021 and 2020 were $9,889,433 and $17,122,520,

respectively.

incurred a net loss of $5,315,883 for the year ended December 31, 2021, compared to a net loss of $2,536,051 for the year ended December

We may incur other losses in the foreseeable future due to the significant costs associated with our business development,

including costs associated with maintaining compliance under SEC reporting standards.

We cannot assure you that our operations will annually

generate sufficient revenues to fund our continuing operations or to fully implement our business plan, and thereafter sustain profitability

in any future period.

likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered

in connection with the start and growth of a business, the implementation and execution of our business plan, and the regulatory environment

affecting the distribution of pharmaceuticals in which we operate.

we do not obtain additional financing, our business, prospects, financial condition and results of operations will be adversely affected.

anticipates that we will require additional working capital in the future to pursue continued development of products, services, and

marketing operations.

We cannot accurately predict the timing and amount of such capital requirements.

Additional financing

may not be available to us when needed or, if available, it may not be obtained on commercially reasonable terms.

If we are not

able to obtain the necessary additional financing on a timely or commercially reasonable basis, we will be forced to delay or

scale down some or all of our development activities (or perhaps even cease the operation of our business).

Additional financing may not be

available to us when needed or, if available, it may not be obtained on commercially reasonable terms.

If we are not able to obtain the

necessary additional financing on a timely or commercially reasonable basis, we will be forced to delay or scale down some or all of

our development activities (or perhaps even cease the operation of our business).

Our access to additional capital may be negatively

affected by future recessions, downturns in the economy or the markets as a whole, or inflation.

have no commitments for any additional financing, and such commitments may not be obtained on favorable terms, if at all.

additional equity financing will be dilutive to our stockholders, and debt financing, if available, may involve restrictive covenants

with respect to dividends, raising future capital, and other financial and operational matters.

If we are unable to obtain additional

financing as needed, we may be required to reduce the scope of our operations or our anticipated expansion, which could have a

material adverse effect on us.

Any additional

equity financing will be dilutive to our stockholders, and debt financing, if available, may involve restrictive covenants with respect

to dividends, raising future capital, and other financial and operational matters.

If we are unable to obtain additional financing as

needed, we may be required to reduce the scope of our operations or our anticipated expansion, which could have a material adverse effect

and global economic conditions could materially adversely affect the Company’s business, results of operations, financial condition

macroeconomic conditions, including inflation, slower growth or recession, new or increased tariffs, changes to fiscal and monetary policy,

tighter credit, higher interest rates, high unemployment and currency fluctuations could have a material adverse impact on demand for

the Company’s products and services.

In addition, consumer confidence and spending could be adversely affected in response to financial

market volatility, negative financial news, conditions in the real estate and mortgage markets, declines in income or asset values, changes

to fuel and other energy costs, labor and healthcare costs and other economic factors.

addition to an adverse impact on demand for the Company’s products, uncertainty about, or a decline in, U.S.

or global economic

conditions could have a significant impact on the Company’s suppliers, the pharmacy industry as a whole, the Company’s network

of independent pharmacies and other partners.

Potential effects include financial instability;

inability to obtain credit to finance

operations and purchases of the Company’s products, payment defaults and insolvency.

downturn in the economic environment could also lead to increased credit and collectability risk on the Company’s receivables;

limitations on the Company’s ability to raise new funding through the sale of debt or equity;

reduced liquidity;

and declines in

the value of the Company’s securities.

These and other economic factors could materially adversely affect the Company’s business,

results of operations, financial condition and growth.

business is subject to rigorous regulatory and licensing requirements.

described in greater detail in “

Business ”, above, our business is highly regulated in the United States, at

described in greater detail in “ Item 1.

Business ”, above, our business is highly regulated in the United States, at

both the federal and state level, and in foreign countries.

If we fail to comply with regulatory requirements, or if allegations

are made that we fail to comply, our results of operations and financial condition could be adversely affected.

lawfully operate our businesses, we are required to obtain and hold permits, product registrations, licenses and other regulatory

approvals from, and to comply with operating and security standards of, numerous governmental bodies.

For example, as a wholesale

distributor of controlled substances, we must hold valid DEA registrations and state-level licenses, meet various security and

operating standards, and comply with the Controlled Substances Act (CSA).

Failure to maintain or renew necessary permits, product

registrations, licenses or approvals, or to comply with required standards, could have an adverse effect on our results of operations

and financial condition.

If we fail to comply with regulatory requirements, or if allegations are

made that we fail to comply, our results of operations and financial condition could be adversely affected.

lawfully operate our businesses, we are required to obtain, and hold permits, product registrations, licenses and other regulatory approvals

from, and to comply with operating and security standards of, numerous governmental bodies.

For example, as a wholesale distributor of

controlled substances, we must hold valid DEA registrations and state-level licenses, meet various security and operating standards,

and comply with the Controlled Substances Act (CSA).

Failure to maintain or renew necessary permits, product registrations, licenses

or approvals, or to comply with required standards, could have an adverse effect on our results of operations and financial condition.

We are also required to comply with various state pricing gouging laws.

Products that we source and distribute

must also comply with regulatory requirements.

Products that we source and distribute must also comply with

regulatory requirements.

Noncompliance

or concerns over noncompliance may result in suspension of our ability to distribute or import products, product bans, recalls

or seizures, or criminal or civil sanctions, which, in turn, could result in product liability claims and lawsuits, including

class actions.

of our competitors are better established and have resources significantly greater than we have, which may make it difficult to

fend off competition.

expect to compete with the three largest ADR distributors (McKesson, Cardinal Health and AmerisourceBergen), in addition to other

pharmaceutical distributors, buying groups, software products, and various start-up drug companies.

Many of these operations have

substantially greater financial and manufacturer-backed resources, longer operating histories, greater name recognition and more

established relationships in the industry than us.

or concerns over noncompliance may result in suspension of our ability to distribute or import products, product bans, recalls or seizures,

or criminal or civil sanctions, which, in turn, could result in product liability claims and lawsuits, including class actions.

of our competitors are better established and have resources significantly greater than we have, which may make it difficult to fend

off competition.

expect to compete with the three largest ADR distributors (McKesson, Cardinal Health and AmerisourceBergen), in addition to other pharmaceutical

distributors, buying groups, software products, and various start-up drug companies.

Many of these companies have substantially greater

financial and manufacturer-backed resources, longer operating histories, greater name recognition and more established relationships

in the industry than us.

In addition, a number of these competitors may combine or form strategic partnerships.

As a result, our competitors may establish a more favorable footing in the pharmaceutical industry with respect to pricing or

other factors.

Our failure to compete successfully with any of these companies would have a material adverse effect on our business

and the trading price of our common stock.

As a result, our competitors

may establish a more favorable footing in the pharmaceutical industry with respect to pricing or other factors.

Our failure to compete

successfully with any of these companies would have a material adverse effect on our business and the trading price of our common stock.

three distributors listed above have a strong control over our industry, as they have contracts with approximately 24,000 independent,

retail pharmacies that limit the participants’

ability to purchase pharmaceuticals outside of those primary distributors.

Additional restrictive elements exist within the pharmaceutical channels of distribution.

For example, a number of the inventory

management systems, either developed by the distributors or third-party vendors, have been developed to require compliance to

these restrictive purchasing agreements.

Management anticipates that other existing and prospective competitors will adopt technologies

or business plans similar to ours or seek other means to develop operations competitive with ours, particularly if our development

of large-scale production progresses as scheduled.

retail pharmacies that limit the participants’ ability to purchase pharmaceuticals outside of those primary distributors.

restrictive elements exist within the pharmaceutical channels of distribution.

For example, a number of the inventory management systems,

either developed by the distributors or third-party vendors, have been developed to require compliance to these restrictive purchasing

Management anticipates that other existing and prospective competitors will adopt technologies or business plans similar

to ours or seek other means to develop operations competitive with ours, particularly if our development of large-scale production progresses

as scheduled.

will need to expand our member base or our profit margins to attain profitability.

we are paid an administrative fee of up to 6 percent of the buying price on the generic pharmaceuticals sold to pharmacies and

up to 1 percent on brand pharmaceuticals that pass through our pharmaceutical exchanges.

we are paid an administrative fee of up to 6 percent of the buying price on the generic pharmaceuticals sold to pharmacies and up to

1 percent on brand pharmaceuticals that pass through our pharmaceutical exchanges.

Our management is aware that the competitiveness

of the group of suppliers that participate in our system and price products on our exchange is a key factor in determining how

many purchasing pharmacies and wholesalers will purchase products through our platforms.

However, price is not the only factor

that influences where retail pharmacies will obtain their product.

Quality fulfillment services are also important, and retail

pharmacies have historically received quality fulfillment services from the three major ADR distributors.

In order to be more

competitive, we must improve our customer service and wholesaler fulfillment efforts, because the independent, retail pharmacy

has for years considered this element of the fulfillment process as important as price.

Other factors influencing the pharmacies

purchasing behavior in the future will be changes brought upon by the ACA, which regulates some aspects of pharmaceutical spending

Management believes that we should benefit substantially from our pricing and product knowledge that is offered by

our platform.

of the group of suppliers that participate in our system and price products on our exchange is a key factor in determining how many purchasing

pharmacies and wholesalers will purchase products through our platforms.

However, price is not the only factor that influences where

retail pharmacies will obtain their product.

Quality fulfillment services are also important, and retail pharmacies have historically

received quality fulfillment services from the three major ADR distributors.

In order to be more competitive, we must improve our customer

service and wholesaler fulfillment efforts, because the independent, retail pharmacy has for years considered this element of the fulfillment

process as important as price.

Other factors influencing the pharmacies purchasing behavior in the future will be changes brought upon

by the ACA, which regulates some aspects of pharmaceutical spending and pricing.

Management believes that we should benefit substantially

from our pricing and product knowledge that is offered by our platform.

Profitability

may be further increased as a result of lower cost of goods, should the Company build stronger relationships with manufacturers

and other larger buying groups that serve wholesalers and distributors.

On a larger scale, those margins are expected to drop

depending upon the breadth of products provided in the market and the sale turn rates required.

We are currently undertaking a

significant effort to increase our membership base through attendance at annual conferences and other strategies.

Trxade has an

expanded e-mail marketing strategy based on our competitive price advantages and price trend analysis tools.

may be further increased as a result of lower cost of goods, should the Company build stronger relationships with manufacturers and other

larger buying groups that serve wholesalers and distributors.

On a larger scale, those margins are expected to drop depending upon the

breadth of products provided in the market and the sale turn rates required.

We are currently undertaking a significant effort to increase

our membership base through attendance at annual conferences and other strategies.

Trxade has an expanded e-mail marketing strategy based

on our competitive price advantages and price trend analysis tools.

are inherent risks associated with our operations within the Pharmaceutical Distribution Market.

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all of our end-user agreements require our customers to indemnify us and for any and all liabilities resulting from our participation

in the pharmaceutical distribution industry, we cannot assure you that the parties required to provide such indemnification will

have the financial resources to do so.

Additionally, although we have evaluated appropriate state statutes and federal laws pertaining

to pharmaceutical distribution in an effort to diminish our risks, the Board of Pharmacy for each state is responsible for interpreting

in the pharmaceutical distribution industry, we cannot assure you that the parties required to provide such indemnification will have

the financial resources to do so.

Additionally, although we have evaluated appropriate state statutes and federal laws pertaining to

pharmaceutical distribution in an effort to diminish our risks, the Board of Pharmacy for each state is responsible for interpreting

their state laws, and their interpretations may not comport with our analysis.

It is also possible that any third-party logistics

arrangements may disrupt service, create a loss of income, or other unforeseen disruptions should the service provider experience

any legal, financial or other difficulties of their own.

It is also possible that any third-party logistics arrangements

may disrupt service, create a loss of income, or other unforeseen disruptions should the service provider experience any legal, financial

or other difficulties of their own.

do not have a traditional credit facility with a financial institution, which may adversely impact our operations.

do not have a traditional credit facility with a financial institution, such as a working line of credit.

The absence of such

a facility could adversely impact our operations, as it may constrain our ability to have available the working capital for equipment

purchases or other operational requirements.

If adequate funds are not otherwise available, we may be required to delay, scale

back or eliminate portions of our business development efforts.

Without credit facilities, we could be forced to cease operations

and investors in our securities could lose their entire investment.

The absence of such a facility

could adversely impact our operations, as it may constrain our ability to have available the working capital for equipment purchases

or other operational requirements.

If adequate funds are not otherwise available, we may be required to delay, scale back or eliminate

portions of our business development efforts.

Without credit facilities, we could be forced to cease operations and investors in our

securities could lose their entire investment.

offer limited credit to the pharmacies which limits the amount of the orders that they place and may result in us losing business and

a reduction in our revenues.

currently offer a limited amount of credit to our members.

Such limited credit reduces the risk that such members do not pay for products;

however, it also limits the amount of revenue we generate per member.

We believe that if we were to increase the amount of credit we

provide to members we would generate more revenues, but bear more risk of non-payment.

We are currently exploring increasing the amount

of credit we provide to members, which may in turn result in an increase in receivables and write-offs.

are dependent upon our current management, who may have conflicts of interest.

are dependent upon the efforts of our current management.

All of our officers and directors have duties and affiliations with

other companies.

Even though these companies are not competitors or involved in pharmaceutical distribution, involvement of our

officers and directors in other businesses may still present a conflict of interest regarding decisions they make for Trxade or

with respect to the amount of time available for Trxade.

All of our officers and directors have duties and affiliations with other companies.

Even though these companies are not competitors or involved in pharmaceutical distribution, involvement of our officers and directors

in other businesses may still present a conflict of interest regarding decisions they make for Trxade or with respect to the amount of

time available for Trxade.

The loss of any of our officers or directors and, in particular, Mr.

Prashant Patel, our President or Mr.

Suren Ajjarapu, our Chief Executive Officer and Chairman of the Company, could have a materially

adverse effect upon our business and future prospects.

Company purchased, on behalf of and for the benefit of Mr.

Suren Ajjarapu, a personal disability insurance policy providing for

a $1,500,000 lump sum benefit, payable to Mr.

Suren Ajjarapu, our Chief Executive Officer and Chairman of the Company, could have a materially adverse effect upon our business and

future prospects.

Company holds, on behalf of and for the benefit of Mr.

Suren Ajjarapu, a personal disability insurance policy providing for a $1,500,000

lump sum benefit, payable to Mr.

Ajjarapu, in the event of Mr.

Ajjarapu’s disability.

The premiums on

such policy will be paid by the Company for so long as Mr.

Ajjarapu’s disability.

The premiums on such policy will be paid

by the Company for so long as Mr.

Ajjarapu is employed by the Company.

Company also obtained a $4,000,000 key-man life insurance policy on the life of Mr.

Suren Ajjarapu, and a $1,500,000 lump sum

disability insurance policy on Mr.

Company also holds a $4,000,000 key-man life insurance policy on the life of Mr.

Suren Ajjarapu, and a $1,500,000 lump sum disability

insurance policy on Mr.

Ajjarapu, providing for the Company as beneficiary of such policies.

our management team has considerable information technology and entrepreneurial experience, none of our management was involved

in pharmaceutical distribution prior to joining the Company and, as such, did not have any technical experience in pharmaceutical

distribution prior to joining us.

our management team has considerable information technology and entrepreneurial experience, none of our management was involved in pharmaceutical

distribution prior to joining the Company and, as such, did not have any technical experience in pharmaceutical distribution prior to

In the event of the loss of Mr.

Ajjarapu’s services, we will seek to hire and retain a

qualified professional.

In the event of the loss of his services in connection with his death, upon obtaining funding from the

key-man life insurance, management intends to hire qualified and experienced personnel.

We may be unable to find a suitable or

qualified replacement for Mr.

Ajjarapu and as such our operations and/or prospects may suffer.

Ajjarapu’s services, we will seek to hire and retain a qualified professional.

event of the loss of his services in connection with his death, upon obtaining funding from the key-man life insurance, management intends

to hire qualified and experienced personnel.

We may be unable to find a suitable or qualified replacement for Mr.

Ajjarapu and as such

our operations and/or prospects may suffer.

rely on third party contracts.

depend on others to provide products and services to us.

We do not manufacture pharmaceuticals and we do not sell pharmaceuticals

to the end consumer.

We do not control these wholesalers, suppliers and purchasers and, although our arrangements with them will

be terminable or of limited length, a change may be difficult to implement.

At this time, we have a working relationship with

over 50 wholesalers and the nation’s largest buying group.

Although we believe that those entities are satisfied with their

business relationship with Trxade, if our buying group and two or three of the wholesalers decided no longer to do business with

us, that supplier void would materially and adversely affect our competitiveness in the marketplace.

We do not manufacture pharmaceuticals and we do not sell pharmaceuticals to

the end consumer.

We do not control these wholesalers, suppliers and purchasers, and although our arrangements with them will be terminable

or of limited length, a change may be difficult to implement.

At this time, we have a working relationship with over 50 wholesalers and

the nation’s largest buying group.

Although we believe that those entities are satisfied with their business relationship with

Trxade, if our buying group and two or three of the wholesalers decided no longer to do business with us, that supplier void would materially

and adversely affect our competitiveness in the marketplace.

depend on suppliers to make their drugs and other medical products available to us for resale and are subject to risks associated with

the availability of these drugs and other medical products.

do not directly manufacture any of the products we sell and instead we rely on third parties to manufacture and/or procure such drugs

and other medical products for us to resell.

Supply chain constraints have, and may in the future have, a negative impact on the availability

of drugs and medical products that we sell.

Our supplier relationships could be interrupted, become less favorable to us or be terminated

and the supply of these drugs or products could be interrupted or become insufficient.

Supply interruptions or other disruptions in manufacturing

processes could be caused by events beyond our control, including natural disasters, supplier facility shut-downs, defective raw materials,

the impact of epidemics or pandemics, such as COVID-19, and actions by U.S.

or international governments, including export restrictions

A sustained supply reduction or interruption, and an inability to develop alternative and additional sources for such supply,

could result in lost sales, increased cost, damage to our reputation, and may have an adverse effect on our business.

may have difficulties in sourcing or selling products due to a variety of causes.

might experience difficulties and delays in sourcing and selling products due to a variety of causes, such as:

difficulties in complying

with the legal requirements for export or import of pharmaceuticals or supplies;

suppliers’ failure to satisfy production demand;

manufacturing or supply problems such as inadequate resources;

and real or perceived quality issues.

Difficulties in product manufacturing

or access to raw materials could result in supplier production shutdowns, product shortages and other supply disruptions.

pandemic has adversely affected the availability of some products, resulting in product allocation and delivery delays.

risks might have a materially adverse impact on our business operations and our financial position or results of operations.

technological change in our industry presents us with significant risks and challenges .

industry is characterized by rapid technological change, changing consumer requirements, short product lifecycles and evolving

industry standards.

industry is characterized by rapid technological change, changing consumer requirements, short product lifecycles and evolving industry

Our success will depend on our ability to develop or to acquire and market new services.

There is no guarantee

that we will possess the resources, either financial or personnel, for the research, design and development of new applications

or services, or that we will be able to utilize these resources successfully and avoid technological or market obsolescence.

there can be no assurance that technological advances by one or more of our competitors or future competitors will not result

in our present or future applications and services becoming uncompetitive or obsolete.

There is no guarantee that we will

possess the resources, either financial or personnel, for the research, design and development of new applications or services, or that

we will be able to utilize these resources successfully and avoid technological or market obsolescence.

Further, there can be no assurance

that technological advances by one or more of our competitors or future competitors will not result in our present or future applications

and services becoming uncompetitive or obsolete.

are currently facing and may in the future face difficulties in sourcing products and inventory due to a variety of causes.

to the continued effects of the COVID-19 pandemic, the governmental responses to contain the spread of such virus, we have to

date experienced issues with the availability of certain products, resulting in product allocation and delivery delays, which

has not to date, had a material adverse effect on our results of operations.

We might also experience difficulties and delays

in sourcing products and inventory due to a variety of causes in the future, such as:

difficulties in complying with the legal

requirements for export or import of pharmaceuticals or components;

suppliers’

failures to satisfy production demand;

manufacturing

or supply problems such as inadequate resources;

to the continued effects of the COVID-19 pandemic, the governmental responses to contain the spread of such virus, we have

to date experienced issues with the availability of certain products, resulting in product allocation and delivery delays, which has

not to date, had a material adverse effect on our results of operations.

We might also experience difficulties and delays in sourcing

products and inventory due to a variety of causes in the future, such as:

difficulties in complying with the legal requirements for export

or import of pharmaceuticals or components;

suppliers’ failures to satisfy production demand;

manufacturing or supply problems

such as inadequate resources;

real or perceived quality issues;

and advanced deposits which are at risk of

return if product is not delivered.

Difficulties in product manufacturing or access to raw materials could result in supplier

production shutdowns, product shortages and other supply disruptions.

Any of these risks might have a materially adverse impact

on our business operations and our financial position or results of operations.

have in the past, and may in the future, not be able to sell our inventory, at or above the price we acquired such inventory for,

and have in the past, and may in the future, be forced to write-down inventory in the future.

to the supply and demand nature of our pharmaceutical business

and the personal protective equipment (PPE) business, especially in connection with the rapidly changing regulations, recommendations

and guidance surrounding COVID-19, the inventory of products we have acquired, or may acquire in the future, has been/may be,

acquired at a cost higher than the price at which we may be able to resell such products.

As a result, in the past we have, and

in the future we may not be able to, make a profit on such sales and have in the past and may in the future, have to write-down

a significant portion of our inventory.

During the years ended December 31, 2020 and 2019, write-down to market value was $1,220,269

and $0, respectively.

and advanced deposits which are at risk of return if product is not delivered.

Difficulties in product manufacturing or access to raw materials could result in supplier production shutdowns, product shortages and

other supply disruptions.

Any of these risks might have a materially adverse impact on our business operations and our financial position

or results of operations.

have in the past, and may in the future, not be able to sell our inventory, at or above the price we acquired such inventory for, and

have in the past, and may in the future, be forced to write-down inventory and certain of our other assets which may have a material

adverse effect on our balance sheet.

to the supply and demand nature of our pharmaceutical business and the personal protective equipment (PPE) business, especially in connection

with the rapidly changing regulations, recommendations and guidance surrounding COVID-19, the inventory of products we have acquired,

or may acquire in the future, has been/may be, acquired at a cost higher than the price at which we may be able to resell such products.

As a result, in the past we have, and in the future we may not be able to, make a profit on such sales and have in the past and may in

the future, have to write-down a significant portion of our inventory.

During the years ended December 31, 2021 and 2020, write-down

to market value was $376,348 and $1,220,269, respectively.

A significant write-down of assets may have a material adverse effect on our

balance sheet and results of operations.

may not receive products or receive refunds for deposited amounts and may experience losses in connection with such deposits.

might not receive products or the return of funds on deposits that have been provided.

We have two deposits outstanding as of

the date of this report in an aggregate amount of approximately $1,081,250.

In the event we do not receive products for the deposited

amounts or the return of our deposits (through litigation or otherwise), this will cause us financial harm and result in us taking

a significant charge on our financial statements and taking a loss in the amount of such deposit amount.

Additionally, in the

future we may provide additional deposits for products which may be material, which deposits may not be refunded timely, if at

all, and which products may not be delivered, or may be defective or unusable.

Any significant losses of deposited funds could

have a material adverse effect on our financial condition, results of operations and the value of our securities.

In July 2020, the Company’s

wholly-owned subsidiary, Integra, entered into an agreement with Studebaker Defense Group, LLC (“Studebaker”) wherein Integra

would pay Studebaker a down payment of $500,000 and Studebaker would deliver 180,000 boxes of nitrile gloves by August 14, 2020.

wired the $500,000 to Studebaker, but to date, Studebaker has not delivered the gloves or provided a refund of the deposit.

2020, we filed a complaint against Studebaker Defense Group, LLC in Florida state court, Case No.

20-CA-010118 in the Circuit Court for

the Thirteenth Judicial Circuit in Hillsborough County for, among other things, breach of contract.

Studebaker did not answer the complaint,

nor did counsel for Studebaker file an appearance.

Accordingly, in February 2021 the Company filed a default judgment;

March 22, 2021, counsel for Studebaker filed an appearance and the Company anticipates that Studebaker will file a motion to vacate

the judgment.

A hearing on our motion for a default judgement has been set for April 27, 2021.

The Company anticipates that irrespective

of the outcome of such hearing on April 27, 2021, the Company will prevail on the merits;

and believes Studebaker has the

ability to satisfy a judgment.

August 2020, Company’s subsidiary, Integra, entered into an agreement with Sandwave Group Dsn Bhd, wherein Integra

would pay Sandwave a down payment of $581,250 and Sandwave’s supplier, Crecom Burj Group SDN BHD (“Crecom”),

would deliver 150,000 boxes of nitrile gloves within 45 days.

Integra wired the $581,250 to Sandwave, which in turn wired the

purchase price to Crecom, which Crecom accepted;

We have two deposits outstanding as of the date

of this report in an aggregate amount of approximately $1,081,250.

In the event we do not receive the return of our deposits (through

litigation or otherwise), this will cause us financial harm and as a result the Company has taken a significant charge on our financial

statements by taking a loss in the amount of such deposit amount.

Additionally, in the future we may provide additional deposits for

products which may be material, which deposits may not be refunded timely, if at all, and which products may not be delivered, or may

be defective or unusable.

Any significant losses of deposited funds could have a material adverse effect on our financial condition,

results of operations and the value of our securities.

July 2020, the Company’s wholly-owned subsidiary, Integra, entered into an agreement with Studebaker Defense Group, LLC (“Studebaker”)

wherein Integra would pay Studebaker a down payment of $500,000 and Studebaker would deliver 180,000 boxes of nitrile gloves by August

Integra wired the $500,000 to Studebaker, but to date, Studebaker has not delivered the gloves or provided a refund of the

On December 31, 2020, we filed a complaint against Studebaker in Florida state court, Case No.

20-CA-010118 in

the Circuit Court for the Thirteenth Judicial Circuit in Hillsborough County, for among other things, breach of contract.

29, 2021, Integra Pharma Solutions filed a motion for clerk’s default against Studebaker.

On February 2, 2021, the clerk of court

issued default against Studebaker.

On March 4, 2021, Integra Pharma Solutions filed a motion for final default judgment against Studebaker.

On March 22, 2021, counsel for Studebaker filed a notice of appearance in the case.

On March 24, Studebaker filed a response in opposition

to the motion for final judgment, and on March 25, 2021, Studebaker filed a motion to dismiss the case.

On May 14, 2021, the Court denied

Integra’s motion for final default judgment, granted Studebaker’s motion to set aside the clerk’s default, and denied

Studebaker’s motion to dismiss.

An amended answer and affirmative defenses were filed by Studebaker on October 14, 2021.

motion to strike the affirmative defenses, or in the alternative, motion for more definite statement is scheduled for hearing on April

We have also scheduled the deposition of Studebaker’s corporate representative on April 12, 2022, and moved to compel

better answers to outstanding discovery.

The litigation remains pending and is in the discovery phase.

Integra remains confident it can

successfully prosecute its claims against Studebaker on the merit.

On June 30, 2021, the $500,000 was recorded as Loss on

Inventory Investment.

August 2020, Integra, entered into an agreement with Sandwave Group Dsn Bhd (“Sandwave”), wherein Integra would pay Sandwave

a down payment of $581,250 and Sandwave’s supplier, Crecom Burj Group SDN BHD (“Crecom”), would deliver 150,000 boxes

of nitrile gloves within 45 days.

Integra wired the $581,250 to Sandwave, which in turn wired the purchase price to Crecom, which Crecom

however, to date, Crecom has not delivered the nitrile gloves.

demanded return of its $581,250 and Crecom has acknowledged that Integra is entitled to a refund, but to date Crecom has

failed to return Integra’s money.

In February 2021, Integra filed a complaint against Crecom in Malaysia:

WA-22NCC-55-02/2021 in the High Court of Malaysia at Kuala Lumpur in the Federal Territory, Malaysia for the Malaysian

equivalent of breach of contract.

Integra demanded return of its $581,250 and Crecom has acknowledged

that Integra is entitled to a refund, but to date Crecom has failed to return Integra’s money.

In February 2021, Integra filed

a complaint against Crecom in Malaysia:

WA-22NCC-55-02/2021 in the High Court of Malaysia at Kuala Lumpur in the Federal Territory,

Malaysia for the Malaysian equivalent of breach of contract.

Crecom filed an appearance on March 1, 2021.

and Crecom had 14 days to file an answer,

which they did not do;

however, Crecom has filed a request for extension which we are contesting.

There is a hearing scheduled

on April 20, 2021 to hear the matter and, in the meantime, we are preparing our Application for Summary Judgement.

If a judgment is entered against Crecom, the process of executing the judgment, and ultimately

collecting, can take three to six months.

The Company believes that it will prevail in the lawsuit filed;

believes Crecom has the ability to satisfy a judgment, and the steps to enforce a judgment in Malaysia, if any,

may be cumbersome, time consuming or costly.

In April 2021, an Application

for Summary Judgment was filed with the court, and on May 25, 2021, the Court extracted the sealed application, and a copy thereof was

served on Crecom’s attorneys and Crecom, 14 days later, filed an Affidavit in Reply with the court alleging that there are issues

to be tried and that this case must go to a full trial.

On June 28, 2021, the court directed both parties to file their written submissions/arguments

in relation to the application for summary judgment on or before July 12, 2021, and scheduled a hearing thereon for August 26, 2021.

At the final hearing on October 18, 2021, the ruling for the summary judgment was denied and a trial date is pending.

The Company believes

that it will prevail in the lawsuit filed;

but the steps to enforce a judgment in Malaysia, if any, may be cumbersome, time consuming

The Company cannot determine the timing of the judgment, nor the amount ultimately collected.

At June 30, 2021, the $581,250

was recorded as Loss on Inventory Investment.

quarterly results have in the past, and may in the future, fluctuate significantly due to certain non-recurring sales of products.

quarterly revenues have in the past and may in the future fluctuate significantly due to certain non-recurring sales of personal protective

equipment (PPE) and other products and associated costs of revenues therewith, which may be compounded in our year over year financial

As such, we believe that quarter-to-quarter comparisons of our revenues, operating results and cash flows may not be meaningful

and should not be relied upon as an indication of future performance.

investments in new businesses and new products, services, and technologies is inherently risky, and could disrupt our ongoing businesses.

have invested and expect to continue to invest in new businesses, products, services, and technologies.

Such endeavors may involve significant

risks and uncertainties, including insufficient revenues from such investments to offset any new liabilities assumed and expenses associated

with these new investments, inadequate return of capital on our investments, distraction of management from current operations, and unidentified

issues not discovered in our due diligence of such strategies and offerings that could cause us to fail to realize the anticipated benefits

of such investments and incur unanticipated liabilities.

Because these new ventures are inherently risky, no assurance can be given that

such strategies and offerings will be successful and will not adversely affect our reputation, financial condition, and operating results.

To date we have taken losses and/or write-downs on several businesses, products, services, and technologies.

For example, (a) we had

$725,973 of loss on impairment of goodwill for the year ended December 31, 2020, in connection with the acquisition of Community

Specialty Pharmacy, LLC;

(b) we designed and invested resources into the “Bonum Health Hub”, a self-enclosed, free standing

virtual examination room, which was launched by the Company’s wholly-owned Bonum Health, LLC, in November 2019 and was expected

to be operational in April 2020;

however, due to the COVID-19 pandemic, the Company does not anticipate installations moving forward,

and has taken a write off of the hubs purchased at June 30, 2021 in the amount of $143,891, which is included under loss on inventory

investments in the statement of operations for the year ended December 31, 2021;

and (c) we also used resources and funding

to create a Health Passport application during 2020 and 2021, which was planned to store a user’s health and vaccination status

and allow confirmation thereof via a QR code;

however, we did not generate any revenue from this product and the product was discontinued

at the end of December 2021.

The use of resources for new businesses and new products, services, and technologies, to the extent such

new businesses and new products, services, and technologies do not generate revenues or profits may take management’s focus and

time away from more profitable endeavors, may require the Company to take significant write-downs or write-offs, may take funding away

from the Company’s other operations or growth opportunities, which may ultimately be more profitable, and may have a material adverse

effect on the Company’s cash flows, liquidity and revenues, any or all of which may cause the value of the Company’s securities

to decline in value or become worthless.

Relating to Our Information Systems;

Technology and Intellectual Property

may be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could

require us to pay significant damages and limit our ability to operate.

on the Internet and technology industries, and other patent and trademark holders seeking to profit from royalties in connection

with grants of licenses, own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation

based on allegations of infringement or other violations of intellectual property rights.

There may be intellectual property rights

held by others, including issued or pending patents and trademarks, that cover significant aspects of our technologies, content,

branding or business methods.

Any intellectual property claims against us, regardless of merit, could be time-consuming and expensive

to settle or litigate and could divert our management’s attention and other resources.

These claims also could subject us

to significant liability for damages and could result in our having to stop using technology, content, branding or business methods

found to be in violation of another party’s rights.

We might be required or may opt to seek a license for rights to intellectual

property held by others, which may not be available on commercially reasonable terms, or at all.

If we cannot license or develop

technology, content, branding or business methods for any allegedly infringing aspect of our business, we may be unable to compete

Even if a license is available, we could be required to pay significant royalties, which could increase our operating

We may also be required to develop alternative non-infringing technology, content, branding or business methods, which

could require significant effort and expense and be inferior.

may be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could require

us to pay significant damages and limit our ability to operate.

on the Internet and technology industries, and other patent and trademark holders seeking to profit from royalties in connection with

grants of licenses, own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based

on allegations of infringement or other violations of intellectual property rights.

There may be intellectual property rights held by

others, including issued or pending patents and trademarks, that cover significant aspects of our technologies, content, branding or

business methods.

Any intellectual property claims against us, regardless of merit, could be time-consuming and expensive to settle or

litigate and could divert our management’s attention and other resources.

These claims also could subject us to significant liability

for damages and could result in our having to stop using technology, content, branding or business methods found to be in violation of

another party’s rights.

We might be required or may opt to seek a license for rights to intellectual property held by others, which

may not be available on commercially reasonable terms, or at all.

If we cannot license or develop technology, content, branding or business

methods for any allegedly infringing aspect of our business, we may be unable to compete effectively.

Even if a license is available,

we could be required to pay significant royalties, which could increase our operating expenses.

We may also be required to develop alternative

non-infringing technology, content, branding or business methods, which could require significant effort and expense and be inferior.

Any of these results could harm our operating results.

business and operations depend on the proper functioning of information systems, critical facilities and distribution networks.

rely on our and third-party service providers’

information systems for a wide variety of critical operations, including

to obtain, rapidly process, analyze and manage data to:

rely on our and third-party service providers’ information systems for a wide variety of critical operations, including to obtain,

rapidly process, analyze and manage data to:

the purchase and distribution of inventory items from distribution centers;

4 unchanged sentences

business also depends on the proper functioning of our critical facilities and our distribution networks.

Our results of operations

could be adversely affected if our or a service provider’s information systems, critical facilities or distribution networks

are disrupted (including disruption of access), are damaged or fail, whether due to physical disruptions, such as fire, natural

disaster, pandemic or power outage, or due to cyber-security incidents, ransomware or other actions of third parties, including

labor strikes, political unrest and terrorist attacks.

Manufacturing disruptions also can occur due to regulatory action, production

quality deviations, safety issues or raw material shortages or defects, or because a key product or component is manufactured

at a single manufacturing facility with limited alternate facilities.

rely on network and information systems and other technologies and a disruption, cyber-attack, failure or destruction of such

networks, systems, or technologies may disrupt our business or result in liability.

and information systems and other technologies, including those related to our computer, data back-up and processing systems,

network management, customer service operations and programming delivery, are critical to our business activities.

information systems-related events, such as computer hackings, cyber-attacks, computer viruses, worms or other destructive or

disruptive software, process breakdowns, denial of service attacks, malicious social engineering or other malicious activities,

or any combination of the foregoing, or power outages, natural disasters, terrorist attacks or other similar events, could result

in a degradation or disruption of our services or damage to our properties, equipment and data.

These events also could result

in large expenditures to repair or replace the damaged properties, networks or information systems or to protect them from similar

events in the future.

Our results of operations could

be adversely affected if our or a service provider’s information systems, critical facilities or distribution networks are disrupted

(including disruption of access), are damaged or fail, whether due to physical disruptions, such as fire, natural disaster, pandemic

or power outage, or due to cyber-security incidents, ransomware or other actions of third parties, including labor strikes, political

unrest and terrorist attacks.

Manufacturing disruptions also can occur due to regulatory action, production quality deviations, safety

issues or raw material shortages or defects, or because a key product or component is manufactured at a single manufacturing facility

with limited alternate facilities.

rely on network and information systems and other technologies and a disruption, cyber-attack, failure or destruction of such networks,

systems, or technologies may disrupt our business or result in liability .

and information systems and other technologies, including those related to our computer, data back-up and processing systems, network

management, customer service operations and programming delivery, are critical to our business activities.

Network and information systems-related

events, such as computer hackings, cyber-attacks, computer viruses, worms or other destructive or disruptive software, process breakdowns,

denial of service attacks, malicious social engineering or other malicious activities, or any combination of the foregoing, or power

outages, natural disasters, terrorist attacks or other similar events, could result in a degradation or disruption of our services or

damage to our properties, equipment and data.

These events also could result in large expenditures to repair or replace the damaged properties,

networks or information systems or to protect them from similar events in the future.

risk of these systems-related events and security breaches occurring has intensified, in part because we maintain certain information

necessary to conduct our businesses in digital form stored on cloud servers.

While we develop and maintain systems seeking to

prevent systems-related events and security breaches from occurring, the development and maintenance of these systems is costly

and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.

Despite these efforts, there can be no assurance that these events and security breaches will not occur in the future.

we may provide certain confidential, proprietary and personal information to third parties in connection with our businesses,

and while we obtain assurances that these third parties will protect this information, there is a risk that this information could

be compromised.

any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair

or replace them, and may experience loss or corruption of critical data and interruptions or delays in our ability to perform

critical functions, which could adversely affect our business and results of operations.

In addition, we are currently making,

and expect to continue to make, substantial investments in our information technology systems and infrastructure, some of which

are significant.

Upgrades involve replacing existing systems with successor systems, making changes to existing systems, or cost-effectively

acquiring new systems with new functionality.

Implementing new systems carries significant potential risks, including failure

to operate as designed, potential loss or corruption of data or information, cost overruns, implementation delays, disruption

of operations, and the potential inability to meet business and reporting requirements.

While we are aware of inherent risks associated

with replacing these systems and believe we are taking reasonable action to mitigate known risks, these technology initiatives

may not be deployed as planned or may not be timely implemented without disruption to our operations.

may be losses or unauthorized access to or releases of confidential information, including personally identifiable information,

that could subject the Company to significant reputational, financial, legal and operational consequences.

Company’s business requires it to use, transmit and store confidential information including, among other things, personally

identifiable information (“

PII ”) with respect to the Company’s customers and employees.

The Company devotes

significant resources to network and data security, including through the use of encryption and other security measures intended

to protect its systems and data.

But these measures cannot provide absolute security, and losses or unauthorized access to or

releases of confidential information occur and could materially adversely affect the Company’s reputation, financial condition

and operating results.

The Company’s business also requires it to share confidential information with third parties.

the Company takes steps to secure confidential information that is provided to third parties, such measures are not always effective

and losses or unauthorized access to or releases of confidential information occur and could materially adversely affect the Company’s

reputation, financial condition and operating results.

example, the Company may experience a security breach impacting the Company’s information technology systems that compromises

the confidentiality, integrity or availability of confidential information.

Such an incident could, among other things, impair

the Company’s ability to attract and retain customers for its products and services, impact the Company’s stock price,

materially damage supplier relationships, and expose the Company to litigation or government investigations, which could result

in penalties, fines or judgments against the Company.

Company has implemented systems and processes intended to secure its information technology systems and prevent unauthorized access

to or loss of sensitive data.

As with all companies, these security measures may not be sufficient for all eventualities and may

be vulnerable to hacking, employee error, malfeasance, system error, faulty password management or other irregularities.

to the risks relating to general confidential information described above, the Company is also subject to specific obligations

relating to health data and payment card data.

Health data is subject to additional privacy, security and breach notification

requirements, and the Company can be subject to audit by governmental authorities regarding the Company’s compliance with

these obligations.

If the Company fails to adequately comply with these rules and requirements, or if health data is handled in

a manner not permitted by law or under the Company’s agreements with healthcare institutions, the Company could be subject

to litigation or government investigations, may be liable for associated investigatory expenses, and could also incur significant

fees or fines.

While we develop and maintain systems seeking to prevent

systems-related events and security breaches from occurring, the development and maintenance of these systems is costly and requires

ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated.

Despite these

efforts, there can be no assurance that these events and security breaches will not occur in the future.

Moreover, we may provide certain

confidential, proprietary and personal information to third parties in connection with our businesses, and while we obtain assurances

that these third parties will protect this information, there is a risk that this information could be compromised.

any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or

replace them, and may experience loss or corruption of critical data and interruptions or delays in our ability to perform critical functions,

which could adversely affect our business and results of operations.

In addition, we are currently making, and expect to continue to

make, substantial investments in our information technology systems and infrastructure, some of which are significant.

Upgrades involve

replacing existing systems with successor systems, making changes to existing systems, or cost-effectively acquiring new systems with

new functionality.

Implementing new systems carries significant potential risks, including failure to operate as designed, potential

loss or corruption of data or information, cost overruns, implementation delays, disruption of operations, and the potential inability

to meet business and reporting requirements.

While we are aware of inherent risks associated with replacing these systems and believe

we are taking reasonable action to mitigate known risks, these technology initiatives may not be deployed as planned or may not be timely

implemented without disruption to our operations.

the past, we had an incident with an email account being compromised and an attempt was made to get the us to wire outgoing money.

did not fall victim to the attempt, conducted a thorough investigation, performed cleanup procedures, and instituted additional

security measure to mitigate the risk of this incident from occurring in the future.

Risk mitigation includes the board of directors

inquiring with the information technology department on status of cyber risks management, on a quarterly basis.

may be losses or unauthorized access to or releases of confidential information, including personally identifiable information, that

could subject the Company to significant reputational, financial, legal and operational consequences.

Company’s business requires it to use, transmit and store confidential information including, among other things, personally identifiable

information (“ PII ”) with respect to the Company’s customers and employees.

The Company devotes significant resources

to network and data security, including through the use of encryption and other security measures intended to protect its systems and

But these measures cannot provide absolute security, and losses or unauthorized access to or releases of confidential information

occur and could materially adversely affect the Company’s reputation, financial condition and operating results.

The Company’s

business also requires it to share confidential information with third parties.

Although the Company takes steps to secure confidential

information that is provided to third parties, such measures are not always effective and losses or unauthorized access to or releases

of confidential information occur and could materially adversely affect the Company’s reputation, financial condition and operating

example, the Company may experience a security breach impacting the Company’s information technology systems that compromises the

confidentiality, integrity or availability of confidential information.

Such an incident could, among other things, impair the Company’s

ability to attract and retain customers for its products and services, impact the Company’s stock price, materially damage supplier

relationships, and expose the Company to litigation or government investigations, which could result in penalties, fines or judgments

against the Company.

Company has implemented systems and processes intended to secure its information technology systems and prevent unauthorized access to

or loss of sensitive data.

As with all companies, these security measures may not be sufficient for all eventualities and may be vulnerable

to hacking, employee error, malfeasance, system error, faulty password management or other irregularities.

In addition to the risks relating

to general confidential information described above, the Company is also subject to specific obligations relating to health data and

payment card data.

Health data is subject to additional privacy, security and breach notification requirements, and the Company can be

subject to audit by governmental authorities regarding the Company’s compliance with these obligations.

If the Company fails to

adequately comply with these rules and requirements, or if health data is handled in a manner not permitted by law or under the Company’s

agreements with healthcare institutions, the Company could be subject to litigation or government investigations, may be liable for associated

investigatory expenses, and could also incur significant fees or fines.

payment card rules and obligations, if cardholder information is potentially compromised, the Company could be liable for associated

investigatory expenses and could also incur significant fees or fines if the Company fails to follow payment card industry data

security standards.

The Company could also experience a significant increase in payment card transaction costs or lose the ability

to process payment cards if it fails to follow payment card industry data security standards, which would materially adversely

affect the Company’s reputation, financial condition and operating results.

errors or failures of our platform or services to conform to specifications could cause unforeseen liabilities or injury, harm

our reputation and have a material adverse impact on our results of operations.

investigatory expenses and could also incur significant fees or fines if the Company fails to follow payment card industry data security

The Company could also experience a significant increase in payment card transaction costs or lose the ability to process

payment cards if it fails to follow payment card industry data security standards, which would materially adversely affect the Company’s

reputation, financial condition and operating results.

errors or failures of our platform or services to conform to specifications could cause unforeseen liabilities or injury, harm our reputation

and have a material adverse impact on our results of operations.

software and technology services that we operate are complex.

1 unchanged sentence

services may contain errors, especially when first introduced.

Failure of a customer’s system to perform in accordance with

our documentation could constitute a breach of warranty and could require us to incur additional expense in order to make the

system comply with the documentation.

If such failure is not remedied in a timely manner, it could constitute a material breach

under a contract, allowing the client to cancel the contract, obtain refunds of amounts previously paid, or assert claims for

significant damages.

Failure of a customer’s system to perform in accordance with our

documentation could constitute a breach of warranty and could require us to incur additional expense in order to make the system comply

with the documentation.

If such failure is not remedied in a timely manner, it could constitute a material breach under a contract, allowing

the client to cancel the contract, obtain refunds of amounts previously paid, or assert claims for significant damages.

Associated with Bonum Health Telemedicine Services

telehealth market is immature and volatile.

telehealth market is relatively new and unproven, and it is uncertain whether it will achieve and sustain high levels of demand,

consumer acceptance and market adoption.

Our success will depend to a substantial extent on the willingness of our clients’

members or patients to use, and to increase the frequency and extent of their utilization of, our services, as well as on our

ability to demonstrate the value of telehealth to employers, health plans, government agencies and other purchasers of healthcare

for beneficiaries.

Negative publicity concerning our services or the telehealth market as a whole could limit market acceptance

of our services.

If our clients, or their members or patients, do not perceive the benefits of our services, or if our services

are not competitive, then our market may not develop at all, or it may develop more slowly than we expect.

Similarly, individual

and healthcare industry concerns or negative publicity regarding patient confidentiality and privacy in the context of telehealth

could limit market acceptance of our healthcare services.

If any of these events occurs, it could have a material adverse effect

on our business, financial condition or results of operations.

respect to our planned “

Bonum Health Hub ”

telehealth services, the market for such services is new and unproven,

and it is uncertain whether it will achieve consumer acceptance and market adoption.

The success of our “

will depend to a substantial extent on the willingness of patients to use new technologies such as our planned

Bonum Health Hubs ”.

Negative publicity concerning our “

Bonum Health Hubs ”

or the telehealth

market as a whole, could limit market acceptance of the “

Bonum Health Hubs ”.

Similarly, individual and healthcare

industry concerns or negative publicity regarding patient confidentiality and privacy in the context of telehealth could limit

market acceptance of our “

Bonum Health Hubs ”.

If any of these events occurs, it could have a material adverse

effect on our business, financial condition or results of operations.

telehealth business could be adversely affected by legal challenges to our business model or by actions restricting our ability

to provide services in certain jurisdictions.

telehealth market is relatively new and unproven, and it is uncertain whether it will achieve and sustain high levels of demand, consumer

acceptance and market adoption.

Our success will depend to a substantial extent on the willingness of our clients’ members or patients

to use, and to increase the frequency and extent of their utilization of, our services, as well as on our ability to demonstrate the

value of telehealth to employers, health plans, government agencies and other purchasers of healthcare for beneficiaries.

Negative publicity

concerning our services or the telehealth market as a whole could limit market acceptance of our services.

If our clients, or their members

or patients, do not perceive the benefits of our services, or if our services are not competitive, then our market may not develop at

all, or it may develop more slowly than we expect.

Similarly, individual and healthcare industry concerns or negative publicity regarding

patient confidentiality and privacy in the context of telehealth could limit market acceptance of our healthcare services.

these events occurs, it could have a material adverse effect on our business, financial condition or results of operations.

telehealth business could be adversely affected by legal challenges to our business model or by actions restricting our ability to provide

services in certain jurisdictions.

ability to conduct telehealth services in a particular U.S.

state is dependent upon the applicable laws governing remote healthcare

and the practice of medicine and healthcare delivery in general in such location which are subject to changing political, regulatory

and other influences.

With respect to telehealth services, which we plan to offer through our “

Bonum Health Hubs ”,

such services and our ability to offer such services are subject to rules established or interpreted by state medical boards and

whether such boards consider such “

Bonum Health Hubs ”

services to be the practice of medicine.

state is dependent upon the applicable laws governing remote healthcare and

the practice of medicine and healthcare delivery in general in such location which are subject to changing political, regulatory and

other influences.

With respect to telehealth services, such services and our ability to offer such services are subject to rules established

or interpreted by state medical boards and whether such boards consider such services to be the practice of medicine.

The definition

of practicing medicine is subject to change and open to evolving interpretations by medical boards and state attorneys’

generals, among others.

Accordingly, we must monitor our compliance with laws in the jurisdictions in which we operate, on an

ongoing basis, and we cannot provide assurance that our activities and arrangements, if challenged, will be found to be in compliance

with the law.

Additionally, it is possible that the laws and rules governing the practice of medicine, including remote healthcare,

in one or more jurisdictions may change in a manner which negatively effects our ability to operate.

If a successful legal challenge

or an adverse change in the relevant laws were to occur, and we were unable to adapt our business model accordingly, our operations

in the affected jurisdictions would be disrupted, which could have a material adverse effect on our business, financial condition

and results of operations.

our telehealth business, we will be dependent on our relationships with affiliated professions and our business would be adversely

affected if those relationships were disrupted.

is a risk that state authorities in some jurisdictions may find that contractual relationships with physicians providing telehealth

violate laws prohibiting the corporate practice of medicine.

State corporate practice of medicine doctrines also often impose

penalties on physicians themselves for aiding the corporate practice of medicine, which could discourage physicians from participating

in our network of providers.

A material changes in our relationship with our healthcare providers, whether resulting from a dispute

among the entities, a change in government regulation, or the loss of these affiliations, could impair our ability to provide

services through our planned “

Bonum Health Hub ”, and could have a material adverse effect on our business,

financial condition and results of operations.

“Bonum Health Hub”

telehealth business will depend on our ability to maintain and expand a network of qualified providers.

success of our “

Bonum Health Hubs ”

is dependent upon our ability to maintain a network of qualified telehealth

If we are unable to recruit and retain board-certified physicians and other healthcare professionals, it would have

a material adverse effect on our “

Bonum Health Hubs ”

business and ability to grow such operations.

be willing to pay the costs demanded by such services providers and/or changes in Medicare and/or Medicaid reimbursement levels

and other pressures on healthcare providers and consolidation activity among hospitals, physician groups and healthcare providers

may make such providers harder or more expensive to find and contract with.

The result of the above may be that our “

Health Hubs ”

are unsuccessful, which may result in a material adverse effect to our operations.

of practicing medicine is subject to change and open to evolving interpretations by medical boards and state attorneys’ generals,

among others.

Accordingly, we must monitor our compliance with laws in the jurisdictions in which we operate, on an ongoing basis, and

we cannot provide assurance that our activities and arrangements, if challenged, will be found to be in compliance with the law.

Additionally,

it is possible that the laws and rules governing the practice of medicine, including remote healthcare, in one or more jurisdictions

may change in a manner which negatively effects our ability to operate.

If a successful legal challenge or an adverse change in the relevant

laws were to occur, and we were unable to adapt our business model accordingly, our operations in the affected jurisdictions would be

disrupted, which could have a material adverse effect on our business, financial condition and results of operations.

our telehealth business, we will be dependent on our relationships with affiliated professions and our business would be adversely affected

if those relationships were disrupted.

is a risk that state authorities in some jurisdictions may find that contractual relationships with physicians providing telehealth violate

laws prohibiting the corporate practice of medicine.

State corporate practice of medicine doctrines also often impose penalties on physicians

themselves for aiding the corporate practice of medicine, which could discourage physicians from participating in our network of providers.

A material change in our relationship with our healthcare providers, whether resulting from a dispute among the entities, a change in

government regulation, or the loss of these affiliations, could impair our ability to provide services and could have a material adverse

effect on our business, financial condition and results of operations.

“Bonum Health” telehealth business will depend on our ability to maintain and expand a network of qualified providers.

success of our “ Bonum Health ” telehealth services is dependent upon our ability to maintain a network of qualified

telehealth providers.

If we are unable to recruit and retain board-certified physicians and other healthcare professionals, it would

have a material adverse effect on our “ Bonum Health ” business and ability to grow such operations.

We may not be willing

to pay the costs demanded by such services providers and/or changes in Medicare and/or Medicaid reimbursement levels and other pressures

on healthcare providers and consolidation activity among hospitals, physician groups and healthcare providers may make such

providers harder or more expensive to find and contract with.

The result of the above may be that our “ Bonum Health ”

telehealth services are unsuccessful, which may result in a material adverse effect to our operations.

technological change in the telehealth industry presents us with significant risks and challenges.

telehealth market is characterized by rapid technological change, changing consumer requirements, short product lifecycles and

evolving industry standards.

Our success will depend on our ability to enhance our offerings with next-generation technologies

and to develop or to acquire and market new services.

There is no guarantee that we will possess the resources, either financial

or personnel, for the research, design and development of new applications or services, or that we will be able to utilize these

resources successfully and avoid technological or market obsolescence.

Further, there can be no assurance that technological advances

by one or more of our competitors or future competitors will not result in our present or future software-based products and services

becoming uncompetitive or obsolete.

telehealth industry is competitive, and if we are not able to compete effectively, our business, financial condition and results

of operations will be harmed.

the telehealth market is in an early stage of development, it is competitive and we expect it to attract increased competition,

which could make it difficult for us to succeed.

We currently face competition in the telehealth industry from a range of companies,

including specialized software and solution providers that offer similar solutions, often at substantially lower prices, and that

are continuing to develop additional products and becoming more sophisticated and effective.

These competitors include Doctor

On Demand, MDLive and Teladoc.

In addition, large, well-financed health systems have in some cases developed their own telehealth

tools and may provide these solutions to their customers at discounted prices.

The surge in interest in telehealth, and in particular

the relaxation of HIPAA privacy and security requirements, has also attracted new competition from providers who utilize consumer-grade

video conferencing platforms such as Zoom and Twilio.

Competition from large software companies or other specialized solution

providers, communication tools and other parties could result in continued pricing pressures, which is likely to lead to price

declines in certain product segments, which could negatively impact our future market, sales, profitability and market share (if

If we are unable to successfully compete in the telehealth market, our business, financial condition and results of operations

could be materially adversely affected.

emergence of new technologies may render our telehealth solution obsolete or require us to expend significant resources in order

to remain competitive.

healthcare industry is massive, with a number of large market participants with conflicting agendas, and it is subject to

significant government regulation and is currently undergoing significant change.

Changes in the telehealth industry, for example,

such as the emergence of new technologies as more competitors enter our market, could result in our telehealth solution being

less desirable or relevant.

If healthcare benefits trends shift or entirely new technologies are developed that replace existing

solutions, our existing or future products could be rendered obsolete and our business could be adversely affected.

we may experience difficulties with industry standards, design or marketing that could delay or prevent our development, introduction

or implementation of new applications and enhancements.

telehealth market is characterized by rapid technological change, changing consumer requirements, short product lifecycles and evolving

industry standards.

Our success will depend on our ability to enhance our offerings with next-generation technologies and to develop

or to acquire and market new services.

There is no guarantee that we will possess the resources, either financial or personnel, for the

research, design and development of new applications or services, or that we will be able to utilize these resources successfully and

avoid technological or market obsolescence.

Further, there can be no assurance that technological advances by one or more of our competitors

or future competitors will not result in our present or future software-based products and services becoming uncompetitive or obsolete.

telehealth industry is competitive, and if we are not able to compete effectively, our business, financial condition and results of operations

will be harmed.

the telehealth market is in an early stage of development, it is competitive and we expect it to attract increased competition, which

could make it difficult for us to succeed.

We currently face competition in the telehealth industry from a range of companies, including

specialized software and solution providers that offer similar solutions, often at substantially lower prices, and that are continuing

to develop additional products and becoming more sophisticated and effective.

These competitors include Doctor On Demand, MDLive, Teladoc

In addition, large, well-financed health systems have in some cases developed their own telehealth tools and provide these

solutions to their customers at discounted prices.

The surge in interest in telehealth, and in particular the relaxation of HIPAA privacy

and security requirements, has also attracted new competition from providers who utilize consumer-grade video conferencing platforms

such as Zoom, Microsoft Teams, Google Meet and Twilio.

Competition from large software companies or other specialized solution providers,

communication tools and other parties could result in continued pricing pressures, which is likely to lead to price declines in certain

product segments, which could negatively impact our future market, sales, profitability and market share (if any).

If we are unable to

successfully compete in the telehealth market, our business, financial condition and results of operations could be materially adversely

emergence of new technologies may render our telehealth solution obsolete or require us to expend significant resources in order to remain

healthcare industry is massive, with a number of large market participants with conflicting agendas, and it is subject to significant

government regulation and is currently undergoing significant change.

Changes in the telehealth industry, for example, such as the emergence

of new technologies as more competitors enter our market, could result in our telehealth solution being less desirable or relevant.

healthcare benefits trends shift or entirely new technologies are developed that replace existing solutions, our existing or future products

could be rendered obsolete, and our business could be adversely affected.

In addition, we may experience difficulties with industry standards,

design or marketing that could delay or prevent our development, introduction or implementation of new applications and enhancements.

we fail to develop widespread brand awareness cost-effectively, our business may suffer.

believe that developing and maintaining widespread awareness of our brand in a cost-effective manner is critical to achieving

widespread adoption of our products and attracting new clients.

Our brand promotion activities may not generate client awareness

or increase revenue, and even if they do, any increase in revenue may not offset the expenses we incur in building our brand.

If we fail to successfully promote and maintain our brand, or incur substantial expenses in doing so, we may fail to attract or

retain clients necessary to realize a sufficient return on our brand-building efforts or to achieve the widespread brand awareness

that is critical for broad client adoption of our solution.

Associated with Our Planned MedCheks Health Passport Platform

health passport market may not achieve and sustain high levels of demand, consumer acceptance and market adoption.

health passport market is relatively new and unproven, and it is uncertain whether it will achieve and sustain high levels of

demand, consumer acceptance and market adoption.

Our success in this new market will depend to a substantial extent on the willingness

of our customers to use, and to increase the frequency and extent of their utilization of, our services, as well as on our ability

to demonstrate the value of health passports to employers, health plans, government agencies and other purchasers.

Negative publicity

concerning our services or the health passport market as a whole could limit market acceptance of our services.

If our s, or their

members or patients, do not perceive the benefits of our services, or if our services are not competitive, then our market may

not develop at all, or it may develop more slowly than we expect.

Similarly, individual and healthcare industry concerns or negative

publicity regarding patient confidentiality and privacy in the context of health passport could limit market acceptance of our

Our health passport may not be adopted by customers due to among other things, their belief that smartphones lack appropriate

security or their failure to understand blockchain.

If customers fail to adopt our health passport, or health passports fail to

become adopted in the marketplace, it could have a material adverse effect on our business, financial condition or results of

Separately, governments may come out with their own health passports or similar technology which makes our health

passport obsolete.

believe that developing and maintaining widespread awareness of our brand in a cost-effective manner is critical to achieving widespread

adoption of our products and attracting new clients.

Our brand promotion activities may not generate client awareness or increase revenue,

and even if they do, any increase in revenue may not offset the expenses we incur in building our brand.

If we fail to successfully promote

and maintain our brand, or incur substantial expenses in doing so, we may fail to attract or retain clients necessary to realize a sufficient

return on our brand-building efforts or to achieve the widespread brand awareness that is critical for broad client adoption of our solution.

Associated with Our Governing Documents and Delaware Law

certificate of incorporation provides for indemnification of officers and directors at our expense and limits their liability,

which may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended

for the benefit of officers or directors.

certificate of incorporation provides for indemnification of officers and directors at our expense and limits their liability, which

may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit

of officers or directors.

Certificate of Incorporation provides for indemnification as follows:

“To the fullest extent permitted by applicable law,

the Corporation is authorized to provide indemnification of, and advancement of expenses to, such agents of the Corporation (and

any other persons to which Delaware law permits the Corporation to provide indemnification) through Bylaw provisions, agreements

with such agents or other persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification

and advancement otherwise permitted by Section 145 of the Delaware General Corporation Law, subject only to limits created by

applicable Delaware law (statutory or non-statutory), with respect to actions for breach of duty to the Corporation, its stockholders

and others.”

have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against

public policy as expressed in the Securities Act and is, therefore, unenforceable.

In the event that a claim for indemnification

for liabilities arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director,

officer or controlling person in the successful defense of any action, suit or proceeding, is asserted by a director, officer

or controlling person in connection with our activities, we will (unless in the opinion of our counsel, the matter has been settled

by controlling precedent) submit to a court of appropriate jurisdiction, the question whether indemnification by us is against

public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The legal process

relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either

of which factors is likely to materially reduce the market and price for our shares.

certificate of incorporation contains a specific provision that limits the liability of our directors for monetary damages to

the Company and the Company’s stockholders and requires us, under certain circumstances, to indemnify officers, directors

and employees.

“To the fullest extent permitted by applicable law, the Corporation

is authorized to provide indemnification of, and advancement of expenses to, such agents of the Corporation (and any other persons to

which Delaware law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other

persons, vote of stockholders or disinterested directors or otherwise, in excess of the indemnification and advancement otherwise permitted

by Section 145 of the Delaware General Corporation Law, subject only to limits created by applicable Delaware law (statutory or non-statutory),

with respect to actions for breach of duty to the Corporation, its stockholders and others.” Our obligation to indemnify our officers

and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty.

These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even

though such an action, if successful, might otherwise benefit us and our stockholders.

Furthermore, a stockholder’s investment

may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant

to these indemnification provisions.

have been advised that, in the opinion of the SEC, indemnification for liabilities arising under federal securities laws is against public

policy as expressed in the Securities Act and is, therefore, unenforceable.

In the event that a claim for indemnification for liabilities

arising under federal securities laws, other than the payment by us of expenses incurred or paid by a director, officer or controlling

person in the successful defense of any action, suit or proceeding, is asserted by a director, officer or controlling person in connection

with our activities, we will (unless in the opinion of our counsel, the matter has been settled by controlling precedent) submit to a

court of appropriate jurisdiction, the question whether indemnification by us is against public policy as expressed in the Securities

Act and will be governed by the final adjudication of such issue.

The legal process relating to this matter if it were to occur is likely

to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market

and price for our shares.

certificate of incorporation contains a specific provision that limits the liability of our directors for monetary damages to the Company

and the Company’s stockholders and requires us, under certain circumstances, to indemnify officers, directors and employees.

limitation of monetary liability against our directors, officers and employees under Delaware law and the existence of indemnification

rights to them may result in substantial expenditures by us and may discourage lawsuits against our directors, officers and employees.

certificate of incorporation contains a specific provision that limits the liability of our directors for monetary damages to

the Company and the Company’s stockholders.

We also have contractual indemnification obligations under our employment and

engagement agreements with our executive officers and directors.

The foregoing indemnification obligations could result in us

incurring substantial expenditures to cover the cost of settlement or damage awards against our directors and officers, which

the Company may be unable to recoup.

These provisions and resultant costs may also discourage us from bringing a lawsuit against

our directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation

by our stockholders against our directors and officers, even though such actions, if successful, might otherwise benefit us and

our stockholders.

certificate of incorporation contains a specific provision that limits the liability of our directors for monetary damages to the Company

and the Company’s stockholders, including as a result of a breach of their fiduciary duties, except to the extent such exception

from liability is not permitted under Delaware General Corporation Law.

We also have contractual indemnification obligations under our

employment and engagement agreements with our executive officers and directors, as well as pursuant to indemnification agreements.

foregoing indemnification obligations could result in us incurring substantial expenditures to cover the cost of settlement or damage

awards against our directors and officers, which the Company may be unable to recoup.

These provisions and resultant costs may also discourage

us from bringing a lawsuit against our directors and officers for breaches of their fiduciary duties and may similarly discourage the

filing of derivative litigation by our stockholders against our directors and officers, even though such actions, if successful, might

otherwise benefit us and our stockholders.

directors have the right to authorize the issuance of shares of preferred stock and additional shares of our common stock.

directors, within the limitations and restrictions contained in our certificate of incorporation and without further action by

our stockholders, have the authority to issue shares of preferred stock from time to time in one or more series and to fix the

number of shares and the relative rights, conversion rights, voting rights, and terms of redemption, liquidation preferences and

any other preferences, special rights and qualifications of any such series.

Any issuance of shares of preferred stock could adversely

affect the rights of holders of our common stock.

Should we issue additional shares of our common stock at a later time, each

investor’s ownership interest in our stock would be proportionally reduced.

directors, within the limitations and restrictions contained in our certificate of incorporation and without further action by our stockholders,

have the authority to issue shares of preferred stock from time to time in one or more series and to fix the number of shares and the

relative rights, conversion rights, voting rights, and terms of redemption, liquidation preferences and any other preferences, special

rights and qualifications of any such series.

Any issuance of shares of preferred stock could adversely affect the rights of holders

of our common stock.

Should we issue additional shares of our common stock at a later time, each investor’s ownership interest

in our stock would be proportionally reduced.

Anti-takeover

provisions may impede the acquisition of Trxade.

provisions of the Delaware General Corporation Law (DGCL) have anti-takeover effects and may inhibit a non-negotiated merger or

other business combination.

These provisions are intended to encourage any person interested in acquiring Trxade to negotiate

with, and to obtain the approval of, our directors, in connection with such a transaction.

As a result, certain of these provisions

may discourage a future acquisition of Trxade, including an acquisition in which the stockholders might otherwise receive a premium

for their shares.

In addition, we can also authorize “

blank check ”

preferred stock, which could be issued by

our Board of Directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to

our common stock.

provisions may impede the acquisition of the Company.

provisions of the Delaware General Corporation Law (DGCL) have anti-takeover effects and may inhibit a non-negotiated merger or other

business combination, notwithstanding the fact that our certificate of incorporation provides that we are not subject to Section 203

of Delaware General Corporation Law, which relates to certain restrictions on business combinations with interested stockholders.

provisions are intended to encourage any person interested in acquiring the Company to negotiate with, and to obtain the approval of,

our directors, in connection with such a transaction.

As a result, certain of these provisions may discourage a future acquisition of

the Company, including an acquisition in which the stockholders might otherwise receive a premium for their shares.

In addition, we can

also authorize “ blank check ” preferred stock, which could be issued by our Board of Directors without stockholder

approval and may contain voting, liquidation, dividend and other rights superior to our common stock.

Reporting and Listing Risks

2 unchanged sentences

incur significant costs associated with our public company reporting requirements and with applicable U.S.

and NASDAQ Capital

Market corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented

by the SEC and The NASDAQ Capital Market.

The rules of The NASDAQ Capital Market include requiring us to maintain independent

directors, comply with other corporate governance requirements and pay annual listing and stock issuance fees.

All of such SEC

and NASDAQ obligations require a commitment of additional resources including, but not limited, to additional expenses, and may

result in the diversion of our senior management’s time and attention from our day-to-day operations.

We expect all of these

applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities

more time consuming and costly.

We also expect that these applicable rules and regulations may make it more difficult and more

expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and

coverage or incur substantially higher costs to obtain the same or similar coverage.

As a result, it may be more difficult for

us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers.

will continue to incur increased costs as a result of being a reporting company, and given our limited capital resources, such

additional costs may have an adverse impact on our profitability.

and NASDAQ Capital Market

corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the SEC

and The NASDAQ Capital Market.

The rules of The NASDAQ Capital Market include requiring us to maintain independent directors, comply

with other corporate governance requirements and pay annual listing and stock issuance fees.

All of such SEC and NASDAQ obligations require

a commitment of additional resources including, but not limited to, additional expenses, and may result in the diversion of our senior

management’s time and attention from our day-to-day operations.

We expect all of these applicable rules and regulations to significantly

increase our legal and financial compliance costs and to make some activities more time consuming and costly.

We also expect that these

applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance

and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar

As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors

or as executive officers.

will continue to incur increased costs as a result of being a reporting company, and given our limited capital resources, such additional

costs may have an adverse impact on our profitability.

are an SEC-reporting company.

The rules and regulations under the Exchange Act require reporting companies to provide periodic

reports with interactive data files, which require that we engage legal, accounting and auditing professionals, and eXtensible

Business Reporting Language (XBRL) and EDGAR (Electronic Data Gathering, Analysis, and Retrieval) service providers.

The engagement

of such services can be costly, and we may continue to incur additional losses, which may adversely affect our ability to continue

as a going concern.

In addition, the Sarbanes-Oxley Act of 2002, as well as a variety of related rules implemented by the SEC,

have required changes in corporate governance practices and generally increased the disclosure requirements of public companies.

For example, as a result of being a reporting company, we are required to file periodic and current reports and other information

with the SEC and we have adopted policies regarding disclosure controls and procedures and regularly evaluate those controls and

additional costs we continue to incur in connection with becoming a reporting company (expected to be several hundred thousand

dollars per year) will continue to further stretch our limited capital resources.

Due to our limited resources, we have to allocate

resources away from other productive uses in order to continue to comply with our obligations as an SEC reporting company.

there is no guarantee that we will have sufficient resources to continue to meet our reporting and filing obligations with the

SEC as they come due.

may not be able to comply with NASDAQ’s continued listing standards.

common stock was approved for listing on The NASDAQ Capital Market under the symbol “

MEDS ”, on February 13,

Notwithstanding such listing, there can be no assurance any broker will be interested in trading our stock.

Therefore, it

may be difficult to sell your shares of common stock if you desire or need to sell them.

Our underwriters are not obligated to

make a market in our securities, and even they do make a market, they can discontinue market making at any time without notice.

Neither we nor the underwriters can provide any assurance that an active and liquid trading market in our securities will develop

or, if developed, that such market will continue.

The rules and regulations under the Exchange Act require reporting companies to provide periodic reports

with interactive data files, which require that we engage legal, accounting and auditing professionals, and inline eXtensible Business

Reporting Language (iXBRL) and EDGAR (Electronic Data Gathering, Analysis, and Retrieval) service providers.

The engagement of such services

can be costly, and we may continue to incur additional losses, which may adversely affect our ability to continue as a going concern.

In addition, the Sarbanes-Oxley Act of 2002, as well as a variety of related rules implemented by the SEC, have required changes in corporate

governance practices and generally increased the disclosure requirements of public companies.

For example, as a result of being a reporting

company, we are required to file periodic and current reports and other information with the SEC, and we have adopted policies regarding

disclosure controls and procedures and regularly evaluate those controls and procedures.

additional costs we continue to incur in connection with becoming a reporting company (expected to be several hundred thousand dollars

per year) will continue to further stretch our limited capital resources.

Due to our limited resources, we have to allocate resources

away from other productive uses in order to continue to comply with our obligations as an SEC reporting company.

Further, there is no

guarantee that we will have sufficient resources to continue to meet our reporting and filing obligations with the SEC as they come due.

may not be able to comply with NASDAQ’s continued listing standards.

common stock was approved for listing on The NASDAQ Capital Market under the symbol “ MEDS ”, in February 2020.

Notwithstanding

such listing, there can be no assurance any broker will be interested in trading our stock.

Therefore, it may be difficult to sell your

shares of common stock if you desire or need to sell them.

Our underwriters are not obligated to make a market in our securities, and

even if they do make a market, they can discontinue market making at any time without notice.

Neither we nor the underwriters can provide

any assurance that an active and liquid trading market in our securities will develop or, if developed, that such market will continue.

is also no guarantee that we will be able to maintain our listing on The NASDAQ Capital Market for any period of time by perpetually

satisfying NASDAQ’s continued listing requirements.

Our failure to continue to meet these requirements may result in our

securities being delisted from NASDAQ.

the conditions required for continued listing on The NASDAQ Capital Market, NASDAQ requires us to maintain at least $2.5 million

in stockholders’

equity or $500,000 in net income over the prior two years or two of the prior three years, to have a majority

of independent directors, and to maintain a stock price over $1.00 per share.

Our stockholders’

equity may not remain above

NASDAQ’s $2.5 million minimum, we may not generate over $500,000 of yearly net income, we may not be able to maintain independent

directors, and we may not be able to maintain a stock price over $1.00 per share.

If we fail to timely comply with the applicable

requirements, our stock may be delisted.

In addition, even if we demonstrate compliance with the requirements above, we will have

to continue to meet other objective and subjective listing requirements to continue to be listed on The NASDAQ Capital Market.

satisfying NASDAQ’s continued listing requirements.

Our failure to continue to meet these requirements may result in our securities

being delisted from NASDAQ.

the conditions required for continued listing on The NASDAQ Capital Market, NASDAQ requires us to maintain at least $2.5 million in stockholders’

equity or $500,000 in net income over the prior two years or two of the prior three years, to have a majority of independent directors,

an audit committee of at least three independent directors (subject to certain limited exceptions), and to maintain a stock price over

$1.00 per share.

Our stockholders’ equity may not remain above NASDAQ’s $2.5 million minimum, we may not generate over $500,000

of yearly net income, we may not be able to maintain independent directors or an audit committee of at least three independent directors

(subject to certain limited exceptions), and we may not be able to maintain a stock price over $1.00 per share.

If we fail to timely

comply with the applicable requirements, our stock may be delisted.

In addition, even if we demonstrate compliance with the requirements

above, we will have to continue to meet other objective and subjective listing requirements to continue to be listed on The NASDAQ Capital

Delisting from The NASDAQ Capital Market could make trading our common stock more difficult for investors, potentially leading

to declines in our share price and liquidity.

Without a NASDAQ Capital Market listing, stockholders may have a difficult time

getting a quote for the sale or purchase of our stock, the sale or purchase of our stock would likely be made more difficult and

the trading volume and liquidity of our stock could decline.

Delisting from The NASDAQ Capital Market could also result in negative

publicity and could also make it more difficult for us to raise additional capital.

The absence of such a listing may adversely

affect the acceptance of our common stock as currency or the value accorded by other parties.

Further, if we are delisted, we

would also incur additional costs under state blue sky laws in connection with any sales of our securities.

These requirements

could severely limit the market liquidity of our common stock and the ability of our stockholders to sell our common stock in

the secondary market.

If our common stock is delisted by NASDAQ, our common stock may be eligible to trade on an over-the-counter

quotation system, such as the OTCQB Market, where an investor may find it more difficult to sell our stock or obtain accurate

quotations as to the market value of our common stock.

In the event our common stock is delisted from The NASDAQ Capital Market,

we may not be able to list our common stock on another national securities exchange or obtain quotation on an over-the counter

quotation system.

Without a NASDAQ Capital Market listing, stockholders may have a difficult time getting

a quote for the sale or purchase of our stock, the sale or purchase of our stock would likely be made more difficult, and the trading

volume and liquidity of our stock could decline.

Delisting from The NASDAQ Capital Market could also result in negative publicity and

could also make it more difficult for us to raise additional capital.

The absence of such a listing may adversely affect the acceptance

of our common stock as currency or the value accorded by other parties.

Further, if we are delisted, we would also incur additional costs

under state blue sky laws in connection with any sales of our securities.

These requirements could severely limit the market liquidity

of our common stock and the ability of our stockholders to sell our common stock in the secondary market.

If our common stock is delisted

by NASDAQ, our common stock may be eligible to trade on an over-the-counter quotation system, such as the OTCQB Market or the OTC Pink

market, where an investor may find it more difficult to sell our stock or obtain accurate quotations as to the market value of our common

In the event our common stock is delisted from The NASDAQ Capital Market, we may not be able to list our common stock on another

national securities exchange or obtain quotation on an over-the counter quotation system.

changes that affect our distribution channels could harm our business.

the federal level, track and trace legislation requiring the use of pharmaceutical pedigree may restrict and disrupt the movement

of pharmaceuticals along the supply chain should the cost of complying with this legislation be too burdensome for smaller suppliers.

Changes in the United States healthcare industry and regulatory environment could have a material adverse impact on our results

of operations.

of our products and services are intended to function within the structure of the healthcare financing and reimbursement system

currently being used in the United States.

In recent years, the healthcare industry in the United States has changed significantly

in an effort to enhance efficiencies, reduce costs and improve patient outcomes.

These changes have included cuts in Medicare

and Medicaid reimbursement levels, changes in the basis for payments, shifting away from fee-for-service and towards value-based

payments and risk-sharing models, increases in the use of managed care, and consolidation in the healthcare industry generally.

We expect that the healthcare industry in the United States shall continue to change and evolve in the near future.

the healthcare industry’s (or our pharmaceutical suppliers’) pricing, selling, inventory, distribution or supply policies

or practices could significantly reduce our revenues and net income.

Additionally, if we experience disruptions in our supply

of generic drugs, our margins could be adversely affected.

the federal level, track and trace legislation requiring the use of pharmaceutical pedigree may restrict and disrupt the movement of

pharmaceuticals along the supply chain should the cost of complying with this legislation be too burdensome for smaller suppliers.

in the United States healthcare industry and regulatory environment could have a material adverse impact on our results of operations.

of our products and services are intended to function within the structure of the healthcare financing and reimbursement system currently

being used in the United States.

In recent years, the healthcare industry in the United States has changed significantly in an effort

to enhance efficiencies, reduce costs and improve patient outcomes.

These changes have included cuts in Medicare and Medicaid reimbursement

levels, changes in the basis for payments, shifting away from fee-for-service and towards value-based payments and risk-sharing models,

increases in the use of managed care, and consolidation in the healthcare industry generally.

We expect that the healthcare industry

in the United States shall continue to change and evolve in the near future.

Changes in the healthcare industry’s (or our pharmaceutical

suppliers’) pricing, selling, inventory, distribution or supply policies or practices could significantly reduce our revenues and

Additionally, if we experience disruptions in our supply of generic drugs, our margins could be adversely affected.

distribute generic pharmaceuticals, which can be subject to both price deflation and price inflation.

Continued volatility in

the availability, pricing trends or reimbursement of these generic drugs, or significant fluctuations in the nature, frequency

and magnitude of generic pharmaceutical launches, could have a material adverse impact on our results of operations.

Additionally,

any future changes in branded and generics drug pricing could be significantly different than our projections.

Generic drug manufacturers

are increasingly challenging the validity or enforceability of patents on branded pharmaceutical products.

During the pendency

of these legal challenges, a generics manufacturer may begin manufacturing and selling a generic version of the branded product

prior to the final resolution of its legal challenge over the branded product’s patent.

To the extent we source, contract

manufacture, and distribute such generic products, the brand-name company could assert infringement claims against us.

generally obtain indemnification against such claims from generic manufacturers as a condition of distributing their products,

these rights may not be adequate or sufficient to protect us.

Continued volatility

in the availability, pricing trends or reimbursement of these generic drugs, or significant fluctuations in the nature, frequency and

magnitude of generic pharmaceutical launches, could have a material adverse impact on our results of operations.

Additionally, any future

changes in branded and generics drug pricing could be significantly different than our projections.

Generic drug manufacturers are increasingly

challenging the validity or enforceability of patents on branded pharmaceutical products.

During the pendency of these legal challenges,

a generics manufacturer may begin manufacturing and selling a generic version of the branded product prior to the final resolution of

its legal challenge over the branded product’s patent.

To the extent we source, contract manufacture, and distribute such generic

products, the brand-name company could assert infringement claims against us.

While we generally obtain indemnification against such

claims from generic manufacturers as a condition of distributing their products, these rights may not be adequate or sufficient to protect

are also required to comply with various state pricing gouging laws.

healthcare industry is highly regulated, and further regulation of our distribution businesses and technology products and services

could impose increased costs, negatively impact our profit margins and the profit margins of our customers, delay the introduction

or implementation of our new products, or otherwise negatively impact our business and expose us to litigation and regulatory

investigations.

healthcare industry is highly regulated, and further regulation of our distribution businesses and technology products and services could

impose increased costs, negatively impact our profit margins and the profit margins of our customers, delay the introduction or implementation

of our new products, or otherwise negatively impact our business and expose us to litigation and regulatory investigations.

fraud laws are often vague and uncertain, exposing us to potential liability.

are subject to extensive, and frequently changing, local, state and federal laws and regulations relating to healthcare fraud,

waste and abuse.

Local, state and federal governments continue to strengthen their position and scrutiny over practices involving

fraud, waste and abuse affecting Medicare, Medicaid and other government healthcare programs.

Many of the regulations applicable

to us, including those relating to marketing incentives, are vague or indefinite and have not been interpreted by the courts.

The regulations may be interpreted or applied by a prosecutorial, regulatory, or judicial authority in a manner that could require

us to make changes in our operations.

If we fail to comply with applicable laws and regulations, we could become liable for damages

and suffer civil and criminal penalties, including the loss of licenses or our ability to participate in Medicare, Medicaid and

other federal and state healthcare programs.

reducing reimbursements for pharmaceuticals could ruin our industry.

our profit margins and the profit margins of our customers may be adversely affected by laws and regulations reducing reimbursement

rates for pharmaceuticals, medical treatments and related services, or changing the methodology by which reimbursement levels

are determined.

The federal government may adopt measures that could reduce Medicare or Medicaid spending, or impose additional

requirements on healthcare entities.

We cannot predict what alternative or additional deficit reduction initiatives or Medicare

payment reductions, if any, will ultimately be enacted into law, or the timing or affect any such initiatives or reductions would

Any of the changes discussed above may have a material adverse impact on our results of operations.

are subject to extensive, and frequently changing, local, state and federal laws and regulations relating to healthcare fraud, waste

Local, state and federal governments continue to strengthen their position and scrutiny over practices involving fraud, waste

and abuse affecting Medicare, Medicaid and other government healthcare programs.

Many of the regulations applicable to us, including

those relating to marketing incentives, are vague or indefinite and have not been interpreted by the courts.

The regulations may be interpreted

or applied by a prosecutorial, regulatory, or judicial authority in a manner that could require us to make changes in our operations.

If we fail to comply with applicable laws and regulations, we could become liable for damages and suffer civil and criminal penalties,

including the loss of licenses or our ability to participate in Medicare, Medicaid and other federal and state healthcare programs.

reducing reimbursements for pharmaceuticals could negatively affect our industry.

our profit margins and the profit margins of our customers may be adversely affected by laws and regulations reducing reimbursement rates

for pharmaceuticals, medical treatments and related services, or changing the methodology by which reimbursement levels are determined.

The federal government may adopt measures that could reduce Medicare or Medicaid spending, or impose additional requirements on healthcare

We cannot predict what alternative or additional deficit reduction initiatives or Medicare payment reductions, if any, will

ultimately be enacted into law, or the timing or affect any such initiatives or reductions would have on us.

Any of the changes discussed

above may have a material adverse impact on our results of operations, cash flows, prospects and/or the value of our securities.

security and licensure standards of federal agencies challenge our ability to comply with applicable laws and regulations.

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(the FDA), various state boards of pharmacy, state health departments, the U.S.

Department of Health and Human Services (HHS),

the Centers for Medicare & Medicaid Services (CMS), and other comparable agencies.

We are also subject to certain state laws

relating to price gouging.

Although we have enhanced our procedures to ensure compliance, a regulatory agency or tribunal may

conclude that our operations are not compliant with applicable laws and regulations.

In addition, we may be unable to maintain

or renew existing permits, licenses or any other regulatory approvals or obtain without significant delay, future permits, licenses

or other approvals needed for the operation of our businesses.

Any noncompliance by us with applicable laws and regulations or

the failure to maintain, renew or obtain necessary permits and licenses could lead to litigation and have a material adverse impact

on our results of operations.

Department of Health and Human Services (HHS), the Centers

for Medicare & Medicaid Services (CMS), and other comparable agencies.

We are also subject to certain state laws relating to price

Although we have enhanced our procedures to ensure compliance, a regulatory agency or tribunal may conclude that our operations

are not compliant with applicable laws and regulations.

In addition, we may be unable to maintain or renew existing permits, licenses

or any other regulatory approvals or obtain without significant delay, future permits, licenses or other approvals needed for the operation

of our businesses.

Any noncompliance by us with applicable laws and regulations or the failure to maintain, renew or obtain necessary

permits and licenses could lead to litigation and have a material adverse impact on our results of operations.

tracking laws and regulations could increase our regulatory burdens.

and state and federal agencies, including state boards of pharmacy and departments of health and the FDA, have made increased

efforts in the past year to regulate the pharmaceutical distribution system in order to prevent the introduction of counterfeit,

adulterated or mislabeled drugs into the pharmaceutical distribution system (otherwise known as “

pedigree tracking ”).

In November 2013, Congress passed (and President Barack Obama signed into law) the Drug Quality and Security Act (the “

DQSA ”).

and state and federal agencies, including state boards of pharmacy and departments of health and the FDA, have made increased efforts

in the past year to regulate the pharmaceutical distribution system in order to prevent the introduction of counterfeit, adulterated

or mislabeled drugs into the pharmaceutical distribution system (otherwise known as “ pedigree tracking ”).

2013, Congress passed (and President Barack Obama signed into law) the Drug Quality and Security Act (the “ DQSA ”).

The DQSA establishes federal standards requiring supply-chain stakeholders to participate in an electronic, interoperable, lot-level

prescription drug track-and-trace system.

The law also preempts state drug pedigree requirements and establishes new requirements

for drug wholesale distributors and third-party logistics providers, including licensing requirements in states that had not previously

licensed such entities.

addition, the Food and Drug Administration Amendments Act of 2007 requires the FDA to establish standards and identify and validate

effective technologies for the purpose of securing the pharmaceutical supply chain against counterfeit drugs.

These standards

may include track-and-trace or authentication technologies, such as radio frequency identification devices, 2D data matrix barcodes,

and other similar technologies.

On March 26, 2010, the FDA released the Serialized Numerical Identifier (the “

guidance for manufacturers who serialize pharmaceutical packaging.

We expect to be able to accommodate these SNI regulations in

our distribution operations.

The DQSA and other pedigree tracking laws and regulations have increased the overall regulatory burden

and costs associated with our pharmaceutical distribution business and have had a material adverse impact on our results of operations.

The law also preempts state drug pedigree requirements and establishes new requirements for

drug wholesale distributors and third-party logistics providers, including licensing requirements in states that had not previously licensed

such entities.

addition, the Food and Drug Administration Amendments Act of 2007 requires the FDA to establish standards and identify and validate effective

technologies for the purpose of securing the pharmaceutical supply chain against counterfeit drugs.

These standards may include track-and-trace

or authentication technologies, such as radio frequency identification devices, 2D data matrix barcodes, and other similar technologies.

On March 26, 2010, the FDA released the Serialized Numerical Identifier (the “ SNI ”) guidance for manufacturers who

serialize pharmaceutical packaging.

To date we have been able to accommodate these SNI regulations in our distribution operations.

DQSA and other pedigree tracking laws and regulations have increased the overall regulatory burden and costs associated with our pharmaceutical

distribution business and have had a material adverse impact on our results of operations.

are uncertain how new privacy laws shall be interpreted.

are numerous federal and state laws and regulations related to the privacy and security of personal information.

In particular,

regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) establish privacy

and security standards that limit the use and disclosure of individually identifiable health information (known as “

health information ”) and require the implementation of administrative, physical and technological safeguards to protect

the privacy of protected health information and ensure the confidentiality, integrity and availability of electronic protected

health information.

We are directly subject to certain provisions of the regulations as a “

Business Associate ”

through our relationships with customers.

We are also directly subject to the HIPAA privacy and security regulations as a “

Entity ”

with respect to our operations as a healthcare clearinghouse, specialty pharmacy and medical surgical supply

If we are unable to properly protect the privacy and security of protected health information entrusted to us, we could

be found to have breached our contracts with our customers.

Further, if we fail to comply with applicable HIPAA privacy and security

standards, we could face civil and criminal penalties.

Although we have implemented and continue to maintain policies and processes

to assist us in complying with these regulations and our contractual obligations, we cannot provide assurances regarding how these

regulations will be interpreted, enforced or applied by the government and regulators to our operations.

In addition to the risks

associated with enforcement activities and potential contractual liabilities, our ongoing efforts to comply with evolving laws

and regulations at the federal and state level might also require us to make costly system purchases /or modifications from time

are continued uncertainties associated with efforts to change or repeal healthcare reforms, and we cannot predict their full effect

on us at this time.

ACA significantly expanded health insurance coverage to uninsured Americans and changed the way healthcare is financed by both

governmental and private payers.

While certain provisions of the ACA took effect immediately, others have delayed effective dates

or require further rulemaking action or regulatory guidance by governmental agencies to implement or finalize (e.g., nondiscrimination

in health programs and activities, or excise taxes on high-cost employer-sponsored health coverage).

Further, there are continued

uncertainties associated with efforts to add, change or repeal certain provisions of the ACA or other healthcare reforms, and

we cannot predict their full effect on us at this time.

While there is currently a substantial lack of clarity around the likelihood,

timing and details of any such policies and reforms, such policies and reforms may have a material adverse impact on our results

of operations.

In particular, regulations

promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996 (HIPAA) establish privacy and security standards

that limit the use and disclosure of individually identifiable health information (known as “ protected health information ”)

and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information

and ensure the confidentiality, integrity and availability of electronic protected health information.

We are directly subject to certain

provisions of the regulations as a “ Business Associate ” through our relationships with customers.

We are also directly

subject to the HIPAA privacy and security regulations as a “ Covered Entity ” with respect to our operations as a healthcare

clearinghouse, specialty pharmacy and medical surgical supply business.

If we are unable to properly protect the privacy and security

of protected health information entrusted to us, we could be found to have breached our contracts with our customers.

Further, if we

fail to comply with applicable HIPAA privacy and security standards, we could face civil and criminal penalties.

Although we have implemented

and continue to maintain policies and processes to assist us in complying with these regulations and our contractual obligations, we

cannot provide assurances regarding how these regulations will be interpreted, enforced or applied by the government and regulators to

our operations.

In addition to the risks associated with enforcement activities and potential contractual liabilities, our ongoing efforts

to comply with evolving laws and regulations at the federal and state level might also require us to make costly system purchases /or

modifications from time to time.

We might be adversely

impacted by healthcare reform such as changes in pricing and reimbursement models.

Many of our products and services

are designed and intended to function within the structure of current healthcare financing and reimbursement systems.

The healthcare

industry and related government programs are changing.

Some of these changes increase our risks and create uncertainties for our business.

For example, some changes

in reimbursement methodologies (including government rates) for pharmaceuticals, medical treatments and related service reduces profit

margins for us and our customers and impose new legal requirements on healthcare providers.

Those changes have included cuts in Medicare

and Medicaid reimbursement levels, changes in the basis for payments, shifting away from fee-for-service and toward value-based payment

and risk-sharing models, and increases in the use of managed care.

In the U.S., the Patient Protection and Affordable

Care Act (“ACA”) significantly expanded health insurance covered to uninsured Americans and changed the way healthcare is

financed by both governmental and private payers.

There are continued efforts to challenge the ACA.

There are also efforts to broaden

healthcare coverage.

lawmakers also have explored proposals to reduce drug prices, including requiring price transparency and drug

importation measures.

These proposals might result in significant changes in the pharmaceutical value chain as manufacturers, PBM, managed

care organizations and other industry stakeholders look to implement new transactional flows and adapt their business models.

Provincial governments in

Canada that provide partial funding for the purchase of pharmaceuticals and independently regulate the sale and reimbursement of drugs

have sought to reduce the costs of publicly funded health programs.

For example, provincial governments have taken steps to reduce consumer

prices for generic pharmaceuticals and, in some provinces, change professional allowances paid to pharmacists by generic manufacturers.

Many European governments

provide or subsidize healthcare to consumers and regulate pharmaceutical prices, patient eligibility and reimbursement levels in order

to control government healthcare system costs.

Some European governments have implemented or are considering austerity measures to reduce

healthcare spending.

These measures exert pressure on the pricing and reimbursement timelines for pharmaceuticals and may cause our customers

to purchase fewer of our products and services or influence us to reduce prices.

billing and coding laws may subject us to fines and investigations.

billing, coding and collection activities are governed by numerous federal and state civil and criminal laws.

In connection with

these laws, we may be subjected to federal or state government investigations and possible penalties may be imposed upon us, false

claims actions may have to be defended, private payers may file claims against us and we may be excluded from Medicare, Medicaid

or other government-funded healthcare programs.

Any such proceeding or investigation could have a material adverse impact on our

results of operations.

In connection with these

laws, we may be subjected to federal, or state government investigations and possible penalties may be imposed upon us, false claims

actions may have to be defended, private payers may file claims against us, and we may be excluded from Medicare, Medicaid or other government-funded

healthcare programs.

Any such proceeding or investigation could have a material adverse impact on our results of operations.

may be difficult and costly for us to comply with the extensive government regulations to which our business is subject.

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federal and state governments.

In addition, as we expand our operations,

we may also become subject to the regulations of foreign jurisdictions, as well as additional regulations relating to environmental

matters, transportation of pharmaceutical products, shipping restrictions, and import and export restrictions.

We are also required

to comply with various state pricing gouging laws.

In addition, as we expand our operations, we

may also become subject to the regulations of foreign jurisdictions, as well as additional regulations relating to environmental matters,

transportation of pharmaceutical products, shipping restrictions, and import and export restrictions.

We are also required to comply

with various state pricing gouging laws.

the enactment of new rules and regulations could adversely affect our business.

For example, the ACA has the primary goal of reducing

the cost of healthcare and providing medical coverage to some of the nation’s 25 million uninsured.

Depending on future

enforcement or additional rules and regulations created around it, pharmaceutical pricing controls could be established resulting

in substantially reduced margins and limited reimbursement for pharmacies and all other healthcare provider bases.

In turn, this

may adversely affect our cash flow, profitability, and growth.

enforcement or additional rules and regulations created around it, pharmaceutical pricing controls could be established resulting in

substantially reduced margins and limited reimbursement for pharmacies and all other healthcare provider bases.

In turn, this may adversely

affect our cash flow, profitability, and growth.

Relating to Our Industry in General

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Pharmaceutical segment distributes prescription opioid pain medications.

In recent years, the abuse of prescription opioid pain

medication has become a public health crisis.

significant number of counties, municipalities and other plaintiffs, including a number of state attorney generals, have filed

lawsuits against pharmaceutical manufacturers, pharmaceutical wholesale distributors, retail chains and others relating to the

manufacturing, marketing or distribution of prescription opioid pain medications.

The defense and resolution of future lawsuits

and events relating to these lawsuits could have a material adverse effect on our results of operations, financial condition,

cash flows or liquidity or have adverse reputational or operational effects on our business.

legislative, regulatory or industry measures related to the public health crisis involving the abuse of prescription opioid pain

medication and the distribution of these medications could affect our business in ways that we may not be able to predict.

example, several states have now adopted taxes or other fees on the sale of opioids, and several other states have proposed similar

legislative initiatives.

In recent years, the abuse of prescription opioid pain medication

has become a public health crisis.

significant number of counties, municipalities and other plaintiffs, including a number of state attorney generals, have filed lawsuits

against pharmaceutical manufacturers, pharmaceutical wholesale distributors, retail chains and others relating to the manufacturing,

marketing or distribution of prescription opioid pain medications.

The defense and resolution of future lawsuits and events relating

to these lawsuits could have a material adverse effect on our results of operations, financial condition, cash flows or liquidity or

have adverse reputational or operational effects on our business.

legislative, regulatory or industry measures related to the public health crisis involving the abuse of prescription opioid pain medication

and the distribution of these medications could affect our business in ways that we may not be able to predict.

For example, several

states have now adopted taxes or other fees on the sale of opioids, and several other states have proposed similar legislative initiatives.

These laws and proposals vary in the tax amounts imposed and the means of calculation.

Liabilities for

taxes or assessments under any such laws could have an adverse impact on our results of operations unless we are able to mitigate

them through operational changes or commercial arrangements where permitted.

Liabilities for taxes or assessments under any

such laws could have an adverse impact on our results of operations unless we are able to mitigate them through operational changes or

commercial arrangements where permitted.

healthcare environment may not be favorable to us.

a number of years, the U.S.

healthcare industry has undergone significant changes designed to increase access to medical care,

improve safety and patient outcomes, contain costs and increase efficiencies.

These changes include adoption of the Patient Protection

and Affordable Care Act (ACA), a general decline in Medicare and Medicaid reimbursement levels, efforts by healthcare insurance

companies to limit or reduce payments to pharmacies and providers, the basis for payments beginning to transition from a fee-for-service

model to value-based payments and risk-sharing models, and the industry shifting away from traditional healthcare venues like

hospitals and into clinics, physician offices and patients’

healthcare industry has undergone significant changes designed to increase access to medical care, improve

safety and patient outcomes, contain costs and increase efficiencies.

These changes include adoption of the Patient Protection and Affordable

Care Act (ACA), a general decline in Medicare and Medicaid reimbursement levels, efforts by healthcare insurance companies to limit or

reduce payments to pharmacies and providers, the basis for payments beginning to transition from a fee-for-service model to value-based

payments and risk-sharing models, and the industry shifting away from traditional healthcare venues like hospitals and into clinics,

physician offices and patients’ homes.

expect the U.S.

1 unchanged sentence

Possible changes include repeal and replacement

of major parts of the Patient Protection and Affordable Care Act, further reduction or limitations on governmental funding at

the state or federal level, efforts by healthcare insurance companies to further limit payments for products and services or changes

in legislation or regulations governing prescription pharmaceutical pricing, healthcare services or mandated benefits.

These possible

changes, and the uncertainty surrounding these possible changes, may cause healthcare industry participants to reduce the number

of products and services they purchase from us or the price they are willing to pay for our products and services, which could

adversely affect us.

of major parts of the Patient Protection and Affordable Care Act, further reduction or limitations on governmental funding at the state

or federal level, efforts by healthcare insurance companies to further limit payments for products and services or changes in legislation

or regulations governing prescription pharmaceutical pricing, healthcare services or mandated benefits.

These possible changes, and the

uncertainty surrounding these possible changes, may cause healthcare industry participants to reduce the number of products and services

they purchase from us or the price they are willing to pay for our products and services, which could adversely affect us.

Consolidation

4 unchanged sentences

Consolidations create larger enterprises with greater negotiating

power, and also could result in the possible loss of a customer where the combined enterprise selects one distributor from two

power, and also could result in the possible loss of a customer where the combined enterprise selects one distributor from two incumbents.

If this consolidation trend continues, it could adversely affect our results of operations.

have identified material weaknesses in our internal control over financial reporting which could, if not remediated, adversely

affect our ability to report our financial condition, cash flows and results of operations in a timely and accurate manner and/or

increase the risk of future misstatements, which could have a material adverse effect on our business, financial condition, cash

flows and results of operations and could cause the market value of our shares of common stock and/or debt securities to decline.

have identified material weaknesses in our internal control over financial reporting and controls and procedures which could, if not

remediated, adversely affect our ability to report our financial condition, cash flows and results of operations in a timely and accurate

manner and/or increase the risk of future misstatements, which could have a material adverse effect on our business, financial condition,

cash flows and results of operations and could cause the market value of our shares of common stock and/or debt securities to decline.

effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce

reliable financial statements.

As reported under “

Controls and Procedures ”, as of December 31, 2020, our

CEO and CFO have determined that our disclosure controls and procedures were not effective.

Additionally, our management is responsible

for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the

Exchange Act.

As disclosed below under “

Controls and Procedures ”, based on reviews conducted by management,

we have concluded that a material weakness exists in the Company’s internal controls over financial reporting.

weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting such that there is a

reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected

on a timely basis.

As reported under “ Item 9A.

Controls and Procedures ”, as of December 31, 2021, our CEO and

CFO have determined that our disclosure controls and procedures were not effective.

Additionally, our management is responsible for establishing

and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.

below under “ Item 9A.

Controls and Procedures ”, based on reviews conducted by management, we have concluded that a material

weakness exists in the Company’s internal controls over financial reporting.

A material weakness is a deficiency, or a combination

of deficiencies, in internal controls over financial reporting such that there is a reasonable possibility that a material misstatement

of our annual or interim financial statements will not be prevented or detected on a timely basis.

Such internal control over financial

reporting and disclosure controls and procedures have been ineffective since approximately June 30, 2014 and December 31, 2015, respectively.

material weaknesses identified in our controls and procedures as of December 31, 2021, included the fact that (1) The Company did not

maintain a fully integrated financial consolidation and reporting system throughout the period and as a result, extensive manual analysis,

reconciliation and adjustments were required in order to produce financial statements for external reporting purposes.

and (2) the Company

does not currently have a sufficient complement of technical accounting and external reporting personnel commensurate to support standalone

external financial reporting under public company or SEC requirements.

Specifically, the Company did not effectively segregate certain

accounting duties due to the small size of its accounting staff and maintain a sufficient number of adequately trained personnel necessary

to anticipate and identify risks critical to financial reporting and the closing process.

In addition, there were inadequate reviews

and approvals by the Company’s personnel of certain reconciliations and other processes in day-to-day operations due to the lack

of a full complement of accounting staff.

material weaknesses identified in our internal control over financial reporting include the fact that:

the Company did not maintain a

fully integrated financial consolidation and reporting system throughout the period and as a result, extensive manual analysis, reconciliation

and adjustments were required in order to produce financial statements for external reporting purposes;

and the Company does not currently

have a sufficient complement of technical accounting and external reporting personnel commensurate to support standalone external financial

reporting under public company or SEC requirements.

Specifically, the Company did not effectively segregate certain accounting duties

due to the small size of its accounting staff and maintain a sufficient number of adequately trained personnel necessary to anticipate

and identify risks critical to financial reporting and the closing process.

In addition, there were inadequate reviews and approvals

by the Company’s personnel of certain reconciliations and other processes in day-to-day operations due to the lack of a full complement

of accounting staff.

effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce

reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly

Company has identified certain remediation actions and is in the process of implementing them, but such efforts are not complete

and remain ongoing.

If we do not complete our remediation in a timely manner or if our remedial measures are insufficient to address

the material weaknesses, or if additional material weaknesses in our internal controls are discovered or occur in the future,

it may materially adversely affect our ability to report our financial condition and results of operations in a timely and accurate

manner and there will continue to be an increased risk of future misstatements.

Although we regularly review and evaluate internal

controls systems to allow management to report on the effectiveness of our internal controls over financial reporting, we may

discover additional weaknesses in our internal controls over financial reporting or disclosure controls and procedures.

time we evaluate our internal controls over financial reporting and disclosure controls and procedures, if we identify one or

reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly as possible.

Company has identified certain remediation actions and is in the process of implementing them, but such efforts are not complete and

remain ongoing.

If we do not complete our remediation in a timely manner or if our remedial measures are insufficient to address the

material weaknesses, or if additional material weaknesses in our internal controls and/or controls and procedures are discovered or occur

in the future, it may materially adversely affect our ability to report our financial condition and results of operations in a timely

and accurate manner and there will continue to be an increased risk of future misstatements.

Although we regularly review and evaluate

internal controls systems to allow management to report on the effectiveness of our internal controls over financial reporting and controls

and procedures, we may discover additional weaknesses in our internal controls over financial reporting or disclosure controls and procedures.

The next time we evaluate our internal controls over financial reporting and disclosure controls and procedures, if we identify one or

more new material weaknesses or have been unable to timely remediate our existing material weaknesses, we would be unable to conclude

that our internal controls over financial reporting or disclosure controls and procedures are effective.

If we are unable in the

future to conclude that our internal controls over financial reporting or our disclosure controls and procedures are effective,

we may not be able to report our financial condition and results of operations in a timely and accurate manner, which could have

a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market

value of our shares of common stock to decline.

In addition, any potential future restatements could subject us to additional

adverse consequences, including sanctions by the SEC, stockholder litigation and other adverse actions.

Moreover, we may be the

subject of further negative publicity focusing on such financial statement adjustments and resulting restatement and negative

reactions from our stockholders, creditors or others with whom we do business.

The occurrence of any of the foregoing could have

a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market

value of our shares of common stock to decline.

may experience adverse impacts on our reported results of operations as a result of adopting new accounting standards or interpretations.

implementation of and compliance with changes in accounting rules, including new accounting rules and interpretations, could adversely

affect our reported financial position or operating results or cause unanticipated fluctuations in our reported operating results

in future periods.

significant amount of our revenues has historically been due to only a small number of customers, and if we were to lose any of

those customers, our results of operations would be adversely affected .

the years ended December 31, 2020 and 2019, sales to two customers represent greater than 10% of revenue at 25% and 15% in 2020

and 10.3% and 10.8% in 2019.

As a result, in the event our customers do not pay us amounts owed, sales to such customers cease

or we are unable to find new customers moving forward, it could have a materially adverse effect on our results of operations.

Related to Our Common Stock

common stock has in the past been a “

penny stock ”

under SEC rules, and may be subject to the “

stock ”

If we are unable in the future

to conclude that our internal controls over financial reporting or our disclosure controls and procedures are effective, we may not be

able to report our financial condition and results of operations in a timely and accurate manner, which could have a material adverse

effect on our business, financial condition, cash flows and results of operations and could cause the market value of our shares of common

stock to decline.

In addition, any potential future restatements could subject us to additional adverse consequences, including sanctions

by the SEC, stockholder litigation and other adverse actions.

Moreover, we may be the subject of further negative publicity focusing

on such financial statement adjustments and resulting restatement and negative reactions from our stockholders, creditors or others with

whom we do business.

The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition,

cash flows and results of operations and could cause the market value of our shares of common stock to decline.

may experience adverse impacts on our reported results of operations as a result of adopting new accounting

standards or interpretations.

implementation of and compliance with changes in accounting rules, including new accounting rules and interpretations, have not affected

our reported financial position or operating results to date or cause unanticipated fluctuations in our reported operating results in

future periods.

significant amount of our revenues has historically been due to only a small number of customers and we depend on a small number of major

wholesalers, and if we were to lose any of those customers or suppliers, our results of operations would be adversely affected .

the years ended December 31, 2021 and 2020, no sales to customers represented greater than 10% of revenue in 2021 and sales to two customers

represented 25% and 15% of revenue, respectively, in 2020.

In the event our customers do not pay us amounts owed, sales to

such customers cease or we are unable to find new customers moving forward, it could have a materially adverse effect on our results

of operations.

We have a working relationship with over 25 wholesalers and the nation’s largest buying group.

Although we believe

those entities are satisfied with their business relationship with Trxade, if our buying group and two or three of the largest wholesalers

decided no longer to do business with Trxade, and we were unable to find additional entities to step into their shoes, the resulting

supplier void would materially and adversely affect our competitiveness in the marketplace, and could cause a material adverse effect

on our results of operations.

might be harmed by changes in our relationships or contracts with suppliers .

attempt to structure our agreements with wholesalers to ensure that we are appropriately and predictably compensated for the services

We cannot control the frequency or magnitude of pharmaceutical price changes.

We might be unable to renew agreements with

wholesalers in a timely and favorable manner.

Any of these risks might have a materially adverse impact on our business operations and

our financial positions or results of operations.

Related to Our Common Stock and Organizational Documents

common stock has in the past been a “ penny stock ” under SEC rules, and may be subject to the “ penny stock ”

rules in the future.

It may be more difficult to resell securities classified as “

the past (including immediately prior to our common stock being listed on The NASDAQ Capital Market in February 2020), our common

stock was a “

penny stock ”

under applicable SEC rules (generally defined as non-exchange traded stock with a

per-share price below $5.00).

While our common stock is not now considered a “

penny stock ”

because it is listed

on The NASDAQ Capital Market, if we are unable to maintain that listing, unless we maintain a per-share price above $5.00, our

common stock will become “

These rules impose additional sales practice requirements on broker-dealers

that recommend the purchase or sale of penny stocks to persons other than those who qualify as “

established customers ”

accredited investors.

For example, broker-dealers must determine the appropriateness for non-qualifying

persons of investments in penny stocks.

Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise

exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks in the

penny stock market.

The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock,

disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing

the market value of each penny stock held in the customer’s account, provide a special written determination that the penny

stock is a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction.

remedies available to an investor in “

penny stocks ”

may include the following:

penny stock ”

is sold to the investor in violation of the requirements listed above, or other federal

or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.

penny stock ”

is sold to the investor in a fraudulent manner, the investor may be able to sue the persons

and firms that committed the fraud for damages.

requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that

becomes subject to the penny stock rules.

The additional burdens imposed upon broker-dealers by such requirements may discourage

broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our

These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability

to resell our common stock.

It may be more difficult to resell securities classified as “ penny stock.

the past (including immediately prior to our common stock being listed on The NASDAQ Capital Market in February 2020), our common stock

was a “ penny stock ” under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price

below $5.00).

While our common stock is not now considered a “ penny stock ” because it is listed on The NASDAQ Capital

Market, if we are unable to maintain that listing, unless we maintain a per-share price above $5.00, our common stock will become “ penny

” These rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of

penny stocks to persons other than those who qualify as “ established customers ” or “ accredited investors.

For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks.

Broker-dealers

must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document

that provides information about penny stocks and the risks in the penny stock market.

The broker-dealer also must provide the customer

with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the

transaction, furnish monthly account statements showing the market value of each penny stock held in the customer’s account, provide

a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written

agreement to the transaction.

remedies available to an investor in “ penny stocks ” may include the following:

a “ penny stock ” is sold to the investor in violation of the requirements listed above, or other federal or states

securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.

a “ penny stock ” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and

firms that committed the fraud for damages.

requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes

subject to the penny stock rules.

The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers

from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities.

These requirements

may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.

brokerage firms will discourage or refrain from recommending investments in penny stocks.

Most institutional investors will not

invest in penny stocks.

In addition, many individual investors will not invest in penny stocks due, among other reasons, to the

increased financial risk generally associated with these investments.

Most institutional investors will not invest

in penny stocks.

In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial

risk generally associated with these investments.

these reasons, penny stocks may have a limited market and, consequently, limited liquidity.

We can give no assurance at what time,

if ever, our common stock will not be classified as a “

penny stock ”

in the future.

significant number of our shares are eligible for sale and their sale or potential sale may depress the market price of our common

We can give no assurance at what time, if

ever, our common stock will not be classified as a “ penny stock ” in the future.

significant number of our shares are eligible for sale and their sale or potential sale may depress the market price of our common stock.

of a significant number of shares of our common stock in the public market could harm the market price of our common stock.

of our common stock is available for resale in the public market, and if sold would increase the supply of our common stock, thereby

causing a decrease in its price.

Some or all of our shares of common stock may be offered from time to time in the open market

pursuant to effective registration statements and/or compliance with Rule 144, which sales could have a depressive effect on the

market for our shares of common stock.

Subject to certain restrictions, a person who has held restricted shares for a period of

six months may generally sell common stock into the market.

The sale of a significant portion of such shares when such shares

are eligible for public sale may cause the value of our common stock to decline in value.

common stock is available for resale in the public market, and if sold would increase the supply of our common stock, thereby causing

a decrease in its price.

Some or all of our shares of common stock may be offered from time to time in the open market pursuant to effective

registration statements and/or compliance with Rule 144, which sales could have a depressive effect on the market for our shares of common

Subject to certain restrictions, a person who has held restricted shares for a period of six months may generally sell common

stock into the market.

The sale of a significant portion of such shares when such shares are eligible for public sale may cause the value

of our common stock to decline in value.

may not be sufficient liquidity in the market for our securities in order for investors to sell their shares.

The market price

of our common stock may continue to be volatile .

The market price of our

common stock may continue to be volatile .

market price of our common stock will likely continue to be highly volatile.

Some of the factors that may materially affect the

market price of our common stock are beyond our control, such as conditions or trends in the industry in which we operate or sales

Some of the factors that may materially affect the market

price of our common stock are beyond our control, such as conditions or trends in the industry in which we operate or sales of our common

This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown

to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume,

and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company

such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.

a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared

to a mature issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse

effect on share price.

It is possible that a broader or more active public trading market for our common stock will not develop or be

sustained, or that trading levels will not continue.

These factors may materially adversely affect the market price of our common stock,

regardless of our performance.

In addition, the public stock markets have experienced extreme price and trading volume volatility.

volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating

performance of the specific companies.

These broad market fluctuations may adversely affect the market price of our common stock.

exercise of outstanding warrants, options and shares issued in connection with a joint venture and acquisition will be dilutive to our

existing stockholders .

of the date of this Report, we had 8,181,041 shares of our common stock issued and outstanding and the following securities,

which are exercisable into shares of our common stock:

44,535 shares of our common stock issuable upon the exercise of warrants with exercise prices ranging from $0.06 to $9.00 per share,

with a weighted average price of $0.32;

410,964 shares of our common stock issuable upon the exercise of options with exercise prices ranging from $2.46 per share to $9.60 per

share, with a weighted average price of $4.88.

the life of the options and warrants, the holders have the opportunity to profit from a rise in the market price of our common stock

without assuming the risk of ownership.

The issuance of shares upon the exercise of outstanding securities will also dilute the ownership

interests of our existing stockholders.

availability of these shares for public resale, as well as any actual resales of these shares, could adversely affect the trading price

of our common stock.

This situation is attributable to a number of factors, including the fact that we are a small company which

is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate

or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be

reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we

became more seasoned and viable.

a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as

compared to a mature issuer which has a large and steady volume of trading activity that will generally support continuous sales

without an adverse effect on share price.

It is possible that a broader or more active public trading market for our common stock

will not develop or be sustained, or that trading levels will not continue.

These factors may materially adversely affect the

market price of our common stock, regardless of our performance.

In addition, the public stock markets have experienced extreme

price and trading volume volatility.

This volatility has significantly affected the market prices of securities of many companies

for reasons frequently unrelated to the operating performance of the specific companies.

These broad market fluctuations may adversely

affect the market price of our common stock.

exercise of outstanding warrants, options and shares issued in connection with a joint venture and acquisition will be dilutive

to our existing stockholders.

of the date of this Report, we had 8,093,199 shares of our common stock issued and outstanding and the following securities, which

are exercisable into shares of our common stock, which are due to be issued or granted, and which are contingently issuable:

82,751 shares of our common stock issuable upon the exercise of warrants with exercise prices ranging from $0.06 to $9.00 per

425,817 shares of our common stock issuable upon the exercise of options with exercise prices ranging from $2.46 per share to

$9.60 per share;

20,000 shares of common stock issuable upon the exercise of options with an exercise price of $6.55 per share granted in February

Certain of the shares of common stock underlying outstanding options will be available for resale immediately in

the public market without restriction.

cannot predict the size of future issuances of our common stock pursuant to the exercise of outstanding options or warrants, or the effect,

if any, that future issuances and sales of shares of our common stock may have on the market price of our common stock.

Sales or distributions

of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that such sales

could occur, may cause the market price of our common stock to decline.

have never paid or declared any dividends on our common stock.

have never paid or declared any dividends on our common stock or preferred stock.

Likewise, we do not anticipate paying, in the

near future, dividends or distributions on our common stock.

Any future dividends on common stock will be declared at the discretion

of our Board of Directors and will depend, among other things, on our earnings, our financial requirements for future operations

and growth, and other facts as we may then deem appropriate.

Since we do not anticipate paying cash dividends on our common stock,

return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

Likewise, we do not anticipate paying, in the near

future, dividends or distributions on our common stock.

Any future dividends on common stock will be declared at the discretion of our

Board of Directors and will depend, among other things, on our earnings, our financial requirements for future operations and growth,

and other facts as we may then deem appropriate.

Since we do not anticipate paying cash dividends on our common stock, return on your

investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

common stock price is likely to be highly volatile because of several factors, including a limited public float.

market price of our common stock has been volatile in the past and the market price of our common stock is likely to be highly

volatile in the future.

You may not be able to resell shares of our common stock following periods of volatility because of the

market’s adverse reaction to volatility.

market price of our common stock has been volatile in the past and the market price of our common stock is likely to be highly volatile

in the future.

You may not be able to resell shares of our common stock following periods of volatility because of the market’s

adverse reaction to volatility.

factors that could cause such volatility may include, among other things:

12 unchanged sentences

of these factors could have a significant and adverse impact on the market price of our common stock.

In addition, the stock market

in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to

the operating performance of particular companies.

These broad market fluctuations may adversely affect the trading price of our

common stock, regardless of our actual operating performance.

Chief Executive Officer and President are our two largest stockholders and, as a result, they can exert control over us and have

actual or potential interests that may differ from yours.

In addition, the stock market in

general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating

performance of particular companies.

These broad market fluctuations may adversely affect the trading price of our common stock, regardless

of our actual operating performance.

Chief Executive Officer and President are our two largest stockholders and, as a result, they can exert control over us and have actual

or potential interests that may differ from yours.

Suren Ajjarapu, our CEO, and Mr.

Prashant Patel, our President, beneficially own, in the aggregate, over 53% of our common stock.

As a result, these stockholders, acting together, will be able to influence many matters requiring stockholder approval, including

the election of directors and approval of mergers and other significant corporate transactions.

Prashant Patel, our President, beneficially own, in the aggregate, over 53% of our

common stock.

As a result, these stockholders, acting together, will be able to influence many matters requiring stockholder approval,

including the election of directors and approval of mergers and other significant corporate transactions.

This concentration of ownership

may have the effect of delaying, preventing or deterring a change in control, and could deprive our stockholders of an opportunity

to receive a premium for their shares of common stock as part of a sale of our company and may affect the market price of our

may have the effect of delaying, preventing or deterring a change in control, and could deprive our stockholders of an opportunity to

receive a premium for their shares of common stock as part of a sale of our company and may affect the market price of our stock.

Ajjarapu and Mr.

8 unchanged sentences

of our Board of Directors.

common stock may continue to be followed by only a limited number of analysts and there may continue to be a limited number of

common stock may continue to be followed by only a limited number of analysts and there may continue to be a limited number of institutions

acting as market makers for our common stock.

the foreseeable future, our common stock is unlikely to be followed by a significant number of market analysts, and there may be few

institutions acting as market makers for our common stock.

the foreseeable future, our common stock is unlikely to be followed by a significant number of market analysts, and there may

be few institutions acting as market makers for our common stock.

Either of these factors could adversely affect the liquidity

and trading price of our common stock.

Until our common stock is fully distributed, and an orderly market develops in our common

stock, if ever, the price at which it trades is likely to fluctuate significantly.

Prices for our common stock are determined

in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common

stock, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor

perception of us and general economic and market conditions.

No assurances can be given that an orderly or liquid market will

ever develop for the shares of our common stock.

of the anticipated low price of the securities being registered, many brokerage firms may not be willing to effect transactions

in these securities.

Purchasers of our securities should be aware that any market that develops in our stock will be subject to

the penny stock restrictions.

Either of these factors could adversely affect the liquidity and trading price

of our common stock.

Until our common stock is fully distributed, and an orderly market develops in our common stock, if ever, the price

at which it trades is likely to fluctuate significantly.

Prices for our common stock are determined in the marketplace and may be influenced

by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business,

including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of us and general economic and market

No assurances can be given that an orderly or liquid market will ever develop for the shares of our common stock.

bylaws require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers,

other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in

the State of Delaware, and if brought outside of Delaware, the stockholder bringing the suit will, subject to certain exceptions, be

deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits

against our directors, officers, other employees or stockholders.

bylaws require that unless the Company consents in writing to an alternative forum, the Court of Chancery of the State of Delaware shall,

to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf

of the Company;

(b) any action asserting a claim of breach of fiduciary duty owed by, or other wrongdoing by, any director, officer,

employee or agent of the Company to the Company or the Company’s stockholders;

to any provision of Delaware General Corporation Law or the certificate of incorporation or bylaws of the Company;

(d) any action to

interpret, apply, enforce or determine the validity of the certificate of incorporation or bylaws of the Company;

or (e) any action asserting

a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the

indispensable parties named as defendants therein (or such indispensable parties consenting to the personal jurisdiction of the Court

of Chancery within 10 days following any determination by the Court of Chancery that an indispensable party is not subject to such personal

jurisdiction);

provided that, if the Court of Chancery of the State of Delaware dismisses any action for lack of subject matter jurisdiction,

such action may be brought in another state or federal court sitting in the State of Delaware.

Any person or entity purchasing or otherwise

acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our

This choice of forum provision may limit or make more costly a stockholder’s ability to bring a claim in a judicial forum

that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage

lawsuits with respect to such claims.

Alternatively, if a court were to find the choice of forum provision contained in our bylaws to

be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions,

which could harm our business, operating results and financial condition.

described above, our bylaws provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable

law, subject to certain exceptions.

However, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought

to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.

As a result, the exclusive forum

provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the

federal courts have exclusive jurisdiction.

We also note that investors cannot waive compliance with the federal securities laws and

the rules and regulations thereunder.

Section 22 of the Securities Act, creates concurrent jurisdiction for state and federal courts

over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

stockholders have no right to call special meetings of stockholders.

bylaws provide that special meetings of our stockholders may be called only by the chairperson of the board of directors, the chief executive

officer or president (in the absence of a chief executive officer).

Because our stockholders do not have the right to call a special

meeting, a stockholder could not force stockholder consideration of a proposal over the opposition of our board of directors by calling

a special meeting of stockholders prior to such time as the chairperson of the board of directors, the chief executive officer or president

(in the absence of a chief executive officer) believed the matter should be considered or until the next annual meeting provided that

the requestor met the notice requirements.

The restriction on the ability of stockholders to call a special meeting means that a proposal

to replace our board of directors also could be delayed until the next annual meeting.

in our certificate of incorporation and bylaws may inhibit a takeover of us, which could limit the value of our securities and could

entrench management.

certificate of incorporation and bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider

to be in their best interests.

These provisions include the ability of the board of directors to designate the terms of and issue new

series of preferred shares and the requirement to receive the affirmative vote of holders of at least two-thirds of the outstanding capital

stock of the Company to amend any provision of the bylaws of the Company, without Board of Directors approval (which Board of Directors

approved amendments may be affected solely by the Board of Directors, without stockholder approval, subject to certain exceptions, without

stockholder approval), which may make the removal of management more difficult and may discourage transactions that otherwise could involve

payment of a premium over prevailing market prices for our securities.

These provisions may make the removal of management more difficult

and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

Relating to The JOBS Act

JOBS Act allows us to postpone the date by which we must comply with certain laws and regulations and to reduce the amount of

information provided in reports filed with the SEC.

We cannot be certain if the reduced disclosure requirements applicable to

emerging growth companies ”

will make our common stock less attractive to investors.

are and we will remain an “

emerging growth company ”

until the earliest to occur of (i) the last day of the

fiscal year during which our total annual revenues equal or exceed $1.07 billion (subject to adjustment for inflation), (ii) the

last day of the end of our 2024 fiscal year (5 years from our first public offering), (iii) the date on which we have, during

the previous three-year period, issued more than $1 billion in non-convertible debt, or (iv) the date on which we are deemed a

large accelerated filer ”

JOBS Act allows us to postpone the date by which we must comply with certain laws and regulations and to reduce the amount of information

provided in reports filed with the SEC.

We cannot be certain if the reduced disclosure requirements applicable to “ emerging

growth companies ” will make our common stock less attractive to investors.

are and we will remain an “ emerging growth company ” until the earliest to occur of (i) the last day of the fiscal

year during which our total annual revenues equal or exceed $1.07 billion (subject to adjustment for inflation), (ii) the last day of

the end of our 2024 fiscal year (5 years from our first public offering), (iii) the date on which we have, during the previous three-year

period, issued more than $1 billion in non-convertible debt, or (iv) the date on which we are deemed a “ large accelerated filer ”

(with at least $700 million in public float) under the Exchange Act.

as we remain an “

emerging growth company ”

as defined in the JOBS Act, we may take advantage of certain exemptions

from various reporting requirements that are applicable to other public companies that are not “

emerging growth companies ”

as described in further detail in the risk factors below.

We cannot predict if investors will find our common stock less attractive

because we will rely on some or all of these exemptions.

If some investors find our common stock less attractive as a result,

there may be a less active trading market for our common stock and our stock price may be more volatile.

If we avail ourselves

of certain exemptions from various reporting requirements, as is currently our plan, our reduced disclosure may make it more difficult

for investors and securities analysts to evaluate us and may result in less investor confidence.

For so long as we remain an “ emerging growth company ”

as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other

public companies that are not “ emerging growth companies ” as described in further detail in the risk factors below.

We cannot predict if investors will find our common stock less attractive because we will rely on some or all of these exemptions.

some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and

our stock price may be more volatile.

If we avail ourselves of certain exemptions from various reporting requirements, as is currently

our plan, our reduced disclosure may make it more difficult for investors and securities analysts to evaluate us and may result in less

investor confidence.

election not to opt out of the JOBS Act extended accounting transition period may not make our financial statements easily comparable

to other companies.

to the JOBS Act, as an “

emerging growth company ”, we can elect to opt out of the extended transition period

for any new or revised accounting standards that may be issued by the Public Company Accounting Oversight Board (PCAOB) or the

We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and

it has different application dates for public or private companies, we, as an “

emerging growth company ”, can

adopt the standard for the private company.

This may make a comparison of our financial statements with any other public company

which is not either an “

emerging growth company ”

nor an “

emerging growth company ”

has opted out of using the extended transition period, more difficult or impossible as possible different or revised standards

to the JOBS Act, as an “ emerging growth company ”, we can elect to opt out of the extended transition period for any

new or revised accounting standards that may be issued by the Public Company Accounting Oversight Board (PCAOB) or the SEC.

We have elected

not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application

dates for public or private companies, we, as an “ emerging growth company ”, can adopt the standard for the private

This may make a comparison of our financial statements with any other public company which is not either an “ emerging

growth company ” nor an “ emerging growth company ” which has opted out of using the extended transition period,

more difficult or impossible as possible different or revised standards may be used.

JOBS Act also allows us to postpone the date by which we must comply with certain laws and regulations intended to protect investors

and to reduce the amount of information provided in reports filed with the SEC.

JOBS Act is intended to reduce the regulatory burden on “

emerging growth companies ”.

The Company meets the

definition of an “

emerging growth company ”

and so long as it qualifies as an “

emerging growth company, ”

it will, among other things:

JOBS Act is intended to reduce the regulatory burden on “ emerging growth companies ”.

The Company meets the definition

of an “ emerging growth company ” and so long as it qualifies as an “ emerging growth company, ” it

will, among other things:

exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting

firm provide an attestation report on the effectiveness of its internal control over financial reporting;

exempt from the “

say on pay ”

provisions (requiring a non-binding stockholder vote to approve compensation

of certain executive officers) and the “

say on golden parachute ”

provisions (requiring a non-binding stockholder

vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other

business combinations) of The Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and certain

disclosure requirements of the Dodd-Frank Act relating to compensation of Chief Executive Officers;

permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange

Act and instead provide a reduced level of disclosure concerning executive compensation;

exempt from any rules that may be adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s

exempt from the “ say on pay ” provisions (requiring a non-binding stockholder vote to approve compensation of certain

executive officers) and the “ say on golden parachute ” provisions (requiring a non-binding stockholder vote to

approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations)

of The Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and certain disclosure requirements of the

Dodd-Frank Act relating to compensation of Chief Executive Officers;

permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act

and instead provide a reduced level of disclosure concerning executive compensation;

exempt from any rules that may be adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s

report on the financial statements.

Company currently intends to take advantage of all of the reduced regulatory and reporting requirements that will be available

to it so long as it qualifies as an “

emerging growth company ”.

The Company has elected not to opt out of the

extension of time to comply with new or revised financial accounting standards available under Section 102(b)(1) of the JOBS Act.

Among other things, this means that the Company’s independent registered public accounting firm will not be required to

provide an attestation report on the effectiveness of the Company’s internal control over financial reporting so long as

it qualifies as an “

emerging growth company ”, which may increase the risk that weaknesses or deficiencies in

the internal control over financial reporting go undetected.

Likewise, so long as it qualifies as an “

emerging growth

company ”, the Company may elect not to provide certain information, including certain financial information and certain

information regarding compensation of executive officers, which it would otherwise have been required to provide in filings with

the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company.

As a result, investor

confidence in the Company and the market price of its common stock may be adversely affected.

Company has and intends to continue to take advantage of all of the reduced regulatory and reporting requirements that will be available

to it so long as it qualifies as an “ emerging growth company ”.

The Company has elected not to opt out of the extension

of time to comply with new or revised financial accounting standards available under Section 102(b)(1) of the JOBS Act.

Among other things,

this means that the Company’s independent registered public accounting firm will not be required to provide an attestation report

on the effectiveness of the Company’s internal control over financial reporting so long as it qualifies as an “ emerging

growth company ”, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting

go undetected.

Likewise, so long as it qualifies as an “ emerging growth company ”, the Company may elect not to provide

certain information, including certain financial information and certain information regarding compensation of executive officers, which

it would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities

analysts to evaluate the Company.

As a result, investor confidence in the Company and the market price of its common stock may be adversely

Notwithstanding

the above, we are also currently a “

smaller reporting company ”, meaning that we are not an investment company,

an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a

public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year.

In the event that we are still considered a “

smaller reporting company ”, at such time are we cease being an

emerging growth company ”, the disclosure we will be required to provide in our SEC filings will increase,

but will still be less than it would be if we were not considered either an “

emerging growth company ”

smaller reporting company ”.

Specifically, similar to “

emerging growth companies ”, “

reporting companies ”

the above, we are also currently a “ smaller reporting company ”, meaning that we are not an investment company, an

asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float

of less than $700 million and less than $100 million annual revenues or a public float of less than $250 million, during the most recently

completed fiscal year.

In the event that we are still considered a “ smaller reporting company ”, at such time are we

cease being an “ emerging growth company ”, the disclosure we will be required to provide in our SEC filings will increase,

but will still be less than it would be if we were not considered either an “ emerging growth company ” or a “ smaller

reporting company ”.

Specifically, similar to “ emerging growth companies ”, “ smaller reporting companies ”

are able to provide simplified executive compensation disclosures in their filings;

from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms

provide an attestation report on the effectiveness of internal control over financial reporting;

and have certain other decreased

disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited

financial statements in annual reports.

Decreased disclosures in our SEC filings due to our status as an “

emerging growth

company ”

smaller reporting company ”

may make it harder for investors to analyze the Company’s

results of operations and financial prospects.

are exempt from the provisions of Section 404(b)

of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness

of internal control over financial reporting;

except from the requirement to include the detailed compensation discussion and analysis

disclosures and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required

to provide two years of audited financial statements in annual reports.

Decreased disclosures in our SEC filings due to our status as

an “ emerging growth company ” or “ smaller reporting company ” may make it harder for investors to

analyze the Company’s results of operations and financial prospects.

to adequately manage our planned aggressive growth strategy may harm our business or increase our risk of failure.

the foreseeable future, we intend to pursue an aggressive growth strategy for the expansion of our operations through increased

product development and marketing.

Our ability to rapidly expand our operations will depend upon many factors, including our ability

to work in a regulated environment, market value-added products effectively to independent pharmacies, establish and maintain

strategic relationships with suppliers, and obtain adequate capital resources on acceptable terms.

Any restrictions on our ability

to expand may have a materially adverse effect on our business, results of operations, and financial condition.

Accordingly, we

may be unable to achieve our targets for sales growth, and our operations may not be successful or achieve anticipated operating

the foreseeable future, we intend to pursue an aggressive growth strategy for the expansion of our operations through increased product

development and marketing.

Our ability to rapidly expand our operations will depend upon many factors, including our ability to work

in a regulated environment, market value-added products effectively to independent pharmacies, establish and maintain strategic relationships

with suppliers, and obtain adequate capital resources on acceptable terms.

Any restrictions on our ability to expand may have a materially

adverse effect on our business, results of operations, and financial condition.

Accordingly, we may be unable to achieve our targets

for sales growth, and our operations may not be successful or achieve anticipated operating results.

Additionally,

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Our future success will depend, in part, upon the ability of our senior management to manage growth effectively.

This will require

us to, among other things:

This will require us

to, among other things:

additional management information systems;

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additional office space;

close coordination among our engineering, operations, legal, finance, sales and marketing, and client service and support

organizations;

close coordination among our engineering, operations, legal, finance, sales and marketing, and client service and support organizations;

our expanding international operations.

a result, we may lack the resources to deploy our services on a timely and cost-effective basis.

Failure to accomplish any of

these requirements could impair our ability to deliver services in a timely fashion or attract and retain new customers.

Failure to accomplish any of these requirements

could impair our ability to deliver services in a timely fashion or attract and retain new customers.

we do not successfully implement any acquisition strategies, our operating results and prospects could be harmed.

face competition within our industry for acquisitions of businesses, technologies and assets, and, in the future, such competition

may become more intense.

As such, even if we are able to identify an acquisition that we would like to consummate, we may not

be able to complete the acquisition on commercially reasonable terms or at all because of such competition.

Furthermore, if we

enter into negotiations that are not ultimately consummated, those negotiations could result in diversion of management time and

significant out-of-pocket costs.

Even if we are able to complete such acquisitions, we may additionally expend significant amounts

of cash or incur substantial debt to finance them, which indebtedness could result in restrictions on our business and use of

available cash.

In addition, we may finance or otherwise complete acquisitions by issuing equity or convertible debt securities,

which could result in dilution of our existing stockholders.

If we fail to evaluate and execute acquisitions successfully, we

may not be able to realize their benefits.

If we are unable to successfully address any of these risks, our business, financial

condition or operating results could be harmed.

face competition within our industry for acquisitions of businesses, technologies and assets, and, in the future, such competition may

become more intense.

As such, even if we are able to identify an acquisition that we would like to consummate, we may not be able to

complete the acquisition on commercially reasonable terms or at all because of such competition.

Furthermore, if we enter into negotiations

that are not ultimately consummated, those negotiations could result in diversion of management time and significant out-of-pocket costs.

Even if we are able to complete such acquisitions, we may additionally expend significant amounts of cash or incur substantial debt to

finance them, which indebtedness could result in restrictions on our business and use of available cash.

In addition, we may finance

or otherwise complete acquisitions by issuing equity or convertible debt securities, which could result in dilution of our existing stockholders.

If we fail to evaluate and execute acquisitions successfully, we may not be able to realize their benefits.

If we are unable to successfully

address any of these risks, our business, financial condition or operating results could be harmed.

we make any acquisitions, they may disrupt or have a negative impact on our business.

we make acquisitions in the future, funding permitting, which may not be available on favorable terms, if at all, we could have

difficulty integrating the acquired company’s assets, personnel and operations with our own.

We do not anticipate that any

acquisitions or mergers we may enter into in the future would result in a change of control of the Company.

In addition, the key

personnel of the acquired business may not be willing to work for us.

We cannot predict the effect expansion may have on our core

Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business,

distract our management and employees and increase our expenses.

In addition to the risks described above, acquisitions are accompanied

by a number of inherent risks, including, without limitation, the following:

we make acquisitions in the future, funding permitting, which may not be available on favorable terms, if at all, we could have difficulty

integrating the acquired company’s assets, personnel and operations with our own.

We do not anticipate that any acquisitions or

mergers we may enter into in the future would result in a change of control of the Company.

In addition, the key personnel of the acquired

business may not be willing to work for us.

We cannot predict the effect expansion may have on our core business.

Regardless of whether

we are successful in acquiring, the negotiations could disrupt our ongoing business, distract our management and employees and increase

our expenses.

In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including, without

limitation, the following:

difficulty of integrating acquired products, services or operations;

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effect of any government regulations which relate to the business acquired;

unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool,

reposition or modify the marketing and sales of acquired products or operations, or the defense of any litigation, whether

or not successful, resulting from actions of the acquired company prior to our acquisition;

unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition

or modify the marketing and sales of acquired products or operations, or the defense of any litigation, whether or not successful,

resulting from actions of the acquired company prior to our acquisition;

expenses under the labor, environmental and other laws of various jurisdictions.

business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other

problems encountered in connection with an acquisition, many of which cannot be presently identified.

These risks and problems

could disrupt our ongoing business, distract our management and employees, increase our expenses and adversely affect our results

of operations.

may apply working capital and future funding to uses that ultimately do not improve our operating results or increase the value

of our securities.

business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems

encountered in connection with an acquisition, many of which cannot be presently identified.

These risks and problems could disrupt our

ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations.

may apply working capital and future funding to uses that ultimately do not improve our operating results or increase the value of our

general, we have complete discretion over the use of our working capital and any new investment capital we may obtain in the future.

Because of the number and variety of factors that could determine our use of funds, our ultimate expenditure of funds (and their

uses) may vary substantially from our current intended operating plan for such funds.

Because of the number and variety of factors that could determine our use of funds, our ultimate expenditure of funds (and their uses)

may vary substantially from our current intended operating plan for such funds.

intend to use existing working capital and future funding to support the development of our products and services, product purchases

in our wholesale distribution division, the expansion of our marketing, or the support of operations to educate our customers.

We will also use capital for market and network expansion, acquisitions, and general working capital purposes.

However, we do

not have more specific plans for the use and expenditure of our capital.

Our management has broad discretion to use any or all

of our available capital reserves.

Our capital could be applied in ways that do not improve our operating results or otherwise

increase the value of a stockholder’s investment.

also use capital for market and network expansion, acquisitions, and general working capital purposes.

However, we do not have more specific

plans for the use and expenditure of our capital.

Our management has broad discretion to use any or all of our available capital reserves.

Our capital could be applied in ways that do not improve our operating results or otherwise increase the value of a stockholder’s

websites may encounter technical problems and service interruptions.

websites may in the future experience slower response times or interruptions as a result of increased traffic or other reasons.

These delays and interruptions resulting from failure to maintain Internet service connections to our site could frustrate visitors

and reduce our future web site traffic, which could have a material adverse effect on our business.

delays and interruptions resulting from failure to maintain Internet service connections to our site could frustrate visitors and reduce

our future web site traffic, which could have a material adverse effect on our business.

sale of shares by our directors and officers may adversely affect the market price for our shares.

of significant amounts of shares held by our officers and directors, or the prospect of these sales, could adversely affect the

market price of our common stock.

Management’s stock ownership may discourage a potential acquirer from making a tender

offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders

from realizing a premium over our stock price.

may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional

shares of our common stock.

of significant amounts of shares held by our officers and directors, or the prospect of these sales, could adversely affect the market

price of our common stock.

Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise

attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over

our stock price.

may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares

of our common stock.

possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations.

In many instances, we believe

that the non-cash consideration will consist of restricted shares of our common stock or where shares are to be issued to our

officers, directors and applicable consultants.

Our Board of Directors has authority, without action or vote of the stockholders,

but subject to NASDAQ rules and regulations (which generally require shareholder approval for any transactions which would result

in the issuance of more than 20% of our then outstanding shares of common stock or voting rights representing over 20% of our

then outstanding shares of stock), to issue all or part of the authorized but unissued shares of common stock.

In addition, we

may attempt to raise capital by selling shares of our common stock, possibly at a discount to market.

These actions will result

in dilution of the ownership interests of existing stockholders, which may further dilute common stock book value, and that dilution

may be material.

Such issuances may also serve to enhance existing management’s ability to maintain control of the Company

because the shares may be issued to parties or entities committed to supporting existing management.

In many instances, we believe that

the non-cash consideration will consist of restricted shares of our common stock or where shares are to be issued to our officers, directors

and applicable consultants.

Our Board of Directors has authority, without action or vote of the stockholders, but subject to NASDAQ rules

and regulations (which generally require shareholder approval for any transactions which would result in the issuance of more than 20%

of our then outstanding shares of common stock or voting rights representing over 20% of our then outstanding shares of stock), to issue

all or part of the authorized but unissued shares of common stock.

In addition, we may attempt to raise capital by selling shares of

our common stock, possibly at a discount to market.

These actions will result in dilution of the ownership interests of existing stockholders,

which may further dilute common stock book value, and that dilution may be material.

Such issuances may also serve to enhance existing

management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting

existing management.

growth depends in part on the success of our strategic relationships with third parties.

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our technology providers.

Identifying partners, and negotiating and documenting relationships with them, requires significant

time and resources.

Our competitors may be effective in providing incentives to third parties to favor their products or services,

or utilization of, our products and services.

In addition, acquisitions of our partners by our competitors could result in a decrease

in the number of our current and potential customers.

If we are unsuccessful in establishing or maintaining our relationships

with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our results of operations

Even if we are successful, we cannot assure you that these relationships will result in increased customer use of

our products or increased revenue.

Identifying partners, and negotiating and documenting relationships with them, requires significant time and

Our competitors may be effective in providing incentives to third parties to favor their products or services, or utilization

of, our products and services.

In addition, acquisitions of our partners by our competitors could result in a decrease in the number

of our current and potential customers.

If we are unsuccessful in establishing or maintaining our relationships with third parties, our

ability to compete in the marketplace or to grow our revenue could be impaired and our results of operations may suffer.

Even if we are

successful, we cannot assure you that these relationships will result in increased customer use of our products or increased revenue.

litigation, government investigations, and other proceedings may adversely affect our business and results of operations.

a company offering a wide range of products and services, we are regularly subject to actual and threatened claims, litigation,

reviews, investigations, and other proceedings, including proceedings relating to goods and services offered by us and by third

parties, and other matters.

Any of these types of proceedings, including currently pending proceedings as discussed herein, may

have an adverse effect on us because of legal costs, disruption of our operations, diversion of management resources, negative

publicity, and other factors.

The outcomes of these matters are inherently unpredictable and subject to significant uncertainties.

Determining legal reserves and possible losses from such matters involves judgment and may not reflect the full range of uncertainties

and unpredictable outcomes.

Until the final resolution of such matters, we may be exposed to losses in excess of the amount recorded,

and such amounts could be material.

Should any of our estimates and assumptions change or prove to have been incorrect, it could

have a material effect on our business, consolidated financial position, results of operations, or cash flows.

In addition, it

is possible that a resolution of one or more such proceedings, including as a result of a settlement, could require us to make

substantial future payments, prevent us from offering certain products or services, require us to change our business practices

in a manner materially adverse to our business, requiring development of non-infringing or otherwise altered products or technologies,

damaging our reputation, or otherwise having a material effect on our operations.

a company offering a wide range of products and services, we are regularly subject to actual and threatened claims, litigation, reviews,

investigations, and other proceedings, including proceedings relating to goods and services offered by us and by third parties, and other

Any of these types of proceedings, including currently pending proceedings as discussed herein, may have an adverse effect on

us because of legal costs, disruption of our operations, diversion of management resources, negative publicity, and other factors.

outcomes of these matters are inherently unpredictable and subject to significant uncertainties.

Determining legal reserves and possible

losses from such matters involves judgment and may not reflect the full range of uncertainties and unpredictable outcomes.

final resolution of such matters, we may be exposed to losses in excess of the amount recorded, and such amounts could be material.

any of our estimates and assumptions change or prove to have been incorrect, it could have a material effect on our business, consolidated

financial position, results of operations, or cash flows.

In addition, it is possible that a resolution of one or more such proceedings,

including as a result of a settlement, could require us to make substantial future payments, prevent us from offering certain products

or services, require us to change our business practices in a manner materially adverse to our business, requiring development of non-infringing

or otherwise altered products or technologies, damaging our reputation, or otherwise having a material effect on our operations.

may be adversely affected by climate change or by legal, regulatory or market responses to such change.

long-term effects of climate change are difficult to predict;

however, such effects may be widespread.

Impacts from climate change may

include physical risks (such as rising sea levels or frequency and severity of extreme weather conditions—which may affect our

current operations due to among other things, the fact that we are based in Florida, which is only on average 6 feet higher than current

sea level), social and human effects (such as population dislocations or harm to health and well-being), compliance costs and transition

risks (such as regulatory or technology changes) and other adverse effects.

The effects of climate change could increase the cost of

certain products, commodities and energy (including utilities), which in turn may impact our ability to procure goods or services required

for the operation of our business.

Climate change could also lead to increased costs as a result of physical damage to or destruction

of our facilities, loss of inventory, and business interruption due to weather events that may be attributable to climate change.

events and impacts could materially adversely affect our business operations, financial position or results of operation.

might be adversely impacted by changes in accounting standards.

consolidated financial statements are subject to the application of U.S.

GAAP, which periodically is revised or reinterpreted.

to time, we are required to adopt new or revised accounting standards issued by recognized authoritative bodies, including the Financial

Accounting Standards Board (“ FASB ”) and the SEC.

It is possible that future accounting standards may require changes

to the accounting treatment in our consolidated financial statements and may require us to make significant changes to our financial

Such changes might have a materially adverse impact on our financial position or results of operations.

all of the foregoing reasons and others set forth herein, an investment in our securities involves a high degree of risk.

1 unchanged sentence

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What changed 10-K

Item 1A. Risk Factors