What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-28 compared with 2021-03-29 · 728 added, 782 removed, 236 unchanged (86% of the section changed)

2 unchanged sentences

Financial Statements

Report of Independent Registered Public Accounting Firm

of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Statements of Changes in Stockholders’

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

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on the Financial Statements

have audited the accompanying consolidated balance sheets of Trxade Group, Inc.

and its subsidiaries (collectively, the “Company”)

as of December 31, 2020 and 2019, and the related consolidated statements of operations, changes in stockholders’

and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of

December 31, 2020 and 2019, and the results of their operations and their cash flows for the years then ended, in conformity with

accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on

the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company

Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

have audited the accompanying consolidated balance sheets of TRxADE HEALTH, INC.

and its subsidiaries (collectively, the “Company”)

as of December 31, 2021, and 2020, and the related consolidated statements of operations, changes in stockholders’ equity, and

cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31,

2021, and 2020, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles

generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but

not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ MaloneBailey, LLP

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

MaloneBailey, LLP

www.malonebailey.com

have served as the Company’s auditor since 2013.

Balance Sheets

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Property Plant and Equipment, Net

Deferred offering costs

Right of use leased assets

Liabilities and Stockholders’

Liabilities and Stockholders’ Equity

Current Liabilities

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Customer Deposits

Notes Payable –

Related Party

Notes Payable – Related Party

Total Current Liabilities

Long Term Liabilities

Notes Payable –

Related Party

Operating Lease Liabilities, net of current portion

Total Liabilities

Stockholders’

Stockholders’ Equity

Series A Preferred Stock, $ 0.00001 par value;

10,000,000 shares authorized;

none issued and outstanding as of December 31, 2020 and December 31, 2019, respectively

issued and outstanding as of December 31, 2021, and December 31, 2020, respectively

Common Stock, $ 0.00001 par value;

100,000,000 shares authorized;

8,093,199 and 6,539,415 shares issued and outstanding as of December 31, 2020 and 2019, respectively

8,166,457 and 8,093,199

shares issued and outstanding as of December 31, 2021 and 2020, respectively

Additional Paid-in Capital

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( 16,247,437 )

Total Stockholders’

Total Liabilities and Stockholders’

( 10,931,554 )

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

accompanying notes are an integral part of the consolidated financial statements.

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Operating Expenses

Loss on write-off of software asset

Loss on Inventory Investment

Loss on Impairment of Goodwill

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Total Operating Expenses

Operating Income (Loss)

Investment Loss

Loss on Extinguishment of Debt

Operating Loss

( 5,292,293 )

( 2,506,662 )

Interest Expense

$ ( 5,315,883 )

Net Loss per Common Share –

Basic and Diluted

Weighted average Common Shares Outstanding –

Basic and Diluted

$ ( 2,536,051 )

Net Loss per Common Share – Basic and Diluted

Weighted average Common Shares Outstanding – Basic and Diluted

accompanying notes are an integral part of the consolidated financial statements.

Statements of Changes in Stockholders’

Statements of Changes in Stockholders’ Equity

Ended December 31, 2021 and 2020

Preferred Stock

Stockholders’

Balance at December 31, 2019

$ ( 8,395,503 )

Common Stock issued for cash

Common Stock Issued for Convertible Note Conversion

Common Stock Issued for Settlement of Notes Payable

Common Stock Issued for Asset Acquisition

Common Stock Issued from Offering

Fractional Common Stock Issued due to reverse split

Stock Issuance Costs

Common Stock Issued for Services

Options Exercised for Cash

Warrants Exercised for Cash

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Options Expense

( 2,536,051 )

Balance at December 31, 2020

$ ( 10,931,554 )

Common Stock Issued from Offering

Fractional Common Stock Issued due to reverse split

Stock Issuance Costs

Common Stock Issued for Services

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Options Expense

( 5,315,883 )

Balance at December 31, 2021

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$ ( 5,315,883 )

$ ( 2,536,051 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

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Bad Debt Expense

Loss on extinguishment of debt

Investment Loss

Loss on write off of software asset

Loss on Inventory Investment

Loss on Impairment of Goodwill

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Prepaid Assets and Other Current Assets

( 2,419,013 )

Deposits for Inventory Purchases

( 1,087,675 )

Other Receivables

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Customer Deposits

Net Cash provided by (used in) operating activities

Net cash used in operating activities

( 2,566,226 )

( 2,214,786 )

Investing Activities:

Purchase of Fixed Assets

Purchase of Equity Method Investment

Net cash used in Investing Activities

Financing Activities:

Repayments of Short-Term Convertible Debt –

Related Parties

Repayments of Short-Term Promissory Notes – Related Parties

Payment of Stock Issuance Costs

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Proceeds from Issuance of Common Stock

Net Cash provided by financing activities

Net increase in Cash

Net Cash provided by (used in) financing activities

Net increase (decrease) in Cash

( 2,797,000 )

Cash at Beginning of the Year

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Non-Cash Transactions

Recognition of ROU assets and operating lease obligations

Purchase of Fixed Assets recorded in Accounts Payable

Common Stock Issued for Conversion of Note and Accrued Interest

Remeasurement of ROU Assets and Lease Liability for Nonrenewal of Lease

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the years ended December 31, 2021 and 2020

we ”, “

our ”, “

Trxade ”, and the “

Company ”)

owns 100% of Trxade, Inc., Integra Pharma Solutions, LLC, Community Specialty Pharmacy, LLC, Alliance Pharma Solutions, LLC and

Bonum Health, LLC.

1 – ORGANIZATION

(“ we ”, “ our ”, “ Trxade ”, and the “ Company ”) owns

100 % of Trxade, Inc., Integra Pharma Solutions, LLC, Community Specialty Pharmacy, LLC, Alliance Pharma Solutions, LLC, Bonum Health,

LLC and MedCheks, LLC (from January 2021 to December 2021, when it was dissolved).

The merger of Trxade, Inc.

and Trxade Group, Inc.

and TRxADE HEALTH, INC.

occurred in May 2013.

Community Specialty Pharmacy was acquired

in October 2018.

operates a web-based market platform that enables commerce among healthcare buyers and sellers of pharmaceuticals, accessories

and services.

Community Specialty Pharmacy was acquired in October 2018.

operates a web-based market platform that enables commerce among healthcare buyers and sellers of pharmaceuticals, accessories and

Pharma Solutions, LLC is a licensed pharmaceutical wholesaler and sells brand, generic and non-drug products.

Specialty Pharmacy, LLC is an accredited independent retail pharmacy with a focus on specialty medications.

The company operates

with innovative pharmacy model which offers home delivery services to any patient thereby providing convenience.

Pharma Solutions, LLC has developed a same day Pharma delivery software –

Delivmeds.com and invested in SyncHealth MSO,

LLC a managed services organization in January 2019.

(See Note 12 –

Equity Method Investment ).

Specialty Pharmacy, LLC is an accredited independent retail pharmacy with a focus on specialty medications and a community-based model

offering home delivery services to patients.

Pharma Solutions, LLC (d.b.a.

DelivMeds) has developed a same day Pharma delivery software – Delivmeds.com and invested in SyncHealth

MSO, LLC a managed services organization in January 2019, which investment was divested in February 2020.

Health, LLC, was formed to hold certain telehealth assets acquired in October 2019.

Bonum Health Hub ”

launched in November 2019 and was expected to be operational in April 2020;

however, due to the COVID-19 pandemic, at present

the Company does not anticipate installations moving forward until later in 2021 at the earliest.

The hub is a Health Insurance

Portability and Accountability Act (HIPPA)-compliant booth planned to be installed at select independent pharmacies, with technology

that connects patients to board-certified medical care through the Bonum Health mobile app and website portal.

The Bonum Health

mobile application is also available on a subscription basis, primarily as a stand-alone telehealth software application that

can be licensed on a business-to-business (B2B) model to clients as an employment health benefit for the clients’

In August 2020, Bonum Health, LLC launched a business-to-business (B2B) platform called Bonum+, which bundles telehealth, a COVID-19

risk assessment tool and a personal protective equipment (PPE) purchasing tool, through a secure mobile dashboard for corporate

LLC was formed in January 2021 and is a patient-centered, digital, precision healthcare

platform that lets patients consolidate and control their health data via a digital Health Passport.

The digital Health Passport

allows users to share their health profile, tests and vaccinations simply and safely.

Secured in a blockchain, the Health Passport

includes health and vaccination status verification via a QR code (a two-dimensional machine-readable optical label), which is

available for travel, entry into stadiums, concert venues, events, offices, industrial plants, warehouses, and other physical

access points.

MedCheks Health Passport stores all of a user’s health records securely in one place.

October 9, 2019, the Company’s Board of Directors, and on October 15, 2019, stockholders holding a majority of the Company’s

outstanding voting shares, approved resolutions authorizing a reverse stock split of the outstanding shares of the Company’s

common stock in the range from one-for-two (1-for-2) to one-for-ten (1-for-10) and provided authority to the Company’s Board

of Directors to select the ratio of the reverse stock split in their discretion (the “

Stockholder Authority ”).

On February 12, 2020, the Board of Directors of the Company approved a stock split ratio of 1-for-6 (“

Reverse Stock Split ”)

in connection with the Stockholder Authority and the Company filed a Certificate of Amendment with the Secretary of Delaware to

affect the Reverse Stock Split.

adjustments were made to the conversion and exercise prices of the Company’s outstanding warrants and stock options, and

to the number of shares issued and issuable under the Company’s stock incentive plans in connection with the Reverse Stock

The Reverse Stock Split did not affect any stockholder’s ownership percentage of the Company’s common stock,

except to the limited extent that the Reverse Stock Split resulted in any stockholder owning a fractional share.

Fractional shares

of common stock were rounded up to the nearest whole share based on each holder’s aggregate ownership of the Company.

issued and outstanding shares of common stock, options and warrants to purchase common stock and per share amounts contained in

the financial statements, have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.

The “ Bonum Health Hub ” was launched

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 Loss on Inventory Investments of $ 143,891

for the year ended December 31, 2021.

The Bonum Health mobile application is available on a subscription basis, primarily as a stand-alone

telehealth software application that can be licensed on a business-to-business (B2B) model to clients as an employment health benefit

for the clients’ employees.

LLC, was formed in January 2021 and is a patient-centered, digital, precision healthcare platform that lets patients consolidate

and control their health data via a digital Health Passport.

This product has been discontinued and MedCheks, LLC was subsequently dissolved

in December 2021.

October 9, 2019, the Company’s Board of Directors, and on October 15, 2019, stockholders holding a majority of the Company’s

outstanding voting shares, approved resolutions authorizing a reverse stock split of the outstanding shares of the Company’s common

stock in the range from one-for-two (1-for-2) to one-for-ten (1-for-10) and provided authority to the Company’s Board of Directors

to select the ratio of the reverse stock split in their discretion (the “ Stockholder Authority ”).

On February 12,

2020, the Board of Directors of the Company approved a stock split ratio of 1-for-6 (“ Reverse Stock Split ”) in connection

with the Stockholder Authority and the Company filed a Certificate of Amendment with the Secretary of Delaware to affect the Reverse

adjustments were made to the conversion and exercise prices of the Company’s outstanding warrants and stock options, and to the

number of shares issued and issuable under the Company’s stock incentive plans in connection with the Reverse Stock Split.

Reverse Stock Split did not affect any stockholder’s ownership percentage of the Company’s common stock, except to the limited

extent that the Reverse Stock Split resulted in any stockholder owning a fractional share.

Fractional shares of common stock were rounded

up to the nearest whole share based on each holder’s aggregate ownership of the Company.

All issued and outstanding shares of common

stock, options and warrants to purchase common stock and per share amounts contained in the financial statements, have been retroactively

adjusted to reflect the Reverse Stock Split for all periods presented.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United

States of America (“

GAAP ”).

summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial

Such financial statements and accompanying notes are the representations of the Company’s management, who are

responsible for their integrity and objectivity.

These accounting policies conform to accounting principles generally accepted

in the United States of America (“

GAAP ”) in all material respects and have been consistently applied in preparing

the accompanying financial statements.

Historically, operations have been funded primarily through the sale of equity or debt securities and operating

In 2020, the Company raised approximately $5.99 million in capital (See Note 4 –

Stockholders’

The Company has the ability to maintain the current level of spending or reduce expenditures to maintain operations if funding

is not available.

of Estimates –

In preparing these financial statements, management is required to make estimates and assumptions

that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date

of the financial statements and the reported amount of revenues and expenses during the reporting periods.

Actual results could

differ from those estimates.

accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States

of America (“ GAAP ”) in all material respects and have been consistently applied in preparing the accompanying financial

summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements.

Such financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their

integrity and objectivity.

– Historically, operations have been funded primarily through the sale of equity or debt securities and operating activities.

In 2020, the Company raised approximately $ 5.99 million in capital (See Note 4 – Stockholders’ Equity ).

The Company has the

ability to maintain the current level of spending or reduce expenditures to maintain operations if funding is not available.

of Estimates – In preparing these financial statements, management is required to make estimates and assumptions that effect

the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements

and the reported amount of revenues and expenses during the reporting periods.

Actual results could differ from those estimates.

Reclassification

– Certain prior year amounts have been reclassified to conform to the current year presentation.

of Consolidation –

The Company’s consolidated financial statements include the accounts of Trxade Group, Inc.,

Trxade, Inc., Integra Pharma Solutions, Inc., Alliance Pharma Solutions, LLC, Community Specialty Pharmacy, LLC, Bonum Health,

LLC and MedCheks, LLC.

of Consolidation – The Company’s consolidated financial statements include the accounts of TRxADE HEALTH, INC., Trxade,

Inc., Integra Pharma Solutions, Inc., Alliance Pharma Solutions, LLC, Community Specialty Pharmacy, LLC, Bonum Health, LLC and MedCheks,

All significant intercompany accounts and transactions have been eliminated.

and Cash Equivalents –

Cash in bank accounts are at risk to the extent that they exceed U.S.

and Cash Equivalents – Cash in bank accounts are at risk to the extent that they exceed U.S.

Federal Deposit Insurance

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All investments purchased with a maturity of three months or less are cash equivalents.

cash equivalents are available on demand and are generally within FDIC insurance limits for 2020.

Receivable –

The Company’s receivables are from customers and are collected within 90 days.

Cash and cash equivalents

are available on demand and are generally within FDIC insurance limits for 2021.

Receivable – The Company’s receivables are from customers and are collectible within 90 days.

The Company determines

the allowance based on known troubled accounts, historical experience, and other currently available evidence.

During the years

ended December 31, 2020 and 2019, $10,539 and $11,500 of bad debt expense, respectively and $0 of recovery of bad debt,

was recognized.

During the years ended

December 31, 2021, and 2020, $ 615,657 and $ 10,539 of bad debt expense, respectively and $ 0 of recovery of bad debt, was recognized.

– Inventories are stated at the lower of cost or net realizable value.

Cost is determined on a first in

first out basis.

Cost is determined on a first in first out basis.

These are merchandise inventories at Community Specialty Pharmacy, LLC and Integra Pharma Solutions, LLC.

a quarterly basis, we evaluate inventory for net realizable value using estimates based on historical experience, current or projected

pricing trends, specific categories of inventory, age and expiration dates of on-hand inventory and manufacturer return policies.

If actual conditions are less favorable than our assumptions, additional inventory write-downs may be required, and no reserve

is maintained as obsolete or expired inventories are written off.

We believe that the inventory valuation provides a reasonable

approximation of the current value of inventory.

There is no reserve for inventory obsolescence and inventory is not pledged during

the periods presented.

During the years ended December 31, 2020 and 2019, included

in cost of sales were write-downs to reduce inventory to net realizable value of $1,218,020 and $0, respectively.

Conversion Features –

The intrinsic value of a beneficial conversion feature inherent to a convertible note payable,

which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion,

is treated as a discount to the convertible note payable.

This discount is amortized over the period from the date of issuance

to the date the note is due using the effective interest method.

If the note payable is retired prior to the end of its contractual

term, the unamortized discount is expensed in the period of retirement to interest expense.

In general, the beneficial conversion

feature is measured by comparing the effective conversion price, after considering the relative value of detachable instruments

included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon

Value of Financial Instruments –

The Company measures its financial assets and liabilities in accordance with the

requirements of Financial Accounting Standards Board (FASB) ASC 820, “

Fair Value Measurements and Disclosures ”.

ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy

to classify the inputs used in measuring fair value as follows:

On a quarterly basis, we evaluate

inventory for net realizable value using estimates based on historical experience, current or projected pricing trends, specific categories

of inventory, age and expiration dates of on-hand inventory and manufacturer return policies.

If actual conditions are less favorable

than our assumptions, additional inventory write-downs may be required, and no reserve is maintained as obsolete or expired inventories

are written off.

We believe that the inventory valuation provides a reasonable approximation of the current value of inventory.

is no reserve for inventory obsolescence and inventory is not pledged during the periods presented.

During the years ended December 31,

2021 and 2020, included in cost of sales were write-downs to reduce inventory to net realizable value of $ 376,348 and $ 1,218,020 , respectively.

Conversion Features – The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which

is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated

as a discount to the convertible note payable.

This discount is amortized over the period from the date of issuance to the date the note

is due using the effective interest method.

If the note payable is retired prior to the end of its contractual term, the unamortized

discount is expensed in the period of retirement to interest expense.

In general, the beneficial conversion feature is measured by comparing

the effective conversion price, after considering the relative value of detachable instruments included in the financing transaction,

if any, to the fair value of the common shares at the commitment date to be received upon conversion.

Value of Financial Instruments – The Company measures its financial assets and liabilities in accordance with the requirements

of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, “ Fair Value Measurements and Disclosures ”.

ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to

classify the inputs used in measuring fair value as follows:

1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.

markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing

information on an ongoing basis.

Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable

securities and listed equities.

Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or

indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation

methodologies.

These models are primarily industry-standard models that consider various assumptions, including quoted forward

prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments,

as well as other relevant economic measures.

Substantially all of these assumptions are observable in the marketplace throughout

the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions

are executed in the marketplace.

Instruments in this category generally include non-exchange-traded derivatives such as commodity

swaps, interest rate swaps, options and collars.

Active markets

are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on

an ongoing basis.

Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and

listed equities.

2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly

observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies.

These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities,

time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic

Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be

derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

3 – Pricing inputs include significant inputs that are generally less observable from objective sources.

may be used with internally developed methodologies that result in management’s best estimate of fair value.

These inputs may be

used with internally developed methodologies that result in management’s best estimate of fair value.

Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.

carrying amounts of cash, accounts receivable, accounts payable, accrued liabilities and short-term debt approximate fair value

because of the short-term nature of these instruments.

The carrying amount of long-term debt approximates fair value because the

debt is based on current rates at which the Company could borrow funds with similar maturities.

The Company accounts for goodwill and intangible assets in accordance with ASC 350 “

Intangibles Goodwill and

Other ”.

carrying amounts of cash, accounts receivable, accounts payable, accrued liabilities and short-term debt approximate fair value because

of the short-term nature of these instruments.

The carrying amount of long-term debt approximates fair value because the debt is based

on current rates at which the Company could borrow funds with similar maturities.

– The Company accounts for goodwill and intangible assets in accordance with ASC 350 “ Intangibles Goodwill and

ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on

1 unchanged sentence

carrying value.

The Company performed impairment analysis using the quantitative analysis under ASC 350-20 and because of declining

revenues and operating losses an impairment of goodwill was recognized as of December 31, 2020 was $725,973.

Recognition –

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No.

2014-09 (Topic 606) “

Revenue from Contracts with Customers.

Topic 606 supersedes the revenue recognition requirements

in Accounting Standards Codification Topic 605, “

Revenue Recognition ”, and requires entities to recognize revenue

when they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the

entity expects to be entitled to in exchange for those goods or services.

The Company adopted ASU 2014-09 using the modified retrospective

approach effective January 1, 2018, under which prior periods were not retrospectively adjusted.

The adoption of Topic 606 did

not have a material impact on the Company’s consolidated financial statements, including the presentation of revenues in

the Company’s Consolidated Statements of Operations.

provides an online website service, a buying and selling marketplace for licensed Pharmaceutical Wholesalers to sell products

and services to licensed Pharmacies.

The Company charges Suppliers a transaction fee, a percentage of the purchase price of the

Prescription Drugs and other products sold through its website service.

The fulfillment of confirmed orders, including delivery

and shipment of Prescription Drugs and other products, is the responsibility of the Supplier and not of the Company.

holds no inventory and assumes no responsibility for the shipment or delivery of any products or services from the Company’s

The Company considers itself an agent for this revenue stream and as such, reports revenue as net.

the contract with the customer –

Trxade, Inc.’s Terms and Use Agreement is acknowledged between the Wholesaler and

The Company performed impairment analysis using the quantitative analysis under ASC 350-20 and because of declining revenues

and operating losses an impairment of goodwill was recognized as of December 31, 2021 and 2020, was $ 0 and $ 725,973 , respectively.

Recognition – In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No.

(Topic 606) “ Revenue from Contracts with Customers.

” Topic 606 supersedes the revenue recognition requirements in

Accounting Standards Codification Topic 605, “ Revenue Recognition ”, and requires entities to recognize revenue when

they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects

to be entitled to in exchange for those goods or services.

The Company adopted ASU 2014-09 using the modified retrospective approach

effective January 1, 2018, under which prior periods were not retrospectively adjusted.

The adoption of Topic 606 did not have a material

impact on the Company’s consolidated financial statements, including the presentation of revenues in the Company’s Consolidated

Statements of Operations.

provides an online website service, a buying and selling marketplace for licensed Pharmaceutical Wholesalers to sell products and

services to licensed Pharmacies.

The Company charges Suppliers a transaction fee, a percentage of the purchase price of the Prescription

Drugs and other products sold through its website service.

The fulfillment of confirmed orders, including delivery and shipment of Prescription

Drugs and other products, is the responsibility of the Supplier and not of the Company.

The Company holds no inventory and assumes no

responsibility for the shipment or delivery of any products or services from the Company’s website.

The Company considers itself

an agent for this revenue stream and as such, reports revenue as net.

Identify the contract with the customer – Trxade,

Inc.’s Terms and Use Agreement is acknowledged between the Wholesaler and Trxade, Inc.

which outlines the terms and conditions.

The collection is probable based on the credit evaluation of the Wholesaler.

Identify the performance obligations in the contract –

The Company provides to the Supplier access to the online

website, uploading of catalogs of products and Dashboard access to review status of inventory posted and processed orders.

Agreement requires the supplier to provide a catalog of pharmaceuticals for posting on the platform, deliver the pharmaceuticals

and upon shipment remit the stated platform fee.

Determine the transaction price –

The Fee Agreement outlines

the fee based on the type of product, generic, brand or non-drug.

There are no discounts for volume of transactions or early payment

Allocate the transaction price –

The Fee Agreement outlines the fee.

There is no difference between

contract price and “

stand-alone selling price ”.

Recognize revenue when or as the entity satisfies

a performance obligation –

Revenue is recognized the day the order has been processed by the Supplier.

Pharma Solutions, LLC is a licensed wholesaler and sells to licensed pharmacies brand, generic and non-drug products.

takes orders for product and creates invoices for each order and recognizes revenue at the time the Customer receives the product.

Customer returns are not material.

Identify the contract with the customer –

The Company requires that an application

and a credit card for payment is completed by the Customer prior to the first order.

Each transaction is evidenced by an order

form sent by the customer and an invoice for the product is sent by the Company.

The collection is probable based on the application

and credit card information provided prior to the first order.

Identify the performance obligations in the contract

Each order is distinct and evidenced by the shipping order and invoice.

Determine the transaction price –

The consideration is variable if product is returned.

The variability is determined based on the return policy of the product

manufacturer.

– The Company provides to the Supplier access to the online website, uploading of catalogs of products and Dashboard access to

review status of inventory posted and processed orders.

The Agreement requires the supplier to provide a catalog of pharmaceuticals for

posting on the platform, deliver the pharmaceuticals and upon shipment remit the stated platform fee.

Determine the transaction

price – The Fee Agreement outlines the fee based on the type of product, generic, brand or non-drug.

There are no discounts for

volume of transactions or early payment of invoices.

Allocate the transaction price – The Fee Agreement outlines the

There is no difference between contract price and “ stand-alone selling price ”.

Recognize revenue when

or as the entity satisfies a performance obligation – Revenue is recognized the day the order has been processed by the Supplier.

Pharma Solutions, LLC is a licensed wholesaler and sells to licensed pharmacies brand, generic and non-drug products.

The Company takes

orders for product and creates invoices for each order and recognizes revenue at the time the Customer receives the product.

returns are not material.

Identify the contract with the customer – The Company requires that an application and a credit

card for payment is completed by the Customer prior to the first order.

Each transaction is evidenced by an order form sent by the customer

and an invoice for the product is sent by the Company.

The collection is probable based on the application and credit card information

provided prior to the first order.

Identify the performance obligations in the contract – Each order is distinct and

evidenced by the shipping order and invoice.

Determine the transaction price – The consideration is variable if product

The variability is determined based on the return policy of the product manufacturer.

There are no sales or volume discounts.

The transaction price is determined at the time of the order evidenced by

Allocate the transaction price –

There is no difference between contract price and “

selling price ”.

Recognize revenue when or as the entity satisfies a performance obligation - The Revenue

is recognized when the Customer receives the product.

The transaction price is determined at the time of the order evidenced by the invoice.

Allocate the transaction price –

There is no difference between contract price and “ stand-alone selling price ”.

Recognize revenue when or

as the entity satisfies a performance obligation - The Revenue is recognized when the Customer receives the product.

Specialty Pharmacy, LLC is in the retail pharmacy business.

The Company fills prescriptions for drugs written by a doctor and

recognizes revenue at the time the patient confirms delivery of the prescription.

The Company fills prescriptions for drugs written by a doctor and recognizes

revenue at the time the patient confirms delivery of the prescription.

Customer returns are not material.

Identify the contract with the customer –

The prescription is written by a doctor for a Customer and delivered to the Company.

The prescription identifies the performance obligations in the contract.

The Company fills the prescription and delivers to the

Customer the prescription, fulfilling the contract.

The collection is probable because there is confirmation that the customer

has insurance for the reimbursement to the Company prior to filling of the prescription.

Identify the performance obligations

in the contract –

Each prescription is distinct to the Customer.

Determine the transaction price –

consideration is not variable.

The transaction price is determined to be the price of the prescription at the time of delivery

which considers the expected reimbursements from third party payors (e.g., pharmacy benefit managers, insurance companies and

government agencies).

Allocate the transaction price –

The price of the prescription invoiced represents the

expected amount of reimbursement from third party payors.

There is no difference between contract price and “

selling price ”.

Recognize revenue when or as the entity satisfies a performance obligation –

is recognized upon the delivery of the prescription.

of Goods Sold –

The Company recognized cost of goods sold from activities in Integra Pharma Solutions, LLC and Community

Identify the contract

with the customer – The prescription is written by a doctor for a customer and delivered to the Company.

The prescription identifies

the performance obligations in the contract.

The Company fills the prescription and delivers to the Customer the prescription, fulfilling

the contract.

The collection is probable because there is confirmation that the customer has insurance for the reimbursement to the Company

prior to filling of the prescription.

Identify the performance obligations in the contract – Each prescription is distinct

to the Customer.

Determine the transaction price – The consideration is not variable.

The transaction price is determined

to be the price of the prescription at the time of delivery which considers the expected reimbursements from third party payors (e.g.,

pharmacy benefit managers, insurance companies and government agencies).

Allocate the transaction price – The price

of the prescription invoiced represents the expected amount of reimbursement from third party payors.

There is no difference between

contract price and “ stand-alone selling price ”.

Recognize revenue when or as the entity satisfies a performance

obligation – Revenue is recognized upon the delivery of the prescription.

of Goods Sold – The Company recognized cost of goods sold from activities in Integra Pharma Solutions, LLC and Community

Specialty Pharmacy, LLC.

Compensation –

The Company accounts for stock-based compensation to employees in accordance with ASC 718, “

Compensation-Stock

Compensation ”.

ASC 718 requires companies to measure the cost of employee services received in exchange for an award

of equity instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation

expense over the period the employee is required to provide service in exchange for the award, usually the vesting period.

option forfeitures are recognized at the date of employee termination.

Effective January 1, 2019, the Company adopted ASU 2018-07

for the accounting of share-based payments granted to non-employees for goods and services.

Taxes –

The Company accounts for income taxes utilizing ASC 740, “

Income Taxes ”

ASC 740 requires the measurement of deferred tax assets for deductible temporary differences and operating loss carry forwards,

and of deferred tax liabilities for taxable temporary differences.

Measurement of current and deferred tax liabilities and assets

is based on provisions of enacted tax law.

Compensation – The Company accounts for stock-based compensation to employees in accordance with ASC 718, “ Compensation-Stock

Compensation ”.

ASC 718 requires companies to measure the cost of employee services received in exchange for an award of equity

instruments, including stock options, based on the grant date fair value of the award and to recognize it as compensation expense over

the period the employee is required to provide service in exchange for the award, usually the vesting period.

Stock option forfeitures

are recognized at the date of employee termination.

Effective January 1, 2019, the Company adopted ASU 2018-07 for the accounting of

share-based payments granted to non-employees for goods and services.

Taxes – The Company accounts for income taxes utilizing ASC 740, “ Income Taxes ” (SFAS No.

740 requires the measurement of deferred tax assets for deductible temporary differences and operating loss carry forwards, and of deferred

tax liabilities for taxable temporary differences.

Measurement of current and deferred tax liabilities and assets is based on provisions

of enacted tax law.

The effects of future changes in tax rates are not included in the measurement.

Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and

assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial

statements or tax returns.

The Company currently has substantial net operating loss carry forwards.

The Company has recorded a

100% valuation allowance against net deferred tax assets due to uncertainty of their ultimate realization.

Valuation allowances

are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Tax years from 2017 forward

are open to examination by the Internal Revenue Service.

Investments –

If the investments are less than 50% owned and more than 20% owned, the entities use the equity method

of accounting in accordance with ASC 323-10 Investments –

Equity Method and Joint Ventures.

The Company recognizes the amount

of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences

of events and transactions that have been recognized in the Company’s financial statements or tax returns.

The Company currently

has substantial net operating loss carry forwards.

The Company has recorded a 100 % valuation allowance against net deferred tax assets

due to uncertainty of their ultimate realization.

Valuation allowances are established when necessary to reduce deferred tax assets to

the amount expected to be realized.

Tax years from 2018 forward are open to examination by the Internal Revenue Service.

Investments – If the investments are less than 50% owned and more than 20% owned, the entities use the equity method of

accounting in accordance with ASC 323-10 Investments – Equity Method and Joint Ventures.

share of income (loss) of such entities is recorded as a single amount as share in equity income (loss) of investments.

if any, are recorded as a reduction of the investment.

Company’s equity investment was fully impaired at December 31, 2019.

Dividends, if

any, are recorded as a reduction of the investment.

Company had no equity investment for the year ended December 31, 2021.

(loss) Per Share –

Basic net income (loss) per common share is computed by dividing net loss available to common stockholders

(loss) Per Share – Basic net income (loss) per common share is computed by dividing net loss available to common stockholders

by the weighted average number of common shares outstanding.

2 unchanged sentences

if the potential common shares had been issued and if the additional common shares were dilutive.

The treasury stock method and as if

converted methods are used to determine the dilutive shares for the Company’s options and warrants and convertible notes, respectively.

In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because

their inclusion would be anti-dilutive.

following table sets forth the computation of basic and diluted income per common share for the years ended December 31, 2020

The dilutive effect of the Company’s

options and warrants is computed using the treasury stock method.

As of December 31, 2021, we had 44,535 outstanding warrants to purchase

shares of common stock and 410,964 options to purchase shares of common stock.

following table sets forth the computation of basic and diluted income (loss) per common share for the years ended December 31, 2021,

OF BASIC AND DILUTIVE INCOME (LOSS) PER COMMON SHARE

December 31, 2021

2 unchanged sentences

$ ( 5,315,883 )

Numerator for basic and diluted income available to common shareholders

$ ( 2,536,051 )

Denominator for basic and diluted income per common share –

Weighted average common shares outstanding

Basic and Diluted income (loss) per common share

Numerator for basic and diluted EPS - income (loss) available to common Shareholders

$ ( 5,315,883 )

$ ( 2,536,051 )

Denominator for basic and diluted EPS – Weighted average shares

Basic Income (Loss) per common share

Concentration

4 unchanged sentences

The amount of cash not insured by the FDIC as of December 31, 2021, is $ 2,332,137 .

During 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, respectively.

Accounting Pronouncements –

The Company has implemented all new relevant accounting pronouncements that are in effect

through the date of these financial statements.

The pronouncements did not have any material impact on the financial statements

unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have

been issued that might have a material impact on its consolidated financial position or results of operations.

the years ended December 31, 2021, no sales to customers represented greater than 10 % of revenue.

Accounting Pronouncements – The Company has implemented all new relevant accounting pronouncements that are in effect through

the date of these financial statements.

The pronouncements did not have any material impact on the financial statements unless otherwise

disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have

a material impact on its consolidated financial position or results of operations.

January 1, 2019, the Company adopted ASU No.

2016-02, Leases (Topic 842 ) (“

ASU 2016-02 ”) using the required

2016-02, Leases (Topic 842 ) (“ ASU 2016-02 ”) using the required

modified retrospective approach.

The most significant changes under the new guidance include clarification of the definition of

a lease, and the requirements for lessees to recognize a Right of Use (“

ROU ”) asset and a lease liability for

all qualifying leases with terms longer than twelve months in the consolidated balance sheet.

In addition, under Topic 842, additional

disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty

of cash flows arising from leases.

See Note 10 –

Leases , below for more detail on the Company’s accounting with respect

The most significant changes under the new guidance include clarification of the definition of a lease,

and the requirements for lessees to recognize a Right of Use (“ ROU ”) asset and a lease liability for all qualifying

leases with terms longer than twelve months in the consolidated balance sheet.

In addition, under Topic 842, additional disclosures are

required to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising

See Note 10 – Leases , below for more detail on the Company’s accounting with respect to leases.

January 1, 2019, the Company adopted ASU No.

2018-07, Compensation –

Stock Based Compensation (Topic 718):

to Nonemployee Share-Based Payment Accounting (“

ASU 2018-7 ”), which aligns accounting for share-based payments

issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions.

This update supersedes

previous guidance for equity-based payments to nonemployees under Subtopic 505-50, Equity –

Equity-Based Payments to Non-Employees.

The adoption of ASU 2018-07 did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

Not Yet Adopted - In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments - Credit Losses (Topic 326):

of Credit Losses on Financial Instruments”

(“ASU 2016-13”).

ASU 2016-13 requires financial assets measured at amortized

cost to be presented at the net amount expected to be collected.

The measurement of expected credit losses is based on relevant information

about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility

of the reported amounts.

An entity must use judgment in determining the relevant information and estimation methods that are appropriate

in its circumstances.

ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2019, including interim periods

within those fiscal years, and a modified retrospective approach is required, with a cumulative-effect adjustment to retained earnings

as of the beginning of the first reporting period in which the guidance is effective.

In November of 2019, the FASB issued ASU 2019-10, which delayed the implementation of ASU 2016-13 to fiscal years

beginning after December 15, 2022 for smaller reporting companies.

The Company does not expect the adoption

of this new accounting guidance to have a material impact on its financial position, results of operations, or cash flows.

2018-07, Compensation – Stock Based Compensation (Topic 718):

Improvements to Nonemployee

Share-Based Payment Accounting (“ ASU 2018-7 ”), which aligns accounting for share-based payments issued to nonemployees

to that of employees under the existing guidance of Topic 718, with certain exceptions.

This update supersedes previous guidance for

equity-based payments to nonemployees under Subtopic 505-50, Equity – Equity-Based Payments to Non-Employees.

The adoption of ASU

2018-07 did not have a material impact on the Company’s consolidated financial statements.

Issued Accounting Pronouncements Not Yet Adopted - In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments

- Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (“ ASU 2016-13 ”).

requires financial assets measured at amortized cost to be presented at the net amount expected to be collected.

The measurement of expected

credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable

and supportable forecasts that affect the collectability of the reported amounts.

An entity must use judgment in determining the relevant

information and estimation methods that are appropriate in its circumstances.

ASU 2016-13 is effective for annual reporting periods beginning

after December 15, 2019, including interim periods within those fiscal years, and a modified retrospective approach is required, with

a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.

In November of 2019, the FASB issued ASU 2019-10, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December

15, 2022, for smaller reporting companies.

Company does not expect the adoption of this new accounting guidance to have a material impact on its financial position, results of

operations, or cash flows.

3 – SHORT-TERM DEBT AND RELATED PARTIES DEBT

Promissory Notes

February 2019, convertible promissory notes issued in 2015 for $181,500 were amended to have a conversion price of $3.00 per share, and

the principal and accrued interest totalling $211,983, were then converted into 70,666 common shares.

of December 31, 2020 and 2019, short-term convertible notes payable has a balance of $0 and $0, respectively, net of $0 unamortized

debt discount.

Party Convertible Promissory Notes

August 2019, a $40,000 convertible promissory note due to Mr.

Shilpa Patel, a relative of Mr.

Prashant Patel, the Company’s

President and director, was paid in full.

September and October 2016, convertible promissory notes were issued in the aggregate amount of $211,725 to a related party, Mr.

Nitil Patel, the brother of Mr.

Prashant Patel, the Company’s President and director.

The term of the notes was one year.

Simple interest of 10% was payable at the maturity date of the notes.

Prior to maturity, the notes could be converted into common

stock at a conversion price of $3.72 per share.

In connection with the notes, the holders of the notes were granted warrants to

purchase 8,810 shares of common stock.

These warrants were granted at a strike price of $3.72 per share and had an expiration

date of five years from the date of issuance.

In July 2019, a note was extended to October 15, 2019, and the modification was

not considered substantial.

In October 2019, the note was converted into 33,333 shares of common stock at $3.00 per share.

was a loss recognized on conversion of $102,000.

of December 31, 2020 and 2019, the short-term related party convertible notes had a principal balance of $0 and $0, respectively,

net of an unamortized debt discount of $0.

Party Promissory Notes

June 2017, the Company repaid an outstanding promissory note, dated May 8, 2016, as amended, in the principal amount of $250,000

NPR Note ”), owed to NPR INVESTMENT GROUP, LLC (the “

Lender ”).

The NPR Note included

a personal guarantee from Suren Ajjarapu and Prashant Patel, who both serve on the Board of Directors of the Company and are controlling

stockholders of the Company.

Ajjarapu is the CEO of the Company and Mr.

Patel is President.

Company borrowed funds to repay the NPR Note in the amounts of $100,000 and $80,000 from Sansur Associates, LLC, a limited liability

company controlled by Mr.

Ajjarapu, and Mr.

Patel, respectively (the “

Promissory Notes ”).

The term of each

of these n otes is three years and they each bear interest at 6% per annum, which is payable

note due to Mr.

Patel is $ 122,552.

$80,000 for the NPR note, $17,280 for an existing promissory note and $25,272 of assumption of credit card obligations related

to business expenses of the Company.

October 8, 2019, the notes were paid in full.

The notes were due on July 1, 2020 and each bear interest at the rate of 6% per

The outstanding amounts paid to Mr.

Patel and Sansur Associates, LLC were $122,552 and $100,000, respectively.

October 2018, in connection with the acquisition of Community Specialty Pharmacy, LLC, a $300,000 promissory note was issued to

Nikul Panchal, a non-executive officer of the Company, accruing simple interest at the rate of 10% per annum, payable annually,

and having a maturity date in October 15, 2021.

In October 2019, $75,000 of the note was converted into 25,000 common shares at

$3.00 per share.

October 2018, in connection with the acquisition of Community Specialty Pharmacy, LLC, a $ 300,000 promissory note was issued to Nikul

Panchal, a non-executive officer of the Company, accruing simple interest at the rate of 10 % per annum, payable annually, and having

a maturity date on October 15, 2021 .

In October 2019, $ 75,000 of the note was converted into 25,000 common shares at $ 3.00 per share,

leaving $ 225,000 of principal owed under the promissory note.

There was a loss recognized on this conversion of $ 76,500 .

2021, the promissory note was paid in full.

December 31, 2021 and 2020, total related party debt was $ 0 and $ 225,000 , respectively.

STOCKHOLDERS’

February 2019, convertible promissory notes issued in 2015 in the amount of $181,500, were amended to include a conversion price of $3.00

per share, and the principal and accrued interest totalling $211,983 was then converted into 70,666 common shares.

February 2019, warrants to purchase 2,778 shares of common stock granted in 2014 with an exercise price of $0.06 per share were

exercised for $166 in cash and the Company issued 2,778 common shares.

April and May 2019, options to purchase 84,178 shares of common stock were granted with exercise prices of between $2.46 and $2.64

per share, and a term of 10 years from the grant date.

The options vest over a period of four to five years.

July 10, 2019, the Company entered into a securities Purchase Agreement with an accredited investor with respect to the private

placement of 333,333 shares of common stock at a purchase price of $3.00 per share, for gross proceeds of $1,000,000.

This transaction

closed on July 30, 2019.

September 1, 2019, the Company granted Flacane Advisors, Inc., a company controlled by Gary Augusta, a former member of the Board

of Directors of the Company, warrants to purchase 50,000 shares of the Company’s common stock at an exercise price of $0.06

Based on the agreement, warrants to purchase 25,000 shares vest on April 1, 2020 and warrants to purchase 25,000 shares

vest on April 1, 2021.

The warrants have a term of 5 years.

Warrants to purchase 25,000 shares were exercised in May 2020.

remaining 25,000 warrants were automatically revoked when Flacane Advisors, Inc.’s services were terminated.

September 30, 2019, the Company entered into Securities Purchase Agreements with certain accredited investors with respect to

the private placement of 485,000 shares of common stock at a purchase price of $3.00 per share, for gross proceeds of $1,455,000.

Subscribers included Bedford Falls Capital, which is controlled by Gary Augusta, the Company’s former director (166,667

Nitesh Patel, who is the cousin of Prashant Patel, the Company’s director and President (6,667 shares);

Patel, who is the spouse of Nitesh Patel, the brother of Prashant Patel, the Company’s director and President (3,333 shares).

October 2019, the Company converted $175,000 of principal owed under various outstanding promissory notes into 58,333 shares common

stock of the Company at $3.00 per share.

There was a loss recognized on this conversion of $178,500.

October 23, 2019 (the “

Closing Date ”), Bonum Health, LLC, a Delaware limited liability company, and a wholly-owned

subsidiary of the Company entered into an Asset Purchase Agreement with Bonum Health, LLC, a Florida limited liability company

Seller ”) and Hardikkumar Patel, the sole member of the Seller (the “

Member ”).

to the Asset Purchase Agreement, the Company acquired from the Seller, certain specified assets and certain specified contracts

associated with the assets of Seller’s operation as a telehealth service provider (the Tele Meds Platform) (the “

Assets ”).

Included with the acquisition of the Assets, were contracts (relating to the Assets), intellectual property for the E-Hub Software

and Technology and personal computers.

The Company agreed to provide the Seller consideration equal to 41,667 shares of restricted

common stock of the Company at the closing with a fair value of $277,500.

See Note 13–

Asset Acquisition .

February 13, 2020, we entered into an underwriting agreement (the “

Underwriting Agreement ”) with Dawson James

Securities, Inc.

Representative ”), as representative of the several underwriters named therein, relating

to the sale of 806,452 shares of common stock in a firm commitment underwritten offering (the “

Offering ”).

The transactions contemplated by the Underwriting Agreement closed on February 18, 2020 (the “

Closing Date ”),

at which time we sold 806,452 shares of common stock to the underwriters.

On February 21, 2020, the Representative exercised their

overallotment option and purchased an additional 115,767 shares of common stock.

The shares were sold at a public offering price

of $6.50 per share.

Company received proceeds of approximately $5.99 million from the Offering.

The Company paid the underwriters a cash fee equal to 8%

of the aggregate gross proceeds received by the Company in connection with the Offering and reimbursed certain expenses.

The total costs

of the Offering were $820,587, including $88,213 paid in the prior year, which was included in deferred offering cost as of December

The net proceeds of the Offering were approximately $5.17 million.

February 2020, warrants to purchase 22,529 shares of common stock were exercised at $0.06 per share by Nikul Panchal, a non-executive

officer of the Company and note holder.

The Company issued 22,529 shares of common stock upon such exercise, and $1,352 in proceeds

were received in connection with such exercise.

March 2020, options to purchase 167 shares of common stock were exercised at $3.00 per share;

the Company issued 167 shares of

common stock upon such exercise and received $501 in proceeds.

May 2020, warrants to purchase 25,000 shares of common stock were exercised at $0.06 per share by a former consultant;

issued 25,000 shares of common stock upon such exercise and $1,500 in proceeds was received by the Company in connection with

such exercise.

June 25, 2020, warrants to purchase 335,002 shares of common stock were exercised at $0.06 per share;

the Company issued 335,002

shares of common stock upon such exercise and $20,100 in proceeds was received by the Company.

August 2020, warrants to purchase 1,667 shares of common stock were exercised at $4.80 per share;

the Company issued 1,667 shares

of common stock upon such exercise and $8,002 in proceeds was received by the Company.

August 2020, warrants to purchase 1,667 shares of common stock were exercised at $3.00 per share;

the Company issued 1,667 shares

of common stock upon such exercise and $5,001 in proceeds was received by the Company.

September 2020, warrants to purchase 5,000 shares of common stock were exercised at $0.06 per share;

the Company issued 5,000

shares of common stock upon such exercise and $300 in proceeds was received by the Company.

These warrants were granted in September

2020 in connection with the financial consulting agreement dated in September 2019 where the Company agreed to pay the consultant

$15,000 over nine months and the above mentioned warrants.

October 2020, warrants to purchase 22,528 shares of common stock were exercised at $0.06 per share by Nikul Panchal, a non-executive

officer of the Company and note holder.

The Company issued 22,528 shares of common stock upon such exercise, and $1,351 in proceeds

were received in connection with such exercise.

Chief Executive Officer and President Bonuses

April 14, 2020, the Board of Directors of the Company (the “

Board ”) and the Compensation Committee of the Board,

approved the award to Suren Ajjarapu, the Company’s Chief Executive Officer and Prashant Patel, the Company’s President,

of bonuses equal to 1% of the Company’s outstanding shares, equivalent to 74,484 shares of common stock, and 50,000 shares

of common stock, respectively.

The awards were made under and pursuant to the Company’s 2019 Equity Incentive Plan (the

Plan ”).

The Company recognized stock-based compensation expense of $761,842 equivalent to the fair value of

the shares granted.

4 – STOCKHOLDERS’ EQUITY

August 2021, warrants to purchase 5,000 shares of common stock were granted with an exercise price of $ 3.00 per share, and were exercised

at $ 3.00 per share;

the Company issued 5,000 shares of common stock, and $ 15,000 in proceeds were received in connection with such exercise.

Equity Compensation Awards

April 14, 2020, the Compensation Committee approved the grant of (a) 5,000 shares of restricted common stock to the Company’s

legal counsel;

April 14, 2020, the Compensation Committee approved the grant of (a) 5,000 shares of restricted common stock to the Company’s legal

and (b) 12,500 shares of restricted common stock to Howard A.

Doss, the Company’s Chief Financial Officer,

which shares vest at the rate of 1/4th of such shares on July 1 and October 1, 2020 and January 1 and April 1, 2021.

have a fair value of $107,100 and the Company recognized stock-based compensation expense of $80,325 for the year ended December

Director Compensation Plan

April 14, 2020, the three independent members of the Board of Directors (Mr.

Doss, the Company’s Chief Financial Officer, which shares

vested at the rate of ¼ th of such shares on July 1 and October 1, 2020, and January 1 and April 1, 2021.

have a fair value of $ 107,100 and the Company recognized stock-based compensation expense of $ 53,550 for the twelve months ended December

April 14, 2020, the then three independent members of the Board of Directors (Mr.

Pamela Tenaerts, and Mr.

Peterson), were each awarded 8,987 shares of restricted stock, which vest at the rate of 1/4th of such shares on July 1 and

October 1, 2020 and January 1 and April 1, 2021.

Peterson), were each awarded 8,987 shares of restricted stock, which vested at the rate of ¼ th of such shares on

July 1 and October 1, 2020, and January 1 and April 1, 2021.

The shares have a fair value of $ 165,000 and the Company recognized stock-based

compensation expense of $123,751 for the year ended December 31, 2020.

compensation expense of $ 82,501 for the twelve months ended December 31, 2021.

Equity Compensation Awards

April 15, 2021, the Board of Directors, with the recommendation of the Compensation Committee, approved the grant of options to purchase

an aggregate of 17,500 shares of our common stock to certain employees of the Company, in consideration for services to be rendered by

such individuals through 2025.

The options vest at the rate of ¼ th of such options per year, on the first, second,

third and fourth anniversaries of the grant date, subject to such option holders continuing to provide services to the Company on such

dates, subject to the terms of the Company’s Second Amended and Restated 2019 Equity Incentive Plan (the “Plan”) and

the option agreements entered into evidence such grants.

The options were granted pursuant to, and are subject to, the Plan, and have

a term of five years from the grant date.

The options have an exercise price of $ 4.76 per share, the closing price of the Company’s

common stock on the date of the grant of such options.

connection with and pursuant to the independent director compensation policy previously adopted by the Board of Directors, on April 15,

2021, the then three independent members of the Board of Directors (Mr.

Pamela Tenaerts, and Mr.

were each awarded 10,721 shares of restricted stock, valued at $ 55,000 ($ 5.13 per share) based on the closing sales price of the Company’s

common stock on the Nasdaq Capital Market on the effective date of the grant, April 1, 2021, which vest at the rate of ¼ th

of such shares on July 1 and October 1, 2021 and January 1 and April 1, 2022, subject to such persons continuing to provide services

to the Company on such dates, subject to the terms of the Plan and the Restricted Stock Grant Agreements entered into as evidence of

The shares have a fair value of $ 165,000 and the Company recognized stock-based compensation expense of $ 68,750 for the

twelve months ended December 31, 2021.

Common Shares totaling 16,082 were cancelled on May 27, 2021, when the director services of Mr.

Peterson and Ms.

Tenaerts were terminated.

Board of Directors of the Company, on May 27, 2021, confirmed the vesting of 2,680 shares of common stock previously issued to each of

Peterson and Dr.

Pamela Tenaerts on July 1, 2021, which were subject to forfeiture subject to such persons continued service

on the Board of Directors prior to the vesting date.

connection with and pursuant to the independent director compensation policy previously adopted by the Board of Directors, on May 27,

2021, the Board of Directors awarded Charles L.

Pope, and Christine L.

Jennings, each independent members of the Board of Directors appointed

to the Board of Directors on May 27, 2021, 10,912 shares of restricted stock each, valued at $ 41,250 each ($ 3.78 per share) based on

the closing sales price of the Company’s common stock on the Nasdaq Capital Market on the effective date of the grant, May 27,

2021, which vested at the rate of 1/3rd of such shares on October 1, 2021 and January 1, with the last tranche thereof vesting on April

1, 2022, subject to such persons continuing to provide services to the Company on such date.

The Company recognized stock-based compensation

expense of $ 64,167 for the twelve months ended December 31, 2021.

Agreement with Suren Ajjarapu, Chief Executive Officer

connection with our employment agreement with Mr.

Suren Ajjarapu, our Chief Executive Officer, which was effective on April 14, 2020,

we granted 49,020 restricted shares of common stock which vest upon the Company reaching certain performance metrics established by the

Compensation Committee on the same date and further amended on May 5, 2020.

The fair value of the shares at the grant date was determined

to be $300,000.

The modification of the performance conditions resulted in an incremental value to the shares of $72,062.

The Compensation

Committee subsequently determined that the performance conditions were met and the 49,020 bonus shares vested in full on December 31,

The compensation expense of $391,841 was recognized for the year ended December 31, 2020.

2019, warrants to purchase 2,778 shares of common stock were exercised for cash, 50,000 were granted and 2,778 were forfeited.

See Note 4 –

Stockholders’

2020, warrants to purchase 413,393 shares of common stock were exercised for cash, 5,000 were granted and 33,336 were forfeited.

See Note 4 –

Stockholders’

Suren Ajjarapu, our Chief Executive Officer, no stock or other equity compensation

was granted for the year ended December 31, 2021.

Repurchase Program

May 27, 2021, the Board of Directors of the Company authorized and approved a stock repurchase program for up to $ 1 million of the currently

outstanding shares of the Company’s common stock.

There is no time frame for the repurchase program, and such program will remain

in place until a maximum of $1.0 million of the Company’s common stock has been repurchased or until such program is suspended

or discontinued by the Board of Directors.

the Market Offering

August 5, 2021, our Board of Directors paused the Stock Repurchase Program until the “at-the-market” offering (discussed

below) was complete.

August 6, 2021, the Company entered into an Equity Distribution Agreement, relating to an “at-the-market” offering for the

sale of up to $ 9 million in shares of the common stock under which EF Hutton, division of Benchmark Investments, LLC, the distribution

agent, could sell the offering shares in public market transactions reported on the consolidated tape or privately negotiated transactions

which could include block trades pursuant to and in connection with the Company’s previously filed Form S-3 Shelf Registration

Statement filed with the Securities and Exchange Commission on August 28, 2020 and declared effective by the Commission on September

3, 2020 (File Number:

333-248473) and the Prospectus Supplement was filed with the Commission under Rule 424(b)(5) dated August 6, 2021

(the “ATM Program”).

on November 30, 2021, the Company provided the distribution agent notice of the termination of the Equity Distribution Agreement and

the ATM Program (each of which were terminated effective December 5, 2021, pursuant to the terms of the Equity Distribution Agreement),

and as a result, $ 128,000 of deferring offering costs were recognized.

shares of common stock were sold pursuant to the “at-the-market” offering prior to the termination date.

of the Stock Repurchase Program

December 10, 2021, the Board of Directors authorized and approved the resumption of the Company’s prior share repurchase program.

The share repurchase program as approved by the Board of Directors on December 10, 2021, modified the prior repurchase program to allow

for the repurchase of up to 100,000 of the currently outstanding shares of the Company’s common stock.

There is no time frame for

the repurchase program, and such program will remain in place until a maximum of 100,000 shares of the Company’s common stock has

been repurchased or until such program is discontinued by the Board of Directors.

of December 31, 2021, no shares have been repurchased.

2021, warrants to purchase 5,000 shares of common stock were granted, 5,000 were exercised, and warrants to purchase 38,216 shares of

common stock expired and were forfeited.

See Note 4 – Stockholders’ Equity .

the twelve-month period ended December 31, 2021, warrants to purchase 5,000 shares of common stock were exercised, resulting in proceeds

of $ 15,000 .

Company uses the Black-Scholes pricing model to estimate the fair value of stock-based awards on the date of the grant.

The following

table summarizes the assumptions used to estimate the fair value of the warrants granted during the years ended December 31, 2020

The compensation

cost related to the warrants granted was $ 0 and $ 21,640 for the year ended December 31, 2021, and 2020, respectively.

following table summarizes the assumptions used to estimate the fair value of the warrants granted during the years ended December 31,

2021 and 2020.

SUMMARY OF ASSUMPTIONS USED TO ESTIMATE FAIR VALUE OF WARRANTS GRANTED

Expected dividend yield

2 unchanged sentences

Expected life of warrants

Company’s outstanding and exercisable warrants as of December 31, 2020 and 2019 are presented below:

Company’s outstanding and exercisable warrants as of December 31, 2021 and 2020 are presented below:

SCHEDULE OF OUTSTANDING AND EXERCISABLE WARRANTS

Warrants Outstanding as of December 31, 2019

8 unchanged sentences

Warrants Exercisable as of December 31, 2021

Company maintains stock option plans under which certain employees are awarded option grants based on a combination of performance

The stock option plans provide for the grant of up to 2,333,333 shares, and the Company’s 2019 Amended and Restated

2019 Equity Incentive Plan provides for automatic increases in the number of shares available under such plan (currently 2,000,000

shares) on April 1st of each calendar year, beginning in 2021 and ending in 2029 (each a “Date of Determination”),

in each case subject to the approval and determination of the administrator of the plan (the Board of Directors or Compensation

Committee) on or prior to the applicable Date of Determination, equal to the lesser of (A) ten percent (10%) of the total shares

of common stock of the Company outstanding on the last day of the immediately preceding fiscal year and (B) such smaller number

of shares as determined by the administrator.

options were granted during 2020 and 2019 to employees totalling 94,154 and 84,178, respectively.

These options vest over a period

of 4 to 7 years, are granted with an exercise price of between $2.46-$7.50 per share and have a term of 10 years.

The last options expire

in November 2029.

Company maintains stock option plans under which certain employees are awarded option grants based on a combination of performance and

The stock option plans provide for the grant of up to 2,333,333 shares, and the Company’s Second Amended and Restated 2019

Equity Incentive Plan provides for automatic increases in the number of shares available under such plan (currently 2,000,000 shares)

on April 1 st of each calendar year, beginning in 2021 and ending in 2029 (each a “Date of Determination”), in

each case subject to the approval and determination of the administrator of the plan (the Board of Directors or Compensation Committee)

on or prior to the applicable Date of Determination, equal to the lesser of (A) ten percent (10%) of the total shares of common stock

of the Company outstanding on the last day of the immediately preceding fiscal year and (B) such smaller number of shares as determined

by the administrator, provided that not more than 25 million shares of common stock may be issued pursuant to the exercise of incentive

stock options pursuant to the plan.

The administrator did not approve an increase in the number of shares covered under the plan as of

April 1, 2021.

2021, options to purchase 36,700 shares of common stock were granted, 30,353 were exercised, 21,200 were forfeited, and none expired.

The options granted during the period vest over a four-year period, the average exercise price was $ 4.86 per share and the options have

a term of 5 years.

the twelve-month period ended December 31, 2021, options to purchase 30,353 shares of common stock were exercised, resulting in proceeds

the Black-Scholes option price model, fair value of the options granted in 2021 and 2020 were $ 168,008 and $ 557,308 , respectively.

Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards on the date of grant.

following table summarizes the assumptions used to estimate the fair value of stock options granted during the years ended December

31, 2020 and 2019:

The following

table summarizes the assumptions used to estimate the fair value of stock options granted during the years ended December 31, 2021 and

SCHEDULE OF ESTIMATE FAIR VALUE OF STOCK OPTIONS

Expected dividend yield

3 unchanged sentences

compensation cost related to stock options was $ 187,273 and $ 448,404 for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2020, there was $264,833 of unrecognized compensation costs related to stock options, which is expected to

be recognized over a weighted average period of 5.33 years.

The following table represents stock option activity for the two years

ended December 31, 2020:

of December 31, 2021, there was $ 135,118 of unrecognized compensation costs related to stock options, which is expected to be recognized

over a weighted average period of 5 years.

The following table represents stock option activity for the two years ended December 31,

SCHEDULE OF STOCK OPTION ACTIVITY

Options Outstanding as of December 31, 2019

3 unchanged sentences

Options expired

Options exercised

Options Outstanding as of December 31, 2020

6 unchanged sentences

Options Exercisable as of December 31, 2021

7 – INCOME TAXES

December 22, 2017, H.R.

1, originally known as the Tax Cuts and Jobs Act, (the “

Tax Act ”) was enacted.

the significant changes to the U.S.

1, originally known as the Tax Cuts and Jobs Act, (the “ Tax Act ”) was enacted.

Among the significant

changes to the U.S.

Internal Revenue Code, the Tax Act lowers the U.S.

federal corporate income tax rate (“

Tax Rate ”) from 35% to 21% effective January 1, 2018.

federal corporate income tax rate (“ Federal Tax Rate ”)

from 35 % to 21 % effective January 1, 2018.

statutory tax rate is the percentage imposed by law;

the effective tax rate is the percentage of income actually paid by a company

after taking into account tax deductions, exemptions, credits and operating loss carry forwards.

the effective tax rate is the percentage of income actually paid by a company after

considering tax deductions, exemptions, credits and operating loss carry forwards.

December 31, 2021 and 2020 deferred tax assets consist of the following:

SCHEDULE OF DEFERRED TAX ASSETS

December 31, 2021

2 unchanged sentences

valuation allowance

Company has established a valuation allowance equal to the full amount of the deferred tax asset primarily due to uncertainty

in the utilization of the net operating loss carry forwards.

estimated net operating loss carry forwards of approximately $5,506,902 will be available based on the new carryover rules

in section 172(a) passed with the Tax Cuts and Jobs Acts.

( 2,347,266 )

( 1,309,534 )

Company has established a valuation allowance equal to the full amount of the deferred tax asset primarily due to uncertainty in the

utilization of the net operating loss carry forwards.

estimated net operating loss carry forwards of approximately $ 10,462,828 will be available based on the new carryover rules in section

172(a) passed with the Tax Cuts and Jobs Acts.

8 – OTHER RECEIVABLES

In July 2020, the Company’s wholly-owned subsidiary,

Integra Pharma Solutions, Inc.

(“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

In December 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.

Studebaker did not answer

the complaint, nor did counsel for Studebaker file an appearance.

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

however, on March 22, 2021, counsel for Studebaker filed an appearance and the Company anticipates that Studebaker will file a

motion to vacate the default judgment.

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

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

Studebaker’s has the ability to satisfy a judgment.

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 accepted;

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.

Integra wired

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

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.

On January 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.

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.

Integra’s motion to strike the affirmative

defenses, or in the alternative, motion for more definite statement is scheduled for hearing on April 27, 2022.

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.

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

and 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.

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.

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 th , the ruling for the summary judgment was denied and a trial date is pending.

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 or costly.

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.

On November 19, 2021, Integra filed a

complaint against GSG PPE, LLC (“GSG”) and Gary Waxman (“Waxman”), the owner, alleging three counts of

breach of contract for a purchase agreement, a promissory note, and a personal guaranty.

Collectively, the company alleges that GSG

and Waxman have materially breached all three contracts.

In late 2020, GSG and Integra executed a valid initial contract setting the

terms of a business transaction.

GSG failed to pay Integra approximately 75% of the amount owed to Integra.

GSG acknowledged it owed

the money and executed a promissory note in favor of Integra in the amount of $ 630,000

which matured on September 30, 2021.

The note provides for attorney fees and interest in addition to the $ 630,000 .

Waxman’s personal guaranty confirmed that GSG owed Integra $ 630,000 .

Integra has propounded discovery and plans to file a

motion for summary judgment on all three counts of breach of contract shortly after this filing.

The company believes that the facts

of the case are favorable to Integra, but the outcome of the summary judgment hearing is unknown.

On September 30, 2021, the $ 630,000 was

recorded as Bad Debt Expense.

9 - CONTINGENCIES

January 2020, we became aware of a complaint filed by Jitendra Jain, Manish Arora, Scariy Kumaramangalam, Harsh Datta and Balvant

Arora (collectively, plaintiffs), against our wholly-owned subsidiary, Trxade, Inc.

and our Chief Executive Officer, Suren Ajjarapu

as well as certain unrelated persons, Annapurna Gundlapalli, Gajan Mahendiran and Nexgen Memantine (collectively, defendants),

in the Circuit Court of Madison County, Alabama (Case:47-CV-2019-902216.00).

The complaint alleged causes of actions against the

defendants including fraud in the inducement, relating to certain investments alleged to have been made by plaintiffs in Nexgen

Memantine, breach of fiduciary duty, conversion and voidable transactions.

The complaint related to certain investments alleged

made by the plaintiffs in Nexgen Memantine and certain alleged fraudulent transfers of assets and funds alleged to have been taken

by the defendants which are unrelated to the Company.

The complaint sought $425,000 in compensatory damages and $1,275,000 in

punitive damages.

The Company and Mr.

Ajjarapu denied in their entirety the plaintiffs’

allegations and filed a motion to

dismiss the plaintiffs’

claims against the Company and Mr.

Ajjarapu, which motion was granted in May 2020, due to the plaintiffs

not being able to establish personal jurisdiction over the defendants, which motion was successful as to all defendants.

Ajjarapu further refute any connections for the purpose of the suit to the other named defendants.

To the Company’s

Ajjarapu’s knowledge, the complaint had no merit whatsoever.

The final date for the plaintiffs to appeal the ruling

to dismiss the lawsuit passed in August 2020, and there was no appeal.

As such, the ruling is final.

in September 2020, the plaintiffs filed a similar complaint (alleging substantially similar facts) in the United States District

Court for the Middle District of Florida, Tampa Division (Case 8:20-cv-02263), against the same defendants but adding Westminster

Pharmaceuticals, LLC, our former wholly-owned subsidiary (“

Westminster ”), and raising claims for alleged fraud

under Section 10(b) and Rule 10b-5 of the Exchange Act;

joint and several liability under 15 U.S.C.

Code 78t (against Trxade,

fraudulent transactions of securities under the Florida Securities Act (against all of the defendants except Trxade);

sale of unregistered securities under the Florida Securities Act (against all of the defendants except Trxade).

The total amount

of damages sought is unclear, but is thought to be in excess of $425,000.

To the Company’s and Mr.

Ajjarapu’s knowledge,

the complaint has no merit whatsoever and each of the Company and Mr.

Ajjarapu intend to defend themselves and oppose the relief

sought in the complaint.

The Company is not currently accused of any direct misconduct;

instead, the Company is alleged to be

liable for the acts of certain or all of the other defendants.

The Company would likely only incur liability if some or

all of the other defendants were found liable to plaintiffs and the Company is found to be jointly and severally liable for the

actions of such other defendant or defendants.

The lawsuit claims approximately $450,000 in damages;

however, based on facts currently

known, the Company assesses the likelihood of any material loss as remote.

Company elected the practical expedient under ASU 2018-11 “

Targeted Improvements ”

which allows the

Company to apply the transition provision for Topic 842 at the Company’s adoption date instead of at the earliest comparative

period presented in the financial statements.

Therefore, the Company recognized and measured leases existing at January 1, 2019,

but without retrospective application.

In addition, the Company elected the optional practical expedient permitted under the transition

guidance which allows the Company to carry forward the historical accounting treatment for existing leases upon adoption.

was recorded to the beginning retained earnings for Topic 842.

Jain, et al., v.

Memantine, et al.

January 2020, we became aware of a complaint filed by Jitendra Jain, Manish Arora, Scariy Kumaramangalam, Harsh Datta and Balvant Arora

(collectively, plaintiffs), against our wholly-owned subsidiary, Trxade, Inc.

and our Chief Executive Officer, Suren Ajjarapu as well

as certain unrelated persons, Annapurna Gundlapalli, Gajan Mahendiran and Nexgen Memantine (collectively, defendants), in the Circuit

Court of Madison County, Alabama (Case:47-CV-2019-902216.00).

The complaint alleged causes of actions against the defendants including

fraud in the inducement, relating to certain investments alleged to have been made by plaintiffs in Nexgen Memantine, breach of fiduciary

duty, conversion and voidable transactions.

The complaint related to certain investments alleged made by the plaintiffs in Nexgen Memantine

and certain alleged fraudulent transfers of assets and funds alleged to have been taken by the defendants which are unrelated to the

On May 14, 2021, Plaintiffs filed a second amended

complaint against the defendants.

The second amended complaint alleges causes of action against the defendants including securities fraud,

breach of fiduciary duty, violation of the Florida RICO Act, and breach of contract.

The operative complaint relates to certain investments

alleged to have been made by the plaintiffs in Nexgen Memantine and certain alleged transfers of assets and funds alleged to have been

taken by the defendants which are unrelated to the Company.

The amended complaint seeks injunctive relief, $ 425,000 in compensatory damages,

treble damages, punitive damages, and fees and costs

In February 2022, A settlement as to Suren Ajjarapu,

Annapurna Gundlapalli and Trxade Group has been reached and signed.

This settlement involves no admission of liability and a full and

complete release of all actions after a lump-sum payment of $ 225,000

Because the complaint purports to be a derivative action, court approval is required.

A hearing was held on the

request to approve the settlement, and changes were made at the instruction of the court which should lead to it being approved by the

The settlement has been fully funded and the money transferred to the attorneys for the $ 225,000 .

A settlement has also been reached regarding

defendant Nexgen Memantine, Inc., to which defendant Gajan Mahendiran has objected because of some of the factual recitations.

This dispute is before a court-appointed mediator and should not prevent the Ajjarapu/Trxade settlement from being approved, but this

is causing some delay.

Mahendiran, Ajjarapu, Gundlapalli and Trxade have agreed to move the Court to dismiss all counter and

crossclaims that were filed between the defendants in this matter and will do so once the Court approves the settlement.

suit against Gajan Mahendiran remains active, it is possible that Trxade may incur future expenses related to its employees being

called as witnesses by either or both of the sides.

However, it is expected that all liability issues will be resolved once the

settlement is finally approved.

Company elected the practical expedient under ASU 2018-11 “ Leases:

Targeted Improvements ” which allows the Company

to apply the transition provision for Topic 842 at the Company’s adoption date instead of at the earliest comparative period presented

in the financial statements.

Therefore, the Company recognized and measured leases existing at January 1, 2019, but without retrospective

In addition, the Company elected the optional practical expedient permitted under the transition guidance which allows the

Company to carry forward the historical accounting treatment for existing leases upon adoption.

No impact was recorded to the beginning

retained earnings for Topic 842.

The Company has two operating leases for corporate offices.

following table outlines the details:

The following table outlines the details

of such leases:

SCHEDULE OF OPERATING LEASES

Initial Lease Term

December 2017 to December 2021

November 2018 to November 2023

January 2021 to December 2021

November 2018 to November 2023

Renewal Lease Term

November 2023 to November 2028

New Initial Lease Term

January 2022 to December 2026

New Renewal Lease Term

January 2027 to December 2031

Initial Recognition of Right to use assets at January 1, 2019

New Initial Recognition of Right to use Assets at December 31, 2021

Incremental Borrowing Rate

Company decided not to renew the corporate office lease (Lease 1) on January 2021;

however, the parties subsequently negotiated

a one-year lease at the same location.

The Company determined that the decision to not renew Lease 1 changed the corresponding

lease term which required remeasurement of the lease liability resulting in the reduction of the right-of-use asset and the associated

lease liability by $97,020.

The reassessment of the lease term did not change the existing classification and the lease is still

classified as an operating lease.

table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining

years to the operating lease liabilities recorded in the Consolidated Balance Sheet as of December 31, 2020.

Company entered into a new corporate office lease (Lease 1) on January 2022.

The Company determined that entering into the new lease

required remeasurement of the lease liability resulting in the increase of the right-of-use asset and the associated lease liability

by $ 977,220 .

The new lease is still classified as an operating lease.

table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years

to the operating lease liabilities recorded in the Consolidated Balance Sheet as of December 31, 2021.

SCHEDULE OF FUTURE MINIMUM PAYMENTS FOR OPERATING LEASE LIABILITIES

Amounts due within twelve months of December 31

4 unchanged sentences

Long-term lease obligations

the year ended December 31, 2020, amortization of assets was $97,020.

the year ended December 31, 2020, operating lease liabilities paid was $97,033.

the years ended December 31, 2021, and 2020, amortization of assets was $ 131,558 and 97,020 , respectively.

the years ended December 31, 2021, and 2020, operating lease liabilities paid was $ 131,153 and 97,033 , respectively.

11 – SEGMENT REPORTING

Company classifies its business interests into reportable segments which are Trxade, Inc., Community Specialty Pharmacy, LLC,

Integra Pharma, LLC and Other (Unallocated).

Operating segments are defined as the components of an enterprise about which separate

financial information is available that is evaluated regularly by the chief operating decision makers in deciding how to allocate

resources and in assessing performance.

The Company’s chief operating decision makers direct the allocation of resources

to operating segments based on the profitability, cash flows, and growth opportunities of each respective segment.

Company classifies its business interests into reportable segments which are Trxade, Inc., Community Specialty Pharmacy, LLC, Integra

Pharma, LLC and Other (Unallocated).

Operating segments are defined as the components of an enterprise about which separate financial

information is available that is evaluated regularly by the chief operating decision makers in deciding how to allocate resources and

in assessing performance.

The Company’s chief operating decision makers direct the allocation of resources to operating segments

based on the profitability, cash flows, and growth opportunities of each respective segment.

SCHEDULE OF BUSINESS INTERESTS INTO REPORTABLE SEGMENTS

December 31, 2021

Pharmacy, LLC

$ ( 393,582 )

Segment Assets

$ ( 431,593 )

Segment Profit/Loss

1 unchanged sentence

$ ( 2,749,028 )

$ ( 4,416,230 )

$ ( 5,315,883 )

December 31, 2020

Pharmacy, LLC

Segment Assets

$ ( 457,784 )

Segment Profit/Loss

$ ( 900,427 )

EQUITY METHOD INVESTMENT

January 2019, the Company, through its wholly-owned subsidiary Alliance Pharma Solution, LLC (“

Alliance ”),

entered into a joint venture transaction to form SyncHealth MSO, LLC (“

SyncHealth ”).

SyncHealth is owned by

PanOptic Health, LLC (“

PanOptic ”) and Alliance.

Alliance contributed $250,000 for the acquisition of a 30%

equity interest in SyncHealth and the option to acquire the remaining ownership from PanOptic stockholders.

Prior to March 31,

2019, $210,000 was paid with the remaining $40,000 paid in April 2019.

Pursuant to the operating agreement, PanOptic owned 70%

of SyncHealth and Alliance owned 30%;

however, pursuant to the Letter Agreement, PanOptic would transfer to Alliance an additional

6% of SyncHealth’s membership units on May 1, 2019, an additional 6% on August 1, 2019 and an additional 7% on November

1, 2019, and at Alliance’s option, the 51% balance on January 31, 2020, upon transfer of between 378,888 and 2,462,773 shares

of Company common stock based on 2019 Gross Revenue Quotas.

As of December 31, 2019, the additional interests had not been transferred

and Alliance still owns 30% of SyncHealth.

We did not realize any income from the joint venture and we terminated the joint venture

agreements pursuant to their terms effective as of January 31, 2020 and assigned the 30% ownership of SyncHealth back to PanOptic.

As of February 1, 2020, we own no equity in SyncHealth and only the terms of the agreements relating to confidentiality, non-solicitation

and each party’s obligation to cease use of the other party’s intellectual property survive the termination.

The investment

loss recognized during the year ended December 31, 2019 was $250,000.

ASSET ACQUISITION

October 23, 2019 (the “

Closing Date ”), Bonum Health, LLC, a Delaware limited liability company, and a wholly-owned

subsidiary of the Company, entered into an Asset Purchase Agreement with Bonum Health, LLC, a Florida limited liability company

Seller ”) and Hardikkumar Patel, the sole member of the Seller (the “

Member ”).

to the Asset Purchase Agreement, the Company acquired from the Seller, certain specified assets and certain specified contracts

associated with the assets of Seller’s operation as a telehealth service provider (the Tele Meds Platform) (the “

Assets ”).

Included with the acquisition of the Assets, were contracts (relating to the Assets), intellectual property for the Bonum Health

telemedicine Software and Technology and personal computers.

The Company agreed to provide the Seller consideration equal to 41,667

shares of restricted common stock of the Company at the closing (the “

Closing Shares ”), and that the Seller

had the right to earn up to an additional 108,334 shares of restricted common stock of the Company in the event certain milestones

mainly relating to the placement of in-store wellness kiosks were met in the first year following the Closing Date, none of which

were met and none of which milestone shares were met.

Asset Purchase Agreement includes a three year non-compete requirement, prohibiting the Seller and the Member from competing against

the Assets, customary representations and indemnification obligations, subject to a $25,000 minimal claim amount and certain limitations

on liability disclosed in the Asset Purchase Agreement.

Asset Purchase Agreement also requires the Company to fund up to $600,000 in connection with the remote hub installation, marketing

and IT, subject to certain milestones set forth in the Asset Purchase Agreement (the “

Funding Obligation ”).

to the acquisition, the Company determined that the Assets were not usable and wrote off the value of the Assets amounting to

approximately $369,000.

$ ( 531,092 )

$ ( 4,413,660 )

$ ( 2,536,051 )

12 – SUBSEQUENT EVENTS

February 2021, options to purchase 20,000 shares of common stock were granted with an exercise price of $6.55 per share, and a

term of 10 years from the grant date.

The options vest over a period of four years.

The options were granted under the 2019 Equity

Incentive Plan.

STOCKHOLDERS’

January 2022, warrants to purchase 14,584 shares of common stock were exercised with an exercise price of $ 0.06 per share;

issued 14,584 shares of common stock, and $ 875 in proceeds were received in connection with such exercise.

INTO A MATERIAL DEFINITIVE AGREEMENT – EXCHANGE HEALTH, LLC

February 15, 2022, the Company entered into a relationship with Exchange Health, LLC, a technology company providing an online

platform for manufacturers and suppliers to sell and purchase pharmaceuticals (“ Exchange Health ”).

SOSRx LLC, a Delaware

limited liability company (“ SOSRx ”), was formed, which is owned 51 %

by the Company and 49 %

by Exchange Health.

February 15, 2022, the Company contributed cash to SOSRx in the amount of $ 325,000 , issued a promissory note to SOSRx in the amount of

$ 500,000 , which was immediately assigned to Exchange Health (the “ Promissory Note ”), and agreed to make an earn out

payment of up to $ 400,000 , payable, at the Company’s discretion, in cash or common stock of the Company, based on SOSRx achieving

certain revenue targets of SOSRx as discussed below (the “ Earn Out Payments ”);

and entered into a Distribution Services

Agreement with SOSRx (the “ Distribution Agreement ”).

Earn Out Payments require the Company to pay (a) $25,000 to Exchange Health if total revenue for SOSRx are over $0.7 million, and $25,000

to Exchange Health if total EBITDA is over $0.5 million, for fiscal year ending 2022;

(b) $87,500 to Exchange Health if total revenue

for SOSRx is over $3.3 million, and $87,500 to Exchange Health if total EBITDA is over $2.95 million, for fiscal year ending 2023;

(c) $87,500 to Exchange Health if total revenue for SOSRx is over $5.7 million, and $87,500 to Exchange Health if total EBITDA is over

$4.9 million, for fiscal year ending 2024, provided that certain amounts will be payable in the event at least 95% of such milestones

are met, and such payments will be grossed up or down by up to 5% of such amounts, if such milestone amounts are between 95% and 105%

of the required thresholds.

At the Company’s option, the Earn Out Payments may be paid in cash or shares of common stock, valued

at the then current trading price of the Company’s common stock.

If one year’s milestones are not achieved, no earnout will

be payable for that year and those earn out payments will not be eligible to be earned in any other year.

Health contributed certain property, contracts and licenses to SOSRx, having an agreed value of $ 792,500 , in exchange for its 49 % membership

interest in SOSRx and received a cash payment of $ 275,000 from SOSRx, LLC, pursuant to a Member Asset Contribution Agreement (the “ Asset

Contribution Agreement ”), also entered into on February 15, 2022.

Promissory Note, which was immediately assigned to Exchange Health, and represents amounts currently due to Exchange Health, bears interest

at the rate of the prime rate, plus 2 % per annum (currently 5.25 % per annum), with (i) one-third of the principal ($ 166,666.67 ) and interest

payable after one year (on February 15, 2023) and (ii) the remaining two-thirds of principal payable quarterly over the next two years

in eight equal installments of $ 41,666.67 , together with any unpaid accrued interest thereupon, at the end of every full fiscal quarter,

beginning, June 20, 2023.

The Promissory Note may be prepaid by the Company, at its discretion, in whole or in part at any time, without

premium or penalty.

Notwithstanding

the foregoing, if the Company effectuates a Voluntary Withdrawal (defined below) under the Company Agreement (as discussed below) prior

to February 15, 2024 (the “ Earn Out Period ”), and SOSRx has failed to meet any of the revenue targets required by

the Earn Out Payments prior to the expiration of the Earn Out Period, then all remaining amounts of interest and principal not yet due

and payable under the Promissory Note shall immediately terminate and all related indebtedness evidenced hereby shall be deemed canceled.

owed under the Promissory Note are secured by the Company’s membership interests in the SOSRx and are a non-recourse obligation

of the Company, secured solely by such membership interests.

the event that the Company is delinquent to pay when due (whether at maturity, by reason of acceleration or otherwise) any principal

of or interest on the Promissory Note, then if such payment is not made within fifteen days of the due date, then Exchange Health may

declare an additional interest fee of 2% of the delinquent amount to be due.

If the delinquency is thirty days or more late from the

due date, then Exchange Health may declare another additional interest fee of 3%, to make a total of 5%, for the delinquent payment.

the event that we fail to pay when due (whether at maturity, by reason of acceleration or otherwise) any principal of or interest on

Promissory Note, then if such payment is not made within sixty days of the due date, then Exchange Health may declare all obligations

(including without limitation, outstanding principal and accrued and unpaid interest thereon) under the Promissory Note to be immediately

due and payable.

Operating Agreement

rights of the Company and Exchange Health in connection with SOSRx are set forth in the Operating Agreement of SOSRx (the “ Operating

Agreement ”), effective February 15, 2022.

Pursuant to the Operating Agreement, SOSRx is to be managed by a management committee

consisting of three members, two of which are nominated by the Company, who currently include Suren Ajjarapu, the Company’s Chief

Executive Officer and Chairman and Prashant Patel, the Company’s President and director, and one person nominated by Exchange Health.

If either the Company or Exchange Health shall ever hold less than 25 % of the membership interests of SOSRx, such entity shall forfeit

its management appointment rights, and such appointment rights shall be held by such other member which holds over 50 % of the membership

Operating Agreement includes customary transfer restrictions on the SOSRx membership interests, right of first refusal rights upon receipt

of a bona fide third party offer for purchase of a member’s membership interest (exercisable first by SOSRx and then the other

members), preemptive rights (subject to certain exceptions), tag-along rights, and drag-along rights (applying if any greater than 50 %

owner desires to transfer their ownership in SOSRx).

member of SOSRx has the right to effect a voluntary withdrawal from the Company (a “ Voluntary Withdrawal ”), provided

that such member must give ninety days prior written notice to all other members.

Any member who effectuates a Voluntary Withdrawal is

not permitted to receive the fair value or any value of the member’s membership interest as of the date of the Voluntary Withdrawal,

and may instead effect a Voluntary Withdrawal by forfeiture of its membership interests in SOSRx without compensation or consideration;

provided however, that if the Company (a) effectuates a Voluntary Withdrawal prior to February 15, 2024, and (b) SOSRx has failed to

meet any of the revenue targets required by the Earn Out Payments prior to the date of withdrawal, then all obligations of the Company

under the Earn Out Payments and the Promissory Note shall terminate.

Company or its assigns may at any time by written notice to any other member, offer to purchase all (but not less than all) of such other

member’s membership interests, which shall be calculated and payable pursuant to a discounted cash flow model.

If the buyout is

paid to Exchange Health or its successors or assigns, any remaining amounts payable under the Promissory Note become immediately due

and payable upon such payment.

Operating Agreement also provides, that without the prior written approval of the unanimous consent of the management committee, a manager

or member may not, directly or indirectly, (a) enter into a business relationship with any other person that is materially adverse to

the business of SOSRx or an affiliate of SOSRx, or (b) cause any person to reduce or terminate its relationship with SOSRx or any affiliate

The foregoing covenants apply to each member, and each manager during the period in which each manager is a member.

February 15, 2022, SOSRx entered into the Distribution Agreement with Integra Pharma Solutions LLC, the Company’s wholly-owned

subsidiary (“ Integra ”).

Pursuant to the Distribution Agreement, Integra appoints each SOSRx member an active account

for Manufacturer Non-Control (Schedule 2-5 as classified by the US Drug Enforcement Agency) products bought on the SOSRx platform.

agreement remains in effect until December 31, 2023, and renews thereafter on a yearly basis until terminated;

which agreement

can only be terminated by the non-breaching party, upon the breach of the agreement by a party thereto, with a 30-day cure right.

Pursuant to the Distribution Agreement, for each calendar quarter (or portion thereof) during the term, SOSRx agreed to pay Integra a

fee equal to 2% of the net price of all purchases of products during such period.

Integra also agreed to participate in SOSRx’s

annual trade show, once established.

Integra made certain representations and warranties in the Distribution Services Agreement, and

agreed to indemnify SOSRx against certain damages and losses.

The Distribution Services Agreement included customary confidentiality

Contribution Agreement

February 15, 2022, Exchange Health entered into a Member Asset Contribution Agreement with SOSRx, pursuant to which it contributed certain

assets and assigned certain contracts, relating to software, manufacturers and members, to SOSRx, in consideration for its 49 % membership

interest in SOSRx.

SOSRx did not assume any of Exchange Health’s liabilities or obligations other than the obligations and commitments

of Exchange Health arising under the assumed contracts.

IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data