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Item 8. Financial Statements and Supplementary Data

2023-03-27 compared with 2022-03-28 · 492 added, 358 removed, 606 unchanged (58% of the section changed)

STATEMENTS AND SUPPLEMENTAL DATA

FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

OF CONTENTS TO FINANCIAL STATEMENTS

Financial Statements

of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (Firm ID:

Consolidated Balance Sheets

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OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Stockholders and Board of Directors of

on the Financial Statements

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 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.

To the Shareholders and Board of Directors of

TRxADE HEALTH, INC.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of TRxADE HEALTH, INC.

and its subsidiaries (collectively, the “Company”) as of December 31, 2022 and 2021,

and the related consolidated statements of operations, stockholders’ equity, 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, 2022 and 2021, 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.

Going Concern Matter

The accompanying financial statements have

been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company

has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue

as a going concern.

Management’s plans in regard to these matters are also described in Note 2.

The financial statements do not include

any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These 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

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.

We 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 or fraud.

The Company 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.

Our 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

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

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Prepaid assets

Other Receivables

Total Current Assets

Property plant and equipment, net

Right of use leased assets

Liabilities and Stockholders’ Equity

Intangible assets and capitalized software, net

Operating lease right-of-use assets

Liabilities and Shareholders’ Equity

Current Liabilities

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Accrued liabilities

Current Portion - Operating Lease Liabilities

Customer Deposits

Other current liabilities

Contingent funding liabilities

Current portion lease liabilities

Warrant liability

Notes payable— related party

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Long Term Liabilities

Operating Lease Liabilities, net of current portion

Other long-term liabilities — leases

Notes payable- related party

Total Liabilities

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10,000,000 shares authorized;

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

none issued and outstanding as of December 31, 2022 and December 31, 2021

Common stock, $ 0.00001 par value;

100,000,000 shares authorized;

8,166,457 and 8,093,199

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

9,393,708 , and 8,166,457 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

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( 16,247,437 )

Total TRxADE Health, Inc stockholders’ equity

Non-controlling interest in subsidiary

Total stockholders’ equity

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Ended December 31, 2022 and 2021

Revenues, net

Years Ended December 31,

Cost of Sales

Operating Expenses:

Impairment of intangible asset

Loss on inventory investment

Loss on Impairment of Goodwill

Loss on write-down of inventory

Wage and salary expense

Professional fees

Accounting and legal expense

Technology expense

General and administrative

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( 5,292,293 )

Other income (expense)

Change in fair value of warrant liability

Gain on disposal of asset

Interest expense

Total nonoperating expense

$ ( 3,909,868 )

$ ( 5,315,883 )

Net loss attributable to TRxADE Health, Inc.

( 3,472,099 )

( 5,315,883 )

Net loss attributable to non-controlling interests

Net loss per common share — basic and diluted

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Preferred stock

Stockholders’

Non-Controlling

Accumulated Deficit

Interest in Subsidiary

Stockholders’ Equity

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

Options Exercised for Cash

Warrants exercised for cash

Warrants expense

Option exercised for cash

Options expense

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$ ( 16,247,437 )

Capital Contributions

Capital Distribution

Common stock issued for services

Options Exercised for Cash

Common stock issued for placement, net issuance costs

Warrants exercised for cash

Warrants Expense

Options expense

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$ ( 19,719,536 )

$ ( 420,269 )

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

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ended December 31, 2022 and 2021

Operating Activities:

Cash flows from operating activities:

$ ( 3,909,868 )

$ ( 5,315,883 )

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

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation expense

Options expense

Warrant Expense

Common stock issued for services

Bad debt expense

Loss on Inventory Investment

Loss on Impairment of Goodwill

Warrant Expense

Loss on write-off of intangible asset

Loss on write-down of inventory

Amortization of Right-of-Use Asset

Loss on inventory investments

Gain on sale of asset

Amortization of right of use assets

Changes in operating assets and liabilities:

Accounts Receivable

Prepaid Assets and Other Current Assets

( 2,419,013 )

Deposits for Inventory Purchases

( 1,087,675 )

Accounts receivable, net

Prepaid assets and deposits

Other receivables

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Accounts payable

Accrued Liabilities and Other Liabilities

Accrued liabilities

Current liabilities

Warrant liability

Customer deposits

Net cash used in operating activities

cash used in operating activities

( 1,525,929 )

( 2,566,226 )

Investing Activities:

Cash flows from investing activities:

Purchase of fixed assets

Sale of fixed assets

Investment in capitalized software

Net cash used in investing activities

Financing Activities:

Repayments of Short-Term Promissory Notes – Related Parties

Payment of Stock Issuance Costs

Proceeds from Exercise of Warrants

Cash flows from financing activities:

Repayments of Promissory Notes - Related Parties

Repayment of contingent liability

Distributions to non-controlling interest

Proceeds from sale of future revenue

Proceeds from exercise of stock options

Proceeds from Issuance of Common Stock

Net Cash provided by (used in) financing activities

Net increase (decrease) in Cash

Proceeds from exercise of warrants

Proceeds from Issuance of Common Stock, net of issuance costs

Net cash provided by financing activities

Net decrease in cash

( 1,988,945 )

( 2,797,000 )

Cash at beginning of the year

Cash at End of the Year

Supplemental Cash Flow Information

Cash Paid for Interest

Cash at end of the period

Supplemental disclosure of cash flow information

Cash paid for interest, net

Cash paid for income taxes

Non-Cash Transactions

Remeasurement of ROU Assets and Lease Liability for Nonrenewal of Lease

premium financed

Note issued as SOSRx contribution

Intangible asset contribution from non-controlling interest

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

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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.

LLC was formed on 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, the

created entity relating to the relationship, a Delaware limited liability company, was formed in February 2022, and is owned 51 % by the

Company and 49 % by Exchange Health.

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

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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.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates

realization of assets and the satisfaction of liabilities in the normal course of business within one year after the date the consolidated

financial statements are issued.

In accordance with Financial Accounting Standards Board, or the FASB, Accounting Standards Update No.

2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), our management evaluates whether there are conditions

or events, considered in aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after

the date that the financial statements are issued.

of December 31, 2022 the Company had an accumulated deficit of $ 19.7

We have limited financial resources.

As of December 31, 2022 we had working capital deficit of approximately $ 54,000

and a cash balance of $ 1.1

We will need to raise additional capital or secure debt funding to support on-going operations.

The sources of this capital

are expected to be the sale of equity and debt, which may not be available on favorable terms, if at all, and may, if sold, cause

significant dilution to existing stockholders.

If we are unable to access additional capital moving forward, it may hurt our ability

to grow and to generate future revenues, our financial position, and liquidity.

These factors raise substantial doubt about the

ability of the Company to continue as a going concern.

Unless Management is able to obtain additional financing, it is unlikely that

the Company will be able to meet its funding requirements during the next 12 months.

The financial statements do not include any

adjustments that might result from the outcome of this uncertainty.

– Historically, operations have been funded

primarily through the sale of equity or debt securities and operating activities.

In 2022, the Company raised approximately $ 1.5

million in capital (See Note 4 – Stockholders’

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

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Reclassification

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

– Certain prior year amounts have been

reclassified to conform to the current year presentation.

The reclassification did not result in a change in the net loss.

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

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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.

Federal Deposit Insurance

Corporation insured amounts.

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

Cash and cash equivalents

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

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

Federal Deposit Insurance Corporation insured amounts.

All investments

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

Cash is available on demand and are generally within

FDIC insurance limits for 2022.

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

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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.

December 31, 2022, and 2021, $( 246,683 ) and $ 615,657 of bad debt expense, respectively and $ 247,861 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.

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

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

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.

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.

the years ended December 31, 2022 and 2021, included in cost of sales were write-downs to reduce inventory to net realizable value

of $ 0 and $ 376,348 , respectively.

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

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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.

Company has warrant liabilities on its balance sheet at December 31, 2022 that are required to be measured and recorded at fair value

on a recurring basis.

The Company uses the Black Scholes method to calculate the liability.

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

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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

an interim basis if events or circumstances indicate that the fair value of an asset is more likely than not has decreased below its

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, 2021 and 2020, was $ 0 and $ 725,973 , respectively.

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

Goodwill and Other ”.

ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for

impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset is more likely than

not has decreased below its carrying value.

The Company had no

goodwill as of December 31, 2022 and 2021.

The Company recorded an intangible asset associated with the joint venture formed with

Exchange Health in February 2022 in the amount of $ 792,000 .

It was determined that the intangible assets had a definite live of 15

years and is being amortized quarterly with the straight line method.

The Company recognized an amortization expense of $ 44,100

in fiscal year 2022.

At December 31, 2022 the Company

determined this asset was impaired and recorded a loss on asset impairment of $ 792,000 .

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

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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

SOSRx provides pharmaceutical manufacturers with an efficient platform in which to divest short-dated, overstock, and slow-moving

products to direct purchasers.

SOSRx’s proprietary method researches the current market, allowing the manufacturer to list the

optimal selling price for their products.

Manufacturers list their short-dated overstock and slow-moving products by lot with pictures

and descriptions.

The manufacturer then determines which vetted and registered customers can bid on or outright purchase their products.

products from a manufacturer have been entered into SOSRx’s platform, a bid cycle begins.

Each bid cycle is 3 days.

(wholesaler, distributor or chain) will have 3 options.

The options are buy now, bid, or pass.

In the buy now option the manufacturer

has an established price in which they would sell the product.

The bid option allows the buyers to put in a price if they value the product

and at the end of the bid cycle the manufacturer has several options.

The manufacturer can accept the highest bidder if the buyer has

met the minimum bid requirement, counter if the bid is below the minimum bid requirement or begin a negotiation to an agreed upon price

or accepted bid, regardless of minimum bid requirement.

The fourth option is to decline.

one of the four options described above, except decline, have been selected a committed offer is generated in the system.

The buyer then

submits a purchase order to the manufacturer.

The manufacturer then processes the purchase order and sends the product directly to the

This is when revenue is recognized as a transaction fee.

At no point does SOSRx take possession of the inventory.

the manufacturer per committed offer at a fee percentage of total offer value.

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

Specialty Pharmacy, LLC.

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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.

Dividends, if

any, are recorded as a reduction of the investment.

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

Liability - The Company will account for the 2,663,045 warrants issued in connection with the Private Placement in accordance

with the guidance contained in FASB ASC 815 “Derivatives and Hedging” whereby under that provision the warrants do not meet

the criteria for equity treatment and must be recorded as a liability.

Accordingly, the Company will classify the warrant instruments

as a liability at fair value and adjust the instrument to fair value at each reporting period.

This liability will be re-measured at

each balance sheet date until the warrants are exercised or expire, and any change in fair value will be recognized in the Company’s

statement of operations.

The fair value of warrants will be estimated using a Black-Scholes model.

The valuation model will utilize inputs

such as closing share prices, volatility, risk free interest factors and other assumptions and may not be reflective of the price at

which they can be settled.

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

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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.

As of December 31, 2022, we had 2,689,969 outstanding warrants to

purchase shares of common stock and 295,623 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, 2022,

OF BASIC AND DILUTIVE INCOME (LOSS) PER COMMON SHARE

SCHEDULE OF BASIC AND DILUTIVE INCOME (LOSS) PER SHARE

December 31, 2022

December 31, 2021

Net Income (Loss)

$ ( 3,909,868 )

$ ( 5,315,883 )

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

Numerator for basic and diluted EPS - income available to common stockholders

( 3,472,099 )

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Denominator for basic and diluted EPS – weighted average shares

Basic Income (Loss) per common share

Basic and diluted loss per common share

Concentration

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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

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

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):

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.

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2021, the promissory note was paid in full.

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

December 31, 2022 and 2021, total related party debt was $ 0 .

4 – STOCKHOLDERS’ EQUITY

January of 2022, warrants to purchase 14,584 shares of common stock were exercised and $ 875 in proceeds were received in connection with

the exercise.

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

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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

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

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

September 1, 2022, the Board of Directors and Compensation Committee, awarded shares to six employees

and officers in lieu of reduced cash salary.

In lieu of the reduced cash salary payable to each employee and Officer, the Board and Compensation

Committee agreed to issue such officers and employees shares of the Company’s common stock equal to the amount of reduced cash

salary set forth in the table above, divided by the closing sales price of the Company’s common stock on the NASDAQ Capital Market

on August 31, 2022, the date approved by the Board of Directors.

There was a total of 108,617 common stock shares issued at a price of

$ 1.16 , the closing price of MEDS on August 31, 2022.

A total of the shares of common stock issuable to the employees and officers vest

at the rate of 1/4 th of such shares on each of September 30, 2022, October 31, 2022, November 30, 2022, and December 31, 2022,

subject to each applicable Officer’s and employees continued service to the Company on such dates and subject to the restricted

stock award agreements entered into to evidence such awards.

Independent Director Compensation

on August 31, 2022, the Board of Directors approved the issuance of 54,525 shares of common stock of the Company to each independent

member of the Board of Directors, for services rendered to the Company during fiscal 2022, which shares were valued at $ 63,250 , and based

on the closing sales price of the Company’s common stock on the date approved by the Board of Directors.

The shares vest at the

rate of 1/4 th of such shares immediately on the grant date, and 1/4 th of such shares on each of October 1, 2022,

January 1, 2023 and April 1, 2023, subject to each applicable independent director’s continued service to the Company on such dates.

of the awards discussed above were issued under the Company’s Second Amended and Restated 2019 Plan and all restricted stock awards

discussed above were evidenced by Restricted Stock Grant Agreements.

will be 1,407,276 shares available to grant from the Company’s Second Amended and restated 2019 Equity Incentive Plan.

Equity Compensation Awards

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

September of 2022 and effective on September 1, 2022 the Board of Directors with recommendation of the Compensation Committee, agreed

to issue certain employees of the Company shares of the Company’s common stock in lieu of reductions to annual cash compensation.

The employees agreed to reduce their salaries by an aggregate of $ 37,000 in consideration for an aggregate of 31,896 shares of the Company’s

restricted common stock.

The shares vested at a rate of 1/4 th each on September 30, 2022, October 31, 2022, November 30, 2022

and December 31, 2022.

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

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was granted for the year ended December 31, 2021.

September 1, 2022 the Board of Directors and Compensation Committee with the approval of the officers agreed to reduce the annual cash

compensation of Mr.

Suren Ajjarapu.

The reduction was documented in a Second Amendment to Employment Agreement with Mr.

Ajjarapu’ s annual compensation was reduced from $ 360,000 to $ 300,000 .

In lieu of the reduced cash salary payable the Board and

Compensation Committee agreed to issue shares of the Company’s common stock equal to the amount of reduced cash salary divided

by the closing sales price of the Company’s common stock on the Nasdaq Capital Market on August 31, 2022.

The number of common

shares issued was 51,724 .

The shares vested at a rate of 1/4 th each on September 30, 2022, October 31, 2022, November 30,

2022 and December 31, 2022.

Agreement with Prashant Patel, Chief Operating Officer

September 1, 2022 the Board of Directors and Compensation Committee with the approval of the officers agreed to reduce the annual cash

compensation of Mr.

Prashant Patel.

The reduction was documented in the First Amendment to Employment Agreement with Mr.

s annual compensation was reduced from $ 150,000 to $ 140,000 .

In lieu of the reduced cash salary payable the Board and Compensation Committee

agreed to issue shares of the Company’s common stock equal to the amount of reduced cash salary divided by the closing sales price

of the Company’s common stock on the Nasdaq Capital Market on August 31, 2022.

The number of common shares issued was 8,620 .

shares vested at a rate of 1/4 th each on September 30, 2022, October 31, 2022, November 30, 2022 and December 31, 2022.

Letter with Ms.

Huffman, Chief Financial Officer

September 1, 2022 the Board of Directors and Compensation Committee with the approval of the officers agreed to reduce the annual cash

compensation of Ms.

The reduction was documented in an Amendment to Offer Letter with Ms.

Huffman’s annual

compensation was reduced from $ 225,000 to $ 200,000 .

In lieu of the reduced cash salary payable the Board and Compensation Committee agreed

to issue shares of the Company’s common stock equal to the amount of reduced cash salary divided by the closing sales price of

the Company’s common stock on the Nasdaq Capital Market on August 31, 2022.

The number of common shares issued was 21,551 .

shares vested at a rate of 1/4 th each on September 30, 2022, October 31, 2022, November 30, 2022 and December 31, 2022.

December 13, 2022 the Board of Directors with recommendation of the Compensation Committee approved the issuance of 50,000 shares of

Restricted Common Stock of the Company to Ms.

Huffman in consideration for services to be rendered.

The shares were awarded pursuant

to and are subject in all cases to the terms and conditions of, the Company’s Second Amended and Restated 2019 Equity Incentive

The shares vest at the rate of 1/4th of such Restricted Common Stock shares on each of December 31, 2022, March 31, 2023, June

30, 2023 and September 30, 2023, subject to Ms.

Huffman remaining employed by the Company through such vesting dates.

The shares were

awarded pursuant to, and are subject in all cases to the terms and conditions of, the Company’s Second Amended and Restated 2019

Equity Incentive Plan.

Repurchase Program

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of December 31, 2022, no shares have been repurchased.

5 – PREFUNDED AND PRIVATE PLACEMENT WARRANTS

Simultaneously

with the closing of the stock placement, the investor pre-purchased 601,740 Private Warrants at a purchase price of $ 1.14999 per warrant.

The Pre-Funded Warrants are immediately exercisable, have an exercise price of $ 0.00001 per share, and may be exercised at any time until

all of the Pre-Funded Warrants are exercised in full.

Each Private Warrant has an exercise price of $ 1.50 per share, will be exercisable

following Stockholder Approval, which was obtained in December 2022, and will expire on the fifth anniversary of the date on which the

Private Warrants become exercisable.

The Private Warrants contain standard adjustments to the exercise price including for stock splits,

stock dividend, rights offerings and pro rata distributions, and include full ratchet anti-dilutive rights in the event the Company issues

shares of Common Stock or Common Stock equivalents within fifteen months of the initial exercise date, with a value less than the then

exercise price of such Private Warrants, subject to certain customary exceptions, and further subject to a minimum exercise price of

$ 0.232 per share.

The Private Warrants also include certain rights upon ‘fundamental transactions’ as described in the Private

Warrants, including allowing the holders thereof to require that the Company re-purchase such Private Warrants at the Black Scholes Value

of such securities.

2022, 2,663,045 private-placement warrants were granted as part of the stock offering, 14,584 were exercised and warrants to purchase

3,027 shares of common stock expired and were forfeited.

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

1 unchanged sentence

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 .

the twelve-month period ended December 31, 2022 and 2021, warrants to purchase 14,584 and 5,000 shares of common stock were exercised,

resulting in proceeds of $ 875 and $ 15,000 respectively.

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

The compensation

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

There were 2,663,045

warrants granted in 2022.

The warrant valuation income/(expense) for the fiscal year 2022 was $ 825,544 .

There was no warrant expense

for the fiscal year ended 2021.

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

4 unchanged sentences

Weighted-average risk-free interest rate

Warrants, measurement input

Expected life of warrants

1 unchanged sentence

SCHEDULE OF OUTSTANDING AND EXERCISABLE WARRANTS

Number Outstanding

Weighted Average Exercise Price

Contractual Life In Years

Intrinsic Value

Warrants outstanding as of December 31, 2020

Warrants granted

Warrants forfeited

Warrants forfeited, expired, cancelled

Warrants exercised

1 unchanged sentence

Warrants granted

Warrants forfeited

Warrants forfeited, expired, cancelled

Warrants exercised

12 unchanged sentences

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.

2022, no options were exercised, 18,499 shares were forfeited, and 96,842 shares expired.

For 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

1 unchanged sentence

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

The following

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

no stock options granted during the year ended December 31, 2022.

The following table summarizes the assumptions used to estimate the

fair value of stock options granted during the year ended December 31, 2021:

SCHEDULE OF ESTIMATE FAIR VALUE OF STOCK OPTIONS

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SCHEDULE OF STOCK OPTION ACTIVITY

Number Outstanding

Weighted-Average Exercise Price

Weighted-Average Contractual Life in Years

Intrinsic Value

Options outstanding as of December 31, 2020

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9 – OTHER RECEIVABLES

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.

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.

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

Waxman’s personal guaranty confirmed that GSG owed Integra

On September 30, 2021, the $ 630,000 was recorded as Bad Debt Expense.

A settlement was entered into between the parties in

June 2022, whereby GSG and Waxman agreed to pay $ 743,000 which included attorney fees and interest, which is required to be paid to the

Company in monthly installments over 17 months.

In Fiscal 2022, the Company received approximately $ 248,000 recorded as credits to legal

expenses and bad debt expense.

10 – CONTINGENCIES

Defense Group, LLC

July 2020, the Company’s wholly-owned subsidiary, Integra Pharma Solutions, LLC (“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.

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 for a default judgment;

however, on March 22, 2021, counsel for Studebaker filed an appearance and shortly thereafter

filed a motion to vacate the default judgment and dismiss the complaint on jurisdictional grounds.

The court granted Studebaker’s

motion to set aside the default judgment but denied the motion to dismiss.

The Company has filed several pretrial motions;

the next step

in the litigation after the pre-trial motions are resolved will be a motion for summary judgment.

The Company believes it will prevail

on the merits but cannot determine the timing of the judgment or the amount ultimately collected.

At June 30, 2021, the $ 500,000 was

recorded as Loss on Inventory Investment.

Group Dsn Bhd and Crecom Burj Group SDN BHD

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

16 unchanged sentences

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

Jain, et al., v.

At the final hearing on October 18, 2021, the ruling for the summary judgment was denied.

On September 1, 2022, Crecom informed the court

that Crecom had been liquidated pursuant to Malaysian insolvency laws and the court proceedings were stayed.

ON September 7, 2022, Integra

received written confirmation from Crecom counsel and a copy of the relevant Winding Up Order.

Accordingly, the complaint was dismissed.

At June 30, 2021, the $ 581,250 was recorded as Loss on Inventory Investment.

Memantine, et al.

9 unchanged sentences

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.

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.

February 2022, a settlement as to Suren Ajjarapu, Annapurna Gundlapalli and the Company was reached and signed.

This settlement involved

no admission of liability and a full and complete release of all actions after a lump-sum payment of $ 225,000 was made.

Because the complaint

purports to be a derivative action, court approval was required, which approval was received on March 14, 2022.

As a result of the settlement,

the Plaintiff’s dismissed their lawsuit with prejudice.

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

37 unchanged sentences

Long-term lease obligations

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

difference to the balance sheet above is due to the current and long-term remaining obligations of the copier lease not included in the

amount of $ 13,943 as of December 31, 2022.

the years ended December 31, 2022, and 2021, amortization of right-of-use assets was $ 181,218

and $ 131,558 ,

respectively.

the years ended December 31, 2022, and 2021, operating lease liabilities paid was $ 164,618 and 131,153 , respectively.

8 unchanged sentences

SCHEDULE OF BUSINESS INTERESTS INTO REPORTABLE SEGMENTS

December 31, 2021

Pharmacy, LLC

$ ( 393,582 )

Year Ended December 31, 2022

Segment Assets

$ ( 431,593 )

Segment Profit/Loss

1 unchanged sentence

( 3,909,868 )

$ ( 4,416,230 )

$ ( 5,315,883 )

December 31, 2020

Pharmacy, LLC

Cost of Sales

Year Ended December 31, 2021

Segment Assets

$ ( 457,784 )

Segment Profit/Loss

2 unchanged sentences

( 5,315,883 )

$ ( 2,536,051 )

Cost of Sales

13 – SUBSEQUENT EVENTS

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

to December 31, 2022 and prior to the filing of this Form 10-K the Company had the following events.

January 3, 2023, Charles L.

Pope resigned as a member of the Board of Directors.

Pope’s resignation he also served as

the Chairman of the Company’s Audit Committee and served on the Company’s Compensation Committee and Nominating and Governance

January 4, 2023, to fill the vacancy left by Mr.

Pope’s resignation, the Board of Directors of the Company, with the recommendation

of the Nominating and Corporate Governance Committee of the Board of Directors, appointed Mr.

Peterson as a member of the

Board of Directors.

Peterson was also appointed to serve as the Chairperson of the Board of Director’s Audit Committee and

as a member of the Compensation Committee and Nominating and Corporate Governance Committee.

As part of Mr.

Peterson’s compensation

he will receive cash compensation in the amount of $ 55,000 per year for services on the board of directors, $ 20,000 per year for services

as the Chairman of the Audit Committee (each paid 1/4 th quarterly).

The Company also issued Mr.

Peterson 100,000 shares of

restricted common stock, vesting quarterly over two years (beginning April 1, 2023), as well as options vesting over two years valued

at $ 55,000 , for his services on the Board.

All equity awards were issued under a stockholder approved equity incentive plan, and are

subject to the terms of such plan.

January 6, 2023, a restricted stock grant to Jeff Newell of 79,062 ,

as compensation as part of Board compensation.

January 6, 2023, the investor exercised their prefunded warrants in the amount of 601,740

shares per the stock issuance agreement from the October 2023 funding.

The total amount paid to exercise the shares was $ 6.02

at a price of $ .00001

January 20, 2023, the Company entered into Membership Interest Purchase Agreements to sell 100 % of the outstanding membership interests

of the Company’s subsidiaries, Alliance Pharma Solutions, LLC and Community Specialty Pharmacy, LLC.

The Company will receive consideration

in the amount of $ 125,000 for Alliance Pharma Solutions, LLC and $ 100,000 for Community Specialty Pharmacy, LLC.

The Company also agreed

to enter into a Master Service Agreement to operate the businesses prior to closing, additional amounts owed to the Company as a result

of this Master Service Agreement are estimated to total approximately an aggregate of $ 266,000 as of the closing date, currently expected

to occur on April 30, 2023.

January 30, 2023, the Company received a delist determination letter from The Nasdaq Stock Market LLC.

(the “Staff”), advising

the Company that the Staff had determined that the Company was not in compliance with the minimum continued listing requirements of stockholders’

equity, and that the Company had not met the terms of the extension granted to them in in October 2022 to regain compliance by the deadline

of January 25, 2023.

Specifically, the Company did not complete its proposed transactions and was unable to file a Current Report Form

8-K by the January 25, 2023 deadline previously required by the Staff, evidencing compliance with the Rule.

February 6, 2023, the Company submitted a hearing request to the Nasdaq Hearings Panel (the “Panel”), which request will

stay any delisting action by the Staff at least until the hearing process concludes and any extension granted by the Panel expires.

the Panel hearing, the Company intends to present a plan to regain compliance with the minimum stockholders’ equity requirement.

In the interim, the Company’s common stock will continue to trade on Nasdaq under the symbol “MEDS” at least pending

the ultimate conclusion of the hearing process.

February 27, 2023, Ms.

Janet Huffman, the Company’s Chief Financial Officer notified the Company of the termination of her Offer

Letter dated February 3, 2022.

Effective March 1, 2023, Ms.

Huffman also transitioned from Chief Financial Officer to a consulting relationship

with the Company instead of a full-time employee relationship.

It is expected that Ms.

Huffman will provide a set number of hours of

her time to the Company and that the Company will engage a new Chief Financial Officer (or similar position) to replace Ms.

Effective March 6, 2023, Prashant Patel, a member of the Board of Directors, the President and the Chief Operating Officer of the Company,

was appointed as Interim Principal Financial/Accounting Officer of the Company.

March 1, 2023, the Company issued 50,000

shares to White Lion Capital LLC as part of an

On March 2, 2023, the Company entered into an

agreement with Agile Capital Funding LLC., for an accounts receivable funding agreement in the amount of $ 787,500 .

CHANGES 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