UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~June 30, 2020~~March 31, 2021

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______ to _______

Commission File Number: 001-39199

TRXADE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware		46-3673928
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification ~~Number)~~No.)

3840 Land O’ Lakes Blvd.
Land O’ Lakes, Florida		34639
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (800)~~-261-0281~~ 261-0281

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.00001 Par Value Per Share

MEDS

The NASDAQ Stock Market LLC

(The NASDAQ Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[ ]	Accelerated filer	[ ]

Non-accelerated filer	[X]	Smaller reporting company	[X]

Emerging growth company	[X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

There were ~~8,062,337~~8,125,362 shares of the registrant’s common stock outstanding on ~~July 24, 2020,~~April 22, 2021, and no shares of preferred stock outstanding.

TRXADE GROUP, INC.

FORM 10-Q

For the Quarter Ended ~~June 30, 2020~~March 31, 2021

TABLE OF CONTENTS

		Page
Cautionary Note Regarding Forward-Looking Statements		1

PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)		13

Consolidated Balance Sheets		13
Consolidated Statements of Operations		24
Consolidated Statements of Changes in ~~Shareholders’~~STOCKHOLDERS’ Equity		35
Consolidated Statements of Cash Flows		46
Notes to Unaudited Consolidated Financial Statements		57

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		1213

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		20

ITEM 4. CONTROLS AND PROCEDURES		21

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS		22

~~ITEM 1A. RISK FACTORS~~		22

ITEM 1A. RISK FACTORS		22

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		2423

ITEM 3. DEFAULTS UPON SENIOR SECURITIES		2423

ITEM 4. MINE SAFETY DISCLOSURES		2423

ITEM 5. OTHER INFORMATION		2423

ITEM 6. EXHIBITS		2423

SIGNATURES		2524

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Report”), including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding future events and the future results of the Company that are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the management of the Company. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. In particular, as discussed in greater detail below, our financial condition and results could be materially adversely affected by the impacts and disruptions caused by the novel coronavirus (COVID-19) global pandemic and governmental responses thereto. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Report, including under “Risk Factors”, and in other reports the Company files with the Securities and Exchange Commission (“SEC”), including the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 29, 2021 (under the heading “Risk Factors” and in other parts of that report). The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason, except as otherwise required by law.

The following discussion is based upon our unaudited Consolidated Financial Statements included elsewhere in this report, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingencies. In the course of operating our business, we routinely make decisions as to the timing of the payment of invoices, the collection of receivables, the shipment of products, the fulfillment of orders, the purchase of supplies, and the building of inventory, among other matters. Each of these decisions has some impact on the financial results for any given period. In making these decisions, we consider various factors including contractual obligations, customer satisfaction, competition, internal and external financial targets and expectations, and financial planning objectives. On an on-going basis, we evaluate our estimates, including those related to sales returns, pricing credits, warranty costs, allowance for doubtful accounts, impairment of long-term assets, especially goodwill and intangible assets, contract manufacturer exposures for carrying and obsolete material charges, assumptions used in the valuation of stock-based compensation, and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in other reports we file with the SEC, and in our most recent Annual Report on Form 10-K. All references to years relate to the calendar year ended December 31 of the particular year.

Summary Risk Factors

We face risks and uncertainties related to our business, many of which are beyond our control. In particular, risks associated with our business include:

	●	We have been adversely affected by COVID-19 and may continue to be adversely affected by COVID-19;

	●	We were recently unprofitable, we have recently generated net losses, and we may incur losses in the future;

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

	●	We may not be able to manage our future growth;

	●	Many of our competitors are better established and have resources significantly greater than ours;

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

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

	●	We are dependent on our current management;

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

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

	●	We have in the past, and may in the future, not be able to sell our inventory, at or above the price we acquired such inventory for, have in the past, and may in the future, be forced to write-down inventory;

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

	●	We may be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could require us to pay significant damages and limit our ability to operate;

	●	Our business and operations depend on the proper functioning of information systems, critical facilities and distribution networks and a disruption, cyber-attack, failure or destruction of such networks, systems, or technologies may disrupt our business or result in liability;

	●	There may be losses or unauthorized access to or releases of confidential information, including personally identifiable information, that could subject the Company to significant reputational, financial, legal and operational consequences;

	●	We face risks associated with our business in the telehealth market, including risks associated with legal challenges, relationships with third parties and affiliated professionals, our network of qualified providers, competition for services; new technologies, failure to develop widespread brand awareness and regulatory risks;

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

	●	Our certificate of incorporation limits the liability of our officers and directors and provides for indemnification rights;

	●	We incur significant costs to ensure compliance with U.S. and NASDAQ Capital Market reporting and corporate governance requirements;

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

	●	Regulatory changes that affect our distribution channels could harm our business;

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

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

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

	●	Consolidation in the U.S. healthcare industry may negatively impact our results of operations;

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

	●	There may not be sufficient liquidity in the market for our securities in order for investors to sell their shares. The market price of our comment stock may continue to be volatile;

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

	●	Our Chief Executive Officer and President are our two largest stockholders and, as a result, they can exert control over us and have actual or potential interests that may differ from yours;

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

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

	●	Cyber security attacks and website problems; and

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

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PART I: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

~~Trxade Group, Inc.~~

~~Consolidated Balance Sheets~~

~~June 30, 2020 and December 31, 2019~~

~~(unaudited)~~

June 30, 2020 December 31, 2019
Assets
Current Assets
Cash $ 4,151,044 $ 2,871,694
Accounts Receivable, net 3,544,381 792,050
Inventory 1,818,874 56,761
Prepaid Assets 300,067 82,452
Deposits for Inventory purchases 309,000 -
Total Current Assets 10,123,366 3,802,957

Property Plant and Equipment, Net 151,397 174,987

Other Assets
Deposits 21,636 21,636
Deferred Offering Costs - 88,231
Right of use leased assets 709,911 757,710
Goodwill 725,973 725,973

Total Assets $ 11,732,283 $ 5,571,494

Liabilities and Shareholders’ Equity

Current Liabilities
Accounts Payable $ 272,148 $ 334,614
Accrued Liabilities 349,850 98,852
Current Portion Lease Liabilities 94,253 87,350
Customer Deposits 3,574 -
Total Current Liabilities 719,825 520,816

Long Term Liabilities
Notes Payable – Related Parties 225,000 225,000
Other Long-term Liabilities – Leases 636,081 685,461
Total Liabilities 1,580,906 1,431,277

Shareholders’ Equity
Series A Preferred Stock, $0.00001 par value; 10,000,000 shares authorized; none issued and outstanding as of June 30, 2020 and December 31, 2019, respectfully - -
Common Stock, $0.00001 par value; 100,000,000 shares authorized; 8,062,337 and 6,539,415 shares issued and outstanding, as of June 30, 2020 and December 31, 2019, respectively 81 65
Additional Paid-in Capital 18,909,083 12,535,655
Retained Deficit (8,757,787 ) (8,395,503 )
Total Shareholders’ Equity 10,151,377 4,140,217

Total Liabilities and Shareholders’ Equity $ 11,732,283 $ 5,571,494
~~The accompanying notes are an integral part of the unaudited consolidated financial statements.~~
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Trxade Group, Inc.
Consolidated ~~Statements of Operations~~Balance Sheets
~~For the Three~~March 31, 2021 and ~~Six Months Ended June 30,~~December 31, 2020 ~~and 2019~~
(unaudited)

Three months ended Six months ended
2020 2019 2020 2019

Revenues $ 6,592,637 $ 1,916,414 $ 8,795,957 $ 3,428,935

Cost of Sales 4,587,865 753,138 5,151,049 1,118,977
Gross Profit 2,004,772 1,163,276 3,644,908 2,309,958

Operating Expenses
General and Administrative 2,540,049 1,030,571 3,991,958 2,005,494

Operating (Loss) Income (535,277 ) 132,705 (347,050 ) 304,464

Investment Loss - (58,850 ) - (87,822 )
Interest Expense (7,310 ) (15,874 ) (15,234 ) (33,432 )
Net (Loss) Income $ (542,587 ) $ 57,981 $ (362,284 ) $ 183,210

Net (Loss) Income per Common Share – Basic: $ (0.07 ) $ 0.01 $ (0.05 ) $ 0.03

Net (Loss) Income per Common Share – Diluted: $ (0.07 ) $ 0.01 $ (0.05 ) $ 0.03

Weighted average Common Shares Outstanding - Basic 7,580,977 5,621,082 7,324,512 5,591,055

Weighted average Common Shares Outstanding - Diluted 7,580,977 6,058,977 7,324,512 6,058,959

~~The accompanying notes are an integral part of the unaudited consolidated financial statements.~~
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~~Trxade Group, Inc.~~
~~Consolidated Statements of Changes in Shareholders’ Equity~~
~~For the Three and Six Months Ended June 30, 2020 and 2019~~
~~(unaudited)~~
Preferred Stock Common Stock Additional Paid-in- Accumulated Total Shareholders’
Shares Amount Shares Amount Capital Deficit Equity
Balance at December 31, 2019      - $      - 6,539,415 $    65 $ 12,535,655 $ (8,395,503 ) $ 4,140,217
Common Stock issued from offering - - 922,219 10 5,994,414 - 5,994,424
Fractional shares issued due to reverse split - - 40 - - - -
Stock Issuance Costs - - - - (820,586 ) - (820,586 )
Options Exercised for Cash - - 167 - 501 - 501
Warrants Exercised for Cash - - 22,529 - 1,352 - 1,352
Warrants Expense - - - - 79,089 - 79,089
Options Expense - - - - 61,997 - 61,997
Net Income - - - - - 180,303 180,303
Balance at March 31, 2020 - $ - 7,484,370 $ 75 $ 17,852,422 $ (8,215,200 ) $ 9,637,297

Common Stock Issued for Services - - 217,965 2 829,865 - 829,867
Warrants Exercised for Cash - - 360,002 4 21,596 - 21,600
Warrants Expense - - - - 21,294 - 21,294
Options Expense - - - - 183,906 - 183,906
Net Loss - - - - - (542,587 ) (542,587 )
Balance at June 30, 2020 - $ - 8,062,337 $ 81 $ 18,909,083 $ (8,757,787 ) $ 10,151,377
Preferred Stock Common Stock Additional Paid-in- Accumulated Total Shareholders’
Shares Amount Shares Amount Capital Deficit Equity
Balance at December 31, 2018     - $       - 5,547,638 $    55 $ 8,955,688 $ (8,111,075 ) $ 844,668
Common Stock issued for convertible debt and accrued interest - - 70,666 1 211,982 - 211,983
Warrants Exercised for Cash - - 2,778 - 166 - 166
Options Expense - - - - 35,979 - 35,979
Net Income - - - - - 125,229 125,229
Balance at March 31, 2019 - $ - 5,621,082 $ 56 $ 9,203,815 $ (7,985,846 ) $ 1,218,025

Option Expense - - - - 64,011 - 64,011
Net (Loss) Income - - - - - 57,981 57,981
Balance at June 30, 2019 - - 5,621,082 56 9,267,826 (7,927,865 ) 1,340,017
March 31, 2021 December 31, 2020
Assets
Current Assets
Cash $ 5,209,280 $ 5,919,578
Accounts Receivable, net 1,936,850 805,043
Inventory 470,122 1,257,754
Prepaid Assets 457,738 151,248
Other Receivables 1,081,250 1,087,675
Total Current Assets 9,155,240 9,221,298

Property Plant and Equipment, Net 160,647 162,397

Other Assets
Deposits 21,636 21,636
Right of use leased assets 355,693 387,371

Total Assets $ 9,693,216 $ 9,792,702

Liabilities and Stockholders’ Equity

Current Liabilities
Accounts Payable $ 366,471 $ 256,829
Accrued Liabilities 519,179 219,256
Current Portion Lease Liabilities 117,030 131,153
Customer Deposits 10,000 10,000
Notes Payables– Related Party 225,000 225,000
Total Current Liabilities 1,237,680 842,238

Long Term Liabilities
Other Long-Term Liabilities — Leases 253,912 271,306
Total Liabilities 1,491,592 1,113,544

Stockholders’ Equity
Series A Preferred Stock, $0.00001 par value; 10,000,000 shares authorized; none issued and outstanding as of March 31, 2021 and December 31, 2020 - -
Common Stock, $0.00001 par value; 100,000,000 shares authorized; 8,093,199 shares issued and outstanding as of March 31, 2021 and December 31, 2020 81 81
Additional Paid-in Capital 19,784,616 19,610,631
Accumulated Deficit (11,583,073 ) (10,931,554 )
Total Stockholders’ Equity 8,201,624 8,679,158

Total Liabilities and Stockholders’ Equity $ 9,693,216 $ 9,792,702

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

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Trxade Group, Inc.
Consolidated Statements of ~~Cash Flows~~Operations
For the ~~Six months ended June 30,~~Three Months Ended March 31, 2021 and 2020 ~~and 2019~~
(unaudited)

2020 2019

Operating Activities:
Net (Loss) Income $ (362,284 ) $ 183,210

Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation Expense 2,500 2,500
Options expense 245,903 99,990
Warrant Expense 100,383 -
Common Stock issued for services 829,867 -
Bad Debt Expense 9,000 -
Investment Loss - 87,822
Amortization of right to use asset 47,799 43,939
Changes in operating assets and liabilities:
Accounts Receivable (2,761,331 ) (279,852 )
Prepaid Assets and other Current Assets (217,615 ) (70,119 )
Inventory (1,762,113 ) (466,850 )
Deposits for Inventory purchases (309,000 ) -
Lease Liability (42,477 ) (36,276 )
Accounts Payable (17,871 ) 362,599
Customer Deposits 3,574 -
Accrued Liabilities and Other Liabilities 250,998 (6,652 )
Net Cash (used in) operating activities (3,982,667 ) (79,689 )

Investing Activities:
Purchase of Fixed Assets (23,505 ) -
Purchase of equity method investment - (250,000 )
Net Cash (used in) investing activities (23,505 ) (250,000 )

Financing Activities:
Payment of Stock Issuance Costs (732,355 ) -
Proceeds from exercise of Warrants 22,952 166
Proceeds from exercise of Stock Options 501 -
Proceeds from Issuance of Common Stock 5,994,424 -
Net Cash provided by financing activities 5,285,522 166

Net increase (decrease) in Cash 1,279,350 (329,523 )
Cash at Beginning of the Year 2,871,694 869,557
Cash at June 30, 2020 and 2019 $ 4,151,044 $ 540,034

Supplemental Cash Flow Information
Cash Paid for Interest $ 3,984 $ 2,997
Cash Paid for Income Taxes $ - $ -

Non-Cash Transactions
Common Stock Issued for Conversion of Note and Accrued Interest $ - $ 211,983
ROU assets and operating lease obligations recognized $ - $ 847,441
2021 2020

Revenues $ 3,053,235 $ 2,203,320

Cost of Sales 1,669,924 563,184
Gross Profit 1,383,311 1,640,136

Operating Expenses
General and Administrative 2,027,566 1,451,909

Operating Income (Loss) (644,255 ) 188,227

Interest, net (7,264 ) (7,924 )
Net Income (Loss) $ (651,519 ) $ 180,303

Net Income per Common Share – Basic: $ (0.08 ) $ 0.03

Net Income per Common Share – Diluted: $ (0.08 ) $ 0.02

Weighted average Common Shares Outstanding Basic 8,093,199 6,971,427

Weighted average Common Shares Outstanding Diluted 8,093,199 7,423,669

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

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Trxade Group, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
For the Three Months Ended March 31, 2021 and 2020
(unaudited)
Preferred Stock Common Stock Additional
Paid-in- Accumulated Total
Stockholders’
Shares Amount Shares Amount Capital Deficit Equity
Balance at December 31, 2020 - $ - 8,093,199 $ 81 $ 19,610,631 $ (10,931,554 ) $     8,679,158
Common Stock issued for Services - - - - 98,247 - 98,247
Options Expense - - - - 75,738 - 75,738
Net Income (Loss)
      -           - - - - (651,519 ) (651,519 )
Balance at March 31, 2021 - $ - 8,093,199 $ 81 $ 19,784,616 $ (11,583,073 ) $ 8,201,624
Preferred Stock Common Stock Additional
Paid-in- Accumulated Total
Stockholders’
Shares Amount Shares Amount Capital Deficit Equity
Balance at December 31, 2019      - $         - 6,539,415 $ 65 $ 12,535,655 $ (8,395,503 ) $     4,140,217
Common Stock issued from offering - - 922,219 10 5,994,414 - 5,994,424
Fractional shares issued due to reverse split - - 40 - - - -
Stock Issuance Costs - - - - (820,586 ) - (820,586 )
Options Exercised for Cash - - 167 - 501 - 501
Warrants Exercised for Cash - - 22,529 - 1,352 - 1,352
Warrants Expense - - - - 79,089 - 79,089
Options Expense - - - - 61,997 - 61,997
Net Income - - - - - 180,303 180,303
Balance at March 31, 2020 - $ - 7,484,370 $ 75 $ 17,852,422 $ (8,215,200 ) $ 9,637,297
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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Trxade Group, Inc.
Consolidated Statements of Cash Flows
For the Three months ended March 31, 2021 and 2020
(unaudited)
2021 2020

Operating Activities:
Net Income (Loss) $ (651,519 ) $ 180,303
Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation Expense 1,750 1,250
Options expense 75,738 61,997
Warrant Expense - 79,089
Common Stock Issued for Services 98,247 -
Bad Debt Expense - 9,000
Amortization of right of use asset 31,678 23,635
Changes in operating assets and liabilities:
Accounts Receivable (1,131,807 ) (94,047 )
Prepaid Assets and other Current Assets (306,490 ) (184,923 )
Inventory 787,632 (311,640 )
Deposits for Inventory Purchases - (580,800 )
Other Receivables 6,425 -
Lease Liability (31,517 ) (20,974 )
Accounts Payable 109,642 (14,376 )
Customer Deposits - 305,972
Accrued Liabilities and Other Liabilities 299,923 134,708
Net Cash used in operating activities (710,298 ) (410,806 )

Investing Activities:
Purchase of Fixed Assets - (23,505 )
Net Cash used in Investing activities - (23,505 )

Financing Activities:
Stock Issuance Costs - (732,355 )
Proceeds from exercise of Warrants - 1,352
Proceeds from exercise of Stock Options - 501
Proceeds from Issuance of Common Stock - 5,994,424
Net Cash provided by financing activities - 5,263,922

Net increase (decrease) in Cash (710,298 ) 4,829,611
Cash at Beginning of the Period
5,919,578 2,871,694
Cash at End of the Period
$ 5,209,280 $ 7,701,305

Supplemental Cash Flow Information
Cash Paid for Interest $ 1,639 $ 2,348
Cash Paid for Income Taxes $ - $ -
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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Trxade Group, Inc.
Notes to Unaudited Consolidated Financial Statements
For the ~~Six~~Three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Trxade Group, Inc. (“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. The merger of Trxade, Inc. and Trxade Group, Inc. occurred in May 2013. Community Specialty Pharmacy was acquired in October 2018.

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

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

Community 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.

Alliance Pharma Solutions, LLC, has developed a same-day pharmaceutical delivery software – Delivmeds.com, and invested in SyncHealth MSO, LLC, a managed services organization during January 2019, which investment was divested in February 2020.

Bonum Health, LLC was formed to hold certain telehealth assets acquired in October 2019. 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, 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’ employees. 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 clients.

~~On October 9, 2019,~~MedCheks, 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 ~~Company’s Board~~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 ~~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~~user’s health records securely 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 effect the Reverse Stock Split.~~one place.
Proportional 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. 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. All issued and outstanding shares of common stock, options and warrants to purchase common stock and per share amounts contained in these financial statements, have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.

Basis of Presentation - The accompanying unaudited interim consolidated financial statements of Trxade Group, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, as filed with the Securities and Exchange Commission on March ~~30, 2020.~~29, 2021.

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In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, ~~2019~~2020 as reported in the Company’s Annual Report on Form 10-K have been omitted.

Income (loss) Per Common Share – Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding. Diluted net income per common share is computed similar to basic net income per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. The dilutive effect of the Company’s options and warrants is computed using the treasury stock ~~method while the dilutive effect of our convertible notes is computed using the if-converted~~ method.

The following table sets forth the computation of basic and diluted Income (Loss) per Share:

For three months ended
March 31,

2021 2020
Numerator:
Net Income (loss) $ (651,519 ) $ 180,303

Numerator for basic and diluted EPS - income available to common Shareholders (651,519 ) $ 180,303

Denominator:
Denominator for basic EPS – Weighted average shares 8,093,199 6,971,427
Dilutive Effect of Common Stock Equivalent - 452,242
Denominator for diluted EPS – adjusted Weighted average shares and assumed Conversions 8,093,199 7,423,669
Basic income (loss) per common share $ (0.08 ) $ 0.03
Diluted income (loss) per common share $ (0.08 ) $ 0.02
For three months ended
June 30, For six months ended
June 30,
2020 2019 2020 2019
Numerator:
Net (Loss) Income $ (542,587 ) $ 57,981 $ (362,284 ) $ 183,210

Numerator for basic and diluted EPS - income available to common Shareholders (542,587 ) $ 57,981 (362,284 ) $ 183,210

Denominator:
Denominator for basic EPS – Weighted average shares 7,580,977 5,621,082 7,324,512 5,591,055
Dilutive Effect of Warrants, Options and Convertible Debt - 437,877 - 467,904
Denominator for diluted EPS – adjusted Weighted average shares and assumed Conversions 7,580,977 6,058,959 7,324,512 6,058,959
Basic (Loss) Income per common share $ (0.07 ) $ 0.01 $ (0.05 ) $ 0.03
Diluted (Loss) Income per common share $ (0.07 ) $ 0.01 $ (0.05 ) $ 0.03

NOTE 2– ~~LONG~~SHORT TERM DEBT – RELATED PARTIES

In October 2018, in connection with the acquisition of Community Specialty Pharmacy, LLC, a $300,000 promissory note was issued to Nikul Panchal, ~~the seller and currently~~ 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.~~share, leaving $225,000 of principal owed under the promissory note. There was a loss recognized on this conversion of $76,500. ~~The outstanding balance at June 30,~~
At March 31, 2021 and December 31, 2020, istotal related party debt was $225,000.

NOTE 3 – ~~SHAREHOLDERS’~~STOCKHOLDERS’ EQUITY
In 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 totaling $211,983 was then converted into 70,666 common shares.
In 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 in connection with such exercise.
~~On February 13, 2020, we entered into an underwriting agreement (the “Underwriting Agreement”) with Dawson James Securities, Inc. (the “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.
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The 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 $820,586, including $88,213 paid in the prior year, which was included in deferred offering cost as of December 31, 2019. The net proceeds of the Offering were approximately $5.17 million.
In September 2019, the Company entered into a financial consulting agreement. As compensation, the Company agreed to pay the consultant $15,000 over six months and to grant the consultant warrants to purchase 5,000 shares of common stock with an exercise price of $0.06 per share. The warrants have not been formally granted as of the date of this Report, and are expected to be formally granted in August 2020.
~~In 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 (see “Note 2 – Long Term Debt – Related Parties”). The Company issued 22,529 shares of common stock upon such exercise, and $1,352 in proceeds were received in connection with such exercise.~~
~~In 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.~~
In May 2020, warrants to purchase 25,000 shares of common stock were exercised at $0.06 per share by a former consultant; the Company 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.
On 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.
~~2019 Chief Executive Officer and President Bonuses~~
~~On 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.~~

2020 Equity Compensation Awards

On April 14, 2020, the Compensation Committee approved the grant of (a) 5,000 shares of restricted common stock to the Company’s legal counsel; 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~~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 $107,100 and the Company recognized stock-based compensation expense of ~~$26,775~~$53,550 for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021.

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Independent Director Compensation Plan

On April 14, 2020, the three independent members of the Board of Directors (Mr. Donald G. Fell, Dr. Pamela Tenaerts, and Mr. Michael L. Peterson), were each awarded 8,987 shares of restricted stock, which vest at the rate of ~~1/4th~~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 ~~$41,250~~$82,500 for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021.
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~~Employment Agreement with Suren Ajjarapu, Chief Executive Officer~~NOTE 4 – WARRANTS

~~In connection with our employment agreement with Mr. Suren Ajjarapu, our Chief Executive Officer, which was effective on April 14, 2020, we~~For the three-month period ended March 31, 2021, no warrants were granted ~~49,020 restricted shares of common stock which vest upon~~and none expired.
The Company uses the ~~Company reaching certain performance metrics established by~~Black-Scholes pricing model to estimate the ~~Compensation Committee on the same date and further amended on May 5, 2020. The~~ fair value of stock-based awards on 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 Company determined that it was probable that certain performance conditions will be met and recognized compensation expense of $130,222 for the six months ended June 30, 2020.
~~NOTE 4 - WARRANTS~~
~~For the six month period ended June 30, 2020, warrants to purchase 382,531 shares of common stock were exercised for proceeds of $22,952, none were granted and 8,336 expired. See “Note 3 – Shareholders’ Equity~~”.grant.

The compensation cost related to the warrants granted ~~in prior year~~ was ~~$100,383~~$0 and $0$79,089 for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively.

The Company’s outstanding and exercisable warrants as of ~~June 30, 2020~~March 31, 2021 are presented below:

Number Outstanding

Weighted Average Exercise Price

Contractual Life in Years
Intrinsic Value Number Outstanding Weighted Average Exercise Price Contractual Life in Years Intrinsic Value
Warrants Outstanding as of December 31, 2019 524,480 $ 0.42 2.39 $ 3,273,897
Warrants Outstanding as of December 31, 2020 82,751 $ 1.33 2.73 $ 352,951
Warrants granted - $ - - - - $ - - -
Warrants expired or forfeited (8,336 ) 9.00 - - - $ - - -
Warrants exercised (382,531 ) $ 0.06 - - - $ - - -

Warrants Outstanding as of June 30, 2020 133,613 $ 0.94 3.91 $ 696,140
Warrants Exercisable as of June 30, 2020 63,557 $ 1.92 2.12 $ 280,007
Warrants Outstanding as of March 31, 2021 82,751 $ 1.33 2.48 $ 349,157
Warrants Exercisable as of March 31, 2021 60,223 $ 1.81 1.34 $ 232,462

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NOTE 5 – OPTIONS

The Company maintains stock option plans under which certain employees are awarded option grants based on a combination of performance and tenure. 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~~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. The administrator did not approve an increase in the number of shares covered under the plan as of April 1, 2021.

For the ~~six-month~~three-month period ended ~~June 30, 2020,~~March 31, 2021, options to purchase ~~78,770~~20,000 shares were granted, none were forfeited ~~or expired~~ and ~~options to purchase 167 shares of common stock were exercised, for 167 shares of common stock and proceeds of $501.~~none expired. The options granted during the period vest over a four-year period, ~~ranging from less than~~the exercise price was $6.55 per share and the options have a ~~year to four years and have exercise prices ranging from $0.06 to $7.50 and terms ranging from 1.4 years to ten~~term of 5 years.

The Company uses the Black-Scholes option 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 stock options granted during the quarter ended ~~June 30, 2020.~~March 31, 2021:

~~2020~~
Expected dividend yield 0 %
Weighted-average expected volatility ~~134-236~~106-215 %
Weighted-average risk-free interest rate 0.25 %
Expected life of options ~~5-7~~5 years

Total compensation cost related to stock options granted was ~~$245,903~~$75,738 and ~~$99,990~~$61,997 for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively.

The following table represents stock option activity for the ~~six-month~~three-month period ended ~~June 30, 2020:~~March 31, 2021:

Number
Outstanding

Weighted
Average
Exercise Price

Contractual Life
in Years

Intrinsic
Value
Number Outstanding Weighted Average Exercise Price Contractual Life in Years Intrinsic Value
Options Outstanding as of December 31, 2019 346,998 $ 4.39 6.77 $ 817,220
Options Exercisable as of December 31, 2019 207,485 $ 5.29 5.53 $ 312,338
Options Outstanding as of December 31, 2020 425,817 $ 4.44 5.33 $ 597,322
Options Exercisable as of December 31, 2020 282,167 $ 4.52 4.56 $ 384,226
Options granted 78,770 $ 4.08 4.36 - 20,000 $ 6.55 4.85 -
Options forfeited - $ - - - - $ - - -
Options expired - $ - - - - $ - - -
Options exercised (167 ) $ 3.00 - - - $ - - -

Options Outstanding as of June 30, 2020 425,601 $ 4.33 5.92 $ 801,715
Options Exercisable as of June 30, 2020 243,668 $ 5.09 5.42 $ 286,011
Options Outstanding as of March 31, 2021 445,817 $ 4.53 5.07 $ 586,080
Options Exercisable as of March 31, 2021 304,867 $ 4.44 4.52 $ 421,737

NOTE 6 – 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 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. A hearing on our motion for a default judgment has been set for April 27, 2021. The Company anticipates that irrespective of the outcome of such hearing on April 27, 2021, the Company will prevail on the merits; and believes Studebaker has the ability to satisfy a judgment.
In 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; however, to date, Crecom has not delivered the nitrile gloves. 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: Case No. 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 Judgement was filed with the court, and on May 25, 2021, the Court will extract the sealed application and a copy thereof will be served on Crecom’s attorneys and Crecom will have two weeks to file an Affidavit in Reply with the court to show that there are issues to be tried and that this case must go to a full trial. We will be given 14 days thereafter to reply to that Affidavit in Reply (if there is a need to do so). In this case, we will request for a longer time to reply, given the distance involved (the court has taken note of this fact). Also at the May 25, 2021 hearing, the court will give directions on the timelines for both parties to file their written submissions/arguments in relation to the application for summary judgment If a judgment is entered against Crecom, the process of executing the judgment, and ultimately attempting to collect on the judgment, can take three to six months. The Company believes that it will prevail in the lawsuit filed; 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.
NOTE 7 – CONTINGENCIES

In 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 ~~and~~as well as certain unrelated persons, Annapurna Gundlapalli, Gajan Mahendiran and Nexgen Memantine ~~certain unrelated persons~~ (collectively, defendants), in the Circuit Court of Madison County, Alabama (Case:47-CV-2019-902216.00). The complaint ~~alleges~~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 ~~relates~~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 ~~seeks~~sought $425,000 in compensatory damages and $1,275,000 in punitive damages. The Company and Mr. Ajjarapu ~~deny~~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’~~plaintiffs not being able to establish personal jurisdiction over the defendants, which motion was successful as to all defendants. The Company and Mr. Ajjarapu further refute any connections for the purpose of the suit to the other named defendants. To the Company’s and Mr. Ajjarapu’s knowledge, the complaint ~~has~~had no merit whatsoever and, to the extent the motion to dismiss is reversed or the plaintiffs’ appeal, each of the Company and Mr. Ajjarapu intend to vigorously defend themselves and oppose the relief sought in the complaint. The Company is unable to determine the estimate of the probable or reasonable possible loss or range of losses arising from the above legal proceeding.whatsoever. The final date for the plaintiffs to appeal the ruling to dismiss the lawsuit ispassed in August ~~2020.~~2020, and there was no appeal. As such, the ruling is final.
However, 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, Inc.); fraudulent transactions of securities under the Florida Securities Act (against all of the defendants except Trxade); and 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.

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NOTE 78 – LEASES

The Company elected the practical expedient under ~~ASU~~Accounting Standards Update (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 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. No impact was recorded to the beginning retained earnings for Topic 842. The Company has two operating leases for corporate offices. The following table outlines the details:

Lease 1 Lease 2 Lease 1 Lease 2
Initial Lease Term December 2017 to January 2021 November 2018 to November 2023 December 2017 to December 2021 November 2018 to November 2023
Renewal Term January 2021 to December 2024 November 2023 to November 2028 January 2021 to December 2024 November 2023 to November 2028
Initial Recognition of Right to use assets at January 1, 2019 $ 534,140 $ 313,301
Initial Recognition of right-of-use assets at January 1, 2019 $ 534,140 $ 313,301
Incremental Borrowing Rate 10 % 10 % 10 % 10 %
The 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 $384,110. The reassessment of the lease term did not change the existing classification and the lease is still classified as an operating lease.

The 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 ~~June 30, 2020.~~March 31, 2021.

Amounts due within twelve months of June 30
2020 $ 163,102
Amounts due within twelve months of March 31
2021 167,984 $ 146,218
2022 173,038 49,452
2023 178,237 50,949
2024 117,259 52,478
2025 54,052
Thereafter 187,752 147,046
Total minimum lease payments 987,372 500,195
Less: effect of discounting (257,038 ) (129,253 )
Present value of future minimum lease payments 730,334 370,942
Less: current obligations under leases 94,253 117,030
Long-term lease obligations $ 636,081 $ 253,912

For the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ amortization of ~~assets~~Right of Use Assets was ~~$47,799~~$31,678 and ~~$43,939,~~$23,635, respectively.

For the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ amortization of ~~liabilities~~Lease Liability was ~~$42,477~~$31,517 and ~~$36,276,~~$20,974, respectively.

NOTE 89 – SEGMENT REPORTING

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

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Six Months Ended June 30, 2020 Trxade, Inc. Community Specialty Pharmacy, LLC Integra Pharma, LLC Other Total
Three Months Ended
March 31, 2021
Trxade, Inc. Community Specialty Pharmacy, LLC Integra Pharma, LLC Other Total
Revenue $ 2,914,537 $ 870,637 $ 5,003,523 $ 7,260 $ 8,795,957 $ 1,236,650 $ 397,896 $ 1,402,586 $ 16,103 $ 3,053,235
Gross Profit $ 2,914,537 $ 74,835 $ 648,276 $ 7,260 $ 3,644,908 $ 1,236,650 $ 36,089 $ 94,563 $ 16,009 $ 1,383,311
Segment Assets $ 1,793,747 $ 243,603 $ 5,041,989 $ 4,652,944 $ 11,732,283 $ 2,053,494 $ (405,348 ) $ 3,111,536 $ 4,933,534 $ 9,693,216
Segment Profit (Loss) $ 1,872,862 $ (72,955 ) $ 369,370 $ (2,531,561 ) $ (362,284 ) $ 512,293 $ (31,251 ) $ (32,446 ) $ (1,100,115 ) $ (651,519 )

Six Months Ended June 30, 2019 Trxade, Inc. Community Specialty Pharmacy, LLC Integra Pharma, LLC Other Total
Revenue $ 2,182,668 $ 892,357 $ 353,910 $ - $ 3,428,935
Gross Profit $ 2,182,668 $ 111,977 $ 15,313 $ - $ 2,309,958
Segment Assets $ 1,401,724 $ 224,863 $ 834,082 $ 1,217,396 $ 3,678,065
Segment Profit (Loss) $ 1,166,543 $ (61,628 ) $ (143,882 ) $ (777,823 ) $ 183,210
~~NOTE 9 – EQUITY METHOD INVESTMENT~~
~~In 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 was, prior to the divestment discussed below, 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 shareholders. 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 gross revenue quotas for 2019. As of December 31, 2019, the additional interests had not been transferred and Alliance still owned 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, nonsolicitation and each party’s obligation to cease use of the other party’s intellectual property survive the termination. The investment loss recognized during the period ended June 30, 2019 was $87,822 and for the year ended December 31, 2019 was $250,000.
Three Months Ended
March 31, 2020
Trxade, Inc. Community Specialty Pharmacy, LLC Integra Pharma, LLC Other Total
Revenue $ 1,519,907 $ 432,929 $ 245,016 $ 5,468 $ 2,203,320
Gross Profit $ 1,519,907 $ 36,108 $ 78,653 $ 5,468 $ 1,640,136
Segment Assets $ 2,055,429 $ 280,514 $ 1,817,170 $ 7,320,791 $ 11,473,904
Segment Profit (Loss) $ 972,993 $ (41,245 ) $ (28,883 ) $ (722,562 ) $ 180,303

NOTE 10 – SUBSEQUENT EVENTS
2021 Equity Compensation Awards
On 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 2019 Amended and Restated 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.

~~Return~~In connection with and pursuant to the independent director compensation policy previously adopted by the Board of ~~Inventory Deposits~~
InDirectors, on April 15, 2021, the three independent members of the Board of Directors (Mr. Donald G. Fell, Dr. Pamela Tenaerts, and Mr. Michael L. Peterson), 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 ~~2020, $226,500 of inventory deposits were returned~~1 and October 1, 2021 and January 1 and April 1, 2022, subject to such persons continuing to provide services to the Company ason such dates, subject to the ~~providers were out of stock~~terms of the ~~specific product ordered.~~Plan and the Restricted Stock Grant Agreements entered into to evidence such awards.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
~~Forward-Looking Statements~~
~~This Quarterly Report on Form 10-Q (“Report”), including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,~~” contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, regarding future events and the future results of the Company that are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the management of the Company. Words such as “~~expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,~~” variations of such words, and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. In particular, as discussed in greater detail below, our financial condition and results could be materially adversely affected by the impacts and disruptions caused by the novel coronavirus (COVID-19) global pandemic. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed elsewhere in this Report, including under “~~Risk Factors”, and in other reports the Company files with the Securities and Exchange Commission (“SEC”), including the Company’s~~ ~~Annual Report on Form 10-K~~ ~~for the year ended December 31, 2019, as filed with the SEC on March 30, 2020 (under the heading “Risk Factors” and in other parts of that report). The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason, except as otherwise required by law.~~
The following discussion is based upon our unaudited Consolidated Financial Statements included elsewhere in this report, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingencies. In the course of operating our business, we routinely make decisions as to the timing of the payment of invoices, the collection of receivables, the shipment of products, the fulfillment of orders, the purchase of supplies, and the building of inventory, among other matters. Each of these decisions has some impact on the financial results for any given period. In making these decisions, we consider various factors including contractual obligations, customer satisfaction, competition, internal and external financial targets and expectations, and financial planning objectives. On an on-going basis, we evaluate our estimates, including those related to sales returns, pricing credits, warranty costs, allowance for doubtful accounts, impairment of long-term assets, especially goodwill and intangible assets, contract manufacturer exposures for carrying and obsolete material charges, assumptions used in the valuation of stock-based compensation, and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, and in other reports we file with the SEC, including under “~~Item 1A. Risk Factors” below, and in our most recent Annual Report on Form 10-K. All references to years relate to the calendar year ended December 31 of the particular year.~~

General Information

This information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the audited financial statements and notes thereto and “Part II. Other Information -– Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, contained in our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed with the Securities and Exchange Commission on March ~~30, 2020~~29, 2021 (the “Annual Report”).

Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited consolidated financial statements included above under “Part I -– Financial Information” -– “Item 1. Financial Statements”.

Please see the section entitled “Glossary” in our Annual Report for a list of abbreviations and definitions used throughout this Report.

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Our logo and some of our trademarks and tradenames are used in this Report. This Report also includes trademarks, tradenames and service marks that are the property of others. Solely for convenience, trademarks, tradenames and service marks referred to in this Report may appear without the ®, ™ and SM symbols. References to our trademarks, tradenames and service marks are not intended to indicate in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

The market data and certain other statistical information used throughout this Report are based on independent industry publications, reports by market research firms or other independent sources that we believe to be reliable sources. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We are responsible for all of the disclosures contained in this Report, and we believe these industry publications and third-party research, surveys and studies are reliable. While we are not aware of any misstatements regarding any third-party information presented in this Report, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed under, and incorporated by reference in, the section entitled “Item 1A. Risk ~~Factors~~”Factors” of this Report. These and other factors could cause our future performance to differ materially from our assumptions and estimates. Some market and other data included herein, as well as the data of competitors as they relate to Trxade Group, Inc., is also based on our good faith estimates.

Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “Trxade”, “Trxade Group” and “Trxade Group, Inc.” refer specifically to Trxade Group, Inc. and its consolidated subsidiaries.

In addition, unless the context otherwise requires and for the purposes of this report only:

● “Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

● “SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and

● “Securities Act” refers to the Securities Act of 1933, as amended.

Effective on February 12, 2020, the Company effected a stock split of its outstanding common stock in a ratio of 1-for-6 (“Reverse Stock Split”). Proportional retroactive 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 in the disclosures below.

Where You Can Find Other Information

We file annual, quarterly, and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s website at www.sec.gov and are available for download, free of charge, soon after such reports are filed with or furnished to the SEC, on the “NASDAQ: MEDS,” “SEC Filings” page of our corporate website at www.rx.trxade.com. Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report. Our corporate website address is www.rx.trxade.com. The information on, or that may be accessed through, our corporate website is not incorporated by reference into this Report and should not be considered a part of this Report.

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Summary of The Information Contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. MD&A is organized as follows:

● Overview. Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of MD&A.

● Liquidity and Capital Resources. An analysis of changes in our consolidated balance sheets and cash flows and discussion of our financial condition.

● Results of Operations. An analysis of our financial results comparing the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 and ~~2019.~~2020.

● Critical Accounting Policies. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.

Company Overview

We have designed and developed, and now own and operate, a business-to-business web-based marketplace focused on the US pharmaceutical industry. Our core service brings the nation’s independent pharmacies and accredited national suppliers of pharmaceuticals together to provide efficient and transparent buying and selling opportunities.

We began operations as Trxade Group, Inc., a Nevada corporation (“Trxade Nevada”) in August of 2010 and spent over two years creating and enhancing our web-based services. Our services provide pricing transparency, purchasing capabilities and other value-added services on a single platform focused on serving the nation’s approximately ~~22,000~~21,000 independent pharmacies with annual purchasing power of $78 billion (according to the National Community of Pharmacists Association’s 2018 Digest). Our national wholesale supply partners are able to fulfill orders on our platform in real-time and provide pharmacies with cost-saving payment terms and next-day delivery capabilities in unrestrictive states under the Model State Pharmacy Act and Model Rules of the National Association of Boards of Pharmacy (Model Act). We have expanded significantly since 2015 and now have ~~over 11,725~~around 12,100+ registered ~~pharmacy~~ members ~~purchasing products~~ on our sales platform.

Company Organization

Trxade Group, Inc. owns 100 percent of Trxade, Inc., and Integra Pharma Solutions, LLC (formerly Pinnacle Tek, Inc.), Alliance Pharma Solutions, LLC, Community Specialty Pharmacy, LLC, and Bonum Health, LLC. The reverse triangular merger of Trxade, Inc. and Trxade Group, Inc. occurred in July 2013. Integra was acquired in July 2013. We acquired 100 percent of Community Specialty Pharmacy, LLC, in October 2018. Alliance Pharma Solutions, LLC was formed in January 2018 and our joint venture with SyncHealth MSO, LLC, which was terminated in February 2020, was formed in January 2019. We acquired our Bonum Health operations in October 2019. Trxade, Inc. is a web-based market platform that enables commerce among healthcare buyers and sellers of pharmaceuticals, accessories and services.

Novel Coronavirus (COVID-19)
In December 2019, a novel strain of coronavirus, which causes the infectious disease known as COVID-19, was reported in Wuhan, China. The World Health Organization declared COVID-19 a “Public Health Emergency of International Concern” on January 30, 2020 and a global pandemic on March 11, 2020. In March and April, many U.S. states and local jurisdictions began issuing ‘stay-at-home’ orders. For example, the state of Florida, where the Company’s principal business operations are, issued a ‘stay-at-home’ order effective on April 1, 2020, which remained in place, subject to certain exceptions, through June 2020, when the order was gradually lifted until September 2020, when the order was completely lifted. ~~Since that time the~~The U.S., in general and Florida specifically, has recently seen decreases in ~~particular, has seen rapid increases~~total new COVID-19 infections, however, it is unknown whether such decreases will continue, new strains of the virus will cause numbers to increase, currently projected vaccine efficacy numbers will hold, or new strains of the virus will become dominate in the ~~spread of COVID-19. It is currently unclear~~future, and/or whether the state of Florida, or other jurisdictions in which we operate, will issue new or expanded ‘stay-at-home’ orders, or how those orders, or others, may affect our operations.

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To date, we have been deemed an essential healthcare technology provider under applicable governmental orders based on the critical nature of the products we offer and the community we serve. As such, our business operations were not materially impacted by the prior restrictions put in place by the State of Florida to slow the spread of COVID-19, which have since expired. Additionally, as shown in our results of operations below, we have to date, not experienced any significant material negative impact to our operations, revenues or gross profit due to COVID-19. We have however ~~experienced~~been adversely affected by reductions to, and interruptions in, the delivery of supply chain pharmaceuticals that ~~we anticipate will~~ have had a negative impact on our wholesalers and certain technology outsourcing in India and the Philippines due to the pandemic, which may become more frequent or material in the future. We are carefully managing our ~~inventories~~inventory supply network while we work to overcome these hopefully temporary challenges. As a result of the above and other unknown issues associated with the pandemic, our sales and operating results may be adversely impacted in the coming months. The full extent of the impact of COVID-19 on our business and operations currently cannot be estimated and will depend on a number of factors including the scope and duration of the global pandemic.

Since the start of the pandemic, we have taken steps to prioritize the health and safety of our employees. The Company’s employees started working remotely around March 17, 2020, and our corporate office is currently planned to be closed through ~~December~~May 31, ~~2020, at~~2021. The office is expected to open for our management team beginning in June 2021, while our remaining employees will continue to work remotely for the ~~earliest, unless the current situation improves.~~time being.

Currently we believe that we have sufficient cash on hand and will generate sufficient cash through operations to support our operations for the foreseeable future; however, we will continue to evaluate our business operations based on new information as it becomes available and will make changes that we consider necessary in light of any new developments regarding the ongoing pandemic.

~~Again, although~~Although COVID-19 has had a major impact on businesses around the world, to date, ~~we have thankfully been mostly spared from any~~the pandemic has not had a significant negative impact ~~of the pandemic.~~on our business. However, the future impact of COVID-19 on our business and operations is currently unknown. The pandemic is developing rapidly and the full extent to which COVID-19 will ultimately impact us depends on future unknowable developments, including the duration and spread of the virus, as well as potential ~~seasonality of~~ new seasonal outbreaks.

Liquidity and Capital Resources

Cash

Cash was ~~$4,151,044~~$5,209,280 at ~~June 30, 2020.~~March 31, 2021. We expect that our future available capital resources will consist primarily of cash generated from operations, remaining cash balances, borrowings, and additional funds raised through sales of debt and/or equity securities.

Liquidity
Cash, current assets, current liabilities, short term debt and working capital at the end of each period were as follows:

June 30, 2020 December 31, 2019 March 31, 2021 December 31, 2020

Cash $ 4,151,044 $ 2,871,694 $ 5,209,280 $ 5,919,578
Current assets (excluding cash) 5,972,322 931,263 3,945,960 3,301,720
Current liabilities 719,825 520,816
Current liabilities (excluding short term debt) �� 1,012,680 617,238
Short Term Debt 225,000 225,000
Working Capital 9,403,541 3,282,141 7,917,560 8,379,060

Our principal sources of liquidity have been cash provided by operations, sales of equity, and borrowings under various debt arrangements. Our principal uses of cash have been for operating expenses and acquisitions. We anticipate these uses will continue to be our principal uses of cash in the future.

The ~~increase~~decrease in cash as of ~~June 30, 2020,~~March 31, 2021, compared to December 31, ~~2019,~~2020, was primarily due to ~~$5,994,424~~increased spending for the development and marketing of ~~cash raised through the sale of common stock in our February 2020 underwritten offering, as described in greater detail above in “Part I. Financial Statements – Item 1. Financial Statements” – “Note 3 – Shareholders’ Equity~~”.Bonum TeleHealth and MedCheks Health Passport.

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Liquidity Outlook cash explanation.

Cash Requirements

Our primary objectives for the remainder of ~~2020~~2021 are to continue the development of the Trxade Platform, Bonum Health telehealth services and MedCheks health passport, to increase our client base and operational revenue. As a result of our cash generated through operations and the cash raised in the February 2020 underwritten offering, we believe we have sufficient cash to support our operations for the foreseeable future. There can be no assurance that our operations will generate significant positive cash flow, or that additional funds will be available to us, through borrowings or otherwise, on favorable terms if required in the future, or at all.

We estimate our operating expenses and working capital requirements for the next 12 months to be approximately as follows:

Projected Expenses for 2020-2021 Amount
Projected Expenses for April 2021 to March 2022 Amount
General and administrative (1) $ 5,000,000 $ 9,000,000
Total $ 5,000,000 $ 9,000,000
(1) Includes wages and payroll, legal and accounting, marketing, rent and web development.

~~(1) Includes wages~~We currently anticipate paying the estimated expenses described above through cash on hand and ~~payroll, legal and accounting, marketing, rent and web development.~~
revenues generated from our operations. Since inception, we have funded our operations primarily through debt and equity capital raises and operational revenue. ~~To date in 2020, we have raised $5,994,424 through the sale of common stock in our February 2020 underwritten offering. We also raised $22,952 through the exercise of outstanding warrants during 2020.~~

We may require additional funding in the future to expand or complete acquisitions. The sources of this capital are expected to be equity investments and notes payable. Our plan for the next twelve months is to continue using the same marketing and management strategies and continue providing a quality product with excellent customer service while also seeking to expand our operations organically or through acquisitions, as funding and opportunities arise. As our business continues to grow, customer feedback will be integral in making small adjustments to improve our products and overall customer experience. InIf in the ~~event~~future we require additional funding, we plan to raise ~~that~~such funds through the sale of debt or equity, 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.

We believe that we have adequate cash to implement our plan to operate a business-to-business web-based marketplace focused on the United States pharmaceutical industry. Our core service is designed to bring the nation’s independent pharmacies and accredited national suppliers of pharmaceuticals together to provide efficient and transparent buying and selling opportunities.

As of the date of this filing, there has been a global viral outbreak that world governments have responded to with travel and other restrictions, including ‘stay-at-home’ orders, among other steps. The extent and duration of business disruptions and related financial impacts from the COVID-19 coronavirus cannot be reasonably estimated at this time; however, our exposure includes reductions to, and interruptions in, the delivery of supply chain pharmaceuticals that ~~we anticipate will~~ have had a negative impact on our wholesalers and certain technology outsourcing in India and the Philippines. In addition, employee sicknesses and remote working environments related to the coronavirus and the federal, state and local responses to such virus, could materially impact our consolidated results for the ~~third quarter and~~ full year ~~2020.~~2021. See also “Novel Coronavirus (COVID-19)”, above.
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Cash Flows

The following table summarizes our Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 and ~~2019:~~2020:

Six months Ended Three months Ended
June 30, 2020 June 30, 2019 Change Percent Change March 31, 2021 March 31, 2020 Change Percent Change
Net (Loss) Income $ (362,284 ) $ 183,210 $ (545,494 ) (298 )% $ (651,519 ) $ 180,303 $ (831,822 ) (461 %)
Net Cash Provided by (used in):
Operating Activities (3,982,667 ) (79,689 ) (3,902,978 ) (4,898 )% (710,298 ) (410,806 ) (299,492 ) (73 %)
Investing Activities (23,505 ) (250,000 ) 226,495 (91 )% - (23,505 ) 23,505 100 %
Financing Activities 5,285,522 166 5,285,356 3,183,949 % - 5,263,922 (5,263,922 ) (100 )%
Net increase (decrease) in cash $ 1,279,350 $ (329,523 ) $ 1,608,873 $ 488 % $ (710,298 ) $ 4,829,611 $ (5,539,909 ) $ (115 )%

Cash used in operations for the ~~six~~three months ended ~~June 30,~~March 31, 2021 was $710,298, compared to cash used in operations for the three months ended March 31, 2020 of $410,806. The decrease in cash as of March 31, 2021, compared to March 31, 2020, was ~~$3,982,667 compared~~due to ~~$79,689~~increased spending for the ~~six months ended June 30, 2019. This increase was mainly due to inventory deposits required~~development and marketing of ~~$309,000, made for delivery of specific products,~~Bonum TeleHealth and MedCheks Health Passport and an increase in inventory of $1,762,113 and increase in accounts receivable of $2,761,331, offset by $829,867 of stock grants. An invoice for $2,575,000 was outstanding at June 30, 2020 (which was attributed to the increase in accounts receivable), which amount was collected in July 2020.Accounts Receivables.

~~Cash~~There was no cash used byin investing activities for the ~~six~~three months ended ~~June 30,~~March 31, 2021, compared to cash used in investing activities for the three months ended March 31, 2020 ~~was a purchase~~ of ~~fixed assets.~~$23,505. Cash used in investing activities for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020, was associated with the ~~$250,000 investment in SyncHealth MSO, LLC, which has since been divested.~~purchase of fixed assets.

Cash provided by financing activities for the ~~six~~three months ended ~~June 30,~~March 31, 2021 was $0, compared to cash provided by financing activities for the three months ended March 31, 2020 of $5,263,922. Cash provided by financing activities for the three months ended March 31, 2020, included the sale of common stock in the February 2020 underwritten offering which generated $5,994,424 of proceeds and approximately $5.26 million in cash to the Company after expenses and the exercise of warrants and options which generated cash of ~~$22,952. Financing activities in 2019 included $166 of proceeds from a warrant exercise.~~$1,853.

Results of Operations

The following selected consolidated financial data should be read in conjunction with the unaudited consolidated financial statements and the notes to these statements included above.

Three Month Period Ended ~~June 30, 2020~~March 31, 2021 Compared to Three Month Period Ended ~~June 30, 2019~~March 31, 2020

Three Months Ended Three Months Ended Percent
June 30, 2020 June 30, 2019 Change Percent Change March 31, 2021 March 31, 2020 Change Change

Revenues $ 6,592,637 $ 1,916,414 $ 4,676,223 244.0 % $ 3,053,235 $ 2,203,320 $ 849,915 39 %
Cost of Sales 4,587,865 753,138 3,834,727 509.2 % 1,669,924 563,184 1,106,740 197 %

Gross Profit 2,004,772 1,163,276 841,496 72.3 % 1,383,311 1,640,136 (256,825 ) (16 )%
Operating Expenses:
General and Administrative (less stock- based compensation expense) 1,504,676 966,560 538,116 55.7 %
Stock-Based Compensation Expense 1,035,373 64,011 971,362 1,517.5 %
Total General and Administrative/Operating Expense 2,540,049 1,030,571 1,509,478 146.5 %
General and Administrative* 1,853,581 1,310,823 542,758 41 %
Warrants and Options Expense 173,985 141,086 32,899 23 %
Total Operating Expense 2,027,566 1,451,909 575,657 40 %

Investment Loss - (58,850 ) 58,850 100 %
Interest Expense (7,310 ) (15,874 ) 8,564 53.9 % (7,264 ) (7,924 ) 660 (8 )%

Net Income (Loss) $ (542,587 ) $ 57,981 $ (600,568) (1,035.8 )%
Net Income (loss) $ (651,519 ) $ 180,303 $ (831,822 ) (461 )%
* Less warrants and options expense.

Our revenues for the three months ended ~~June 30, 2020~~March 31, 2021 were from the Trxade platform, Community Specialty Pharmacy and Integra Pharma Solutions. Revenues increased by ~~$4,676,223~~$849,915, compared to the prior period. Integra Pharma Solutions revenue increased to ~~$4,785,507~~$1,402,586 for the three months ended ~~June 30, 2020,~~March 31, 2021, compared to ~~$327,622~~$245,016, in the prior year’s period. The increase was mainly a result of sourcing ~~items – N95 masks and sanitizers.~~protective medical gowns. Cost of ~~goods sold~~sales and gross profit for the ~~three month~~three-month period ended ~~June 30, 2020~~March 31, 2021, were ~~$4,587,865~~$1,669,924 and ~~$2,004,772,~~$1,383,311, respectively, and for the ~~three month~~three-month period ended ~~June 30, 2019~~March 31, 2020, were ~~$753,138~~$563,184 and ~~$1,163,276,~~$1,640,136, respectively. As sales for PPE increased in 2021, the cost of sales increased. Revenue from the Trxade Platform decreased 19%, from $1,519,907 for the three months ended March 31, 2020, to $1,236,650 for the three months ended March 31, 2021. The decrease in 2021 related to weather disruptions for shipping and supply chain issues for drugs selling on the platform and certain non-recurring large purchases of additionally supplies by pharmacies in March 2020, at the start of the COVID-19 pandemic.
Gross profit as a percentage of sales was 45% for the three months ended March 31, 2021, compared to 74% for the three months ended March 31, 2020. The reason for the decrease in gross profit as a percentage of sales was the cost of the orders of PPE related products in the current period. In 2020, a larger percentage of revenue was generated by the Trxade Platform, which carries no cost of sales.

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General and administrative expenses (less stock-based compensation expense) increased for the three months ended ~~June 30, 2020~~March 31, 2021 to ~~$1,504,478~~$1,853,581, compared to ~~$966,560~~$1,310,823 for the comparable period in 2019. The increase was mainly due to IT development, legal expenses ~~filing fees~~ and marketing ~~expenses.~~expenses relating to Bonum Health and MedCheks.

Total stock-based compensation expense increased ~~by 1,517.5%~~to $173,985 for the three months ended ~~June 30, 2020,~~March 31, 2021, compared to $141,086 for the prior year’s period, due to ~~warrants granted to consultants, 2019 bonus shares issued to executives, shares issued to directors, 2020 bonus accruals and employee option grants, as described in greater detail above under “Part I. Financial Statements – Item 1. Financial Statements” – “Note 3 – Shareholders’ Equity~~”.
~~We had $58,850~~Board of ~~investment loss for the quarter ended June 30, 2019 in connection with the SyncHealth, LLC joint venture which was terminated effective as of January 31, 2020.~~Directors restricted stock grants.

We had interest expense of ~~$7,310~~$7,264 for the three months ended ~~June 30, 2020,~~March 31, 2021, compared to interest expense of ~~$15,874~~$7,924 for the three months ended ~~June 30, 2019,~~March 31, 2020, which decreased due to decreases in the amount of outstanding debt we had as of the current period.

Net ~~income declined $600,568,~~loss increased to ~~a net loss of $542,587~~$651,519 for the three months ended ~~June 30, 2020,~~March 31, 2021, compared to net income of ~~$57,981~~$180,303, for the three months ended ~~June 30, 2019,~~March 31, 2020, mainly due to ~~the value~~increased development of the ~~2019 bonus stock award grants issued to management, as described in greater detail above under “Part I. Financial Statements – Item 1. Financial Statements” – “Note 3 – Shareholders’ Equity~~”.
~~Six Month Period Ended June 30, 2020 Compared to Six Month Period Ended June 30, 2019~~
Six Months Ended
June 30, 2020 June 30, 2019 Change Percent Change

Revenues $ 8,795,957 $ 3,428,935 $ 5,367,022 156.5 %
Cost of Sales 5,151,049 1,118,977 4,032,072 360.3 %

Gross Profit 3,644,908 2,309,958 1,334,950 57.8 %
Operating Expenses:
General and Administrative (less stock-based compensation Expense) 2,685,583 1,905,504 780,079 40.9 %
Stock-Based compensation Expense 1,306,375 99,990 1,206,385 1,206.5 %
Total General and Administrative/Operating Expense 3,991,958 2,005,494 1,986,464 99.1 %

Investment Loss - (87,822 ) 87,822 100 %
Interest Expense (15,234 ) (33,432 ) 18,198 54.4 %

Net Income (Loss) $ (362,284 ) $ 183,210 $ (545,494 ) (297.7 )%
~~Our revenues for the six months ended June 30, 2020 were from the~~ Trxade ~~platform, Community Specialty Pharmacy~~Platform, Bonum Health and Integra Pharma Solutions. Revenues increased by $5,367,022 compared to the prior period. In Trxade, Inc., revenue increased by $731,869 which is attributable to our sales department continuing to add customers throughout 2019 and into 2020 through direct marketing and customer training and the availability of items from suppliers. Integra Pharma Solutions increased revenue to $5,003,523 for the six months ended June 30, 2020, compared to $353,910 in the same period of 2019. The increase was a result of sourcing items – N95 masks and sanitizers. Cost of goods sold and gross profit were $5,151,049 and $3,644,908 for the six months ended June 30, 2020, respectively, and $1,118,977 and $2,309,958 for the six months ended June 30, 2019, respectively.
General and administrative expenses (less stock-based compensation expense) increased for the six months ended June 30, 2020 to $2,685,583, compared to $1,905,504 for the comparable period in 2019. The increase was mainly due to IT development, legal expenses, filing fees and marketing expenses.
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Total stock-based compensation expense increased by 1,206.5% for the six months ended June 30, 2020, compared to the prior year’s period due to warrants granted to consultants, 2019 bonus shares issued to executives, shares issued to directors, 2020 bonus accruals and employee option grants, as described in greater detail above under “~~Part I. Financial Statements – Item 1. Financial Statements” – “Note 3 – Shareholders’ Equity~~”.
~~We had $87,822 of investment loss for the quarter ended June 30, 2019 in connection with the SyncHealth, LLC joint venture, which has been terminated effective as of January 31, 2020.~~
We had interest expense of $15,234 for the six months ended June 30, 2020, compared to interest expense of $33,432 for the six months ended June 30, 2019, which decreased due to decreases in the amount of outstanding debt we had as of the current period.
Net income declined $545,494, to a net loss of $362,284 for the six months ended June 30, 2020, compared to net income of $183,210 for the six months ended June 30, 2019, mainly due to the value of the 2019 bonus stock award grants issued to management, as described in greater detail above under “~~Part I. Financial Statements – Item 1. Financial Statements” – “Note 3 – Shareholders’ Equity~~”.MedCheks start up development.

Off-Balance Sheet Arrangements

We had no outstanding off-balance sheet arrangements as of ~~June 30, 2020.~~March 31, 2021.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of net sales and expenses for each period. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

Revenue Recognition

In general, the Company accounts for revenue recognition in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers.”

Trxade, Inc. provides an online web-based buying and selling platform for licensed pharmaceutical wholesalers (“Suppliers”) to sell products and services to licensed pharmacies (“Customers”). 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. Fulfillment of confirmed orders, including delivery and shipment of prescription drugs and other products, is the responsibility of the Supplier, not the Company. The Company holds no inventory and assumes no responsibility for the shipment or delivery of any products or services from our website. The Company considers itself an agent for this revenue stream and as such, reports revenue as net. Step One: Identify the contract with the Customers – Trxade, Inc.’s Terms and Use “Agreement,” which outlines the terms and conditions between the Company and the Supplier, is acknowledged and agreed to by the Supplier. Collection is probable based on a credit evaluation of the Supplier. Step Two: Identify the performance obligations in the Agreement – the Company provides the Supplier access to the online website, ability to upload catalogs of products and Dashboard access to review status of inventory as well as posted and processed orders. The Agreement requires the Supplier to post a catalog of pharmaceuticals on the platform, deliver the pharmaceuticals and, upon shipment, remit the stated platform fee. Step Three: Determine the transaction price – the Agreement outlines the fee, which is based on the type of product: generic, brand or non-drug. There are no discounts for volume transactions or early payment of invoices. Step Four: Allocate the transaction price – the Agreement details the fee: There is no difference between contract price and “stand-alone selling ~~price~~price””. Step Five: Recognize revenue when or as the entity satisfies a performance obligation – revenue is recognized upon Supplier’s fulfillment of the applicable order.

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Integra Pharma Solutions, LLC is a licensed wholesaler of brand, generic and non-drug products to Customers. The Company takes orders for products, creates invoices for each order and recognizes revenue at the time the Customer receives the product. Customer returns are not material. Step One: Identify the contract with the Customer – the Company requires that an application and a credit card for payment be 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. Step Two: Identify the performance obligations in the contract – Each order is distinct and evidenced by the shipping order and invoice. Step Three: 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. There are no sales or volume discounts. The transaction price is determined at the time of the order evidenced by the invoice. Step Four: Allocate the transaction price – There is no difference between contract price and “stand-alone selling price”. Step Five: Recognize revenue when or as the entity satisfies a performance obligation -– The Revenue is recognized when the Customer receives the product.

Community Specialty Pharmacy, LLC is a licensed retail pharmacy. 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. Step One: Identify the contract with the Customer – The prescription is written by a doctor for a patient and presented by the patient to the Customer and is in turn delivered to the Company. The prescription identifies the performance obligations in the contract. The Company fills the prescription and delivers to the Customer the drugs, fulfilling the contract. The collection is probable because there is confirmation that the patient has insurance for reimbursement to the Company prior to filling of the prescription. Step Two: Identify the performance obligations in the contract – Each prescription is distinct to the Customer. Step Three: Determine the transaction price – The consideration is not variable. The transaction price is determined to be the price of 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). Step Four: 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”. Step Five: Recognize revenue when or as the entity satisfies a performance obligation – Revenue is recognized after the delivery of the prescription.

Stock-Based 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.

RECENTLY ISSUED ACCOUNTING STANDARDS

For more information on recently issued accounting standards, see “Note 1 – Organization and Basis of Presentation”, to the Notes to Consolidated Financial Statements included herein under “Part I - – Item 1. Financial Statements”.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer (our principal executive officer and principal accounting/financial officer), Mr. Ajjarapu and Mr. Doss, respectively, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that as of ~~June 30, 2020,~~March 31, 2021, our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in our reports filed with the SEC pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

As a result of the formative stage of our development, the Company has not fully implemented the necessary internal controls. The matters involving internal controls and procedures that the Company’s management considered to be material weaknesses under the standards of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) were: (1) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of accounting principles generally accepted in the United States of America (“GAAP”) and SEC disclosure requirements; and (2) ineffective controls over period end financial disclosure and reporting processes.

Management believes that the material weaknesses set forth above did not have an effect on the Company’s financial results reported herein. We are committed to improving our financial organization. As part of this commitment, we have recently increased our personnel resources and technical accounting expertise as we develop the internal and financial resources of the Company. In addition, the Company will prepare and implement sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements.

Management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes.

We have improved our financial organization as we have increased our personnel resources and technical accounting expertise. We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis.

Changes in Internal Control over Financial Reporting

There has not been any change in our internal control over financial reporting that occurred during the ~~three months~~quarter ended ~~June 30, 2020~~March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of business, we may become a party to lawsuits involving various matters. The impact and outcome of litigation, if any, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We believe the ultimate resolution of any such current proceeding will not have a material adverse effect on our continued financial position, results of operations or cash flows.

Such current litigation or other legal proceedings are described in, and incorporated by reference in, this “Item 1. Legal Proceedings” of this Form 10-Q from, “Part I - – Item 1. Financial Statements” in the Notes to Consolidated Financial Statements in “Note 6 – ~~Contingencies~~Other Receivables” and “Note 7 – Contingences”. The Company believes that the resolution of currently pending matters will not individually or in the aggregate have a material adverse effect on our financial condition or results of operations. However, assessment of the current litigation or other legal claims could change in light of the discovery of facts not presently known to the Company or by judges, juries or other finders of fact, which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or claims.

Additionally, the outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed with the Commission on March ~~30, 2020~~29, 2021 (the “Form 10-K”), under the heading “Risk Factors”, which risk factors are incorporated by reference herein, except as set forth below, and investors should review the risks provided in the Form 10-K and below, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K for the year ended December 31, ~~2019,~~2020, under “Risk Factors”, and below, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.

The risk factor in the Form 10-K entitled, “We have been, and may in the future be, adversely affected by the global COVID-19 pandemic, the duration and economic, governmental and social impact of which is difficult to predict, which may significantly harm our business, prospects, financial condition and operating results.”, is replaced in its entirety by the below:
We have been, and may in the future be, adversely affected by the global COVID-19 pandemic, the duration and economic, governmental and social impact of which is difficult to predict, which may significantly harm our business, prospects, financial condition and operating results.

During 2020 and ~~following the second quarter of 2020,~~continuing into 2021, there has been a widespread worldwide impact from the COVID-19 pandemic, and we have been, and may in the future be, adversely affected as a result. Numerous government regulations and public advisories, as well as shifting social behaviors, have temporarily limited or closed non-essential transportation, government functions, business activities, and person-to-person interactions, and the duration of such trends is difficult to predict. ~~We currently anticipate that the~~The outbreak of the COVID-19 coronavirus, the global response to such coronavirus, including travel restrictions and quarantines that governments are instituting, has adversely affected our operations, may continue to have an adverse effect on our operations, and/or may have a significant negative impact on our results of operations, the production of pharmaceuticals and our ability to timely obtain pharmaceuticals for resale. ~~In addition,~~Currently, we are experiencing reductions to, and interruptions in, the delivery of supply chain pharmaceuticals that are having a negative impact on our wholesalers and certain technology outsourcing in India and the Philippines. Notwithstanding the above disruptions, our results of operations have not, to date, been materially adversely affected by the pandemic. However, if we continue to experience production difficulties, quality control problems or further shortages in supply of pharmaceuticals in the future, this could ~~also~~ harm our business and results of operations, any of which could have a material adverse effect on our operations and the value of our securities. Currently, we are experiencing reductions to, and interruptions in, the delivery of supply chain pharmaceuticals that we anticipate will have a negative impact on our wholesalers and certain technology outsourcing in India and the Philippines. In addition, employee sicknesses and remote working environments, and the potential negative effect thereof on productivity and internal controls, related to the coronavirus and the federal, state and local responses to such virus, could materially impact our consolidated results for the ~~third quarter and full~~ year for ~~2020.~~2021 and beyond. The COVID-19 outbreak could also restrict our access to capital such as credit facilities and lead to material nonrecurring charges, write-downs, impairments and expenses. The Company is actively and continually monitoring the pandemic’s effect on our businesses and endeavoring to adapt quickly in real time to meet the rapidly-changing demands of our Customers and Suppliers.

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To mitigate the spread of COVID-19, we implemented travel restrictions and remote working arrangements for most of our employees in order to minimize physical contact, and we implemented additional sanitation and personal protection measures. The Company’s employees started working remotely around March 17, 2020, and ~~as a result,~~although productivity ~~may~~did not drop, ~~which~~if it does, it could impact revenues and profitability. The Company’s corporate office is closed through ~~December~~May 31, ~~2020, at~~2021. The office is expected to open for our management team beginning in June 2021, while our remaining employees will continue to work remotely for the ~~earliest, unless the current situation improves.~~time being. These measures might not fully mitigate COVID-19 risks to our workforce and we could experience unusual levels of absenteeism that might impair operations and delay delivery of products. The COVID-19 pandemic affects product manufacturing, supply and transport availability and cost. The pandemic reduces demand for some products due to delays or cancellations of elective medical procedures, consumer self-isolation and business closures, among other reasons. The COVID-19 pandemic also influences shortages of some products, with product allocation resulting in delivery delays for customers.Additionally, as a result of the recent coronavirus outbreak, various states have adopted price gouging laws. Our failure to comply with such laws and regulations could subject us to claims, penalties, fines or lawsuits.
We have been impacted and may be further impacted by COVID-19 as follows:
● As a result of COVID-19, various states have adopted price gouging laws. Our failure to comply with such laws and regulations could subject us to claims, penalties, fines or lawsuits;
● Inventory price fluctuations as a result of supply and demand issues caused by COVID-19 have caused values of inventory to decrease, which has had a direct impact on gross profit and has resulted in a direct write-off of inventory value;
● Payment Terms with customers may be altered or extended, which would have an impact on current ratios and cash flow; and
● There have previously been material impairments with respect to goodwill and may be future material impairments and/or affects on right-of-use assets as the evaluation of the long-term impact to delivery of service or physical space assessments changes.
COVID-19 may cause further disruptions to our business, including, but not limited to:
● causing one or more of our customers to file for bankruptcy protection or shut down, including as a result of broader economic disruption;
● reducing health system or health plan subscription agreement fees generated, as well as visit fees, by customers or providers, as a result of funding constraints related to loss of revenue or employment;
● negatively impacting collections of accounts receivable;
● negatively impacting our ability to facilitate the provision of our telehealth services due to unpredictable demand;
● negatively impacting our ability to forecast our business’s financial outlook;
● creating regulatory uncertainty on our telehealth services, if certain restrictions on reimbursement or the practice of medicine across state lines are reintroduced at some point in the future; and
● harming our business, results of operations and financial condition.

The ongoing impacts of the pandemic may cause a general economic slowdown or recession in one or more markets, disruptions and volatility in global capital markets and other broad and adverse effects on the economy, business conditions, commercial activity and the healthcare industry. The pandemic might impact our business operations, financial position and results of operation in unpredictable ways that depend on highly-uncertain future developments, such as determining the effectiveness of current or future government actions to address the public health or economic impacts of the pandemic. Any of these risks might have a materially adverse impact on our business operations and our financial position or results of operations.
~~We may be further impacted by COVID-19 as follows:~~
● ~~As a result of COVID-19, various states have adopted price gouging laws. Our failure to comply with such laws and regulations could subject us to claims, penalties, fines or lawsuits; and~~
● Inventory price fluctuations as a result of supply and demand issues caused by COVID-19 may cause values of inventory to decrease, which would have a direct impact on gross profit and could result in a direct write-off of inventory value.
● ~~Payment Terms with customers may be altered or extended, which would have an impact on current ratios and cash flow.~~
● ~~There may be material impairments with respect to goodwill and right of use assets as the evaluation of the long-term impact to delivery of service or physical space assessments changes.~~
~~We may have difficulties in sourcing products and inventory due to a variety of causes.~~
We might experience difficulties and delays in sourcing products and inventory due to a variety of causes, such as: difficulties in complying with the legal requirements for export or import of pharmaceuticals or components; suppliers’ failures to satisfy production demand; manufacturing or supply problems such as inadequate resources; real or perceived quality issues; and advanced deposits which are at risk of return if product is not delivered. Difficulties in product manufacturing or access to raw materials could result in supplier production shutdowns, product shortages and other supply disruptions. All of these issues may be exacerbated by the COVID-19 pandemic which to date has resulted in issues with the availability of certain products, resulting in product allocation and delivery delays. Any of these risks might have a materially adverse impact on our business operations and our financial position or results of operations.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no sales of unregistered securities during the quarter ended ~~June 30, 2020~~March 31, 2021 and from the period from ~~July~~April 1, ~~2020~~2021, to the filing date of this report, which have not previously been disclosed in a prior Quarterly Report on Form 10-Q or a Current Report on Form 8-K, ~~except as set forth below:~~if any.
In May 2020, warrants to purchase 25,000 shares of common stock were exercised at $0.06 per share by a former consultant, the Company 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.
We claim an exemption from registration pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act for such issuance, since the foregoing issuance did not involve a public offering, the recipient was (a) an “accredited investor”; and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act. The securities are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom. The securities were not registered under the Securities Act and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Trxade Group, Inc.

By: /s/ Suren Ajjarapu
Suren Ajjarapu

Chief Executive Officer
(Principal Executive Officer)

Date: ~~July 27, 2020~~April 26, 2021

By: /s/ Howard Doss
Howard Doss

Chief Financial Officer
(Principal Accounting/Financial Officer)

Date: ~~July 27, 2020~~April 26, 2021

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EXHIBIT INDEX

Incorporated by Reference
Exhibit No. Description Form File No. Exhibit
Filing Date
Filed Herewith
1.1
Underwriting Agreement dated February 13, 2020, by and between Trxade Group, Inc. and Dawson James Securities, Inc. as the representative of the underwriters named therein
8-K 001-39199 1.1 February 13, 2020
3.1 Second Amended and Restated Certificate of Incorporation of Trxade Group, Inc. S-1 333-234221 3.1 October 15, 2019
3.2 Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (1-for-6 Reverse Stock Split of Common Stock) filed with the Delaware Secretary of State on February 12, 2020, and effective February 13, 2020 8-K 001-39199 3.1 February 13, 2020
3.3 Amended and Restated Bylaws of Trxade Group, Inc. 10-12G/A 000-55218 3.1 July 24, 2014
10.1***
Trxade Group, Inc. Amended and Restated 2019 Equity Incentive Plan 8-K 001-39199 10.1 June 1, 2020
10.2*** Form of Stock Option Agreement (April 2020 Grants to Employees) April 14, 2020 8-K 001-39199 10.2 April 16, 2020
10.3*** Form of Restricted Stock Grant Agreement (Independent Directors 2020 Award, 2020 CFO Award and 2020 Legal Counsel) April 14, 2020 8-K 001-39199 10.3 April 16, 2020
10.4*** April 14, 2020 Executive Employment Agreement with Suren Ajjarapu 8-K 001-39199 10.4 April 16, 2020
10.5*** First Amendment to Executive Employment Agreement with Suren Ajjarapu dated May 5, 2020 8-K 001-39199 10.2 May 7, 2020
10.6*** Restricted Stock Grant Agreement (Mr. Ajjarapu 2020 Performance Bonus)(Updated) May 5, 2020 8-K 001-39199 10.3 May 7, 2020
10.7*** Executive Employment Agreement dated effective June 19, 2020, entered into by and between Trxade Group, Inc. and Howard A. Doss 8-K 001-39199 10.1 June 26, 2020
10.8*** Trxade Group, Inc. Independent Director Compensation Policy adopted April 14, 2020 X
31.1* Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act* X
31.2* Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act* X
32.1** Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act** X
32.2** Certification of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act** X
101.INS XBRL Instance Document X
101.SCH XBRL Taxonomy Extension Schema Document X
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB XBRL Taxonomy Extension Label Linkbase Document X
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X
Incorporated by Reference
Exhibit No. Description Form File No. Exhibit Filing Date Filed Herewith
10.1* Trxade Group, Inc. 2019 Equity Incentive Plan Restricted Stock Grant Agreement
10.2* Trxade Group, Inc. 2019 Equity Incentive Plan Stock Option Agreement
31.1* Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act* X
31.2* Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act* X
32.1** Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act** X
32.2** Certification of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act** X
101.INS XBRL Instance Document X
101.SCH XBRL Taxonomy Extension Schema Document X
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB XBRL Taxonomy Extension Label Linkbase Document X
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X

* Filed herewith.

** Furnished herewith.

*** Indicates management contract or compensatory plan or arrangement.

2625

	June 30, 2020			December 31, 2019
Assets
Current Assets
Cash	$	4,151,044		$	2,871,694
Accounts Receivable, net		3,544,381			792,050
Inventory		1,818,874			56,761
Prepaid Assets		300,067			82,452
Deposits for Inventory purchases		309,000			-
Total Current Assets		10,123,366			3,802,957

Property Plant and Equipment, Net		151,397			174,987

Other Assets
Deposits		21,636			21,636
Deferred Offering Costs		-			88,231
Right of use leased assets		709,911			757,710
Goodwill		725,973			725,973

Total Assets	$	11,732,283		$	5,571,494

Liabilities and Shareholders’ Equity

Current Liabilities
Accounts Payable	$	272,148		$	334,614
Accrued Liabilities		349,850			98,852
Current Portion Lease Liabilities		94,253			87,350
Customer Deposits		3,574			-
Total Current Liabilities		719,825			520,816

Long Term Liabilities
Notes Payable – Related Parties		225,000			225,000
Other Long-term Liabilities – Leases		636,081			685,461
Total Liabilities		1,580,906			1,431,277

Shareholders’ Equity
Series A Preferred Stock, $0.00001 par value; 10,000,000 shares authorized; none issued and outstanding as of June 30, 2020 and December 31, 2019, respectfully		-			-
Common Stock, $0.00001 par value; 100,000,000 shares authorized; 8,062,337 and 6,539,415 shares issued and outstanding, as of June 30, 2020 and December 31, 2019, respectively		81			65
Additional Paid-in Capital		18,909,083			12,535,655
Retained Deficit		(8,757,787	)		(8,395,503	)
Total Shareholders’ Equity		10,151,377			4,140,217

Total Liabilities and Shareholders’ Equity	$	11,732,283		$	5,571,494

	Three months ended						Six months ended
	2020			2019			2020			2019

Revenues	$	6,592,637		$	1,916,414		$	8,795,957		$	3,428,935

Cost of Sales		4,587,865			753,138			5,151,049			1,118,977
Gross Profit		2,004,772			1,163,276			3,644,908			2,309,958

Operating Expenses
General and Administrative		2,540,049			1,030,571			3,991,958			2,005,494

Operating (Loss) Income		(535,277	)		132,705			(347,050	)		304,464

Investment Loss		-			(58,850	)		-			(87,822	)
Interest Expense		(7,310	)		(15,874	)		(15,234	)		(33,432	)
Net (Loss) Income	$	(542,587	)	$	57,981		$	(362,284	)	$	183,210

Net (Loss) Income per Common Share – Basic:	$	(0.07	)	$	0.01		$	(0.05	)	$	0.03

Net (Loss) Income per Common Share – Diluted:	$	(0.07	)	$	0.01		$	(0.05	)	$	0.03

Weighted average Common Shares Outstanding - Basic		7,580,977			5,621,082			7,324,512			5,591,055

Weighted average Common Shares Outstanding - Diluted		7,580,977			6,058,977			7,324,512			6,058,959

	Preferred Stock				Common Stock				Additional Paid-in-			Accumulated			Total Shareholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance at December 31, 2019		-	$	-		6,539,415	$	65	$	12,535,655		$	(8,395,503	)	$	4,140,217
Common Stock issued from offering		-		-		922,219		10		5,994,414			-			5,994,424
Fractional shares issued due to reverse split		-		-		40		-		-			-			-
Stock Issuance Costs		-		-		-		-		(820,586	)		-			(820,586	)
Options Exercised for Cash		-		-		167		-		501			-			501
Warrants Exercised for Cash		-		-		22,529		-		1,352			-			1,352
Warrants Expense		-		-		-		-		79,089			-			79,089
Options Expense		-		-		-		-		61,997			-			61,997
Net Income		-		-		-		-		-			180,303			180,303
Balance at March 31, 2020		-	$	-		7,484,370	$	75	$	17,852,422		$	(8,215,200	)	$	9,637,297

Common Stock Issued for Services		-		-		217,965		2		829,865			-			829,867
Warrants Exercised for Cash		-		-		360,002		4		21,596			-			21,600
Warrants Expense		-		-		-		-		21,294			-			21,294
Options Expense		-		-		-		-		183,906			-			183,906
Net Loss		-		-		-		-		-			(542,587	)		(542,587	)
Balance at June 30, 2020		-	$	-		8,062,337	$	81	$	18,909,083		$	(8,757,787	)	$	10,151,377

	March 31, 2021			December 31, 2020
Assets
Current Assets
Cash	$	5,209,280		$	5,919,578
Accounts Receivable, net		1,936,850			805,043
Inventory		470,122			1,257,754
Prepaid Assets		457,738			151,248
Other Receivables		1,081,250			1,087,675
Total Current Assets		9,155,240			9,221,298

Property Plant and Equipment, Net		160,647			162,397

Other Assets
Deposits		21,636			21,636
Right of use leased assets		355,693			387,371

Total Assets	$	9,693,216		$	9,792,702

Liabilities and Stockholders’ Equity

Current Liabilities
Accounts Payable	$	366,471		$	256,829
Accrued Liabilities		519,179			219,256
Current Portion Lease Liabilities		117,030			131,153
Customer Deposits		10,000			10,000
Notes Payables– Related Party		225,000			225,000
Total Current Liabilities		1,237,680			842,238

Long Term Liabilities
Other Long-Term Liabilities — Leases		253,912			271,306
Total Liabilities		1,491,592			1,113,544

Stockholders’ Equity
Series A Preferred Stock, $0.00001 par value; 10,000,000 shares authorized; none issued and outstanding as of March 31, 2021 and December 31, 2020		-			-
Common Stock, $0.00001 par value; 100,000,000 shares authorized; 8,093,199 shares issued and outstanding as of March 31, 2021 and December 31, 2020		81			81
Additional Paid-in Capital		19,784,616			19,610,631
Accumulated Deficit		(11,583,073	)		(10,931,554	)
Total Stockholders’ Equity		8,201,624			8,679,158

Total Liabilities and Stockholders’ Equity	$	9,693,216		$	9,792,702

	2020			2019

Operating Activities:
Net (Loss) Income	$	(362,284	)	$	183,210

Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation Expense		2,500			2,500
Options expense		245,903			99,990
Warrant Expense		100,383			-
Common Stock issued for services		829,867			-
Bad Debt Expense		9,000			-
Investment Loss		-			87,822
Amortization of right to use asset		47,799			43,939
Changes in operating assets and liabilities:
Accounts Receivable		(2,761,331	)		(279,852	)
Prepaid Assets and other Current Assets		(217,615	)		(70,119	)
Inventory		(1,762,113	)		(466,850	)
Deposits for Inventory purchases		(309,000	)		-
Lease Liability		(42,477	)		(36,276	)
Accounts Payable		(17,871	)		362,599
Customer Deposits		3,574			-
Accrued Liabilities and Other Liabilities		250,998			(6,652	)
Net Cash (used in) operating activities		(3,982,667	)		(79,689	)

Investing Activities:
Purchase of Fixed Assets		(23,505	)		-
Purchase of equity method investment		-			(250,000	)
Net Cash (used in) investing activities		(23,505	)		(250,000	)

Financing Activities:
Payment of Stock Issuance Costs		(732,355	)		-
Proceeds from exercise of Warrants		22,952			166
Proceeds from exercise of Stock Options		501			-
Proceeds from Issuance of Common Stock		5,994,424			-
Net Cash provided by financing activities		5,285,522			166

Net increase (decrease) in Cash		1,279,350			(329,523	)
Cash at Beginning of the Year		2,871,694			869,557
Cash at June 30, 2020 and 2019	$	4,151,044		$	540,034

Supplemental Cash Flow Information
Cash Paid for Interest	$	3,984		$	2,997
Cash Paid for Income Taxes	$	-		$	-

Non-Cash Transactions
Common Stock Issued for Conversion of Note and Accrued Interest	$	-		$	211,983
ROU assets and operating lease obligations recognized	$	-		$	847,441

	2021			2020

Revenues	$	3,053,235		$	2,203,320

Cost of Sales		1,669,924			563,184
Gross Profit		1,383,311			1,640,136

Operating Expenses
General and Administrative		2,027,566			1,451,909

Operating Income (Loss)		(644,255	)		188,227

Interest, net		(7,264	)		(7,924	)
Net Income (Loss)	$	(651,519	)	$	180,303

Net Income per Common Share – Basic:	$	(0.08	)	$	0.03

Net Income per Common Share – Diluted:	$	(0.08	)	$	0.02

Weighted average Common Shares Outstanding Basic		8,093,199			6,971,427

Weighted average Common Shares Outstanding Diluted		8,093,199			7,423,669

	Preferred Stock				Common Stock				Additional Paid-in-		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance at December 31, 2020		-	$	-		8,093,199	$	81	$	19,610,631	$	(10,931,554	)	$	8,679,158
Common Stock issued for Services		-		-		-		-		98,247		-			98,247
Options Expense		-		-		-		-		75,738		-			75,738
Net Income (Loss)		-		-		-		-		-		(651,519	)		(651,519	)
Balance at March 31, 2021		-	$	-		8,093,199	$	81	$	19,784,616	$	(11,583,073	)	$	8,201,624

	For three months ended March 31,
	2021			2020
Numerator:
Net Income (loss)	$	(651,519	)	$	180,303

Numerator for basic and diluted EPS - income available to common Shareholders		(651,519	)	$	180,303

Denominator:
Denominator for basic EPS – Weighted average shares		8,093,199			6,971,427
Dilutive Effect of Common Stock Equivalent		-			452,242
Denominator for diluted EPS – adjusted Weighted average shares and assumed Conversions		8,093,199			7,423,669
Basic income (loss) per common share	$	(0.08	)	$	0.03
Diluted income (loss) per common share	$	(0.08	)	$	0.02

	For three months ended June 30,					For six months ended June 30,
	2020			2019		2020			2019
Numerator:
Net (Loss) Income	$	(542,587	)	$	57,981	$	(362,284	)	$	183,210

Numerator for basic and diluted EPS - income available to common Shareholders		(542,587	)	$	57,981		(362,284	)	$	183,210

Denominator:
Denominator for basic EPS – Weighted average shares		7,580,977			5,621,082		7,324,512			5,591,055
Dilutive Effect of Warrants, Options and Convertible Debt		-			437,877		-			467,904
Denominator for diluted EPS – adjusted Weighted average shares and assumed Conversions		7,580,977			6,058,959		7,324,512			6,058,959
Basic (Loss) Income per common share	$	(0.07	)	$	0.01	$	(0.05	)	$	0.03
Diluted (Loss) Income per common share	$	(0.07	)	$	0.01	$	(0.05	)	$	0.03

	Number Outstanding			Weighted Average Exercise Price		Contractual Life in Years		Intrinsic Value		Number Outstanding		Weighted Average Exercise Price		Contractual Life in Years		Intrinsic Value
Warrants Outstanding as of December 31, 2019		524,480		$	0.42		2.39	$	3,273,897
Warrants Outstanding as of December 31, 2020											82,751	$	1.33		2.73	$	352,951
Warrants granted		-		$	-		-		-		-	$	-		-		-
Warrants expired or forfeited		(8,336	)		9.00		-		-		-	$	-		-		-
Warrants exercised		(382,531	)	$	0.06		-		-		-	$	-		-		-

Warrants Outstanding as of June 30, 2020		133,613		$	0.94		3.91	$	696,140
Warrants Exercisable as of June 30, 2020		63,557		$	1.92		2.12	$	280,007
Warrants Outstanding as of March 31, 2021											82,751	$	1.33		2.48	$	349,157
Warrants Exercisable as of March 31, 2021											60,223	$	1.81		1.34	$	232,462

	~~2020~~
Expected dividend yield		0	%
Weighted-average expected volatility		~~134-236~~106-215	%
Weighted-average risk-free interest rate		0.25	%
Expected life of options		~~5-7~~5 years

	Number Outstanding			Weighted Average Exercise Price		Contractual Life in Years		Intrinsic Value		Number Outstanding		Weighted Average Exercise Price		Contractual Life in Years		Intrinsic Value
Options Outstanding as of December 31, 2019		346,998		$	4.39		6.77	$	817,220
Options Exercisable as of December 31, 2019		207,485		$	5.29		5.53	$	312,338
Options Outstanding as of December 31, 2020											425,817	$	4.44		5.33	$	597,322
Options Exercisable as of December 31, 2020											282,167	$	4.52		4.56	$	384,226
Options granted		78,770		$	4.08		4.36		-		20,000	$	6.55		4.85		-
Options forfeited		-		$	-		-		-		-	$	-		-		-
Options expired		-		$	-		-		-		-	$	-		-		-
Options exercised		(167	)	$	3.00		-		-		-	$	-		-		-

Options Outstanding as of June 30, 2020		425,601		$	4.33		5.92	$	801,715
Options Exercisable as of June 30, 2020		243,668		$	5.09		5.42	$	286,011
Options Outstanding as of March 31, 2021											445,817	$	4.53		5.07	$	586,080
Options Exercisable as of March 31, 2021											304,867	$	4.44		4.52	$	421,737

	Lease 1			Lease 2			Lease 1			Lease 2
Initial Lease Term		December 2017 to January 2021			November 2018 to November 2023			December 2017 to December 2021			November 2018 to November 2023
Renewal Term		January 2021 to December 2024			November 2023 to November 2028			January 2021 to December 2024			November 2023 to November 2028
Initial Recognition of Right to use assets at January 1, 2019	$	534,140		$	313,301
Initial Recognition of right-of-use assets at January 1, 2019							$	534,140		$	313,301
Incremental Borrowing Rate		10	%		10	%		10	%		10	%

Amounts due within twelve months of June 30
2020	$	163,102
Amounts due within twelve months of March 31
2021		167,984		$	146,218
2022		173,038			49,452
2023		178,237			50,949
2024		117,259			52,478
2025					54,052
Thereafter		187,752			147,046
Total minimum lease payments		987,372			500,195
Less: effect of discounting		(257,038	)		(129,253	)
Present value of future minimum lease payments		730,334			370,942
Less: current obligations under leases		94,253			117,030
Long-term lease obligations	$	636,081		$	253,912

Six Months Ended June 30, 2020	Trxade, Inc.		Community Specialty Pharmacy, LLC			Integra Pharma, LLC		Other			Total
Three Months Ended March 31, 2021														Trxade, Inc.		Community Specialty Pharmacy, LLC			Integra Pharma, LLC			Other			Total
Revenue	$	2,914,537	$	870,637		$	5,003,523	$	7,260		$	8,795,957		$	1,236,650	$	397,896		$	1,402,586		$	16,103		$	3,053,235
Gross Profit	$	2,914,537	$	74,835		$	648,276	$	7,260		$	3,644,908		$	1,236,650	$	36,089		$	94,563		$	16,009		$	1,383,311
Segment Assets	$	1,793,747	$	243,603		$	5,041,989	$	4,652,944		$	11,732,283		$	2,053,494	$	(405,348	)	$	3,111,536		$	4,933,534		$	9,693,216
Segment Profit (Loss)	$	1,872,862	$	(72,955	)	$	369,370	$	(2,531,561	)	$	(362,284	)	$	512,293	$	(31,251	)	$	(32,446	)	$	(1,100,115	)	$	(651,519	)

Six Months Ended June 30, 2019	Trxade, Inc.		Community Specialty Pharmacy, LLC			Integra Pharma, LLC			Other			Total
Revenue	$	2,182,668	$	892,357		$	353,910		$	-		$	3,428,935
Gross Profit	$	2,182,668	$	111,977		$	15,313		$	-		$	2,309,958
Segment Assets	$	1,401,724	$	224,863		$	834,082		$	1,217,396		$	3,678,065
Segment Profit (Loss)	$	1,166,543	$	(61,628	)	$	(143,882	)	$	(777,823	)	$	183,210

Three Months Ended March 31, 2020	Trxade, Inc.		Community Specialty Pharmacy, LLC			Integra Pharma, LLC			Other			Total
Revenue	$	1,519,907	$	432,929		$	245,016		$	5,468		$	2,203,320
Gross Profit	$	1,519,907	$	36,108		$	78,653		$	5,468		$	1,640,136
Segment Assets	$	2,055,429	$	280,514		$	1,817,170		$	7,320,791		$	11,473,904
Segment Profit (Loss)	$	972,993	$	(41,245	)	$	(28,883	)	$	(722,562	)	$	180,303

	●	“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

	●	“SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and

	●	“Securities Act” refers to the Securities Act of 1933, as amended.

	●	Overview. Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of MD&A.

	●	Liquidity and Capital Resources. An analysis of changes in our consolidated balance sheets and cash flows and discussion of our financial condition.

	●	Results of Operations. An analysis of our financial results comparing the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 and ~~2019.~~2020.

	●	Critical Accounting Policies. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.

Projected Expenses for 2020-2021	Amount
Projected Expenses for April 2021 to March 2022			Amount
General and administrative (1)	$	5,000,000	$	9,000,000
Total	$	5,000,000	$	9,000,000

	Three Months Ended											Three Months Ended									Percent
	June 30, 2020			June 30, 2019			Change		Percent Change			March 31, 2021			March 31, 2020			Change			Change

Revenues	$	6,592,637		$	1,916,414		$	4,676,223		244.0	%	$	3,053,235		$	2,203,320		$	849,915			39	%
Cost of Sales		4,587,865			753,138			3,834,727		509.2	%		1,669,924			563,184			1,106,740			197	%

Gross Profit		2,004,772			1,163,276			841,496		72.3	%		1,383,311			1,640,136			(256,825	)		(16	)%
Operating Expenses:
General and Administrative (less stock- based compensation expense)		1,504,676			966,560			538,116		55.7	%
Stock-Based Compensation Expense		1,035,373			64,011			971,362		1,517.5	%
Total General and Administrative/Operating Expense		2,540,049			1,030,571			1,509,478		146.5	%
General and Administrative*													1,853,581			1,310,823			542,758			41	%
Warrants and Options Expense													173,985			141,086			32,899			23	%
Total Operating Expense													2,027,566			1,451,909			575,657			40	%

Investment Loss		-			(58,850	)		58,850		100	%
Interest Expense		(7,310	)		(15,874	)		8,564		53.9	%		(7,264	)		(7,924	)		660			(8	)%

Net Income (Loss)	$	(542,587	)	$	57,981		$	(600,568)		(1,035.8	)%
Net Income (loss)												$	(651,519	)	$	180,303		$	(831,822	)		(461	)%

	●	As a result of COVID-19, various states have adopted price gouging laws. Our failure to comply with such laws and regulations could subject us to claims, penalties, fines or lawsuits;

	●	Inventory price fluctuations as a result of supply and demand issues caused by COVID-19 have caused values of inventory to decrease, which has had a direct impact on gross profit and has resulted in a direct write-off of inventory value;

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

	●	There have previously been material impairments with respect to goodwill and may be future material impairments and/or affects on right-of-use assets as the evaluation of the long-term impact to delivery of service or physical space assessments changes.

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

	●	reducing health system or health plan subscription agreement fees generated, as well as visit fees, by customers or providers, as a result of funding constraints related to loss of revenue or employment;

	●	negatively impacting collections of accounts receivable;

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

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

	●	creating regulatory uncertainty on our telehealth services, if certain restrictions on reimbursement or the practice of medicine across state lines are reintroduced at some point in the future; and

	●	harming our business, results of operations and financial condition.

	●	~~As a result of COVID-19, various states have adopted price gouging laws. Our failure to comply with such laws and regulations could subject us to claims, penalties, fines or lawsuits; and~~

	●	Inventory price fluctuations as a result of supply and demand issues caused by COVID-19 may cause values of inventory to decrease, which would have a direct impact on gross profit and could result in a direct write-off of inventory value.

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

	●	~~There may be material impairments with respect to goodwill and right of use assets as the evaluation of the long-term impact to delivery of service or physical space assessments changes.~~

	Trxade Group, Inc.

	By:	/s/ Suren Ajjarapu
		Suren Ajjarapu
		Chief Executive Officer (Principal Executive Officer)

		Date: ~~July 27, 2020~~April 26, 2021

	By:	/s/ Howard Doss
		Howard Doss
		Chief Financial Officer (Principal Accounting/Financial Officer)

		Date: ~~July 27, 2020~~April 26, 2021