SCNX 10-Q

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 March 31, 2021

OR

[ ] 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<br>or other jurisdiction of<br><br>incorporation<br>or organization)		(I.R.S. Employer<br><br>Identification No.)
3840<br>Land O’ Lakes Blvd.
Land<br>O’ Lakes, Florida		34639
(Address<br>of principal executive offices)		(Zip<br>code)

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

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

Title<br>of each class	Trading<br>Symbol(s)		Name<br>of each exchange on which registered
Common<br>Stock, 0.00001 Par Value Per Share	MEDS		The<br>NASDAQ Stock Market LLC<br><br>(The<br>NASDAQ Capital Market)

All values are in US Dollars.

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<br>accelerated filer	[ ]	Accelerated<br>filer	[ ]
Non-accelerated<br>filer	[X]	Smaller<br>reporting company	[X]
Emerging<br>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 8,125,362 shares of the registrant’s common stock outstanding on April 22, 2021, and no shares of preferred stock outstanding.

TRXADE GROUP, INC.

FORM 10-Q

For the Quarter Ended March 31, 2021

TABLE OF CONTENTS

		Page
Cautionary Note Regarding Forward-Looking Statements		1
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)		3
Consolidated Balance Sheets		3
Consolidated Statements of Operations		4
Consolidated Statements of Changes in STOCKHOLDERS’ Equity		5
Consolidated Statements of Cash Flows		6
Notes to Unaudited Consolidated Financial Statements		7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		13
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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		23
ITEM 3. DEFAULTS UPON SENIOR SECURITIES		23
ITEM 4. MINE SAFETY DISCLOSURES		23
ITEM 5. OTHER INFORMATION		23
ITEM 6. EXHIBITS		23
SIGNATURES		24
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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<br>have been adversely affected by COVID-19 and may continue to be adversely affected by COVID-19;
	●	We<br>were recently unprofitable, we have recently generated net losses, and we may incur losses in the future;
	●	We<br>may need additional financing in the future, which may not be available on favorable terms, if at all;
	●	We<br>may not be able to manage our future growth;
	●	Many<br>of our competitors are better established and have resources significantly greater than ours;
	●	We<br>will need to expand our member base or our profit margins to attain profitability;
	●	We<br>face risks associated with our operations within the pharmaceutical distribution market;
	●	We<br>are dependent on our current management;
	●	We<br>rely on third party contracts, which may not be renewed or may be terminated;
	●	We<br>are currently facing and may in the future face difficulties in sourcing products and inventory due to a variety of causes;
	●	We<br>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,<br>have in the past, and may in the future, be forced to write-down inventory;
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	●	We<br>may not receive products or receive refunds for deposited amounts and may experience losses in connection with such deposits;
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	●	We<br>may be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could<br>require us to pay significant damages and limit our ability to operate;
	●	Our<br>business and operations depend on the proper functioning of information systems, critical facilities and distribution networks and<br>a disruption, cyber-attack, failure or destruction of such networks, systems, or technologies may disrupt our business or result<br>in liability;
	●	There<br>may be losses or unauthorized access to or releases of confidential information, including personally identifiable information, that<br>could subject the Company to significant reputational, financial, legal and operational consequences;
	●	We<br>face risks associated with our business in the telehealth market, including risks associated with legal challenges, relationships<br>with third parties and affiliated professionals, our network of qualified providers, competition for services; new technologies,<br>failure to develop widespread brand awareness and regulatory risks;
	●	The<br>health passport market may not achieve and sustain high levels of demand, consumer acceptance and market adoption;
	●	Our<br>certificate of incorporation limits the liability of our officers and directors and provides for indemnification rights;
	●	We<br>incur significant costs to ensure compliance with U.S. and NASDAQ Capital Market reporting and corporate governance requirements;
	●	We<br>may not be able to comply with NASDAQ’s continued listing standards;
	●	Regulatory<br>changes that affect our distribution channels could harm our business;
	●	Healthcare<br>fraud laws are often vague and uncertain, exposing us to potential liability;
	●	New<br>and expanded laws or regulations could have a material adverse effect on our business operations, cash flows or future prospects;
	●	The<br>public health crisis involving the abuse of prescription opioid pain medication could have a material negative effect on our business;
	●	Consolidation<br>in the U.S. healthcare industry may negatively impact our results of operations;
	●	We<br>have identified material weaknesses in our internal control over financial reporting and controls and procedures;
	●	There<br>may not be sufficient liquidity in the market for our securities in order for investors to sell their shares. The market price of<br>our comment stock may continue to be volatile;
	●	Stockholders<br>may experience dilution to future equity sales, the exercise or conversion of outstanding convertible securities or future transactions;
	●	Our<br>Chief Executive Officer and President are our two largest stockholders and, as a result, they can exert control over us and have<br>actual or potential interests that may differ from yours;
	●	Risks<br>associated with the JOBS Act and our status as an emerging growth company;
	●	Risks<br>associated with future acquisitions, including unknown liabilities and difficulty integrating such acquisitions;
	●	Cyber<br>security attacks and website problems; and
	●	Claims,<br>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

March 31, 2021 and December 31, 2020

(unaudited)

	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

All values are in US Dollars.

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

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Trxade Group, Inc.

Consolidated Statements of Operations

For the Three Months Ended March 31, 2021 and 2020

(unaudited)

	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

All values are in US Dollars.

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<br>(Loss)		-	-		-	-	-	(651,519	)	(651,519	)
Balance at March 31, 2021		-	-		8,093,199	81	19,784,616	(11,583,073	)	8,201,624

All values are in US Dollars.

	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

All values are in US Dollars.

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<br>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<br>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	-		-

All values are in US Dollars.

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 Three months ended March 31, 2021 and 2020

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.

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 Health Passport includes health and vaccination status verification via a QR code (a two-dimensional machine-readable optical label), which is available for travel, entry into stadiums, concert venues, events, offices, industrial plants, warehouses, and other physical access points. MedCheks Health Passport stores all of a user’s health records securely in one place.

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, 2020, as filed with the Securities and Exchange Commission on March 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, 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.

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

All values are in US Dollars.

NOTE 2– 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, 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, leaving $225,000 of principal owed under the promissory note. There was a loss recognized on this conversion of $76,500.

At March 31, 2021 and December 31, 2020, total related party debt was $225,000.

NOTE 3 – STOCKHOLDERS’ EQUITY

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 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 $53,550 for the three months ended March 31, 2021.

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 ¼^th^ of such shares on July 1 and October 1, 2020 and January 1 and April 1, 2021. The shares have a fair value of $165,000 and the Company recognized stock-based compensation expense of $82,500 for the three months ended March 31, 2021.

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NOTE 4 – WARRANTS

For the three-month period ended March 31, 2021, no warrants were granted and none expired.

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

The compensation cost related to the warrants granted was $0 and $79,089 for the three months ended March 31, 2021 and 2020, respectively.

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

	Number Outstanding		Weighted Average Exercise Price	Contractual Life in Years		Intrinsic Value
Warrants Outstanding as of December 31, 2020		82,751	1.33		2.73	352,951
Warrants granted		-	-		-	-
Warrants expired or forfeited		-	-		-	-
Warrants exercised		-	-		-	-
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

All values are in US Dollars.

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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 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 three-month period ended March 31, 2021, options to purchase 20,000 shares were granted, none were forfeited and none expired. The options granted during the period vest over a four-year period, the exercise price was $6.55 per share and the options have a 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 March 31, 2021:

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

Total compensation cost related to stock options granted was $75,738 and $61,997 for the three months ended March 31, 2021 and 2020, respectively.

The following table represents stock option activity for the three-month period ended March 31, 2021:

	Number Outstanding		Weighted Average Exercise Price	Contractual Life in Years		Intrinsic Value
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		20,000	6.55		4.85	-
Options forfeited		-	-		-	-
Options expired		-	-		-	-
Options exercised		-	-		-	-
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

All values are in US Dollars.

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 as well as certain unrelated persons, Annapurna Gundlapalli, Gajan Mahendiran and Nexgen Memantine (collectively, defendants), in the Circuit Court of Madison County, Alabama (Case:47-CV-2019-902216.00). The complaint alleged causes of actions against the defendants including fraud in the inducement, relating to certain investments alleged to have been made by plaintiffs in Nexgen Memantine, breach of fiduciary duty, conversion and voidable transactions. The complaint related to certain investments alleged made by the plaintiffs in Nexgen Memantine and certain alleged fraudulent transfers of assets and funds alleged to have been taken by the defendants which are unrelated to the Company. The complaint sought $425,000 in compensatory damages and $1,275,000 in punitive damages. The Company and Mr. Ajjarapu denied in their entirety the plaintiffs’ allegations and filed a motion to dismiss the plaintiffs’ claims against the Company and Mr. Ajjarapu, which motion was granted in May 2020, due to the plaintiffs not being able to establish personal jurisdiction over the defendants, which motion was successful as to all defendants. 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 had no merit whatsoever. The final date for the plaintiffs to appeal the ruling to dismiss the lawsuit passed in August 2020, and there was no appeal. As such, the ruling is final.

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 8 – LEASES

The Company elected the practical expedient under 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
Initial Lease Term	December 2017 to December 2021		November 2018 to November 2023
Renewal Term	January 2021 to December 2024		November 2023 to November 2028
Initial Recognition of right-of-use assets at January 1, 2019	534,140		313,301
Incremental Borrowing Rate	10	%	10	%

All values are in US Dollars.

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 March 31, 2021.

Amounts due within twelve months of March 31
2021	146,218
2022	49,452
2023	50,949
2024	52,478
2025	54,052
Thereafter	147,046
Total minimum lease payments	500,195
Less: effect of discounting	(129,253	)
Present value of future minimum lease payments	370,942
Less: current obligations under leases	117,030
Long-term lease obligations	253,912

All values are in US Dollars.

For the three months ended March 31, 2021 and 2020, amortization of Right of Use Assets was $31,678 and $23,635, respectively.

For the three months ended March 31, 2021 and 2020, amortization of Lease Liability was $31,517 and $20,974, respectively.

NOTE 9 – 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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Three Months Ended<br><br>March 31, 2021	Trxade, Inc.	Community Specialty Pharmacy, LLC		Integra Pharma, LLC		Other		Total
---	---	---	---	---	---	---	---	---	---
Revenue	1,236,650	397,896		1,402,586		16,103		3,053,235
Gross Profit	1,236,650	36,089		94,563		16,009		1,383,311
Segment Assets	2,053,494	(405,348	)	3,111,536		4,933,534		9,693,216
Segment Profit (Loss)	512,293	(31,251	)	(32,446	)	(1,100,115	)	(651,519	)

All values are in US Dollars.

Three Months Ended<br><br>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

All values are in US Dollars.

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.

In connection with and pursuant to the independent director compensation policy previously adopted by the Board of Directors, 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 1 and October 1, 2021 and January 1 and April 1, 2022, subject to such persons continuing to provide services to the Company on such dates, subject to the terms of the Plan and the Restricted Stock Grant Agreements entered into to evidence such awards.

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

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, 2020, filed with the Securities and Exchange Commission on March 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” 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<br>Act” refers to the Securities Exchange Act of 1934, as amended;
	●	“SEC”<br>or the “Commission” refers to the United States Securities and Exchange Commission; and
	●	“Securities<br>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.<br>Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the<br>remainder of MD&A.
	●	Liquidity<br>and Capital Resources. An analysis of changes in our consolidated balance sheets and cash flows and discussion of our<br>financial condition.
	●	Results<br>of Operations. An analysis of our financial results comparing the three months ended March 31, 2021 and 2020.
	●	Critical<br>Accounting Policies. Accounting estimates that we believe are important to understanding the assumptions and judgments<br>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 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 around 12,100+ registered members 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. The U.S. in general and Florida specifically, has recently seen decreases in 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 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 been adversely affected by reductions to, and interruptions in, the delivery of supply chain pharmaceuticals that 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 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 May 31, 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 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.

Although COVID-19 has had a major impact on businesses around the world, to date, the pandemic has not had a significant negative impact 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 new seasonal outbreaks.

Liquidity and Capital Resources

Cash

Cash was $5,209,280 at 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:

	March 31, 2021	December 31, 2020
Cash	5,209,280	5,919,578
Current assets (excluding cash)	3,945,960	3,301,720
Current liabilities (excluding short term debt)	1,012,680	617,238
Short Term Debt	225,000	225,000
Working Capital	7,917,560	8,379,060

All values are in US Dollars.

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 decrease in cash as of March 31, 2021, compared to December 31, 2020, was primarily due to increased spending for the development and marketing of Bonum TeleHealth and MedCheks Health Passport.

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Liquidity Outlook cash explanation.

Cash Requirements

Our primary objectives for the remainder of 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 April 2021 to March 2022	Amount
General and administrative (1)	9,000,000
Total	9,000,000

All values are in US Dollars.

(1)	Includes<br>wages and payroll, legal and accounting, marketing, rent and web development.

We currently anticipate paying the estimated expenses described above through cash on hand and revenues generated from our operations. Since inception, we have funded our operations primarily through debt and equity capital raises and operational revenue.

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. If in the future we require additional funding, we plan to raise 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 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 full year 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 three months ended March 31, 2021 and 2020:

	Three months Ended
	March 31, 2021		March 31, 2020		Change		Percent Change
Net (Loss) Income	(651,519	)	180,303		(831,822	)	(461	%)
Net Cash Provided by (used in):
Operating Activities	(710,298	)	(410,806	)	(299,492	)	(73	%)
Investing Activities	-		(23,505	)	23,505		100	%
Financing Activities	-		5,263,922		(5,263,922	)	(100	)%
Net increase (decrease) in cash	(710,298	)	4,829,611		(5,539,909	)	(115	)%

All values are in US Dollars.

Cash used in operations for the three months ended 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 due to increased spending for the development and marketing of Bonum TeleHealth and MedCheks Health Passport and an increase in Accounts Receivables.

There was no cash used in investing activities for the three months ended March 31, 2021, compared to cash used in investing activities for the three months ended March 31, 2020 of $23,505. Cash used in investing activities for the three months ended March 31, 2020, was associated with the purchase of fixed assets.

Cash provided by financing activities for the three months ended 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 $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 March 31, 2021 Compared to Three Month Period Ended March 31, 2020

	Three Months Ended						Percent
	March 31, 2021		March 31, 2020		Change		Change
Revenues	3,053,235		2,203,320		849,915			39	%
Cost of Sales	1,669,924		563,184		1,106,740			197	%
Gross Profit	1,383,311		1,640,136		(256,825	)		(16	)%
Operating Expenses:
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	%
Interest Expense	(7,264	)	(7,924	)	660			(8	)%
Net Income (loss)	(651,519	)	180,303		(831,822	)		(461	)%

All values are in US Dollars.

* Less warrants and options expense.

Our revenues for the three months ended March 31, 2021 were from the Trxade platform, Community Specialty Pharmacy and Integra Pharma Solutions. Revenues increased by $849,915, compared to the prior period. Integra Pharma Solutions revenue increased to $1,402,586 for the three months ended March 31, 2021, compared to $245,016, in the prior year’s period. The increase was mainly a result of sourcing protective medical gowns. Cost of sales and gross profit for the three-month period ended March 31, 2021, were $1,669,924 and $1,383,311, respectively, and for the three-month period ended March 31, 2020, were $563,184 and $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 March 31, 2021 to $1,853,581, compared to $1,310,823 for the comparable period in 2019. The increase was mainly due to IT development, legal expenses and marketing expenses relating to Bonum Health and MedCheks.

Total stock-based compensation expense increased to $173,985 for the three months ended March 31, 2021, compared to $141,086 for the prior year’s period, due to Board of Directors restricted stock grants.

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

Net loss increased to $651,519 for the three months ended March 31, 2021, compared to net income of $180,303, for the three months ended March 31, 2020, mainly due to increased development of the Trxade Platform, Bonum Health and MedCheks start up development.

Off-Balance Sheet Arrangements

We had no outstanding off-balance sheet arrangements as of 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”. 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 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 quarter ended 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 – 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, 2020, filed with the Commission on March 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, 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 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. The outbreak of the COVID-19 coronavirus, the global response to such coronavirus, including travel restrictions and quarantines that governments are instituting, has adversely affected our operations, may continue to have an adverse effect on our operations, and/or may have a significant negative impact on our results of operations, the production of pharmaceuticals and our ability to timely obtain pharmaceuticals for resale. Currently, we are experiencing reductions to, and interruptions in, the delivery of supply chain pharmaceuticals that are having a negative impact on our wholesalers and certain technology outsourcing in India and the Philippines. 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 harm our business and results of operations, any of which could have a material adverse effect on our operations and the value of our securities. In addition, employee sicknesses and remote working environments, and the potential negative effect thereof on productivity and internal controls, related to the coronavirus and the federal, state and local responses to such virus, could materially impact our consolidated results for the year for 2021 and beyond. 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 although productivity did not drop, if it does, it could impact revenues and profitability. The Company’s corporate office is closed through May 31, 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 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<br>a result of COVID-19, various states have adopted price gouging laws. Our failure to comply with such laws and regulations<br>could subject us to claims, penalties, fines or lawsuits;
	●	Inventory<br>price fluctuations as a result of supply and demand issues caused by COVID-19 have caused values of inventory to decrease,<br>which has had a direct impact on gross profit and has resulted in a direct write-off of inventory value;
	●	Payment<br>Terms with customers may be altered or extended, which would have an impact on current ratios and cash flow; and
	●	There<br>have previously been material impairments with respect to goodwill and may be future material impairments and/or affects on<br>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<br>one or more of our customers to file for bankruptcy protection or shut down, including as a result of broader economic disruption;
	●	reducing<br>health system or health plan subscription agreement fees generated, as well as visit fees, by customers or providers, as a<br>result of funding constraints related to loss of revenue or employment;
	●	negatively<br>impacting collections of accounts receivable;
	●	negatively<br>impacting our ability to facilitate the provision of our telehealth services due to unpredictable demand;
	●	negatively<br>impacting our ability to forecast our business’s financial outlook;
	●	creating<br>regulatory uncertainty on our telehealth services, if certain restrictions on reimbursement or the practice of medicine across<br>state lines are reintroduced at some point in the future; and
	●	harming<br>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.

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

There have been no sales of unregistered securities during the quarter ended March 31, 2021 and from the period from April 1, 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, if any.

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<br>Group, Inc.
	By:	/s/<br>Suren Ajjarapu
		Suren<br>Ajjarapu
		Chief<br>Executive Officer<br><br>(Principal<br>Executive Officer)
		Date:<br>April 26, 2021
	By:	/s/<br>Howard Doss
		Howard<br>Doss
		Chief<br>Financial Officer<br><br>(Principal<br>Accounting/Financial Officer)
		Date:<br>April 26, 2021
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EXHIBIT INDEX

				Incorporated<br>by Reference
Exhibit<br>No.		Description		Form		File<br>No.		Exhibit		Filing<br>Date		Filed<br>Herewith
10.1*		Trxade Group, Inc. 2019 Equity Incentive Plan<br>Restricted Stock Grant Agreement
10.2*		Trxade Group, Inc. 2019 Equity Incentive Plan<br>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<br>Instance Document										X
101.SCH		XBRL<br>Taxonomy Extension Schema Document										X
101.CAL		XBRL<br>Taxonomy Extension Calculation Linkbase Document										X
101.DEF		XBRL<br>Taxonomy Extension Definition Linkbase Document										X
101.LAB		XBRL<br>Taxonomy Extension Label Linkbase Document										X
101.PRE		XBRL<br>Taxonomy Extension Presentation Linkbase Document										X
*	Filed<br>herewith.
---	---
**	Furnished<br>herewith.
***	Indicates<br>management contract or compensatory plan or arrangement.
---	---
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Exhibit 10.1

TRXADE GROUP, INC.

2019 EQUITY INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK GRANT

Capitalized but otherwise undefined terms in this Notice of Restricted Stock Grant and the attached Restricted Stock Grant Agreement shall have the same defined meanings as in the Trxade Group, Inc. Amended and Restated 2019 Equity Incentive Plan (as amended from time to time) (as amended from time to time, the “Plan”).

Grantee<br>Name:
Address:

You have been granted Restricted Stock (“Shares”) subject to the terms and conditions of the Plan and the attached Restricted Stock Grant Agreement, as follows:

Date<br>of Grant:		April<br>15, 2021
Vesting<br>Commencement Date:		April<br>1, 2021
Price<br>Per Share:		$5.13
Total<br>Number of Shares Granted:		10,721
Total<br>Value of Shares Granted:		$55,000
Total<br>Purchase Price:		$0,<br>Issued In Consideration For Services
Agreement<br>Date:		April<br>15, 2021

Vesting Schedule: 1/4th of the Shares vest on July 1 and October 1, 2021 and January 1 and April 1, 2022, subject to the terms of the applicable Restricted Stock Grant Agreement which follows and the Plan.

Page 1 of 9<br><br>2019 Equity Incentive Plan Restricted Stock Grant Agreement

TRXADE GROUP, INC.

2019 EQUITY INCENTIVE PLAN

RESTRICTED STOCK GRANT AGREEMENT

This RESTRICTED STOCK GRANT AGREEMENT (“Agreement”), dated as of the Agreement Date specified on the Notice of Restricted Stock Grant is made by and between Trxade Group, Inc., a Delaware corporation (the “Company”), and the grantee named in the Notice of Restricted Stock Grant (the “Grantee,” which term as used herein shall be deemed to include any successor to Grantee by will or by the laws of descent and distribution, unless the context shall otherwise require).

BACKGROUND

Pursuant to the Plan, the Board (or an authorized Committee thereof), approved the issuance to Grantee, effective as of the date set forth above, of an award of the number of shares of Restricted Stock as is set forth in the attached Notice of Restricted Stock Grant (which is expressly incorporated herein and made a part hereof, the “Notice of Restricted Stock Grant”) at the purchase price per share of Restricted Stock (the “Purchase Price”), if any, set forth in the attached Notice of Restricted Stock Grant, upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual premises and undertakings hereinafter set forth, the parties agree as follows:

1. Grant and Purchase of Restricted Stock. The Company hereby grants to Grantee, and Grantee hereby accepts the Restricted Stock set forth in the Notice of Restricted Stock Grant, subject to the payment by Grantee of the total purchase price, if any, set forth in the Notice of Restricted Stock Grant.

2. Stockholder Rights.

(a) Voting Rights. Until such time as all or any part of the Restricted Stock are forfeited to the Company under this Agreement, if ever, Grantee (or any successor in interest) has the rights of a stockholder, including voting rights, with respect to the Restricted Stock subject, however, to the transfer restrictions or any other restrictions set forth in the Plan.

(b) Dividends and Other Distributions. During the period of restriction, Participants holding Restricted Stock are entitled to all regular cash dividends or other distributions paid with respect to all shares while they are so held. If any such dividends or distributions are paid in shares, such shares will be subject to the same restrictions on transferability and forfeitability as the Restricted Stock with respect to which they were paid.

Page 2 of 9<br><br>2019 Equity Incentive Plan Restricted Stock Grant Agreement

3. Vesting of Restricted Stock.

(a) The Restricted Stock are restricted and subject to forfeiture until vested. The Restricted Stock which have vested and are no longer subject to forfeiture are referred to as “Vested Shares.” All Restricted Stock which have not become Vested Shares are referred to as “Nonvested Shares.”

(b) Restricted Stock will vest and become nonforfeitable in accordance with the vesting schedule contained in the Notice of Restricted Stock Grant.

(c) Any Nonvested Shares will automatically vest and become nonforfeitable if Grantee’s service with the Company ceases owing to the Grantee’s (a) death; or (b) Retirement.

(d) Any Nonvested Shares will vest and become nonforfeitable immediately prior to the date of a Change of Control, provided that the Board (or an authorized committee thereof), in its discretion, may also accelerate the time at which all or any portion of Grantee’s Nonvested Shares will vest prior to a contemplated Change of Control.

(e) Terms used in Section 3 and Section 4 have the following meanings:

(i) “Cause” has the meaning ascribed to such term or words of similar import in Grantee’s written employment or service contract with the Company or its subsidiaries and, in the absence of such agreement or definition, means Grantee’s (i) conviction of, or plea of nolo contendere to, a felony or crime involving moral turpitude; (ii) fraud on or misappropriation of any funds or property of the Company or its subsidiaries, or any affiliate, customer or vendor; (iii) personal dishonesty, incompetence, willful misconduct, willful violation of any law, rule or regulation (other than minor traffic violations or similar offenses), or breach of fiduciary duty which involves personal profit; (iv) willful misconduct in connection with Grantee’s duties or willful failure to perform Grantee’s responsibilities in the best interests of the Company or its subsidiaries; (v) illegal use or distribution of drugs; (vi) violation of any material rule, regulation, procedure or policy of the Company or its subsidiaries, the violation of which could have a material detriment to the Company; or (vii) material breach of any provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by Grantee for the benefit of the Company or its subsidiaries, all as reasonably determined by the Board of Directors of the Company, which determination will be conclusive.

(ii) “Retirement” means Grantee’s retirement from Company employ at or above the age 65 as determined in accordance with the policies of the Company or its subsidiaries, if any, in good faith by the Board of Directors of the Company, which determination will be final and binding on all parties concerned.

(f) Nonvested Shares may not be sold, transferred, assigned, pledged, or otherwise disposed of, directly or indirectly, whether by operation of law or otherwise. The restrictions set forth in this Section will terminate upon a Change of Control.

Page 3 of 9<br><br>2019 Equity Incentive Plan Restricted Stock Grant Agreement

4. Forfeiture of Nonvested Shares. Except as provided herein, if Grantee’s service with the Company ceases for any reason (including Disability) other than Grantee’s (a) Retirement or (b) death, any Nonvested Shares will be automatically forfeited to the Company for no consideration; unless the Board (or an authorized committee thereof) provides otherwise, and provided, however, that the Board (or an authorized committee thereof) may cause any Nonvested Shares immediately to vest and become nonforfeitable if Grantee’s service with the Company is terminated by the Company without Cause.

(a) Legend. Each certificate representing Restricted Stock granted pursuant to the Notice of Restricted Stock Grant may bear a legend substantially as follows:

“THE SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE TRXADE GROUP, INC. 2019 AMENDED AND RESTATED EQUITY INCENTIVE PLAN (AS AMENDED) AND IN A RESTRICTED SHARE GRANT AGREEMENT. A COPY OF SUCH PLAN AND SUCH AGREEMENT MAY BE OBTAINED FROM TRXADE GROUP, INC.”

(b) Escrow of Nonvested Shares. The Company has the right to retain the certificates representing Nonvested Shares in the Company’s possession until such time as all restrictions applicable to such shares have been satisfied.

(c) Removal of Restrictions. The Participant is entitled to have the legend removed from certificates representing Vested Shares.

5. Recapitalizations, Exchanges, Mergers, Etc. The provisions of this Agreement apply to the full extent set forth herein with respect to any and all shares of capital stock of the Company or successor of the Company which may be issued in respect of, in exchange for, or in substitution for the Restricted Stock by reason of any stock dividend, split, reverse split, combination, recapitalization, reclassification, merger, consolidation or otherwise which does not terminate this Agreement. Except as otherwise provided herein, this Agreement is not intended to confer upon any other person except the parties hereto any rights or remedies hereunder.

6. Grantee Representations.

Grantee represents to the Company the following:

(a) Restrictions on Transfer. Grantee acknowledges that the Restricted Stock to be issued to Grantee must be held indefinitely unless subsequently registered and qualified under the Securities Act of 1933, as amended (the “Securities Act”) or unless an exemption from registration and qualification is otherwise available. In addition, Grantee understands that the certificate representing the Restricted Stock will be imprinted with a legend which prohibits the transfer of such Restricted Stock unless they are sold in a transaction in compliance with the Securities Act or are registered and qualified or such registration and qualification are not required in the opinion of counsel acceptable to the Company.

Page 4 of 9<br><br>2019 Equity Incentive Plan Restricted Stock Grant Agreement

(b) Relationship to the Company; Experience. Grantee either has a preexisting business or personal relationship with the Company or any of its officers, directors or controlling persons or, by reason of Grantee’s business or financial experience or the business or financial experience of Grantee’s personal representative(s), if any, who are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent, directly or indirectly, has the capacity to protect Grantee’s own interests in connection with Grantee’s acquisition of the Restricted Stock to be issued to Grantee hereunder. Grantee and/or Grantee’s personal representative(s) have such knowledge and experience in financial, tax and business matters to enable Grantee and/or them to utilize the information made available to Grantee and/or them in connection with the acquisition of the Restricted Stock to evaluate the merits and risks of the prospective investment and to make an informed investment decision with respect thereto.

(c) Grantee’s Liquidity. In reaching the decision to invest in the Restricted Stock, Grantee has carefully evaluated Grantee’s financial resources and investment position and the risks associated with this investment, and Grantee acknowledges that Grantee is able to bear the economic risks of the investment. Grantee (i) has adequate means of providing for Grantee’s current needs and possible personal contingencies, (ii) has no need for liquidity in Grantee’s investment, (iii) is able to bear the substantial economic risks of an investment in the Restricted Stock for an indefinite period and (iv) at the present time, can afford a complete loss of such investment. Grantee’s commitment to investments which are not readily marketable is not disproportionate to Grantee’s net worth and Grantee’s investment in the Restricted Stock will not cause Grantee’s overall commitment to become excessive.

(d) Access to Data. Grantee acknowledges that during the course of this transaction and before deciding to acquire the Restricted Stock, Grantee has been provided with financial and other written information about the Company. Grantee has been given the opportunity by the Company to obtain any information and ask questions concerning the Company, the Restricted Stock, and Grantee’s investment that Grantee felt necessary; and to the extent Grantee availed himself/herself of that opportunity, Grantee has received satisfactory information and answers concerning the business and financial condition of the Company in response to all inquiries in respect thereof.

(e) Risks. Grantee acknowledges and understands that (i) an investment in the Company constitutes a high risk, (ii) the Restricted Stock are highly speculative, and (iii) there can be no assurance as to what investment return, if any, there may be. Grantee is aware that the Company may issue additional securities in the future which could result in the dilution of Grantee’s ownership interest in the Company.

(f) Valid Agreement. This Agreement when executed and delivered by Grantee will constitute a valid and legally binding obligation of Grantee which is enforceable in accordance with its terms.

(g) Residence. The address set forth on the Notice of Restricted Stock Grant is Grantee’s current address and accurately sets forth Grantee’s place of residence.

(h) Tax Consequences. Grantee has reviewed with Grantee’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. Grantee is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Grantee understands that Grantee (and not the Company) is responsible for Grantee’s own tax liability that may arise as a result of the transactions contemplated by this Agreement. Grantee understands that Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income the difference between the purchase price for the Restricted Stock and the fair market value of the Restricted Stock as of the date any restrictions on the Restricted Stock lapse. Grantee understands that Grantee may elect to be taxed at the time the Restricted Stock is purchased rather than when and as the restrictions lapse by filing an election under Section 83(b) of the Code with the Internal Revenue Service within 30 days from the date of purchase. The form for making this election is attached as Exhibit A hereto.

Page 5 of 9<br><br>2019 Equity Incentive Plan Restricted Stock Grant Agreement

GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY ANY ELECTION UNDER SECTION 83(b), EVEN IF GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON GRANTEE’S BEHALF.

7. No Employment Contract Created. The issuance of the Restricted Stock is not to be construed as granting to Grantee any right with respect to continuance of employment or any service with the Company or any of its subsidiaries. The right of the Company or any of its subsidiaries to terminate at will Grantee’s employment or terminate Grantee’s service at any time (whether by dismissal, discharge or otherwise), with or without cause, is specifically reserved, subject to any other written employment or other agreement to which the Company and Grantee may be a party.

8. Tax Withholding. The Company has the power and the right to deduct or withhold, or require Grantee to remit to the Company, an amount sufficient to satisfy Federal, state and local taxes (including the Grantee’s FICA obligation) required by law to be withheld with respect to the grant and vesting of the Restricted Stock.

9. Interpretation. The Restricted Stock are being issued pursuant to the terms of the Plan, and are to be interpreted in accordance therewith. The Board (or an authorized committee thereof) will interpret and construe this Agreement and the Plan, and any action, decision, interpretation or determination made in good faith by the Board (or an authorized committee thereof) will be final and binding on the Company and Grantee.

10. Notices. All notices or other communications which are required or permitted hereunder will be in writing and sufficient if (i) personally delivered or sent by telecopy, (ii) sent by nationally-recognized overnight courier or (iii) sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

(a) if to the Grantee, to the address (or telecopy number) set forth on the Notice of Grant; and

(b) if to the Company, to its principal executive office as specified in any report filed by the Company with the Securities and Exchange Commission or to such address as the Company may have specified to the Grantee in writing, Attention: Corporate Secretary;

or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such communication will be deemed to have been given (i) when delivered, if personally delivered, or when telecopied, if telecopied, (ii) on the first Business Day (as hereinafter defined) after dispatch, if sent by nationally-recognized overnight courier and (iii) on the fifth Business Day following the date on which the piece of mail containing such communication is posted, if sent by mail. As used herein, “Business Day” means a day that is not a Saturday, Sunday or a day on which banking institutions in the city to which the notice or communication is to be sent are not required to be open.

Page 6 of 9<br><br>2019 Equity Incentive Plan Restricted Stock Grant Agreement

11. Specific Performance. Grantee expressly agrees that the Company will be irreparably damaged if the provisions of this Agreement and the Plan are not specifically enforced. Upon a breach or threatened breach of the terms, covenants and/or conditions of this Agreement or the Plan by Grantee, the Company will, in addition to all other remedies, be entitled to a temporary or permanent injunction, without showing any actual damage, and/or decree for specific performance, in accordance with the provisions hereof and thereof. The Board (or an authorized committee thereof) has the power to determine what constitutes a breach or threatened breach of this Agreement or the Plan. Any such determinations will be final and conclusive and binding upon Grantee.

12. No Waiver. No waiver of any breach or condition of this Agreement will be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

13. Grantee Undertaking. Grantee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on Grantee pursuant to the express provisions of this Agreement.

14. Modification of Rights. The rights of Grantee are subject to modification and termination in certain events as provided in this Agreement and the Plan.

15. Governing Law. This Agreement is governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to its conflict or choice of law principles that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

16. Counterparts; Facsimile Execution. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument. Facsimile execution and delivery of this Agreement is legal, valid and binding execution and delivery for all purposes.

17. Entire Agreement. This Agreement (including the Notice of Restricted Stock Grant) and the Plan, constitute the entire agreement between the parties with respect to the subject matter hereof, and supersedes all previously written or oral negotiations, commitments, representations and agreements with respect thereto.

18. Severability. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions of this Agreement, and this Agreement will be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

19. WAIVER OF JURY TRIAL. THE GRANTEE HEREBY EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

[Signature Page Follows]

Page 7 of 9<br><br>2019 Equity Incentive Plan Restricted Stock Grant Agreement

IN WITNESS WHEREOF, the parties hereto have executed this Restricted Share Grant Agreement as of the date first written above.

TRXADE<br>GROUP, INC.
By:
Name:
Title:
GRANTEE:
Name:
Page 8 of 9<br><br>2019 Equity Incentive Plan Restricted Stock Grant Agreement
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SPOUSE’S CONSENT TO AGREEMENT

(Required where Grantee resides in a community property state)

I acknowledge that I have read the Agreement and the Plan and that I know and understand the contents of both. I am aware that my spouse has agreed therein to the imposition of certain forfeiture provisions and restrictions on transferability with respect to the Restricted Stock that are the subject of the Agreement, including with respect to my community interest therein, if any, on the occurrence of certain events described in the Agreement. I hereby consent to and approve of the provisions of the Agreement, and agree that I will abide by the Agreement and bequeath any interest in the Restricted Stock which represents a community interest of mine to my spouse or to a trust subject to my spouse’s control or for my spouse’s benefit or the benefit of our children if I predecease my spouse.

Dated:
Signature:
Print<br>Name:
Page 9 of 9<br><br>2019 Equity Incentive Plan Restricted Stock Grant Agreement
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ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in the taxpayer’s gross income or alternative minimum taxable income, as the case may be, for the current taxable year, as compensation for services the excess (if any) of the fair market value of the shares described below over the amount paid for those shares:

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

Taxpayer:
Spouse:
Name:
Address:
Identification<br>No.:
Taxable<br>Year:

2. The property with respect to which the election is made is described as follows: __________ shares (the “Shares”) of the Common Stock of Trxade Group, Inc., a Delaware corporation (the “Company”).

3. The date on which the property was transferred is:___________________ ,______.

4. The property is subject to the following restrictions: The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company. These restrictions lapse upon the satisfaction of certain conditions contained in such agreement.

5. The fair market value of the property at the time of transfer (determined without regard to any restriction other than a nonlapse restriction as defined in § 1.83-3(h) of the Income Tax Regulations) is: $_______ per share x ________ shares = $___________.

6. For the property transferred, the undersigned paid $______ per share x _________ shares = $______________.

7. The amount to include in gross income is $______________. [The result of the amount reported in Item 5 minus the amount reported in Item 6.]

The undersigned taxpayer will file this election with the Internal Revenue Service office with which taxpayer files his or her annual income tax return not later than 30 days after the date of transfer of the property. A copy of the election also will be furnished to the person for whom the services were performed. Additionally, the undersigned will include a copy of the election with his or her income tax return for the taxable year in which the property is transferred. The undersigned is the person performing the services in connection with which the property was transferred.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated: ______________________, _____

___________________________

Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: ______________________, _____

_________________________

Spouse of Taxpayer

Exhibit 10.2

TRXADE GROUP, INC.

2019 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms in the Stock Option Agreement (the “Option Agreement”) have the same meanings as defined in the Trxade Group, Inc. Amended and Restated 2019 Equity Incentive Plan (as amended from time to time, the “Plan”).

I. NOTICE OF STOCK OPTION GRANT

	Optionee:
	Address:

You have been granted an Option to purchase Common Stock of the Company (the “Option”), subject to the terms and conditions of the Plan and this Option Agreement, as follows:

	Grant<br>Date:	_________________
	Vesting<br>Commencement Date:	_________________
	Exercise<br>Price per Share:	$________________
	Total<br>Number of Shares Granted:	_________________
	Total<br>Exercise Price:	$________________
	Type<br>of Option:	Incentive<br>Stock Option (ISO)
	Expiration<br>Date:	_________________

Vesting Schedule: 1/4^th^ of such Options vest on the first, second, third and fourth anniversaries of the Grant Date, subject to the terms hereof and the Plan.

To the extent vested, this Option will be exercisable for three (3) months following the Termination of Service of Optionee, unless termination is due to Optionee’s death or Disability, in which case this Option will be exercisable for twelve (12) months following the Termination of Service of Optionee. In the event of termination due to Optionee’s death, the Company shall use commercially reasonable efforts to notify Optionee’s estate of the exercisability of the Option following Optionee’s death. Notwithstanding the foregoing sentence, in no event may this Option be exercised following the Termination of Service of Optionee as determined by the Company’s Board to be for Cause or after the Expiration Date as provided above and this Option may be subject to earlier termination as provided in the Plan.

“Cause” has the meaning ascribed to such term or words of similar import in Optionee’s written employment or service contract with the Company or its parent or any subsidiary and, in the absence of such agreement or definition, means Optionee’s (i) conviction of, or plea of nolo contendere to, a felony or any other crime involving moral turpitude; (ii) fraud on or misappropriation of any funds or property of the Company or its subsidiaries, or any affiliate, customer or vendor; (iii) personal dishonesty, incompetence, willful misconduct, willful violation of any law, rule or regulation (other than minor traffic violations or similar offenses), or breach of fiduciary duty which involves personal profit; (iv) willful misconduct in connection with Optionee’s duties or willful failure to perform Optionee’s responsibilities in the best interests of the Company or its subsidiaries; (v) illegal use or distribution of drugs; (vi) violation of any material rule, regulation, procedure or policy of the Company or its subsidiaries, the violation of which could have a material detriment to the Company; or (vii) material breach of any provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by Optionee for the benefit of the Company or its subsidiaries, all as reasonably determined by the Company’s Board of Directors, which determination will be conclusive.

Legends.

(a) All certificates representing the Shares issued upon exercise of this Option shall, prior to such date as the Plan and Common Stock hereunder are covered by a valid Form S-8 or similar U.S. federal registration statement, where applicable, have endorsed thereon the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF U.S. FEDERAL, STATE AND FOREIGN SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND QUALIFICATION UNDER U.S. FEDERAL, STATE AND FOREIGN SECURITIES LAWS IS NOT REQUIRED.

2019 Stock Option Agreement<br><br>Page 2 of 11

(b) If the Option is an incentive stock option (ISO), then the following legend will be included:

THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED UPON EXERCISE OF AN INCENTIVE STOCK OPTION, AND THE COMPANY MUST BE NOTIFIED IF THE SHARES SHALL BE TRANSFERRED BEFORE THE LATER OF THE TWO (2) YEAR ANNIVERSARY OF THE DATE OF GRANT OF THE OPTION OR THE ONE (1) YEAR ANNIVERSARY OF THE DATE ON WHICH THE OPTION WAS EXERCISED. THE REGISTERED HOLDER MAY RECOGNIZE ORDINARY INCOME IF THE SHARES ARE TRANSFERRED BEFORE SUCH DATE.

II. AGREEMENT

1. Grant of Option. The Administrator grants to the Optionee named in the Notice of Stock Option Grant in Part I of this Option Agreement, an Option to purchase the number of Shares set forth in the Notice of Stock Option Grant, at the exercise price per Share set forth in the Notice of Stock Option Grant (the “Exercise Price”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference. In the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan prevail.

If designated in the Notice of Stock Option Grant as an Incentive Stock Option, this Option is intended to qualify as an Incentive Stock Option as defined in Code section 422. Nevertheless, to the extent that it exceeds the $100,000 rule of Code section 422(d), this Option will be treated as a Nonstatutory/Non-Qualified Stock Option.

2. Exercise of Option.

(a) Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Stock Option Grant and with the applicable provisions of the Plan and this Option Agreement.

(b) Method of Exercise. This Option is exercisable by (i) delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) or in a manner and pursuant to procedures as the Administrator may determine, which will state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and other representations and agreements as may be required by the Company and (ii) paying the Company in full the aggregate Exercise Price as to all Shares being acquired, together with any applicable tax withholding.

This Option will be deemed to be exercised upon receipt by the Company of a fully executed Exercise Notice accompanied by the aggregate Exercise Price, together with any applicable tax withholding.

2019 Stock Option Agreement<br><br>Page 3 of 11

No Shares will be issued pursuant to the exercise of an Option unless the issuance and exercise of Shares complies with applicable state and federal laws (“Applicable Laws”). Assuming compliance, for income tax purposes the Shares will be considered transferred to the Optionee on the date on which the Option is exercised with respect to the Shares.

3. Method of Payment. The aggregate Exercise Price may be paid by any of the following, or a combination thereof, at the election of the Optionee:

(a) cash;

(b) check;

(c) to the extent not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002, a promissory note;

(d) other shares of Common Stock, provided Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option will be exercised;

(e) by asking the Company to withhold Shares from the total Shares to be delivered upon exercise equal to the number of Shares having a value equal to the aggregate Exercise Price of the Shares being acquired;

(f) any combination of the foregoing methods of payment; or

(g) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

4. Restrictions on Exercise. This Option may not be exercised if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Laws. The Company will be relieved of any liability with respect to any delayed issuance of shares or its failure to issue shares if such delay or failure is necessary to comply with Applicable Laws.

5. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of the Plan and this Option Agreement are binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

6. Term of Option. This Option may be exercised only within the term set out in the Notice of Stock Option Grant, and may be exercised during the term only in accordance with the Plan and the terms of this Option.

2019 Stock Option Agreement<br><br>Page 4 of 11

7. Tax Obligations.

(a) Withholding Taxes. Optionee agrees to arrange for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if withholding amounts are not delivered at the time of exercise.

(b) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Optionee is an Incentive Stock Option (“ISO”), and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Grant Date, or (ii) the date one (1) year after the date of exercise, the Optionee must immediately notify the Company of the disposition in writing. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee.

(c) Code Section 409A. Under Code section 409A, an Option that was granted with a per Share exercise price that is determined by the Internal Revenue Service (the “IRS”) to be less than the Fair Market Value of a Share on the Grant Date (a “discount option”) may be considered deferred compensation. An Option that is a discount option may result in (i) income recognition by the Optionee prior to the exercise of the Option, (ii) an additional twenty percent (20%) tax, and (iii) potential penalty and interest charges. Optionee acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the per Share Exercise Price of this Option equals or exceeds Fair Market Value of a Share on the Grant Date in a later examination. Optionee agrees that if the IRS determines that the Option was granted with a per Share exercise price that was less than the Fair Market Value of a Share on the Grant Date, Optionee will be solely responsible for any and all resulting tax consequences.

8. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE OR DIRECTOR AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING OPTIONEE) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER. OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR DIRECTOR FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING OPTIONEE) TO TERMINATE OPTIONEE’S RELATIONSHIP AS AN EMPLOYEE OR DIRECTOR AT ANY TIME, WITH OR WITHOUT CAUSE.

2019 Stock Option Agreement<br><br>Page 5 of 11

9. Notices. All notices or other communications which are required or permitted hereunder will be in writing and sufficient if (i) personally delivered or sent by telecopy, (ii) sent by nationally-recognized overnight courier or (iii) sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

(a) if to the Optionee, to the address (or telecopy number) set forth on the Notice of Stock Option Grant; and

(b) if to the Company, to its principal executive office as specified in any report filed by the Company with the Securities and Exchange Commission or to such address as the Company may have specified to the Optionee in writing, Attention: Corporate Secretary;

or to any other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any communication will be deemed to have been given (i) when delivered, if personally delivered, or when telecopied, if telecopied, (ii) on the first Business Day (as hereinafter defined) after dispatch, if sent by nationally-recognized overnight courier and (iii) on the fourth Business Day following the date on which the piece of mail containing the communication is posted, if sent by mail. As used herein, “Business Day” means a day that is not a Saturday, Sunday or a day on which banking institutions in the city to which the notice or communication is to be sent are not required to be open.

10. Specific Performance. Optionee expressly agrees that the Company will be irreparably damaged if the provisions of this Option Agreement and the Plan are not specifically enforced. Upon a breach or threatened breach of the terms, covenants and/or conditions of this Option Agreement or the Plan by the Optionee, the Company will, in addition to all other remedies, be entitled to a temporary or permanent injunction, without showing any actual damage, and/or decree for specific performance, in accordance with the provisions hereof and thereof. The Administrator has the power to determine what constitutes a breach or threatened breach of this Option Agreement or the Plan. The Administrator’s determinations will be final and conclusive and binding upon the Optionee.

11. No Waiver. No waiver of any breach or condition of this Option Agreement will be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

12. Optionee Undertaking. The Optionee agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Option Agreement.

13. Modification of Rights. The rights of the Optionee are subject to modification and termination in certain events as provided in this Option Agreement and the Plan.

2019 Stock Option Agreement<br><br>Page 6 of 11

14. Governing Law. This Agreement is governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to its conflict or choice of law principles that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

15. Counterparts; Facsimile Execution. This Option Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together constitute one and the same instrument. Facsimile execution and delivery of this Option Agreement is legal, valid and binding execution and delivery for all purposes.

16. Entire Agreement. The Plan, this Option Agreement, and upon execution, the Exercise Notice, constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

17. Severability. In the event one or more of the provisions of this Option Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions of this Option Agreement, and this Option Agreement will be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

18. WAIVER OF JURY TRIAL. THE OPTIONEE EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS OPTION AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

[Remainder of page left intentionally blank.]

2019 Stock Option Agreement<br><br>Page 7 of 11

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

OPTIONEE			TRXADE<br>GROUP, INC.
Signature			By:
Print<br>Name:			Print<br>Name:
Address:			Address:
Date<br>Signed:			Date<br>Signed:
2019 Stock Option Agreement<br><br>Page 8 of 11
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EXHIBIT A

2019 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

Trxade Group, Inc.

3840 Land O’ Lakes Blvd

Land O’ Lakes, Florida 34639

Attention: Trxade Group, Inc., Corporate Secretary

1. Exercise of Option. Effective as of today, _____________, _____, the undersigned (“Optionee”) elects to exercise Optionee’s option to purchase ___________ shares of the Common Stock (the “Shares”) of Trxade Group, Inc. (the “Company”) under and pursuant to the Trxade Group, Inc. Amended and Restated 2019 Equity Incentive Plan (as amended from time to time, the “Plan”) and the Stock Option Agreement dated _______________ and effective _____________ (the “Option Agreement”).

2. Delivery of Payment. Optionee herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

3. Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

4. Rights as Stockholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder exists with respect to the Optioned Stock, notwithstanding the exercise of the Option. Subject to the requirements of Section 6 below, the Shares will be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment will be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in the Plan.

5. Tax Consultation. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

6. Refusal to Transfer. The Company will not (i) transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice, or (ii) be required to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares have been so transferred.

2019 Stock Option Agreement<br><br>Page 9 of 11

7. Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice inures to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice is binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

8. Interpretation. Any dispute regarding the interpretation of this Exercise Notice will be submitted by Optionee or by the Company forthwith to the Administrator for review at its next regular meeting. The resolution of disputes by the Administrator will be final and binding on all parties.

9. Governing Law; Severability. This Exercise Notice is governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to its conflict or choice of law principles that might otherwise refer construction or interpretation of this Exercise to the substantive law of another jurisdiction. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Exercise Notice will continue in full force and effect.

10. Optionee Representations.

(a) With respect to a transaction occurring prior to such date as the Plan and Common Stock thereunder are covered by a valid Form S-8 or similar U.S. federal registration statement, Optionee agrees that in no event shall Optionee make a disposition of any of the Common Stock, unless and until: (i) Optionee shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the proposed disposition; and (ii) Optionee shall have furnished the Company with an opinion of counsel satisfactory to the Company to the effect that (A) such disposition will not require registration or qualification of such Common Stock under applicable U.S. federal, state or foreign securities laws or (B) appropriate action necessary for compliance with the U.S. federal, state or foreign securities laws has been taken; or (iii) the Company shall have waived, expressly and in writing, its rights under clauses (i) and (ii) of this Subsection.

(b) Optionee understands that if a registration statement covering the Common Stock under the Securities Act is not in effect when Optionee desires to sell the Common Stock, Optionee may be required to hold the Common Stock for an indeterminate period. Optionee also acknowledges that Optionee understands that any sale of the Common Stock which might be made by Optionee in reliance upon Rule 144 under the Securities Act may be made only in limited amounts in accordance with the terms and conditions of that Rule.

11. Other Documents. Optionee hereby acknowledges receipt or the right to receive a document providing the information required by Rule 428(b)(1) promulgated under the Securities Act of 1933, as amended, including, but not limited to, the information required by Part I of Form S-8, if applicable.

12. Notices. Any notice required or permitted hereunder will be provided in writing and deemed effective if provided in the manner specified in the Option Agreement.

13. Further Instruments. The parties agree to execute any further instruments and to take any further action as may be reasonably necessary to carry out the purposes and intent of the Option Agreement and this Exercise Notice.

14. Entire Agreement. The Plan and Option Agreement are incorporated herein by reference. This Exercise Notice, the Plan, and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

[Signature page follows.]

2019 Stock Option Agreement<br><br>Page 10 of 11
Submitted by:		Accepted<br>by:
---	---	---	---
OPTIONEE		TRXADE<br>GROUP, INC.
Signature		By:
Print<br>Name:		Print<br>Name:
Address:		Date<br>Received:
2019 Stock Option Agreement<br><br>Page 11 of 11
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Exhibit 31.1

Certification of Chief Executive Officer

I, Suren Ajjarapu, certify that:

1.	I<br>have reviewed this quarterly report on Form 10-Q of Trxade Group, Inc. (the “registrant”);
2.	Based<br>on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary<br>to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect<br>to the period covered by this report;
3.	Based<br>on my knowledge, the financial statements, and other financial information included in this report, fairly present in all<br>material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods<br>presented in this report;
4.	The<br>registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and<br>procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined<br>in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed<br>such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,<br>to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to<br>us by others within those entities, particularly during the period in which this report is being prepared;
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	b)	Designed<br>such internal control over financial reporting, or caused such internal control over financial reporting to be designed under<br>our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial<br>statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated<br>the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions<br>about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based<br>on such evaluation; and
	d)	Disclosed<br>in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s<br>most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially<br>affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;<br>and
5.	The<br>registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control<br>over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors<br>(or persons performing the equivalent functions):
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	a)	All<br>significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which<br>are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial<br>information; and
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	b)	Any<br>fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s<br>internal control over financial reporting.
Date:<br>April 26, 2021
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/s/<br>Suren Ajjarapu
Suren<br>Ajjarapu
Chief<br>Executive Officer (Principal Executive Officer)

Exhibit 31.2

Certification of Chief Financial Officer

I, Howard Doss, certify that:

1.	I<br>have reviewed this quarterly report on Form 10-Q of Trxade Group, Inc. (the “registrant”);
2.	Based<br>on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary<br>to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect<br>to the period covered by this report;
3.	Based<br>on my knowledge, the financial statements, and other financial information included in this report, fairly present in all<br>material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods<br>presented in this report;
4.	The<br>registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and<br>procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined<br>in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed<br>such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,<br>to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to<br>us by others within those entities, particularly during the period in which this report is being prepared;
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	b)	Designed<br>such internal control over financial reporting, or caused such internal control over financial reporting to be designed under<br>our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial<br>statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated<br>the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions<br>about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based<br>on such evaluation; and
	d)	Disclosed<br>in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s<br>most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially<br>affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;<br>and
5.	The<br>registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control<br>over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors<br>(or persons performing the equivalent functions):
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	a)	All<br>significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which<br>are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial<br>information; and
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	b)	Any<br>fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s<br>internal control over financial reporting.
Date:<br>April 26, 2021
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/s/<br>Howard Doss
Howard<br>Doss
Chief<br>Financial Officer (Principal Accounting/Financial Officer)

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

I, Suren Ajjarapu, Chief Executive Officer of Trxade Group, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

	(i)	The<br>Quarterly Report on Form 10-Q of Trxade Group, Inc. for the quarter ended March 31, 2021 (the “Report”)<br>fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934,<br>and
	(ii)	The<br>information contained in the Report fairly presents, in all material respects, the financial condition and results of operations<br>of the Company at the dates and for the periods indicated.
Dated:<br>April 26, 2021
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/s/<br>SUREN AJJARAPU
Suren<br>Ajjarapu
Chief<br>Executive Officer (Principal Executive Officer)

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

I, Howard Doss, Chief Financial Officer of Trxade Group, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

	(i)	The<br>Quarterly Report on Form 10-Q of Trxade Group, Inc. for the quarter ended March 31, 2021 (the “Report”)<br>fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934,<br>and
	(ii)	The<br>information contained in the Report fairly presents, in all material respects, the financial condition and results of operations<br>of the Company at the dates and for the periods indicated.
Dated:<br>April 26, 2021
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/s/<br>HOWARD DOSS
Howard<br>Doss
Chief<br>Financial Officer (Principal Accounting/Financial Officer)