TRxADE HEALTH, INC - Quarter Report: 2021 September (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 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 HEALTH, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 46-3673928 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| 3840 Land O’ Lakes Blvd. | ||
| Land O’ Lakes, Florida | 34639 | |
| (Address of principal executive offices) | (Zip code) |
(800) 261-0281
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, $0.00001 Par Value Per Share | MEDS | The NASDAQ Stock Market LLC (The NASDAQ Capital Market) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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 ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☒ |
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 ☒
There were shares of the registrant’s common stock outstanding on October 25, 2021, and no shares of preferred stock outstanding.
TRxADE HEALTH, INC.
FORM 10-Q
For the Quarter Ended September 30, 2021
TABLE OF CONTENTS
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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 continued 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 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.
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Summary Risk Factors
We face risks and uncertainties related to our business, many of which are beyond our control. In particular, risks associated with our business include:
| ● | We have in the past been adversely affected by COVID-19 and may continue to be adversely affected by COVID-19 and/or governmental responses thereto; | |
| ● | We were recently unprofitable, we have recently generated net losses, and we may incur losses in the future; | |
| ● | We may need additional financing in the future, which may not be available on favorable terms, if at all; | |
| ● | We may not be able to manage our future growth; | |
| ● | Many of our competitors are better established and have resources significantly greater than ours; | |
| ● | We will need to expand our member base or our profit margins to attain profitability; | |
| ● | We face risks associated with our operations within the pharmaceutical distribution market; | |
| ● | We are dependent on our current management; | |
| ● | We rely on third party contracts, which may not be renewed or may be terminated; | |
| ● | We are currently facing and may in the future face difficulties in sourcing products and inventory due to a variety of causes; | |
| ● | We have in the past, and may in the future, not be able to sell our inventory, at or above the price we acquired such inventory for, have in the past, and may in the future, be forced to write-down inventory; | |
| ● | We may not receive products or receive refunds for deposited amounts and may experience losses in connection with such deposits; | |
| ● | We may be subject to claims that we violated intellectual property rights of others, which are extremely costly to defend and could require us to pay significant damages and limit our ability to operate; | |
| ● | Our business and operations depend on the proper functioning of information systems, critical facilities and distribution networks and a disruption, cyber-attack, failure or destruction of such networks, systems, or technologies may disrupt our business or result in liability; | |
| ● | There may be losses or unauthorized access to or releases of confidential information, including personally identifiable information, that could subject the Company to significant reputational, financial, legal and operational consequences; | |
| ● | We face risks associated with our business in the telehealth market, including risks associated with legal challenges, relationships with third parties and affiliated professionals, our network of qualified providers, competition for services; new technologies, failure to develop widespread brand awareness and regulatory risks; | |
| ● | The health passport market may not achieve and sustain high levels of demand, consumer acceptance and market adoption; | |
| ● | The health passport market is rapidly changing and the need for such services will continue to change; the Company’s health passport application and services may not be adopted, may not ultimately be needed, and may be incompatible with other offerings and/or more widely adopted products; | |
| ● | Our certificate of incorporation limits the liability of our officers and directors and provides for indemnification rights; |
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| ● | We incur significant costs to ensure compliance with U.S. and NASDAQ Capital Market reporting and corporate governance requirements; | |
| ● | We may not be able to comply with NASDAQ’s continued listing standards; | |
| ● | Regulatory changes that affect our distribution channels could harm our business; | |
| ● | Healthcare fraud laws are often vague and uncertain, exposing us to potential liability; | |
| ● | New and expanded laws or regulations could have a material adverse effect on our business operations, cash flows or future prospects; | |
| ● | The public health crisis involving the abuse of prescription opioid pain medication could have a material negative effect on our business; | |
| ● | Consolidation in the U.S. healthcare industry may negatively impact our results of operations; | |
| ● | We have identified material weaknesses in our internal control over financial reporting and controls and procedures; | |
| ● | There may not be sufficient liquidity in the market for our securities in order for investors to sell their shares. The market price of our comment stock may continue to be volatile; | |
| ● | Stockholders may experience dilution to future equity sales, the exercise or conversion of outstanding convertible securities or future transactions; | |
| ● | Our Chief Executive Officer and President are our two largest stockholders and, as a result, they can exert control over us and have actual or potential interests that may differ from yours; | |
| ● | Risks associated with the JOBS Act and our status as an emerging growth company; | |
| ● | Risks associated with future acquisitions, including unknown liabilities and difficulty integrating such acquisitions; | |
| ● | Cyber security attacks and website problems; | |
| ● | Claims, litigation, government investigations, and other proceedings that may adversely affect our business and results of operations; | |
| ● | Other risk factors included under “Risk Factors” in our latest Annual Report on Form 10-K and set forth below under “Risk Factors”. |
All forward-looking statements speak only at the date of the filing of this Report. The reader should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Report are reasonable, we provide no assurance that these plans, intentions or expectations will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Report and our Annual Report on Form 10-K for the year ended December 31, 2020. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf. We do not undertake any obligation to update or revise publicly any forward-looking statements except as required by law, including the securities laws of the United States and the rules and regulations of the SEC.
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PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRxADE HEALTH, INC.
Consolidated Balance Sheets
September 30, 2021, and December 31, 2020
(unaudited)
| September 30, 2021 | December 31, 2020 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 3,571,889 | $ | 5,919,578 | ||||
| Accounts Receivable, net | 1,008,816 | 805,043 | ||||||
| Inventory | 94,822 | 1,257,754 | ||||||
| Prepaid Assets | 435,747 | 151,248 | ||||||
| Deferred Offering Costs | 78,000 | - | ||||||
| Other Receivables | - | 1,087,675 | ||||||
| Total Current Assets | 5,189,274 | 9,221,298 | ||||||
| Property Plant and Equipment, Net | 13,256 | 162,397 | ||||||
| Other Assets | ||||||||
| Deposits | 21,636 | 21,636 | ||||||
| Right of use leased assets | 289,935 | 387,371 | ||||||
| Total Assets | $ | 5,514,101 | $ | 9,792,702 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | 275,220 | $ | 256,829 | ||||
| Accrued Liabilities | 316,081 | 219,256 | ||||||
| Current Portion Lease Liabilities | 63,560 | 131,153 | ||||||
| Customer Deposits | - | 10,000 | ||||||
| Notes Payables– Related Party | - | 225,000 | ||||||
| Total Current Liabilities | 654,861 | 842,238 | ||||||
| Long Term Liabilities | ||||||||
| Other Long-Term Liabilities — Leases | 241,945 | 271,306 | ||||||
| Total Liabilities | 896,806 | 1,113,544 | ||||||
| Stockholders’ Equity | ||||||||
| Series A Preferred Stock, $par value shares authorized; issued and outstanding as of September 30, 2021, and December 31, 2020 | - | - | ||||||
| Common Stock, $par value; shares authorized; and shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively | 82 | 81 | ||||||
| Additional Paid-in Capital | 20,080,310 | 19,610,631 | ||||||
| Accumulated Deficit | (15,463,097 | ) | (10,931,554 | ) | ||||
| Total Stockholders’ Equity | 4,617,295 | 8,679,158 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 5,514,101 | $ | 9,792,702 | ||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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TRxADE HEALTH, INC.
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2021, and 2020
(unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues | $ | 2,550,046 | $ | 6,332,269 | $ | 7,501,535 | $ | 15,128,226 | ||||||||
| Cost of Sales | 1,269,005 | 4,402,967 | 3,995,792 | 9,554,016 | ||||||||||||
| Gross Profit | 1,281,041 | 1,929,302 | 3,505,743 | 5,574,210 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Loss on Inventory Investment | 1,285 | - | 1,226,426 | - | ||||||||||||
| General and Administrative | 2,575,882 | 1,783,481 | 6,789,286 | 5,775,439 | ||||||||||||
| Operating Income (Loss) | (1,296,126 | ) | 145,821 | (4,509,969 | ) | (201,229 | ) | |||||||||
| Interest Expense | (5,622 | ) | (7,430 | ) | (21,574 | ) | (22,664 | ) | ||||||||
| Net Income (Loss) | $ | (1,301,748 | ) | $ | 138,391 | $ | (4,531,543 | ) | $ | (223,893 | ) | |||||
| Net (Loss) Income per Common Share – Basic and Diluted: | $ | (0.16 | ) | $ | 0.02 | $ | (0.56 | ) | $ | (0.03 | ) | |||||
| Weighted average Common Shares Outstanding – Basic and Diluted | 8,163,522 | 8,063,043 | 8,126,689 | 7,572,954 | ||||||||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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TRxADE HEALTH, INC.
Consolidated Statements of Changes in Shareholders’ Equity
For the Three and Nine Months Ended September 30, 2021, and 2020
(unaudited)
| Preferred Stock | Common Stock | Additional Paid-in- | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance at December 31, 2020 | - | $ | 8,093,199 | $ | 81 | $ | 19,610,631 | $ | (10,931,554 | ) | $ | 8,679,158 | ||||||||||||||||
| Common Stock issued for Services | - | - | - | - | 98,247 | - | 98,247 | |||||||||||||||||||||
| Options Expense | - | - | - | - | 75,738 | - | 75,738 | |||||||||||||||||||||
| Net Income (Loss) | - | - | - | - | - | (651,519 | ) | (651,519 | ) | |||||||||||||||||||
| Balance at March 31, 2021 | - | $ | 8,093,199 | $ | 81 | $ | 19,784,616 | $ | (11,583,073 | ) | $ | 8,201,624 | ||||||||||||||||
| Common Stock issued for Services | - | - | 37,905 | - | 100,416 | - | 100,416 | |||||||||||||||||||||
| Options Exercised for Cash | - | - | 30,353 | - | 1,821 | - | 1,821 | |||||||||||||||||||||
| Options Expense | - | - | - | 61,392 | - | 61,392 | ||||||||||||||||||||||
| Net Income (Loss) | - | - | - | - | - | (2,578,276 | ) | (2,578,276 | ) | |||||||||||||||||||
| Balance at June 30, 2021 | - | $ | 8,161,457 | $ | 81 | $ | 19,948,245 | $ | (14,161,349 | ) | $ | 5,786,977 | ||||||||||||||||
| Common Stock issued for Services | - | - | - | - | 41,250 | - | 41,250 | |||||||||||||||||||||
| Warrants Exercised for Cash | - | - | 5,000 | 1 | 15,000 | - | 15,001 | |||||||||||||||||||||
| Warrants Expense | - | - | - | 21,640 | - | 21,640 | ||||||||||||||||||||||
| Options Expense | - | - | - | 54,175 | - | 54,175 | ||||||||||||||||||||||
| Net Income (Loss) | - | - | - | - | - | (1,301,748 | ) | (1,301,748 | ) | |||||||||||||||||||
| Balance at September 30, 2021 | - | $ | - | 8,166,457 | $ | 82 | $ | 20,080,310 | $ | (15,463,097 | ) | $ | 4,617,295 | |||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-in- | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance at December 31, 2019 | - | $ | - | 6,539,415 | $ | 65 | $ | 12,535,655 | $ | (8,395,503 | ) | $ | 4,140,217 | |||||||||||||||
| Common Stock issued from offering | - | - | 922,219 | 10 | 5,994,414 | - | 5,994,424 | |||||||||||||||||||||
| Fractional shares issued due to reverse split | - | - | 40 | - | - | - | - | |||||||||||||||||||||
| Stock Issuance Costs | - | - | - | - | (820,586 | ) | - | (820,586 | ) | |||||||||||||||||||
| Options Exercised for Cash | - | - | 167 | - | 501 | - | 501 | |||||||||||||||||||||
| Warrants Exercised for Cash | - | - | 22,529 | - | 1,352 | - | 1,352 | |||||||||||||||||||||
| Warrants Expense | - | - | - | - | 79,089 | - | 79,089 | |||||||||||||||||||||
| Options Expense | - | - | - | - | 61,997 | - | 61,997 | |||||||||||||||||||||
| Net Income (Loss) | - | - | - | - | - | 180,303 | 180,303 | |||||||||||||||||||||
| Balance at March 31, 2020 | - | $ | 7,484,370 | $ | 75 | $ | 17,852,422 | $ | (8,215,200 | ) | $ | 9,637,297 | ||||||||||||||||
| Common Stock Issued for Services | - | - | 217,965 | 2 | 829,865 | - | 829,867 | |||||||||||||||||||||
| Warrants Exercised for Cash | - | - | 360,002 | 4 | 21,596 | - | 21,600 | |||||||||||||||||||||
| Warrants Expense | - | - | - | - | 21,294 | - | 21,294 | |||||||||||||||||||||
| Options Expense | - | - | - | - | 183,906 | - | 183,906 | |||||||||||||||||||||
| Net Income (Loss) | - | - | - | - | - | (542,587 | ) | (542,587 | ) | |||||||||||||||||||
| Balance at June 30, 2020 | - | $ | 8,062,337 | $ | 81 | $ | 18,909,083 | $ | (8,757,787 | ) | $ | 10,151,377 | ||||||||||||||||
| Common Stock Issued for Services | - | - | - | - | 348,246 | - | 348,246 | |||||||||||||||||||||
| Warrants Exercised for Cash | - | - | 8,334 | - | 13,303 | - | 13,303 | |||||||||||||||||||||
| Warrants Expense | - | - | - | - | 48,775 | - | 48,775 | |||||||||||||||||||||
| Options Expense | - | - | - | - | 126,997 | - | 126,997 | |||||||||||||||||||||
| Net Income (Loss) | - | - | - | - | - | 138,391 | 138,391 | |||||||||||||||||||||
| Balance at September 30, 2020 | - | - | 8,070,671 | 81 | 19,446,404 | (8,619,396 | ) | 10,827,089 | ||||||||||||||||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements
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TRxADE HEALTH, INC.
Consolidated Statements of Cash Flows
For the Nine months ended September 30, 2021, and 2020
(unaudited)
| 2021 | 2020 | |||||||
| Operating Activities: | ||||||||
| Net Income (Loss) | $ | (4,531,543 | ) | $ | (223,893 | ) | ||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation Expense | 5,250 | 3,750 | ||||||
| Options expense | 191,305 | 372,900 | ||||||
| Warrant Expense | 21,640 | 149,158 | ||||||
| Common Stock Issued for Services | 239,913 | 1,178,113 | ||||||
| Bad Debt Expense | 616,215 | 35,539 | ||||||
| Loss on Inventory Investments | 1,226,426 | 137,155 | ||||||
| Amortization of right of use asset | 97,436 | 60,600 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts Receivable | (819,988 | ) | (277,971 | ) | ||||
| Prepaid Assets and other Current Assets | (284,499 | ) | (150,219 | ) | ||||
| Inventory | 1,162,932 | (1,727,482 | ) | |||||
| Deferred Offering Costs | (78,000 | ) | - | |||||
| Deposits for Inventory Purchases | - | (1,081,250 | ) | |||||
| Other Receivables | 5,140 | - | ||||||
| Lease Liability | (96,954 | ) | (64,522 | ) | ||||
| Accounts Payable | 18,391 | (98,422 | ) | |||||
| Customer Deposits | (10,000 | ) | - | |||||
| Accrued Liabilities and Other Liabilities | 96,825 | 187,293 | ||||||
| Net Cash used in operating activities | (2,139,511 | ) | (1,499,251 | ) | ||||
| Investing Activities: | ||||||||
| Purchase of Fixed Assets | - | (23,505 | ) | |||||
| Net Cash used in Investing activities | - | (23,505 | ) | |||||
| Financing Activities: | ||||||||
| Repayment of Promissory Notes – Related Party | (225,000 | ) | - | |||||
| Stock Issuance Costs | - | (732,355 | ) | |||||
| Proceeds from exercise of Warrants | 15,001 | 36,255 | ||||||
| Proceeds from exercise of Stock Options | 1,821 | 501 | ||||||
| Proceeds from Issuance of Common Stock | - | 5,994,424 | ||||||
| Net Cash provided by (used in) financing activities | (208,178 | ) | 5,298,825 | |||||
| Net increase (decrease) in Cash | (2,347,689 | ) | 3,776,069 | |||||
| Cash at Beginning of the Period | 5,919,578 | 2,871,694 | ||||||
| Cash at End of the Period | $ | 3,571,889 | $ | 6,647,763 | ||||
| Supplemental Cash Flow Information | ||||||||
| Cash Paid for Interest | $ | 26,321 | $ | 5,789 | ||||
| Cash Paid for Income Taxes | $ | $ | ||||||
| Non-Cash Transactions | ||||||||
| Remeasurement of ROU Assets and Lease Liability for Nonrenewal of Lease | $ | $ | 384,110 | |||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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TRxADE HEALTH, INC.
Notes to Unaudited Consolidated Financial Statements
For the Nine months ended September 30, 2021, and 2020
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
TRxADE HEALTH, INC. (“we”, “our”, “Trxade”, and the “Company”) owns 100% of Trxade, Inc., Integra Pharma Solutions, LLC, Community Specialty Pharmacy, LLC, Alliance Pharma Solutions, LLC, Bonum Health, LLC and MedCheks, LLC. 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 the Company does not anticipate installations moving forward, and has taken a write off of the hubs purchased at June 30, 2021, in Loss on Inventory Investments of $143,891. The Bonum Health mobile application is available on a subscription basis, primarily as a stand-alone telehealth software application that can be licensed on a business-to-business (B2B) model to clients as an employment health benefit for the clients’ employees.
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. The Health Passport App has encountered head winds as the governments…local, national and international…continue to change the requirements regarding COVID-19, which include testing and mask mandates. We are evaluating the next steps needed for any additional roll-out.
Basis of Presentation - The accompanying unaudited interim consolidated financial statements of Trxade Health, 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.
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.
Accounts Receivable – The Company’s receivables are from customers and are typically collected within 90 days. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. During the nine-months ended September 30, 2021, and 2020, bad debt expense was $616,215, and $35,539, respectively.
The Company had an Account Receivable with a single customer for the amount of $630,000 which was past due. The Company had obtained a Note Receivable which was due on September 30, 2021 and remained unpaid. The Company believes the amount may not be collectible without legal actions, and therefore, recorded bad debt expense. The note was not paid pursuant to its terms and the Company is in the process of filing suit to collect on the note and the personal guaranty securing the note. The Company believes it will prevail on the merits if litigation is required to ultimately collect.
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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. As of September 30, 2021, we had 47,096 outstanding warrants to purchase common stock and 432,164 options to purchase common stock.
For three months ended September 30, | For nine months ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net Income (Loss) | $ | (1,301,748 | ) | $ | 138,391 | $ | (4,531,543 | ) | $ | (223,893 | ) | |||||
| Numerator for basic and diluted EPS - income (loss) available to common Shareholders | $ | (1,301,748 | ) | $ | 138,391 | $ | (4,531,543 | ) | $ | (223,893 | ) | |||||
| Denominator: | ||||||||||||||||
| Denominator for basic EPS – Weighted average shares | 8,163,522 | 8,063,043 | 8,126,689 | 7,572,954 | ||||||||||||
| Basic Income (Loss) per common share | $ | (0.16 | ) | $ | 0.02 | $ | (0.56 | ) | $ | (0.03 | ) | |||||
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 on October 15, 2021. In October 2019, $75,000 of the note was converted into 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.
In September 2021, the promissory note was paid in full.
At September 30, 2021 total related party debt was $.
NOTE 3 – STOCKHOLDERS’ EQUITY
In August 2021, warrants to purchase 5,000 shares of common stock were granted with an exercise price of $3.00 per share, and were exercised for $15,001 in cash. The Company issued shares of common stock.
2020 Equity Compensation Awards
On April 14, 2020, the Compensation Committee approved the grant of (a) shares of restricted common stock to the Company’s legal counsel; and (b) shares of restricted common stock to Howard A. Doss, the Company’s Chief Financial Officer, which shares vested at the rate of ¼th 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 $for the nine months ended September 30, 2021.
On April 14, 2020, the then three independent members of the Board of Directors (Mr. Donald G. Fell, Dr. Pamela Tenaerts, and Mr. Michael L. Peterson), were each awarded shares of restricted stock, which vested at the rate of ¼th 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 $for the nine months ended September 30, 2021.
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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 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 ¼th of such options per year, on the first, second, third and fourth anniversaries of the grant date, subject to such option holders continuing to provide services to the Company on such dates, subject to the terms of the Company’s Second Amended and Restated 2019 Equity Incentive Plan (the “Plan”) and the option agreements entered into evidence such grants. The options were granted pursuant to, and are subject to, the Plan, and have a term of from the grant date. The options have an exercise price of $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 then three independent members of the Board of Directors (Mr. Donald G. Fell, Dr. Pamela Tenaerts, and Mr. Michael L. Peterson), were each awarded shares of restricted stock, valued at $55,000 ($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 ¼th of such shares on July 1 and October 1, 2021 and January 1 and April 1, 2022, subject to such persons continuing to provide services to the Company on such dates, subject to the terms of the Plan and the Restricted Stock Grant Agreements entered into as evidence of such awards. The shares have a fair value of $165,000 and the Company recognized stock-based compensation expense of $for the nine months ended September 30, 2021. Common Shares totaling were cancelled on May 27, 2021, when the director services of Mr. Peterson and Ms. Tenaerts were terminated.
The Board of Directors of the Company, on May 27, 2021, confirmed the vesting of shares of common stock previously issued to each of Michael L. Peterson and Dr. Pamela Tenaerts on July 1, 2021, which were subject to forfeiture subject to such persons continued service on the Board of Directors prior to the vesting date.
In connection with and pursuant to the independent director compensation policy previously adopted by the Board of Directors, on May 27, 2021, the Board of Directors awarded Charles L. Pope, and Christine L. Jennings, each independent members of the Board of Directors appointed to the Board of Directors on May 27, 2021, shares of restricted stock each, valued at $41,250 each ($per share) based on the closing sales price of the Company’s common stock on the Nasdaq Capital Market on the effective date of the grant, May 27, 2021, which vest at the rate of 1/3rd of such shares on October 1, 2021 and January 1 and April 1, 2022, subject to such persons continuing to provide services to the Company on such dates. The Company recognized stock-based compensation expense of $for the nine months ended September 30, 2021.
Employment Agreement with Suren Ajjarapu, Chief Executive Officer
In connection with our employment agreement with Mr. Suren Ajjarapu, our Chief Executive Officer, which was effective on April 14, 2020, we granted restricted shares of common stock which vest upon the Company reaching certain performance metrics established by the Compensation Committee on the same date and further amended on May 5, 2020. The fair value of the shares at the grant date was determined to be $300,000. The modification of the performance conditions resulted in an incremental value to the shares of $72,062. The Compensation Committee subsequently determined that the performance conditions were met and the bonus shares vested in full on December 31, 2020. The compensation expense of $was recognized for the year ended December 31, 2020.
Stock Repurchase Program
On May 27, 2021, the Board of Directors of the Company authorized and approved a share repurchase program for up to $1 million of the currently outstanding shares of the Company’s common stock. There is no time frame for the repurchase program, and such program will remain in place until a maximum of $1.0 million of the Company’s common stock has been repurchased or until such program is suspended or discontinued by the Board of Directors. As of September 30, 2021, shares have been repurchased.
On July 18, 2021 the Board of Directors approved an “at-the-market” offering for the sale of up to $9 million in shares of the common stock under which the Distribution Agent may sell the Offering shares in public market transactions reported on the consolidated tape or privately negotiated transactions which may include block trades pursuant to and in connection with the Company’s previously filed Form S-3 Shelf Registration Statement filed with the Securities and Exchange Commission on August 28, 2020 and declared effective by the Commission on September 3, 2020 (File Number: 333-248473) and the Prospectus Supplement was filed with the Commission under Rule 424(b)(5) dated August 6, 2021.
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On July 18, 2021, our Board of Directors paused the Stock Repurchase Program until the “at-the-market” offering is complete.
On July 22, 2021, our Board of Directors deferred the filing of the “at-the market’ offering and reactivated the Stock Repurchase Program.
On August 4, 2021, our Board of Directors paused the Stock Repurchase Program until the “at-the-market” offering is complete.
On August 6, 2021, and the Prospectus Supplement relating to the “at-the-market” offering was filed with the Commission under Rule 424(b)(5).
No shares of common stock have been sold pursuant to the “at-the-market” offering as of the date of this filing.
NOTE 4 – WARRANTS
For the nine-month period ended September 30, 2021, warrants were granted, warrants to purchase 35,655 shares of common stock expired and were exercised.
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 $and $for the nine months ended September 30, 2021, and 2020, respectively.
The Company’s outstanding and exercisable warrants as of September 30, 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 | $ | 352,951 | |||||||||||
| Warrants granted | 5,000 | $ | 3.00 | - | ||||||||||||
| Warrants expired or forfeited | (35,655 | ) | $ | 2.43 | - | - | ||||||||||
| Warrants exercised | (5,000 | ) | $ | 3.00 | - | - | ||||||||||
| Warrants Outstanding as of September 30, 2021 | 47,096 | $ | 0.51 | $ | 208,078 | |||||||||||
| Warrants Exercisable as of September 30, 2021 | 47,096 | $ | 0.51 | $ | 208,078 | |||||||||||
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 shares, and the Company’s Second Amended and Restated 2019 Equity Incentive Plan provides for automatic increases in the number of shares available under such plan (currently shares) on April 1st of each calendar year, The administrator did not approve an increase in the number of shares covered under the plan as of April 1, 2021.
For the nine-month period ended September 30, 2021, options to purchase shares were granted, none were forfeited, and none expired. The options granted during the period vest over a period, the weighted average exercise price was $per share and the options have a term of . For the nine-month period ended September 30, 2021, options to purchase shares of common stock were exercised, for shares of common stock resulting in proceeds of $1,821.
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| Expected dividend yield | % | |
| Weighted-average expected volatility | - | % |
| Weighted-average risk-free interest rate | % | |
| Expected life of options |
Total compensation cost related to stock options granted was $and $for the nine-months ended September 30, 2021, and 2020, respectively.
| Number Outstanding | Weighted Average Exercise Price | Contractual Life in Years | Intrinsic Value | |||||||||||||
| Options Outstanding as of December 31, 2020 | 425,817 | $ | 4.44 | $ | 597,322 | |||||||||||
| Options Exercisable as of December 31, 2020 | 282,167 | $ | 4.52 | $ | 384,226 | |||||||||||
| Options granted | 36,700 | $ | 5.74 | - | ||||||||||||
| Options forfeited | $ | - | - | |||||||||||||
| Options expired | $ | - | - | |||||||||||||
| Options exercised | (30,353 | ) | $ | 0.06 | - | - | ||||||||||
| Options Outstanding as of September 30, 2021 | 432,164 | $ | 4.86 | $ | 368,613 | |||||||||||
| Options Exercisable as of September 30, 2021 | 295,015 | $ | 4.90 | $ | 245,551 | |||||||||||
NOTE 6 – OTHER RECEIVABLES
In July 2020, the Company’s wholly-owned subsidiary, Integra Pharma Solutions, LLC (“Integra”), entered into an agreement with Studebaker Defense Group, LLC (“Studebaker”) wherein Integra would pay Studebaker a down payment of $500,000 and Studebaker would deliver 180,000 boxes of nitrile gloves by August 14, 2020. Integra wired the $500,000 to Studebaker, but to date, Studebaker has not delivered the gloves or provided a refund of the deposit. In December 2020, we filed a complaint against Studebaker in Florida state court, Case No. 20-CA-010118 in the Circuit Court for the Thirteenth Judicial Circuit in Hillsborough County, for among other things, breach of contract. Studebaker did not answer the complaint, nor did counsel for Studebaker file an appearance. Accordingly, in February 2021 the Company filed for a default judgment; however, on March 22, 2021, counsel for Studebaker filed an appearance and shortly thereafter filed a motion to vacate the default judgment and dismiss the complaint on jurisdictional grounds. The court granted Studebaker’s motion to set aside the default judgment but denied the motion to dismiss. Studebaker then filed an answer and affirmative defenses, and we filed a motion to strike their affirmative defenses. The court has not yet ruled, but the discovery phase of the litigation has commenced; the next step in the litigation after the pre-trial motions are resolved will be a motion for summary judgment. The Company believes it will prevail on the merits but cannot determine the timing of the judgment or the amount ultimately collected. At June 30, 2021, the $500,000 was recorded as Loss on Inventory Investment.
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 Judgment was filed with the court, and on May 25, 2021, the Court extracted the sealed application, and a copy thereof was served on Crecom’s attorneys and Crecom, 14 days later, filed an Affidavit in Reply with the court alleging that there are issues to be tried and that this case must go to a full trial. On June 28, 2021, the court directed both parties to file their written submissions/arguments in relation to the application for summary judgment on or before July 12, 2021, and scheduled a hearing thereon for August 26, 2021. At the final hearing on October 18th, the ruling for the summary judgment was denied and a trial date is pending. The Company believes that it will prevail in the lawsuit filed; but the steps to enforce a judgment in Malaysia, if any, may be cumbersome, time consuming or costly. The Company cannot determine the timing of the judgment, nor the amount ultimately collected. At June 30, 2021, the $581,250 was recorded as Loss on Inventory Investment.
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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 | % | ||||
The Company decided not to renew the corporate office lease (Lease 1) in 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 September 30, 2021.
| Amounts due within twelve months of September 30 | |||||
| 2021 | $ | 88,000 | |||
| 2022 | 50,196 | ||||
| 2023 | 51,704 | ||||
| 2024 | 53,255 | ||||
| 2025 | 54,853 | ||||
| Thereafter | 119,553 | ||||
| Total minimum lease payments | 417,561 | ||||
| Less: effect of discounting | (112,056 | ) | |||
| Present value of future minimum lease payments | 305,505 | ||||
| Less: current obligations under leases | 63,560 | ||||
| Long-term lease obligations | $ | 241,945 | |||
For the nine months ended September 30, 2021, and 2020, amortization of Right of Use Assets was $97,436 and $60,600, respectively.
For the nine months ended September 30, 2021, and 2020, amortization of Lease Liability was $96,954 and $64,522, respectively.
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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.
Nine Months Ended September 30, 2021 | Trxade, Inc. | Community Specialty Pharmacy, LLC | Integra Pharma, LLC | Other | Total | |||||||||||||||
| Revenue | $ | 3,653,269 | $ | 1,287,296 | $ | 2,511,270 | $ | 49,700 | $ | 7,501,535 | ||||||||||
| Gross Profit | $ | 3,652,015 | $ | 123,470 | $ | (319,104 | ) | $ | 49,362 | $ | 3,505,743 | |||||||||
| Segment Assets | $ | 1,487,657 | $ | (404,174 | ) | $ | 563,396 | $ | 3,867,221 | $ | 5,514,101 | |||||||||
| Segment Profit (Loss) | $ | 1,511,809 | $ | (89,025 | ) | $ | (2,500,032 | ) | $ | (3,454,295 | ) | $ | (4,531,543 | ) | ||||||
Nine Months Ended September 30, 2020 | Trxade, Inc. | Community Specialty Pharmacy, LLC | Integra Pharma, LLC | Other | Total | |||||||||||||||
| Revenue | $ | 4,268,619 | $ | 1,287,197 | $ | 9,548,512 | $ | 23,898 | $ | 15,128,226 | ||||||||||
| Gross Profit | $ | 4,268,619 | $ | 119,946 | $ | 1,162,030 | $ | 23,615 | $ | 5,574,210 | ||||||||||
| Segment Assets | $ | 1,828,345 | $ | 257,495 | $ | 3,118,945 | $ | 6,649,226 | $ | 11,854,011 | ||||||||||
| Segment Profit (Loss) | $ | 2,655,734 | $ | (88,756 | ) | $ | 762,149 | $ | (3,553,020 | ) | $ | (223,893 | ) | |||||||
NOTE 10 – SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to through October 25, 2021 the date that the financial statements were issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
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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.
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 “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 HEALTH, INC., is also based on our good faith estimates.
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Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” and “Trxade”, refer specifically to TRxADE HEALTH, INC. and its consolidated subsidiaries.
In addition, unless the context otherwise requires and for the purposes of this report only:
| ● | “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; | |
| ● | “SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and | |
| ● | “Securities Act” refers to the Securities Act of 1933, as amended. |
Effective on February 12, 2020, the Company effected a stock split of its outstanding common stock in a ratio of 1-for-6 (“Reverse Stock Split”). Proportional retroactive adjustments were made to the conversion and exercise prices of the Company’s outstanding warrants and stock options, and to the number of shares issued and issuable under the Company’s stock incentive plans in connection with the Reverse Stock Split in the disclosures below.
Effective May 27, 2021, the Company filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, to change the Company’s name to “TRxADE HEALTH, INC.”, which amendment was effective on June 1, 2021.
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.
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:
| ● | Company Overview. Discussion of our business and overall analysis of financial and other highlights affecting us, to provide context for the remainder of MD&A. | |
| ● | Liquidity and Capital Resources. An analysis of changes in our consolidated balance sheets and cash flows and discussion of our financial condition. | |
| ● | Results of Operations. An analysis of our financial results comparing the three and nine months ended September 30, 2021, and 2020. | |
| ● | Critical Accounting Policies. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. |
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Company Overview
We are a health services IT company focused on digitalizing the retail pharmacy experience by optimizing drug procurement, the prescription journey and patient engagement in the U.S and have designed and developed, and now own and operate, a business-to-business web-based marketplace. 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. The Company changed its name on June 1, 2021, from “Trxade Group, Inc” to “TRxADE HEALTH, INC.” Our services provide pricing transparency, purchasing capabilities and other value-added services on a single platform focused on serving the nation’s approximately 21,650 independent pharmacies with annual purchasing power of $73.7 billion (according to the National Community of Pharmacists Association’s 2020 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 12,950+ registered members on our sales platform.
Company Organization
TRxADE HEALTH, INC. owns 100 percent of Trxade, Inc., and Integra Pharma Solutions, LLC (formerly Pinnacle Tek, Inc.), Alliance Pharma Solutions, LLC, Community Specialty Pharmacy, LLC, Bonum Health, LLC and MedCheks, 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 2020, 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 as vaccines are now widely available and the number of individuals who have received vaccines has increased; however, it is unknown whether such decreases will continue, new strains of the virus will cause current vaccines to be less effective or whether numbers will increase, 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.
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, certain technology outsourcing in India and the Philippines and finding qualified staff 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 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 continued 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 was closed through September 30, 2021. The office is expected to open for our management team beginning in January 2022, 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 and potential future equity sales, 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. We may also raise additional funding in the future through sales of debt or equity through an at-the-market offering.
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Liquidity and Capital Resources
Cash
Cash was $3,571,889 at September 30, 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:
| As of | ||||||||||||||||
| September 30, 2021 | December 31, 2020 | Change | Percent Change | |||||||||||||
| Cash | $ | 3,571,889 | $ | 5,919,578 | $ | (2,347,689 | ) | (40 | %) | |||||||
| Current assets (excluding cash) | 1,617,385 | 3,301,720 | (1,684,335 | ) | (51 | %) | ||||||||||
| Current liabilities (excluding short term debt) | 654,861 | 617,238 | 37,623 | 6 | % | |||||||||||
| Short Term Debt | - | 225,000 | (225,000 | ) | (100 | %) | ||||||||||
| Working Capital | 4,534,413 | 8,379,060 | (3,844,647 | ) | (46 | %) | ||||||||||
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 sources of, and uses of, cash in the future.
The decrease in cash as of September 30, 2021, compared to December 31, 2020, was primarily due to increased spending for the IT development and marketing of Bonum TeleHealth, MedCheks Health Passport, DelivMeds and TRxADE Prime.
Liquidity Outlook cash explanation
Cash Requirements
Our primary objectives for the remainder of 2021 are to continue the development of the Trxade Platform and Bonum Health telehealth services, 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 may also raise additional funding in the future through the sale of equity. An at-the-market offering was approved by the Board of Directors and filed on August 6, 2021.
We estimate our operating expenses and working capital requirements for the next 12 months to be approximately as follows:
| Projected Expenses for October 2021 to September 2022 | Amount | |||
| General and administrative (1) | $ | 9,000,000 | ||
| Total | $ | 9,000,000 | ||
| (1) | Includes estimated wages and payroll, legal and accounting, marketing, rent and web development. |
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We currently anticipate paying the estimated expenses described above through cash on hand and revenues generated from our operations.
We may require additional funding in the future to expand or complete acquisitions. The sources of this capital are expected to be equity investments (including pursuant to the ongoing “at-the-market” offering described below) 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 (including pursuant to the ongoing “at-the-market” offering described below), 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.
On August 6, 2021, we entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with EF Hutton, division of Benchmark Investments, LLC (“EF Hutton”, or the “Agent”). In accordance with the terms of the Equity Distribution Agreement, the Company may offer and sell from time to time through the Agent the Company’s common stock having an aggregate offering price of up to $9,000,000 (the “Placement Shares”). Sales of the Placement Shares under the Equity Distribution Agreement will be made in transactions that are deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act. The Company will pay the sales agent a commission of 2.0% of the gross sales price of any Placement Shares sold under the Equity Distribution Agreement. The Company has no obligation to sell any of the Placement Shares, and may, at any time, suspend the sale of the Placement Shares under the Equity Distribution Agreement upon proper notice to the other party for any reason and the Agent may also suspend the sale of Placement Shares at any time. The Equity Distribution Agreement will terminate upon the issuance and sale of all of the Placement Shares through or to the Agent, unless earlier terminated in accordance with its terms.
The Company intends to use the net proceeds, if any, from the sale of the Placement Shares pursuant to the Equity Distribution Agreement for general corporate purposes, which may include working capital or capital expenditures and other investments.
To date the Company has not sold any of the Placement Shares.
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.
Since the first quarter of 2020 and through 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 continued 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 potential continued 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 the past and finding qualified staff due to the pandemic 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 future consolidated results; however, we do not currently forecast any material adverse effects on our 2021 operating results due to COVID-19; although the ultimate impact and duration of the pandemic remains unknown. See also “Novel Coronavirus (COVID-19)”, above.
Cash Flows
The following table summarizes our Consolidated Statements of Cash Flows for the nine months ended September 30, 2021, and 2020:
| Nine months Ended | ||||||||||||||||
| September 30, 2021 | September 30, 2020 | Change | Percent Change | |||||||||||||
| Net Income (Loss) | $ | (4,531,543 | ) | $ | (223,893 | ) | $ | (4,307,650 | ) | (1,924 | %) | |||||
| Net Cash Provided by (used in): | ||||||||||||||||
| Operating Activities | (2,139,511 | ) | (1,499,251 | ) | (640,260 | ) | (43 | %) | ||||||||
| Investing Activities | - | (23,505 | ) | 23,505 | 100 | % | ||||||||||
| Financing Activities | (208,178 | ) | 5,298,825 | (5,507,003 | ) | (104 | %) | |||||||||
| Net increase (decrease) in cash | $ | (2,374,689 | ) | $ | 3,776,069 | $ | (6,123,759 | ) | $ | (162 | %) | |||||
Cash used in operations for the nine months ended September 30, 2021, was $2,139,511, compared to cash used in operations for the nine months ended September 30, 2020, of $1,499,251. The decrease in cash as of September 30, 2021, compared to September 30, 2020, was due to cash used in operations for the IT development and marketing of Bonum TeleHealth and MedCheks Health Passport and a decrease in revenue.
There was no cash used in investing activities for the nine months ended September 30, 2021. Cash used in investing activities for the nine months ended September 30, 2020, was $23,505, which was associated with the purchase of fixed assets.
Cash used in financing activities for the nine months ended September 30, 2021, was $208,178, which was mainly due to the repayment of related party note, compared to cash provided by financing activities for the nine months ended September 30, 2020, which was $5,298,825. Cash provided by financing activities for the nine months ended September 30, 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 $36,756.
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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 September 30, 2021, compared to Three Month Period Ended September 30, 2020
| Three Months Ended | ||||||||||||||||
| September 30, 2021 | September 30, 2020 | Change | Percent Change | |||||||||||||
| Revenues | $ | 2,550,046 | $ | 6,332,269 | $ | (3,782,223 | ) | (59.7 | %) | |||||||
| Cost of Sales | 1,269,005 | 4,402,967 | (3,133,962 | ) | (71.2 | %) | ||||||||||
| Gross Profit | 1,281,041 | 1,929,302 | (648,261 | ) | (33.6 | %) | ||||||||||
| Operating Expenses: | ||||||||||||||||
| Loss on Inventory Investment | 1,285 | - | 1,285 | 100.0 | % | |||||||||||
| General and Administrative (less stock- based compensation expense) | 2,458,817 | 1,259,463 | 1,199,354 | 95.2 | % | |||||||||||
| Stock-Based Compensation Expense | 117,065 | 524,018 | (406,953 | ) | (77.7 | %) | ||||||||||
| Total General and Administrative/Operating Expense | 2,577,167 | 1,783,481 | 793,686 | 44.5 | % | |||||||||||
| Interest Expense | (5,622 | ) | (7,430 | ) | (1,808 | ) | (24.3 | %) | ||||||||
| Net Income (Loss) | $ | (1,301,748 | ) | $ | 138,391 | $ | (1,440,139 | ) | (1,040.6 | %) | ||||||
Our revenues for the three months ended September 30, 2021, were from the Trxade platform, Community Specialty Pharmacy and Integra Pharma Solutions. Revenues decreased by $3,787,223, compared to the prior period. The decrease was a result of non-recurring sales of personal protective equipment (PPE) in 2020 related to the COVID-19 pandemic. In Trxade, Inc., revenue decreased by 6.5% to $1,265,909 for the three months ended September 30, 2021, compared to $1,354,082, in the prior year’s period. The decrease was mainly as a result of supply chain issues for generic drugs selling on the platform, which carry higher fee revenue than brands. The pandemic has created supply issues for wholesalers and the generic product supply.
Cost of goods sold, and gross profit were $1,269,005 and $1,281,041 for the three-month period ended September 30, 2021, respectively, and for the three-month period ended September 30, 2020, were $4,402,967 and $1,929,302, respectively.
Gross profit as a percentage of sales was 50% for the three months ended September 30, 2021, compared to 31% for the three months ended September 30, 2020. The reason for the increase in gross profit as a percentage of sales was a result of fewer lower margin Personal Protective Equipment (“PPE”) sales in 2021. Gross profit decreased during the current period due to the decrease in sales discussed above, coupled with the decrease in cost of sales, also as discussed above.
General and administrative expenses (less stock-based compensation expense) increased for the three months ended September 30, 2021, to $2,458,817 compared to $1,259,463 for the comparable period in 2020. The increase was mainly due to IT development and marketing expenses relating to Bonum Health and Alliance Pharma Solutions.
Total stock-based compensation expense decreased by 77.7% for the three months ended September 30, 2021, compared to the prior year’s period due to no management stock bonuses being granted during the period, as described in greater detail above under “PART I. – ITEM 1. FINANCIAL STATEMENTS” – “NOTE 3 – SHAREHOLDERS’ EQUITY”.
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We had $1,285 of Loss on Inventory Investment for the quarter ended September 30, 2021, in connection with a foreign exchange loss as a result of Inventory deposits made in USD converting to CAD.
We had interest expense of $5,622 for the three months ended September 30, 2021, compared to interest expense of $7,430 for the three months ended September 30, 2020, which decreased due to decreases in the amount of outstanding debt we had as of the current period.
Net Income decreased $1,440,139, to a net loss of $1,301,748 for the three months ended September 30, 2021, compared to net income of $138,391 for the three months ended September 30, 2020, mainly due to the IT development and marketing of the Trxade Platform, Bonum Health and MedCheks start-up development, loss on inventory investments, legal expenses, inventory write downs and bad debt expense, as described in greater detail above under “PART I. – ITEM 1. FINANCIAL STATEMENTS” – “NOTE 6 – OTHER RECEIVABLE”, as well as the decrease in revenues, offset by the decrease in cost of sales, each described in greater detail above.
Nine Month Period Ended September 30, 2021, compared to Nine Month Period Ended September 30, 2020
| Nine Months Ended | ||||||||||||||||
| September 30, 2021 | September 30, 2020 | Change | Percent Change | |||||||||||||
| Revenues | $ | 7,501,535 | $ | 15,128,226 | $ | (7,626,691 | ) | (50.4 | %) | |||||||
| Cost of Sales | 3,995,792 | 9,554,016 | (5,558,224 | ) | (58.2 | %) | ||||||||||
| Gross Profit | 3,505,743 | 5,574,210 | (2,068,467 | ) | (37.1 | %) | ||||||||||
| Operating Expenses: | ||||||||||||||||
| Loss on Inventory Investment | 1,226,426 | - | 1,226,426 | 100.0 | % | |||||||||||
| General and Administrative (less stock-based compensation Expense) | 6,336,428 | 4,075,268 | 2,261,160 | 55.5 | % | |||||||||||
| Stock-Based compensation Expense | 452,858 | 1,700,171 | (1,247,313 | ) | (73.4 | %) | ||||||||||
| Total General and Administrative/Operating Expense | 8,015,712 | 5,775,439 | 2,240,273 | 38.8 | % | |||||||||||
| Interest Expense | (21,574 | ) | (22,664 | ) | 1,090 | (4.8 | %) | |||||||||
| Net Income (Loss) | $ | (4,531,543 | ) | $ | (223,893 | ) | $ | (4,307,650 | ) | (1,924.0 | %) | |||||
Our revenues for the nine months ended September 30, 2021, were from the Trxade platform, Community Specialty Pharmacy and Integra Pharma Solutions. Revenues decreased by $7,626,691 compared to the prior period. Integra Pharma Solutions revenue decreased by 73.7% to $2,511,270 for the nine months ended September 30, 2021, compared to $9,548,512 in the prior year’s period. The decrease was a result of non-recurring sales of personal protective equipment (PPE) in 2020 related to the COVID-19 pandemic. In Trxade, Inc., revenue decreased by 14.4% to $3,653,269 for the nine months ended September 30, 2021, compared to $4,268,619, in the prior year’s period. The decrease was mainly as a result of supply chain issues for generic drugs selling on the platform, which carry higher fee revenue than brands. The pandemic has created supply issues for wholesalers and the generic product supply.
Cost of sales and gross profit were $3,995,792 and $3,505,743 for the nine months ended September 30, 2021, respectively, and $9,554,016 and $5,574,210 for the nine months ended September 30, 2020, respectively. As sales for PPE decreased in 2021, the cost of sales also decreased.
Gross profit as a percentage of sales was 47% for the nine months ended September 30, 2021, compared to 37% for the nine months ended September 30, 2020. The reason for the increase in gross profit as a percentage of sales was a result of a greater amount of sales from the Trxade platform, which carries a higher gross margin.
General and administrative expenses (less stock-based compensation expense) increased for the nine months ended September 30, 2021, to $6,336,428, compared to $4,075,268 for the comparable period in 2020. The increase was mainly due to IT development and marketing expenses related to Bonum Health and MedCheks, and legal expenses.
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Total stock-based compensation expense decreased to $452,858 for the nine months ended September 30, 2021, compared to $1,700,171 for the prior year’s period, due to no management stock bonuses being granted in the current period. Stock-based compensation is described in greater detail above under “PART I. – ITEM 1. FINANCIAL STATEMENTS” – “NOTE 3 – SHAREHOLDERS’ EQUITY”.
We had $1,226,426 of Loss on Inventory Investment for the nine months ended September 30, 2021, in connection with Inventory deposits and our write-down of our Bonum Health Hubs as described in greater detail in “NOTE 6 – OTHER RECEIVABLES”.
We had interest expense of $21,574 for the nine months ended September 30, 2021, compared to interest expense of $22,664 for the nine months ended September 30, 2020.
Net loss increased by $4,307,650, to a net loss of $4,531,543 for the nine months ended September 30, 2021, compared to net loss of $223,893 for the nine months ended September 30, 2020, mainly due to the IT development and marketing of the Trxade Platform, Bonum Health and MedCheks start-up development, loss on inventory investments, legal expenses, inventory write downs and bad debt expense, as described in greater detail above under “PART I. – ITEM 1. FINANCIAL STATEMENTS”– “NOTE 6 – OTHER RECEIVABLES”, as well as the decrease in revenues, offset by the decrease in cost of sales, each described in greater detail above.
Off-Balance Sheet Arrangements
We had no outstanding off-balance sheet arrangements as of September 30, 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”). Trxade, Inc. 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 Trxade, Inc. Trxade, Inc. holds no inventory and assumes no responsibility for the shipment or delivery of any products or services from our website. Trxade, Inc. 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 Trxade, Inc. 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 – Trxade, Inc. 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 (“Integra LLC”) is a licensed wholesaler of brand, generic and non-drug products to Customers. Integra LLC 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 – Integra LLC 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 Integra LLC. 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 (“CSP”) is a licensed retail pharmacy. CSP 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 CSP. The prescription identifies the performance obligations in the contract. CSP 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 CSP 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 September 30, 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.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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 September 30, 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 – CONTINGENCIES”. 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:
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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 and finding qualified staff due to the pandemic. 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.
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 was closed through September 30, 2021. The office is expected to open for our management team beginning in January 2022, 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 COVID-19 pandemic also influences shortages of some products, with product allocation resulting in delivery delays for customers. Additionally, as a result of the coronavirus outbreak, various states have adopted price gouging laws. Our failure to comply with such laws and regulations could subject us to claims, penalties, fines or lawsuits.
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We have been impacted and may be further impacted by COVID-19 as follows:
| ● | As a result of COVID-19, various states have adopted price gouging laws. Our failure to comply with such laws and regulations could subject us to claims, penalties, fines or lawsuits; | |
| ● | Inventory price fluctuations as a result of supply and demand issues caused by COVID-19 have caused values of inventory to decrease, which has had a direct impact on gross profit and has resulted in a direct write-off of inventory value; | |
| ● | Payment Terms with customers may be altered or extended, which would have an impact on current ratios and cash flow; and | |
| ● | There have previously been material impairments with respect to goodwill and may be future material impairments and/or effects on right-of-use assets as the evaluation of the long-term impact to delivery of service or physical space assessments changes. |
COVID-19 may cause further disruptions to our business, including, but not limited to:
| ● | causing one or more of our customers to file for bankruptcy protection or shut down, including as a result of broader economic disruption; | |
| ● | reducing health system or health plan subscription agreement fees generated, as well as visit fees, by customers or providers, as a result of funding constraints related to loss of revenue or employment; | |
| ● | negatively impacting collections of accounts receivable; | |
| ● | negatively impacting our ability to facilitate the provision of our telehealth services due to unpredictable demand; | |
| ● | negatively impacting our ability to forecast our business’s financial outlook; | |
| ● | creating regulatory uncertainty on our telehealth services, if certain restrictions on reimbursement or the practice of medicine across state lines are reintroduced at some point in the future; and | |
| ● | harming our business, results of operations and financial condition. |
The ongoing impacts of the pandemic may cause a general economic slowdown or recession in one or more markets, disruptions and volatility in global capital markets and other broad and adverse effects on the economy, business conditions, commercial activity and the healthcare industry. The pandemic might impact our business operations, financial position and results of operation in unpredictable ways that depend on highly uncertain future developments, such as determining the effectiveness of current or future government actions to address the public health or economic impacts of the pandemic. Any of these risks might have a materially adverse impact on our business operations and our financial position or results of operations.
The risk factor in the Form 10-K entitled, “We have in the past, and may in the future, not be able to sell our inventory, at or above the price we acquired such inventory for, and have in the past, and may in the future, be forced to write-down inventory in the future.”, is replaced in its entirety by the below:
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We have in the past, and may in the future, not be able to sell our inventory, at or above the price we acquired such inventory for, and have in the past, and may in the future, be forced to write-down inventory in the future. We may also be subject to write-downs of certain of our other assets which may have a material adverse effect on our balance sheet.
Due to the supply and demand nature of our pharmaceutical business and the personal protective equipment (PPE) business, especially in connection with the rapidly changing regulations, recommendations and guidance surrounding COVID-19, the inventory of products we have acquired, or may acquire in the future, has been/may be, acquired at a cost higher than the price at which we may be able to resell such products. As a result, in the past we have, and in the future, we may not be able to make a profit on such sales and have in the past and may in the future, have to write-down a significant portion of our inventory. During the years ended December 31, 2020, and 2019, write-down to market value was $1,220,269 and $0, respectively. We had $1,225,141 of Loss on Inventory Investment for the nine months ended September 30, 2021, in connection with Inventory deposits and our write-down of our Bonum Health Hubs as described in greater detail in “NOTE 6 – OTHER RECEIVABLES”. Future write-downs of assets could have a material adverse effect on our balance sheet. Additionally, the company recorded bad debt expense in connection with the sale of PPE items with a single customer for the amount of $630,000 which was more than 90 past due as of September 30, 2021.
The risk factor in the Form 10-K entitled, “The health passport market may not achieve and sustain high levels of demand, consumer acceptance and market adoption.”, is replaced in its entirety by the below:
The health passport market may not achieve and sustain high levels of demand, consumer acceptance and market adoption, and the market for such health passport is rapidly changing.
The health passport market is relatively new and unproven, and it is uncertain whether it will achieve and sustain high levels of demand, consumer acceptance and market adoption. Our success in this new market will depend to a substantial extent on the willingness of our customers to use, and to increase the frequency and extent of their utilization of, our services, as well as on our ability to demonstrate the value of health passports to employers, health plans, government agencies and other purchasers. Negative publicity concerning our services or the health passport market as a whole could limit market acceptance of our services. If ours, or their members or patients, do not perceive the benefits of our services, or if our services are not competitive, then our market may not develop at all, or it may develop more slowly than we expect. Similarly, individual and healthcare industry concerns or negative publicity regarding patient confidentiality and privacy in the context of health passport could limit market acceptance of our services. Our health passport may not be adopted by customers due to among other things, their belief that smartphones lack appropriate security or their failure to understand blockchain. The health passport market is rapidly changing and the need for such services will continue to change. The Company’s health passport application and services may not be adopted, may not ultimately be needed, and may be incompatible with other offerings and/or more widely adopted products. If customers fail to adopt our health passport, or health passports fail to become adopted in the marketplace, it could have a material adverse effect on our business, financial condition or results of operations. Separately, governments may come out with their own health passports or similar technology which makes our health passport obsolete. Any of the above could have a material adverse effect on our operations and future prospects.
The below is a new risk factor which supplements the risk factors described in the Form 10-K:
Our quarterly results have in the past, and may in the future, fluctuate significantly due to certain non-recurring sales of products.
Our revenues for the three months ended September 30, 2021, were from the Trxade platform, Community Specialty Pharmacy and Integra Pharma Solutions. Revenues decreased by $3,782,223, compared to the prior period. Integra Pharma Solutions revenue was $795,804 for the three months ended September 30, 2021. The decrease was a result of non-recurring sales of personal protective equipment (PPE) in 2020 related to the COVID-19 pandemic. Our revenues for the nine months ended September 30, 2021, were from the Trxade platform, Community Specialty Pharmacy and Integra Pharma Solutions. Revenues decreased by $7,626,691 compared to the prior period. Integra Pharma Solutions revenue decreased by 73.7% to $2,511,270 for the nine months ended September 30, 2021, compared to $9,548,512 in the prior year’s period. The decrease was a result of non-recurring sales of personal protective equipment (PPE) in 2020 related to the COVID-19 pandemic. Our quarterly operating results may fluctuate in the future based on certain non-recurring sales of PPE and associated costs of revenues therewith, which may be compounded in our year over year financial results. As such, we believe that quarter-to-quarter comparisons of our revenues, operating results and cash flows may not be meaningful and should not be relied upon as an indication of future performance.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Sales of Equity Securities
There have been no sales of unregistered securities during the quarter ended September 30, 2021, and from the period from October 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.
Issuer Purchases of Equity Securities
The following table sets forth share repurchase activity for the respective periods:
| Period | Total Number of Shares Purchased(1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | Maximum
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) | ||||||||||||
| July 1, 2021 – July 31, 2021 | — | $ | — | — | $ | 1,000,000 | ||||||||||
| August 1, 2021 – August 31, 2021 | — | $ | — | — | $ | 1,000,000 | ||||||||||
| September 1, 2021 – September 30, 2021 | — | — | — | $ | 1,000,000 | |||||||||||
| Total | — | $ | — | — | $ | 1,000,000 | ||||||||||
(1) On May 27, 2021, our Board of Directors authorized the repurchase up to $1 million of the currently outstanding shares of the Company’s common stock in open market transactions. There is no time frame or expiration date for the repurchase program, and such program will remain in place until a maximum of $1.0 million of the Company’s common stock has been repurchased or until such program is suspended or discontinued by the Board of Directors. During the quarter ended September 30, 2021, and through the date of the filing of this Report, no shares have been repurchased and a total of $1 million remains available for repurchases under the program.
On July 18, 2021, our Board of Directors approved an “at-the-market” offering and paused the Stock Repurchase Program until the offering was complete.
On July 22, 2021, our Board of Directors delayed the “at-the-market” offering and reactivated the Stock Repurchase Program.
On August 4, 2021, our Board of Directors approved an “at-the-market” offering and paused the Stock Repurchase Program until the offering is complete.
To date, no shares of common stock have been sold in connection with the “at-the-market” offering, which is still ongoing.
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 Health, Inc. | ||
| By: | /s/ Suren Ajjarapu | |
| Suren Ajjarapu | ||
Chief Executive Officer (Principal Executive Officer) | ||
| Date: October 25, 2021 | ||
| By: | /s/ Howard Doss | |
| Howard Doss | ||
Chief Financial Officer (Principal Accounting/Financial Officer) | ||
| Date: October 25, 2021 | ||
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EXHIBIT INDEX
| Incorporated by Reference | ||||||||||||
Exhibit No. |
Description | Form | File No. | Exhibit | Filing Date |
Filed Herewith | ||||||
| 1.1 | Equity Distribution Agreement, dated July 19, 2021 between the Company and EF Hutton, division of Benchmark Investments LLC | 8-K |
001-39199 | 1.1 |
August 6, 2021 |
|||||||
| 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* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | X | ||||||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||
| 104* | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. | X | ||||||||||
| * | Filed herewith. |
| ** | Furnished herewith. |
| *** | Indicates management contract or compensatory plan or arrangement. |
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