Thank you, Operator, and thank you everyone for joining us today. I’d like to welcome you to our Second Quarter 2020 Financial Results Conference Call, the first earnings call we have had as a public company.

Before we walk through our financial and operational results for the quarter, for those of you new to the Company, I’d like to walk you through who we are and how we are revolutionizing the way independent pharmacies procure drugs. Prior to the launch of our company, obtaining drug quotes as an independent pharmacy was an extremely laborious and time-inefficient process with no insight or transparency into a fair market price, or what others are paying for the same drug.

Traditional wholesalers would provide unfavorable payment terms, slow delivery, and create a difficult conundrum for the approximately 22,000 independent pharmacies nationwide. We identified this market inefficiency as well as the incredible potential in these independent pharmacies, which together maintain $78 billion in annual purchasing power, and proceeded to launch Trxade.

We designed, own and operate a business-to-business web-based marketplace platform, bringing together the nation’s independent pharmacies with accredited national pharmaceutical suppliers to provide a uniquely efficient and transparent buying and selling process. Our platform lets these independents know that they are receiving a fair price from competing suppliers on fair payment terms and often with next-day delivery.

We believe this radical price transparency, economy of scale and competition amongst suppliers leads up to a 10% reduction in a pharmacy’s total annual drug purchase costs with drug-level savings of up to 90% on certain pharmaceutical products. Our platform saves pharmacists from having to manually compare prices across distributors, saving hundreds of hours of unnecessary labor annually, and eliminating negative reimbursement, in some cases filling the prescription at a loss.

Our revenue model is simple, we charge a percentage of transaction fee based on the value of drug purchases transacted on our platform, similar to PayPal or Visa-like model. To date, we’ve seen incredible success in garnering attention from independent pharmacies nationwide, validating our business model.

We currently have over 11,700 pharmacies on our platform, representing over 50% market penetration into the 22,000 independent pharmacies nationwide. Our growth drivers for the Trxade platform are two-fold: one, increasing the average purchases per pharmacy so that pharmacies transact an increasingly high percentage of total drug purchases through our trading platform; and two, continuing to expand our market penetration, adding new and independent pharmacies to our network.

Now, proceeding to our second quarter 2020 financial and operational results, I was particularly pleased with our growth in the second quarter compared to 2019, achieving record quarterly revenues, while continuing to grow average spend per pharmacy on our proprietary platform. Our affiliated services offering continues to expand, with our telemedicine subsidiary Bonum Health in particular shaping up to be a critical healthcare service to thousands of customers across the United States.

We recently appointed Senior Healthcare Executive Ashton Maaraba as President of Bonum Health to spearhead our telemedicine efforts, in which we see a significant opportunity as more and more consumers shelter in place due to the COVID-19 pandemic. Ashton is an intuitive leader with acute business acumen and expertise in channel and market development.

I am confident in his ability to drive adoption of Bonum Health amongst both employers seeking to provide unique healthcare perks to their workers, as well as to individuals seeking a low-cost, convenient way to speak with a doctor. On the capital markets fronts, we’ve made exciting progress over the last several months, fortifying our balance sheet, uplisting to NASDAQ, being added to the Russell MicroCap Index, and now, today, hosting our first earnings call.

We continue to mature as a public company, and our progress this year is a testament to these efforts. Now, before we go further, I’d like Howard Doss, the CFO, to walk through some key financial highlights from the second quarter of 2020.

Thank you, Suren. Revenues for the second quarter of 2020 increased 244% to a record $6.6 million compared to revenue of $1.9 million in the same quarter last year.

Sequentially, this represents an increase of 199% when compared to revenues of $2.2 million in the first quarter of 2020. The increase in revenue was primarily due to Personal Protective Equipment sales, such as N95 masks and sanitizer products.

These products were sold by our Integra Pharma unit as a response to the COVID-19 pandemic. Gross profit in the second quarter of 2020 increased 72% to $2 million, or 30.4% of revenues, compared to gross profit of $1.2 million or 60.7% of revenues in the same quarter last year.

The increase in gross profit was at lower margins, which was primarily due to lower-margin sales of Personal Protective Equipment in our Integra Pharma unit. Operating expenses in the second quarter of 2020 were $2.5 million compared to $1 million in the same quarter last year.

This increase is primarily due to non-cash stock-based compensation expenses, which included executive bonuses for 2019, IT expenditures and marketing expenses. Net loss in the second quarter of 2020 was $542,000, or a loss of $0.07 per basic and diluted share, compared to net income of $60,000 or $0.01 per basic and diluted share in the same quarter last year.

Adjusted EBITDA, which is a non-GAAP financial measure, increased 525% to $500,000 compared to $80,000 in the same quarter last year. Looking at the balance sheet, cash and cash equivalents were $4.2 million as of June 30, 2020, compared with $7.7 million as of March 31, 2020.

A sizeable portion of this cash usage was due to inventory purchases surrounding Personal Protective Equipment sales to address the COVID-19 pandemic, a notable driver of our sales in the quarter. I should also note that Accounts Receivable and Inventory increased to $3.5 million and $1.8 million, respectively, as of the end of the quarter, compared to only $0.9 million and $0.4 million, respectively, as of March 31, 2020, which helped our total current assets only decline $0.3 million compared to March 31, 2020, even with the decrease in cash.

As the pandemic subsides, we don’t expect to carry this same level of inventory going forward, and we do not foresee a need for further capital to support the business.

Thank you, Howard. Overall, I am pleased with our growth in the second quarter, laying the foundation for what we hope will be an incredible year.

And what’s driving this growth? Of course the platform growth along with Personal Protective Equipment sales.

We continue to meet or exceed internal projections while regularly attaining key milestone achievements. As a founder of Trxade, I firmly believe that we are better positioned to create sustainable value for our shareholders than any prior time in our history.

I look forward to continued operational execution into the second half of 2020 and beyond. With that, I’ll turn it over to the Operator to begin the question-and-answer session.

Operator, take it over.

Thanks very much. Good afternoon, guys, and congrats on a spectacular quarter and your first earnings call.

Thank you. (Inaudible).

Certainly. Suren, I wanted to—before we get to the Integra piece, which is really impressive, I wanted to just ask you a couple of questions about the platform.

The revenue was down a little bit sequentially. I was looking for a little bit of growth there considering you added more pharmacies.

What were the drivers there in the quarter? How much did COVID impact pharma spend, and how was the same-store sales growth, or as you refer to as revenue per store, compared to the first quarter?

Sure. I’ll take a first stab at it and then I’ll pass it on to Howard if he wants to add anything.

Definitely, we saw the impact of the COVID because most of the stores have been shut down in the month of April and a little part of May, but eventually they had to open. Slowly and steadily everything is opening up, so I don’t have the exact percentage of the decrease, how much they’ve bought less, but definitely we saw the impact.

And the percentage calculations, Howard, if you want to take that, please go ahead.

Actually, I don’t have those calculations right in front of me, but I do know that for the six months ending June revenue in Trxade Inc was about $2.9 million where the revenue over the six-month period in 2019 was about $2.1 million, so over the six months period of time I think we still had some pretty nice revenue.

No doubt, no doubt. What about the same-store sales growth?

Are you able to quantify that for us?

Howard, do you want to take that?

Yes, actually we don’t publish that same-store sales growth, so I can’t really answer that question for you.

Okay, but Suren mentioned in his prepared remarks you did grow revenue per store over the prior year, right?

Correct.

Yes, okay. All right.

What are some of the strategies or opportunities you see to increase higher revenue per pharmacy?

As far as—they are buying from us because if you look at the brand drugs, Gene, and the percentage is always less. You have a (inaudible) acquisition cost plus or minus pricing there, most of the margins on the pharmacies get negative reimbursement on the generic products and that is what is our main focus, even though 75% of our product, that most through our platform is generic and remaining 25% is on the branded drug side.

We continue to grow on the generic side: how can we add more and more product list than worrying about high dollar value product because you are on—the pharmacy has a set margin plus or minus percentage versus on the generic side.

Okay, makes sense. Switching gears then to Integra, I mean you’re really knocked it out of the park there with the PPE revenue.

I’m just wondering if Q2 we should view that as an extraordinarily high quarter due to the onset of the COVID pandemic just sort of peaking there. How sustainable are these PPE sales in the back half of the year?

You’re absolutely correct, but nobody understands where this PPE opportunity is there. We definitely took the opportunity in the second quarter.

How sustainable it is, nobody knows, but we continue to grow the platform and see any other opportunities on the PPE side to help our pharmacies because if you look at April, all the pharmacies were stacked up with sanitizers and no big wholesalers had the sanitizers by month of May. Everything changed, the dynamics, so you don’t need it, and then they jumped onto the PPE equipment like masks and so on, gloves and isolations gowns.

Now as the States are mandating more and more masks, we may see that spike in the requirement that gets to these independent pharmacies or other schools and stuff that come to us to buy us when the schools start opening up, but nobody really knows what the PPE opportunity is there, so we cannot quantify that, whether it’s going to be the same as second quarter, but we see some improvement or see the really—I don’t know what is the percent of the growth will be on PPE.

Sure. No, that’s got to be difficult to forecast.

Tell me, you mentioned—well, I noticed that you signed some—a law firm during the quarter, so who is the customer here? Is it the pharmacy?

Is it the employer? Or are you targeting both?

Both, but as the CLIA (inaudible) is not allowed to the pharmacies to (inaudible). You’re talking about the PPE side or you’re talking about the testing bit?

Both. Both of those.

The PPE is anybody is a customer, all right? Whether it’s a law firm or a pharmacy, but especially the testing side we executed to both the nursing, the point of care people that administer the test onsite, we became a supplier of those test kits, but CLIA, CLIA certified, FDA approved antibody testing is not allowed at these pharmacies still, so we could not move any of our products to these pharmacies, but we went after the employers or point of care facilities to move these testing kits.

Makes sense, okay. Did you or could you disclose your revenue from COVID test kits?

We’re not—we don’t have any segmented that way. We have segmented Trxade, Integra Pharma and CSP side of things.

Fair enough, fair enough. Okay, one more then from me would be on your community specialty pharmacy business, you beat us by a little bit there as well.

What metrics can you offer around Bonham Health, either in terms of how many kiosks are set up today, how long the app has been available and if you know how many users there are at this point? Thanks.

No problem, Gene. Still it’s a maturing level.

The app is getting stabilized so we don’t have that data readily available, so when it’s available in the next quarter, we’ll hopefully—we’ll try to get those metrics but right now it’s not available.

All right. Very fine.

In terms of one final, final question then, how are we shaping up for 2020? Are you in a position to give any full-year guidance at this point?

No, not at this time.

Very good. Thank you, and congrats.

Thank you.

Congratulations on the quarter, guys.

Thanks, Howard.

I’m going to go back to, I guess, Accounts Receivable and Inventory. Do you expect those two numbers to go back to more normalized levels by the end of this fiscal year?

Howard, can you take that question?

Yes, I do. The Accounts Receivable at the end of June was very high.

We had about a $2.5 million accounts receivable to one customer and that was paid in July, so that came down significantly. Then in Inventory, which is now at about $1.7 million, most of that is PPE product and we expect to work through most of that through the end of the year.

We anticipate that, anyway.

Okay. In terms of the PPEs and the FDA test kits and stuff, do you have multiple sources for those products that you’re shipping to customers?

Yes, our primary business for the last 10 years on the platform, if you look at it, is as supply chain, and those relationships we are transitioning into the Integra, especially in the PPE side and as well as the testing set. Yes, we have multiple sources to buy these products, correct.

Okay. If PPE sales come down some, we would expect gross margin to improve as time goes on from this level in the second quarter?

Yes, that’s probably right because the tech platform is the one, then because the product side the gross margin varies, correct.

Okay. Also, in turn, do you foresee any large or any additional large amount of stock-based comp in the second half of the year?

We don’t anticipate anything at this time.

Okay. So, excluding that from the first half—I know sometimes, I know in the first quarter you put in the Q you expect operating expenses around $5 million.

Is that going to be slightly higher this year, even excluding the stock-based comp?

Howard, do you want to take that?

Yes. I think that because of some of the things that we’re doing in Integra and potentially the ramp-up with Bonham Health, that $5 million may go up during 2020.

We’ll be doing a re-evaluation of that and disclose that in the next Q.

Okay. In terms of Bonham, you talked about thousands are using it.

If you could just give a little bit of context on how you’re seeing people sign up for it? Has it increased a little bit every week that you’ve seen?

How are they finding out about it? Is it through your independent pharmacies that are letting customers know that it exists?

That’s one channel, but of course social media, that’s the primary channel that we would like to know it on, but especially on the business-to-business as well, when they are trying to open up the new stores and they cannot offer this insurance, those are the ones that are attracted to Bonham Health because our fee structure is less than the insurance, the co-pay. Those are the attractive items, so the main channels are through our independent pharmacies; of course, the second and tertiary are of course making the calls and social media.

Okay. Do you expect the sign-ups to be in the hundreds per month?

Or do you think you could drive it in the second half of the year could it be (inaudible) a month?

We can’t give you guys that guidance at this time. As I mentioned, the app is getting matured as we speak, and the COVID has impacted April and May and now it’s picking up steam.

Okay, and one last one. Because you had mentioned too that schools, I guess primarily K through 12 schools are going to be—look like they’re going to be opening up around the country.

Are you making plans to market yourself to districts around—especially in the state of Florida since that’s where you’re based, but is that something that you’re looking to do actively?

Yes. Yes.

Okay, okay. Well, keep up the great work, guys.

Thank you.

Hi, guys. How are you doing?

Nice quarter, Suren.

Very good, Andy. Thank you.

A question on your PPE side. Do you have like a gross margin for that particular side of the business?

I know it’s all depending on what particular deal you’re doing, or is that—obviously that’s a much lower gross margin business, but is that line item, any sanitizer run at a lower rate or masks than let’s say gowns or gloves or any of the particular products?

Sure. It averages out to 25% to 30% because of the supply and demand, right?

(Inaudible) was in April, it was a bigger margin because the same (inaudible) cost of goods were higher. It’s all depending on the supply and demand at that time.

We try to maintain around 25% to 30% gross margin.

That’s good. Your supply chain, is it coming from overseas?

Is it …

It varied in April to—I don’t want to pinpoint when we have (inaudible) blocked up, we had to bring in from Canada and so it’s various sources that we continue to bring in.

And you continue to get adequate supplies going forward, or is it (cross-talking)?

Yes, we are solidified from Far East if we have an issue with—of course, our country itself has an issue with China then we moved on to Vietnam, Malaysia or something like that. So, we are already able to find the product to bring it in so that we can store it in our stores because the stores also need these sanitizers and masks and so on and so forth.

You have a natural customer base in your pharmacy clients.

Yes. A little bit (inaudible) a couple of hospitals at the time because that came through our pharmacy network asking here is the hospital looking for these kind of things, and so on and so forth.

It’s our primary customer is our pharmacies, yes.

Have you gotten into any of the stateside contracts, or they are harder to get into, or?

We tried to do a subcontracting of that, but not as a primary contractor we could not get to it because you need to have an established service oriented, disabled veteran or some certification, so on and so forth, so we try to fulfill those to other subcontractors.

Okay, thank you. Great quarter again.

Thanks.

Thanks, Andy. Yes.

Hi, Suren.

Hi, Carlo.

I think all the previous persons asked all my questions and it’s exhausted them. I don’t have any more.

I was really looking at the inventory as in and receivables, but great quarter, and I thank you and Howard for having the call and so everybody can hear more about the company. I will (inaudible) the rest of my time.

Thank you.