Trxade Group, Inc. (“we”, “our”, “Trxade”, the “Company”) owns 100% of Trxade, Inc., Integra Pharma Solutions, LLC and Alliance Pharma Solutions, LLC. The merger of Trxade, Inc. and Trxade Group, Inc. occurred in May 2013.

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

Basis of Presentation - The accompanying unaudited interim consolidated financial statements of Trxade Group, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10K.

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, 2017 as reported in the Company’s Annual Report on Form 10K have been omitted.

Inventory - Inventories are stated at the lower of cost or net realizable value. Cost, is determined on a first-in, first-out basis. On a quarterly basis, we analyze our inventory levels and reserve for inventory that is expected to expire prior to being sold, inventory that has a cost basis in excess of its expected net realizable value, inventory in excess of expected sales requirements, or inventory that fails to meet commercial sale specifications. Expired inventory is disposed of and the related costs are written off to the reserve for inventory obsolescence.

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

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

		For three months ended September 30, 2018		For nine months ended September 30, 2018


Numerator:
Net Income	$	94,249	$	197,031

Denominator:
Denominator for basic EPS – weighted average shares		32,083,629		32,083,629
Dilutive effect of warrants		2,252,849		2,247,425
Dilutive effect of convertible debt		401,486		401,486
Denominator for diluted EPS –weighted average shares		34,737,964		34,732,540

Basic and Diluted income per common share		0.00		0.01

Revenue Recognition -- Trxade, Inc. generates net transaction fee income as a percentage of the total transactions between the seller (wholesaler) and the buyer (independent pharmacies), S2P. Step One: Identify the contract with the customer – Trxade, Inc. Terms and Uses Agreement is acknowledged between the Wholesaler and Trxade, Inc. which outlines the transaction fee amount based on the type of product. Fee amount is based on the selling price purchased on the Trxade platform. The transaction fee is higher for generic drugs and lower for brand named drugs. The transaction fees are collectible based on evaluation of the quality of the wholesaler and the payable experience. Step Two: Identify the performance obligations in the contract – Agreement requires the wholesaler to provide a catalog of pharmaceuticals for posting on the Trxade Platform for purchase by Pharmacies. Deliver the pharmaceuticals and upon shipment remits the stated platform fee to Trxade, Inc. Trxade, Inc. is required to upload the catalogs and provide the order information to the wholesalers. Step Three: Determine the transaction price – The transaction fees to be paid on the Trxade platform that the wholesalers have are outlined in the Terms and Uses Agreement. Step Four: Allocate the transaction price – 100% of the transaction fee is earned at the time the wholesaler has shipped the order to the buyer. Step Five: Recognize revenue when or as the entity satisfies a performance obligation – the revenue is recognized at the date of the sale consummated on the Trxade Platform.

Integra Pharma Solutions, LLC generates net income as a seller of merchandise to the buyer – independent pharmacies. Step One: Identify the contract with the customer – Agreement is acknowledged between Integra and the buyer with a credit application by the customer. Step Two: Identify the performance obligations in the contract – Sales invoice requires Integra to deliver the products and pharmacy to remit the stated invoice amount. Step Three: Determine the transaction price – The transaction price is determined at the time of sale and is outlined in the invoice. Step Four: Allocate the transaction price – 100% of the transaction revenue is earned at the time the order is delivered to the buyer. Step Five: Recognize revenue when or as the entity satisfies a performance obligation - the product is delivered to the customer.

Recent Accounting Pronouncements – The Company has implemented all new relevant accounting pronouncements that are in effect through the date of these financial statements. The pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its consolidated financial position or results of operations.

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, “Revenue Recognition”, and requires entities to recognize revenue when they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We adopted Topic 606 as of January 1, 2018. The adoption of Topic 606 did not have a material impact to our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations because the revenue of the Company does not include contracts that extend over several periods.