As an internet-based business, we may be vulnerable to hackers who may access the data of our investors and the issuer companies that utilize our platform. Further, any significant disruption in service on our app, platform or computer systems could reduce the attractiveness of our services and result in a loss of investors and customers and partners interested in doing business with us. Further, we rely on a third-party technology provider to provide hosting, security and some of our back-up technology. Any disruptions of services or cyber-attacks either on our technology provider or the Company could harm our reputation and materially negatively impact our financial condition and business.

We are subject to data privacy and security laws, regulations and contractual obligations governing the transmission, security and privacy of health and other sensitive or proprietary information, which may impose restrictions on the manner in which we access, store, transmit, use and disclose such information and subject us to penalties if we are unable to fully comply with such laws or contractual provisions.

● As described below, we are required to comply with numerous federal and state laws and regulations governing the collection, use, disclosure, storage and transmission of individually identifiable health information that we may obtain or have access to in connection with the provision of our services. These laws and regulations, including their interpretation by governmental agencies, are subject to frequent change. These laws and regulations include the following.

• The Health Insurance Portability and Accountability Act, or HIPAA, and its implementing regulations. Actual failure to comply with HIPAA could result in fines and civil and criminal penalties, as well as contractual damages, which could harm our business, finances and reputation. 

• The Health Information Technology for Economic and Clinical Health Act, or the HITECH Act, enacted as part of the American Recovery and Reinvestment Act of 2009, also known as the "Stimulus Bill", effective February 22, 2010, modified HIPAA by setting forth health information security breach notification requirements and increasing penalties for violations of HIPAA, among other things. Failure to comply with HIPAA as modified by the HITECH Act could result in fines and penalties, criminal sanctions and reputational damage that could harm our business. 

• Numerous other federal and state laws may apply that restrict the use and disclosure and mandate the protection of the privacy and security of individually identifiable information, as well as employee personal information, and that require notifications and mitigation in the event of a breach. These include state medical information privacy laws, state social security number protection laws and federal and state consumer protection laws, among others. These various laws in many cases are not preempted by HIPAA and may be subject to varying interpretations by the courts and government agencies, creating complex compliance issues for us and our clients and potentially exposing us to additional expense, adverse publicity and liability. 

•Federal and state consumer protection laws are increasingly being applied by the UnitedStates Federal Trade Commission, or FTC, and states' attorneys general to regulate the collection, use, storage and disclosure of personal or individually identifiable information, through websites or otherwise, and to regulate the presentation of website content. The security measures that we and our third-party vendors and subcontractors have in place to ensure compliance with privacy and data protection laws and contractual commitments may not protect our facilities and systems from security breaches, acts of vandalism or theft, cyber incidents, misplaced or lost data, programming and human errors or other similar events. The occurrence of a cyber incident that affects either individually identifiable health information or other confidential or proprietary information with which we have been entrusted may result in liability and hurt our reputation. Additionally, as business associates under HIPAA, we may also be liable for privacy and security breaches of protected health information and certain similar failures of their subcontractors. Even though we contractually require subcontractors to safeguard protected health information as required by law, we still have limited control over the actions and practices of such subcontractors. An actual or perceived breach of privacy or security of individually identifiable health information held by us or by our subcontractors may result in an enforcement action, including criminal and civil liability, against us, as well as negative publicity. We are not able to predict the full extent of the impact such incidents may have on our business if such incidents occur. Any failure we may have in complying with HIPAA may result in criminal or civil liability. Enforcement actions against us could be costly and could interrupt regular operations, which may harm our business.

We historically have funded the business through debt financing, and as a result have significant outstanding debt obligations, in addition to trade payables and tax obligations, which could impair our ability to raise additional capital, restrict our use of cash from operations to grow the business, and increase the risk of loss of your investment.

We historically have funded development of our business through debt financing, and as of August 31, 2020, our total debt outstanding (including principal and accrued interest on borrowings, and excluding trade payables and tax obligations) was approximately $10.4 million. We have projected approximately 12% of the proceeds from the current offering, assuming the maximum amount is raised, is expected to be applied to repayment of debt, including interest expenses. The Company reserves the right to apply a higher or lower proportion of offering proceeds to repay Company debt. A portion of the Company's debt is secured by liens on the Company's assets. Portions of our debt are secured by personal guarantees by Lawrence Margolis, our founder and CEO, as well as by security interests on Mr. Margolis' own real property. The majority of our outstanding debt is comprised of an unsecured loan made to the Company in November 2017 by Health Tech Harbor, Inc. ("HTH") in the principal amount of $7,076,470 (the "HTH Loan"). Mr. Margolis, our founder and CEO, is the majority stockholder, sole director and president of HTH. Except for making the HTH Loan to the Company, HTH is not involved in the Company's business. The HTH Loan was made using a portion of funds borrowed by HTH from third party lenders unrelated to the Company ("HTH Lenders"), which were provided to fund Company operations in anticipation of a merger of the Company and a third party. The anticipated merger ultimately did not close and HTH's debt to the HTH Lenders remains outstanding. On July 29, 2020, certain of the HTH Lenders filed an involuntary petition against HTH under chapter 7 of the United States Bankruptcy Code. HTH subsequently filed a motion in the Bankruptcy Court to dismiss the case. To date, no action by HTH or the HTH Lenders against the Company has been filed or threatened. Both sides had agreed to mediation. The outstanding debt of the Company, including the HTH Loan, may hinder our ability to raise capital, invest in the business, preserve cash from operations and achieve profitability. Debt repayment obligations may restrict us from using revenue for investments in marketing, product development, business development, staffing, technology, operations and other business uses. If we are unable to raise sufficient capital and generate sufficient revenue, we may be unable to meet our debt service obligations, which may result in an event of default under one or more debt instruments or agreements. A default in repayment of our debt could result in increased legal expenses, litigation costs, acceleration of indebtedness, adverse judgments against the Company, seizure of Company assets and/or enforcement of personal guaranties or personal liens against our founder and CEO. Any such consequences could have a material adverse effect on the Company and its ability to continue operating. In a liquidation of the Company, debt holders generally would be paid from the proceeds of a sale of the Company's assets prior to any distribution of proceeds to stockholders. Failure to raise or generate cash sufficient to meet our debt obligations therefore may significantly impair the value of the Company and its stock, and could cause the shares purchased in the present offering to decrease in value or lose all value. Further, there can be no guarantee as to the impact on the Company of the bankruptcy of HTH, actions by the HTH Lenders, or the terms of repayment of the HTH Loan that may be agreed between the Company and HTH or its representatives. If HTH or the HTH Lenders sought to declare a default by the Company and/or accelerate the Company's repayment obligations with respect to the HTH Loan, the Company's liabilities could increase and the value of the Company's stock could decrease. If any debt obligations of the Company, including the HTH Loan, were capitalized and converted to equity, such debt and corresponding liabilities on our balance sheet would be reduced, but the stock issued in exchange for such debt would dilute the outstanding equity interests of the Company's stockholders, including the interests of purchasers of the stock issued in the current offering. The magnitude of such dilution cannot be predicted with any certainty

The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.

The pharmaceutical industry is undergoing significant change and the market for technology-enabled healthcare products and services is constantly changing, which makes it difficult to forecast demand for our technology-enabled products and services. If we are not successful in promoting the benefits offered by our products and services, our growth may be limited.

The pharmaceutical and healthcare industries in the United States are undergoing significant structural change and are rapidly evolving. We believe demand for the products and services we offer has been driven in large part by increasing consumer preference for e-commerce and personalized healthcare and pharmaceutical solutions over traditional "brick and mortar" retail experience. Widespread acceptance of home delivery in the pharmaceutical space is critical to our future growth and success. The market for technology-enabled pharmaceutical healthcare products and services is constantly changing and it is uncertain whether it will achieve and sustain high levels of demand and market adoption. Our future financial performance will depend in part on growth in these markets and on our ability to adapt to emerging demands of our clients. It is difficult to predict the future growth rate and size of our target market. Our success will depend to a substantial extent on the willingness of pharmaceutical patients to increase their use of the technology and services provided by us and our ability to demonstrate the value of the technology and services offered to the existing customers and potential future customers. If pharmaceutical patients do not recognize the benefits of the products and services offered by us, or if we are unable to drive positive health outcomes, then the market for the products and services offered by us might not develop at all, or it might develop more slowly than we expect.

We operate in a highly competitive industry and if we are unable to compete successfully ou revenue and profitability will be adversely affected.

The pharmaceutical market is highly competitive, and we anticipate that competition will increase in volume and intensity. We face competition from major e-commerce platforms and retailers like Amazon and Walmart, as well as the largest retail pharmacies such as CVS and Walgreen which have far longer operating histories and far greater resources than we do. Competitors could focus their substantial resources on developing a more attractive solution than ours. Volume-based pricing of pharmaceuticals also may benefit our competitors, who buy medications in quantities much higher than we do or expect to, and may hinder our efforts to reduce our costs of good sold even as our business grows.

We are subject to data privacy and security laws, regulations and contractual obligations governing the transmission, security and privacy of health and other sensitive or proprietary information, which may impose restrictions on the manner in which we access, store, transmit, use and disclose such information and subject us to penalties if we are unable to fully comply with such laws or contractual provisions.

As described below, we are required to comply with numerous federal and state laws and regulations governing the collection, use, disclosure, storage and transmission of individually identifiable health information that we may obtain or have access to in connection with the provision of our services. These laws and regulations, including their interpretation by governmental agencies, are subject to frequent change. These laws and regulations include the following. - The Health Insurance Portability and Accountability Act, or HIPAA, and its implementing regulations. Actual failure to comply with HIPAA could result in fines and civil and criminal penalties, as well as contractual damages, which could harm our business, finances and reputation. The Health Information Technology for Economic and Clinical Health Act, or the HITECH Act, enacted as part of the American Recovery and Reinvestment Act of 2009, also known as the "Stimulus Bill", effective February 22, 2010, modified HIPAA by setting forth health information security breach notification requirements and increasing penalties for violations of HIPAA, among other things. Failure to comply with HIPAA as modified by the HITECH Act could result in fines and penalties, criminal sanctions and reputational damage that could harm our business. Numerous other federal and state laws may apply that restrict the use and disclosure and mandate the protection of the privacy and security of individually identifiable information, as well as employee personal information, and that require notifications and mitigation in the event of a breach. These include state medical information privacy laws, state social security number protection laws and federal and state consumer protection laws, among others. These various laws in many cases are not preempted by HIPAA and may be subject to varying interpretations by the courts and government agencies, creating complex compliance issues for us and our clients and potentially exposing us to additional expense, adverse publicity and liability. Federal and state consumer protection laws are increasingly being applied by the United States Federal Trade Commission, or FTC, and states' attorneys general to regulate the collection, use, storage and disclosure of personal or individually identifiable information, through websites or otherwise, and to regulate the presentation of website content. The security measures that we and our third-party vendors and subcontractors have in place to ensure compliance with privacy and data protection laws and contractual commitments may not protect our facilities and systems from security breaches, acts of vandalism or theft, cyber incidents, misplaced or lost data, programming and human errors or other similar events. The occurrence of a cyber incident that affects either individually identifiable health information or other confidential or proprietary information with which we have been entrusted may result in liability and hurt our reputation. Additionally, as business associates under HIPAA, we may also be liable for privacy and security breaches of protected health information and certain similar failures of their subcontractors. Even though we contractually require subcontractors to safeguard protected health information as required by law, we still have limited control over the actions and practices of such subcontractors. An actual or perceived breach of privacy or security of individually identifiable health information held by us or by our subcontractors may result in an enforcement action, including criminal and civil liability, against us, as well as negative publicity. We are not able to predict the full extent of the impact such incidents may have on our business if such incidents occur. Any failure we may have in complying with HIPAA may result in criminal or civil liability. Enforcement actions against us could be costly and could interrupt regular operations, which may harm our business.

We operate in a highly regulated industry and must comply with a significant number of complex and evolving requirements. Sustaining compliance with state and federal statutes and regulation may prove costly. Further, if we fail to comply with these requirements, we could incur significant penalties and other costs and loss of business.

Failure to comply with various other regulations and laws applicable to our business could cause us to suffer reputational damage as well as the costs of penalties, legal fees, and other costs. Such additional regulations and laws may include the following, among others: 

- The federal Anti-Kickback Statute (the “AKS”) which prohibits individuals andentities from knowingly and willfully paying, offering, receiving or soliciting anything of value in order to induce the referral of patients or in return for purchasing, leasing, ordering, arranging for, or recommending services or goods covered in whole or in part by Medicare, Medicaid, or other government healthcare programs. 

- The federal physician self-referral law, often referred to as the Stark Law, which prohibits, with limited exceptions, physicians from referring Medicare or Medicaid patients to an entity for the provision of specified Designated Health Services, or DHS, among them outpatient prescription drugs, if the physician or a member of such physician's immediate family has a direct or indirect financial relationship (including an ownership interest or a compensation arrangement) with the entity. 

- Various state licensure, registration and certification laws applicable to pharmacies, pharmacists, pharmacy technicians and other pharmacy personnel. If we are unable to maintain our licenses or if states place burdensome restrictions or limitations on licensing of out-of-state pharmacies, this could limit or affect our ability to operate in some states. Additionally, if we or any of our personnel violate conditions of their pharmacy or pharmacist licensure, we could face penalties and lose valuable personnel. - Federal and state laws and policies that require pharmacies to maintain, enroll and participate in federal healthcare programs or to report specified changes in their operations to the agencies that administer these programs. If we do not comply with these laws, we may not be able to participate in some federal healthcare programs, which could compromise their ability to sell their solutions. 

- A number of federal and state laws and registration requirements applicable to dispensing controlled substances. If we are unable to maintain their registrations, this could limit or affect their ability to dispense controlled substances, as applicable, and other violations of these laws could subject us to criminal or other sanctions. 

- Federal and state laws and policies that require pharmacies to maintain, enroll and participate in federal healthcare programs or to report specified changes in their operations to the agencies that administer these programs. If we do not comply with these laws, we may not be able to participate in some federal healthcare programs, which could compromise their ability to sell their solutions. 

- A number of FDA regulations applicable to our business, including those related to pharmaceutical and medical device promotional practices and the pre-market and post-market approval requirements for medical devices.

To date, we have derived substantially all of our product revenue from sales of prescription medications, and revenue from such sales is dependent upon factors outside of our control.

To date, substantially all of our product revenue has been derived from sales of prescription medications, and we expect to continue to derive the substantial majority of our product revenue from sales of prescription medications for the foreseeable future. Revenue from prescription medication fulfillment is dependent upon a number of factors, many of which are outside of our control, such as growth or contraction in patient populations at our clients, the number and mix of medications each patient is prescribed, and reimbursement and regulatory factors. Any change in these factors could harm our financial results.

Adverse drug events attributed to adherence packaging and home delivery could give rise to claims against us and could damage our reputation.

Our services include adherence packaging and home delivery of patient medications. In the event that our adherence packaging or delivery services are alleged to contribute to an adverse drug event or “ADE,” patients could assert liability claims against us. Such instances could also generate significant negative publicity that could harm our reputation, increase our costs and materially adversely affect our results of operation

Significant and increasing pressure from third-party payers to limit reimbursements and the impact of high cost drugs could materially adversely impact our profitability, results of operations and financial condition.

The continued efforts of health maintenance organizations, managed care organizations, pharmacy benefit managers (“PBMs”), government programs (such as Medicare, Medicaid and other federal and state funded programs) and other third-party payers to limit pharmacy reimbursements may adversely impact our profitability. While manufacturers have increased the price of drugs, payers have generally decreased reimbursement rates as a percentage of drug cost. We expect pricing pressures from third-party payers to continue given the high and increasing costs of specialty, brand-name and generic drugs. Given the significant competition in the industry, we have limited bargaining power to counter payer demands for reduced reimbursement rates. If a significant number of patients cannot afford to cover the portions of drug costs not covered by payers as a result of limited reimbursements, and we are unable to find other sources of funding for such patients, those patients may not fill their prescriptions and our revenues and business could be adversely affected. In response to rising drug prices, payers may also demand that we provide additional services, enhanced service levels and other cost savings to help mitigate the increase in drug costs. Additional services with minimal or no service fees would adversely impact our profitability and data-management technology and software make it challenging for us to prove specific cost savings to payers. Our inability or failure to demonstrate cost efficiencies could adversely impact a payer's willingness to engage us, exclusively or at all, as a pharmacy in the face of rising drug costs.

We may be subject to periodic audit compliance performed by pharmacy benefit managers and third-party payers.

We derive a substantial portion of revenue through participation in provider networks pursuant to contracts with PBMs and third-party payers who periodically audit for compliance with the terms of their contracts, provider manuals, and applicable laws and regulations. Non-compliance with any such contracts, provider manuals, or laws and regulations can result in the clawback of payment and may jeopardize continued participation in provider networks.

Changes in reimbursement rates from Medicare and Medicaid for the services we provide may cause our revenue and profitability to decline.

Reimbursement from government programs are subject to statutory and regulatory requirements, administrative rulings, interpretations of policy, implementation of reimbursement procedures, retroactive payment adjustments, governmental funding restrictions, changes to existing legislation, and the enactment of new legislation, all of which may materially affect the amount and timing of reimbursement payments to us. Changes to the way Medicare and Medicaid pay for our services may reduce our revenue and profitability on services provided to Medicare and Medicaid patients and increase our working capital requirements. Since its inception in 2006, Medicare Part D has resulted in increased utilization and decreased pharmacy gross margin rates as higher margin business, such as cash and state Medicaid customers, migrated to Medicare Part D coverage. Further, as a result of the Affordable Care Act and changes to Medicare Part D, such as the elimination in 2013 of the tax deductibility of the retiree drug subsidy payment received by sponsors of retiree drug plans, certain of our PBMs could decide to discontinue providing prescription drug benefits to their Medicare-eligible members. To the extent this occurs, the adverse effects of increasing customer migration into Medicare Part D may outweigh the benefits we realize from the growth of Medicare Part D.

We have limited contractual protections with pharmaceutical suppliers and wholesalers that supply us with most of the pharmaceuticals that we distribute.

We dispense pharmaceuticals that are supplied to us by several suppliers and wholesalers. Our contracts with pharmaceutical suppliers and wholesalers often provide us with, among other things: 

- discounts on drugs we purchase to be dispensed to our clients; 

- rebates and service fees; and 

- access patient required pharmaceuticals.

Our revenues, profitability and cash flows may be negatively impacted if safety risks of a drug are publicized or if a drug is withdrawn from the market due to manufacturing or other issues.

Physicians may significantly reduce the numbers of prescriptions for a drug with safety concerns or manufacturing issues. Additionally, negative press regarding a drug with a higher safety risk profile may result in reduced global consumer demand for such drug. Decreased utilization and demand of a drug we distribute could materially and adversely impact our volumes, net revenues, profitability and cash flows

Consolidation in the healthcare industry could materially adversely affect our business, financial condition and results of operations.

Many healthcare industry participants are consolidating to create integrated healthcare delivery systems with significant market power and we expect this trend to continue. As provider networks and managed care organizations consolidate, thereby decreasing the number of market participants, competition to provide products and services like ours will become more intense, and the importance of establishing relationships with key industry participants and growing the strength of our brand will become greater. In addition, industry participants may try to use their increased market power to negotiate price reductions for our products and services. If our reimbursements are reduced as a result of either an imbalance of market power or decreased demand for our products, revenue would be reduced and we could become significantly less profitable.

We rely heavily on a single shipping provider, and our business could be harmed if our shipping rates increase, our provider is unavailable or our provider performs poorly and we are unable to successfully replace our shipping provider.

A substantial majority of the prescriptions we dispense are shipped through UPS. We depend heavily on these shipping services for efficient and cost-effective delivery of our products. The risks associated with our dependence on UPS include: - any significant increase in shipping rates, including rate increases resulting from higher fuel prices;

- strikes or other service interruptions by UPS or by another carrier that could affect UPS; 

- spoilage of high cost drugs during shipment, since our drugs sometimes require special handling, such as refrigeration; and 

- increased delivery errors by UPS, resulting in lost or stolen product. In the event any of the foregoing occurs and we are unable to transition efficiently and effectively to a new provider, we could incur increased costs or experience a material disruption in our operations.

Vaibhav Khullar is a part-time officer. As such, it is likely that the company will not make the same progress as it would if that were not the case.

Gavin Scotti, Sr. and Gavin Scotti Jr. v. Lawrence Margolis and DGN Pharmacy, Inc. Westchester County Court Index No. 63028/2020. This lawsuit involves alleged counterclaims against the Company for breach of contract asserted by the Scotti parties in response to a lawsuit for $600,000 previously filed by Mr. Margolis as a Plaintiff in the New Jersey Bergen Court under docket BER-L-3171-20.  We believe the New York matter is barred by the judicial stay imposed by the New Jersey court and otherwise barred by the entire controversy doctrine. No counterclaims have been asserted in the New Jersey action. 

  Smilgiewicz v. DGN Pharmacy, Inc. (Docket No. BER_L-4639-20). This matter involves a dispute over a Consulting Agreement in which plaintiff alleges PersonalRX is responsible for fees totaling $104,048.41. No complaint has been served at this time and the Company disputes the asserted claim.