UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,

WASHINGTON, D.C. 20549

FORM 10-Q


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 JUNE

For the quarterly period ended June 30, 2020

2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _________

_____ to_____

Commission file number 000-53298

MYOS RENS TECHNOLOGYFile Number 001-36533


MEDAVAIL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada90-0772394

Delaware90-0772394
(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)Number)
6665 Millcreek Dr. Unit 1, Mississauga ON CanadaL5N 5M4
45 Horsehill Road, Suite 106
Cedar Knolls, New Jersey 07927
(Address of principal executive offices, including zip code)offices)(Zip Code)

(973) 509-0444

+1 (905) 812-0023
(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class:classTrading Symbol(s)Name of each exchange on which registered:registered
Common Stock, $0.001 par value
Series A Preferred Stock Purchase Rights, $0.001 par valueper share		MYOSMDVLThe Nasdaq Stock Market LLC

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 (1) 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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging"emerging growth company”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 ActAct. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 4, 2020,10, 2021, there were 11,846,79532,746,549 shares of the registrant’s common stock outstanding.

MYOS RENS TECHNOLOGY INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020

Table of Contents

PAGE
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements.
1




MedAvail Holdings, Inc.
Form 10-Q
For the Three Months Ended June 30, 2021

TABLE OF CONTENTS

Page
PART I
Item 1.Financial Statements
4
Consolidated Condensed Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 20191
4
Consolidated Condensed Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2020 and 2019Comprehensive Loss2
5
Consolidated Condensed Statements of Shareholders Equity (Deficit)
6
Consolidated Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2020 and 20193
7
Notes to Consolidated Condensed Financial Statements
9
Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2020 and 20194
Notes to Condensed Consolidated Financial Statements5
Item 2.Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations.Operations19
20
Item 3.Quantitative and Qualitative Disclosures about Market Risk.Risk28
31
Item 4.Controls and Procedures
31
Item 4.Controls and Procedures.28
PART II
PART II - OTHER INFORMATIONItem 1.Legal Proceedings
32
Item 1A.Risk Factors
32
Item 1.Legal Proceedings.29
Item 1A.Risk Factors.29
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.Proceeds30
32
Item 3.Defaults Upon Senior Securities.Securities30
32
Item 4.Mine Safety Disclosures
32
Item 4.5.Mine Safety Disclosures.Other Information30
32
Item 6.Exhibits
33
Item 5.Other Information.30
Signatures
Item 6.35
Exhibits.31
SIGNATURES32

i



2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.
These forward-looking statements include, but are not limited to, statements about:
•our plans to modify our current products, or develop new products;
•the expected growth of our business and organization;
•our expectations regarding the size of our sales organization and expansion of our sales and marketing efforts;
•our ability to retain and recruit key personnel, including the continued development of a sales and marketing infrastructure;
•our ability to obtain and maintain intellectual property protection for our products;
•our ability to expand our business into new geographic markets;
•our compliance with extensive Nasdaq requirements and government laws, rules and regulations both in the United States and internationally;
•our estimates of expenses, ongoing losses, future revenue, capital requirements and our need for, or ability to obtain, additional financing;
•our ability to identify and develop new and planned products and/or acquire new products;
•our financial performance; and
•developments and projections relating to our competitors or our industry.
We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to the Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

3

PART I. FINANCIAL INFORMATION

I

ITEM

Item 1. FINANCIAL STATEMENTS

MYOS RENS TECHNOLOGYFinancial Statements

MEDAVAIL HOLDINGS, INC. AND SUBSIDIARY

CONDENSED

Consolidated Condensed Balance Sheets

(Unaudited)
(US Dollars in thousands, except share amounts)

June 30,December 31,
20212020
Assets
Current assets:
Cash and cash equivalents$48,735 $57,936 
Restricted cash62 60 
Accounts receivable (net of allowance for doubtful accounts of $39 thousand for June 30, 2021, $40 thousand for December 31, 2020)1,058 1,520 
Inventories3,171 2,817 
Prepaid expenses and other current assets1,039 1,534 
Total current assets54,065 63,867 
Property, plant and equipment, net4,302 3,795 
Right-of-use assets1,283 1,239 
Other assets214 203 
Intangible assets1,386 227 
Total assets$61,250 $69,331 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities$7,047 $4,512 
Short-term debt1,000 2,161 
Contract liability328 275 
Current portion of lease obligations549 665 
Total current liabilities8,924 7,613 
Long-term debt, net9,414 0 
Long-term portion of lease obligations813 651 
Total liabilities19,151 8,264 
Commitments and contingencies00
Stockholders' deficit:
Common shares ($0.001 par value, 100,000,000 shares authorized, 32,583,734 and 31,816,020 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively)33 32 
Warrants1,485 2,614 
Additional paid-in-capital215,700 213,624 
Accumulated other comprehensive loss(6,928)(6,928)
Accumulated deficit(168,191)(148,275)
Total stockholders' equity42,099 61,067 
Total liabilities and stockholders' equity$61,250 $69,331 

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
4

MEDAVAIL HOLDINGS, INC.
Consolidated Condensed Statements of Operations and Comprehensive Loss
(Unaudited)
(US Dollars in thousands, except share and per shareper-share amounts)

  June 30,  December 31, 
  2020  2019 
ASSETS (Unaudited)    
Current assets:      
Cash $1,334  $64 
Accounts receivable, net  33   5 
Inventories, net  1,474   1,666 
Prepaid expenses  187   23 
Total current assets  3,028   1,758 
         
Operating lease right of use asset  165   192 
Deferred offering costs  -   95 
Fixed assets, net  88   97 
Intangible assets, net  791   896 
Total assets $4,072  $3,038 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable $108  $277 
Accrued expenses and other current liabilities  3   230 
Operating lease liabilities – current portion  37   46 
Related party promissory note payable and accrued interest  654   1,159 
Total current liabilities  802   1,712 
         
Long-term liabilities:        
Note Payable PPP loan  310   - 
Operating lease liabilities – net of current portion  132   146 
Total liabilities  1,244   1,858 
         
Commitments and contingencies (Note 11)        
         
Stockholders’ equity:        
Preferred stock, $0.001 par value; 500,000 shares authorized; no shares issued and outstanding        
Common stock, $0.001 par value; 15,000,000 shares authorized; 11,846,795 and 9,176,908 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively  12   9 
Additional paid-in capital  43,778   40,496 
Accumulated deficit  (40,962)  (39,325)
Total stockholders’ equity  2,828   1,180 
Total liabilities and stockholders’ equity $4,072  $3,038 

See



Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Sales:
Pharmacy and hardware sales$4,725 $2,259 $8,506 $3,661 
Service sales305 52 551 62 
Total sales5,030 2,311 9,057 3,723 
Cost of sales:
Pharmacy and hardware cost of sales4,679 1,826 8,205 3,211 
Service cost of sales178 39 359 86 
Total cost of sales4,857 1,865 8,564 3,297 
Gross profit173 446 493 426 
Pharmacy operations2,292 1,116 4,224 2,205 
General and administrative6,646 3,580 13,136 7,080 
Selling and marketing1,497 570 2,878 1,273 
Research and development201 163 369 378 
Merger expenses0 1,283 0 1,283 
Operating loss(10,463)(6,266)(20,114)(11,793)
Other gain (loss), net38 0 199 8 
Interest income27 7 67 15 
Interest expense(66)(277)(68)(456)
Loss before income taxes(10,464)(6,536)(19,916)(12,226)
Income tax0 0 0 0 
Net loss$(10,464)$(6,536)$(19,916)$(12,226)
Other comprehensive income (loss):
Foreign currency translation adjustment$0 $0 $0 $(2)
Total comprehensive loss$(10,464)$(6,536)$(19,916)$(12,228)
Net loss per share - basic and diluted$(0.32)$(3.35)$(0.61)$(6.50)
Weighted average shares outstanding - basic and diluted32,546,3951,953,04932,493,4681,880,577

The accompanying notes toare an integral part of these unaudited consolidated condensed consolidated financial statements

1

statements.


MYOS RENS TECHNOLOGY

5

MEDAVAIL HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Consolidated Condensed Statements of Shareholders' Equity (Deficit)
(Unaudited)
(Unaudited;US Dollars in thousands, except share and per share amounts)

  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2020  2019  2020  2019 
             
Net revenues $329  $154  $619   303 
Cost of revenues  172   81   330   142 
Gross profit  157   73   289   161 
Operating expenses:                
Selling, marketing and research  227   337   429   612 
Personnel and benefits  365   470   833   890 
General and administrative  329   432   644   788 
Total operating expenses  921   1,239   1,906   2,290 
Operating loss  (764)  (1,166)  (1,617)  (2,129)
Other expense, net  (7)  (9)  (20)  (21)
Net loss $(771) $(1,175) $(1,637) $(2,150)
                 
Net loss per share attributable to common shareholders:                
Basic and diluted $(0.07) $(0.13) $(0.15) $(0.23)
                 
Weighted average number of common shares outstanding:                
Basic and diluted  11,404,497   9,170,658   10,562,389   9,170,658 

See


Common Shares
Preferred Shares (1)
WarrantsAdditional Paid-in-CapitalAccumulated DeficitAccumulated Other Comprehensive LossTotal Stockholders' Equity (Deficit)
SharesAmountSharesAmount
Balance at March 31, 202131,939,898 $32 0 $0 $2,579 $214,125 $(157,727)$(6,928)$52,081 
Net loss— — — — — — (10,464)— (10,464)
Shares issued for options exercises23,177 — — — — 40 — — 40 
Exercise of warrants620,659 1 — — (1,094)1,212 — — 119 
Share-based compensation— — — — — 323 — — 323 
Balance at June 30, 202132,583,734 $33 0 $0 $1,485 $215,700 $(168,191)$(6,928)$42,099 
Balance at December 31, 202031,816,020 32 0 0 2,614 213,624 (148,275)(6,928)61,067 
Net loss— — — —��— — (19,916)— (19,916)
Shares issued for options exercises144,101 — — — — 241 — — 241 
Exercise of warrants623,613 1 — — (1,129)1,252 — — 124 
Share-based compensation— — — — — 583 — — 583 
Balance at June 30, 202132,583,734 $33 0 $0 $1,485 $215,700 $(168,191)$(6,928)$42,099 
Balance at March 31, 20201,521,411$8 10,603,217$94,272 $1,133 $30,929 $(126,920)$(6,952)$(7,530)
Net loss—— —— — — (6,536)— (6,536)
Shares issued for options exercises2,584— —— — 4 — — 4 
Share-based compensation—— —— — 86 — — 86 
Warrants issued—— —— 182 — — — 182 
Cumulative translation adjustment—— —— — — — — 0 
Balance at June 30, 20201,523,995$8 10,603,217$94,272 $1,315 $31,019 $(133,456)$(6,952)$(13,794)
Balance at December 31, 20191,504,2518 10,500,44093,484 698 30,829 (121,230)(6,950)(3,161)
Net loss—— —— — — (12,226)— (12,226)
Issuance of preferred shares—— 102,777788 — — — — 788 
Shares issued for options exercises19,744— —— — 31 — — 31 
Share-based compensation—— —— — 170 — — 170 
Warrants issued—— —— 617 (11)— — 606 
Cumulative translation adjustment—— —— — — — (2)(2)
Balance at June 30, 20201,523,995$8 10,603,217$94,272 $1,315 $31,019 $(133,456)$(6,952)$(13,794)

(1) $0.001 par value, 10,000,000 shares authorized at June 30, 2021 and December 31, 2020. $0.001 par value, 15,539,330 shares authorized at June 30, 2020.

The accompanying notes toare an integral part of these unaudited consolidated condensed consolidated financial statements

2

statements.


MYOS RENS TECHNOLOGY



6

MEDAVAIL HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Consolidated Condensed Statement of Cash Flows
(Unaudited)
(Unaudited;US Dollars in thousands)

  Six Months Ended 
  June 30, 
  2020  2019 
Cash Flows From Operating Activities:      
Net loss $(1,637) $(2,150)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation  9   13 
Amortization  105   165 
Stock-based compensation  227   71 
Non-cash lease expense  27   - 
Changes in operating assets and liabilities:        
(Increase) decrease in accounts receivable  (28)  62 
Decrease in other current asset  -   1,124 
Decrease (increase) in inventories  192   (1)
Increase in prepaid expenses and other assets  (164)  (87)
Decrease in operating lease liabilities  (23)  - 
Increase in accrued interest expense  20   20 
Decrease in accounts payable and accrued expenses  (396)  (352)
Net cash used in operating activities  (1,668)  (1,135)
         
Cash Flows From Financing Activities:        
Proceeds from registered direct offering of common stock, net  1,298   428 
Proceeds from related party promissory note  300   - 
Proceeds from note payable PPP loan  310     
Proceeds from issuance of common stock in private placement  1,030   1,850 
Net cash provided by financing activities  2,938   2,278 
         
Net increase in cash  1,270   1,143 
Cash at beginning of period  64   15 
Cash at end of period $1,334  $1,158 
         
Supplemental schedule of non-cash investing and financing activities:        
Conversion of related party promissory note payable into shares of common stock  825   250 
Reclassification of deferred offering costs to additional paid in capital  95   16 
         

See
Six Months Ended June 30,
20212020
Cash flows from operating activities:
Net loss$(19,916)$(12,226)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant, and equipment586 463 
Amortization of intangible and leased assets, and debt discount480 350 
Bad debt and other non cash receivables adjustments21 0 
Interest accretion on debt and finance leases4 473 
Unrealized foreign currency (loss) gain0 (2)
Share-based compensation expense583 170 
Warrant expense0 158 
PPP loan forgiveness gain(161)0 
Changes in operating assets and liabilities:
Change in accounts receivable441 (25)
Change in inventory(893)(134)
Change in prepaid expenses and other current assets495 (264)
Change in accounts payable, accrued expenses and other liabilities2,123 1,113 
Change in contract liability53 119 
Change in operating lease liability due to cash payments(332)(268)
Net cash used in operating activities(16,516)(10,073)
Cash flows from investing activities:
Purchase of property, plant and equipment(411)(243)
Payment of security deposits(11)(39)
Purchase of intangible assets and other assets(991)(20)
Net cash used in investing activities(1,413)(302)
Cash flows from financing activities:
Issuance of common shares upon exercise of options and warrants365 31 
Issuance of preferred shares0 788 
Proceeds from debt10,000 8,094 
Payment of debt issuance costs(604)(64)
Repayment of debt(1,000)0 
Payments on finance lease obligations(31)(3)
Net cash provided by financing activities8,730 8,846 
Net decrease in cash, cash equivalents and restricted cash(9,199)(1,529)
Cash, cash equivalents and restricted cash at beginning of period57,996 8,849 
Cash, cash equivalents and restricted cash at end of period$48,797 $7,320 

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.
7


MEDAVAIL HOLDINGS, INC.
Consolidated Condensed Statement of Cash Flows
(Unaudited)
(US Dollars in thousands)
Six Months Ended June 30,
20212020
Supplemental noncash investing and financing activities:
Inventory transferred to property, plant and equipment$539 $763 
Property, plant and equipment transferred to intangible assets$46 $0 
Purchase of property, plant and equipment in accounts payable$189 $0 
Purchase of intangible assets in accounts payable$294 $0 
Conversion of other liability amount into warrants$0 $448 
Lease liabilities arising from obtaining right of use assets:
Operating leases$437 $491 
Finance leases$0 $51 

8



MEDAVAIL HOLDINGS, INC.
Notes to condensed consolidated financial statements

3

Consolidated Condensed Financial Statements

(Unaudited)

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

CONDENSED Consolidated StatementS of Changes in Stockholders’ Equity

(in thousands, except share amounts)

  Six Months Ended June 30, 2020 
  Common Stock  Additional
paid-in		  Accumulated  Total
stockholders’		 
  Shares  Amount  capital  deficit  equity 
Balance at December 31, 2019  9,176,908  $9  $40,496  $(39,325) $1,180 
Proceeds from sale of common stock, net  964,102   1   1,202   -   1,203 
Proceeds from private placement of common stock  851,240   1   1,029   -   1,030 
Issuance of common stock upon exchange of related party promissory note payable  681,818   1   824   -   825 
Stock-based compensation expense  -   -   18   -   18 
Issuance of restricted common stock  172,727   -   209   -   209 
Net loss      -       (1,637)  (1,637)
Balance at June 30, 2020  11,846,795  $12  $43,778  $(40,962) $2,828 

  Six Months Ended June 30, 2019 
  Common Stock  Additional
paid-in		  Accumulated  Total
stockholders’		 
  Shares  Amount  capital  deficit  equity 
Balance at December 31, 2018  7,481,723  $     8  $37,880  $(35,067) $2,821 
Proceeds from sale of common stock  111,129   -   211   -   211 
Proceeds from private placement of common stock  1,267,123   1   1,849   -   1,850 
Issuance of common stock upon exchange of related party promissory note payable  171,233   -   250   -   250 
Stock-based compensation expense  -   -   71   -   71 
Issuance of restricted common stock  139,450   -   201   -   201 
Net loss  -   -   -   (2,150)  (2,150)
Balance at June 30, 2019  9,170,658  $9  $40,462  $(37,217) $3,254 

  Three Months Ended June 30, 2020 
  Common Stock  Additional
paid-in		  Accumulated  Total
stockholders’		 
  Shares  Amount  capital  deficit  equity 
Balance at March 31, 2020  11,030,100  $11  $42,794  $(40,191) $2,614 
Proceeds from sale of common stock, net  816,695   1   974   -   975 
Stock-based compensation expense  -   -   10   -   10 
Net loss      -      (771)  (771)
Balance at June 30, 2020  11,846,795  $12  $43,778  $(40,962) $2,828 

  Three Months Ended June 30, 2019 
  Common Stock  Additional
paid-in		  Accumulated  Total
stockholders’		 
  Shares  Amount  capital  deficit  equity 
Balance at March 31, 2019  9,170,658  $9  $40,434  $(36,042) $4,401 
Stock-based compensation expense  -   -   28   -   28 
Net loss  -   -   -   (1,175)  (1,175)
Balance at June 30, 2019  9,170,658  $9  $40,462  $(37,217) $3,254 

See accompanying notes to condensed consolidated financial statements


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

NOTE 1 –- NATURE OF OPERATIONS

MedAvail Holdings, Inc., MedAvail, or the Company, a Delaware corporation is a telehealth-enabled pharmacy technology company that has developed and commercialized an innovative self-service pharmacy, mobile application, kiosk and drive-thru solution. MedAvail's principal technology and product is the MedCenter, a pharmacist controlled, customer-interactive, prescription dispensing system akin to a “pharmacy in a box” or prescription-dispensing ATM. The MedCenter facilitates live pharmacist counselling via two-way audio-video communication with the ability to dispense prescription medicines under pharmacist control. MedAvail also operates SpotRx, or the Pharmacy, a full-service retail pharmacy utilizing the Company’s automated pharmacy technology.

NOTE 2 - BASIS OF PRESENTATION AND LIQUIDITY

Nature of Operations

MYOS RENS Technology Inc. (the “Company” or “MYOS”) is focused on the discovery, development and commercialization of advanced nutrition products that improve muscle health and performance.

The Company was incorporated under the laws of the State of Nevada on April 11, 2007. On March 17, 2016, the Company merged with its wholly-owned subsidiary and changed its name from MYOS Corporation to MYOS RENS Technology Inc. As used in theseaccompanying unaudited consolidated condensed consolidated financial statements the terms “the Company”, “MYOS”, “our”, or “we”, refers to MYOS RENS Technology Inc.as of June 30, 2021 and its subsidiary, unless the context indicates otherwise. On February 25, 2011, the Company entered into an agreement to acquire the intellectual property for Fortetropin®, our proprietary active ingredient from Peak Wellness, Inc. The Company’s activities are subject to significant risks and uncertainties.

Our commercial focus is to leverage our clinical data to develop multiple products to target the large, but currently underserved, markets focused on muscle health. The sales channels through which we sell our products are evolving. The first product we introduced was MYO-T12, a proprietary formula containing Fortetropin® and other ingredients which was sold in the sports nutrition market. 

In May 2016, we launched Physician Muscle Health Formula®, a proprietary formulation containing Fortetropin® and sold the product directly to physicians to distribute to their patients who are focused on wellness. The Company relaunched the product as part of its longevity marketing strategy in December 2019. In March 2017 we launched Qurr®, a Fortetropin®-powered product line that is available on our direct-to-consumer platform. We recorded $10 and $32 in net revenues for the three and six months ended June 30, 2020 and June 30, 2019, respectively, for our longevity product lines.

In March 2018, we launched Yolked®, a Fortetropin®-powered product which is NSF Certified for Sports, and developed and marketed to collegiate and professional athletes who want to increase their muscle size and performance2021 have been prepared in accordance with an all-natural advanced nutrition product. The Company recorded $104 and $121 of net revenues for the six months ended June 30, 2020 and June 30, 2019, respectively, for our Yolked® product line.

In June 2018, we launched our Fortetropin® based pet product Myos Canine Muscle Formula® (“MCMF”). Two veterinarian hospitals had previously performed some informal observational studies with older dogs experiencing muscle atrophy and saw positive results after taking our pet product. We believe that the positive feedback received from the veterinarian community, together with the positive results from our Kansas State University study, will enable us to grow our pet business product line. The Company recorded $477 and $150 of net revenues for the six months ended June 30, 2020 and June 30, 2019, respectively, for our MCMF product line.

In November 2019, we launched our white label business, working with manufacturers to create new brands and products using Fortetropin® as the foundation. We recorded $28 of net revenues for the six months ended June 30, 2020.

We continue to pursue additional distribution and branded sales opportunities. There can be no assurance that we will be able to secure distribution arrangements on terms acceptable to us, or that we will be able to generate significant sales of our current and future branded products. We expect to continue developing our own core branded products in markets such as functional foods, sports and fitness nutrition and to pursue international sales opportunities. We remain committed to continuing our focus on various clinical trials in support of enhancing our commercial strategy as well as enhancing our intellectual property assets, to develop product improvements and new products, and to reduce the cost of our products by finding more efficient manufacturing processes and contract manufacturers.

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MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

Merger with MedAvail, Inc.

Merger Agreement

On June 30, 2020, MYOS and MedAvail, Inc., a privately-held Delaware corporation (“MedAvail”), entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), by and among MYOS, MedAvail, and Matrix Merger Sub, Inc., a newly-created wholly-owned subsidiary of MYOS (“Merger Sub”), pursuant to which, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into MedAvail, with MedAvail being the surviving corporation and a wholly-owned subsidiary of MYOS (the “Merger”). The Boards of Directors of MYOS and MedAvail have both approved the Merger and have recommended approval of the Merger by their respective shareholders. MedAvail is a private, in-clinic telemedicine-enabled pharmacy organization based in Ontario, Canada that has developed and commercialized a proprietary robotic dispensing platform and home delivery operation focused on the Medicare Advantage marketgenerally accepted accounting principles in the United States.

AtStates of America ("GAAP") for unaudited interim financial information. Accordingly, the effective timeunaudited interim consolidated condensed financial statements do not include all of the Merger (the “Effective Time”): (a) each share of MedAvail’s common stockinformation and each share of MedAvail’s preferred stock outstanding immediately prior to the Effective Time, excluding any dissenting shares, will be automatically converted solely into the right to receive a number of shares of MYOS common stock (“MYOS Common Stock”) calculated according to the exchange ratio described below; (b) each outstanding MedAvail stock option that has not been exercised prior to the Effective Time will be assumedfootnotes required by MYOS; and (c) each outstanding warrant to acquire MedAvail capital stock that has not been exercised prior to the Effective Time will be assumed by MYOS. Under the exchange ratio formula in the Merger Agreement, as of immediately after the Merger, the former MedAvail security holders are expected to own approximately 96.5% of the aggregate number of fully-diluted shares of MYOS Common Stock outstanding following the consummation of the Merger (the “Post-Closing Shares”), and the stockholders of MYOS immediately prior to the Merger are expected to own approximately 3.5% of the Post-Closing Shares, subject to the adjustments set forth in the Merger Agreement.GAAP for audited financial statements. The exchange ratio will be fixed prior to the closing of the Merger to reflect MYOS’s and MedAvail’s respective capitalizations as of immediately prior to the Effective Time. The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

Immediately following the Merger, the name of the post-merger combined company (the “Post-Merger Combined Company”) is expected to be changed from “MYOS RENS Technology Inc.” to “MedAvail Holdings, Inc.” The Merger Agreement provides that the Board of Directors of the Post-Merger Combined Company will consist of members who are currently directors of MedAvail. The executive officers of the Post-Merger Combined Company will be designated by MedAvail, with MedAvail’s Chief Executive Officer, Ed Kilroy, expected to be the Post-Merger Combined Company’s Chief Executive Officer and MedAvail’s Chief Financial Officer, Ryan Ferguson, expected to be the Post-Merger Combined Company’s Chief Financial Officer.

The Merger Agreement contains certain customary termination rights, including, among others, (a) the right of either MYOS or MedAvail to terminate the Merger Agreement if the other party’s stockholders fail to adopt and approve the Merger Agreement, (b) the right of either party to terminate the Merger Agreement if the other party’s board of directors changes or withdraws its recommendation in favor of the transactions, (c) the right of either party to terminate the Merger Agreement if the Merger has not occurred by the six month anniversary of the date of the Merger Agreement, (d) the right of either party to terminate the Merger Agreement due to a material breach by the other party of any of its representations, warranties or covenants which would result in the closing conditions not being satisfied, subject to certain conditions, and (e) the right of either party to terminate the Merger Agreement if a court of competent jurisdiction or other governmental body issues a final and non-appealable order, decree or ruling, or has taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting the Merger and related transactions. Upon the termination of the Merger Agreement by MYOS or MedAvail, a termination fee of (i) $500,000 may be payable by MYOS to MedAvail, or (ii) $750,000 may be payable by MedAvail to MYOS.


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

Assignment and Assumption Agreement and Subscription and Stock Purchase Agreement

The Merger Agreement provides that, prior to the consummation of the Merger, MYOS will transfer and assign all of its assets and liabilities into MYOS Corp., a newly-created, wholly-owned subsidiary of MYOS, pursuant to an Assignment and Assumption Agreement (the “Assignment and Assumption Agreement”) and a related Subscription and Stock Purchase Agreement (the “Subscription and Stock Purchase Agreement”). The shares of MYOS Corp., immediately after the closing of the Merger, will be spun-out from the Post-Merger Combined Company through a dividend of the stock of MYOS Corp. to the pre-Merger MYOS shareholders, resulting in MYOS Corp., a private company, continuing the current business operations of MYOS. MedAvail will pay MYOS Corp. $2 million in cash upon the closing of the Merger and issue a promissory note for an additional $3 million, payable in installments within one year of the closing of the Merger.

Amendment to Rights Agreement

On June 30, 2020 MYOS entered into the Second Amendment to Rights Agreement (the “Amendment”) with Transhare, as rights agent, which amends the Rights Agreement, dated as of February 14, 2017, previously entered into between MYOS and Island Stock Transfer as rights agent, as amended on February 14, 2020, with Transhare as the successor rights agent (the “Rights Agreement”). The Amendment amends the Rights Agreement to provide, among other things, that (i) neither the approval, execution, delivery or performance or, if approved by the board of directors of MYOS, amendment, modification or waiver of the Merger Agreement or the Voting Agreement or the consummation of the Merger or any other transaction contemplated by the Merger Agreement or the Voting Agreement, nor the public announcement of any of the foregoing will (a) cause any person to (1) become an Acquiring Person (as defined in the Rights Agreement) or be deemed to have become an Acquiring Person or (2) be deemed to have acquired Beneficial Ownership (as defined in the Rights Agreement) of any securities of MYOS or (b) result in the occurrence or deemed occurrence of a Distribution Date (as defined in the Rights Agreement), consolidation or merger or other event or occurrence resulting in a triggering of rights of holders of Rights (as defined in the Rights Agreement), or of obligations of MYOS under the Rights Agreement, and (ii) the Rights will expire in their entirety, and the Rights Agreement will terminate upon the earliest of (a) immediately prior to the Effective Time, (b) the Close of Business (as defined in the Rights Agreement) on February 21, 2021, (c) the time at which all Rights are redeemed, (d) the time at which all Rights are exchanged and (e) the closing of any merger or other acquisition involving MYOS at which time the Rights are terminated. 

Basis of Presentation

The accompanyingconsolidated condensed consolidated balance sheet as of December 31, 2019 has been2020 was derived from ourthe Company's audited consolidated condensed financial statements and the unaudited interim condensed consolidated financial statements as of June 30, 2020 have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information andbut does not include all disclosures required by U.S. GAAP for complete consolidatedaudited financial statements have been condensed or omitted herein.statements. In the opinion of the Company's management, the interim information includes all adjustments, which includes normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The unauditedfootnote disclosures related to the interim condensed consolidated financial statementsinformation included herein are also unaudited. Such financial information should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2020 included in the Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 20192020, which was filed with the SEC on March 24, 2020. 31, 2021, or the 2020 Form 10-K.

The unaudited interim condensed consolidatedpreparation of financial statements presented herein reflect all normal adjustments that are, in the opinion of management, necessary for a fair presentation of the statement of the financial position, results of operations and cash flows for the periods presented. The results of any interim period are not necessarily indicative of the results for the full year.

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MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

Going Concern and Liquidity

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP which contemplatesrequires management to use judgment in the continuationapplication of accounting policies, including making estimates and assumptions. Actual results could differ from those estimates. Estimates are used in accounting for, among other things, revenue recognition, contract loss accruals, excess, slow-moving and obsolete inventories, product warranty accruals, loss accruals on service agreements, share-based compensation expense, allowance for doubtful accounts, depreciation and amortization and in-process research and development intangible assets, impairment of long-lived assets and contingencies. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated condensed financial statements in the period they are deemed to be necessary.

The Company bases its estimates on the information available at the time, its experiences and various other assumptions believed to be reasonable under the circumstances including estimates of the impact of COVID-19. The extent to which COVID-19 impacts the Company’s business and financial results will depend on numerous evolving factors, including but not limited to, the severity and duration of COVID-19, the extent to which it will impact our clinic customers, employees, suppliers, vendors, and business partners. The Company as a going concernassessed certain accounting matters that require consideration of estimates and assumptions in context with the information reasonably available to the Company and the realizationunknown future impacts of assets and satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustment that might become necessary should the Company be unable to continue as a going concern.

The Company has suffered recurring losses from operations and incurred a net loss of $1,637 for the six months ended June 30, 2020. The accumulated deficitCOVID-19 as of June 30, 2020 was $40,962.2021 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s recoverability of, intangible and other long-lived assets including operating lease right-of-use assets. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated condensed financial statements in future reporting periods. Adjustments may be made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Actual results may differ.

Principles of consolidation
The unaudited consolidated condensed financial statements include the accounts of all entities controlled by MedAvail Holdings, Inc., which are referred to as subsidiaries. The Company's subsidiaries include, MedAvail Technologies, Inc., MedAvail Technologies (US), Inc., MedAvail Pharmacy, Inc., and MedAvail, Inc. The Company has no interests in variable interest entities of which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated.
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NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
Measurement of Credit Losses on Financial Statements
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326)”- Measurement of Credit Losses on Financial Instruments”, (“ASU 2016-13”), supplemented by ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses”, (“ASU 2018-19”). The new standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 became effective for Public Business Entities who are SEC filers for fiscal years beginning after December 15, 2019, other than smaller reporting companies, all other public business entities and private companies, with early adoption permitted. This ASU will be effective beginning in the first quarter of our fiscal year 2023. The Company is currently evaluating the impact that this new guidance will have on its consolidated condensed financial statements and related disclosures.
Recently Adopted Accounting Standards
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). This guidance removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. This ASU will be effective beginning in the first quarter of our fiscal year 2021. Early adoption is permitted. Certain amendments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. MedAvail assessed the impact of the new accounting standard on its consolidated condensed financial statements to facilitate its required adoption of the new standard on January 1, 2021. The adoption of ASU 2019-12 did not yet achieved profitabilityresult in a material change to our consolidated condensed financial statements.
Debt with Conversion and expects to continue to incur cash outflows   from operations. It is expected that its operating expensesOther Options
In August 2020, the FASB issued ASU No. 2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting For Convertible Instruments and Contracts in an Entity's Own Equity” (“ASU 2020-06”). The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will continue to increase and,be reported as a result,single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the Companyderivative scope exception, which will eventually needpermit more equity contracts to generate significant product revenues to achieve profitability. These conditions indicate that there is substantial doubt aboutqualify for it. The ASU also simplifies the Company’s ability to continue as a going concern within one year afterdiluted net income per share calculation in certain areas. MedAvail assessed the condensed consolidated financial statement issuance date.

As of June 30, 2020, the Company had cash of $1,334 and working capital of $2,226 (current assets of $3,028 less current liabilities of $802). For the six months ended June 30, 2020 and 2019, our net loss was $1,637 and $2,150, respectively. For the six months ended June 30, 2020 and 2019, net cash used in operating activities was $1,668 and $1,135, respectively.

Asimpact of the filing date of this quarterly reportnew accounting standard on Form 10-Q (the “Report”), management believes that there may not be sufficient capital resources from operations and existing financing arrangements in orderits consolidated condensed financial statements to meet operating expenses and working capital requirements for the next twelve months.

Accordingly, we are evaluating various alternatives, including reducing operating expenses, securing additional financing through debt or equity securities to fund future business activities and other strategic alternatives. The Company entered into the Merger Agreement on June 30, 2020 and expects the Merger to close before the endfacilitate its early adoption of the year. There can be no assurance that the Company will be ablenew standard on January 1, 2021. The adoption of ASU 2020-06 did not result in a material change to generate the level of operating revenues in its business plan, or if additional sources of financing will be available on acceptable terms, if at all. If no additional sources of financing are available, our future operating prospects may be adversely affected. Theconsolidated condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Since the date of the Annual Report on Form 10-K for the year ended December 31, 2019, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note. 

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with a maturity of three months or less and money market accounts to be cash equivalents. At June 30, 2020 and December 31, 2019, the Company had no cash equivalents. The Company maintains its bank accounts with high credit quality financial institutions and has never experienced any losses related to these bank accounts. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its financial institutions. As part of our ongoing liquidity assessments management evaluates our cash and cash equivalents. The amount of funds held in these accounts can fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as business-development activities so the Company may at times have exposure to cash in excess of FDIC insured limits. At June 30, 2020, total cash in the Company’s bank accounts was $1,334, which exceeded the FDIC coverage limit of $250. statements.

There were no accountsrecently issued and effective authoritative guidance that exceededis expected to have a material impact on the FDIC limit at December 31, 2019.

Company’s consolidated condensed financial statements through the reporting date.


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and

NOTE 4 - EARNINGS (LOSS) PER SHARE
Basic earnings per share amounts, unless otherwise indicated)

Concentrationsis computed by dividing net income or loss available to common stockholders by the weighted-average number of Credit Risk, Customers and Suppliers

Management regularly reviews accounts receivable, and if necessary, establishes an allowance for doubtful accounts that reflects management’s best estimatecommon shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of amounts that may not be collectible based on historical collection experience and specific customer information. Accounts receivable is non-interest bearing. Credit is issuedcommon shares plus the effect of dilutive potential common shares outstanding during the period.

The following table presents warrants included in weighted average shares outstanding due to customers without collateral. If an account becomes delinquent, management will review if a write off is appropriate. Expense recognized as a result of an allowance for doubtful accounts is classified under general and administrative expenses in the condensed consolidated statements of operations. 

Fortheir insignificant exercise price:

SharesIssuance DateExercise Date
118,228May 9, 2018May 10, 2021
309,698February 11, 2020May 10, 2021
84,911June 29, 2020May 10, 2021
58,518November 18, 2020May 10, 2021
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During the three and six months ended June 30, 2021 and 2020, and 2019,there was no potential dilution from stock options or other warrants due to the Company did notCompany’s net loss position. Weighted average shares for historical periods have any revenue, accounts receivable or supplier concentrations.

Deferred Offering Costs

The Company defers as other assetsbeen adjusted for the direct incremental costs of raising capital until such time as the offering is completed. At the timeeffect of the completion1.26 for 1 split on November 17, 2020. The following table sets forth the computation of the offering, the costs are charged against the capital raised. Should the offering not be completed, deferred offering costs are charged to operations in accordance with SEC guidance. basic and diluted earnings per share.

Three Months EndedSix Months Ended
(In thousands, except share and per share amounts)June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Net loss - basic and diluted$(10,464)$(6,536)$(19,916)$(12,226)
Weighted average shares - basic and diluted32,546,3951,953,04932,493,4681,880,577
Net loss per share - basic and diluted$(0.32)$(3.35)$(0.61)$(6.50)
As of June 30, 2021 and 2020, there were 2.1 million and 3.1 million, respectively, of option awards outstanding that were not included in the diluted shares calculation because their inclusion would have been antidilutive.

NOTE 5 - FAIR VALUE MEASUREMENTS
Assets and liabilities measured at fair value on a recurring basis were as follows:
Fair Value Hierarchy
(In thousands)June 30, 2021Level 1Level 2Level 3
Assets:
Cash and cash equivalents$48,735 $48,735 $0 $0 
Restricted cash62 62 0 0 
Total assets$48,797 $48,797 $0 $0 
Fair Value Hierarchy
(In thousands)December 31, 2020Level 1Level 2Level 3
Assets:
Cash and cash equivalents$57,936 $57,936 $0 $0 
Restricted cash60 60 0 0 
Total assets$57,996 $57,996 $0 $0 

NOTE 6 - BALANCE SHEET AND OTHER INFORMATION
Inventories
The following table presents detail of inventory balances:
June 30,December 31,
(In thousands)20212020
Inventories:
MedCenter hardware$1,330 $1,655 
Pharmacy1,375 837 
Spare parts466 325 
Total inventories$3,171 $2,817 
Pharmacy inventory was recognized in pharmacy and hardware cost of sales at $4.1 million and $1.6 million during the three months ended June 30, 2021 and 2020, respectively, and $7.2 million and $2.9 million during the six months ended June 30, 2021 and 2020, respectively. MedCenter hardware was recognized in pharmacy and hardware cost of sales at $0.2 million and $0.1 million during the three months ended June 30, 2021 and 2020, respectively, and $0.4 million and $0.1 million during the six months ended June 30, 2021 and 2020, respectively.
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Property, plant and equipment
The following tables present property, plant and equipment balances:
Estimated useful livesJune 30,December 31,
(In thousands)20212020
Property, plant and equipment:
MedCenter equipment5 years$4,808 $4,622 
IT equipment1 - 3 years2,239 1,999 
Leasehold improvementslesser of useful life or term of lease820 799 
General plant and equipment5 - 8 years369 353 
Office furniture and equipment5 - 8 years352 329 
Vehicles5 years54 54 
Construction-in-process696 90 
Total historical cost9,338 8,246 
Accumulated depreciation(5,036)(4,451)
Total property, plant and equipment, net$4,302 $3,795 
Depreciation expense of property and equipment was $0.3 million and $0.3 million for the three months ended June 30, 2021 and 2020, respectively, and $0.6 million and $0.5 million for the six months ended June 30, 2021 and 2020, respectively. Depreciation expense included in pharmacy and hardware cost of sales was $0.04 million and $0.05 million for the three months ended June 30, 2021 and 2020, respectively, and $0.09 million and $0.10 million for the six months ended June 30, 2021 and 2020, respectively.
Intangible assets
The following table presents intangible asset balances:
June 30,December 31,
(In thousands)20212020
Gross intangible assets:
Intellectual property$3,857 $3,857 
Software3,074 1,815 
Website and mobile application583 583 
Total intangible assets7,514 6,255 
Accumulated amortization:
Intellectual property(3,857)(3,857)
Software(1,688)(1,588)
Website and mobile application(583)(583)
Total accumulated amortization(6,128)(6,028)
Total intangible assets, net$1,386 $227 
Amortization expense of intangible assets was $0.07 million and $0.02 million for the three months ended June 30, 2021 and 2020, respectively, and $0.10 million and $0.06 million for the six months ended June 30, 2021 and 2020, respectively, and are included in operating expenses.
Software includes internal use software costs that are accounted for in accordance with ASC 350. Costs associated with application development are capitalized as intangible assets. All other costs including planning, training, and conceptual evaluation are expensed.
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Lessee leases
Balance sheet amounts for lease assets and leases liabilities are as follows:
June 30,December 31,
(In thousands)20212020
Assets:
Operating$1,180$1,108
Finance103131
Total assets$1,283$1,239
Liabilities:
Operating:
Current$497 $612 
Long-term761 572 
Finance:
Current52 53 
Long-term52 79 
Total liabilities$1,362 $1,316 
The following table summarizes the weighted-average remaining lease term and weighted-average discount rate related to the Company’s leases as follows:
June 30,December 31,
(In thousands)20212020
Finance leases:
Weighted-average remaining lease term (years)2.02.4
Weighted-average discount rate6.0 %6.0 %
Operating leases:
Weighted-average remaining lease term (years)3.32.5
Weighted-average discount rate6.0 %6.0 %
Maturities of operating leases liabilities are as follows, in thousands:
Remaining period in 2021$325 
2022408 
2023262 
2024204 
2025137 
202659 
Thereafter0 
Total lease payments1,395 
Less: present value discount(137)
Total leases$1,258 
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Maturities of finance lease liabilities are as follows, in thousands:
Remaining period in 2021$27 
202257 
202327 
20240 
20250 
20260 
Thereafter0 
Total finance lease payments111 
Less: imputed interest(7)
Total leases$104 
Operating lease expense was $0.2 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively, and $0.4 million and $0.3 million for the six months ended June 30, 2021 and 2020, respectively.
The Company entered into or extended operating leases with commencement dates after June 30, 2021, with total preliminary initial right of use asset balances of $1.8 million.

NOTE 7 - DEBT
The following table presents debt balances at June 30, 2021 and December 31, 2019, deferred offering costs of $02020:
June 30,December 31,
(In thousands)20212020
Short-term note due May 2021$0 $1,000 
Short-term note due November 20211,000 1,000 
PPP loan0 161 
Term loan10,008 0 
Term loan issuance cost, net(594)0 
Total debt, net10,414 2,161 
Less short term debt(1,000)(2,161)
Long-term debt, net$9,414 $0 
Term loan
Short-term notes
The notes do not accrue interest and $95, respectively, were included as a noncurrent assetmay be repaid early without penalty. On May 14, 2021 the Company repaid $1.0 million on the accompanying condensed consolidatedShort-term note in accordance with the maturity schedule.
PPP loan
MedAvail received forgiveness approval of the loan on March 30, 2021 in accordance with the terms of the CARES Act.
Term loan
On June 7, 2021, the Company entered into a Loan and Security Agreement, or the Loan Agreement, with Silicon Valley Bank and SVB Innovation Credit Fund VIII, L.P., pursuant to which we borrowed $10.0 million in aggregate initial term loans, or the Initial Loans. The Company may borrow up to an additional $20.0 million in aggregate term loans (or, together with the Initial Loans, the Loans) on or before April 30, 2022, subject to no material adverse change or event of default (each as defined in the Loan Agreement) having occurred and continuing. The Loans and the Company's obligations under the Loan Agreement are guaranteed by certain of our subsidiaries and are secured by substantially all of the assets of the Company and its subsidiary guarantors.
14

The Loans mature on April 1, 2026. Principal repayment will commence on May 1, 2024 in equal monthly installments of the outstanding Loan balance sheets relatedthrough the maturity date. The Loans bear interest at a floating rate equal to the greater of 7.25% or the Prime Rate plus 4.0% (7.25% at June 30, 2021).
The Company may elect to prepay the Loans, in whole but not in part, at any time. If the Company elects to voluntarily prepay the Loans before the scheduled maturity date, the Company is required to pay the lenders a prepayment premium, equal to 3.0% of the outstanding principal balance if the prepayment occurs on or before June 7, 2022, 2.0% of the outstanding principal balance if the prepayment occurs on or before June 7, 2023, or 1.0% for a prepayment made after June 7, 2023, but before the scheduled maturity date. A prepayment premium is also applicable to a July 2018 sales agreement.

Intangible Assets

The Company’s intangible assets consist primarily of intellectual property pertaining to Fortetropin®, including its formula, trademarks, trade secrets, patent application and domain names which were determined to have a fair value of $2,000 as of December 31, 2011. Management determined that the intellectual property had a finite useful life of ten (10) years and began amortizing the asset over its estimated useful life beginning April 2014.

Intangible assets also includes patent costs associated with applying for a patent and being issued a patent. Costs to defend a patent and costs to invalidate a competitor’s patent or patent application are expensed as incurred. Upon issuancemandatory prepayment of the patent, capitalized patent costs are reclassified to intangibles with finite lives and amortized on a straight-line basis over the shorterLoans upon an acceleration of the estimated economic lifeLoans. Upon a voluntary or the initial termmandatory prepayment of the patent, generally 20 years.

Our policyLoans, the Company is also required to evaluate intangible assets subjectpay the lenders’ expenses and all accrued but unpaid interest on the Loans through the prepayment date.

A final payment fee equal to amortization for possible impairment whenever events or changes in circumstances indicate that4.75% of the carrying amount of such assets may not be recoverable. Impairment testing of intangible assets subject to amortization involves comparing the carryingoriginal principal amount of the assetLoans advanced will be due at the earlier of the maturity date, acceleration of the Loans, or a voluntary or mandatory prepayment of the Loans. The final payment fee is accreted to the forecasted undiscounted future cash flows.Loan balance over the loan term using the effective interest method.
The Loan Agreement includes customary representations and covenants that, subject to exceptions and qualifications, restrict the Company's ability to do the following things: engage in mergers, acquisitions, and asset sales; transact with affiliates; undergo a change in control; engage in businesses that are not related to existing business; add or change business locations; incur additional indebtedness; incur additional liens; make loans and investments; declare dividends or redeem or repurchase equity interests; and make certain amendments or payments in respect of any subordinated debt. In addition, the Loan Agreement contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, maintenance of our bank accounts, protection of our intellectual property, reporting requirements, compliance with applicable laws and regulations, and formation or acquisition of new subsidiaries.
Upon the occurrence and during the continuance of an event of default, the carrying valuelenders may declare all outstanding principal and accrued and unpaid interest under the Loan Agreement immediately due and payable and may exercise the other rights and remedies provided for under the Loan Agreement and related loan documents. The events of default under the Loan Agreement include, subject to grace periods in certain instances, payment defaults, breaches of covenants or representations and warranties, a material adverse change as defined in the Loan Agreement and with respect to certain governmental approvals, material judgments and attachments, cross defaults with certain other material indebtedness, bankruptcy and insolvency events with respect to the Company and its subsidiaries, and delisting of the asset exceedsCompany's shares from NASDAQ.
Loan issuance costs of $0.6 million are included in long term debt and are amortized to interest expense over the undiscounted future cash flows,loan term using the carrying value is consideredeffective interest method.
NOTE 8 - INCOME TAXES
The Company did not recoverable and an impairment exists. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, calculated using a discounted future cash flow method. Assets which are not impaired may require an adjustment to the remaining useful lives for which to amortize the asset. There were no impairment chargesincur income tax expense for the three and six months ended June 30, 2020 and 2019. Intangible assets at June 30, 2020 and December 31, 2019 consisted2021, respectively, due to ongoing losses. The effective income tax rate in each period differed from the federal statutory tax rate of 21% primarily as a result of the following:

  June 30,  December 31, 
  2020  2019 
Intangibles with finite lives:      
Intellectual property $2,101  $2,101 
Website - qurr.com  380   380 
Less: accumulated amortization – intellectual property  (1,310)  (1,205)
Less: accumulated amortization - website  (380)  (380)
Total intangible assets, net $791  $896 

Amortization expense related to intangible assets for the six months ended June 30, 2020 and 2019 was $105 and $165, respectively, and $53 and $103 for the three months ended June 30, 2020 and 2019, respectively.


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

Net Revenues

Revenue Recognition

Net revenues include products and shipping and handling charges, net of estimates for incentives and other sales allowances or discounts. Our product sales generally do not provide for rights of return. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. We recognize revenue by transferring the promised products to the customer, with revenue recognized at the point in time the customer obtains control of the products. We consider charges associated with shipping and handling activities as costs to fulfill our performance obligations. Using probability assessments, we estimate sales incentives expected to be paid over the term of the contract. The majority of our contracts have a single performance obligation and are short term in nature. Sales taxes that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net revenues.

Disaggregation of Net Revenues

Our net revenues by product type are presented below for the three months ended June 30, 2020 and 2019.

  Three months ended 
Product Type June 30,
2020		  June 30,
2019		 
Myos Canine Muscle Formula® (1) $261  $89 
Yolked® (2)  53   53 
Longevity (includes Qurr® (3) and Physician Muscle Health Formula (4) brands)  4   12 
White Label (5)  11   - 
Total Net Revenues $329  $154 

Our net revenues by product type are presented below for the six months ended June 30, 2020 and 2019.

  Six months ended 
Product Type June 30,
2020		  June 30,
2019		 
Myos Canine Muscle Formula® (1) $477  $150 
Yolked® (2)  104   121 
Longevity (includes Qurr® (3) and Physician Muscle Health Formula (4) brands)  10   32 
White Label (5)  28   - 
Total Net Revenues $619  $303 

(1)Launched in June 2018
(2)Launched in March 2018
(3)Launched in March 2017
(4)Launched in May 2016; relaunched in December 2019
(5)Launched in December 2019

10

ongoing losses.

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

Contract Assets and Liabilities

The Company did not have any contract assets and contract liabilities from contracts with customers asAs of June 30, 2020 or December 31, 2019. Contract liabilities represent payments received from customers for which2021, the Company had not yet satisfiedrecorded a full valuation allowance against all of its performance obligation undernet deferred tax assets due to the contract. For the three and six months ended June 30, 2020 and 2019 there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. 

Advertising, Marketing and Promotions

The Company charges the costs of advertising to sales and marketing expenses as incurred. Advertising and marketing costs were $248 and $467 for the six months ended June 30, 2020 and 2019, respectively, and $70 and $131 for the three months ended June 30, 2020 and 2019, respectively. Advertising costs consisted primarily of marketing costs for our Yolked® and Myos Canine Muscle Formula® products.

Shipping and Handling Costs

The Company records costs for the shipping and handling of products to its customers in cost of revenues. These expenses were $16 and $16 for the six months ended June 30, 2020 and 2019, respectively and $7 and $10 for the three months ended June 30, 2020 and 2019, respectively.

Research and Development

Research and development expenses consist primarily of the cost of manufacturing our product for clinical study, the cost of conducting clinical studies and the cost of conducting preclinical and research activities. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are initially capitalized and are then recognized as an expense as the related goods are consumed or the services are performed. Research and development expenses were $27 and $89 for the six months ended June 30, 2020 and 2019, respectively and $5 and $80 for the three months ended June 30, 2020 and 2019, respectively.


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

Basic and Diluted Loss Per Share

Basic net loss per share is computed by dividing net loss available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potential dilutive securities outstanding had been issued. The Company uses the “treasury stock” method to determine the dilutive effect of common stock equivalents such as options, warrants and restricted stock. For the three and six months ended June 30, 2020 and 2019, the Company incurred a net loss. Accordingly,uncertainty surrounding the Company’s common stock equivalents were anti-dilutive and excluded fromability to utilize these assets in the diluted net loss per share computation.

The aggregate number of potentially dilutive common stock equivalents outstanding at June 30, 2020 excluded from the diluted net loss per share computation because their inclusion would be anti-dilutive were 1,034,740, which includes warrants to purchase an aggregate of 375,000 shares of common stock and options to purchase an aggregate of 659,740 shares of common stock and rights under the Rights Agreement.

The aggregate number of potentially dilutive common stock equivalents outstanding at June 30, 2019 excluded from the diluted net loss per share computation because their inclusion would be anti-dilutive were 1,216,096 which includes warrants to purchase an aggregate of 663,356 shares of common stock and options to purchase an aggregate of 555,740 shares of common stock.

Income Taxes

future.

On March 27, 2020, President Trump signed into law11, 2021, the Coronavirus Aid, Relief and Economic SecurityU.S. federal government enacted the American Rescue Plan Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Under Accounting Standards Codification Topic 740 (“ASC 740”), Income Taxes, the effects of new legislation are recognized upon enactment. Accordingly, the CARES Act is effective beginning in the quarter ended March 31, 2020. While the Company is currently evaluating how provisions in the CARES Act will impact its condensed consolidated financial statements, it does2021, which did not currently believe that such provisions will have a material impact on the Company’s condensed consolidated financial statements.  

NOTE 3 – RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 simplify the accountingour benefit for income taxes by removing certain exceptions to the general principles in ASC 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 will be effective for the Company’s fiscal year beginning after December 15, 2020, with early adoption permitted. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively. The Company does not expect this ASU to have a material impact on its condensed consolidated financial statements.

taxes.


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

NOTE 4 – INVENTORIES, NET

Inventories, net at June 30, 2020 and December 31, 2019 consisted of the following:

  June 30,
2020		  December 31,
2019		 
Raw materials $1,117  $1,264 
Work in process  1   15 
Finished goods  419   450 
   1,537   1,729 
Less: inventory reserves  (63)  (63)
Inventories, net $1,474  $1,666 

NOTE 5 – FIXED ASSETS, NET

Fixed assets, net at June 30, 2020 and December 31, 2019 consisted of the following:

  June 30,
2020		  December 31,
2019		 
Furniture, fixtures and equipment $116  $116 
Computers and software  68   68 
Leasehold improvements  239   239 
Other  7   7 
Total fixed assets  430   430 
Less: accumulated depreciation and amortization  (342)  (333)
Net book value of fixed assets $88  $97 

Depreciation expense was $9 and $13 for the six months ended June 30, 2020 and 2019, respectively, and $4 and $6 for the three months ended June 30, 2020 and 2019, respectively.

NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of various payments that the Company has made in advance for goods or services to be received in the future. Prepaid expenses and other current assets at June 30, 2020 and December 31, 2019 consisted of the following:

  June 30,
2020		  December 31,
2019		 
Prepaid consulting fees $57  $9 

Prepaid legal fees

  50   - 
Prepaid Nasdaq fees  22   - 
Prepaid marketing expenses  40   6 
Prepaid other expenses  18   8 
Total prepaid expenses and other current assets $187  $23 

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

NOTE 7 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of estimated future payments that relate to the current and prior accounting periods. Management reviews these estimates regularly to determine their reasonableness. Accrued expenses and other current liabilities at June 30, 2020 and December 31, 2019 consisted of the following:

  June 30,
2020		  December 31,
2019		 
Board compensation $-  $209 
Other  3   21 
Total accrued expenses and other current liabilities $3  $230 

NOTE 8 – RELATED PARTY PROMISSORY NOTE PAYABLE

On August 30, 2018, the Company issued an unsecured promissory note (the “Note”) in the principal amount of $750 in favor of Joseph Mannello, the Company’s chief executive officer (the “Lender”).

The Note accrues interest at a rate of 5% per annum and all payments of principal, interest and other amounts under the original Note were payable on March 31, 2020. On March 31, 2020, the Company modified its Note to extend the maturity to March 31, 2021. The Company may prepay, in whole or in part, at any time, the principal, interest and other amounts owed under the Note, without penalty.

In January 2020, the Lender advanced an additional $300 to the Company for general working capital purposes.

On March 2, 2020, the Company entered into securities purchase agreements for a private placement with a group of accredited investors, including four members of the Company’s board of directors. In connection with the closing of the private placement on March 5, 2020, the Company issued 851,240 shares of common stock for aggregate cash proceeds of $1,030 and $825 of the principal amount of the Note was exchanged for 681,818 shares of common stock. 

As of June 30, 2020, the total amounts outstanding under the Note was $580 of principal and $74 of accrued interest.

Note 9 – NOTE PAYABLE – PAYCHECK PROTECTION PROGRAM

On April 22, 2020, the Company received loan proceeds in the amount of $310 under the Paycheck Protection Program (“PPP”). The PPP, established as part of the CARES Act, provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period.

The unforgiven portion of the PPP loan is payable over two years at an interest rate of 1% per annum, with a deferral of payments for the first six months. The Company intends to use the proceeds for purposes consistent with the PPP. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the loan in whole, there can be no assurance that it will not take actions that could cause the Company to be ineligible for forgiveness of the loan, in whole or in part. As of June 30, 2020, no amount of the PPP loan had been forgiven.


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

Note 10 – Stockholders’ Equity

Authorized Capital

As of June 30, 2020, the Company was authorized to issue 15,000,000 shares of common stock, $0.001 par value, and 500,000 shares of preferred stock, $0.001 par value. The holders of the Company’s common stock are entitled to one vote per share.

Preferred Stock Purchase Rights

Effective February 14, 2017, the board of directors declared a dividend of one right (“Right”) for each of the Company’s issued and outstanding shares of common stock. The Rights were granted to the stockholders of record at the close of business on February 24, 2017. Each Right entitles the registered holder, upon the occurrence of certain events specified in the Rights Agreement, to purchase from the Company one one-thousandth of a share of the Company’s Series A Preferred Stock at a price of $7.00, subject to certain adjustments. The Rights are not exercisable until the occurrence of certain events, including a person acquiring or obtaining the right to acquire beneficial ownership of 10% or more of the Company’s outstanding common stock. The Rights are evidenced by certificates for the common stock and automatically transfer with the common stock unless they become exercisable. If the Rights become exercisable, separate certificates evidencing the Rights will be distributed to each holder of common stock. Holders of the preferred stock will be entitled to certain dividend, liquidation and voting rights. The Rights are redeemable by the Company at a fixed price as determined by the board of directors, after certain defined events.

On February 14, 2020, the Company amended the Rights Agreement to, among other things extend the expiration date to February 14, 2021. In connection with the Merger Agreement, the Company amended the Rights Agreement on June 30, 2020 (see Note 1.)

As of June 30, 2020, the Rights have no dilutive effect on the earnings per common share calculation and no shares of preferred stock have been issued. At the time of issuance, the Company determined that these Rights have a de minimis fair value.

Issuance of Common Stock

The Company has periodically issued common stock in connection with certain private and public offerings. For the six months ended June 30, 2020, the Company received aggregate net proceeds of $2,233 from these offerings:

     Net 
Date Shares  Proceeds 
March 5, 2020  851,240(1) $1,030 
January 1, 2020 through June 30, 2020 at-the-market offerings  964,102(2)  1,203 

(1)Shares issued pursuant to a private placement with accredited investors for $1.21 per share.
(2) Shares of common stock sold at various prices in at-the-market offerings from $1.18 to $1.55 per share.

See Note 8 for a description of the issuance of common stock on March 5, 2020 in connection with the exchange of a portion of the related party promissory notes payable.


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

At-the-Market Offering

On January 23, 2020, the Company sold 7,322 shares of common stock for $1.50 per share for gross proceeds of $11 in an at-the-market offering.

On February 3, 2020, the Company sold 140,085 shares of common stock for $1.55 per share for gross proceeds of $217 in an at-the-market offering.

On May 12, 2020, the Company sold 81,695 shares of common stock for $1.18 per share for gross proceeds of $97 in an at-the-market offering.

On May 26, 2020, the Company sold 735,000 shares of common stock for $1.38 per share for gross proceeds of $976 in an at-the-market offering.

As of the filing date of this Report, a total of 1,075,231 shares were sold under this program for aggregate gross proceeds of $1,512 since the sales agreement began in July 2018.

NOTE 11 – STOCK-BASED COMPENSATION

Equity Incentive Plan

The Company increased the number of shares available for issuance under its 2012 Equity Incentive Plan (as amended, the “Plan”) from 850,000 to 1,200,000 in December 2019, which was approved by the Company’s shareholders in December 2019. The plan provides for the issuance of up to 1,200,000 shares. The Plan provides for grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards. As of June 30, 2020, the remaining shares of common stock available for future issuances of awards was increased due to forfeitures to 560,260.

Stock options generally vest and become exercisable with respect to 100% of the common stock subject to such stock option on the third (3rd) anniversary of the date of grant. Any unvested portion of a stock option shall expire upon termination of employment or service of the participant granted the stock option, and the vested portion shall remain exercisable in accordance with the provisions of the Plan.

Stock-Based Compensation

Stock-based compensation consists of expenses related to the issuance of stock options and restricted stock. Stock-based compensation expenses were $9 and $28 for the three months ended June 30, 2020 and 2019, respectively, and $18 and $71 for the six months ended June 30, 2020 and 2019, respectively.

On March 31, 2020, the Company issued 172,727 shares of its common stock with a fair value of $209 to members of its board of directors in connection with 2019 services. These restricted shares vested immediately upon issuance.


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

Note 12 – Commitments

NOTE 9 - COMMITMENTS AND CONTINGENCIES
Legal
Following MYOS Rens Technology Inc.’s, or MYOS’s and Contingencies

Defined Contribution Plan

The Company established a 401(k) Plan (the “401(k) Plan”) for eligible employeesMedAvail, Inc.’s, or MAI's, announcement of the Company effective April 1, 2014. Generally, all employeesexecution of the Company who are at least twenty-one years of age and who have completed three months of service are eligible to participate in the 401(k) Plan. The 401(k) Plan is a defined contribution plan that provides that participants may make salary deferral contributions, of up to the statutory maximum allowed by law (subject to catch-up contributions) in the form of voluntary payroll deductions. As of April 1, 2020 the Company decided to not match 401(k) contributions until the Company becomes profitable. The Company’s aggregate matching contributions were $11 and $18 for the six months endedMerger Agreement on June 30, 2020, and 2019, respectively, and $0 and $15 for the three months ended June 30,MYOS received separate litigation demands from purported MYOS stockholders on September 16, 2020 and 2019, respectively.

Note 13 – OPERATING LEASES

The Company has operating leases for its executive office (approximately 5,225 square feet of space) and office equipment. The remaining terms on these leases range from 3 to 4 years. The Company does not have any financing leases. The components of lease expense of $33 and $38 for the six months ended June 30,October 20, 2020, and June 30, 2019, respectively were recordedseeking certain additional disclosures in the condensed consolidated statements of operations. The components of lease expense of $18 and $22 for the three months ended June 30, 2020 and June 30, 2019, respectively, were recorded in the condensed consolidated statements of operations.

There were no material operating and financing leases that the Company had entered into that were yet to commence as of June 30, 2020. Components of the Company’s right-of-use assets and liabilities calculations are as follows:

Cash paid for rent included in the measurement of operating lease liabilities cash flows $32 
Right-of-use asset obtained in exchange for new operating lease liability  236 
Weighted-average remaining lease term - operating leases, in years  2.55 
Weighted-average discount rate - operating leases  11.7%

Future minimum lease payments for operating leases in excess of one year are as follows:  

For the year ending December 31, Amount 
2020 $38 
2021  77 
2022  79 
2023  3 
Total future minimum lease payments  197 
Imputed interest  (28)
Total $169 


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

(Unaudited; amounts in thousands, except share and per share amounts, unless otherwise indicated)

Note 14 – Related Party Transactions

See Notes 8 and 10 for additional information relating to the Note issued to the Company’s chief executive officer as well as details associatedForm S-4 Registration Statement filed with the issuance of common stock to certain related parties in connection with securities purchase agreements.

Note 15 – legal PROCEEDINGS

On January 6, 2017, in connection withSecurities and Exchange Commission on September 2, 2020, collectively, the financingDemands. Thereafter, on September 23, 2020, a complaint regarding the transactions contemplated by a securities purchase agreement with RENS Technology Inc. (the “Purchaser”), we commenced an actionwithin the Merger Agreement was filed in the Supreme Court of the State of New York, County of New York, (the “Court”)captioned Faasse v. MYOS RENS Technology Inc., againstet. al., Index No.: 654644/2020 (NY Supreme Ct., NY Cnty., September 23, 2020), or the Purchaser, RENS Agriculture,New York Complaint. On October 12, 2020, a second complaint regarding the parent companytransactions was filed in the District Court of Nevada, Clark

15

County Nevada, captioned Vigil v. Mannello, et. al., Case No. A-20-822848-C, or the Nevada Complaint, and together with the New York Complaint, the Complaints, and collectively with the Demands, the Litigation.
The Demands and the Complaints that comprise the Litigation generally alleged that the directors of MYOS breached their fiduciary duties by entering into the Merger Agreement, and MYOS and MAI disseminated an incomplete and misleading Form S-4 Registration Statement. The New York Complaint also alleged MedAvail aided and abetted such breach of fiduciary duties.
MYOS and MAI believe that the claims asserted in the Litigation are without merit, and believe that the Form S-4 Registration Statement disclosed all material information concerning the Merger and no supplemental disclosure is required under applicable law. However, in order to avoid the risk of the Purchaser,Litigation delaying or adversely affecting the Merger and Ren Ren, a principalto minimize the costs, risks and uncertainties inherent in both entitieslitigation, and onewithout admitting any liability or wrongdoing, MYOS determined to voluntarily supplement the Form S-4 Registration Statement as described in the Current Report on Form 8-K on November 2, 2020. Subsequently, the Nevada Complaint and the New York Complaint were voluntarily dismissed. The remainder of our directors, arisingthe Litigation remains outstanding. MYOS and MAI specifically deny all allegations in the Litigation and/or that any additional disclosure was or is required.

NOTE 10 - SHARE-BASED COMPENSATION AND WARRANTS
Share-based compensation
The following table presents the Company's expense related to share-based compensation, in thousands:
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Share-based compensation$323 $86 $583 $170 
The share-based compensation expense for the three and six months ended June 30, 2021, included $7 thousand from 2020 ESPP expense. Expense remaining to be recognized for unvested awards from the Purchaser’s breach2012, 2018, and 2020 plans as of June 30, 2021 was $3.0 million, which will be recognized on a weighted average basis over the next 2.9 years.
The following table presents the Company's outstanding option awards activity during the six months ended June 30, 2021:
(in thousands, except for share and per share amounts)Number of AwardsWeighted Average Exercise PriceWeighted Average Share Price on Date of ExerciseWeighted Average Fair ValueWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
Outstanding, beginning of period2,439,020 $1.59 $0.77 $32,791 
Granted315,974 13.70 8.04 0 
Exercised/Released(144,101)1.71 $14.66 0.85 1,866 
Cancelled/Forfeited(1,909)1.68 0.84 24 
Outstanding, end of period2,608,984 $3.07 $1.34 7.97$24,474 
Vested and exercisable, end of the period1,786,584 1.93 0.79 7.5718,494 
Vested and unvested exercisable, end of the period1,786,584 1.93 0.79 7.5718,494 
Vested and expected to vest, end of the period2,528,947 2.89 1.30 7.9324,089 
During the six months ended June 30, 2021, the Company granted approximately 89,974 restricted stock units or RSUs to employees with a weighted average fair value of $13.72 per RSU and total aggregate intrinsic value of $1.2 million. NaNne of the agreement under which the Purchaser agreed to investRSUs were vested as of June 30, 2021, and they had a weighted average remaining contractual life of 9.8 years.
As of June 30, 2021 and December 31, 2020, there was an aggregate of $20.254.7 million in our company in exchange for an aggregate of 3,537,037 shares of our common stock and warrants to purchase an aggregate of 884,259 shares of common stock.

On April 11, 2017, the Court noted that we had demonstrated a likelihood of success on the merits of the breach of contract claim. Thereafter, a hearing was scheduled on the application by the Purchaser to dismiss the complaint and various pre-trial discovery applications by both parties.

In August 2017, before the hearing occurred, the Company amended its complaint repeating most of the initial claims but adding several additional claims against RENS Agriculture, Mr. Ren and two additional Chinese defendants, including a claim against RENS Agriculture for breaching the exclusive distribution agreement, as well as claims against all defendants for theft and misappropriation of our confidential proprietary information and trade secrets, breach of fiduciary duty and duty of loyalty, misappropriation of corporate opportunity, unfair competition and a number of other torts.

On July 13, 2020, the Company entered into a settlement agreement (the “Settlement Agreement”) with the Purchaser, Mr. Ren and Mr. Mannello to settle all claims in connection with all pending litigation matters between the parties (the “Claims”). Pursuant to the Settlement Agreement, the parties agreed to file the appropriate documentation in the Nevada and New York courts to dismiss the Claims within five days of the execution of the Settlement Agreement. In addition, the Purchaser and Mr. Ren agreed to: (i) vote all of their5.0 million shares of common stock, respectively, available for grant under the 2020 Plan.

Warrants
During the six months ended June 30, 2021 0 warrants were issued.
16

During the six months ended June 30, 2021, warrants were exercised in exchange for issuing 623,613 shares of the Company’s common stock with total cash proceeds of $124 thousand.
Warrants exercised during the six months ended June 30, 2021, included 565,496 held by related parties (investors), with 626,339 related party warrants outstanding as of June 30, 2021.

NOTE 11 - REVENUE AND SEGMENT REPORTING
Operating segments are the individual operations that the chief operating decision maker ("CODM"), who is our chief executive officer, reviews for purposes of assessing performance and making resource allocation decisions. The CODM currently receives the monthly management report which includes information to assess performance. The retail pharmacy services and pharmacy technology operating segments both engage in different business activities from which they earn revenues and incur expenses.
The Company in favorhas the following 2 reportable segments:
Retail Pharmacy Services Segment
Retail pharmacy services segment revenue consists of products sold directly to consumers at the point of sale. MedAvail recognizes retail pharmacy sales revenue, net of taxes and expected returns, at the time it sells merchandise or dispenses prescription drugs to the customer. The Company estimates revenue based on expected reimbursements from third-party payers (e.g., pharmacy benefit managers, insurance companies and governmental agencies) for dispensing prescription drugs. The estimates are based on all available information including historical experience and are updated to actual reimbursement amounts.
Pharmacy Technology Segment
The pharmacy technology segment consists of sales and subscriptions of MedPlatform systems to customers. These agreements include providing the MedCenter prescription dispensing kiosk, software, and maintenance services. This generally includes either an initial lump sum payment upon installation of the transactions contemplatedMedCenter with monthly payments for software and services following, or monthly payments for the MedCenter along with monthly payments for software and maintenance services for subscription agreements.
The following table presents sales and costs of sales by the Merger Agreement and (ii) waive and forfeit any right to receive any ownership interestsegment, in the private company (which will include thethousands:
Retail Pharmacy ServicesPharmacy TechnologyTotal
Three Months Ended June 30, 2021
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales$4,494 $0 $4,494 
Hardware0 123 123 
Subscription sales0 108 108 
Total pharmacy and hardware sales4,494 231 4,725 
Service sales:
Software integration0 0 0 
Software0 41 41 
Maintenance and support0 40 40 
Installation0 12 12 
Professional services and other0 212 212 
Total service sales0 305 305 
Total sales4,494 536 5,030 
Cost of sales4,435 422 4,857 
Gross profit$59 $114 $173 
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Retail Pharmacy ServicesPharmacy TechnologyTotal
Three Months Ended June 30, 2020
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales$1,713 $0 $1,713 
Hardware0 423 423 
Subscription sales0 123 123 
Total pharmacy and hardware sales1,713 546 2,259 
Service sales:
Software0 10 10 
Maintenance and support0 13 13 
Installation0 28 28 
Professional services and other0 1 1 
Total service sales0 52 52 
Total sales1,713 598 2,311 
Cost of sales1,679 186 1,865 
Gross profit$34 $412 $446 

Retail Pharmacy ServicesPharmacy TechnologyTotal
Six Months Ended June 30, 2021
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales$7,912 $0 $7,912 
Hardware0 364 364 
Subscription sales0 230 230 
Total pharmacy and hardware sales7,912 594 8,506 
Service sales:
Software0 74 74 
Maintenance and support0 71 71 
Installation0 28 28 
Professional services and other0 378 378 
Total service sales0 551 551 
Total sales7,912 1,145 9,057 
Cost of sales7,764 800 8,564 
Gross profit$148 $345 $493 
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Retail Pharmacy ServicesPharmacy TechnologyTotal
Six Months Ended June 30, 2020
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales$3,010 $0 $3,010 
Hardware0 423 423 
Subscription sales0 228 228 
Total pharmacy and hardware sales3,010 651 3,661 
Service sales:
Software0 10 10 
Maintenance and support0 23 23 
Installation0 28 28 
Professional services and other0 1 1 
Total service sales0 62 62 
Total sales3,010 713 3,723 
Cost of sales3,017 280 3,297 
Gross profit$(7)$433 $426 
The following table presents assets and liabilities forby segment, in thousands:
Retail Pharmacy ServicesPharmacy TechnologyCorporateTotal
June 30, 2021
Assets$8,528 $4,407 $48,315 $61,250 
Liabilities$4,205 $3,713 $11,233 $19,151 
December 31, 2020
Assets$6,012 $5,547 $57,772 $69,331 
Liabilities$2,203 $3,422 $2,639 $8,264 
The following table presents long-lived assets, which include property, plant, and equipment and right-of-use-assets by geographic region, based on the Company’s existing muscle health business) to be spun-out from the Company in connection with the Merger. The Purchaser also agreed that, simultaneous with the closingphysical location of the Merger, it will deliver its warrant to purchase 375,000 shares of common stock to the Company for cancellation or, if the warrant cannot be located, execute documents necessary to ensure that the warrant is cancelled. The Settlement Agreement further provides that Mr. Ren will resign as the Company’s Global Chairman and as a member of the Company’s board of directors upon the execution of the Settlement Agreement. The Settlement Agreement also includes mutual releases by the parties against each other for any claims or actions (including the Claims) through the date of the Settlement Agreement. 

Note 16 – SUBSEQUENT EVENT

On July 13, 2020, the Company entered into the Settlement Agreement to settle all claimsassets, in connection with all pending litigation matters between the parties. The litigation was dismissed on July 23, 2020. (See Note 15)

thousands:

June 30,December 31,
20212020
Long-lived assets:
United States$5,391 $4,533 
Canada194 501 
Total long-lived assets$5,585 $5,034 

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ITEM

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

The

You should read the following discussion in conjunction with our audited historical consolidated condensed financial statements for the year ended December 31, 2020, which are included in the Annual Report on Form 10-K, filed with the SEC on March 31, 2021, and analysisour unaudited consolidated condensed financial statements for the three and six months ended June 30, 2021 included elsewhere in this Quarterly Report on Form 10-Q. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks, uncertainties and other factors. Actual results could differ materially because of the factors discussed below or elsewhere in this Quarterly Report on Form 10-Q. See Part II, Item 1A. "Risk Factors" of this Quarterly Report on Form 10-Q, Part II, Item 1A. "Risk Factors" of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, and Part I, Item 1A. "Risk Factors" of the 2020 Form 10-K for the year ended December 31, 2020. Unless otherwise indicated or the context otherwise requires, references herein to “MedAvail,” “MedAvail Holdings,” “we,” “us,” “our,” and the “Company” refers to MedAvail Holdings, Inc. and its subsidiaries.
Overview
We are a technology-enabled retail pharmacy company that is transforming full-service pharmacy. Through our full-stack pharmacy technology platform, and personal one-on-one service, we bring pharmacy-dispensing capability to the point of care, resulting in lower costs, higher patient satisfaction, improved medication adherence and better health outcomes.
We offer a unique, pharmacy technology solution which is anchored around our core technology called the MedAvail MedCenter™, or the MedCenter. The MedCenter enables on-site pharmacy in medical clinics, retail store locations, employer sites with and without onsite clinics, and any other location where onsite prescription dispensing is desired. The MedCenter establishes an audio-visual connection to a live pharmacist enabling prescription drug dispensing to occur directly to a patient while still providing real-time supervision by a pharmacist. Although its technology platform has broad application, we are currently focused on serving high-value Medicare members in the United States of America, or U.S.
We currently deploy the MedCenter solution through two distinct commercialization channels. First, we own and operate a full retail pharmacy business in the U.S. under the name SpotRx™, or SpotRx. The SpotRx pharmacy business is structured as a hub-and-spoke model where a central pharmacy supports and operates MedCenter kiosks embedded in medical clinics, usually in close proximity to the central pharmacy. The second commercialization channel is a direct ‘sell-to’ model, whereby we sell the MedCenter technology and subscriptions for the associated software directly to large healthcare providers and retailers for use within their own pharmacy operations.
The MedCenter kiosk works in tandem with our Remote Dispensing System®, or the Remote Dispensing System, which consists of customer-facing software for remote ordering of medications for pick-up at a MedCenter, or next day home delivery. Supporting its MedCenter kiosks and Remote Dispensing System is our back-end MedPlatform® Enterprise Software, or the MedPlatform Enterprise Software, which controls dispensing and MedCenter monitoring; and supporting Pharmacy Management System software, which allows connection to our supporting team of pharmacists and kiosk administrators.
Our kiosks come in two models: the M4 MedCenter and the M5 MedCenter. The M4 MedCenter kiosk is designed to fit in waiting rooms, hallways, and lobbies. The M5 MedCenter is a larger kiosk designed as a full pharmacy replacement with the ability to serve 3-4 customers simultaneously. It can also to be configured for drive through dispensing, similar to bank ATM drive through lanes.
Traditional retail pharmacies are built around a physical store front. In order to dispense medication, these stores must have a pharmacist onsite for all hours of operation. Most pharmacies have reduced hours of operation based on customer purchasing patterns in order to contain labor cost, which results in further reduced consumer access. Furthermore, retail pharmacy wait times are typically 30 to 60 minutes or more, causing substantial delays for the consumer. During the COVID-19 pandemic, most people are looking to minimize the amount of physical contact that can lead to further disease contraction, especially for those most vulnerable, such as the elderly or those with compromised immune systems. Consequently, some patients are foregoing filling their prescribed medications, leading to declining health, increased healthcare costs and increased morbidity.
Components of Operating Results for the Six Months Ended June 30, 2021
We have never been profitable and have incurred operating losses in each year since inception. Our net losses were $19.9 million and $12.2 million for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, we had an accumulated deficit of $168.2 million. Substantially all of our operating losses resulted from expenses incurred in connection with building out our retail pharmacy services operating footprint and from general and administrative costs associated with our operations.
We expect to incur significant additional expenses and operating losses for at least the next two years as we initiate and continue the technology development, deployment of our MedCenter technology and adding personnel necessary to operate as a public company with rapidly growing retail pharmacy operations in the United States. In addition, operating as a publicly traded company involves the hiring of additional financial
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and other personnel, upgrading our financial information systems and incurring costs associated with operating as a public company. We expect that our operating losses will lessen and turn positive as we execute our growth strategies within each of our operating segments. If our management accelerates deployment into new states, operating losses could increase in the near-term, as we grow and scale our operations in new states; we expect operating performance to turn positive once each state reaches sufficient scale in sales volume.
As of June 30, 2021, we had cash and cash equivalents of $48.7 million. We will continue to require additional capital to continue our technology development and commercialization activities and build out our pharmacy operations to serve our growing customer base. Accordingly, in November 2020 we completed the sale of additional equity through a private placement funding, where we raised $83.9 million. Additionally, in June 2021 we entered into a term loan and borrowed $10.0 million. Although we believe the proceeds from the private placement, loan proceeds, and borrowing capacity provide sufficient funding to execute our current growth plan, due to market risks (as outlined in the "Risk Factors" section of this Quarterly Report on Form 10-Q), we expect a need to raise additional capital to continue to fund our operations. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our growth strategy and capital market conditions. Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and resultsour ability to develop product candidates.
We have two reportable segments: Retail Pharmacy Services and Pharmacy Technology. These reportable segments are generally defined by how we execute our go-to-market strategy to sell products and services.
Overview of Retail Pharmacy Services Segment
The Retail Pharmacy Services operating segment operates as SpotRx, or the Pharmacy, a full-service retail pharmacy utilizing our automated pharmacy technology, primarily servicing Medicare patients in the United States. In operating SpotRx, we employ the pharmacy team, purchase the medications, and deploy our proprietary technology, the MedCenter, directly into the Medicare-focused clinics. This is an end-to-end turnkey solution.
Overview of Pharmacy Technology Segment
MedAvail Technologies develops and commercializes the MedCenter for direct sale or subscription to third-party customers, including some of the world’s largest healthcare providers and systems, as well as large retail chains that provide full retail-pharmacy services using our technology.

Results of Operations for the Three Months Ended June 30, 2021
Sales – Retail Pharmacy and Hardware and Service
Retail pharmacy and hardware sales
Retail pharmacy sales from the retail pharmacy services segment are derived from sales of prescription medications and over-the-counter products to patients. Medications are sold and delivered by various methods including dispensing product directly from the MedCenter, patient pick up at MedAvail’s SpotRx pharmacy locations or home delivery of medications to patient residences. Hardware sales from the pharmacy technology segment are derived from either the sales or subscription of the MedCenter to customers.
Service sales
Services sales from the pharmacy technology segment are derived from installation and support services.

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Sales
Three Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Pharmacy and hardware sales:(in thousands)
Retail pharmacy sales$4,494 $1,713 $2,781 162 %
Hardware123 423 (300)(71)%
Subscription sales108 123 (15)(12)%
Total pharmacy and hardware sales4,725 2,259 2,466 109 %
Service sales:
Software41 10 31 310 %
Maintenance and support40 13 27 208 %
Installation12 28 (16)(57)%
Professional services and other212 1 211 21100 %
Total service sales305 52 253 487 %
Total sales$5,030 $2,311 $2,719 118 %
During the three months ended June 30, 2021, retail pharmacy and hardware sales increased $2.5 million to $4.7 million compared to the same period in 2020. The increase was primarily due to volume growth in prescription sales at existing sites in Arizona, as well as growth from newly launched sites in Arizona, California and Michigan.
During the three months ended June 30, 2021, services sales increased $0.25 million to $0.31 million compared to the same period in 2020. The increase was due to the related increase in pharmacy and hardware sales, and professional services associated with contracted software integration work enabling a large health system customer to fully integrate their backend pharmacy management system with our back-end MedPlatform® Enterprise Software. This integration work was nearly complete by June 30, 2021.
Cost of Sales – Pharmacy and Hardware and Service
Pharmacy and hardware cost of sales
Cost of sales consists primarily of prescription medications, and other over-the-counter health products; and costs incurred to acquire MedCenters sold to third-party customers.
Service cost of sales
Cost of sales consists primarily of costs incurred to install and maintain MedCenters at third-party customer locations.
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Costs of sales
Three Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Retail pharmacy and hardware cost of sales:(in thousands)
Prescription drugs$4,126 $1,587 $2,539 160 %
Shipping309 93 216 232 %
Hardware202 93 109 117 %
Depreciation42 53 (11)(21)%
Total retail pharmacy and hardware cost of sales4,679 1,826 2,853 156 %
Service cost of sales:
Professional services143 — 143 — %
Maintenance and support services30 27 3 11 %
Installation services5 12 (7)(58)%
Total service cost of sales178 39 139 356 %
Total cost of sales$4,857 $1,865 $2,992 160 %
During the three months ended June 30, 2021, retail pharmacy and hardware cost of sales increased $2.9 million to $4.7 million compared to the same period in 2020. The increase was primarily due to costs associated with volume growth in prescription sales at existing sites and additional sites launched in the remaining period in 2020 and 2021 in Arizona, California and Michigan. Shipping costs, related to our home delivery service via third-party courier, increased $0.2 million compared to the same period in 2020. This increase is due to increased utilization of the service due to higher telehealth clinic visits caused by the Covid-19 pandemic.
During the three months ended June 30, 2021, service cost of sales increased $0.1 million to $0.2 million compared to the same period in 2020. The increase was due primarily to costs associated with contracted software integration work enabling a large health system customer to fully integrate their backend pharmacy management system with our MedPlatform® Enterprise Software.
Pharmacy operations
Pharmacy operations should be readconsist of costs incurred to operate retail pharmacies including pharmacy labor costs, rent and utilities, and pharmacy license fees. Wages and salaries consist of compensation costs incurred for all pharmacy operations related employees and contractors including bonuses, health plans, severance, and contractor costs.
Depreciation of property, plant and equipment includes depreciation on MedCenters, IT equipment, leasehold improvements, general plant and equipment, software, office furniture and equipment and vehicles. Amortization of intangible assets consists of amortization of intellectual property, website and mobile applications and software.
Three Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Pharmacy operations expenses:(in thousands)
Wages and salaries$1,713 $874 $839 96 %
Other pharmacy operations expenses298 16 282 1763 %
Depreciation of property, plant and equipment213 206 7 3 %
Amortization of intangible assets68 20 48 240 %
Total pharmacy operations expenses$2,292 $1,116 $1,176 105 %
During the three months ended June 30, 2021, pharmacy operations expenses increased $1.2 million to $2.3 million compared to the same period in 2020. This increase was primarily due to the opening of four additional central pharmacy locations in the remaining period in 2020, including three in California and one in Michigan. Additionally, volume growth continued to ramp at existing pharmacy locations in Arizona, increasing pharmacy personnel and supplies during the remaining period in 2020 and first half of 2021, resulting in increased operating costs.

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General and administrative
General and administrative expenses consist of personnel costs, facility expenses and expenses for outside professional services, including legal, audit and accounting services. Personnel costs consist of salaries, benefits and share-based compensation. Facility expenses consist of rent and other related costs. Corporate insurance, office supplies and technology expenses are also captured within general and administrative expenses. We incurred and expect to incur additional expenses as a result of being a public company, including expenses related to compliance with the rules and regulations of the SEC, Nasdaq, additional insurance, investor relations and other administrative expenses and professional services.
We have a stock option plan whereby awards are granted to certain of our employees. The fair value of the stock options and restricted stock units granted by us to our employees is recognized as compensation expense on a straight-line basis over the applicable vesting period. We measure the fair value of the stock options using the Black-Scholes option pricing model as of the grant date/measurement date. Shares issued upon the exercise of stock options and vesting of restricted stock units are new shares. We estimate forfeitures based on historical experience and expense related to awards is adjusted over the term of the awards to reflect their probability of vesting. All fully vested awards are fully expensed.
Three Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
General and administrative expenses:(in thousands)
Wages and salaries$3,231 $2,412 $819 34 %
Professional services1,120 265 855 323 %
Rent and utilities401 298 103 35 %
Office and IT supplies400 262 138 53 %
Insurance437 57 380 667 %
Share-based compensation323 86 237 276 %
Travel and other employee expenses225 80 145 181 %
Other general and administrative expenses509 120 389 324 %
Total general and administrative expenses$6,646 $3,580 $3,066 86 %
During the three months ended June 30, 2021, general and administrative costs increased approximately $3.1 million to $6.6 million compared to the same period in 2020. This increase was primarily due to hiring additional administrative staff as well as other investments necessary for our growth and becoming a public company. Additionally, increases in other general expenses, such as director and officer insurance, auditor fees, and legal fees were also partly a consequence of operating as a public company.
Selling and marketing
Selling and marketing expenses consist of marketing and advertising costs, personnel costs, and marketing related expenses for outside professional services. Wages and salaries consist of compensation costs incurred for all selling and marketing employees, and contractors including bonuses, health plans, severance, and contractor costs.
Three Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Selling and marketing expenses:(in thousands)
Wages and salaries$1,277 $459 $818 178 %
Marketing140 86 54 63 %
Travel and other employee expenses78 24 54 225 %
Other selling and marketing expenses2 1 1 100 %
Total selling and marketing expenses$1,497 $570 $927 163 %
During the three months ended June 30, 2021, selling and marketing costs increased approximately $0.9 million to $1.5 million compared to the same period in 2020. This increase was primarily due to personnel related costs associated with hiring additional Clinic Account Managers (CAMs) and Regional Directors, which directly support the medical clinic’s staff and patients at the clinics where we are deployed.
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Research and development
Research and development expenses represent costs incurred to develop and innovate our MedCenter platform technology, including development work on hardware, software and supporting information technology infrastructure. Wages and salaries consist of compensation costs incurred for research and development employees and contractors including bonuses, health plans, severance, and contractor costs.
We recognize hardware development costs as they are incurred. When hardware is constructed for use by customers, costs are capitalized after technological feasibility is achieved and expensed before technological feasibility is achieved. Costs of hardware completed but not yet placed in service are capitalized as equipment (a long-lived asset) on the consolidated condensed balance sheets. Costs of hardware completed and placed in service with customers are capitalized as equipment and depreciated over the estimated useful life of the equipment.
Software development costs are accrued and expensed based on ASC 985, which is for software that we intend to sell (in conjunction with our interimrelated hardware). Any software development costs that are incurred prior to the point where the project has demonstrated technological feasibility are expensed as they are incurred. Once technological feasibility has been established, most development costs are capitalized. Once development is complete and the software is made available for release to customers, capitalization no longer is appropriate because any remaining costs are considered ongoing maintenance and support. These are expensed as they are incurred.
Three Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Research and development expenses:(in thousands)
Wages and salaries$167 $124 $43 35 %
Materials20 37 (17)(46)%
Other expenses14 2 12 600 %
Total research and development expenses$201 $163 $38 23 %
During the three months ended June 30, 2021, research and development costs increased approximately $0.04 million. This increase was primarily due to ongoing product improvement activities.
Other gain (loss)
During the three months ended June 30, 2021, other gain (loss) of $0.04 million was not significant.
Interest income and expense
Interest expense consists of accrued interest on outstanding debt and is payable upon the maturity date.
Three Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Interest income:(in thousands)
Interest income$27 $7 $20 286 %
Total interest income$27 $7 $20 286 %
Interest expense:
Interest expense$(66)$(277)$211 (76)%
Total interest expense$(66)$(277)$211 (76)%
During the three months ended June 30, 2021, interest expense decreased compared to the same period in 2020 due to a convertible note that was outstanding through the second quarter in 2020 and settled in November 2020. On March 24, 2016, MedAvail and a significant customer and investor entered into a subordinated secured convertible promissory five-year note agreement for $10.0 million or the Convertible Note. This Convertible Note was convertible into common shares at the holder’s request. The Convertible Note, including accrued interest, was repaid in its entirety on November 17, 2020. For more detail on outstanding debt and associated maturities, see Note 7 to the unaudited consolidated condensed consolidated financial statements and related notes thereto includedpresented elsewhere in this Quarterly Report on Form 10-Q.

25

Results of Operations for the Six Months Ended June 30, 2021
Sales – Retail Pharmacy and Hardware and Service
Retail pharmacy and hardware sales
Retail pharmacy sales from the retail pharmacy services segment are derived from sales of prescription medications and over-the-counter products to patients. Medications are sold and delivered by various methods including dispensing product directly from the MedCenter, patient pick up at MedAvail’s SpotRx pharmacy locations or home delivery of medications to patient residences. Hardware sales from the pharmacy technology segment are derived from either the sales or subscription of the MedCenter to customers.
Service sales
Services sales from the pharmacy technology segment are derived from installation and support services.
Sales
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Pharmacy and hardware sales:(in thousands)
Retail pharmacy sales$7,912 $3,010 $4,902 163 %
Hardware364 423 (59)(14)%
Subscription sales230 228 2 1 %
Total pharmacy and hardware sales8,506 3,661 4,845 132 %
Service sales:
Software74 10 64 640 %
Maintenance and support71 23 48 209 %
Installation28 28 — — %
Professional services and other378 1 377 37700 %
Total service sales551 62 489 789 %
Total sales$9,057 $3,723 $5,334 143 %
During the six months ended June 30, 2021, retail pharmacy and hardware sales increased $4.8 million to $8.5 million compared to the same period in 2020. The increase was primarily due to volume growth in prescription sales at existing sites in Arizona, as well as growth from newly launched sites in Arizona, California and Michigan.
During the six months ended June 30, 2021, services sales increased $0.5 million to $0.6 million compared to the same period in 2020. The increase was due to the related increase in pharmacy and hardware sales, and professional services associated with contracted software integration work enabling a large health system customer to fully integrate their back-end pharmacy management system with our back-end MedPlatform® Enterprise Software. This integration work was nearly complete by June 30, 2021.
Cost of Sales – Pharmacy and Hardware and Service
Pharmacy and hardware cost of sales
Cost of sales consists primarily of prescription medications, and other over-the-counter health products; and costs incurred to acquire MedCenters sold to third-party customers.
Service cost of sales
Cost of sales consists primarily of costs incurred to install and maintain MedCenters at third-party customer locations.

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Costs of sales
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Retail pharmacy and hardware cost of sales:(in thousands)
Prescription drugs$7,185 $2,861 $4,324 151 %
Shipping579 156 423 271 %
Hardware353 93 260 280 %
Depreciation88 101 (13)(13)%
Total retail pharmacy and hardware cost of sales8,205 3,211 4,994 156 %
Service cost of sales:
Professional services285 — 285 — %
Maintenance and support services59 60 (1)(2)%
Installation services15 26 (11)(42)%
Total service cost of sales359 86 273 317 %
Total cost of sales$8,564 $3,297 $5,267 160 %
During the six months ended June 30, 2021, retail pharmacy and hardware cost of sales increased $5.0 million to $8.2 million compared to the same period in 2020. The increase was primarily due to costs associated with volume growth in prescription sales at existing sites and additional sites launched in the remaining period in 2020 and 2021 in Arizona, California and Michigan. Shipping costs, related to our home delivery service via third-party courier, increased $0.4 million compared to the same period in 2020. This increase is due to increased utilization of the service due to higher telehealth clinic visits caused by the Covid-19 pandemic.
During the six months ended June 30, 2021, service cost of sales increased $0.3 million to $0.4 million compared to the same period in 2020. The increase was due primarily to costs associated with contracted software integration work enabling a large health system customer to fully integrate their backend pharmacy management system with our MedPlatform® Enterprise Software.
Pharmacy operations
Pharmacy operations consist of costs incurred to operate retail pharmacies including pharmacy labor costs, rent and utilities, and pharmacy license fees. Wages and salaries consist of compensation costs incurred for all pharmacy operations related employees and contractors including bonuses, health plans, severance, and contractor costs.
Depreciation of property, plant and equipment includes depreciation on MedCenters, IT equipment, leasehold improvements, general plant and equipment, software, office furniture and equipment and vehicles. Amortization of intangible assets consists of amortization of intellectual property, website and mobile applications and software.
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Pharmacy operations expenses:(in thousands)
Wages and salaries$3,183 $1,709 $1,474 86 %
Other pharmacy operations expenses520 76 444 584 %
Depreciation of property, plant and equipment421 363 58 16 %
Amortization of intangible assets100 57 43 75 %
Total pharmacy operations expenses$4,224 $2,205 $2,019 92 %
During the six months ended June 30, 2021, pharmacy operations expenses increased $2.0 million to $4.2 million compared to the same period in 2020. This increase was primarily due to the opening of four additional central pharmacy locations in the remaining period in 2020, including three in California and one in Michigan. Additionally, volume growth continued to ramp at existing pharmacy locations in Arizona, increasing pharmacy personnel and supplies during the remaining period in 2020 and 2021, resulting in increased operating costs.

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General and administrative
General and administrative expenses consist of personnel costs, facility expenses and expenses for outside professional services, including legal, audit and accounting services. Personnel costs consist of salaries, benefits and share-based compensation. Facility expenses consist of rent and other related costs. Corporate insurance, office supplies and technology expenses are also captured within general and administrative expenses. We incurred and expect to incur additional expenses as a result of becoming a public company, including expenses related to compliance with the rules and regulations of the SEC, Nasdaq, additional insurance, investor relations and other administrative expenses and professional services.
We have a stock option plan whereby awards are granted to certain of our employees. The fair value of the stock options and restricted stock units granted by us to our employees is recognized as compensation expense on a straight-line basis over the applicable vesting period. We measure the fair value of the stock options using the Black-Scholes option pricing model as of the grant date. Shares issued upon the exercise of stock options and vesting of restricted stock units are new shares. We estimate forfeitures based on historical experience and expense related to awards is adjusted over the term of the awards to reflect their probability of vesting. All fully vested awards are fully expensed.
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
General and administrative expenses:(in thousands)
Wages and salaries$6,960 $4,500 $2,460 55 %
Professional services2,165 422 1,743 413 %
Rent and utilities819 653 166 25 %
Office and IT supplies693 574 119 21 %
Insurance895 102 793 777 %
Share-based compensation583 170 413 243 %
Travel and other employee expenses378 276 102 37 %
Other general and administrative expenses643 383 260 68 %
Total general and administrative expenses$13,136 $7,080 $6,056 86 %
During the six months ended June 30, 2021, general and administrative costs increased approximately $6.1 million to $13.1 million compared to the same period in 2020. This increase was primarily due to hiring additional administrative staff as well as other investments necessary for our growth and becoming a public company. Additionally, increases in other general expenses, such as director and officer insurance, auditor fees, and legal fees were also partly a consequence of operating as a public company.
Selling and marketing
Selling and marketing expenses consist of marketing and advertising costs, personnel costs, and marketing related expenses for outside professional services. Wages and salaries consist of compensation costs incurred for all selling and marketing employees, and contractors including bonuses, health plans, severance, and contractor costs.
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Selling and marketing expenses:(in thousands)
Wages and salaries$2,494 $1,009 $1,485 147 %
Marketing269 178 91 51 %
Travel and other employee expenses109 61 48 79 %
Other selling and marketing expenses6 25 (19)(76)%
Total selling and marketing expenses$2,878 $1,273 $1,605 126 %
During the six months ended June 30, 2021, selling and marketing costs increased approximately $1.6 million to $2.9 million compared to the same period in 2020. This increase was primarily due to personnel related costs associated with hiring additional Clinic Account Managers (CAMs) and Regional Directors, which directly support the medical clinic’s staff and patients at the clinics where we are deployed.
28

Research and development
Research and development expenses represent costs incurred to develop and innovate our MedCenter platform technology, including development work on hardware, software and supporting information technology infrastructure. Wages and salaries consist of compensation costs incurred for research and development employees and contractors including bonuses, health plans, severance, and contractor costs.
We recognize hardware development costs as they are incurred. When hardware is constructed for use by customers, costs are capitalized after technological feasibility is achieved and expensed before technological feasibility is achieved. Costs of hardware completed but not yet placed in service are capitalized as equipment (a long-lived asset) on the consolidated condensed balance sheets. Costs of hardware completed and placed in service with customers are capitalized as equipment and depreciated over the estimated useful life of the equipment.
Software development costs are accrued and expensed based on ASC 985, which is for software that we intend to sell (in conjunction with related hardware). Any software development costs that are incurred prior to the point where the project has demonstrated technological feasibility are expensed as they are incurred. Once technological feasibility has been established, most development costs are capitalized. Once development is complete and the software is made available for release to customers, capitalization no longer is appropriate because any remaining costs are considered ongoing maintenance and support. These are expensed as they are incurred.
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Research and development expenses:(in thousands)
Wages and salaries$333 $249 $84 34 %
Materials20 122 (102)(84)%
Other expenses16 7 9 129 %
Total research and development expenses$369 $378 $(9)(2)%
During the six months ended June 30, 2021, research and development costs decreased approximately $0.01 million. This decrease was primarily due to completion of certain development work related to our M5 MedCenter technology in 2020.
Other gain (loss)
During the six months ended June 30, 2021, other gain (loss) included a gain of $0.2 million, primarily from PPP loan forgiveness. MedAvail received forgiveness approval of the loan on March 30, 2021 in accordance with the terms of the CARES Act.
Interest income and expense
Interest expense consists of accrued interest on outstanding debt and is payable upon the maturity date.
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Interest income:(in thousands)
Interest income$67 $15 $52 347 %
Total interest income$67 $15 $52 347 %
Interest expense:
Interest expense$(68)$(456)$388 (85)%
Total interest expense$(68)$(456)$388 (85)%
During the six months ended June 30, 2021, interest expense decreased compared to the same period in 2020 due to a convertible note that was outstanding through the second quarter in 2020 and settled in November 2020. On March 24, 2016, MedAvail and a significant customer and investor entered into a subordinated secured convertible promissory five-year note agreement for $10.0 million or the Convertible Note. This Convertible Note was convertible into common shares at the option holder’s request. The Convertible Note, including accrued interest, was repaid in its entirety on November 17, 2020. For more detail on outstanding debt and associated maturities, see Note 7 to the unaudited consolidated condensed financial statements presented elsewhere in this Quarterly Report on Form 10-Q.
29


Liquidity and related notes theretoCapital Resources
Sources of Liquidity
Since inception through June 30, 2021, our operations have been financed primarily by net cash proceeds from the sale of stock from private placements, the sale of redeemable preferred stock and debt. As of June 30, 2021, we had $48.7 million in cash and cash equivalents and an accumulated deficit of $168.2 million. Although we believe our cash and cash equivalents and borrowing capacity are sufficient funding to execute our current growth plan for the foreseeable future, due to market risks (as outlined in the "Risk Factors" section of this Quarterly Report on Form 10-Q) and opportunities, we expect a need to raise additional capital to continue to fund our operations. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our growth strategy and capital market conditions. Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and our ability to develop our product candidates. Our management actively evaluates matters of liquidity and growth capital needs, including evaluating debt and equity as sources of growth capital with a focus on lower overall weighted average cost of capital and favorable financing terms.
Cash Flows
The following table summarizes our cash flows for the three months ended June 30, 2021 and 2020:
Six Months Ended June 30,2021 vs. 2020
(In thousands)20212020Amount Change% Change
Cash used in operating activities$(16,516)(10,073)$(6,443)64 %
Cash used in investing activities(1,413)(302)(1,111)368 %
Cash provided by financing activities8,730 8,846 (116)(1)%
Net decrease in cash and cash equivalents, and restricted cash$(9,199)$(1,529)$(7,670)502 %
Operating Activities
During the six months ended June 30, 2021, cash used in operating activities increased $6.4 million to $16.5 million compared to the same period in 2020. The increase was primarily due to an increase in operating expenses from wages and salaries and costs attributable to the launch and growth of our retail pharmacy operations in Arizona, California, and Michigan, and operating as a public company.
Investing Activities
During the six months ended June 30, 2021, cash used in investing activities increased $1.1 million to $1.4 million compared to the same period in 2020. The increase was primarily due to an increase in investment in property, plant and equipment and intangible assets associated with investments in retail pharmacy services operations in Arizona, California and Michigan.
Financing Activities
During the six months ended June 30, 2021, cash provided by financing activities decreased $0.1 million to $8.7 million compared to the same period in 2020. In the first half of 2020 the activity was primarily from the issuance of preferred stock and debt, and in the first half of 2021 the activity was primarily from issuing debt.

Critical Accounting Policies and Estimates
There were no significant changes in our critical accounting policies in the six months ended June 30, 2021, from those previously disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019.

Certain2020, filed with the SEC on March 31, 2021.

Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 31, 2021, and Note 3: "Recent Accounting Pronouncements" in the notes to our unaudited consolidated condensed financial statements included elsewhere in this section contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this report and not clearly historical in nature are forward-looking, and the words “may,” “will,” “expect,” anticipate,” “continue,” “estimate,” “project,” “intend,” “predict,” “forecast,” “potential,” “believe,” “plan,” “might,” “could,” “should,” “would,” “seek” and similar expressions are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect future plans of operations, business strategy, operating results, and financial position generally are intended to identify forward-looking statements. Any statements in this report that are not historical facts are forward-looking statements. Actual results may differ materially from those projected or implied in any forward-looking statements. Such statements involve risks and uncertainties, including but not limited to those relating to product and customer demand, market acceptance of our products, the ability to create new products, the ability to achieve a sustainable profitable business, the effect of economic conditions, the ability to protect our intellectual property rights, competition from other providers and products, risks in product development, our ability to raise capital to fund continuing operations, and other factors discussed from time to time in our filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made except as required by law. Dollar amounts in this section are in thousands, unless otherwise indicated.

Overview

We were incorporated in the State of Nevada on April 11, 2007. On March 17, 2016, we merged with our wholly-owned subsidiary and changed our name from MYOS Corporation to MYOS RENS Technology Inc. Prior to February 2011, we did not have any operations and did not generate any revenues. In February 2011, we acquired our proprietary active ingredient called Fortetropin®, the first clinically demonstrated natural myostatin reducing agent. Since February 2011, our principal business activities have been focused on deepening our scientific understanding relating to the activity of Fortetropin®, and to leverage this knowledge to strengthen and build our intellectual property estate; developing sales and marketing strategies aimed at expanding our commercial presence; evaluating the value of Fortetropin® in therapeutic markets, including the treatment of sarcopenia, cachexia, anorexia, obesity and muscular disorders; and, conducting research and development focused on the discovery, development and commercialization of other products and technologies aimed at maintaining or improving the health and performance of muscle tissue. Since our inception in April 2007, we have recognized cumulative revenues of approximately $10.4 million.  

Plan of Operation

We are focused on the discovery, development and commercialization of advanced nutrition products, functional foods, and other technologies aimed at maintaining or improving the health and performance of muscle tissue. Our initial core ingredient is Fortetropin®, a natural and proprietary bioactive composition derived from fertilized egg yolk that has been shown in clinical trials to increase lean muscle mass, size and strength. Our plan of action is to: (i) create a sales platform through marketing products containing our proprietary ingredient Fortetropin® in established, growing, and new markets and strategic selection of partnerships and collaborations to maximize near-term and future revenues, (ii) deepen our scientific understanding of the activity of Fortetropin® as a natural product to improve muscle health and performance, and to leverage this knowledge to strengthen and build our intellectual property estate, (iii) conduct research and development activities to evaluate the impact of Fortetropin® on muscle health and wellness in humans as well as domestic pets. (iv) identify other products and technologies which may broaden our portfolio and define a business development strategy to protect, enhance and accelerate the growth of our products, (v) reduce the cost of manufacturing through process improvement, and (vi) identify contract manufacturing organizations that can fully meet our future growth requirements and (vii) develop a differentiated and advantaged consumer positioning, brand name and iconography.

Quarterly Report Form 10-Q.


Product Strategy

Our strategy is to understand the complex genetic and molecular pathways regulating muscle mass and function. Understanding the impact of complex regulatory pathways which act to build and maintain healthy lean muscle is central to our research and development activities. We are developing nutritional products that target specific mechanisms to promote muscle health in ways that cannot be met by other food products.

We will seek to gain market share for our core branded products in the 1) sports and fitness nutrition, 2) rehabilitation and restorative health and 3) domestic pet muscle health verticals by (i) formulating and developing new and complementary product lines, (ii) expanding U.S. distribution by increasing the channels of sale, (iii) expanding distribution geography beyond the U.S. and (iv) seeking strategic relationships with other distributors.

Marketing, Sales and Distribution

Our commercial focus is to leverage our clinical data to develop multiple products to target the large, but currently underserved, markets focused on muscle health. The sales channels which we sell our products are evolving.

In May 2016, we launched Physician Muscle Health Formula®, a proprietary formulation containing Fortetropin® and sold the product directly to physicians to distribute to their patients who are focused on wellness. The Company relaunched the product as part of its longevity marketing strategy in December 2019. In March 2017 we launched Qurr®, a Fortetropin®-powered product line that is available on our direct-to-consumer platform. We recorded $10 and $32 in net revenues for the six months ended June

30 2020 and June 30, 2019, respectively, for our longevity product lines.

In March 2018, we launched Yolked®, a Fortetropin®-powered product which is NSF Certified for Sports, and developed and marketed to collegiate and professional athletes who want to increase their muscle size and performance with an all-natural advanced nutrition product. The Company recorded $104 and $121 of net revenues for the six months ended June 30, 2020 and June 30, 2019, respectively, for our Yolked® product line.

In June 2018, we launched our Fortetropin® based pet product Myos Canine Muscle Formula® (“MCMF”). Two veterinarian hospitals had previously performed some informal observational studies with older dogs experiencing muscle atrophy and saw positive results after taking our pet product. We believe that the positive feedback received from the veterinarian community, together with the positive results from our Kansas State University study, will enable us to grow our pet business product line. The Company recorded $477 and $150 of net revenues for the six months ended June 30, 2020 and June 30, 2019, respectively, for our MCMF product line.

In November 2019, we launched our white label business, working with manufacturers to create new brands and products using Fortetropin® as the foundation. We recorded $28 of net revenues for the six months ended June 30, 2020.

We continue to pursue additional distribution and branded sales opportunities. There can be no assurance that we will be able to secure distribution arrangements on terms acceptable to the Company, or that we will be able to generate significant sales of our current and future branded products. We expect to continue developing our own core branded products in markets such as functional foods, sports and fitness nutrition and rehabilitation and restorative health and to pursue international sales opportunities.

The Company currently relies on one third-party manufacturer to produce Fortetropin®. This manufacturer purchases all the necessary raw materials from suppliers and coordinates any additional production steps with third-parties. We have multiple vendors for blending, packaging and labeling our products. The Company is pursuing other alternatives in order to build a more robust supply chain going forward.


Research and Development

As an advanced nutrition company, we are dedicated to basic and clinical research that supports our existing and future product portfolio. We are focused on the following areas of research:

Basic Research

●Biochemical characterization of Fortetropin®, including proteomic and lipidomic approaches;
●Identification and isolation of proteins, peptides, and lipids in Fortetropin® responsible for pro-myogenic activity.

Canine Clinical Research

●Effect of Fortetropin® to reverse disuse atrophy in dogs after an orthopedic surgery procedure to repair the cranial cruciate ligament (CCL);
●Effect of Fortetropin® on quality of life and activity in geriatric dogs;
●Effect of Fortetropin® on serum myostatin levels in healthy dogs.

Human Clinical Research

●Effect of Fortetropin® on skeletal muscle protein fractional synthetic rate in older men and women;
●Effect of Fortetropin® on muscle function and recovery after orthopedic procedures.

Our research program is actively evaluating the many active proteins, lipids and peptides in Fortetropin®. We believe our research programs will establish a basis for the continued prosecution of patent applications in order to further protect and augment our intellectual property assets. We are dedicated to protecting our innovative technology.

We expect our investment in research and development to continue in the future. 

Clinical and Basic Research Programs

As an emerging company focused on the discovery, development and commercialization of advanced nutrition products that improve muscle health and performance, we are dedicated to basic and clinical research that supports our existing and future product portfolio. Our research program is actively evaluating the many active proteins, lipids and peptides in Fortetropin®, specifically as a natural, reversible, temporary modulator of the regulatory protein myostatin, and to leverage this knowledge to strengthen and build our intellectual property. We are dedicated to protecting our innovative technology and believe that our research programs will establish a basis for the continued prosecution of patent applications in order to protect and augment the Company’s intellectual property estate. We expect our investment in research and development to continue to grow in the future. 

We invest in research and development activities externally through academic and industry collaborations aimed at enhancing our products, optimizing manufacturing and broadening the product portfolio. We have developed the following collaborations with various academic centers:

●In February 2019, we entered into an agreement with the College of Veterinary Medicine at Kansas State University (the “College”) to study the impact of Fortetropin® on quality of life and activity in geriatric dogs.  The principal investigator for this study is Kenneth R. Harkin DVM, DACVIM (SAIM), Professor and Section Head at the College. In this study geriatric dogs were assigned to two groups where they consumed either Fortetropin® or a placebo. The quality of life evaluation at baseline, midpoint and end of study was based on questionnaires filled by the dog owners. The level activity at baseline, midpoint and end of study was based on data recorded on the Vetrax collars worn by the dogs. The study, titled, “Fortetropin inhibits disuse muscle atrophy in dogs after tibial plateau leveling osteotomy,” was published in April 2020 in the peer-reviewed, open-access scientific journal, PLOS ONE (Public Library of Science), reporting results from the randomized, double-blind, placebo-controlled study involving 100 dogs conducted by researchers at the College.


●In March 2018, we entered into a research agreement with Rutgers University, The State University of New Jersey, to work with Rutgers researchers in a program focused on discovering compounds and products for improving muscle health and performance.

●In December 2017, we entered into an agreement with the University of California, Berkeley’s Department of Nutritional Sciences & Toxicology.  The research project will study the effects of Fortetropin® on increasing the fractional rate of skeletal muscle protein synthesis in men and women between 60 and 75 years old. The Principal Investigator for this clinical study is William J. Evans, PhD, Adjunct Professor of Human Nutrition at the Department of Nutritional Sciences & Toxicology at the University of California, Berkeley. Professor Evans, a leading authority in muscle health research, is coordinating the activities of a multi-disciplinary team of scientists and physicians. In this randomized, double-blind, placebo-controlled clinical study, 20 subjects, men and women 60 – 75 years of age, will consume either Fortetropin® or a placebo for 21 days along with daily doses of a heavy water tracer.  After 21 days, a micro-biopsy was collected from each subject to determine the fractional rate of muscle protein synthesis. In July 2018, we agreed to pay for additional costs incurred in connection with the study. This clinical study was completed in June 2019 and the results showed that among subjects who received Fortetropin, the average FSR of several muscle protein gene ontologies was significantly higher compared to the placebo group.  The proportion of proteins with an increased FSR in the Fortetropin group relative to the placebo group was found to be statistically significant. The overall magnitude of increase was 15%.

●

In April 2017, we entered into an agreement with the College of Veterinary Medicine at Kansas State University to study the impact of Fortetropin® on reducing muscle atrophy in dogs after Tibial-Plateau-Leveling Osteotomy (“TPLO”) surgery to repair the cranial cruciate ligament (CCL). In August 2018, we agreed to pay for additional costs incurred in connection with the study. The study was completed and Kenneth R. Harkin DVM, DACVIM (SAIM), Professor and Section Head, College of Veterinary Medicine, Kansas State University and the principal investigator of the study presented the results titled, “The Impact of Fortetropin® Supplementation on Dogs Recovering from TPLO surgery” at the VMX Conference in Orlando in January 2019.

The randomized, double-blind, placebo-controlled study evaluated the impact of Fortetropin® on attenuating muscle atrophy following a common surgical procedure known as TPLO in 100 dogs at Kansas State University.  TPLO is performed by veterinary surgeons to repair ruptures of the cranial cruciate ligament (CCL), a canine ligament that is analogous to the anterior cruciate ligament (ACL) in humans.  In the weeks that follow TPLO surgery, the immobilized operated limb frequently shows significant muscle loss due to muscle disuse atrophy.  The objective of the study was to determine whether Fortetropin® could reduce this muscle atrophy with respect to a macronutrient-matched placebo. The study showed that: i) Fortetropin® prevented the loss of muscle mass in these dogs as measured by the thigh circumference in their affected and unaffected limbs; ii) Fortetropin® supplemented dogs had a significant improvement in percentage of weight supported by the affected limb (more rapid return to normal stance force distribution) than the placebo group; and iii) Fortetropin® prevented a rise in serum myostatin levels in dogs. We believe the results of this study are not only relevant to our veterinary business, which was established in 2018, but are also relevant to our human muscle nutrition business, with a particular focus on recovery and rehabilitation.

●In May 2015, we initiated a dose response clinical study led by Jacob Wilson, Ph.D., CSCS*D, Professor of Health Sciences and Human Performance at the University of Tampa, to examine the effects of Fortetropin® supplementation on plasma myostatin levels at various dosing levels in young adult males and females. This study is intended to help us better define the dose response curve, the minimal effective dose and effects of Fortetropin® on serum myostatin. In this double blind placebo controlled clinical study, 80 male and female subjects ranging in ages between 18 and 22 were randomized into four groups such that no significant differences in serum myostatin concentration existed between groups.

Following assignment to one of the four groups, blood samples were collected to establish baseline values. Subjects were subsequently supplemented with three different doses of Fortetropin® (2.0g, 4.0g and 6.6g) and a matching placebo for one week. Following one week of supplementation, blood samples were collected and serum myostatin levels were assayed. Results demonstrated that Fortetropin® reduces serum myostatin levels at daily doses of 4.0g and 6.6g. This research, which continues to build upon our current understanding of Fortetropin®, may result in the formulation of new products. An abstract of this study was presented at 2016 International Conference on Frailty & Sarcopenia Research in Philadelphia, PA.  

●In August 2014, we entered into a research agreement with Human Metabolome Technologies America, Inc., (“HMT”), to apply their proprietary, state-of-the-art capillary electrophoresis-mass spectrometry (CE-MS) technologies to characterize the metabolomic profiles of plasma samples obtained from healthy male subjects who used either Fortetropin® or placebo with the goal of identifying metabolites with pro-myogenic activity in the plasma samples of subjects who took Fortetropin® as well as examining the effect on glucose and fat metabolism. HMT used a metabolite database of over 290 lipids and over 900 metabolites to identify potential plasma biomarkers related to muscle growth. The study was completed during the fourth quarter of 2014. Initial data from this study indicated that subjects who received Fortetropin® displayed differential metabolomic profiles relative to subjects who received placebo. The early indications of plasma biomarkers may guide future study design for Fortetropin® clinical trials by identifying clinically-relevant endpoints. The results from this study were presented at the Sarcopenia, Cachexia and Wasting Disorders Conference (Berlin, Germany) in December 2016.

●In May 2014, we entered into an agreement with the University of Tampa to study the effects of Fortetropin® supplementation in conjunction with modest resistance training in 18-21 year old males. The study was a double-blind, placebo-controlled trial which examined the effects of Fortetropin® on skeletal muscle growth, lean body mass, strength, and power in recreationally trained males. Forty-five subjects were divided into placebo, 6.6g and 19.8g dosing arms of Fortetropin® daily for a period of 12 weeks. Results demonstrated a statistically significant increase in both muscle thickness and lean body mass in subjects taking Fortetropin® but not in subjects taking placebo. The clinical study also analyzed blood myostatin levels via high-sensitivity enzyme-linked immunosorbent assay (“ELISA”) based analysis. Results demonstrated statistically significant reduction in serum myostatin levels in both groups that consumed Fortetropin® but not in the group that consumed the placebo. The lipid serum safety protocol demonstrated that daily use of Fortetropin® at recommended and three times the recommended dose had no adverse lipid effect and did not adversely affect cholesterol, HDL or triglyceride levels. Data from the study was presented at the American College of Nutrition’s 55th annual conference. A separate mechanism of action study at the University of Tampa demonstrated that in addition to reducing serum myostatin levels, Fortetropin® showed activity in mTOR and Ubiquitin pathways, two other crucial signaling pathways in the growth and maintenance of healthy muscle. Specifically, the preclinical data showed that Fortetropin® up-regulates the mTOR regulatory pathway. The mTOR pathway is responsible for production of a protein kinase related to cell growth and proliferation that increases skeletal muscle mass. Up-regulation of the mTOR pathway is important in preventing muscle atrophy. The preclinical study also demonstrated that Fortetropin® acts to reduce the synthesis of proteins in the Ubiquitin Proteasome Pathway, a highly selective, tightly regulated system that serves to activate muscle breakdown. Over-expression of the Ubiquitin Proteasome Pathway is responsible for muscle degradation. We believe that Fortetropin® has the ability to regulate production in the Ubiquitin Proteasome Pathway, which may have significant implications for preventing age-related muscle loss.

The foregoing programs are an integral part of our business strategy. We believe that they will provide a clear scientific rationale for Fortetropin® as an advanced nutritional product and support its use in different medical and health applications in the future.

We intend to pursue additional clinical studies and medical research to support differentiated and advantaged marketing claims, to build and enhance our competitive insulation through an aggressive intellectual property strategy, to develop product improvements and new products in consumer preferred dosage forms, to enhance overall marketing, and to pursue best in class personnel.


Results of Operations

Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019

  Three Months Ended
June 30,		  Change 
  2020  2019  Dollars  % 
             
Net revenues $329  $154  $175   114%
Cost of revenues  172   81   91   112%
Gross profit  157   73   84   116%
                 
Operating expenses:                
Selling, marketing and research  227   337   (110)  -33%
Personnel and benefits  365   470   (105)  -23%
General and administrative  329   432   (103)  -24%
Total operating expenses  921   1,239   (318)  -26%
                 
Operating loss  (764)  (1,166)  402   -35%
                 
Interest expense  (7)  (9)  2   -23%
                 
Net loss $(771) $(1,175) $404   -34%

Net revenues

Net revenues for the three months ended June 30, 2020 increased by $175 or 114% to $329 compared to net revenues of $154 for the three months ended June 30, 2019. This increase is primarily due to an increase of $173 for Myos Canine Muscle Formula and an increase of $2 for our older products.

Cost of revenues

Cost of revenues for the three months ended June 30, 2020 increased by $91 or 112% to $172 compared to cost of revenues of $81 for the three months ended June 30, 2019. The increase is primarily due to costs related to an increase in our product sales.

Gross profit

Gross profit increased $84 or 116% to $157 for the three months ended June 30, 2020 compared to $73 for the three months ended June 30, 2019.

Operating expenses

Operating expenses for the three months ended June 30, 2020 decreased by $318 or 26% to $921, compared to operating expenses of $1,239 for the three months ended June 30, 2019. The decrease is primarily due to a 33% decrease in selling, marketing and research expenses of $110, a 24% decrease in general and administrative of $103, and a 23% decrease in personnel and benefits of $105 due to certain personnel changes. 


Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

  Six Months Ended
June 30,		  Change 
  2020  2019  Dollars  % 
             
Net revenues $619  $303  $316   104%
Cost of revenues  330   142   188   132%
Gross profit  289   161   128   79%
                 
Operating expenses:                
Selling, marketing and research  429   612   (183)  -30%
Personnel and benefits  833   890   (57)  -6%
General and administrative  644   788   (144)  -18%
Total operating expenses  1,906   2,290   (384)  -17%
                 
Operating loss  (1,617)  (2,129)  512   -24%
                 
Interest expense  (20)  (21)  1   -4%
                 
Net loss $(1,637) $(2,150) $513   -24%

Net revenues

Net revenues for the six months ended June 30, 2020 increased by $316 or 104% to $619 compared to net revenues of $303 for the six months ended June 30, 2019. This increase is primarily due to an increase of $328 for Myos Canine Muscle Formula offset by a net decrease of $12 for our older products.

Cost of revenues

Cost of revenues for the six months ended June 30, 2020 increased by $188 or 132% to $330 compared to cost of revenues of $142 for the six months ended June 30, 2019. The increase is primarily due to costs related to an increase in our product sales.

Gross profit

Gross profit increased $128 or 79% to $289 for the six months ended June 30, 2020 compared to $161 for the six months ended June 30, 2019.

Operating expenses

Operating expenses for the six months ended June 30, 2020 decreased by $384 or 17% to $1,906, compared to operating expenses of $2,290 for the six months ended June 30, 2019. The decrease is primarily due to a 30% decrease in selling, marketing and research expenses of $183, an 18% decrease in general and administrative of $144, and a 6% decrease in personnel and benefits of $57 due to some personnel changes.


Liquidity and Capital Resources 

As of the filing date of this report, management believes that there may not be sufficient capital resources from operations and existing financing arrangements in order to meet operating expenses and working capital requirements for the next twelve months. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. Accordingly, the Company is evaluating various alternatives, including reducing operating expenses, securing additional financing through debt or equity securities to fund future business activities.

The Company entered into the Merger Agreement on June 30, 2020 with MedAvail and it expects the Merger to close before the end of the year. The Merger Agreement provides that, prior to the consummation of the Merger, MYOS will transfer and assign all of its assets and liabilities into MYOS Corp., a newly-created, wholly-owned subsidiary of MYOS. The shares of MYOS Corp., immediately after the closing of the Merger, will be spun-out from the Post-Merger Combined Company through a dividend of the stock of MYOS Corp. to the pre-Merger MYOS shareholders, resulting in MYOS Corp., a private company, continuing the current business operations of MYOS. MedAvail will pay MYOS Corp. $2 million in cash upon the closing of the Merger and issue a promissory note for an additional $3 million, payable in instalments within one year of the closing of the Merger.

There can be no assurance that the Company will be able to generate the level of operating revenues in its business plan, or if additional sources of financing will be available on acceptable terms, if at all. If no additional sources of financing are available, our future operating prospects may be adversely affected. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Working capital at June 30, 2020 and December 31, 2019 is summarized as follows:

  June 30,  December 31,  Increase 
  2020  2019  (Decrease) 
Current Assets:         
Cash $1,334  $64  $1,270 
Accounts receivable, net  33   5   28 
Inventories, net  1,474   1,666   (192)
Prepaid expenses and other assets  187   23   164 
Total current assets $3,028  $1,758  $1,270 
Current liabilities:            
Accounts payable $108  $277  $(169)
Accrued expenses and other current liabilities  40   276   (236)
Notes payable and accrued interest  654   1,159   (505)
Total current liabilities $802  $1,712  $(910)

Working capital increased by $2,180 to $2,226 at June 30, 2020 compared to $46 at December 31, 2019. 

Significant changes in working capital components were as follows:

●Cash increased by $1,270 primarily due to net proceeds provided by financing activities of $2,938 during the six months ended June 30, 2020 offset by funds used in operating activities of $1,668.
●Notes payable and other current liabilities decreased by $505 primarily due to a conversion of principal of $825 offset by $300 of proceeds received on the promissory note payable and $20 of accrued interest.

At June 30, 2020, we had cash of $1,334 and total assets of $4,072.


Summarized cash flows for the six months ended June 30, 2020 and 2019 are as follows:

  Six Months Ended
June 30,		    
  2020  2019  Change 
Net cash used in operating activities $(1,668) $(1,135) $(533)
Net cash provided by financing activities  2,938   2,278   660 
Net increase in cash $1,270  $1,143  $127 

Net cash used in operating activities represents net loss adjusted for certain non-cash items and changes in operating assets and liabilities.

Net cash used in operating activities for the six months ended June 30, 2020 was $1,668, an increase of $533 compared to $1,135 used in operating activities for the six months ended June 30, 2019.

Net cash provided by financing activities for the six months ended June 30, 2020 was $2,938, an increase of $660 compared to $2,278 for the six months ended June 30, 2019.

For additional information about the changes in operating assets and liabilities, refer to the above discussion on working capital.

On March 2, 2020, the Company entered into securities purchase agreements for a private placement with a group of accredited investors, including four members of the Company’s board of directors. In connection with the closing of the private placement on March 5, 2020, the Company issued 851,240 shares of common stock for aggregate cash proceeds of $1,030, and $825 of the principal amount of the Note was exchanged for 681,818 shares of common stock. The Company intends to use the net proceeds from the private placement primarily for working capital, research and development, strategic initiatives and other general corporate purposes.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 

Recently Issued Accounting Standards

For a description of recently issued accounting standards, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Report.

Critical Accounting Policies

For a description of our critical accounting policies, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Report.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are

As a smaller“smaller reporting company, and therefore,company”, we are not required to provide the information required by this Item of Form 10-Q.

Item.

Item 4. Controls and Procedures

Evaluation of

Disclosure Controls and Procedures

Our management, is responsible for establishingwith the participation of our Chief Executive Officer and maintaining a systemChief Financial Officer, has evaluated the effectiveness of disclosure controls and procedures (as such term is defined in RuleRules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) that is designed to provide reasonable assurance that information we are required to disclose in the reports that we fileAct of 1934, as amended, or submit under the Exchange Act, are recorded, processed, summarized and reported, withinas of the time periods specified inend of the Commission’s rules and forms. Disclosure controls and procedure include, without limitations, controls and procedures designed to ensure that information required to be disclosedperiod covered by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rules 13a-15 and 15d-15, anthis report. Based on such evaluation, was completed by our PrincipalChief Executive Officer and PrincipalChief Financial Officer have concluded that, as of the effectivenessend of the design and operation ofsuch period, our disclosure controls and procedures as of June 30, 2020. Based on that evaluation, management concluded that due to a material weakness in our internal control over financial reporting, our disclosure controls and procedures were notare effective. We are implementing remedial measures designed to address the material weakness.

Changes in Internal Control overOver Financial Reporting

There were nohave not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f)13a15(f) and 15d-15(f) ofunder the Exchange Act) during the quarter ended June 30, 20202021 that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.



31

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

On January 6, 2017,Proceedings

Following MYOS Rens Technology Inc.’s, or MYOS’s and MedAvail, Inc.’s, or MAI's, announcement of the execution of the Merger Agreement on June 30, 2020, MYOS received separate litigation demands from purported MYOS stockholders on September 16, 2020 and October 20, 2020, respectively seeking certain additional disclosures in connectionthe Form S-4 Registration Statement filed with the financingSecurities and Exchange Commission on September 2, 2020, collectively, the Demands. Thereafter, on September 23, 2020, a complaint regarding the transactions contemplated by a securities purchase agreement with RENS Technology Inc. (the “Purchaser”), we commenced an actionwithin the Merger Agreement was filed in the Supreme Court of the State of New York, County of New York, (the “Court”)captioned Faasse v. MYOS RENS Technology Inc., againstet. al., Index No.: 654644/2020 (NY Supreme Ct., NY Cnty., September 23, 2020), or the Purchaser, RENS Agriculture,New York Complaint. On October 12, 2020, a second complaint regarding the parent company of the Purchaser, and Ren Ren, a principal in both entities and one of our directors, arising from the Purchaser’s breach of the agreement under which the Purchaser agreed to invest an aggregate of $20.25 million in our company in exchange for an aggregate of 3,537,037 shares of our common stock and warrants to purchase an aggregate of 884,259 shares of common stock.

On April 11, 2017, the Court noted that we had demonstrated a likelihood of success on the merits of the breach of contract claim. Thereafter, a hearingtransactions was scheduled on the application by the Purchaser to dismiss the complaint and various pre-trial discovery applications by both parties.

In August 2017, the Company amended its complaint repeating most of the initial claims but adding several additional claims against RENS Agriculture, Mr. Ren and two additional Chinese defendants, including a claim against RENS Agriculture for breaching the exclusive distribution agreement, as well as claims against all defendants for theft and misappropriation of our confidential proprietary information and trade secrets, breach of fiduciary duty and duty of loyalty, misappropriation of corporate opportunity, unfair competition and a number of other torts. We are seeking damages and injunctive relief. The Purchaser has filed a motion to dismiss the amended complaint, which is still pending and scheduled for oral argument in the second quarterDistrict Court of 2019.

On July 13, 2020,Nevada, Clark County Nevada, captioned Vigil v. Mannello, et. al., Case No. A-20-822848-C, or the Company entered into a settlement agreement (the “Settlement Agreement”)Nevada Complaint, and together with the Purchaser,  Mr. Ren and Mr. Mannello to settle all claims in connection with all pending litigation matters between the parties (the “Claims”). Pursuant to the Settlement Agreement, the parties agreed to file the appropriate documentation in the Nevada and New York courts to dismissComplaint, the Claims within five daysComplaints, and collectively with the Demands, the Litigation.

The Demands and the Complaints that comprise the Litigation generally alleged that the directors of the execution of the Settlement Agreement. In addition, the Purchaser and Mr. Ren agreed to: (i) vote all ofMYOS breached their shares of common stock of the Company in favor of the transactions contemplatedfiduciary duties by entering into the Merger Agreement, and (ii) waiveMYOS and forfeit any right to receive any ownership interestMAI disseminated an incomplete and misleading Form S-4 Registration Statement. The New York Complaint also alleged MedAvail aided and abetted such breach of fiduciary duties.
MYOS and MAI believe that the claims asserted in the private company (which will includeLitigation are without merit, and believe that the assetsForm S-4 Registration Statement disclosed all material information concerning the Merger and liabilities forno supplemental disclosure is required under applicable law. However, in order to avoid the Company’s existing muscle health business) to be spun-out from the Company in connection with the Merger. The Purchaser also agreed that, simultaneous with the closingrisk of the Litigation delaying or adversely affecting the Merger it will deliver its warrantand to purchase 375,000 shares of common stockminimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, MYOS determined to voluntarily supplement the Company for cancellation or, ifForm S-4 Registration Statement as described in the warrant cannot be located, execute documents necessary to ensure thatCurrent Report on Form 8-K on November 2, 2020. Subsequently, the warrant is cancelled.Nevada Complaint and the New York Complaint were voluntarily dismissed. The Settlement Agreement further provides that Mr. Ren will resign as the Company’s Global Chairman and as a memberremainder of the Company’s board of directors uponLitigation remains outstanding. MYOS and MAI specifically deny all allegations in the execution of the Settlement Agreement. The Settlement Agreement also includes mutual releases by the parties against each other forLitigation and/or that any claimsadditional disclosure was or actions (including the Claims) through the date of the Settlement Agreement. The litigation was dismissed on July 23, 2020.

is required.

Item 1A. Risk Factors.

Factors

There have been no material changes from the risk factors disclosed in Part I, Item IA – Risk Factors that could cause our actual results to differ materially from those in this report are any of the risks describedcontained in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with2020 (the “2020 Annual Report”) and in Part II, Item 1A – Risk Factors contained in our Quarterly Report on Form 10-Q for the SEC onquarter ended March 24, 2020. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional31, 2021 (the “Q1 2021 Quarterly Report”). The risk factors described in those sections, as well as other information set forth in this Quarterly Report on Form 10-Q, could materially affect our business, financial condition or operating results. The risks described in our 2020 Annual Report and our Q1 2021 Quarterly Report are not presentlythe only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also impair our business or results of operations.

As of the date of this report, except as set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC, except we may disclose changes to such factors or disclose additional factors from time to time in our future SEC filings.

The COVID-19 pandemic has adversely affected our business and operations and may have a material adverse effect on our business and operations in the future.

The recent outbreak of COVID-19 has been declared by the World Health Organization to be a “pandemic,” and has spread across the globe to many countries, including the United States, and is impacting worldwide economic activity. The current COVID-19 pandemic has disrupted or prevented us, our suppliers and other business partners from conducting business activities as usual andimmaterial also may prevent us from conducting our business as usual for an additional period of time, the duration of which is uncertain. In addition, we, our suppliers and other business partners may also experience significant impairments of business activities due to operational shutdowns or suspensions that may be requested or mandated by national or local governmental authorities or self-imposed by us, our suppliers or other business partners.

While it is not possible at this time to estimate the future impact that COVID-19 could have on our business, customers, suppliers or other business partners, the continued spread of COVID-19, the measures taken in the United States by federal and local governments, actions taken to protect employees, and the impact of the pandemic on various business activities couldmaterially adversely affect our results of operations and financial condition.

The Company was deemed to be an essential business in the State of New Jersey and we made changes to accommodate the orders to practice social distancing. All employees are currently working remotely.


The inability to maintain adequate supplies of finished goods in our inventory or at our fulfillment centers in a timely manner, including as a result of COVID-19, could limit our ability to manufacture and sell our products and have a material adverse effect on our business, financial condition and results of operations.

The capital markets have experienced significant volatility due to the ongoing spread of COVID-19. As a result the price of our shares may be negatively impacted and affect our ability to raise additional capital.

or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Proceeds

None.


Item 3. Defaults Upon Senior Securities.

Securities

None.


Item 4. Mine Safety Disclosures.

Disclosures

None.


Item 5. Other Information.

Information

None.


32

Item 6. Exhibits.

Exhibits
Incorporated by Reference
Exhibit NumberDescriptionFormExhibitFiling Date
3.18-K3.1November 18, 2020
3.28-K3.2November 18, 2020
4.18-K4.1November 18, 2020
4.2S-4/A4.9October 9, 2020
4.38-K4.3November 18, 2020
10.1#8-K10.15November 18, 2020
10.2#8-K10.11November 18, 2020
10.3#8-K10.12November 18, 2020
10.4#8-K10.13November 18, 2020
10.5#8-K10.14November 18, 2020
10.6S-410.21September 3, 2020
10.7§S-410.23September 3, 2020
10.8§S-410.24September 3, 2020
10.9S-410.8September 3, 2020
10.10#§S-410.15September 3, 2020
10.11#§S-410.16September 3, 2020
10.12#§S-410.17September 3, 2020
10.13#§S-410.18September 3, 2020
10.14#§S-410.19September 3, 2020
10.158-K10.1June 11, 2021
17.018-K99.1June 15, 2021
31.1*
31.2*
32.1**
33

No.Description
10.1AgreementIncorporated by Reference
Exhibit NumberDescriptionFormExhibitFiling Date
101*Inline XBRL Document Set for the consolidated condensed financial statements and Planaccompanying notes in Part I, Item 1, “Financial Statements” of Merger and Reorganization, dated June 30, 2020, by and among MYOS RENS Technology, Inc., MedAvail, Inc., and Matrix Merger Sub, Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Currentthis Quarterly Report on Form 8-K, filed with the SEC on June 30, 2020)10-Q
104*
10.2FormInline XBRL for the cover page of Assignment and Assumption Agreement, to be entered into by and between MYOS RENS Technology, Inc., and MYOS Corp. (incorporated by reference to Exhibit 2.2 of the Company’s Current Reportthis Quarterly on Form 8-K, filed with10-Q, included in the SEC on June 30, 2020)
Exhibit 101 Inline XBRL Document Set
10.3Second Amendment to Rights Agreement, dated June 30, 2020, by and between MYOS RENS Technology, Inc., and Transhare (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed with the SEC on June 30, 2020)
10.4Form of MedAvail, Inc. Voting Agreement, dated June 30, 2020,  by and between MedAvail, Inc., and each of the parties named therein (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on June 30, 2020)
10.5Form of MYOS RENS Technology, Inc. Voting Agreement, dated June 30, 2020, by and between MYOS RENS Technology, Inc., and each of the parties named therein (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed with the SEC on June 30, 2020)
10.6

Form of MedAvail, Inc. Lock-Up Agreement, by and between MedAvail, Inc., and each of the parties named therein (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed with the SEC on June 24, 2020)

31.1Certification of Principal Executive Officer and Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.SCHXBRL Taxonomy Extension Schema Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Labels Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document

*Furnished herewith

§ Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(a)(6) and Item 601(b)(10).

# Indicates a management contract or compensatory plan.
* Filed herewith.
** Furnished herewith.
34

SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on its
behalf by the undersigned hereuntothereunto duly authorized.



MYOS RENS TECHNOLOGY INC.
MEDAVAIL HOLDINGS, INC.
Date: August 4, 202012, 2021By:/s/ Joseph MannelloEd Kilroy
Name: Joseph MannelloEd Kilroy
Title:President and Chief Executive Officer

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