UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, ~~2021~~2022

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

For the transition period from _____ to_____

Commission File Number 001-36533

MEDAVAIL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

90-0772394

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

~~6665 Millcreek Dr. Unit 1, Mississauga ON Canada~~4720 East Cotton Gin Loop, Suite 220, Phoenix, Arizona

~~L5N 5M4~~85040

(Address of principal executive offices)

(Zip Code)

+1 (905) 812-0023

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

MDVL

The 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 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,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of November ~~5, 2021,~~8, 2022, there were ~~32,848,154~~80,045,696 shares of the registrant’s common stock outstanding.

MedAvail Holdings, Inc.

Form 10-Q

For the Three and Nine Months Ended September 30, ~~2021~~2022

TABLE OF CONTENTS


		Page

PART I
Item 1.	Financial Statements	4
	~~Consolidated Condensed Balance Sheets~~	4
	~~Consolidated Condensed Statements of Operations and Comprehensive Loss~~ (Unaudited)	5
	Condensed Consolidated ~~Condensed Statements of Shareholders' Equity (Deficit)~~Balance Sheets	65
	Condensed Consolidated Statements of Operations and Comprehensive Loss	6
	Condensed Consolidated Statements of Shareholders' Equity	7
	Condensed Consolidated Statements of Cash Flows	78
	Notes to Condensed Consolidated ~~Condensed~~ Financial Statements	910
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2126
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3237
Item 4.	Controls and Procedures	3237

PART II
Item 1.	Legal Proceedings	3338
Item 1A.	Risk Factors	3338
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3439
Item 3.	Defaults Upon Senior Securities	3439
Item 4.	Mine Safety Disclosures	3439
Item 5.	Other Information	3439
Item 6.	Exhibits	3540

Signatures		3741

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;

•the expectations regarding the impact of the COVID-19 pandemic on our business;

•existing regulations and regulatory developments in the United States, Canada and other jurisdictions;

•the impact of laws and regulations;

•our financial performance;

•the period over which we estimate our existing cash, cash equivalents and available-for-sale investments will be sufficient to fund our future operating expenses and capital expenditure requirements;

•our anticipated use of our existing resources;

•developments and projections relating to our competitors or our ~~industry.~~industry; and

•the impact of general market and macroeconomic conditions, including inflation and events including the outbreak of war in Ukraine,

on our business.

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.

PART I

Item 1. Financial Statements

MEDAVAIL HOLDINGS, INC.

Condensed Consolidated ~~Condensed~~ Balance Sheets

(Unaudited)

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


		September 30,		December 31,			September 30,		December 31,
		2021		2020			2022		2021

Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	35,875	$	57,936	Cash and cash equivalents	$	27,196	$	19,689
Restricted cash	Restricted cash	400		60		Restricted cash	676		400
Accounts receivable (net of allowance for doubtful accounts of $27 thousand for September 30, 2021, $40 thousand for December 31, 2020)		1,075		1,520
Accounts receivable (net of allowance for doubtful accounts of $186 thousand for September 30, 2022, $66 thousand for December 31, 2021)						Accounts receivable (net of allowance for doubtful accounts of $186 thousand for September 30, 2022, $66 thousand for December 31, 2021)	2,262		1,189
Inventories	Inventories	4,253		2,817		Inventories	6,401		3,916
Prepaid expenses and other current assets	Prepaid expenses and other current assets	762		1,534		Prepaid expenses and other current assets	2,863		2,191
Total current assets	Total current assets	42,365		63,867		Total current assets	39,398		27,385
Property, plant and equipment, net	Property, plant and equipment, net	4,632		3,795		Property, plant and equipment, net	6,370		5,692
Intangible assets, net						Intangible assets, net	1,580		2,300
Right-of-use assets	Right-of-use assets	2,902		1,239		Right-of-use assets	2,270		2,538
Other assets	Other assets	248		203		Other assets	233		228
Intangible assets		1,950		227
Total assets	Total assets	$	52,097	$	69,331	Total assets	$	49,851	$	38,143
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable and accrued liabilities		$	7,075	$	4,512
Short-term debt		1,000		2,161
Contract liability		317		275
Accounts payable						Accounts payable	$	2,006	$	2,477
Accrued liabilities						Accrued liabilities	1,383		1,530
Accrued payroll and benefits						Accrued payroll and benefits	2,869		2,733
Deferred revenue						Deferred revenue	70		83
Current portion of lease obligations	Current portion of lease obligations	742		665		Current portion of lease obligations	728		682
Total current liabilities	Total current liabilities	9,134		7,613		Total current liabilities	7,056		7,505
Long-term debt, net	Long-term debt, net	9,466		—		Long-term debt, net	9,751		9,538
Long-term portion of lease obligations	Long-term portion of lease obligations	2,279		651		Long-term portion of lease obligations	1,738		2,027

Total liabilities	Total liabilities	20,879		8,264		Total liabilities	18,545		19,070

Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies
Stockholders' deficit:
Common shares ($0.001 par value, 100,000,000 shares authorized, 32,754,925 and 31,816,020 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively)		33		32
Stockholders' equity:						Stockholders' equity:
Common shares ($0.001 par value, 300,000,000 shares authorized, 80,045,696 and 32,902,048 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)						Common shares ($0.001 par value, 300,000,000 shares authorized, 80,045,696 and 32,902,048 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)	80		33
Warrants	Warrants	1,373		2,614		Warrants	11,148		1,373
Additional paid-in-capital	Additional paid-in-capital	216,204		213,624		Additional paid-in-capital	255,642		216,685
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(6,928)		(6,928)		Accumulated other comprehensive loss	(6,928)		(6,928)
Accumulated deficit	Accumulated deficit	(179,464)		(148,275)		Accumulated deficit	(228,636)		(192,090)
Total stockholders' equity	Total stockholders' equity	31,218		61,067		Total stockholders' equity	31,306		19,073
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	52,097	$	69,331	Total liabilities and stockholders' equity	$	49,851	$	38,143

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

~~MEDAVAIL HOLDINGS, INC.~~

~~Consolidated Condensed Statements of Operations and Comprehensive Loss~~

~~(Unaudited)~~

~~(US Dollars in thousands, except share and per-share amounts)~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Sales:
Pharmacy and hardware sales $ 5,659 $ 3,926 $ 14,165 $ 7,587
Service sales 133 3,219 684 3,281
Total sales 5,792 7,145 14,849 10,868
Cost of sales:
Pharmacy and hardware cost of sales 5,539 2,132 13,744 5,343
Service cost of sales 67 30 426 116
Total cost of sales 5,606 2,162 14,170 5,459
Gross profit 186 4,983 679 5,409
Pharmacy operations 2,395 1,450 6,619 3,655
General and administrative 6,805 3,464 19,941 10,544
Selling and marketing 1,779 624 4,657 1,897
Research and development 232 154 601 532
Merger expenses — 1,324 — 2,607
Operating loss (11,025) (2,033) (31,139) (13,826)
Other gain (loss), net 7 — 206 8
Interest income 7 — 74 15
Interest expense (260) (455) (328) (911)
Loss before income taxes (11,271) (2,488) (31,187) (14,714)
Income tax expense (2) — (2) —
Net loss $ (11,273) $ (2,488) $ (31,189) $ (14,714)
Other comprehensive income (loss):
Foreign currency translation adjustment $ — $ — $ — $ (2)
Total comprehensive loss $ (11,273) $ (2,488) $ (31,189) $ (14,716)
Net loss per share - basic and diluted $ (0.34) $ (1.22) $ (0.96) $ (7.60)
Weighted average shares outstanding - basic and diluted 32,750,831 2,045,686 32,580,199 1,936,015

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

MEDAVAIL HOLDINGS, INC.

Condensed Consolidated ~~Condensed~~ Statements of ~~Shareholders' Equity (Deficit)~~Operations and Comprehensive Loss

(Unaudited)

(~~US Dollars~~ in thousands, except ~~per~~ share and per-share amounts)

Common Shares
Preferred Shares (1)
Warrants Additional Paid-in-Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit)
Shares Amount Shares Amount
Balance at June 30, 2021 32,583,734 $ 33 — $ — $ 1,485 $ 215,700 $ (168,191) $ (6,928) $ 42,099
Net loss — — — — — — (11,273) — (11,273)
Shares issued for options exercises — — — — — — — — —
Exercise of warrants 171,191 — — — (112) 139 — — 27
Share-based compensation — — — — — 365 — — 365
Balance at September 30, 2021 32,754,925 $ 33 — $ — $ 1,373 $ 216,204 $ (179,464) $ (6,928) $ 31,218
Balance at December 31, 2020 31,816,020 32 — — 2,614 213,624 (148,275) (6,928) 61,067
Net loss — — — — — — (31,189) — (31,189)
Shares issued for options exercises 144,101 — — — — 241 — — 241
Exercise of warrants 794,804 1 — — (1,241) 1,391 — — 151
Share-based compensation — — — — — 948 — — 948
Balance at September 30, 2021 32,754,925 $ 33 — $ — $ 1,373 $ 216,204 $ (179,464) $ (6,928) $ 31,218
Balance at June 30, 2020 1,523,995 $ 8 10,603,217 $ 94,272 $ 1,315 $ 31,019 $ (133,456) $ (6,952) $ (13,794)
Net loss — — — — — — (2,488) — (2,488)
Shares issued for options exercises 12,532 — — — — 19 — — 19
Share-based compensation — — — — — 65 — — 65
Warrants issued — — — — 5 — — — 5
Cumulative translation adjustment — — — — — — — — —
Balance at September 30, 2020 1,536,527 $ 8 10,603,217 $ 94,272 $ 1,320 $ 31,103 $ (135,944) $ (6,952) $ (16,193)
Balance at December 31, 2019 1,504,251 8 10,500,440 93,484 698 30,829 (121,230) (6,950) (3,161)
Net loss — — — — — — (14,714) — (14,714)
Issuance of preferred shares — — 102,777 788 — — — — 788
Shares issued for options exercises 32,276 — — — — 50 — — 50
Share-based compensation — — — — — 235 — — 235
Warrants issued — — — — 622 (11) — — 611
Cumulative translation adjustment — — — — — — — (2) (2)
Balance at September 30, 2020 1,536,527 $ 8 10,603,217 $ 94,272 $ 1,320 $ 31,103 $ (135,944) $ (6,952) $ (16,193)

~~(1) $0.001 par value, 10,000,000 shares authorized at September 30, 2021 and December 31, 2020. $0.001 par value, 16,638,421 shares authorized at September 30, 2020.~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue:
Pharmacy and hardware revenue	$	11,266	$	5,659	$	31,210	$	14,165
Service revenue	195		133		549		684
Total revenue	11,461		5,792		31,759		14,849
Cost of products sold and services:
Pharmacy and hardware cost of products sold	10,113		5,539		28,827		13,744
Service costs	56		67		221		426
Total cost of products sold and services	10,169		5,606		29,048		14,170
Operating expense:







Pharmacy operations	4,392		3,750		11,970		9,428
General and administrative	6,087		5,320		18,729		16,733
Selling and marketing	2,126		1,909		6,738		5,056
Research and development	178		232		952		601

Total operating expense	12,783		11,211		38,389		31,818
Operating loss	(11,491)		(11,025)		(35,678)		(31,139)
Other gain (loss), net	—		7		—		206
Interest income	—		7		1		74
Interest expense	(315)		(260)		(845)		(328)
Loss before income taxes	(11,806)		(11,271)		(36,522)		(31,187)
Income tax expense	—		(2)		(24)		(2)
Net loss and comprehensive loss	$	(11,806)	$	(11,273)	$	(36,546)	$	(31,189)
Net loss per share - basic and diluted	$	(0.15)	$	(0.34)	$	(0.60)	$	(0.96)
Weighted average shares outstanding - basic and diluted	80,045,995		32,750,831		60,947,511		32,580,199

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

MEDAVAIL HOLDINGS, INC.

Condensed Consolidated ~~Condensed Statement~~Statements of ~~Cash Flows~~Shareholders' Equity

(Unaudited)

(~~US Dollars~~ in ~~thousands)~~thousands, except per share amounts)

Nine Months Ended September 30,
2021 2020
Cash flows from operating activities:
Net loss $ (31,189) $ (14,714)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant, and equipment 928 721
Amortization of intangible and leased assets, and debt discount 877 525
Bad debt and other non cash receivables adjustments 47 39
Interest accretion on debt and finance leases — 834
Unrealized foreign currency gain — (2)
Other loss — 67
Share-based compensation expense 948 235
Warrant expense — 174
PPP loan forgiveness gain (161) —
Changes in operating assets and liabilities:
Change in accounts receivable 398 (243)
Change in inventory (2,511) (243)
Change in prepaid expenses and other current assets 772 (117)
Change in accounts payable, accrued expenses and other liabilities 2,180 2,427
Change in contract liability 42 (4,694)
Change in operating lease liability due to cash payments (505) (336)
Net cash used in operating activities (28,174) (15,327)
Cash flows from investing activities:
Purchase of property, plant and equipment (680) (419)
Payment of security deposits (45) (114)
Purchase of intangible assets and other assets (1,544) (82)
Net cash used in investing activities (2,269) (615)
Cash flows from financing activities:
Issuance of common shares upon exercise of options and warrants 392 39
Issuance of preferred shares — 788
Proceeds from debt 10,000 8,498
Payment of debt issuance costs (624) (69)
Repayment of debt (1,000) —
Payments on finance lease obligations (46) (16)
Net cash provided by financing activities 8,722 9,240
Net decrease in cash, cash equivalents and restricted cash (21,721) (6,702)
Cash, cash equivalents and restricted cash at beginning of period 57,996 8,849
Cash, cash equivalents and restricted cash at end of period $ 36,275 $ 2,147


	Common Shares			Preferred Shares (1)			Warrants		Additional Paid-in-Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at June 30, 2022	70,609,972	$	71	—	$	—	$	8,876	$	247,598	$	(216,830)	$	(6,928)	$	32,787
Net loss	—	—		—	—		—		—		(11,806)		—		(11,806)
Issuance of common shares	9,411,765	9		—	—		—		9,751		—		—		9,760
Issuance of warrants	—	—		—	—		2,272		(2,272)		—		—		—

Shares issued for vested restricted stock units	23,959	—		—	—		—		—		—		—		—

Share-based compensation	—	—		—	—		—		565		—		—		565
Balance at September 30, 2022	80,045,696	$	80	—	$	—	$	11,148	$	255,642	$	(228,636)	$	(6,928)	$	31,306

Balance at December 31, 2021	32,902,048	$	33	—	—		$	1,373	$	216,685	$	(192,090)	$	(6,928)	$	19,073
Net loss	—	—		—	—		—		—		(36,546)		—		(36,546)
Issuance of common shares	47,058,820	47		—	—		—		46,914		—		—		46,961
Issuance of warrants	—	—		—	—		9,775		(9,775)		—		—		—
Shares issued for vested restricted stock units	30,833	—		—	—		—		—		—		—		—

Issuance of common shares under employee stock purchase plan	53,995	—		—	—		—		77		—		—		77
Share-based compensation	—	—		—	—		—		1,741		—		—		1,741
Balance at September 30, 2022	80,045,696	$	80	—	$	—	$	11,148	$	255,642	$	(228,636)	$	(6,928)	$	31,306






Balance at June 30, 2021	32,583,734	$	33	—	$	—	$	1,485	$	215,700	$	(168,191)	$	(6,928)	$	42,099
Net loss	—	—		—	—		—		—		(11,273)		—		(11,273)


Exercise of warrants	171,191	—		—	—		(112)		139		—		—		27
Share-based compensation	—	—		—	—		—		365		—		—		365

Balance at September 30, 2021	32,754,925	$	33	—	$	—	$	1,373	$	216,204	$	(179,464)	$	(6,928)	$	31,218


Balance at December 31, 2020	31,816,020	32		—	—		2,614		213,624		(148,275)		(6,928)		61,067
Net loss	—	—		—	—		—		—		(31,189)		—		(31,189)
Exercise of options	144,101	—		—	—		—		241		—		—		241
Exercise of warrants	794,804	1		—	—		(1,241)		1,391		—		—		151
Share-based compensation	—	—		—	—		—		948		—		—		948


Balance at September 30, 2021	32,754,925	$	33	—	$	—	$	1,373	$	216,204	$	(179,464)	$	(6,928)	$	31,218

(1) $0.001 par value, 10,000,000 shares authorized for all periods presented.

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

MEDAVAIL HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(36,546)	$	(31,189)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant, and equipment	891		928
Amortization of intangible and leased assets	2,141		877
Bad debt and other non-cash receivables adjustments	120		47
Term loan discount amortization and interest accretion on debt	213		—
Impairment of lease asset	(27)		—
Share-based compensation expense	1,741		948

PPP loan forgiveness gain	—		(161)

Changes in operating assets and liabilities:
Accounts receivable	(1,193)		398
Inventory	(3,354)		(2,511)
Prepaid expenses and other current assets	(672)		772
Accounts payable, accrued expenses and other liabilities	(137)		2,180
Deferred revenue	(13)		42
Operating lease liability due to cash payments	(447)		(505)
Net cash used in operating activities	(37,283)		(28,174)
Cash flows from investing activities:
Purchase of property, plant and equipment	(804)		(680)
Payment of security deposits	(5)		(45)
Purchase of intangible and other assets	(1,088)		(1,544)
Net cash used in investing activities	(1,897)		(2,269)
Cash flows from financing activities:
Proceeds from issuance of common shares, net	46,961		—
Proceeds from issuance of common shares upon exercise of options and warrants	—		392

Proceeds from issuance of common shares upon exercise of employee stock purchase plan	77		—
Proceeds from debt	—		10,000
Payment of debt issuance costs	—		(624)
Repayment of debt	—		(1,000)
Payments on finance lease obligations	(75)		(46)

Net cash provided by financing activities	46,963		8,722
Net increase (decrease) in cash, cash equivalents and restricted cash	7,783		(21,721)
Cash, cash equivalents and restricted cash at beginning of period	20,089		57,996
Cash, cash equivalents and restricted cash at end of period	$	27,872	$	36,275

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

MEDAVAIL HOLDINGS, INC.

Condensed Consolidated ~~Condensed~~ Statement of Cash Flows

(Unaudited)

(~~US Dollars~~ in thousands)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
Supplemental cash flow information:						Supplemental cash flow information:
Cash paid for interest						Cash paid for interest	$	603	$	125
Supplemental noncash investing and financing activities:	Supplemental noncash investing and financing activities:					Supplemental noncash investing and financing activities:
Inventory transferred to property, plant and equipment	Inventory transferred to property, plant and equipment	$	1,075	$	1,182	Inventory transferred to property, plant and equipment	$	869	$	1,075
Property, plant and equipment transferred to intangible assets	Property, plant and equipment transferred to intangible assets	$	46	$	—	Property, plant and equipment transferred to intangible assets	$	—	$	46
Purchase of property, plant and equipment in accounts payable	Purchase of property, plant and equipment in accounts payable	$	56	$	62	Purchase of property, plant and equipment in accounts payable	$	21	$	56
Purchase of intangible assets in accounts payable	Purchase of intangible assets in accounts payable	$	398	$	36	Purchase of intangible assets in accounts payable	$	—	$	398
Conversion of other liability amount into warrants		$	—	$	448
Fair value of warrants issued upon closing of private placement						Fair value of warrants issued upon closing of private placement	$	9,775	$	—

Lease liabilities arising from obtaining right of use assets:	Lease liabilities arising from obtaining right of use assets:					Lease liabilities arising from obtaining right of use assets:
Operating leases	Operating leases	$	2,177	$	590	Operating leases	$	206	$	2,177
Finance leases	Finance leases	$	97	$	164	Finance leases	$	73	$	97

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

MEDAVAIL HOLDINGS, INC.

Notes to Condensed Consolidated ~~Condensed~~ Financial Statements

(Unaudited)

NOTE 1 - NATURE OF OPERATIONS

MedAvail Holdings, Inc., ~~a Delaware corporation,~~ or , MedAvail, or the Company, a Delaware corporation formerly known as MYOS RENS Technology, is a ~~telehealth-enabled~~ pharmacy technology and services company that has developed and commercialized an innovative self-service pharmacy, mobile application, ~~kiosk~~ and ~~drive-thru solution. MedAvail's~~kiosk. The Company’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~~counseling via two-way audio-video communication with the ability to dispense prescription medicines under pharmacist control. ~~MedAvail~~The Company also operates SpotRx, or the Pharmacy, ~~which is~~ a full-service retail pharmacy utilizing the Company’s ~~MedCenter~~automated pharmacy technology. MedAvail also sells the MedCenter technology, which includes the MedCenter hardware, software, and related support services to customers such as healthcare providers and retailers for use within their own pharmacy operations.

NOTE 2 - GOING CONCERN

Relevant accounting standards require that management make a determination as to whether or not substantial doubt exists as to ~~our~~the Company's ability to continue as a going concern. If substantial doubt does exist, then management should determine if there are plans in place which alleviate that doubt. ~~For~~Since inception through September 30, 2022, the ~~current~~Company has continually incurred losses from operations which have been financed primarily by net cash proceeds from the sale of stock from private placements, the sale of redeemable preferred stock and debt. Net cash used in operating activities for nine months ended September 30, 2022 and 2021 ~~the Company has a net loss of $31.2~~was $37.3 million and ~~negative cash flows from operations of~~ $28.2 ~~million. The Company's accumulated deficit as~~million, respectively. As of September 30, ~~2021 is $179.5~~2022, the Company had $27.2 million in cash and cash equivalents and an accumulated deficit of $228.6 million. ~~Management has~~

In April 2022, the Company completed a private placement, pursuant to which the Company received $40.0 million in gross proceeds, with an additional $10.0 million in gross proceeds received upon the second close that occurred on July 1, 2022, before deducting placement agent commissions and other offering expenses totaling $3.0 million. Additionally, the private placement included warrants, some of which may be callable at the Company’s option beginning on each of the 12 month and 24 month anniversaries of the warrant issuance dates and subject to the satisfaction of certain pricing conditions relating to the trading of the Company’s shares. See Note 11 for further information regarding the private placement warrants.

Due to the Company’s significant and ongoing cash requirements to fund operations, management determined that there is ~~not~~ substantial doubt as to the Company’s ability to continue as a going concern. ~~Our current cash on hand combined~~The Company added liquidity resources in 2021 through a senior secured term loan facility with ~~our current borrowing capacity is expected~~Silicon Valley Bank as described in Note 8, pursuant to ~~provide liquidity for~~which the Company ~~to support operations~~borrowed $10.0 million in aggregate initial term loans. Additionally, as referenced above, the Company raised $40.0 million and ~~growth for at least~~$10.0 million in gross proceeds through a private placement that closed in April 2022 and July 2022, respectively. There can be no assurance that the ~~next 12 months from~~steps management is taking will be successful. If the ~~date of issuance of these unaudited interim consolidated condensed financial statements. However, we may have~~Company is unable to raise additional capital in sufficient amounts or on acceptable terms, the Company may have to ~~continue to fund our operations.~~significantly reduce operations or delay, scale back or discontinue development and expansion plans. The ~~amount and timing~~condensed consolidated financial statements do not include any adjustments that might result from the outcome of ~~our future funding requirements~~this uncertainty. The Company’s ultimate success will largely depend on ~~many factors, including~~continued development and deployment of MedCenter kiosks and SpotRx pharmacy operations and the ~~pace and results of our growth strategy and capital market conditions. Failure~~ability 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.~~significant additional funding.

NOTE 23 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated ~~condensed~~ financial statements as of September 30, ~~2021~~2022 and for the three and nine months ended September 30, 2022 and 2021 have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for unaudited interim financial ~~information.~~information and in accordance with the rules of the Securities and Exchange Commission ("SEC") applicable to interim reports of companies filing as a smaller reporting company. Accordingly, the unaudited interim condensed consolidated ~~condensed~~ financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. The condensed consolidated ~~condensed~~ balance sheet as of December 31, ~~2020~~2021 was derived from the Company's audited consolidated financial statements but does not include all disclosures required by GAAP for audited financial statements. In the opinion of the Company's management, the interim information includes all adjustments, which include normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The footnote disclosures related to the interim financial information included herein are also unaudited. Such financial information should be read in conjunction with the consolidated financial statements and related notes thereto for the year ended December 31, ~~2020~~2021 included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, which was filed with the Securities and Exchange Commission, or SEC on March ~~31, 2021,~~29, 2022, or the ~~2020~~2021 Form 10-K.

The preparation of financial statements in accordance with US GAAP requires management to use judgment in the application 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, and impairment of long-lived assets and contingencies. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the condensed consolidated ~~condensed~~ financial statements in the period they are deemed to be necessary.

Risks and uncertainties relating to COVID-19

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~~the Company's clinic customers, employees, suppliers, vendors, and business partners. The Company assessed certain accounting matters that require consideration of estimates and assumptions in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of September 30, ~~2021~~2022 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 condensed 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 could differ from these estimates and any such differences may ~~differ.~~be material to the Company’s financial statements.

Principles of consolidation

The unaudited condensed 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.

Reclassifications

During the fourth quarter of 2021, management reclassified certain operating expenses to reflect the costs attributable to pharmacy operations. Specifically, certain costs were reclassified from general and administrative expenses, to pharmacy operations expenses and selling and marketing expenses. This reclassification had no impact on the operating loss subtotal within the consolidated statements of operations and comprehensive loss. The effect of the reclassifications within the condensed consolidated statement of operations and comprehensive loss for 2021 are as follows (in thousands):


	Three Months Ended September 30, 2021
	Current presentation		As previously reported		Change
Pharmacy operations	$	3,750	$	2,395	$	1,355
General and administrative	5,320		6,805		(1,485)
Selling and marketing	1,909		1,779		130
	$	10,979	$	10,979	$	—


	Nine Months Ended September 30, 2021
	Current presentation		As previously reported		Change
Pharmacy operations	$	9,428	$	6,619	$	2,809
General and administrative	16,733		19,941		(3,208)
Selling and marketing	5,056		4,657		399
	$	31,217	$	31,217	$	—

NOTE 34 - 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 No. 2016-13 will be effective beginning in the first quarter of ~~our~~the Company's 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,~~June 2022, the FASB issued ASU No. ~~2019-12, “Income Taxes~~2022-03, “Fair Value Measurement (Topic ~~740): Simplifying~~820)”- Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”, (“ASU 2022-03”). The amendments in this update clarify the ~~Accounting~~guidance in Topic 820. ASU 2022-03 becomes effective for ~~Income Taxes” (“~~Public Business Entities who are SEC filers for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. 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 wasNo. 2022-03 will be effective beginning in the first quarter of ~~our~~the Company's fiscal year 2021. 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 period2024. The Company has not yet completed its evaluation of ~~adoption. MedAvail assessed~~ the impact of ~~the~~this new ~~accounting standard~~guidance 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 result in a material change to our consolidated condensed~~ financial statements.

~~Debt with Conversion and Other 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):~~Recently Adopted 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 be reported as a 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 derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. MedAvail assessed the impact of the new accounting standard on its consolidated condensed financial statements to facilitate its early adoption of the new standard on January 1, 2021. The adoption of ASU 2020-06 did not result in a material change to our consolidated condensed financial statements.Standards

There ~~were~~was no recently issued and effective authoritative guidance that is expected to have a material impact on the Company’s condensed consolidated ~~condensed~~ financial statements through the reporting date.

NOTE 45 - EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income or loss available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed by dividing net income or loss available to common stockholders by the weighted-average number of common 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 their insignificant exercise price, during the period ~~they were outstanding up~~from the date of issuance to ~~when they were exercised.~~the exercise date. After these warrants were exercised the related issued and outstanding common shares are included in weighted average shares outstanding:

Issuance Date

Exercise Date

118,228

May 9, 2018

May 10, 2021

309,698

February 11, 2020

May 10, 2021

84,911

June 29, 2020

May 10, 2021

~~58,518~~39,208

November 18, 2020

May 10, 2021

19,310

November 18, 2020

Outstanding

During the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, there was no dilutive effect from stock options or other warrants due to the Company’s net loss position. Weighted average shares for historical periods have been adjusted for the effect of the 1.26 for 1 split on November 17, 2020. The following table sets forth the computation of basic and diluted earnings per share.

Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except share and per share amounts) 2021 2020 2021 2020
Net loss - basic and diluted $ (11,273) $ (2,488) $ (31,189) $ (14,714)
Weighted average shares - basic and diluted 32,750,831 2,045,686 32,580,199 1,936,015
Net loss per share - basic and diluted $ (0.34) $ (1.22) $ (0.96) $ (7.60)

As of September 30, ~~2021~~2022 and ~~2020,~~2021, there were ~~2.9~~4.5 million and ~~2.2~~2.9 million, respectively, of option awards outstanding that were not included in the diluted shares calculation because their inclusion would have been antidilutive. As of September 30, 2022 and December 31, 2021, there were 24.3 million and 0.7 million, respectively, of unexercised warrants that were not included in the diluted shares calculation.

NOTE 56 - FAIR VALUE MEASUREMENTS

Assets and liabilities measured at fair value on a recurring basis were as follows:


			Fair Value Hierarchy
(in thousands)	September 30, 2022		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	27,196	$	27,196	$	—	$	—
Restricted cash	676		676		—		—
Total assets	$	27,872	$	27,872	$	—	$	—


				Fair Value Hierarchy									Fair Value Hierarchy
(In thousands)		September 30, 2021		Level 1		Level 2		Level 3
(in thousands)										(in thousands)	December 31, 2021		Level 1		Level 2		Level 3
Assets:	Assets:									Assets:
Cash and cash equivalents	Cash and cash equivalents	$	35,875	$	35,875	$	—	$	—	Cash and cash equivalents	$	19,689	$	19,689	$	—	$	—
Restricted cash	Restricted cash	400		400		—		—		Restricted cash	400		400		—		—
Total assets	Total assets	$	36,275	$	36,275	$	—	$	—	Total assets	$	20,089	$	20,089	$	—	$	—

Fair Value Hierarchy
(In thousands) December 31, 2020 Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents $ 57,936 $ 57,936 $ — $ —
Restricted cash 60 60 — —
Total assets $ 57,996 $ 57,996 $ — $ —

~~The carrying amount of the Company’s short-term notes and PPP loan approximates fair value due to their short-term nature and the loans carry a current market rate, a Level 2 input.~~ The carrying amount of the Company's term loan approximates fair value based upon market interest rates available to us for debt of similar risk and ~~maturities, a Level 2 input.~~maturities. Refer to Note 7,8, Debt, for further information.

NOTE 67 - BALANCE SHEET AND OTHER INFORMATION

Restricted cash

~~MedAvail~~

The Company considers cash to be restricted when withdrawal or general use is legally restricted. During the ~~three~~nine months ended September 30, ~~2021, MedAvail~~2022, the Company recovered the ~~prior $0.06~~$0.1 million restricted cash balance outstanding at December 31, 2021, that was held as a guarantee for certain purchasing cards. During the

same period, pursuant to a Loan and Security Agreement with ~~Silicone~~Silicon Valley Bank ~~(See~~dated June 7, 2021 (see Note 7)8), ~~MedAvail~~the Company issued letters of credit to secure certain operating leases, and ~~MedAvail~~the Company is required to maintain a ~~$0.40~~$0.7 million balance with the bank to secure the outstanding letters of ~~credit.~~credit, of which $0.3 million was issued in February 2022. Due to the nature of the deposit, the balance is classified as restricted cash. Restricted cash is included in the balance for cash, cash equivalents and restricted cash presented in the statements of cash flows.

~~Inventories~~

Inventory

The following table presents detail of inventory balances:

September 30, December 31,
(In thousands) 2021 2020
Inventories:
MedCenter hardware $ 1,739 $ 1,655
Pharmacy 1,985 837
Spare parts 529 325
Total inventories $ 4,253 $ 2,817


	September 30,		December 31,
(in thousands)	2022		2021
Inventory:
MedCenter hardware	$	2,464	$	1,201
Pharmaceuticals	3,275		2,150
Spare parts	662		565
Total inventory	$	6,401	$	3,916

~~Pharmacy~~Pharmaceutical inventory was recognized in pharmacy and hardware cost of ~~sales~~products sold at ~~$5.0~~$9.3 million ~~an $1.9~~and $5.0 million during the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$12.2~~$26.4 million and ~~$4.8~~$12.2 million during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. MedCenter hardware was recognized in pharmacy and hardware cost of ~~sales~~products sold at ~~$0.13~~$0.01 million and ~~$0.04~~$0.1 million during the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$0.48~~$0.2 million and ~~$0.14~~$0.5 million during the nine months ended September 30, 2022 and 2021, respectively.

Prepaid expenses and ~~2020, respectively.~~other current assets

The following table presents prepaid expenses and other current assets balances:


	September 30,		December 31,
(in thousands)	2022		2021
Prepaid expenses and other current assets:
Prepaid MedCenter inventory	$	2,204	$	1,050
Prepaid insurance	292		509
Other	367		632
Total prepaid expenses and other current assets	$	2,863	$	2,191

Property, plant and equipment, net

The following ~~tables present~~table presents property, plant and equipment balances:


		Estimated useful lives	September 30,		December 31,			Estimated useful lives		September 30,			December 31,
(In thousands)			2021		2020
(in thousands)							(in thousands)		Estimated useful lives			2022			2021
Property, plant and equipment:	Property, plant and equipment:						Property, plant and equipment:
MedCenter equipment	MedCenter equipment	5 years	$	5,268	$	4,622	MedCenter equipment	8 years		$	7,525		$	5,875
IT equipment	IT equipment	1 - 3 years	2,269		1,999		IT equipment	1 - 3 years		2,390			2,361
Leasehold improvements	Leasehold improvements	lesser of useful life or term of lease	866		799		Leasehold improvements	lesser of useful life or term of lease		980			880
General plant and equipment	General plant and equipment	5 - 8 years	567		353		General plant and equipment	5 - 8 years		619			603
Office furniture and equipment	Office furniture and equipment	5 - 8 years	369		329		Office furniture and equipment	5 - 8 years		538			394
Vehicles	Vehicles	5 years	54		54		Vehicles	5 years		54			54
Construction-in-process	Construction-in-process		534		90		Construction-in-process			481			1,021
Total historical cost	Total historical cost		9,927		8,246		Total historical cost			12,587			11,188
Accumulated depreciation	Accumulated depreciation		(5,295)		(4,451)		Accumulated depreciation			(6,217)			(5,496)
Total property, plant and equipment, net	Total property, plant and equipment, net		$	4,632	$	3,795	Total property, plant and equipment, net			$	6,370		$	5,692

Depreciation expense of property and equipment was $0.3 million and $0.3 million for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and $0.9 million and ~~$0.7~~$0.9 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Depreciation expense included in pharmacy and hardware cost of ~~sales~~products sold was ~~$0.04~~$0.03 million and $0.05 million for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$0.13~~$0.1 million and ~~$0.15~~$0.1 million for the nine months ended September 30, ~~2021~~2022, and ~~2020,~~2021, respectively.

1214

Intangible assets, net

The following table presents intangible asset balances:


		September 30,		December 31,			September 30,		December 31,
(In thousands)		2021		2020
(in thousands)						(in thousands)	2022		2021
Gross intangible assets:	Gross intangible assets:					Gross intangible assets:
Intellectual property	Intellectual property	$	3,857	$	3,857	Intellectual property	$	3,857	$	3,857
Software	Software	3,731		1,815		Software	5,321		4,475
Website and mobile application	Website and mobile application	583		583		Website and mobile application	583		583
Total intangible assets	Total intangible assets	8,171		6,255		Total intangible assets	9,761		8,915
Accumulated amortization:	Accumulated amortization:					Accumulated amortization:
Intellectual property	Intellectual property	(3,857)		(3,857)		Intellectual property	(3,857)		(3,857)
Software	Software	(1,781)		(1,588)		Software	(3,741)		(2,175)
Website and mobile application	Website and mobile application	(583)		(583)		Website and mobile application	(583)		(583)
Total accumulated amortization	Total accumulated amortization	(6,221)		(6,028)		Total accumulated amortization	(8,181)		(6,615)
Total intangible assets, net	Total intangible assets, net	$	1,950	$	227	Total intangible assets, net	$	1,580	$	2,300

~~Amortization expense~~No intangible assets were purchased for the three months ended September 30, 2022. The Company purchased $0.7 million of intangible assets ~~was $0.09 million and $0.01 million~~ for the three months ended September 30, 2021, and ~~2020, respectively, and $0.19~~$0.9 million and ~~$0.07~~$1.9 million for the nine months ended September 30, 2022 and 2021, respectively.

Amortization expense of intangible assets was $1.3 million and ~~2020,~~$0.1 million for the three months ended September 30, 2022 and 2021, respectively, and $1.6 million and $0.2 million for the nine months ended September 30, 2022 and 2021, respectively, and are included in operating expenses.

~~Software includes internal use~~The Company’s management team is evaluating its existing systems and software.If management were to determine that certain systems or software ~~costs that are accounted for~~were to be replaced in ~~accordance with ASC 350. Costs associated with application development are capitalized as~~order to achieve greater efficiencies, cost savings, or both, the estimated remaining useful life of some IT equipment and intangible ~~assets. All other costs including planning, training,~~assets may be reduced, resulting in higher depreciation and ~~conceptual evaluation are expensed.~~amortization expense, respectively.

Lessee leases

Balance sheet amounts for lease assets and leases liabilities are as follows:


		September 30,		December 31,			September 30,		December 31,
(In thousands)		2021		2020
(in thousands)						(in thousands)	2022		2021
Assets:	Assets:					Assets:
Operating	Operating	$	2,720	$	1,108	Operating	$	2,110	$	2,376
Finance	Finance	182		131		Finance	160		162
Total assets	Total assets	$	2,902	$	1,239	Total assets	$	2,270	$	2,538
Liabilities:	Liabilities:					Liabilities:
Operating:	Operating:					Operating:
Current	Current	$	661	$	612	Current	$	632	$	599
Long-term	Long-term	2,178		572		Long-term	1,673		1,947
Finance:	Finance:					Finance:
Current	Current	81		53		Current	96		83
Long-term	Long-term	101		79		Long-term	65		80
Total liabilities	Total liabilities	$	3,021	$	1,316	Total liabilities	$	2,466	$	2,709

1315

The following table summarizes the weighted-average remaining lease term and weighted-average discount rate related to the Company’s leases as follows:


		September 30,		December 31,			September 30,		December 31,
(In thousands)		2021		2020
(in thousands)						(in thousands)	2022		2021
Operating leases:						Operating leases:
Weighted-average remaining lease term (years)						Weighted-average remaining lease term (years)	3.8		4.2
Weighted-average discount rate						Weighted-average discount rate	6.9	%	6.9	%
Finance leases:	Finance leases:					Finance leases:
Weighted-average remaining lease term (years)	Weighted-average remaining lease term (years)	1.8		2.4		Weighted-average remaining lease term (years)	1.8		1.5
Weighted-average discount rate	Weighted-average discount rate	8.7	%	6.0	%	Weighted-average discount rate	8.6	%	8.8	%
Operating leases:
Weighted-average remaining lease term (years)		4.1		2.5
Weighted-average discount rate		6.8	%	6.0	%

Maturities of operating leases liabilities as of September 30, 2022, are as follows, in thousands:


Remaining period in 2021		$	176
2022		884
Remaining period in 2022				Remaining period in 2022	$	202
2023	2023	773		2023	755
2024	2024	562		2024	617
2025	2025	478		2025	534
2026	2026	410		2026	468
2027				2027	64
Thereafter	Thereafter	26		Thereafter	—
Total lease payments	Total lease payments	3,309		Total lease payments	2,640
Less: present value discount	Less: present value discount	(470)		Less: present value discount	(335)
Total leases	Total leases	$	2,839	Total leases	$	2,305

Maturities of finance lease liabilities as of September 30, 2022, are as follows, in thousands:


Remaining period in 2021		$	24
2022		95
Remaining period in 2022				Remaining period in 2022	$	30
2023	2023	65		2023	91
2024	2024	19		2024	49
2025	2025	—		2025	4
2026		—

Thereafter	Thereafter	—		Thereafter	—
Total finance lease payments	Total finance lease payments	203		Total finance lease payments	174
Less: imputed interest	Less: imputed interest	(21)		Less: imputed interest	(13)
Total leases	Total leases	$	182	Total leases	$	161

Operating lease ~~expense was $0.3~~expenses were $0.2 million and ~~$0.2~~$0.3 million for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and $0.7 million and ~~$0.5~~$0.7 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

NOTE 78 - DEBT

The following table presents debt ~~balances~~balances:


	September 30,		December 31,
(in thousands)	2022		2021
Term loan	10,162		10,070
Term loan issuance costs, net	(411)		(532)


Total long-term debt, net	$	9,751	$	9,538

Term loan

The term loan bears interest at a floating rate equal to the greater of 7.25% or the Prime Rate plus 4.0% (10.25% at September 30, ~~2021 and December 31, 2020:~~

September 30, December 31,
(In thousands) 2021 2020
Short-term note due May 2021 $ — $ 1,000
Short-term note due November 2021 1,000 1,000
PPP loan — 161
Term loan 10,039 —
Term loan issuance costs, net (573) —
Total debt, net 10,466 2,161
Less short term debt (1,000) (2,161)
Long-term debt, net $ 9,466 $ —

~~Short-term notes~~

2022). The ~~notes do not accrue interest and may be repaid early without penalty. On May 14, 2021 the Company repaid $1.0 million on the Short-term note in accordance with the maturity schedule.~~

~~PPP~~term 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.

~~The Loans mature~~ matures on April 1, 2026. Principal repayment will commence on May 1, 2024 in equal monthly installments of the outstanding ~~Loan~~loan balance through 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 September 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 mandatory prepayment of the Loans upon an acceleration of the Loans. Upon a voluntary or mandatory prepayment of the Loans, the Company is also required to pay the lenders’ expenses and all accrued but unpaid interest on the Loans through the prepayment date.

A final payment fee equal to 4.75% of the original principal amount of the Loans 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 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 lenders 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 Company'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 loan term using the effective interest method.~~

NOTE 89 - INCOME TAXES

The Company incurred ~~minimal~~$0.02 million and zero of income tax expense for the ~~three and~~ nine months ended September 30, 2022, and 2021, ~~respectively, due~~respectively. The income taxes for the periods ended September 30, 2022, are primarily attributed to ~~ongoing losses and minimum~~certain state ~~income tax obligations.~~taxes. The Company continues to be in a loss position as of September 30, 2022. The effective income tax rate in each period differed from the federal statutory tax rate of 21% primarily as a result of the ongoing losses.

As of September 30, ~~2021,~~2022, the Company recorded a full valuation allowance against all of its net deferred tax assets due to the uncertainty surrounding the Company’s ability to utilize these assets in the foreseeable future.

On ~~March 11, 2021,~~August 16, 2022, the U.S. ~~federal government~~ enacted the ~~American Rescue Plan~~Inflation Reduction Act of ~~2021,~~2022, which, ~~did~~among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. The Company has evaluated the impacts of this legislation to the financial statements but does not ~~have a material impact on our benefit for income taxes.~~expect them to be material.

NOTE 910 - COMMITMENTS AND CONTINGENCIES

Legal

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 the Form S-4 Registration Statement filed with the Securities and Exchange Commission on September 2, 2020, collectively, the Demands. Thereafter, on September 23, 2020, a complaint regarding the transactions contemplated within the Merger Agreement was filed in the Supreme Court of the State of New York, County of New York, captioned Faasse v. MYOS RENS Technology Inc., et. al., Index No.: 654644/2020 (NY Supreme Ct., NY Cnty., September 23, 2020), or the New York Complaint. On October 12, 2020, a second complaint regarding the transactions was filed in the District Court of Nevada, Clark 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~~comprised 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~~were without merit, and believe that the Form S-4 Registration Statement disclosed all material information concerning the Merger and no supplemental disclosure iswas required under applicable law. However, in order to avoid the risk of the Litigation delaying or adversely affecting the Merger and to minimize the costs, risks and uncertainties inherent in litigation, and without 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 the Litigation remains outstanding.~~ MYOS and MAI specifically deny all allegations in the Litigation and/or that any additional disclosure was or is ~~required.~~required, and none of the Litigation remains currently pending.

1617

NOTE 1011 - EQUITY, SHARE-BASED COMPENSATION AND WARRANTS

On June 14, 2022, the Company’s stockholders approved an Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock, par value $0.001, from 100 million shares to a new total of 300 million shares. The Restated Certificate was effective upon filing the Restated Certificate with the Secretary of State of the State of Delaware on June 15, 2022.

Private Placement

On March 30, 2022, the Company entered into a Securities Purchase Agreement, or Purchase Agreement, with certain purchasers thereto, or the Investors. Pursuant to the Purchase Agreement, the Company agreed to issue and sell to the Investors in a private placement, or the Private Placement, up to 47.1 million shares, or the Shares, of the Company’s common stock, and to issue warrants, or the Warrants, to purchase up to 23.5 million shares of common stock, or Warrant Shares. The Shares and the Warrants were sold at two closings as further described below, at a price per share of $1.0625.

Each Investor purchasing Shares in the Private Placement was issued a Warrant to purchase that number of Warrant Shares equal to 50% of the number of Shares purchased under the Purchase Agreement by such Investor. The Warrants have a per share exercise price of $1.25 and will be exercisable by the holder at any time on or after the issuance date of the Warrant for a period of five years. If the Warrants were exercised in full immediately after issuance by the Investors, the Company would receive additional gross proceeds of up to $29.4 million. In addition, the Warrant terms provide the Company with a call option to force the Warrant holders to exercise up to two-thirds of the warrant shares subject to each Warrant, with one-third of the Warrant Shares being callable beginning on each of the 12 month and 24 month anniversaries of the Warrant issuance dates, in each case until the expiration of the Warrants, and subject to the satisfaction of certain pricing conditions relating to the trading of the Company’s shares. If the Company were to exercise the contingent call options immediately after issuance, approximately $19.6 million in gross proceeds could be raised.

On April 4, 2022, the first closing of the Private Placement occurred, in which 37.6 million shares of common stock for $40.0 million in gross proceeds, before deducting placement agent commissions and other offering expenses, and Warrants exercisable for up to 18.8 million Warrant Shares were issued by the Company. A second and final closing occurred on July 1, 2022, and the Investors purchased an additional 9.4 million shares of common stock for $10.0 million in additional gross proceeds and Warrants exercisable for up to 4.7 million Warrants Shares.

Shelf Registration and Sales Agreement

On August 12, 2022, the Company filed a shelf registration statement on Form S-3, or the Shelf, with the SEC in relation to the registration and potential future issuance of common stock, preferred stock, debt securities, depositary shares, warrants, subscription rights, purchase contracts, units and/or any combination thereof, in the aggregate amount of up to $150,000,000. The Shelf was declared effective on August 26, 2022. The Company also entered into a sales agreement as of August 12, 2022, or Sales Agreement, with Cowen and Company, LLC, or Cowen, as sales agent, providing for the offering, issuance and sale of up to an aggregate $50,000,000 of the Company’s common stock from time to time at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act, including sales made directly on the Nasdaq Capital Market or any other trading market for the Company’s common stock in “at-the-market” offerings, under the Shelf. As of September 30, 2022, the Company has not issued and sold any shares of common stock under the Sales Agreement.

Share-based compensation

The following table presents the Company's expense related to share-based compensation ~~in thousands:~~(in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Share-based compensation $ 365 $ 65 $ 948 $ 235


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Share-based compensation	$	565	$	365	$	1,741	$	948

The share-based compensation expense for the three and nine months ended September 30, ~~2021, included $0.03~~2022 and included $0.02 million and $0.1 million, respectively, from ~~2020 ESPP~~employee stock purchase plan expense. ~~Expense~~

The expense remaining to be recognized for unvested option awards from the 2012, 2018, and 2020 plans and the 2022 inducement plan as of September 30, ~~2021~~2022 was ~~$3.8~~$2.4 million, which is expected to be recognized on a weighted average basis over the next 2.7 years. The expense remaining to be recognized for unvested restricted stock units was $2.2 million, which will be recognized on a weighted average basis over the next ~~3.0~~2.3 years.

The following table presents the Company's outstanding option awards activity during the nine months ended September 30, ~~2021:~~2022:


(in thousands, except for share and per share amounts)	(in thousands, except for share and per share amounts)	Number of Awards	Weighted Average Exercise Price		Weighted Average Share Price on Date of Exercise		Weighted Average Fair Value		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value		(in thousands, except for share and per share amounts)	Number of Awards	Weighted Average Exercise Price		Weighted Average Share Price on Date of Exercise	Weighted Average Fair Value		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding, beginning of period	Outstanding, beginning of period	2,439,020	$	1.59			$	0.77		$	32,791	Outstanding, beginning of period	2,848,903	$	2.78		$	1.44		$	104
Granted	Granted	670,850	8.14				4.44			—		Granted	2,758,040	1.35			0.98			—
Exercised/Released		(144,101)	1.67		$	14.66	0.83			1,872
Cancelled/Forfeited		(1,909)	1.65				0.83			24
Exercised/released												Exercised/released	—	—			—			—
Expired												Expired	(117,730)	1.99			1.08			5
Forfeited												Forfeited	(952,488)	2.52			1.42			111
Outstanding, end of period	Outstanding, end of period	2,963,860	$	3.05			$	1.59	7.99	$	3,173	Outstanding, end of period	4,536,725	$	1.93		$	1.15	8.33	$	—
Vested and exercisable, end of the period	Vested and exercisable, end of the period	1,854,062	1.88				0.91		7.34	2,438		Vested and exercisable, end of the period	1,777,907	2.28			1.16		6.79	—
Vested and unvested exercisable, end of the period	Vested and unvested exercisable, end of the period	1,854,062	1.88				0.91		7.34	2,348		Vested and unvested exercisable, end of the period	1,777,907	2.28			1.16		6.79	—
Vested and expected to vest, end of the period	Vested and expected to vest, end of the period	2,865,212	2.98				1.55		7.95	3,122		Vested and expected to vest, end of the period	4,309,018	1.94			1.15		8.29	—

~~During~~

The following table presents the Company's outstanding restricted stock unit activity during the nine months ended September 30, 2021, the Company granted approximately 285,899 restricted stock units or RSUs to employees with a weighted average fair value of $6.50 per RSU and total aggregate intrinsic value of $1.9 million. None of the RSUs were vested as of September 30, 2021, and expense remaining to be recognized for unvested awards of $1.4 million will be recognized on a weighted average basis over the next 2.7 years.2022:

~~As of September 30, 2021 and December 31, 2020, there was an~~


(in thousands, except for share and per share amounts)	Number of Awards	Weighted Average Exercise Price		Weighted Average Share Price on Date of Exercise		Weighted Average Fair Value		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding, beginning of period	802,740	$	—			$	2.78		$	1,124
Granted	1,601,824	—				1.41			2,252
Exercised/released	(46,009)	—		$	1.17	6.32			54
Expired	—	—				—			—
Forfeited	(585,973)	—				2.05			791
Outstanding, end of period	1,772,582	$	—			$	1.69	4.93	$	1,376
Vested and exercisable, end of the period	—	—				—			—
Vested and unvested exercisable, end of the period	—	—				—			—
Vested and expected to vest, end of the period	1,628,975	—				1.69		4.92	1,264

An aggregate of ~~4.2~~2.8 million and ~~5.0~~3.4 million shares of common stock ~~respectively,~~was available for grant under the 2020 Plan as of September 30, 2022 and December 31, 2021, respectively.

In April 2022, the Company adopted the MedAvail Holdings, Inc. 2022 Inducement Equity Incentive Plan or the Inducement Plan. The Inducement Plan reserved 1,500,000 shares of the Company’s common stock for issuance pursuant to equity awards granted under the Inducement Plan. On April 8, 2022, the Company issued inducement awards to employees that included options to purchase 426,500 shares of Company common stock, and 426,500 restricted stock units. The inducement stock options have an exercise price of $1.96, and 25% of the shares vest on the one year anniversary of the date that employment commenced, and an additional one forty-eighth (1/48th) of the shares vest monthly thereafter. The inducement restricted stock units vest at one-third (1/3rd) of the shares on the first, second and third yearly anniversaries of March 1, 2022.

Warrants

During the nine months ended September 30, ~~2021 no~~2022, 18.8 million warrants were ~~issued.~~

~~During~~issued from the ~~nine months ended September 30, 2021,~~first closing of the Private Placement in April 2022 with a fair value of $7.5 million. 4.7 million warrants were ~~exercised in exchange for issuing 794,804 shares~~issued from the second closing of the ~~Company’s common stock~~Private Placement in July 2022 with ~~total cash proceeds~~a fair value of ~~$151 thousand.~~

~~Warrants~~$2.3 million. No warrants were exercised during the nine months ended September 30, ~~2021, included 565,496 held by related parties (investors), with 626,339~~2022. There were 24.2 million related party warrants outstanding as of September 30, ~~2021.~~2022.

The terms for the warrants issued from the Private Placement were as follows:


September 30, 2022
Issue Date	Reason for issuance	Term (years)	Exercise Price (USD)
April 4, 2022	Private Placement	5	$	1.25
July 1, 2022	Private Placement	5	$	1.25

NOTE 1112 - REVENUE AND SEGMENT REPORTING

Operating segments are the individual operations that the chief operating decision maker, ~~("CODM"),~~or CODM, who is ~~our~~the Company's 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 has the following 2two reportable segments:

Retail Pharmacy Services Segment

Retail ~~pharmacy services~~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~~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 MedCenter 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.

In September 2020, the Company and a significant customer agreed that MedAvail had no further obligation to the customer and therefore would have no additional deliverables related to the contract liability balance, of which $4.7 million was outstanding as of December 31, 2019. As such, the Company recognized $4.7 million of revenue related to this contract during 2020. The contract revenue recognized consisted of $1.5 million of hardware sales revenue and $3.2 million of software integration for contract obligations for software programming and hardware development that were in progress but not completed.

The following ~~table presents sales~~tables present revenue and costs of ~~sales~~products sold and services by segment ~~in thousands:~~

Retail Pharmacy Services Pharmacy Technology Total
Three Months Ended September 30, 2021
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales $ 5,445 $ — $ 5,445
Hardware — 106 106
Subscription sales — 108 108
Total pharmacy and hardware sales 5,445 214 5,659
Service sales:
Software integration — — —
Software — 51 51
Maintenance and support — 44 44
Installation — 11 11
Professional services and other — 27 27
Total service sales — 133 133
Total sales 5,445 347 5,792
Cost of sales 5,366 240 5,606
Gross profit $ 79 $ 107 $ 186
(in thousands):

1820

Retail Pharmacy Services
Pharmacy Technology(1)
Total
Three Months Ended September 30, 2020
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales $ 2,186 $ — $ 2,186
Hardware — 1,625 1,625
Subscription sales — 115 115
Total pharmacy and hardware sales 2,186 1,740 3,926
Service sales:
Software integration — 3,168 3,168
Software — 15 15
Maintenance and support — 17 17
Installation — — —
Professional services and other — 19 19
Total service sales — 3,219 3,219
Total sales 2,186 4,959 7,145
Cost of sales 2,042 120 2,162
Gross profit $ 144 $ 4,839 $ 4,983

~~(1)~~ ~~Includes $1.5 million of hardware sales and $3.2 million of software integration sales associated with a non-recurring commercial agreement~~.

Retail Pharmacy Services Pharmacy Technology Total
Nine Months Ended September 30, 2021
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales $ 13,357 $ — $ 13,357
Hardware — 470 470
Subscription sales — 338 338
Total pharmacy and hardware sales 13,357 808 14,165
Service sales:
Software integration — — —
Software — 125 125
Maintenance and support — 115 115
Installation — 39 39
Professional services and other — 405 405
Total service sales — 684 684
Total sales 13,357 1,492 14,849
Cost of sales 13,130 1,040 14,170
Gross profit $ 227 $ 452 $ 679


	Retail Pharmacy Services		Pharmacy Technology		Total
Three Months Ended September 30, 2022
Revenue:
Pharmacy and hardware revenue:
Retail pharmacy revenue	$	11,162	$	—	$	11,162
Hardware	—		—		—
Subscription	—		104		104
Total pharmacy and hardware revenue	11,162		104		11,266
Service revenue:

Software	—		94		94
Maintenance and support	—		48		48
Installation	—		—		—
Professional services and other	—		53		53
Total service revenue	—		195		195
Total revenue	11,162		299		11,461
Cost of products sold and services	10,047		122		10,169
Segment gross profit	$	1,115	$	177	1,292
Operating expense:
Pharmacy operations					4,392
General and administrative					6,087
Selling and marketing					2,126
Research and development					178
Total operating expense					12,783
Operating loss					$	(11,491)

1921

Retail Pharmacy Services
Pharmacy Technology(1)
Total
Nine Months Ended September 30, 2020
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales $ 5,196 $ — $ 5,196
Hardware — 2,048 2,048
Subscription sales — 343 343
Total pharmacy and hardware sales 5,196 2,391 7,587
Service sales:
Software integration — 3,168 3,168
Software — 25 25
Maintenance and support — 40 40
Installation — 28 28
Professional services and other — 20 20
Total service sales — 3,281 3,281
Total sales 5,196 5,672 10,868
Cost of sales 5,059 400 5,459
Gross profit $ 137 $ 5,272 $ 5,409


	Retail Pharmacy Services		Pharmacy Technology		Total
Three Months Ended September 30, 2021
Revenue:
Pharmacy and hardware revenue:
Retail pharmacy revenue	$	5,445	$	—	$	5,445
Hardware	—		106		106
Subscription	—		108		108
Total pharmacy and hardware revenue	5,445		214		5,659
Service revenue:

Software	—		51		51
Maintenance and support	—		44		44
Installation	—		11		11
Professional services and other	—		27		27
Total service revenue	—		133		133
Total revenue	5,445		347		5,792
Cost of products sold and services	5,366		240		5,606
Segment gross profit	$	79	$	107	186
Operating expense:
Pharmacy operations					3,750
General and administrative					5,320
Selling and marketing					1,909
Research and development					232
Total operating expense					11,211
Operating loss					$	(11,025)


	Retail Pharmacy Services		Pharmacy Technology		Total
Nine Months Ended September 30, 2022
Revenue:
Pharmacy and hardware revenue:
Retail pharmacy revenue	$	30,652	$	—	$	30,652
Hardware	—		236		236
Subscription	—		322		322
Total pharmacy and hardware revenue	30,652		558		31,210
Service revenue:

Software	—		228		228
Maintenance and support	—		127		127
Installation	—		77		77
Professional services and other	—		117		117
Total service revenue	—		549		549
Total revenue	30,652		1,107		31,759
Cost of products sold and services	28,460		588		29,048
Segment gross profit	$	2,192	$	519	2,711
Operating expense:
Pharmacy operations					11,970
General and administrative					18,729
Selling and marketing					6,738
Research and development					952
Total operating expense					38,389
Operating loss					$	(35,678)

~~(1)~~

~~Includes $1.5 million of hardware sales and $3.2 million of software integration sales associated with a non-recurring commercial agreement.~~


	Retail Pharmacy Services		Pharmacy Technology		Total
Nine Months Ended September 30, 2021
Revenue:
Pharmacy and hardware revenue:
Retail pharmacy revenue	$	13,357	$	—	$	13,357
Hardware	—		470		470
Subscription	—		338		338
Total pharmacy and hardware revenue	13,357		808		14,165
Service revenue:

Software	—		125		125
Maintenance and support	—		115		115
Installation	—		39		39
Professional services and other	—		405		405
Total service revenue	—		684		684
Total revenue	13,357		1,492		14,849
Cost of products sold and services	13,130		1,040		14,170
Segment gross profit	$	227	$	452	679
Operating expense:
Pharmacy operations					9,428
General and administrative					16,733
Selling and marketing					5,056
Research and development					601
Total operating expense					31,818
Operating loss					$	(31,139)

The following table presents assets and liabilities by segment ~~in thousands:~~(in thousands):


		Retail Pharmacy Services		Pharmacy Technology		Corporate		Total			Retail Pharmacy Services		Pharmacy Technology		Corporate		Total
September 30, 2021
September 30, 2022										September 30, 2022
Assets	Assets	$	11,867	$	4,740	$	35,490	$	52,097	Assets	$	15,939	$	7,953	$	25,959	$	49,851
Liabilities	Liabilities	$	5,976	$	4,108	$	10,795	$	20,879	Liabilities	$	5,841	$	2,689	$	10,015	$	18,545
December 31, 2020
December 31, 2021										December 31, 2021
Assets	Assets	$	6,012	$	5,547	$	57,772	$	69,331	Assets	$	13,641	$	5,222	$	19,280	$	38,143
Liabilities	Liabilities	$	2,203	$	3,422	$	2,639	$	8,264	Liabilities	$	5,618	$	3,567	$	9,885	$	19,070

The following table presents long-lived assets, which include property, plant, and equipment and right-of-use-assets by geographic region, based on the physical location of the assets ~~in thousands:~~(in thousands):


		September 30,		December 31,			September 30,		December 31,
		2021		2020			2022		2021
Long-lived assets:	Long-lived assets:					Long-lived assets:
United States	United States	$	7,108	$	4,533	United States	$	8,286	$	7,675
Canada	Canada	426		501		Canada	354		555
Total long-lived assets	Total long-lived assets	$	7,534	$	5,034	Total long-lived assets	$	8,640	$	8,230

2024

NOTE 13 – SUBSEQUENT EVENTS

Nasdaq Capital Market Listing Qualifications

The Company received a deficiency letter from the Listing Qualifications Department of the Nasdaq Capital Market (“Nasdaq”) on October 31, 2022 notifying the Company that for the last 30 consecutive business days the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued inclusion in Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). The deficiency letter will not result in the immediate delisting of the Company’s common stock from Nasdaq.

The Company has an initial period of 180 calendar days, or until May 1, 2023, to regain compliance with the Bid Price Rule. If the Company is not in compliance with the Bid Price Rule within the first 180 calendar days, the Company may be afforded a second 180 calendar day period to regain compliance. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards required by Nasdaq, except for the minimum bid price requirement.

The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider available options to regain compliance with the Bid Price Rule, including initiating a reverse stock split. However, there can be no assurance that the Company will be able to regain compliance with the Bid Price Rule or will otherwise be in compliance with other Nasdaq Listing Rules. If we do not regain compliance with the Bid Price Rule and are not eligible for an additional compliance period, our common stock may be delisted. For more information, see “Risk Factors - Our share price does not meet the minimum bid price for continued listing on Nasdaq. Our ability to continue operations or to publicly or privately sell equity securities and the liquidity of our common stock could be adversely affected if we do not regain compliance with the minimum bid price requirement and we are delisted from Nasdaq.”

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

You should read the following discussion in conjunction with our audited historical condensed consolidated ~~condensed~~ financial statements for the year ended December 31, ~~2020,~~2021, which are included in the Annual Report on Form 10-K, filed with the ~~SEC~~Securities and Exchange Commission on March ~~31, 2021,~~29, 2022, and our unaudited condensed consolidated ~~condensed~~ financial statements for the three and nine months ended September 30, ~~2021~~2022 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~~2021 Form 10-K for the year ended December 31, ~~2020.~~2021. 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 technology and services company, ~~that is transforming full-service pharmacy.~~we have developed and commercialized an innovative self-service pharmacy, mobile application, and kiosk. 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~~our 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~~Second, as a direct ‘sell-to’ model, ~~whereby~~commercialization channel, 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~~our MedCenter kiosks and Remote Dispensing System isare our back-end MedPlatform® Enterprise Software, or the MedPlatform Enterprise Software, which controls dispensing and MedCenter ~~monitoring;~~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 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~~Many 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~~many 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 Nine Months Ended September 30, ~~2021~~2022

We ~~are not~~have never been profitable and ~~have~~we incurred operating losses in each year since inception. Our net losses were ~~$31.2~~$36.5 million and ~~$14.7~~$31.2 million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. As of September 30, ~~2021,~~2022, we had an accumulated deficit of ~~$179.5~~$228.6 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 the foreseeable future 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

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 decrease and turn positive as we execute our growth strategies within 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; we expect operating performance to turn positive once each state reaches sufficient scale in sales volume.

As of September 30, ~~2021,~~2022, we had cash and cash equivalents of ~~$35.9~~$27.2 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, April 2022, and July 2022, we completed the sale of additional equity through a private placement ~~funding,~~fundings, where we raised $83.9 ~~million.~~million, $40.0 million, and $10.0 million in gross proceeds, respectively. 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), weWe expect ~~a need~~ to raise additional capital to continue ~~to fund our~~funding 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 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 September 30, ~~2021~~2022

~~Sales~~Revenue – Retail Pharmacy and Hardware and Service

Retail pharmacy and hardware ~~sales~~revenue

Retail pharmacy ~~sales~~revenue from the ~~retail pharmacy services~~Retail Pharmacy Services segment ~~are~~is 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 orand 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~~revenue

~~Services sales~~Service revenue from the ~~pharmacy technology segment are~~Pharmacy Technology Segment is derived from installation and support services.

2227

~~Sales~~Revenue

Three Months Ended September 30, 2021 vs. 2020
2021 2020 Amount Change % Change
Pharmacy and hardware sales: (in thousands)
Retail pharmacy sales $ 5,445 $ 2,186 $ 3,259 149 %
Hardware 106 1,625 (1,519) (93) %
Subscription sales 108 115 (7) (6) %
Total pharmacy and hardware sales 5,659 3,926 1,733 44 %
Service sales:
Software integration — 3,168 (3,168) — %
Software 51 15 36 240 %
Maintenance and support 44 17 27 159 %
Installation 11 — 11 — %
Professional services and other 27 19 8 42 %
Total service sales 133 3,219 (3,086) (96) %
Total sales $ 5,792 $ 7,145 $ (1,353) (19) %


	Three Months Ended September 30,				2022 vs. 2021
	2022		2021		Amount Change		% Change
Pharmacy and hardware revenue:	(in thousands)
Retail pharmacy revenue	$	11,162	$	5,445	$	5,717	105	%
Hardware	—		106		(106)		(100)	%
Subscription	104		108		(4)		(4)	%
Total pharmacy and hardware revenue	11,266		5,659		5,607		99	%
Service revenue:

Software	94		51		43		84	%
Maintenance and support	48		44		4		9	%
Installation	—		11		(11)		(100)	%
Professional services and other	53		27		26		96	%
Total service revenue	195		133		62		47	%
Total revenue	$	11,461	$	5,792	$	5,669	98	%

During the three months ended September 30, ~~2021,~~2022, retail pharmacy and hardware ~~sales~~revenue increased ~~$1.7~~by $5.6 million to ~~$5.7~~$11.3 million compared to that of the same period in ~~2020.~~2021. The ~~$1.7~~$5.6 million increase was due to a ~~$3.3~~$5.7 million increase from volume growth in prescription ~~sales~~revenue at existing sites and additional sites launched primarily in ~~the remaining period~~Florida in ~~2020~~Q4 2021 and 2021 in Arizona, California and Michigan, offset by the decrease in hardware sales from the third quarter 2020. During the third quarter 2020, MedAvail and a significant customer agreed that we had no further obligation to the customer related to a commercial contract. This revenue is non-recurring and was recorded as $1.5 million of hardware sales and $3.2 million of software integration sales for contract obligations that were in progress but not completed.

continuing into 2022.

During the three months ended September 30, ~~2021, services sales decreased $3.09~~2022, service revenue increased by $0.1 million to ~~$0.13~~$0.2 million compared to that of the same period in ~~2020. The decrease was primarily due to the aforementioned commercial agreement.~~2021.

Cost of ~~Sales – Pharmacy~~Products Sold and ~~Hardware and Service~~Services

~~Pharmacy~~Retail pharmacy and hardware cost of ~~sales~~products sold

Cost of ~~sales~~products sold consists primarily of prescription medications, ~~and~~ other over-the-counter health products; and costs associated with MedCenters sold to third-party customers.

Service ~~cost of sales~~costs

~~Cost of sales~~Service costs consists primarily of costs incurred to install and maintain MedCenters at third-party customer locations.

Costs of ~~sales~~Products and Services


		Three Months Ended September 30,				2021 vs. 2020					Three Months Ended September 30,				2022 vs. 2021
		2021		2020		Amount Change		% Change			2022		2021		Amount Change		% Change
Retail pharmacy and hardware cost of sales:		(in thousands)
Retail pharmacy and hardware cost of products sold:										Retail pharmacy and hardware cost of products sold:	(in thousands)
Prescription drugs	Prescription drugs	$	4,969	$	1,916	$	3,053	159	%	Prescription drugs	$	9,313	$	4,969	$	4,344	87	%
Shipping	Shipping	396		125		271		217	%	Shipping	735		396		339		86	%
Hardware	Hardware	129		44		85		193	%	Hardware	13		129		(116)		(90)	%
Depreciation	Depreciation	45		47		(2)		(4)	%	Depreciation	52		45		7		16	%
Total retail pharmacy and hardware cost of sales		5,539		2,132		3,407		160	%
Service cost of sales:
Total retail pharmacy and hardware cost of products sold										Total retail pharmacy and hardware cost of products sold	10,113		5,539		4,574		83	%
Service costs:										Service costs:
Professional services	Professional services	16		—		16		—	%	Professional services	10		16		(6)		(38)	%
Maintenance and support services	Maintenance and support services	46		30		16		53	%	Maintenance and support services	46		46		—		—	%
Installation services	Installation services	5		—		5		—	%	Installation services	—		5		(5)		(100)	%
Total service cost of sales		67		30		37		123	%
Total cost of sales		$	5,606	$	2,162	$	3,444	159	%
Total service costs										Total service costs	56		67		(11)		(16)	%
Total cost of products sold and services										Total cost of products sold and services	$	10,169	$	5,606	$	4,563	81	%

During the three months ended September 30, ~~2021,~~2022, retail pharmacy and hardware cost of ~~sales~~products sold increased ~~$3.4~~$4.6 million to ~~$5.5~~$10.1 million compared to the same period in ~~2020.~~2021. The increase was primarily due to costs associated with volume growth in prescription sales at existing

sites and additional sites launched primarily in ~~the remaining period~~Florida in ~~2020~~Q4 2021 and ~~2021 in Arizona, California and Michigan.~~continuing into 2022. Shipping costs, related to our home delivery service via third-party courier, increased $0.3 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.~~2021.

During the three months ended September 30, ~~2021,~~2022, service ~~cost of sales~~costs were reasonably consistent with the same period in the prior ~~period.~~year.

Pharmacy ~~operations~~Operations

Pharmacy operations consist of costs incurred to operate retail pharmacies ~~including pharmacy labor costs,~~ and ~~pharmacy license fees.~~our call center. Wages and salaries consist of compensation costs incurred for all pharmacy operations related employees and contractors including bonuses, health plans, severance, and contractor costs. Facility expenses consist of rent and utilities directly associated with our pharmacy operations.

Other pharmacy operations expenses consist of ~~consulting and professional fees, maintenance fees,~~ supply costs and other 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 September 30,				2021 vs. 2020					Three Months Ended September 30,				2022 vs. 2021
		2021		2020		Amount Change		% Change			2022		2021		Amount Change		% Change
Pharmacy operations expenses:	Pharmacy operations expenses:	(in thousands)								Pharmacy operations expenses:	(in thousands)
Wages and salaries	Wages and salaries	$	1,605	$	1,131	$	474	42	%	Wages and salaries	$	2,375	$	2,794	$	(419)	(15)	%
Other pharmacy operations expenses		476		54		422		781	%
Rent, utilities, and other										Rent, utilities, and other	569		570		(1)		(0)	%

Depreciation of property, plant and equipment	Depreciation of property, plant and equipment	220		252		(32)		(13)	%	Depreciation of property, plant and equipment	242		220		22		10	%

Amortization of intangible assets	Amortization of intangible assets	94		13		81		623	%	Amortization of intangible assets	1,089		90		999		1110	%
Repairs and maintenance										Repairs and maintenance	117		76		41		54	%
Total pharmacy operations expenses	Total pharmacy operations expenses	$	2,395	$	1,450	$	945	65	%	Total pharmacy operations expenses	$	4,392	$	3,750	$	642	17	%

During the three months ended September 30, ~~2021,~~2022, pharmacy operations expenses increased ~~$0.9~~by $0.6 million to ~~$2.4~~$4.4 million compared to the same period in 2020. This increase was primarily due to the opening of three additional central pharmacy locations in the remaining period in 2020, including two in California and one in Michigan. Additionally, volume growth continued to ramp at existing pharmacy locations, thus increasing pharmacy personnel and supplies during the remaining period in 2020 and into 2021, resulting in increased operating costs.2021. Amortization of intangible assets has increased ~~as a result of~~due to deploying internally developed software in our pharmacy ~~operations.~~

operations and decreasing the remaining useful life resulting in an increased amortization of $1.0 million. The increase was offset by the decrease in wages and salaries due to reduction in contractor costs.

General and ~~administrative~~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.~~costs specific to our corporate and technology activities. 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 Securities and Exchange Commission, or SEC, Nasdaq, additional insurance, investor relations and other administrative expenses and professional services.

We have ~~a stock option plan~~equity incentive plans 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 expensed.

Three Months Ended September 30, 2021 vs. 2020
2021 2020 Amount Change % Change
General and administrative expenses: (in thousands)
Wages and salaries $ 4,005 $ 2,274 $ 1,731 76 %
Professional services 549 247 302 122 %
Rent and utilities 484 362 122 34 %
Office and IT supplies 454 346 108 31 %
Insurance 462 64 398 622 %
Share-based compensation 365 65 300 462 %
Travel and other employee expenses 174 45 129 287 %
Other general and administrative expenses 312 61 251 411 %
Total general and administrative expenses $ 6,805 $ 3,464 $ 3,341 96 %


	Three Months Ended September 30,				2022 vs. 2021
	2022		2021		Amount Change		% Change
General and administrative expenses:	(in thousands)
Wages and salaries	$	3,098	$	2,695	$	403	15	%
Professional services	531		549		(18)		(3)	%
Share-based compensation	565		367		198		54	%
Insurance	503		462		41		9	%
Software licenses and support	421		305		116		38	%
Rent, utilities, and other	745		555		190		34	%


Office and IT supplies	88		126		(38)		(30)	%
Travel and other employee expenses	87		184		(97)		(53)	%
Depreciation of property, plant and equipment	49		77		(28)		(36)	%
Total general and administrative expenses	$	6,087	$	5,320	$	767	14	%

During the three months ended September 30, ~~2021,~~2022, general and administrative costs increased approximately ~~$3.3~~by $0.8 million to ~~$6.8~~$6.1 million compared to that of the same period in ~~2020.~~2021. This increase was primarily due to hiring additional administrative staff, increased share-based compensation, 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~~Marketing

Selling and marketing expenses consist of personnel costs, 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 our in-clinic customer account managers, including bonuses, health plans, ~~severance,~~ and ~~contractor costs.~~severance.


		Three Months Ended September 30,				2021 vs. 2020					Three Months Ended September 30,				2022 vs. 2021
		2021		2020		Amount Change		% Change			2022		2021		Amount Change		% Change
Selling and marketing expenses:	Selling and marketing expenses:	(in thousands)								Selling and marketing expenses:	(in thousands)
Wages and salaries	Wages and salaries	$	1,538	$	523	$	1,015	194	%	Wages and salaries	$	1,960	$	1,658	$	302	18	%
Travel and other employee expenses										Travel and other employee expenses	86		126		(40)		(32)	%
Marketing	Marketing	110		82		28		34	%	Marketing	74		110		(36)		(33)	%
Travel and other employee expenses		117		15		102		680	%
Other selling and marketing expenses	Other selling and marketing expenses	14		4		10		250	%	Other selling and marketing expenses	6		15		(9)		(60)	%
Total selling and marketing expenses	Total selling and marketing expenses	$	1,779	$	624	$	1,155	185	%	Total selling and marketing expenses	$	2,126	$	1,909	$	217	11	%

During the three months ended September 30, ~~2021,~~2022, selling and marketing costs increased approximately ~~$1.2~~by $0.2 million to ~~$1.8~~$2.1 million compared to that of the same period in ~~2020.~~2021. 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 growing number of medical clinics where we are deployed.

Research and ~~development~~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.


		Three Months Ended September 30,				2021 vs. 2020					Three Months Ended September 30,				2022 vs. 2021
		2021		2020		Amount Change		% Change			2022		2021		Amount Change		% Change
Research and development expenses:	Research and development expenses:	(in thousands)								Research and development expenses:	(in thousands)
Wages and salaries	Wages and salaries	$	165	$	136	$	29	21	%	Wages and salaries	$	166	$	165	$	1	1	%
Materials		53		17		36		212	%
Other expenses	Other expenses	14		1		13		1300	%	Other expenses	12		67		(55)		(82)	%
Total research and development expenses	Total research and development expenses	$	232	$	154	$	78	51	%	Total research and development expenses	$	178	$	232	$	(54)	(23)	%

During the three months ended September 30, ~~2021,~~2022, research and development costs ~~increased~~decreased by approximately ~~$0.08~~$0.1 million. ~~This increase was primarily due to ongoing product improvement activities, including efforts to integrate our MedPlatform® Enterprises Software to the EPIC pharmacy management system.~~

~~Other gain (loss)~~

~~During the three months ended September 30, 2021, other gain (loss) of $7 thousand was not significant.~~

Interest ~~income~~Income and ~~expense~~Expense

Interest expense consists of accrued interest on outstanding debt and is payable monthly.


		Three Months Ended September 30,				2021 vs. 2020					Three Months Ended September 30,				2022 vs. 2021
		2021		2020		Amount Change		% Change			2022		2021		Amount Change		% Change
Interest income:	Interest income:	(in thousands)								Interest income:	(in thousands)
Interest income	Interest income	$	7	$	—	$	7	0	%	Interest income	$	—	$	7	$	(7)	(100)	%
Total interest income	Total interest income	$	7	$	—	$	7	0	%	Total interest income	$	—	$	7	$	(7)	(100)	%
Interest expense:	Interest expense:									Interest expense:
Interest expense	Interest expense	$	(260)	$	(455)	$	195	(43)	%	Interest expense	$	(315)	$	(260)	$	(55)	21	%
Total interest expense	Total interest expense	$	(260)	$	(455)	$	195	(43)	%	Total interest expense	$	(315)	$	(260)	$	(55)	21	%

During the three months ended September 30, ~~2021,~~2022, interest expense ~~decreased~~increased compared to the same period in ~~2020~~2021 due to ~~a convertible note that was outstanding through~~ the ~~third quarter in 2020 and settled in November 2020. On March 24, 2016, MedAvail and a significant customer and investor entered~~Company entering into a ~~subordinated secured convertible promissory five-year note agreement for $10.0 million or~~term loan in June 2021. The interest rate on the ~~Convertible Note. This Convertible Note~~term loan was ~~convertible into common shares at the holder’s request. The Convertible Note, including accrued interest, was repaid in its entirety~~10.25% on ~~November 17, 2020.~~September 30, 2022, compared to 7.25% on September 30, 2021. For more detail on outstanding debt and associated maturities, see Note 78 to the unaudited condensed consolidated ~~condensed~~ financial statements presented elsewhere in this Quarterly Report on Form 10-Q.

Results of Operations for the Nine Months Ended September 30, ~~2021~~2022

~~Sales~~Revenue – Retail Pharmacy and Hardware and Service

Retail pharmacy and hardware ~~sales~~revenue

Retail pharmacy ~~sales~~revenue from the ~~retail pharmacy services~~Retail Pharmacy Services segment ~~are~~is 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~~revenue

~~Services sales~~Service revenue from the ~~pharmacy technology segment are~~Pharmacy Technology Segment is derived from installation and support services.

~~Sales~~Revenue

Nine Months Ended September 30, 2021 vs. 2020
2021 2020 Amount Change % Change
Pharmacy and hardware sales: (in thousands)
Retail pharmacy sales $ 13,357 $ 5,196 $ 8,161 157 %
Hardware 470 2,048 (1,578) (77) %
Subscription sales 338 343 (5) (1) %
Total pharmacy and hardware sales 14,165 7,587 6,578 87 %
Service sales:
Software integration — 3,168 (3,168) — %
Software 125 25 100 400 %
Maintenance and support 115 40 75 188 %
Installation 39 28 11 39 %
Professional services and other 405 20 385 1925 %
Total service sales 684 3,281 (2,597) (79) %
Total sales $ 14,849 $ 10,868 $ 3,981 37 %


	Nine Months Ended September 30,				2022 vs. 2021
	2022		2021		Amount Change		% Change
Pharmacy and hardware revenue:	(in thousands)
Retail pharmacy revenue	$	30,652	$	13,357	$	17,295	129	%
Hardware	236		470		(234)		(50)	%
Subscription	322		338		(16)		(5)	%
Total pharmacy and hardware revenue	31,210		14,165		17,045		120	%
Service revenue:

Software	228		125		103		82	%
Maintenance and support	127		115		12		10	%
Installation	77		39		38		97	%
Professional services and other	117		405		(288)		(71)	%
Total service revenue	549		684		(135)		(20)	%
Total revenue	$	31,759	$	14,849	$	16,910	114	%

During the nine months ended September 30, ~~2021,~~2022, retail pharmacy and hardware ~~sales~~revenue increased ~~$6.6~~by $17.0 million to ~~$14.2~~$31.2 million compared to that of the same period in ~~2020.~~2021. The ~~$6.6~~$17.0 million increase was due to a ~~$8.2~~$17.3 million increase from volume growth in prescription ~~sales~~revenue at existing sites and additional sites launched primarily in ~~the remaining period~~Florida in ~~2020~~Q4 2021 and ~~2021 in Arizona, California and Michigan,~~continuing into 2022, offset by the decrease in hardware ~~sales. During~~revenue from the third quarter 2020, MedAvail and a significant customer agreed that we had no further obligation to the customer related to a commercial contract. This revenue is non-recurring and was recorded as $1.5 million of hardware sales and $3.2 million of software integration sales for contract obligations that weresame period in ~~progress but not completed.~~2021.

During the nine months ended September 30, ~~2021, services sales~~2022, service revenue decreased ~~$2.6~~by $0.1 million to ~~$0.7~~$0.5 million compared to the same period in 2020. The decrease was primarily due to the aforementioned agreement. The increase in software sales was due to the related increase in pharmacy and hardware sales, and professional services associated with contracted software work enabling a large health system customer to fully integrate their back-end pharmacy management system with our MedPlatform® Enterprise Software that was completed during the third quarter 2021.

Cost of ~~Sales – Pharmacy~~Products Sold and ~~Hardware and Service~~Services

~~Pharmacy~~Retail pharmacy and hardware cost of ~~sales~~products sold

Cost of ~~sales consist~~products sold consists primarily of prescription medications, ~~and~~ other over-the-counter health products; and costs associated with MedCenters sold to third-party customers.

Service ~~cost of sales~~costs

~~Cost of sales consists~~Service costs consist primarily of costs incurred to install and maintain MedCenters at third-party customer locations.

Costs of ~~sales~~Products and Services


		Nine Months Ended September 30,				2021 vs. 2020					Nine Months Ended September 30,				2022 vs. 2021
		2021		2020		Amount Change		% Change			2022		2021		Amount Change		% Change
Retail pharmacy and hardware cost of sales:		(in thousands)
Retail pharmacy and hardware cost of products sold:										Retail pharmacy and hardware cost of products sold:	(in thousands)
Prescription drugs	Prescription drugs	$	12,154	$	4,778	$	7,376	154	%	Prescription drugs	$	26,402	$	12,154	$	14,248	117	%
Shipping	Shipping	976		281		695		247	%	Shipping	2,059		976		1,083		111	%
Hardware	Hardware	482		137		345		252	%	Hardware	245		482		(237)		(49)	%
Depreciation	Depreciation	132		147		(15)		(10)	%	Depreciation	121		132		(11)		(8)	%
Total retail pharmacy and hardware cost of sales		13,744		5,343		8,401		157	%
Service cost of sales:
Total retail pharmacy and hardware cost of products sold										Total retail pharmacy and hardware cost of products sold	28,827		13,744		15,083		110	%
Service costs:										Service costs:
Professional services	Professional services	301		—		301		—	%	Professional services	33		301		(268)		(89)	%
Maintenance and support services	Maintenance and support services	105		90		15		17	%	Maintenance and support services	139		105		34		32	%
Installation services	Installation services	20		26		(6)		(23)	%	Installation services	49		20		29		145	%
Total service cost of sales		426		116		310		267	%
Total cost of sales		$	14,170	$	5,459	$	8,711	160	%
Total service costs										Total service costs	221		426		(205)		(48)	%
Total cost of products sold and services										Total cost of products sold and services	$	29,048	$	14,170	$	14,878	105	%

During the nine months ended September 30, ~~2021,~~2022, retail pharmacy and hardware cost of ~~sales~~products sold increased ~~$8.4~~by $15.1 million to ~~$13.7~~$28.8 million compared to that of the same period in ~~2020.~~2021. The increase was primarily due to costs associated with volume growth in prescription sales at existing sites and additional sites launched primarily in ~~the remaining period~~Florida in ~~2020~~Q4 2021 and ~~2021 in Arizona, California and Michigan.~~continuing into 2022. Shipping costs, related to our home delivery service via third-party courier, increased ~~$0.7~~by $1.1 million compared to that of 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 nine months ended September 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.2021.

Pharmacy ~~operations~~Operations

Other pharmacy operations expenses consist of ~~consulting and professional fees, maintenance fees,~~ supply ~~costs,~~cost and other costs.

Nine Months Ended September 30, 2021 vs. 2020
2021 2020 Amount Change % Change
Pharmacy operations expenses: (in thousands)
Wages and salaries $ 4,788 $ 2,841 $ 1,947 69 %
Other pharmacy operations expenses 997 130 867 667 %
Depreciation of property, plant and equipment 641 615 26 4 %
Amortization of intangible assets 193 69 124 180 %
Total pharmacy operations expenses $ 6,619 $ 3,655 $ 2,964 81 %


	Nine Months Ended September 30,				2022 vs. 2021
	2022		2021		Amount Change		% Change
Pharmacy operations expenses:	(in thousands)
Wages and salaries	$	7,970	$	7,330	$	640	9	%
Rent, utilities, and other	1,602		1,102		500		45	%

Depreciation of property, plant and equipment	694		641		53		8	%

Amortization of intangible assets	1,362		187		1,175		628	%
Repairs and maintenance	342		168		174		104	%
Total pharmacy operations expenses	$	11,970	$	9,428	$	2,542	27	%

During the nine months ended September 30, ~~2021,~~2022, pharmacy operations expenses increased ~~$3.0~~by $2.5 million to ~~$6.6~~$12.0 million compared to that of the same period in ~~2020.~~2021. This increase was primarily due to ~~the opening of three additional~~adding our Orlando central pharmacy ~~locations~~location in ~~the remaining period in 2020, including two in California~~Q4 2021 and ~~one in Michigan.~~continued growth of our other pharmacies. Additionally, volume growth continued to ramp up at existing pharmacy locations, ~~this~~thus increasing pharmacy personnel and supplies, ~~during the remaining period in 2020 and into 2021,~~ resulting in increased wages, salaries, and operating costs. Amortization of intangible assets has increased as a result of deploying internally developed software in our pharmacy ~~operations.~~

operations and decreasing the remaining useful life resulting in an increased amortization of $1.0 million

General and ~~administrative~~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.~~costs specific to our corporate and technology activities. 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~~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~~an equity incentive 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 isare adjusted over the term of the awards to reflect their probability of vesting. All fully vested awards are ~~fully~~ expensed.


		Nine Months Ended September 30,				2021 vs. 2020					Nine Months Ended September 30,				2022 vs. 2021
		2021		2020		Amount Change		% Change			2022		2021		Amount Change		% Change
General and administrative expenses:	General and administrative expenses:	(in thousands)								General and administrative expenses:	(in thousands)
Wages and salaries	Wages and salaries	$	10,965	$	6,773	$	4,192	62	%	Wages and salaries	$	9,699	$	8,044	$	1,655	21	%
Professional services	Professional services	2,714		669		2,045		306	%	Professional services	2,087		2,714		(627)		(23)	%
Rent and utilities		1,303		1,014		289		29	%
Share-based compensation										Share-based compensation	1,741		948		793		84	%
Insurance										Insurance	1,509		1,357		152		11	%
Software licenses and support										Software licenses and support	1,132		785		347		44	%
Rent, utilities, and other										Rent, utilities, and other	1,944		1,895		49		3	%

Office and IT supplies	Office and IT supplies	1,147		920		227		25	%	Office and IT supplies	286		270		16		6	%
Insurance		1,357		167		1,190		713	%
Share-based compensation		948		235		713		303	%
Travel and other employee expenses	Travel and other employee expenses	552		321		231		72	%	Travel and other employee expenses	212		566		(354)		(63)	%
Other general and administrative expenses		955		445		510		115	%
Depreciation of property, plant and equipment										Depreciation of property, plant and equipment	119		154		(35)		(23)	%
Total general and administrative expenses	Total general and administrative expenses	$	19,941	$	10,544	$	9,397	89	%	Total general and administrative expenses	$	18,729	$	16,733	$	1,996	12	%

During the nine months ended September 30, ~~2021,~~2022, general and administrative costs increased approximately ~~$9.4~~by $2.0 million to ~~$19.9~~$18.7 million compared to that of the same period in ~~2020.~~2021. This increase was primarily due to hiring additional administrative staff, increased share-based compensation, as well as other investments necessary for our growth ~~and becoming~~as a public company. ~~Additionally, increases~~Professional services decreased approximately by $0.6 million to $2.1 million compared to that of the same period in ~~other general expenses, such as director~~2021. This decrease was primarily due to the reduction of fees from data warehousing, legal and ~~officer insurance, auditor fees, and legal fees were also partly a consequence of operating as a public company.~~audit costs.

Selling and ~~marketing~~Marketing

Selling and marketing expenses consist of personnel costs, 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 including our in-clinic customer account managers, and contractors including bonuses, health plans, ~~severance,~~ and ~~contractor costs.~~severance.


		Nine Months Ended September 30,				2021 vs. 2020					Nine Months Ended September 30,				2022 vs. 2021
		2021		2020		Amount Change		% Change			2022		2021		Amount Change		% Change
Selling and marketing expenses:	Selling and marketing expenses:	(in thousands)								Selling and marketing expenses:	(in thousands)
Wages and salaries	Wages and salaries	$	4,032	$	1,532	$	2,500	163	%	Wages and salaries	$	6,167	$	4,411	$	1,756	40	%
Travel and other employee expenses										Travel and other employee expenses	286		242		44		18	%
Marketing	Marketing	379		260		119		46	%	Marketing	260		378		(118)		(31)	%
Travel and other employee expenses		226		76		150		197	%
Other selling and marketing expenses	Other selling and marketing expenses	20		29		(9)		(31)	%	Other selling and marketing expenses	25		25		0		0	%
Total selling and marketing expenses	Total selling and marketing expenses	$	4,657	$	1,897	$	2,760	145	%	Total selling and marketing expenses	$	6,738	$	5,056	$	1,682	33	%

During the nine months ended September 30, ~~2021,~~2022, selling and marketing costs increased approximately ~~$2.8~~by $1.7 million to ~~$4.7~~$6.7 million compared to that of the same period in ~~2020.~~2021. 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 growing number of medical clinics where we are deployed.

Research and ~~development~~Development


		Nine Months Ended September 30,				2021 vs. 2020					Nine Months Ended September 30,				2022 vs. 2021
		2021		2020		Amount Change		% Change			2022		2021		Amount Change		% Change
Research and development expenses:	Research and development expenses:	(in thousands)								Research and development expenses:	(in thousands)
Wages and salaries	Wages and salaries	$	498	$	385	$	113	29	%	Wages and salaries	$	534	$	498	$	36	7	%
Materials		73		140		(67)		(48)	%
Other expenses	Other expenses	30		7		23		329	%	Other expenses	418		103		315		306	%
Total research and development expenses	Total research and development expenses	$	601	$	532	$	69	13	%	Total research and development expenses	$	952	$	601	$	351	58	%

During the nine months ended September 30, ~~2021,~~2022, research and development costs increased by approximately ~~$0.07~~$0.4 million. This increase was primarily due to ongoing product improvement activities, including efforts to integrate our MedPlatform® Enterprises Software towith the EPIC pharmacy management ~~system; partially offset by a decrease~~system for material and subcontractor costs reflected in ~~materials costs associated with the completion of certain development work related to our M5 MedCenter technology in 2020.~~

~~Other gain (loss)~~

~~During the nine months ended September 30, 2021,~~ other ~~gain (loss) included a gain of $0.2 million, primarily from PPP loan forgiveness. MedAvail received forgiveness of the loan on March 30, 2021 in accordance with the terms of the CARES Act.~~expenses.

Interest ~~income~~Income and ~~expense~~Expense

Interest expense consists of accrued interest on outstanding debt and is payable monthly.


		Nine Months Ended September 30,				2021 vs. 2020					Nine Months Ended September 30,				2022 vs. 2021
		2021		2020		Amount Change		% Change			2022		2021		Amount Change		% Change
Interest income:	Interest income:	(in thousands)								Interest income:	(in thousands)
Interest income	Interest income	$	74	$	15	$	59	393	%	Interest income	$	1	$	74	$	(73)	(99)	%
Total interest income	Total interest income	$	74	$	15	$	59	393	%	Total interest income	$	1	$	74	$	(73)	(99)	%
Interest expense:	Interest expense:									Interest expense:
Interest expense	Interest expense	$	(328)	$	(911)	$	583	(64)	%	Interest expense	$	(845)	$	(328)	$	(517)	158	%
Total interest expense	Total interest expense	$	(328)	$	(911)	$	583	(64)	%	Total interest expense	$	(845)	$	(328)	$	(517)	158	%

During the nine months ended September 30, ~~2021,~~2022, interest expense ~~decreased~~increased compared to the same period in ~~2020~~2021 due to ~~a convertible note that was outstanding through~~ the ~~third quarter in 2020 and settled in November 2020. On March 24, 2016, MedAvail and a significant customer and investor entered~~Company entering into a ~~subordinated secured convertible promissory five-year note agreement for $10.0 million or~~term loan in June 2021. The interest rate on the ~~Convertible Note. This Convertible Note~~term loan was ~~convertible into common shares at the option holder’s request. The Convertible Note, including accrued interest, was repaid in its entirety~~10.25% on ~~November 17, 2020.~~September 30, 2022, compared to 7.25% on September 30, 2021. For more detail on outstanding debt and associated maturities, see Note 78 to the unaudited condensed consolidated ~~condensed~~ financial statements presented elsewhere in this Quarterly Report on Form 10-Q.

3034

Liquidity and Capital Resources

Sources of Liquidity

Since inception through September 30, ~~2021,~~2022, 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 September 30, ~~2021,~~2022, we had ~~$35.9~~$27.2 million in cash and cash equivalents and an accumulated deficit of ~~$179.5~~$228.6 million. ~~Although~~We added to our liquidity resources in 2021 through a senior secured term loan facility with Silicon Valley Bank or the Loan Agreement, pursuant to which we ~~believe~~borrowed $10.0 million in aggregate initial term loans. In April 2022, we completed a private placement, pursuant to which we received $40.0 million in gross proceeds before deducting placement agent commissions and other offering expenses. An additional $10.0 million in gross proceeds closed on July 1, 2022.

In connection with the private placement, we issued callable warrants in April 2022 and July 2022. The warrant call option is exercisable by us beginning on each of the 12-month and 24-month anniversaries of the warrant issuance dates and subject to the satisfaction of certain pricing conditions relating to the trading of our ~~cash~~shares. If the warrants are exercised in full immediately after issuance by the Investors, we would receive additional gross proceeds of up to $29.4 million. If we exercise our call option immediately after issuance, then we could raise approximately $19.6 million in gross proceeds.

Management is also exploring additional sources of financing, the success of which is dependent on market conditions. Management has concluded that the aforementioned conditions, including the ongoing uncertainty related to the negative impacts of the COVID-19 pandemic and ~~cash equivalents~~the economic uncertainties related to the conflict in Ukraine resulting from the military actions of Russia, including on the global economy, interest rate fluctuations, inflationary pressures and ~~borrowing capacity are sufficient~~our supply chain, raise substantial doubt about our ability to ~~execute our current growth plan for~~continue as a going concern within 12 months from the ~~foreseeable future, due~~date of issuance of the financial statements. Our plans to ~~market risks (as outlined~~address this uncertainty include raising additional funding, as necessary, through public or private equity or debt financings.

However, we may not be able to secure additional financing in ~~the "Risk Factors" section of this Quarterly Report~~a timely manner or on ~~Form 10-Q) and opportunities,~~favorable terms, if at all. Furthermore, if we ~~expect a need~~issue equity securities to raise additional ~~capital~~funds, our existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to ~~continue to fund our operations. The amount and timing~~those of our ~~future funding requirements will depend on many factors, including the pace and results of our growth strategy and capital market conditions.~~existing stockholders. 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. Our primary uses of liquidity are operating activities, capital expenditures, and lease payments.

Cash Flows

The following table summarizes our cash ~~flows for the nine months ended September 30, 2021 and 2020:~~flows:


		Nine Months Ended September 30,				2021 vs. 2020					Nine Months Ended September 30,				2022 vs. 2021
(In thousands)	(In thousands)	2021		2020		Amount Change		% Change		(In thousands)	2022		2021		Amount Change		% Change
Cash used in operating activities	Cash used in operating activities	$	(28,174)	(15,327)		$	(12,847)	84	%	Cash used in operating activities	$	(37,283)	$	(28,174)	$	(9,109)	32	%
Cash used in investing activities	Cash used in investing activities	(2,269)		(615)		(1,654)		269	%	Cash used in investing activities	(1,897)		(2,269)		372		(16)	%
Cash provided by financing activities	Cash provided by financing activities	8,722		9,240		(518)		(6)	%	Cash provided by financing activities	46,963		8,722		38,241		438	%
Net decrease in cash and cash equivalents, and restricted cash		$	(21,721)	$	(6,702)	$	(15,019)	224	%
Net increase (decrease) in cash and cash equivalents, and restricted cash										Net increase (decrease) in cash and cash equivalents, and restricted cash	$	7,783	$	(21,721)	$	29,504	(136)	%

Operating Activities

During the nine months ended September 30, ~~2021,~~2022, cash used in operating activities increased ~~$12.8~~by $9.1 million to ~~$28.2~~$37.3 million compared to that of the same period in ~~2020.~~2021. The increase was primarily due to an increase in inventory, accounts receivable, operating expenses from wages and salaries, and costs attributable to the launch and growth of our retail pharmacy operations in Arizona, California, Michigan, and Florida, and operating as a public company.

Investing Activities

During the nine months ended September 30, ~~2021,~~2022, cash used in investing activities ~~increased $1.7~~decreased by $0.4 million to ~~$2.3~~$1.9 million compared to that of the same period in ~~2020.~~2021. The ~~increase~~decrease was primarily due to ~~an increase~~a decrease in investment in ~~property, plant and equipment and~~ intangible assets associated with investments in ~~retail pharmacy services operations in Arizona, California, Michigan, and Florida.~~Retail Pharmacy Services Segment.

Financing Activities

During the nine months ended September 30, ~~2021,~~2022, cash provided by financing activities ~~decreased $0.5~~increased by $38.2 million to ~~$8.7~~$47.0 million compared to that of the same period in ~~2020. During~~2021. The increase was primarily due to issuance of common shares and warrants through a private placement in April 2022 and July 2022, with no similar activity during the nine months ended September 30, ~~2020,~~2021, offset by $10.0 million from debt proceeds during the nine months ended September 30, 2021, with no similar activity ~~was primarily from the issuance of preferred stock and debt, and~~ in the ~~same period in 2021 the activity was primarily from issuing debt.~~current period.

Critical Accounting ~~Policies and~~ Estimates

There were no significant changes in our critical accounting ~~policies~~estimates in the nine months ended September 30, ~~2021,~~2022, from those previously disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the SEC on March ~~31, 2021.~~29, 2022.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see Part II, Item 78, Note 5 of our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed with the SEC on March ~~31, 2021,~~29, 2022, and Note 3:4: "Recent Accounting Pronouncements" in the notes to our unaudited condensed consolidated ~~condensed~~ financial statements included elsewhere in this Quarterly Report Form 10-Q.

3136

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange ~~Act,~~Act), as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules ~~13a15(f)~~13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

3237

PART II

Item 1. Legal Proceedings

~~Following MYOS Rens Technology Inc.’s, or MYOS’s~~The information set forth under the heading “Legal” in Note 10, Commitments and ~~MedAvail, Inc.’s, or MAI's, announcement~~Contingencies, in Part I, Item 1 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 the Form S-4 Registration Statement filed with the Securities and Exchange Commission on September 2, 2020, collectively, the Demands. Thereafter, on September 23, 2020, a complaint regarding the transactions contemplated within the Merger Agreement was filed in the Supreme Court of the State of New York, County of New York, captioned Faasse v. MYOS RENS Technology Inc., et. al., Index No.: 654644/2020 (NY Supreme Ct., NY Cnty., September 23, 2020), or the New York Complaint. On October 12, 2020, a second complaint regarding the transactions was filed in the District Court of Nevada, Clark 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 Litigation delaying or adversely affecting the Merger and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, MYOS determined to voluntarily supplement the Form S-4 Registration Statement as described in the Currentthis Quarterly Report on Form 8-K on November 2, 2020. Subsequently, the Nevada Complaint and the New York Complaint were voluntarily dismissed. The remainder of the Litigation remains outstanding. MYOS and MAI specifically deny all allegations in the Litigation and/or that any additional disclosure was or10-Q is ~~required.~~incorporated herein by reference.

Item 1A. Risk Factors

~~In addition to the other information~~Except as set forth ~~in this Quarterly Report on Form 10-Q, you should carefully consider~~below, there have been no material changes from the risk factors ~~discussed below as well as~~disclosed in Part I, Item IA1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2020 (the “2020~~2021, or the “2021 Annual ~~Report”)~~Report", filed with the Securities and ~~in Part II, Item 1A – Risk Factors contained~~Exchange Commission on March 29, 2022. The risk factors described in our ~~Quarterly~~2021 Annual Report, ~~on Form 10-Q for the quarter ended March 31, 2021 (the “Q1 2021 Quarterly Report”) which could materially affect our business, financial condition or operating results. The risks described~~as well as other information set forth in this Quarterly Report on Form 10-Q, incould materially adversely affect our ~~2020 Annual Report~~business, financial condition, results of operations and prospects, and should be carefully considered. The risks and uncertainties that we face, however, are not limited to those described in the Q1 2021 ~~Quarterly Report are not the only risks we face.~~Annual Report. Additional risks and uncertainties not ~~currently~~presently known to us or that we currently ~~deem~~believe to be immaterial ~~also~~ may ~~materially~~also adversely affect our business ~~financial condition or operating results.~~

~~Risks Related to Ownership~~and the trading price of our securities, particularly in light of the ~~Company’s Securitie~~sfast-changing nature of the COVID-19 pandemic, containment measures and the related impacts to economic and operating conditions.

~~The terms~~Our share price does not meet the minimum bid price for continued listing on Nasdaq. Our ability to continue operations or to publicly or privately sell equity securities and the liquidity of our ~~credit agreement require~~common stock could be adversely affected if we do not regain compliance with the minimum bid price requirement and we are delisted from Nasdaq.

We received a deficiency letter from Nasdaq notifying us that for the last 30 consecutive business days the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have 180 calendar days starting on October 31, 2022 or until May 1, 2023, to regain compliance with the Bid Price Rule. If, at any time before May 1, 2023, the bid price for our common stock closes at $1.00 or more for a minimum of 10 consecutive business days, we will regain compliance with the Bid Price Rule, unless the Nasdaq staff exercises its discretion to extend this 10-day period pursuant to Nasdaq listing rules. We have not regained compliance with Nasdaq Listing Rules as of the filing date of this Quarterly Report on Form 10-Q.

If we do not regain compliance with Nasdaq Listing Rule 5550(a)(2) by May 1, 2023, we may be eligible for additional time to comply. To qualify, we will be required to meet certain ~~operating~~continued listing requirements for market value of publicly held shares and ~~financial covenants~~all other initial listing standards for Nasdaq. If we meet these requirements, Nasdaq may grant us an additional 180 calendar days to regain compliance with the Bid Price Rule, and ~~place restrictions~~we may provide written notice to Nasdaq of our intention to cure the deficiency during the additional compliance period. One method to regain compliance in such circumstances would be to implement a reverse stock split, but there is no guarantee that a reverse stock split would be approved by the stockholders or that a reverse stock split would allow us to regain compliance with the Bid Price Rule, and such an action could result in an adverse effect on or negatively impact the price of our ~~operating and financial flexibility.~~ common stock.

If we do not regain compliance with the Bid Price Rule and are not eligible for or are not granted an additional compliance period, our common stock may be delisted. There can be no assurance that, if we receive a delisting notice and appeal the delisting determination by the staff, such appeal would be successful. There can be no assurance that we will maintain compliance with the requirements for listing our common stock on Nasdaq.

Delisting could adversely affect our ability to raise additional capital through ~~debt financing,~~ the ~~terms~~public or private sale of ~~any new debt~~equity securities, which would significantly affect the ability of investors to trade our securities and would negatively affect the value and liquidity of our common stock.

We and our stockholders could ~~further restrict~~be materially adversely impacted if our common stock is delisted from Nasdaq. In particular:

•we may lose the confidence of our current or prospective third-party providers and collaboration partners, which could jeopardize our ability to ~~operate~~enter into supply, manufacturing, licensing, and collaboration agreements and continue our ~~business.~~business as currently conducted;

~~We entered into~~•we could be in a ~~senior secured term loan facility~~material breach under agreements we have with third parties, such as the Loan and Security Agreement between us and Silicon Valley ~~Bank,~~Bank;

•the price of our common stock will likely decrease;

•stockholders may be unable to sell or ~~SVB, on June 7, 2021, or~~ purchase our common stock when they wish to do so;

•the ~~Loan Agreement, pursuant to~~potential loss of confidence by employees;

•we may lose the interest of institutional investors in our common stock;

•we may have fewer business development opportunities;

•we may lose media and analyst coverage;

•our common stock could be considered a “penny stock,” which ~~we borrowed $10.0 million in aggregate initial term loans, or~~would likely limit 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 eventlevel of ~~default (each as defined~~trading activity in the ~~Loan Agreement) having occurred~~secondary market for our common stock; and ~~continuing. The Loans are secured by substantially all~~

•we would likely lose the active trading market for our common stock, as it may only be traded on one of ~~our assets, subject to certain exceptions. The Loan Agreement contains a number~~the over-the-counter markets, if at all.

As of ~~restrictive covenants, and~~ the terms may restrict our current and future operations, particularly our ability to respond to certain changes in our business or industry, or take future actions. See Note 7 to our unaudited interim condensed financial statements included elsewhere indate of this Quarterly Report on Form 10-Q, except for ~~more information. The Loan Agreement includes customary representations and covenants that, subject to exceptions and qualifications, restrict our ability to do~~ the ~~following things: engage in mergers, acquisitions, and asset sales; transact~~risk factor described above with affiliates; undergo a change in control; engage in businesses that are not related to our 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. The Loan Agreement also contains customary events of default. If we fail to comply with such covenants, payments or other terms of the Loan Agreement, our lender could declare an event of default, which would give it the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable. In addition, our lender would have the right to proceed against the assets we provided as collateral

~~pursuant~~ to the ~~Loan Agreement. If~~deficiency in connection with the ~~debt under~~Bid Price Rule, there have been no material changes to the ~~Loan Agreement was accelerated, we may not have sufficient cash or be able to sell sufficient assets to repay this debt, which would harm our business and financial condition.~~

~~The Company does not expect to pay any cash dividends~~risk factors disclosed in the ~~foreseeable future~~

2021 Annual Report filed with the Securities and Exchange Commission on March 29, 2022. We ~~expect~~may disclose additional changes to ~~retain~~such factors or disclose additional factors from time to time in our future ~~earnings, if any, to fund~~filings with the ~~development~~Securities and growth of our business. As a result, capital appreciation, if any, of our common stock is expected to be its stockholders’ sole source of gain, if any, for the foreseeable future. In addition, the terms of the Loan Agreement restrict our ability to pay dividends to limited circumstances. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.Exchange Commission.

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

~~None.~~On July 1, 2022, the Company sold and issued 9,411,765 Shares and Warrants to purchase 4,705,881 Warrant Shares in a private placement, which was previously disclosed by the Company on its Current Report on Form 8-K filed July 1, 2022.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

Incorporated by Reference
Exhibit Number Description Form Exhibit Filing Date
3.1
Amended and Restated Certificate of Incorporation of the Registrant
8-K 3.1 November 18, 2020
3.2
Amended and Restated Bylaws of the Registrant
8-K 3.2 November 18, 2020
4.1
Form of Common Stock Purchase Warrant issued by MedAvail, Inc.
8-K 4.1 November 18, 2020
4.2
Amended and Restated Investors’ Rights Agreement by and among the Registrant, MedAvail, Inc., and certain stockholders, dated October 9, 2020
S-4/A 4.9 October 9, 2020
4.3
Form of Common Stock Purchase Warrant issued by the Registrant to H.C. Wainwright & Co., LLC or its affiliates
8-K 4.3 November 18, 2020
10.1#
Form of Indemnification Agreement between the Registrant and each director and executive officer of the Registrant
8-K 10.15 November 18, 2020
10.2#
MedAvail Holdings, Inc. 2020 Equity Incentive Plan and related form agreements
8-K 10.11 November 18, 2020
10.3#
MedAvail Holdings, Inc. 2020 Employee Stock Purchase Plan
8-K 10.12 November 18, 2020
10.4#
MedAvail, Inc. 2012 Equity Incentive Plan, as amended, and related form agreements
8-K 10.13 November 18, 2020
10.5#
MedAvail, Inc. 2018 Equity Incentive Plan and related form agreements
8-K 10.14 November 18, 2020
10.6
Product Distribution Agreement, dated October 31, 2018, by and between MedAvail Pharmacy Inc. and Priority Healthcare Distribution, Inc.
S-4 10.21 September 3, 2020
10.7§
Pharmacy Provider Agreement, dated September 11, 2017, by and between MedAvail Pharmacy Inc. and Express Scripts, Inc.
S-4 10.23 September 3, 2020
10.8§
Manufacturing and Supply Agreement, dated August 17, 2020, by and between MedAvail Technologies Inc. and KITRON TECHNOLOGIES
S-4 10.24 September 3, 2020
10.9
Industrial Lease, dated August 13, 2012, by and between MedAvail Technologies Inc. and The Great-West Life Assurance Company and 801611 Ontario Limited, as amended on February 11, 2019
S-4 10.8 September 3, 2020
10.10#§
Offer Letter, dated November 1, 2012, by and between MedAvail, Inc. and Ed Kilroy
S-4 10.15 September 3, 2020
10.11#§
Offer Letter, dated December 30, 2019, by and between MedAvail, Inc. and Ryan Ferguson
S-4 10.16 September 3, 2020
10.12#§
Offer Letter, dated May 16, 2018, by and between MedAvail, Inc. and William Misloski
S-4 10.17 September 3, 2020
10.13#§
Offer Letter, dated May 7, 2019, by and between MedAvail, Inc. and David Rawlins
S-4 10.18 September 3, 2020
10.14#§
Offer Letter, dated June 20, 2019, by and between MedAvail, Inc. and Neil Prezioso
S-4 10.19 September 3, 2020
10.15
Loan and Security Agreement Dated June 7, 2021
8-K 10.1 June 11, 2021
10.16#
Offer Letter, dated August 12, 2021, by and between MedAvail Technologies (US), Inc. and Ramona Seabaugh
8-K 10.1 September 20, 2021
10.17#
Change in Control and Severance Agreement, dated August 31, 2021, by and between MedAvail Technologies (US), Inc. and Ramona Seabaugh
8-K 10.1 September 20, 2021
31.1*
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**
Certifications of Chief 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

~~Incorporated by Reference~~

~~Exhibit Number~~

~~Description~~

~~Form~~

~~Exhibit~~

~~Filing Date~~

101*

~~Inline XBRL Document Set for the consolidated condensed financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q~~

104*

~~Inline XBRL for the cover page of this Quarterly on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set~~

Incorporated by Reference

Exhibit Number

Description

Form

Exhibit

Filing Date

3.1

Amended and Restated Certificate of Incorporation of MedAvail Holdings, Inc.

8-K

3.1

June 16, 2022

3.2

Amended and Restated Bylaws of MedAvail Holdings, Inc.

8-K

3.2

November 18, 2020

4.1

Form of Common Stock Purchase Warrant issued by MedAvail, Inc.

8-K

4.1

November 18, 2020

4.2

Amended and Restated Investors’ Rights Agreement by and among the Registrant, MedAvail, Inc., and certain stockholders, dated October 9, 2020

S-4/A

4.9

October 9, 2020

4.3

Form of Common Stock Purchase Warrant issued by the Registrant to H.C. Wainwright & Co., LLC or its affiliates

8-K

4.3

November 18, 2020

4.4

Securities Purchase Agreement, dated as of March 30, 2022

8-K

10.1

April 4, 2022

4.5

Registration Rights Agreement, dated as of March 30, 2022

8-K

10.2

April 4, 2022

4.6

Form of Warrant

8-K

10.3

April 4, 2022

4.7

Sales Agreement dated as of August 12, 2022.

S-3

1.2

August 12, 2022

10.1#

MedAvail Holdings, Inc. 2022 Inducement Equity Incentive Plan and related forms of stock option and restricted stock unit agreements.

8-K

10.1

April 8, 2022

16.1

Letter to the Securities and Exchange Commission from PricewaterhouseCoopers LLP, dated July 11, 2022

8-K

16.1

July 11, 2022

31.1*

Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**

Certifications of Chief 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*

Inline XBRL Document Set for the condensed consolidated financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q

104*

Inline XBRL for the cover page of this Quarterly on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set

§ 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.

3640

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its

behalf by the undersigned thereunto duly authorized.


	MEDAVAIL HOLDINGS, INC.

Date: November ~~9, 2021~~10, 2022	By:	/s/ ~~Ed Kilroy~~Mark Doerr
		~~Ed Kilroy~~Mark Doerr
		President, Chief Executive Officer, and Principal Executive Officer

	By:	/s/ Ramona Seabaugh
		Ramona Seabaugh
		Chief Financial Officer and Principal Financial Officer

3741


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except share and per share amounts)	2021		2020		2021		2020
Net loss - basic and diluted	$	(11,273)	$	(2,488)	$	(31,189)	$	(14,714)
Weighted average shares - basic and diluted	32,750,831		2,045,686		32,580,199		1,936,015
Net loss per share - basic and diluted	$	(0.34)	$	(1.22)	$	(0.96)	$	(7.60)


	Retail Pharmacy Services		Pharmacy Technology(1)		Total
Three Months Ended September 30, 2020
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales	$	2,186	$	—	$	2,186
Hardware	—		1,625		1,625
Subscription sales	—		115		115
Total pharmacy and hardware sales	2,186		1,740		3,926
Service sales:
Software integration	—		3,168		3,168
Software	—		15		15
Maintenance and support	—		17		17
Installation	—		—		—
Professional services and other	—		19		19
Total service sales	—		3,219		3,219
Total sales	2,186		4,959		7,145
Cost of sales	2,042		120		2,162
Gross profit	$	144	$	4,839	$	4,983