UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,

WASHINGTON, D.C. 20549

FORM 10-Q


FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER

For the quarterly period ended June 30, 2017

2021

or

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

For the transition period from _______ to _________

_____ to_____

Commission file number 000-53298

MYOS RENS TECHNOLOGYFile Number 001-36533


MEDAVAIL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada90-0772394

Delaware90-0772394
(State or other jurisdiction of

incorporation or organization)

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

(973) 509-0444

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareMDVLThe Nasdaq Stock Market LLC
Indicate by check mark whether the Registrantregistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant (1)registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange Act.

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

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

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

As of November 9, 2017,August 10, 2021, there were 32,746,549 shares of the registrant had 6,344,372 shares ofregistrant’s common stock outstanding.

MYOS RENS TECHNOLOGY INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017

INDEX

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




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

TABLE OF CONTENTS

Page
PART I
Item 1.Financial Statements
4
Consolidated Condensed Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 20161
4
Consolidated Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2017 and 2016Comprehensive Loss2
5
Consolidated Condensed Statements of Shareholders Equity (Deficit)
6
Consolidated Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2017 and 20163
7
Notes to Consolidated Condensed Consolidated Financial Statements4
9
Item 2.Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations23
20
Item 3.Quantitative and Qualitative Disclosures about Market Risk34
31
Item 4.Controls and Procedures35
31
PART II. OTHER INFORMATIONII
Item 1.Legal Proceedings
32
Item 1.1A.Legal ProceedingsRisk Factors36
32
Item 1A.Risk Factors37
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds37
32
Item 3.Defaults Upon Senior Securities37
32
Item 4.Mine Safety Disclosures37
32
Item 5.Other Information
32
Item 5.6.Other InformationExhibits37
33
Item 6.SignaturesExhibits37
Signatures38
35



2

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

3

PART I. FINANCIAL INFORMATION

I

ITEM

Item 1. FINANCIAL STATEMENTS

MYOS RENS TECHNOLOGYFinancial Statements

MEDAVAIL HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

Consolidated Condensed Balance Sheets
(Unaudited)
(US Dollars in thousands, except share amounts)

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

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

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

  September 30,  December 31, 
  2017  2016 
  (Unaudited)    
ASSETS      
Current assets:      
Cash $468  $1,866 
Accounts receivable, net  56   8 
Inventories, net  1,821   1,862 
Prepaid expenses and other current assets  500   85 
Total current assets  2,845   3,821 
         
Deferred offering costs  125   - 
Fixed assets, net  194   233 
Intangible assets, net  1,711   1,907 
Total assets $4,875  $5,961 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable $107  $226 
Accrued expenses and other current liabilities  368   361 
Deferred revenue  10   56 
Total current liabilities  485   643 
         
Total liabilities  485   643 
         
Commitments and contingencies        
         
Stockholders’ equity:        
Preferred stock, $.001 par value; 500,000 shares authorized; no shares issued and outstanding  -   - 
Common stock, $.001 par value; 12,000,000 shares authorized at September 30, 2017 and December 31, 2016; 5,844,372 and 5,344,372 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively  6   5 
Additional paid-in capital  35,146   33,099 
Accumulated deficit  (30,762)  (27,786)
Total stockholders’ equity  4,390   5,318 
         
Total liabilities and stockholders’ equity $4,875  $5,961 

See



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

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

1
statements.


MYOS RENS TECHNOLOGY

5

MEDAVAIL HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2017  2016  2017  2016 
             
Net revenues $160  $39  $369  $300 
Cost of sales  65   30   244   292 
Gross profit  95   9   125   8 
Operating expenses                
Selling, marketing and advertising  90   97   557   778 
Research & development  1   4   42   16 
Personnel and benefits  269   281   932   1,071 
Share-based compensation  39   38   121   264 
General and administrative  382   391   1,206   1,233 
Amortization of acquired intangibles  71   53   196   157 
Bad debt  -   -   59   - 
Loss on asset impairment  -   -   -   44 
Total operating expenses  852   864   3,113   3,563 
Operating loss  (757)  (855)  (2,988)  (3,555)
                 
Other income (expense)                
Other income  5   -   13   - 
Interest (expense)  (1)  (11)  (1)  (34)
Total other income (expense, net)  4   (11)  12   (34)
                 
Net loss $(753) $(866) $(2,976) $(3,589)
                 
Net loss per share attributable to common shareholders:                
Basic and diluted $(0.13) $(0.17) $(0.52) $(0.76)
                 
Weighted average number of common shares outstanding:                
Basic and diluted  5,844   5,064   5,773   4,708 

See


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

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

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

2
statements.


MYOS RENS TECHNOLOGY



6

MEDAVAIL HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

  Nine Months Ended 
  September 30, 
  2017  2016 
Cash Flows From Operating Activities:      
Net loss $(2,976) $(3,589)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation  39   41 
Amortization  196   157 
Provision for inventory reserve  (2)  94 
Accretion of contract liability  -   8 
Share-based compensation  121   264 
Bad debt  (59)  - 
Impairment charge  -   44 
Changes in operating assets and liabilities:        
Decrease in accounts receivable  11   405 
Decrease (increase) in inventories  43   (480)
(Increase) decrease in prepaid expenses and other current assets  (415)  461 
Decrease in deferred revenue  (46)  - 
Decrease in accounts payable and accrued expenses  (112)  (436)
Net cash used in operating activities  (3,200)  (3,031)
         
Cash Flows From Financing Activities:        
Repayment of term note  -   (100)
Deferred offering costs  (125)  (109)
Proceeds from registered direct offering of common stock, net of offering costs  1,927   5,250 
Net cash provided by financing activities  1,802   5,041 
         
Net (decrease) increase in cash  (1,398)  2,010 
Cash at beginning of period  1,866   879 
Cash at end of period $468  $2,889 
         
Supplemental Schedule of Cash Flow Information:        
Cash paid during the period for:        
 Interest  -   2 

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

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


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

8



MEDAVAIL HOLDINGS, INC.
Notes to condensed consolidated financial statements

3
Consolidated Condensed Financial Statements

(Unaudited)

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

NOTE 1 –- NATURE OF OPERATIONS
MedAvail Holdings, Inc., MedAvail, or the Company, a Delaware corporation is a telehealth-enabled pharmacy technology company that has developed and commercialized an innovative self-service pharmacy, mobile application, kiosk and drive-thru solution. MedAvail's principal technology and product is the MedCenter, a pharmacist controlled, customer-interactive, prescription dispensing system akin to a “pharmacy in a box” or prescription-dispensing ATM. The MedCenter facilitates live pharmacist counselling via two-way audio-video communication with the ability to dispense prescription medicines under pharmacist control. MedAvail also operates SpotRx, or the Pharmacy, a full-service retail pharmacy utilizing the Company’s automated pharmacy technology.

NOTE 2 - BASIS OF PRESENTATION AND LIQUIDITY

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements as of June 30, 2021 and for the three and six months ended June 30, 2021 have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for unaudited interim financial information. Accordingly, the unaudited interim consolidated condensed financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. The consolidated condensed balance sheet as of December 31, 2016, which has been2020 was derived from the Company's audited consolidated condensed financial statements and the unaudited interim condensed consolidated financial statements, have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information andbut does not include all disclosures required by U.S. GAAP in orderfor audited financial statements. In the opinion of the Company's management, the interim information includes all adjustments, which includes normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The footnote disclosures related to have complete consolidatedthe interim financial statements have been condensed or omitted herein. The unaudited interim condensed consolidatedinformation included herein are also unaudited. Such financial statementsinformation should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2020 included in the Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 20162020, which was filed with the SEC on March 31, 2017. 2021, or the 2020 Form 10-K.
The unaudited interim condensed consolidatedpreparation of financial statements presented herein reflect all normal adjustments that are,in accordance with GAAP requires management to use judgment in the opinionapplication of management, necessary for a fair presentation of the statement of the financial position,accounting policies, including making estimates and assumptions. Actual results of operations and cash flows for the periods presented. The Company is responsible for the unaudited interim condensed consolidated financial statements included in this report. The results of any interim periodcould differ from those estimates. Estimates are not necessarily indicative of the results for the full year.

Nature of Operations

MYOS RENS Technology Inc. is an emerging bio-nutrition and bio-therapeutics company focused on the discovery, development and commercialization of products that improve muscle health and function. The Company was incorporated under the laws of the State of Nevada on April 11, 2007. On March 17, 2016, the Company merged with its wholly-owned subsidiary and changed its name from MYOS Corporation to MYOS RENS Technology Inc. As used in these financial statements, the terms “the Company”, “MYOS”, “our”, or “we”, refers to MYOS RENS Technology Inc.accounting for, among other things, revenue recognition, contract loss accruals, excess, slow-moving and its subsidiary, unless the context indicates otherwise. The Company’s activities are subject to significant risksobsolete inventories, product warranty accruals, loss accruals on service agreements, share-based compensation expense, allowance for doubtful accounts, depreciation and uncertainties.

On February 25, 2011, the Company entered into an agreement to acquire the intellectual property for Fortetropin®, our proprietary active ingredient, from Peak Wellness, Inc. Our commercial focus is to leverage our clinical data to develop multiple products to target the largeamortization and currently underserved markets focused on muscle health.

In February 2014 we expanded our commercial operations into the age management market under a distribution agreement with Cenegenics Product and Lab Services, LLC (“Cenegenics”), where Cenegenics distributes and promotes a proprietary formulation containing Fortetropin through its age management centers and its community of physicians focused on treating a growing population of patients focused on proactively addressing age-related health and wellness concerns. The distribution agreement with Cenegenics expired in December 2016. In May 2017, we received a purchase order from Cenegenics to deliver more product to them in 2017.

During the second quarter of 2015 we launched Rē Muscle HealthTM, our own direct-to-consumer portfolio of muscle health bars, meal replacement shakes and daily nutrition powders each powered by a full 6.6 gram single serving dose of Fortetropin. In March 2017, the Company stopped selling these products.

In March 2017, the Company launched Qurr®, a line of flavored puddings, powders and shakes all shown to be safe for daily use. This Fortetropin®-powered product line is formulated to support the vital role of muscle in overall well-being as well as in fitness. Qurr’s muscle-focused, over-the-counter products are available through convenient direct online ordering. All Qurr® products are blended with Fortetropin®, MYOS’ proprietary ingredient, which has been clinically demonstrated to reduce serum myostatin levels, which helps increase muscle size and lean body mass. MYOS’ earlier product formulations featuring Fortetropin® have become part of the daily routine of many athletes and fit-conscious people.

4

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

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

Strategic Investment Transaction

On December 17, 2015, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with RENS Technology Inc. (the “Purchaser”), pursuant to which the Purchaser agreed to invest $20.25 million in the Company (the “Financing”) in exchange for (i) an aggregate of 3,537,037 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), and (ii) warrants to purchase an aggregate of 884,259 shares of Common Stock (the “Warrants”, and together with the Shares, the “Securities”). As set forth in the Purchase Agreement the Purchaser would purchase the Securities in three tranches over twenty-four months. In the first tranche, which closed on March 3, 2016, the Purchaser acquired 1,500,000 Shares and 375,000 Warrants (the “Initial Warrant”) for $5.25 million. In the second tranche, which was to close within six months of the closing of the first tranche, the Purchaser would acquire 925,926 Shares and 231,481 Warrants (the “Second Warrant”) for $5.0 million. In the third tranche, which was to close within eighteen months of the closing of the second tranche, the Purchaser would acquire 1,111,111 Shares and 277,778 Warrants (the “Third Warrant”) for $10.0 million. Each of the Warrants would be immediately exercisable upon issuance, would expire five years after issuance and would have the following exercise prices: (a) $7.00 per share for the Initial Warrant, (b) $10.80 per share for the Second Warrant and (c) $18.00 per share for the Third Warrant. In addition, the Company agreed: (i) that the Purchaser will have the right to appoint four persons to the Company’s board of directors, subject to adjustment based on the Purchaser’s ownership percentage of the Company (ii) to provide the Purchaser with a right to participate in 50% (or 100% if shares are to be issued for less than $3.50 per share) of any future financings pursued by the Company within 12 months from the closing of the third tranche of the Financing and (iii) until the closing of the third tranche, the Company will not take certain actions, including issuing shares (except for certain permitted issuances) or appointing new officers and directors, without the Purchaser’s consent.

In addition, on December 17, 2015, the Company issued a Convertible Note in the amount of $575 to Gan Ren, a related party of RENS Agriculture, the parent of RENS Technology, Inc., and the son of Ren Ren, one of our directors. The Convertible Note provided short-term funding to the Company prior to the closing of the first tranche of the Financing. On December 17, 2016 the Convertible Note and accrued interest was converted into 225,860 shares at $2.74 per share. For additional information on the Convertible Note with Gan Ren refer to “NOTE 6 – Debt – Convertible Note.” 

The first tranche of the Financing was completed on March 3, 2016. The Company used the net proceeds from the first tranche of the Financing to fund its working capital, product development and marketing,in-process research and development intangible assets, impairment of long-lived assets and contingencies. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the consolidated condensed financial statements in the period they are deemed to be necessary.

The Company bases its estimates on the information available at the time, its experiences and various other general corporate purposes. On August 19, 2016,assumptions believed to be reasonable under the Purchaser notified the Company that it did not intend to fulfill its remaining obligation to fund the second tranchecircumstances including estimates of the Financing notwithstanding its confirmationimpact of COVID-19. The extent to which COVID-19 impacts the Company in June 2016 that it would provide such funding in accordance with the terms of the Purchase Agreement. The Purchase Agreement provides that in the event that the Purchaser notifies the Company that it does not intend to fund the Second Closing Subscription Amount, the Purchaser is required to take all requisite action to cause the resignation or removal of one of its designeesCompany’s business and financial results will depend on the Board of Directors of the Company. Pursuant to the terms of the Purchase Agreement, effective August 23, 2016, Guiying Zhao resigned as a director of the Company. In addition, the Purchaser’s Rights terminated, effective August 19, 2016.

On January 6, 2017, the Company commenced an action in the Supreme Court of New York, County of New York, (the “Court”) against the Purchaser, RENS Agriculture Science & Technology Co., Ltd (“RENS Agriculture”), the parent company of the Purchaser, and Ren Ren, a principal in both entities and a director of the Company, arising from the Purchaser’s breach of the Securities Purchase Agreement.

5

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

In addition to seeking compensatory, consequential and other damages in the action, the Company asked the Court to preliminarily restrain RENS Technology, Inc. and its agents and representatives,numerous evolving factors, including but not limited to, RENS Agriculturethe severity and Ren Ren, from selling, transferring, conveying, assigning, hypothecating or encumberingduration of COVID-19, the 1,500,000 sharesextent to which it will impact our clinic customers, employees, suppliers, vendors, and business partners. The Company assessed certain accounting matters that require consideration of common stock ofestimates and assumptions in context with the information reasonably available to the Company and warrants permitting the purchaseunknown future impacts of 375,000 shares at a priceCOVID-19 as of $7.00 per share that RENS Technology had purchased underJune 30, 2021 and through the Securities Purchase Agreement and, after the parties had an opportunitydate of this report. The accounting matters assessed included, but were not limited to, submit opposition and reply papers in connection with the Company’s application, a preliminary injunction prohibiting RENS Technology from selling, transferring, conveying, assigning, hypothecating or encumbering the 1,500,000 sharesrecoverability of, intangible and warrant during the pendencyother long-lived assets including operating lease right-of-use assets. The Company’s future assessment of the actionmagnitude and an order attaching the stock and warrant to satisfy any judgment entered in favorduration of the Company.

On January 11, 2017, the Court granted the Company the preliminary restraints that it had requested, which prevents RENS Technology, among others, from selling, transferring, conveying, assigning, hypothecating or encumbering the 1,500,000 shares of the Company’s common stock or the aforementioned warrant. The Court scheduled a hearing on February 14, 2017, at which time the Court heard oral argument on the application for a preliminary injunction and prejudgment attachment of the stock and warrants to satisfy any judgment entered in favor of the Company. As a result, RENS Technology filed a motion to dismiss the complaint to which the Company filed opposition papers.

On April 11, 2017, the Court denied the Company’s application for a prejudgment attachment of the Purchaser’s acquired shares and warrant and a preliminary injunction in aid of the attachment to prevent a sale, transfer, or hypothecation of such securities, and vacating the preliminary restraints which it had previously entered. However, the Court noted that the Company’s had demonstrated a likelihood of success on the merits of the breach of contract claim. An application by the Purchaser to dismiss the complaint and various pre-trial discovery applications by both parties was scheduled for oral argument, but we thereafter amended the complaint in August 2017. The amended complaint repeated most of the initial claims but added a number of additional claims against RENS Agriculture, Mr. Ren and two additional Chinese defendants, including a claim against RENS Agriculture for breaching the exclusive distribution agreement,COVID-19, as well as claims against all defendants for theft and misappropriation of our confidential proprietary information and trade secrets, breach of fiduciary duty and duty of loyalty, misappropriation of corporate opportunity, unfair competition and a number of other torts. The Company is seeking damages and injunctive relief. The Purchaser has filed a motionfactors, could result in material impacts to dismiss the amended complaint, which is still pending.

On August 16, 2017, the Purchaser commenced an action in the District Court of Clark County in the State of Nevada against the Company and Joseph Mannello, the Company’s then interim Chief Executive Officer, alleging that Mr. Mannello had breached his fiduciary duties and was grossly negligent in managing our Company. The action seeks monetary damages and injunctive relief from Mr. Mannello as well as the appointment of a receiver over the Company. Subsequently, the Purchaser submitted a petition to appoint a receiver and the Company and Mr. Mannello submitted a motion to dismiss the action, both of which are currently pending and are due to be heard in December 2017.

Going Concern and Liquidity

The accompanyingconsolidated condensed financial statements have been prepared in accordance with U.S. GAAP, which contemplates the continuation of the Company as a going concern. As of September 30, 2017 the Company had cash of $468 and working capital of $2,360 (current assets of $2,845 less current liabilities of $485). Subsequent to the end of the quarter, on October 26, 2017 the Company raised $1,070 from the sale of 500,000 shares of common stock at $2.144 per share. (See Note 14).

The Company continues to incur recurring losses from operations and had a net loss of $4,341 for the year ended December 31, 2016. For the three months ended September 30, 2017 and 2016 the Company incurred a net loss of $753 and $866, respectively. For the nine months ended September 30, 2017 and 2016, the Company incurred a net loss of $2,976 and $3,589, respectively. For the nine months ended September 30, 2017 and 2016, net cash used in operating activities was $3,200 and $3,031, respectively.

As of the filing date of this Form 10-Q, management believes that there may not be sufficient capital resources from operations and existing financing arrangements in order to meet operating expenses and working capital requirements for the next twelve months primarily due to the failure of RENS Technology Inc. to fund the required amounts. (See Note 13 – Legal Proceedings) This raises substantial doubt about the Company’s ability to continue as a going concern. Accordingly, the Company is evaluating various alternatives, including reducing operating expenses, securing additional financing through debt or equity securities to fund future business activities and other strategic alternatives. There can be no assurance that the Company will be able to generate the level of operating revenues projected in its business plan, or if additional sources of financing will be available on acceptable terms, if at all. If no additional sources of financing become available, the Company’s future operating prospectsreporting periods. Adjustments may be adversely affected. The financial statements do notmade in subsequent periods to reflect any adjustmentsmore current estimates and assumptions about matters that are inherently uncertain. Actual results may result as a result of these uncertainties. 

6
differ.

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

At-the-Market Offering

On February 21, 2017, the Company entered into a sales agreement with H.C. Wainwright & Co., LLC which established an at-the-market equity program pursuant to which the Company may offer and sell up to $6.0 million of its shares of common stock from time to time through H.C. Wainwright. The Company incurred $125 of deferred offering costs in connection with this program which it has recorded as a long term other asset on the accompanying balance sheet. As of September 30, 2017 there were no shares sold under this program. Subsequent to the end of the quarter, on October 26, 2017 the Company raised $1,070 through the sale of 500,000 shares of common stock at $2.144 per share under the program. (See Note 14)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

consolidation

The accompanyingunaudited consolidated condensed financial statements include the accounts of MYOS RENS Technologyall 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 its wholly-owned subsidiary, Atlas Acquisition Corp.MedAvail, Inc. The Company has no interests in variable interest entities of which the Company is the primary beneficiary. All material intercompany balances and transactions have been eliminated in consolidation.

Reclassification

Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications did not have a material impact on the reported results of operations.

Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, equity and the disclosures of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future non-conforming events. Accordingly, actual results could differ significantly from these estimates. Significant items subject to such estimates include but are not limited to the valuation of stock-based awards, measurement of allowances for doubtful accounts and inventory reserves, the selection of asset useful lives, fair value estimations used to test long-lived assets, including intangibles, impairments and provisions necessary for assets and liabilities. 

The Company has recorded minimal sales to its distributors during the past twelve consecutive quarters, and has only recently launched its Qurr® portfolio of branded products. Management’s estimates, including evaluation of impairment of long-lived assets and inventory reserves are based in part on forecasted future results. A variety of factors could cause actual results to differ from forecasted results and these differences could have a significant effect on the asset carrying amounts.

Cash

The Company considers all highly liquid investments purchased with a maturity of three months or less and money market accounts to be cash equivalents. At September 30, 2017 and December 31, 2016, the Company had no cash equivalents.

The Company maintains its bank accounts with high credit quality financial institutions and has never experienced any losses related to these bank accounts. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its financial institutions. The balance at times may exceed federally insured limits.

As part of our ongoing liquidity assessments, management evaluates our cash. The amount of funds held in the Company’s bank accounts can fluctuate due to the timing of receipts, payments in the ordinary course of business and other reasons, such as business-development activities so the Company may have exposure to cash in excess of FDIC insured limits.

Accounts Receivable, net

Accounts receivable consist primarily of trade amounts due from customers and from un-cleared credit card transactions. It also includes holdback amounts from credit card companies. Accounts receivable are recorded at invoiced amounts and do not bear interest.

7
eliminated.

9

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

Inventories, net

Inventories are valued at the lower of cost or market, with cost determined on a first in, first-out basis. Each quarter the Company evaluates the need for a change in the inventory reserve based on sales and expiration dates of products. Inventories are valued at the lower of cost or market, with cost determined on a first-in, first-out basis. Our policy is to recognize an inventory reserve as a loss in earnings in the period in which evidence exists that the market value of inventory is less than its cost due to damage, physical deterioration, obsolescence, changes in price levels or other causes. Inventory “market value” is initially deemed to be current replacement cost, but it cannot be more than the net realizable value, and it cannot be less than the net realizable value, less an approximate normal profit margin. Net realizable value is the estimated selling price in the ordinary course of business, less costs to complete and sell finished goods, including direct selling costs such as transportation and sales commissions.

Deferred Offering Costs

The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. Once the offering is completed, the costs are charged against the capital raised. Should the offering not be completed, deferred offering costs will be charged to operations during the period in accordance with SEC guidance. Deferred offering costs as of September 30, 2017 were $125 relating to legal and accounting fees for the at-the-market transaction. These costs will be charged against the proceeds of future transactions under this program.

Fixed Assets

Fixed assets are stated at cost and are depreciated to their estimated residual value over their estimated useful lives of 3 to 7 years. Leasehold improvements are amortized over the lesser of the asset’s useful life or the contractual remaining lease term including expected renewals. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are reversed from the accounts and the resulting gains or losses are included in the Consolidated Statements of Operations. Depreciation is expensed using the straight-line method for all fixed assets.

The Company reviews fixed assets for impairment when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company uses an estimate of future undiscounted net cash flows of the related assets or groups of assets over their remaining lives in measuring whether the assets are recoverable. If the assets are determined to be unrecoverable, an impairment loss is calculated by determining the difference between the carrying values and the estimated fair value. The Company did not consider any of its fixed assets to be impaired during the nine months ended September 30, 2017 and 2016.

Intangible Assets

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

In July 2014, the Companyacquired the United States patent application for the manufacture of Fortetropin fromDeutsches Institut fur Lebensmitteltechnik e.V. - the German Institute for Food Technologies (“DIL”). The cost of the patent application, which was capitalized as an intangible asset, was determined to be $101, based on the present value of the minimum guaranteed royalty payable to DIL using a discount rate of 10%. The intangible asset is being amortized over an estimated useful life of ten (10) years. The remaining contingent royalty payments will be recorded as the contingency has been resolved and the royalty becomes payable under the arrangement. For additional information on the amended supply agreement with DIL refer to “NOTE 11 – Commitments and Contingencies - Supply Agreement.”

Intangible assets also include patent costs associated with the application and issuance of patents. Costs to defend patents and costs to invalidate a competitor’s patent or patent application are expensed as incurred. Upon issuance of the patents, capitalized patent costs are reclassified from intangibles with indefinite lives to intangibles with finite lives and amortized on a straight-line basis over the shorter of the estimated economic life or the initial term of the patent, generally 20 years.

During the year ended December 31, 2016, the Company recorded an impairment of $44. The impairment was related to the write-off of capitalized patent costs due to the unlikelihood of certain patents being issued.

8

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

In March 2017, the Company launched a new product line on its e-commerce websitewww.qurr.com. The Company capitalized costs of $380 to be amortized over 5 years starting with the launch of the website in March 2017 at $19 per quarter.

Intangible assets at September 30, 2017 and December 31, 2016 consisted of the following:

  September 30,  December 31, 
(In thousand $) 2017  2016 
Intangibles with finite lives:      
Intellectual property $2,101  $2,101 
Website - qurr.com  380   380 
Less: accumulated amortization  (770)  (574)
Total intangible assets, net $1,711  $1,907 

Assuming no additions, disposals or adjustments are made to the carrying values and/or useful lives of the intangible assets, annual amortization expense is estimated to be as follows:

   (In thousand $) 
Years Ended December 31, Amount 
2017 (remaining three months) $72 
2018  286 
2019  286 
2020  286 
2021  286 
2022  286 
2023  203 
Total $1,711 

Impairment testing of intangible assets subject to amortization involves comparing the carrying amount of the asset to the forecasted undiscounted future cash flows whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. In the event the carrying value of the asset exceeds the undiscounted future cash flows, the carrying value would be considered not recoverable and an impairment charge would be recorded. An impairment is measured as the excess of the asset’s carrying value over its fair value and is calculated using discounted future cash flows. The computed impairment is recognized in the period that it occurs. Assets which are not impaired may require an adjustment to the remaining useful lives for which to amortize the asset. Impairment testing requires the development of estimates and assumptions involving the determination of estimated net cash flows, selection of the appropriate discount rate to measure the risk inherent in future cash flow streams, assessment of an asset’s life cycle, competitive trends impacting the asset, as well as other factors. Changes in these underlying assumptions could significantly impact the asset’s estimated fair value.

Based on twelve consecutive quarters of minimal revenues combined with changes in the sales channels through which the Company sells its products and an inability to predict future orders, if any, the Company tested the intellectual property for impairment in the fourth quarter of 2016 and determined that the asset value was recoverable and therefore no impairment was recognized. The Company’s management tests intangible assets for impairment annually or when events or circumstances occur that may indicate importance. The Company made an assessment that there were no impairments of intangible assets as of December 31, 2016. There have been no subsequent events that have occurred to indicate any impairment as of September 30, 2017.

9

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers which amended FASB Accounting Standards Codification® (“ASC”) by creating Topic 606. The FASB also issued the following amendments to ASU No. 2014-09 to provide clarification on the guidance:

●ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date
●ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent (Reporting Revenue Gross vs Net)
●ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing
●ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients

The adoption of Topic 606 is required for public entities for reporting periods beginning after December 15, 2017. The Company has evaluated  the effects of ASU 2014-09 on the financial statements and believes the effects will be  insignificant.

Currently, the Company records revenue from product sales when persuasive evidence of an arrangement exists, product has been shipped or delivered, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Product sales represent revenue from the sale of products and related shipping amounts billed to customers, net of promotional discounts, rebates, and return allowances. Depending on individual customer agreements, sales are recognized either upon shipment of product to customers or upon delivery. With respect to direct-to-consumer sales, both title and risk of loss transfer to customers upon our delivery to the customer. The Company’s gross product sales may be subject to sales allowances and deductions in arriving at reported net product sales. For example, the Company may periodically offer discounts and sales incentives to customers to encourage purchases. Sales incentives are treated as a reduction to the purchase price of the related transaction. Reductions from gross sales for customer discounts and rebates have been minimal, and sales allowances for product returns have not been provided since under our existing arrangements customers are not permitted to return product except for non-conforming product.

Deferred Revenue

The Company recognizes revenue from bulk product sales when product is shipped to customers or upon delivery. Deposits received with a purchase order are recorded as deferred revenue on the balance sheet. Deferred revenue of $10 as of September 30, 2017 represents revenue in connection with a purchase order received in April 2017 for which we received $20 down payment for product to be shipped and paid for later in the year. We shipped 50% of the product during the three months ended September 30, 2017 and therefore recognized $10 of deferred revenue as revenue for the period. The deferred revenue from December 31, 2016 represents a purchase order received in October 2016 along with $56 down payment. The order was shipped in January 2017.

Advertising

The Company charges the costs of advertising to selling and marketing as incurred. Advertising and promotional costs were $83 and $64 for the three months ended September 30, 2017 and 2016, respectively, and $395 and $433 for the nine months ended September 30, 2017 and 2016, respectively.

Research and Development

Research and development expenses consist primarily of salaries, benefits, and other related costs, including stock-based compensation, for personnel serving in our research and development functions, and other internal operating expenses, the cost of manufacturing our product for clinical study, the cost of conducting those studies and the cost of conducting preclinical and research activities. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are initially capitalized and are then recognized as an expense as the related goods are consumed or the services are performed. Research and development expenses were $1 and $4 for the three months ended September 30, 2017 and 2016, respectively, and $42 and $16 for the nine months ended September 30, 2017 and 2016, respectively.

Shipping and Handling Costs

The Company records expenses for shipping and handling of products to our customers as cost of sales. These expenses were $9 and $4 for the three months ended September 30, 2017 and 2016, respectively, and $28 and $18 for the nine months ended September 30, 2017 and 2016, respectively.

Stock-based Compensation

Stock-based payments are measured at their estimated fair value on the date of grant. Stock-based awards to non-employees are re-measured at fair value each financial reporting date until performance is completed. Stock-based compensation expense recognized during a period is based on the estimated number of awards that are ultimately expected to vest. For stock options and restricted stock that do not vest immediately but which contain only a service vesting feature, we recognize compensation cost on the unvested shares and options on a straight-line basis over the remaining vesting period. The Company uses the Black-Scholes option-pricing model to estimate the fair value of options and the market price of our common stock on the date of grant for the fair value of restricted stock issued. Our determination of fair value of stock-based awards is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, our expected stock price volatility over the term of the awards, and certain other market variables such as the risk-free interest rate.

10

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

Segment Information

ASC 280,Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments and requires selected information for those segments to be presented in the financial statements. It also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. Management has determined that the Company operates in one segment.

Concentrations of Credit Risk

Management regularly reviews accounts receivables, and if necessary, establishes an allowance for doubtful accounts that reflects management’s best estimate of amounts that may not be collectible based on historical collection experience and specific customer information. Bad debt expense recognized as a result of an allowance for doubtful accounts is included in operating expenses in the condensed consolidated statements of operations. If we are unable to collect our outstanding accounts receivable from our distributors, or they are unable or unwilling to purchase our products, our operating results and financial condition will be adversely affected.

Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby observable and unobservable inputs, used in valuation techniques, are assigned a hierarchical level.

The following are the hierarchy levels of inputs to measure fair value:

Level 1:Inputs that utilize quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2:Inputs that utilize observable quoted prices for similar assets and liabilities in active markets and observable quoted prices for identical or similar assets in markets that are not very active.
Level 3:Inputs that utilize unobservable inputs and include valuations of assets or liabilities for which there is little, if any, market activity.

A financial asset or liability’s classification within the above hierarchy is determined based on the lowest level input that is significant to the fair value measurement. At September 30, 2017 and December 31, 2016 the Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued expense. Due to their short-term nature, the carrying amounts of the Company’s financial instruments approximated their fair values.

Basic and Diluted Loss Per Share

Basic net loss per share is computed by dividing net loss available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potential dilutive securities outstanding had been issued. The Company uses the “treasury stock” method to determine the dilutive effect of common stock equivalents such as options, warrants and restricted stock. For the three and nine months ended September 30, 2017 and 2016, the Company incurred a net loss. Accordingly, the potential dilutive securities were excluded from the calculation of diluted loss per share of common stock because their inclusion would have been antidilutive. As a result, diluted loss per common share is the same as basic loss per common share for all periods presented.

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with ASC 740,Accounting for Income Taxes(“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized. The Company follows ASC 740 rules governing uncertain tax positions, which provides guidance for recognition and measurement. This prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on recognition, classification and disclosure of these uncertain tax positions. The Company has no uncertain income tax positions.

Interest costs and penalties related to income taxes are classified as interest expense and operating expenses, respectively, in the Company’s financial statements. For the three and nine months ended September 30, 2017 and 2016, the Company did not recognize any interest or penalty expense related to income taxes. The Company files income tax returns in the U.S. federal jurisdiction and states in which it does business.

11

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

NOTE 3 –- RECENT ACCOUNTING PRONOUNCEMENTS

Measurement of Credit Losses on Financial Statements
In September 2017, FASB issued ASU No. 2017-13, Revenue from Contracts with Customers which amended FASB ASC by creating Topic 606, Revenue from Contracts with Customers. In May 2014,June 2016, the FASB issued ASU No. 2014-09 which supersedes nearly all existing revenue recognition guidance under U.S. GAAP and requires revenue2016-13, “Financial Instruments-Credit Losses (Topic 326)”- Measurement of Credit Losses on Financial Instruments”, (“ASU 2016-13”), supplemented by ASU 2018-19, “Codification Improvements to be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.

The FASB also issued the following amendments to Topic 326, Financial Instruments – Credit Losses”, (“ASU No. 2014-09 to provide clarification on the guidance:

●ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date
●ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent (Reporting Revenue Gross vs Net)
●ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing
●ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients

The adoption of Topic 606 is required for public entities for reporting periods beginning after December 15, 2017. This accounting guidance is effective for us beginning January 1, 2018 using one of two prescribed transition methods. We have evaluated the effect that the updated standard will have on our consolidated financial statements looking at our revenue for 2016 & 2017 and related disclosure and the Company does not expect the adoption to have a significant impact on its consolidated financial statements.

The Company will adopt the provisions of this ASU for its fiscal year beginning January 1, 2018

In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718)2018-19”). The amendments in this Update provide guidance about which changesnew standard requires entities to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This update is effectivemeasure all expected credit losses for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The Company has evaluated the impact of the updated guidance and has determined that the adoption of ASU 2017-09 is not expected to have a significant impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017- 04, Simplifying the Test for Goodwill, which accomplishes exactly what its title indicates by eliminating the second step in the current goodwill impairment calculation. Currently there is a two-step process for determining the amount of any goodwill impairment. In Step 1 an entity determines if the carrying value of the reporting unit (for which goodwill has been recorded) exceeds the fair value of the reporting unit. If the calculation in Step 1 indicates that the carrying value of a reporting unit for which goodwill has been recorded exceeds the fair value, the entity would have to determine the implied fair value of the reporting unit’s goodwill. An impairment would be recorded to the extent that the goodwill carrying value exceeded the implied fair value of goodwillassets held at the reporting date. The amount of any goodwill impairment must take into consideration the effects of income taxesdate based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 became effective for any tax deductible goodwill. The effective date to adopt the ASU isPublic Business Entities who are SEC filers for fiscal years beginning after December 15, 2019. The2019, other than smaller reporting companies, all other public business entities and private companies, with early adoption permitted. This ASU is towill be applied prospectively. Early adoption is permitted.effective beginning in the first quarter of our fiscal year 2023. The Company has evaluatedis currently evaluating the impact of the updatedthat this new guidance and has determined that the adoption of ASU 2017-04 is not expected towill have a significant impact on its consolidated condensed financial statements.

statements and related disclosures.

Recently Adopted Accounting Standards
Simplifying the Accounting for Income Taxes
In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).” The amendments in this Update relate to eight specific types of cash receipts and cash payments which current U.S. GAAP either is unclear or does not include specific guidance on the cash flow classification issues. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company will adopt the provisions of this ASU for its fiscal year beginning January 1, 2018. The adoption of ASU 2016-15 did not have a significant impact on its consolidated financial statements.

12

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606), Narrow Scope Improvements and Practical Expedients.” The amendments in ASU 2016-12 affect only the narrow aspects of Topic 606 that are outlined in ASU 2016-12 and are effective for annual reporting periods beginning after December 31, 2017, including interim reporting periods within that reporting period. The Company has evaluated the impact of the updated guidance and has determined that the adoption of ASU 2016-12 is not expected to have a significant impact on its consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10 “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.” The amendments in this update affect entities with transactions included within the scope of Topic 606. The scope of that Topic includes entities that enter into contracts with customers to transfer goods or services (that are an output of the entity’s ordinary activities) in exchange for consideration. The effective date to adopt the ASU is for fiscal years beginning after December 15, 2017. The Company has evaluated the impact of the updated guidance and has determined that the adoption of ASU 2016-10 is not expected to have a significant impact on its consolidated financial statements.

In March 2016,2019, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting which provides guidance designed to simplify several aspects of the accounting for share-based payment transactions, including guidance relating to accounting for income taxes with respect to share-based payment awards; providing generally that excess tax benefits related to share-based awards should be recorded as a reduction to income tax expense (currently, excess tax benefits generally are recorded to additional-paid-in-capital); providing generally that excess tax benefits related to share-based awards should be classified along with other income tax cash flows as an operating activity (currently, excess tax benefits generally are separated from other income tax cash flows and classified as a financing activity); providing that an entity may make an accounting policy election either to base compensation cost accruals on the number of awards expected to vest (as required by current guidance) or to account for forfeitures when they occur; modifying the current exception to liability classification such that partial cash settlement of an award for tax withholding purposes would not result, by itself, in liability classification of the award if the amount withheld does not exceed the maximum statutory tax rate in the employees’ applicable jurisdictions (currently, an award cannot qualify for equity classification, rather than liability classification, if the amount withheld exceeds the minimum statutory withholding requirements); and providing that cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity on the statement of cash flows (currently there is no authoritative guidance addressing this classification issue). The guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Application of the guidance was made prospectively. The adoption of ASU 2016-09 did not have a significant impact on the consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will continue to primarily depend on its classification as a finance or operating lease. However, unlike U.S. GAAP, which requires only capital leases to be recognized on the balance sheet, ASU 2016-02 will require both types of leases to be recognized on the balance sheet. ASU 2016-02 also requires disclosures about the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. ASU 2016-02 is effective beginning January 1, 2019, with early application permitted. We have evaluated the adoption of ASU 2016-02 and determined that the standard would not have a significant impact on the consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income2019-12, “Income Taxes (Topic 740): Balance Sheet ClassificationSimplifying the Accounting for Income Taxes” (“ASU 2019-12”). This guidance removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of Deferred Taxes which requires that deferred tax assetsliabilities for outside basis differences. This guidance also clarifies and liabilitiessimplifies other areas of ASC 740. This ASU will be classified as noncurrenteffective beginning in a classified statementthe first quarter of financial position. Theour fiscal year 2021. Early adoption is permitted. Certain amendments in this Update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented and was effective for periods beginning after December 15, 2016. The adoption of ASU 2015-17 did not have a significant impact on the consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”), which changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-11 defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new guidanceupdate must be applied on a prospective basis, by us beginningcertain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. MedAvail assessed the impact of the new accounting standard on its consolidated condensed financial statements to facilitate its required adoption of the new standard on January 1, 2017, with early adoption permitted.2021. The adoption of ASU 2015-172019-12 did not haveresult in a significant impact on thematerial change to our consolidated condensed financial statements.

13

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

Other Options

In April 2015,August 2020, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting For Convertible Instruments and Contracts in an Entity's Own Equity” (“ASU 2015-03”2020-06”), which requires all. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the associated debt. Prior to the issuance of this standard, debt issuance costs, which are specific incremental costs, other than those paid to the lender, that are directly attributable to issuing a debt instrument (i.e., third party costs), were required to be presented in the balance sheet as a deferred charge (i.e., an asset). Under ASU 2015-03, the presentation of debt issuance costs is consistent with the presentation for a debt discount, (i.e., a direct adjustment to the carrying value of the debt). ASU 2015-03 does not affect the recognition and measurement of debt issuance costs. Accordingly, the amortization of such costs should continue to be calculated using the interest method andinstruments will be reported as interest expense.a single liability instrument with no separate accounting for embedded conversion features. The ASU 2015-03 was effectiveremoves certain settlement conditions that are required for us beginningequity 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, 2016.2021. The adoption of ASU 2015-032020-06 did not result in a material change to our consolidated condensed financial statements.
There were no recently issued and effective authoritative guidance that is expected to have ana material impact on the Company’s consolidated condensed financial statements and related disclosures.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). The amendments in this update define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and provides related footnote disclosure requirements. Under U.S. GAAP, financial statements are prepared under the presumption thatthrough the reporting organization will continuedate.


NOTE 4 - EARNINGS (LOSS) PER SHARE
Basic earnings per share is computed by dividing net income or loss available to operate as a going concern, exceptcommon stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income 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 limited circumstances. Financial reporting under this presumption is commonly referredweighted average shares outstanding due to astheir insignificant exercise price:
SharesIssuance DateExercise Date
118,228May 9, 2018May 10, 2021
309,698February 11, 2020May 10, 2021
84,911June 29, 2020May 10, 2021
58,518November 18, 2020May 10, 2021
10

During the going concern basisthree and six months ended June 30, 2021 and 2020, there was no potential dilution 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 accounting.the 1.26 for 1 split on November 17, 2020. The going concern basisfollowing table sets forth the computation of accounting establishes the fundamental basis for measuringbasic and classifying assetsdiluted earnings per share.
Three Months EndedSix Months Ended
(In thousands, except share and per share amounts)June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Net loss - basic and diluted$(10,464)$(6,536)$(19,916)$(12,226)
Weighted average shares - basic and diluted32,546,3951,953,04932,493,4681,880,577
Net loss per share - basic and diluted$(0.32)$(3.35)$(0.61)$(6.50)
As of June 30, 2021 and liabilities. This update provides guidance on when2020, there is substantial doubt about an organization’s ability to continue as a going concernwere 2.1 million and how the underlying conditions and events should be disclosed3.1 million, respectively, of option awards outstanding that were not included in the footnotes. It is intended to reduce diversity that existed in footnote disclosuresdiluted shares calculation because of the lack of guidance about when substantial doubt existed. The amendments in this update was effective for us beginning December 31, 2016. The impact of the updated guidance hastheir inclusion would have been disclosed in the footnotes on its consolidated financial statements.

NOTE 4 – INVENTORIES, NET

Inventories, net at September 30, 2017 and December 31, 2016 consisted of the following:

(In thousand $) September 30,
2017		  December 31,
2016		 
Raw materials $2,231  $2,378 
Work in process  46   5 
Finished goods  251   188 
   2,528   2,571 
Less: inventory reserves  (707)  (709)
Inventories, net $1,821  $1,862 

14
antidilutive.


MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

NOTE 5 – FIXED ASSETS

Fixed assets- FAIR VALUE MEASUREMENTS

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

NOTE 6 - BALANCE SHEET AND OTHER INFORMATION
Inventories
The following table presents detail of inventory balances:
June 30,December 31,
(In thousands)20212020
Inventories:
MedCenter hardware$1,330 $1,655 
Pharmacy1,375 837 
Spare parts466 325 
Total inventories$3,171 $2,817 
Pharmacy inventory was recognized in pharmacy and hardware cost of sales at $4.1 million and $1.6 million during the three months ended June 30, 20172021 and December 31, 2016 consisted2020, respectively, and $7.2 million and $2.9 million during the six months ended June 30, 2021 and 2020, respectively. MedCenter hardware was recognized in pharmacy and hardware cost of sales at $0.2 million and $0.1 million during the following:

 (In thousand $) September 30,
2017		  December 31,
2016		 
Furniture, fixtures and equipment $116  $116 
Computers and software  66   66 
Leasehold improvements  239   239 
Other  7   7 
Total fixed assets  428   428 
Less: accumulated depreciation  (234)  (195)
Net book value of fixed assets $194  $233 

three months ended June 30, 2021 and 2020, respectively, and $0.4 million and $0.1 million during the six months ended June 30, 2021 and 2020, respectively.

11

Property, plant and equipment
The following tables present property, plant and equipment balances:
Estimated useful livesJune 30,December 31,
(In thousands)20212020
Property, plant and equipment:
MedCenter equipment5 years$4,808 $4,622 
IT equipment1 - 3 years2,239 1,999 
Leasehold improvementslesser of useful life or term of lease820 799 
General plant and equipment5 - 8 years369 353 
Office furniture and equipment5 - 8 years352 329 
Vehicles5 years54 54 
Construction-in-process696 90 
Total historical cost9,338 8,246 
Accumulated depreciation(5,036)(4,451)
Total property, plant and equipment, net$4,302 $3,795 
Depreciation expense of property and equipment was $13$0.3 million and $14$0.3 million for the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, and $39$0.6 million and $41$0.5 million for the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively. RepairsDepreciation expense included in pharmacy and maintenancehardware cost of sales was $0.04 million and $0.05 million for the three months ended June 30, 2021 and 2020, respectively, and $0.09 million and $0.10 million for the six months ended June 30, 2021 and 2020, respectively.
Intangible assets
The following table presents intangible asset balances:
June 30,December 31,
(In thousands)20212020
Gross intangible assets:
Intellectual property$3,857 $3,857 
Software3,074 1,815 
Website and mobile application583 583 
Total intangible assets7,514 6,255 
Accumulated amortization:
Intellectual property(3,857)(3,857)
Software(1,688)(1,588)
Website and mobile application(583)(583)
Total accumulated amortization(6,128)(6,028)
Total intangible assets, net$1,386 $227 
Amortization expense of intangible assets was $0.07 million and $0.02 million for the three months ended June 30, 2021 and 2020, respectively, and $0.10 million and $0.06 million for the six months ended June 30, 2021 and 2020, respectively, and are included in operating expenses.
Software includes internal use software costs that are expensedaccounted for in accordance with ASC 350. Costs associated with application development are capitalized as incurred.

NOTE 6 – DEBT

Convertible Note

On December 17, 2015, concurrentintangible assets. All other costs including planning, training, and conceptual evaluation are expensed.

12

Lessee leases
Balance sheet amounts for lease assets and leases liabilities are as follows:
June 30,December 31,
(In thousands)20212020
Assets:
Operating$1,180$1,108
Finance103131
Total assets$1,283$1,239
Liabilities:
Operating:
Current$497 $612 
Long-term761 572 
Finance:
Current52 53 
Long-term52 79 
Total liabilities$1,362 $1,316 
The following table summarizes the weighted-average remaining lease term and weighted-average discount rate related to the Company’s leases as follows:
June 30,December 31,
(In thousands)20212020
Finance leases:
Weighted-average remaining lease term (years)2.02.4
Weighted-average discount rate6.0 %6.0 %
Operating leases:
Weighted-average remaining lease term (years)3.32.5
Weighted-average discount rate6.0 %6.0 %
Maturities of operating leases liabilities are as follows, in thousands:
Remaining period in 2021$325 
2022408 
2023262 
2024204 
2025137 
202659 
Thereafter0 
Total lease payments1,395 
Less: present value discount(137)
Total leases$1,258 
13

Maturities of finance lease liabilities are as follows, in thousands:
Remaining period in 2021$27 
202257 
202327 
20240 
20250 
20260 
Thereafter0 
Total finance lease payments111 
Less: imputed interest(7)
Total leases$104 
Operating lease expense was $0.2 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively, and $0.4 million and $0.3 million for the six months ended June 30, 2021 and 2020, respectively.
The Company entered into or extended operating leases with the executioncommencement dates after June 30, 2021, with total preliminary initial right of the Purchase Agreement with RENS Technology Inc., the Company issued an unsecured promissory note in the principal amountuse asset balances of $575 (the “Note”) to Gan Ren, a related party of RENS Agriculture, and the son of Ren Ren, one of our directors. The Note accrued interest at a rate of 8% per annum and matured on December 17, 2016. On December 17, 2016, the Note and accrued interest of $46 were automatically converted into 225,864 shares of common stock at $2.75 per share.

Term Note

On September 10, 2015, the Company converted its outstanding revolving note with City National Bank, which had a termination date of August 31, 2015, into a term note (the “Term Note”). The Term Note provided that the then outstanding balance of $400 shall be payable along with interest thereon on the last day of each month in four consecutive installments of $100. At December 31, 2015, the balance under the Term Note was $100, which was subsequently paid in full January 7, 2016.

$1.8 million.


NOTE 7 – PREPAID EXPENSES, ACCRUED EXPENSES, OTHER CURRENT ASSETS AND LIABILITIES

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of various payments that the Company has made in advance for goods or services to be received in the future. Prepaid expenses and other current assets- DEBT

The following table presents debt balances at SeptemberJune 30, 20172021 and December 31, 2016 consisted2020:
June 30,December 31,
(In thousands)20212020
Short-term note due May 2021$0 $1,000 
Short-term note due November 20211,000 1,000 
PPP loan0 161 
Term loan10,008 0 
Term loan issuance cost, net(594)0 
Total debt, net10,414 2,161 
Less short term debt(1,000)(2,161)
Long-term debt, net$9,414 $0 
Term loan
Short-term notes
The notes do not accrue interest and 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 loan
MedAvail received forgiveness approval of the following:

(In thousand $) September 30,
2017		  December 31,
2016		 
Prepaid insurance $125  $27 
Prepaid inventory purchases  158   1 
Prepaid consulting & other  217   57 
Total prepaid expenses and other current assets $500  $85 

15

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Septemberloan on March 30, 2017

(Unaudited; amounts2021 in thousands, except share and per share amounts, unless otherwise indicated)

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of estimated future payments that relate toaccordance with the current and prior accounting periods. Management reviews these estimates regularly to determine their reasonableness. Accrued expenses and other current liabilities at September 30, 2017 and December 31, 2016 consistedterms of the following:

(In thousand $) September 30,
2017		  December 31,
2016		 
Advertising and promotional expenses $171  $171 
Insurance financing  93   - 
Professional fees  61   88 
Payroll related expenses  24   62 
Deferred rent  19   40 
Total accrued expenses and other current liabilities $368  $361 

Note 8 – Stockholders’ Equity

Changes in stockholders’ equity for the nine months ended September 30, 2017 were as follows:

     Additional     Total 
  Common Stock  Paid in  Accumulated  Stockholders’ 
(In thousand $) Shares  Amount  Capital  deficit  equity 
Balance at December 31, 2016  5,344,372  $5  $33,099  $(27,786) $5,318 
Net proceeds from sale of common stock  500,000   1   1,926   -   1,927 
Stock-based compensation expense  -   -   121   -   121 
Net loss  -   -   -   (2,976)  (2,976)
Balance at September 30, 2017  5,844,372  $6  $35,146  $(30,762) $4,390 

Registered Direct Offering

CARES Act.

Term loan
On February 3, 2017,June 7, 2021, the Company entered into a securities purchase agreementLoan 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 institutional investor providing foradditional $20.0 million in aggregate term loans (or, together with the issuanceInitial 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 salecontinuing. The Loans and the Company's obligations under the Loan Agreement are guaranteed by the Companycertain of 500,000 shares of common stock, in a registered direct offering at a purchase price of $4.25 per share, for gross proceeds of $2,125. The offering closed on February 8, 2017. Offering costs of $199 were recognized as an offset to additional paid in capital.

Preferred Stock Purchase Rights

Effective February 14, 2017, the Board of Directors declared one Right for eachour subsidiaries and are secured by substantially all of the Company’s issued and outstanding sharesassets of common stock. The Rights were granted to the stockholders of record at the close of business on February 24, 2017. Each Right entitles the registered holder, upon the occurrence of certain events specified in the Rights Agreement, to purchase from the Company one one-thousandth of a share of the Company’s Series A Preferred Stock at a price of $7.00, subject to certain adjustments.

The Rights are not exercisable until the occurrence of certain events, including a person acquiring or obtaining the right to acquire beneficial ownership of 10% or more of the Company’s outstanding common stock. The Rights are evidenced by certificates for the common stock and automatically transfer with the common stock unless they become exercisable. If the Rights become exercisable, separate certificates evidencing the Rights will be distributed to each holder of common stock. Holders of the preferred stock will be entitled to certain dividend, liquidation and voting rights. The rights are redeemable by the Company at a fixed price as determined by the Board, after certain defined events. As of September 30, 2017, the Rights have no dilutive effect on the earnings per common share calculation and no shares of preferred stock have been issued. The Company has determined that these rights have a de minimis fair value. The description and terms of the Rights are set forth in the Rights Agreement dated as of February 14, 2017 between the Company and Island Stock Transfer, as Rights Agent.

16
its subsidiary guarantors.

14

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September


The Loans mature on April 1, 2026. Principal repayment will commence on May 1, 2024 in equal monthly installments of the outstanding 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 June 30, 2017

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

Issuance of Common Stock

2021).

The Company has periodically issued common stockmay elect to prepay the Loans, in connection with certain private and public offerings. During the nine months ended September 30, 2017 and 2016,whole but not in part, at any time. If the Company has received aggregate gross proceeds of $7,375 from these offerings as follows:

(In thousand $)    Gross 
Date Shares  Proceeds 
March 6, 2016  1,500,000(1) $5,250 
February 8, 2017  500,000(2)  2,125 
   2,000,000  $7,375 

(1)Shares issued pursuant to the closing of the first tranche of the Financing with RENS Technology Inc.
(2)Shares issued pursuant to a registered direct offering with an institutional investor.

Note 9 – Warrants

On March 3, 2016,elects to voluntarily prepay the Loans before the scheduled maturity date, the Company completedis required to pay the first tranchelenders a prepayment premium, equal to 3.0% of the Financing, pursuantoutstanding 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 whicha mandatory prepayment of the Purchaser acquiredLoans upon an acceleration of the Loans. Upon a warrantvoluntary or mandatory prepayment of the Loans, the Company is also required to purchase 375,000 sharespay 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 common stock. The warrant was immediately exercisable upon issuance,the original principal amount of the Loans advanced will expire five years after issuance and has an exercise price of $7.00 per share.

The warrant was determined to have an estimated aggregate fair value of $480 at issuance.

The following table summarizes information about outstanding and exercisable warrants at September 30, 2017:

       Shares          
    Number of  Underlying  Shares       
    Shares  Warrants  Underlying       
    Underlying  Exchanged,  Warrants       
    Warrants  Exercised  Outstanding     Expiration 
    Originally  or  and  Exercise  Term 
Description Grant Date Granted  Expired  Exercisable  Price  in years 
Series A(1) January 27, 2014  315,676   (315,676)  -   N/A   N/A 
Series B(1) January 27, 2014  157,846   -   157,846  $45.00   1.33 
Series C(2) November 19, 2014  145,399   (142,957)  2,442  $12.00   2.63 
         142,957   142,957  $9.00   2.63 
Series D(2) November 19, 2014  193,865   (193,865)  -   N/A   N/A 
Series E(2) November 19, 2014  145,399   (145,399)  -   N/A   N/A 
         142,957   142,957  $9.00   4.63 
Rens(3) March 3, 2016  375,000   -   375,000  $7.00   3.42 
     1,333,185   (511,983)  821,202         

(1)Issued in connection with the January 27, 2014 private placement transaction.
(2)Issued in connection with the November 19, 2014 registered direct public offering, and subsequently revised pursuant to Warrant Exercise Agreements entered into on May 18, 2015.
(3)Shares issued pursuant to the closing of the first tranche of the Financing with RENS Technology Inc.

17

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

The following table summarizes the activities in warrants for the nine months ended September 30, 2017:

  Shares Underlying Warrants  Average
Exercise
Price		 
Balance at December 31, 2016  1,136,878  $15.01 
Warrants expired  (315,676) $15.00 
Balance at September 30, 2017  821,202  $15.02 

The following table summarizes the assumptions used to value the warrantsbe due at the issuanceearlier 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 Black-Scholes option pricing model:

    Number of                   
    Shares  Stock                
  Grant / Underlying  Price on                
  Modification Warrants  Measurement  Exercise  Expected  Expected  Dividend  Risk Free 
Description Date Granted  Date  Price  Term  Volatility  Yield  Rate 
Series B 1/27/2014  157,846  $7.00  $45.00   5.00   150.00%  0.00%  1.61%
Series C 11/19/2014  145,399  $9.37  $12.00   5.50   94.60%  0.00%  1.64%
Repricing Series C 5/18/2015  142,957  $5.95  $9.00   5.00   96.34%  0.00%  1.46%
Repricing Series E 5/18/2015  142,957  $5.95  $9.00   7.00   96.34%  0.00%  1.87%
Rens Technology 3/3/2016  375,000  $7.00  $7.00   4.00   96.34%  0.00%  1.87%

NOTE 10 – STOCK COMPENSATION

Equity Incentive Plan

effective interest method.

The Company’s boardLoan 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 directors authorizedany 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 increaseevent 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 number of shares available for issuance under its 2012 Equity Incentive Plan (as amended, the “Plan”) from 550,000 to 850,000 in November 2016, which was approved by the Company’s shareholders in December 2016. The Plan provides for grants of stock options, stock appreciation rights, restricted stock, other stock-based awardsLoan Agreement and other cash-based awards. As of September 30, 2017, 288,260 shares of common stock were available for future issuances.

The Company granted an aggregate of 30,000 options to purchase restricted common stock to certain directors prior to the adoption of the Plan. Stock options generally vest and become exercisable with respect to 100%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 common stock subjectCompany's shares from NASDAQ.

Loan issuance costs of $0.6 million are included in long term debt and are amortized to such stock option oninterest expense over the third (3rd) anniversary of the date of grant. Any unvested portion of a stock option shall expire upon termination of employment or service of the participant granted the stock option, and the vested portion shall remain exercisable in accordance with the provisions of the Plan.

On August 24, 2017 the Company granted an incentive stock option to its Chief Executive Officer to purchase 300,000 shares under the Plan at an exercise price of $4.00 per share to be vested in eight quarterly installments commencing September 30, 2017. We evaluated the options issuedloan term using the Black-Scholes calculation with a stock price of $1.32, time to maturity of 6 years, risk free rate of 2.19%, and annualized volatility of 100% to determine that there is no significant adjustment in valuation.

18
effective interest method.

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

Stock Options

NOTE 8 - INCOME TAXES
The following table summarizes stock option activity for the nine months ended September 30, 2017:

  Shares
Under Exercisable
Options		  Weighted
Average Exercise
Price		  Weighted Average
Remaining Contractual
Term (Years)		 
Balance at December 31, 2016  300,340  $15.09   6.71 
Options granted  300,000  $4.00   9.90 
Options forfeited/expired  (38,600) $15.70     
Balance at September 30, 2017  561,740  $9.46   6.20 

At September 30, 2017 and December 31, 2016, the exercisable options had no intrinsic value.

The following table summarizes information about options outstanding and exercisable at September 30, 2017 that were granted under the Plan:

Exercise
Price		   Options
 Outstanding		  Weighted Average
Remaining
Contractual Life		   Options
Exercisable		  Weighted Average
Remaining
Contractual Life		 
              
$4.00   300,000   9.90   -   9.90 
$8.60   16,000   6.70   16,000   6.70 
$10.00   40   5.39   40   5.39 
$12.10   30,000   6.86   30,000   6.86 
$12.50   81,700   6.96   60,221   4.98 
$13.45   2,000   6.98   1,000   6.98 
$13.50   12,000   6.99   9,049   6.99 
$17.50   100,000   5.61   100,000   5.61 
$32.00   15,000   4.04   15,000   4.04 
$34.50   5,000   4.07   5,000   4.07 
     561,740       236,310     

As of September 30, 2017, 236,310 options have vested and 325,430 options remain unvested. The vesting terms range from 4.0 to 9.9 years; vested options have a weighted average remaining term of 6.86 years; and a weighted average exercise price of $9.46 per share.

Restricted Stock

The following table summarizes restricted stock awards activity for the nine months ended September 30, 2017:

  Shares  Weighted
Average
Grant Date
Share Price		 
Restricted stock awards unvested at December 31, 2016  53,857  $2.74 
Granted  -     
Forfeited / expired  -     
Vested  50,957   2.14 
Restricted stock awards unvested at September 30, 2017  2,900  $1.00 

At September 30, 2017, the weighted-average remaining vesting period of unvested restricted stock awards was 0.5 years.

19

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

Stock-Based Compensation:

Stock-based compensation was $39 and $38Company did not incur income tax expense for the three and six months ended SeptemberJune 30, 2017 and 2016,2021, respectively, and $121 and $264 fordue to ongoing losses. The effective income tax rate in each period differed from the nine months ended September 2017 and 2016, respectively. Stock-based compensation consistsfederal statutory tax rate of expenses related21% primarily as a result of the ongoing losses.

As of June 30, 2021, the Company recorded a full valuation allowance against all of its net deferred tax assets due to the issuanceuncertainty surrounding the Company’s ability to utilize these assets in the future.
On March 11, 2021, the U.S. federal government enacted the American Rescue Plan Act of stock options and restricted stock.

The aggregate unrecognized compensation expense of stock options and restricted stock at September 30, 2017 was $415,2021, which will be recognized through August 2021.

did not have a material impact on our benefit for income taxes.

Note 11 – Commitments

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

Supply Agreement

On November 18, 2016, the Company entered into an Amended Supply Agreement with DIL Technologie GmbH (“DIL”). Pursuant to the agreement (and so long as the agreement is effective), DIL will manufacture and supply the Company with Fortetropin®, the active ingredient for its products, and the Company will purchase quantitiesMedAvail, Inc.’s, or MAI's, announcement of Fortetropin® from DIL in its discretion. DIL will manufacture the formula exclusively for the Company in perpetuity, and may not manufacture the formula for other entities (but may manufacture it for its own non-commercial research). The Company agreed, commencing January 2017, to pay DIL €10,000 (approximately $12,000) per month for prepayment of inventory purchases. The monthly payments terminate upon the earlier of: (a) the date that the Company orders additional product in accordance with the terms of the agreement and (b) December 31, 2018, and the Company has no further financial obligations to DIL thereafter. The Company also agreed to pay DIL €400,000 (approximately $525,000) in satisfaction of all prior liabilities and obligations under its prior agreements with DIL. The agreement expires on December 31, 2018, and the Company has the unilateral right to renew the agreement for subsequent one-year terms. At September 30, 2017, the future minimum payments under the supply agreement were as follows:

(In thousand $)   
Years Ended December 31, Amount 
2017 (remaining three months) $36 
2018  132 
Total $168 

Operating Lease

The Company leases its corporate offices under an operating lease. The term of the lease is five years commencing on January 1, 2015 and expiring on December 31, 2019. The Company has two options to renew the lease for an additional three years each. At September 30, 2017, the future minimum lease payments under the non-cancellable operating lease in excess of one year is as follows: 

(In thousand $)   
Years Ended December 31, Amount 
2017 (remaining three months) $18 
2018  71 
2019  72 
Total $161 

Rent expense including common area maintenance charges and taxes for the three months ended September 30, 2017 and 2016 was $21 and $55, respectively, and for the nine months ended September 30, 2017 and 2016 was $46 and $155, respectively.

20

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

Defined Contribution Plan

The Company established a 401(K) Plan (the “401(K) Plan”) for eligible employees of the Company effective April 1, 2014. Generally, all employees of the Company who are at least twenty-one years of age and who have completed three months of service are eligible to participate in the 401(K) Plan. The 401(K) Plan is a defined contribution plan that provides that participants may make salary deferral contributions of up to the statutory maximum allowed by law (subject to catch-up contributions) in the form of voluntary payroll deductions. The Company’s matching contribution is equal to 100 percent on the first four percent of a participant’s compensation which is deferred as an elective deferral. The Company’s aggregate matching contributions were $8 and $5 for the three months ended September 30, 2017 and 2016, respectively, and $17 and $21 for the nine months ended September 30, 2017 and 2016, respectively.

Product Liability

As a manufacturer of nutritional products that are ingested by consumers, the Company may be subject to various product liability claims. Although we have not had any claims to date, it is possible that future product liability claims could have a material adverse effect on our business or financial condition, results of operations or cash flows. The Company currently maintains product liability insurance of $5 million per-occurrence and a $10 million annual aggregate coverage. At September 30, 2017 and December 31, 2016, the Company had not recorded any accruals for product liability claims.

Research Study

In April 2017 the Company entered into an agreement with the College of Veterinary Medicine at Kansas State University to study the impact of Fortetropin on reducing muscle atrophy in dogs after ligament tear repair surgery. The study is expected to cost $32, began in the second quarter of 2017 and is expected to be completed by the second quarter of 2018. The Company’s research costs were $3 and $1 for the three months ended September 30, 2017 and 2016, respectively, and $42 and $16 for the nine months ended September 30, 2017 and 2016, respectively.

Note 12 – Related Party Transactions

The following is a description of the transactions we have engaged in with our directors, director nominees and officers and beneficial owners of more than five percent of our voting securities and their affiliates:

On August 1, 2015, we entered into a consulting agreement with Muscle Longevity LLC, a company that has the same owner as Ultra Pro Sports, LLC, a then greater than 5% beneficial owner of our common stock. Under the terms of the agreement, Muscle Longevity LLC then agreed to provide introductions and referrals to new distribution channels for our products including, but not limited to, health and wellness centers and sports nutrition companies and to conduct industry research and advise us regarding distributors, markets, and sales opportunities for the Company’s products. As compensation for the services, Muscle Longevity LLC was paid a consulting fee of $16 per month. The agreement was terminated in October 2016.

On December 17, 2015, concurrent with the execution of the PurchaseMerger Agreement with RENS Technology Inc., the Company issued an unsecured promissory noteon 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 principal amount of $575 (the “Note”) to Gan Ren,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 related party of RENS Agriculture andcomplaint regarding the son of Ren Ren, one of our directors. The Note accrued interest at a rate of 8% per annum and matured (the “Maturity Date”) on December 17, 2016. Ontransactions contemplated within the Maturity Date, the Note and accrued interest of $46 were automatically converted into 225,864 shares of Common Stock at $2.75 per share.

On December 17, 2015, we entered into the PurchaseMerger Agreement with Rens Technology Inc. (the “Purchaser”), an entity which is controlled by Ren Ren, who is currently a director of the Company and its largest stockholder. For additional information refer to Note 1 – Strategic Investment Transaction. The Board agreed to issue Mr. Ren 18,182 shares of the Company’s common stock upon completion of the first tranche of the Financing for his services to the Company as a member of the Board. (See Note 13).

In October 2016, the Company entered into a sales agreement with RENS Agriculture. We received a 50% deposit in November 2016 in order to manufacture the product. The goods were shipped in January 2017 and received in China in March 2017. We have not received payment for the order to date. As a result of the ongoing litigation (See Note 13), the Company recorded bad debt expense of $59 related to the receivable due from RENS Agriculture.

21

MYOS RENS TECHNOLOGY INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

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

Note 13 – legal PROCEEDINGS

On January 6, 2017, the Company commenced an actionwas filed in the Supreme Court of the State of New York, County of New York, againstcaptioned Faasse v. MYOS RENS Technology Inc. (“, et. al., Index No.: 654644/2020 (NY Supreme Ct., NY Cnty., September 23, 2020), or the Purchaser”)New York Complaint. On October 12, 2020, a second complaint regarding the transactions was filed in the District Court of Nevada, Clark

15

County Nevada, captioned Vigil v. Mannello, et. al., RENS Agriculture,Case No. A-20-822848-C, or the parent companyNevada Complaint, and together with the New York Complaint, the Complaints, and collectively with the Demands, the Litigation.
The Demands and the Complaints that comprise the Litigation generally alleged that the directors of MYOS breached their fiduciary duties by entering into the Merger Agreement, and MYOS and MAI disseminated an incomplete and misleading Form S-4 Registration Statement. The New York Complaint also alleged MedAvail aided and abetted such breach of fiduciary duties.
MYOS and MAI believe that the claims asserted in the Litigation are without merit, and believe that the Form S-4 Registration Statement disclosed all material information concerning the Merger and no supplemental disclosure is required under applicable law. However, in order to avoid the risk of the Purchaser,Litigation delaying or adversely affecting the Merger and Ren Ren, a principalto minimize the costs, risks and uncertainties inherent in both entitieslitigation, and a directorwithout 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 Company, arisingLitigation remains outstanding. MYOS and MAI specifically deny all allegations in the Litigation and/or that any additional disclosure was or is required.

NOTE 10 - SHARE-BASED COMPENSATION AND WARRANTS
Share-based compensation
The following table presents the Company's expense related to share-based compensation, in thousands:
Three Months EndedSix Months Ended
June 30, 2021June 30, 2020June 30, 2021June 30, 2020
Share-based compensation$323 $86 $583 $170 
The share-based compensation expense for the three and six months ended June 30, 2021, included $7 thousand from 2020 ESPP expense. Expense remaining to be recognized for unvested awards from the Purchaser’s breach2012, 2018, and 2020 plans as of June 30, 2021 was $3.0 million, which will be recognized on a Securities Purchase Agreement under whichweighted average basis over the Purchaser agreednext 2.9 years.
The following table presents the Company's outstanding option awards activity during the six months ended June 30, 2021:
(in thousands, except for share and per share amounts)Number of AwardsWeighted Average Exercise PriceWeighted Average Share Price on Date of ExerciseWeighted Average Fair ValueWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
Outstanding, beginning of period2,439,020 $1.59 $0.77 $32,791 
Granted315,974 13.70 8.04 0 
Exercised/Released(144,101)1.71 $14.66 0.85 1,866 
Cancelled/Forfeited(1,909)1.68 0.84 24 
Outstanding, end of period2,608,984 $3.07 $1.34 7.97$24,474 
Vested and exercisable, end of the period1,786,584 1.93 0.79 7.5718,494 
Vested and unvested exercisable, end of the period1,786,584 1.93 0.79 7.5718,494 
Vested and expected to vest, end of the period2,528,947 2.89 1.30 7.9324,089 
During the six months ended June 30, 2021, the Company granted approximately 89,974 restricted stock units or RSUs to investemployees with a weighted average fair value of $13.72 per RSU and total aggregate intrinsic value of $1.2 million. NaNne of the RSUs were vested as of June 30, 2021, and they had a weighted average remaining contractual life of 9.8 years.
As of June 30, 2021 and December 31, 2020, there was an aggregate of $20.254.7 million in the Company in exchange for an aggregate of 3,537,037and 5.0 million shares of common stock, of the Company and warrants to purchase an aggregate of 884,259 shares of common stock. In addition to seeking compensatory, consequential and other damages in the action, the Company asked the Court to preliminarily restrain the Purchaser and its agents and representatives, including, but not limited to, RENS Agriculture and Ren Ren, from selling, transferring, conveying, assigning, hypothecating or encumbering 1,500,000 shares of common stock of the Company and a warrant permitting the purchase of 375,000 share at a price of $7.00 per share that the Purchaser had purchasedrespectively, available for grant under the Securities Purchase Agreement and, after2020 Plan.
Warrants
During the parties had an opportunity to submit opposition and reply paperssix months ended June 30, 2021 0 warrants were issued.
16

During the six months ended June 30, 2021, warrants were exercised in connection with the Company’s application, a preliminary injunction prohibiting the Purchaser from selling, transferring, conveying, assigning, hypothecating or encumbering the 1,500,000 shares and warrant during the pendency of the action and an order attaching the stock and warrant to satisfy any judgment entered in favor of the Company.

On January 11, 2017, the Court granted the Company the preliminary restraints that it requested, which prevents RENS Technology, among others, from selling, transferring, conveying, assigning, hypothecating or encumbering the 1,500,000exchange for issuing 623,613 shares of the Company’s common stock with total cash proceeds of $124 thousand.

Warrants exercised during the six months ended June 30, 2021, included 565,496 held by related parties (investors), with 626,339 related party warrants outstanding as of June 30, 2021.

NOTE 11 - REVENUE AND SEGMENT REPORTING
Operating segments are the individual operations that the chief operating decision maker ("CODM"), who is our chief executive officer, reviews for purposes of assessing performance and making resource allocation decisions. The CODM currently receives the monthly management report which includes information to assess performance. The retail pharmacy services and pharmacy technology operating segments both engage in different business activities from which they earn revenues and incur expenses.
The Company has the following 2 reportable segments:
Retail Pharmacy Services Segment
Retail pharmacy services segment revenue consists of products sold directly to consumers at the point of sale. MedAvail recognizes retail pharmacy sales revenue, net of taxes and expected returns, at the time it sells merchandise or dispenses prescription drugs to the aforementioned warrant.customer. The Court scheduled a hearingCompany estimates revenue based on February 14, 2017, atexpected reimbursements from third-party payers (e.g., pharmacy benefit managers, insurance companies and governmental agencies) for dispensing prescription drugs. The estimates are based on all available information including historical experience and are updated to actual reimbursement amounts.
Pharmacy Technology Segment
The pharmacy technology segment consists of sales and subscriptions of MedPlatform systems to customers. These agreements include providing the MedCenter prescription dispensing kiosk, software, and maintenance services. This generally includes either an initial lump sum payment upon installation of the 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.
The following table presents sales and costs of sales by segment, in thousands:
Retail Pharmacy ServicesPharmacy TechnologyTotal
Three Months Ended June 30, 2021
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales$4,494 $0 $4,494 
Hardware0 123 123 
Subscription sales0 108 108 
Total pharmacy and hardware sales4,494 231 4,725 
Service sales:
Software integration0 0 0 
Software0 41 41 
Maintenance and support0 40 40 
Installation0 12 12 
Professional services and other0 212 212 
Total service sales0 305 305 
Total sales4,494 536 5,030 
Cost of sales4,435 422 4,857 
Gross profit$59 $114 $173 
17

Retail Pharmacy ServicesPharmacy TechnologyTotal
Three Months Ended June 30, 2020
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales$1,713 $0 $1,713 
Hardware0 423 423 
Subscription sales0 123 123 
Total pharmacy and hardware sales1,713 546 2,259 
Service sales:
Software0 10 10 
Maintenance and support0 13 13 
Installation0 28 28 
Professional services and other0 1 1 
Total service sales0 52 52 
Total sales1,713 598 2,311 
Cost of sales1,679 186 1,865 
Gross profit$34 $412 $446 

Retail Pharmacy ServicesPharmacy TechnologyTotal
Six Months Ended June 30, 2021
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales$7,912 $0 $7,912 
Hardware0 364 364 
Subscription sales0 230 230 
Total pharmacy and hardware sales7,912 594 8,506 
Service sales:
Software0 74 74 
Maintenance and support0 71 71 
Installation0 28 28 
Professional services and other0 378 378 
Total service sales0 551 551 
Total sales7,912 1,145 9,057 
Cost of sales7,764 800 8,564 
Gross profit$148 $345 $493 
18

Retail Pharmacy ServicesPharmacy TechnologyTotal
Six Months Ended June 30, 2020
Sales:
Pharmacy and hardware sales:
Retail pharmacy sales$3,010 $0 $3,010 
Hardware0 423 423 
Subscription sales0 228 228 
Total pharmacy and hardware sales3,010 651 3,661 
Service sales:
Software0 10 10 
Maintenance and support0 23 23 
Installation0 28 28 
Professional services and other0 1 1 
Total service sales0 62 62 
Total sales3,010 713 3,723 
Cost of sales3,017 280 3,297 
Gross profit$(7)$433 $426 
The following table presents assets and liabilities by segment, in thousands:
Retail Pharmacy ServicesPharmacy TechnologyCorporateTotal
June 30, 2021
Assets$8,528 $4,407 $48,315 $61,250 
Liabilities$4,205 $3,713 $11,233 $19,151 
December 31, 2020
Assets$6,012 $5,547 $57,772 $69,331 
Liabilities$2,203 $3,422 $2,639 $8,264 
The following table presents long-lived assets, which time the Court heard oral argumentinclude property, plant, and equipment and right-of-use-assets by geographic region, based on the application for a preliminary injunction and prejudgment attachmentphysical location of the stock and warrants to satisfy any judgment enteredassets, in favor of the Company. Since then, RENS Technology filed a motion to dismiss the complaint which the Company has opposed.

On April 11, 2017, the Court denied our application for a prejudgment attachment of the Purchaser’s acquired shares and warrant and a preliminary injunction in aid of the attachment to prevent a sale, transfer, or hypothecation of such securities, and vacating the preliminary restraints which it had previously entered. However, the Court noted that we had demonstrated a likelihood of success on the merits of the breach of contract claim. An application by the Purchaser to dismiss the complaint and various pre-trial discovery applications by both parties was scheduled for oral argument, but we thereafter amended the complaint in August 2017. The amended complaint repeated most of the initial claims but added a number of additional claims against RENS Agriculture, Mr. Ren and two additional Chinese defendants, including a claim against RENS Agriculture for breaching the exclusive distribution agreement, as well as claims against all defendants for theft and misappropriation of our confidential proprietary information and trade secrets, breach of fiduciary duty and duty of loyalty, misappropriation of corporate opportunity, unfair competition and a number of other torts. We are seeking damages and injunctive relief. The Purchaser has filed a motion to dismiss the amended complaint, which is still pending.

On August 16, 2017, the Purchaser commenced an action in the District Court of Clark County in the State of Nevada against us and Joseph Mannello, our then interim Chief Executive Officer, alleging that Mr. Mannello had breached his fiduciary duties and was grossly negligent in managing our company. The action seeks monetary damages and injunctive relief from Mr. Mannello as well as the appointment of a receiver over us. Subsequently, the Purchaser submitted a petition to appoint a receiver and we and Mr. Mannello submitted a motion to dismiss the action, both of which are currently pending and are due to be heard in December 2017.

Note 14 – SUBSEQUENT EVENTS

Effective October 18, 2017, the Company entered into a sports marketing agreement to promote its Qurr® product line to colleges and universities in the IMG College network.

Subsequent to the end of the quarter, on October 26, 2017 the Company sold 500,000 shares of common stock for $2.144 per share for gross proceeds of $1,070 in an at-the-market offering.

22
thousands:

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

19

ITEM

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

The

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

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

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General and administrative
General and administrative expenses consist of personnel costs, facility expenses and expenses for outside professional services, including legal, audit and accounting services. Personnel costs consist of salaries, benefits and share-based compensation. Facility expenses consist of rent and other related costs. Corporate insurance, office supplies and technology expenses are also captured within general and administrative expenses. We incurred and expect to incur additional expenses as a result of being a public company, including expenses related to compliance with the rules and regulations of the SEC, Nasdaq, additional insurance, investor relations and other administrative expenses and professional services.
We have a stock option plan whereby awards are granted to certain of our employees. The fair value of the stock options and restricted stock units granted by us to our employees is recognized as compensation expense on a straight-line basis over the applicable vesting period. We measure the fair value of the stock options using the Black-Scholes option pricing model as of the grant date/measurement date. Shares issued upon the exercise of stock options and vesting of restricted stock units are new shares. We estimate forfeitures based on historical experience and expense related to awards is adjusted over the term of the awards to reflect their probability of vesting. All fully vested awards are fully expensed.
Three Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
General and administrative expenses:(in thousands)
Wages and salaries$3,231 $2,412 $819 34 %
Professional services1,120 265 855 323 %
Rent and utilities401 298 103 35 %
Office and IT supplies400 262 138 53 %
Insurance437 57 380 667 %
Share-based compensation323 86 237 276 %
Travel and other employee expenses225 80 145 181 %
Other general and administrative expenses509 120 389 324 %
Total general and administrative expenses$6,646 $3,580 $3,066 86 %
During the three months ended June 30, 2021, general and administrative costs increased approximately $3.1 million to $6.6 million compared to the same period in 2020. This increase was primarily due to hiring additional administrative staff as well as other investments necessary for our growth and becoming a public company. Additionally, increases in other general expenses, such as director and officer insurance, auditor fees, and legal fees were also partly a consequence of operating as a public company.
Selling and marketing
Selling and marketing expenses consist of marketing and advertising costs, personnel costs, and marketing related expenses for outside professional services. Wages and salaries consist of compensation costs incurred for all selling and marketing employees, and contractors including bonuses, health plans, severance, and contractor costs.
Three Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Selling and marketing expenses:(in thousands)
Wages and salaries$1,277 $459 $818 178 %
Marketing140 86 54 63 %
Travel and other employee expenses78 24 54 225 %
Other selling and marketing expenses2 1 1 100 %
Total selling and marketing expenses$1,497 $570 $927 163 %
During the three months ended June 30, 2021, selling and marketing costs increased approximately $0.9 million to $1.5 million compared to the same period in 2020. This increase was primarily due to personnel related costs associated with hiring additional Clinic Account Managers (CAMs) and Regional Directors, which directly support the medical clinic’s staff and patients at the clinics where we are deployed.
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Research and development
Research and development expenses represent costs incurred to develop and innovate our MedCenter platform technology, including development work on hardware, software and supporting information technology infrastructure. Wages and salaries consist of compensation costs incurred for research and development employees and contractors including bonuses, health plans, severance, and contractor costs.
We recognize hardware development costs as they are incurred. When hardware is constructed for use by customers, costs are capitalized after technological feasibility is achieved and expensed before technological feasibility is achieved. Costs of hardware completed but not yet placed in service are capitalized as equipment (a long-lived asset) on the consolidated condensed balance sheets. Costs of hardware completed and placed in service with customers are capitalized as equipment and depreciated over the estimated useful life of the equipment.
Software development costs are accrued and expensed based on ASC 985, which is for software that we intend to sell (in conjunction with 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 June 30,2021 vs. 2020
20212020Amount Change% Change
Research and development expenses:(in thousands)
Wages and salaries$167 $124 $43 35 %
Materials20 37 (17)(46)%
Other expenses14 2 12 600 %
Total research and development expenses$201 $163 $38 23 %
During the three months ended June 30, 2021, research and development costs increased approximately $0.04 million. This increase was primarily due to ongoing product improvement activities.
Other gain (loss)
During the three months ended June 30, 2021, other gain (loss) of $0.04 million was not significant.
Interest income and expense
Interest expense consists of accrued interest on outstanding debt and is payable upon the maturity date.
Three Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Interest income:(in thousands)
Interest income$27 $7 $20 286 %
Total interest income$27 $7 $20 286 %
Interest expense:
Interest expense$(66)$(277)$211 (76)%
Total interest expense$(66)$(277)$211 (76)%
During the three months ended June 30, 2021, interest expense decreased compared to the same period in 2020 due to a convertible note that was outstanding through the second quarter in 2020 and settled in November 2020. On March 24, 2016, MedAvail and a significant customer and investor entered into a subordinated secured convertible promissory five-year note agreement for $10.0 million or the Convertible Note. This Convertible Note was convertible into common shares at the holder’s request. The Convertible Note, including accrued interest, was repaid in its entirety on November 17, 2020. For more detail on outstanding debt and associated maturities, see Note 7 to the unaudited consolidated condensed financial statements presented elsewhere in this Quarterly Report on Form 10-Q.

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

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

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General and administrative
General and administrative expenses consist of personnel costs, facility expenses and expenses for outside professional services, including legal, audit and accounting services. Personnel costs consist of salaries, benefits and share-based compensation. Facility expenses consist of rent and other related costs. Corporate insurance, office supplies and technology expenses are also captured within general and administrative expenses. We incurred and expect to incur additional expenses as a result of becoming a public company, including expenses related to compliance with the rules and regulations of the SEC, Nasdaq, additional insurance, investor relations and other administrative expenses and professional services.
We have a stock option plan whereby awards are granted to certain of our employees. The fair value of the stock options and restricted stock units granted by us to our employees is recognized as compensation expense on a straight-line basis over the applicable vesting period. We measure the fair value of the stock options using the Black-Scholes option pricing model as of the grant date. Shares issued upon the exercise of stock options and vesting of restricted stock units are new shares. We estimate forfeitures based on historical experience and expense related to awards is adjusted over the term of the awards to reflect their probability of vesting. All fully vested awards are fully expensed.
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
General and administrative expenses:(in thousands)
Wages and salaries$6,960 $4,500 $2,460 55 %
Professional services2,165 422 1,743 413 %
Rent and utilities819 653 166 25 %
Office and IT supplies693 574 119 21 %
Insurance895 102 793 777 %
Share-based compensation583 170 413 243 %
Travel and other employee expenses378 276 102 37 %
Other general and administrative expenses643 383 260 68 %
Total general and administrative expenses$13,136 $7,080 $6,056 86 %
During the six months ended June 30, 2021, general and administrative costs increased approximately $6.1 million to $13.1 million compared to the same period in 2020. This increase was primarily due to hiring additional administrative staff as well as other investments necessary for our growth and becoming a public company. Additionally, increases in other general expenses, such as director and officer insurance, auditor fees, and legal fees were also partly a consequence of operating as a public company.
Selling and marketing
Selling and marketing expenses consist of marketing and advertising costs, personnel costs, and marketing related expenses for outside professional services. Wages and salaries consist of compensation costs incurred for all selling and marketing employees, and contractors including bonuses, health plans, severance, and contractor costs.
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Selling and marketing expenses:(in thousands)
Wages and salaries$2,494 $1,009 $1,485 147 %
Marketing269 178 91 51 %
Travel and other employee expenses109 61 48 79 %
Other selling and marketing expenses6 25 (19)(76)%
Total selling and marketing expenses$2,878 $1,273 $1,605 126 %
During the six months ended June 30, 2021, selling and marketing costs increased approximately $1.6 million to $2.9 million compared to the same period in 2020. This increase was primarily due to personnel related costs associated with hiring additional Clinic Account Managers (CAMs) and Regional Directors, which directly support the medical clinic’s staff and patients at the clinics where we are deployed.
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Research and development
Research and development expenses represent costs incurred to develop and innovate our MedCenter platform technology, including development work on hardware, software and supporting information technology infrastructure. Wages and salaries consist of compensation costs incurred for research and development employees and contractors including bonuses, health plans, severance, and contractor costs.
We recognize hardware development costs as they are incurred. When hardware is constructed for use by customers, costs are capitalized after technological feasibility is achieved and expensed before technological feasibility is achieved. Costs of hardware completed but not yet placed in service are capitalized as equipment (a long-lived asset) on the consolidated condensed balance sheets. Costs of hardware completed and placed in service with customers are capitalized as equipment and depreciated over the estimated useful life of the equipment.
Software development costs are accrued and expensed based on ASC 985, which is for software that we intend to sell (in conjunction with related hardware). Any software development costs that are incurred prior to the point where the project has demonstrated technological feasibility are expensed as they are incurred. Once technological feasibility has been established, most development costs are capitalized. Once development is complete and the software is made available for release to customers, capitalization no longer is appropriate because any remaining costs are considered ongoing maintenance and support. These are expensed as they are incurred.
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Research and development expenses:(in thousands)
Wages and salaries$333 $249 $84 34 %
Materials20 122 (102)(84)%
Other expenses16 7 9 129 %
Total research and development expenses$369 $378 $(9)(2)%
During the six months ended June 30, 2021, research and development costs decreased approximately $0.01 million. This decrease was primarily due to completion of certain development work related to our M5 MedCenter technology in 2020.
Other gain (loss)
During the six months ended June 30, 2021, other gain (loss) included a gain of $0.2 million, primarily from PPP loan forgiveness. MedAvail received forgiveness approval of the loan on March 30, 2021 in accordance with the terms of the CARES Act.
Interest income and expense
Interest expense consists of accrued interest on outstanding debt and is payable upon the maturity date.
Six Months Ended June 30,2021 vs. 2020
20212020Amount Change% Change
Interest income:(in thousands)
Interest income$67 $15 $52 347 %
Total interest income$67 $15 $52 347 %
Interest expense:
Interest expense$(68)$(456)$388 (85)%
Total interest expense$(68)$(456)$388 (85)%
During the six months ended June 30, 2021, interest expense decreased compared to the same period in 2020 due to a convertible note that was outstanding through the second quarter in 2020 and settled in November 2020. On March 24, 2016, MedAvail and a significant customer and investor entered into a subordinated secured convertible promissory five-year note agreement for $10.0 million or the Convertible Note. This Convertible Note was convertible into common shares at the option holder’s request. The Convertible Note, including accrued interest, was repaid in its entirety on November 17, 2020. For more detail on outstanding debt and associated maturities, see Note 7 to the unaudited consolidated condensed financial statements presented elsewhere in this Quarterly Report on Form 10-Q.
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Liquidity and Capital Resources
Sources of Liquidity
Since inception through June 30, 2021, our operations have been financed primarily by net cash proceeds from the sale of stock from private placements, the sale of redeemable preferred stock and debt. As of June 30, 2021, we had $48.7 million in cash and cash equivalents and an accumulated deficit of $168.2 million. Although we believe our cash and cash equivalents and borrowing capacity are sufficient funding to execute our current growth plan for the foreseeable future, due to market risks (as outlined in the "Risk Factors" section of this Quarterly Report on Form 10-Q) and opportunities, we expect a need to raise additional capital to continue to fund our operations. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our growth strategy and capital market conditions. Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition and our ability to develop our product candidates. Our management actively evaluates matters of liquidity and growth capital needs, including evaluating debt and equity as sources of growth capital with a focus on lower overall weighted average cost of capital and favorable financing terms.
Cash Flows
The following table summarizes our cash flows for the three months ended June 30, 2021 and 2020:
Six Months Ended June 30,2021 vs. 2020
(In thousands)20212020Amount Change% Change
Cash used in operating activities$(16,516)(10,073)$(6,443)64 %
Cash used in investing activities(1,413)(302)(1,111)368 %
Cash provided by financing activities8,730 8,846 (116)(1)%
Net decrease in cash and cash equivalents, and restricted cash$(9,199)$(1,529)$(7,670)502 %
Operating Activities
During the six months ended June 30, 2021, cash used in operating activities increased $6.4 million to $16.5 million compared to the same period in 2020. The increase was primarily due to an increase in operating expenses from wages and salaries and costs attributable to the launch and growth of our retail pharmacy operations in Arizona, California, and Michigan, and operating as a public company.
Investing Activities
During the six months ended June 30, 2021, cash used in investing activities increased $1.1 million to $1.4 million compared to the same period in 2020. The increase was primarily due to an increase in investment in property, plant and equipment and intangible assets associated with investments in retail pharmacy services operations in Arizona, California and Michigan.
Financing Activities
During the six months ended June 30, 2021, cash provided by financing activities decreased $0.1 million to $8.7 million compared to the same period in 2020. In the first half of 2020 the activity was primarily from the issuance of preferred stock and debt, and in the first half of 2021 the activity was primarily from issuing debt.

Critical Accounting Policies and Estimates
There were no significant changes in our critical accounting policies in the six months ended June 30, 2021, from those previously disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2016.

Certain statements in this section contain “forward-looking statements” within2020, filed with the meaningSEC on March 31, 2021.

Recent Accounting Pronouncements
For a discussion of the Private Securities Litigation Reform Act of 1995. All statements contained in this report and not clearly historical in nature are forward-looking, and the words “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “intends,” “potential,” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) generally are intended to identify forward-looking statements. Any statements in this report that are not historical facts are forward-looking statements. Actual results may differ materially from those projected or implied in any forward-looking statements. Such statements involve risks and uncertainties, including but not limited to those relating to product and customer demand, market acceptancerecent accounting pronouncements, see Part II, Item 7 of our products,Annual Report on Form 10-K for the ability to create new products, the ability to achieve a sustainable profitable business, the effect of economic conditions, the ability to protect our intellectual property rights, competition from other providers and products, risks in product development, our ability to raise capital to fund continuing operations, and other factors discussed from time to time in our filingsyear ended December 31, 2020, filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made except as required by law. Amounts in this section are in thousands, unless otherwise indicated.

Overview

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

We are an emerging bio-nutrition and bio-therapeutics company focused on the discovery, development and commercialization of nutritional products, functional foods, therapeutic products and other technologies aimed at maintaining or improving the health and performance of muscle tissue. Our initial core ingredient is Fortetropin, a natural, reversible, temporary myostatin reducing agent. Our plan of action is to: (i) create a sales platform through marketing products containing our proprietary ingredient Fortetropin in established, growing, and new markets and strategic selection of partnerships and collaborations to maximize near-term and future revenues, (ii) deepen the scientific understanding of the activity of Fortetropin, specifically as a natural, reversible, temporary reducer of the regulatory protein myostatin, and to leverage this knowledge to strengthen and build our intellectual property, (iii) conduct research and development activities to evaluate myostatin modulation in a range of both wellness and disease states, (iv) identify other products and technologies which may broaden our portfolio and define a business development strategy to protect, enhance and accelerate the growth of our products, (v) reduce the cost of manufacturing through process improvement, and (vi) identify contract manufacturing resources that can fully meet our future growth requirements. We believe that myostatin regulation represents a rational entry point for our drug discovery efforts and are evaluating therapeutic targets in this area.

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

The first product we introduced was MYO-T12, which was sold in the sports nutrition market. MYO T-12 is a proprietary formula containing Fortetropin and other ingredients. The formula was sold under the brand name MYO T-12 and later as MYO-X through an exclusive distribution agreement with Maximum Human Performance, or MHP. There were no sales to MHP in 2016 and we do not expect any orders from MHP in 2017. 

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In February 2014, we expanded our commercial operations into the age management market through a distribution agreement with Cenegenics Product and Lab Services, LLC (“Cenegenics”), under which Cenegenics distributed and promoted a proprietary formulation containing Fortetropin through its age management centers and its community of physicians focused on treating a growing population of patients focused on proactively addressing age-related health and wellness concerns. The distribution agreement with Cenegenics expired in December 2016. As of December 31, 2016 we recognized all of the deferred revenue. In May 2017, we received a purchase order from Cenegenics to deliver more product to them in 2017. We recorded the $20 received as a down payment as deferred revenue. We shipped 50% of the product ordered during the three months ended September 30, 2017 and recognized $10. The remaining deferred revenue will be recognized later in the year when we shipped the balance of the order. 

During the second quarter of 2015 we launched Rē Muscle HealthTM, our own direct-to-consumer portfolio of muscle health bars, meal replacement shakes and daily nutrition powders each powered by a full 6.6 gram single serving dose of Fortetropin. Our Rē Muscle Health products were previously sold through our e-commerce website, remusclehealth.com, and amazon.com. In March 2017, the Company stopped selling these products.

In March 2017 we launched our Fortetropin®-powered product line formulated to support the vital role of muscle in overall well-being as well as in fitness. Qurr® is a line of flavored puddings, powders, and shakes all shown to be safe for daily use. Qurr’s muscle-focused, over-the-counter products are available through convenient direct online ordering. All Qurr®products are blended with Fortetropin®, MYOS’ proprietary ingredient which has been clinically demonstrated to reduce serum myostatin levels, which helps increase muscle size and lean body mass. MYOS’ earlier product formulations featuring Fortetropin® have become part of the daily routine of many athletes and fit-conscious people. We continue to pursue additional distribution and branded sales opportunities. We expect to continue developing our own core branded products in markets such as functional foods, sports and fitness nutrition and rehab and restorative health and to pursue international sales opportunities. There can be no assurance that we will be able to secure distribution arrangements on terms acceptable to the Company, or that we will be able to generate significant sales of our current and future branded products.

Strategic Investment Transaction

On December 17, 2015, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with RENS Technology Inc. (the “Purchaser”), pursuant to which the Purchaser agreed to invest $20.25 million in the Company (the “Financing”) in exchange for (i) an aggregate of 3,537,037 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), and (ii) warrants to purchase an aggregate of 884,259 shares of Common Stock (the “Warrants”, and together with the Shares, the “Securities”). The Purchaser agreed to purchase the Securities in three tranches over twenty-four months. In the first tranche, which closedSEC on March 3, 2016, the Purchaser acquired 1,500,000 Shares31, 2021, and 375,000 Warrants (the “Initial Warrant”) for $5.25 million. In the second tranche, which was to close within six months of the closing of the first tranche, the Purchaser agreed to acquire 925,926 Shares and 231,481 Warrants (the “Second Warrant”) for $5.0 million. In the third tranche, which was to close within eighteen months of the closing of the second tranche, the Purchaser agreed to acquire 1,111,111 Shares and 277,778 Warrants (the “Third Warrant”) for $10.0 million. Each of the Warrants was to be immediately exercisable upon issuance, was to expire five years after issuance and was to have the following exercise prices: (a) $7.00 per share for the Initial Warrant, (b) $10.80 per share for the Second Warrant and (c) $18.00 per share for the Third Warrant. In addition, the Company agreed: (i) that the Purchaser will have the right to appoint four persons to the Company’s board of directors, subject to adjustment based on the Purchaser’s ownership percentage of the Company; (ii) to provide the Purchaser with a right to participate in 50% (or 100% if shares are to be issued for less than $3.50 per share) of any future financings pursued by the Company within 12 months from the closing of the third tranche of the Financing; and, (iii) until the closing of the third tranche, the Company would not take certain actions, including issuing shares (except for certain permitted issuances) or appointing new officers and directors, without the Purchaser’s consent (collectively, the “Purchaser’s Rights”). In addition, on December 17, 2015, the Company issued a convertible note in the amount of $575 to Gan Ren, a related party of RENS Agriculture. The convertible note provided short-term funding to the Company prior to the closing of the first tranche of the Financing. On December 17, 2016 the convertible note and accrued interest was converted into 225,860 shares at $2.74 per share.

The first tranche of the Financing was completed on March 3, 2016. The Company used the net proceeds from the first tranche of the Financing to fund its working capital, product development and marketing, research and development and other general corporate purposes. On August 19, 2016, the Purchaser notified the Company that it did not intend to fulfill its obligation to fund the second tranche of the Financing, notwithstanding its confirmation to the Company in June 2016 that the Purchaser would provide such funding in accordance with the terms of the Purchase Agreement. The Purchase Agreement provides that in the event that the Purchaser notifies the Company that it does not intend to fund the Second Closing Subscription Amount, the Purchaser is required to take all requisite action to cause the resignation or removal of one of its designees on the Board of Directors of the Company. Pursuant to the terms of the Purchase Agreement, effective August 23, 2016, Guiying Zhao resigned as a director of the Company. In addition, the Purchaser’s Rights terminated, effective August 19, 2016.

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On January 6, 2017, the Company commenced an action in the Supreme Court of New York, County of New York, against RENS Technology, Inc., RENS Agriculture Science & Technology Co., Ltd (“RENS Agriculture”), the parent company of RENS Technology, and Ren Ren, a principal in both entities and a director of the Company, arising from RENS Technology’s breach of a Securities Purchase Agreement under which RENS Technology agreed to invest an aggregate of $20.25 million in the Company in exchange for an aggregate of 3,537,037 shares of common stock of the Company and warrants to purchase an aggregate of 884,259 shares of common stock. In addition to seeking compensatory, consequential and other damages in the action, the Company asked the Court to preliminarily restrain RENS Technology and its agents and representatives, including, but not limited to, RENS Agriculture and Ren Ren, from selling, transferring, conveying, assigning, hypothecating or encumbering 1,500,000 shares of common stock of the Company and a warrant permitting the purchase of 375,000 shares at a price of $7.00 per share that RENS Technology had purchased under the Securities Purchase Agreement and, after the parties had an opportunity to submit opposition and reply papers in connection with the Company’s application, a preliminary injunction prohibiting RENS Technology from selling, transferring, conveying, assigning, hypothecating or encumbering the 1,500,000 shares and warrant during the pendency of the action and an order attaching the stock and warrant to satisfy any judgment entered in favor of the Company.

On January 11, 2017, the Court granted the Company the preliminary restraints that it requested, which prevents RENS Technology, among others, from selling, transferring, conveying, assigning, hypothecating or encumbering the 1,500,000 shares of the Company’s common stock or the aforementioned warrant. The Court scheduled a hearing on February 14, 2017, at which time the Court heard oral argument on the application for a preliminary injunction and prejudgment attachment of the stock and warrants to satisfy any judgment entered in favor of the Company. Since then, RENS Technology filed a motion to dismiss the complaint which the Company has opposed.

On April 11, 2017, the Court denied our application for a prejudgment attachment of the Purchaser’s acquired shares and warrant and a preliminary injunction in aid of the attachment to prevent a sale, transfer, or hypothecation of such securities, and vacating the preliminary restraints which it had previously entered. However, the Court noted that we had demonstrated a likelihood of success on the merits of the breach of contract claim. An application by the Purchaser to dismiss the complaint and various pre-trial discovery applications by both parties was scheduled for oral argument, but we thereafter amended the complaint in August 2017. The amended complaint repeated most of the initial claims but added a number of additional claims against RENS Agriculture, Mr. Ren and two additional Chinese defendants, including a claim against RENS Agriculture for breaching the exclusive distribution agreement, as well as claims against all defendants for theft and misappropriation of our confidential proprietary information and trade secrets, breach of fiduciary duty and duty of loyalty, misappropriation of corporate opportunity, unfair competition and a number of other torts. We are seeking damages and injunctive relief. The Purchaser has filed a motion to dismiss the amended complaint, which is still pending.

On August 16, 2017, the Purchaser commenced an action in the District Court of Clark County in the State of Nevada against us and Joseph Mannello, our then interim Chief Executive Officer, alleging that Mr. Mannello had breached his fiduciary duties and was grossly negligent in managing our company. The action seeks monetary damages and injunctive relief from Mr. Mannello as well as the appointment of a receiver over us. Subsequently, the Purchaser submitted a petition to appoint a receiver and we and Mr. Mannello submitted a motion to dismiss the action, both of which are currently pending and are due to be heard in December 2017.

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Clinical and Basic Research Programs

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

●In April 2017, we entered into an agreement with the College of Veterinary Medicine at Kansas State University to study the impact of Fortetropin on reducing muscle atrophy in dogs after ligament tear repair surgery. The study is expected to cost $32 and is expected to be completed by the second quarter of 2018.
●In May 2015, we initiated a dose response clinical study led by Jacob Wilson, Ph.D., CSCS*D, Professor of Health Sciences and Human performance at the University of Tampa, to examine the effects of Fortetropin supplementation on plasma myostatin levels at various dosing levels in young adult males and females. This study was intended to help us better define the dose response curve, the minimal effective dose and effects of Fortetropin on serum myostatin. In this double blind placebo controlled clinical study, 80 male and female subjects ranging in ages between 18 and 22 were randomized into four groups such that no significant differences in serum myostatin concentration existed between groups. Following assignment to one of the four groups, blood samples were collected to establish baseline values. Subjects were subsequently supplemented with three different doses of Fortetropin (2.0g, 4.0g and 6.6g) and a matching placebo for one week. Following a week of supplementation, blood samples were collected and serum myostatin levels were assayed. Results demonstrated that Fortetropin is effective as a myostatin reducing agent at daily doses of 4.0g and 6.6g. This research, which continues to build upon our current knowledge of Fortetropin, may result in the formulation of new products. Data from this study was presented at the 2016 International Conference on Frailty & Sarcopenia in April 2016.

●In May 2014, we entered into an agreement with the University of Tampa to study the effects of Fortetropin supplementation in conjunction with modest resistance training in average men. The study was a double-blind, placebo-controlled trial which examined the effects of Fortetropin on skeletal muscle growth, lean body mass, strength, and power in recreationally trained males. Forty-five subjects were divided into placebo, 6.6g and 19.8g dosing arms of Fortetropin daily for a period of 12 weeks. Results demonstrated a statistically significant increase in both muscle thickness and lean body mass in subjects taking Fortetropin compared to placebo. The clinical study also analyzed blood myostatin and cytokines levels via high-sensitivity enzyme-linked immunosorbent assay (“ELISA”) based spectrophotometric. Serum was analyzed for a plethora of relative cytokine levels via high-sensitivity enhanced chemiluminescent-based methods. The Interferon-Gamma (“IFN-γ”) inflammatory cytokine protocol screening showed no statistically significant changes in serum levels of IFN-γ for subjects in the placebo group. However, subjects in both Fortetropin daily dosing arms experienced statistically significant decreases (p < 0.05) in serum levels of the IFN-γ inflammatory cytokine. The lipid serum safety protocol demonstrated that daily use of Fortetropin at recommended and three times the recommended dose had no adverse lipid effect and did not adversely affect cholesterol, HDL or triglyceride levels. Data from the study was presented at the American College of Nutrition’s 55thannual conference. A separate mechanism of action study at the University of Tampa demonstrated that in addition to reducing serum myostatin levels, Fortetropin showed activity in mTOR and Ubiquitin pathways, two other crucial signaling pathways in the growth and maintenance of healthy muscle. Specifically, the preclinical data showed that Fortetropin up-regulates the mTOR regulatory pathway. The mTOR pathway is responsible for production of a protein kinase related to cell growth and proliferation that increases skeletal muscle mass. Up-regulation of the mTOR pathway is important in preventing muscle atrophy. The preclinical data also demonstrated that Fortetropin acts to reduce the synthesis of proteins in the Ubiquitin pathway, a highly selective, tightly regulated system that serves to activate muscle breakdown. Over-production in the Ubiquitin pathway is responsible for muscle degradation. We believe Fortetropin’s ability to regulate production in the Ubiquitin pathway may have significant implications for repairing age-related muscle loss.

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Results of Operations

Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016

  

Three Months

September 30,

  Change 
  2017  2016  Dollars  % 
             
Net revenues $160  $39  $121   312%
Cost of sales  65   30   35   118%
Gross profit  95   9   86     
                 
Operating expenses:                
Selling, marketing and advertising  90   97   (7)  (7%)
Research & development  1   4   (3)  (75%)
Personnel and benefits  269   281   (12)  (4%)
Shared based compensation  39   38   1   3%
General and administrative  382   391   (9)  (2%)
Amortization of acquired intangibles  71   53   18   34%
Total operating expenses  852   864   (12)  (1%)
                 
Operating loss  (757)  (855)  (98)  11%
                 
Other income (expense), net  4   (11)  15   135%
                 
Net loss $(753) $(866) $(113)  13%

Net revenues

Net revenues for the three months ended September 30, 2017 increased 312% to $160 compared to $39 for the three months ended September 30, 2016. The increase in net revenues was primarily due to the launch of our new product line in March 2017 as well as an order from Cenegenics in May 2017.

Cost of sales

Cost of sales for the three months ended September 30, 2017 increased 118% to $65 compared to $30 for the three months ended September 30, 2016. The increase was primarily due to the costs associated with the launch of our new product line in March 2017 as well as costs associated in fulfilling an order from Cenegenics in May 2017.

Operating expenses

Operating expenses for the three months ended September 30, 2017 decreased 1% to $852, compared to operating expenses of $864 for the three months ended September 30, 2016. The decrease of $12 is due primarily to savings in all areas of operating expenses of $30 offset by increase in amortization expense of $18.

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Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

  Nine Months Ended September 30,  Change 
  2017  2016  Dollars  % 
             
Net revenues $369  $300  $69   23% 
Cost of sales  244   292   (48)  (16%)
Gross profit  125   8   117   1,461% 
                 
Operating expenses:                
Selling, marketing and advertising  557   778   (221)  (28%) 
Research & development  42   16   26    163% 
Personnel and benefits  932   1,071   (139)  (13%) 
Shared based compensation  121   264   (143)  (54%) 
General and administrative  1,206   1,233   (27)  (2%) 
Amortization of acquired intangibles  196   157   39    25% 
Loss on asset impairments / bad debt  59   44   15   32% 
Total operating expenses  3,113   3,563   (450)  (13%) 
                 
Operating loss  (2,988)  (3,555)  567   17% 
                 
Other income (expense), net  12   (34)  46   129% 
                 
Net loss $(2,976) $(3,589) $(613)   17% 

N/M = Percent change not meaningful

Net revenues

Net revenues for the nine months ended September 30, 2017 increased 23% to $369 compared to $300 for the nine months ended September 30, 2016. The increase in net revenues was primarily due to the launch of our new product line in March 2017 as well as an order from Cenegenics in May 2017.

Cost of sales

Cost of sales for the nine months ended September 30, 2017 decreased 16% to $244 compared to $292 for the nine months ended September 30, 2016. The decrease was primarily due to costs associated with the launch of our new product line of $25 and an order from Cenegenics of $23, offset by a decrease in inventory reserve in the nine months ended September 30, 2016.

Operating expenses

Operating expenses for the nine months ended September 30, 2017 decreased 13% to $3,113, compared to $3,563 for the nine months ended September 30, 2016. The decrease of $450 is due primarily to savings in selling, marketing and advertising of $221; a decrease in personnel costs of $139; a decrease in share based compensation of $143 and a decrease in general & administrative costs of $26 offset by increase in amortization of $38 due to capitalized web-site amortization costs during the nine months ended September 30, 2017.

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Liquidity and Capital Resources

Working capital at September 30, 2017 and December 31, 2016 is summarized as follows:

  September 30,  December 31,  Increase 
  2017  2016  (Decrease) 
Current Assets:         
Cash $468  $1,866  $(1,398)
Accounts receivable, net  56   8   48 
Inventories, net  1,821   1,862   (41)
Prepaid expenses and other assets  500   85   415 
Total current assets $2,845  $3,821  $976 
Current liabilities:            
Accounts payable $107  $226  $(119)
Accrued expenses and other current liabilities  368   361   7 
Deferred revenue  10   56   (46)
Total current liabilities $485  $643  $(158)

Working capital decreased $818 to $2,360 at September 30, 2017 compared to $3,178 at December 31, 2016. Changes in working capital components were as follows:

●Cash decreased $1,398 for the nine months ended September 30, 2017 primarily due to net cash used in operating activities of $3,200, deferred offering costs of $125 less $1,927 received from proceeds of issuance of common stock in February 2017.

●Inventories, net decreased slightly by $41 during the nine months ended September 30, 2017 due to sales of the new product line.

●Prepaid expenses and other assets increased $415 primarily due to an increase in prepayment of inventories of $157, an increase in insurance premiums of $98 and an increase in other prepaid expenses of $160.

●Accounts payable decreased $119 primarily due to the timing of payments under new vendor processing and lower spending.

●Accrued expenses and other current liabilities increased $7 primarily due to a decrease of $25 in accrued professional fees, a $47 decrease in other liabilities offset by a $93 increase in insurance payable.

At September 30, 2017, the Company had cash of $468 and total assets of $4,875 (which includes $1,711 of net intangible assets).

Summarized cash flows for the nine months ended September 30, 2017 and 2016 are as follows:

  Nine Months Ended
September 30,		    
  2017  2016 ��Change 
          
Net cash used in operating activities $(3,200)  (3,031)  (169)
Net cash provided by financing activities  1,802   5,041   (3,239)
Net (decrease) / increase in cash $(1,398)  2,010   (3,408)

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Net cash used in operating activities represents net loss adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash used in operating activities for the nine months ended September 30, 2017 increased $169 compared to the nine months ended September 30, 2016. For additional information about the changes in operating assets and liabilities, refer to the above discussion on working capital and the condensed consolidated statement of cash flows as of September 30, 2017.

Net cash provided by financing activities includes proceeds from borrowing and issuing equity instruments. Net cash provided by financing activities for the nine months ended September 30, 2017 includes net proceeds of $1,926 relating to the sale of securities on February 7, 2017 to an institutional investor in a registered direct offering of 500,000 shares offset by deferred offering costs of $125.

Net cash provided by financing activities for the nine months ended September 30, 2016 includes net proceeds of $5,141 from the closing of the first tranche of the Financing with RENS Technology Inc. on March 3, 2016, partially offset by $100 used to pay off the Term Note on January 7, 2016

Term Note

On September 10, 2015, the Company converted its outstanding revolving note with City National Bank, which had a termination date of August 31, 2015, into a term note (the “Term Note”). The Term Note provided that the then outstanding balance of $400 shall be payable along with interest thereon on the last day of each month in four (4) consecutive installments of $100, with the final installment due and payable in full on December 31, 2015. At December 31, 2015, the balance under the Term Note was $100. The Term Note was paid in full on January 7, 2016.

Long-term Contractual Obligations

At September 30, 2017, the Company’s enforceable and legally binding contractual obligations include future minimum lease payments under a non-cancellable operating lease and purchase obligations under a long-term supply agreement.

At September 30, 2017, the future minimum lease payments under the non-cancellable operating lease were as follows:

Years Ended December 31, Amount 
2017 (remaining three months) $18 
2018  71 
2019  72 
Total $161 

For additional information about the operating lease refer to “NOTE 11 – Commitments and Contingencies – Operating Lease”3: "Recent Accounting Pronouncements" in the notes to condensedour unaudited consolidated financial statements.

Supply Agreement

At September 30, 2017, the future minimum payments under the supply agreement were as follows:

Years Ended December 31, Amount 
2017 (remaining three months) $36 
2018  132 
Total $168 

The agreement expires on December 31, 2018, and the Company has the unilateral right to renew the agreement for subsequent one-year terms.

For additional information about the supply agreement refer to “NOTE 11 – Commitments and Contingencies – Supply Agreement” in the notes to condensed consolidated financial statements.

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Off-Balance Sheet Arrangements

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

Recent Accounting Pronouncements

In September 2017, FASB issued Accounting Standards Update (ASU) No. 2017-13, Revenue from Contracts with Customers which amended FASB Accounting Standards Codification® (ASC) by creating Topic 606, Revenue from Contracts with Customers. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 supersedes nearly all existing revenue recognition guidance under U.S. GAAP and requires revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract.

The FASB also issued the following amendments to ASU No. 2014-09 to provide clarification on the guidance:

●ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date
●ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent (Reporting Revenue Gross vs Net)
●ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing
●ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients

The adoption of Topic 606 is required for public entities for reporting periods beginning after December 15, 2017. This accounting guidance is effective for us beginning January 1, 2018 using one of two prescribed transition methods. We have evaluated the effect that the updated standard will have on our consolidated financial statements looking at our revenue for 2016 & 2017 and related disclosure and the Company does not expect the adoption to have a significant impact on its consolidated financial statements.

The Company will adopt the provisions of this ASU for its fiscal year beginning January 1, 2018

In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718). The amendmentsincluded elsewhere in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This update is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The Company has evaluated the impact of the updated guidance and has determined that the adoption of ASU 2017-09 is not expected to have a significant impact on its consolidated financial statements. 

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill, which accomplishes exactly what its title indicates by eliminating the second step in the current goodwill impairment calculation. Currently there is a two-step process for determining the amount of any goodwill impairment. In Step 1 an entity determines if the carrying value of the reporting unit (for which goodwill has been recorded) exceeds the fair value of the reporting unit. If the calculation in Step 1 indicates that the carrying value of a reporting unit for which goodwill has been recorded exceeds the fair value, the entity would have to determine the implied fair value of the reporting unit’s goodwill. An impairment would be recorded to the extent that the goodwill carrying value exceeded the implied fair value of goodwill at the reporting date. The amount of any goodwill impairment must take into consideration the effects of income taxes for any tax deductible goodwill. The effective date to adopt the ASU is for fiscal years beginning after December 15, 2019. The ASU is to be applied prospectively. Early adoption is permitted. The Company has evaluated the impact of the updated guidance and has determined that the adoption of ASU 2017-04 is not expected to have a significant impact on its consolidated financial statements. 

In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).” The amendments in this Update relate to eight specific types of cash receipts and cash payments which current U.S. GAAP either is unclear or does not include specific guidance on the cash flow classification issues. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company has adopted the provisions of this ASU for its fiscal year beginning January 1, 2018. The adoption of ASU 2016-15 did not have a significant impact on its consolidated financial statements.

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Quarterly Report Form 10-Q.

In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606), Narrow Scope Improvements and Practical Expedients.” The amendments in ASU 2016-12 affect only the narrow aspects of Topic 606 that are outlined in ASU 2016-12 and is effective for annual reporting periods beginning after December 31, 2017, including interim reporting periods within that reporting period. The Company has evaluated the impact of the updated guidance and has determined that the adoption of ASU 2016-12 is not expected to have a significant impact on its consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10 “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.” The amendments in this Update affect entities with transactions included within the scope of Topic 606. The scope of that Topic includes entities that enter into contracts with customers to transfer goods or services (that are an output of the entity’s ordinary activities) in exchange for consideration. The effective date to adopt the ASU is for fiscal years beginning after December 15, 2017.The Company has evaluated the impact of the updated guidance and has determined that the adoption of ASU 2016-10 is not expected to have a significant impact on its consolidated financial statements.

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09”). ASU 2016-09 provides guidance designed to simplify several aspects of the accounting for share-based payment transactions, including guidance relating to accounting for income taxes with respect to share-based payment awards; providing generally that excess tax benefits related to share-based awards should be recorded as a reduction to income tax expense (currently, excess tax benefits generally are recorded to additional-paid-in-capital); providing generally that excess tax benefits related to share-based awards should be classified along with other income tax cash flows as an operating activity (currently, excess tax benefits generally are separated from other income tax cash flows and classified as a financing activity); providing that an entity may make an accounting policy election either to base compensation cost accruals on the number of awards expected to vest (as required by current guidance) or to account for forfeitures when they occur; modifying the current exception to liability classification such that partial cash settlement of an award for tax withholding purposes would not result, by itself, in liability classification of the award if the amount withheld does not exceed the maximum statutory tax rate in the employees’ applicable jurisdictions (currently, an award cannot qualify for equity classification, rather than liability classification, if the amount withheld exceeds the minimum statutory withholding requirements); and providing that cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity on the statement of cash flows (currently there is no authoritative guidance addressing this classification issue). The guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Depending on the particular issue addressed by the guidance, application of the guidance will be made prospectively, retrospectively or subject to a retrospective transition method. The adoption of ASU 2016-09 did not have a significant impact on the consolidated financial statements.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leases with lease terms of more than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will continue to primarily depend on its classification as a finance or operating lease. However, unlike U.S. GAAP, which requires only capital leases to be recognized on the balance sheet, ASU 2016-02 will require both types of leases to be recognized on the balance sheet. ASU 2016-02 also requires disclosures about the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. ASU 2016-02 is effective beginning January 1, 2019, with early application permitted. We have evaluated the adoption of ASU 2016-12 and determined that the standard will not have a significant impact on our consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”) ASU 2015-17 requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The amendments in this Update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented and is effective for periods beginning after December 15, 2016. The adoption of ASU 2015-17 did not have a significant impact on the consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”), which changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-11 defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new guidance must be applied on a prospective basis by us beginning January 1, 2017, with early adoption permitted. The adoption of ASU 2015-17 did not have a significant impact on the consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which requires all debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the associated debt.

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Prior to the issuance of this standard, debt issuance costs, which are specific incremental costs, other than those paid to the lender, that are directly attributable to issuing a debt instrument (i.e., third party costs), were required to be presented in the balance sheet as a deferred charge (i.e., an asset). Under ASU 2015-03, the presentation of debt issuance costs is consistent with the presentation for a debt discount, (i.e., a direct adjustment to the carrying value of the debt). ASU 2015-03 does not affect the recognition and measurement of debt issuance costs. Accordingly, the amortization of such costs should continue to be calculated using the interest method and be reported as interest expense. ASU 2015-03 is effective for us beginning January 1, 2016. The Company has evaluated the impact of the updated guidance and has determined that the adoption of ASU 2015-03 does not have an impact on the consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”). The amendments in this update define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and provides related footnote disclosure requirements. Under U.S. GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting establishes the fundamental basis for measuring and classifying assets and liabilities. This update provides guidance on when there is substantial doubt about an organization’s ability to continue as a going concern and how the underlying conditions and events should be disclosed in the footnotes. It is intended to reduce diversity that existed in footnote disclosures because of the lack of guidance about when substantial doubt existed. The amendments in this update are effective for us beginning December 31, 2016. The Company has evaluated the impact of the updated guidance and has disclosed the impact in the footnotes on its consolidated financial statements.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, equity and the disclosures of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future non-conforming events. Accordingly, the actual results could differ significantly from estimates. Significant items subject to such estimates include but are not limited to the valuation of stock-based awards, measurement of allowances for doubtful accounts and inventory reserves, the selection of asset useful lives, fair value estimations used to test long-lived assets, including intangibles, for impairment and provisions necessary for assets and liabilities. The Company has recorded minimal sales to its distributors during the past seven consecutive quarters and has only recently launched its Qurr® portfolio of branded products. Management’s estimates, including evaluation of impairment of long-lived assets and inventory reserves are based in part on forecasted future results. A variety of factors could cause actual results to differ from forecasted results and these differences could have a significant effect on asset carrying amounts.

Concentrations of Credit Risk

Management regularly reviews accounts receivables, and if necessary, establishes an allowance for doubtful accounts that reflects management’s best estimate of amounts that may not be collectible based on historical collection experience and specific customer information. Bad debt expense recognized as a result of an allowance for doubtful accounts is classified under selling, general and administrative expenses in the statements of operations. If we are unable to collect our outstanding accounts receivable from our distributors, or if our distributors are unable or unwilling to purchase our products, our operating results and financial condition will be adversely affected.

Fair Value of Long-Lived Assets

We test long-lived assets, including fixed assets and intangibles with finite lives, for recoverability when events or changes in circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. We consider historical performance and future estimated results in our evaluation of potential impairment and then compare the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, we measure the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows at the rate we utilize to evaluate potential investments. We estimate fair value based on the information available in making the necessary estimates, judgments and projections.

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Our policy is to evaluate intangible assets subject to amortization for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Impairment testing of intangible assets subject to amortization involves comparing the carrying amount of the asset to the forecasted undiscounted future cash flows. In the event the carrying value of the asset exceeds the undiscounted future cash flows, the carrying value is considered not recoverable and an impairment exists. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, calculated using a discounted future cash flow method. The computed impairment loss is recognized in the period that the impairment occurs. Assets which are not impaired may require an adjustment to the remaining useful lives for which to amortize the asset.

Stock-based Compensation

Stock-based payments are measured at their estimated fair value on the date of grant. Stock-based awards to non-employees are re-measured at fair value each financial reporting date until performance is complete. Stock-based compensation expense recognized during a period is based on the estimated number of awards that are ultimately expected to vest. For stock options and restricted stock that do not vest immediately but which contain only a service vesting feature, we recognize compensation cost on the unvested shares and options on a straight-line basis over the remaining vesting period.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of options and the market price of our common stock on the date of grant for the fair value of restricted stock issued. Our determination of fair value of stock-based awards is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and certain other market variables such as the risk free interest rate.

Income Taxes

We account for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before we are able to realize their benefits, or that future deductibility is uncertain. We record a valuation allowance for deferred tax assets, if any, based on our estimates of future taxable income as well as tax planning strategies when it is more likely than not that a portion or all of its deferred tax assets will not be realized. If we are able to utilize more of our deferred tax assets than the net amount previously recorded when unanticipated events occur, an adjustment to deferred tax assets would increase our net income when those events occur.

Inventory Reserves

Inventories are valued at the lower of cost or market, with cost determined on a first-in, first-out basis. Our policy is to recognize an inventory reserve as a loss in earnings in the period in which evidence exists that the market value of inventory is less than its cost due to damage, physical deterioration, obsolescence, changes in price levels or other causes. Inventory “market value” is initially deemed to be current replacement cost, but it cannot be more than the net realizable value, and it cannot be less than the net realizable value, less an approximate normal profit margin. Net realizable value is the estimated selling price in the ordinary course of business, less costs to complete and sell finished goods, including direct selling costs such as transportation and sales commissions. The multiple possible outcomes that can result from applying lower of cost or market can make inventory valuation highly complex.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are

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

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Item.


Item 4. Controls and Procedures

Evaluation of

Disclosure Controls and Procedures

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

In accordance with Exchange Act Rules 13a-15 and 15d-15, anthis report. Based on such evaluation, was completed by our PrincipalChief Executive Officer and PrincipalChief Financial Officer have concluded that, as of the effectivenessend of the design and operation ofsuch period, our disclosure controls and procedures as of September 30, 2017. Based on that evaluation, these officers concluded that our disclosure controls and procedures wereare effective.

Changes in Internal Control overOver Financial Reporting

There were nohave not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f)13a15(f) and 15d-15(f) ofunder the Exchange Act) during the quarter ended SeptemberJune 30, 20172021 that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.

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PART II-OTHER INFORMATION

II

Item 1. Legal Proceedings.

OnProceedings

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 27, 2016, Cutler Holdings, L.L.C. (“Cutler”)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 inregarding the Superior Court of New Jersey alleging thattransactions contemplated within the Company failed to make certain rental payments. On March 30, 2017, the Company entered into a settlement agreement with Cutler, pursuant to which Cutler released the Company from any liability for the claims asserted in the complaint.

On January 6, 2017, the Company commenced an actionMerger Agreement was filed in the Supreme Court of the State of New York, County of New York, againstcaptioned Faasse v. MYOS RENS Technology Inc. (“the Purchaser”), RENS Agriculture, the parent company of the Purchaser, and Ren Ren, a principal in both entities and a director of the Company, arising from the Purchaser’s breach of a Securities Purchase Agreement under which the Purchaser agreed to invest an aggregate of $20.25 million in the Company in exchange for an aggregate of 3,537,037 shares of common stock of the Company and warrants to purchase an aggregate of 884,259 shares of common stock. In addition to seeking compensatory, consequential and other damages in the action, the Company asked the Court to preliminarily restrain the Purchaser and its agents and representatives, including, but not limited to, RENS Agriculture and Ren Ren, from selling, transferring, conveying, assigning, hypothecating or encumbering 1,500,000 shares of common stock of the Company and a warrant permitting the purchase of 375,000 share at a price of $7.00 per share that the Purchaser had purchased under the Securities Purchase Agreement and, after the parties had an opportunity to submit opposition and reply papers in connection with the Company’s application, a preliminary injunction prohibiting the Purchaser from selling, transferring, conveying, assigning, hypothecating or encumbering the 1,500,000 shares and warrant during the pendency of the action and an order attaching the stock and warrant to satisfy any judgment entered in favor of the Company.

On January 11, 2017, the Court granted the Company the preliminary restraints that it requested, which prevents RENS Technology, among others, from selling, transferring, conveying, assigning, hypothecating or encumbering the 1,500,000 shares of the Company’s common stocket. al., Index No.: 654644/2020 (NY Supreme Ct., NY Cnty., September 23, 2020), or the aforementioned warrant. The Court scheduledNew York Complaint. On October 12, 2020, a hearing on February 14, 2017, at which timesecond complaint regarding the Court heard oral argument on the application for a preliminary injunction and prejudgment attachment of the stock and warrants to satisfy any judgment entered in favor of the Company. Since then, RENS Technologytransactions was filed a motion to dismiss the complaint which the Company has opposed. No decision has been made by the Court on these two pending applications.

On April 11, 2017, the Court denied our application for a prejudgment attachment of the Purchaser’s acquired shares and warrant and a preliminary injunction in aid of the attachment to prevent a sale, transfer, or hypothecation of such securities, and vacating the preliminary restraints which it had previously entered. However, the Court noted that we had demonstrated a likelihood of success on the merits of the breach of contract claim. An application by the Purchaser to dismiss the complaint and various pre-trial discovery applications by both parties was scheduled for oral argument, but we thereafter amended the complaint in August 2017. The amended complaint repeated most of the initial claims but added a number of additional claims against RENS Agriculture, Mr. Ren and two additional Chinese defendants, including a claim against RENS Agriculture for breaching the exclusive distribution agreement, as well as claims against all defendants for theft and misappropriation of our confidential proprietary information and trade secrets, breach of fiduciary duty and duty of loyalty, misappropriation of corporate opportunity, unfair competition and a number of other torts. We are seeking damages and injunctive relief. The Purchaser has filed a motion to dismiss the amended complaint, which is still pending.

On August 16, 2017, the Purchaser commenced an action 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 StateLitigation 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 Nevada against usthe Litigation delaying or adversely affecting the Merger and Joseph Mannello, our then interim Chief Executive Officer, alleging that Mr. Mannello had breached his fiduciary dutiesto minimize the costs, risks and was grossly negligentuncertainties inherent in managing our company. The action seeks monetary damageslitigation, and injunctive relief from Mr. Mannellowithout admitting any liability or wrongdoing, MYOS determined to voluntarily supplement the Form S-4 Registration Statement as well asdescribed in the appointment of a receiver over us.Current Report on Form 8-K on November 2, 2020. Subsequently, the Purchaser submitted a petition to appoint a receiverNevada Complaint and wethe New York Complaint were voluntarily dismissed. The remainder of the Litigation remains outstanding. MYOS and Mr. Mannello submitted a motion to dismissMAI specifically deny all allegations in the action, both of which are currently pending and are due to be heard in December 2017.

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Litigation and/or that any additional disclosure was or is required.


Item1A.

Item 1A. Risk Factors.

Factors

There have been no material changes from the risk factors disclosed in Part I, Item IA – Risk Factors that could cause our actual results to differ materially from those in this report are any of the risks describedcontained in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with2020 (the “2020 Annual Report”) and in Part II, Item 1A – Risk Factors contained in our Quarterly Report on Form 10-Q for the SEC onquarter ended March 31, 2017 and2021 (the “Q1 2021 Quarterly Report”). The risk factors described in those sections, as well as other information set forth in this Quarterly Report on Form 10-Q, could materially affect our business, financial condition or operating results. The risks described in our Registration Statement on Form S-3, initially filed with2020 Annual Report and our Q1 2021 Quarterly Report are not the SEC on October 25, 2017, as amended (“Form S-3”). Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition.only risks we face. Additional risk factorsrisks and uncertainties not presentlycurrently known to us or that we currently deem to be immaterial also may also impairmaterially adversely affect our business, financial condition or results of operations.

As of the date of this report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016 or our Form S-3 filed with the SEC, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

operating results.

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

None

Proceeds
None.

Item 3. Defaults Upon Senior Securities.

None

Securities
None.

Item 4. Mine Safety Disclosures.

None

Disclosures
None.

Item 5. Other Information.

None

Information
None.
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Item 6. Exhibits.

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

No.Description
10.1Employment Agreement, dated asIncorporated by Reference
Exhibit NumberDescriptionFormExhibitFiling Date
101*Inline XBRL Document Set for the consolidated condensed financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of August 24, 2017, by and between Joseph  Mannello  and MYOS RENS Technology, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Currentthis Quarterly Report on Form 8-K, filed with the SEC on August 28, 2017)10-Q
31.1104*CertificationInline XBRL for the cover page of Principal Executive Officer and Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 ofthis Quarterly on Form 10-Q, included in the Sarbanes-Oxley Act of 2002
32.1*Exhibit 101 Inline XBRL Document SetCertification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.SCHXBRL Taxonomy Extension Schema Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Labels Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document

* Furnished herewith

37

§ 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.
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SIGNATURES


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



MYOS RENS TECHNOLOGY INC.
MEDAVAIL HOLDINGS, INC.
Date: November 9, 2017By:/s/ Joseph Mannello
Date: August 12, 2021By:Name: Joseph Mannello/s/ Ed Kilroy
Title:Ed Kilroy
President and Chief Executive Officer

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