MedAvail Holdings, Inc.

Michael Porter - President, Porter LeVay & Rose Joseph Mannello - CEO Joseph DiPietro - Controller

Brian Marckx - Zacks Investment Research Elliot Smith - Private Investor Pat Haggerty - Aegis Capital Joseph Cordi - Aegis Capital

Thank you, Melissa. Good morning, ladies and gentlemen, and welcome to our first quarter earnings conference Call.

The forward-looking statement any statements in this release that are not historical facts are forward-looking statements. Actual results may differ materially from those projected or implied in any forward-looking statements.

Such statements involve risks and uncertainties, including but not limited to those relating to product and customer demand, market acceptance and our products, the ability to create new products through research and development, the successful results of strategic initiatives, the successful launch of our products, including Qurr products, the success of our research and development partnerships, opportunities and success of our existing partnerships, the ability to generate the forecast revenue margins, the ability to achieve a sustainable, profitable business, the effect of economic conditions, the ability of products, our intellectual property rights, competition from other providers and products, the continued listing of our securities on NASDAQ. All these information can and other factors may discussed from time to time in the company's Security Exchange Commission filings.

The company undertakes no obligations to update or revise any forward-looking statement for events and circumstances after the date on which such statements is made except as required by law. I'd now like to turn the call over to Joe DiPietro, Controller of the company.

Good morning, Joe.

Good morning. Good morning, everyone.

Thank you for joining us. I'm going to go over our first quarter 2018 financial highlights.

Our gross profit margin was 46% for the first quarter of 2018, compared to 10% in the prior year. Net revenues decreased 62% to 57 for the first quarter of 2018, compared to 150 for the first quarter of 2017.

The decrease in net revenues was primarily due to a non-recurring sale to a related party of 116 in the first three months of 2017. Gross profit increased to 26, compared to 15 for the first quarter of 2017.

Operating expenses increased 9% to 1,238, compared to 1,137 for the first quarter of 2017 and our net loss increased 9% to 1,213, compared to 1,117 for the first quarter of 2017. Our liquidity, as of March 31, 2018, the company had no debt and had 1.7 million in working capital.

The company raised approximately 287,000 from the sale of 140,295 shares of stock for $2.11 per share through its at-the-market program with H.C. Wainwright subsequent to the end of the quarter.

The company consummated a private placement of shares of common stock on April 25, 2018, issuing 806,452 shares at a purchase price of $1.24 per share to a group of accredited investors, including MYOS CEO, Joseph Mannello and another member of the company's Board of Directors, for aggregate gross proceeds of a $1 million. I'd now like to turn the call over to our Chief Executive Officer, Joseph Mannello.

Thank you, Joe. Good morning, everyone, and thank you for being on the call.

Our results for the first quarter of 2018 are in-line with our expectations. I am optimistic about our sports nutrition vertical, as several key initiatives have begun, which I believe will be a strong catalyst for additional sales growth here at Myos.

We recently secured the prestigious NSF Certified for Sport for the manufacture of our new Yolked line of products. Gaining this certification activated our marketing relationship with IMG College, a division of the sports and marketing firm IMG.

We have begun already meeting with several Division I universities in the northeast part of the country. We hope to place our product in these universities and based on the overall demand, establish accounts for recurring orders at these universities.

I can't emphasize enough how efficient this process has been in terms of gaining entry into these universities. Thanks to our marketing partnership with IMG.

In the coming days, we will debut a new, more focused website for our products. Based on feedback from customers and visitors, we learned that we needed to improve our messaging in terms of educating the marketplace about the science-based benefits of Fortetropin.

Simply said, what we learned specifically at the Arnold Classic and other areas where we talk about our product, it is key to tell people what Fortetropin is and what it does. We often get put in the place of all other proteins and Fortetropin is a much different product, a much more powerful product.

Recently, we have hired two direct sales organizations to support our internal sales team. These sales organizations allow us to run a much more efficient marketing campaign, we will be identifying key decision makers for advancing and selling our products across all the areas that we are focused on, sports nutrition, veterinary products, et cetera and we believe that we'll see results from their efforts in the third quarter of this year.

As I've stated in previous communications, we continue to be fully committed towards building shareholder value through science, that is what this company founded on and that's what we're going to continue to do. We now have four active studies, one at Kansas State University, one at UC Berkeley, one at Rutgers and yesterday we announced the pre-clinical cachexia study with Weill Cornell Medical Center.

Today, I'd like to highlight our study at Kansas State, relating to Fortetropin and its impact on the muscle health in dogs. We announced it in 2017 and this is a randomized, double blind, placebo-controlled clinical study initiated with Dr.

Kenneth Harkin, who is at the College of Veterinary Medicine at Kansas State and what we are trying to determine here is if daily supplementation of Fortetropin can reduce muscle atrophy in dogs that undergo TPLO surgery, which is comparable to ACL surgery in humans. The study involves 100 dogs, where 50 dogs will receive daily supplementation of Fortetropin over the course of 12 weeks following surgery, while the remaining 50 dogs will receive a macronutrient-matched placebo control.

The primary endpoint of this study is muscle thickness of the coxofemoral extensors and flexors. The secondary end-points are epaxial muscle thickness, muscle condition score and stance analysis.

I hope more of you understand what I just said, because I have a degree in psychology not biology, so it's difficult for me, but thank God, we have a great Scientific Advisory Board and great scientists here. To-date, the study is more than 90% complete and we expect to announce the results before the end of 2018.

I am very excited about the potential for our veterinary product, we continue to receive great feedback from veterinarians that have been using the product on dogs. This is an important part of the MYOS story and we have found several veterinary industry indicators that demonstrate the great promise of market success and acceptance for our Fortetropin-based product.

Simply put, pet owners are paying more today for their pets than ever before. Nontraditional veterinary care and nutrition techniques have grown significantly in the past several years.

Veterinarians are now adopting new treatment protocols, including Integrative Veterinary Medicine, combining western veterinary science with nontraditional approaches. These methods include homeopathic, herbal remedies, massage, chiropractic work and nutritional counseling.

Now why is this all important? Because as new technologies and a changing marketplace of pet owners have spurred greater interest in more nontraditional supplements and therapies for pets.

It's perfect for a company like ours and our Fortetropin. During the past decade, a majority of pet owners in the US were middle-aged.

But as millennials begin to outnumber baby boomers, this particular pet owner demographic will reach a tipping point. Now ranking the highest among generations, millennial pet ownership has surpassed baby boomers, according to the 2017 Packaged Facts report on pet food in the US.

The report also states that millennials account for 35% of all pet owners and research has shown that pets are living longer, thanks to advances in care, and have very different veterinary needs, both for wellness and sickness, compared to prior generations. And many pet owners are willing to pay for treatments that were once reserved only for humans and are willing to pay significant sum for these treatments.

I can assure you having two dogs that I will do whatever my pet tells me if I can afford it to treat these dogs to keep them living well and alive longer. The US pet market just for pet health insurance is expected to double from 530 million to almost 1 billion by 2020.

And now as I mentioned early, the Kansas State study is just one of the four ongoing clinical studies. The results of these and other studies are going to determine just how large the long-term potential is for this company going forward.

I view our company today as a bio-nutrition company, with a portfolio of brands that are entering the marketplace and supporting our scientific initiatives. I believe that the best way to value MYOS over the long-term is through our scientific initiatives that will potentially provide large revenue opportunities.

It is my belief and optimism in the long-term potential of MYOS that led me to participate, along with one of our other Board members and others, in an additional 1 million investment into the company. We continue to have no debt.

Fortetropin is truly a disruptive and remarkable product that improves muscle health. With our strong balance sheet, conservative cash management strategy, improved scientific profile and brand development I believe will yield both short-term and long-term success.

We look forward to sharing more on our developing story in the months to come. Thank you very much.

Melissa, we're now ready for questions.

Hi. Good morning, guys, and thanks for taking the questions.

I'm wondering if you can talk a little bit about the IMG relationship and how that works particularly on the marketing side, so is IMG directly involved in the sales process?

The answer is yes and no, and I'll explain. IMG is introducing, let me explain a little bit how IMG works.

IMG has people at every major university, I shouldn't say every, but I think 200 out of 300 major universities in the country, where they have one or more individuals at that university to help them with marketing and advertising. So when we get introduced to a school there is a IMG rep at that school and then there's a rep from the whole area.

We will go, they will get us to meet the school and the idea is, we will get to meet the person who is decision makers at that school for their products and then it's up to us to do the sale.

Okay.

They get us the warm lead so to speak and it is a very warm lead.

Okay. So is they act in somewhat of a broker fashion, I guess.

Yeah. I guess that's a way to call it.

Okay. So, in terms of the NSF certified for sport designation, does that -- so I assume that would go on your label, your packaging or maybe both.

And if that's the case, how extensive or not extensive is the process to update your labels and packaging for the designation?

Well, what we do is, it is on our labels and packaging. We go -- the process was you get NSF certified first and then you build the packaging next.

So we're pretty confident that our Yolked product was -- we were pretty confident was going to be NSF certified, Mr. Wright from Fertilized Egg Yolk.

So, you go, you get certified and then you go and do your packaging. So if you look at our Yolked product, it says on the box NSF certified.

So it's not the -- there is a cost for the certification. Any certification, there are other ones NSF just seems to be the gold standard.

Okay.

There's always a cost. It's not prohibited.

Yeah. Okay.

Okay. Great.

And then in terms of back to the universities, can you talk a little bit about what the sales process is and then maybe sort of too early to ask this question, but do you have a sense of kind of a typical timeline for how long it would take to close a perspective sales of the -- from the time that you engage a university client until the time that the university would start purchasing?

No.

Okay.

And I mean that's honest. I -- we just don't have enough experience.

Right.

I want you to know. I don't look at universities as low-hanging fruit.

I look at it as higher hanging fruit, because the process does take longer. The beauty of it, once you get in to one or two, I think, then the growth becomes faster.

Someone in the SCC finds out some other school and the SCC or the Big 10 is taking the product. It is a natural product.

It's NSF certified and it really does something. And I think then it starts growing faster.

I think the initial time to get there is going to take longer. But we also look at it if we're in ex-school, our product is a perfect product for people from 18 to 110.

So you then appeal to the alumni of those schools. That's the idea.

It just doesn't stop at -- with the Athletic Department.

Okay.

So, but it's not a short process. I don't want anyone to believe that.

Yeah. Okay.

Yeah. Yes.

Understood. And then, on the University of Kansas dog study.

Do you have an idea of how many of the TPLO surgeries are performed in the US each year?. Just trying to get a sense kind of the market would -- just you know?

But Kansas State when we hired them to do this study. They were doing around 200 a year roughly one university.

Yeah. Got it.

So I don't have that. And don't -- I don't want anyone to think that we are going to make a fortune giving it to dogs who had TPLO surgery.

That's not the idea here. The idea is and not that we're not going to.

The idea is, we are testing, when I went over all the different areas that of testing, muscle atrophy, when someone gets injured and they're not moving, your body has muscle atrophy. And if we can show that our product help lessen that or reverse it or whatever and we get good results there, that opens up a lot of the areas and it also opens those up for clinical trial, human clinical trial on rehab and recovery.

And if we can show benefits that our product helps shorten someone's rehab or makes the rehab better that's pretty powerful. So there is the veterinarian market and there's the human market.

So we look at this study not just limited to dogs who had this surgery.

Sure. Yeah.

It's kind of a first step. Thank.

And on the animal side, on the pet side, how do you envision the product being position. So is this -- is it a product that's sold in the at veterinarian clinics, Is it a consumer product, is it a prescription product that you need a vets prescription for and then in terms of --

No.

No. Okay.

As far as the prescription. We are going to -- we believe right now that the best part for this product is working through the vets.

Okay. And then, well, my next question was going to have -- it has to do with -- and you referenced it in your prepared remarks relative to pet insurance and I don't know really the nuances of that.

But is that -- do you think that might be something where it would be covered, because it has clinical evidence behind it and maybe other products, not necessarily in this space, but other products may not, because they don't have, I don't know how the medical -- the pet medical insurance works. So my question is especially Medicare or Medicaid on the human side wants to see often times clinical evidence, is that the same sort of thing on the pet medical side?

Not. We are not looking at this product at the moment to use insurance for it.

The reference it was that people, it is becoming more like a human market, that was the point of it. And that doesn't mean we're not, we are looking into all avenues.

But and the pet insurance markets in its infancy. The idea there was really to show that people care about their dogs so much.

I've been to my vet, they gave me a thing to fill out to get pet insurance. So that's really the idea.

Yeah.

So, we are targeting pet insurance. We've looked at it.

This is not a drug, it's a nutritional products. It's a -- so we're not there yet.

Yeah. Okay.

All right. Thanks a lot guys.

Appreciate it.

Thank you. Next question.

Good afternoon.

Good afternoon.

I have a couple questions for you and the Rutgers and the UC Berkeley program, have they started to recruit people for these studies?

They are in the process. I will tell you guys the frustration with studies, they take much longer than you think.

I believe Berkeley study should begin hopefully this month. And the Rutgers study shortly thereafter.

But it's my experience and I have limited that when you start these, they take, if you think it's going to take six months, it is going to take a year. It's just the nature of the beast.

Okay. Now as far as the newest study with Cornell Weill in the rats or mice I should say, either one, I am not sure.

How long will that take and when will that really start?

That one, it's a lot easier to get rodents to do a study. And so we're hoping that's --

You don't have to give a big check, yeah.

No. No.

Just Fortetropin and they are happy. The -- that should start in the summer.

That's the plan, and again, we hope we get the results early next year. That's the plan.

Okay.

This help [ph] -- go ahead.

One last thing, have you approach companies like Pet Owners Act and Chewy that sell pet products, food, toys, supplements, as a outlet for your products.

We have -- it's on our radar screen. We are -- we're not there yet.

Okay.

Chewy is especially is one that interests us. I -- just two thoughts, we are going to release the pet product into the market.

We've already done some. We have some vets, as I've said previous statements, purchasing the product.

And once we establish a following and once we get the results of the Kansas State study. If those results, there's no guarantees are positive.

I think that helps us. What I don't want to do is make a deal from a position of weakness.

I'd rather make it from a position of strength and I think we'll be stronger if for the next three months, six months while the Kansas State study is playing out that we do it ourselves.

Okay. Thank you so much and good luck.

Thank you.

Hi, Joe. You there.

Hi. Pat, how are you?

Okay. Hey.

Just a couple of quick things. Number one, I might have miss this.

But how many colleges those IMG give you access to. That might have been covered, but I missed that.

Nine.

And -- okay.

Pat, the next question also --

And then just the second thing was, is there any progress on things happening with the NFL. Could you give a little bit more information on that if possible.

Sure. IMG speaks to over 200 colleges I believe they have arrangements with.

We are starting it with the northeast and then we're going to see how we progress from there. So, but, IMG, the way I look at it is IMG has these relationships with all these colleges and also the fact that we're with IMG and other colleges who may not be a part of their system that we're involved with IMG gives us some credibility.

The fact that where NSF gives us huge credibility and the fact that we have on our Yolked product a nutritional fact panel rather than the supplement fact panel is big. And that's I can tell you the reception at the colleges we have been to has been very, very good.

They're pretty impressed with what we have and I hope that leads to sales. The next question about the NFL Alumni, that is an ongoing relationship.

We do sell products to some NFL Alumni. I never looked at that relationship as something that's going to bring in enormous amounts of revenue.

It's a good working relationship. I think our product fits very well for the alumni.

After numerous surgeries and getting banged around for years. It -- I think it's a great product for that demographic so to speak.

But it's not a huge revenue product for us. It's -- a lot of it is the relationship that you can build and people can introduce you and you have influencers in the NFL Alumni group that can help us.

All right. Great.

Thank you.

Hi. Good morning.

Thanks for taking the call.

Good morning.

Being the benefit of -- being at the end of the conference call questions. Most of them have already been answered.

So very quickly with regard to the Kansas State study, which we will be looking for results at year end. What are the costs associated with that you get from now to that point?

In general, has there been any talk with regard to strategies. I know that the dog knee surgery market from my animal health companies that I follows roughly a $1.5 billion market.

You alluded to the fact that this won't be as great for you, obviously, would be wonderful if it was. But give me a general idea if you had any strategic -- any thoughts with any strategies.

And then, lastly, with regard to the private that was done recently. Just elaborate a little bit on the use of the capital?

And more or less, I know there was a director then investor, as well as yourself, Joseph are there anybody -- is there anybody else that you might be able to ask any type of new investors that have come in? That's all I have.

Thanks.

Sure. The Kansas State study has already been paid for in full.

We are looking at potential strategies. We'd love your firms, if you have ideas, we'd love to hear from you.

Again, I am more than willing to talk to people in the area about doing something together. I think we have something unique.

So if you have ideas there please. I would love to do a deal and pay you guys a commission if you find us a partner.

And as far as the raise, it's for general corporate purposes. And who is involved?

I can just tell you that myself and one Board member.

Okay. Thank you.

You're welcome.

Okay. I just want everyone -- to thank everyone who's got on the call today.

Thank you for being a part of MYOS and please know that any -- my phone is always available for a call, any ideas, any thoughts, that you may have. I'm always willing to listen, because we do get a lot of benefit from people outside of MYOS on ideas for us.

So please share them, email me, give me a shot on the phone, I will always get back to you. And please watch what we're doing.

The microcap world is a very interesting world for me. I didn't come from it and I do believe we are executing on our plan.

It's taking longer than I thought when I got here, but we think we're executing it right and we're doing it with the backbone of science. So, thank you again.

Everyone have a great Mother's Day.