Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2021

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

Commission File Number: 001-37863

BIOMERICA, INC.

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(Exact name of registrant as specified in its charter)

Delaware 95-2645573

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(State or other jurisdiction of (I.R.S. Employer

incorporation or organization) Identification No.)

17571 Von Karman Avenue, Irvine, CA 92614

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(Address of principal executive offices) (Zip Code)

Registrant's telephone number including area code: (949) 645-2111

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

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

(TITLE OF EACH CLASS)	(TICKER SYMBOL)	(NAME OF EACH EXCHANGE ON WHICH REGISTERED)
-----------------------------------	-----------------------------------	-------------------------------------------------------------------------------
Common, par value $.08	BMRA	NASDAQ Capital Market

Indicate by check whether the registrant (1) 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 [X] No [_]

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (paragraph 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 [X] No [_]

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

Large Accelerated Filer [ ]		Accelerated Filer [ ]
Non-Accelerated Filer [X]		Smaller Reporting Company [X]
		Emerging Growth Company [ ]

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [_] No [X]

The number of shares of the registrant's common stock outstanding as of January 12, 2022 was 12,851,924.

BIOMERICA, INC.

INDEX

PART I	Financial Information

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets (unaudited) – November 30, 2021 and May 31, 2021	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) – Three and Six Months Ended November 30, 2021 and 2020 (restated)	2

	Condensed Consolidated Statements of Shareholders’ Equity (unaudited) – Six Months Ended November 30, 2021 and 2020 (restated)	3

	Condensed Consolidated Statements of Cash Flows (unaudited) – Six Months Ended November 30, 2021 and 2020 (restated)	4

	Notes to Condensed Consolidated Financial Statements (unaudited)	5 - 14

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	14 - 18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18

Item 4.	Controls and Procedures	18

PART II	Other Information

Item 1.	Legal Proceedings	18 - 19

Item 1A.	Risk and Uncertainties	19

Item 5.	Other Information	19

Item 6.	Exhibits	20

	Signatures	21

Table of Contents

PART I - FINANCIAL INFORMATION SUMMARIZED FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS

BIOMERICA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

	November 30, 2021 (Unaudited)
			May 31, 2021
			May 31, 2021
Assets

Current Assets:
Cash and cash equivalents	$	7,199,172	$	4,199,311
Accounts receivable, less allowance for doubtful accounts of $27,777 and $837,415 as of November 30, 2021 and May 31, 2021, respectively		1,125,239		1,455,051
Inventories, net		2,982,201		3,206,255
Prepaid expenses and other		1,096,750		370,290
Total current assets		12,403,362		9,230,907

Property and equipment, net of accumulated depreciation and amortization of $2,026,764 and $1,972,357 as of November 30, 2021 and May 31, 2021, respectively		274,325		310,520

Right of use assets, net of accumulated amortization of $595,116 and $469,077 as of November 30, 2021 and May 31, 2021, respectively		1,427,042		1,553,081

Investments		165,324		165,324

Intangible assets, net of accumulated amortization of $91,030 and $126,769 as of November 30, 2021 and May 31, 2021, respectively		389,486		294,830

Other assets		149,581		264,151
Total Assets	$	14,809,120	$	11,818,813

Liabilities and Shareholders' Equity

Current Liabilities:
Accounts payable and accrued expenses	$	1,580,707	$	583,380
Accrued compensation		674,327		388,896
Advance from customers		2,150,466		-
Lease liability, current portion		335,385		327,944
Total current liabilities		4,740,885		1,300,220
Lease liability, net of current portion		1,166,808		1,291,570
Total Liabilities		5,907,693		2,591,790

Commitments and contingencies (Notes 1 and 6)

Shareholders' Equity:

Preferred stock, Series A 5% convertible, $0.08 par value, 571,429 shares authorized, none issued and outstanding as of November 30, 2021 and May 31, 2021		-		-
Preferred stock, undesignated, no par value, 4,428,571 shares authorized, none issued and outstanding as of November 30, 2021 and May 31, 2021		-		-
Common stock, $0.08 par value, 25,000,000 shares authorized, 12,692,327 and 12,307,157 issued and outstanding at November 30, 2021 and May 31, 2021, respectively		1,015,385		984,571
Additional paid-in-capital		41,158,551		38,836,743
Accumulated other comprehensive loss		(58,319)		(47,956)
Accumulated deficit		(33,214,190)		(30,546,335)
Total Shareholders' Equity		8,901,427		9,227,023
Total Liabilities and Shareholders' Equity	$	14,809,120	$	11,818,813

The accompanying notes are an integral part of these statements.

Table of Contents

BIOMERICA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
	Three Months Ended November 30,				Six Months Ended November 30,
	2021		2020 (As Restated)		2021		2020 (As Restated)
	2021		2020 (As Restated)		2021		2020 (As Restated)
Net sales	$	4,646,900	$	1,372,526	$	5,908,687	$	2,516,332
Cost of sales		(3,875,141)		(1,063,807)		(5,225,898)		(2,089,524)
Gross profit		771,759		308,719		682,789		426,808

Operating expenses:
Selling, general and administrative		1,282,998		1,404,846		2,294,533		2,710,790
Research and development		618,522		616,561		1,058,386		1,328,066
Total operating expense		1,901,520		2,021,407		3,352,919		4,038,856

Loss from operations		(1,129,761)		(1,712,688)		(2,670,130)		(3,612,048)

Other income:
Dividend and interest income		6,916		7,983		13,721		16,074

Loss before income taxes		(1,122,845)		(1,704,705)		(2,656,409)		(3,595,974)

Provision for income taxes		(2,429)		(13,393)		(11,446)		(14,518)

Net loss	$	(1,125,274)	$	(1,718,098)	$	(2,667,855)	$	(3,610,492)

Basic net loss per common share	$	(0.09)	$	(0.15)	$	(0.21)	$	(0.31)

Diluted net loss per common share	$	(0.09)	$	(0.15)	$	(0.21)	$	(0.31)

Weighted average number of common and common equivalent shares:
Basic		12,592,341		11,756,265		12,509,110		11,752,299

Diluted		12,592,341		11,756,265		12,509,110		11,752,299

Net loss	$	(1,125,274)	$	(1,718,098)	$	(2,667,855)	$	(3,610,492)

Other comprehensive loss, net of tax:
Foreign currency translation		(4,750)		(1,530)		(10,363)		(3,250)

Comprehensive loss	$	(1,130,024)	$	(1,719,628)	$	(2,678,218)	$	(3,613,742)

The accompanying notes are an integral part of these statements.

Table of Contents

BIOMERICA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

For the Six Months Ended November 30, 2020 (As Restated)

									Accumulated Other Comprehensive Loss
				Series A 5% Convertible Preferred Stock
	Common Stock			Series A 5% Convertible Preferred Stock			Additional Paid-in Capital				Accumulated Deficit
	Shares	Amount		Share	Amount		Additional Paid-in Capital				Accumulated Deficit		Total
Balances, May 31, 2020, restated	11,740,089	$	939,205	321,429	$	25,714	$	36,388,056	$	(39,841)	$	(23,100,081)	$	14,213,053

Exercise of stock options	30,000		2,400	-		-		46,930		-		-		49,330
Foreign currency translation	-		-	-		-		-		(3,250)		-		(3,250)
Compensation expense in connection with options granted	-		-	-		-		500,140		-		-		500,140
Net loss	-		-	-		-		-		-		(3,610,492)		(3,610,492)

Balances, November 30, 2020, restated	11,770,089	$	941,605	321,429	$	25,714	$	36,935,126	$	(43,091)	$	(26,710,573)	$	11,148,781

For the Six Months Ended November 30, 2021

									Accumulated Other Comprehensive Loss
				Series A 5% Convertible Preferred Stock
	Common Stock			Series A 5% Convertible Preferred Stock			Additional Paid-in Capital				Accumulated Deficit
	Shares	Amount		Shares	Amount		Additional Paid-in Capital				Accumulated Deficit		Total
Balances, May 31, 2021	12,307,157	$	984,571	-	$	-	$	38,836,743	$	(47,956)	$	(30,546,335)	$	9,227,023

Exercise of stock options	21,500		1,720	-		-		32,760		-		-		34,480
Net proceeds from ATM	363,670		29,094	-		-		1,655,029		-		-		1,684,123
Foreign currency translation	-		-	-		-		-		(10,363)		-		(10,363)
Compensation expense in connection with options granted	-		-	-		-		634,019		-		-		634,019
Net loss	-		-	-		-		-		-		(2,667,855)		(2,667,855)

Balances, November 30, 2021	12,692,327	$	1,015,385	-	$	-	$	41,158,551	$	(58,319)	$	(33,214,190)	$	8,901,427

The accompanying notes are an integral part of these statements.

Table of Contents

BIOMERICA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended November 30,
	Six Months Ended November 30,
			2020 (As Restated)
	2021		2020 (As Restated)
Cash flows from operating activities:

Net loss	$	(2,667,855)	$	(3,610,492)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		68,668		64,435
Change in allowance on accounts receivable		(809,638)		410,161
Inventory reserve		181,825		11,943
Stock option expense		634,019		500,140
Amortization of right-of-use asset		126,039		115,025
Changes in assets and liabilities:
Accounts receivable		1,139,450		(256,059)
Inventories

SEC Form 10-Q filed by Biomerica, Inc.