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 FEBRUARY 28, 2022

[ ] 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 April 14, 2022 was 12,851,924.

BIOMERICA, INC.

INDEX

PART I	Financial Information

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets (unaudited) – February 28, 2022 and May 31, 2021	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) – Three and Nine Months Ended February 28, 2022 and 2021 (restated)	2

	Condensed Consolidated Statements of Shareholders’ Equity (unaudited) – Nine Months Ended February 28, 2022 and 2021 (restated)	3

	Condensed Consolidated Statements of Cash Flows (unaudited) – Nine Months Ended February 28, 2022 and 2021 (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

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
	February 28, 2022 (Unaudited)
			May 31, 2021
			May 31, 2021
Assets

Current Assets:
Cash and cash equivalents	$	10,173,808	$	4,199,311
Accounts receivable, less allowance for doubtful accounts of $20,293 and $837,415 as of February 28, 2022 and May 31, 2021, respectively		1,158,738		1,455,051
Inventories, net		3,231,430		3,206,255
Prepaid expenses and other		667,129		370,290
Total current assets		15,231,105		9,230,907

Property and equipment, net of accumulated depreciation and amortization of $2,046,612 and $1,972,357 as of February 28, 2022 and May 31, 2021, respectively		263,048		310,520

Right of use assets, net of accumulated amortization of $658,773 and $469,077 as of February 28, 2022 and May 31, 2021, respectively		1,367,863		1,553,081

Investments		165,324		165,324

Intangible assets, net of accumulated amortization of $49,253 and $126,769 as of February 28, 2022 and May 31, 2021, respectively		386,013		294,830

Other assets		146,980		264,151
Total Assets	$	17,560,333	$	11,818,813

Liabilities and Shareholders' Equity

Current Liabilities:
Accounts payable and accrued expenses	$	2,608,840	$	583,380
Accrued compensation		537,284		388,896
Advances from customers		3,213,052		-
Lease liability, current portion		338,744		327,944
Total current liabilities		6,697,920		1,300,220
Lease liability, net of current portion		1,104,611		1,291,570
Total Liabilities		7,802,531		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 February 28, 2022 and May 31, 2021		-		-
Preferred stock, undesignated, no par value, 4,428,571 shares authorized, none issued and outstanding as of February 28, 2022 and May 31, 2021		-		-
Common stock, $0.08 par value, 25,000,000 shares authorized, 12,851,924 and 12,307,157 issued and outstanding at February 28, 2022 and May 31, 2021, respectively		1,028,152		984,571
Additional paid-in-capital		42,108,865		38,836,743
Accumulated other comprehensive loss		(60,857)		(47,956)
Accumulated deficit		(33,318,358)		(30,546,335)
Total Shareholders' Equity		9,757,802		9,227,023
Total Liabilities and Shareholders' Equity	$	17,560,333	$	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 February 28,				Nine Months Ended February 28,
	Three Months Ended February 28,				Nine Months Ended February 28,
	2022		2021 (As Restated)		2022		2021 (As Restated)
Net sales	$	7,660,501	$	3,628,638	$	13,569,188	$	6,144,970
Cost of sales		(5,987,277)		(3,702,069)		(11,213,175)		(5,791,593)
Gross profit (loss)		1,673,224		(73,431)		2,356,013		353,377

Operating expenses:
Selling, general and administrative		1,323,725		1,527,947		3,618,258		4,238,737
Research and development		456,998		563,967		1,515,384		1,892,033
Total operating expense		1,780,723		2,091,914		5,133,642		6,130,770

Loss from operations		(107,499)		(2,165,345)		(2,777,629)		(5,777,393)

Other income:
Dividend and interest income		6,019		37,687		19,740		53,761

Loss before income taxes		(101,480)		(2,127,658)		(2,757,889)		(5,723,632)

(Provision) benefit for income taxes		(2,688)		3,117		(14,134)		(11,401)

Net loss	$	(104,168)	$	(2,124,541)	$	(2,772,023)	$	(5,735,033)

Basic net loss per common share	$	(0.01)	$	(0.18)	$	(0.22)	$	(0.49)

Diluted net loss per common share	$	(0.01)	$	(0.18)	$	(0.22)	$	(0.49)

Weighted average number of common and common equivalent shares:
Basic		12,820,481		11,905,492		12,611,760		11,802,803

Diluted		12,820,481		11,905,492		12,611,760		11,802,803

Net loss	$	(104,168)	$	(2,124,541)	$	(2,772,023)	$	(5,735,033)

Other comprehensive loss, net of tax:
Foreign currency translation		(2,538)		(5,437)		(12,901)		(8,687)
Comprehensive loss	$	(106,706)	$	(2,129,978)	$	(2,784,924)	$	(5,743,720)

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 Nine Months Ended February 28, 2021 (As Restated)

	Common Stock			Series A 5% Convertible Preferred Stock			Additional		Accumulated Other Comprehensive		Accumulated
	Shares	Amount		Shares		Amount	Paid-in Capital		Loss		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	81,750		6,540	-		-		89,915		-		-		96,455
Net proceeds from ATM	158,889		12,711	-		-		998,764		-		-		1,011,475
Foreign currency translation	-		-	-		-		-		(8,687)		-		(8,687)
Conversion of preferred to common stock	321,429		25,714	(321,429)		(25,714)		-		-		-		-
Compensation expense in connection with options granted	-		-	-		-		1,022,320		-		-		1,022,320
Net loss	-		-	-		-		-		-		(5,735,033)		(5,735,033)

Balances, February 28, 2021, restated	12,302,157	$	984,170	-	$	-	$	38,499,055	$	(48,528)	$	(28,835,114)	$	10,599,583

For the Nine Months Ended February 28, 2022

	Common Stock			Series A 5% Convertible Preferred Stock			Additional		Accumulated Other Comprehensive		Accumulated
	Shares	Amount		Shares		Amount	Paid-in Capital		Loss		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	23,500		1,880	-		-		37,295		-		-		39,175
Net proceeds from ATM	521,267		41,701	-		-		2,275,459		-		-		2,317,160
Foreign currency translation	-		-	-		-		-		(12,901)		-		(12,901)
Compensation expense in connection with options granted	-		-	-		-		959,368		-		-		959,368
Net loss	-

SEC Form 10-Q filed by Biomerica Inc.