Form 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2023 or

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

Commission File Number: 001-37863

BIOMERICA, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation of organization)

95-2645573

(I.R.S. Employer
Identification No.)

17571 Von Karman Avenue, Irvine, CA

(Address of principal executive offices)

92614

(Zip Code)

REGISTRANT'S TELEPHONE NUMBER:

(949) 645-2111

Securities registered under Section 12(b) of the Exchange Act:

(Title of each class)

COMMON STOCK, PAR VALUE $0.08

(Name of each exchange on which registered)

NASDAQ Capital Market

(Trading symbol)

BMRA

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 filer, 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, 2023 was 16,821,646.

BIOMERICA, INC.

INDEX

PART I	Financial Information

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets (unaudited) – February 28, 2023 and May 31, 2022	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) – Three and Nine Months Ended February 28, 2023 and 2022	2

	Condensed Consolidated Statements of Shareholders’ Equity (unaudited) – Three and Nine Months Ended February 28, 2023 and 2022	3

	Condensed Consolidated Statements of Cash Flows (unaudited) – Nine Months Ended February 28, 2023 and 2022	4

	Notes to Condensed Consolidated Financial Statements (unaudited)	5 - 13

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13 - 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 Factors	19

Item 5.	Other Information	19

Item 6.	Exhibits	20

	Signatures	21

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIOMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	February 28, 2023		May 31, 2022
Assets

Current Assets:
Cash and cash equivalents	$	3,345,212	$	5,916,983
Accounts receivable, less allowance for doubtful accounts of $17,432 and $153,231 as of Feburary 28, 2023 and May 31, 2022, respectively		754,559		773,818
Inventories, net of inventory reserves of $807,576 and $845,549 as of Feburary 28, 2023 and May 31, 2022, respectively		2,064,152		2,416,447
Prepaid expenses and other		318,448		320,283
Total current assets		6,482,371		9,427,531

Property and equipment, net of accumulated depreciation and amortization of $1,316,268 and $1,305,360 as of Feburary 28, 2023 and May 31, 2022, respectively		227,589		214,487

Right of use assets, net of accumulated amortization of $927,077 and $724,802 as of Feburary 28, 2023 and May 31, 2022, respectively		1,101,648		1,301,834

Investments		165,324		165,324

Intangible assets, net of accumulated amortization of $27,383 and $18,994 as of Feburary 28, 2023 and May 31, 2022, respectively		154,638		169,516

Other assets		78,598		95,588
Total Assets	$	8,210,168	$	11,374,280

Liabilities and Shareholders' Equity

Current Liabilities:
Accounts payable and accrued expenses	$	387,228	$	972,372
Accrued compensation		520,457		646,944
Advance from customers		138,013		50,670
Lease liability, current portion		349,410		341,296
Total current liabilities		1,395,108		2,011,282
Lease liability, net of current portion		828,944		1,038,284
Total Liabilities		2,224,052		3,049,566

Commitments and contingencies (Notes 5-7)

Shareholders' Equity:

Common stock, $0.08 par value, 25,000,000 shares authorized, 13,488,313 and 12,867,924 issued and outstanding at Feburary 28, 2023 and May 31, 2022, respectively		1,079,065		1,029,432
Additional paid-in-capital		45,443,164		42,446,597
Accumulated other comprehensive loss		(110,911)		(73,936)
Accumulated deficit		(40,425,202)		(35,077,379)
Total Shareholders' Equity		5,986,116		8,324,714
Total Liabilities and Shareholders' Equity	$	8,210,168	$	11,374,280

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				Nine Months Ended
	February 28, 2023		February 28, 2022		February 28, 2023		February 28, 2022
Net sales	$	1,111,442	$	7,660,501	$	4,230,792	$	13,569,188
Cost of sales		(991,169)		(5,987,277)		(3,813,599)		(11,213,175)
Gross profit		120,273		1,673,224		417,193		2,356,013

Operating expenses:
Selling, general and administrative		1,379,412		1,393,619		4,589,255		3,817,061
Research and development		392,031		387,104		1,215,143		1,316,581
Total operating expenses		1,771,443		1,780,723		5,804,398		5,133,642

Loss from operations		(1,651,170)		(107,499)		(5,387,205)		(2,777,629)

Other income:
Dividend and interest income		36,086		6,019		77,368		19,740

Loss before income taxes		(1,615,084)		(101,480)		(5,309,837)		(2,757,889)

Provision for income taxes		(34,775)		(2,688)		(37,986)		(14,134)

Net loss	$	(1,649,859)	$	(104,168)	$	(5,347,823)	$	(2,772,023)

Basic net loss per common share	$	(0.12)	$	(0.01)	$	(0.40)	$	(0.22)

Diluted net loss per common share	$	(0.12)	$	(0.01)	$	(0.40)	$	(0.22)

Weighted average number of common and common equivalent shares:
Basic		13,481,490		12,820,481		13,340,958		12,611,760

Diluted		13,481,490		12,820,481		13,340,958		12,611,760

Net loss	$	(1,649,859)	$	(104,168)	$	(5,347,823)	$	(2,772,023)

Other comprehensive loss, net of tax:
Foreign currency translation		(15,498)		(2,538)		(36,975)		(12,901)

Comprehensive loss	$	(1,665,357)	$	(106,706)	$	(5,384,798)	$	(2,784,924)

The accompanying notes are an integral part of these statements.

Table of Contents

BIOMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

						Accumulated Other Comprehensive Loss
	Common Stock			Additional Paid-in Capital				Accumulated Deficit
	Shares	Amount		Additional Paid-in Capital				Accumulated Deficit		Total
Balances, May 31, 2022	12,867,924	$	1,029,432	$	42,446,597	$	(73,936)	$	(35,077,379)	$	8,324,714
Exercise of stock options	15,000		1,200		12,750		-		-		13,950
Net proceeds from ATM	523,977		41,918		1,721,650		-		-		1,763,568
Foreign currency translation	-		-		-		(12,527)		-		(12,527)
Stock option expense	-		-		303,755		-		-		303,755
Net loss	-		-		-		-		(2,071,876)		(2,071,876)
Balances, August 31, 2022	13,406,901		1,072,550		44,484,752		(86,463)		(37,149,255)		8,321,584
Exercise of stock options	31,500		2,520		62,685		-		-		65,205
Net proceeds from ATM	41,012		3,283		169,631		-		-		172,914
Foreign currency translation	-		-		-		(8,950)		-		(8,950)
Stock option expense	-		-		318,230		-		-		318,230
Net loss	-		-		-		-		(1,626,088)		(1,626,088)
Balances, November 30, 2022	13,479,413		1,078,353		45,035,298		(95,413)		(38,775,343)		7,242,895
Net proceeds from ATM	8,900		712		24,038		-		-		24,750
Foreign currency translation	-		-		-		(15,498)		-		(15,498)
Stock option expense	-		-		383,828		-		-		383,828
Net loss	-		-		-		-		(1,649,859)		(1,649,859)
Balances, Feburary 28, 2023	13,488,313	$	1,079,065	$	45,443,164	$	(110,911)	$	(40,425,202)	$	5,986,116

						Accumulated Other Comprehensive Loss			Accumulated Deficit
	Common Stock			Additional Paid-in Capital
	Shares	Amount		Additional Paid-in Capital						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	1,500		120		3,775		-		-		3,895
Net proceeds from ATM	201,553		16,124		784,586		-		-		800,710
Foreign currency translation	-		-		-		(5,613)		-		(5,613)
Stock option expense	-		-		319,622		-		-		319,622
Net loss	-		-		-		-		(1,542,581)		(1,542,581)
Balances, August 31, 2021	12,510,210		1,000,815		39,944,726		(53,569)		(32,088,916)		8,803,056

SEC Form 10-Q filed by Biomerica Inc.