Core Insights - Biomerica, Inc. has announced the publication of a large multicenter clinical trial demonstrating the effectiveness of its inFoods® IBS diagnostic-guided therapy in managing Irritable Bowel Syndrome (IBS) symptoms [1][3][10] Study Overview - The clinical trial was randomized, multicenter, double-blind, and placebo-controlled, evaluating the inFoods® IBS test's ability to identify patient-specific dietary triggers and guide targeted food elimination [2][4] - The study involved 223 IBS patients across eight major U.S. academic medical centers, including renowned institutions like Mayo Clinic and Harvard Beth Israel Deaconess Medical Center [4] Key Findings - Patients following the inFoods® IBS-guided elimination diet experienced significantly greater symptom relief, with 59.6% achieving the FDA-defined target for abdominal pain reduction compared to 42.1% in the control group [9] - Particularly strong results were noted in difficult-to-treat IBS subtypes, with 67.1% of IBS-C patients and 66.0% of IBS-M patients responding positively to the treatment [9] Methodology and Innovation - The inFoods® IBS assay utilizes a proprietary discriminatory p-value method to identify foods causing abnormal IgG responses unique to IBS patients, allowing for a more focused dietary approach [7][10] - The study design addressed limitations of previous research by employing an IBS-specific food panel and robust statistical methodology, enhancing the reliability of the findings [6][10] Clinical Implications - The results support a shift towards precision medicine in gastrointestinal care, where individualized biological markers guide tailored treatment decisions rather than generalized approaches [12][11] - The inFoods® IBS protocol typically results in the elimination of only 2 to 4 foods per patient, making it a more practical and sustainable option compared to broader dietary strategies like the low-FODMAP diet [8][10] Recognition and Future Outlook - The inclusion of inFoods® IBS in Biotherapeutics Quarterly highlights the growing recognition of Biomerica's innovation among healthcare professionals [13] - The study's outcomes underscore the potential of diagnostic-guided dietary strategies to address unmet clinical needs, particularly for IBS-M patients, for whom no FDA-approved medications currently exist [11][12]

Core Viewpoint - Biomerica, Inc. is expanding its Contract Development and Manufacturing Organization (CDMO) services to meet increasing market demand for advanced medical diagnostic solutions [1][2]. Group 1: Company Overview - Biomerica has over 40 years of experience in assay development, manufacturing, and regulatory compliance, making it a sought-after partner for biotechnology and diagnostic companies [2]. - The company is positioned to capture growing demand for outsourced diagnostic development and production, supported by ISO 13485 certification and an FDA registered cGMP manufacturing facility [5]. Group 2: CDMO Services Expansion - The expansion of CDMO services aims to provide end-to-end support from concept through commercial manufacturing, addressing the needs of both large and small diagnostic organizations [3][5]. - Biomerica's CDMO services include capabilities in lateral flow, point-of-care diagnostics, ELISA tests, and Multiplex ELISA assays, which help partners reduce timelines and ensure high-quality outcomes [4][5]. Group 3: Marketing and Visibility - The company has updated its corporate website to prominently feature its CDMO capabilities, facilitating easier access for potential partners to understand the expanded service offerings [4]. - The updated site includes service descriptions and resources to support collaboration with innovators [4]. Group 4: Comprehensive Capabilities - Biomerica offers a range of services including custom assay development, antibody and reagent services, recombinant antibody development, manufacturing and assembly, and supply chain and technology transfer [7][8]. - These services are designed to enhance the efficiency and scalability of product development for pharmaceutical, biotechnology, and diagnostic companies [8].

Core Insights - Biomerica has entered a marketing services arrangement with Henry Schein to promote its inFoods® IBS test across the U.S., excluding New York, marking a significant step in its commercialization strategy [1][2][3] Company Overview - Biomerica, Inc. is a global biomedical technology company focused on developing diagnostic and therapeutic products for gastrointestinal and inflammatory diseases [13] - Henry Schein, Inc. is the largest provider of health care solutions to office-based dental and medical practitioners, with over $12 billion in annual sales in 2024 and a strong distribution network [2][11] Product Details - The inFoods® IBS test is a diagnostic-guided therapy that identifies food triggers for IBS symptoms, allowing for personalized dietary recommendations [6] - The test has shown significant efficacy in clinical studies, particularly for IBS-M patients, with 59.6% of patients in the treatment group achieving the FDA's endpoint for abdominal pain reduction [4][7] Market Context - IBS affects approximately 10% to 15% of adults in the U.S., leading to a lower quality of life and decreased work productivity for those affected [5] - The partnership with Henry Schein is expected to enhance the adoption of this non-drug therapy, addressing a significant unmet need in the IBS market [2][3]

Core Insights - Biomerica, Inc. reported financial results for the first quarter ended August 31, 2025, highlighting a decrease in net sales but an improvement in gross profit due to a favorable product mix and higher-margin services [1][7][9] Financial Performance - Net sales for Q1 fiscal 2026 were $1.4 million, down from $1.8 million in Q1 fiscal 2025, attributed to reduced retail activity and international order timing, partially offset by increased sales of inFoods IBS products [7][10] - Gross margin improved to 31% from 16% year-over-year, driven by a higher-margin product mix [10] - Operating expenses decreased to $1.5 million from $1.7 million, reflecting ongoing cost discipline [8][10] - Operating loss improved to $1.1 million from $1.4 million, with a net profit of approximately $2,000 compared to a net loss of $1.3 million in the prior year [9][10] Product Developments - The inFoods IBS test received a Proprietary Laboratory Analysis (PLA) code, facilitating reimbursement claims for healthcare providers [2] - The UAE Ministry of Health approved the Fortel Ulcer Test and Fortel Kidney Test for home use, enhancing access to diagnostic tools for gastric diseases and kidney damage [3][4] - Biomerica launched the AI-backed inFoods IBS Trigger Food Navigator to support personalized dietary plans for IBS patients [5] Clinical Validation - A multicenter trial published in June 2025 demonstrated the effectiveness of the inFoods IBS test, with significant outcomes in symptom relief for IBS patients [12][14]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Biomerica, Inc.'s unaudited condensed consolidated financial statements for the three months ended August 31, 2025, and comparative periods, including key financial statements and explanatory notes [Condensed Consolidated Balance Sheets (unaudited) – August 31, 2025 and May 31, 2025](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show an increase in total assets and shareholders' equity, primarily driven by an increase in cash and accounts receivable, while total liabilities decreased slightly | Metric | August 31, 2025 | May 31, 2025 | Change ($) | Change (%) | | :-------------------------------- | :-------------- | :----------- | :--------- | :--------- | | Cash and cash equivalents | $3,053,000 | $2,399,000 | $654,000 | 27.26% | | Accounts receivable, net | $1,205,000 | $731,000 | $474,000 | 64.84% | | Total current assets | $5,899,000 | $4,875,000 | $1,024,000 | 21.01% | | Total Assets | $6,854,000 | $5,945,000 | $909,000 | 15.29% | | Total current liabilities | $1,693,000 | $1,740,000 | $(47,000) | -2.70% | | Total Liabilities | $1,699,000 | $1,840,000 | $(141,000) | -7.66% | | Total Shareholders' Equity | $5,155,000 | $4,105,000 | $1,050,000 | 25.58% | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) – Three Months Ended August 31, 2025 and 2024](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) The company reported a net income of $2,000 for the three months ended August 31, 2025, a significant improvement from a net loss of $1,316,000 in the prior year, primarily due to a substantial increase in other income, largely from an Employee Retention Credit refund | Metric | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | Change ($) | Change (%) | | :------------------------------------ | :--------------------------------- | :--------------------------------- | :--------- | :--------- | | Net sales | $1,380,000 | $1,807,000 | $(427,000) | -23.63% | | Cost of sales | $(956,000) | $(1,518,000) | $562,000 | -37.02% | | Gross profit | $424,000 | $289,000 | $135,000 | 46.71% | | Total operating expense | $1,542,000 | $1,657,000 | $(115,000) | -6.94% | | Loss from operations | $(1,118,000) | $(1,368,000) | $250,000 | -18.27% | | Total other income | $1,123,000 | $56,000 | $1,067,000 | 1905.36% | | Income (loss) before income taxes | $5,000 | $(1,312,000) | $1,317,000 | -100.38% | | Net income (loss) | $2,000 | $(1,316,000) | $1,318,000 | -100.15% | | Basic net income (loss) per common share | $0.00 | $(0.63) | $0.63 | -100.00% | | Diluted net income (loss) per common share | $0.00 | $(0.63) | $0.63 | -100.00% | - Net sales decreased by **23.63% YoY** to **$1,380,000**, while gross profit increased by **46.71% YoY** to **$424,000** due to a larger decrease in cost of sales[14](index=14&type=chunk) - Other income saw a substantial increase of **$1,067,000**, primarily driven by a **$1,100,000** Employee Retention Credit (ERC) refund[14](index=14&type=chunk)[81](index=81&type=chunk)[120](index=120&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity (unaudited) – Three Months Ended August 31, 2025 and 2024](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity increased significantly for the three months ended August 31, 2025, primarily due to net proceeds from common stock sales and share-based compensation, contrasting with a net loss in the prior year | Metric | August 31, 2025 | May 31, 2025 | Change ($) | | :-------------------------------- | :-------------- | :----------- | :--------- | | Common Stock Shares | 2,815,410 | 2,546,216 | 269,194 | | Common Stock Amount | $225,000 | $203,000 | $22,000 | | Additional Paid-in Capital | $58,198,000 | $57,175,000 | $1,023,000 | | Accumulated Deficit | $(53,166,000) | $(53,168,000)| $2,000 | | Total Stockholders' Equity | $5,155,000 | $4,105,000 | $1,050,000 | - Net proceeds from sales of common stock contributed **$912,000** to shareholders' equity for the three months ended August 31, 2025[19](index=19&type=chunk)[84](index=84&type=chunk) - Share-based compensation added **$133,000** to shareholders' equity for the three months ended August 31, 2025[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited) – Three Months Ended August 31, 2025 and 2024](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased significantly for the three months ended August 31, 2025, primarily driven by cash provided by financing activities, which offset cash used in operating activities | Metric | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | Change ($) | | :------------------------------------ | :--------------------------------- | :--------------------------------- | :--------- | | Net cash used in operating activities | $(268,000) | $(1,344,000) | $1,076,000 | | Net cash provided by financing activities | $920,000 | $0 | $920,000 | | Net increase (decrease) in cash and cash equivalents | $654,000 | $(1,350,000) | $2,004,000 | | Cash and cash equivalents at end of period | $3,053,000 | $2,820,000 | $233,000 | - Cash used in operating activities decreased significantly from **$(1,344,000)** in 2024 to **$(268,000)** in 2025, a **79.9%** improvement[22](index=22&type=chunk) - Financing activities provided **$920,000** in cash in 2025, primarily from common stock sales, compared to no cash from financing in 2024[22](index=22&type=chunk)[135](index=135&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential context for the financial statements, detailing business operations, accounting policies, liquidity, and specific financial items, including ASC 326 adoption and ERC recognition [NOTE 1: BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201%3A%20BASIS%20OF%20PRESENTATION) Biomerica, Inc. is a global biomedical technology company focused on diagnostic and therapeutic products, with unaudited interim financial statements prepared in accordance with SEC rules and GAAP - Biomerica, Inc. is a global biomedical technology company developing, patenting, manufacturing, and marketing advanced diagnostic and therapeutic products[24](index=24&type=chunk) - Primary focus is on diagnostic-guided therapy (DGT) products for gastrointestinal diseases, such as the inFoods® IBS product[25](index=25&type=chunk) - Products are sold worldwide in clinical laboratories and point-of-care markets, with some CE marked and/or FDA cleared[26](index=26&type=chunk) [NOTE 2: SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=NOTE%202%3A%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines significant accounting policies, critical estimates, and revenue recognition, highlighting ongoing operating losses and 'going concern' doubt, which management addresses through cost reduction and capital raising strategies - The company has incurred recurring operating losses and negative cash flows, with an accumulated deficit of approximately **$53,200,000** as of August 31, 2025, raising substantial doubt about its ability to continue as a going concern[34](index=34&type=chunk)[40](index=40&type=chunk) - Management is actively pursuing strategies to increase sales, reduce expenses, sell non-core assets, and seek additional financing to address capital needs[39](index=39&type=chunk) - The company sold **258,569** shares of common stock through an ATM offering, generating net proceeds of **$912,000** during the three months ended August 31, 2025, for general corporate purposes[36](index=36&type=chunk)[37](index=37&type=chunk) Net Sales by Market (Three Months Ended August 31) | Market | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :------------------ | :------- | :------- | :--------- | :--------- | | Clinical lab | 1,024,000| 1,278,000| (254,000) | -19.87% | | Contract manufacturing | 192,000 | 339,000 | (147,000) | -43.36% | | Over-the-counter | 161,000 | 187,000 | (26,000) | -13.90% | | Physician's office | 3,000 | 3,000 | 0 | 0.00% | | **Total** | **1,380,000**| **1,807,000**| **(427,000)**| **-23.63%**| - The company adopted ASC 326 (CECL model) for credit losses on June 1, 2023, establishing a reserve of approximately **$64,000** for credit losses as of August 31, 2025[49](index=49&type=chunk)[50](index=50&type=chunk) Inventory Composition (August 31, 2025 vs. May 31, 2025) | Inventory Type | August 31, 2025 ($) | May 31, 2025 ($) | | :--------------- | :------------------ | :--------------- | | Raw materials | 976,000 | 1,071,000 | | Work in progress | 816,000 | 743,000 | | Finished products| 159,000 | 147,000 | | Total gross inventory | 1,951,000 | 1,961,000 | | Inventory reserves | (478,000) | (471,000) | | Net inventory | 1,473,000 | 1,490,000 | - Share-based compensation expense for stock options was **$74,000** for the three months ended August 31, 2025, down from **$77,000** in the prior year. Restricted stock awards expense was **$59,000** for the three months ended August 31, 2025, with no expense in the prior year[64](index=64&type=chunk)[65](index=65&type=chunk) - Revenue from product sales is recognized at the time of shipment (FOB shipping point), and diagnostic testing services revenue is recognized upon completion of test results by a third-party lab[67](index=67&type=chunk)[68](index=68&type=chunk) - Research and development costs decreased by **29%** to **$212,000** for the three months ended August 31, 2025, compared to **$297,000** in the prior year[72](index=72&type=chunk) - The company recognized **$3,000** in income tax expense for state minimum and foreign miscellaneous taxes, and has a full valuation allowance against deferred tax assets due to uncertainties in generating future taxable income[73](index=73&type=chunk) - Operating lease costs were **$88,000** for both periods, with a weighted-average remaining lease term of **1.02 years** and a weighted-average discount rate of **5.78%** as of August 31, 2025[92](index=92&type=chunk) [NOTE 3: SHAREHOLDERS' EQUITY](index=17&type=section&id=NOTE%203%3A%20SHAREHOLDERS%27%20EQUITY) This note details changes in shareholders' equity, highlighting capital raised through the 2024 ATM Offering and net proceeds from common stock sales - The company filed a 'shelf' registration statement on Form S-3, effective September 29, 2023, allowing issuance of up to **$20,000,000** in common stock[83](index=83&type=chunk) - During the three months ended August 31, 2025, **258,569** shares of common stock were sold via the 2024 ATM Offering, yielding gross proceeds of **$939,000** and net proceeds of **$912,000**[84](index=84&type=chunk) [NOTE 4: GEOGRAPHIC INFORMATION](index=18&type=section&id=NOTE%204%3A%20GEOGRAPHIC%20INFORMATION) The company operates as a single segment but provides disaggregated revenue information by geographic region, showing a decline in sales across all major regions for the three months ended August 31, 2025 Revenues from Sales to Unaffiliated Customers by Region (Three Months Ended August 31) | Region | 2025 ($) | 2024 ($) | Change ($) | Change (%) | | :------------- | :------- | :------- | :--------- | :--------- | | Asia | 670,000 | 817,000 | (147,000) | -17.99% | | Europe | 305,000 | 470,000 | (165,000) | -35.11% | | North America | 318,000 | 427,000 | (109,000) | -25.53% | | Middle East | 85,000 | 90,000 | (5,000) | -5.56% | | South America | 2,000 | 3,000 | (1,000) | -33.33% | | **Total** | **1,380,000**| **1,807,000**| **(427,000)**| **-23.63%**| - Approximately **$480,000** of gross inventory and **$9,000** of net property and equipment were located in Mexicali, Mexico, as of August 31, 2025[85](index=85&type=chunk)[86](index=86&type=chunk) [NOTE 5: LEASES](index=19&type=section&id=NOTE%205%3A%20LEASES) The company leases facilities in Irvine, California, and Mexicali, Mexico, as well as a small office in Lindau, Germany. Lease liabilities are recognized on the balance sheet, with operating lease costs remaining stable year-over-year - The company leases approximately **22,000 square feet** for its corporate headquarters in Irvine, California, with the lease expiring in August 2026 and an option for a five-year extension[89](index=89&type=chunk) - Biomerica de Mexico leases **8,100 square feet** of manufacturing space under a 10-year lease with a 10-year renewal option[90](index=90&type=chunk) Lease Costs (Three Months Ended August 31) | Lease Cost Type | 2025 ($) | 2024 ($) | | :---------------- | :------- | :------- | | Operating lease cost | 88,000 | 88,000 | | Variable lease cost | 3,000 | 2,000 | | Short-term lease cost | - | 2,000 | | **Total lease cost** | **91,000** | **92,000** | [NOTE 6: COMMITMENTS AND CONTINGENCIES](index=19&type=section&id=NOTE%206%3A%20COMMITMENTS%20AND%20CONTINGENCIES) The company is occasionally involved in legal proceedings but had no pending matters as of August 31, 2025, with management believing future outcomes will not materially affect its financial position - No legal proceedings were pending as of August 31, 2025[94](index=94&type=chunk) - Management believes that any potential future legal outcomes will not have a material adverse effect on the company's consolidated financial position, results of operations, or cash flows[94](index=94&type=chunk) [NOTE 7: SUBSEQUENT EVENTS](index=20&type=section&id=NOTE%207%3A%20SUBSEQUENT%20EVENTS) There were no subsequent events to report after the period ended August 31, 2025, through the filing date of the report - No subsequent events were reported[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition and results for the three months ended August 31, 2025, covering operations, product development, revenues, expenses, liquidity, and 'going concern' strategies [Forward-Looking Statements](index=21&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements regarding future performance and financial position, subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements that are not guarantees of future performance and actual results may differ materially[97](index=97&type=chunk) - Key factors influencing actual results include the ability to raise capital, accuracy of estimates, intellectual property protection, competition, regulatory certifications, distributor relations, global economic impacts, and retention of key personnel[98](index=98&type=chunk)[100](index=100&type=chunk) [Overview](index=21&type=section&id=Overview) Biomerica is a global biomedical technology company specializing in advanced diagnostic and therapeutic products, enhancing health and reducing healthcare costs through worldwide sales - Biomerica is a global biomedical technology company that develops, patents, manufactures, and markets advanced diagnostic and therapeutic products[100](index=100&type=chunk) - Products are sold worldwide in clinical laboratories and point-of-care settings, with many being CE marked and/or FDA cleared[102](index=102&type=chunk) [Technological Advancements and Product Development](index=22&type=section&id=Technological%20Advancements%20and%20Product%20Development) The company focuses on developing rapid, accurate, and easy-to-use diagnostic tests for point-of-care and home use, aiming to provide quick and reliable results without complex instrumentation - A key objective is to develop and market rapid diagnostic tests that are accurate, use easily obtained patient specimens, and are simple to perform without complex instrumentation[103](index=103&type=chunk) - The company believes its rapid point-of-care tests can be as accurate as laboratory tests, delivering reliable results in minutes[103](index=103&type=chunk) [Research and Development](index=22&type=section&id=Research%20and%20Development) Biomerica invests in R&D for new diagnostic and therapeutic products, notably its patented inFoods® IBS platform, expanding commercialization efforts and recently receiving FDA clearance for hp+detect™ - A key outcome of R&D is the patented diagnostic-guided therapy (DGT) product, inFoods® IBS, designed to identify patient-specific foods that trigger IBS symptoms[105](index=105&type=chunk) - The company is expanding inFoods® IBS to GI physician groups and exploring distribution, partnership, and licensing opportunities[107](index=107&type=chunk)[109](index=109&type=chunk) - In December 2023, the company received FDA clearance for hp+detect™, a diagnostic test for Helicobacter pylori bacteria[112](index=112&type=chunk) - Due to slower-than-expected product launches, the company initiated significant cost-cutting measures and raised **$912,000** in net proceeds from an ATM offering to extend cash runway[113](index=113&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) The company experienced a **24%** decrease in net sales for the three months ended August 31, 2025, but gross profit improved, operating expenses decreased, and a substantial ERC refund led to net income [Net Sales and Cost of Sales](index=24&type=section&id=Net%20Sales%20and%20Cost%20of%20Sales) Net sales decreased by **24%** to **$1,380,000**, primarily due to reduced retail activity, lower international OTC sales, and decreased contract manufacturing demand. Despite this, gross profit increased by **47%** due to a larger reduction in cost of sales, driven by changes in product mix, improved efficiency, and reduced labor costs Net Sales by Market (Three Months Ended August 31) | Market | August 31, 2025 ($) | August 31, 2024 ($) | Change ($) | Change (%) | | :------------------ | :------------------ | :------------------ | :--------- | :--------- | | Clinical lab | 1,024,000 | 1,278,000 | (254,000) | -20% | | Contract manufacturing | 192,000 | 339,000 | (147,000) | -43% | | Over-the-counter | 161,000 | 187,000 | (26,000) | -14% | | Physician's office | 3,000 | 3,000 | - | 0% | | **Total** | **1,380,000** | **1,807,000** | **(427,000)**| **-24%** | - Consolidated net sales decreased by **$427,000** (**24%**) to **$1,380,000** for the three months ended August 31, 2025, compared to the same period in 2024[115](index=115&type=chunk) - Cost of sales decreased by **$562,000** (**37%**) to **$956,000**, improving gross margin due to lower contract manufacturing costs and reduced direct labor[116](index=116&type=chunk) [Operating Expenses](index=24&type=section&id=Operating%20Expenses) Total operating expenses decreased by **7%** year-over-year, with SG&A decreasing due to RIF and lower stock-based compensation, and R&D decreasing due to payroll reductions and cost savings Operating Expenses (Three Months Ended August 31) | Expense Type | 2025 ($) | 2025 (% of Total Revenues) | 2024 ($) | 2024 (% of Total Revenues) | Change ($) | Change (%) | | :-------------------------------- | :------- | :------------------------- | :------- | :------------------------- | :--------- | :--------- | | Selling, General and Administrative | 1,330,000| 96% | 1,360,000| 75% | (30,000) | -2% | | Research and Development | 212,000 | 15% | 297,000 | 16% | (85,000) | -29% | - SG&A expenses decreased by **$30,000** (**2%**) due to a **$65,000** reduction in salaries/wages from a RIF, a **$68,000** decrease in stock-based compensation, and a **$43,000** decrease in legal expenses, partially offset by a **$131,000** increase in professional service fees for ERC filings[118](index=118&type=chunk) - R&D expenses decreased by **$85,000** (**29%**) due to a **$60,000** reduction in payroll from a RIF and **$23,000** in cost savings on inFoods® R&D projects[119](index=119&type=chunk) [Interest, Dividend Income and Other Income](index=24&type=section&id=Interest%2C%20Dividend%20Income%20and%20Other%20Income) Other income increased substantially by **$1,067,000**, primarily due to a **$1,100,000** cash refund from the IRS for the Employee Retention Credit (ERC), a one-time, non-recurring benefit - Interest, dividend, and other income increased by **$1,067,000** to **$1,123,000** for the three months ended August 31, 2025[120](index=120&type=chunk) - The increase was primarily driven by a **$1,100,000** cash refund from the IRS related to the Employee Retention Credit (ERC) for calendar year 2021, which is a one-time, non-recurring item[120](index=120&type=chunk) [Liquidity, Capital Resources and Going Concern](index=26&type=section&id=Liquidity%2C%20Capital%20Resources%20and%20Going%20Concern) The company's current cash is insufficient for operating requirements and growth, raising 'going concern' doubt, which management addresses through sales increases, expense reductions, and additional financing, including ATM offerings Liquidity Metrics | Metric | August 31, 2025 ($) | May 31, 2025 ($) | | :-------------------------------- | :------------------ | :--------------- | | Cash and cash equivalents | 3,053,000 | 2,399,000 | | Working capital | 4,206,000 | 3,135,000 | - Current cash and cash equivalents are insufficient to meet operating cash requirements and strategic growth objectives for the next twelve months, raising substantial doubt about the company's ability to continue as a going concern[123](index=123&type=chunk)[125](index=125&type=chunk)[130](index=130&type=chunk) - Strategies to address capital needs include increasing sales, reducing expenses, selling non-core assets, and seeking additional debt or equity financing[124](index=124&type=chunk) - The company raised **$912,000** in net proceeds from the 2024 ATM Offering during the three months ended August 31, 2025, intended for general corporate purposes[127](index=127&type=chunk)[129](index=129&type=chunk) [Operating Activities](index=27&type=section&id=Operating%20Activities) Cash used in operating activities significantly decreased to **$268,000** for the three months ended August 31, 2025, a substantial improvement from **$1,344,000** in the prior year, primarily due to net income and changes in working capital - Cash used in operating activities was approximately **$268,000** for the three months ended August 31, 2025, compared to **$1,344,000** in the prior year[131](index=131&type=chunk)[132](index=132&type=chunk) - Key factors contributing to cash used in operating activities in 2025 included a net income of **$2,000**, an increase in accounts receivable of **$512,000**, and decreases in accrued compensation and lease liabilities, partially offset by non-cash expenses and decreases in inventories and prepaid expenses[131](index=131&type=chunk) [Investing Activities](index=27&type=section&id=Investing%20Activities) The company did not acquire any new property, equipment, or patents during the three months ended August 31, 2025, or the same period in 2024 - No new property, equipment, or patents were acquired during the three months ended August 31, 2025, or 2024[133](index=133&type=chunk) [Financing Activities](index=28&type=section&id=Financing%20Activities) Cash provided by financing activities was **$920,000** for the three months ended August 31, 2025, entirely from the net proceeds of common stock sales through the ATM offering, a significant change from no financing activities in the prior year - Cash provided by financing activities was approximately **$920,000** for the three months ended August 31, 2025[135](index=135&type=chunk) - This cash was generated from gross proceeds of **$939,000** from common stock sales, offset by **$19,000** in costs[135](index=135&type=chunk) - There was no cash provided by financing activities in the comparable period of 2024[135](index=135&type=chunk) [Off Balance Sheet Arrangements](index=28&type=section&id=Off%20Balance%20Sheet%20Arrangements) The company reported no off-balance sheet arrangements as of August 31, 2025 - There were no off-balance sheet arrangements as of August 31, 2025[136](index=136&type=chunk) [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The preparation of financial statements requires significant estimates and assumptions for revenue recognition, bad debts, inventory, and leases, with no significant changes to critical accounting policies from the prior annual report - Critical accounting policies and estimates include revenue recognition, bad debts, inventory overhead application, inventory reserves, lease liabilities, and right-of-use assets[138](index=138&type=chunk) - No significant changes to critical accounting policies were reported from the 2025 Annual Report[138](index=138&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Biomerica, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Biomerica, Inc. is exempt from providing quantitative and qualitative disclosures about market risk[139](index=139&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of August 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of August 31, 2025[141](index=141&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended August 31, 2025[142](index=142&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal proceedings in the ordinary course of business but had no pending matters as of August 31, 2025, with management believing future outcomes will not materially affect its financial position - No legal proceedings were pending as of August 31, 2025[144](index=144&type=chunk) - Management believes that any future legal matters will not have a material adverse effect on the company's consolidated financial position, results of operations, or cash flows[144](index=144&type=chunk) [Item 1A. Risks Factors](index=29&type=section&id=Item%201A.%20Risks%20Factors) Investing in the company's common stock involves risks, and no material changes to previously disclosed risk factors occurred during the three months ended August 31, 2025 - Investing in the company's common stock involves certain risks, detailed in this report and the 2025 Annual Report[145](index=145&type=chunk) - No material changes to the risk factors described in the 2025 Annual Report occurred during the three months ended August 31, 2025[146](index=146&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) Dr. Jane Emerson will step down as a Board member, effective November 1, 2025, with no disagreement with the company cited as the reason - Dr. Jane Emerson will step down as a Board member, effective November 1, 2025[147](index=147&type=chunk) - Her resignation was not due to any disagreement with the company's operations, policies, or practices[147](index=147&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or furnished as part of the quarterly report on Form 10-Q, including certifications and interactive data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[148](index=148&type=chunk) - Interactive data files (XBRL) are furnished as Exhibit 101 and its sub-components, along with a Cover Page Interactive Data File (Exhibit 104)[148](index=148&type=chunk) [Signatures](index=30&type=section&id=Signatures) The report was signed by Zackary S. Irani, Chief Executive Officer, and Gary Lu, Chief Financial Officer, on October 14, 2025 - The report was signed by Zackary S. Irani, CEO, and Gary Lu, CFO, on October 14, 2025[150](index=150&type=chunk)

Core Insights - Biomerica Inc. has appointed Gary Huff as an independent board member, bringing extensive leadership experience in the diagnostics and healthcare services industry [1][2][3] - Mr. Huff's background includes serving as CEO of LabCorp Diagnostics and managing commercial laboratories across various sizes and sectors, contributing to sustainable growth and operational efficiencies [2][3] - Biomerica's innovative product, inFoods® IBS, aims to transform the management of irritable bowel syndrome (IBS) by identifying patient-specific food triggers [3][4] Company Overview - Biomerica, Inc. is a global biomedical technology company focused on developing, patenting, manufacturing, and marketing advanced diagnostic and therapeutic products for medical conditions, particularly gastrointestinal and inflammatory diseases [10] - The company aims to enhance health and well-being while reducing healthcare costs through its diagnostic solutions [10] Product Insights - inFoods® IBS is a diagnostic-guided therapy that utilizes a finger-stick blood sample to identify food triggers for IBS symptoms, allowing for targeted dietary changes [4][9] - A recent clinical trial published in June 2025 demonstrated that 59.6% of patients in the treatment group achieved significant abdominal pain reduction compared to 42.1% in the control group, indicating the product's potential effectiveness [5][8] Leadership and Strategic Vision - Gary Huff's appointment is expected to provide valuable insights as Biomerica expands its market presence and enhances its innovative diagnostic portfolio [3] - Mr. Huff has a proven track record in building successful diagnostics businesses and delivering shareholder value, which aligns with Biomerica's growth objectives [2][3]

Core Viewpoint - Biomerica, Inc. has launched the inFoods IBS Trigger Food Navigator, an AI-backed digital tool aimed at improving dietary compliance and treatment success for patients with Irritable Bowel Syndrome (IBS) [1][4]. Product Overview - The inFoods IBS test identifies an average of two to four specific foods that trigger IBS symptoms, allowing for a targeted dietary plan [2]. - The Trigger Food Navigator enhances this by providing smart meal suggestions, ingredient substitutions, and simplified meal planning tools [2][4]. Patient Benefits - The inFoods IBS test allows patients to maintain most of their current diet with minor adjustments, making it easier than traditional restrictive diets [3]. - The AI-backed Navigator empowers patients to manage their IBS symptoms effectively, leading to improved adherence to dietary plans and better symptom relief [4][15]. Clinical Results - A pivotal clinical study published in June 2025 showed that 59.6% of patients in the treatment group achieved significant abdominal pain reduction, compared to 42.2% in the control group [8][16]. - Among IBS-C patients, 67.1% in the treatment group achieved the endpoint versus 35.8% in the control group, and for IBS-M patients, 66.0% versus 29.5% [8][16]. Access and Integration - The Trigger Food Navigator is available at no additional cost for patients who have purchased the inFoods IBS test, with easy access through healthcare providers or online [9]. Company Background - Biomerica, Inc. is a global biomedical technology company focused on developing advanced diagnostic and therapeutic products, particularly for gastrointestinal and inflammatory diseases [10][11].

Core Insights - Biomerica, Inc. has received approval from the UAE Ministry of Health and Prevention for its Fortel Kidney Test for home use, enhancing access to early kidney damage detection tools in high-risk populations [1][4][6] - The Fortel Kidney Test is a rapid, 10-minute diagnostic tool that detects low levels of albumin in urine, a key early indicator of kidney disease, particularly beneficial for individuals with diabetes and hypertension [2][9] - The prevalence of diabetes and hypertension in the UAE is significant, with diabetes affecting approximately one in four nationals and hypertension prevalence around 31%, highlighting the need for early detection tools [3][9] Company Overview - Biomerica is a global biomedical technology company focused on developing advanced diagnostic and therapeutic products for point-of-care and clinical laboratory use, aiming to improve health outcomes while reducing healthcare costs [7] - The company has a growing presence in the Middle East, building on the success of its other diagnostic products, and plans to distribute the Fortel Kidney Test through pharmacies, clinics, and hospitals across the UAE [4][6] Industry Context - Chronic kidney disease (CKD) affects over 840 million people globally and is on the rise, necessitating effective early detection and intervention strategies [5] - The Fortel Kidney Test aligns with the urgent need for preventive healthcare solutions in regions with high rates of diabetes and hypertension, positioning Biomerica as a leader in preventive diagnostics [6]

Core Viewpoint - Biomerica, Inc. reported a modest decline in net sales for fiscal year 2025, attributed to global tariff uncertainties and a shift in product mix, but achieved significant improvements in operating efficiency and cost management [2][3][5]. Financial Performance - Net sales for fiscal year 2025 were $5.3 million, slightly down from $5.4 million in the previous year [2][6]. - Gross profit decreased to $498,000 from $611,000, reflecting macroeconomic impacts [3][6]. - Operating loss improved to $5.1 million, a 19% year-over-year improvement from $6.4 million [5][6]. - Cash used in operating activities reduced to $3.8 million from $5.3 million, indicating stronger operational discipline [3][8]. - Total operating expenses decreased to $5.6 million from $7.0 million, with significant reductions in selling, general, and administrative expenses as well as research and development costs [4][6]. Strategic Growth Areas - Biomerica is focusing on three key areas for revenue growth, including advancements in its inFoods IBS diagnostic product [7]. - The company submitted a Proprietary Laboratory Analyses (PLA) code application for inFoods IBS, which has received approval, enhancing reimbursement pathways [7][9]. - The company is expanding its product offerings in the MENA region and pursuing insurance reimbursement for new products [9][11]. Product Development and Innovation - The inFoods IBS test has shown statistically significant clinical improvements in patient outcomes, with a new self-collection system introduced for easier access [10][13][16]. - Biomerica achieved EU IVDR certification for its food-intolerance diagnostic tests, supporting future commercialization in Europe [10]. - The company has been granted three new international patents related to its inFoods technology platform [12]. Market Expansion - Biomerica has expanded its footprint in the Middle East with the approval of its Fortel PSA rapid screening test by the UAE Ministry of Health [11]. - The company launched direct-to-consumer availability of inFoods IBS, broadening patient access through telehealth and digital channels [11].

[FORM 10-K Filing Information](index=1&type=section&id=FORM%2010-K%20Filing%20Information) [General Information](index=1&type=section&id=General%20Information) Biomerica, Inc. files its annual Form 10-K for FY2025, confirming Nasdaq listing (BMRA) and non-accelerated filer status - Biomerica, Inc. is filing its Annual Report on Form 10-K for the fiscal year ended May 21, 2025[2](index=2&type=chunk) Securities Registered under Section 12(b) of the Exchange Act | Title of each class | Trading Symbols | Name of each exchange on which registered | | :------------------ | :-------------- | :---------------------------------------- | | Common Stock, par value $0.08 | BMRA | Nasdaq Capital Market | - The registrant is a Non-Accelerated Filer and a Smaller Reporting Company[4](index=4&type=chunk) - The aggregate market value of common stock held by non-affiliates as of November 30, 2024, was approximately **$6.4 million**, adjusted for a 1-for-8 reverse stock split effective April 21, 2025[6](index=6&type=chunk) [Cautionary Note Regarding Forward Looking Statements](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward%20Looking%20Statements) This standard disclaimer warns that forward-looking statements may differ materially from actual results due to various risks - The Annual Report contains forward-looking statements regarding strategy, future operations, expenses, financial position, revenue, costs, prospects, plans, intentions, expectations, goals, and objectives[10](index=10&type=chunk) - Forward-looking statements are not guarantees of future performance, and actual results may differ materially due to significant known and unknown risks, uncertainties, and other factors[11](index=11&type=chunk) [Factors Causing Material Differences](index=3&type=section&id=Factors%20Causing%20Material%20Differences) Key factors causing material differences include capital, financial estimates, IP protection, competition, and regulatory issues - Key factors that could cause actual results to differ include the ability to raise additional capital, accuracy of financial estimates, intellectual property protection, competitive landscape, regulatory certifications, distributor relations, global economic and political developments, business model implementation, and retention of key personnel[13](index=13&type=chunk) [Table of Contents](index=4&type=section&id=Table%20of%20Contents) This section indexes the Annual Report on Form 10-K, outlining its structure and page numbers for major sections [PART I](index=5&type=section&id=PART%20I) [ITEM 1. BUSINESS](index=5&type=section&id=ITEM%201.%20BUSINESS) Biomerica's business overview covers products, R&D, strategies, global operations, markets, and intellectual property [BUSINESS OVERVIEW](index=5&type=section&id=BUSINESS%20OVERVIEW) Biomerica is a global biomedical technology company developing advanced diagnostic and therapeutic products - Biomerica is a global biomedical technology company that develops, patents, manufactures, and markets advanced diagnostic and therapeutic products[19](index=19&type=chunk) - Diagnostic test kits analyze blood, urine, nasal, or fecal material for various diseases, food intolerances, and medical complications, aiming to enhance health and reduce healthcare costs[19](index=19&type=chunk) - Products are sold worldwide in clinical laboratories and point-of-care settings, with most being CE marked and/or registered with regulatory agencies, and several cleared by the U.S. FDA[20](index=20&type=chunk) [TECHNOLOGICAL ADVANCEMENTS AND PRODUCT DEVELOPMENT](index=5&type=section&id=TECHNOLOGICAL%20ADVANCEMENTS%20AND%20PRODUCT%20DEVELOPMENT) The company focuses on developing accurate, simple, and rapid diagnostic tests for point-of-care and home use - A key objective is to develop and market rapid diagnostic tests that are accurate, use easily obtained patient specimens, and are simple to perform without complex instrumentation[21](index=21&type=chunk) - The company's rapid point-of-care tests are designed for home or physician's office use, delivering reliable results in minutes, comparable to laboratory tests[21](index=21&type=chunk) [RESEARCH AND DEVELOPMENT](index=5&type=section&id=RESEARCH%20AND%20DEVELOPMENT) R&D expenses decreased, reflecting a shift to commercialization and new applications for inFoods® technology Consolidated Research and Development Expenses | Fiscal Year Ended May 31, | Amount | | :------------------------ | :--------- | | 2025 | $1,023,000 | | 2024 | $1,491,000 | - The decrease in R&D expenses reflects a transition from intensive product development to the commercialization phase of inFoods® IBS and hp+detect™, alongside broader cost management efforts[23](index=23&type=chunk) - The company is pursuing additional applications for inFoods® technology for diseases like Functional Dyspepsia, Crohn's Disease, Ulcerative Colitis, GERD, Migraine Headaches, Depression, and Osteoarthritis, with patents filed globally[24](index=24&type=chunk) - Research led to FDA 510(k) clearance of hp+detect™, a diagnostic test for Helicobacter pylori, with commercialization activities in early stages[25](index=25&type=chunk) [KEY PRODUCT LAUNCHES](index=5&type=section&id=KEY%20PRODUCT%20LAUNCHES) Key product launches include inFoods® IBS for IBS and FDA-cleared hp+detect™ for Helicobacter pylori - The patented diagnostic-guided therapy (DGT) product, inFoods® IBS, uses a simple blood test to identify patient-specific food triggers for IBS symptoms, offering a targeted dietary approach[26](index=26&type=chunk) - inFoods® product has been introduced to gastroenterology physician groups in multiple states, with positive initial feedback and ongoing expansion efforts[27](index=27&type=chunk) - FDA clearance for hp+detect™ was received in December 2023, a diagnostic test for Helicobacter pylori, a significant risk factor for gastric cancer, and is being marketed to laboratories[29](index=29&type=chunk) [STRATEGIC INITIATIVES AND COST MANAGEMENT](index=7&type=section&id=STRATEGIC%20INITIATIVES%20AND%20COST%20MANAGEMENT) Strategic initiatives include workforce reduction and ATM offering to optimize costs and extend cash runway - Proactive steps to optimize cost structure and extend cash runway include a workforce reduction of approximately **15%** during the fiscal year[30](index=30&type=chunk) Net Proceeds from ATM Offering | Offering | Net Proceeds | | :--------- | :----------- | | May 2024 ATM | $2,015,000 | [OPERATIONS AND GLOBAL PRESENCE](index=7&type=section&id=OPERATIONS%20AND%20GLOBAL%20PRESENCE) Biomerica's operations include Irvine headquarters, Mexicali manufacturing, and BioEurope GmbH for international sales - Biomerica is headquartered in Irvine, California, centralizing administration, finance, regulatory compliance, product development, sales, marketing, customer service, and primary manufacturing[31](index=31&type=chunk) - The company maintains manufacturing and assembly operations in Mexicali, Mexico, and operates BioEurope GmbH in Europe for international sales[31](index=31&type=chunk) [PRODUCTION](index=7&type=section&id=PRODUCTION) Production involves manufacturing diagnostic test kits in California and Mexico, with quality control and regulatory compliance - Diagnostic test kits are manufactured and/or assembled at facilities in Irvine, California, and Mexicali, Mexico, with a significant portion of packaging and assembly moved to Mexico in fiscal 2003[33](index=33&type=chunk) - Production involves formulating component antibodies and antigens, attaching tracers, filling components, packaging, and labeling, with continuous quality control to comply with FDA and international regulations[34](index=34&type=chunk) - Manufacturing operations are regulated by FDA Current Good Manufacturing Practices for medical devices, and the company maintains internal quality and Quality Systems departments to ensure compliance with FDA, CE Mark, and ISO regulations[35](index=35&type=chunk) [MARKETS AND METHODS OF DISTRIBUTION](index=8&type=section&id=MARKETS%20AND%20METHODS%20OF%20DISTRIBUTION) Biomerica's markets and distribution rely on distributors, advertising, and internal sales, with significant sales concentration - Biomerica has approximately **76 current diagnostic customers**, including **34 foreign distributors**, **4 domestic distributors**, and domestic hospitals, clinical laboratories, research institutions, and e-commerce customers[36](index=36&type=chunk) - Marketing relies on distributors, advertising in medical/trade journals, trade shows, direct mailings, and an internal sales staff, targeting clinical laboratories and point-of-care testing[38](index=38&type=chunk) Net Sales and Distributor Concentration | Fiscal Year Ended May 31, | Net Sales | Distributor Concentration (one distributor) | | :------------------------ | :----------- | :------------------------------------------ | | 2025 | $5,311,000 | 31% | | 2024 | $5,415,000 | 33% | Gross Receivables and Distributor Concentration | As of May 31, | Gross Receivables | Distributor Concentration (four distributors) | | :-------------- | :---------------- | :-------------------------------------------- | | 2025 | $757,000 | 69% (27% from North America) | | 2024 | $966,000 | 64% | [BACKLOG](index=9&type=section&id=BACKLOG) The backlog of unshipped orders for FY2025 and FY2024 is presented, with most of the 2025 backlog for Asia Backlog of Unshipped Orders | As of May 31, | Backlog Amount | | :-------------- | :------------- | | 2025 | $1,324,000 | | 2024 | $755,000 | - The majority of the backlog as of May 31, 2025, consisted of orders intended for shipment to Asia[42](index=42&type=chunk) [RAW MATERIALS](index=9&type=section&id=RAW%20MATERIALS) Principal raw materials are sourced from multiple suppliers, but critical components have limited sources and vendor concentration - Principal raw materials include chemicals, serums, reagents, and packaging supplies, mostly sourced from multiple suppliers, but critical materials like antibodies have limited sources[43](index=43&type=chunk) Raw Material Procurement from Single Vendor | Fiscal Year Ended May 31, | Percentage of Total Raw Material Procurement | | :------------------------ | :------------------------------------------- | | 2025 | 12% (primarily commodity plastic products) | | 2024 | 16% (primarily commodity plastic products) | [COMPETITION](index=9&type=section&id=COMPETITION) Biomerica's competitive edge relies on product distinctiveness and patents, despite larger competitors - Proprietary products with competitive advantages include EZ Detect colon disease home test, Aware Breast Self-Exam, inFoods IBS, and hp+detect for H. pylori detection[46](index=46&type=chunk) - Competitors vary greatly in size, with many being larger medical and pharmaceutical companies with significantly greater resources for R&D, manufacturing, advertising, and marketing[47](index=47&type=chunk) - Competitive edge is based on product distinctiveness, high quality, rapid test results, and a strong patent portfolio, despite limited marketing capabilities[48](index=48&type=chunk) [GOVERNMENT REGULATION OF OUR DIAGNOSTIC BUSINESS](index=9&type=section&id=GOVERNMENT%20REGULATION%20OF%20OUR%20DIAGNOSTIC%20BUSINESS) Biomerica's medical devices are extensively regulated by FDA and European agencies, requiring compliance with various standards - The company's products are primarily medical devices and in vitro diagnostic medical devices, subject to extensive regulation by numerous governmental entities including the FDA, EPA, FTC, and European agencies[49](index=49&type=chunk) - Products are mainly Class I or Class II medical devices under the FDCA, requiring compliance with general controls and special controls, respectively[50](index=50&type=chunk) - The company's manufacturing facility is FDA-registered and subject to routine inspections for compliance with Quality System Regulation (QSR) and Medical Device Reporting (MDR)[51](index=51&type=chunk) - In Europe, products require a CE Mark and compliance with IVDD, MDR, and IVDR, as well as ISO 13485:2016 and EN ISO 14971:2019[52](index=52&type=chunk) - The company submitted a formal application to its notified body by May 26, 2025, to comply with the new EU IVDR 2017/746 Amendment Regulation (EU) 2022/112, allowing devices with IVDD CE certificates to be placed on the market until December 31, 2027[58](index=58&type=chunk) [SEASONALITY OF BUSINESS](index=11&type=section&id=SEASONALITY%20OF%20BUSINESS) This section states that the company's business has not experienced significant seasonal fluctuations - The company's business has not been subject to significant seasonal fluctuations[60](index=60&type=chunk) [INTERNATIONAL BUSINESS](index=11&type=section&id=INTERNATIONAL%20BUSINESS) International business revenue and risks are detailed, including reliance on independent distributors Revenue Attributable to Domestic and Foreign Customers | Region | 2025 Revenue | 2025 % | 2024 Revenue | 2024 % | | :------------ | :----------- | :----- | :----------- | :----- | | Asia | $1,718,000 | 32% | $1,881,000 | 35% | | Europe | $1,297,000 | 24% | $1,438,000 | 27% | | North America | $1,658,000 | 31% | $1,285,000 | 24% | | Middle East | $630,000 | 13% | $800,000 | 14% | | South America | $8,000 | 0% | $11,000 | 0% | | Total | $5,311,000 | 100% | $5,415,000 | 100% | - International operations face distinct risks including economic fluctuations, regulatory changes, geopolitical instability, tariffs, embargoes, import/export restrictions, and disruptions in shipping/distribution[61](index=61&type=chunk) - The company relies on approximately **38 independent distributors** across around **30 countries** for international sales, each with its own licensing requirements[62](index=62&type=chunk) [INTELLECTUAL PROPERTY](index=11&type=section&id=INTELLECTUAL%20PROPERTY) Protecting methodologies, designs, product formulations, and patents is essential for future success, utilizing legal safeguards - Protection of methodologies, designs, product formulations, manufacturing processes, diagnostic procedures, copyrights, service marks, trademarks, and trade secrets is essential for future success, utilizing various legal safeguards and contractual restrictions[63](index=63&type=chunk) [LICENSE OF THIRD-PARTY INTELLECTUAL PROPERTY](index=12&type=section&id=LICENSE%20OF%20THIRD-PARTY%20INTELLECTUAL%20PROPERTY) The company in-licenses third-party intellectual property and patents, typically involving royalty and other payment obligations - The company in-licenses exclusive and non-exclusive rights to third-party intellectual property and patents, typically requiring royalties and other payments[66](index=66&type=chunk) Royalty Expenses for ACTH Test Agreement | Fiscal Year Ended May 31, | Royalty Expense | | :------------------------ | :-------------- | | 2025 | $7,000 | | 2024 | $10,000 | [BRANDS AND TRADEMARKS](index=12&type=section&id=BRANDS%20AND%20TRADEMARKS) This section lists the company's registered and unregistered tradenames, including 'InFoods' and 'Aware' - Registered tradenames include 'InFoods' (December 2016) and 'Aware' (renewed 2021), with unregistered tradenames like 'EZ Detect,' 'EZ-H.P.,' and 'EZ-PSA'[69](index=69&type=chunk) [PATENTS AND INFOODS TECHNOLOGY](index=12&type=section&id=PATENTS%20AND%20INFOODS%20TECHNOLOGY) The company holds an extensive patent portfolio, including **15 pending or registered patents** for inFoods® technology - The company has filed dozens of international and PCT patents, with approximately **15 pending or registered patents** pertaining to the inFoods® technology platform[71](index=71&type=chunk) - The inFoods® technology platform is a method for diagnosing and treating symptoms of various inflammatory diseases, with the first product being inFoods® IBS[72](index=72&type=chunk) - Issued inFoods® IBS patents exist in the U.S., Australia, Canada, Japan (two), Korea (two), Mexico, Panama, Peru, and Singapore, with additional applications in prosecution[73](index=73&type=chunk) - Patents are also filed for other diseases utilizing inFoods® technology, including Functional Dyspepsia, Crohn's disease, Ulcerative Colitis, GERD, Migraine Headaches, Depression, and Osteoarthritis, as well as IT platforms and AI/ML tools for food monitoring[74](index=74&type=chunk) [EMPLOYEES](index=13&type=section&id=EMPLOYEES) Employee count for FY2025 and FY2024 is provided, noting engagement of external experts for support Employee Count | As of May 31, | Total Employees | | :-------------- | :-------------- | | 2025 | 54 | | 2024 | 64 | - The company engages external experts (Ph.D.'s, M.D.'s) and medical institutions for technical support, regulatory guidance, marketing, financial advisory, and contract product development/manufacturing, with confidentiality agreements in place[80](index=80&type=chunk) [CORPORATE HISTORY](index=13&type=section&id=CORPORATE%20HISTORY) Biomerica, Inc.'s corporate structure is a Delaware corporation operating through two wholly-owned subsidiaries - Biomerica, Inc. is a Delaware corporation operating through two wholly-owned subsidiaries: Biomerica de Mexico (assembly and manufacturing) and BioEurope GmbH (international product distribution)[81](index=81&type=chunk) [ITEM 1A. RISK FACTORS](index=14&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section details comprehensive risks that could materially affect Biomerica's business, financial condition, and future prospects [RISKS RELATED TO OUR BUSINESS](index=14&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS) This section outlines various operational, financial, market, regulatory, and intellectual property risks specific to Biomerica's business - The company has a history of operating losses and its ability to achieve future profitability is uncertain, which could lead to a decline in common stock value and necessitate additional funding[84](index=84&type=chunk) - There is substantial doubt about the company's ability to continue as a going concern for the next 12 months due to recurring losses and insufficient cash, requiring additional financing or operational improvements[85](index=85&type=chunk)[86](index=86&type=chunk) - Operating results are subject to adverse fluctuations from factors outside control, including regulatory clearances, competition, reimbursement changes, economic conditions, and market penetration of new products[87](index=87&type=chunk) - The company must continuously develop and protect proprietary technology to remain competitive, requiring considerable resources with no assurance of commercial viability or market acceptance for new products like inFoods® IBS and hp+detect™[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) - Risks include the potential loss of government or regulatory certifications in various countries, especially with evolving EU IVDR requirements, which could increase compliance costs and limit sales[93](index=93&type=chunk) - Operating a manufacturing facility in Mexico exposes the company to international risks such as local economic/political conditions, trade restrictions, currency fluctuations, and labor shortages[94](index=94&type=chunk) - The use of hazardous materials in research and production presents risks of accidental contamination, injury, and significant liability, potentially exceeding insurance coverage and incurring substantial environmental compliance costs[95](index=95&type=chunk)[96](index=96&type=chunk) - High reliance on a limited number of key distributors (one accounted for **31% of net sales in FY2025**) makes the company vulnerable to adverse changes in these relationships or their financial condition[97](index=97&type=chunk)[98](index=98&type=chunk) - International sales face risks from diverse regulatory requirements, tariffs, currency exchange fluctuations, longer payment cycles, difficulties in collecting receivables, and reduced intellectual property protection in foreign markets[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - The financial soundness of customers, distributors, and suppliers can adversely affect operational results and financial condition, potentially impacting cash flow and product supply[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - Managing growth strategy, including scaling operations and entering new markets, could strain resources and systems, leading to inefficiencies and adverse financial impacts[109](index=109&type=chunk)[110](index=110&type=chunk) - The diagnostic products industry is highly competitive, with larger competitors possessing greater resources, which could reduce sales and margins[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - Intellectual property risks include theft, inability to secure adequate patent protection, and third-party infringement claims, potentially leading to costly litigation, product redesigns, or royalty payments[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - The company needs to raise additional funds to finance future capital and operating needs, which could dilute existing stockholders or be unavailable on favorable terms, potentially delaying or eliminating development programs[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) - Business and products are highly regulated, and failures or delays in regulatory approvals, loss of existing approvals, or changes in laws could negatively affect manufacturing and marketing[124](index=124&type=chunk) - Changes in government policy, such as tariffs, tax policy, or healthcare reform, could increase costs, affect sales, and negatively impact profitability[125](index=125&type=chunk) - Compliance with numerous laws beyond FDA regulations (e.g., environmental, data privacy) could increase costs, and non-compliance could result in fines or operational shutdowns[126](index=126&type=chunk) - Revenue is affected by third-party reimbursement policies; inadequate reimbursement for products, especially inFoods® IBS, could reduce demand and profitability[127](index=127&type=chunk) - Inability to meet unexpected increases in demand due to manufacturing problems or supply shortfalls could harm customer relationships and reputation, requiring additional capital or third-party manufacturers[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Claims of product defects or failure to meet performance criteria could lead to product recalls, liability claims, harm to patients, and reputational damage, potentially exceeding insurance coverage[131](index=131&type=chunk)[132](index=132&type=chunk) - Clinical trials are lengthy, expensive, and uncertain, with no guarantee of positive results or timely completion, potentially affecting regulatory approvals and licensing[133](index=133&type=chunk)[134](index=134&type=chunk) - Failures in information technology and storage systems, many outsourced, or data security breaches could significantly disrupt business, incur excessive costs, and lead to data loss, regulatory actions, and reputational damage[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Future success depends on retaining key technical, sales, marketing, and executive personnel, and the recent workforce reduction may increase workload and make talent retention/recruitment difficult[141](index=141&type=chunk)[142](index=142&type=chunk) - Future sales of common stock to raise capital could dilute existing stockholders and depress the market price. The stock price is also subject to unpredictable market fluctuations unrelated to operating performance[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - The ability to use federal and state net operating loss carryforwards (approximately **$28.4 million** and **$26.9 million**, respectively, as of May 31, 2025) may be limited by future income or ownership changes under IRC Sections 382 and 383[150](index=150&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=24&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) This section confirms that there are no unresolved staff comments from the SEC - There are no unresolved staff comments[151](index=151&type=chunk) [ITEM 1C. CYBERSECURITY](index=24&type=section&id=ITEM%201C.%20CYBERSECURITY) The company maintains an information security program to manage cybersecurity threats, with Board oversight - The company has implemented an information security program to identify, assess, and manage material risks from cybersecurity threats to its critical computer networks, hosted services, communication systems, hardware, software, and data[152](index=152&type=chunk)[153](index=153&type=chunk) - Cybersecurity risk management is integrated into the broader risk management framework, with the management team working closely with the IT department and a third-party IT managed services vendor[162](index=162&type=chunk) - The Board of Directors oversees cybersecurity risk management, receiving regular quarterly briefings on risks and incidents from the CFO[154](index=154&type=chunk) [ITEM 2. PROPERTIES](index=26&type=section&id=ITEM%202.%20PROPERTIES) Biomerica leases headquarters in Irvine, manufacturing in Mexicali, and an office in Lindau, Germany - The company leases approximately **22,000 square feet** for its corporate headquarters in Irvine, California, with the current lease extended until August 31, 2026[156](index=156&type=chunk) - Biomerica de Mexico leases approximately **8,100 square feet** of manufacturing space in Mexicali, Mexico, under a 10-year lease from November 2016, with a 10-year renewal option[157](index=157&type=chunk) - A small office is leased month-to-month in Lindau, Germany, for BioEurope GmbH[157](index=157&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=26&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) No pending legal proceedings as of May 31, 2025, and management anticipates no material adverse effects from future matters - As of May 31, 2025, there were no pending legal proceedings[160](index=160&type=chunk) - Management believes that any future legal matters will not have a material adverse effect on the company's consolidated financial position, results of operations, or cash flows[160](index=160&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=26&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to Biomerica, Inc. - This item is not applicable[161](index=161&type=chunk) [PART II](index=28&type=section&id=PART%20II) [ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=28&type=section&id=ITEM%205.%20MARKET%20FOR%20COMMON%20EQUITY%20AND%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) This section covers common stock market, holders, dividend policy, and issuer equity purchases, noting no cash dividends [Market Information](index=28&type=section&id=Market%20Information) This section states that the company's common stock is listed for trading on the Nasdaq Capital Market under the symbol BMRA - The company's common stock is listed for trading on the Nasdaq Capital Market under the symbol BMRA[163](index=163&type=chunk) [Holders](index=28&type=section&id=Holders) This section reports approximately **858 holders of record** for Biomerica's common stock as of August 29, 2025 - As of August 29, 2025, there were approximately **858 holders of record** of Biomerica's common stock, excluding stock held in street name[164](index=164&type=chunk) [Dividends](index=28&type=section&id=Dividends) The company has not paid cash dividends on its common stock historically and does not plan to in the foreseeable future - The company has not paid any cash dividends on its common stock in the past and does not plan to pay any in the foreseeable future, intending to retain earnings for business operations and expansion[165](index=165&type=chunk) [Performance Graph](index=28&type=section&id=Performance%20Graph) As a smaller reporting company, Biomerica is not required to provide a performance graph - As a smaller reporting company, Biomerica is not required to provide a performance graph[166](index=166&type=chunk) [Recent Sales of Unregistered Securities](index=28&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) This section states that there were no recent sales of unregistered securities - There were no recent sales of unregistered securities[167](index=167&type=chunk) [Purchases of Equity Securities by the Issuer and Affiliated Purchasers](index=28&type=section&id=Purchases%20of%20Equity%20Securities%20by%20the%20Issuer%20and%20Affiliated%20Purchasers) The company did not purchase any of its common stock or other securities during the fiscal year ended May 31, 2025 - The company did not purchase any of its common stock or other securities during the fiscal year ended May 31, 2025[168](index=168&type=chunk) [ITEM 6. RESERVED](index=28&type=section&id=ITEM%206.%20RESERVED) This item is reserved and not required for the company - This item is reserved and not required[169](index=169&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=29&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Biomerica's financial condition and operating results for FY2025 and FY2024, covering sales, expenses, and liquidity [OVERVIEW](index=29&type=section&id=OVERVIEW) Biomerica, a global biomedical technology company, focuses on advanced diagnostic and therapeutic products, expanding inFoods® IBS - Biomerica is a global biomedical technology company focused on developing, patenting, manufacturing, and marketing advanced diagnostic and therapeutic products, primarily for clinical laboratories and point-of-care settings[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - Key products include the patented inFoods® IBS diagnostic-guided therapy for gastrointestinal conditions and the FDA-cleared hp+detect™ for Helicobacter pylori detection[175](index=175&type=chunk)[176](index=176&type=chunk)[183](index=183&type=chunk) - The company is expanding its inFoods® product to gastroenterology physician groups, exploring distribution/partnership opportunities, and applying for U.S. government reimbursement for inFoods® IBS[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) - Due to slower-than-expected product launches, significant cost-cutting measures, including a nearly **15% workforce reduction**, have been implemented to extend cash runway[184](index=184&type=chunk) [Reverse Stock Split](index=30&type=section&id=Reverse%20Stock%20Split) A **1-for-8 reverse stock split** became effective on April 21, 2025, retroactively adjusting all historical share and per share data - A **1-for-8 reverse stock split** became effective on April 21, 2025, with common stock trading on Nasdaq on a split-adjusted basis under 'BMRA'[185](index=185&type=chunk) - All historical share and per share data in consolidated financial statements have been retroactively adjusted to reflect the reverse stock split[186](index=186&type=chunk) [RESULTS OF OPERATIONS](index=30&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes Biomerica's net sales, cost of sales, operating expenses, and dividend and interest income for fiscal years 2025 and 2024 [Net Sales and Cost of Sales](index=31&type=section&id=Net%20Sales%20and%20Cost%20of%20Sales) Net sales decreased by **2%** in FY2025 due to reduced retail activity, partially offset by contract manufacturing and inFoods® IBS sales Net Sales Breakdown by Market | Market | 2025 Sales | 2024 Sales | Increase (Decrease) $ | Increase (Decrease) % | | :--------------------- | :----------- | :----------- | :-------------------- | :-------------------- | | Clinical lab | $3,181,000 | $3,236,000 | $(55,000) | -2% | | Over-the-counter | $1,049,000 | $1,426,000 | $(377,000) | -26% | | Contract manufacturing | $1,070,000 | $741,000 | $329,000 | 44% | | Physician's office | $11,000 | $12,000 | $(1,000) | -8% | | Total | $5,311,000 | $5,415,000 | $(104,000) | -2% | - Net sales decreased by **2%** in FY2025, primarily due to reduced retail market activity and lower international over-the-counter sales, partially offset by higher contract manufacturing and inFoods® IBS sales[188](index=188&type=chunk) Consolidated Cost of Sales | Fiscal Year Ended May 31, | Cost of Sales | % of Net Sales | | :------------------------ | :------------ | :------------- | | 2025 | $4,813,000 | 91% | | 2024 | $4,804,000 | 89% | - Cost of sales slightly increased by **0.2%** in FY2025, driven by higher contract manufacturing and inFoods® product costs, partially offset by reduced direct labor, with overall margin impacted by a shift to lower-margin sales mix[189](index=189&type=chunk) [Operating Expenses](index=32&type=section&id=Operating%20Expenses) Operating expenses, including SG&A and R&D, are summarized for fiscal years 2025 and 2024 Operating Expenses Summary | Operating Expense Category | 2025 Amount | 2025 % of Total Revenues | 2024 Amount | 2024 % of Total Revenues | Change $ | Change % | | :----------------------------------- | :---------- | :----------------------- | :---------- | :----------------------- | :----------- | :------- | | Selling, General and Administrative Expenses | $4,612,000 | 87% | $5,487,000 | 101% | $(875,000) | -16% | | Research and Development | $1,023,000 | 19% | $1,491,000 | 28% | $(468,000) | -31% | [Selling, General and Administrative Expenses](index=32&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) SG&A expenses decreased by **$875,000 (16%)** in FY2025, primarily due to reduced payroll, stock compensation, and marketing expenses - SG&A expenses decreased by **$875,000 (16%)** in FY2025, primarily due to a **$351,000 reduction** in payroll expenses from a July 2024 workforce reduction, a **$327,000 decrease** in stock compensation, and reduced marketing and sales outside services[192](index=192&type=chunk) [Research and Development](index=32&type=section&id=Research%20and%20Development) R&D expenses decreased by **$468,000 (31%)** in FY2025, mainly due to payroll reductions and cost savings for inFoods® R&D and hp+detect™ projects - R&D expenses decreased by **$468,000 (31%)** in FY2025, mainly due to a **$311,000 reduction** in payroll expenses following a July 2024 workforce reduction, **$68,000 in cost savings** for inFoods® R&D, and a **$33,000 reduction** in hp+detect™ project expenses as its research phase completed[193](index=193&type=chunk) [Dividend and Interest income](index=32&type=section&id=Dividend%20and%20Interest%20income) Dividend and interest income decreased by **$266,000** in FY2025, primarily due to lower market interest rates and reduced cash balances Dividend and Interest Income | Fiscal Year Ended May 31, | Amount | | :------------------------ | :------- | | 2025 | $165,000 | | 2024 | $431,000 | - Dividend and interest income decreased by **$266,000** in FY2025, primarily due to lower market interest rates on cash and cash equivalents, and a reduction in cash balances[194](index=194&type=chunk) [LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN](index=32&type=section&id=LIQUIDITY%2C%20CAPITAL%20RESOURCES%20AND%20GOING%20CONCERN) Liquidity, capital resources, and going concern status are discussed, highlighting insufficient cash and strategies to address needs Liquidity Summary | As of May 31, | Cash and Cash Equivalents | Working Capital | | :-------------- | :------------------------ | :-------------- | | 2025 | $2,399,000 | $3,135,000 | | 2024 | $4,170,000 | $5,527,000 | - The company's current cash and cash equivalents are insufficient to meet operating cash requirements and strategic growth objectives for the next twelve months, raising substantial doubt about its ability to continue as a going concern[195](index=195&type=chunk)[201](index=201&type=chunk) - Strategies to address capital needs include increasing sales, reducing expenses (e.g., nearly **16% workforce reduction**), selling non-core assets, and seeking additional debt or equity financing[196](index=196&type=chunk)[197](index=197&type=chunk) - In FY2025, the company sold **440,687 shares** of common stock through an ATM offering, generating net proceeds of **$2,015,000**, intended for general corporate purposes including sales, marketing, clinical studies, and product development[199](index=199&type=chunk)[200](index=200&type=chunk) [Operating Activities](index=34&type=section&id=Operating%20Activities) Cash used in operating activities decreased in FY2025 due to a lower net loss and favorable changes in inventory and accounts receivable Cash Used in Operating Activities | Fiscal Year Ended May 31, | Cash Used in Operating Activities | | :------------------------ | :-------------------------------- | | 2025 | $(3,841,000) | | 2024 | $(5,361,000) | - The decrease in cash used in operating activities in FY2025 was primarily due to a lower net loss and favorable changes in inventory and accounts receivable, partially offset by decreases in accounts payable and accrued expenses[203](index=203&type=chunk) [Investing Activities](index=34&type=section&id=Investing%20Activities) Cash used in investing activities decreased in FY2025, solely for patent expenditures, compared to FY2024 which also included property and equipment purchases Cash Used in Investing Activities | Fiscal Year Ended May 31, | Cash Used in Investing Activities | | :------------------------ | :-------------------------------- | | 2025 | $(37,000) | | 2024 | $(115,000) | - Cash used in investing activities in FY2025 was solely for patent expenditures, a decrease from FY2024 which also included purchases of property and equipment[205](index=205&type=chunk) [Financing Activities](index=34&type=section&id=Financing%20Activities) Financing activities provided **$2,111,000** in FY2025, primarily from common stock sales, with **$231,986** remaining under the 2023 Shelf Registration Cash Provided by (Used in) Financing Activities | Fiscal Year Ended May 31, | Cash Provided by (Used in) Financing Activities | | :------------------------ | :---------------------------------------------- | | 2025 | $2,111,000 | | 2024 | $(81,000) | - In FY2025, financing activities provided **$2,111,000**, primarily from **$2,015,000** net proceeds from common stock sales and **$15,000** from stock option exercises[206](index=206&type=chunk) - The company's 2023 Shelf Registration Statement has an offering limit of **$3,315,084**, with **$231,986** remaining available for sale as of the filing date[208](index=208&type=chunk) [SUBSEQUENT EVENTS](index=35&type=section&id=SUBSEQUENT%20EVENTS) Subsequent events include a **$1.1 million** IRS refund and **$919,000** net proceeds from ATM stock sales in July and August 2025 - On July 21, 2025, the company received a cash refund of approximately **$1.1 million** from the IRS related to Employee Retention Credit claims[209](index=209&type=chunk) - In July and August 2025, the company generated approximately **$919,000 in net proceeds** from sales of common stock under its At-the-Market (ATM) offering program[210](index=210&type=chunk) [OFF BALANCE SHEET ITEMS](index=35&type=section&id=OFF%20BALANCE%20SHEET%20ITEMS) This section confirms that there were no off-balance sheet arrangements as of May 31, 2025 - There were no off-balance sheet arrangements as of May 31, 2025[211](index=211&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=35&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Key accounting estimates include allowance for doubtful accounts, revenue recognition, stock option forfeiture, inventory obsolescence, and lease valuations - Key estimates and assumptions include allowance for doubtful accounts, variable consideration in revenue recognition, stock option forfeiture rates, inventory obsolescence, and valuation of lease liabilities and right-of-use assets[212](index=212&type=chunk)[213](index=213&type=chunk) [REVENUE RECOGNITION](index=35&type=section&id=REVENUE%20RECOGNITION) Revenue from product sales is recognized at shipment, diagnostic services upon completion, and contract manufacturing as services are performed - Revenue from product sales is recognized at the time of shipment (FOB shipping point), when control transfers[215](index=215&type=chunk) - Revenue for diagnostic testing services is recognized once the third-party CLIA-certified lab completes test results[216](index=216&type=chunk) - Revenue for contract manufacturing services is recognized as the service is performed or as the project progresses[216](index=216&type=chunk) [SHARE-BASED COMPENSATION](index=36&type=section&id=SHARE-BASED%20COMPENSATION) The company follows ASC 718, using the fair-value based method for compensation, with the Black-Scholes model for options and fair value for RSUs - The company follows ASC 718, using the fair-value based method for compensation, with the Black-Scholes option-pricing model for options and fair value for RSUs[217](index=217&type=chunk) [VALUATION OF INVENTORIES, NET](index=36&type=section&id=VALUATION%20OF%20INVENTORIES%2C%20NET) Inventories are valued at the lower of cost or net realizable value, with reserves recorded for excess quantities and obsolescence - Inventories are valued at the lower of cost (specific lot identification and FIFO) or net realizable value, with valuation reserves recorded for excess quantities and obsolescence[218](index=218&type=chunk)[219](index=219&type=chunk) Inventory Valuation Reserves | As of May 31, | Inventory Reserves | | :-------------- | :----------------- | | 2025 | $471,000 | | 2024 | $467,000 | [RECENT ACCOUNTING PRONOUNCEMENTS](index=36&type=section&id=RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company adopted ASU 2023-07 and ASU 2023-09 with no material impact and is evaluating ASU 2024-03 - The company adopted ASU 2023-07 (Improvements to Reportable Segment Disclosures) and ASU 2023-09 (Improvements to Income Tax Disclosures) on May 31, 2025, with no material impact on consolidated financial statements[221](index=221&type=chunk)[222](index=222&type=chunk) - The company is currently evaluating the effect of adopting ASU 2024-03 (Expense Disaggregation Disclosures), effective for annual periods beginning after December 15, 2026[223](index=223&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=36&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Biomerica, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide information under this item[224](index=224&type=chunk) [ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=37&type=section&id=ITEM%208.%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents Biomerica's audited consolidated financial statements for FY2025 and FY2024, including the independent auditor's report and detailed notes [INDEX TO FINANCIAL STATEMENTS](index=37&type=section&id=INDEX%20TO%20FINANCIAL%20STATEMENTS) This section provides a table of contents for the consolidated financial statements, including balance sheets, statements of operations, equity, cash flows, and notes - Provides a table of contents for the consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, shareholders' equity, cash flows, and notes[226](index=226&type=chunk)[254](index=254&type=chunk) [REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM](index=45&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) Haskell & White LLP issued an unqualified opinion on the consolidated financial statements, noting substantial doubt about the company's going concern ability - Haskell & White LLP issued an unqualified opinion on the consolidated financial statements for May 31, 2025 and 2024, stating they are presented fairly in all material respects[256](index=256&type=chunk) - The report includes an explanatory paragraph highlighting substantial doubt about the company's ability to continue as a going concern due to recurring losses and negative cash flows[257](index=257&type=chunk) [Critical Audit Matter](index=46&type=section&id=Critical%20Audit%20Matter) The critical audit matter identified is Inventory Valuation, due to extensive use of estimates for capitalized labor, overhead, and obsolete inventories - The critical audit matter identified is Inventory Valuation, due to the extensive use of estimates for capitalized labor and overhead, and for slow-moving and obsolete inventories[263](index=263&type=chunk) - Audit procedures included understanding management's methodologies, testing the reasonableness of cost pools and inventory quantities, recalculating allocable rates, performing sensitivity analyses, and evaluating qualitative analyses of reserves[264](index=264&type=chunk) [CONSOLIDATED FINANCIAL STATEMENTS](index=47&type=section&id=CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section presents the core consolidated financial statements, including balance sheets, statements of operations, shareholders' equity, and cash flows [Consolidated Balance Sheets](index=47&type=section&id=Consolidated%20Balance%20Sheets) This section presents the consolidated balance sheets, detailing assets, liabilities, and shareholders' equity as of May 31, 2025 and 2024 Consolidated Balance Sheet Highlights | Item | May 31, 2025 | May 31, 2024 | | :------------------------ | :----------- | :----------- | | Cash and cash equivalents | $2,399,000 | $4,170,000 | | Total current assets | $4,875,000 | $7,731,000 | | Total Assets | $5,945,000 | $9,254,000 | | Total current liabilities | $1,740,000 | $2,204,000 | | Total Liabilities | $1,840,000 | $2,663,000 | | Total Shareholders' Equity | $4,105,000 | $6,591,000 | | Accumulated deficit | $(53,168,000) | $(48,195,000) | [Consolidated Statements of Operations and Comprehensive Loss](index=48&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section presents consolidated statements of operations and comprehensive loss, detailing net sales, gross profit, operating expenses, and net loss Consolidated Statements of Operations and Comprehensive Loss Highlights | Item | For the Year Ended May 31, 2025 | For the Year Ended May 31, 2024 | | :------------------------ | :------------------------------ | :------------------------------ | | Net sales | $5,311,000 | $5,415,000 | | Cost of sales | $(4,813,000) | $(4,804,000) | | Gross profit | $498,000 | $611,000 | | Total operating expense | $5,635,000 | $6,978,000 | | Loss from operations | $(5,137,000) | $(6,367,000) | | Net loss | $(4,973,000) | $(5,978,000) | | Basic net loss per common share | $(2.16) | $(2.84) | | Comprehensive loss | $(4,976,000) | $(5,970,000) | [Consolidated Statements of Shareholders' Equity](index=49&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) This section presents the consolidated statements of shareholders' equity, detailing changes in common stock, additional paid-in capital, and accumulated deficit Consolidated Statements of Shareholders' Equity Highlights | Item | Balances at May 31, 2023 | Balances at May 31, 2024 | Balances at May 31, 2025 | | :------------------------ | :----------------------- | :----------------------- | :----------------------- | | Common Stock Shares | 2,103,154 | 2,103,154 | 2,546,216 | | Common Stock Amount | $168,000 | $168,000 | $203,000 | | Additional Paid-in Capital | $53,883,000 | $54,720,000 | $57,175,000 | | Accumulated Other Comprehensive Loss | $(110,000) | $(102,000) | $(105,000) | | Accumulated Deficit | $(42,217,000) | $(48,195,000) | $(53,168,000) | | Total Stockholders' Equity | $11,724,000 | $6,591,000 | $4,105,000 | [Consolidated Statements of Cash Flows](index=50&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents consolidated statements of cash flows, detailing cash used in operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights | Item | For the Year Ended May 31, 2025 | For the Year Ended May 31, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash used in operating activities | $(3,841,000) | $(5,361,000) | | Net cash used in investing activities | $(37,000) | $(115,000) | | Net cash provided by (used in) financing activities | $2,111,000 | $(81,000) | | Net decrease in cash and cash equivalents | $(1,770,000) | $(5,549,000) | | Cash and cash equivalents at end of year | $2,400,000 | $4,170,000 | [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=51&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed notes to the consolidated financial statements, offering further explanation and context for the reported financial data [NOTE 1: ORGANIZATION](index=51&type=section&id=NOTE%201%3A%20ORGANIZATION) This note describes Biomerica, Inc. as a global biomedical technology company focused on diagnostic and therapeutic products, particularly for gastrointestinal diseases - Biomerica, Inc. is a global biomedical technology company focused on developing, patenting, manufacturing, and marketing advanced diagnostic and therapeutic products[275](index=275&type=chunk) - Primary focus is on patented diagnostic-guided therapy (DGT) products for gastrointestinal diseases like IBS, with the inFoods® IBS product designed to identify patient-specific food triggers[276](index=276&type=chunk) - Products are sold worldwide in clinical laboratories and point-of-care settings, with most having CE Mark clearance and/or FDA clearance for sale in the U.S[277](index=277&type=chunk) [NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=51&type=section&id=NOTE%202%3A%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's significant accounting policies, including principles of consolidation, estimates, revenue recognition, and share-based compensation [PRINCIPLES OF CONSOLIDATION](index=51&type=section&id=PRINCIPLES%20OF%20CONSOLIDATION) Consolidated financial statements include Biomerica, Inc. and its wholly-owned subsidiaries, with all significant intercompany transactions eliminated - Consolidated financial statements include Biomerica, Inc. and its wholly-owned subsidiaries, BioEurope GmbH (Germany) and Biomerica de Mexico (Mexico), with all significant intercompany accounts and transactions eliminated[278](index=278&type=chunk) [ACCOUNTING ESTIMATES](index=51&type=section&id=ACCOUNTING%20ESTIMATES) Key accounting estimates include allowance for doubtful accounts, variable consideration, stock option forfeiture, inventory obsolescence, and lease valuations - Key accounting estimates include allowance for doubtful accounts, variable consideration in revenue recognition, stock option forfeiture rates, inventory obsolescence, and valuation of lease liabilities and right-of-use assets[279](index=279&type=chunk) [REVERSE STOCK SPLIT](index=52&type=section&id=REVERSE%20STOCK%20SPLIT) A **1-for-8 reverse stock split** became effective on April 21, 2025, retroactively adjusting all common stock and per share information - A **1-for-8 reverse stock split** became effective on April 21, 2025, retroactively adjusting all common stock, per share, and related information in the financial statements[281](index=281&type=chunk) [LIQUIDITY AND GOING CONCERN](index=52&type=section&id=LIQUIDITY%20AND%20GOING%20CONCERN) The company's liquidity and going concern status are discussed, noting recurring losses, insufficient cash, and strategies to secure additional financing - The company has incurred net losses and negative cash flows from operations, with an accumulated deficit of approximately **$53.2 million** as of May 31, 2025[282](index=282&type=chunk) Cash and Working Capital | As of May 31, | Cash and Cash Equivalents | Working Capital | | :-------------- | :------------------------ | :-------------- | | 2025 | $2,399,000 | $3,135,000 | | 2024 | $4,170,000 | $5,527,000 | - Current cash and cash equivalents are insufficient for operating and strategic growth objectives for the next 12 months, raising substantial doubt about the company's ability to continue as a going concern[286](index=286&type=chunk)[287](index=287&type=chunk) - Strategies to address capital needs include increasing sales, reducing expenses, selling non-core assets, and seeking additional financing through debt or equity[287](index=287&type=chunk) [FAIR VALUE OF FINANCIAL INSTRUMENTS](index=52&type=section&id=FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) The carrying amounts of the company's financial instruments approximate their fair values - The carrying amounts of the company's financial instruments (cash and cash equivalents, accounts receivable, and accounts payable) approximate their fair values[291](index=291&type=chunk) [CONCENTRATION OF CREDIT RISK](index=53&type=section&id=CONCENTRATION%20OF%20CREDIT%20RISK) This section details credit risk concentration, including cash balances, distributor reliance, and raw material vendor concentration - The company maintains cash balances at financial institutions that may exceed federal insurance limits but does not believe it is exposed to significant credit risks[292](index=292&type=chunk) Net Sales and Distributor Concentration | Fiscal Year Ended May 31, | Net Sales | Distributor Concentration (one distributor) | | :------------------------ | :----------- | :------------------------------------------ | | 2025 | $5,311,000 | 41% (two distributors) | | 2024 | $5,415,000 | 33% (one distributor) | Gross Receivables and Distributor Concentration | As of May 31, | Gross Receivables | Distributor Concentration (four distributors) | | :-------------- | :---------------- | :-------------------------------------------- | | 2025 | $757,000 | 69% (27% from North America) | | 2024 | $966,000 | 64% | Raw Material Vendor Concentration | Fiscal Year Ended May 31, | Percentage of Raw Material Purchases from One Vendor | | :------------------------ | :--------------------------------------------------- | | 2025 | 12% | | 2024 | 16% | [GEOGRAPHIC CONCENTRATION](index=54&type=section&id=GEOGRAPHIC%20CONCENTRATION) This section details the geographic concentration of inventory and property and equipment in Mexicali, Mexico Inventory and Property & Equipment in Mexicali, Mexico | As of May 31, | Gross Inventory | Property and Equipment, Net | | :-------------- | :-------------- | :-------------------------- | | 2025 | $483,000 | $10,000 | | 2024 | $537,000 | $14,000 | [CASH AND CASH EQUIVALENTS](index=54&type=section&id=CASH%20AND%20CASH%20EQUIVALENTS) Cash and cash equivalents consist of demand deposits and money market accounts with original maturities of less than three months - Cash and cash equivalents consist of demand deposits and money market accounts with original maturities of less than three months[299](index=299&type=chunk) [ACCOUNTS RECEIVABLE, NET](index=54&type=section&id=ACCOUNTS%20RECEIVABLE%2C%20NET) The company extends unsecured credit to customers and adopted ASU 2016-13 (CECL model) for estimating expected credit losses - The company extends unsecured credit to customers, with international customers typically prepaying until a credit history is established[300](index=300&type=chunk) - The company adopted ASU 2016-13 (CECL model) on June 1, 2023, for estimating expected credit losses based on historical experience and current/future economic conditions[301](index=301&type=chunk) Allowance for Credit Losses | As of May 31, | Allowance Amount | | :-------------- | :--------------- | | 2025 | $26,000 | | 2024 | $19,000 | [PREPAID EXPENSES AND OTHER](index=54&type=section&id=PREPAID%20EXPENSES%20AND%20OTHER) Prepaid expenses and other assets are detailed, primarily consisting of prepayments for insurance and various other suppliers Prepaid Expenses and Other | As of May 31, | Amount | | :-------------- | :------- | | 2025 | $255,000 | | 2024 | $238,000 | - Prepaid expenses consist of prepayments for insurance and various other suppliers[303](index=303&type=chunk) [INVENTORIES, NET](index=54&type=section&id=INVENTORIES%2C%20NET) Inventories are valued at the lower of cost or net realizable value, with periodic review for excess quantities and obsolescence - Inventories are valued at the lower of cost (specific lot identification and FIFO) or net realizable value, with periodic review for excess quantities and obsolescence[304](index=304&type=chunk) Net Inventories Breakdown | Item | May 31, 2025 | May 31, 2024 | | :-------------------- | :----------- | :----------- | | Raw materials | $1,071,000 | $1,519,000 | | Work in progress | $743,000 | $1,145,000 | | Finished products | $147,000 | $179,000 | | Total gross inventory | $1,961,000 | $2,843,000 | | Inventory reserve | $(471,000) | $(467,000) | | Inventories, net | $1,490,000 | $2,376,000 | [PROPERTY AND EQUIPMENT, NET](index=55&type=section&id=PROPERTY%20AND%20EQUIPMENT%2C%20NET) Property and equipment are stated at cost and depreciated over estimated useful lives of **5 to 10 years** using the straight-line method - Property and equipment are stated at cost and depreciated over estimated useful lives of **5 to 10 years** using the straight-line method[306](index=306&type=chunk)[307](index=307&type=chunk) Depreciation and Amortization Expense on Property and Equipment | Fiscal Year Ended May 31, | Amount | | :------------------------ | :------ | | 2025 | $66,000 | | 2024 | $63,000 | [INTANGIBLE ASSETS, NET](index=55&type=section&id=INTANGIBLE%20ASSETS%2C%20NET) Intangible assets, including patents and product rights, are amortized on a straight-line basis over estimated useful lives and evaluated for impairment - Intangible assets, including trademarks, product rights, technology rights, and patents, are amortized on a straight-line basis over estimated useful lives (up to **18 years** for marketing/distribution rights, **10 years** for technology use rights, **15 years** for patents)[308](index=308&type=chunk)[309](index=309&type=chunk) Amortization Expense for Intangible Assets | Fiscal Year Ended May 31, | Amount | | :------------------------ | :------ | | 2025 | $21,000 | | 2024 | $18,000 | - Intangible assets are evaluated for impairment qualitatively, and no impairment was identified for the years ended May 31, 2025 and 2024[310](index=310&type=chunk) [INVESTMENTS](index=55&type=section&id=INVESTMENTS) The company has an investment of approximately **$165,000** in a privately held Polish distributor, accounted for at initial cost and assessed for impairment - The company has an investment of approximately **$165,000** in a privately held Polish distributor, representing approximately **6% ownership**, accounted for at initial cost[311](index=311&type=chunk)[312](index=312&type=chunk) - Equity holdings are assessed for impairment, and no impairment was determined as of May 31, 2025[313](index=313&type=chunk) [SHARE-BASED COMPENSATION](index=56&type=section&id=SHARE-BASED%20COMPENSATION) The company follows ASC 718 for share-based payment awards, measuring at grant-date fair value using the Black-Scholes model for options and fair value for RSUs - The company follows ASC 718, measuring share-based payment awards at grant-date fair value, using the Black-Scholes model for options and fair value for RSUs[314](index=314&type=chunk) Share-Based Compensation Expense | Fiscal Year Ended May 31, | Amount | | :------------------------ | :------- | | 2025 | $460,000 | | 2024 | $837,000 | Black-Scholes Option-Pricing Model Assumptions | Assumption | 2025 Range | 2024 Range | | :---------------------- | :------------------ | :------------------ | | Dividend yield | 0% | 0% | | Expected volatility | 105.90 - 117.41% | 100.54 - 111.98% | | Risk free interest rate | 3.68 - 4.52% | 4.00 - 4.59% | | Expected term | 4.69 - 6.25 years | 4.69 - 6.25 years | [REVENUE RECOGNITION](index=56&type=section&id=REVENUE%20RECOGNITION) Revenue from product sales is recognized at shipment, diagnostic services upon completion, and contract manufacturing as performed, with variable consideration f