We use hazardous materials in our research and production. The risk of accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an accident, the Company could be held liable for any harm or damages that result and any such liability could exceed the resources of the Company. The Company may incur substantial costs to comply with environmental regulations. Companies in or related to our industry often aggressively protect and pursue their intellectual prop ...

Table of Contents | --- | --- | --- | --- | --- | --- | --- | --- | |--------------------------|-------|------------------------|-------|-------------------------|-------|----------------|----------------| | | | Nine Months \n2023 | Ended | February 28, \n2022 | | Increase \n$ | (Decrease) \n% | | Clinical lab | $ | 2,580,000 | $ | 2,259,000 | $ | 321,000 | 14% | | Over-the-counter | | 971,000 | | 857,000 | | 114,000 | 13% | | Contract manufacturing | | 431,000 | | 319,000 | | 112,000 | 35% | | Physician's ...

WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2022 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-37863 | --- | --- | |------------------------------------------------------------------------------------------------|-------------------------------------------------------| | Delaware (State or other jurisdiction of | 95-2 ...

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2022 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-37863 | --- | --- | |------------------------------------------------------------------------------------------------------------------------------|--------------------------------- ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Biomerica is a biomedical technology company focused on developing and marketing diagnostic and therapeutic products, with a strategic emphasis on its InFoods® IBS therapy [Business Overview](index=5&type=section&id=BUSINESS%20OVERVIEW) Biomerica focuses on developing and marketing diagnostic and therapeutic products, prioritizing the commercialization of its InFoods® IBS product as an LDT while pursuing FDA clearance - The company's primary focus is on its patented InFoods® IBS product, designed to identify specific foods that may alleviate IBS symptoms when removed from a patient's diet[5](index=5&type=chunk) - In February 2022, the company reported positive top-line results from its InFoods® IBS endpoint determination clinical trial conducted at major institutions like the Mayo Clinic and a Harvard Medical School Teaching Hospital. The company is now preparing for a final pivotal trial to seek FDA clearance[5](index=5&type=chunk) - While pursuing FDA clearance, Biomerica plans to launch the InFoods® IBS product as a Laboratory Developed Test (LDT) and expects to generate revenue from it by December 31, 2022[5](index=5&type=chunk) - In Q4 FY2022, the company applied for FDA 510(k) clearance for its H. Pylori diagnostic test. Additionally, Walmart has begun selling the Aware® Breast Self Exam product on its online platform[6](index=6&type=chunk) [Production, R&D, and Operations](index=7&type=section&id=PRODUCTION,%20R%26D,%20AND%20OPERATIONS) Biomerica manufactures diagnostic kits in California and Mexico, with FY2022 R&D expenses of **$1.8 million** focused on InFoods® IBS and H. Pylori - Manufacturing and assembly operations are located in Irvine, CA, and Mexicali, Mexico, and are regulated by FDA Good Manufacturing Practices, CE Mark, and ISO standards[7](index=7&type=chunk) Research & Development Expenses | Expense Category | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Research & Development | $1,812,000 | $2,194,000 | - R&D efforts in FY2022 were concentrated on the InFoods® IBS product and a proprietary H. Pylori test, which was submitted to the FDA for clearance in Q4 FY2022[8](index=8&type=chunk) [Markets, Distribution, and Customer Concentration](index=8&type=section&id=MARKETS,%20DISTRIBUTION,%20AND%20CUSTOMER%20CONCENTRATION) Biomerica markets products to clinical labs and point-of-care, with significant customer concentration as two distributors accounted for **65% of FY2022 net sales** - The company targets two main markets: clinical laboratories and point-of-care testing (physicians' offices and over-the-counter)[9](index=9&type=chunk) - Significant customer concentration exists. In FY2022, two distributors accounted for **65% of net sales** (up from 60% in FY2021). The largest distributor alone made up **55% of net sales**[10](index=10&type=chunk) - As of May 31, 2022, one distributor in Asia accounted for **50% of the total gross accounts receivable** of approximately **$927,000**[10](index=10&type=chunk) - The company's order backlog increased significantly to approximately **$754,000** at the end of FY2022, up from **$85,000** in FY2021, primarily consisting of orders to a distributor in Asia[11](index=11&type=chunk) [Competition and Regulation](index=9&type=section&id=COMPETITION%20AND%20REGULATION) Biomerica competes in a highly regulated immunodiagnostics market, subject to FDA and international regulations, and is transitioning to new EU IVDR requirements - The company competes with hundreds of global companies, many of which are larger and have greater resources. Biomerica competes on the basis of product uniqueness, quality, speed, patents, and pricing[14](index=14&type=chunk) - The company's products are primarily Class I or Class II medical devices, subject to FDA regulations, including the Quality System Regulation (QSR) and Medical Device Reporting (MDR)[15](index=15&type=chunk) - For sales in Europe, the company must comply with EU directives and is transitioning to the new, more stringent In Vitro Diagnostic Medical Device Regulation (IVDR) 2017/746. The company has received an extended CE Certificate effective until May 26, 2025, providing time to update technical documentation to meet the new IVDR requirements[16](index=16&type=chunk) [Intellectual Property](index=11&type=section&id=INTELLECTUAL%20PROPERTY) Biomerica's IP strategy focuses on patents, trademarks, and trade secrets, with **12 granted patents** and over **100 pending applications** for its InFoods® technology platform - The company's most important patent family pertains to the InFoods® technology platform, which is a method for diagnosing and treating symptoms of various inflammatory diseases[24](index=24&type=chunk) - Biomerica has been granted **12 patents** for its InFoods® IBS product in countries including the United States (2), Japan (3), Korea (2), and Australia (1), and has over **100 additional international and USPTO patent applications pending**[24](index=24&type=chunk) - The company has licensed CRISPR-based technology from the University of California for a potential COVID-19 test, though no product launch from this collaboration is imminent[22](index=22&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant operational, product, market, regulatory, IP, and financial risks, including a history of losses and reliance on key distributors [Business and Operational Risks](index=14&type=section&id=RISKS%20RELATED%20TO%20BUSINESS%20AND%20OPERATIONS) Biomerica faces operational risks including a history of losses, reliance on a few key distributors, COVID-19 impacts, and international business complexities - The company is susceptible to widespread public health epidemics like COVID-19, which can cause supply chain disruptions, loss of customers, and other negative impacts[29](index=29&type=chunk) - The company has a history of net losses and cannot assure future profitability or positive cash flow[30](index=30&type=chunk) - There is a high concentration of revenue from a few key distributors. In FY2022, two distributors accounted for **65% of net sales**, and one distributor in Asia represented **50% of accounts receivable** as of May 31, 2022[33](index=33&type=chunk) - The manufacturing facility in Mexico presents risks associated with international business, including economic and political instability and currency fluctuations[32](index=32&type=chunk) [Product, Market, and Clinical Trial Risks](index=18&type=section&id=RISKS%20RELATED%20TO%20PRODUCTS,%20MARKETS,%20AND%20CLINICAL%20TRIALS) Success depends on overcoming product, market, and clinical trial risks, including uncertain trial outcomes, intense competition, and market acceptance of new products - Clinical trials are an expensive and uncertain process, and there is no assurance of positive results or that they will lead to regulatory clearance[37](index=37&type=chunk) - The diagnostic industry is highly competitive, with numerous larger competitors that have substantially greater financial, technical, and marketing resources[41](index=41&type=chunk) - Market acceptance of new products by healthcare providers and physicians is uncertain and critical for future revenue growth[39](index=39&type=chunk) - Reliance on third-party CROs and clinical sites for trials presents risks. If these parties fail to perform their duties, it could compromise clinical data and delay commercialization[47](index=47&type=chunk) [Regulatory, IP, and Financial Risks](index=17&type=section&id=RISKS%20RELATED%20TO%20REGULATION,%20INTELLECTUAL%20PROPERTY,%20AND%20FINANCE) Biomerica faces significant regulatory, IP, and financial risks, including the need for additional funding, stock price volatility, and limitations on NOL utilization - The company's business is highly regulated, and failure to receive or maintain regulatory approvals (e.g., from the FDA or for the new EU IVDR) could negatively affect operations[41](index=41&type=chunk)[32](index=32&type=chunk) - The company faces risks of third-party claims of IP infringement, which could be costly and require product redesigns or licensing fees[36](index=36&type=chunk) - The company may need to raise additional funds to finance future operations, which could result in dilution for existing stockholders. An S-3 shelf registration for up to **$90 million** is in place[37](index=37&type=chunk)[51](index=51&type=chunk) - The company has significant federal (**$17.1 million**) and California state (**$10.8 million**) net operating loss carryforwards, but their future use may be limited by IRC Section 382 ownership change rules[53](index=53&type=chunk) [Properties](index=25&type=section&id=Item%202.%20Properties) Biomerica operates from leased facilities, including a **22,000 sq. ft.** headquarters in Irvine, CA, and an **8,100 sq. ft.** manufacturing plant in Mexicali, Mexico - The company leases its **22,000 sq. ft.** corporate headquarters in Irvine, CA. The lease was extended in April 2021 for five years, until August 2026[57](index=57&type=chunk) - The Mexican subsidiary leases an **8,100 sq. ft.** manufacturing space in Mexicali under a 10-year lease that began in November 2016[57](index=57&type=chunk) [Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) As of May 31, 2022, Biomerica had no pending legal proceedings, though it may be involved in ordinary course litigation - There were no legal proceedings pending as of May 31, 2022[58](index=58&type=chunk) Part II [Market for Common Equity and Related Stockholder Matters](index=25&type=section&id=Item%205.%20Market%20for%20Common%20Equity%20and%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Biomerica's common stock trades on Nasdaq (BMRA); the company does not pay dividends and had **2,321,616 outstanding stock options** as of May 31, 2022 - The company's common stock trades on the Nasdaq Capital Market under the symbol BMRA[59](index=59&type=chunk) - The company has not paid and does not plan to pay cash dividends, intending to retain earnings for business operations and expansion[60](index=60&type=chunk) Equity Compensation Plan Information (as of May 31, 2022) | Equity Compensation Plan Information (as of May 31, 2022) | Value | | :--- | :--- | | Securities to be Issued Upon Exercise of Outstanding Options | 2,321,616 | | Weighted-Average Exercise Price of Outstanding Options | $3.72 | | Securities Remaining Available for Future Issuance | 102,801 | [Management's Discussion and Analysis (MD&A)](index=26&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2022 net sales increased **162% to $18.9 million** driven by COVID-19 tests, improving gross profit but still resulting in a **$4.5 million net loss** [Overview](index=26&type=section&id=MD%26A%20Overview) Management's overview highlights the dual strategy for InFoods® IBS commercialization (LDT launch and FDA clearance) and the role of COVID-19 test sales in FY2022 revenue - The company's primary focus is the research, development, and commercialization of its patented InFoods® IBS product[64](index=64&type=chunk) - After positive clinical trial results, the company plans to launch the InFoods® IBS product as an LDT, expecting to generate revenue by December 31, 2022, while simultaneously working towards FDA clearance[65](index=65&type=chunk) - All COVID-19 revenues in fiscal 2022 came from international sales of COVID-19 antigen tests[66](index=66&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) FY2022 net sales surged **162% to $18.9 million**, driven by physician's office sales, leading to an improved **16% gross margin** despite flat operating expenses Net Sales by Market | Net Sales by Market | FY 2022 | FY 2021 | % Change | | :--- | :--- | :--- | :--- | | Physician's office | $14,259,000 | $2,801,000 | 409% | | Clinical lab | $3,064,000 | $3,077,000 | 0% | | Over-the-counter | $1,089,000 | $766,000 | 42% | | Contract manufacturing | $459,000 | $555,000 | -17% | | **Total** | **$18,871,000** | **$7,199,000** | **162%** | - Cost of sales as a percentage of revenue improved to **84% in FY2022** from **95% in FY2021**. The prior year's figure was elevated by a non-recurring inventory allowance[68](index=68&type=chunk) Operating Expenses | Operating Expenses | FY 2022 | FY 2021 | % Change | | :--- | :--- | :--- | :--- | | Selling, General & Administrative | $5,699,000 | $5,672,000 | 0% | | Research and Development | $1,812,000 | $2,194,000 | -17% | [Liquidity and Capital Resources](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of May 31, 2022, Biomerica had **$5.9 million in cash** and **$7.4 million in working capital**, with cash used in operations significantly improving to **($0.5 million)** Liquidity Metrics | Liquidity Metrics | May 31, 2022 | May 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,917,000 | $4,199,000 | | Working capital | $7,416,000 | $7,931,000 | Cash Flow Summary | Cash Flow Summary | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($486,000) | ($5,252,000) | | Net Cash Used in Investing Activities | ($170,000) | ($296,000) | | Net Cash Provided by Financing Activities | $2,395,000 | $1,114,000 | - Financing activities in FY2022 were primarily driven by **$2.3 million** in net proceeds from the sale of common stock through an at-the-market (ATM) offering[74](index=74&type=chunk) - Subsequent to year-end, the company sold an additional **523,977 shares** for net proceeds of approximately **$1,765,000** under its ATM program[76](index=76&type=chunk) [Critical Accounting Policies](index=31&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) Critical accounting policies involve significant estimates for revenue recognition, bad debts, inventory valuation, and share-based compensation using the Black-Scholes model - Key critical accounting policies requiring significant management estimates include revenue recognition, bad debts, inventory overhead and reserves, lease liabilities, and share-based compensation[79](index=79&type=chunk) - Revenue from product sales is recognized at the time of shipment (FOB shipping point), when control transfers to the customer[80](index=80&type=chunk) - Share-based compensation is calculated using the Black-Scholes model. For FY2022, key assumptions included expected volatility of **102.5% - 105.5%** and an expected term of **5.5 - 6.25 years**[81](index=81&type=chunk)[150](index=150&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of May 31, 2022, with no material changes identified - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of May 31, 2022[83](index=83&type=chunk) - Based on an assessment using the COSO framework, management concluded that the company's internal control over financial reporting was effective as of May 31, 2022[85](index=85&type=chunk) Part III [Directors, Executive Officers, Compensation, and Other Matters](index=33&type=section&id=Items%2010-14) Information for Items 10-14, covering directors, executive compensation, and related matters, is incorporated by reference from the company's 2022 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's proxy statement for its 2022 Annual Meeting of Stockholders[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) Financial Statements and Notes [Independent Auditor's Report](index=40&type=section&id=Independent%20Auditor's%20Report) The independent auditor issued an unqualified opinion on the FY2022 financial statements, highlighting 'Evaluation of Inventory Reserves' as a critical audit matter - The auditor issued an unqualified opinion on the FY2022 consolidated financial statements[106](index=106&type=chunk) - The 'Evaluation of Inventory Reserves' was identified as a Critical Audit Matter due to the subjective and complex judgments required by management in forecasting future demand[108](index=108&type=chunk)[109](index=109&type=chunk) [Consolidated Financial Statements](index=42&type=section&id=Consolidated%20Financial%20Statements) FY2022 consolidated financial statements show total assets of **$11.4 million**, a net loss of **$4.5 million** (improved from **$7.4 million**), and revenues of **$18.9 million** Selected Balance Sheet Data (in thousands) | Selected Balance Sheet Data (in thousands) | May 31, 2022 | May 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $9,428 | $9,231 | | Total Assets | $11,374 | $11,819 | | Total Current Liabilities | $2,011 | $1,300 | | Total Liabilities | $3,050 | $2,592 | | Total Shareholders' Equity | $8,325 | $9,227 | Selected Statement of Operations Data (in thousands) | Selected Statement of Operations Data (in thousands) | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net Sales | $18,871 | $7,199 | | Gross Profit | $2,977 | $366 | | Loss from Operations | ($4,534) | ($7,500) | | Net Loss | ($4,531) | ($7,446) | | Basic and Diluted Net Loss Per Share | ($0.36) | ($0.62) | Selected Cash Flow Data (in thousands) | Selected Cash Flow Data (in thousands) | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Cash Flow from Operations | ($481) | ($5,252) | | Cash Flow from Investing | ($170) | ($296) | | Cash Flow from Financing | $2,395 | $1,114 | [Notes to Consolidated Financial Statements](index=46&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail significant customer and vendor concentrations, stock-based compensation expense of **$1.3 million**, operating lease commitments, and licensing agreements - The company has significant customer and vendor concentration. In FY2022, two distributors accounted for **65% of net sales**, and one vendor accounted for **84% of raw material purchases**[136](index=136&type=chunk)[138](index=138&type=chunk) - Inventory reserves decreased to **$846,000** in FY2022 from **$1,617,000** in FY2021, primarily due to the disposal of previously reserved COVID-19 antibody inventory[144](index=144&type=chunk) - The company recognized approximately **$1,260,000** in stock-based compensation expense in FY2022. As of May 31, 2022, there was **$1,982,000** of total unrecognized compensation cost related to non-vested stock options[148](index=148&type=chunk)[171](index=171&type=chunk)[173](index=173&type=chunk) - Subsequent to the fiscal year-end, the company entered into a General Merchandise Supplier Agreement with Walmart for its Aware® Breast Self Exam product to be sold in Walmart's retail system[190](index=190&type=chunk)

Copyright © 2022 Biomerica. All Rights Reserved BIOMERICA ) Investor Presentation A u g u s t 2022 Forward-Looking Statement The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this presentation (as well as information included in oral statements or other written statements made or to be made by Biomerica) contains statements that are forward-looking, including statements other than statements of historical facts; such ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2022 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-37863 BIOMERICA, INC. (Former name, former address and former fiscal year, if changed since last report.) Securities registered pursuant to Section 12(b) ...

| --- | --- | --- | |-----------------------------------------------------------|-----------------------------------------------------|-------| | | | | | (TITLE OF EACH CLASS) ----------------------------------- | (TICKER SYMBOL) ----------------------------------- | | | Common, par value $.08 | BMRA | | (NAME OF EACH EXCHANGE ON WHICH REGISTERED) ------------------------------------------------------------------------------- NASDAQ Capital Market Indicate by check whether the registrant (1) filed all repor ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2021 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-37863 BIOMERICA, INC. (Former name, former address and former fiscal year, if changed since last report.) Securities registered pursuant to Section 12(b) of ...

Financial Performance - Consolidated net sales for fiscal 2021 were $7,199,027, an increase of $506,316 or 8% compared to fiscal 2020[72] - Consolidated cost of sales increased from $4,910,935 in fiscal 2020 to $6,702,046 in fiscal 2021, representing an increase of $1,791,111 or 36.4%[72] - Selling, general and administrative expenses rose by 103% to $4,608,950 in fiscal 2021, up from $2,274,415 in fiscal 2020[72] - Research and development expenses increased by 26% to $2,410,506 in fiscal 2021, compared to $1,910,209 in fiscal 2020[73] - Cash used in operating activities was $5,251,748 in fiscal 2021, compared to $4,297,498 in fiscal 2020[76] - As of May 31, 2021, cash and cash equivalents were $4,199,311, down from $8,641,027 as of May 31, 2020[74] Strategic Plans - The company plans to file for 510K clearance with the FDA for its H. Pylori laboratory diagnostic test during the second fiscal quarter of 2022[71] - The company is finalizing a clinical trial for its InFoods® IBS product, expecting all patients to be enrolled or completed by the end of the second fiscal quarter of 2022[70] - The company intends to increase sales of existing non-COVID products by adding new employees in its sales and marketing department[71] - The company may seek additional financing through debt and equity to satisfy capital requirements for ongoing operations[74] Stock and Financing Activities - The company exercised options to purchase 1,500 shares of common stock at an exercise price of $2.68 per share, generating proceeds of approximately $4,000[81] - The company sold 201,553 shares of common stock at an average sale price of $4.16 per share, resulting in net proceeds of approximately $824,000[81] Intellectual Property and Agreements - An exclusive distribution and marketing agreement was signed in Canada for the Helicobacter Pylori test[81] - The company received a patent in Japan for a digital health system that provides food recommendations based on food sensitivity testing, enhancing dietary restriction implementation[81] - A notice of allowance for a patent in Japan was received, covering the use of InFoods® technology for diagnosing and treating depression[81] Tax and Revenue Recognition - The company established a valuation allowance of $5,590,000 against its deferred tax assets, fully covering the asset due to recent losses and ongoing research and development plans[85] - Revenues from product sales are recognized at the time of shipment, with no allowance for returns except for defective merchandise[86] - The company manufactures clinical lab products for various customers, including hospitals, medical research institutions, and pharmaceutical companies[86]