Investor Presentation | --- | --- | --- | --- | --- | |-------|-------|-------|-------|---------------| | | | | | | | | | | | | | | | | | | | | | | | Investor | | | | | | | | | | | | Presentation | | | | | | June 2021 | | | | | | NASDAQ: BMRA | 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 m ...

Investor Presentation | --- | --- | --- | --- | --- | |-------|-------|-------|-------|---------------| | | | | | | | | | | | | | | | | | | | | | | | Investor | | | | | | | | | | | | Presentation | | | | | | June 2021 | | | | | | NASDAQ: BMRA | 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 m ...

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, 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. Securities registered pursuant to Section 12(g) of the Act: (TITLE OF EACH CLASS) COMMON STOCK, PAR VALUE $0.08 Indicate by check wh ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2020 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-37863 BIOMERICA, INC. -------------------------------------------------------------------------------------------- Securities registered pursuant to Secti ...

PART I Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) For the three months ended August 31, 2020, Biomerica reported a net loss of $1.65 million, a significant increase from the $0.51 million loss in the prior-year period. The balance sheet shows a decrease in total assets to $15.89 million and a reduction in shareholders' equity to $12.58 million. Cash flow from operations was a net use of $1.60 million, driven by the operating loss and an increase in inventory. [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company's net sales slightly decreased by 4.2% year-over-year to $1.14 million. However, a significant increase in operating expenses, particularly in SG&A and R&D, led to a widened net loss of $1.65 million, or ($0.14) per share, compared to a net loss of $0.51 million, or ($0.05) per share, in the same quarter of the previous year. | Financial Metric | Three Months Ended Aug 31, 2020 | Three Months Ended Aug 31, 2019 | | :--- | :--- | :--- | | **Net Sales** | **$1,143,806** | **$1,194,415** | | Gross Profit | $182,876 | $367,304 | | Total Operating Expense | $1,839,257 | $876,863 | | Loss from Operations | ($1,656,381) | ($509,559) | | **Net Loss** | **($1,649,415)** | **($506,296)** | | **Diluted Net Loss per Share** | **($0.14)** | **($0.05)** | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of August 31, 2020, total assets stood at $15.89 million, down from $17.26 million at May 31, 2020, primarily due to a decrease in cash and cash equivalents. Total liabilities increased to $3.31 million from $3.05 million, while total shareholders' equity decreased from $14.21 million to $12.58 million. | Balance Sheet Item | August 31, 2020 | May 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $6,964,314 | $8,641,027 | | Total Current Assets | $13,120,072 | $14,766,817 | | **Total Assets** | **$15,892,490** | **$17,259,878** | | Total Current Liabilities | $1,801,459 | $1,477,147 | | **Total Liabilities** | **$3,311,865** | **$3,046,825** | | **Total Shareholders' Equity** | **$12,580,625** | **$14,213,053** | [Condensed Consolidated Statement of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Shareholders%27%20Equity) Shareholders' equity decreased by $1.63 million during the three months ended August 31, 2020. The decline was primarily driven by the net loss of $1.65 million for the period, slightly offset by proceeds from the exercise of stock options. - Total Shareholders' Equity decreased from **$14,213,053** at May 31, 2020, to **$12,580,625** at August 31, 2020[14](index=14&type=chunk) - The primary driver for the decrease was the net loss of **$1,649,415** recorded during the quarter[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the quarter, the company used $1.60 million in cash from operating activities, a significant increase from the $8,154 used in the prior-year period. Investing activities used $92,746, while financing activities provided $14,900. The company's cash and cash equivalents decreased by $1.68 million to end the period at $6.96 million. | Cash Flow Activity | Three Months Ended Aug 31, 2020 | Three Months Ended Aug 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,597,146) | ($8,154) | | Net cash used in investing activities | ($92,746) | ($14,271) | | Net cash provided by financing activities | $14,900 | $146,636 | | **Net (decrease) increase in cash** | **($1,676,713)** | **$120,769** | | **Cash at end of period** | **$6,964,314** | **$807,554** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant accounting policies, including revenue recognition and inventory valuation. Key disclosures include a high concentration of credit risk, with two distributors accounting for 40.1% of net sales. The company also disclosed an SEC investigation related to its COVID-19 test announcement and subsequent events, including a new sales agreement in Ukraine. - The company has significant customer concentration risk. For the quarter ended August 31, 2020, two distributors accounted for **40.1%** of net consolidated sales. As of the same date, two distributors accounted for **62.1%** of gross accounts receivable[22](index=22&type=chunk) | Revenue by Market | Three Months Ended Aug 31, 2020 | Three Months Ended Aug 31, 2019 | | :--- | :--- | :--- | | Clinical lab | $581,708 | $890,152 | | OTC | $184,908 | $199,209 | | Physician's office | $197,331 | $45,222 | | Contract Manufacturing | $179,859 | $59,832 | | **Total** | **$1,143,806** | **$1,194,415** | - On July 2, 2020, the company received a notice of investigation and subpoena from the SEC related to its March 17, 2020 announcement regarding its COVID-19 IgG/IgM Rapid Test[35](index=35&type=chunk) - Subsequent to the quarter end, on October 5, 2020, the company entered into a four-year sales agreement with a Ukrainian distributor valued at **$480,000**[36](index=36&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 4.2% decrease in net sales to lower demand in Asia and the Middle East, partially offset by increased sales in Europe, including COVID-19 tests. The significant increase in net loss was driven by a 130% rise in SG&A expenses (due to legal fees for the SEC inquiry and consulting costs) and an 82.1% increase in R&D expenses (related to COVID-19 tests and InFoods® IBS clinical trials). The company's cash position decreased due to the operating loss and increased inventory for COVID-19 products. A new $90 million S-3 shelf registration was filed to support future capital needs. [Results of Operations](index=17&type=section&id=Results%20of%20Operations) Net sales for the quarter decreased by 4.2% to $1.14 million. Cost of sales as a percentage of sales increased from 69.2% to 84.0% due to unfavorable manufacturing variances from facilities not running at full capacity. SG&A expenses surged by 130% to $1.16 million, and R&D expenses grew by 82.1% to $0.67 million, contributing to the wider operating loss. - Net sales decreased by **$50,609** (**4.2%**) YoY, primarily due to a **$355,000** decrease in Asia and the Middle East, partially offset by a **$290,000** increase in Europe from contract manufacturing and COVID-19 tests[40](index=40&type=chunk) - SG&A expenses increased by **130%** (**$658,167**) due to legal expenses related to the SEC inquiry, a higher allowance for doubtful accounts, and increased consulting and personnel costs[40](index=40&type=chunk) - R&D expenses increased by **82.1%** (**$304,227**) due to costs for the development and validation of COVID-19 tests and clinical trial initiation costs for the InFoods® IBS product[40](index=40&type=chunk) [Liquidity and Capital Resources](index=17&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity decreased, with cash and cash equivalents falling to $6.96 million from $8.64 million at the end of the prior fiscal year. Working capital also declined to $11.32 million. The primary use of cash was to fund operating losses and build inventory, particularly for COVID-19 products. To ensure future funding, the company filed a new $90 million Form S-3 shelf registration statement, which became effective on September 30, 2020. | Liquidity Metric | August 31, 2020 | May 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $6,964,314 | $8,641,027 | | Working Capital | $11,318,613 | $13,289,670 | - Cash used in operations increased significantly to **$1,597,146** for the quarter, compared to **$8,154** in the prior year period, driven by operating losses and a **$1.25 million** growth in inventory[41](index=41&type=chunk) - On July 21, 2020, the Company filed a new Form S-3 "Shelf" registration statement for a maximum aggregate offering amount of **$90,000,000**, which became effective September 30, 2020[41](index=41&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=18&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Biomerica is not required to provide quantitative and qualitative disclosures about market risk. - The company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item[45](index=45&type=chunk) [Item 4. Controls and Procedures](index=18&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded that they were effective at the "reasonable assurance" level as of August 31, 2020. There were no material changes in internal control over financial reporting during the quarter. - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the "reasonable assurance" level[46](index=46&type=chunk) - No changes in internal control over financial reporting occurred during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[46](index=46&type=chunk) PART II Other Information [Item 1. Legal Proceedings](index=18&type=section&id=Item%201.%20Legal%20Proceedings) The company states it is not involved in any material legal proceedings arising in the ordinary course of business. However, it reiterates the disclosure of an ongoing investigation by the SEC's Division of Enforcement concerning the company's March 17, 2020 announcement about its COVID-19 rapid test. The company is cooperating with the investigation and cannot predict its outcome. - On July 2, 2020, the Company received a notice of investigation and a subpoena from the SEC related to its March 17, 2020 announcement about commencing shipping of its COVID-19 IgG/IgM Rapid Test[48](index=48&type=chunk) - The company is cooperating fully with the SEC's investigation and is unable to predict its duration, scope, or outcome at this time[48](index=48&type=chunk) [Item 1A. Risk and Uncertainties](index=19&type=section&id=Item%201A.%20Risk%20and%20Uncertainties) This section highlights significant business risks, with a primary focus on the adverse effects of the COVID-19 pandemic. Key risks include supply chain disruptions, potential loss of customers, and government restrictions. The company also faces challenges related to gaining market acceptance and regulatory approval for its COVID-19 tests amidst intense competition. Other general risks include regulatory compliance, reliance on key distributors, and the ability to manage future growth. - The business is susceptible to widespread public health epidemics like COVID-19, which can cause supply chain disruptions, loss of customers, and financial risks from uncollectible receivables[49](index=49&type=chunk) - There are significant risks that the company's COVID-19 tests may not gain market acceptance due to competition, questions of efficacy, or failure to receive necessary regulatory approvals from agencies like the FDA[50](index=50&type=chunk) - The company faces competition from a large number of companies making and selling COVID-19 tests, many from low-cost manufacturing regions in Asia, leading to supply and price competition[50](index=50&type=chunk) [Item 2. Unregistered Sales of Equity Securities & Use of Proceeds](index=21&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20%26%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or specific use of proceeds during the reporting period. - None[51](index=51&type=chunk) [Item 3. Defaults upon Senior Securities](index=21&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The company reported no defaults upon senior securities. - None[52](index=52&type=chunk) [Item 4. Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company. - None[53](index=53&type=chunk) [Item 5. Other Information](index=21&type=section&id=Item%205.%20Other%20Information) The company did not report any other information under this item. - None[54](index=54&type=chunk) [Item 6. Exhibits](index=21&type=section&id=Item%206.%20Exhibits) The report lists the exhibits filed, which include certifications by the CEO and CFO as required by Sections 302 and 906 of the Sarbanes-Oxley Act, and interactive data files (XBRL). | Exhibit No. | Description | | :--- | :--- | | 31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Zackary S. Irani | | 31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Steve Sloan | | 32.1 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act — Zackary S. Irani | | 32.2 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act — Steve Sloan | | 101 | Interactive data files pursuant to Rule 405 Regulation S-T |

| --- | --- | --- | --- | |-------|-------|-----------|----------------| | | | | | | | | Investor | | | | | | Presentation | | | | | September 2020 | | | | ⑤ inFoods | BIOMERICA | Forward looking statements ® 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 f ...

Part I [Item 1. Business](index=3&type=section&id=ITEM%201.%20BUSINESS) Biomerica develops and markets diagnostic and therapeutic products, focusing on DGT for GI diseases and COVID-19 tests [Business Overview](index=3&type=section&id=BUSINESS%20OVERVIEW) * Biomerica develops, manufactures, and markets advanced diagnostic and therapeutic products for point-of-care and clinical laboratory use[5](index=5&type=chunk) * The company's primary strategic focus is on developing patented diagnostic guided therapy (DGT) products, such as **InFoods® IBS**, for gastrointestinal and other inflammatory diseases[5](index=5&type=chunk) * In March 2020, the company pivoted to focus resources on developing and selling **COVID-19 antibody diagnostic tests**, beginning sales of a rapid finger-prick test outside the U.S. and submitting an EUA application to the FDA for a lab-based ELISA test[5](index=5&type=chunk) [Production](index=4&type=section&id=PRODUCTION) * The company manufactures and assembles most diagnostic test kits at its facilities in Irvine, California, and Mexicali, Mexico[7](index=7&type=chunk) * Manufacturing operations are regulated by **FDA Good Manufacturing Practices**, with compliance to **CE Mark** and **ISO regulations** maintained[8](index=8&type=chunk) [Research and Development](index=4&type=section&id=RESEARCH%20AND%20DEVELOPMENT) R&D Expenses | Fiscal Year | R&D Expense | | :--- | :--- | | 2020 | $1,910,209 | | 2019 | $1,679,098 | * R&D spending increased due to a focus on developing **COVID-19 diagnostic tests** and pursuing regulatory approval for gastrointestinal market tests, including the **InFoods® IBS** product[9](index=9&type=chunk) * The **InFoods® IBS** product is undergoing clinical studies at major institutions like the Mayo Clinic and a Harvard Medical School Teaching Hospital, pursuing a de novo 510(k) clearance pathway[9](index=9&type=chunk)[10](index=10&type=chunk) * Since March 2020, a majority of R&D resources have been dedicated to developing **COVID-19 antibody and antigen tests**, including submitting an EUA application to the FDA for a lab-scale ELISA test[10](index=10&type=chunk) [Markets and Methods of Distribution](index=5&type=section&id=MARKETS%20AND%20METHODS%20OF%20DISTRIBUTION) * The company has approximately **400 customers**, including **75 foreign** and **40 domestic distributors**, targeting clinical laboratories and point-of-care markets[11](index=11&type=chunk) * A high concentration of sales and receivables exists with a few key distributors, with **three distributors accounting for 57.2% of net sales and 80.0% of gross accounts receivable** in fiscal 2020[13](index=13&type=chunk) * The **COVID-19 pandemic** has caused significant operational disruptions, including supply chain issues, and is expected to materially impact financial performance[12](index=12&type=chunk) [Backlog](index=6&type=section&id=BACKLOG) Order Backlog | Date | Backlog Amount | | :--- | :--- | | May 31, 2020 | $727,000 | | May 31, 2019 | $207,000 | [Raw Materials](index=6&type=section&id=RAW%20MATERIALS) * The company faces significant supplier concentration risk, with **one vendor accounting for 59.3% of raw material purchases in fiscal 2020**, up from 23.8% in fiscal 2019[15](index=15&type=chunk) * The **COVID-19 pandemic** has negatively impacted the sourcing and receiving of raw materials due to supplier plant shutdowns and distribution channel restrictions[15](index=15&type=chunk) [Government Regulation](index=7&type=section&id=GOVERNMENT%20REGULATION%20OF%20OUR%20DIAGNOSTIC%20BUSINESS) * The company's products are classified as in vitro diagnostic and medical devices (primarily Class I or Class II) and are subject to extensive **FDA regulation**, including Quality System Regulation (QSR) and Medical Device Reporting (MDR)[18](index=18&type=chunk) * International sales require compliance with local regulations, including the **CE Mark** in the European Union, with ongoing efforts to comply with the new, more stringent **EU Medical Device Regulation (MDR)** and **In Vitro Diagnostic Medical Device Regulation (IVDR)**[18](index=18&type=chunk)[19](index=19&type=chunk) * The last FDA inspection in November 2019 noted no observations, and the company believes it is in material compliance with all relevant regulations[19](index=19&type=chunk) [International Business](index=8&type=section&id=INTERNATIONAL%20BUSINESS) Revenue by Geographic Region | Region | 2020 Revenue | 2019 Revenue | | :--- | :--- | :--- | | Europe | $2,434,000 (36.4%) | $1,694,000 (32.6%) | | United States | $445,000 (6.6%) | $523,000 (10.1%) | | Asia | $1,867,000 (27.9%) | $2,514,000 (48.3%) | | S. America | $1,615,000 (24.1%) | $256,000 (4.9%) | | Middle East | $314,000 (4.7%) | $214,000 (4.1%) | | Other foreign | $18,000 (0.3%) | -- | | **Total Sales** | **$6,693,000** | **$5,201,000** | * Foreign sales are subject to special risks, including economic factors, government regulations, tariffs, and disruptions from the **COVID-19 pandemic**, which have negatively impacted non-COVID-19 product sales[22](index=22&type=chunk) [Intellectual Property](index=9&type=section&id=INTELLECTUAL%20PROPERTY) * The company relies on patents, trademarks, and trade secrets to protect its proprietary rights, having filed over **100 international and PCT patents**, with **22 currently filed with the USPTO**[23](index=23&type=chunk)[27](index=27&type=chunk) * The most important patent family pertains to the **InFoods® IBS technology platform**, with patents issued in the U.S., Korea, and Japan[27](index=27&type=chunk) * The company has licensed technology from third parties, including from the Icahn School of Medicine at Mount Sinai for its **ELISA COVID-19 test** and from the University of California for a **CRISPR-based COVID-19 test technology**[24](index=24&type=chunk)[25](index=25&type=chunk) [Employees](index=11&type=section&id=EMPLOYEES) Employee Headcount (U.S. and Europe) | Department | 2020 | 2019 | | :--- | :--- | :--- | | Administrative | 5 | 4 | | Research and Development | 9 | 8 | | Marketing & Sales | 3 | 4 | | Production and Operations | 28 | 23 | | **Total** | **45** | **39** | * In addition to its U.S. and European employees, **Biomerica de Mexico employs 20 people** at its Mexico facility[28](index=28&type=chunk) [Item 1A. Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, reliance on key distributors, competition, regulatory compliance, and capital needs * **Business & Operational Risks:** The **COVID-19 pandemic** poses significant risks, including supply chain disruptions, loss of customers, and financial risks from receivables, with uncertain market acceptance and regulatory approval for its COVID-19 tests amidst strong competition[31](index=31&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) * **Financial & Strategic Risks:** The company is highly dependent on a few key distributors, with **three accounting for 57.2% of sales in FY2020**, and additional capital will be needed for future growth, potentially leading to stockholder dilution[42](index=42&type=chunk)[44](index=44&type=chunk) * **Regulatory & Legal Risks:** The business is subject to extensive government regulation (FDA, etc.), with non-compliance potentially leading to loss of certifications or manufacturing shutdowns, alongside risks from intellectual property infringement claims and product liability[38](index=38&type=chunk)[43](index=43&type=chunk)[51](index=51&type=chunk) * **Market & Stock Risks:** The diagnostic market is highly competitive, the company's stock price is volatile, and future sales of common stock, including from a new **$90 million shelf registration**, could lower the market price[49](index=49&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) [Item 1B. Unresolved Staff Comments](index=21&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC * None[69](index=69&type=chunk) [Item 2. Properties](index=21&type=section&id=Item%202.%20Properties) The company leases all its facilities, including its 22,000 sq. ft. corporate headquarters in Irvine, CA, and an 8,100 sq. ft. manufacturing facility in Mexico * The company leases its **22,000 sq. ft. corporate headquarters** in Irvine, CA, with the current lease expiring on August 31, 2021[70](index=70&type=chunk) * The Mexican subsidiary, Biomerica de Mexico, leases an **8,100 sq. ft. manufacturing facility** under a 10-year lease that began in November 2016[70](index=70&type=chunk) [Item 3. Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings) The company received an SEC subpoena on July 2, 2020, regarding its March 2020 COVID-19 rapid test announcement, and is cooperating with the unpredictable investigation * The company received a subpoena from the SEC on **July 2, 2020**, regarding its **March 17, 2020 announcement** about its **COVID-19 IgG/IgM Rapid Test**[71](index=71&type=chunk) * The company is cooperating with the SEC investigation and cannot predict its duration, scope, or outcome at this time[71](index=71&type=chunk) [Item 4. Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company * Not applicable[73](index=73&type=chunk) Part II [Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq (BMRA), has not paid dividends, and raised **$6.8 million** via ATM sales in FY2020, with a new **$90 million** shelf registration filed in July 2020 * The company's common stock trades on the **Nasdaq Capital Market** under the symbol **BMRA**[74](index=74&type=chunk) * The company raised approximately **$6.8 million** in gross proceeds under an ATM prospectus supplement filed in March 2020, and a new S-3 'Shelf' registration for up to **$90 million** was filed in July 2020[74](index=74&type=chunk) Equity Compensation Plan Information as of May 31, 2020 | Plan Category | Securities to Be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 1,789,251 | $2.75 | 799,041 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2020 net sales increased **28.7% to $6.7 million** driven by COVID-19 tests, resulting in a **$2.3 million** net loss, while liquidity significantly improved to **$8.6 million** cash from **$12.4 million** in financing activities [Results of Operations](index=24&type=section&id=RESULTS%20OF%20OPERATIONS) Fiscal Year 2020 vs. 2019 Performance | Metric | FY 2020 | FY 2019 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $6,692,711 | $5,200,682 | +28.7% | | Gross Profit | $1,781,776 | $1,292,014 | +37.9% | | R&D Expense | $1,910,209 | $1,679,098 | +13.8% | | SG&A Expense | $2,274,415 | $2,025,706 | +12.3% | | Net Loss | ($2,339,054) | ($2,393,060) | -2.3% | * The increase in annual sales was primarily driven by sales of **COVID-19 tests** during the fourth quarter, offsetting declines in other product lines negatively impacted by the pandemic[81](index=81&type=chunk) * Gross margin improved from **24.8% in FY2019 to 26.6% in FY2020**, with cost of sales as a percentage of sales decreasing from 75.2% to 73.4%, mainly due to higher margins on **COVID-19 products**[81](index=81&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Liquidity Position | Metric | May 31, 2020 | May 31, 2019 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $8,641,027 | $686,785 | | Working Capital | $13,289,670 | $3,230,535 | * Cash used in operating activities was **$4.3 million in FY2020**, compared to **$2.2 million in FY2019**[84](index=84&type=chunk) * Cash provided by financing activities was **$12.4 million in FY2020**, primarily from **$10.2 million** in net proceeds from common stock sales and **$1.9 million** from a convertible preferred stock sale[84](index=84&type=chunk) [Subsequent Events](index=26&type=section&id=Subsequent%20Events) * Filed a new S-3 'Shelf' registration statement for up to **$90 million** on July 20, 2020[86](index=86&type=chunk) * Received a notice of allowance from the USPTO for a second key patent for the **InFoods® IBS** product in August 2020[86](index=86&type=chunk) * Appointed a new Chief Financial Officer, **Steven Sloan**, and a new board member, **Cathy Coste**, effective September 3, 2020[86](index=86&type=chunk)[88](index=88&type=chunk) [Critical Accounting Policies](index=27&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) * Management identifies critical accounting policies as those requiring significant judgments and estimates, including Revenues, Allowance for Doubtful Accounts, Inventory Reserves, Stock-Based Compensation, Income Taxes, and Right-of-Use Asset and Lease Liability[90](index=90&type=chunk) * The company adopted **ASC 842, Leases**, on June 1, 2019, resulting in the recognition of a right-of-use asset of **$1,942,999** and a lease liability of **$1,980,970**[93](index=93&type=chunk) * A full valuation allowance of **$3,175,000** has been established against the company's net deferred tax assets due to recent losses[92](index=92&type=chunk) [Item 9A. Controls and Procedures](index=29&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and internal control over financial reporting were effective at a 'reasonable assurance' level as of May 31, 2020, with no material changes identified * Management concluded that as of **May 31, 2020**, the company's disclosure controls and procedures were effective at the '**reasonable assurance**' level[97](index=97&type=chunk) * Based on the **COSO framework**, management concluded that the company's internal control over financial reporting was effective as of **May 31, 2020**[101](index=101&type=chunk) * No changes in internal control over financial reporting occurred during the last fiscal year that have materially affected, or are reasonably likely to affect, these controls[98](index=98&type=chunk) Part III Items 10-14, covering Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Related Transactions, are incorporated by reference from the Company's 2020 proxy statement * Information for **Items 10, 11, 12, 13, and 14** is incorporated by reference from the Company's **2020 proxy statement**[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=31&type=section&id=ITEM%2015.%20EXHIBITS%20LIST%20AND%20FINANCIAL%20SCHEDULES) This section lists documents filed with the Form 10-K, including consolidated financial statements and an index of exhibits, with financial statement schedules omitted * This section provides a list of all exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and required certifications[107](index=107&type=chunk)[112](index=112&type=chunk) * The consolidated financial statements are filed with the report, while all financial statement schedules have been omitted[108](index=108&type=chunk) Consolidated Financial Statements [Consolidated Balance Sheets](index=38&type=section&id=Consolidated%20Balance%20Sheets) As of May 31, 2020, total assets increased to **$17.3 million** (from $5.2 million) driven by cash, total liabilities were **$3.0 million**, and shareholders' equity rose to **$14.2 million** from stock issuances Consolidated Balance Sheet Highlights (as of May 31) | Account | 2020 | 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $8,641,027 | $686,785 | | Total current assets | $14,766,817 | $4,494,929 | | Total Assets | $17,259,878 | $5,245,364 | | **Liabilities & Equity** | | | | Total current liabilities | $1,477,147 | $1,264,394 | | Total Liabilities | $3,046,825 | $1,264,394 | | Total Shareholders' Equity | $14,213,053 | $3,980,970 | [Consolidated Statements of Operations and Comprehensive Loss](index=39&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For FY2020, net sales reached **$6.7 million**, with gross profit at **$1.8 million**, resulting in a net loss of **$2.34 million** or **($0.23) per share**, a slight improvement from prior year Statement of Operations Summary (for the year ended May 31) | Account | 2020 | 2019 | | :--- | :--- | :--- | | Net sales | $6,692,711 | $5,200,682 | | Gross Profit | $1,781,776 | $1,292,014 | | Loss from Operations | ($2,402,848) | ($2,412,790) | | Net Loss | ($2,339,054) | ($2,393,060) | | Basic and Diluted Net Loss per Share | ($0.23) | ($0.26) | [Consolidated Statements of Cash Flows](index=41&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For FY2020, net cash used in operations was **$4.3 million**, offset by **$12.4 million** from financing activities, resulting in an **$8.0 million** net increase in cash, bringing the year-end balance to **$8.6 million** Cash Flow Summary (for the year ended May 31) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,297,498) | ($2,244,039) | | Net cash used in investing activities | ($118,927) | ($171,111) | | Net cash provided by financing activities | $12,373,977 | $1,907,427 | | **Net increase (decrease) in cash** | **$7,954,242** | **($518,118)** | [Notes to Consolidated Financial Statements](index=42&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including ASC 842 adoption, customer/supplier concentrations, deferred tax asset valuation, stock incentive plans, **$2 million** convertible preferred stock issuance, and various clinical trial and COVID-19 licensing agreements * **Customer and Supplier Concentration:** In FY2020, **three distributors accounted for 57.2% of net sales**, and **one vendor accounted for 59.3% of raw material purchases**[139](index=139&type=chunk) * **Shareholders' Equity:** In February 2020, the company issued 571,429 shares of Series A 5% Convertible Preferred Stock for approximately **$2 million**, and raised over **$10.2 million** in net proceeds from common stock sales under its ATM agreements[183](index=183&type=chunk)[187](index=187&type=chunk) * **Commitments and Contingencies:** The company is engaged in multiple clinical trial agreements for its **InFoods® IBS** and **H. pylori** products with institutions like the University of Michigan and the Mayo Clinic, and entered into licensing agreements for **COVID-19 test technology**[206](index=206&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) * **Income Taxes:** The company has significant federal (**$9.2 million**) and state (**$5.0 million**) net operating loss carryforwards but has recorded a full valuation allowance of **$3.175 million** against its deferred tax assets[190](index=190&type=chunk)[193](index=193&type=chunk)

[PART I Financial Information](index=2&type=section&id=PART%20I%20Financial%20Information) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Biomerica reported a widened net loss for the nine months ended February 29, 2020, while total assets increased significantly due to financing activities [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net sales slightly decreased, leading to a widened net loss for the nine months ended February 29, 2020, primarily due to lower gross profit and higher operating expenses Consolidated Statements of Operations Highlights (Unaudited) | Metric | Nine Months Ended Feb 29, 2020 ($) | Nine Months Ended Feb 28, 2019 ($) | Three Months Ended Feb 29, 2020 ($) | Three Months Ended Feb 28, 2019 ($) | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $3,967,712 | $4,034,822 | $1,176,889 | $1,261,161 | | **Gross Profit** | $1,048,155 | $1,111,207 | $211,979 | $365,924 | | **Loss from Operations** | $(1,914,987) | $(1,647,971) | $(914,885) | $(707,248) | | **Net Loss** | $(1,852,482) | $(1,607,730) | $(860,926) | $(678,746) | | **Basic & Diluted Net Loss per Share** | $(0.19) | $(0.18) | $(0.09) | $(0.07) | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets significantly increased to **$8.22 million** as of February 29, 2020, driven by higher cash and right-of-use assets, alongside a rise in liabilities Consolidated Balance Sheet Highlights | Metric | Feb 29, 2020 (Unaudited, $) | May 31, 2019 (Audited, $) | | :--- | :--- | :--- | | **Cash and cash equivalents** | $2,391,732 | $686,785 | | **Total Current Assets** | $5,739,163 | $4,494,929 | | **Total Assets** | $8,215,110 | $5,245,364 | | **Total Current Liabilities** | $1,909,832 | $1,264,394 | | **Total Liabilities** | $3,534,190 | $1,264,394 | | **Total Shareholders' Equity** | $4,680,920 | $3,980,970 | [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity increased to **$4.68 million** for the nine months ended February 29, 2020, primarily due to capital raises, partially offset by a net loss - The company issued 571,429 shares of Series A 5% Convertible Preferred Stock, resulting in proceeds of **$1,917,586**[8](index=8&type=chunk) - Net proceeds from the At Market (ATM) common stock sales amounted to **$366,258**[8](index=8&type=chunk) - The net loss for the nine-month period was **$1,852,482**, which reduced retained earnings (accumulated deficit)[8](index=8&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operations improved, while substantial financing activities led to a significant increase in cash and cash equivalents for the nine months ended February 29, 2020 Consolidated Statements of Cash Flows Highlights (Unaudited) | Metric | Nine Months Ended Feb 29, 2020 ($) | Nine Months Ended Feb 28, 2019 ($) | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(802,911) | $(1,257,708) | | **Net cash used in investing activities** | $(51,657) | $(119,173) | | **Net cash provided by financing activities** | $2,563,672 | $1,097,298 | | **Net increase (decrease) in cash** | $1,704,947 | $(286,968) | | **Cash and cash equivalents at end of period** | $2,391,732 | $917,935 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes include the adoption of ASC 842, significant customer concentration, recent capital raises, and post-quarter developments regarding COVID-19 tests and financing - The company has significant customer concentration, with one customer accounting for **43.4%** of consolidated sales for the nine months ended February 29, 2020[14](index=14&type=chunk) - On February 26, 2020, the company issued 571,429 shares of Series A 5% Convertible Preferred Stock for approximately **$2 million** in a private placement[29](index=29&type=chunk) - Subsequent to the quarter, the company began shipping samples of its COVID-19 IgG/IgM Rapid Test, raised an additional **$5.39 million** through its ATM agreement, and licensed technology from Mount Sinai for a SARS-CoV-2 test[35](index=35&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **1.7%** decrease in net sales due to the coronavirus, increased cost of sales, and significantly improved liquidity from recent financing activities intended for R&D and general corporate purposes [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Net sales decreased by **1.7%** due to lower China sales, while cost of sales increased to **73.6%** of sales, and SG&A expenses rose by **15.2%** for the nine-month period - Net sales decreased by **1.7%** for the nine-month period, primarily due to lower sales to China as a result of the coronavirus[40](index=40&type=chunk) - Cost of sales as a percentage of sales increased to **73.6%** from **72.5%** year-over-year for the nine-month period, attributed to increased material costs, higher wages, and fixed costs against lower sales[40](index=40&type=chunk) - Selling, general and administrative expenses increased by **15.2%** for the nine-month period, mainly due to higher non-cash option expense, wages, and consulting fees[40](index=40&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents increased to **$2.39 million** as of February 29, 2020, driven by **$2.56 million** in financing activities, significantly improving liquidity for operations and R&D Liquidity Position | Metric | Feb 29, 2020 ($) | May 31, 2019 ($) | | :--- | :--- | :--- | | **Cash and cash equivalents** | $2,391,732 | $686,785 | | **Working Capital** | $3,829,331 | $3,230,535 | - During the nine months ended Feb 29, 2020, the company raised **$366,258** in net proceeds from its At Market Issuance (ATM) Sales Agreement[42](index=42&type=chunk) - In February 2020, the company raised approximately **$2 million** through the sale of Series A 5% Convertible Preferred Stock[42](index=42&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=20&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Biomerica is exempt from providing quantitative and qualitative disclosures about market risk under Rule 12b-2 - As a smaller reporting company, Biomerica is not required to provide quantitative and qualitative disclosures about market risk[46](index=46&type=chunk) [Item 4. Controls and Procedures](index=20&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective at a 'reasonable assurance' level, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the 'reasonable assurance' level[47](index=47&type=chunk) - There were no changes in internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[47](index=47&type=chunk) [PART II Other Information](index=20&type=section&id=PART%20II%20Other%20Information) [Item 1. Legal Proceedings](index=20&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - There are no legal proceedings to report[47](index=47&type=chunk) [Item 1A. Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) New material risks include adverse impacts from the COVID-19 pandemic and potential failures in market acceptance or regulatory approval for new COVID-19 tests - A new risk factor has been added regarding the potential adverse effects of widespread public health epidemics, specifically the COVID-19 pandemic. This includes risks of supply chain disruption, loss of customers, and operational interruptions[48](index=48&type=chunk)[49](index=49&type=chunk) - The company identifies risks associated with its new COVID-19 tests, stating they may not gain market acceptance, could prove ineffective, or may not receive regulatory approvals, any of which would materially harm financial results[50](index=50&type=chunk)[51](index=51&type=chunk) [Item 2. Unregistered Sales of Equity Securities & Use of Proceeds](index=22&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20%26%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities to report[52](index=52&type=chunk) [Item 5. Other Information](index=22&type=section&id=Item%205.%20Other%20Information) The Annual Meeting of Stockholders was held on December 11, 2019, with results previously reported in a Form 8-K - The Annual Meeting of Stockholders was held on December 11, 2019[53](index=53&type=chunk) [Item 6. Exhibits](index=22&type=section&id=Item%206.%20Exhibits) The report includes various exhibits, such as Sarbanes-Oxley certifications from the CEO and CFO, and Interactive Data Files (XBRL) - Exhibits filed include Sarbanes-Oxley certifications (31.1, 31.2, 32.1, 32.2) and Interactive Data Files (101)[53](index=53&type=chunk) [Signatures](index=23&type=section&id=Signatures) - The report was signed on April 14, 2020, by Zackary S. Irani, Chief Executive Officer, and Janet Moore, Chief Financial Officer[57](index=57&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2019 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-8765 BIOMERICA, INC. Securities registered pursuant to Section 12(g) of the Act: (TITLE OF EACH CLASS) COMMON STOCK, PAR VALUE $0.08 Indicate by check wheth ...

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, 2019 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-8765 BIOMERICA, INC. Securities registered pursuant to Section 12(g) of the Act: (TITLE OF EACH CLASS) COMMON STOCK, PAR VALUE $0.08 Indicate by check whether ...