Form 10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2018

OR

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

Commission File Number:  0-8765

 

 

BIOMERICA, INC.

--------------------------------------------------------------------------------------------

(Exact name of registrant as specified in its charter)

 

Delaware                                                             95-2645573

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(State or other jurisdiction of                                          (I.R.S. Employer

incorporation or organization)                                            Identification No.)

 

17571 Von Karman Avenue, Irvine, CA                                               92614

--------------------------------------------------------------------------------------------

(Address of principal executive offices)                                        (Zip Code)

 

Registrant's telephone number including area code:  (949) 645-2111

--------------------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------------------

(Former name, former address and former fiscal year, if changed since last report.)

 

     (TITLE OF EACH CLASS)                           (NAME OF EACH EXCHANGE ON WHICH REGISTERED)

--------------------------------                    -------------------------------------------

Common, par value $.08                                    NASDAQ Capital Market    

 

Securities registered pursuant to Section 12(g) of the Act:

 

(TITLE OF EACH CLASS)

COMMON STOCK, PAR VALUE $0.08

 

Indicate by check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        Yes [X] No [_]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (paragraph 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).         Yes [X] No [_]

 

Indicate by check mark whether the registrant is a large accelerated, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

           Large Accelerated Filer [_]           Accelerated Filer [_]

           Non-Accelerated Filer   [_]           Smaller Reporting Company [X]

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).         Yes [_] No [X]

 

Indicate the number of shares outstanding of each of the registrant's common stock, as of the latest practicable date: 8,651,961 shares of common stock, par value $0.08, as of April 16, 2018.

 

 


 

BIOMERICA, INC.

INDEX

PART I

Financial Information

Item 1. 

Financial Statements:

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) –

Three and Nine Months Ended February 28, 2018 and February 28, 2017

1

Condensed Consolidated Balance Sheets (unaudited) February 28, 2018 and (audited) May 31, 2017

2

Condensed Consolidated Statements of Cash Flows (unaudited) - Nine Months Ended February 28, 2018

and February 28, 2017

3

Notes to Condensed Consolidated Financial Statements (unaudited)

4-11

Item 2. 

Management's Discussion and Analysis of Financial Condition and Results of Operations

11-12

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

13

Item 4. 

Controls and Procedures

13

PART II 

Other Information

Item 1. 

Legal Proceedings

13

Item 1A.

Risk Factors

13-14

Item 2. 

Unregistered Sales of Equity Securities & Use of Proceeds

14

Item 3. 

Defaults upon Senior Securities

14

Item 4. 

Mine Safety Disclosures

14

Item 5. 

Other Information

14

Item 6. 

Exhibits

14

Signatures

15

 

 


 
 
PART I - FINANCIAL INFORMATION

SUMMARIZED FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

BIOMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS (UNAUDITED)

Nine Months Ended

Three Months Ended

                                       

February 28,

2018

February 28,

2017

February 28,

2018

February 28,

2017

Net sales

$

4,433,785

 

$

4,342,247

 

$

1,375,666

 

$

1,499,930

Cost of sales

 

(2,947,652)

 

(2,759,169)

 

(910,295)

 

(1,050,503)

Gross profit

 

1,486,133

 

 

1,583,078

 

 

465,371

 

 

449,427

                                                   

Operating Expense:

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

1,409,164

1,404,334

434,658

510,428

Research and development

 

914,581

 

 

781,929

 

 

353,559

 

 

256,721

Total operating expenses

 

2,323,745

 

2,186,263

 

788,217

 

767,149

Loss from operations

 

(837,612)

 

 

(603,185)

 

 

(322,846)

 

 

(317,722)

                                                   

Other Income (Expense):   

 

 

 

 

 

 

 

 

 

 

 

Dividend and interest income

39,438

40,724

355

13,681

Interest expense

 

(37)

 

 

(280)

 

 

--

 

 

(100)

Total other income

 

39,401

 

40,444

 

355

 

13,581

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

(798,211)

(562,741)

(322,491)

(304,141)

Income taxes

 

--

 

 

--

 

 

--

 

 

--

Net loss

$

(798,211)

$

(562,741)

$

(322,491)

$

(304,141)

 

 

 

 

 

 

 

 

 

 

 

 

Basic net loss per common share

$

(0.09)

$

(0.07)

$

(0.04)

$

(0.04)

Diluted net loss per common share

$

(0.09)

 

$

(0.07)

 

$

(0.04)

 

$

(0.04)

Weighted average number of common and
  common equivalent shares:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

8,529,009

 

8,269,791

 

8,556,480

 

8,433,932

Diluted

 

8,529,009

 

 

8,269,791

 

 

8,556,480

 

 

8,433,932

Net loss

$

(798,211)

 

$

(562,741)

 

$

(322,491)

 

$

(304,141)

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

(6,308)

 

(1,001)

 

(1,140)

 

(241)

Comprehensive loss

$

(804,519)

 

$

(563,742)

 

$

(323,631)

 

$

(304,382)

The accompanying notes are an integral part of these statements.

                                               

1


 

BIOMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

February 28,

2018

(unaudited)

May 31,

2017

(audited)

                                                                                

Assets

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

$

597,030

$

1,225,462

Accounts receivable, less allowance for doubtful accounts of
  $54,486 and $50,129 as of February 28, 2018 and May 31, 2017, respectively

 

1,157,633

 

 

1,060,011

Inventories, net

1,953,655

1,729,121

Prepaid expenses and other

 

340,607

 

 

195,757

Total current assets

4,048,925

4,210,351

 

 

 

 

 

 

Property and Equipment, net of accumulated depreciation and
  amortization of $1,637,552 and $1,550,073 as of February 28, 2018
  and May 31, 2017, respectively

318,681

331,857

 

 

 

 

 

 

Deferred Tax Assets

41,000

41,000

 

 

 

 

 

 

Investments

165,324

165,324

 

 

 

 

 

 

Intangible Assets, net

122,084

174,469

 

 

 

 

 

 

Other Assets

 

63,164

 

94,989

Total Assets

$

4,759,178

 

$

5,017,990

Liabilities and Shareholders' Equity

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable and accrued expenses

$

562,498

$

352,000

Accrued compensation

 

196,801

 

 

176,866

Total current liabilities

759,299

528,866

 

 

 

 

 

 

Commitments and Contingencies (Note 5)

 

 

 

 

 

 

Shareholders' Equity:

    

 

 

 

 

 

Preferred stock, no par value authorized 5,000,000 shares, none issued
  and none outstanding at February 28, 2018 and May 31, 2017

--

--

Common stock, $0.08 par value authorized 25,000,000 shares, issued
  and outstanding 8,621,929 and 8,511,173 at February 28, 2018 and
  May 31, 2017, respectively

 

689,753

 

 

680,893

Additional paid-in-capital

19,890,568

19,551,855

Subscriptions receivable

 

(32,299)

 

 

--

Accumulated other comprehensive loss

(22,142)

(15,834)

Accumulated deficit

 

(16,526,001)

 

 

(15,727,790)

Total Shareholders' Equity

 

3,999,879

 

4,489,124

Total Liabilities and Shareholders' Equity

$

4,759,178

 

$

5,017,990

The accompanying notes are an integral part of these statements.

 

2


 

BIOMERICA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

Nine Months Ended

              

February 28,

2018

February 28,

2017

Cash flows from operating activities:

 

 

 

 

 

Net loss

$

(798,211)

 

$

(562,741)

Adjustments to reconcile net loss to net cash used in
  operating activities

 

 

 

 

 

Depreciation and amortization

139,864

163,587

Stock option expense

 

10,927

 

 

10,009

Change in provision for allowance on accounts receivable

4,357

59,190

Inventory reserve

 

(465)

 

 

(12,799)

Increase in deferred rent liability

12,454

2,510

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

(101,979)

(161,562)

Inventories

 

(224,069)

 

 

57,666

Prepaid expenses and other

(144,850)

(98,452)

Accounts payable and accrued expenses

 

198,044

 

 

170,869

Other assets

31,825

(9,185)

Accrued compensation

 

19,935

 

 

(8,472)

Net cash used in operating activities

 

(852,168)

 

 

(389,380)

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(74,303)

 

(95,833)

 

 

 

 

 

 

Net cash used in investing activities

 

(74,303)

 

(95,833)

 

 

 

 

 

 

Cash flows from financing activities:

       

 

 

 

 

 

Net proceeds from sales of common stock

285,733

--

Proceeds from exercise of stock options

 

18,614

 

 

138,997

Net cash provided by financing activities

 

304,347

 

 

138,997

                                                           

Effect of exchange rate changes in cash

 

(6,308)

 

 

(1,001)

Net decrease in cash and cash equivalents

 

(628,432)

 

 

(347,217)

Cash and cash equivalents at beginning of period

 

1,225,462

 

 

1,888,925

Cash and cash equivalents at end of period

$

597,030

 

$

1,541,708

Non-cash investing and financing activities:

 

 

 

 

 

Subscriptions receivable

$

32,299

 

$

--

Exercise of stock options for reduction of accrued expenses

$

--

 

$

14,190

Supplemental Disclosure of Cash-Flow Information:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

$

37

$

242

Income taxes

$

800

 

$

800

    

The accompanying notes are an integral part of these statements.

 

3


 

BIOMERICA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

Note 1: Basis of Presentation

 

  The information set forth in these condensed consolidated statements is unaudited and reflects all adjustments which, in the opinion of management, are necessary to present a fair statement of the consolidated results of operations of Biomerica, Inc. and subsidiaries (the “Company”), for the periods indicated. It does not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles in the United States of America. All adjustments that were made are of a normal recurring nature.

 

  The unaudited Condensed Consolidated Financial Statements and Notes are presented as permitted by the requirements for Form 10-Q and do not contain certain information included in our annual financial statements and notes. The condensed consolidated balance sheet as of May 31, 2017 was derived from audited financial statements. The accompanying interim condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on August 29, 2017 for the fiscal year ended May 31, 2017. The results of operations for our interim periods are not necessarily indicative of results to be achieved for our full fiscal year.

 

Note 2: Significant Accounting Policies

 

Principles of Consolidation

 

  The condensed consolidated financial statements include the accounts of Biomerica, Inc. as well as the Company’s German subsidiary and Mexican subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Accounting Estimates

 

  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could materially differ from those estimates.

 

Concentration of Credit Risk

 

         The Company maintains cash balances at certain financial institutions in excess of amounts insured by federal agencies.  The Company does not believe it is exposed to significant credit risks.

 

         The Company provides credit in the normal course of business to customers throughout the United States and foreign markets.  At February 28, 2018 and May 31, 2017 the Company had three customers which accounted for 74.2% and two customers which accounted for 54.2%, respectively, of gross accounts receivable. The Company had one customer which accounted for approximately 44.0% and 38.1%, of consolidated sales for the nine months ended February 28, 2018 and February 28, 2017, respectively.

 

Cash and Cash Equivalents

 

  Cash and cash equivalents consist of demand deposits and money market accounts with original maturities of less than three months.

 

Accounts Receivable

 

  The Company extends unsecured credit to its customers on a regular basis.  International accounts are required to prepay until they establish a history with the Company and at that time, they are extended credit at levels based on a number of criteria.  Credit levels are approved by designated upper level management.  Domestic customers are extended initial credit limits until they establish a history with the Company or submit credit information.  All increases in credit limits are also approved by designated upper level management.  Management evaluates receivables on a quarterly basis and adjusts the reserve for bad debt accordingly.  Balances over ninety days old are usually reserved for unless collection is reasonably assured. 

   

  Occasionally certain long-standing customers, who routinely place large orders, will have unusually large accounts receivable balances relative to the total gross accounts receivable.  Management monitors these large balances closely and very often requires payment of existing invoices before shipping new sales orders.

 

4


 

Inventories

 

  The Company values inventory at the lower of cost (determined using a combination of specific lot identification and the first-in, first-out methods) or net realizable value. Management periodically reviews inventory for excess quantities and obsolescence. Management evaluates quantities on hand, physical condition, and technical functionality as these characteristics may be impacted by anticipated customer demand for current products and new product introductions. The reserve is adjusted based on such evaluation, with a corresponding provision included in cost of sales. Abnormal amounts of idle facility expenses, freight, handling costs and wasted material are recognized as current period charges and the allocation of fixed production overhead is based on the normal capacity of the Company’s production facilities.

 

  The approximate balances of inventories are the following at:

 

 

 February 28,

2018

May 31,

2017

Raw materials     

$

892,000

 

$

830,000

Work in progress

891,000

728,000

Finished products

 

171,000

 

 

171,000

Total

$

1,954,000

$

1,729,000

 

         Reserves for inventory obsolescence are reduced as necessary to reduce obsolete inventory to estimated realizable value or to specifically reserve for obsolete inventory that the Company intends to dispose of. As of February 28, 2018 and May 31, 2017 inventory reserves were approximately $35,000.

 

Property and Equipment

 

  Property and equipment are stated at cost. Expenditures for additions and major improvements are capitalized. Repairs and maintenance costs are charged to operations as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts, and gains or losses from retirements and dispositions are credited or charged to income.

 

  Depreciation and amortization are provided over the estimated useful lives of the related assets, ranging from 5 to 10 years, using the straight-line method. Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the term of the lease. Depreciation and amortization expense on property and equipment and leasehold improvements amounted to $28,344 and $33,688 for the three months ended February 28, 2018 and February 28, 2017, and $87,479 and $108,160 for the nine months ended February 28, 2018 and 2017, respectively.

  

Intangible Assets

 

  Intangible assets include trademarks, product rights, licenses, technology rights and patents, and are accounted for based on Accounting Standards Codification (“ASC”) 350 “Intangibles – Goodwill and Other” (ASC 350). In that regard, intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets are being amortized using the straight-line method over the useful life; not to exceed 18 years for marketing and distribution rights, 10 years for purchased technology use rights and licenses, and 17 years for patents. Amortization amounted to $17,387 and $18,905 for the three months ended February 28, 2018 and February 28, 2017, respectively, and $52,385 and $55,427 for the nine months ended February 28, 2018 and 2017, respectively.

 

Share-Based Compensation

 

  The Company follows the guidance of the accounting provisions of ASC 718 “Share-based Compensation” (ASC 718), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (options). The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected forfeiture rate, expected term, and the risk-free interest rate.

 

  Expected volatilities are based on weighted averages of the historical volatility of the Company’s stock and other factors estimated over the expected term of the options. The expected forfeiture rate is based on historical forfeitures experienced. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.

 

5


 

  The following summary presents the options and warrants granted, exercised, expired, cancelled and outstanding as of February 28, 2018:

Exercise

Price

Weighted

Average

Option

Shares

Outstanding May 31, 2017

897,000

 

$

0.98

Granted                             

287,000

$

3.63

Exercised

(24,125)

 

$ 

0.78

Cancelled or expired

(10,625)

$

1.44

Outstanding February 28, 2018

1,149,250

 

$

1.64

 

During the nine months ended February 28, 2018 options to purchase 24,125 shares of common stock were exercised at prices ranging from $0.71 to $1.04 per share.  Proceeds to the Company were $18,614.

    

Revenue Recognition

 

  Revenues from product sales are recognized at the time the product is shipped, customarily FOB shipping point, at which point title passes. An allowance is established when necessary for estimated returns as revenue is recognized. As of February 28, 2018 and May 31, 2017, the allowance for returns was $0. In conjunction with sales to certain customers, the Company provides free products upon attaining certain levels of purchases by the customer. The Company accounts for these free products in accordance with ASC 605-50 “Revenue Recognition – Customer Payments and Incentives” and recognizes the cost of the product as part of cost of sales.

 

Investments

 

  From time-to-time, the Company makes investments in privately-held companies.  The Company determines whether the fair values of any investments in privately-held entities have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable.  If the Company considers any such decline to be other than temporary (based on various factors, including historical financial results, and the overall health of the investee’s industry), a write-down to estimated fair value is recorded.  The Company currently has not written down the investment and no events have occurred which could indicate the carrying value to be less than the fair value. Investments represent the Company’s investment in a Polish distributor which is primarily engaged in distributing medical devices.  The Company owns approximately 6% of the investee, and accordingly, applies the cost method to account for the investment.  Under the cost method, investments are recorded at cost, with gains and losses recognized as of the sale date, and income recorded when received.

 

Shipping and Handling Fees and Costs

 

  The Company included shipping and handling fees billed to customers in net sales.  The Company included shipping and handling costs associated with inbound freight and unreimbursed shipping to customers in cost of sales.

 

Research and Development

 

  Research and development costs are expensed as incurred.

 

Income Taxes

 

         The Company has provided a valuation allowance on deferred income tax assets of approximately $1,716,000 and $1,435,000 as of February 28, 2018 and May 31, 2017, respectively.

 

Foreign Currency Translation

 

  The subsidiaries located in Germany and Mexico are accounted for primarily using local functional currency. Accordingly, assets and liabilities of these subsidiaries are translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period. The resulting adjustments are presented as a separate component of accumulated other comprehensive loss.

 

6


 

Deferred Rent

 

  Incentive payments received from landlords are recorded as deferred lease incentives and are amortized over the underlying lease term on a straight-line basis as a reduction of rent expense. When the terms of an operating lease provide for periods of free rent, rent concessions, and/or rent escalations, the Company establishes a deferred rent liability for the difference between the scheduled rent payment and the straight-line rent expense recognized. This deferred rent liability is amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

 

Basic Net Loss Per Share

 

  Basic losses per share are computed as net loss divided by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur from common shares issuable through stock options using the treasury stock method. The total amount of anti-dilutive options not included in the loss per share calculation for the three and nine months ended February 28, 2018 was 597,645 and 569,915, respectively. The total amount of anti-dilutive options not included in the loss per share calculation for the three and nine months ended February 28, 2017 was 557,271 and 552,656, respectively.

 

  The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted loss per share computations.

                                               

Nine Months
Ended

February 28,

Three Months
Ended

February 28,

 

 

 

2018

2017

2018

2017

Numerator:

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(798,211)

$

(562,741)

$

(322,491)

$

(304,141)

Denominator for basic loss

  per common share

 

8,529,009

 

 

8,269,791

 

 

8,556,480

 

 

8,433,932

Effect of dilutive securities:

Options and warrants

 

--

 

 

--

 

 

--

 

 

--

Denominator for diluted loss

  per common share

8,529,009

8,269,791

8,556,480

8,433,932

Basic net loss per common share

$

(0.09)

 

$

(0.07)

 

$

(0.04)

 

$

(0.04)

Diluted net loss per common share

$

(0.09)

$

(0.07)

$

(0.04)

$

(0.04)

 

New Accounting Pronouncements

 

        In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), which addresses “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”.  In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable).  The amendments in this update were effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  Management adopted the provisions of this statement and is taking them into account in the preparation of the accompanying financial statements.

  

        In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (ASU 2014-09).  ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services.  In adopting, ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach.  ASU 2014-09 is effective for the first interim period within annual reporting periods beginning December 15, 2016, and early adoption is not permitted.  During August 2015, the FASB voted to defer the effective date of the above mentioned revenue recognition guidance by one year to December 15, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations.

 

7


 

        In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory” (ASU 2015-11). ASU 2015-11 applies to inventory that is measured using first-in, first-out (“FIFO”) or average cost. An entity should measure inventory within the scope of ASU 2015-11 at the lower of cost and net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.  The amendments in ASU 2015-11 more closely align the measurement of inventory in accounting principles generally accepted of the United States of America with the measurement of inventory in International Financial Reporting Standards (“IFRS”).  ASU 2015-11 was effective for fiscal years beginning after December 31, 2016.  Management has implemented the provisions of this statement and does not believe the adoption of ASU 2015-11 had a significant impact on the Company’s financial position or results of operations.

 

        On January 5, 2016, the FASB issued ASU 2016-01, “Financial Instruments-Overall” (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01).  The release affects public and private companies that hold financial assets or owe financial liabilities.  ASU 2016-01 will take effect for public companies for fiscal years beginning after December 15, 2017. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2016-01 will have on the Company’s financial position or results of operations.

 

        On February 25, 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (ASU 2016-02).  ASU 2016-02 defines whether a contract is a lease. If it is a lease, the Company is required to recognize the lease assets and liabilities. ASU 2016-02 is effective for public companies for the annual periods beginning after December 15, 2018. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2016-02 will have on the Company’s financial position or results of operations.

 

        On March 30, 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). The update includes provisions intended to simplify various aspects of accounting for share-based compensation. ASU 2016-09 took effect for public companies for the annual periods beginning after December 15, 2016. Management does not believe the adoption of ASU 2016-09 has had a significant impact on the Company’s financial position or results of operations.

 

        On August 26, 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments(ASU 2016-15). This Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice.  ASU 2016-15 will take effect for public companies for the fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2016-15 will have on the Company’s financial position or results of operations.

 

        On November 27, 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash(ASU 2016-18). This update addresses the fact that diversity exists in the classification and presentation of changes in restricted cash on the statement of cash flows under Topic 230, Statement of Cash Flows. ASU-2016-18 will take effect for public companies for the fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2016-18 will have on the Company’s financial position or results of operations.

 

        In January 2017 the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350), Simplifying the test for Goodwill Impairment” (ASU 2017-04). This update addresses how an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. ASU 2017-04 will take effect for public companies for the fiscal years beginning after December 15, 2019. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2017-04 will have on the Company’s financial position or results of operations.

 

        On February 15, 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects From Accumulated Comprehensive Income” (ASU 2018-02). ASU 2018-02 will give companies the option to reclassify stranded tax effects caused by the newly-enacted US Tax Cuts and Jobs Act (TCJA) from accumulated other comprehensive income (AOCI) to retained earnings. ASU 2018-02 will take effect for all companies for the fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2018-02 will have on the Company’s financial position or results of operations.

 

8


 

        Other recent ASU's issued by the FASB and guidance issued by the Securities and Exchange Commission did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.

 

Note 3: Accounts Payable and Accrued Expenses

 

        The Company’s accounts payable and accrued expenses consist of the following at:

 

     

February 28,

2018

 May 31,

 2017

Accounts payable and accrued expenses          

$

534,474

 

$

336,430

Deferred rent

 

28,024

 

15,570

Total

$

562,498

 

$

352,000

 

Note 4: Geographic Information

 

  Financial information about foreign and domestic operations and export sales is approximately as follows:

Nine Months Ended

Three Months Ended

February 28,
2018

February 28,
2017

February 28,
2018

February 28,
2017

Revenues from sales to unaffiliated customers:

 

 

 

 

 

 

 

 

 

 

 

United States      

$

533,000

$

743,000

$

208,000

$

345,000

Asia                  

 

2,112,000

 

 

1,740,000

 

 

626,000

 

 

448,000

Europe            

1,562,000

1,672,000

485,000

654,000

South America                  

 

106,000

 

 

43,000

 

 

3,000

 

 

13,000

Middle East                        

115,000

127,000

54,000

37,000

Other

 

 6,000

 

 

17,000

 

 

 --

 

 

3,000

$

4,434,000

$

4,342,000

$

1,376,000

$

1,500,000

 

         No other geographic concentrations exist where net sales exceed 10% of total net sales.

 

         As of February 28, 2018 and May 31, 2017, approximately $537,000 and $467,000, of Biomerica’s gross inventory and approximately $20,000 and $15,000, of Biomerica’s property and equipment, net of accumulated depreciation, was located in Mexicali, Mexico, respectively.

 

Note 5: Commitments and Contingencies

 

         On June 18, 2009, the Company entered into an agreement to lease a building in Irvine, California. The lease commenced September 1, 2009 and ended August 31, 2016.  The initial base rent was set at $18,490 per month with scheduled annual increases through the end of the lease term the rent was $22,080.In November 2015, the Company entered into a First Amendment to Lease whereby the lease for the above referenced property is extended until August 31, 2021.  The initial rent for the period of the extension commencing September 1, 2016 was set at $21,000 per month with scheduled annual increases through the end of the lease term. September 1, 2017 the rent increased to $21,849 per month.

 

         In November 2016, the Company’s subsidiary, Biomerica de Mexico, entered into a ten year lease for approximately 8,100 square feet at a monthly rent of $2,926.  On November 1, 2017 the monthly rent increased to $3,017. The yearly rate is subject to an annual adjustment for inflation according to the United States Bureau of Labor Statistics Consumer Price Index For All Urban Consumers.  Biomerica, Inc. is not a guarantor of such lease.

 

9


 

         In September 2017, the Company signed a Clinical Samples Agreement with the University of Southern California for the purpose of providing clinical samples for use by the Company in conducting future clinical trials for one of the products which the Company is developing. The work started in October 2017 with charges for work performed being invoiced and paid monthly. In November, 2017, Biomerica announced the enrollment of its first patient at the University of Southern California for the Company's Helicobacter Pylori test.

 

         On November 1, 2017 the Company signed a Clinical Trial Agreement with the University of Michigan to perform clinical trials using its InFoods IBS Foods Test on patients with diagnosed Irritable Bowel Syndrome. The initial start-up costs for this agreement were $12,500. Costs for the clinical trials as patients are enrolled and the trials are conducted are to be paid for work performed on a monthly basis.

 

         On November 7, 2017, Biomerica announced that it has extended its exclusive license agreement with Celtis Pharm Co. Ltd of South Korea.  Celtis has changed its name to Telcon Pharmaceuticals (“Telcon”). The License Agreement grants Telcon an exclusive license to market and sell Biomerica’s InFoods® IBS (Irritable Bowel Syndrome) products in Korea for five years. The amended agreement may be cancelled if Biomerica has not obtained final clearance for sale of the Products in the United States from the United States FDA on or before December 31, 2019.

 

         On December 1, 2017, Biomerica, Inc. (the “Company”) entered into an At Market Issuance Sales Agreement (the “At Market Issuance Sales Agreement”) with an agent (“Agent”), pursuant to which the Company may offer and sell from time to time up to an aggregate of $7,000,000 of shares of the Company’s common stock, par value $0.08 per share (the “Placement Shares”), through the Agent.

 

         The Placement Shares have been registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Registration Statement on Form S-3 (File No. 333-219130) (the “Registration Statement”), which was originally filed with the Securities and Exchange Commission (“SEC”) on June 30, 2017 and declared effective by the SEC on July 20, 2017, the base prospectus contained within the Registration Statement, and a prospectus supplement that was filed with the SEC on December 1, 2017. 

 

  Sales of the Placement Shares, if any, pursuant to the At Market Issuance Sales Agreement, may be made in sales deemed to be “at the market offerings” as defined in Rule 415 promulgated under the Securities Act. The Agent will act as sales agent and will use commercially reasonable efforts to sell on the Company’s behalf all of the Placement Shares requested to be sold by the Company, consistent with its normal trading and sales practices, on mutually agreed terms between the Agent and the Company. 

  The Company has no obligation to sell any of the Placement Shares under the At Market Issuance Sales Agreement, and may at any time suspend offers under the At Market Issuance Sales Agreement or terminate the At Market Issuance Sales Agreement. The Company intends to use the net proceeds from this offering for general corporate purposes, including, without limitation, sales and marketing activities, clinical studies and product development, making acquisitions of assets, businesses, companies or securities, capital expenditures, and for working capital needs.

         During the quarter ended February 28, 2018 the Company sold 86,631 shares of common stock under the S-3 registration statement and received gross proceeds of approximately $390,000, with net proceeds totaling approximately $318,000, of which approximately $286,000 in cash was received by February 28, 2018 and approximately $32,000 was received in March 2018. Deducted from the gross proceeds were one-time legal, accounting and regulatory expenses related to this registration statement of approximately $60,000 as well as broker fees of approximately $12,000. 

         On January 8, 2018, Biomerica announced that the Company signed definitive agreements with two leading research institutes to perform the clinical trials needed to validate the performance of its InFoods® product to alleviate Irritable Bowel Syndrome (IBS) symptoms. The clinical studies will be conducted at Beth Israel Deaconess Medical Center Inc., a Harvard Medical School Teaching Hospital, and the University of Michigan. The agreement with Beth Israel Deaconess Medical Center has one-time start-up costs of $17,000. Costs for the clinical trials as patients are enrolled and the trials are conducted are to be paid for work performed on a monthly basis.

 

10


 

 

Note 6:  Subsequent Events

 

         Subsequent to February 28, 2018 the Company sold 30,032 common stock shares under its S-3 shelf registration statement for total net proceeds of approximately $128,000.

 

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

CERTAIN INFORMATION CONTAINED HEREIN (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, SUCH AS STATEMENTS RELATING TO ANTICIPATED FUTURE REVENUES OF THE COMPANY AND SUCCESS OR CURRENT PRODUCT OFFERINGS. SUCH FORWARD-LOOKING INFORMATION INVOLVES IMPORTANT RISKS AND UNCERTAINTIES THAT COULD SIGNIFICANTLY AFFECT ANTICIPATED RESULTS IN THE FUTURE, AND ACCORDINGLY, SUCH RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS MADE BY OR ON BEHALF OF BIOMERICA. THE POTENTIAL RISKS AND UNCERTAINTIES INCLUDE, AMONG OTHERS, FLUCTUATIONS IN THE COMPANY'S OPERATING RESULTS. THESE RISKS AND UNCERTAINTIES ALSO INCLUDE THE SUCCESS OF THE COMPANY IN RAISING NEEDED CAPITAL, THE ABILITY OF THE COMPANY TO MAINTAIN REQUIREMENTS TO BE LISTED ON NASDAQ, THE CONTINUAL DEMAND FOR THE COMPANY'S PRODUCTS, COMPETITIVE AND ECONOMIC FACTORS OF THE MARKETPLACE, AVAILABILITY OF RAW MATERIALS, HEALTH CARE REGULATIONS AND THE STATE OF THE ECONOMY. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF, AND THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS.

 

OVERVIEW

 

  Biomerica, Inc. and Subsidiaries ("Biomerica", the "Company", "we" or "our") develops, manufactures, and markets medical diagnostic products designed for the early detection and monitoring of chronic diseases and medical conditions. Our medical diagnostic products are sold worldwide in two markets: 1) clinical laboratories and 2) point of care (physicians' offices and over-the-counter drugstores). Our diagnostic test kits are used to analyze blood, or fecal samples from patients in the diagnosis of various diseases and other medical complications, or to measure the level of specific hormones, antibodies, antigens or other substances, which may exist in the human body in extremely small concentrations.

 

RESULTS OF OPERATIONS

 

        Consolidated net sales for Biomerica were $1,375,666 for the three months ended February 28, 2018 as compared to $1,499,930 for the period ended February 28, 2017. This represents a decrease of $124,264, or 8.3%. For the nine month periods ended February 28, 2018 as compared to February 28, 2017, net sales were $4,433,785 as compared to $4,342,247, an increase of $91,538, or 2.1%.  The sales decrease for the three months ended February 28, 2018 compared to 2017 was primarily a result of decreased contract manufacturing sales, timing of EZ Detect screening programs, and the timing of the shipment of certain orders, which did not take place this quarter. For the nine months the increase was due to increased sales to Asia and a new customer in South America, which was offset by lower domestic and European sales.

 

         For the three months ended February 28, 2018 as compared to the three months ended February 28, 2017, cost of sales decreased as a percentage of sales from 70.0% of sales, or $1,050,503, to 66.2% of sales, or $910,295.  For the nine months ended February 28, 2018 as compared to February 28, 2017, cost of sales as a percentage of sales increased from 63.5% of sales, or $2,759,169 to 66.5% of sales, or $2,947,652.  The decrease in cost of sales during the three months was primarily due to higher levels of inventory in stock and the capitalization of labor and overhead into the inventory. The increase in the percentage of cost of goods to sales for the nine months was primarily a result of increased wages.

 

         For the three months ended February 28, 2018 compared to February 28, 2017, selling, general and administrative costs decreased by $75,770, or 14.8%. For the nine months ended February 28, 2018 as compared to February 28, 2017, general and administrative costs increased by $4,830, or 0.3%. The decrease for the quarter ended February 28, 2018 compared to February 28, 2017 was primarily due to a charge to bad debt expense for the period ended February 28, 2017 as well as the cost of uplisting to Nasdaq in fiscal 2017, both of which did not occur in fiscal 2018.

 

11


 

         For the three months ended February 28, 2018 compared to February 28, 2017, research and development expenses increased by $96,838, or 37.7%. For the nine month period ended February 28, 2018 as compared to February 28, 2017, these expenses increased by $132,652, or 17.0%.  The increases for both periods was due to research being done related to new products, regulatory applications and patent application preparation in addition to development work performed on current products.

 

         For the three and nine months ended February 28, 2018 as compared to February 28, 2017, other income decreased by $13,326 and by $1,286, respectively. Both decreases were primarily due to timing of dividends received from the Polish distributor in which the Company owns approximately 6%.

 

LIQUIDITY AND CAPITAL RESOURCES

 

         As of February 28, 2018 and May 31, 2017, the Company had cash and cash equivalents in the amount of $597,030 and $1,225,462 and working capital of $3,289,626 and $3,681,485, respectively.

 

         During the nine months ended February 28, 2018, the Company’s operations used cash of $852,168 compared to $389,380 in the same period of the prior fiscal year. Cash used in operations in fiscal 2018 was primarily a result of the net loss of $798,211, increases of $101,979 in accounts receivable, $144,850 in prepaid expenses, and $224,069 in inventories which were offset by a $198,044 increase in accounts payable. In the period ended February 28, 2017 cash used in operations was primarily a result of a net loss of $562,741, an increase in accounts receivable of $161,562, an increase in prepaids of $98,452 which was offset by an increase in accounts payables of $170,869. Cash used in investing activities in the nine months ended February 28, 2018 was $74,303 compared to the nine months ended February 28, 2017 of $95,833. For both fiscal years these decreases in cash from investing activities were due to purchases of property and equipment. The Company received $285,733 in cash from the sale of common stock through an S-3 registration statement in fiscal 2018 compared to no funds received from such source in fiscal 2017. In fiscal 2018 the Company received $18,614 from the exercise of stock options as compared to $138,997 from the exercise of stock options during the nine month period ended February 28, 2017.

 

         The Company has been working on new products for the gastroenterology market.  Patent applications for the new products have been filed and the Company has been working on obtaining additional patents and U.S. regulatory approvals. The Company has been spending significant funds on the research, development and related costs and expects this will continue in order to obtain the desired patents and approvals.

 

         As mentioned in “Commitments and Contingencies” in the notes to the condensed consolidated financial statements, the Company entered into an At Market Issuance Sales Agreement, whereby, the Company may raise additional working capital and funds for continued development of current research projects.  These funds will be needed to fund current research and development projects and bring them to the next stage of completion. Management expects to raise additional funds throughout the year from the At Market Issuance Agreement to fund operations as necessary.

 

         Subsequent to February 28, 2018 the Company sold 30,032 common stock shares under its S-3 shelf registration statement for total net proceeds of approximately $128,000.

   

OFF BALANCE SHEET ARRANGEMENTS - None.

 

CRITICAL ACCOUNTING POLICIES

 

  The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

 

  We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These relate to revenue recognition, bad debts, inventory overhead application, and inventory reserve. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial conditions or results of operations. We suggest that our significant accounting policies be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

12


 

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

         We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 4.  CONTROLS AND PROCEDURES

 

         Our management evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this report. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives and the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at the "reasonable assurance" level. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file and submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms; and (2) accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

         There have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during our last fiscal quarter that has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1.  LEGAL PROCEEDINGS.  None.

 

Item 1A. RISKS FACTORS.

 

         You should read the following factors in conjunction with the factors discussed elsewhere in this and our other filings with the Securities and Exchange Commission and in materials incorporated by reference in these filings such as the Form S-3 and Prospectus Supplement filed in July and December 2017, respectively. The following is intended to highlight certain factors that may affect the financial condition and results of operations of Biomerica, Inc. and are not meant to be an exhaustive discussion of risks that apply to companies such as Biomerica, Inc. Like other businesses, Biomerica, Inc. is susceptible to macroeconomic downturns in the United States or abroad, as were experienced in recent history that may affect the general economic climate and performance of Biomerica, Inc. or its customers. Our results may fluctuate adversely as a result of many factors that are outside our control, which may negatively impact our stock price. Sales of our common stock in the public market could lower the market price for our common stock and the price of our stock could fluctuate unpredictably in response to various factors.  The Company does not anticipate paying dividends in the foreseeable future, which could affect the market price of the stock.

 

         There is no assurance that we will be able to remain competitive and develop new products and markets for these products. Raising funds to support this development may be difficult and the inability to do so may impact our ability to develop these new products.  Acceptance of these new products by health care providers and physicians could have a negative impact on future sales.

 

13


 

         There is no assurance that the Company will have the ability to sell common stock in order to raise the capital needed for its operations in the future.

 

         Our business is subject to regulation by various governmental agencies. Our results of operations could be negatively impacted by failures or delays in approvals or the loss of previously received approvals or changes to existing laws and regulations. Possible costs or difficulty in complying with government regulations and the delays in receiving required regulatory approvals or the enactment of new adverse regulations or regulatory requirements could affect results adversely.

 

         Interruptions in the supply of raw materials could adversely affect our operations and results. Inability to successfully control our margins is affected by many factors including competition and product mix.

 

         The loss of key personnel and the inability to hire key personnel could affect the business.

 

         The results of the Company could be affected if trade with certain countries (especially where we have significant sales, such as China) became more difficult or costly due to trade restrictions or tariffs which are out of our control.

 

         Aside from general macroeconomic downturns, the additional material factors that could affect future financial results include, but are not limited to: Terrorist attacks and the impact of such events; shipping labor disruption or other major degradation of the ability to ship out products to end users; inability to successfully control our margins which are affected by many factors including competition and product mix; protracted shutdown of the U.S. border due to an escalation of terrorist or counter terrorist activity; any changes in our business relationships with international distributors or the economic climate they operate in; any event that has a material adverse impact on our foreign manufacturing operations may adversely affect our operations as a whole; failure to manage the future expansion of our business could have a material adverse effect on our revenues and profitability; numerous competitors, some of which have substantially greater financial and other resources than we do; potential claims and litigation brought by patients or medical professionals alleging harm caused by the use of or exposure to our products; quarterly variations in operating results caused by a number of factors, including business and industry conditions; concentrations of sales with certain distributors-the loss of certain of these distributors could lead to significantly reduced sales, which have been increasing. In addition, the inability to bring new products to market or get desired approvals may impact the Company’s ability to compete in the marketplace and increase sales. This could adversely affect the results of the Company if the Company were to lose the sales of that distributor and other factors beyond our control; high balances carried on accounts receivables from concentrated customers could result in write-offs of accounts receivable; and the costs of recalls, should such occasion arise.  All these factors make it difficult to predict operating results for any particular period.

 

Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None.

 

Item 3.  DEFAULTS UPON SENIOR SECURITIES.  None.

 

Item 4.  MINE SAFETY DISCLOSURES. None.

 

Item 5.  OTHER INFORMATION. None.

 

Item 6.  EXHIBITS.

 

The following exhibits are filed or furnished as part of this quarterly report on Form 10-Q:

 

 

 

 

 

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 — Janet Moore

 

 

 

 

 

 

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 — Janet Moore

 

101 Interactive data files pursuant to Rule 405 Regulation S-T, as follows:
 


101.INS-XBRL Instance Document
101.SCH-XBRL Taxonomy Extension Schema Document

101.CAL-XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF–XBRL Taxonomy Extension Definition Linkbase Document

101.LAB-XBRL Taxonomy Extension Label Linkbase Document

101.PRE-XBRL Taxonomy Extension Presentation Linkbase Document

*Filed herewith

 

 

14


 

SIGNATURES

 

         Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has fully caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

                                       

BIOMERICA, INC.

Date:  April 16, 2018

                                        

By:

/S/ Zackary Irani

Zackary S. Irani

                                           

Chief Executive Officer

                                           

(Principal Executive Officer)

Date:  April 16, 2018

            

By:

/S/ Janet Moore

Janet Moore

  

Chief Financial Officer

                                           

(Principal Financial Officer)

 

15