What changed in this filing

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Item 1. Financial Statements

2024-01-16 compared with 2023-10-12 · 272 added, 243 removed, 377 unchanged (58% of the section changed)

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CONSOLIDATED BALANCE SHEETS (UNAUDITED)

November 30, 2023

Current Assets:

Cash and cash

Cash and cash equivalents

Accounts receivable, net

Inventories, net

expenses and other

Prepaid expenses and other

Total current assets

Property and equipment,

net of accumulated depreciation and amortization

Right-of-use assets, net of accumulated amortization

of $ 688,000 and $ 617,000 as of August 31, 2023 and May 31, 2023, respectively

Intangible assets, net

of accumulated amortization

Liabilities and Shareholders’

Property and equipment, net of accumulated depreciation and amortization

Right-of-use assets, net of accumulated amortization of $ 761,000 and $ 617,000 as of November 30, 2023 and May 31, 2023, respectively

Intangible assets, net of accumulated amortization

Liabilities and Shareholders’ Equity

Current Liabilities:

Accounts payable and accrued

Accounts payable and accrued expenses

Accrued compensation

Advance from customers

liabilities, current portion

Lease liabilities, current portion

Total current liabilities

liabilities, net of current portion

Lease liabilities, net of current portion

Total Liabilities

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Shareholders’ Equity:

Preferred stock, Series

A 5% convertible, $ 0.08 par value, 571,429 shares authorized, none issued and outstanding as of August 31, 2023 and May 31, 2023

Preferred stock, undesignated, no par value,

4,428,571 shares authorized, none issued and outstanding as of August 31, 2023 and May 31, 2023

Preferred stock, Series A 5% convertible, $ 0.08 par value, 571,429 shares authorized, none issued and outstanding as of November 30, 2023 and May 31, 2023

Preferred stock, undesignated, no par value, 4,428,571 shares authorized, none issued and outstanding as of November 30, 2023 and May 31, 2023

Preferred stock, value

Common stock, $ 0.08 par

value, 25,000,000 shares authorized, 16,821,646 issued and outstanding at August 31, 2023 and May 31, 2023, respectively

Common stock, $ 0.08 par value, 25,000,000 shares authorized, 16,821,646 issued and outstanding at November 30, 2023 and May 31, 2023, respectively

Additional paid-in-capital

Accumulated other comprehensive

Accumulated other comprehensive loss

Accumulated deficit

( 44,856,000 )

( 42,217,000 )

Total Shareholders’

Total Liabilities and

Shareholders’ Equity

Total Shareholders’ Equity

Total Liabilities and Shareholders’ Equity

accompanying notes are an integral part of these statements.

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COMPREHENSIVE LOSS (UNAUDITED)

the Three Months Ended August 31,

For the Three Months Ended

For the Six Months Ended

Cost of sales

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( 1,130,000 )

Gross profit (loss)

( 2,541,000 )

( 2,822,000 )

Operating expenses:

Selling, general and administrative

and development

operating expenses

Research and development

Total operating expenses

Loss from operations

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( 1,666,000 )

( 2,839,000 )

( 3,736,000 )

Other income:

and dividend income

Interest and dividend income

Total other income

Loss before income taxes

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( 1,625,000 )

Provision for income

( 2,608,000 )

( 3,695,000 )

Basic net loss per common

Diluted net loss per

Weighted average number of common and

common equivalent shares:

Provision for income taxes

$ ( 1,507,000 )

$ ( 1,626,000 )

$ ( 2,639,000 )

$ ( 3,698,000 )

Basic net loss per common share

Diluted net loss per common share

Weighted average number of common and common equivalent shares:

$ ( 1,507,000 )

$ ( 1,626,000 )

$ ( 2,639,000 )

$ ( 3,698,000 )

Other comprehensive income (loss), net of tax:

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$ ( 1,635,000 )

$ ( 2,633,000 )

$ ( 3,719,000 )

accompanying notes are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

the Three Months Ended August 31, 2022

Comprehensive

Shareholders’

the Six Months Ended November 30, 2023

Other Comprehensive

Stockholder’s

Balances at May 31, 2023

$ ( 110,000 )

$ ( 42,217,000 )

Exercise of stock options

Net proceeds from ATM

Shares issued in connection

with public offering

Foreign currency translation

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( 43,349,000 )

the Three Months Ended August 31, 2023

Comprehensive

Shareholders’

Balances at May 31, 2023

Exercise of stock options

Foreign currency translation

Share-based compensation

( 1,507,000 )

Balances at November 30, 2023

$ ( 104,000 )

$ ( 44,856,000 )

For the Six Months Ended November 30,

Comprehensive

Total Stockholder’s

Balances at May 31, 2022

$ ( 35,077,000 )

Exercise of stock options

Net proceeds from ATM

Shares issued in connection

with public offering

Foreign currency translation

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( 37,149,000 )

Exercise of stock options

Net proceeds from ATM

Foreign currency translation

Share-based compensation

$ ( 1,626,000 )

( 1,626,000 )

Balances at November 30, 2022

$ ( 38,775,000 )

accompanying notes are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

the Three Months Ended August 31,

Cash flows from operating

For the Six Months Ended November 30,

Cash flows from operating activities:

$ ( 2,639,000 )

$ ( 3,698,000 )

Adjustments to reconcile

net loss to net cash used in operating activities:

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

Depreciation and amortization

Provision for allowance on accounts receivable

Provision (recovery) for allowance on accounts receivable

Inventory reserve

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Reduction in lease liabilities

Net cash used in by

operating activities

Net cash used in operating activities

( 2,516,000 )

( 2,786,000 )

Cash flows from investing

Cash flows from investing activities:

Purchases of property and equipment

Expenditures related to intangibles

Net cash used in investing

Cash flows from financing

Net cash used in investing activities

Cash flows from financing activities:

Gross proceeds from sale of common stock

Costs from sale of common stock

Proceeds from exercise

of stock options

Proceeds from exercise of stock options

Net cash provided by financing activities

Effect of exchange rate

changes in cash

Net decrease (increase) in cash and cash equivalents

Effect of exchange rate changes in cash

Net decrease in cash and cash equivalents

( 2,585,000 )

Cash and cash equivalents

at beginning of year

Cash and cash equivalents

at end of the period

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of period

Supplemental Disclosure of Cash Flow Information:

Cash paid during the period

Non-cash investing and financing

Write off of intangible

Cash paid during the period for:

Non-cash investing and financing activities:

Write off of intangible assets, cost

Write off of intangible assets, accumulated amortization

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enhance the health and well-being of people, while reducing total healthcare costs.

primary focus is the research, development, commercialization and in certain cases regulatory approval, of patented, diagnostic-guided

therapy (“DGT”) products based on our inFoods ® Technology platform that treat gastrointestinal diseases, such

as irritable bowel syndrome (“IBS”), and other inflammatory diseases.

These inFoods ® based products are directed

at chronic inflammatory illnesses that are widespread and common, and as such address very large markets.

The first product we are launching

using this patented inFoods Technology is our inFoods ® IBS product which uses a simple blood sample to identify patient-specific

foods that, when removed from their diet, may alleviate IBS symptoms such as pain, bloating, diarrhea, cramping and constipation.

of broad and difficult to manage dietary restrictions, the inFoods® IBS product works by identifying a patient’s above normal

immunoreactivity to a panel of specific foods that have been shown to often be problematic to IBS sufferers.

A food identified as positive

(causing an abnormally high immune response in the patient) is simply removed from the diet to help alleviate IBS symptoms.

We have launched

this product with certain large gastroenterology (“GI”) physician groups that are now offering this product to their patients.

We have also recently hired an internal sales force to sign up additional GI physician groups who are interested in offering this product

to their patients.

As such, we are expecting material growth in revenues from the launch of our inFoods ® IBS product in

coming quarters.

primary focus is the research, development, commercialization and eventual regulatory approval, of patented, diagnostic-guided therapy

(“DGT”) products based on our inFoods ® Technology platform that treat gastrointestinal diseases, such as irritable

bowel syndrome (“IBS”), and other inflammatory diseases.

These inFoods based products are directed at chronic inflammatory

illnesses that are widespread and common, and as such address very large markets.

The first product we are launching using this patented

inFoods Technology is our inFoods IBS product which uses a simple blood sample to identify patient-specific foods that, when removed

from their diet, may alleviate IBS symptoms such as pain, bloating, diarrhea, cramping and constipation.

Instead of broad and difficult

to manage dietary restrictions, the inFoods IBS product works by identifying a patient’s above normal immunoreactivity to a panel

of specific foods that have been shown to often be problematic to IBS sufferers.

A food identified as positive (causing an abnormally

high immune response in the patient) is simply removed from the diet to help alleviate IBS symptoms.

We have launched this product with

certain large gastroenterology (“GI”) physician groups that are now offering this product to their patients.

recently hired an internal sales force to sign up additional GI physician groups who are interested in offering this product to their

As such, we are expecting growth in revenues from the launch of our inFoods IBS product in coming quarters.

other existing medical diagnostic products are sold worldwide primarily in two markets:

1) clinical laboratories and 2) point-of-care

(physicians’ offices and over-the-counter at Walmart, Amazon, and Walgreens).

The diagnostic test kits are used to analyze blood,

urine, nasal or fecal specimens from patients in the diagnosis of various diseases, food intolerances and other medical complications,

by measuring or detecting the existence and/or level of specific bacteria, hormones, antibodies, antigens, or other substances, which

may exist in a patient’s body, stools, or blood, often in extremely small concentrations.

(physicians’ offices and over-the-counter at Walmart, CVS Pharmacy and Amazon).

The diagnostic test kits are used to

analyze blood, urine, nasal or fecal specimens from patients in the diagnosis of various diseases, food intolerances and other medical

complications, by measuring or detecting the existence and/or level of specific bacteria, hormones, antibodies, antigens, or other substances,

which may exist in a patient’s body, stools, or blood, often in extremely small concentrations.

to the global 2019 SARS-CoV-2 novel coronavirus pandemic, in March 2020 we began developing COVID-19 products to indicate if a person

has been infected by COVID-19 or is currently infected.

While we initially offered a COVID-19 antibody diagnostic test to determine if

a person has previously been infected by the COVID-19 virus, all of our COVID-19 revenues in fiscal 2022 and 2023 have come from international

sales of our COVID-19 antigen tests that use a patient’s nasal fluid sample to detect if the patient is currently infected with

Due to falling demand, there were no sales of our COVID-19 related products in the three months ended August 31, 2023.

such, our COVID-19 product sales have caused significant swings in our revenues over the past eight quarters.

non-COVID-19 products that accounted for all of our revenues during the three months ended August 31, 2023, are primarily focused on

gastrointestinal diseases, colorectal diseases, food intolerances, and certain esoteric tests.

These diagnostic test products utilize

immunoassay technology.

Most of our products are CE marked and/or sold for diagnostic use where they are registered by each country’s

regulatory agency.

We began selling these COVID-19 related diagnostic tests during fiscal 2021,

and we experienced significant revenues from such sales during fiscal 2021 and 2022 with lesser sales in fiscal 2023.

Due to falling

demand, there were no sales of our COVID-19 related products in the six months ended November 30, 2023.

As such, our COVID-19

product sales have caused significant swings in our revenues over the past nine quarters.

products that accounted for all of our revenues during the six months ended November 30, 2023, are primarily focused on gastrointestinal

diseases, colorectal diseases, food intolerances, and certain esoteric tests.

These diagnostic test products utilize immunoassay technology.

Most of our products are CE marked and/or sold for diagnostic use where they are registered by each country’s regulatory agency.

In addition, some products are cleared for sale in the United States by the FDA.

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considered necessary for a fair presentation have been included.

Operating results for the three months ended August 31, 2023 are not

necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2024.

For further information, refer to

the audited consolidated financial statements and notes thereto for the fiscal year ended May 31, 2023 included in the Company’s

Operating results for the three and six months ended November 30, 2023

are not necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2024.

For further information,

refer to the audited consolidated financial statements and notes thereto for the fiscal year ended May 31, 2023 included in the Company’s

Annual Report on Form 10-K filed with the SEC on August 25, 2023.

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All significant intercompany accounts and transactions have been eliminated in consolidation.

preparation of the condensed consolidated 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 condensed consolidated financial statements, and

the reported amounts of revenues and expenses during the reported period.

Estimates that are made include the allowance for doubtful

accounts, which is estimated based on current as well as historical practices with a customer;

stock option forfeiture rates, which are

calculated based on historical data;

inventory obsolescence, which is based on projected and historical usage of materials;

liability and right-of-use assets, which are calculated based on certain assumptions such as borrowing rate, the likelihood of lease

extensions to occur, asset valuation, among other things;

and other items that may be necessary to estimate using current, historical

and judgment based information.

preparation of the condensed consolidated financial statements in conformity with 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 condensed

consolidated financial statements, and the reported amounts of revenues and expenses during the reported period.

Estimates that are made

include the allowance for doubtful accounts, which is estimated based on current as well as historical practices with a customer;

option forfeiture rates, which are calculated based on historical data;

inventory obsolescence, which is based on projected and historical

usage of materials;

and lease liability and right-of-use assets, which are calculated based on certain assumptions such as borrowing

rate, the likelihood of lease extensions to occur, asset valuation, among other things;

and other items that may be necessary to estimate

using current, historical and judgment based information.

Actual results could materially differ from those estimates.

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Due to global and economic disruptions caused by the COVID-19 pandemic, the

ongoing war in Ukraine, and tensions between the country of China and the United States, the Company’s operations have been negatively

The Company has faced disruptions in the following areas, and may face further challenges from supply chain disruptions, cost

inflation, loss of contracts and/or customers, closure of the facilities of the Company’s suppliers, partners and customers, travel,

shipping and logistical disruptions, government responses of all types, international business risks in countries where the Company makes

and/or sells its products, loss of human capital or personnel at the Company, its partners and its customers, interruptions of production,

customer credit risk, and general economic calamities.

The Company’s current sales and marketing focus is on the sale of the inFoods ®

IBS product within the U.S.

As such, going forward, the Company hopes to see reduced disruptions from the issues listed above.

ongoing war in Ukraine and Israel, and tensions between the country of China and the United States, the Company’s operations have

been negatively impacted.

The Company has faced disruptions in the following areas, and may face further challenges from supply chain

disruptions, cost inflation, loss of contracts and/or customers, travel, shipping and logistical disruptions, government responses of

all types, international business risks in countries where the Company makes and/or sells its products, loss of human capital or personnel

at the Company, its partners and its customers, interruptions of production, customer credit risk, and general economic calamities.

Company’s current sales and marketing focus is on the sale of the inFoods IBS product which is manufactured and sold within the U.S.

and the launch

of our new H.

Pylori test that was recently cleared for sale in the US by the FDA, which is also manufactured and sold within the

Company has incurred net losses and negative cash flows from operations and has an accumulated deficit of approximately $ 44,856,000 million

as of August 31, 2023.

as of November 30, 2023.

Management expects to continue to incur significant costs as it advances its clinical trials, product development,

and commercial product launch activities.

As of August 31, 2023, the Company had cash and cash equivalents of approximately $ 7,988,000

As of November 30, 2023, the Company had cash and cash equivalents of approximately $ 7,134,000

and working capital of approximately $ 8,443,000 .

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of up to $ 90,000,000 of the Company’s equity securities during the three years ended September 30, 2023.

the Company’s outstanding Registration Statement, on March 7, 2023, the Company sold 3,333,333 shares of common stock in a firm

commitment public offering at a gross sales price of $ 2.40 per share, with net total proceeds, after deducting issuance fees and expenses

of $ 700,000 , of approximately $ 7,300,000 .

Since the closing of the March 7, 2023 offering, the ATM has been withdrawn and is not active.

the Company’s outstanding Registration Statement, on March 7, 2023, the Company sold 3,333,333

shares of common stock in a firm commitment public offering at a gross sales price of $ 2.40

per share, with net total proceeds, after deducting issuance fees and expenses of $ 700,000 ,

of approximately $ 7,300,000 .

Since the closing of the March 7, 2023 offering, a previously ATM facility has been withdrawn and is not

replace the shelf registration statement that was set to expire on September 30, 2023, on September 27, 2023, the Company filed with

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or securities, capital expenditures, and for working capital needs.

has analyzed the cash requirements of the Company’s business through at least November 2024.

has analyzed the cash requirements of the Company’s business through at least February 2025.

As a result of cash and cash equivalents

on hand on August 31, 2023, largely from the public offering, and the ability to raise additional funds if needed through the sale of

shares of the Company’s common stock, management believes the Company has sufficient funds to operate through at least November

on hand on November 30, 2023, largely from the public offering, and the ability to raise additional funds if needed through the sale

of shares of the Company’s common stock, management believes the Company has sufficient funds to operate through at least February

CONCENTRATION

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The Company does not believe it is exposed to any significant credit risks.

net sales were approximately $ 1,713,000 for the three months ended August 31, 2023, as compared to $ 1,637,000 for the three months ended

August 31, 2022.

For the three months ended August 31, 2023 and 2022, the Company had one and two key customers who are located in foreign

countries which accounted for 59 % and 64 % of net sales, respectively.

gross receivables on August 31, 2023 and May 31, 2023 were approximately $ 1,459,000 and $ 751,000 , respectively.

On August 31, 2023 and

May 31, 2023, the Company had one key customer, who are located in foreign countries which accounted for a total of 67 % and 35 % , respectively,

of gross accounts receivable.

the three months ended August 31, 2023 and 2022, the Company had one key vendor which accounted for 12 % and 9 % of the purchases of raw

materials, respectively.

As of August 31, 2023 and May 31, 2023, the Company had one key vendor which accounted for 47 % and 23 % , respectively,

of accounts payable.

net sales were approximately $ 1,567,000 and $ 1,482,000 for the three months ended November 30, 2023 and 2022, respectively, and approximately

$ 3,281,000 and $ 3,119,000 for the six months ended November 30, 2023 and 2022, respectively.

the three months ended November 30, 2023, the Company had two key customers who are located in foreign countries which accounted for

52 % of net consolidated sales.

For the three months ended November 30, 2022, the Company had two key customers, one located in Asia and

one located in United States which accounted for 48 % of net consolidated sales.

For the six months ended November 30, 2023 and 2022,

the Company had one key customer who is located in Asia which accounted for 49 % and 44 % of net consolidated sales, respectively.

gross receivables on November 30, 2023 and May 31, 2023 were approximately $ 1,089,000 and $ 751,000 , respectively.

As of November 30,

2023, the Company had two key customers, who are located in foreign countries which accounted for a total of 64 % of gross accounts receivable.

As of May 31, 2023, the Company had one key customer, who is located in Asia which accounted for a total of 36 % of gross accounts receivable.

the three months ended November 30, 2023, the Company had five key vendors which accounted for 75 % of the purchases of raw materials.

For the three months ended November 30, 2022, the Company had one key vendor which accounted for 12 % of the purchases of raw materials.

For the six months ended November 30, 2023, the Company had five vendors which accounted for 76 % of the purchases of raw materials.

the six months ended November 30, 2022, the Company had one key vendor which accounted for 8 % of the purchases of raw materials.

of November 30, 2023 and May 31, 2023, the Company had three and one key vendors which accounted for 55 %

respectively, of accounts payable.

AND CASH EQUIVALENTS

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

RECEIVABLE, NET

Company extends unsecured credit to its customers on a regular basis.

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means of collection have been exhausted and the potential for recovery is considered remote.

certain long-standing customers, who routinely place large orders, will have unusually large receivables balances relative to the total

gross receivables.

Management monitors the payments for these large balances closely and very often requires payment of existing invoices

before shipping new sales orders.

of August 31, 2023 and May 31, 2023, the Company has established a reserve of approximately $ 29,000 for credit losses.

Occasionally,

certain long-standing customers who routinely place large orders will have unusually large receivable balances relative to the

total gross receivables.

Management monitors the payments for these large balances closely and very often requires payment of

existing invoices before shipping new sales orders.

of November 30, 2023 and May 31, 2023, the Company has established a reserve of approximately $ 22,000 and $ 29,000 , respectively, for

doubtful accounts.

EXPENSES AND OTHER

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other, until either the inventory is physically received, or the insurance and other items are expensed.

of August 31, 2023 and May 31, 2023, the prepaids were approximately $ 279,000 and $ 300,000 , respectively, composed of prepayments to

of November 30, 2023 and May 31, 2023, the prepaids were approximately $ 223,000 and $ 300,000 , respectively, composed of prepayments to

insurance and various other suppliers.

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inventories are approximately the following:

OF NET INVENTORIES

SCHEDULE OF NET INVENTORIES

November 30, 2023

Raw materials

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Inventory reserves

Net inventory

for inventory obsolescence are recorded as necessary to reduce obsolete inventory to estimated net realizable value or to specifically

reserve for obsolete inventory.

As of August 31, 2023, and May 31, 2023, inventory reserves were approximately $ 532,000 and $ 672,000 ,

As of November 30, 2023, and May 31, 2023, inventory reserves were approximately $ 498,000 and $ 672,000 ,

respectively.

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Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the term of the lease.

and amortization expense on property and equipment was approximately $ 16,000 and $ 20,000 for the three months ended August 31, 2023

and 2022, respectively.

assets include trademarks, product rights, technology rights and patents, and are accounted for based on Accounting Standards Codification

(“ASC”), 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.

and amortization expense on property and equipment were approximately $ 15,000 and $ 16,000 for the three months ended November 30, 2023

and 2022, respectively, and approximately $ 30,000 and $ 36,000 for the six months ended November 30, 2023 and 2022, respectively.

assets include trademarks, product rights, technology rights and patents, and are accounted for based on ASC, ASC 350 Intangibles –

Goodwill and Other (“ASC 350”).

In that regard, intangible assets that have indefinite useful lives are not amortized but

are tested annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired.

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 20 years for patents.

Amortization expense was approximately $ 5,000 and $ 9,000

for the three months ended August 31, 2023 and 2022, respectively.

rights, 10 years for purchased technology use rights, and patents are based on their individual useful lives which average around 15

Amortization expense was approximately $ 4,000 and $ 3,000 for the three months ended November 30, 2023 and 2022, respectively,

and approximately $ 9,000 and $ 12,000 for the six months ended November 30, 2023 and 2022, respectively.

Amortizing intangible assets

are tested for impairment if management determines that events or changes in circumstances indicate that the asset might be impaired.

Company assesses the recoverability of these intangible assets by determining whether the amortization of the asset’s balance over

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whether there was any impairment.

During the three months ended August 31, 2023 and 2022, an impairment adjustment was made of $ 0 and

$ 6,000 , respectively.

During the six months ended November 30, 2023, there was no impairment.

During the six months ended

November 30, 2022, an impairment adjustment was made of $ 6,000 .

Company has made investments in a privately held Polish distributor, which is primarily engaged in distributing medical products and

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Management reviewed the underlying net assets of the Company’s equity method holding as

of August 31, 2023 and determined that the Company’s proportionate economic interest in the entity indicates that the equity holding

was not impaired.

There were no observable price changes in orderly transactions for identical or a similar holding or security of the

Company’s Cost Method Holdings during the period ended August 31, 2023.

of November 30, 2023 and determined that the Company’s proportionate economic interest in the entity indicates that the equity

holding was not impaired.

There were no observable price changes in orderly transactions for identical or a similar holding or security

of the Company’s Cost Method Holdings during the period ended November 30, 2023.

Company follows the guidance of ASC 718, Share-based Compensation (“ASC 718”), which requires the use of the fair-value based

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the straight-line attribution method.

Company expensed approximately $ 170,000 and $ 304,000 of share-based compensation during the three months ended August 31, 2023 and 2022,

Company expensed approximately $ 292,000 and $ 622,000 of share-based compensation during the six months ended November 30, 2023 and 2022,

respectively.

following summary presents the options granted, exercised, expired, canceled and outstanding for the three months ended August 31, 2023:

OF OPTIONS ACTIVITY

following summary presents the options granted, exercised, expired, canceled and outstanding for the six months ended November 30, 2023:

SUMMARY OF OPTIONS ACTIVITY

Option Shares

Weighted Average

Exercise Price

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Cancelled or expired

Options Outstanding

at August 31, 2023

Options Outstanding at November 30, 2023

Company has various contracts with customers.

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specified sales volumes.

The Company evaluated the status of these contracts during the three months ended August 31, 2023 and 2022 and

The Company evaluated the status of these contracts during the six months ended November 30, 2023 and 2022 and

does not believe that any additional discounts will be given through the end of the contract periods.

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manufacturers.

of August 31, 2023, the Company had approximately $ 60,000 of advances from certain foreign customers.

The majority of these advances

are prepayments on orders that are expected to ship during our second fiscal quarter ended November 30, 2023.

of November 30, 2023, the Company had approximately $ 60,000 of advances from domestic customers, which are prepayments on orders for

future shipments.

Disaggregation

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SCHEDULE OF DISAGGREGATION REVENUE

Three Months Ended

Three Months Ended November 30,

Six Months Ended November 30,

Over-the-counter

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Physician’s office

Note 4 for additional information regarding revenue concentrations.

Note 4 for additional information regarding geographic revenue concentrations.

AND HANDLING FEES

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The Company expensed approximately $ 412,000 and $ 462,000 of research and development

costs during the three months ended August 31, 2023 and 2022, respectively.

Company had income tax expense for the three months ended August 31, 2023 of approximately $ 23,000 , consisting of state minimum and foreign

miscellaneous taxes.

During the three months ended August 31, 2023, the Company had a net operating loss (“NOL”) that generated

deferred tax assets for NOL carryforwards.

Deferred income tax assets and liabilities are recognized for temporary differences between

the financial statements and income tax carrying values using tax rates in effect for the years such differences are expected to reverse.

Due to uncertainties surrounding our ability to generate future taxable income and consequently realize such deferred income tax assets,

the Company has determined that it is more likely than not that these deferred tax assets will not be realized.

Accordingly, the Company

has established a full valuation allowance against its deferred tax assets as of August 31, 2023.

costs during the three months ended November 30, 2023 and 2022, respectively, and approximately $ 883,000 and $ 823,000 of research and

development costs during the six months ended November 30, 2023 and 2022, respectively.

the three months ended November 30, 2023, the Company had an income tax expense of approximately $ 8,000 .

For the six months ended November

30, 2023, the Company had an income tax expense of approximately $ 31,000 .

These expenses consisted of state minimum taxes and miscellaneous

foreign taxes.

During the three and six months ended November 30, 2023, the Company had a net operating loss (“NOL”) that

generated deferred tax assets for NOL carryforwards.

Deferred income tax assets and liabilities are recognized for temporary differences

between the financial statements and income tax carrying values using tax rates in effect for the years such differences are expected

Due to uncertainties surrounding our ability to generate future taxable income and consequently realize such deferred income

tax assets, the Company has determined that it is more likely than not that these deferred tax assets will not be realized.

the Company has established a full valuation allowance against its deferred tax assets as of November 30, 2023.

Company’s policy is to recognize any interest and penalties related to unrecognized tax benefits as a component of income tax expense.

For the three months ended August 31, 2023, the Company had no accrued interest or penalties related to uncertain tax positions.

For the three months ended November 30, 2023, the Company had no accrued interest or penalties related to uncertain tax positions.

Company reports the cost of advertising as expense in the period in which those costs are incurred.

Advertising costs were approximately

$ 30,000 and $ 18,000 for the three months ended August 31, 2023 and 2022, respectively.

$ 26,000 and $ 18,000 for the three months ended November 30, 2023 and 2022, respectively, and approximately $ 56,000 and $ 36,000 during

the six months ended November 30, 2023 and 2022, respectively

CURRENCY TRANSLATION

7 unchanged sentences

other comprehensive loss.

There are no foreign currency transactions that are included in the consolidated statements of operations for

the three months ended August 31, 2023 and 2022.

There are no foreign currency transactions that are included in the condensed consolidated statements of operations

for the three and six months ended November 30, 2023 and 2022.

ASSETS AND LEASE LIABILITY

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The total amount of anti-dilutive stock options not included in the loss per share calculation

at August 31, 2023 and 2022 was 2,363,116 and 2,388,616 , respectively.

on November 30, 2023 and 2022 was 2,280,116 and 2,338,616 , respectively.

ACCOUNTING PRONOUNCEMENTS

ASU’s issued by the FASB and guidance issued by the SEC did not, or are not believed by the management to, have a material

effect on the Company’s present or future consolidated financial statements.

ASU’s issued by the FASB and guidance issued by the SEC did not, or are not believed by the management to, have a material effect

on the Company’s present or future consolidated financial statements.

June 2016, the FASB issued ASU 2016-13.

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SHAREHOLDERS’ EQUITY

the three months ended August 31, 2022, the Company sold 523,977 shares of its common stock at prices ranging from $ 3.15 to $ 3.55 under

the six months ended November 30, 2022, the Company sold 564,989 shares of its common stock at prices ranging from $ 3.15 to 4.26 under

its Form S-3 Registration Statement and ATM Offering which resulted in gross proceeds of approximately $ 1,988,000 and net proceeds to

6 unchanged sentences

$ 7,300,000 .

On August 31, 2023, the Company did not have an open ATM offering in place.

On November 30, 2023, the Company did not have an open ATM offering in place.

No shares of common stock or other equity securities

of the Company were sold under the shelf registration statement during the three months ended August 31, 2023.

of the Company were sold under the shelf registration statement during the six months ended November 30, 2023.

GEOGRAPHIC INFORMATION

1 unchanged sentence

Geographic information regarding net sales is approximately as follows:

OF GEOGRAPHIC INFORMATION

Months Ended August 31,

Revenues from sales to unaffiliated

from sales to unaffiliated customers total

of August 31, 2023 and May 31, 2023, approximately $ 610,000 and $ 626,000 of Biomerica’s gross inventory was located in Mexicali,

SCHEDULE OF GEOGRAPHIC INFORMATION

Three Months Ended November 30,

Six Months Ended November 30,

Revenues from sales to unaffiliated customers:

North America

South America

of November 30, 2023 and May 31, 2023, approximately $ 555,000 and $ 626,000 of the Company’s gross inventory was located in Mexicali,

Mexico, respectively.

of August 31, 2023 and May 31, 2023, approximately $ 16,000 and $ 17,000 of Biomerica’s property and equipment, net of accumulated

of November 30, 2023 and May 31, 2023, approximately $ 16,000 and $ 17,000 of the Company’s property and equipment, net of accumulated

depreciation and amortization, was located in Mexicali, Mexico, respectively.

Company leases its facilities.

On August 31, 2023, the Company had approximately 22,000 square feet of floor space at its corporate headquarters

at 17571 Von Karman Avenue in Irvine, California, which it has been leasing since 2009.

The lease for its headquarters expired on August

On November 30, 2023, the Company had approximately 22,000 square feet of floor space at its corporate

headquarters at 17571 Von Karman Avenue in Irvine, California, which it has been leasing since 2009.

The lease for its headquarters expired

on August 31, 2016.

The Company had an option to extend the term of its lease for two additional sixty-month periods.

On November 30,

the Company exercised its option to extend its lease for an additional sixty-month period and entered into the First Amendment to Lease

wherein it extended its lease until August 31, 2021.

On April 9, 2021, the Company exercised its second option to extend its lease for

an additional five years.

When the Company extended its lease in April 2021, it was also granted an additional five-year lease extension

2015, the Company exercised its option to extend its lease for an additional sixty-month period and entered into the First Amendment

to Lease wherein it extended its lease until August 31, 2021.

On April 9, 2021, the Company exercised its second option to extend its

lease for an additional five years.

When the Company extended its lease in April 2021, it was also granted an additional five-year lease

extension option.

The Company made a security deposit of approximately $ 22,000 .

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lease expense in the consolidated statements of operations and comprehensive loss when they are incurred.

following table presents information on our operating leases for the three months ended August 31, 2023 and 2022:

OF OPERATING LEASES

Months Ended August 31,

Operating lease

following table presents information on our operating leases for the three month and six month ended November 30, 2023 and 2022:

SCHEDULE OF OPERATING LEASES

Three Months Ended November 30,

Six Months Ended November 30,

Operating lease cost

Variable lease cost

approximate maturity of lease liabilities as of August 31, 2023 are as follows:

OF FUTURE MINIMUM LEASE PAYMENTS

Ending August 31:

minimum future lease payments

Short-term lease cost

Total lease cost

approximate maturity of lease liabilities as of November 30, 2023 are as follows:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Year Ending November 30:

Operating Leases

Total minimum future lease payments

imputed interest

operating lease liabilities

following table summarizes the Company’s other supplemental lease information for the three months ended August 31, 2023 and 2022:

OF OTHER SUPPLEMENTAL LEASE INFORMATION

Months Ended August 31,

paid for operating lease liabilities

Weighted-average

remaining lease term (years)

Weighted-average

discount rate

Total operating lease liabilities

following table summarizes the Company’s other supplemental lease information for the six months ended November 30, 2023 and 2022:

SCHEDULE OF OTHER SUPPLEMENTAL LEASE INFORMATION

Six Months Ended November 30,

Cash paid for operating lease liabilities

Weighted-average remaining lease term (years)

Weighted-average discount rate

Company also has various insignificant leases for office equipment.

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Company is, from time to time, involved in legal proceedings, claims, and litigation arising in the ordinary course of business.

were no legal proceedings pending as of August 31, 2023.

were no material legal proceedings pending as of November 30, 2023.

SUBSEQUENT EVENTS

September 15, 2023 the Company submitted to the FDA the final H.

Pylori data set requested by the FDA during the FDA’s recent review

of the 510-K filed by the Company.

The Company received confirmation from the FDA that the data was received.

The Biomerica hp+detect™

diagnostic test is designed to detect the presence of the H.

pylori bacteria which infects approximately 35% of the U.S.

December 18, 2023, the Company received FDA clearance for its new HP Detect Stool Antigen ELISA test, a new product that is designed

to detect the presence of the H.

Pylori bacteria.

The Company is now marketing this product in the U.S.

and intends to initiate marketing

of the product in certain international markets in the near future.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements