What changed in this filing

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Item 1. Financial Statements

2024-04-12 compared with 2024-01-16 · 309 added, 228 removed, 421 unchanged (56% of the section changed)

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CONSOLIDATED BALANCE SHEETS (UNAUDITED)

November 30, 2023

Current Assets:

Cash and cash equivalents

Cash and cash

Accounts receivable, net

Inventories, net

Prepaid expenses and other

expenses and other

Total current assets

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

Property and equipment,

net of accumulated depreciation and amortization

Right-of-use assets, net of accumulated amortization

of $ 835,000 and $ 617,000 as of February 29, 2024 and May 31, 2023, respectively

Intangible assets, net

of accumulated amortization of $ 44,000 and $ 30,000 as of February 29, 2024 and May 31, 2023, respectively

Liabilities and Shareholders’

Current Liabilities:

Accounts payable and accrued expenses

Accounts payable and accrued

Accrued compensation

Advance from customers

Lease liabilities, current portion

liabilities, current portion

Total current liabilities

Lease liabilities, net of current portion

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 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, Series

A 5% convertible, $ 0.08 par value, 571,429 shares authorized, none issued and outstanding as of February 29, 2024 and May 31, 2023

Preferred stock, undesignated, no par value,

4,428,571 shares authorized, none issued and outstanding as of February 29, 2024 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 November 30, 2023 and May 31, 2023, respectively

Additional paid-in-capital

Accumulated other comprehensive loss

Accumulated deficit

Common stock, $ 0.08 par

value, 25,000,000 shares authorized, 16,821,646 issued and outstanding at February 29, 2024 and May 31, 2023, respectively

Additional paid-in

Accumulated other comprehensive

( 46,774,000 )

( 42,217,000 )

Total Shareholders’ Equity

Total Liabilities and Shareholders’ Equity

Total Shareholders’

Total Liabilities and

Shareholders’ Equity

accompanying notes are an integral part of these statements.

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COMPREHENSIVE LOSS (UNAUDITED)

For the Three Months Ended

For the Six Months Ended

Cost of sales

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( 3,814,000 )

( 2,822,000 )

Operating expenses:

Selling, general and administrative

Research and development

Total operating expenses

and development

operating expenses

Loss from operations

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Other income:

Interest and dividend income

Total other income

and dividend income

Loss before income taxes

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( 5,310,000 )

Provision for income taxes

Provision (benefit) for

$ ( 1,918,000 )

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$ ( 5,348,000 )

Basic net loss per common share

Diluted net loss per common share

Weighted average number of common and common equivalent shares:

Basic net loss per common

Diluted net loss per

Weighted average number of common and common equivalent

$ ( 1,918,000 )

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

the Six Months Ended November 30, 2023

Other Comprehensive

Stockholder’s

For the Nine Months Ended February 29, 2024

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholder’s

Balances at May 31, 2023

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$ ( 42,217,000 )

Exercise of stock options

Foreign currency translation

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( 43,349,000 )

Exercise of stock options

Foreign currency translation

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( 44,856,000 )

Foreign currency translation

Share-based compensation

( 1,918,000 )

For the Six Months Ended November 30,

Comprehensive

( 1,918,000 )

Balances at February

$ ( 102,000 )

$ ( 46,774,000 )

the Nine Months Ended February 28, 2023

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholder’s

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( 37,149,000 )

Exercise of stock options

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( 38,775,000 )

Net proceeds from ATM

Foreign currency translation

Share-based compensation

( 1,650,000 )

Balances at February

$ ( 111,000 )

$ ( 40,425,000 )

$ ( 111,000 )

$ ( 40,425,000 )

accompanying notes are an integral part of these statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended November 30,

Cash flows from operating activities:

Cash flows from operating

$ ( 4,557,000 )

$ ( 5,348,000 )

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 (recovery) for allowance on accounts receivable

Recovery for allowance on accounts

Inventory reserve

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Reduction in lease liabilities

Net cash used in operating activities

Net cash used in operating

( 4,317,000 )

( 4,511,000 )

Cash flows from investing activities:

Cash flows from investing

Purchases of property and equipment

Expenditures related to intangibles

Net cash used in investing activities

Cash flows from financing activities:

Expenditures related

to intangibles

Net cash used in investing

Cash flows from financing

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

Effect of exchange rate

changes in cash

Net decrease in cash and cash equivalents

( 4,400,000 )

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of period

( 2,572,000 )

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 for:

Non-cash investing and financing activities:

Write off of intangible assets, cost

Write off of intangible assets, accumulated amortization

Cash paid during the period

Non-cash investing and financing

Write off of intangible

assets, accumulated amortization

accompanying notes are an integral part of these statements.

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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.

(“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.

have successfully launched our product across numerous gastroenterology (“GI”) physician groups in various states and

This includes collaboration with one of the largest GI groups in the US, now offering inFoods to their patients.

feedback from the GI specialty has been positive, and we are actively expanding our network by onboarding additional physician

These GI practices are beginning to prescribe inFoods IBS to their patients.

At the same time, we recognize the potential

to extend our product’s application to other physician segments.

We are convinced that forming partnerships in these other

segments is the most effective strategy for market penetration.

Currently, we are engaging in discussions with several potential

This strategy enables our newly formed sales team to focus on building strong relationships within the GI segment,

capitalizing on the distinct advantages of the inFoods IBS product.

Consequently, we anticipate sustained revenue growth from the

inFoods IBS product rollout in the upcoming quarters.

addition to our focus on the inFoods products, during the quarter, we also recently received FDA clearance for a new diagnostic test

called hp+detect™, which is used for the detection of the H.

pylori bacteria in a patient’s GI tract.

pylori bacteria

is estimated to infect 35% of the U.S.

population and 45% of the population in Europe’s five largest countries.

pylori infection

is the strongest known risk factor for gastric cancer and gastric cancer is the third most common cause of cancer-related death worldwide.

Physicians and medical centers will now be able use hp+detect™ to diagnose H.

pylori infection and monitor the safety and efficacy

of treatment.

This diagnostic test is sold directly to labs where patient samples are tested and diagnosis occurs.

During the quarter,

we hired a small sales team to market this product.

We also began making this test available to the end customer labs.

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

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(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.

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

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.

March 2020, we began developing COVID-19 diagnostic tests to indicate if a person has been infected by COVID-19 or is currently infected.

We began selling these COVID-19 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 twelve

months ended February 29, 2024.

As such, our COVID-19 product sales caused significant swings in our revenues over the past over the last four years

products that accounted for all of our revenues during the nine months ended February 29, 2024, are primarily focused on gastrointestinal

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

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considered necessary for a fair presentation have been included.

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

Operating results for the three and nine months ended February 29, 2024

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

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AND METHODS OF DISTRIBUTION

majority of the Company’s revenues come from the sale of products that the company manufactures in the U.S.

and in Mexico.

of the raw materials used in manufacturing come from Asia and other regions of the world.

Finally, most of the Company’s revenues

are generated from the international sales of its products.

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

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 November 30, 2023.

The Company employs a diverse range of distribution methods to deliver our products to our customers.

serve approximately 80 customers in our diagnostic business.

Among these, roughly 40 are foreign distributors, 10 are domestic distributors,

and the remainder primarily consists of domestic hospital and clinical laboratories, medical research institutions, medical schools, pharmaceutical

companies, chain drugstores, wholesalers, physicians’ offices, and e-commerce customers.

Company derives the majority of its revenues from the sale of domestically manufactured products in the U.S.

and Mexico, with some raw

materials sourced from Asia and other global regions.

Primarily, the Company’s revenue stream is bolstered by international sales

of its products.

However, the Company’s operations have been adversely affected by various global and economic disruptions stemming

from the COVID-19 pandemic, ongoing conflicts such as the war in Ukraine and Israel, and geopolitical tensions between China and the

United States.

challenges have resulted in disruptions across multiple facets of the Company’s operations, including supply chain disruptions,

cost inflation, potential loss of contracts and customers, travel restrictions, shipping and logistical challenges, diverse government

responses, and inherent international business risks in the Company’s operational regions.

Additionally, there is a risk of human

capital depletion among the Company, its partners, and customers, as well as potential interruptions to production and customer credit

Furthermore, the Company remains vulnerable to general economic downturns.

light of these prevailing global challenges, the Company remains steadfast in its strategic direction.

Our focus continues to be

driving inFoods IBS product growth within the U.S.

and launching our new H.

pylori test which recently received FDA clearance to further strengthen our domestic portfolio.

Both products

are domestically manufactured and marketed, enhancing the Company’s resilience amidst global uncertainties.

Looking ahead, we remain committed to expanding both products in certain international markets in the future.

Company has incurred net losses and negative cash flows from operations and has an accumulated deficit of approximately $ 46,774,000 as of February 29, 2024.

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

and commercial product launch activities.

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

As of February 29, 2024, the Company had cash and cash equivalents of approximately $ 5,319,000

and working capital of approximately $ 6,855,000 .

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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, a previously ATM facility has been withdrawn and is not

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 active.

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 February 2025.

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

As a result of cash and cash equivalents

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

on hand on February 29, 2024, 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 May 2025.

CONCENTRATION

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

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.

Net consolidated sales were approximately $ 1,017,000 and $ 1,111,000 for the three months ended February 29, 2024 and February 28, 2023, respectively,

and approximately $ 4,299,000 and $ 4,231,000 for the nine months ended February 29, 2024 and February 28, 2023, respectively.

the three months ended February 29, 2024, the Company had three key customers who are located in the United States and Aisa which accounted

for 44 % of net consolidated sales.

For the three months ended February 28, 2023, the Company had one key customer who is located in Asia

which accounted for 22 % of net consolidated sales.

For the nine months ended February 29, 2024, the Company had one key customer who

is located in Asia which accounted for 40 % of net consolidated sales.

For the nine months ended February 28, 2023, the Company had one

key customer who is located in Asia which accounted for 38 % of net consolidated sales.

gross receivables on February 29, 2024 and May 31, 2023 were approximately $ 1,153,000 and $ 751,000 , respectively.

As of February 2024,

the Company had three key customers, who are located in the United States and Asia which accounted for a total of 44 % 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 February 29, 2024, the Company had one key vendor which accounted for 50 % of the purchases of raw materials.

the three months ended February 28, 2023, the Company had two key vendors which accounted for 31 % of the purchase of raw materials.

the nine months ended February 29, 2024, the Company had one vendors which accounted for 18 % of the purchases of raw materials.

nine months ended February 28, 2023, there was no individual vendor that comprised more than 10 % of the Company’s purchases.

of February 29, 2024, the Company had two key vendors which accounted for 52 % of gross accounts payable.

As of May 31, 2023,

the Company had one key vendor which accounted for 23 % of gross accounts payable.

AND CASH EQUIVALENTS

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Company adopted Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments – Credit Losses (codified

as Accounting Standards Codification (“ASC”) 326) on June 1, 2023.

2016-13, Financial Instruments – Credit Losses (codified as

Accounting Standards Codification (“ASC”) 326) on June 1, 2023.

ASC 326 adds to U.S.

GAAP the current expected credit

loss (“CECL”) model, a measurement model based on expected losses rather than incurred losses.

GAAP the current expected credit loss

(“CECL”) model, a measurement model based on expected losses rather than incurred losses.

Prior to the adoption of ASC 326,

the Company evaluated receivables on a quarterly basis and adjusted the allowance for doubtful accounts accordingly.

Balances over

ninety days old were usually reserved for unless collection was reasonably assured.

Under the application of ASC 326, the Company’s

historical credit loss experience provides the basis for the estimation of expected credit losses, as well as current economic and business

conditions, and anticipated future economic events that may impact collectability.

In developing its expected credit loss estimate, the

Company evaluated the appropriate grouping of financial assets based upon its evaluation of risk characteristics, including consideration

of the types of products and services sold.

Account balances are written off against the allowance for expected credit losses after all

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

Balances over ninety

days old were usually reserved for unless collection was reasonably assured.

Under the application of ASC 326, the Company’s historical

credit loss experience provides the basis for the estimation of expected credit losses, as well as current economic and business conditions,

and anticipated future economic events that may impact collectability.

In developing its expected credit loss estimate, the Company evaluated

the appropriate grouping of financial assets based upon its evaluation of risk characteristics, including consideration of the types

of products and services sold.

Account balances are written off against the allowance for expected credit losses after all means of collection

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

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.

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 February 29, 2024 and May 31, 2023, the Company has established a reserve of approximately $ 23,000 and $ 29,000 , respectively, for

credit losses.

EXPENSES AND OTHER

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

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

of February 29, 2024 and May 31, 2023, the prepaids were approximately $ 268,000 and $ 300,000 , respectively, composed of prepayments to

insurance and various other suppliers.

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current period charges and the allocation of fixed production overhead is based on the normal capacity of the production facilities.

inventories are approximately the following:

inventories are comprised of approximately the following:

SCHEDULE OF NET INVENTORIES

November 30, 2023

Raw materials

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reserve for obsolete inventory.

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

As of February 29, 2024, and May 31, 2023, inventory reserves were approximately $ 491,000 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 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 –

and amortization expense on property and equipment were approximately $ 16,000 and $ 15,000 for the three months ended February 29, 2024

and February 28, 2023, respectively, and approximately $ 46,000 and $ 51,000 for the nine months ended February 29, 2024 and February 28,

2023, respectively.

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

Goodwill and Other (“ASC 350”).

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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.

Amortization expense was approximately $ 4,000 for the three months ended February 29, 2024, and $ 3,000 for the corresponding period

ended February 28, 2023.

For the nine months ended February 29, 2024, and February 28, 2023, the expenses were approximately $ 13,000

and $ 15,000 , 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 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 .

During the nine months ended February 29, 2024, management did not identify any indicators of impairment.

During the nine months ended

February 28, 2023, 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 November 30, 2023 and determined that the Company’s proportionate economic interest in the entity indicates that the equity

of February 29, 2024 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.

of the Company’s Cost Method Holdings during the period ended February 29, 2024.

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 $ 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 six months ended November 30, 2023:

Company expensed approximately $ 633,000 in share-based compensation during the nine months ended February 29, 2024, and $ 1,006,000 for

the same period ended February 28, 2023.

following summary presents the options granted, exercised, expired, canceled and outstanding for the nine months ended February 29, 2024:

SUMMARY OF OPTIONS ACTIVITY

Option Shares

Weighted Average

Exercise Price

Weighted Average Exercise Price

Options Outstanding at May 31, 2023

Cancelled or expired

Options Outstanding at November 30, 2023

Options Outstanding at February 29, 2024

Company has various contracts with customers.

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specified sales volumes.

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.

The Company evaluated the status of these contracts during the nine months ended February 29, 2024 and 2023,

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

for contract work performed by the Company for others are invoiced and recognized as that work has been performed and as the project

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manufacturers.

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

of February 29, 2024, the Company had approximately $ 85,000 of advances from domestic customers, which are prepayments on orders for

future shipments.

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SCHEDULE OF DISAGGREGATION REVENUE

Three Months Ended November 30,

Six Months Ended November 30,

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended

Nine Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Over-the-counter

7 unchanged sentences

The Company expensed approximately $ 343,000 and $ 392,000 of research and development

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

costs during the three months ended February 29, 2024 and February 28, 2023, respectively.

Similarly, it expensed approximately $ 1,226,000

and $ 1,215,000 of research and development costs during the nine months ended February 29, 2024 and February 28, 2023, respectively.

the three months ended February 29, 2024, the Company had an income tax expense of approximately $ 4,000 .

For the nine months ended February

29, 2024, the Company had an income tax expense of approximately $ 35,000 .

1 unchanged sentence

foreign taxes.

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

During the three and nine months ended February 29, 2024, the Company had a net operating loss (“NOL”) that

generated deferred tax assets for NOL carryforwards.

3 unchanged sentences

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.

the Company has established a full valuation allowance against its deferred tax assets as of February 29, 2024.

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

For the nine months ended February 29, 2024, 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

$ 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

For the three months ended February

29, 2024, and February 28, 2023, advertising costs were approximately $ 25,000 and $ 51,000 , respectively.

During the nine months ended

February 29, 2024, and February 28, 2023, the costs were approximately $ 80,000 and $ 87,000 , respectively.

CURRENCY TRANSLATION

8 unchanged sentences

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.

and comprehensive loss for the three and nine months ended February 29, 2024 and February 28, 2023.

ASSETS AND LEASE LIABILITY

20 unchanged sentences

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

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

was 3,506,616 for February 29, 2024, and 2,336,116 for February 28, 2023, respectively.

ACCOUNTING PRONOUNCEMENTS

24 unchanged sentences

$ 7,300,000 .

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

On February 29, 2024, 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 six months ended November 30, 2023.

of the Company were sold under the shelf registration statement during the nine months ended February 29, 2024.

GEOGRAPHIC INFORMATION

2 unchanged sentences

SCHEDULE OF GEOGRAPHIC INFORMATION

Three Months Ended November 30,

Six Months Ended November 30,

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended

Nine Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Revenues from sales to unaffiliated customers:

1 unchanged sentence

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,

of February 29, 2024, and May 31, 2023, approximately $ 575,000 and $ 626,000 of Biomerica’s gross inventory was located in Mexicali,

Mexico, respectively.

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

of February 29, 2024, and May 31, 2023, approximately $ 15,000 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 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,

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 .

November 2016, the Company’s Mexican subsidiary, Biomerica de Mexico, entered into a 10-year lease for approximately 8,100 square

feet of manufacturing space.

The Company has one 10-year option to renew at the end of the initial lease period.

Biomerica de Mexico

also leases a smaller unit on a month-to-month basis for use in one manufacturing process.

addition, the Company leases a small office in Lindau, Germany on a month-to-month basis, as headquarters for BioEurope GmbH, its Germany

Company operates through leased facilities.

As of February 29, 2024, our corporate headquarters, situated at 17571 Von Karman Avenue

in Irvine, California, encompasses approximately 22,000 square feet of floor space, under lease since 2009.

The initial lease term for

our headquarters expired on August 31, 2016, with the Company exercising its option to extend for an additional sixty-month period through

the First Amendment to Lease on November 30, 2015.

Subsequently, on April 9, 2021, the Company opted for a second extension, securing

an additional five-year term, and was further granted a similar option for future extension.

A security deposit of approximately $ 22,000

was made in conjunction with the lease extension.

November 2016, our Mexican subsidiary, Biomerica de Mexico, entered a 10-year lease for approximately 8,100 square feet of manufacturing

space, with a single 10-year renewal option at lease end.

Additionally, Biomerica de Mexico leases a smaller unit on a month-to-month

basis for specific manufacturing processes.

In addition, our German subsidiary, BioEurope GmbH, maintains a small office in Lindau, Germany,

under a month-to-month lease agreement, serving as its headquarters.

purposes of determining straight-line rent expense, the lease term is calculated from the date the Company first takes possession of

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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 month and six month ended November 30, 2023 and 2022:

following table presents information on our operating leases for the three months and nine months ended February 29, 2024 and February

SCHEDULE OF OPERATING LEASES

Three Months Ended November 30,

Six Months Ended November 30,

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended

Nine Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Operating lease cost

2 unchanged sentences

Total lease cost

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

approximate maturity of lease liabilities as of February 29, 2024 are as follows:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Year Ending November 30:

Year Ending February 29:

Operating Leases

2 unchanged sentences

Total operating lease liabilities

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

following table summarizes the Company’s other supplemental lease information for the nine months ended February 29, 2024 and February

SCHEDULE OF OTHER SUPPLEMENTAL LEASE INFORMATION

Six Months Ended November 30,

February 29, 2024

February 28, 2023

Nine Months Ended

February 29, 2024

February 28, 2023

Cash paid for operating lease liabilities

4 unchanged sentences

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

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

were no material legal proceedings pending as of February 29, 2024.

SUBSEQUENT EVENTS

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