What changed in this filing

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Item 1A. Risk Factors

2024-08-28 compared with 2023-08-25 · 402 added, 359 removed, 231 unchanged (77% of the section changed)

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RELATED TO OUR BUSINESS

business could be adversely affected by the effects of widespread public health epidemics or other broad government-imposed restrictions

on societies .

recent years, certain aspects of our business were negatively impacted by the COVID-19 pandemic.

We may be materially impacted by ongoing

outbreaks of illness or other health issues, such as the COVID-19 outbreak.

The outbreak of the COVID-19 virus caused various governments,

including the United States, to implement quarantines, various restrictions on transportation, and shelter in place orders and other

broad restrictions.

Governments have also implemented sweeping work restrictions that prohibit most employees from going to work.

Company faces significant future risks from such government imposed restrictions, laws and regulations pertaining to health epidemics

or various other government declared crisis’, that include but are not limited to:

a) supply chain disruptions making it difficult

for the Company to receive materials needed for production of its products, and needed to ship finished products to our customers, b)

loss of contracts and customers from the financial strains or other disruptions they are experiencing as a result of the government restrictions,

c) financial risks pertaining to receivables due from customers that may fall into insolvency or otherwise be unable to pay their bills,

d) government orders that make it difficult to remain open for business, restrict imports of raw materials or exports of finished goods,

refusal to allow the Company’s product to be licensed for sale in their countries, and other seen and unforeseen actions taken

by government agencies, e) absenteeism or loss of employees at the Company, or at our partner’s companies, due to health reasons

or government restrictions, that are needed to develop, validate, manufacture, and perform other necessary functions for our operations,

f) equipment failures, loss of utilities, and other disruptions that could impact our operations or render them inoperable, g) litigation

or government actions against the Company pertaining to existing products and new products sold by the Company that are directed at limiting

or treating the spread of the pandemic outbreak, h) a local or global recession or depression that could harm the international banking,

economic and financial systems, i) a drop in demand for our products, that are all medical related, due to patients’ reluctance

or refusal to visit hospitals, labs, and doctors’ offices where our products are used, due to their fear of contracting a disease,

and j) many other seen and unforeseen events and circumstances, all of which could negatively impact the Company.

have a history of operating losses.

have historically incurred net losses.

There can be no assurance that we will generate net profits in future periods.

Further, there

can be no assurance that we will be cash flow positive in future periods.

In the event that we fail to achieve profitability in future

periods, the value of our common stock may decline.

In addition, if we are unable to achieve or maintain positive cash flows, we would

be required to seek additional funding, which may not be available on favorable terms, if at all.

have a history of operating losses, and there is no guarantee that we will achieve profitability in the future.

Our ability to generate

net profits and maintain positive cash flows is uncertain.

Failure to achieve or sustain profitability could result in a decline in the

value of our common stock and may necessitate seeking additional funding under potentially unfavorable conditions.

Although our financial statements have been prepared on a going concern basis, our current level of cash

and cash equivalents available to us is not sufficient to meet our operating plans for the next 12 months, raising substantial doubt regarding

our ability to continue as a going concern.

financial statements as of May 31, 2024, have been prepared under the assumption that we will continue as a going concern for the next

twelve months from the date of issuance.

However, our independent registered public accounting firm has issued a report that includes

an explanatory paragraph highlighting our operational losses and expressing substantial doubt about our ability to continue as a going

concern for a period of at least the next twelve months from the date this report is filed.

ability to continue as a going concern depends on obtaining additional financing, achieving further operating

efficiencies, increasing sales, reducing costs, and ultimately generating profitable operations.

There is no assurance that we will be

able to secure the necessary capital on favorable terms, achieve sufficient revenue growth, or implement adequate cost reductions.

financial statements do not reflect any adjustments that might result from the resolution of this uncertainty.

operating results may fluctuate adversely as a result of many factors that are outside our control, which may negatively impact our stock

operating results are dependent upon many factors that are substantially outside of our control that could materially and adversely affect

our business, results of operations, and financial condition.

Factors that are beyond our control and that could affect our operating

results in the future include:

clearance of our products in the U.S.

and in other markets;

compliance in the U.S., Europe and other territories;

in the level of competition, such as would occur if one of our competitors introduced a new, better performing or lower priced product

to compete with one or more of our products;

in the reimbursement systems or reimbursement amounts that end-users may rely upon in choosing to use our products;

in economic conditions in our domestic and international markets, such as economic downturns, decreased healthcare spending, reduced

consumer demand, inflation and currency fluctuations;

changes in government laws and regulations affecting our business;

for consumers to visit healthcare providers;

than anticipated market penetration of our new or more recently introduced products;

quantities of our product or that of our competitors in our distributors’ inventories or distribution channels;

in distributor buying patterns;

mandated shelter-in-place, lock downs or other crisis related orders;

potential resurgence of the COVID-19 virus or mutations of the virus;

in the healthcare market including consolidation in our customer base.

operating results are subject to fluctuations due to factors outside our control, which may adversely affect our business, financial

condition, and stock price.

Key factors include:

Delays or issues with obtaining regulatory approvals in the U.S., Europe, and

other markets.

Challenges in meeting compliance requirements in various jurisdictions.

● Competition:

Introduction of superior or lower-priced products by competitors could impact our market

● Reimbursement

Alterations in reimbursement systems or amounts could affect product usage decisions.

Economic downturns, changes in healthcare spending, reduced consumer demand,

inflation, and currency fluctuations.

and Regulatory Changes:

New or amended laws and regulations affecting our business operations.

Lower than expected adoption of new or recently introduced products.

● Distributor

Variability in distributor inventory levels, buying patterns, and overall performance.

Risks from shelter-in-place orders, lockdowns, or other crisis-related directives.

Potential resurgence of COVID-19 or new health threats.

Market Changes:

Consolidation in our customer base or shifts in the healthcare market landscape.

in our operating results, for any reason, could cause operating losses as a result of significant fixed expenses.

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operating results could be adversely affected.

competitive position is heavily dependent on obtaining and protecting our own proprietary technology or obtaining licenses from others.

Our ability to obtain patents and licenses, and their benefits, is uncertain.

remain competitive, we must expend considerable resources to research new technologies and products and develop new markets, and there

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technologies and products will be commercially viable, or our expansion into new markets will be profitable.

is also no guarantee that our new products, including our InFoods® IBS products, will get approval and be well accepted into the

is also no guarantee that our new products, including our inFoods ® IBS products and hp+detect ™ , will

be well accepted into the marketplace.

operations will be adversely affected if our operating results do not correspondingly increase with our increased expenditures or if

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outside the United States.

Company has a significant investment in its manufacturing facility in Mexico through its subsidiary, Biomerica de Mexico.

the Company warehouses a significant amount of its inventory at the Mexico facility.

There are a number of risks associated with doing

business in Mexico, including, exposure to local economic and political conditions, social unrest, including risks of terrorism or other

hostilities, export and import restrictions, the potential for shortages of trained labor, and the possible effects of currency exchange

rate fluctuations.

These risks could lead to additional costs that we cannot foresee at this time and may materially adversely impact

our business, results of operations, and financial condition.

operate a significant manufacturing facility in Mexico through our subsidiary, Biomerica de Mexico.

This international presence introduces

a range of risks, including exposure to local economic and political conditions.

Factors such as social unrest, potential terrorism,

export and import restrictions, and fluctuations in currency exchange rates could impact our operations.

Additionally, there is a risk

of labor shortages, which could affect our manufacturing capabilities.

These factors could lead to unforeseen costs and disruptions,

materially impacting our business, financial results, and operational stability.

use hazardous materials in our research and production that may result in unexpected and substantial claims against us relating to handling,

storage, or disposal.

use hazardous materials in our research and production.

The risk of accidental contamination or injury from these materials cannot be

completely eliminated.

In the event of such an accident, the Company could be held liable for any harm or damages that result and any

such liability could exceed the resources of the Company.

The Company may incur substantial costs to comply with environmental regulations.

any governmental authorities were to impose new environmental regulations requiring compliance in addition to that required by existing

regulations or alter their interpretation of the requirements of such existing regulations, such environmental and safety regulations

could impair our research, development, or production efforts by imposing additional, and possibly substantial, costs, restrictions,

or compliance procedures on our business.

In addition, because of the nature of the penalties provided for in some of these environmental

and safety regulations, we could be required to pay sizable fines, penalties, or damages in the event of noncompliance with regulations

and environmental laws.

Any environmental or safety violation or remediation requirement could also partially or completely shut down

our research and manufacturing facilities and operations, which would have a material adverse effect on our business.

The risk of accidental

contamination or injury from these hazardous materials cannot be completely eliminated and exposure of individuals to these materials

could result in substantial fines, penalties, or damages that may not be covered by insurance.

research and production processes involve the use of hazardous materials, which presents inherent risks.

Despite rigorous safety protocols,

the possibility of accidental contamination or injury cannot be entirely eliminated.

In the event of an accident, we could face significant

liability for harm or damages, potentially exceeding our financial resources.

Compliance with environmental regulations also entails

substantial costs.

government authorities introduce new environmental regulations or change the interpretation of existing regulations, our operations could

be further impacted.

Such changes may impose additional costs, restrictions, or compliance requirements, which could hinder our research,

development, or production efforts.

Noncompliance with these regulations may result in significant fines, penalties, or damages, and

could necessitate costly remediation efforts.

Furthermore, severe environmental or safety violations could lead to partial or total shutdowns

of our research and manufacturing facilities, adversely affecting our business.

The risk of contamination or injury from hazardous materials

may also expose individuals to potential health hazards, resulting in fines or penalties that might not be covered by insurance, thereby

impacting our financial stability and operational continuity.

rely on a limited number of key distributors that account for a substantial majority of our total revenue.

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For the fiscal years ended May 31, 2024,

and 2022, the Company had one distributor and two distributors, respectively, which accounted for a total of 35% and 65% of our net sales,

respectively.

Of this, for the fiscal years ended May 31, 2023 and 2022, the largest of the distributors mentioned above accounted for

35% and 55%, respectively, of net sales.

gross receivables on May 31, 2023 and 2022 were approximately $751,000 and $927,000, respectively.

As of May 31, 2023 and 2022, the Company

had one distributor which accounted for a total of 36% and 50%, respectively, of gross accounts receivable.

Of the 36% as of May 31,

2023, 100% was owed by a distributor in Asia.

Adverse changes in our relationships with these distributors and other partners, or adverse

developments in their financial condition, performance, or purchasing patterns, could adversely affect our business and consolidated financial

sell to countries in Asia including China where trade policies and political issues could impact our revenues.

revenues could be negatively impacted by complex relationships between the United States and other Asian countries including China.

trade between the countries remains extremely strong, there are no assurances that these trade relations continue to be strong.

and 2023, the Company had one distributor each year that accounted for 33% and 35% of our net sales, respectively.

gross receivables as of May 31, 2024, and 2023 were approximately $966,000 and $751,000, respectively.

As of May 31, 2024, and 2023,

the Company had four and one distributor, respectively, that accounted for a total of 64% and 36% of gross accounts receivable.

64% as of May 31, 2024, 37% was owed by a distributor in Asia.

Any adverse changes in our relationships with key distributors, or issues

related to their financial condition, performance, or purchasing patterns, could have a significant impact on our sales and overall financial

The loss of a key distributor, or the failure of our direct distribution efforts, could further exacerbate these challenges

and adversely affect our business.

face risks relating to our international sales, including inherent economic, political, and regulatory risks, which could impact our

financial performance, cause interruptions in our current business operations and impede our growth strategy.

face risks relating to our international sales, including economic, political, and regulatory challenges, which could impact our financial

performance, disrupt our business operations, and hinder our growth strategy.

products are primarily sold internationally, with significant sales to distributors in Asia and Europe.

We rely on distributor organizations

and sales agents to market and sell our products abroad, which exposes us to various foreign risks, including:

We must adhere to diverse and evolving registration requirements, which can be

controlled by distributors, complicating transitions and limiting our ability to benefit

from product registrations.

We must comply with complex foreign and U.S.

laws and regulations, such as import/export

limitations, the Foreign Corrupt Practices Act, and local laws in each market.

and Trade Barriers:

As we expand into new countries and regions, we face changing tariffs

and trade barriers, particularly in China, where tariff policies are in flux.

Exchange Fluctuations:

Our international sales are subject to currency risks, as changes

in the values of foreign currencies relative to the U.S.

dollar can make our products more

expensive and negatively impact sales.

and Pricing Challenges:

We encounter longer payment cycles, generally lower average selling

prices, and greater difficulty in collecting accounts receivable.

Enforceability:

We may lack the ability to enforce receivables collections contracts in foreign

legal systems.

● Intellectual

Property Risks:

There is often reduced protection for, and enforcement of, intellectual property

rights in foreign markets.

and Economic Instability:

We are exposed to political and economic instability in regions

where we currently sell or plan to expand our product sales.

Consequences:

We face complex and potentially adverse tax implications in different jurisdictions.

Products sold internationally at lower prices may be diverted back to the United

States, affecting our domestic sales.

of our international sales are negotiated and paid in U.S.

However, currency risks remain, as fluctuations in foreign exchange

rates can make our products comparatively more expensive.

These exchange rate changes, along with general economic conditions in international

markets, could negatively impact our sales.

To maintain competitive pricing, we may need to offer discounts or reduce prices, leading

to lower margins on international sales.

Continued changes in the values of the Euro, the Mexican peso, and other foreign currencies

could adversely affect our business, financial condition, and results of operations.

also have supply agreements with foreign vendors that involve sharing foreign currency exchange fluctuation risks.

We may enter into

similar arrangements in the future.

significant portion of our revenues comes from sales to our distribution partner in China.

Political tensions between the U.S.

could disrupt or reduce our sales in the Chinese market, posing a substantial risk to our business.

results of operations and financial conditions may be adversely affected by the financial soundness of our customers, distributors, and

operational results and financial condition are closely linked to the financial health of our customers, distributors, and suppliers.

If any of these parties experience a deterioration in their financial performance or encounter difficulties with scheduled payments or

credit, it could have several adverse effects on our business.

instance, if our customers are unable to pay or delay payment on accounts receivable, this would negatively impact our cash flow.

if our suppliers face financial challenges, they may restrict credit, impose more stringent payment terms, reduce or cease production

of essential components, or even stop operations entirely.

Such disruptions could directly affect our ability to procure necessary materials

and maintain consistent product supply.

reductions in reimbursements or purchase volumes from state and federal government programs, or private payers, could also occur due

to budget constraints or expenditure cuts.

These reductions could adversely impact our revenues and cash flow, further straining our

financial performance.

combined effect of these potential challenges could significantly influence our operating results and financial stability.

extend credit to customers outside the United States which can be difficult to collect.

extend credit to many of our customers including those outside of the United States.

It is often difficult to obtain adequate credit

information on these customers.

Further, our ability to collect receivables from these customers through the court systems in those countries

can be more difficult than here in the United States.

Our inability to collect on receivables from customers, in particular those outside

of the United States, could negatively impact the Company.

extend credit to many of our customers, including those located outside the United States.

Collecting receivables, particularly from

international customers, can be challenging due to difficulties in obtaining reliable credit information and the complexities of enforcing

collections through foreign legal systems.

If we are unable to effectively manage and collect on these receivables, especially from international

customers, it could have a detrimental impact on our financial performance and liquidity.

we are not able to manage our growth strategy our operating results may be adversely affected.

business strategy contemplates further growth, which would likely result in expanding into larger facilities, expanding the scope of

operating and financial systems and the geographical area of our operations, including further expansion outside the United States, as

new products and technologies are developed and commercialized or new geographical markets are entered.

Because we have a small executive

staff, acquisitions, and other future growth may divert management’s attention from core aspects of our business and place a strain

on existing management and our operational, financial, and management information systems.

Furthermore, we may expand into markets in

which we have less experience or incur higher costs.

Any and all of these potential growth and expansion strategies and events could

impose material risks and cause the Company to incur adverse operating and financial results.

business strategy contemplates further growth, including scaling up our operational systems and entering new geographical markets, including

those outside the United States.

This growth strategy could place additional demands on our limited employee and executive staff, potentially

diverting their focus from core business activities.

Furthermore, managing growth may strain our operational, financial, and management

information systems.

into new markets or undertaking acquisitions introduces several risks, such as higher costs, unfamiliar market conditions, and integration

Any difficulties in managing this growth or expanding effectively could adversely affect our operating results and financial

The strain on management resources and potential inefficiencies in our systems could lead to operational and financial setbacks.

industry and market segments in which we operate are highly competitive, and intense competition with other providers of diagnostic products

may reduce our sales and margins.

diagnostic products industry and market segments in which we operate are highly competitive.

Our diagnostic tests face competition from

similar products produced by numerous multinational and regional competitors who are heavily investing in competing technologies.

Additionally,

some of our distributors have developed, or may develop, their own products to compete directly with ours.

of our competitors have substantial competitive advantages over us, including significantly greater financial, technical, and research

They also possess larger, more established marketing, sales, distribution, and service networks;

stronger relationships with

healthcare professionals;

and extensive experience in research and development, manufacturing, clinical trials, and regulatory approvals.

Furthermore, some competitors offer a broader range of products and enjoy greater brand recognition.

our competitors’ products prove to be more effective or capture market share through superior marketing or competitive pricing,

our sales and margins could suffer.

This intense competition could materially and adversely affect our operating results.

Additionally,

there has been a noticeable trend towards industry consolidation in recent years, with companies merging to strengthen or maintain their

market positions.

This trend is expected to continue as companies strive to adapt to the evolving industry landscape.

Competing successfully

in a consolidated industry may become increasingly challenging, and failure to do so could adversely impact our market position and financial

property risks and third-party claims of infringement, misappropriation of proprietary rights, or other claims against us could adversely

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attention of our management and other key employees.

In addition to the foregoing, we may also be required to indemnify some

customers, distributors, and strategic partners under our agreements with such parties if a third party alleges or if a court finds that

our products or activities have infringed upon, misappropriated, or misused another person’s proprietary rights.

Further, our products

may contain technology provided to us by other parties such as contractors, suppliers, or customers.

We may have little or no ability

to determine in advance whether such technology infringes the intellectual property rights of a third party.

Our contractors, suppliers,

and licensors may not be required or financially able to indemnify us in the event that a claim of infringement is asserted against us,

or they may be required to indemnify us only up to a maximum amount, above which we would be responsible for any further costs or damages.

addition to the foregoing, we may also be required to indemnify some customers, distributors, and strategic partners under our agreements

with such parties if a third party alleges or if a court finds that our products or activities have infringed upon, misappropriated,

or misused another person’s proprietary rights.

Further, our products may contain technology provided to us by other parties such

as contractors, suppliers, or customers.

We may have little or no ability to determine in advance whether such technology infringes the

intellectual property rights of a third party.

Our contractors, suppliers, and licensors may not be required or financially able to indemnify

us in the event that a claim of infringement is asserted against us, or they may be required to indemnify us only up to a maximum amount,

above which we would be responsible for any further costs or damages.

of the products that we manufacture, sell, or use may be covered by claims in issued patents held by other persons or entities, and as

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our operations and the interests of our stockholders.

a company focused on research and development of new products that do not yet generate revenues, we need to continue to raise funds through

public or private debt or sale of equity to achieve our business strategy.

When we raise funds or acquire other technologies or businesses

through issuance of equity, this dilutes the interests of our stockholders.

Moreover, the availability of additional capital, whether

debt or equity from private capital sources (including banks) or the public capital markets, fluctuates as our financial condition and

industry or market conditions in general change.

There may be times when the private capital markets and the public debt or equity markets

lack sufficient liquidity or when our securities cannot be sold at attractive prices, in which case we would not be able to access capital

from these sources on favorable terms, if at all.

We can give no assurance as to the terms or availability of additional capital.

inability to raise additional funds to finance our future capital or operating needs could force us to delay, reduce, or eliminate our

development programs or commercialization efforts.

related to development projects and approvals are hard to estimate due to factors that are unknown to us at this time.

These future costs

could be much higher than anticipated and current operations are unlikely to be able to cover these costs.

trials involve a lengthy and expensive process with an uncertain outcome, and results of studies and trials may not be predictive of

future trial results.

trials are expensive, time consuming, and difficult to design and implement.

Regulatory agencies may analyze or interpret the results

differently than we do.

Even if the results of our clinical trials are favorable, the clinical trials for a number of our product candidates

may take a significant amount of time to complete.

Regulatory authorities, including state and local authorities, may suspend, delay

or terminate our clinical trials at any time, require us to conduct additional clinical trials, require a particular clinical trial to

continue for a longer duration than originally planned, or require a change to our development plans such that we conduct clinical trials

for a product candidate in a different order.

There is no assurance that the results of the clinical trials will be positive.

clinical trial could affect our ability to obtain regulatory clearances and/or potential licensing partners.

There is also no assurance

that our clinical trials will not be delayed or will be completed.

Any of the foregoing could have a material adverse effect on our business,

results of operations and financial condition.

results of operations and financial conditions may be adversely affected by the financial soundness of our customers, distributors, and

our customers’ or suppliers’ operating and financial performance deteriorates, or if they are unable to make scheduled payments

or obtain credit, our customers may not be able to pay, or may delay payment of, accounts receivable owed to us, and our suppliers may

restrict credit or impose different payment terms or reduce or terminate production of products they supply to us, or may cease all operations.

Any inability of customers to pay us for our products and services, or any demands by suppliers for different payment terms, or inability

for such suppliers to continue operations may adversely affect our operating results and financial condition.

Additionally, both state

and federal government sponsored and private payers, as a result of budget deficits or reductions, may seek to reduce their healthcare

expenditures by cutting or eliminating reimbursements for, or cutting purchase of our products.

Any reduction in payments by such government

sponsored or private payers may adversely affect our earnings and cash flow.

may not achieve market acceptance of our new products among healthcare providers and physicians, and this would have a negative effect

on future sales.

believe our ability to introduce new products that gain acceptance among consumers, healthcare providers, and physicians is an important

part of our ability to grow our revenue in future periods.

However, any new products we introduce may not gain market acceptance to the

extent we anticipate or project.

The acceptance in the medical community for any of our new products is unpredictable at this time.

addition, the Company will need to spend considerable funds in order to introduce new products into the marketplace.

Sales, if any, of

these products in the future are uncertain.

In addition, our competitors may offer different products and product formats at suggested

prices that are lower than our products or whose products are more accurate than our products.

We can provide no assurances that consumers

and the medical community will purchase our products or that they will not prefer to purchase a competitive product.

industry and market segments in which we operate are highly competitive, and intense competition with other providers of diagnostic products

may reduce our sales and margins.

diagnostic tests compete with similar products made by our competitors.

There are a large number of multinational and regional competitors

making investments in competing technologies and products.

We also face competition from our distributors as some have created, and others

may decide to create their own products to compete with ours.

A number of our competitors have a potential competitive advantage because

they have substantially greater financial, technical, research and other resources, larger, more established marketing, sales, distribution

and service organizations;

more established relationships with healthcare professionals;

experience in conducting research and development, manufacturing, clinical trials, and obtaining regulatory approval for products .

Moreover, some competitors offer broader product lines and have greater name recognition than we have.

If our competitors’ products

are more effective than ours or take market share from our products through more effective marketing or competitive pricing, our operating

results could be materially and adversely affected.

addition, there has been a trend toward industry consolidation in our markets over the last few years.

We may not be able to compete

successfully in an increasingly consolidated industry.

We expect this trend toward industry consolidation may continue as companies attempt

to strengthen or hold their market positions in an evolving industry and as companies are acquired or are unable to continue operations.

we currently generate revenue, our company is operating at a loss due to significant investments in research and development and commercialization

of newly developed products and from a slow launch in revenues from our new products.

To sustain and advance our business strategy,

we must continue to raise additional funds to meet our capital and operating needs.

This often involves seeking public or private debt

or issuing equity.

Raising funds through equity can dilute the interests of our existing stockholders.

availability of capital, whether through debt or equity, is subject to fluctuations based on our financial condition and general market

or industry conditions.

There may be periods when private capital markets or public debt and equity markets lack liquidity, or when we

are unable to sell our securities at favorable prices.

In such scenarios, accessing capital on favorable terms may become challenging.

to secure adequate funding could force us to delay, reduce, or even eliminate certain development programs or commercialization efforts.

The costs associated with development projects and regulatory approvals can be unpredictable and may exceed our initial estimates.

our current operations are insufficient to cover these unexpected costs, this could adversely impact our ability to execute our business

strategy and achieve our long-term goals.

business and products are highly regulated by various governmental agencies.

Our results of operations would be negatively affected by

failures or delays in the receipt of regulatory approvals or clearances, the loss of previously received approvals, or other changes to

the existing laws and regulations that adversely impact our ability to manufacture and market our products.

The testing, manufacturing, and sale of our products are subject to regulation

by numerous governmental authorities in the United States, principally the FDA, and corresponding state and foreign regulatory agencies.

Our future performance depends on, among other matters, if, when, and at what cost we will receive regulatory approval for new products,

and if we can continue to comply with the many regulatory requirements that enable us to manufacture and sell medical related products

Regulatory review can be a lengthy, expensive, and uncertain process, making the timing and costs of clearances and approvals

difficult to predict.

Meeting all regulatory requirements, laws and mandates, and maintaining compliance with such in order to manufacture

and sell medical products can be difficult and expensive.

Our results of operations would be negatively affected by failures or delays

in the receipt of regulatory approvals or clearances, the loss of previously received approvals or clearances, the placement of limits

on the marketing and use of our products, and restrictions on our ability to manufacture our products.

failures or delays in the receipt of regulatory approvals or clearances, the loss of previously received approvals, or other changes

to the existing laws and regulations that adversely impact our ability to manufacture and market our products.

testing, manufacturing, and sale of our products are subject to regulation by numerous governmental authorities in the United States,

principally the FDA, and corresponding state and foreign regulatory agencies.

Our future performance depends on, among other matters,

if, when, and at what cost we will receive regulatory approval for new products, and if we can continue to comply with the many regulatory

requirements that enable us to manufacture and sell medical related products and tests.

Regulatory review can be a lengthy, expensive,

and uncertain process, making the timing and costs of clearances and approvals difficult to predict.

Meeting all regulatory requirements,

laws and mandates, and maintaining compliance with such in order to manufacture and sell medical products can be difficult and expensive.

Our results of operations would be negatively affected by failures or delays in the receipt of regulatory approvals or clearances, the

loss of previously received approvals or clearances, the placement of limits on the marketing and use of our products, and restrictions

on our ability to manufacture our products.

in government policy could adversely affect our business and potential profitability.

Changes in government policy could have a significant impact on our business

by increasing the cost of doing business, affecting our ability to sell our products and negatively impacting our profitability.

changes could include tariffs, embargos, trade wars, modifications to existing legislation, such as U.S.

tax policy, or entirely new legislation,

such as the Affordable Healthcare Act in the United States.

We cannot predict the many ways that healthcare reform in the United States

and internationally, and changing trade legislation and policies could adversely affect our business.

It is unclear whether and to what

extent, if at all, other anticipated developments, including changes due to new presidential administration priorities, or changes resulting

from healthcare reform, such as a change in the number of people with health insurance, may impact us.

in government policy could have a significant impact on our business by increasing the cost of doing business, affecting our ability

to sell our products and negatively impacting our profitability.

Such changes could include tariffs, embargos, trade wars, modifications

to existing legislation, such as U.S.

tax policy, or entirely new legislation, such as the Affordable Healthcare Act in the United States.

We cannot predict the many ways that healthcare reform in the United States and internationally, and changing trade legislation and policies

could adversely affect our business.

It is unclear whether and to what extent, if at all, other anticipated developments, including changes

due to new presidential administration priorities, or changes resulting from healthcare reform, such as a change in the number of people

with health insurance, may impact us.

are subject to numerous government regulations in addition to FDA regulations, and compliance with laws, including changed or new laws,

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one or more of our products is claimed to be defective or does not meet the performance criteria we claim in our marketing materials,

we could be subject to product recalls, claims of liability, harm to patients or users of our products, or harm to our reputation

that could adversely affect our business.

we could be subject to product recalls, claims of liability, harm to patients or users of our products, or harm to our reputation that

could adversely affect our business.

claim of a defect in the design or manufacture of our products could have a material adverse effect on our reputation in the industry

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face a number of business risks, including exposure to product liability claims, employment law claims, claims that the Company or its

officers, directors or employees have engaged in illegal or wrongful acts, claims of violation of environmental laws, and many other possible

Although we maintain insurance for a number of these risks, we may face claims for types of damages, or for amounts of damages,

that are not covered by our insurance.

For example, although we currently carry product liability insurance for liability losses, there

is a risk that product liability or other claims may exceed the amount of our insurance coverage or may be excluded from coverage under

the terms of our policy.

Also, our existing insurance may not be renewed at the same cost and level of coverage as currently in effect

or may not be renewed at all.

Further, we do not currently have insurance against many environmental risks we confront in our business.

If we are held liable for a claim against which we are not insured or for damages exceeding the limits of our insurance coverage, whether

arising out of product liability matters, cybersecurity matters, or from some other matter, that claim could have a material adverse

effect on our results of operations.

officers, directors or employees have engaged in illegal or wrongful acts, claims of violation of environmental laws, and many other

possible claims.

Although we maintain insurance for a number of these risks, we may face claims for types of damages, or for amounts

of damages, that are not covered by our insurance.

For example, although we currently carry product liability insurance for liability

losses, there is a risk that product liability or other claims may exceed the amount of our insurance coverage or may be excluded from

coverage under the terms of our policy.

Also, our existing insurance may not be renewed at the same cost and level of coverage as currently

in effect or may not be renewed at all.

Further, we do not currently have insurance against many environmental risks we confront in our

If we are held liable for a claim against which we are not insured or for damages exceeding the limits of our insurance coverage,

that claim could have a material adverse effect on our results of operations.

trials involve a lengthy and expensive process with an uncertain outcome, and results of studies and trials may not be predictive of

future trial results.

trials are expensive, time consuming, and difficult to design and implement.

Regulatory agencies may analyze or interpret the results

differently than we do.

Even if the results of our clinical trials are favorable, the clinical trials for a number of our product candidates

may take a significant amount of time to complete.

Regulatory authorities, including state and local authorities, may suspend, delay

or terminate our clinical trials at any time, require us to conduct additional clinical trials, require a particular clinical trial to

continue for a longer duration than originally planned, or require a change to our development plans such that we conduct clinical trials

for a product candidate in a different order.

There is no assurance that the results of the clinical trials will be positive.

clinical trial could affect our ability to obtain regulatory clearances and/or potential licensing partners.

There is also no assurance

that our clinical trials will not be delayed or will be completed.

Any of the foregoing could have a material adverse effect on our business,

results of operations and financial condition.

may rely on third parties to conduct or be part of our clinical trials.

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duties or meet expected deadlines, we may not be able to seek or obtain regulatory approval for or commercialize our product candidates.

We rely on third-party contract research organizations (“CROs”),

universities or/clinical sites (“Vendors”), to coordinate, monitor and conduct of our clinical trials and to manage, analyze,

and interpret data for our clinical programs.

We, our Vendors, and our clinical sites are required to comply with current Good Clinical

Practices (“GCPs”), regulations, and guidelines issued by the FDA and by similar governmental authorities in other countries

where we are conducting clinical trials.

We have an ongoing obligation to monitor the activities conducted by our Vendors and at our clinical

sites to confirm compliance with these requirements.

In the future, if we, our Vendors or our clinical sites fail to comply with applicable

GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA may require us to perform additional clinical

trials before approving our marketing applications.

If our Vendors do not successfully carry out their contractual duties or obligations

or meet expected deadlines, if they need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised

due to their failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may be extended,

delayed or terminated, and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.

As a result, our financial results and the commercial prospects for our product candidates would be harmed, our costs could increase,

and our ability to generate revenue could be delayed.

in our information technology and storage systems could significantly disrupt our business or force us to expend excessive costs.

We utilize complex information technology systems to support our business

and store information.

We cannot be sure that our systems will meet our future business needs or that necessary upgrades will operate

as designed, which could result in excessive costs or disruptions in portions of our business.

In particular, any disruptions, delays,

or deficiencies caused by our enterprise resource planning system could adversely affect our ability to process orders, ship products,

provide services and customer support, send invoices and track payments, fulfill contractual obligations, or otherwise operate our business.

In addition, despite the implementation of security measures, information technology systems are vulnerable to damage from a variety of

rely on third-party contract research organizations (“CROs”), universities or/clinical sites (“Vendors”), to

coordinate, monitor and conduct of our clinical trials and to manage, analyze, and interpret data for our clinical programs.

Vendors, and our clinical sites are required to comply with current Good Clinical Practices (“GCPs”), regulations, and guidelines

issued by the FDA and by similar governmental authorities in other countries where we are conducting clinical trials.

We have an ongoing

obligation to monitor the activities conducted by our Vendors and at our clinical sites to confirm compliance with these requirements.

In the future, if we, our Vendors or our clinical sites fail to comply with applicable GCPs, the clinical data generated in our clinical

trials may be deemed unreliable and the FDA may require us to perform additional clinical trials before approving our marketing applications.

If our Vendors do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced,

or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols,

regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain

regulatory approval for or successfully commercialize our product candidates.

As a result, our financial results and the commercial prospects

for our product candidates would be harmed, our costs could increase, and our ability to generate revenue could be delayed.

in our information technology and storage systems or data security breaches could significantly disrupt our business or force us to expend

excessive costs.

in our information technology and storage systems, many of which are outsourced to third parties, could significantly disrupt our business

and incur excessive costs.

rely on complex information technology systems, many of which are outsourced to third-party providers, to support our business operations

and store critical information.

Our dependence on these third parties means that we are reliant on their performance, security measures,

and ability to meet our business needs.

Any failures or disruptions in the services provided by these third-party vendors could result

in excessive costs or significant disruptions to our business operations.

Specifically,

any disruptions, delays, or deficiencies caused by our enterprise resource planning system or other outsourced systems could negatively

impact our ability to process orders, ship products, provide services and customer support, send invoices, track payments, fulfill contractual

obligations, and maintain overall business operations.

our and our vendors’ implementation of security measures, information technology systems remain vulnerable to damage from various

sources, including computer viruses, unauthorized access, telecommunications or network failures, malicious human acts, terrorism, and

natural disasters.

Moreover, despite network security and back-up measures, some of our servers are potentially vulnerable to physical

or electronic break-ins, computer viruses and similar disruptive problems.

Cyber security is a great and growing risk to operating companies.

Cyber-attacks may result in loss of vital Company documentation and data, or confidential third-party documents held by the Company, that

are necessary for the Company to operate.

Despite the precautionary measures we have taken to prevent unanticipated problems that could

affect our systems, sustained or repeated system failures that interrupt our ability to generate and maintain data, could result in a

material disruption in our operations and material adverse financial costs to the Company.

Furthermore, to the extent that any disruption

or security breach resulted in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary

information, we could face a variety of negative consequences, including regulatory actions or litigation, fines or penalties, adverse

publicity, increased cybersecurity protection costs, and lost revenue.

is a risk that our measures to protect our systems from cyber-attack are not sufficient to avoid attacks by new sources and methods.

Moreover, despite network security and backup measures, some of our servers and those of our vendors may still be

susceptible to physical or electronic break-ins, computer viruses, and similar disruptive issues.

Cybersecurity risks are escalating

and pose significant threats to our operations.

Cyber-attacks could result in the loss of vital company documentation and data, or confidential

third-party documents held by the company, essential for our operations.

precautionary measures to prevent unforeseen problems, sustained or repeated system failures that interrupt our ability to generate and

maintain data could materially disrupt our operations and lead to significant financial costs.

Furthermore, any disruption or security

breach resulting in data loss or damage, or inappropriate disclosure of confidential or proprietary information, could result in regulatory

actions, litigation, fines or penalties, adverse publicity, increased cybersecurity protection costs, and lost revenue.

is also a risk that our measures and those of our third-party vendors to protect our systems from cyber-attacks may not be sufficient

to prevent attacks by new sources and methods.

business could be negatively affected by the loss of or the inability to hire key personnel.

future success depends in part on our ability to retain our key technical, sales, marketing, and executive personnel and our ability to

identify and hire additional qualified personnel.

Competition for these personnel is intense, both in the industry in which we operate

and where our operations are located.

Further, we expect to grow our operations, and our needs for additional management and other key

personnel are expected to increase.

If we are not able to retain existing key personnel, or timely identify and hire replacement or additional

qualified personnel to meet expected growth, our business could be adversely impacted.

In addition, the loss of any of our key personnel,

particularly key research and development personnel, could harm our business and prospects and could impede the achievement of our research

and development, operation or strategic objectives.

face risks relating to our international sales, including inherent economic, political, and regulatory risks, which could impact our

financial performance, cause interruptions in our current business operations and impede our growth strategy.

products are primarily sold internationally, with the majority of our international sales to our distributors in Asia and Europe.

currently sell and market our products through distributor organizations and sales agents which creates foreign risks include, among

with multiple different registration requirements and new and changing registration requirements, our inability to benefit from registration

for our products inasmuch as registrations may be controlled by a distributor, and the difficulty in transitioning our product registrations;

with complex foreign and U.S.

laws and regulations that apply to our international operations, including U.S.

laws such as import/export

limitations, the Foreign Corrupt Practices Act, and local laws;

or other barriers as we continue to expand into new countries and geographic regions, especially related to China as tariffs are

changing constantly;

to currency exchange fluctuations against the U.S.

payment cycles, generally lower average selling prices and greater difficulty in accounts receivable collection;

of ability to enforce receivables collections contracts in foreign legal courts;

or lack of protection for, and enforcement of, intellectual property rights;

and economic instability in some of the regions where we currently sell our products or that we may expand into in the future;

and potentially adverse tax consequences;

to the United States of our products sold into international markets at lower prices.

most of our international sales are negotiated for and paid in U.S.

Nonetheless, these sales are subject to currency risks,

since changes in the values of foreign currencies relative to the value of the U.S.

dollar can render our products comparatively more

These exchange rate fluctuations could negatively impact international sales of our products, as could changes in the general

economic conditions in those markets.

In order to maintain a competitive price for our products internationally, we may have to continue

to provide discounts or otherwise effectively reduce our prices, resulting in a lower margin on products sold internationally.

change in the values of the Euro, the Mexican peso and other foreign currencies could have a negative impact on our business, financial

condition, and results of operations.

addition, we have certain supply agreements with foreign vendors whereby we share the foreign currency exchange fluctuation risk.

may, in the future, enter into similar arrangements.

material portion of our revenues come specifically from sales to our distribution partner located in China, who sells into the Chinese

Future political tensions between the U.S.

and China governments could cause a disruption or reduction in our sales into that

future success is heavily dependent on our ability to retain key technical, sales, marketing, and executive personnel, as well as our

capacity to identify and recruit additional qualified individuals.

The competition for talent is intense, both within our industry and

in the regions where we operate.

As we anticipate growth in our operations, our need for additional management and other key personnel

is expected to increase.

Failure to retain our existing key personnel or to promptly identify and hire qualified replacements or additional

staff to support our growth could have a detrimental impact on our business.

Additionally, the loss of any key personnel, particularly

in research and development, could significantly harm our business, hinder our prospects, and obstruct the achievement of our research,

operational, or strategic objectives.

response to the need to reduce ongoing operating costs, we have recently implemented a substantial reduction in our workforce.

This reduction

places an increased workload on the remaining employees and may create concerns about job security.

These factors could lead to the loss

of key employees, who are critical to our future success, and may make it difficult to attract and retain new talent in these roles.

of our common stock in the public market could lower the market price for our common stock and adversely impact the trading price of

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offering in place.

However, the Company may in the future commence a new ATM offering or otherwise sell securities under a registration

statement or in private placements, which sales would be dilutive to existing shareholders.

issuance of additional shares of our common stock, or issuances of additional securities, could dilute the ownership interest of our

common stockholders and could depress the market price of shares of our common stock and impair our ability to raise capital through

the sale of additional equity securities.

We cannot predict the size of future issuances or the effect, if any, that they may have on

the market price for our common stock.

September 28, 2023, we filed a “shelf” registration statement on Form S-3 with the SEC, allowing the Company to issue up

to $20,000,000 in common shares.

Under this registration statement, shares of our common stock may be sold from time to time for up to

three years from the filing date.

On May 10, 2024, we filed a prospectus supplement with the SEC, as part of the registration statement

filed on September 28, 2023, which was declared effective on September 29, 2023.

This supplement was intended to facilitate the sale

of up to $5,500,000 in common stock through ATM offerings, as defined in Rule 415 under the Securities Act.

issuance of additional shares of our common stock, or other securities, could dilute our existing stockholders’ ownership interests,

potentially depress the market price of our common stock, and impair our ability to raise capital through future equity sales.

and impact of future issuances on the market price of our common stock cannot be predicted.

also have a number of stockholders who own large blocks of our common stock.

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price of our stock may fluctuate unpredictably in response to factors unrelated to our operating performance.

stock market periodically experiences significant price and volume fluctuations that are unrelated to the operating performance of particular

stock market can experience significant price and volume fluctuations that are unrelated to the operating performance of individual companies.

These broad market fluctuations may cause the market price of our common stock to drop.

In particular, the market price of

our common stock has been very volatile and unpredictable and may vary substantially in the future in response to:

In particular, our common stock has historically

been volatile and may continue to be unpredictable in the future.

Factors that could cause fluctuations in our stock price include, but

are not limited to:

● Announcements

by us or our competitors concerning technological innovations;

introductions

of new products by us or by our competitors;

SEC, Financial Industry Regulation Authority, and foreign regulatory actions against the Company;

or disputes relating to patents or proprietary rights;

by us or our competitors concerning technological innovations or new product introductions.

actions or changes, including those by the FDA, SEC, or international regulatory bodies.

● Developments

or disputes related to patents or proprietary rights.

to meet the expectations of stock market analysts and investors.

Company reporting material weakness in our internal control;

in stock market analyst recommendations regarding our common stock;

material weaknesses in our internal controls.

in stock market analyst recommendations or financial estimates regarding our common stock.

in healthcare policy in the United States or other countries.

or liability claims from shareholders or other parties.

disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent

protection for our product candidates, and the results of any proceedings or lawsuits, including patent or shareholder litigation;

recalls of our products or false positive/false negative results;

of our common stock or other securities by us or our stockholders in the future;

volume of our common stock;

or anticipated variations in quarterly operating results;

of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities

of natural or man-made catastrophic events, including widespread public health epidemics like the pandemic related to COVID-19;

disputes related to intellectual property or other significant litigation.

recalls of our products or reports of false positive/negative results.

of our common stock or other securities by us or our stockholders.

in trading volume of our common stock.

in quarterly operating results, whether actual or anticipated.

● Publication

of research reports about us or our industry, or changes in securities analysts’ recommendations.

of natural or man-made catastrophic events, including widespread health epidemics.

stock market conditions and other factors unrelated to our operating performance.

and disruptions in the capital and credit markets due to rising inflation and interest rates

or expansion of wars or other related actions and events that impact the markets in which we operate;

or societal unrest in the markets in which we operate.

of our common stock is not significant, therefore sales of a larger volume of the stock could adversely affect the stock price.

of August 26, 2016, our Company’s stock has been traded on the Nasdaq Capital Market.

Trading of our stock is limited and liquidation

of the Company’s stock may be difficult as there is a limited market for our stock.

and disruptions in capital and credit markets due to economic conditions such as rising inflation

and interest rates.

● Geopolitical

events, such as wars or political unrest, that impact the markets in which we operate.

in the macroeconomic environment that affect market conditions.

Additionally,

due to the limited trading volume of our common stock, substantial sales of our stock could adversely impact its market price.

our common stock has been traded on the Nasdaq Capital Market since August 26, 2016, liquidity may be limited, and it could be challenging

to liquidate large positions without adversely affecting the stock price.

Company is not currently in compliance with the continued listing requirements for The Nasdaq Stock Market.

If the Company does not regain

compliance and continue to meet the continued listing requirements, our Common Stock may be delisted, which could affect the market price

and liquidity for the Company’s Common Stock and reduce the Company’s ability to raise additional capital.

Company received a letter from the Listing Qualifications Staff of the Nasdaq Stock Market, LLC (“Nasdaq”) on or about May

7, 2024, that the Company is not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for 30 consecutive

trading days for continued listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

Since the receipt of this notice from Nasdaq, the Company’s stock has not closed with a bid traded above $1.00 per common share.

Notice indicated the Company has 180 calendar days, or until November 4, 2024 (the “Compliance Period”), to regain compliance

with the Rule.

If at any time during the Compliance Period the closing bid price of the Company’s common stock is at least $1.00

for a minimum of ten consecutive business days, then the Company will regain compliance.

If the Company fails to regain compliance during

the Compliance Period, Nasdaq may grant the Company additional time to regain compliance (the “Additional Compliance Period”).

To qualify for the Additional Compliance Period, the Company will be required to meet the continued listing requirement for market value

of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement,

and will need to provide written notice of its intention to cure the deficiency during the Additional Compliance Period.

If the Company

does not meet these requirements or it appears to Nasdaq that the Company will not be able to cure the deficiency during the Additional

Compliance Period, then Nasdaq will provide notice to the Company that its common stock will be subject to delisting.

a company receives such delisting notice, the company can request a hearing before a Nasdaq hearings panel (the “Panel”).

If the Common Stock closes at or below $0.10 for ten consecutive days during the Compliance Period or any additional compliance period,

the Company could receive a Staff Delisting Determination during the Compliance Period or any additional compliance period or, if the

Company receives such Staff Delisting Determination, Nasdaq may not grant the Company’s request for a hearing, or if Nasdaq grants

the Company’s request for a hearing, the Panel may not grant the Company’s request for continued listing of the Common Stock

on The Nasdaq Capital Market pending the Company’s compliance with all applicable listing criteria, including the Minimum Bid Price

Requirement, or the Company may be unable to timely satisfy the terms of any extension that may be granted by the Panel.

Company will continue to monitor the closing bid price of its Class A Common Stock and seek to regain compliance with all applicable

Nasdaq requirements within the allotted compliance periods and may, if appropriate, consider available options, including implementation

of a reverse stock split, to regain compliance with the Minimum Bid Price Requirement or the Low Priced Stocks Rule, as applicable.

Company may fail to regain compliance with the Minimum Bid Price requirement during the Compliance Period or maintain compliance with

the other Nasdaq listing requirements.

Any non-compliance may be costly, divert management’s time and attention, and could have

a material adverse effect on the Company’s business, reputation, financing, and results of operation A delisting could substantially

decrease trading in the Common Stock, adversely affect the market liquidity of the Common Stock as a result of the loss of market efficiencies

associated with Nasdaq and the loss of federal pre-emption of state securities laws, materially adversely affect its ability to obtain

financing on acceptable terms, if at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees

and fewer business development opportunities.

Additionally, the market price of the Common Stock may decline further and stockholders

may lose some or all of their investment.

ability to use our net operating loss carry forwards in the future may be subject to limitation.

we have Federal income tax net operating loss carryforwards of approximately $21,778,000 and California state income tax net operating

loss carryforwards of approximately $17,090,000, use of these loss carryforwards will depend on future income in relationship to expirations

dates of these carryforwards.

UNRESOLVED STAFF COMMENTS

we have Federal income tax net operating loss carryforwards of approximately $24,384,000 and California state income tax net

operating loss carryforwards of approximately $22,014,000, as of May 31, 2024, use of these loss carryforwards will depend on future

income in relationship to expirations dates of these carryforwards.

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-K

Item 1A. Risk Factors