What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-08-28 compared with 2023-08-25 · 263 added, 203 removed, 93 unchanged (83% of the section changed)

6 unchanged sentences

those discussed in “Risk Factors” included in Part I, Item 1A of this Report.

and its subsidiaries (which includes wholly-owned subsidiaries, Biomerica de Mexico and BioEurope GmbH), is a biomedical technology

company that develops, patents, manufactures and markets advanced diagnostic and therapeutic products used at the point-of-care (physicians’

offices and over-the-counter through drugstores and online) and in hospital/clinical laboratories for detection and/or treatment of medical

conditions and diseases.

Our diagnostic test kits are used to analyze blood, urine, nasal, or fecal material from patients in the diagnosis

of various diseases, food intolerances and other medical complications, or to measure the level of specific hormones, antibodies, antigens,

or other substances, which may exist in the human body in extremely small concentrations.

The Company’s products are designed to

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

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

therapy (“DGT”) products to treat gastrointestinal diseases, such as irritable bowel syndrome (“IBS”), and other

inflammatory diseases.

These products are directed at chronic inflammatory illnesses that are widespread and common, and as such address

very large markets.

Our InFoods® IBS product uses a simple blood sample and is designed to identify patient-specific foods that,

when removed from the diet, may alleviate IBS symptoms such as pain, bloating, diarrhea, 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

specific foods.

A food identified as positive, and causing an abnormal immune response in the patient is simply removed from the diet

to help alleviate IBS symptoms.

fiscal 2022, we completed an endpoint determination clinical trial on our InFoods® IBS product.

This trial was conducted at Mayo

Clinics in Florida and Arizona, Beth Israel Deaconess Medical Center Inc., a Harvard Medical School Teaching Hospital, University of

Texas Health Science Center at Houston, Houston Methodist, the University of Michigan, and other institutions.

This trial monitored

IBS patients over an 8-week treatment period to determine the efficacy of our InFoods® IBS product to improve the

patients’ IBS symptoms or endpoints.

The top-line trial results were reported in February 2022.

Multiple endpoints

demonstrated statistically significant improvements, indicating that the elimination of specific foods may meaningfully reduce the

symptoms of IBS in each patient subtype (including patients with IBS-Constipation, IBS-Diarrhea & IBS-Mixed).

clinical improvements, including but not limited to abdominal pain and bloating, were seen in patients diagnosed with IBS-Mixed and

IBS-Constipation, in the top line data.

The purpose of the endpoint study was to validate the efficacy of the product, and to

determine the primary symptom endpoint, or endpoints to be used in a final pivotal trial that will be conducted to attain the

validation data needed to apply for U.S.

Food and Drug Administration (“FDA”) clearance for the product.

continuing to review and refine the complete dataset and have selected the final endpoint that we would intend to use in a final

pivotal trial.

We are starting to develop the protocol for submission to the FDA, and once approved the trial will be run thereafter.

The trial is expected to include

the large medical institution participants that conducted the endpoint clinical trial, in addition to other new institutions and a

Clinical Research Organization.

the successful completion and positive statistical results from the Company’s InFoods® IBS clinical trial (run at several prominent

centers including Mayo Clinic, Beth Israel Deaconess Medical Center Inc.

– a Harvard Medical School Teaching Hospital, Houston Methodist

Hospital, and the University of Michigan) which was completed in early calendar 2022, Biomerica received interest from Gastroenterology

(“GI”) physicians who would like to order the InFoods® IBS test for their patients.

As such, we are currently working with

key GI physician groups who are interested in offering this product to their patients.

fiscal 2023, we worked to set up the InFoods® IBS test to be performed in a CLIA

certified, and College of American Pathologists (“CAP”) accredited high-complexity laboratory facility and offered as a laboratory

developed test (“LDT”).

During the quarter ended February 28, 2023, the CLIA lab completed all validation testing necessary

for the InFoods® IBS product to be offered as an LDT and, as of quarter end, is now accepting patient samples.

We also worked to

optimize the process for GI physicians to order the InFoods® IBS test, send patient blood samples to the CLIA lab, and receive the test

results for their patients.

We believe ease of order and workflow for physicians, with easy to understand and actionable results for

patients, is critical to our success.

During the fiscal third quarter, we also set up customer service and payment systems, along with

a dedicated website for patients to receive answers to questions they may have about the test and attain information about how to eliminate

a specific food from their diet.

This is especially important for foods that are ingredients in common processed foods like milk, eggs,

As of the end of the fiscal third quarter, the product is now available to physicians and their patients.

are also beginning the work of selecting and validating one new disease (such as ulcerative colitis or migraines), where there

is evidence that certain foods can trigger or contribute to the symptoms found in these indications.

We expect any new disease we target

will follow a similar development pathway as InFoods® IBS in simultaneously seeking FDA clearance of the product while also launching

the product as an LDT.

will also continue to evaluate partnership/licensing opportunities, as they arise, with U.S and multinational companies that could help

us commercialize, or accelerate revenue growth of, the InFoods® products in the United States and overseas.

Our existing medical diagnostic products are sold worldwide primarily in

1) clinical laboratories and 2) point-of-care (physicians’ offices and OTC at Walmart, CVS Pharmacy, Amazon, etc.).

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.

Due to the global COVID-19 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.

In fiscal 2022, we generated revenues

from the international sale of our COVID-19 antigen tests.

However, in fiscal 2023, due to the decline in severity of COVID-19 and the

corresponding lower sales volumes we no longer sell these products.

fiscal 2022, we finalized development of our H.

Pylori diagnostic test that indicates if a patient is infected with the H.

Pylori bacteria.

Pylori infection is extremely common, and if left untreated, can lead to ulcers and possibly stomach cancers.

During our fourth quarter

of fiscal 2022, we applied for FDA clearance of this product though a 510(k) premarket submission.

We have been in communication with

the FDA answering certain follow-up questions and providing additional data as requested.

We are working with the FDA to perform one

additional set of in-lab tests that the FDA has requested prior to making their final determination on clearance of the product.

Once cleared, we will begin marketing the product in the U.S.

We have already begun discussions with international distributors for

this product and expect to see revenues through these international channels during 2024.

majority of our research and development efforts are focused on development and commercialization of non-COVID related products such

Pylori product, and our InFoods® IBS product.

existing products that contributed to our fiscal 2023 revenues are primarily focused on gastrointestinal diseases, food intolerances,

and certain esoteric tests.

These diagnostic test products utilize immunoassay technology.

Most of our products are CE marked and/or

sold for diagnostic use where they are registered by each country’s regulatory agency.

In addition, some products are cleared for

sale in the United States by the FDA.

and its subsidiaries (which includes wholly-owned subsidiaries, Biomerica de Mexico and BioEurope GmbH), is a global biomedical

technology company that develops, patents, manufactures and markets advanced diagnostic and therapeutic products.

Our diagnostic test

kits are used to analyze blood, urine, nasal or fecal material from patients in the diagnosis of various diseases, food intolerances

and other medical complications, or to measure the level of specific hormones, antibodies, antigens or other substances, which may exist

in the human body in extremely small concentrations.

The Company’s products are designed to enhance the health and well-being of

people, while reducing total healthcare costs.

extensive range of medical diagnostic products is sold worldwide, primarily in two markets:

clinical laboratories and point-of-care settings,

including physicians’ offices and over-the-counter sales at major retailers such as Walmart, CVS Pharmacy, and Amazon.

Our diagnostic

test kits analyze blood, urine, nasal, or fecal specimens from patients to diagnose various diseases, food intolerances, and other medical

They measure or detect the presence and levels of specific bacteria, hormones, antibodies, antigens, and other substances

in the body, often in extremely small concentrations.

Most of our products are Conformite Europeenne (“ CE”) marked and/or registered with regulatory agencies in

various countries for diagnostic use, with several also cleared for sale in the United States by the FDA.

to the global SARS-CoV-2 novel coronavirus (“COVID-19”) pandemic, we began developing, marketing, and selling COVID-19 diagnostic tests

in March 2020.

We started selling these tests in fiscal 2021, generating significant revenues during fiscal 2021 and 2022.

experienced a substantial drop in sales in fiscal 2023, followed by no sales of our COVID-19-related products in fiscal 2024 due to falling

Consequently, our COVID-19 product sales have caused significant fluctuations in our revenues over the past four years.

contrast, our non-COVID-19 products, which accounted for approximately 100% and 96% of our revenues during the fiscal years ended May

31, 2024, and 2023, respectively, and have been our core focus.

Technological

advances in medical diagnostics have enabled diagnostic tests to be performed not only in clinical laboratories but also at home and

at the point-of-care in physicians’ offices.

One of our key objectives has been to develop and market rapid diagnostic tests that

are accurate, utilize easily obtained patient specimens, and are simple to perform without the need for complex instrumentation.

over-the-counter (home use) and professional use (physicians’ office, clinics, etc.) rapid diagnostic test products help manage existing

medical conditions and may save lives through early detection and diagnosis of specific diseases.

Traditionally, such tests required

the expertise of medical technologists and sophisticated equipment, with results often not available for days.

We believe that rapid

point-of-care tests, when properly developed and used, can be as accurate as laboratory tests.

They require limited to no instrumentation,

deliver reliable results in minutes, and can be performed with confidence in the home or physician’s office.

invest considerable resources in the research and development of new products designed to diagnose and, in some cases, treat several

major medical diseases.

These products are both internally developed and obtained licensed from others.

Our experienced and highly trained

technical personnel, including Ph.D.

holders and other scientists, are dedicated to developing new products and managing technology transfer

Our technical staff, many of whom have extensive experience from previous employment at large diagnostic manufacturing companies,

bring a wealth of industry knowledge.

Additionally, we rely on our Scientific Advisory Board, comprised of leading medical doctors and

clinicians, to guide our clinical studies and product development efforts.

key outcome of our recent research and development efforts is our patented diagnostic-guided therapy (“DGT”) product, developed on the

inFoods ® technology platform.

This innovative product is designed to treat gastrointestinal conditions such as irritable

bowel syndrome (“IBS”) and other inflammatory diseases, targeting chronic inflammatory illnesses that are widespread and prevalent

in large markets.

We have launched the inFoods ® IBS product, which leverages this patented technology.

inFoods® IBS product utilizes a simple blood test to identify patient-specific foods that, when eliminated from the diet, may alleviate

IBS symptoms such as pain, bloating, diarrhea, cramping, and constipation.

Unlike broad and difficult-to-manage dietary restrictions,

the inFoods® IBS product pinpoints a patient’s heightened immunoreactivity to specific foods known to frequently trigger IBS

By removing the foods identified as problematic, patients can achieve relief from their IBS symptoms.

have launched our inFoods® product across numerous gastroenterology (“GI”) physician groups in various states and regions, including

collaboration with one of the largest GI groups in the U.S.

Feedback from GI specialty physicians have generally been positive, and we

are actively expanding our network by onboarding additional physician practices.

These GI practices are beginning to prescribe inFoods®

IBS to their patients.

Our dedicated sales team is deepening relationships within the GI segment and strategically targeting opportunities

to introduce inFoods® to other medical specialties.

By leveraging their expertise and building strong partnerships, our sales team

is now working to engage with key physician groups outside the GI field such as integrated health practices and primary-care general

practitioners.

These efforts aim to broaden our market reach and enhance the overall adoption of inFoods® across various healthcare

sectors and to capitalize on the distinct advantages of inFoods® for a strong foundation of meaningful growth in the future.

also continuing to evaluate distribution, partnership and licensing opportunities with U.S.

and multinational companies, which have the

potential to significantly aid in the commercialization and accelerated growth of inFoods® products both domestically and internationally.

our inFoods ® product line, our additional efforts have led to a significant milestone by receiving FDA clearance in December

2023 for hp+detect ™ , a new diagnostic test for detecting Helicobacter pylori (“H.

pylori”) bacteria in the gastrointestinal

pylori is a widespread infection, affecting an estimated 35% of the U.S.

population and 45% of the population in Europe’s

five largest countries.

This bacterium is recognized as the strongest known risk factor for gastric cancer, which is the third most common

cause of cancer-related deaths globally.

hp+detect ™ test provides physicians and medical centers with a reliable tool for diagnosing H.

pylori infections and

monitoring the effectiveness and safety of treatments.

The diagnostic test is marketed directly to laboratories, where patient samples

are analyzed, and diagnoses are made.

To support the launch and distribution of hp+detect ™ , we are actively promoting

the test to large end-customer labs.

This strategic initiative aims to enhance patient care by enabling timely and accurate detection

pylori infections.

to slower-than-expected launch of the Company’s key products, inFoods ® IBS and hp+detect ™ , the

Company has initiated significant cost-cutting measures to extend its cash runway and work towards increasing revenues to cover overhead

These measures include a workforce reduction of nearly 15%.

In addition, the Company is actively exploring strategic opportunities

to enhance and create shareholder value.

OF OPERATIONS

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following is a breakdown of revenues according to markets to which the products are sold:

For the Year Ended May 31,

Year Ended May 31,

Increase (Decrease)

2 unchanged sentences

Physician’s office

$ (14,009,000 )

$ (13,532,000 )

net sales were approximately $5,339,000 for fiscal 2023 compared to $18,871,000 for fiscal 2022, a decrease of $13,532,000, or 72%.

decrease in annual sales is primarily attributable to the decrease of $13,950,000 in sales of COVID-19 tests.

cost of sales were approximately $4,893,000 for fiscal 2023 compared to $15,894,000 for fiscal 2022, a decrease of $11,001,000, or 69%.

This decrease was driven by the significant decrease in the demand for our COVID-19 tests.

The percentage of cost of sales compared to

revenue in fiscal 2023 was 92%, versus 84% in fiscal 2022.

fiscal 2024, our net sales were approximately $5,415,000, representing an increase of $76,000, or 1%, compared to $5,339,000 for

When comparing fiscal 2024 net sales excluding COVID-19 test sales from fiscal 2023, there is an increase of $290,000,

This growth was primarily attributable to the $257,000 increase in OTC Product sales that were within the UAE market,

reflecting stronger demand and expanded distribution channels in the region.

Additionally, a $131,000 increase in revenues from

Contract Manufacturing projects contributed positively to our overall sales performance.

These increases were partially offset by a

$214,000 decline in sales of COVID-19 tests as the global pandemic situation stabilized.

cost of sales for fiscal 2024 was approximately $4,804,000, or 89% of net sales, compared to $4,893,000, or 92% of net sales, for fiscal

2023, reflecting a slight decrease of $89,000, or 2%.

The decrease was primarily driven by a $171,000 reduction due to the absence

of COVID-related sales.

However, this decline was partially offset by a $32,000 increase in OTC product costs and a $56,000 rise in contract

manufacturing costs, reflecting higher sales in both categories during fiscal year 2024.

following is a summary of operating expenses:

Ended May 31,

a % of Total Revenues

Selling, General

and Administrative Expenses

Year Ended May 31,

Increase (Decrease)

Operating Expense

Total Revenues

Operating Expense

Total Revenues

Selling, General and Administrative Expenses

Research and Development

General and Administrative Expenses

selling, general and administrative expenses were approximately $6,085,000 for fiscal 2023 compared to $5,699,000 for fiscal 2022, an

increase of $386,000, or 7%.

The increase was primarily due to $350,000 in legal expenses and a $290,000 non-recurring write-off of bad

debt expense related to COVID-19 sales.

This was partially offset by a decrease of $75,000 in share-based compensation expense.

selling, general, and administrative expenses were approximately $5,487,000 for fiscal 2024, compared to $6,085,000 for fiscal 2023,

a decrease of $598,000, or 10%.

The reduction in fiscal 2024 was primarily due to decreases of $822,000 in legal expenses, $399,000 in bad debt expenses, and $247,000 in share-based compensation.

These significant operating expense reductions were partially offset by

strategic investments in key areas of our business, including a $535,000 expansion of our sales team, a $136,000 increase in sales commission expenses, and a $171,000 increase

in outside services for sales and administration.

Despite these increases, the overall cost reductions from the previous year underscore our commitment to

strategically allocating capital and maintaining financial discipline while pursuing growth opportunities.

and Development

research and development expenses were approximately $1,584,000 for fiscal 2023 compared to $1,812,000 for fiscal 2022, a decrease of

$228,000, or 13%, primarily as a result of decreases in costs related to the research, development and validation of COVID-19.

See “Research

and Development” for a more extensive description of the research being conducted.

and Dividend Income

and dividend income for fiscal 2023 and 2022 was approximately $133,000 and $27,000, respectively.

The $106,000 increase was due to higher

market interest rates on our higher cash balance due to the current fiscal year financings.

AND CAPITAL RESOURCES

research and development expenses were approximately $1,491,000 for fiscal 2024 compared to $1,584,000 for fiscal 2023, a decrease

of $93,000, or 6%.

The decrease in fiscal 2024 was primarily driven by a reduction in share-based compensation expenses, which

decreased by $45,000, and cost optimizations in our inFoods ® R&D projects, resulting in savings of $47,000.

detailed discussion of our ongoing research initiatives and their potential market impacts, please refer to the ‘Research and

Development’ section in Item 1.

and Interest income

and interest income for fiscal 2024 and 2023 was approximately $431,000 and $133,000, respectively.

The $298,000 increase was primarily

driven by higher market interest rates on our cash and cash equivalents.

CAPITAL RESOURCES AND GOING CONCERN

following are the principal sources of liquidity:

and cash equivalents

capital including cash and cash equivalents

Year Ended May 31,

Cash and cash equivalents

Working capital including cash and cash equivalents

of May 31, 2024 and 2023, the Company had cash and cash equivalents of approximately $4,170,000 and $9,719,000, respectively.

31, 2024 and 2023, the Company had working capital of approximately $5,527,000 and $10,852,000, respectively.

Based on management’s analysis of the Company’s cash flow requirements through August 2024 and beyond,

we believe that the aggregate

of our existing cash and cash equivalents is sufficient to meet our operating cash requirements and strategic objectives for growth for

at least the next year.

To satisfy our capital requirements, including ongoing future operations, beyond next year, we may seek to raise

additional financing through debt and equity financings.

fiscal 2023, cash used in operating activities was approximately $5,474,000, as compared to $479,000 for fiscal 2022.

factors that contributed to this were a loss of approximately $7,140,000, an increase in accounts receivable of $291,000, a decrease

in inventory reserves of $174,000, and a decrease in accounts payable and accrued expenses of $79,000.

These were partially offset

by an increase in the allowance on accounts receivable of $342,000, a decrease in inventories of $534,000, and non-cash expenses of

approximately $1,237,000.

fiscal 2022, the Company had a net loss of approximately $4,531,000, a decrease in inventory reserves of $772,000, and a decrease in

the allowance on accounts receivable of $684,000.

These were partially offset by a decrease in accounts receivable of $1,365,000, a decrease

in inventories of $1,562,000, an increase in accounts payable and accrued expenses of $389,000, and non-cash expenses of approximately

Company’s ability to continue as a going concern over the next twelve months is influenced by several factors, including:

need and ability to generate additional revenue from international opportunities and our

new product launches;

need to access the capital and debt markets to meet current obligations and fund operations;

capacity to manage operating expenses and maintain gross margins as we grow;

ability to retain key employees and maintain critical operations with a substantially reduced

has analyzed the Company’s cash flow requirements through August 2025 and beyond.

Based on this analysis, we believe our current

cash and cash equivalents are insufficient to meet our operating cash requirements and strategic growth objectives for the next twelve

address our capital needs and sustain operations beyond the next year, we are actively pursuing strategies to increase sales, reduce

expenses, sell non-core assets, seek additional financing through debt or equity, and seek other strategic alternatives.

As part of our efforts to reduce costs, we have initiated

significant cost-cutting measures to extend our cash runway and work towards increasing revenues to cover overhead costs.

These measures

include a workforce reduction of nearly 15% and a substantial reduction in other operating expenses.

As part of our financing plan, on 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

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

On May 10, 2024, the Company 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.

As part of this transaction, the Company incurred

$81,000 in deferred offering costs.

The amount of capital that we can raise under the ATM offering is highly dependent upon the trading volume and the

trading price of our stock.

The average trading volume of our stock over the last three full calendar months is approximately 229,000

shares per day and the high and low trading price of our stock during the same period of time was $1.25 and $0.50, respectively.

stock continues to trade at low volumes and price, the amount of capital that we can raise under the ATM offering will be constrained.

The Company intends to use the net proceeds from

this offering for general corporate purposes, including, but not limited to, sales and marketing activities, clinical studies and product

development, acquisitions of assets, businesses, companies, or securities, capital expenditures, and working capital needs.

committed to these plans, there is no assurance that these efforts will be successful or sufficient to meet our capital requirements.

factors raise substantial doubt about the Company’s ability to continue as a going concern.

Our future viability depends on the

successful execution of our strategic plans, securing additional financing, and achieving profitable operations.

addition, our business is subject to additional risks and uncertainties, including, but not limited to, those described in Item 1A.

fiscal 2024, cash used in operating activities was approximately $5,361,000, compared to $5,474,000 for fiscal 2023.

factors contributing to this were a loss of approximately $5,978,000, a decrease in inventory reserves of $205,000, an increase in

accounts receivable of $215,000, an increase in inventories of $115,000 and a decrease in lease liability of $297,000.

These were partially offset by an increase in accounts

payable and accrued expenses of $246,000, and non-cash expenses of approximately $1,211,000.

fiscal 2023, cash used in operating activities was approximately $5,474,000.

The primary factors that contributed to this were a

loss of approximately $7,140,000, an increase in accounts receivable of $291,000, a decrease in inventory reserves of $174,000, and

a decrease in accounts payable and accrued expenses of $80,000 and a decrease in lease liability of $297,000.

These were partially offset by an increase in the allowance on

accounts receivable of $342,000, a decrease in inventories of $534,000, and non-cash expenses of approximately

fiscal 2024, cash used in investing activities was approximately $115,000, as compared to $78,000 for fiscal 2023.

2 unchanged sentences

During fiscal

2022, the Company purchased approximately $57,000 of property and equipment and $113,000 in expenditures related to patents.

provided by financing activities for fiscal 2023 was approximately $9,390,000 as compared to $2,394,000 for fiscal 2022.

2023, the Company purchased approximately $64,000 of property and equipment and had $14,000 in expenditures related to patents.

used in financing activities for fiscal 2024 was approximately $81,000, compared to cash provided by financing activities of

$9,390,000 in fiscal 2023.

and 2022, the Company had proceeds from the exercise of stock options of approximately $81,000 and $77,000, respectively.

fiscal 2023 and 2022, the Company received approximately $9,309,000 and $2,317,000, respectively, in net proceeds from the sale of common

The common stock sold and issued in fiscal 2022 and 2023 was issued under the Company’s shelf registration statement filed

with the SEC on July 21, 2020 (the “2020 Shelf Registration Statement”) and declared effective by the SEC on September 30,

2020, and under the prospectus supplement filed with the SEC on January 22, 2021 (“2021 Prospectus Supplement”), and the

prospectus supplement filed in conjunction with the Company’s underwritten public offering of common shares on March 7, 2023 (the

“2023 Prospectus Supplement”) (See Shareholders’ Equity in the notes to the consolidated financial statements for further

details about SEC registration statements).

The 2020 Shelf Registration Statement registers common shares that may be issued by the Company

in a maximum aggregate amount of up to $90,000,000.

In fiscal 2024, the Company did not receive any proceeds from the exercise of stock options, whereas in

fiscal 2023, the Company received approximately $81,000 from such exercises.

fiscal 2024 and 2023, the Company received approximately $0 and $9,309,000, respectively, in net proceeds from the sale of common stock.

The common stock sold and issued in fiscal 2023 was issued under the Company’s shelf registration statement filed with the SEC

on July 21, 2020 (the “2020 Shelf Registration Statement”) and declared effective by the SEC on September 30, 2020, and under

the prospectus supplement filed with the SEC on January 22, 2021 (“2021 Prospectus Supplement”), and the prospectus supplement

filed in conjunction with the Company’s underwritten public offering of common shares on March 7, 2023 (the “2023 Prospectus

Supplement”) (See Shareholders’ Equity in the notes to the consolidated financial statements for further details about SEC

registration statements).

The 2020 Shelf Registration Statement registers common shares that may be issued by the Company in a maximum

aggregate amount of up to $90,000,000.

On January 22, 2021, we filed the 2021 Prospectus Supplement for the sale of up to $15,000,000

$15,000,000 of shares of our common stock in an at-the-market offering under the 2020 Shelf Registration Statement, of which $5,290,000

was issued through March 7, 2023.

of shares of our common stock in an at-the-market offering under the 2020 Shelf Registration Statement, of which $5,290,000 was issued

through March 7, 2023.

March 2023, we terminated the at-the-market offering and sold 3,333,333 shares of our common stock in a firm commitment public offering

7 unchanged sentences

any 12 consecutive months may not exceed one-third of the Company’s public float.

We have sold $7,631,000 of our common stock pursuant

We have not sold any of our common stock pursuant

to General Instruction I.B.6 of Form S-3 in the 12 calendar months preceding the date of filing this Annual Report on Form 10-K.

1 unchanged sentence

$7,037,587, based on 15,639,082 non-restricted shares of our outstanding common stock held by non-affiliates and a price of $0.45 per

share, which was the price at which our common stock was last sold on the Nasdaq Capital Market on August 3, 2023 (a date within 60 days

share, which was the price at which our common stock was last sold on the Nasdaq Capital Market on July 2, 2024 (a date within 60 days

of the date hereof), calculated in accordance with General Instruction I.B.6 of Form S-3.

2 unchanged sentences

the date of filing this Annual Report, we may sell $2,345,862 shares of our common stock at this time under the 2023 Shelf Registration

August 3, 2023, the Company announced it had entered into a sales agreement with CVS Pharmacy wherein the Company’s EZ Detect™

colorectal disease screening test will be offered at approximately 7,000 CVS Pharmacy retail stores.

Biomerica has shipped the EZ Detect

product to CVS Health distribution centers in the United States, and the product is projected to be on store shelves in September.

part of our ongoing efforts to reduce costs, we have implemented significant cost-cutting measures, including a workforce reduction of

nearly 15% in July 2024.

BALANCE SHEET ITEMS

20 unchanged sentences

critical to us.

These relate to revenue recognition, bad debts, inventory overhead application, inventory reserve, lease liabilities,

and right-of-use assets.

We believe estimates and assumptions related to these critical accounting policies are appropriate under

the circumstances;

however, should future events or occurrences result in unanticipated consequences, there could be a material

impact on our future financial conditions or results of operations.

We suggest that our significant accounting policies be read in

conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Please refer to

Note 2 of the Company’s consolidated financial statements for information on Significant Accounting Policies.

Company has various contracts with customers.

All the contracts specify that revenues from product sales are recognized at the time the

product is shipped, customarily FOB shipping point, which is when the transfer of control of goods has occurred, and at which point title

The Company does not allow for returns except in the event of defective merchandise and therefore does not establish an allowance

In addition, the Company has contracts with customers wherein they receive purchase discounts for achieving specified sales

The Company regularly evaluates the status of these contracts and does not believe that any discounts will be given through

the end of the contract periods.

Services for some contract work are invoiced and recognized for work that has been performed as the

project progresses.

The Company sells clinical lab products to domestic and international distributors, including hospitals and clinical

laboratories, medical research institutions, medical schools, and pharmaceutical companies.

OTC products are sold directly to drug stores

and e-commerce customers as well as to distributors.

Physicians’ office products are sold to physicians and distributors, all of

whom are categorized below according to the type of products sold to them.

We also manufacture certain components on a contract basis

for domestic and international manufacturers.

These relate to revenue recognition, inventory overhead application, inventory reserve and share based compensation.

We believe estimates and assumptions related to these critical accounting policies are

appropriate under the circumstances;

however, should future events or occurrences result in unanticipated consequences, there could

be a material impact on our future financial conditions or results of operations.

We suggest that our significant accounting

policies be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of

Please refer to Note 2 of the Company’s consolidated financial statements for information on Significant

Accounting Policies.

Company has various contracts with customers, and these contracts specify the recognition of revenue based on the nature of the transaction.

from product sales are recognized at the time the product is shipped, customarily FOB shipping point, which is when the transfer of control

of goods has occurred and title passes.

This applies to clinical lab products sold to domestic and international distributors, including

hospitals, clinical laboratories, medical research institutions, medical schools, and pharmaceutical companies.

OTC products are sold

directly to drug stores, e-commerce customers, and distributors, while physicians’ office products are sold to physicians and distributors.

The Company does not allow for returns except in the event of defective merchandise and, therefore, does not establish an allowance for

Additionally, the Company has contracts with customers that provide purchase discounts for achieving specified sales volumes.

The Company regularly evaluates the status of these contracts and does not believe any discounts will be given through the end of the

contract periods.

diagnostic testing services sold directly to patients or physician offices that require processing by a third-party CLIA-certified lab,

we recognize revenue once the lab has completed the test results.

services related to contract manufacturing, revenue is recognized when the service has been performed.

Services for some contract work

are invoiced and recognized as the project progresses.

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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ACCOUNTING PRONOUNCEMENTS

Note 2 to our consolidated financial statements for a listing of adopted and soon to be adopted accounting pronouncements.

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

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

June 2016, the FASB issued ASU 2016-13.

This ASU requires the measurement of all expected credit losses for financial assets, including

trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

The guidance was initially effective for the Company for annual reporting periods beginning after December 15, 2019, and interim periods

within those fiscal years.

In November 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Losses (Topic 326), Derivatives

and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates,” which, among other things, defers the effective date of ASU

2016-13 for public filers that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December

15, 2022, including interim periods within those years.

Early adoption is permitted.

The Company adopted ASU 2016-03 on June 1, 2023,

and the adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements.

November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Improvements to Reportable Segment

Disclosures.” The ASU includes enhanced disclosure requirements, primarily related to significant segment expenses that are regularly

provided to and used by the chief operating decision maker (“CODM”).

The amendments are to be applied retrospectively to all prior periods

presented in the financial statements.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, with early adoption

We are currently evaluating the effect of adopting this pronouncement on our financial statements and disclosures.

December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

The ASU includes

enhanced disclosure requirements, primarily related to the rate reconciliation and income taxes paid information.

The amendments are

to be applied prospectively in the financial statements.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024,

with early adoption permitted.

We are currently evaluating the effect of adopting this pronouncement on our financial statements and

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

99.3, “Biomerica, Inc.

and Subsidiaries Consolidated Financial Statements” is incorporated herein by this reference.

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 7. Management’s Discussion and Analysis