What changed in this filing

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Item 9A. Controls and Procedures

2024-08-28 compared with 2023-08-25 · 458 added, 394 removed, 634 unchanged (57% of the section changed)

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OTHER INFORMATION.

August 28, 2024, the Company entered into an employment agreement with their Chief Financial Officer, Mr.

Gary Lu, wherein if Mr.

is terminated by the Company without cause, or if Mr.

Lu voluntarily terminates his employment with the Company with cause, then the

Company will be required to pay Mr.

Lu a severance payment equal to twelve months of base salary.

The definition of “cause”

for each type of termination is found in the agreement, along with other material terms.

This agreement is attached hereto as Exhibit

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The table below provides information relating to our equity compensation plans as of May 31, 2024:

Securities Plan Category

Number of Securities to be Issued Upon Exercise of Outstanding Options

Compensation Plans Weighted-Average Exercise Price of Outstanding Options

Securities Remaining Available for Future Issuance Under Compensation Plans

Equity Compensation Plans Approved by Securities Holders

information required by this item will be disclosed in the Proxy Statement and is incorporated herein by reference.

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following documents are filed as part of this Annual Report on Form 10-K:

Consolidated Financial Statements

Financial Statements

is made to the Index to the consolidated financial statements as set forth on page FS-1 of this Annual Report on Form

Consolidated Financial Statement Schedules

schedules have been omitted as the pertinent information is either not required, not applicable, or otherwise included in the financial

statements and notes thereto.

Financial Statement Schedules

schedules have been omitted as the pertinent information is either not required, not applicable,

or otherwise included in the financial statements and notes thereto.

First Amended and Restated Certificate of Incorporation of Registrant filed with the Secretary of State of Delaware on August 1, 2000 (incorporated by reference to Exhibit 3.8 filed with the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended May 31, 2000).

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Employment Agreement, dated March 1, 2023, by and between Biomerica, Inc.

2023 Stock Incentive Plan of Registrant (incorporated by reference to Exhibit A of the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on September 27, 2023 ).

Employment Agreement dated August 28, 2024 by and between Biomerica Inc.

List of Subsidiaries (attached herein).

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Certification of Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended .

Registrant and Subsidiaries Consolidated Financial Statements.

XBRL Instance Document.

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(the “Company”) as of May 31,

2023 and 2022, the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows

for each of the years then ended, and the related notes (collectively, the “consolidated financial statements”).

opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the

Company as of May 31, 2023 and 2022, and the consolidated results of its operations and its cash flows for each of the years then

ended, in conformity with U.S.

2024 and 2023, the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for

each of the years then ended, and the related notes (collectively, the “consolidated financial statements”).

In our opinion,

the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as

of May 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for each of the years then ended, in conformity

generally accepted accounting principles.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as

a going concern.

As described in Note 2 to the consolidated financial statements, the Company has experienced recurring losses and negative

cash flows from operations and has an accumulated deficit and limited liquid resources.

These matters raise substantial doubt about the

Company’s ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility

is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm

registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

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Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due

to error or fraud, and performing procedures that respond to those risks.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

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Audit Matter Description

As described in Note 2 to the Company’s consolidated financial

statements, the Company values inventory at the lower of cost or net realizable value with cost inclusive of estimates for reasonable

allocations of labor and overhead costs.

Also, management periodically reviews inventory for excess quantities and obsolescence.

evaluates quantities on hand, physical condition, and technical functionality as these characteristics may be impacted by anticipated

customer demand for current products and new product introductions.

Auditing the Company’s estimates for capitalized labor and overhead

was challenging due to the extensive use of estimates throughout this process, including the quantity of labor time allocable to each

inventory item.

Auditing the Company’s estimates for slow-moving and obsolete inventories was challenging due to the inherently

judgmental nature of forecasting future sales and usage of a significant number of diverse inventory items.

As described in Note 2 to the Company’s consolidated financial statements, the Company values inventory at

the lower of cost or net realizable value with cost inclusive of estimates for reasonable allocations of labor and overhead costs.

management periodically reviews inventory for excess quantities and obsolescence.

Management evaluates quantities on hand, physical condition,

and technical functionality as these characteristics may be impacted by anticipated customer demand for current products and new product

introductions.

Auditing the Company’s estimates for capitalized labor and overhead was challenging due to the extensive use of estimates

throughout this process, including the amount of labor and overhead costs allocable to inventory production and the specific amount of

labor and overhead costs allocable to ending inventory quantities.

Auditing the Company’s estimates for slow-moving and obsolete

inventories was challenging due to the inherently judgmental nature of forecasting future sales and usage of a significant number of diverse

inventory items.

the Critical Audit Matter Was Addressed in the Audit

To test the valuation of the Company’s inventory, we performed

the following audit procedures:

● Obtained an understanding of the methodologies and policies used by

management to estimate capitalized labor and overhead and inventory reserves;

we obtained an understanding of key internal controls and

assessed their overall appropriateness;

● Tested the reasonableness of the production labor and overhead cost

pools and the quantities produced and recalculated the allocable labor and overhead rate per unit;

we recalculated the amount of capitalized

labor and overhead based on quantities on hand at the end of the fiscal year;

the accuracy of key data inputs that are the primary drivers for determining the quantitative inventory reserves;

these inputs included

inventory quantities on hand, approximate age of the inventory quantities, and estimated inventory reserve percentages.

HASKELL & WHITE LLP

test the valuation of the Company’s inventory, we performed the following audit procedures:

an understanding of the methodologies and policies used by management to estimate capitalized labor and overhead and inventory reserves;

we obtained an understanding of key internal controls and assessed their overall appropriateness;

Tested the reasonableness of the production labor and overhead cost pools and the reasonableness of inventory quantities

we recalculated the allocable labor and overhead rate per unit produced;

we recalculated the amount of capitalized labor and

overhead based on quantities on hand at the end of the fiscal year;

we performed sensitivity analyses to determine the impact of adjustments

to management’s estimates;

Tested the accuracy of key data inputs that are the primary drivers for determining the quantitative inventory reserves;

these inputs included inventory quantities on hand, approximate age of the inventory quantities, and estimated inventory reserve percentages.

/s/ Haskell & White LLP

have served as the Company’s auditor since 2022.

August 28, 2024

AND SUBSIDIARIES

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Current Assets:

Cash and cash

Cash and cash equivalents

Accounts receivable, net

Inventories, net

expenses and other

Prepaid expenses and other

Total current assets

Property and equipment,

net of accumulated depreciation and amortization

Right-of-use assets, net

of accumulated amortization of $ 617,000 and $ 725,000 as of May 31, 2023 and 2022, respectively

Intangible assets, net

of accumulated amortization

Liabilities and Shareholders’

Property and equipment, net of accumulated depreciation and amortization

Right-of-use assets, net of accumulated amortization of $ 910,000 and $ 617,000 as of May 31, 2024 and 2023, respectively

Intangible assets, net of accumulated amortization of $ 48,000 and $ 30,000 as of May 31, 2024 and 2023, respectively

Liabilities and Shareholders’ Equity

Current Liabilities:

Accounts payable and accrued

Accounts payable and accrued expenses

Accrued compensation

Advance from customers

liabilities, current portion

Advances from customers

Lease liabilities, current portion

Total current liabilities

liabilities, net of current portion

Lease liabilities, net of current portion

Total Liabilities

Commitments and contingencies

Commitments and contingencies (Note 9)

Shareholders’ Equity:

Preferred stock, Series

A 5% convertible, $ 0.08 par value, 571,429 shares authorized, none issued and outstanding as of May 31, 2023 and 2022

Preferred stock, undesignated,

no par value, 4,428,571 shares authorized, none issued and outstanding as of May 31, 2023 and 2022

Preferred stock, value

Common stock, $ 0.08 par value, 25,000,000

shares authorized, 16,821,646 and 12,867,924 issued and outstanding at May 31, 2023 and 2022, respectively

Preferred stock, Series A 5% convertible, $ 0.08 par value, 571,429 shares

authorized, none issued and outstanding as of May 31, 2024 and 2023

Preferred stock, undesignated, no par value, 4,428,571 shares authorized, none issued and outstanding as of May 31, 2024 and

Common stock, $ 0.08 par value, 25,000,000 shares authorized, 16,821,646 issued and outstanding at May 31, 2024 and 2023, respectively

Additional paid-in capital

Accumulated other comprehensive

Accumulated other comprehensive loss

Accumulated deficit

( 48,195,000 )

( 42,217,000 )

Total Shareholders’

Total Liabilities and

Shareholders’ Equity

accompanying notes to consolidated financial statements

Total Shareholders’ Equity

Total Liabilities and Shareholders’ Equity

accompanying notes to consolidated financial statements and Report of Independent Registered Public Accounting Firm.

AND SUBSIDIARIES

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

the Year Ended May 31,

For the Year Ended May 31,

Cost of sales

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Selling, general and administrative

and development

operating expense

Research and development

Total operating expense

Loss from operations

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Dividend and interest income

Total other income

Loss before income taxes

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( 7,089,000 )

Provision for income

Provision for income taxes

$ ( 5,978,000 )

$ ( 7,140,000 )

Basic net loss per common

Diluted net loss per

Weighted average number of common and

common equivalent shares:

Basic net loss per common share

Diluted net loss per common share

Weighted average number of common and common equivalent shares:

$ ( 5,978,000 )

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$ ( 7,176,000 )

accompanying notes to consolidated financial statements

AND SUBSIDIARIES

STATEMENTS OF SHAREHOLDERS’ EQUITY

THE YEARS ENDED MAY 31, 2023 AND 2022

Paid-in-Capital

Other Comprehensive Loss

Stockholder’s Equity

accompanying notes to consolidated financial statements and Report of Independent Registered Public Accounting Firm.

Statements Shareholders’ Equity

the Year Ended May 31, 2024

Additional Paid-in

Accumulated Other Comprehensive

Total Stockholders’

Balances at May 31, 2022

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Net proceeds from ATM

Shares issued in connection with public offering

Foreign currency translation

Share-based compensation

Compensation expense in connection with options granted

( 7,140,000 )

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( 42,217,000 )

Exercise of stock options

Net proceeds from ATM

Shares issued in connection

with public offering, net of offering costs

Foreign currency translation

Share-based compensation

Compensation expense in connection with options granted

( 5,978,000 )

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$ ( 48,195,000 )

accompanying notes to consolidated financial statements.

accompanying notes to consolidated financial statements and Report of Independent Registered Public Accounting Firm.

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

the Year Ended May 31,

Cash flows from operating

For the Year Ended May 31

Cash flows from operating activities:

$ ( 5,978,000 )

$ ( 7,140,000 )

Adjustments to reconcile

net loss to net cash used in operating activities:

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

Depreciation and amortization

Loss on disposal of property and equipment

Provision for allowance on accounts receivable

(Recovery) provision for allowance for credit losses

Inventory reserve

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Accrued compensation

Advance from customers

Advances from customers

Reduction in lease liabilities

Net cash used in operating

Net cash used in operating activities

( 5,361,000 )

Cash flows from investing

Expenditure related to intangibles

Purchases of property

and equipment

Net cash used in investing

Cash flows from financing

( 5,474,000 )

Cash flows from investing activities:

Purchases of property and equipment

Expenditures related to intangibles

Net cash used in investing activities

Cash flows from financing activities:

Gross proceeds from sale of common stock

Deferred offering costs

Costs from sale of common stock

Proceeds from exercise

of stock options

Net cash provided by

financing activities

Effect of exchange rate

changes in cash

Net increase in cash and cash equivalents

Cash and cash equivalents

at beginning of year

Cash and cash equivalents

at end of year

Proceeds from exercise of stock options

Net cash (used in) provided by financing activities

Effect of exchange rate changes in cash

Net (decrease) increase in cash and cash equivalents

( 5,549,000 )

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Supplemental Disclosure of Cash Flow Information:

Cash paid during the year

Non-cash investing and financing

Increase in right-of-use

asset due to lease extension or establishment

Increase in lease liability

due to lease extension or establishment

Write off of fixed assets,

accumulated depreciation

Write off of intangible

assets, accumulated amortization

accompanying notes to consolidated financial statements

Cash paid during the period for:

Non-cash investing and financing activities:

Write off of fixed assets, cost

Write off of fixed assets, accumulated depreciation

Write off of intangible assets, cost

Write off of intangible assets, accumulated amortization

accompanying notes to consolidated financial statements and Report of Independent Registered Public Accounting Firm.

AND SUBSIDIARIES

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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 specific foods that may be causing an abnormally high

immune response in the patient.

A food identified as positive, which is causing the abnormal immune response in the patient,

is simply removed from the diet to help alleviate IBS symptoms.

Our existing medical diagnostic products are sold worldwide primarily in

1) clinical laboratories and 2) point-of-care (physicians’ offices and over-the-counter drugstores like Walmart and

CVS Pharmacy).

The diagnostic test kits are used to analyze blood, urine, nasal, or fecal specimens from patients in the diagnosis of

various diseases, food intolerances, and other medical complications, by measuring or detecting the existence and/or level of specific

bacteria, hormones, antibodies, antigens, or other substances, which may exist in a patient’s body, stools, or blood, often in extremely

small concentrations.

to the global 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.

fiscal 2023, due to the decline in severity of COVID-19 and the corresponding lower sales volumes, we no longer sell these products.

Due to the relatively high volume of sales from these products in fiscal 2021 and fiscal 2022, we have seen significant fluctuations

in quarterly revenues over the past twelve quarters.

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 specific foods that may be causing

an abnormally high immune response in the patient.

A food identified as positive, which is causing the abnormal immune response in the

patient, is simply removed from the diet to help alleviate IBS symptoms.

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

1) clinical laboratories and 2) point-of-care (physicians’

offices and over-the-counter drugstores like Walmart and CVS Pharmacy).

The diagnostic test kits are used to analyze blood, urine, nasal,

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

or detecting the existence and/or level of specific bacteria, hormones, antibodies, antigens, or other substances, which may exist in

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

to the global COVID-19 pandemic, in March 2020, we began selling these COVID-19 related diagnostic tests during fiscal 2021, and we experienced

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

Due to falling demand, there were

no sales of our COVID-19 related products in fiscal 2024.

As such, our COVID-19 product sales caused significant swings in our revenues

over the past 4 years.

other existing products that contributed to our 2024 revenues are primarily focused on gastrointestinal diseases, food intolerances,

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These diagnostic test products utilize immunoassay technology.

Most of our products are CE marked and/or

Most of our products are Conformite Europeenne (“CE”) marked and/or

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

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

preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United

States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of

assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and

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

Estimates that are made include the allowance for doubtful

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

stock option forfeiture rates,

which are calculated based on historical data;

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

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

rate on the lease commencement date and, the likelihood of lease extensions to occur, asset valuations, among other things;

and other items that may be necessary to

estimate using current, historical and judgment based information.

Actual results could materially differ from those

to the global COVID-19 pandemic, the Company’s operations have been negatively impacted.

The Company has faced disruptions in the

following areas, (and may face further challenges):

supply chain disruptions, loss of contracts and/or customers, closure of the Company’s

manufacturing or distribution facilities or of the facilities of the Company’s suppliers, partners and customers, travel, shipping

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

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

credit risk, and general economic calamities.

These pandemic related disruptions can materially negatively impact the Company’s

operations and financial performance and may continue to have significant material negative impacts on the Company.

preparation of our consolidated financial statements in accordance with generally accepted accounting principles in the United States of

America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and

liabilities, as well as the disclosure of contingent assets and liabilities at the date of the financial statements.

These estimates

also impact the reported amounts of revenues and expenses during the reporting period.

Key estimates include the allowance for

doubtful accounts, based on both current and historical practices with customers;

variable consideration in revenue recognition,

estimated based on agreements that include guarantees of specified profit margins, requiring adjustments based on actual sales

performance and market conditions, stock option forfeiture rates, calculated using historical data;

and inventory obsolescence,

where inventory is stated at the lower of cost or net realizable value (NRV) and assessed through judgments based on projected and

historical usage of materials.

The valuation of lease liabilities and right-of-use assets also involves

assumptions such as the borrowing rate at lease commencement and the likelihood of lease extensions.

estimates are critical to our financial reporting, and actual results could materially differ from those

LIQUIDITY AND GOING CONCERN

Company has incurred net losses and negative cash flows from operations and has an accumulated deficit of approximately $ 48 million as

of May 31, 2024.

Management expects to continue to incur significant costs as it advances its trials and development activities.

May 31, 2023, the Company had cash and cash equivalents of approximately $ 9,719,000 and working capital of approximately $ 10,852,000 .

As of May 31, 2024, the Company had cash and cash equivalents of approximately $ 4,170,000 and working capital of approximately

$ 5,527,000 .

January 22, 2021, the Company filed a prospectus supplement to the base prospectus included in a registration statement filed with the

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commissions for each sale and legal, accounting, and other fees related to offering in the amount of $ 53,000 .

the year ended May 31, 2022, the Company sold 521,267 shares of its common stock at prices ranging from $ 4.02 to $ 5.63 pursuant to the

ATM Offering, which resulted in gross proceeds of approximately $ 2,402,000 and net proceeds to the Company of $ 2,317,000 , after deducting

commissions for each sale and legal, accounting, and other fees related to the offering in the amount of $ 85,000 .

March 7, 2023, the Company sold 3,333,333 shares of common stock in a firm commitment public offering at a gross sales price of $ 2.40

per share, with net total proceeds, after deducting issuance fees and expenses of $ 700,000 , of approximately $ 7,300,000 .

Since the closing

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

Company intends to use the net proceeds from such offerings for general corporate purposes, including, without limitation, sales and

marketing activities, clinical studies, product development, making acquisitions of assets, businesses, companies or securities,

capital expenditures, and for working capital needs.

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

As a result of cash and cash

equivalents on hand on May 31, 2023, largely from the public offering, and the ability to raise additional funds through another new

ATM agreement, management believes the Company has sufficient funds to operate through at least August 2024.

of this public offering, the Company terminated the ATM offering agreement.

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, 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.

If our stock continues to trade at low volumes and price, the amount of capital that we can raise under the ATM

offering will be constrained.

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.

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.

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

Our need and ability to generate additional revenue from international

opportunities and our new product launches;

Our need to access the capital and debt markets to meet current

obligations and fund operations;

Our capacity to manage operating expenses and maintain gross

margins as we grow;

Our ability to retain key employees and maintain critical operations

with a substantially reduced workforce.

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 months.

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.

While we are 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.

Company’s consolidated financial statements as of May 31, 2024 were prepared on a going concern basis, which contemplates the realization

of assets and the settlement of liabilities and commitments in the normal course of business.

VALUE OF FINANCIAL INSTRUMENTS

Company has financial instruments whereby the fair market value of the financial instruments could be different than that recorded on

a historical basis.

The Company’s consolidated financial instruments consist of its cash and cash equivalents, accounts receivable,

and accounts payable.

The carrying amounts of the Company’s financial instruments approximate their fair values.

The Company also

maintains an investment in privately held company (see below).

Company has financial instruments whereby the fair market value of the financial instruments could be different than the amount

recorded on a historical basis.

The Company’s consolidated financial instruments consist of its cash and cash equivalents,

accounts receivable, and accounts payable.

The carrying amounts of the Company’s financial instruments approximate their fair

The Company also maintains an investment in privately held company (see below).

CONCENTRATION

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performs ongoing credit evaluations of its customers and requires accelerated prepayment in some circumstances.

net sales were approximately $ 5,339,000

for fiscal 2023 compared to $ 18,871,000

for fiscal 2022.

For the fiscal years ended May 31, 2023 and 2022, the Company had one and two distributors, respectively, which

accounted for a total of 35 %

net sales were approximately $ 5,415,000 for

fiscal 2024, compared to $ 5,339,000 for

For the fiscal years ended May 31, 2024, and 2023, the Company had one distributor each year that accounted for 33 %

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 %

respectively, of net sales.

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

On 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.

the fiscal year ended May 31, 2023, the Company did not have any significant concentration of vendor spend for raw materials.

fiscal year ended May 31, 2022, the Company had one vendor, which accounted for 84 % of our purchases of raw materials largely related

to COVID-19 products.

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.

the fiscal year ended May 31, 2024, the Company had one vendor which accounted for 16 % of the purchases of raw materials.

For the fiscal

year ended May 31, 2023, the Company did not have any significant concentration of vendor spend for raw materials.

CONCENTRATION

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Mexico, respectively.

As of May 31, 2023 and 2022, approximately $ 17,000 of Biomerica’s property and equipment, net of accumulated

of May 31, 2024 and 2023, approximately $ 14,000 and $ 17,000 , respectively, of Biomerica’s property and equipment, net of accumulated

depreciation and amortization, was located in Mexicali, Mexico.

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

International accounts are usually required to prepay until

they establish a history with the Company and at that time, they are extended credit at levels based on a number of criteria.

Initial credit levels for individual distributors are approved by designated officers and managers of the Company.

All increases in

credit limits are also approved by designated upper-level management.

Management evaluates receivables on a quarterly basis and

adjusts the allowance for doubtful accounts accordingly.

Balances over ninety days

old are usually reserved for unless collection is reasonably assured.

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

International accounts are usually required to prepay until they

establish a history with the Company and at that time, they are extended credit at levels based on a number of criteria.

Based on various

criteria, initial credit levels for individual distributors are approved by designated officers and managers of the Company.

All increases

in credit limits are also approved by designated upper-level management.

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

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

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

ASC 326 adds to U.S.

GAAP the current expected credit loss

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

Prior to the adoption of ASC 326,

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

Balances over ninety

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

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

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

and anticipated future economic events that may impact collectability.

In developing its expected credit loss estimate, the Company evaluated

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

of products and services sold.

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

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

Occasionally,

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

gross receivables.

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before shipping new sales orders.

of May 31, 2023 and 2022, the Company has established a reserve of approximately $ 29,000 and $ 153,000 , respectively, for doubtful accounts.

of May 31, 2024 and 2023, the Company has established an allowance of approximately $ 19,000 and $ 29,000 , respectively, for credit losses.

EXPENSES AND OTHER

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the inventory is physically received or the insurance and other items are utilized.

of May 31, 2023 and 2022, the prepaids were approximately $ 300,000 and $ 320,000 , respectively, composed of prepayments to insurance and

of May 31, 2024 and 2023, the prepaids were approximately $ 238,000 and $ 300,000 , respectively, comprised of prepayments to insurance and

various other suppliers.

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following is a summary of approximate net inventories:

OF NET INVENTORIES

SCHEDULE OF NET INVENTORIES

Raw materials

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Inventory reserve

Net inventory

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

1 unchanged sentence

As of May 31, 2024 and 2023, inventory reserves were approximately $ 467,000 and $ 672,000 , respectively.

The Company has fully reserved COVID-19 antibody inventory in fiscal 2023.

AND EQUIPMENT, NET

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assets are being amortized using the straight-line method over the useful life, not to exceed 18 years for marketing and distribution

rights, 10 years for purchased technology use rights, and 20 years for patents.

Amortization amounted to approximately $ 18,000 and $ 239,000

for the years ended May 31, 2023 and 2022, respectively.

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

Amortization amounted to approximately $ 18,000 for the years ended May 31, 2024 and 2023.

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

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whether there was any impairment.

During the year ended May 31, 2023, there was no impairment of intangible assets.

During the year ended May 31, 2022, an impairment

adjustment was made of $ 210,000 .

Company has made investments in a privately held Polish

distributor, which is primarily engaged in distributing medical products and devices, including the distribution of the products

sold by the Company.

The Company invested approximately $ 165,000

into the Polish distributor and owns approximately 6 %

of the investee.

There was no impairment of intangible assets for the years ended May 31, 2024 and 2023.

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

devices, including the distribution of the products sold by the Company.

The Company invested approximately $ 165,000 into the Polish

distributor and owns approximately 6 % of the investee.

holdings in nonmarketable unconsolidated entities in which the Company is not able to exercise significant influence (“Cost Method

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from observable price changes in orderly transactions for the identical or a similar holding or security of the same issuer.

received are recorded as other income.

received are recorded as other dividend and interest income.

Company assesses its equity holdings for impairment whenever events or changes in circumstances indicate that the carrying value of an

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Company expensed approximately $ 837,000 and $ 1,185,000 of share-based compensation during the years ended May 31, 2024 and 2023, respectively.

applying the Black-Scholes option-pricing model, the following assumptions used in the valuation of awards issued for period ending May 31, 2023 and 2022:

applying the Black-Scholes option-pricing model, the following assumptions used in the valuation of awards issued for years ended May

31, 2024 and 2023:

SCHEDULE OF SHARE-BASED PAYMENT AWARD, STOCK OPTIONS, VALUATION ASSUMPTIONS

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Expected term

Company has various contracts with customers.

All of 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 passes.

Company does not typically allow for returns from customers except in the event of defective merchandise and therefore does not establish

an allowance for returns.

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

specified sales volumes.

The Company evaluated the status of these contracts during the years ended May 31, 2023 and 2022 and does not

believe that any additional discounts will be given through the end of the contract periods.

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

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.

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

These advances are prepayments on

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

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 returns except in cases of defective merchandise, and therefore, does not establish an allowance for

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

These contracts are regularly evaluated, and the Company does not anticipate granting any discounts through the end of the

contract period.

the Company offers margin guarantees to certain retail drug store customers to ensure a minimum profit margin.

Should pricing adjustments

cause these margins to fall below the agreed-upon thresholds, the Company is committed to compensating for the shortfall.

This arrangement

introduces variable consideration into our revenue recognition process.

These considerations are estimated monthly based on actual sales

and potential price reductions, ensuring accurate and compliant revenue reporting.

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.

of May 31, 2024, the Company had approximately $ 85,000 of advances from domestic customers, which are prepayments on orders for future

Disaggregation

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SCHEDULE OF DISAGGREGATION REVENUE

the Year Ended May 31,

Year Ended May 31,

Over-the-counter

Contract manufacturing

Physician’s office

manufacturing

Note 8 for additional information regarding geographic revenue concentrations.

6 unchanged sentences

Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”).

Deferred tax assets and

liabilities arise from temporary differences between the tax bases of assets and liabilities and their reported amounts in the

consolidated financial statements that will result in taxable or deductible amounts in future years and the benefits of net

operating loss and tax credit carryforwards.

These temporary differences and the benefits of net operating loss and tax credit

carryforwards are measured using enacted tax rates.

A valuation allowance is recorded to reduce deferred tax assets to the extent

that management considers it is more likely than not that a deferred tax asset will not be realized.

In determining the valuation

allowance, the Company considers factors such as the reversal of deferred income tax assets, projected taxable income, and the

character of income tax assets and tax planning strategies.

A change to these factors could impact the estimated valuation allowance

and income tax expense.

As of May 31, 2023 and 2022, in accordance with ASC 740, the Company has a valuation allowance for

substantially all of its net deferred tax assets.

During the year ended May 31, 2023, this valuation allowance was increased to

$ 8,940,000 ,

which fully covers the net deferred tax asset of $ 8,940,000 .

Deferred tax assets and liabilities

arise from temporary differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial

statements that will result in taxable or deductible amounts in future years and the benefits of net operating loss and tax credit carryforwards.

These temporary differences and the benefits of net operating loss and tax credit carryforwards are measured using enacted tax rates.

A valuation allowance is recorded to reduce deferred tax assets to the extent that management considers it is more likely than not that

a deferred tax asset will not be realized.

In determining the valuation allowance, the Company considers factors such as the reversal

of deferred income tax assets, projected taxable income, and the character of income tax assets and tax planning strategies.

to these factors could impact the estimated valuation allowance and income tax expense.

As of May 31, 2024 and 2023, in accordance with

ASC 740, the Company has a valuation allowance for all of its net deferred tax assets.

During the year ended May 31, 2024,

this valuation allowance was increased to $ 10,369,000 , which fully covers the net deferred tax asset of $ 10,369,000 .

Company accounts for its uncertain tax provisions by using a two-step approach to recognizing and measuring uncertain tax positions.

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Advertising costs were approximately

$ 156,000 and $ 76,000 for the years ended May 31, 2023 and 2022, respectively.

$ 101,000 and $ 156,000 for the years ended May

31, 2024 and 2023, respectively.

CURRENCY TRANSLATION

subsidiary located in Mexico operates primarily using the Mexican peso.

The subsidiary located in Germany operates primarily using the

The subsidiary located in Germany operates primarily using

dollar, with an immaterial amount of transactions occurring using the Euro.

Accordingly, assets and liabilities of these subsidiaries

are translated using exchange rates in effect at the end of the year, and revenues and costs are translated using average exchange rates

for the year.

The resulting adjustments to assets and liabilities are presented as a separate component of accumulated other comprehensive

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

31, 2023 and 2022.

Accordingly, assets and liabilities of these

subsidiaries are translated using exchange rates in effect at the end of the year, and revenues and costs are translated using

average exchange rates for the year.

The resulting adjustments to assets and liabilities are presented as a separate component of

accumulated other comprehensive loss.

There are no foreign currency transaction gains or losses that are included in the

consolidated statements of operations for the years ended May 31, 2024 and 2023.

ASSETS AND LEASE LIABILITIES

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ACCOUNTING PRONOUNCEMENTS

Except as follows, recent

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

the Company’s present or future consolidated financial statements.

June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

This ASU will require 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.

2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases

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 Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including

interim periods within those years.

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 is currently reviewing the requirements of this ASU to determine

its impact on the Company’s consolidated results of operations and financial position.

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 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

PROPERTY AND EQUIPMENT, NET

following is an approximate breakdown of property and equipment, net of accumulated depreciation:

OF PROPERTY AND EQUIPMENT, NET

SCHEDULE OF PROPERTY AND EQUIPMENT, NET

Furniture, fixtures and leasehold improvements

2 unchanged sentences

( 1,331,000 )

property and equipment

Net property and equipment

INTANGIBLE ASSETS, NET

following is an approximate breakdown of intangible assets, net of accumulated amortization:

OF INTANGIBLE ASSETS, NET

SCHEDULE OF INTANGIBLE ASSETS, NET

Less accumulated amortization-patents

Intangible assets, net

amortization of intangible assets for the years ending May 31:

OF EXPECTED AMORTIZATION OF INTANGIBLE ASSETS

SCHEDULE OF EXPECTED AMORTIZATION OF INTANGIBLE ASSETS

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

of May 31, 2023, the Company had one vendor which accounted for 23 % of accounts payable.

As of May 31, 2022, the Company had two vendors

which accounted for 69 % of accounts payable.

Accounts payable

Accrued expenses

of May 31, 2024, the Company had two vendors that accounted for 69 % of accounts payable.

As of May 31, 2023, the Company had one vendor

that accounted for 23 % of accounts payable.

SHAREHOLDERS’ EQUITY

1 unchanged sentence

December 2014, the Company adopted and shareholders approved a stock option and restricted stock plan (the “2014 Plan”).

Subsequently, in December 2017, the Company adopted and shareholders approved an stock option and restricted stock plan (the “2017

Subsequently, in December 2017, the Company adopted and shareholders approved a stock option and restricted stock plan (the “2017

In February 2020, the Board approved the 2020 Stock Incentive Plan (the “2020 Plan”, and collectively with

1 unchanged sentence

the 2020 Plan.

The Equity Incentive Plans provide that non-qualified options and incentive stock options and restricted stock may be

granted to directors, affiliates, employees, or consultants of the Company.

The Equity Incentive Plans authorize awards representing

up to 850,000 , 900,000 and 900,000 shares of the Company’s common stock to be issued under the 2014 Plan, 2017 Plan, and 2020 Plan,

In April 20, 2023, the Board approved the Company’s 2023 Stock Incentive Plan and on December 7, 2023, the shareholders

of the Company approved the 2023 Plan.

Equity Incentive Plans provide that non-qualified options and incentive stock options and restricted stock may be granted to directors,

affiliates, employees, or consultants of the Company.

The Equity Incentive Plans authorize awards representing up to 850,000 , 900,000 ,

900,000 , and 1,200,000 shares of the Company’s common stock to be issued under the 2014 Plan, 2017 Plan, 2020 Plan, and 2023 Plan,

respectively.

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years after the date of grant.

The 2014 Plan expires in December 2024, the 2017 Plan expires in December 2027, and the 2020 Plan expires

in December 2030.

The 2014 Plan expires in December 2024, the 2017 Plan expires in December 2027, the 2020 Plan expires

in December 2030, and 2023 Plan expires on April 20, 2033.

compensation expense for the years ended May 31, 2024 and 2023 is as follows:

OF STOCK BASED COMPENSATION EXPENSE

the Year Ended May 31,

SCHEDULE OF STOCK BASED COMPENSATION EXPENSE

For the Year Ended May 31,

Cost of sales

1 unchanged sentence

Research and development

stock option expense

Total stock option expense

as to aggregate stock options outstanding is as follows:

OF ACTIVITY TO AGGREGATE STOCK OPTIONS

SCHEDULE OF ACTIVITY TO AGGREGATE STOCK OPTIONS

Number of Stock Options

Weighted Average Exercise Price

Weighted Average Exercise

Aggregate Intrinsic Value

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Options granted

Options exercised

Options canceled or expired

Options Outstanding at May 31, 2024

Options vested and exercisable at May 31, 2023

Options vested and exercisable

at May 31, 2024

weighted average grant date fair value of options granted during 2024 and 2023 were $ 0.80 and $ 2.19 , respectively.

6 unchanged sentences

STOCK ACTIVITY

January 22, 2021, the Company filed a prospectus supplement to the base prospectus included in a registration statement filed with the

SEC on July 21, 2020, and declared effective by the SEC on September 30, 2020, for purposes of selling up to $ 15,000,000 in “at-the-market”

offerings, as defined in Rule 415 promulgated under the Securities Act (the “ATM Offering”).

January 22, 2021, the Company filed a prospectus supplement to the base prospectus included in a registration statement filed with

the SEC on July 21, 2020, and declared effective by the SEC on September 30, 2020, for purposes of selling up to $ 15,000,000

in the ATM Offering, as defined in Rule 415 promulgated under the Securities Act.

May 21, 2021, in conjunction with the Company’s 2020 Stock Incentive Plan, that was approved by shareholders at the Company’s

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offers under, or terminate the ATM Offering.

the year ended May 31, 2023, the Company sold 573,889 shares of its common stock at prices ranging from $ 3.15 to $ 4.26 pursuant to the

ATM Offering, which resulted in gross proceeds of approximately $ 2,014,000 and net proceeds to the Company of $ 1,961,000 , after deducting

commissions for each sale and legal, accounting, and other fees related to the offering in the amount of $ 53,000 .

the year ended May 31, 2022, the Company sold 521,267 shares of its common stock at prices ranging from $ 4.02 to $ 5.63 pursuant to the

ATM Offering, which resulted in gross proceeds of approximately $ 2,402,000 and net proceeds to the Company of $ 2,317,000 , after deducting

commissions for each sale and legal, accounting, and other fees related to the offering in the amount of $ 85,000 .

March 7, 2023, the Company closed on an underwritten sale of 3,333,333 shares of our registered common stock through an investment banking

firm, which shares were issued under our shelf registration.

In this offering, the Company sold the registered shares at a gross sales

price of $ 2.40 per share, with net proceeds, after deducting issuance fees and expenses of $ 700,000 , of approximately $ 7,300,000 .

the year ended May 31, 2023 the Company sold 573,889

shares of its common

stock at prices ranging from $ 3.15

pursuant to the ATM

Offering, which resulted in gross proceeds of approximately $ 2,014,000

and net proceeds to

the Company of $ 1,961,000 ,

after deducting commissions for each sale and legal, accounting, and other fees related to the offering in the amount of $ 53,000 .

March 7, 2023, the Company sold 3,333,333

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

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

of approximately $ 7,300,000 .

As a result of this public offering, the Company terminated the ATM offering agreement.

September 28, 2023, the Company 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, 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.

During the year ended May 31, 2024, the Company has not sold any shares of its common stock through the ATM Offering.

STOCK ACTIVITY

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for income taxes for the years ended May 31 consists of the following:

OF PROVISION FOR INCOME TAXES

the Year Ended May 31,

Foreign Taxes

SCHEDULE OF PROVISION FOR INCOME TAXES

For the Year Ended May 31,

Foreign Taxes Subsidiaries

State and local

Total current

State and local

Total deferred

Income tax expense

for income taxes differs from the amounts computed by applying the U.S.

1 unchanged sentence

and 2023) to pretax income as a result of the following:

OF EFFECTIVE INCOME TAX RECONCILIATION

the Year Ended May 31,

Computed “expected”

Increase (reduction) in income taxes resulting

SCHEDULE OF EFFECTIVE INCOME TAX RECONCILIATION

For the Year Ended May 31,

Computed “expected” tax benefit

Increase (reduction) in income taxes resulting from:

Change in valuation allowance

2 unchanged sentences

State income taxes, net of federal benefit

Research and development tax credits

Permanent tax differences and other

1 unchanged sentence

Foreign taxes of subsidiaries

Income tax expense

tax effect of significant temporary differences is presented below:

OF DEFERRED TAX ASSETS

SCHEDULE OF DEFERRED TAX ASSETS

Deferred tax assets:

Accounts receivable,

principally due to allowance for doubtful accounts

Accounts receivable, principally due to allowance for credit losses

Inventory valuation

5 unchanged sentences

Sec 174 capitalized costs

Losses of foreign subsidiaries & other,

depreciation and amortization

Losses of foreign subsidiaries and other, net

Accumulated depreciation and amortization

Total deferred tax assets

2 unchanged sentences

( 8,940,000 )

deferred tax asset

Company has provided a valuation allowance of approximately $ 8,940,000 and $ 6,967,000 as of May 31, 2023 and 2022, respectively.

net change in the valuation allowance for the years ended May 31, 2023 and 2022 was an increase of $ 1,973,000 and $ 1,063,000 , respectively.

Net deferred tax asset

Company has provided a valuation allowance of approximately $ 10,369,000

and $ 8,940,000

as of May 31, 2024 and 2023, respectively.

The net change in the valuation allowance for the years ended May 31, 2024 and 2023 was

an increase of $ 1,429,000

and $ 1,973,000 ,

respectively.

The Company has recorded a full valuation allowance against its United States and foreign deferred tax assets in

each of the years ended May 31, 2024 and 2023 because the Company’s management believes that it is more likely than not that these

assets will not be realized.

May 31, 2024, the Company has Federal income tax net operating loss carryforwards of approximately $ 24,384,000 .

17 unchanged sentences

not performed an analysis to determine if the Company has had a cumulative change in ownership of greater than 50%.

the year ended May 31, 2023, the Company performed an analysis and has not identified any uncertain tax positions as

defined under ASC 740.

Should such position be identified in the future, and should the Company owe interest and penalties as a result

of this, these would be recognized as interest expense and other expense, respectively, in the consolidated financial statements.

Company is no longer subject to any significant U.S.

the year ended May 31, 2024, the Company performed an analysis and has not identified any uncertain tax positions as defined under ASC

Should such position be identified in the future, and should the Company owe interest and penalties as a result of this, these would

be recognized as interest expense and other expense, respectively, in the consolidated financial statements.

The Company is no longer

subject to any significant U.S.

federal tax examinations by tax authorities for years before fiscal 2018.

2 unchanged sentences

Geographic information regarding net sales is approximately as follows:

OF GEOGRAPHIC INFORMATION

the Year Ended May 31,

SCHEDULE OF GEOGRAPHIC INFORMATION

For the Year Ended May 31,

Revenues from sales to unaffiliated customers:

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following table presents information on our operating leases for the years ended May 31, 2024 and 2023:

OF OPERATING LEASES

Ended May 31,

SCHEDULE OF OPERATING LEASES

For the Year Ended May 31,

Operating lease cost

Variable lease cost

Short-term lease cost

1 unchanged sentence

future minimum lease payments of the Company’s operating lease liabilities by fiscal year are as follows:

OF FUTURE MINIMUM LEASE PAYMENTS

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Year Ending May 31,

Operating Leases

Total minimum future lease payments

imputed interest

Total operating lease

Total operating lease liabilities

following table summarizes the Company’s other supplemental lease information for the years ended May 31, 2024 and 2023:

OF OTHER SUPPLEMENTAL LEASE INFORMATION

Ended May 31,

SCHEDULE OF OTHER SUPPLEMENTAL LEASE INFORMATION

For the Year Ended May 31,

Cash paid for operating lease liabilities

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Company has one royalty agreement in which it has obtained rights to manufacture and market certain products for the life of the products.

Royalty expense of approximately $ 13,000 and $ 19,000 is included in cost of sales for the agreement for each of the years ended May 31,

Royalty expenses of approximately $ 10,000 and $ 13,000 is included in cost of sales for the agreement for each of the years ended May

31, 2024 and 2023, respectively.

3 unchanged sentences

necessary for conducting business.

The Company has other royalty agreements however they are not considered material.

The Company has other royalty agreements;

however, they are not considered material.

Trial Agreements

September 2017, the Company signed a Clinical Samples Agreement with the University of Southern California for the purpose of providing

clinical samples for use by the Company in conducting future clinical trials for one of the products which the Company is developing.

The initial budget was estimated to be approximately $ 82,000 .

The work started in October 2017 with charges for work performed being

invoiced and paid monthly.

This study ended in February 2020.

Approximately $ 17,000 in fees has been accrued for unbilled charges as

of May 31, 2022.

There are no unbilled charges as of May 31, 2023.

Company entered into a Clinical Trial Agreement with a research institute for the purpose of conducting a clinical trial of the Biomerica

InFoods® product.

The term of the agreement shall be until completion of the work outlined and the charges will be invoiced monthly

for work performed in the previous month.

The maximum budgeted costs will be approximately $ 107,000 .

This study ended in March 2022.

Approximately $ 28,000 in fees has been accrued for unbilled charges as of May 31, 2022.

There are no unbilled charges as of May 31, 2023.

are no Clinical Trial Agreements for each of the years ended May 31, 2024 and 2023.

SUBSEQUENT EVENTS

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.

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 9A. Controls and Procedures