What changed in this filing

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Item 1. Financial Statements

2025-10-14 compared with 2025-04-14 · 519 added, 704 removed, 147 unchanged (89% of the section changed)

FINANCIAL STATEMENTS

BIOMERICA, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

February 28, 2025

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

August 31, 2025

Current Assets:

4 unchanged sentences

Total current assets

Property and equipment, net of accumulated depreciation and amortization of $ 1,444,000 and $ 1,394,000 as of February 28, 2025 and May 31, 2024, respectively

Right-of-use assets, net of accumulated amortization of $ 1,143,000 and $ 910,000 as of February 28, 2025 and May 31, 2024, respectively

Intangible assets, net of accumulated amortization of $ 63,000 and $ 48,000 as of February 28, 2025 and May 31, 2024, respectively

Property and equipment, net of accumulated depreciation and amortization

Right-of-use assets, net of accumulated amortization of $ 1,305,000 and $ 1,223,000 as of August 31, 2025 and May 31, 2025, respectively

Intangible assets, net of accumulated amortization of $ 74,000 and $ 69,000 as of August 31, 2025 and May 31, 2025, respectively

Liabilities and Shareholders’ Equity

2 unchanged sentences

Accrued compensation

Advance from customers

Advances from customers

Lease liabilities, current portion

4 unchanged sentences

Shareholders’ Equity:

Preferred stock, Series A 5% convertible, $ 0.08 par value, 571,429 shares authorized, none issued and outstanding as of February 28, 2025 and May 31, 2024

Preferred stock, undesignated, no par value, 4,428,571 shares authorized, none issued and outstanding as of February 28, 2025 and May 31, 2024

Preferred stock, Series A 5% convertible, $ 0.08 par value, 571,429 shares authorized, none issued and

outstanding as of August 31, 2025 and May 31, 2025

Preferred stock, undesignated, no par value, 4,428,571 shares authorized, none issued and outstanding

as of August 31, 2025 and May 31, 2025

Preferred stock, value

Common stock, $ 0.08 par value, 25,000,000 shares authorized, 20,366,005 and 16,821,646 issued and outstanding at February 28, 2025 and May 31, 2024, respectively

Common stock, $ 0.08 par value, 25,000,000 shares authorized, 2,815,410 and 2,546,216

issued and outstanding at August 31, 2025 and May 31, 2025, respectively

Additional paid-in capital

5 unchanged sentences

Total Liabilities and Shareholders’ Equity

The accompanying notes are an integral part of

these statements.

BIOMERICA, INC.

accompanying notes are an integral part of these statements.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS (UNAUDITED)

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

Three Months Ended

Nine Months Ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

CONSOLIDATED STATEMENTS OF OPERATIONS

COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

For the Three Months Ended August 31,

Cost of sales

( 1,518,000 )

( 1,166,000 )

( 3,820,000 )

( 3,708,000 )

Gross (loss) profit

Operating expenses:

1 unchanged sentence

Research and development

Total operating expenses

Total operating expense

Loss from operations

1 unchanged sentence

( 1,368,000 )

( 3,573,000 )

( 4,839,000 )

Other income:

Interest and dividend income

Dividend, interest, and other income

Total other income

Loss before income taxes

( 1,167,000 )

( 1,914,000 )

( 3,433,000 )

( 4,522,000 )

Benefit (provision) for income taxes

$ ( 1,163,000 )

$ ( 1,918,000 )

Income (loss) before income taxes

( 1,312,000 )

Provision for income taxes

Net income (loss)

$ ( 1,316,000 )

Basic net loss per common share

Diluted net loss per common share

Basic net income (loss) per common share

Diluted net income (loss) per common share

Weighted average number of common and common equivalent shares:

$ ( 1,163,000 )

$ ( 1,918,000 )

$ ( 3,429,000 )

Net income (loss)

$ ( 1,316,000 )

1 unchanged sentence

Foreign currency translation

Comprehensive loss

$ ( 1,164,000 )

$ ( 1,916,000 )

$ ( 3,440,000 )

Comprehensive income (loss)

$ ( 1,322,000 )

The accompanying notes are an integral part of

these statements.

BIOMERICA, INC.

accompanying notes are an integral part of these statements.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’

EQUITY (UNAUDITED)

For the Nine Months Ended February 29, 2024

Additional Paid-in

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

the Three Months Ended August 31, 2024

Accumulated Other Comprehensive

9 unchanged sentences

$ ( 108,000 )

Foreign currency translation

Share-based compensation

$ ( 49,511,000 )

( 1,507,000 )

Balances at November 30, 2023

( 44,856,000 )

Foreign currency translation

Share-based compensation

( 1,918,000 )

Balances at February 29, 2024

$ ( 102,000 )

$ ( 46,774,000 )

For the Nine Months Ended February 28, 2025

Additional Paid-in

the Three Months Ended August 31, 2025

Accumulated Other Comprehensive

3 unchanged sentences

$ ( 53,168,000 )

Foreign currency translation

Share-based compensation

$ ( 105,000 )

$ ( 53,168,000 )

Balances at August 31, 2024

( 49,511,000 )

Foreign currency translation

Net proceeds from ATM

Share-based compensation

Balances at November 30, 2024

( 50,461,000 )

Foreign currency translation

Net proceeds from ATM

Exercise of stock options

Net proceeds from sales of common stock

Share-based compensation

( 1,163,000 )

Balances at February 28, 2025

Net income loss

Balances at August 31, 2025

$ ( 102,000 )

2 unchanged sentences

$ ( 53,166,000 )

The accompanying notes are an integral

part of these statements.

BIOMERICA, INC.

accompanying notes are an integral part of these statements.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

February 28, 2025

February 29, 2024

Nine Months Ended

February 28, 2025

February 29, 2024

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended August 31,

Cash flows from operating activities:

$ ( 3,429,000 )

Net income (loss)

$ ( 1,316,000 )

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

Adjustments to reconcile net income (loss) to net cash used in operating

Depreciation and amortization

Provision (recovery) for allowance for credit losses

Provision for allowance for credit losses

Inventory reserve

6 unchanged sentences

Accrued compensation

Advance from customers

Advances from customers

Reduction in lease liabilities

1 unchanged sentence

( 1,344,000 )

( 4,317,000 )

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:

1 unchanged sentence

Costs from sale of common stock

Deferred offering costs

Proceeds from exercise of stock options

Net cash provided by financing activities

Effect of exchange rate changes in cash

Net decrease in cash and cash equivalents

( 1,112,000 )

Effect of exchange rate changes on cash

Net increase (decrease) in cash and cash equivalents

( 1,350,000 )

Cash and cash equivalents at beginning of year

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

1 unchanged sentence

Cash paid during the period for:

The accompanying notes are an integral part of

these statements.

BIOMERICA, INC.

Non-cash investing and financing activities:

Deferred offering costs

accompanying notes are an integral part of these statements.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

BASIS OF PRESENTATION

Biomerica, Inc.

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 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 products utilize immunoassay technology to analyze blood, urine, nasal, or fecal material from patients in the diagnosis of various

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

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

Our other existing products are primarily focused on

gastrointestinal diseases, food intolerances, and certain esoteric tests.

Company’s products are designed to enhance the health

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

Our 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, common, and 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 specific foods that may be causing an abnormally high immune response in the patient, which in turn can lead to abdominal pain and cramping, bloating, diarrhea

and constipation.

A food identified as positive, which

is causing an 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 two markets:

a) clinical laboratories and b) point-of-care (physicians’ offices and over-the-counter).

Most of our products have been granted Conformite Europeenne (“CE”)

marked regulatory clearance for sale throughout Europe, and/or are 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.

The unaudited condensed consolidated financial

statements herein have been prepared by management pursuant to the rules and regulations of the United States Securities and Exchange

Commission (“SEC”).

The accompanying unaudited condensed consolidated financial statements have been prepared under the presumption

that users of the interim financial information have either read or have access to the audited consolidated financial statements for the

latest fiscal year ended May 31, 2024.

Accordingly, certain information and note disclosures normally included in financial statements

prepared in accordance with United States generally accepted accounting principles (“GAAP”) have been condensed or omitted

pursuant to such rules and regulations.

In the opinion of management, all adjustments considered necessary for a fair presentation have

been included.

Operating results for the three and nine months ended February 28, 2025 are not necessarily indicative of the results that

may be expected for the fiscal year ending May 31, 2025.

For further information, refer to the audited consolidated financial statements

and notes thereto for the fiscal year ended May 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC

on August 28, 2024.

Management has evaluated all subsequent events and transactions through the date of filing this report.

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 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 products utilize immunoassay technology to analyze blood, urine, nasal, or fecal material

from patients in the diagnosis of various diseases, food intolerances and other medical complications, and to measure the level of specific

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

Our other existing

products are primarily focused on gastrointestinal diseases, food intolerances, and certain esoteric tests.

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, common, and address very large

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, which in turn can lead to abdominal pain and cramping, bloating, diarrhea and constipation.

A food identified

as positive, which is causing an 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:

(a) clinical laboratories and (b) point-of-care (physicians’

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.

In addition, some products

are cleared for sale in the United States by the FDA.

unaudited condensed consolidated financial statements herein have been prepared by management pursuant to the rules and regulations of

the United States Securities and Exchange Commission (“SEC”).

The accompanying unaudited condensed consolidated financial

statements have been prepared under the presumption that users of the interim financial information have either read or have access to

the audited consolidated financial statements for the latest fiscal year ended May 31, 2025.

Accordingly, certain information and note

disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles

(“GAAP”) have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, all adjustments

considered necessary for a fair presentation have been included.

Operating results for the three months ended August 31, 2025 are not

necessarily indicative of the results that may be expected for the fiscal year ending May 31, 2026.

For further information, refer to

the audited consolidated financial statements and notes thereto for the fiscal year ended May 31, 2025 included in our

Annual Report on Form 10-K filed with the SEC on August 29, 2025, as amended on our Annual Report on Form 10-K/A, filed with the SEC on

September 26, 2025.

Management has evaluated all subsequent events and transactions through

the date of filing this report.

SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The condensed consolidated financial statements

include the accounts of Biomerica, Inc.

as well as its German subsidiary (BioEurope GmbH) and Mexican subsidiary (Biomerica de Mexico).

OF CONSOLIDATION

condensed consolidated financial statements include the accounts of Biomerica, Inc.

and its wholly-owned subsidiaries Biomerica de Mexico

and BioEurope GmbH.

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

ACCOUNTING ESTIMATES

In order to prepare our consolidated financial

statements in conformity with GAAP, we must make a number of estimates and assumptions that affect the reported amounts of assets and

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

Such estimates and assumptions

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

Our estimates are based on historical experience and

various other assumptions that we believe to be reasonable under the circumstances.

Different assumptions or conditions may cause actual

results to differ materially from these estimates.

We monitor significant estimates made during the preparation of our financial statements

on an ongoing basis.

We believe our estimates and assumptions are reasonable under the current conditions;

however, actual results may

differ from these estimates under different future conditions.

We believe that the estimates and assumptions

that are most important to the portrayal of our financial condition and results of operations, in that they require subjective or complex

judgments, form the basis for the accounting policies deemed to be most critical to us.

These relate to revenue recognition, bad debts,

inventory overhead application, inventory reserves, lease liabilities, right-of-use assets 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 the Management’s Discussion and Analysis of Financial

Condition and Results of Operations of this Quarterly Report on Form 10-Q.

MARKETS AND METHODS OF DISTRIBUTION

The majority of the Company’s revenues come

from the sale of products it manufactures in the U.S.

and Mexico, with certain raw materials sourced from the U.S.

Asia and other regions.

The Company’s diagnostic business serves a diverse customer base that includes both domestic and international distributors, as

well as hospitals, clinical laboratories, medical research institutions, pharmaceutical companies, wholesalers, physicians’ offices,

and direct sales to consumers from its website.

A significant portion of the Company’s revenues are derived from international sales.

The Company employs a Director of Sales and Marketing

for Europe and South America, based in Germany, who has over 20 years of experience in diagnostics and life sciences.

This individual’s

international business experience and multilingual capabilities have facilitated strong relationships across Europe, Eastern Europe, Middle

East, Latin America, Canada, and the U.S.

The Company expects continued growth through the addition of new distributors and product lines

in these regions.

The Company markets its diagnostic products through

distributors, advertising in medical and trade journals, trade show exhibitions, direct mailings, and through its internal sales team.

The two primary markets the Company targets are clinical laboratories and patient point-of-care testing

LIQUIDITY AND GOING CONCERN

The Company has incurred net losses and negative

cash flows from operations and has an accumulated deficit of approximately $ 52 million as of February 28, 2025.

As of February 28, 2025,

the Company had cash and cash equivalents of approximately $ 3,058,000 and working capital of approximately $ 4,555,000 .

On July 21, 2020, the Company filed with the Securities

and Exchange Commission (“SEC”) a Form S-3 shelf registration statement and base prospectus which was declared effective by

the SEC on September 30, 2020.

The 2020 Shelf Registration Statement registered common shares that could be issued by the Company in a

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

On 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 “2021 ATM Offering”).

During 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 2021 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 offering in the amount of $ 53,000 .

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

of common stock in a firm commitment public offering at a gross sales price of $ 2.40 per share, with net total proceeds, after deducting

issuance fees and expenses of $ 700,000 , of approximately $ 7,300,000 .

As a result of this public offering, the Company terminated the 2021

ATM Offering.

As part of our financing plan, on

September 28, 2023, we filed a new “shelf” registration statement on Form S-3 with the SEC, to replace the expiring S-3

that was filed in July 2020, which was declared effective on September 29, 2023, 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 to facilitate the sale of up to $ 5,500,000

order to prepare our consolidated financial statements in conformity with GAAP, we must make a number of estimates and assumptions that

affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial

Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period.

Our estimates

are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.

assumptions or conditions may cause actual results to differ materially from these estimates.

We monitor significant estimates made during

the preparation of our financial statements on an ongoing basis.

We believe our estimates and assumptions are reasonable under the current

however, actual results may differ from these estimates under different future conditions.

believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations,

in that they require subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us.

relate to revenue recognition, bad debts, inventory overhead application, inventory reserves, lease liabilities, right-of-use assets

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 Operations of this Quarterly Report on Form

AND METHODS OF DISTRIBUTION

majority of our revenues come from the sale of products it manufactures in the United States and Mexico, with certain raw materials

sourced from Asia and other regions.

Our diagnostic business serves a diverse customer base that includes both domestic

and international distributors, as well as hospitals, clinical laboratories, medical research institutions, pharmaceutical companies,

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

A significant portion of our revenues are

derived from international sales.

We employ a Director of Sales and Marketing for Europe and South America, based in Germany, who has over 20 years of experience

in diagnostics and life sciences.

This individual’s international business experience and multilingual capabilities have facilitated

strong relationships across Europe, Eastern Europe, Middle East, Latin America, Canada, and the United States.

We expect continued growth

through the addition of new distributors and product lines in these regions.

Our markets its diagnostic products through distributors, advertising in medical and trade journals, trade show exhibitions, direct

mailings, and through its internal sales team.

The two primary markets we target are clinical laboratories and patient point-of-care

AND GOING CONCERN

have incurred recurring operating losses and negative cash flows from operations and have an accumulated deficit of approximately

$ 53 ,200,000 as of August 31, 2025.

As of August 31, 2025, we had cash and cash equivalents of approximately $ 3,053,000 and working

capital of approximately $ 4,206,000 .

September 28, 2023, we filed a new “shelf” registration statement on Form S-3 with the SEC, to replace the expiring “shelf”

registration statement on Form S-3 that was filed in July 21, 2020, as amended on September 20, 2020 (the “Shelf Registration Statement”),

which was declared effective on September 29, 2023, allowing the Company to issue up to $ 20,000,000 in shares of our common stock.

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

On May 10, 2024, we filed a prospectus supplement to the Shelf Registration Statement with the SEC 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 (the “2024 ATM Offering”).

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 7,798,345

shares per day and the high and low trading price of our stock during the same period of time was $ 1.03

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.

The Company intends to use the net proceeds from

any funds raised through the ATM 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.

During the nine months ended February 28, 2025,

the Company sold 3,525,359 shares of its common stock at prices ranging from $ 0.36 to $ 1.04 pursuant to the May 2024 ATM Offering, which

resulted in gross proceeds of approximately $ 2,143,000 and net proceeds to the Company of $ 2,015,000 after deducting commissions for each

sale and legal, accounting, and other fees related to offering in the amount of $ 128,000 .

Management assesses whether the Company has sufficient

liquidity to fund its costs for the next twelve months from each financial statement issuance date to determine if there is a substantial

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

The 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 sales within the US of existing products, and from 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 or increase gross margins as we grow;

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

Certain SEC regulations that limit the amount of capital the Company can raise through issuance of its equity.

Management has analyzed the Company’s cash

flow requirements through May 2026 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.

To 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.

As part of our efforts to reduce costs, we are

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

measures included a workforce reduction of nearly 15% in July 2024 and a substantial reduction in other operating expenses.

Additionally,

we have successfully raised $ 2,015,000 in net proceeds from the May 2024 ATM offering, providing additional liquidity to support our operations.

These 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.

The Company’s consolidated financial statements

as of February 28, 2025 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.

CONCENTRATION OF CREDIT RISK

The Company maintains cash balances at certain

financial institutions in excess of amounts insured by federal agencies.

From time to time, the Company has uninsured balances.

The Company does not believe it is exposed to any significant credit risks from any uninsured balances held at these financial institutions.

The Company provides credit in the normal course

of business to customers throughout the U.S.

and in foreign markets.

The Company performs ongoing credit evaluations of its customers

and requires accelerated prepayment in some circumstances.

Consolidated net sales were approximately $ 1,119,000

and $ 1,017,000 for the three months ended February 28, 2025, and February 29, 2024, respectively, and approximately $ 4,562,000 and $ 4,299,000

for the nine months ended February 28, 2025 and February 29, 2024, respectively

For the three months ended February 28, 2025,

the Company had three key customers who are located in the United States, Middle East, and Asia which accounted for 61 % of net consolidated sales.

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

for 44 % of net consolidated sales.

For the nine months ended February 28, 2025, the Company had one key customer who is located in Asia

which accounted for 35 % of net consolidated sales.

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

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

As of February 28, 2025, and May 31, 2024, total

gross receivables were approximately $ 1,293,000 and $ 966,000 , respectively.

On these dates, the Company had five and four key customers,

respectively, located in North America, Europe, Asia, and the Middle East.

These customers accounted for 76 % and 64 % of the gross accounts

receivable, respectively.

For the three months ended February 28, 2025,

the Company had two key vendors who accounted for 39 % of the purchases of raw materials.

In contrast, for the three months ended February

29, 2024, the Company had one key vendor who accounted for 50 % of the purchases of raw materials.

For the nine months ended February 28,

2025, the Company had one vendor who accounted for 11 % of the purchases of raw materials.

For the nine months ended February 29, 2024,

there was one vendor who accounted for 18 % of the purchases of raw materials.

As of February 28, 2025 and May 31, 2024, the

Company had two key vendors which accounted for 33 % and 69 % respectively, of accounts payable.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of demand deposits

and money market accounts with original maturities of less than three months.

ACCOUNTS RECEIVABLE

The Company extends unsecured credit to its customers

as part of its standard business practices.

International customers are typically required to prepay until a credit history with the Company

is established, at which point credit levels are determined based on various criteria.

Initial credit limits for distributors are approved

by designated officers or managers, while any increases require authorization from upper-level management.

The Company adopted Accounting Standards Update

2016-13, Financial Instruments – Credit Losses (codified as Accounting Standards Codification (“ASC”)

326) on June 1, 2023.

of this transaction, we incurred $ 81,000 in deferred offering costs during the year ended May 31, 2025.

the three months ended August 31, 2025, we sold 258,569 shares of our common stock at prices ranging from $ 3.34 to $ 3.69 pursuant to

the 2024 ATM Offering, which resulted in gross proceeds of approximately $ 939,000 and net proceeds to us of $ 912,000 after deducting

commissions for each sale and legal, accounting, and other fees related to offering in the amount of $ 27,000 .

We intend to use the net proceeds from any funds raised

through the 2024 ATM 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

assesses whether we have sufficient liquidity to fund its costs for the next twelve months from each financial statement issuance

date to determine if there is a substantial doubt about our ability to continue as a going concern.

Our 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 sales within the United States of existing products,

and from 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 or increase gross margins as we grow;

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

SEC regulations that limit the amount of capital we can raise through issuance of its equity.

has analyzed our cash flow requirements through November 2026 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.

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

part of our efforts to reduce costs, we have implemented significant cost-cutting measures in an attempt to extend our cash runway

and work towards increasing revenues to cover overhead costs.

factors raise substantial doubt about our ability to continue as a going concern.

Our future viability depends on

the successful execution of our strategic plans, securing additional near-term financing, and achieving profitable

Our consolidated financial statements as of August 31, 2025 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.

CONCENTRATION

OF CREDIT RISK

We maintain cash balances at certain financial institutions in excess of amounts insured by federal agencies.

From time to time,

we have uninsured balances.

We do not believe we are exposed to any significant credit risks.

We provide credit in the normal course of business to customers throughout the United States and in foreign markets.

We perform ongoing credit evaluations of our customers and requires accelerated prepayment in some circumstances.

net sales were approximately $ 1,380,000 for the three

months ended August 31, 2025, compared to $ 1,807,000

for the same period in 2024.

For the three months ended August 31, 2025, we had one key customer located in Asia, who accounted for 48 %

of net sales.

For the three months ended August 31, 2024, we had two key customers located in North America and Asia, respectively,

who collectively accounted for 55 %

of net sales.

of August 31, 2025, and May 31, 2025, total gross receivables were approximately $ 1,269,000 and $ 757,000 , respectively.

On these dates,

we had two and four key customers, respectively, located in Asia, North America, and Europe.

These customers accounted for 67 % and

69 % of the gross accounts receivable, respectively.

For the three months ended August 31, 2025, no vendor accounted for 10 %

or more of total raw material purchases.

For the three months ended August 31, 2024, two vendors, in the aggregate, accounted for approximately

34 % of total raw material purchases.

As of August 31, 2025, no vendor represented 10% or more of the our accounts payable.

As of May 31, 2025, one vendor represented approximately 20% of our accounts payable.

AND CASH EQUIVALENTS

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

RECEIVABLE, NET

extend unsecured credit to its customers on a regular basis.

International accounts are usually required to prepay until they

establish a history with us and at that time, they are extended credit at levels.

Initial credit levels for individual distributors

are approved by our designated officers and managers based on various criteria.

All increases in credit limits are

also approved by designated upper-level management.

We 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.

balances are written off against the allowance for expected credit losses after all means of collection have been exhausted and the potential

for recovery is considered remote.

Occasionally, certain long-standing customers

who routinely place large orders will have unusually large receivable balances relative to the total gross receivables.

Management monitors

the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders.

As of February 28, 2025 and May 31, 2024, the

Company has established a reserve of approximately $ 25,000 and $ 19,000 , respectively, for credit losses.

PREPAID EXPENSES AND OTHER

The Company occasionally prepays for items such

as inventory, insurance, and other items.

These items are reported as prepaid expenses and other, until either the inventory is physically

received, or the insurance and other items are expensed.

As of February 28, 2025 and May 31, 2024, prepaids were approximately $ 223,000 and $ 238,000 , respectively, composed of prepayments to insurance and various other suppliers.

INVENTORIES, NET

The Company values inventory at the lower of cost

(determined using a combination of specific lot identification and the first-in, first-out methods) or net realizable value.

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.

The reserve is adjusted based on such evaluation, with a corresponding provision included in cost of sales.

Abnormal amounts of idle facility

expenses, freight, handling costs and wasted material are recognized as current period charges and the allocation of fixed production

overhead is based on the normal capacity of the production facilities.

Net inventories are comprised of approximately

the following:

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,

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

Balances over 90

days old were usually reserved unless collection was reasonably assured.

Under the application of ASC 326, our 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, we evaluated

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

of products and services sold.

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

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

Occasionally,

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

gross receivables.

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

before shipping new sales orders.

of August 31, 2025 and May 31, 2025, we had established a reserve of approximately $ 64,000 and $ 26,000 , respectively, for credit

EXPENSES AND OTHER

We occasionally prepay for items such as inventory, insurance, and other items.

These items are reported as prepaid expenses and

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

of August 31, 2025 and May 31, 2025, the prepaids were approximately $ 168,000 and $ 255,000 , respectively, comprised of prepayments to

insurance and various other suppliers.

We value inventory at the lower of cost (determined using a combination of specific lot identification and the first-in, first-out

methods) or net realizable value.

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.

The reserve is adjusted based on such evaluation, with a corresponding provision

included in cost of sales.

Abnormal amounts of idle facility expenses, freight, handling costs and wasted material are recognized as

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

inventories are comprised of the following:

SCHEDULE OF NET INVENTORIES

February 28, 2025

August 31, 2025

Raw materials

4 unchanged sentences

Net inventory

Reserves for inventory obsolescence are recorded

as necessary to reduce obsolete inventory to estimated net realizable value or to specifically reserve for obsolete inventory.

As of February

28, 2025, and May 31, 2024, inventory reserves were approximately $ 422,000 and $ 467,000 , respectively.

PROPERTY AND EQUIPMENT, NET

Property and equipment are stated at cost.

for additions and major improvements are capitalized.

Repairs and maintenance costs are charged to operations as incurred.

When property

and equipment are sold, retired, or otherwise disposed of, the related cost and accumulated depreciation or amortization are removed from

the accounts, and gains or losses from sales, retirements and dispositions are credited or charged to income.

Depreciation and amortization are provided over

the estimated useful lives of the related assets, ranging from 5 to 10 years, using the straight-line method.

Leasehold improvements are

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

Depreciation and amortization expense on

property and equipment were approximately $ 17,000 and $ 16,000 for the three months ended February 28, 2025, and February 29, 2024, respectively,

and approximately $ 50,000 and $ 46,000 for the nine months ended February 28, 2025 and February 29, 2024, respectively.

INTANGIBLE ASSETS, NET

Intangible assets include trademarks, product

rights, technology rights and patents, and are accounted for based on ASC 350 Intangibles – Goodwill and Other.

In that regard, intangible assets that have indefinite useful lives are not amortized but are tested annually for impairment or more frequently

if events or changes in circumstances indicate that the asset might be impaired.

Intangible 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 patents are based on their individual useful lives which average around 15 years.

Amortization expense was approximately

$ 5,000 for the three months ended February 28, 2025, and $ 4,000 for the corresponding period ended February 29, 2024.

For the nine months

ended February 28, 2025, and February 29, 2024, the expenses were approximately $ 14,000 and $ 13,000 , respectively.

Amortizing intangible

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

The Company assesses the recoverability of these

intangible assets by determining whether the amortization of the asset’s balance over its remaining life can be recovered through

projected undiscounted future cash flows.

The Company uses a qualitative assessment to determine whether there was any impairment.

the nine months ended February 28, 2025, management did no t identify any indicators of impairment.

During the nine months ended February

29, 2024, management did no t identify any indicators of impairment.

The 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.

Equity holdings in nonmarketable unconsolidated

entities in which the Company is not able to exercise significant influence (“Cost Method Holdings”) are accounted for at

the Company’s initial cost, minus any impairment (if any), plus or minus changes resulting from observable price changes in orderly

transactions for the identical or a similar holding or security of the same issuer.

Dividends received are recorded as other income.

The Company assesses its equity holdings for impairment

whenever events or changes in circumstances indicate that the carrying value of an equity holding may not be recoverable.

Management reviewed

the underlying net assets of the Company’s equity method holding as of February 28, 2025 and determined that the Company’s

proportionate economic interest in the entity indicates that the equity holding was not impaired.

There were no observable price changes

in orderly transactions for identical or a similar holding or security of the Company’s Cost Method Holdings during the nine months ended February 28, 2025 and February 29, 2024.

SHARE-BASED COMPENSATION

The Company follows the guidance of ASC 718, Share-based

Compensation, which requires the use of the fair-value based method to determine compensation for all arrangements

under which employees and others receive shares of stock or equity instruments (options).

The Company grants stock options and restricted

stock units (“RSUs”) under its equity incentive plans.

The Company measures all share-based payment awards at their grant-date

The fair value of each option is estimated on the date of grant

using the Black-Scholes option-pricing model that uses assumptions for expected volatility, expected dividends, expected forfeiture rate,

expected term, and the risk-free interest rate.

The Company has not paid dividends historically and does not expect to pay them in the

foreseeable future.

Expected volatilities are based on weighted averages of the historical volatility of the Company’s common stock

estimated over the expected term of the options.

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

reserve for obsolete inventory.

As of August 31, 2025, and May 31, 2025, inventory reserves were approximately $ 478,000 and $ 471,000 ,

respectively.

AND EQUIPMENT, NET

and equipment are stated at cost.

Expenditures for additions and major improvements are capitalized.

Repairs and maintenance costs are

charged to operations as incurred.

When property and equipment are sold, retired or otherwise disposed of, the related cost and accumulated

depreciation or amortization are removed from the accounts, and gains or losses from sales, retirements and dispositions are credited

or charged to income.

and amortization are provided over the estimated useful lives of the related assets, ranging from 5 to 10 years, using the straight-line

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

and amortization expense on property and equipment was approximately $ 15,000 and $ 17,000 for the three months ended August 31, 2025 and

2024, respectively.

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

Goodwill and Other, In that regard, intangible assets that have indefinite useful lives are not amortized but are tested at least annually

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

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 patents are based on their individual useful lives which average around 15

Amortization expense was approximately $ 5,000 and $ 4,000 for the three months ended August 31, 2025 and 2024, respectively.

We assess the recoverability of these intangible assets by determining whether the amortization of the asset’s balance over

its remaining life can be recovered through projected undiscounted future cash flows.

We use a qualitative assessment to determine

whether there is any impairment.

During the three months ended August 31, 2025, and 2024, there were no impairment adjustments.

We have 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 us.

We invested approximately $ 165,000

into the Polish distributor and own approximately 6 %

of the Polish distributor.

holdings in nonmarketable unconsolidated entities in which we are not able to exercise significant influence (“Cost Method

Holdings”) are accounted for at our initial cost, minus any impairment (if any), plus or minus changes resulting

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.

We assess our equity holdings for impairment whenever events or changes in circumstances indicate that the carrying value of an

equity holding may not be recoverable.

Management reviewed the underlying net assets of our equity method holding as

of August 31, 2025 and determined that our proportionate economic interest in the entity indicates that the equity holding

was not impaired.

There were no observable price changes in orderly transactions for identical or a similar holding or security of our Cost Method Holdings during the period ended August 31, 2025.

We follow the guidance of ASC 718, Share-based Compensation, which requires the use of the fair-value based method to determine

compensation for all arrangements under which employees and others receive shares of stock or equity instruments (options).

We grant stock options and restricted stock under equity incentive plans.

We measure all share-based

payment awards at their grant-date fair value.

The fair value of each option is estimated on the date of grant using the Black-Scholes

option pricing model that uses assumptions for expected volatility, expected dividends, expected forfeiture rate, expected term, and

the risk-free interest rate.

We have not paid dividends historically and does not expect to pay them in the foreseeable future.

Expected volatilities are based on weighted averages of the historical volatility of our common stock estimated over

the expected term of the options.

The expected forfeiture rate is based on historical forfeitures experienced.

term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of

the vesting term plus the contract term as historically the Company had limited exercise activity surrounding its options.

The risk-free

rate is based on the U.S.

The expected term of options

granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term

plus the contract term as historically we had limited exercise activity surrounding our options.

The risk-free rate is based

Treasury yield curve in effect at the time of grant for the period of the expected term.

The grant date fair

value of the award is recognized under the straight-line attribution method.

The following summary presents the options granted,

exercised, expired, canceled and outstanding for the nine months ended February 28, 2025:

The grant date fair value of the

award is recognized under the straight-line attribution method.

following summary presents the options granted, exercised, expired, canceled and outstanding for the three months ended August 31, 2025:

SUMMARY OF OPTIONS ACTIVITY

Option Shares

Weighted Average

Exercise Price

Weighted Average Exercise Price

Options Outstanding at May 31, 2025

Cancelled or expired

Options Outstanding at February 28, 2025

During the three months ended February 28, 2025,

the Company expensed approximately $ 91,000 in share-based compensation related to stock options, compared to $ 340,000 for the same period

For the nine months ended February 28, share-based compensation expenses for stock option grants were approximately $ 323,000

in 2025 and $ 633,000 in 2024.

The following summary presents the RSUs granted,

vested, forfeited and outstanding for the nine months ended February 28, 2025:

Options Outstanding at August 31, 2025

the three months ended August 31, 2025, we expensed approximately $ 74,000 in share-based compensation related to stock options,

compared to $ 77,000 for the same period in 2024.

following summary presents the restricted stock awards granted, vested, forfeited and outstanding for the three months ended August 31, 2025:

SCHEDULE OF RSUs ACTIVITY

Restricted Stock Awards

Average Grant

Date Fair Value

RSUs Outstanding at May 31, 2024

RSUs Outstanding at February 28, 2025

During the three and nine months

ended February 28, 2025, the Company expensed $ 29,000

related to RSUs.

share-based compensation expense related to RSUs was recognized during the three and nine months ended February 29, 2024.

REVENUE RECOGNITION

The Company has various contracts with customers,

and these contracts specify the recognition of revenue based on the nature of the transaction.

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 title

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 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 returns.

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.

For 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.

For 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

As of February 28, 2025, the Company had approximately

Unvested Restricted Stock Awards at May 31, 2025

Unvested Restricted Stock Awards at August 31, 2025

the three months ended August 31, 2025, we expensed $ 59,000 related to Restricted Stock Awards.

No share-based compensation expense related to

restricted stock was recognized during the three months ended August 31, 2024.

We have 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 Freight on Board 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.

We do not allow returns except in cases of defective merchandise, and therefore, do not establish an

allowance for returns.

Additionally, we have contracts with customers that provide purchase discounts contingent on achieving specified

sales volumes.

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

contract period.

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 August 31, 2025, we had approximately $ 54,000

in advances from domestic customers, which are prepayments on orders for future shipments.

Disaggregation of revenue:

The following is a breakdown of revenues according

to markets to which the products are sold:

Disaggregation

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

SCHEDULE OF DISAGGREGATION REVENUE

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

Three Months Ended

Nine Months Ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

Over-the-counter

Three Months Ended August 31,

Contract manufacturing

Over-the-counter

Physician’s office

See Note 4 for additional information regarding

geographic revenue concentrations.

SHIPPING AND HANDLING FEES

The Company includes shipping and handling fees

billed to customers in net sales.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as

The Company expensed approximately $ 217,000 and $ 343,000 of research and development costs during the three months ended February

28, 2025 and February 29, 2024, respectively.

Similarly, it expensed approximately $ 771,000 and $ 1,226,000 of research and development

costs during the nine months ended February 28, 2025 and February 29, 2024, respectively.

During the three and nine months ended

February 28, 2025, the Company had a net operating loss (“NOL”) that generated deferred tax assets for NOL carryforwards.

Deferred income tax assets and liabilities are recognized for temporary differences between the financial statements and income tax carrying

values using tax rates in effect for the years such differences are expected to reverse.

Due to uncertainties surrounding our ability

to generate future taxable income and consequently realize such deferred income tax assets, the Company has determined that it is more

likely than not that these deferred tax assets will not be realized.

Accordingly, the Company has established a full valuation allowance

against its deferred tax assets as of February 28, 2025.

The Company’s policy is to recognize any

interest and penalties related to unrecognized tax benefits as a component of income tax expense.

For the nine months ended February 28,

2025, the Company had no accrued interest or penalties related to uncertain tax positions.

ADVERTISING COSTS

The Company reports the cost of advertising as

expense in the period in which those costs are incurred.

For the three months ended February 28, 2025, and February 29, 2024, advertising

costs were approximately $ 4,000 and $ 25,000 , respectively.

During the nine months ended February 28, 2025, and February 29, 2024, the

costs were approximately $ 30,000 and $ 80,000 , respectively.

FOREIGN CURRENCY TRANSLATION

The subsidiary located in Mexico operates primarily

using the Mexican peso.

The subsidiary located in Germany operates primarily using the U.S.

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 period, and revenues and costs are translated using average exchange rates for the period.

The resulting translation adjustments

to assets and liabilities are presented as a separate component of accumulated other comprehensive loss.

Note 4 for additional information regarding revenue concentrations.

AND HANDLING FEES

We include shipping and handling fees billed to customers in net sales.

AND DEVELOPMENT

and development costs are expensed as incurred.

We expensed approximately $ 212,000 and $ 297,000 of research and development

costs during the three months ended August 31, 2025 and 2024, respectively.

We had income tax expense for the three months ended

August 31, 2025 of approximately $3,000, consisting of state minimum and foreign miscellaneous taxes.

During the three months ended August

31, 2025, we had a net operating loss (“NOL”) that generated deferred tax assets for NOL carryforwards.

Deferred income tax

assets and liabilities are recognized for temporary differences between the financial statements and income tax carrying values using

tax rates in effect for the years such differences are expected to reverse.

Due to uncertainties surrounding our ability to generate future

taxable income and consequently realize such deferred income tax assets, we have determined that it is more likely than not that these

deferred tax assets will not be realized.

Accordingly, we have established a full valuation allowance against its deferred tax assets

as of August 31, 2025.

Our policy is to recognize any interest and penalties

related to unrecognized tax benefits as a component of income tax expense.

For the three months ended August 31, 2025, we had no accrued

interest or penalties related to uncertain tax positions.

We report the cost of advertising as expense in the period in which those costs are incurred.

Advertising costs were approximately

$ 9,000 and $ 14,000 for the three months ended August 31, 2025 and 2024, respectively.

CURRENCY TRANSLATION

Mexico, the subsidiary located in Mexico, operates primarily using the Mexican peso.

BioEurope GmbH, the subsidiary located in

Germany, operates primarily using the U.S.

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

assets and liabilities of these subsidiaries are translated using exchange rates in effect at the end of the period, and revenues

and costs are translated using average exchange rates for the period.

The resulting translation adjustments to assets and

liabilities are presented as a separate component of accumulated other comprehensive loss.

There are no foreign currency

transactions that are included in the condensed consolidated statements of operations and comprehensive loss for the three and nine months

ended February 28, 2025 and February 29, 2024.

RIGHT-OF-USE ASSETS AND LEASE LIABILITY

In February 2016, the Financial Accounting Standards

Board (“FASB”) issued an accounting standard update which requires lessees to recognize most leases on the balance sheet with

a corresponding right-of-use asset.

Right-of-use assets represent the Company’s right to use an underlying asset for the lease term

and lease liabilities represent our obligation to make lease payments arising from the lease.

Right-of-use assets and lease liabilities

are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term.

are classified as financing or operating which will drive the expense recognition pattern.

The Company has elected to exclude short-term

The Company leases office space and copy machines, all of which are operating leases.

Most leases include the option to renew

and the exercise of the renewal options is at the Company’s sole discretion.

Options to extend or terminate a lease are considered

in the lease term to the extent that the option is reasonably certain of exercise.

The leases do not include the options to purchase the

leased property.

The depreciable life of assets and leasehold improvements are limited by the expected lease term.

NET LOSS PER SHARE

Basic loss per share is computed as net

loss divided by the weighted average number of common shares outstanding for the period.

Diluted loss per share reflects the potential

dilution that could occur from common shares issuable through stock options, warrants and other convertible securities using the treasury

stock method.

A total of 3,343,866 and 3,506,616 anti-dilutive stock options were excluded

from the loss per share calculation for the nine months ended February 28, 2025, and February 29, 2024, respectively.

Additionally, 780,000

restricted stock units (“RSUs”) were excluded for the nine months ended February 28, 2025, while no RSUs were excluded for

the nine months ended February 29, 2024.

RECENT ACCOUNTING PRONOUNCEMENTS

Recent 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.

In November 2023, the 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 permitted.

We are currently evaluating the effect of adopting this pronouncement

on our financial statements and disclosures.

In 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

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 disclosures.

In November 2024, the FASB issued ASU 2024-03,

“Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)”.

includes enhanced disclosure requirements, which mandates enhanced transparency in financial statements by requiring detailed disclosures

of specific expenses like inventory purchases, employee compensation, depreciation, and intangible asset amortization.

ASU 2024-03 are

effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods

beginning after December 15, 2027.

transactions that are included in the condensed consolidated statements of operations and

comprehensive income (loss) for the three months ended August 31, 2025 and 2024.

ASSETS AND LEASE LIABILITY

February 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update which requires

lessees to recognize most leases on the balance sheet with a corresponding right-of-use asset.

Right-of-use assets represent our

right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising

from the lease.

Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated

present value of fixed lease payments over the lease term.

Leases are classified as financing or operating which will drive the

expense recognition pattern.

We have elected to exclude short-term leases.

Our leases office space and copy

machines, all of which are operating leases.

Most leases include the option to renew and the exercise of the renewal options is at

our sole discretion.

Options to extend or terminate a lease are considered in the lease term to the extent that the

option is reasonably certain of exercise.

The leases do not include the options to purchase the leased property.

The depreciable

life of assets and leasehold improvements are limited by the expected lease term.

INCOME (LOSS) PER SHARE

income (loss) per share is computed as net loss divided by the weighted average number of common shares outstanding for the period.

Diluted income (loss)

per share reflects the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible

securities using the treasury stock method.

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

at August 31, 2025 and 2024 was 413,146 and 413,269 , respectively.

define our segments on the basis in which internally reported financial information is reviewed by the Chief Operating Decision

Maker (the “CODM”) to analyze financial performance, make decisions, and allocate resources.

We manage our operations as a

single operating and reportable segment, which focus on the development, manufacture, marketing, and sale of diagnostic products.

all material financial information is included in the consolidated results we have identified one reportable segment.

The CODM uses

net income (loss) and cash flow information to evaluate performance, including detailed cost information as part of the budget and

forecasting process and considers budget-to-actual variances on a regular basis when making decisions about the allocation of

operating and capital resources.

We measure segment profit or loss is net income (loss) as reported in the consolidated financial

accounting policies used in the segment reporting are the same as those described in the summary of significant accounting policies.

Our CODM is the Chief Executive Officer.

Our reportable segment product sales, net and net income (loss) during the three months ended August 31, 2025 and 2024 consisted

of the following:

OF SEGMENT REPORTING

For the Three Months Ended August 31,

Cost of sales

( 1,518,000 )

Operating expenses:

Sales and marketing expense

General and administrative expense

Research and development expense

Total operating expense

Loss from operations

( 1,118,000 )

( 1,368,000 )

Other income:

Dividend, interest, and other income

Total other income

Loss before income taxes

( 1,312,000 )

Provision for income taxes

$ ( 1,316,000 )

Dividend, interest, and other income for the three

months ended August 31, 2025, included $ 1,100,000 related to the Employee Retention Credit (“ERC”), a refundable payroll-tax

credit established under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

We account for ERC claims

in accordance with ASC 450-30, “Gain Contingencies,” and therefore recognizes income only when all related contingencies have

been resolved and receipt of the refund is realized or realizable.

The ERC relates to qualified wages paid during calendar year 2021 under

the COVID-19 pandemic relief programs and represents a one-time, non-recurring item that will not impact future reporting periods.

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 our present or future consolidated financial statements, except as follows:

November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation

Disclosures (Subtopic 220-40)”.

The ASU includes enhanced disclosure requirements, which mandates enhanced transparency in financial

statements by requiring detailed disclosures of specific expenses like inventory purchases, employee compensation, depreciation, and

intangible asset amortization.

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim

reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The Company is currently evaluating the impact of this standard and intends

to include the required disclosures in its Annual Report on Form 10-K for the fiscal year ended May 31, 2025.

We are currently evaluating

the effect of adopting this pronouncement on our financial statements and disclosures.

SHAREHOLDERS’ EQUITY

On September 28, 2023, the Company filed a “shelf”

registration statement on Form S-3 with the SEC, which was declared effective on September 29, 2023, allowing the Company to issue up

to $ 20,000,000 in common shares.

September 28, 2023, we filed a “shelf” registration statement on Form S-3 with the SEC on September 28, 2023, which was

declared effective on September 29, 2023, allowing us to issue up to $ 20,000,000

in share of common stock.

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 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.

On February 29, 2024, the Company did not have

an open ATM offering in place.

No shares of common stock or other equity securities of the Company were sold under the shelf registration

statement during the nine months ended February 29, 2024.

During the nine months ended February 28, 2025, the Company sold 3,525,359 shares

of its common stock at prices ranging from $ 0.36 to $ 1.04 under its Form S-3 Registration Statement and ATM Offering which resulted in

gross proceeds of approximately $ 2,143,000 and net proceeds to the Company of $ 2,015,000 after deducting commissions for each sale and

legal, accounting, and other fees related to the ATM Offering.

On May 10, 2024, we filed a prospectus supplement with the SEC, as

part of the “shelf” registration statement on Form S-3.

This prospectus supplement was intended to facilitate the sale of

up to $ 5,500,000

in common stock through the 2024 ATM Offering.

the three months ended August 31, 2025, we sold 258,569

shares of our common stock at prices ranging from $ 3.34

pursuant to the 2024 ATM Offering, which resulted in gross proceeds of approximately $ 939,000

and net proceeds us of $ 912,000

after deducting commissions for each sale and legal, accounting, and other fees related to offering in the amount of $ 27,000 ,

including $ 8,000

of previously capitalized deferred offering costs.

GEOGRAPHIC INFORMATION

The Company operates as one segment.

information regarding net sales is approximately as follows:

We operate as one segment.

Geographic information regarding net sales is approximately as follows:

SCHEDULE OF GEOGRAPHIC INFORMATION

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

Three Months Ended

Nine Months Ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

Three Months Ended August 31,

Revenues from sales to unaffiliated customers:

1 unchanged sentence

South America

As of February 28, 2025, and May 31, 2024, approximately

$ 475,000 and $ 537,000 of the Company’s gross inventory was located in Mexicali, Mexico, respectively.

As of February 28, 2025, and May 31, 2024, approximately

$ 11,000 and $ 14,000 of the Company’s property and equipment, net of accumulated depreciation and amortization, was located in Mexicali,

of August 31, 2025 and May 31, 2025, approximately $ 480,000 and $ 483,000 of our gross inventory was located in Mexicali,

Mexico, respectively.

The Company leases facilities in Irvine, California and Mexicali, Mexico

As of February 28, 2025, the Company had approximately

22,000 square feet of floor space at its corporate headquarters at 17571 Von Karman Avenue in Irvine, California.

This facility includes

administration, research and development, certain manufacturing, shipping and inventory storage.

The lease for its headquarters expires

in August 2026.

The Company has the option to extend the lease for an additional five-year term.

The Company made a security deposit of

approximately $ 22,000 .

In November 2016, the Company’s Mexican subsidiary,

Biomerica de Mexico, entered into a 10-year lease for approximately 8,100 square feet of manufacturing space.

The Company has one 10-year

option to renew at the end of the initial lease period.

Biomerica de Mexico also leases a smaller unit on a month-to-month basis for use

in one manufacturing process.

In addition, the Company leases a small office

in Lindau, Germany on a month-to-month basis, as headquarters for BioEurope GmbH, its Germany subsidiary.

For purposes of determining straight-line rent

expense, the lease term is calculated from the date the Company first takes possession of the facility, including any periods of free

rent and any renewal options periods that the Company is reasonably certain of exercising.

The Company’s office and equipment leases

generally have contractually specified minimum rent and annual rent increases are included in the measurement of the right-of-use asset

and related lease liabilities.

Additionally, under these lease arrangements, the Company may be required to pay directly, or reimburse

the lessors, for some maintenance and operating costs.

Such amounts are generally variable and therefore not included in the measurement

of the right-of-use asset and related lease liabilities but are instead recognized as variable lease expense in the consolidated statements

of operations and comprehensive loss when they are incurred.

The following table presents information on our

operating leases for the three months and nine months ended February 28, 2025 and February 29, 2024:

of August 31, 2025 and May 31, 2025, approximately $ 9,000 and $ 10,000 of our property and equipment, net of accumulated

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

We lease facilities in Irvine, California and Mexicali, Mexico.

of August 31, 2025, we had approximately 22,000 square feet of floor space at its corporate headquarters at 17571 Von Karman

Avenue in Irvine, California.

This facility includes administration, research and development, certain manufacturing, shipping and inventory

The lease for its headquarters expires in August 2026.

We have the option to extend the lease for an additional five-year

We made a security deposit of approximately $ 22,000 .

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

feet of manufacturing space.

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

Biomerica de Mexico

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

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

Germany subsidiary.

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

facility, including any periods of free rent and any renewal options periods that we are reasonably certain of exercising Our

office and equipment leases generally have contractually specified minimum rent and annual rent increases are included in the

measurement of the right-of-use asset and related lease liabilities.

Additionally, under these lease arrangements, we may

be required to pay directly, or reimburse the lessors, for some maintenance and operating costs.

Such amounts are generally variable

and therefore not included in the measurement of the right-of-use asset and related lease liabilities but are instead recognized as

variable lease expense in the consolidated statements of operations and comprehensive income (loss) when they are

following table presents information on our operating leases for the three months ended August 31, 2025 and 2024:

SCHEDULE OF OPERATING LEASES

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

Three Months Ended

Nine Months Ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

Three Months Ended August 31,

Operating lease cost

2 unchanged sentences

Total lease cost

The approximate maturity of lease liabilities

as of February 28, 2025 are as follows:

approximate maturity of lease liabilities as of August 31, 2025 are as follows:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

1 unchanged sentence

Operating Leases

2026 (excluding the nine months ended February 28, 2025)

2026 (excluding the three months ended August 31, 2025)

Total minimum future lease payments

1 unchanged sentence

Total operating lease liabilities

The following table summarizes the Company’s

other supplemental lease information for the nine months ended February 28, 2025 and February 29, 2024:

following table summarizes the our other supplemental lease information for the three months ended August 31, 2025 and

SCHEDULE OF OTHER SUPPLEMENTAL LEASE INFORMATION

February 28, 2025

February 29, 2024

Nine Months Ended

February 28, 2025

February 29, 2024

Three Months Ended August 31,

Cash paid for operating lease liabilities

1 unchanged sentence

Weighted-average discount rate

The Company also has various insignificant leases

for office equipment.

Company also has various insignificant leases for office equipment.

COMMITMENTS AND CONTINGENCIES

The Company is, from time to time, involved in

legal proceedings, claims, and litigation arising in the ordinary course of business.

While the amounts claimed may be substantial, the

ultimate liability cannot presently be determined because of considerable uncertainties that exist.

Therefore, it is possible the outcome

of such legal proceedings, claims, and litigation could have a material effect on quarterly or annual operating results or cash flows

when resolved in a future period.

However, based on facts currently available, management believes such matters will not have a material

adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

There were no material legal proceedings pending

as of February 28, 2025.

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

the amounts claimed may be substantial, the ultimate liability cannot presently be determined because of considerable uncertainties that

Therefore, it is possible the outcome of such legal proceedings, claims, and litigation could have a material effect on quarterly

or annual operating results or cash flows when resolved in a future period.

However, based on facts currently available, management believes

such matters will not have a material adverse effect on our consolidated financial position, results of operations or

were no legal proceedings pending as of August 31, 2025.

SUBSEQUENT EVENTS

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

What changed 10-Q

Item 1. Financial Statements