What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-14 compared with 2025-04-14 · 289 added, 354 removed, 20 unchanged (97% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and

analysis in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes thereto included in

Part I, Item 1 of this Report and the audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year

ended May 31, 2024 (our 2024 Annual Report).

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains

forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and

Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and subject to the safe harbor created by the

Securities Litigation Reform Act of 1995.

All statements, other than statements of historical fact, contained in

this Quarterly Report are forward-looking statements.

Such statements include declarations regarding our intent, belief, or current expectations, and those of our management.

In some cases, you can identify forward-looking statements by terminology

such as “may,” “will,” “should, ””could,” “contemplates,” “expects,”

“intends,” “plans,” “targets,” “anticipates,” “believes,” “estimates,”

“projects,” “predicts,” “potential” or “continue” or the negative of these terms or other

comparable terminology.

Investors are cautioned that any such forward-looking statements are not guarantees of future performance and

involve a number of risks, uncertainties and other factors, some of which are beyond our control.

Actual results could differ materially

from those indicated by such forward-looking statements.

Important factors that could cause actual results to differ materially from those

indicated by such forward-looking statements include, but are not limited to, those risks and uncertainties identified under “Risk

Factors,” in our 2024 Annual Report on Form 10-K and the other risks detailed from time-to-time in our reports and registration

statements filed with the Securities and Exchange Commission, or SEC.

Except as required by law, we undertake no obligation to revise

or update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

We are a global biomedical technology company

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

Our diagnostic test kits are used to analyze

blood, urine, nasal or fecal material from patients in the diagnosis of various diseases, food intolerances and other medical complications.

They can also be used to measure or detect the presence and levels of specific bacteria, hormones, antibodies, antigens and other substances,

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

Our products are designed to enhance the health and well-being of

people, while reducing total healthcare costs.

Our extensive range of medical diagnostic products

is sold worldwide, primarily in two markets:

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

should read the following discussion and analysis in conjunction with our unaudited condensed consolidated financial statements and the

accompanying notes thereto included in Part I, Item 1 of this Report and the audited consolidated financial statements in our Annual

Report on Form 10-K for the fiscal year ended May 31, 2025 (our 2025 Annual Report).

FORWARD-LOOKING

This Quarterly Report on Form 10-Q (“Form 10-Q” or “Quarterly

Report”) contains forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities

Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the

“Exchange Act”).

All statements in this Quarterly Report, other than statements of historical facts, including, without limitation,

statements regarding our strategy, future operations, future operating expenses, future financial position, future revenue, projected

costs, prospects, plans, intentions, expectations, goals and objectives may be forward-looking statements.

The forward-looking statements

in this Quarterly Report do not constitute guarantees of future performance, and actual results could differ materially from those expressed

or implied in any forward-looking statements.

In some cases, you can identify forward-looking statements by words such as “believe,”

“expect,” “anticipate,” “contemplate,” “estimate,” “project,” “forecast,”

“would,” “may,” “should,” “will,” “could,” “can,” “potential,”

“possible,” “proposed,” “plan,” “develop,” “opportunity,” “intend,”

“initiative,” “target,” “maintain,” “continue,” “strive,” “progress,”

“aim,” or the negative of these terms or other comparable expressions.

among others, that could cause actual results and events to differ materially from those expressed or implied in any forward-looking

statement include:

ability to raise additional capital and continue as a going concern;

accuracy of our estimates regarding expenses, future revenue, capital requirements and needs

for additional financing;

scope of protection we are able to establish and maintain for our intellectual property rights

covering our products and technology;

ability to compete in our industry, including against competitors that have significantly

greater financial, technical and marketing resources than we do;

ability to obtain and maintain government or regulatory certification in the countries and

regions we sell products in;

ability to maintain relations with our key distributors;

impact of global economic and political developments on our business, including rising inflation

and interest rates, capital market disruptions, bank failures, government shutdowns, economic

sanctions and economic slowdowns or recessions that may result from such developments which

could harm our research and development efforts as well as the value of our common stock

and our ability to access capital markets;

implementation of our business model and strategic plans for our business, products, and

risks related to third parties asserting intellectual property infringement claims against

impact of numerous laws and regulations that apply to us and compliance with these laws and

regulations, as they currently exist or as modified in the future;

risks related to product recalls, claims of liability, harm to patients or users of our products;

ability to retain the continued service of our key personnel and to identify, hire and retain

additional qualified professionals.

factors that might cause actual results and our current expectations and projections to differ materially include, among other things,

those discussed in this Quarterly Report as well as those under the section titled “Risk Factors,” and discussed elsewhere

in our Annual Report and the other risks detailed from time-to-time in our reports and registration statements filed with the Securities

and Exchange Commission (“SEC”).

We intend that such forward-looking statements be subject to the safe harbors for such statements.

These forward-looking statements are based on the current beliefs and expectations of our management and speak only as of the date of

this Quarterly Report or, in the case of documents referred to or incorporated by reference, the date of those documents.

not place undue reliance on these forward-looking statements, which are subject to significant known and unknown risks, uncertainties

and other factors, which are in some cases, beyond our control and which could materially affect results.

If underlying assumptions prove

inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections.

as required by law, we do not undertake any obligation to revise or update publicly any forward-looking

statements, whether as a result of new information, future events or otherwise .

If we do update one or more forward-looking statements,

no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

are a global biomedical technology company that develops, patents, manufactures and markets advanced diagnostic and therapeutic products.

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

food intolerances, and other medical complications.

They can also be used to measure or detect the presence and levels of specific bacteria,

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

are designed to enhance the health and well-being of people, while reducing total healthcare cost.

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

clinical laboratories and point-of-care settings.

Most of our products are Conformite Europeenne

(“CE”) marked and/or registered with regulatory agencies in various countries for diagnostic use, with several also cleared

by the FDA for sale in the United States.

Technological advances in medical diagnostics

have enabled diagnostic tests to be performed not only in clinical laboratories but also at home and at the point-of-care in physicians’

One of our key objectives has been to develop and market rapid diagnostic tests that are accurate, utilize easily obtained patient

specimens, and are simple to perform without the need for complex instrumentation.

Our home use (over-the-counter) and professional use

(physicians’ office, clinics, etc.) rapid diagnostic test products help manage existing medical conditions and may save lives through

early detection and diagnosis of specific diseases.

Traditionally, such tests required the expertise of medical technologists and sophisticated

equipment, with results often not available for days.

We believe our rapid point-of-care tests, when properly used, can be as accurate

as laboratory tests.

Our products require limited to no instrumentation, deliver reliable results in minutes, and can be performed with

confidence at home or in a physician’s office.

We invest resources in the research and development

of new products designed to diagnose and, in some cases, treat several major medical diseases.

These products are either internally developed

or licensed from others.

Our experienced and highly trained technical personnel, including Ph.D.

holders and other scientists, are dedicated

to developing new products and managing technology transfer activities.

Our technical staff, many of whom have extensive experience from

previous employment at large diagnostic manufacturing companies, bring a wealth of industry knowledge.

Additionally, we rely on our Scientific

Advisory Board, comprised of leading medical doctors and clinicians, to guide our clinical studies and product development efforts.

A key outcome from our research and development

efforts is our patented diagnostic-guided therapy (“DGT”) product, developed on the inFoods® technology platform.

innovative technology is designed to treat gastrointestinal conditions such as irritable bowel syndrome (“IBS”) and other

inflammatory diseases.

The DGT product targets chronic inflammatory illnesses that are widespread and prevalent in large markets.

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

The inFoods® IBS product utilizes a simple

blood test to identify patient-specific foods that, when eliminated from the diet, may alleviate IBS symptoms such as pain, bloating,

diarrhea, cramping, and constipation.

Unlike broad and difficult-to-manage dietary restrictions, the inFoods® IBS product pinpoints

a patient’s heightened immunoreactivity to specific foods known to frequently trigger IBS symptoms.

By removing the foods identified

as problematic, patients can achieve relief from their IBS symptoms.

We began commercializing our inFoods® product

with select gastroenterology (“GI”) physician groups in various states and regions, including collaboration with one of the

largest GI groups in the U.S.

This initial phase was focused on gathering real-world feedback, optimizing physician engagement, and validating

operational processes.

Feedback from GI specialists has been generally positive, and we are continuing to expand our network by onboarding

additional physician practices.

Our dedicated sales team is focused on building

strong relationships within the GI segment while selectively exploring opportunities to introduce inFoods® to other medical specialties,

including integrated health practices and primary-care providers.

These efforts are intended to lay the groundwork for broader adoption

by showcasing the distinct clinical value of inFoods® across multiple healthcare channels.

Concurrently, we are evaluating distribution,

partnership, and licensing opportunities with U.S.companies to support a scalable, broad market launch.

These potential collaborations

could significantly enhance the commercialization trajectory of inFoods® products, both domestically and internationally.

As we continue pursue commercial opportunities in both U.S.

and international markets, we remain attentive to evolving

global economic conditions, including uncertainties related to international trade policies, tariffs, and supply chain dynamics.

these factors have not had a material impact on our operations to date, future changes in trade regulations, tariff structures, or logistical

constraints could influence the cost, availability, or timing of materials and components used in our manufacturing processes.

to monitor these developments closely and are actively implementing contingency plans, including alternative sourcing strategies and supplier

diversification, to support supply chain continuity, maintain operational efficiency, and help mitigate potential future impacts.

also focusing on alternative manufacturing and shipping strategies of our products through our European subsidiary (BioEurope), and our

Mexican subsidiary (BioMexico), to mitigate some of the risk these policies may have on our revenues and operations.

Beyond the inFoods® product line,

the Company has achieved a significant milestone with the development of hp+detect™, a diagnostic test designed to detect Helicobacter

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

for diagnostic use, with several also cleared by the U.S.

Food and Drug Administration (“FDA”) for sale in the United States.

TECHNOLOGICAL

ADVANCEMENTS AND PRODUCT DEVELOPMENT

Technological

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

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

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

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

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

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

Traditionally, such tests

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

We believe our

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

Our products require limited to no instrumentation,

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

RESEARCH AND DEVELOPMENT

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

These products are either internally developed or licensed from others.

Our experienced and highly trained technical personnel,

including Ph.D.

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

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

a wealth of industry knowledge.

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

to advise on our clinical studies and product development efforts.

key outcome from our research and development efforts is our patented diagnostic-guided therapy (“DGT”) product,

developed on the inFoods® technology platform.

This innovative technology is designed to aid in the management of

gastrointestinal conditions such as irritable bowel syndrome (“IBS”) and other inflammatory diseases.

target chronic inflammatory illnesses that are widespread and prevalent in large markets.

We have launched inFoods® IBS product,

which leverages this patented technology.

The inFoods® IBS product utilizes a simple blood test to identify patient-specific

foods that, when eliminated from the diet, may help reduce IBS symptoms such as pain, bloating, diarrhea, cramping, and

constipation.

Unlike broad and difficult to manage dietary restrictions, the inFoods® IBS product pinpoints a patient’s

heightened immunoreactivity to specific foods known to frequently trigger IBS symptoms.

By removing the foods identified as

problematic, patients can achieve relief from IBS symptoms.

have introduced our inFoods® IBS product to select gastroenterology (“GI”) physician groups in multiple states and

regions, including in collaboration with one of the largest GI physician groups in the United States.

This initial phase was focused

on gathering real-world feedback, optimizing physician engagement, and validating operational processes.

GI physician feedback has

been generally positive, and we are continuing to expand our network by onboarding additional physician practices.

dedicated sales team is focused on building strong relationships within the GI segment while selectively exploring opportunities to

introduce our inFoods® IBS products to other medical specialties, including integrated health practices and primary-care

These efforts are intended to lay the groundwork for broader adoption by showcasing the distinct clinical value of

inFoods® across multiple healthcare channels.

Concurrently,

we are evaluating distribution, partnership, and licensing opportunities with U.S.

companies to support a scalable, broad

market launch.

These potential collaborations could significantly enhance the commercialization trajectory of inFoods® IBS

products, both domestically and internationally.

are currently in the process of applying for U.S.

government payment or reimbursement for the inFoods® IBS product through the Medicare

If we are successful in attaining reimbursement, we will move forward with applying for reimbursement of this product by private

payer insurance companies.

If patients are able to attain and use our inFoods® IBS product at no cost, or with a small co-payment,

we believe this will dramatically increase our revenues from this product.

we continue to pursue commercial opportunities in both U.S.

and international markets, we remain attentive to evolving global

economic conditions, including uncertainties related to international trade policies, tariffs, and supply chain dynamics.

these factors have not had a material impact on our operations to date, future changes in trade regulations, tariff structures, or

logistical constraints could influence the cost, availability, or timing of materials and components used in our manufacturing

We continue to monitor these developments closely and are actively implementing contingency plans, including alternative

sourcing strategies and supplier diversification, to support supply chain continuity, maintain operational efficiency, and help

mitigate potential future impacts.

We are also focusing on alternative manufacturing and shipping strategies of our products through

our European subsidiary (BioEurope), and our Mexican subsidiary (BioMexico), to mitigate some of the risk these policies may have on

our revenues and operations.

addition, in December 2023 we received FDA clearance for hp+detect™, a diagnostic test designed to detect Helicobacter pylori (H.

pylori) bacteria in the gastrointestinal tract.

pylori is a prevalent infection, affecting approximately

35% of the U.S.

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

This bacterium is the strongest known risk

factor for gastric cancer, which remains one of the leading causes of cancer-related deaths worldwide.

The hp+detect™ test offers physicians and

medical centers a reliable tool for diagnosing H.

pylori infections and monitoring treatment efficacy.

The test is marketed directly to

laboratories, where patient samples are processed to provide timely and accurate diagnoses.

To support the widespread adoption and distribution

of hp+detect™, the Company is working with large reference laboratories, aiming to improve patient outcomes through early

detection and effective treatment of H.

pylori infections.

Due to the slower-than-expected launch of the

Company’s key products, inFoods® IBS and hp+detect™, the Company has executed significant cost-cutting measures to extend

its cash runway and work towards increasing revenues to cover overhead costs.

These measures include a workforce reduction of nearly 15%

during this fiscal year, which incurred costs such as severance, impacting typical cost trends and margins.

Additionally, we raised $2,015,000

in net proceeds from the ATM offering filed in May 2024, providing additional liquidity to support our operations.

The Company is actively

exploring strategic opportunities to enhance and create shareholder value.

RESULTS OF OPERATIONS

Three months ended

February 28, 2025

Net Sales and Cost of Sales

The following is a breakdown of revenues according

to markets to which the products are sold:

pylori is a prevalent infection, affecting approximately 35% of the U.S.

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

This bacterium is recognized as the highest known risk factor for gastric

cancer, which remains one of the leading causes of cancer-related deaths globally.

The hp+detect™ test is marketed directly to

laboratories and is intended to provide physicians and medical centers with a reliable tool for diagnosing H.

pylori infections and monitoring

treatment effectiveness.

We are actively promoting hp+detect™ to large end-customer laboratories and positioning the product for

commercial adoption.

to the slower-than-expected launch of our key products, inFoods ® IBS and hp+detect ™ , we have initiated

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

Additionally,

during the three months ended August 31, 2025, we raised $912,000 in net proceeds from the ATM offering filed in May 2024 providing additional

liquidity to support our operations.

We are actively exploring strategic opportunities to enhance and create shareholder value.

OF OPERATIONS

Sales and Cost of Sales

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

Three Months Ended

Increase (Decrease)

February 28, 2025

February 29, 2024

Over-the-counter

August 31, 2025

August 31, 2024

Contract manufacturing

Physician’s office

Consolidated net sales were approximately $1,119,000

for the three months ended February 28, 2025, as compared to $1,017,000 for the three months ended February 29, 2024, an increase of approximately

$102,000 or 10%.

This increase for the three months ended February 28, 2025, was primarily attributed to increased sales of our food intolerance

products, reflecting a growing interest and engagement in this category.

Sales in this segment are subject to periodic and infrequent

orders, contributing to potential volatility in quarterly sales.

Consolidated cost of sales were approximately

$1,100,000, or 98% of net sales, for the three months ended February 28, 2025, as compared to $1,166,000, or 115% of net sales, for the

three months ended February 29, 2024, a decrease of approximately $66,000, or 6%.

The decrease for the three months ended February 28,

2025 was primarily driven by the reduction in force (“RIF”) executed in July 2024, which helped to decrease labor costs for

Operating Expenses

The following is a summary of operating expenses:

Three Months Ended

February 28, 2025

February 29, 2024

Increase (Decrease)

Operating Expense

Total Revenues

Operating Expense

Total Revenues

Selling, General and Administrative Expenses

Research and Development

Selling, General and Administrative

For the three months ended February 28, 2025,

consolidated selling, general, and administrative expenses amounted to approximately $1,012,000, representing a significant reduction

of $496,000 or 33%, compared to $1,508,000 for the corresponding period in 2024.

This reduction was primarily due to a $225,000 decrease

in stock compensation for the administration and a Reduction in Force (RIF) implemented in July 2024, which resulted in a $183,000 decrease

in payroll expenses.

Additionally, legal expenses were reduced by $46,000.

These efforts demonstrate our focus on operating discipline

and cost optimization as we align our cost structure with near-term business priorities, while preserving the resources needed to support

long-term growth.

Research and Development

For the three months ended February 28, 2025,

consolidated research and development (“R&D”) expenses totaled approximately $217,000, representing a decrease of 37%

from $343,000 in the same period of 2024.

This $126,000 reduction was primarily driven by a $64,000 decline in R&D wages due to a RIF executed in July 2024, and a reduction of $39,000 in expenses related to clinical trial studies.

Interest and Dividend Income

For the three months ended February 28, 2025,

interest and dividend income totaled approximately $43,000, compared to $86,000 for the corresponding period in 2024, representing a decrease

of $43,000, or 50%.

This reduction was primarily attributable to lower market interest rates affecting our lower cash balances, which

had decreased by February 28, 2025.

Nine months ended February 28, 2025

Net Sales and Cost of Sales

The following is a breakdown of revenues according

to markets to which the products are sold:

Nine Months Ended

Increase (Decrease)

February 28, 2025

February 29, 2024

Over-the-counter

Contract manufacturing

Physician’s office

For the nine months ended February 28, 2025, consolidated

net sales reached approximately $4,562,000, marking a 6% increase or $263,000 from $4,299,000 in the same period of 2024.

was largely driven by enhanced contract manufacturing billings and increased demand for our inFoods® IBS product.

Although there was

a decline in over-the-counter (OTC) sales due to reduced retail market activity, and some volatility in clinical laboratory sales, the

company successfully maintained a positive sales trajectory through strategic diversification and bolstered demand in key sectors.

For the nine months ended February 28, 2025, consolidated

cost of sales was approximately $3,820,000, representing 84% of net sales, compared to $3,708,000, or 86% of net sales, for the same period

This 3% increase, amounting to $112,000, was primarily driven by expanded contract manufacturing sales.

Notably, the implementation

of a RIF in July 2024 effectively reduced direct labor costs, thereby contributing to improved gross margins.

Operating Expenses

The following is a summary of operating expenses:

Nine Months Ended

February 28, 2025

February 29, 2024

the three months ended August 31, 2025, consolidated net sales reached approximately $1,380,000, compared to $1,807,000 for the same

period in 2024, representing a decrease of $427,000, or 24%.

The decline in revenue was primarily attributable to reduced retail market

activity, lower international over-the-counter (“OTC”) sales related in part to tariff impacts, and decreased demand under certain

contract manufacturing agreements.

Additionally, we experienced continued volatility in clinical laboratory demand during the

These declines were partially offset by increased demand for our inFoods® IBS product.

the three months ended August 31, 2025, consolidated cost of sales amounted to approximately $956,000, or 69% of net sales, compared

to $1,518,000, or 84% of net sales, for the same period in 2024, representing a decrease of $562,000, or 37%.

The reduction in cost of

sales was primarily driven by lower contract manufacturing costs, reflecting changes in product mix and improved production efficiency.

In addition, we benefited from a reduction in direct labor costs following a Reduction in Force (“RIF”) implemented in the prior fiscal year.

result of these factors, our gross margin improved compared to the same period of the previous year.

following is a summary of operating expenses:

Three Months Ended August 31,

Increase (Decrease)

5 unchanged sentences

Research and Development

For the nine months ended February 28, 2025, consolidated

selling, general, and administrative expenses totaled approximately $3,544,000, compared to $4,204,000 for the same period in 2024.

represents a decrease of $660,000, or 16%.

This notable reduction in expenses reflects our strategic financial management and can be attributed

to multiple factors:

the absence of a sales reserve for OTC products from the previous year, reducing costs by $175,000;

a $262,000 decrease in stock compensation;

and a $172,000 in payroll savings following a RIF implemented in July

Furthermore, we reduced advertising expenses by $50,000.

These overall cost reductions demonstrate our commitment to strategically

allocating capital and maintaining financial discipline as we continue to pursue growth opportunities.

Research and Development

For the nine months ended February 28, 2025, consolidated R&D expenses were approximately $771,000, a decrease of 37% from $1,226,000 during the same period in 2024.

This $455,000 reduction was largely due to a $303,000 decrease in R&D wages following a RIF implemented in July

As part of our strategic cost-cutting initiatives, several clinical trials were scaled back, leading to lower expenditures.

with the commercialization of inFoods® IBS, we strategically reduced R&D funding in this area, which accounted for an additional

$75,000 decrease in related expenses.

Interest and Dividend Income

For the nine months ended February 28, 2025, interest

and dividend income totaled approximately $140,000, compared to $317,000 for the corresponding period in 2024, representing a decrease

of $177,000, or 56%.

This reduction was primarily attributable to lower market interest rates affecting our lower cash balances, which

had decreased by February 28, 2025

LIQUIDITY AND CAPITAL RESOURCES

The following are the principal sources of liquidity:

February 28, 2025

General and Administrative Expenses

the three months ended August 31, 2025, consolidated selling, general, and administrative expenses were approximately $1,330,000,

compared to $1,360,000 for the same period in 2024, reflecting a decrease of $30,000, or 2%.

The decrease was primarily

attributable to a reduction of approximately $65,000 in salaries and wages resulting from a RIF executed in July 2024, a $68,000

decrease in stock-based compensation expense, and a $43,000 decrease in legal expenses related to lower inFoods® patent

application activities.

These decreases were partially offset by a $131,000 increase in professional service fees for ERC filings.

and Development

the three months ended August 31, 2025, consolidated research and development (“R&D”) expenses totaled approximately

$212,000, representing a decrease of $85,000, 29% from $297,000 in the same period of 2024.

The decrease was primarily driven by a $60,000

reduction in payroll expenses resulting from a RIF implemented in July 2024, and approximately $23,000 in cost savings related to lower

spending on inFoods® research and development projects.

Dividend Income and Other Income

the three months ended August 31, 2025, interest, dividend, and other income totaled approximately $1,123,000, compared to $56,000 for

the same period in the prior year, representing an increase of approximately $1,067,000.

The increase was primarily attributable to a

$1,100,000 cash refund received from the Internal Revenue Service (IRS) on July 21, 2025, related to previously filed claims for the ERC,

a refundable payroll tax credit established under the CARES Act.

was available to eligible employers for wages paid during calendar year 2021 in response to the global COVID-19 pandemic.

represents a one-time benefit that is not expected to recur in future periods.

the ERC refund, interest and dividend income decreased by approximately $29,000, primarily due to lower market interest rates during the current quarter compared to the prior year.

CAPITAL RESOURCES AND GOING CONCERN

following are the principal sources of liquidity:

August 31, 2025

Cash and cash equivalents

Working capital including cash and cash equivalents

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

Company had cash and cash equivalents of approximately $3,058,000 and $4,170,000, respectively.

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

the Company had working capital of approximately $4,555,000 and $5,527,000, respectively.

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 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;

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 issuance of 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.

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 us to issue up to $20,000,000 in common shares.

Under this registration

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

On May 10, 2024, we filed

a prospectus supplement with the SEC to facilitate the sale of up to $5,500,000 in common stock through at-the-market (“ATM”)

offerings, as defined in Rule 415 under the Securities Act.

As part of this transaction, we 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

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 $0.27 and $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.

We intend to use the net proceeds from 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.

While we are committed to these plans, there is

no assurance that these efforts will be successful or sufficient to meet our capital requirements.

These 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

of August 31, 2025 and May 31, 2025, we had cash and cash equivalents of approximately $3,053,000 and $2,399,000, respectively.

As of August 31, 2025 and May 31, 2025, we had working capital of approximately $4,206,000 and $3,135,000, respectively.

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 our new product launches;

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

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

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

part of our efforts to reduce costs, we have initiated significant cost-cutting measures to extend our cash runway and work towards increasing

revenues to cover overhead costs.

These 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 operations.

Operating Activities

During the nine months ended February 28, 2025,

cash used in operating activities totaled approximately $3,180,000.

The primary contributors to this outflow were a net loss of approximately

$3,429,000, an increase in accounts receivable of $327,000, a decrease in accounts payable and accrued expenses totaling $506,000, and

a reduction in lease liabilities of $242,000.

These cash outflows were partially offset by a decrease in inventories of $766,000 and non-cash

expenses of $610,000.

The non-cash expenses included depreciation and amortization, provision for allowance on accounts receivable, inventory

reserves, share-based compensation, and amortization of right-of-use assets.

During the nine months ended February 29, 2024,

cash used in operating activities was approximately $4,317,000.

The primary factors that contributed to this was a loss of approximately

$4,557,000, non-cash expenses of $723,000, primarily associated with depreciation and amortization, provision for allowance on accounts

receivable, inventory reserves, share-based compensation, and amortization of right-of-use assets.

This was partially offset by changes

in asset and liability accounts of approximately $483,000.

Importantly, we have made significant progress

in reducing our underlying cost structure.

When excluding the positive impact of proceeds from the ATM offering, our current quarterly

cash burn has improved to approximately $800,000 compared to approximately $1,800,000 in the same period of last year.

This reduction

reflects our disciplined execution of cost saving initiatives, stronger sales from a more diverse portfolio, and tighter management of

working capital.

Investing Activities

During the nine months ended February 28, 2025,

cash used in investing activities was $0 for purchases of property and equipment, and $37,000 in expenditures related to patents.

During the nine months ended February 29, 2024,

cash used in investing activities was approximately $27,000 for purchases of property and equipment, and $64,000 in expenditures related

Financing Activities

During the nine months ended February 28, 2025,

net cash provided by financing activities amounted to approximately $2,116,000.

This influx was primarily driven by net proceeds from

the sale of common stock totaling $2,015,000 and proceeds from the exercise of stock options amounting to $16,000.

These contributions

were partially offset by deferred offering costs of $85,000.

During the nine months ended February 29, 2024,

cash provided by financing activities was $0, with no net proceeds from the sale of common stock or from stock option exercises.

OFF BALANCE SHEET ARRANGEMENTS

There were no off-balance sheet arrangements as

of February 28, 2025.

CRITICAL ACCOUNTING POLICIES

The preparation of consolidated financial statements

in conformity with accounting principles generally accepted in the United States of America requires us to 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

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Actual results may differ materially from these estimates under different assumptions or conditions.

We continue to monitor significant

estimates made during the preparation of our financial statements.

On an ongoing basis, we evaluate estimates and assumptions based upon

historical experience and various other factors and circumstances.

We believe our estimates and assumptions are reasonable under the current

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, credit losses,

inventory overhead application, inventory reserves, right-of-use assets and lease liabilities and share-based compensation.

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 condition or results

of operations.

As part of our financing plan, on September 28, 2023,

we 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 shares of our common stock.

On May 10, 2024, the Company filed a prospectus supplement to the

“shelf” registration statement on Form S-3 with the SEC.

This prospectus supplement was intended to facilitate the sale of

up to $5,500,000 in common stock through the 2024 ATM Offering.

As part of this transaction, we incurred $81,000 in deferred offering

costs during the year ended May 31, 2024.

During the three months ended August 31, 2025, we sold 258,569 shares of its 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.

including $8,000 of previously capitalized deferred offering cost.

We intend to use the net proceeds from 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 needs.

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 our 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.

During the three months

ended August 31, 2025, cash used in operating activities was approximately $268,000.

The primary factors that contributed to this were

a net income of approximately $2,000, an increase in accounts receivable of $512,000, a decrease in accrued compensation of

$63,000 and a decrease in lease liability of $86,000.

These were partially offset by a decrease in inventories

of $10,000, a decrease in prepaid expenses of $87,000, and non-cash expenses of $280,000.

the three months ended August 31, 2024, cash used in operating activities was approximately $1,344,000.

The primary factors that contributed

to this were a loss of approximately $1,316,000, an increase in accounts receivable of $616,000, and a decrease in lease liability of

These were partially offset by a decrease in inventories of $429,000, a decrease in prepaid expenses and other of $106,000,

and non-cash expenses of approximately $191,000.

the three months ended August 31, 2025 and 2024, we did not acquire any new property, equipment, or

During the three months

ended August 31, 2025, cash provided by financing activities

was approximately $920,000.

We received gross proceeds of $939,000 from the sale of our common stock, with costs for sale of $19,000.

In contrast, during the three months ended August 31, 2024, and 2023, we did not have any cash provided by financing activities,

as there were no net proceeds from the sale of common stock or stock option exercises.

BALANCE SHEET ARRANGEMENTS

were no off-balance sheet arrangements as of August 31, 2025.

ACCOUNTING POLICIES AND ESTIMATES

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

America requires us to 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 may affect the reported

amounts of revenues and expenses during the reporting period.

We evaluate and base our estimates and assumptions on historical experience

and various other factors and circumstances that we believe to be reasonable.

Different assumptions or conditions may cause actual results

to differ materially from these estimates.

We continue to monitor significant estimates made during the preparation of our financial

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

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 and right-of-use assets.

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

should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial conditions

or results of operations.

There have been no significant changes to our critical accounting policies from those disclosed in our 2025

Annual Report.

We suggest that our significant accounting policies be read in conjunction with this Management’s Discussion and

1 unchanged sentence

Please refer to Note 2 for information on Significant Accounting Policies.

Our critical accounting policies are discussed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

We are a smaller reporting company as defined

by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)

and are not required to provide the information under this item.

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 2. Management’s Discussion and Analysis