What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-04-14 compared with 2021-01-14 · 103 added, 84 removed, 283 unchanged (40% of the section changed)

4 unchanged sentences

AND COMPREHENSIVE LOSS(UNAUDITED)

Six Months Ended

Nine Months Ended

Three Months Ended

November 30, 2020

November 30, 2019

November 30, 2020

November 30, 2019

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Cost of sales

9 unchanged sentences

Loss before income taxes

Provision for income taxes

Provision (benefit) for income taxes

Basic net loss per common share

9 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

November 30, 2020

February 28, 2021

Current Assets:

1 unchanged sentence

Accounts receivable, less allowance for doubtful accounts

of $481,142 and $70,981 as of November 30, 2020 and May 31, 2020,

of $649,419 and $70,981 as of February 28, 2021 and May 31, 2020,

Inventories, net

2 unchanged sentences

Property and equipment, net of accumulated depreciation and amortization

of $1,920,217 and $1,867,643 as of November 30, 2020 and May 31, 2020,

of $1,945,908 and $1,867,643 as of February 28, 2021 and May 31, 2020,

Right of use assets, net of accumulated amortization of $405,407 and $231,489

as of November 30, 2020 and May 31, 2020, respectively

as of February 28, 2021 and May 31, 2020, respectively

Intangible assets, net of accumulated amortization of $517,792 and $496,124 as

of November 30, 2020 and May 31, 2020, respectively

of February 28, 2021 and May 31, 2020, respectively

Liabilities and Shareholders' Equity

9 unchanged sentences

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

571,429 shares authorized, 321,429 issued and outstanding at November

30, 2020 and May 31, 2020

571,429 shares authorized, none issued and outstanding at February 28,

2021 and 321,429 issued and outstanding at May 31, 2020

Preferred stock, undesignated, no par value,

4,428,571 shares authorized, none issued and outstanding at November

4,428,571 shares authorized, none issued and outstanding at February 28,

2021 and May 31, 2020

1 unchanged sentence

25,000,000 shares authorized, 12,302,157 and 11,740,089 issued and

outstanding at November 30, 2020 and May 31, 2020, respectively

outstanding at February 28, 2021 and May 31, 2020, respectively

Additional paid-in-capital

6 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS ' EQUITY (Unaudited)

Six Months Ended November 30, 2020

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

For the Nine Months Ended February 29, 2020

Series A 5% Convertible Preferred

Subscriptions

Accumulated Other Comprehensive

Balances, May 31, 2019

Exercise of stock

Net proceeds from ATM

preferred stock

Foreign currency

Compensation expense in connection with options granted

February 29, 2020

For the Nine Months Ended February 28, 2021

Series A 5% Convertible Preferred Stock

3 unchanged sentences

Exercise of stock options

Net proceeds from ATM

Foreign currency translation

Conversion of preferred to common

Compensation expense in connection with options granted

Balances, November 30, 2020

Balances, February 28, 2021

The accompanying notes are an integral part of these statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

November 30, 2020

November 30, 2019

February 28, 2021

February 29, 2020

Cash flows from operating activities:

19 unchanged sentences

Proceeds from sale of common stock, net

Proceeds from sale of convertible preferred stock, net

Proceeds from exercise of stock options

20 unchanged sentences

1) clinical laboratories and 2) point of care (physicians' offices and over-the-counter drugstores).

The diagnostic test kits are used to analyze blood, urine or fecal samples from patients in the diagnosis of various diseases and other medical complications, by measuring or detecting the existence and/or level of specific bacteria, hormones, antibodies, antigens or other substances, which may exist in a patients body, stools, or blood, often in extremely small concentrations.

The diagnostic test kits are used to analyze blood, urine, or fecal samples from patients in the diagnosis of various diseases and other medical complications, by measuring or detecting the existence and/or level of specific bacteria, hormones, antibodies, antigens, or other substances, which may exist in a patients body, stools, or blood, saliva or nasal fluid.

The information set forth in these condensed consolidated financial statements is unaudited and reflects all adjustments which, in the opinion of management, are necessary to present a fair statement of the consolidated results of operations of Biomerica, Inc.

16 unchanged sentences

inventory obsolescence, which are based on projected and historical usage of materials;

and lease liability and right-of-use assets, which are calculated based on certain assumptions such as borrowing rate, likelihood of lease extensions to occur, asset valuation, among other things;

and lease liability and right-of-use assets, which are calculated based on certain assumptions such as borrowing rate, the likelihood of lease extensions to occur, asset valuation, among other things;

and other items that may be necessary to estimate using current, historical and judgment based information.

2 unchanged sentences

The Company maintains cash balances at certain financial institutions in excess of amounts insured by federal agencies.

As of November 30, 2020, the Company had approximately $5,417,958 of uninsured cash.

The Company does not believe it is exposed to significant credit risks.

For the six months ended November 30, 2020 and November 30, 2019, the Company had one distributor which accounted for 35.1% and 50.3% of net consolidated sales, respectively.

At November 30, 2020 and May 31, 2020, the Company had two distributors and three distributors which accounted for a total of 61.9% and 80.0%, respectively, of gross accounts receivable.

Of the 61.9% as of November 30, 2020, 37.1% was owed by a distributor in South America.

For the six months ended November 30, 2020 and 2019, two vendors accounted for 56.0% and three vendors which accounted for 51.4% of the purchases of raw materials, respectively.

As of November 30, 2020 and May 31, 2020, the Company had one vendor and two vendors which accounted for 26.5% and 26.9%, respectively, of accounts payable.

As of February 28, 2021, the Company had $4,855,448 of uninsured cash.

The Company does not believe it is exposed to significant credit risks at the financial institutions where cash is held.

For the nine months ended February 28, 2021 and February 29, 2020, the Company had two distributors and one distributor which accounted for 65.5% and 43.4% of net consolidated sales, respectively.

At February 28, 2021 and May 31, 2020, the Company had two distributors and three distributors which accounted for a total of 79.3% and 80.0%, respectively, of gross accounts receivable.

Of the 79.3% as of February 28, 2021, 49.8% was owed by a distributor in China.

For the nine months ended February 28, 2021 and February 29, 2020, one vendor accounted for 61.8% and two vendors accounted for 32.8% of the purchases of raw materials, respectively.

As of February 28, 2021 and May 31, 2020, the Company had two vendors which accounted for 26.7% and 26.9%, respectively, of accounts payable.

CASH AND CASH EQUIVALENTS

7 unchanged sentences

For receivables over ninety days old, the Company begins to reserve a portion of the balance unless collection is reasonably assured.

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

Occasionally certain customers, who routinely place large orders, will have unusually large receivables balances relative to the total gross receivables.

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

The Company has established a reserve of $481,142 for doubtful accounts.

The Company has established a reserve of $649,419 for doubtful accounts as of February 28, 2021.

The majority of this reserve has been established to cover 75% of outstanding accounts receivable from an international distributor.

The distributor continues to make small payments and the Company is continuining to work on collection of this account.

The distributor continues to make small payments and the Company is continuing to work on collection of this account.

The Company occasionally prepays for items such as inventory, insurance and other items.

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

As of May 31, 2020, approximately $1 million of the prepaids was an advance payment to one of our suppliers.

This prepayment was subsequently refunded by the supplier.

As of February 28, 2021, approximately $446,000 of the prepaids was an advance payment to one of our suppliers.

As of May 31, 2020, approximately $1 million of the prepaids was an advance payment to one of our suppliers, which was subsequently refunded by the supplier when the Company determined it no longer needed the materials that had been ordered.

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.

8 unchanged sentences

Reserves for inventory obsolescence are recorded as necessary to reduce obsolete inventory to estimated realizable value or to specifically reserve for obsolete inventory that the Company intends to dispose of.

As of November 30, 2020 and May 31, 2020, inventory reserves were approximately $78,000 and $67,000, respectively.

As of February 28, 2021 and May 31, 2020, inventory reserves were approximately $1,504,000 and $67,000, respectively.

Of the inventory reserve, $1,405,243 was related to a market downturn in our COVID-19 antibody test and materials, as the market shifted to COVID-19 PCR viral tests and antigen tests.

PROPERTY AND EQUIPMENT, NET

5 unchanged sentences

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 amounted to $25,843 and $24,321 for the three months ended November 30, 2020 and 2019, and $52,575 and $53,819 for the six months ended November 30, 2020 and 2019, respectively.

Depreciation and amortization expense on property and equipment amounted to $25,691 and $23,822 for the three months ended February 28, 2021 and February 29, 2020, and $78,266 and $77,641 for the nine months ended February 28, 2021 and February 29, 2020, respectively.

INTANGIBLE ASSETS, NET

2 unchanged sentences

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 20 years for patents.

Amortization amounted to $6,022 and $5,946 for the three months ended November 30, 2020 and 2019 and $11,860 and $11,726 for the six months ended November 30, 2020 and 2019, respectively.

Amortization expense amounted to $4,424 and $5,405 for the three months ended February 28, 2021 and February 29, 2020 and $16,284 and $17,131 for the nine months ended February 28, 2021 and February 29, 2020, respectively.

The Company assesses the recoverability of these intangible assets by determining whether the amortization of the assets 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.

No impairment adjustment was required as of November 30, 2020 or 2019.

No impairment adjustment was required as of February 28, 2021 or February 29, 2020.

From time-to-time, the Company makes investments in privately-held companies.

1 unchanged sentence

If the Company considers any such decline to be other than temporary (based on various factors, including historical financial results, and the overall health of the investees industry), a write-down to estimated fair value is recorded.

Investments represent the Companys investment in a Polish distributor which is primarily engaged in distributing medical products and devices.

Investments represent the Companys investment in a Polish based distributor which is primarily engaged in distributing medical products and devices, and in certain cases, manufacturing the products sold.

The Company currently has not written down the investment and no events have occurred which could indicate the carrying value to be greater than the fair value.

2 unchanged sentences

SHARE-BASED COMPENSATION

The Company follows the guidance of the accounting provisions of ASC 718, Share-based Compensation (ASC 718), 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 follows the guidance of the accounting provisions of ASC 718, Share-based Compensation (ASC 718), which requires the use of the fair-value based method to determine compensation expense for all arrangements under which employees and others receive shares of stock or equity instruments (options).

The fair value of each option award 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.

5 unchanged sentences

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

The following summary presents the options and warrants granted, exercised, expired, cancelled and outstanding for the six months ended November 30, 2020:

The following summary presents the options and warrants granted, exercised, expired, canceled and outstanding for the nine months ended February 28, 2021:

Option Shares

2 unchanged sentences

Cancelled or expired

Outstanding November 30, 2020

During the six months ended November 30, 2020, options to purchase 30,000 shares of common stock were exercised at prices ranging from $1.04 to $3.62.

Outstanding February 28, 2021

During the nine months ended February 28, 2021, options to purchase 81,750 shares of common stock were exercised at prices ranging from $0.82 to $3.62.

Total net proceeds to the Company were $96,455.

During the six months ended November 30, 2020, the Company granted 171,000 options to purchase common stock at an average purchase price of $7.46.

During the nine months ended February 28, 2021, the Company granted 407,616 options to purchase common stock at an average purchase price of $6.82.

REVENUE RECOGNITION

The Company has various contracts with customers.

All of the contracts specify that revenues from product sales are recognized at the time the product is shipped, customarily FOB shipping point, which is when the transfer of control of goods has occurred and at which point title passes.

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

Most of the contracts specify that ownership transfers, and title to the products passes, to the customer at the time the product is shipped from our facility, customarily referred to as FOB shipping point.

For this reason, the Company recognizes revenue on the date of shipping.

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

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

The Company evaluated the status of these contracts as of November 30, 2020 and does not believe that any additional discounts will be given through the end of the contract periods.

The Company evaluated the status of these contracts as of February 28, 2021 and does not believe that any additional discounts will be given through the end of the contract periods.

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

4 unchanged sentences

Disaggregation of revenue:

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

Six Months Ended

The following is a breakdown of revenues according to end-markets to which the products are sold, typically through distributors:

Nine Months Ended

Three Months Ended

November 30, 2020

November 30, 2019

November 30, 2020

November 30, 2019

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Physician's office

5 unchanged sentences

Research and development costs are expensed as incurred.

The Company expensed $586,403 and $404,854 of research and development costs during the three months ended November 30, 2020 and 2019 and $1,261,096 and $775,320 during the six months ended November 30, 2020 and 2019, respectively.

The Company has provided a valuation allowance on deferred income tax assets of approximately $3,832,000 and $3,175,000 as of November 30, 2020 and May 31, 2020, respectively.

The Company expensed $563,216 and $473,279 of research and development costs during the three months ended February 28, 2021 and February 29, 2020 and $1,824,312 and $1,248,599 during the nine months ended February 28, 2021 and February 29, 2020, respectively.

The Company has provided a valuation allowance on deferred income tax assets of approximately $4,215,000 and $3,175,000 as of February 28, 2021 and May 31, 2020, respectively.

FOREIGN CURRENCY TRANSLATION

4 unchanged sentences

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

There are no adjustments to foreign currency loss that are included in the consolidated statements of operations for the three months ended November 30, 2020 and 2019 and six months ended November 30, 2020 and 2019.

There are no adjustments to foreign currency loss that are included in the consolidated statements of operations for the three months ended February 28, 2021 and February 29, 2020 and nine months ended February 28, 2021 and February 29, 2020.

RIGHT-OF-USE ASSETS AND LEASE LIABILITY

10 unchanged sentences

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.

The total amount of anti-dilutive stock options not included in the loss per share calculation for the three months ended November 30, 2020 and 2019 was 1,326,489 and 521,782, respectively.

The total amount of anti-dilutive stock options not included in the loss per share calculation for the six months ended November 30, 2020 and 2019 was 1,399,763 and 498,040, respectively.

The Company also has outstanding 321,429 of series A 5% convertible preferred stock, which may be converted at any time to common stock.

The total amount of anti-dilutive stock options not included in the loss per share calculation for the three months ended February 28, 2021 and February 29, 2020 was 1,278,617 and 476,358, respectively.

The total amount of anti-dilutive stock options not included in the loss per share calculation for the nine months ended February 28, 2021 and February 29, 2020 was 1,360,192 and 483,658, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

Recent ASU's issued by the FASB and guidance issued by the Securities and Exchange Commission (SEC) did not, or are not believed by management to, have a material effect on the Companys present or future consolidated financial statements.

Recent ASUs issued by the FASB and guidance issued by the Securities and Exchange Commission (SEC) did not, or are not believed by management to, have a material effect on the Companys present or future consolidated financial statements.

SHAREHOLDERS EQUITY

On July 20, 2020, the Companys outstanding SEC Form S-3 Shelf registration statement dated July 20, 2017 expired.

This prior registration statement registered an indeterminant number of shares equating to a maximum aggregate offering amount of $45,000,000 of shares.

This prior registration statement registered an indeterminate number of shares equating to a maximum aggregate offering amount of $45,000,000 of shares.

On July 21, 2020, the Company filed with the SEC a new Form S-3 Shelf registration statement to replace the registration statement that expired on July 20, 2020.

2 unchanged sentences

This S-3 registration statement became effective September 30, 2020.

In January 2021, Palm Global Small Cap Master Fund LP converted 321,429 preferred shares to common stock.

Following this conversion, Palm Global Small Cap Master Fund LP no longer owns any preferred stock, and Biomerica currently has no preferred shares outstanding.

During the three months ended February 28, 2021, the Company issued 158,889 shares through the Companys At-The-Market (ATM) facility, under its S-3 shelf registration.

The net proceeds from this issuance were $1,011,475.

Based on data from the NASDAQ website, the total public trading volume of the Companys stock during the quarter was over 25 million shares.

As such, the Companys sale of the 158,889 shares under the ATM represents approximately one-half of one percent (0.5%) of the trading volume during the quarter.

GEOGRAPHIC INFORMATION

Financial information about foreign and domestic operations and export sales is approximately as follows:

Six Months Ended

Nine Months Ended

Three Months Ended

November 30, 2020

November 30, 2019

November 30, 2020

November 30, 2019

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Revenues from sales to unaffiliated customers:

1 unchanged sentence

South America

As of November 30, 2020 and May 31, 2020, approximately $555,000 and $613,000 of Biomericas gross inventory and approximately $28,000 and $31,000, of Biomericas property and equipment, net of accumulated depreciation and amortization, was located in Mexicali, Mexico, respectively.

As of February 28, 2021 and May 31, 2020, approximately $525,000 and $613,000 of Biomericas gross inventory and approximately $27,000 and $31,000, of Biomericas property and equipment, net of accumulated depreciation and amortization, was located in Mexicali, Mexico, respectively.

On June 18, 2009, the Company entered into an agreement to lease a building in Irvine, California.

10 unchanged sentences

In addition, the Company leases a small office on a month-to-month basis in Lindau, Germany, as headquarters for BioEurope GmbH, its Germany subsidiary.

Components of lease expense include fixed lease expense of $171,769 for the six months ended November 30, 2020.

Components of lease expense include fixed lease expense of $257,654 for the nine months ended February 28, 2021.

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 option periods that the Company is reasonably certain of exercising.

3 unchanged sentences

Supplemental cash flow information related to leases for

the six months ended November 30, 2020:

the nine months ended February 28, 2021:

Operating cash flows from operating leases

3 unchanged sentences

Weighted average discount rate

The maturity of lease liabilities as of November 30, 2020 are as follows:

The maturity of lease liabilities as of February 28, 2021 are as follows:

COMMITMENTS AND CONTINGENCIES

8 unchanged sentences

The terms of the Telcon Agreement provide up to $1.25 million in exclusivity fees based on certain milestones including Biomericas starting clinical trials in the United States, receipt of US FDA clearance and Telcons first sales of IBS Products in Korea.

If Biomerica commences FDA Trials and Telcon pays the initial $250,000 milestone-based exclusivity fees, and the Agreement is subsequently terminated by either party for lack of performance, then Biomerica shall issue to Telcon 83,333 shares of Biomerica common in consideration for the $250,000 of paid exclusivity fee.

If Biomerica commences FDA Trials and Telcon pays the initial $250,000 milestone-based exclusivity fees, and the Agreement is subsequently terminated by either party for lack of performance, then Biomerica shall issue to Telcon 83,333 shares of Biomerica common stock in consideration for the $250,000 of paid exclusivity fee.

No exclusivity fees have yet been paid.

Additionally, the Telcon Agreement provides for a royalty of 15% paid to Biomerica on all sales in Korea of the IBS Product, and further sets the pricing of IBS Products sold to Telcon.

In order to retain the exclusivity within South Korean, Telcon must meet certain annual minimum royalty payments to Biomerica following Telcons receipt of Korean FDA approval or clearance for the IBS Product to be sold in Korea, which in no case will be later than May 31, 2019.

In order to retain the exclusivity within South Korea, Telcon must meet certain annual minimum royalty payments to Biomerica following Telcons receipt of Korean FDA approval or clearance for the IBS Product to be sold in Korea, which in no case will be later than May 31, 2019.

In September 2017, the Telcon Agreement was amended to extend the date by which Telcon must attain Korean FDA approval until April 30, 2020.

1 unchanged sentence

On June 25, 2020, the Company entered into a Clinical Trial Agreement with the University of Texas Health Science Center for the purpose of conducting a clinical trial of the Biomerica InFoods product.

The term of the agreement shall be until completion of the work outlined and the charges will be invoiced monthly for work performed in the previous month.

The term of the agreement shall extend until completion of the work outlined and the charges will be invoiced monthly for work performed in the previous month.

The maximum budgeted costs will be $139,850.

On September 15, 2020, the Company entered into an agreement with Public Health England research institution for the purpose of evaluating the Companys COVID-19 Rapid Test.

As disclosed in the Form 10K filed with the SEC on August 31, 2020, on July 2, 2020, the Company received a notice of investigation and subpoena to produce information and documents from the Division of Enforcement of the SEC.

As disclosed in the Companys Form 10K filed with the SEC on August 31, 2020, the Company received a notice of investigation and subpoena to produce information and documents from the Division of Enforcement of the SEC on July 2, 2020.

The subpoena seeks information and documents related to events and circumstances leading up to the March 17, 2020 announcement that the Company had commenced shipping samples of the Companys COVID-19 IgG/IgM Rapid Test to countries outside of the United States, and had initiated the application process with the United States Food and Drug Administration under the COVID-19 Emergency Use Authorization for approval to market and sell the test in the United States.

The subpoena also seeks information and documents about the identity of any persons who were aware of the substance of the March 17, 2020 announcement prior to that date.

In addition, on December 15, 2020, the SEC sent a second subpoena related to this investigation to Zack Irani, the Companys CEO, requesting documents held by Mr.

In addition, on December 15, 2020, the SEC sent a second subpoena related to this investigation to Mr.

Irani, the Companys CEO, requesting documents held by Mr.

Irani concerning his past purchases of Company stock, any past communications with certain persons and entities, and other personal and Company documents.

The Company and Mr.

Irani are continuing to cooperate fully with the SECs investigation and provide information as requested.

Irani have cooperated fully with the SECs investigation and have provided information as requested.

At this time, the Company is unable to predict the duration, scope or outcome of these investigations.

SUBSEQUENT EVENTS

At the December 10, 2020 board meeting, the Board of Directors approved the grant of 213,616 options to purchase shares of the Companys common stock to officers, directors and certain employees.

The options are exercisable by outside board members one year from date of grant and for officers and employees one-quarter per year with the first quarter vesting one year from date of grant.

The options will be at the exercise price of $6.36 per share and expire ten years from date of grant.

During December 2020, the Company filed the necessary paperwork with Medical Device Safety Service who then notified the competent authority in Germany to attain CE Mark in the EU for the Companys COVID-19 antigen test that uses a nasal swab to collect a persons nasal fluid sample to detect if the person has COVID-19 antigen in their system, which can indicate that the person has recently been infected with the COVID-19 virus and may still be infectious to others.

This nasal swab antigen test received CE clearance on January 8, 2021, and is now available for sale in the EU.

The Company has received an initial order for over $1 million of these tests and is in the process of filling this order.

In May 2019, the Company entered into an agreement with MaxHealth Medical International Limited and MaxHealth China (MaxHealth) giving MaxHealth exclusive distribution rights to Biomericas EZ Detect Product in China (the Agreement).

Among other things, the Agreement called for MaxHealth to make an initial prepayment for its first orders, and further required certain annual minimum product purchases.

While MaxHealth initially was in compliance with the terms of the Agreement, it subsequently fell into default and failed to make the required minimum purchases.

For this reason, on March 23, 2021, the Company sent MaxHealth notice of default and termination of the Agreement.

The Company is currently in contract negotiations with a second medical products distributor in China that desires to obtain the exclusive distribution rights for the EZ Detect product in China.

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