What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-08-29 compared with 2021-08-27 · 291 added, 308 removed, 551 unchanged (52% of the section changed)

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and (2) accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

For the reasons discussed in "Management's Report on Internal Control over Financial Reporting" below, Company management, including the CEO and CFO concluded that, as of May 31, 2021, the Company's internal control over financial reporting was effective.

Management has concluded that the consolidated financial statements included in this annual report present fairly, in all material respects, the Company's financial position, results of operations, and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.

Company management, including the CEO and CFO concluded that, as of May 31, 2022, the Company's internal control over financial reporting was effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during the last fiscal year that have materially affected, or that are reasonably likely to affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during the quarter ended May 31, 2022, that have materially affected, or that are reasonably likely to affect, our internal control over financial reporting.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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Company management will continue to monitor and evaluate the effectiveness of its disclosure controls and procedures and its internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing improvements, as necessary and as funds allow.

This 10-K does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.

Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this 10-K.

This 10-K does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting.

Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this 10-K.

OTHER INFORMATION.

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Consolidated Financial Statements

Reference is made to the Index to the consolidated financial statements as set forth on page FS-1 of this Annual Report on Form 10-K.

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

Report on Form 10-K.

Consolidated Financial Statement Schedules

All schedules have been omitted as the pertinent information is either not required, not applicable, or otherwise included in the financial statements and notes thereto.

First Amended and Restated Certificate of Incorporation of Biomerica, Inc.

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

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

included in the financial statements and notes thereto.

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

Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 filed with Amendment No.

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333-87231 filed on September 16, 1999).

Standard Industrial/Commercial Single-Tenant Lease for 17571 Von Karman Avenue, Irvine, CA 92614, incorporated by reference to Exhibit 10.1 of the Company's August 31, 2009 Form 10Q filed October 15, 2009.

2010 Stock Incentive Plan of Registrant (incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on February 2, 2012).

Standard Industrial/Commercial Single-Tenant Lease, dated June 18, 2009, by and between Registrant and CNH, LLC for 17571 Von Karman Avenue, Irvine, CA 92614 (incorporated by reference to Exhibit 10.1 of the Company's August 31, 2009 Form 10Q filed October 15, 2009).

2014 Stock Incentive Plan of Registrant (incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-8 filed with the Securities and Exchange Commission on May 22, 2015).

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Listing of Subsidiaries (attached herein).

Consent of Independent Registered Public Accounting Firm (Haskell & White LLP).

Consent of Independent Registered Public Accounting Firm (PKF San Diego, LLP).

Certification of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Exchange Act, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Exchange Act, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.

Certification of Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

Biomerica, Inc.

and Subsidiaries Consolidated Financial Statements

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.

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

Registrant and Subsidiaries Consolidated Financial Statements.

XBRL Instance Document.

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XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File.

The certifications attached as Exhibits 32.1 and 32.2 accompany this Annual Report pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended, and shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Chief Financial Officer

/s/ Francis R.

August 27, 2021

/s/ Allen Barbieri

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AND SUBSIDIARIES

Report of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firm

CONSOLIDATED FINANCIAL STATEMENTS

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

Biomerica, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Biomerica, Inc.

(the “Company”) as of May 31, 2022, the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively, the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of May 31, 2022, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

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

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

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Evaluation of Inventory Reserves

Critical Audit Matter Description

As of May 31, 2022, the Company recorded reserves for slow-moving and obsolete inventories of approximately $846,000.

As described in Note 2 to the consolidated financial statements, management periodically reviews inventories for excess quantities and obsolescence by evaluating quantities on hand and the physical condition and technical functionality of inventories, as these characteristics may be impacted by anticipated customer demand for current products and new product introductions.

Auditing the Company’s estimates for slow-moving and obsolete inventories was challenging due to the inherently judgmental nature of forecasting future sales and usage of a significant number of diverse inventory components.

How the Critical Audit Matter Was Addressed in the Audit

To test the valuation and accuracy of the Company’s inventory reserve estimates, our audit procedures included :

Obtaining an understanding of the Company’s inventory reserve estimation processes and key internal controls and assessing their appropriateness;

Observing and testing the Company’s year-end physical inventory counts;

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

these inputs included inventory quantities on hand, historical and expected sales and usage of inventory components, and estimated inventory reserve percentages;

Inquiring of any qualitative adjustments to inventory reserves deemed necessary by management and assessing their appropriateness.

/s/ Haskell & White LLP

HASKELL & WHITE LLP ( 200 )

We have served as the Company’s auditor since 2022.

Irvine, California

August 29, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Biomerica, Inc.

(a Delaware Corporation) and Subsidiaries (the “Company”) as of May 31, 2021 and 2020 , the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for each of the two years in the period ended May 31, 2021 , and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2021 and 2020 , and the results of its operations and its cash flows for each of the two years in the period ended May 31, 2021 , in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of Biomerica, Inc.

(a Delaware Corporation) and Subsidiaries (the “Company”) as of May 31, 2021, the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the year ended May 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2021, and the results of its operations and its cash flows for the year ended May 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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

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

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

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

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

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audit in accordance with the standards of the PCAOB.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

The critical audit matters communicated below are matters arising from the May 31, 2021 audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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(formerly PKF, LLP)

We have served as the Company’s auditor since 2004.

We served as the Company’s auditor from 2004 to 2021.

San Diego, California

August 27, 2021

August 27, 2021, except for the effect of the restatement disclosed in Note 11 of the May 31, 2021 consolidated financial statements, as to which the date is October 14, 2021

BIOMERICA, INC.

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of $ 1,305,360 and $ 1,972,357 as of May 31, 2022 and 2021, respectively

Right of use assets, net of accumulated amortization of $469,077 and $231,489

as of May 31, 2021 and 2020, respectively

Intangible assets, net of accumulated amortization of $126,769 and $496,124 as

of May 31, 2021 and 2020, respectively

Right of use assets, net of accumulated amortization

of $ 724,802 and $ 469,077 as of May 31, 2022 and 2021, respectively

Intangible assets, net of accumulated amortization

of $ 18,994 and $ 126,769 as of May 31, 2022 and 2021, respectively

Liabilities and Shareholders' Equity

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Accrued compensation

Advance from customers

Lease liability, current portion

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

571,429 shares authorized, none issued and outstanding at May 31, 2021 and 321,429

issued and outstanding at May 31, 2020

571,429 shares authorized, none issued and outstanding as of May 31, 2022 and 2021

Preferred stock, undesignated, no par value,

4,428,571 shares authorized, none issued and outstanding at May 31, 2021 and 2020

4,428,571 shares authorized, none issued and outstanding as of May 31, 2022 and 2021

Common stock, $ 0.08 par value,

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Accumulated deficit

( 35,077,379 )

( 30,546,335 )

Total Shareholders' Equity

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For The Years Ended

For the year ended May 31,

Cost of sales

( 15,893,991 )

( 6,832,742 )

Operating expenses:

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Loss from operations

( 4,533,964 )

( 7,499,693 )

Other income:

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Loss before income taxes

( 4,507,325 )

( 7,433,197 )

Provision for income taxes

( 4,531,044 )

( 7,446,254 )

Basic net loss per common share

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common equivalent shares:

( 4,531,044 )

( 7,446,254 )

Other comprehensive loss, net of tax:

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Comprehensive loss

( 4,557,024 )

( 7,454,369 )

See accompanying notes to consolidated financial statements

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Paid-in Capital

Accumulated Other

Comprehensive

Balances, May 31, 2019

Balances, May 31, 2020, restated

( 23,100,081 )

Exercise of stock options

Net proceeds from ATM

Issuance of preferred stock

Foreign currency translation

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Compensation expense in connection with options granted

Balances, May 31, 2020

( 7,446,254 )

Balances, May 31, 2021, restated

( 30,546,335 )

Exercise of stock options

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Foreign currency translation

Conversion of preferred to common stock

Compensation expense in connection with options granted

( 4,531,044 )

Balances, May 31, 2022

( 35,077,379 )

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Years Ended

Year ended May 31,

Cash flows from operating activities:

( 4,531,044 )

( 7,446,254 )

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

Depreciation and amortization

Change in allowance on accounts receivable

Loss on disposal of property and equipment

Provision for allowance on accounts receivable

Inventory reserve

Stock option expense

Reduction in deferred rent liability

Amortization of right-of-use asset

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Accounts receivable

Prepaid expenses

( 1,906,013 )

Prepaid expenses and other

Reduction in lease liability

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Accrued compensation

Advance from customers

Net cash used in operating activities

( 5,251,748 )

Cash flows from investing activities:

Increase in intangibles

Expenditure related to intangibles

Purchases of property and equipment

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Cash flows from financing activities:

Proceeds from sale of common stock, net

Proceeds from sale of convertible preferred stock, net

Gross proceeds from sale of common stock

Costs from sale of common stock

Proceeds from exercise of stock options

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Effect of exchange rate changes in cash

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

( 4,441,716 )

Cash and cash equivalents at beginning of year

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Increase in lease liability due to lease extension or establishment

The accompanying notes are an integral part of these statements

Write off of fixed assets, cost

Write off of fixed assets, accumulated depreciation

Write off of intangible assets, cost

Write off of intangible assets, accumulated amortization

See accompanying notes to consolidated financial statements

BIOMERICA, INC.

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Biomerica, Inc.

and Subsidiaries (collectively the “Company”, “Biomerica”, “we”, “us”, or “our”) develops, patents, manufactures and markets advanced diagnostic and therapeutic products used at the point-of-care (physicians' offices and over-the-counter through drugstores and online) and in hospital/clinical laboratories for detection and/or treatment of medical conditions and diseases.

Our diagnostic test kits are used to analyze blood, urine or fecal material from patients in the diagnosis of various diseases, food intolerances and other medical complications, or to measure the level of specific hormones, antibodies, antigens or other substances, which may exist in the human body in extremely small concentrations.

The Company's products are designed to enhance the health and well-being of people, while reducing total healthcare costs.

We are a global biomedical technology company that develops, patents, manufactures and markets advanced diagnostic and therapeutic products used at the point-of-care (in home and in physicians' offices) and in hospital/clinical laboratories for detection and/or treatment of medical conditions and diseases.

and its subsidiaries (which includes wholly-owned subsidiaries, Biomerica de Mexico and BioEurope GmbH) is a biomedical technology company that develops, patents, manufactures and markets advanced diagnostic and therapeutic products used at the point-of-care (physicians' offices and over-the-counter through drugstores and online) and in hospital/clinical laboratories for detection and/or treatment of medical conditions and diseases .

Our diagnostic test kits are used to analyze blood, urine, nasal or fecal material from patients in the diagnosis of various diseases, food intolerances and other medical complications, or to measure the level of specific hormones, antibodies, antigens or other substances, which may exist in the human body in extremely small concentrations.

The Company's products are designed to enhance the health and well-being of people, while reducing total healthcare costs.

Our primary focus is the research and development of revolutionary, patented, diagnostic-guided therapy (“DGT”) products to treat gastrointestinal diseases, such as irritable bowel syndrome, and other inflammatory diseases.

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, and other inflammatory diseases.

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

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

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

The diagnostic test kits are used to analyze blood, urine, or fecal specimens 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 patient’s body, stools, or blood, often in extremely small concentrations.

Due to the global 2019 SARS-CoV-2 novel coronavirus pandemic, in March 2020 we began redirecting and focusing a majority of our resources to develop, test, validate, seek regulatory approval for, and sell diagnostic products that indicate if a person has been infected by COVID-19.

During fiscal 2021, we sold 2 primary types of Covid 19 tests;

1) antibody diagnostic tests that use a patient’s blood sample to detect if the patient has certain antibodies to COVID-19 that were created as part of their body’s immune response to a COVID-19 infection, even if the infection was asymptomatic, and 2) antigen tests that use a patient’s nasal fluid sample to detect if a patient is currently infected with the virus.

Aside from the COVID-19 products we offer, the other products we sell are primarily focused on gastrointestinal diseases, food intolerances, diabetes and certain esoteric tests.

Our InFoods® IBS product uses a simple blood sample and is designed to identify patient-specific foods that, when removed from the diet, may alleviate IBS symptoms such as pain, bloating, diarrhea and constipation.

Instead of broad and difficult to manage dietary restrictions, the InFoods® IBS product works by identifying a patient’s above normal immunoreactivity to specific foods.

A food identified as positive and causing an abnormal immune response in the patient is simply removed from the diet to help alleviate IBS symptoms.

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

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

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

Due to the global 2019 SARS-CoV-2 novel coronavirus pandemic , in March 2020 we began developing COVID-19 products to indicate if a person has been infected by COVID-19 or is currently infected.

While we offer a COVID-19 antibody diagnostic test to determine if a person has previously been infected by the COVID-19 virus, all of our COVID-19 revenues in fiscal 2022 have come from international sales of our COVID-19 antigen tests that use a patient’s nasal fluid sample to detect if the patient is currently infected with the virus.

The other existing products that contributed to our 2022 revenues are primarily focused on gastrointestinal diseases, food intolerances, and certain esoteric tests.

These diagnostic test products utilize immunoassay technology.

Most of our products are CE marked and/or sold for diagnostic use where they are registered by each country’s regulatory agency.

In addition, some products are cleared for sale in the U.S.

In addition, some products are cleared for sale in the United States by the FDA.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The enclosed consolidated financial statements for the years ended May 31, 2021 and 2020 include the accounts of Biomerica, Inc.

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

The consolidated financial statements for the years ended May 31, 2022 and 2021, include the accounts of Biomerica, Inc.

("Biomerica") as well as its wholly-owned German subsidiary (BioEurope GmbH) and Mexican subsidiary (Biomerica de Mexico).

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

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stock option forfeiture rates, which are calculated based on historical data;

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

inventory obsolescence, which is 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, the likelihood of lease extensions to occur, asset valuation, among other things;

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Actual results could materially differ from those estimates.

MARKETS AND METHODS OF DISTRIBUTION

Due to the Coronavirus global pandemic, the Company’s operations have been negatively impacted.

The Company has faced disruptions in certain of the following areas, and may face further challenges from supply chain disruptions, loss of contracts and/or customers, closure of the Company’s manufacturing or distribution facilities or of the facilities of the Company’s suppliers, partners and customers, travel, shipping and logistical disruptions, government responses of all types, international business risks in countries where the Company makes and/or sells its products, loss of human capital or personnel at the Company, its partners and its customers, interruptions of production, customer credit risk, and general economic calamities.

The Company has faced disruptions in the following areas, (and may face further challenges):

supply chain disruptions, loss of contracts and/or customers, closure of the Company’s manufacturing or distribution facilities or of the facilities of the Company’s suppliers, partners and customers, travel, shipping and logistical disruptions, government responses of all types, international business risks in countries where the Company makes and/or sells its products, loss of human capital or personnel at the Company, its partners and its customers, interruptions of production, customer credit risk, and general economic calamities.

These ongoing pandemic related disruptions can materially negatively impact the Company’s operations and financial performance and may continue to have significant material negative impacts on the Company.

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

On January 22, 2021, the Company filed a Prospectus Supplement for purposes of raising up to $15,000,000 to the base prospectus filed with the SEC on July 21, 2020 and declared effective by the SEC on September 30, 2020 and an ATM Agreement.

As of May 31, 2022, the Company had cash and cash equivalents of approximately $ 5,917,000 and working capital of approximately $ 7,416,000 .

On January 22, 2021, the Company filed a Prospectus Supplement for purposes of raising up to $ 15,000,000 to the base prospectus filed with the SEC on July 21, 2020, and was declared effective by the SEC on September 30, 2020, and an ATM “at the market offering” Agreement.

The Company intends to use the net proceeds from such offering for general corporate purposes, including, without limitation, sales and marketing activities, clinical studies, and product development, making acquisitions of assets, businesses, companies or securities, capital expenditures, and for working capital needs.

Under an ATM Agreement, sales of the Placement Shares are deemed to be “at the market offering” as defined in Rule 415 promulgated under the Securities Act.

The agent acts as sales agent under the ATM and uses commercially reasonable efforts to sell on the Company’s behalf all of the Placement Shares requested to be sold from time to time by the Company, consistent with its normal trading and sales practices, on mutually agreed terms between the agent and the Company.

The agent acts as sales agent under the ATM and uses commercially reasonable efforts to sell on the Company’s behalf all the Placement Shares requested to be sold from time to time by the Company, consistent with its normal trading and sales practices, on mutually agreed terms between the agent and the Company.

The Company has no obligation to sell any of the Placement Shares under the ATM Agreement, and may at any time suspend offers under, or terminate the ATM Agreement.

During the year ended May 31, 2022, the Company sold 521,267 shares of its common stock at prices ranging from $ 4.02 to $ 5.63 under its Form S-3 Registration Statement ( File No.

333-239980) and ATM Agreement which resulted in gross proceeds of $1,177,394 and net proceeds to the Company of $1,011,475 after deducting commissions for each sale and legal, accounting and other fees related to the filing of the Form S-3.

As a result of cash and cash equivalents on hand at May 31, 2021, management believes the Company has sufficient funds to operate through August 2022 and the ability to raise additional funds through the ATM noted above.

333-239980) and ATM Agreement which resulted in gross proceeds of approximately $ 2,402,000 and net proceeds to the Company of $ 2,317,000 after deducting commissions for each sale and legal, accounting, and other fees related to the filing of the Form S-3.

As a result of cash and cash equivalents on hand on May 31, 2022, and the ability to raise additional funds through the ATM noted above, management believes the Company has sufficient funds to operate through at least August 2023.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

CONCENTRATION OF CREDIT RISK

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

For the years ended May 31, 2021 and 2020, the Company had two distributors and three distributors which accounted for a total of 60% and 57% of our net consolidated sales, respectively.

Of this, for the years ended May 31, 2021 and 2020 one of the distributors mentioned above accounted for 33% and 26%, respectively, of net consolidated sales.

At May 31, 2021 and 2020, the Company had two distributors and three distributors which accounted for a total of 73% and 80%, respectively, of gross accounts receivable.

Of the 73% as of May 31, 2021, 41% was owed by a distributor in China.

Total gross receivables at May 31, 2021 and 2020 were $2,292,466 and $1,836,852, respectively.

For the year ended May 31, 2021, one vendor accounted for 58% of the purchases of raw materials.

For the year ended May 31, 2020, one vendor accounted for a total of 59% of the purchases of raw materials.

Our net sales were approximately $ 18,871,000 for fiscal 2022 compared to $ 7,199,000 for fiscal 2021.

For the fiscal years ended May 31, 2022 and 2021, the Company had two distributors, which accounted for a total of 65 % and 60 % of our net sales, respectively.

Of this, for the fiscal years ended May 31, 2022 and 2021, the largest of the distributors mentioned above accounted for 55 % and 33 %, respectively, of net sales.

Total gross receivables on May 31, 2022 and 2021 were approximately $ 927,000 and $ 2,292,000 , respectively.

On May 31, 2022 and 2021, the Company had one distributor and two distributors, respectively, which accounted for a total of 50 % and 73 %, respectively, of gross accounts receivable.

Of the 50% as of May 31, 2022, 50 % was owed by a distributor in Asia.

For the fiscal years ended May 31, 2022 and 2021, the Company had one vendor, which accounted for 84 % and 58 %, respectively, of our purchases of raw materials.

GEOGRAPHIC CONCENTRATION

As of May 31, 2021 and 2020, approximately $803,000 and $613,000 of Biomerica's gross inventory and approximately $25,000 and $31,000, of Biomerica's property and equipment, net of accumulated depreciation, was located in Mexicali, Mexico, respectively.

As of May 31, 2022 and 2021, a pproximately $ 621,000 and $ 803,000 , respectively of Biomerica’s gross inventory was located in Mexicali, Mexico, respectively.

As of May 31, 2022 and 2021, approximately $ 17,000 and $ 25,000 , respectively of Biomerica’s property and equipment, net of accumulated depreciation and amortization, was located in Mexicali, Mexico, respectively.

CASH AND CASH EQUIVALENTS

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International accounts are usually required to prepay until they establish a history with the Company and at that time, they are extended credit at levels based on a number of criteria.

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

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

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

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

The Company has established a reserve of $837,415 for doubtful accounts as of May 31, 2021.

The majority of this reserve has been established to cover 100% of outstanding accounts receivable from an international distributor.

As of May 31, 2022 and 2021, the Company has established a reserve of approximately $ 153,000 and $ 837,000 , respectively, for doubtful accounts.

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 utilized.

As of May 31, 2021, the prepaids were approximately $370,000, composed of prepayments to insurance and various other 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.

As of May 31, 2022 and 2021, the prepaids were approximately $ 320,000 and $ 370,000 , respectively, composed of prepayments to insurance and various other suppliers.

INVENTORIES, NET

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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 approximate the following at May 31:

The following is a summary of approximate net inventories:

Raw materials

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Finished products

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

Total gross inventory

Inventory reserve

( 1,617,000 )

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 May 31, 2022 and 2021, inventory reserves were approximately $ 846,000 and $ 1,617,000 , respectively.

Of the inventory reserve, $1,502,675 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.

During the fiscal 2022 the Company disposed of COVID-19 antibody inventory that wasn’t sellable, this has been partially reserved for in fiscal 2021.

The reduction in our inventory reserve relates to the COVID-19 antibody disposal.

The Company continues to sell COVID-19 antigen tests.

PROPERTY AND EQUIPMENT, NET

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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 $104,715 and $105,299 for the years ended May 31, 2021 and 2020, respectively.

Depreciation and amortization expense on property and equipment amounted to approximately $ 100,000 and $ 105,000 for the years ended May 31, 2022 and 2021, respectively.

INTANGIBLE ASSETS, NET

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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 $33,552 and $23,873 for the years ended May 31, 2021 and 2020, respectively.

Amortization amounted to approximately $ 239,000 and $ 34,000 for the years ended May 31, 2022 and 2021, respectively.

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.

No impairment adjustment was required as of May 31, 2021 or 2020.

As of May 31, 2022 and 2021, an impairment adjustment was made of $ 210,000 and $ 0 , respectively.

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

The Company determines whether the fair values of any investments in privately-held entities have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable.

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 investee’s industry), a write-down to estimated fair value is recorded.

Investments represent the Company’s investment in a Polish distributor, which is primarily engaged in distributing medical products and devices.

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

The Company owns approximately 6% of the investee and, accordingly, applies the cost method to account for the investment.

Under the cost method, investments are recorded at cost, with gains and losses recognized as of the sale date, and income recorded when received.

The Company owns approximately 6 % of the investee and, accordingly, applies the cost method holdings to account for the investment.

The Company invested approximately $ 165,000 into the Polish distributor.

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 May 31, 2022 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 Holding during the year ended May 31, 2022.

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 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 fair value of each option award is estimated on the date of grant using the Black-Scholes options-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 future.

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.

The expected forfeiture rate is based on historical forfeitures experienced.

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 the Company had limited activity surrounding its options.

The risk-free rate is based on the U.S.

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

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

The grant date fair value of the award is recognized under the straight-line attribution method.

The Company expensed approximately $ 1,260,000 and $ 1,355,000 of stock-based compensation during the years ended May 31, 2022 and 2021, respectively.

In applying the Black-Scholes options-pricing model, assumptions used were as follows:

For the year ended May 31,

Dividend yield

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102.54 - 105.48 %

71.19 - 107.53 %

Risk free interest rate

0.97 - 2.75 %

0.34 - 1.18 %

Expected term

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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 May 31, 2021 and 2020 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.

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

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

The Company sells clinical lab products to domestic and international distributors, including hospitals and clinical laboratories, medical research institutions, medical schools, and pharmaceutical companies.

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Disaggregation of revenue:

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

The following is an approximate breakdown of revenues according to primary markets to which the products are sold:

For the year ended May 31,

Physician's office

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Contract manufacturing

See Note 8 for additional information regarding revenue concentrations.

See Note 8 for additional information regarding geographic revenue concentrations.

SHIPPING AND HANDLING FEES

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Research and development costs are expensed as incurred.

The Company expensed $2,410,506 and $1,910,209 of research and development costs during the years ended May 31, 2021 and 2020, respectively.

The Company expensed approximately $ 1,812,000 and $ 2,194,000 of research and development costs during the years ended May 31, 2022 and 2021, respectively.

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

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

At May 31, 2021 and 2020, in accordance with ASC 740, the Company has a valuation allowance for substantially all of its deferred tax assets.

During the fiscal year ended May 31, 2021, this valuation allowance was increased to $5,590,000, which fully covers the tax asset of $5,590,000 .

On May 31, 2022 and 2021, in accordance with ASC 740, the Company has a valuation allowance for substantially all of its net deferred tax assets.

During the fiscal year ended May 31, 2022, this valuation allowance was increased to $ 6,967,000 , which fully covers the net tax asset of $ 6,967,000 .

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

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On subsequent recognition and measurement, the maximum amount which is more likely than not to be recognized at each reporting date will represent the Company’s best estimate, given the information available at the reporting date, although the outcome of the tax position is not absolute or final.

Upon adopting the revisions in ASC 740, the Company elected to follow an accounting policy to classify accrued interest related to liabilities for income taxes within the “Interest expense” line and penalties related to liabilities for income taxes within the “Other expense” line of the consolidated statements of operations and comprehensive loss.

The Company elected to follow an accounting policy to classify accrued interest related to liabilities for income taxes within the “Interest expense” line and penalties related to liabilities for income taxes within the “Other expense” line of the consolidated statements of operations and comprehensive loss.

ADVERTISING COSTS

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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 years ended May 31, 2021 and 2020.

There are no foreign currency transactions that are included in the consolidated statements of operations for the years ended May 31, 2022 and 2021.

RIGHT-OF-USE ASSETS AND LEASE LIABILITY

Incentive payments received from landlords are recorded as deferred lease incentives and are amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

When the terms of an operating lease provide for periods of free rent, rent concessions, and/or rent escalations, the Company establishes a deferred rent liability for the difference between the scheduled rent payment and the straight-line rent expense recognized.

This deferred rent liability was amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

During the year ended May 31, 2020, the Company adopted ASC 842, Leases.

As a result, the existing deferred rent liability was netted against the Right-of-Use Asset which was capitalized at that time.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update which requires lessees to recognize most leases on the balance sheet with a corresponding right-of-use asset.

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.

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The Company has elected to exclude short-term leases.

The Company adopted this guidance as of June 1, 2019, the required effective date, using the effective date transition method.

An adjustment to opening accumulated deficit was not required in conjunction with adoption.

The adoption of this statement resulted in a right-of-use asset being recorded in the amount of $1,942,999 and a lease liability being recorded in the amount of $1,980,970.

The Company adopted this guidance as of June 1, 2019, the required effective date, which resulted in a right-of-use asset being recorded of approximately $ 1,943,000 and a lease liability being recorded of approximately $ 1,981,000 .

On April 9, 2021, the Company exercised its second option to extend its lease for an additional five years.

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However, given the recent growth in the Company’s operations, and the expectation that operations will continue to grow in the near future, the Company believes that it will be necessary to relocate into larger facilities by the end of the current lease term.

Therefore, the Company has elected to not book the additional five-year extension option, from August 2026 to August 2031, into its right-of-use asset or its lease liability accounts.

Therefore, the Company has elected to not include the additional five-year extension option, from August 2026 to August 2031, into its right-of-use asset or its lease liability accounts.

For additional information, see Note 9-Commitments and Contingencies.

The Company has elected not to reassess whether expired or existing contracts contain leases, or reassess the classification of existing leases as of the adoption date.

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

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The total amounts of anti-dilutive stock options not included in the loss per share calculation for the years ended May 31, 2022 and 2021 were 2,321,616 and 2,081,366 , respectively.

The Company also had 0 and 321,429 of Series A 5% Convertible Preferred Stock outstanding for the years ended May 31, 2021 and 2020, respectively.

The 321,429 shares outstanding at May 31, 2020 were converted to common stock during the year ended May 31, 2021.

SEGMENT REPORTING

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Comprehensive loss represents net loss and any revenues, expenses, gains and losses that, under GAAP, are excluded from net loss and recognized directly as a component of shareholders’ equity.

Accumulated other comprehensive loss consists solely of foreign currency translation adjustments.

Items of other comprehensive loss consist solely of foreign currency translation adjustments for the years ended May 31, 2022 and 2021.

RECENT ACCOUNTING PRONOUNCEMENTS

Recent ASU's issued by the FASB and guidance issued by the SEC did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.

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

Measurement of Credit Losses on Financial Instruments." This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

The guidance was initially effective for the Company for annual reporting periods beginning after December 15, 2019, and interim periods within those fiscal years.

In November 2019, the FASB issued ASU 201·9- 10, "Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates," which, among other things, defers the effective date of ASU 2016-13 for public filers that are considered smaller reporting companies as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, including interim periods within those years.

Early adoption is permitted.

The Company is currently reviewing the requirements of this ASU to determine its impact on the Company’s consolidated results of operations and financial position.

RECLASSIFICATIONS

Certain comparative figures in the 2021 Statement of Operations have been reclassified to conform to the current year’s presentation.

PROPERTY AND EQUIPMENT, NET

Property and equipment, net of accumulated depreciation, consist of the following at May 31:

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

Furniture, fixtures and leasehold improvements

Less accumulated depreciation

( 1,305,000 )

( 1,972,000 )

Net property and equipment

INTANGIBLE ASSETS, NET

Intangible assets, net of accumulated amortization, consist of the following at May 31:

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

Less accumulated amortization-licenses

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ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The Company’s accounts payable and accrued expense balances consist of the following at May 31:

The following is an approximate breakdown of accounts payable and accrued expenses balances:

Accounts payable

Accrued expense

As of May 31, 2021 and 2020 the Company had one vendor and two vendors which accounted for 17% and 27%, respectively, of accounts payable.

Accrued expenses

As of May 31, 2022 and 2021 the Company had two vendors and one vendor, respectively, which accounted for 69 % and 17 %, respectively, of accounts payable.

SHAREHOLDERS' EQUITY

On February 24, 2020, the Company filed with the Secretary of State of Delaware a certificate of designation to authorize for issuance 571,429 shares of Series A 5% Convertible Preferred Stock.

On February 26, 2020, the Company filed with the Secretary of State of Delaware a certificate of correction, correcting certain language defects in the previously filed certificate of designation.

Please see below a description of the Series A 5% Convertible Preferred Stock shares that were issued in February 2020, and subsequently converted into registered common shares.

STOCK OPTION AND RESTRICTED STOCK PLANS

In August 2010, the Company adopted a stock option and restricted stock plan (the "2010 Plan") which provided that non-qualified options and incentive stock options and restricted stock covering an aggregate of 850,000 shares of the Company's unissued common stock could be granted to affiliates, employees or consultants of the Company.

This plan was approved by shareholders in December 2010.

The 2010 Plan expired in December 2020.

Options granted under the 2010 Plan were granted at prices not less than 80% of the then fair market value of the common stock and will expire not more than 10 years after the date of grant.

In December 2014, the Company adopted a stock option and restricted stock plan (the "2014 Plan") which provides that non-qualified options and incentive stock options and restricted stock covering an aggregate of 850,000 shares of the Company's unissued common stock may be granted to affiliates, employees, or consultants of the Company.

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During fiscal 2020, certain common stock options were granted under this plan.

Stock option expense during fiscal 2021 was $377,391.

This included, by department, $64,491 for research and development, $221,052 for administrative, $18,035 for sales and marketing and $73,813 for production.

Stock option expense during fiscal 2020 was $200,470.

This included, by department, $17,892 for research and development, $156,750 in administrative, $2,933 in sales and marketing and $22,895 for production.

Stock option expense during fiscal 2022 was approximately $ 1,260,000 .

This included, by department, $ 954,000 for administrative, $ 159,000 for production, $ 80,000 for research and development and $ 67,000 for sales and marketing.

Stock option expense during fiscal 2021 was approximately $ 1,355,000 .

This included, by department, $ 957,000 for administrative, $ 205,000 for production, $ 125,000 for research and development and $ 68,000 for sales and marketing

Activity as to aggregate stock options outstanding is as follows:

NUMBER OF STOCK OPTIONS

EXCERCISE PRICE

RANGE PER SHARE

WEIGHTED AVERAGE EXERCISE

STOCK OPTIONS

EXERCISE PRICE

Options outstanding at May 31, 2020

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Options outstanding at May 31, 2022

$1.20 - $6.73

The weighted average fair value of options granted during 2021 and 2020 was $6.73 and $4.47, respectively.

The weighted average fair value of options granted during 2022 and 2021 were $ 4.43 and $ 6.73 , respectively.

The aggregate intrinsic value of options exercised during 2022 and 2021 was approximately $ 90,000 and $ 501,000 , respectively.

The aggregate intrinsic value of options outstanding at May 31, 2021 and 2020 was approximately $2,132,000 and $6,923,000, respectively.

The aggregate intrinsic value of options vested and exercisable at May 31, 2021 and 2020 was approximately $1,872,000 and $4,442,000, respectively.

The aggregate intrinsic value of options outstanding on May 31, 2022 and 2021 was approximately $ 1,838,000 and $ 2,132,000 , respectively.

The aggregate intrinsic value of options vested and exercisable on May 31, 2022 and 2021 was approximately $ 1,731,000 and $ 1,872,000 , respectively.

The number of non-vested stock options included in the table above is as follows:

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Non-vested shares at May 31, 2022

At May 31, 2021, total compensation cost related to non-vested stock option awards not yet recognized totaled approximately $1,208,000.

On May 31, 2022, total compensation cost related to non-vested stock option awards not yet recognized totaled approximately $ 1,982,000 .

The weighted-average period over which this amount is expected to be recognized is 2.32 years.

The weighted average remaining contractual term of options that were exercisable at May 31, 2021 was 6.07 years.

The following summarizes information about all of the Company's stock options outstanding at May 31, 2021.

The weighted average remaining contractual term of options that were exercisable on May 31, 2022, was 5.47 years.

The following summarizes information about all the Company's stock options outstanding on May 31, 2022.

These options are comprised of those granted under the 2014, 2017 and 2020 plans.

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EXERCISE PRICE

$ 0.82 -$ 1.52

$ 2.25 -$ 4.25

$ 4.34 -$ 8.70

COMMON STOCK ACTIVITY

During the year ended May 31, 2020, options to purchase 137,958 shares of common stock were exercised at prices ranging from $0.82 to $3.90.

Total net proceeds to the Company were $223,534.

On December 1, 2017, the Company entered into an At Market Issuance Sales Agreement (or “ATM Agreement”) with an agent, and filed a prospectus supplement with the SEC pursuant under which the Company could offer and sell from time to time up to an aggregate of $7,000,000 of shares of the Company’s common stock, par value $0.08 per share (the “Placement Shares”), through the agent.

From December 1, 2017 to March 19, 2020, the Company sold common stock resulting in $6,997,935 of gross proceeds under this ATM Agreement, of which $3,771,048 were sold during the year ended May 31, 2020.

This At Market Issuance Agreement expired on July 20, 2020 upon the expiration of the Company’s Form S-3 registration statement base prospectus dated July 20, 2017.

The Placement Shares sold and issued under this ATM Agreement have been registered under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the Registration Statement on Form S-3 (File No.

333-219130) (the “Registration Statement”), which was originally filed with the SEC on June 30, 2017 and declared effective by the SEC on July 20, 2017, the base prospectus contained within the Registration Statement, and the prospectus supplement related to the sale of shares under the ATM Agreement was filed with the SEC on December 1, 2017.

On March 20, 2020, the Company filed a new prospectus supplement to the S-3 registration statement base prospectus dated July 20, 2017 for purposes of raising up to $12,500,000 from time to time pursuant to the terms of the ATM Agreement.

This ATM Agreement expired on July 20, 2020 upon the expiration of the Company’s Form S-3 registration statement base prospectus dated July 20, 2017.

Gross proceeds for the year ended May 31, 2020 were $6,817,330.

There were no proceeds for the year ended May 31, 2021, for this July 20, 2017 Form S-3 registration statement.

Combined Placement Shares sold under the ATM Agreements during the year ended May 31, 2020 under the two prospectus supplements dated December 1, 2017 and March 20, 2020 totaled 1,674,943 shares.

Total net proceeds from the sale of Placement Shares under the two prospectus supplements during the year ended May 31, 2020 were $10,232,857 after deducting commissions for each sale and legal, accounting, and other fees related to the filing of the Form S-3.

These shares were sold at prices ranging from $2.33 to $9.08 per share.

On September 11, 2020, the Company filed a Pre-Effective Amendment No.

1 to the Form S-3 to register 571,429 shares of Biomerica common stock in connection with the Stock Purchase Agreement dated February 21, 2020, wherein the Company entered into a registration rights agreement with the selling stockholder, pursuant to which we agreed to file a registration statement registering the resale of the shares of our common stock issuable upon conversion of our Series A Preferred Stock issued to the selling stockholder under the Stock Purchase Agreement.

On September 30, 2020, the Company received a Notice of Effectiveness from the Securities and Exchange Commission for the Form S-3 “shelf” Registration Statement filed on July 21, 2020 and amended on September 11, 2020.

During the year ended May 31, 2020, 250,000 shares of common stock were converted from Preferred Stock as described below in “Preferred Stock Activity”.

During the year ended May 31, 2021, options to purchase 86,750 shares of common stock were exercised at prices ranging from $0.82 to $3.62.

Total net proceeds to the Company were $102,255.

On January 22, 2021, the Company filed a Prospectus Supplement, for purposes of raising up to $ 15,000,000 to the base prospectus filed with the SEC on July 21, 2020, and declared effective by the SEC on September 30, and an ATM Agreement.

On May 21, 2021, in conjunction with the Company’s 2020 Stock Incentive Plan, that was approved by shareholders at the Company’s annual meeting in December 2020, the Company filed an S-8 Registration Statement to register up to 900,000 shares of the Company’s common stock that could be issued under this Plan.

Under an ATM Agreements, sales of the Placement Shares are deemed to be “at the market offering” as defined in Rule 415 promulgated under the Securities Act.

Under ATM Agreements, sales of the Placement Shares are deemed to be “at the market offering” as defined in Rule 415 promulgated under the Securities Act.

The Company has no obligation to sell any of the Placement Shares under the ATM Agreement, and may at any time suspend offers under, or terminate the ATM Agreement.

During the year ended May 31, 2021, 321,429 shares of common stock were converted from Preferred Stock as described below in “Preferred Stock Activity”.

During the year ended May 31, 2022, the Company sold 521,267 shares of its common stock at prices ranging from $ 4.02 to $ 5.63 under its Form S-3 Registration Statement ( File No.

333-239980 ) and ATM Agreement which resulted in gross proceeds of $1,177,394 and net proceeds to the Company of $1,011,475 after deducting commissions for each sale and legal, accounting and other fees related to the filing of the Form S-3.

During the year ended May 31, 2021, the Company sold 158,889 shares of its common stock at prices ranging from $ 7.06 to $ 7.79 under its Form S-3 Registration Statement (File No.

333-239980) and ATM Agreement which resulted in gross proceeds of approximately $ 1,177,000 and net proceeds to the Company of $ 1,011,000 after deducting commissions for each sale and legal, accounting, and other fees related to the filing of the Form S-3.

During the year ended May 31, 2022, options to purchase 39,500 shares of common stock were exercised at prices ranging from $ 1.20 to $ 3.62 .

Total net proceeds to the Company were approximately $ 77,000 .

During the year ended May 31, 2021, 321,429 shares of common stock were converted from Preferred Stock as described below in “Preferred Stock Activity”.

PREFERRED STOCK ACTIVITY

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On January 21, 2021, Palm Converted their remaining 321,429 Convertible Preferred Shares into registered common shares.

At May 30, 2021, the Company had no shares of Preferred Stock outstanding.

On May 30, 2021, the Company had no shares of Preferred Stock outstanding.

Under the terms of the Preferred Stock Purchase Agreement, none of the cumulative Dividends were paid to Palm during the period they owned the Preferred Stock.

1 unchanged sentence

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

Years ended May 31,

For the year ended May 31,

Foreign Taxes Subsidiaries

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Federal income tax rate applicable for each year ( 21 % for 2022 and 2021) to pretax income as a result of the following:

Years ended May 31,

For the year ended May 31,

Computed "expected" tax benefit

1 unchanged sentence

Change in valuation allowance

( 1,022,000 )

( 2,292,000 )

State income taxes, net of federal benefit

1 unchanged sentence

Permanent tax differences and other

Stock based compensation benefit

Foreign taxes of subsidiaries

1 unchanged sentence

The tax effect of significant temporary differences is presented below:

As of May 31,

Deferred tax assets:

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Less valuation allowance

( 6,967,000 )

( 5,904,000 )

Net deferred tax asset

1 unchanged sentence

The net change in the valuation allowance for the years ended May 31, 2022 and 2021, was an increase of $ 1,063,000 and $ 2,292,000 , respectively.

The Company increased the deferred tax asset and the valuation allowance by $313,000 as of May 31, 2020 based on the outstanding stock options as of May 31, 2020.

This change had no impact on the Company’s consolidated financial statements as our deferred tax asset is fully offset by our valuation allowance.

At May 31, 2021, the Company has Federal income tax net operating loss carryforwards of approximately $12,957,000.

At May 31, 2021, the Company has California state income tax net operating loss carryforwards of approximately $6,768,000.

On May 31, 2022, the Company has Federal income tax net operating loss carryforwards of approximately $ 17,116,000 .

On May 31, 2022, the Company has California state income tax net operating loss carryforwards of approximately $ 10,805,000 .

For tax reporting purposes, operating loss carryforwards are available to offset future taxable income;

1 unchanged sentence

Federal net operating losses beginning in 2018 have no expiration date.

At May 31, 2021, the Company has Federal research and development tax credit carryforward of approximately $715,000.

On May 31, 2022, the Company has Federal research and development tax credit carryforward of approximately $ 784,000 .

The Federal credits begin to expire in 2027 .

The Company also had similar credit carryforwards for state purposes of $341,000 at May 31, 2021, which don’t expire.

The Company also had similar credit carryforwards for state purposes of $ 395,000 on May 31, 2022, which don’t expire.

Pursuant to Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of the Company's net operating loss ("NOL") and credit carryforwards may be limited by statute because of a cumulative change in ownership of more than 50%.

4 unchanged sentences

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

federal tax examinations by tax authorities for years before fiscal year 2017.

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

GEOGRAPHIC INFORMATION

1 unchanged sentence

Geographic information regarding net sales is approximately as follows:

Revenues from sales to unaffiliated customers:

United States

For the year ended May 31,

North America

South America

1 unchanged sentence

OPERATING LEASES

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

The lease commenced September 1, 2009 and ended August 31, 2016.

On November 30, 2015, the Company entered into the First Amendment to Lease wherein it exercised its option to extend its lease until August 31, 2021.

The initial base rent for the lease extension was $21,000 per month, increasing to $23,637 through August 31, 2021.

On April 9, 2021 the Company exercised its second option to extend its lease for an additional five years through August 2026.

The Company was also granted an additional five years lease extension option through August 2031.

The rent is currently $23,637 per month and will increase on September 1, 2021 to $25,970 per month and be increased 3% each year thereafter.

The security deposit of $22,080 remains the same.

In November 2016, the Company’s subsidiary, Biomerica de Mexico, entered into a ten-year lease for approximately 8,104 square feet at a monthly rent of $2,926.

The Company leases its facilities.

On May 31, 2022, the Company had approximately 22,000 square feet of floor space at its corporate headquarters at 17571 Von Karman Avenue in Irvine, California, which it has been leasing since 2009.

The lease for its headquarters expired on August 31, 2016.

The Company had an option to extend the term of its lease for two additional sixty-month periods.

On November 30, 2015, the Company exercised its option to extend its lease for an additional sixty-month period and entered into the First Amendment to Lease wherein it extended its lease until August 31, 2021 .

On April 9, 2021, the Company exercised its second option to extend its lease for an additional five years.

When the Company extended its lease in April 2021, it was also granted an additional five-year lease extension option.

The current rent is approximately $ 25,000 per month and will increase on September 1, 2022, to $ 26,000 per month.

The security deposit is 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.

The yearly rate is subject to an annual adjustment for inflation according to the United States Bureau of Labor Statistics Consumer Price Index for All Urban Consumers.

The monthly rate is currently $3,262.

Biomerica, Inc.

is not a guarantor of such lease.

The current rent is approximately $ 3,400 per month.

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.

Total gross rent expense in the U.S.

for fiscal 2021 was $294,759 and 2020 was $300,267.

Rent expense for the Mexico facility for fiscal 2021 and 2020 was $25,351 and $43,481, respectively.

Total gross rent expense in the United States for fiscal 2022 was approximately $ 310,000 , and for fiscal 2021 was $ 295,000 .

Rent expense for the Mexico facility for fiscal 2022 and 2021 was approximately $ 42,000 and $ 25,000 , respectively.

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.

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Weighted average discount rate

Future minimum lease payments under the operating lease as of May 31, 2021 are as follows:

Future minimum lease payments under operating leases on May 31, 2022, are as follows:

Less than 1 year

Total undiscounted lease payments

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There were no legal proceedings pending as of May 31, 2022.

On July 2, 2020, we received a notice of investigation and subpoena to produce information and documents from the Division of Enforcement of the SEC.

The subpoena requested information and documents related to events and circumstances leading up to our March 17, 2020 announcement that we had commenced shipping samples of our 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 requested 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 Company’s CEO, requesting documents held by Mr.

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

The Company and Mr.

Irani have cooperated fully with the SEC’s investigation and provided information as requested.

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

Contracts and Licensing Agreements

5 unchanged sentences

On May 25, 2016, the Company entered into an Exclusive Marketing License Agreement (“Telcon Agreement”) with Celtis Pharm Co., Ltd., who subsequently changed their name to Telcon Pharmaceutical Co., LTD (“Telcon”), a medical company in South Korea.

The Telcon Agreement grants to Telcon an exclusive license to market and sell Biomerica’s new InFoods®

IBS products (“IBS Products”) in South Korea.

The Telcon Agreement grants to Telcon an exclusive license to market and sell Biomerica’s new InFoods® IBS products (“IBS Products”) in South Korea.

The term of the agreement is for a period of five years following Korean FDA clearance of the product and provides an additional two years for Telcon to attain such Korean FDA clearance.

2 unchanged sentences

The agreement may be cancelled if Biomerica has not obtained final USFDA clearance for sale of the IBS Products on or before December 31, 2019.

Biomerica is also obligated to maintain a full quality assurance system for the IBS Products following the harmonized standards according to Annex IV of Directive 98/79/EC.

We are working with Telcon management to extend the term of the Telcon Agreement.

The terms of the Telcon Agreement provide up to $1.25 million in exclusivity fees based on certain milestones including Biomerica’s starting clinical trials in the United States, receipt of U.S.

The required FDA approval was not obtained by December 31, 2019, however, neither party has terminated the agreement.

Once the IBS Product is cleared by the United States FDA, Biomerica is also obligated to maintain a full quality assurance system for the IBS Products following the harmonized standards according to Annex IV of Directive 98/79/EC.

The terms of the Telcon Agreement provide up to $ 1.25 million in future exclusivity fees to be possibly paid to Biomerica based on certain milestones including Biomerica’s starting clinical trials in the United States, receipt of U.S.

FDA clearance and Telcon’s first sales of IBS Products in Korea.

5 unchanged sentences

During the quarter ended August 31, 2020, a second amendment was signed extending the required FDA approval date to December 31, 2021.

On May 29, 2019, the Company entered into an exclusive distribution agreement which contained certain annual minimum sales requirements, with MaxHealth Medical International Limited (a Chinese company) for the distribution of the Company’s EZ Detect Product in China.

On March 15, 2021, the Company terminated this agreement due to MaxHealth’s failure to meet the minimum sales requirements.

The required FDA approval date hasn’t been delivered however, neither party has terminated the agreement.

On April 1, 2020, the Company entered into two separate non-exclusive license agreements (the “Mount Sinai License Agreements”) with the Mount Sinai Icahn School of Medicine in New York (“Mount Sinai”) to license technology from Mount Sinai that the Company intends to use to scale up and manufacture a laboratory version serological test for SARS-CoV-2 coronavirus.

This test uses the ELISA microplate format that can run on existing open system equipment found in most hospitals and clinical laboratories in the United States.

The non-exclusive Mount Sinai License Agreements provide for royalty payments to Mount Sinai based on a percentage of gross sales of commercial products manufactured and sold by Biomerica that incorporate the Mount Sinai technology licensed under the Mount Sinai License Agreement.

On June 20, 2020, the Company filed for Emergency Use Authorization with the FDA based on this on this technology.

The Company purchased materials in the amount of $5,100 during fiscal 2020 and subsequently to that another $2,850.

No royalty fees have been paid yet on these agreements.

On May 7, 2020, the Company entered into an exclusive license agreement (the “UC License Agreements”) with The Regents of the University of California (“UC”) to license all patent rights pertaining to certain licensed technology from UC.

This technology is being developed at the University by one of the professors and his team utilizing CRISPR technology.

On June 20, 2020, the Company filed for Emergency Use Authorization (“EUA”) with the FDA for the sale of a product developed by the Company that is based on this technology.

The FDA has still not approved the Company’s Emergency Use Authorization for this product to be sold.

As such, no royalty fees have been paid yet on these agreements.

The Company is selling a COVID-19 rapid test outside of the United States, which is unrelated to the EUA product discussed above.

On May 7, 2020, the Company entered into an exclusive license agreement (the “UC License Agreement”) with The Regents of the University of California (“UC”) to license all patent rights pertaining to certain licensed technology from UC.

This technology is being developed at UC-San Diego by one of the professors and his team utilizing CRISPR technology.

This group is developing a viral detection test for SARS-CoV-2 coronavirus.

If this technology development is successful, the Company will work with the University to transfer the technology to Biomerica where the CRISPR based product will need to be further developed, validated and cleared with regulatory agencies for commercial sale into the market.

The exclusive UC License Agreements provide for an initial and annual license fee, and a royalty payment on all commercial revenues, to the UC Regents.

If this technology development is successful, the Company will work with the UC to transfer the technology to Biomerica where the CRISPR based product will need to be further developed, validated, and cleared with regulatory agencies for commercial sale into the market.

The exclusive UC License Agreement provides for an initial and annual license fee, and a royalty payment on all commercial revenues, to the UC Regents.

The UC License Agreement also includes certain investment requirements and milestones the Company will need to meet for the launch of a commercial product based on the licensed technology.

6 unchanged sentences

In September 2017, the Company signed a Clinical Samples Agreement with the University of Southern California for the purpose of providing clinical samples for use by the Company in conducting future clinical trials for one of the products which the Company is developing.

The initial budget was estimated to be $82,472.

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

The work started in October 2017 with charges for work performed being invoiced and paid monthly.

This study ended in February 2020.

The Company incurred $2,200 in fiscal 2020 and $12,567 in expenses previously invoiced for a total of $14,767.

In addition, $17,064 in fees has been accrued for unbilled charges as of May 31, 2021.

In November 2017, the Company entered into a Clinical Trial Agreement with the University of Michigan to perform an InFoods ®

24 Endpoint Determination Study.

The Company will be invoiced monthly for work performed the previous month.

The maximum budget for the study is $181,015.

The Company incurred $20,550 and $30,900 in expenses for this study during fiscal 2021 and 2020, respectively.

This commitment is approximately 56% billed.

The Company has accrued $2,050 in charges as of May 31, 2021.

In January 2018, the Company entered into a Clinical Trial Agreement with Beth Israel Deaconess Medical Center for the purposes of conducting an Antibody Guided Restriction Trial Using Biomerica InFoods ®

24G Test in patients with a previous diagnosis of Irritable Bowel Syndrome.

The study began in the first quarter of fiscal 2019.

The Company was invoiced monthly for work performed the previous month.

The total cost of the study was initially estimated to be $142,000, however the study was expanded and total costs of the trial was approximately $305,000.

The Company incurred $0 and $141,640 in expenses for this study during fiscal 2021 and 2020, respectively.

This study was closed in February 2020 and no additional costs are expected.

On July 12, 2019, the Company entered into a Clinical Trial Agreement with a research management institution for the purpose of conducting a clinical trial of the Biomerica HP Stool Antigen test.

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

The maximum budgeted costs were approximately $117,200.

During fiscal 2021 and 2020, $13,111 and $13,355 in charges were billed, respectively.

This study is now closed so no further charges will be incurred.

On July 22, 2019, the Company entered into a Clinical Trial Agreement with a research institution, for the purpose of conducting a clinical trial of the Biomerica InFoods®

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

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

The Company incurred $20,875 in charges during fiscal 2020.

This commitment is approximately 31% billed.

In addition, the Company was billed $12,675 in fiscal 2021 and accrued $19,600 in unbilled charges as of May 31, 2021.

On September 25, 2019, the Company entered into a Clinical Trial Agreement with a medical practice for the purpose of conducting a clinical trial of the Biomerica InFoods®

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

The maximum budgeted costs will be $136,000.

During fiscal 2021 and 2020, the Company was invoiced $11,725 and $45,250 respectively in expenses.

This commitment is approximately 42% billed.

In addition, the Company accrued $5,975 in unbilled charges as of May 31, 2020.

No charges were accrued at May 31, 2021.

On September 25, 2019, the Company entered into a Clinical Trial Agreement with a research institution for the purpose of conducting a clinical trial of the Biomerica H.

pylori product.

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

The maximum budgeted costs will be approximately $57,800.

The Company was invoiced $41,845 in charges during the year ended May 31, 2020.

At May 31, 2020, the commitment was approximately 72% billed and the study was closed so no further charges will be incurred.

In December 2019, the Company entered into a Clinical Trial Agreement with Houston Methodist Research Institute for the purpose of conducting a clinical trial of the Biomerica InFoods®

Approximately $ 17,000 in fees has been accrued for unbilled charges as of May 31, 2022.

The Company entered into a Clinical Trial Agreement with a research institute for the purpose of conducting a clinical trial of the Biomerica InFoods® product.

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

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

During the years ended May 31, 2021 and 2020, the Company was invoiced $0 and $4,000 in charges, respectively.

This commitment is approximately 3% billed.

The Company accrued $3,550 in charges at May 31, 2021.

On May 28, 2020, the Company entered into a Clinical Trial Agreement with the Mayo Clinic Arizona for the purpose of participating in the ongoing end point clinical trial of the Biomerica InFoods®

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

The maximum budgeted costs will be $135,515.

At May 31, 2021 and 2020, $0 and $17,390 had been invoiced to the Company.

The Company has accrued $3,750 in expenses as of May 31, 2021.

This commitment is approximately 13% billed.

On May 28, 2020, the Company entered into a Clinical Trial Agreement with the Mayo Clinic Jacksonville for the purpose of participating in the ongoing end point clinical trial of the Biomerica InFoods®

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

The maximum budgeted costs will be $135,515.

The Company has not received any billings as of May 31, 2020, however accrued $17,390 in charges as of that date.

The Company received $22,827 in billings in fiscal 2021 and did not accrue any charges as of May 31, 2021.

As of May 31, 2021, approximately 17% of the commitment had been invoiced.

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®

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

The maximum budgeted costs will be $139,850.

As of May 31, 2021, $4,850 had been billed and $3,750 in accruals remained.

As of May 31, 2021, approximately 4% of the commitment had been invoiced.

The addition of both Mayo Clinic sites and other major medical centers were brought into the InFoods®

IBS clinicals studies in order to accelerate patient enrollment.

This study ended in March 2022.

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

SUBSEQUENT EVENTS

Subsequent to May 31, 2021, options to purchase 1,500 shares of Biomerica common stock were exercised at the exercise price of $2.68 per share.

Proceeds to the Company were approximately $4,000.

Subsequent to May 31, 2021, the Company sold 201,553 shares of its common stock under its Form S-3 “shelf” Registration statement.

Subsequent to May 31, 2022, as of the filing of Form 10-K, the Company sold 523,977 shares of its common stock under its Form S-3 “shelf” Registration statement.

The average sale price was $ 3.46 per share.

Net proceeds to the Company were approximately $ 1,765,000 .

On June 21, 2021, the Company signed an exclusive distribution and marketing agreement in Canada for its Helicobacter Pylori (H.

Pylori) test.

In June 2021, the Company received a patent in Japan (#6902526) for the System and Method for a Digital Health System Providing a Food Recommendation Based on Food Sensitivity Testing.

This technology is designed to allow for easier implementation of the dietary restrictions that result from InFoods®

diagnostic testing.

This method describes using a smartphone or similar technology to identify prepared or packaged foods that contain restricted food ingredients, using barcodes or product labels.

In August 2021, the Company received a notice of allowance for a patent in Japan whose claims cover the use of the InFoods®

technology to diagnose and treat depression, and covers the compositions, devices and methods of depression sensitivity testing.

On July 14, 2022, the Company announced they had entered into a General Merchandise Supplier Agreement with Walmart, for the Company’s Aware ® Breast Self Exam product to be sold in Walmart’s retail system.

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

What changed 10-K

Item 9A. Controls and Procedures