What changed in this filing

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Item 1A. Risk Factors

2025-08-29 compared with 2024-08-28 · 121 added, 170 removed, 463 unchanged (39% of the section changed)

risks described below are not the only ones we face.

Additional risks and uncertainties we are not presently aware of or that we currently

believe are immaterial may also impair our business operations.

Our business could be harmed by any of these risks and uncertainties.

The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.

these risks, you should also refer to the other information contained or incorporated by reference into this annual report on Form 10-K,

including our consolidated financial statements and related notes.

in our securities involves a high degree of risk.

You should carefully consider the risks and uncertainties described below, together

with the other information in this Annual Report, including our consolidated financial statements and the related notes and “Management’s

Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our securities.

The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events

or circumstances, may have a material adverse effect on our business, reputation, revenue, financial condition, results of operations,

and future prospects, in which event the market price of our Common Stock could decline, and you could lose part or all of your investment.

The risks and uncertainties summarized above and described below are not intended to be exhaustive and are not the only ones we face.

Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

This Annual Report also contains forward-looking statements that involve risks and uncertainties, refer to “Cautionary Note Regarding

Forward-Looking Statements.” Our actual results could differ materially and adversely from our anticipated results as a result

of a number of factors, including the risks described below.

RELATED TO OUR BUSINESS

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value of our common stock and may necessitate seeking additional funding under potentially unfavorable conditions.

Although our financial statements have been prepared on a going concern basis, our current level of cash

and cash equivalents available to us is not sufficient to meet our operating plans for the next 12 months, raising substantial doubt regarding

our ability to continue as a going concern.

our financial statements have been prepared on a going concern basis, our current level of cash and cash equivalents available to us

is not sufficient to meet our operating plans for the next 12 months, raising substantial doubt regarding our ability to continue as

a going concern.

financial statements as of May 31, 2025, have been prepared under the assumption that we will continue as a going concern for the next

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concern for a period of at least the next twelve months from the date this report is filed.

ability to continue as a going concern depends on obtaining additional financing, achieving further operating

efficiencies, increasing sales, reducing costs, and ultimately generating profitable operations.

There is no assurance that we will be

able to secure the necessary capital on favorable terms, achieve sufficient revenue growth, or implement adequate cost reductions.

financial statements do not reflect any adjustments that might result from the resolution of this uncertainty.

ability to continue as a going concern depends on obtaining additional financing, achieving further operating efficiencies, increasing

sales, reducing costs, and ultimately generating profitable operations.

There is no assurance that we will be able to secure the necessary

capital on favorable terms, achieve sufficient revenue growth, or implement adequate cost reductions.

Our financial statements do not

reflect any adjustments that might result from the resolution of this uncertainty.

operating results may fluctuate adversely as a result of many factors that are outside our control, which may negatively impact our stock

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Key factors include:

Delays or issues with obtaining regulatory approvals in the U.S., Europe, and

other markets.

Delays or issues with obtaining regulatory approvals in the U.S., Europe, and other markets.

Challenges in meeting compliance requirements in various jurisdictions.

● Competition:

Introduction of superior or lower-priced products by competitors could impact our market

Introduction of superior or lower-priced products by competitors could impact our market share.

Reimbursement

Alterations in reimbursement systems or amounts could affect product usage decisions.

Economic downturns, changes in healthcare spending, reduced consumer demand,

inflation, and currency fluctuations.

Economic downturns, changes in healthcare spending, reduced consumer demand, inflation, and currency fluctuations.

and Regulatory Changes:

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Lower than expected adoption of new or recently introduced products.

● Distributor

Variability in distributor inventory levels, buying patterns, and overall performance.

Risks from shelter-in-place orders, lockdowns, or other crisis-related directives.

Potential resurgence of COVID-19 or new health threats.

Potential of order holds or sales delays or reductions due to Tariffs

Market Changes:

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technologies and products will be commercially viable, or our expansion into new markets will be profitable.

is also no guarantee that our new products, including our inFoods ® IBS products and hp+detect ™ , will

be well accepted into the marketplace.

is also no guarantee that our new products, including our inFoods ® IBS product and hp+detect ™ , will be

well accepted into the marketplace.

operations will be adversely affected if our operating results do not correspondingly increase with our increased expenditures or if

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product shortages, or delays in product manufacturing and a decline in sales.

Also, evolving EU IVDR requirements may increase compliance

costs and extend certification timelines, which could limit our ability to sell certain IVDD products in the EU.

Company maintains a manufacturing plant in Mexico which presents risks to the Company including risks associated with doing business

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or an unsuccessful effort by us to directly distribute our products could lead to reduced sales.

net sales were approximately $5,415,000 for fiscal 2024, compared to $5,339,000 for fiscal 2023.

For the fiscal years ended May 31, 2024,

and 2023, the Company had one distributor each year that accounted for 33% and 35% of our net sales, respectively.

net sales were approximately $5,311,000 for fiscal year ended May 31, 2025, compared to $5,415,000 for fiscal year eneded May 31,

For the fiscal years ended May 31, 2025 and 2024, the Company had one distributor each year that accounted for 31% and 33% of

our net sales, respectively.

gross receivables as of May 31, 2025, and 2024 were approximately $757,000 and $966,000, respectively.

As of May 31, 2024, and 2023,

the Company had four and one distributor, respectively, that accounted for a total of 64% and 36% of gross accounts receivable.

64% as of May 31, 2024, 37% was owed by a distributor in Asia.

Any adverse changes in our relationships with key distributors, or issues

related to their financial condition, performance, or purchasing patterns, could have a significant impact on our sales and overall financial

The loss of a key distributor, or the failure of our direct distribution efforts, could further exacerbate these challenges

and adversely affect our business.

As of May 31, 2025 and 2024, the

Company had four distributors, respectively, that accounted for a total of 69% and 64% of gross accounts receivable, respectively.

the 69% as of May 31, 2025, 27% was owed by a distributor in North America.

Any adverse changes in our relationships with key distributors,

or adverse issues related to their financial condition, performance, or purchasing patterns, could have a significant impact on our sales

and overall financial results.

The loss of a key distributor, or the failure of our direct distribution efforts, could further exacerbate

these challenges and adversely affect our business.

face risks relating to our international sales, including inherent economic, political, and regulatory risks, which could impact our

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performance, disrupt our business operations, and hinder our growth strategy.

products are primarily sold internationally, with significant sales to distributors in Asia and Europe.

We rely on distributor organizations

and sales agents to market and sell our products abroad, which exposes us to various foreign risks, including:

We must adhere to diverse and evolving registration requirements, which can be

controlled by distributors, complicating transitions and limiting our ability to benefit

from product registrations.

significant amount of our products are sold internationally, with substantial sales to distributors in Asia and Europe.

We rely on distributor

organizations and sales agents to market and sell our products abroad, which exposes us to various foreign risks, including:

We must adhere to diverse and evolving registration requirements, which can be controlled by distributors, complicating

transitions and limiting our ability to benefit from product registrations.

We must comply with complex foreign and U.S.

laws and regulations, such as import/export

limitations, the Foreign Corrupt Practices Act, and local laws in each market.

laws and regulations, such as import/export limitations, the Foreign Corrupt

Practices Act, and local laws in each market.

and Trade Barriers:

As we expand into new countries and regions, we face changing tariffs

and trade barriers, particularly in China, where tariff policies are in flux.

As we expand into new countries and regions, we face changing tariffs and trade barriers, particularly in China

which accounts for a large percentage of our sales, and where tariff policies are troublesome.

Exchange Fluctuations:

Our international sales are subject to currency risks, as changes

in the values of foreign currencies relative to the U.S.

dollar can make our products more

expensive and negatively impact sales.

Our international sales are subject to currency risks, as changes in the values of foreign currencies relative

dollar can make our products more expensive and negatively impact sales.

and Pricing Challenges:

We encounter longer payment cycles, generally lower average selling

prices, and greater difficulty in collecting accounts receivable.

We encounter longer payment cycles, generally lower average selling prices, and greater difficulty in collecting

accounts receivable.

Enforceability:

We may lack the ability to enforce receivables collections contracts in foreign

legal systems.

● Intellectual

We may lack the ability to enforce receivables collections contracts in foreign legal systems.

Property Risks:

There is often reduced protection for, and enforcement of, intellectual property

rights in foreign markets.

There is often reduced protection for, and enforcement of, intellectual property rights in foreign markets.

and Economic Instability:

We are exposed to political and economic instability in regions

where we currently sell or plan to expand our product sales.

We are exposed to political and economic instability in regions where we currently sell or plan to expand

our product sales.

Consequences:

We face complex and potentially adverse tax implications in different jurisdictions.

Products sold internationally at lower prices may be diverted back to the United

States, affecting our domestic sales.

Products sold internationally at lower prices may be diverted back to the United States, affecting our domestic sales.

of our international sales are negotiated and paid in U.S.

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could disrupt or reduce our sales in the Chinese market, posing a substantial risk to our business.

and trade dynamics may affect order timing.

certain markets, tariff changes and related trade uncertainties contributed to extended lead times and rescheduled shipments, which affected

the timing of revenue recognition for certain international orders.

results of operations and financial conditions may be adversely affected by the financial soundness of our customers, distributors, and

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our operations and the interests of our stockholders.

we currently generate revenue, our company is operating at a loss due to significant investments in research and development and commercialization

of newly developed products and from a slow launch in revenues from our new products.

To sustain and advance our business strategy,

we must continue to raise additional funds to meet our capital and operating needs.

This often involves seeking public or private debt

or issuing equity.

we currently generate revenue, our company is operating at a loss due to significant commercialization of newly developed products and

from a slow launch in revenues from our new products and some investments in research and development and.

To sustain and advance our

business strategy, we must continue to raise additional funds to meet our capital and operating needs.

This often involves seeking public

or private debt or issuing equity.

Raising funds through equity can dilute the interests of our existing stockholders.

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total revenue could be affected by third-party reimbursement policies and potential cost constraints.

end-users of our products are primarily physicians, labs, and other healthcare providers.

end-users of our products are physicians, labs, other healthcare providers and direct consumers.

In the United States, healthcare providers

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plans, federal Medicare, and state Medicaid, to reimburse all or part of the cost of the procedure.

Use of our products would be adversely

impacted if physicians and other healthcare providers do not receive adequate reimbursement for the cost of our products by their patients’

third-party payers both in the United States and in foreign markets.

Our total revenue could also be adversely affected by changes or

trends in reimbursement policies of governmental or private healthcare payers.

We believe that the overall escalating cost of medical

products and services has led to, and will continue to lead to, increased pressures on the healthcare industry, both foreign and domestic,

to reduce the cost of products and services.

Given the efforts to control and reduce healthcare costs in recent years, currently available

levels of reimbursement may not continue to be available in the future for our existing products or products under development.

reimbursement and coverage may not be available or adequate in either the United States or foreign markets, current reimbursement amounts

may be decreased in the future and future legislation, regulation, or reimbursement policies of third-party payers may reduce the demand

for our products or adversely impact our ability to sell our products on a profitable basis.

The growth needed in the sales of

our products would be adversely impacted if physicians and other healthcare providers do not receive adequate reimbursement for the cost

of our products by their patients’ third-party payers both in the United States and in foreign markets.

Our total revenue could

also be adversely affected by changes or trends in reimbursement policies of governmental or private healthcare payers.

We believe that

the overall escalating cost of medical products and services has led to, and will continue to lead to, increased pressures on the healthcare

industry, both foreign and domestic, to reduce the cost of products and services.

Given the efforts to control and reduce healthcare

costs in recent years, currently available levels of reimbursement may not continue to be available in the future for our existing products

or products under development.

Third-party reimbursement and coverage may not be available or adequate in either the United States or

foreign markets, current reimbursement amounts may be decreased in the future and future legislation, regulation, or reimbursement policies

of third-party payers may reduce the demand for our products or adversely impact our ability to sell our products on a profitable basis.

Finally, we are in the process of applying for Government payer reimbursement for our inFoods IBS® product in the US market.

are unsuccessful in attaining reimbursement for this product, we will likely fall well short of our future revenue projections.

increases in, or inability to meet, demand for our products could require us to spend considerable resources to meet the demand or harm

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duties or meet expected deadlines, we may not be able to seek or obtain regulatory approval for or commercialize our product candidates.

rely on third-party contract research organizations (“CROs”), universities or/clinical sites (“Vendors”), to

coordinate, monitor and conduct of our clinical trials and to manage, analyze, and interpret data for our clinical programs.

Vendors, and our clinical sites are required to comply with current Good Clinical Practices (“GCPs”), regulations, and guidelines

issued by the FDA and by similar governmental authorities in other countries where we are conducting clinical trials.

We have an ongoing

obligation to monitor the activities conducted by our Vendors and at our clinical sites to confirm compliance with these requirements.

In the future, if we, our Vendors or our clinical sites fail to comply with applicable GCPs, the clinical data generated in our clinical

trials may be deemed unreliable and the FDA may require us to perform additional clinical trials before approving our marketing applications.

If our Vendors do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced,

or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols,

regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain

regulatory approval for or successfully commercialize our product candidates.

As a result, our financial results and the commercial prospects

for our product candidates would be harmed, our costs could increase, and our ability to generate revenue could be delayed.

rely on third-party contract research organizations (“CROs”), universities or/clinical sites collectively, (“Clinical

Research Partners”), to coordinate, monitor and conduct of our clinical trials and to manage, analyze, and interpret data for our

clinical programs.

We, and our Clinical Research Partners, are required to comply with current Good Clinical Practices (“GCPs”),

regulations, and guidelines issued by the FDA and by similar governmental authorities in other countries where we are conducting clinical

We have an ongoing obligation to monitor the activities conducted by our Clinical Research Partners and at our clinical sites

to confirm compliance with these requirements.

In the future, if we, our Clinical Research Partnersor our clinical sites fail to comply

with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA may require us to perform

additional clinical trials before approving our marketing applications.

If our Clinical Research Partners do not successfully carry out

their contractual duties or obligations or meet expected deadlines, if they need to be replaced, or if the quality or accuracy of the

clinical data they obtain is compromised due to their failure to adhere to our clinical protocols, regulatory requirements or for other

reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for or successfully

commercialize our product candidates.

As a result, our financial results and the commercial prospects for our product candidates would

be harmed, our costs could increase, and our ability to generate revenue could be delayed.

in our information technology and storage systems or data security breaches could significantly disrupt our business or force us to expend

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obligations, and maintain overall business operations.

our and our vendors’ implementation of security measures, information technology systems remain vulnerable to damage from various

sources, including computer viruses, unauthorized access, telecommunications or network failures, malicious human acts, terrorism, and

natural disasters.

Moreover, despite network security and backup measures, some of our servers and those of our vendors may still be

susceptible to physical or electronic break-ins, computer viruses, and similar disruptive issues.

Cybersecurity risks are escalating

and pose significant threats to our operations.

Cyber-attacks could result in the loss of vital company documentation and data, or confidential

third-party documents held by the company, essential for our operations.

our and our Clinical Research Partners’ implementation of security measures, information technology systems remain vulnerable to

damage from various sources, including computer viruses, unauthorized access, telecommunications or network failures, malicious human

acts, terrorism, and natural disasters.

Moreover, despite network security and backup measures, some of our servers and those of our

Clinical Research Partners may still be susceptible to physical or electronic break-ins, computer viruses, and similar disruptive issues.

Cybersecurity risks are escalating and pose significant threats to our operations.

Cyber-attacks could result in the loss of vital company

documentation and data, or confidential third-party documents held by the company, essential for our operations.

precautionary measures to prevent unforeseen problems, sustained or repeated system failures that interrupt our ability to generate and

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operational, or strategic objectives.

response to the need to reduce ongoing operating costs, we have recently implemented a substantial reduction in our workforce.

response to the need to reduce ongoing operating costs, we have implemented a substantial reduction in our workforce.

This reduction

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our securities.

sales by the Company of a substantial number of shares of our common stock in the public market, or the perception that such sales may

occur, could adversely affect the then prevailing market price of our common stock and could make it more difficult for us to raise funds

in the future through a public offering of our securities.

July 21, 2020, we filed with the SEC a “shelf” registration statement on Form S-3.

The registration statement registers common

shares that may be issued by the Company in a maximum aggregate amount of up to $90,000,000.

Shares of our common stock may be sold from

time to time under this registration statement for up to three years from the filing date.

On January 22, 2021, we filed a prospectus

supplement for the sale of up to $15,000,000 of shares of our common stock in an at-the-market (“ATM”) offering under the

shelf registration statement, of which approximately $5,290,000 were sold under the ATM.

In March 2023, we terminated the ATM offering

and sold 3,333,333 shares of our common stock in a firm commitment public offering under the shelf registration statement.

in the underwritten public offering were sold at a gross sales price of $2.40 per share, resulting in net proceeds from the offering,

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

At fiscal year-end 2023, the Company did not have an open ATM

offering in place.

sales by the Company of a substantial number of shares of our common stock in the public market to raise needed capital, or the perception

that such sales may occur, could adversely affect the then prevailing market price of our common stock and could make it more difficult

for us to raise funds in the future through a public offering of our securities.

September 28, 2023, we filed a “shelf” registration statement on Form S-3 with the SEC, allowing the Company to issue up

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This supplement was intended to facilitate the sale

of up to $5,500,000 in common stock through ATM offerings, as defined in Rule 415 under the Securities Act.

of up to $5,500,000 in common stock through an At The Market (ATM) offerings, as defined in Rule 415 under the Securities Act.

issuance of additional shares of our common stock, or other securities, could dilute our existing stockholders’ ownership interests,

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stock could be negatively affected.

order to attain needed capital to operate the Company, we may need to issue preferred stock, warrants, convertible debt or other financial

instruments that could have liquidation priority, requirements for interest or dividend payments, or other rights and that could be detrimental

to existing shareholders’ return on their investment in the Company.

price of our stock may fluctuate unpredictably in response to factors unrelated to our operating performance.

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actions or changes, including those by the FDA, SEC, or international regulatory bodies.

● Developments

or disputes related to patents or proprietary rights.

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in quarterly operating results, whether actual or anticipated.

● Publication

of research reports about us or our industry, or changes in securities analysts’ recommendations.

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stock market conditions and other factors unrelated to our operating performance.

and disruptions in capital and credit markets due to economic conditions such as rising inflation

and interest rates.

● Geopolitical

and disruptions in capital and credit markets due to economic conditions such as rising inflation and interest rates.

events, such as wars or political unrest, that impact the markets in which we operate.

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to liquidate large positions without adversely affecting the stock price.

Company is not currently in compliance with the continued listing requirements for The Nasdaq Stock Market.

If the Company does not regain

compliance and continue to meet the continued listing requirements, our Common Stock may be delisted, which could affect the market price

and liquidity for the Company’s Common Stock and reduce the Company’s ability to raise additional capital.

Company received a letter from the Listing Qualifications Staff of the Nasdaq Stock Market, LLC (“Nasdaq”) on or about May

7, 2024, that the Company is not in compliance with the requirement to maintain a minimum bid price of $1.00 per share for 30 consecutive

trading days for continued listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

Since the receipt of this notice from Nasdaq, the Company’s stock has not closed with a bid traded above $1.00 per common share.

Notice indicated the Company has 180 calendar days, or until November 4, 2024 (the “Compliance Period”), to regain compliance

with the Rule.

If at any time during the Compliance Period the closing bid price of the Company’s common stock is at least $1.00

for a minimum of ten consecutive business days, then the Company will regain compliance.

If the Company fails to regain compliance during

the Compliance Period, Nasdaq may grant the Company additional time to regain compliance (the “Additional Compliance Period”).

To qualify for the Additional Compliance Period, the Company will be required to meet the continued listing requirement for market value

of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement,

and will need to provide written notice of its intention to cure the deficiency during the Additional Compliance Period.

If the Company

does not meet these requirements or it appears to Nasdaq that the Company will not be able to cure the deficiency during the Additional

Compliance Period, then Nasdaq will provide notice to the Company that its common stock will be subject to delisting.

a company receives such delisting notice, the company can request a hearing before a Nasdaq hearings panel (the “Panel”).

If the Common Stock closes at or below $0.10 for ten consecutive days during the Compliance Period or any additional compliance period,

the Company could receive a Staff Delisting Determination during the Compliance Period or any additional compliance period or, if the

Company receives such Staff Delisting Determination, Nasdaq may not grant the Company’s request for a hearing, or if Nasdaq grants

the Company’s request for a hearing, the Panel may not grant the Company’s request for continued listing of the Common Stock

on The Nasdaq Capital Market pending the Company’s compliance with all applicable listing criteria, including the Minimum Bid Price

Requirement, or the Company may be unable to timely satisfy the terms of any extension that may be granted by the Panel.

Company will continue to monitor the closing bid price of its Class A Common Stock and seek to regain compliance with all applicable

Nasdaq requirements within the allotted compliance periods and may, if appropriate, consider available options, including implementation

of a reverse stock split, to regain compliance with the Minimum Bid Price Requirement or the Low Priced Stocks Rule, as applicable.

Company may fail to regain compliance with the Minimum Bid Price requirement during the Compliance Period or maintain compliance with

the other Nasdaq listing requirements.

Any non-compliance may be costly, divert management’s time and attention, and could have

a material adverse effect on the Company’s business, reputation, financing, and results of operation A delisting could substantially

decrease trading in the Common Stock, adversely affect the market liquidity of the Common Stock as a result of the loss of market efficiencies

associated with Nasdaq and the loss of federal pre-emption of state securities laws, materially adversely affect its ability to obtain

financing on acceptable terms, if at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees

and fewer business development opportunities.

Additionally, the market price of the Common Stock may decline further and stockholders

may lose some or all of their investment.

ability to use our net operating loss carry forwards in the future may be subject to limitation.

we have Federal income tax net operating loss carryforwards of approximately $24,384,000 and California state income tax net

operating loss carryforwards of approximately $22,014,000, as of May 31, 2024, use of these loss carryforwards will depend on future

income in relationship to expirations dates of these carryforwards.

we have Federal income tax net operating loss carryforwards of approximately $28,378,000 and California state income tax net operating

loss carryforwards of approximately $26,921,000, as of May 31, 2025, use of these loss carryforwards will depend on future income in

relationship to expirations dates of these carryforwards.

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 1A. Risk Factors