Biomerica Inc 10-Q for FY2023 Q2

Biomerica Inc (BMRA)

10-Q 2023-01-13 For: 2022-11-30

Added on April 07, 2026

About this 10-Q

Biomerica Inc filed this 10-Q on January 13, 2023, covering the quarter ended November 30, 2022 (FY2023 Q2).

Headline figures

Quarter ended November 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.48M; down 68.1% from $4.65M a year earlier
Net loss: $1.63M; compared with a net loss of $1.13M a year earlier
Diluted EPS: -$0.12; compared with -$0.09 a year earlier

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PART I	Financial Information

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets (unaudited) – November 30, 2022 and May 31, 2022	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) – Three and Six Months Ended November 30, 2022 and 2021	2

	Condensed Consolidated Statements of Shareholders’ Equity (unaudited) – Three and Six Months Ended November 30, 2022 and 2021	3

	Condensed Consolidated Statements of Cash Flows (unaudited) – Six Months Ended November 30, 2022 and 2021	4

	Notes to Condensed Consolidated Financial Statements (unaudited)	5 - 12

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13 - 17

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	17

Item 4.	Controls and Procedures	17 - 18

PART II	Other Information

Item 1.	Legal Proceedings	18

Item 1A.	Risk Factors	18

Item 5.	Other Information	18

Item 6.	Exhibits	19

	Signatures	20

	November 30, 2022		May 31, 2022
Assets

Current Assets:
Cash and cash equivalents	$	5,066,521	$	5,916,983
Accounts receivable, less allowance for doubtful accounts of $522,234 and $153,231 as of November 30, 2022 and May 31, 2022, respectively		850,014		773,818
Inventories, net of inventory reserves of $773,916 and $845,549 as of November 30, 2022 and May 31, 2022, respectively		2,061,444		2,416,447
Prepaid expenses and other		120,721		320,283
Total current assets		8,098,700		9,427,531

Property and equipment, net of accumulated depreciation and amortization of $1,317,141 and $1,305,360 as of November 30, 2022 and May 31, 2022, respectively		236,719		214,487

Right of use assets, net of accumulated amortization of $859,269 and $724,802 as of November 30, 2022 and May 31, 2022, respectively		1,169,456		1,301,834

Investments		165,324		165,324

Intangible assets, net of accumulated amortization of $24,327 and $18,994 as of November 30, 2022 and May 31, 2022, respectively		157,694		169,516

Other assets		79,654		95,588
Total Assets	$	9,907,547	$	11,374,280

Liabilities and Shareholders' Equity

Current Liabilities:
Accounts payable and accrued expenses	$	670,074	$	972,372
Accrued compensation		697,179		646,944
Advance from customers		49,013		50,670
Lease liability, current portion		346,937		341,296
Total current liabilities		1,763,203		2,011,282
Lease liability, net of current portion		901,449		1,038,284
Total Liabilities		2,664,652		3,049,566

Commitments and contingencies (Notes 5 and 6)

Shareholders' Equity:

Common stock, $0.08 par value, 25,000,000 shares authorized, 13,479,413 and 12,867,924 issued and outstanding at November 30, 2022 and May 31, 2022, respectively		1,078,353		1,029,432
Additional paid-in-capital		45,035,298		42,446,597
Accumulated other comprehensive loss		(95,413)		(73,936)
Accumulated deficit		(38,775,343)		(35,077,379)
Total Shareholders' Equity		7,242,895		8,324,714
Total Liabilities and Shareholders' Equity	$	9,907,547	$	11,374,280

The accompanying notes are an integral part of these statements.

	Three Months Ended				Six Months Ended
		November 30, 2022		November 30, 2021		November 30, 2022		November 30, 2021
Net sales	$	1,481,915	$	4,646,900	$	3,119,350	$	5,908,687
Cost of sales		(1,130,040)		(3,875,141)		(2,822,430)		(5,225,898)
Gross profit		351,875		771,759		296,920		682,789

Operating expenses:
Selling, general and administrative		1,556,022		1,353,587		3,209,843		2,423,442
Research and development		461,941		547,933		823,112		929,477
Total operating expenses		2,017,963		1,901,520		4,032,955		3,352,919

Loss from operations		(1,666,088)		(1,129,761)		(3,736,035)		(2,670,130)

Other income:
Dividend and interest income		41,254		6,916		41,282		13,721

Loss before income taxes		(1,624,834)		(1,122,845)		(3,694,753)		(2,656,409)

Provision for income taxes		(1,254)		(2,429)		(3,211)		(11,446)

Net loss	$	(1,626,088)	$	(1,125,274)	$	(3,697,964)	$	(2,667,855)

Basic net loss per common share	$	(0.12)	$	(0.09)	$	(0.28)	$	(0.21)

Diluted net loss per common share	$	(0.12)	$	(0.09)	$	(0.28)	$	(0.21)

Weighted average number of common and common equivalent shares:

Basic		13,455,166		12,592,341		13,271,845		12,509,110

Diluted		13,455,166		12,592,341		13,271,845		12,509,110

Net loss	$	(1,626,088)	$	(1,125,274)	$	(3,697,964)	$	(2,667,855)

Other comprehensive loss, net of tax:
Foreign currency translation		(8,950)		(4,750)		(21,477)		(10,363)

Comprehensive loss	$	(1,635,038)	$	(1,130,024)	$	(3,719,441)	$	(2,678,218)

The accompanying notes are an integral part of these statements.

	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
Balances, May 31, 2022	12,867,924	$	1,029,432	$	42,446,597	$	(73,936)	$	(35,077,379)	$	8,324,714
Exercise of stock options	15,000		1,200		12,750		-		-		13,950
Net proceeds from ATM	523,977		41,918		1,721,650		-		-		1,763,568
Foreign currency translation	-		-		-		(12,527)		-		(12,527)
Stock option expense	-		-		303,755		-		-		303,755
Net loss	-		-		-		-		(2,071,876)		(2,071,876)
Balances, August 31, 2022	13,406,901		1,072,550		44,484,752		(86,463)		(37,149,255)		8,321,584
Exercise of stock options	31,500		2,520		62,685		-		-		65,205
Net proceeds from ATM	41,012		3,283		169,631		-		-		172,914
Foreign currency translation	-		-		-		(8,950)		-		(8,950)
Stock option expense	-		-		318,230		-		-		318,230
Net loss	-		-		-		-		(1,626,088)		(1,626,088)
Balances, November 30, 2022	13,479,413	$	1,078,353	$	45,035,298	$	(95,413)	$	(38,775,343)	$	7,242,895

	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
Balances, May 31, 2021	12,307,157	$	984,571	$	38,836,743	$	(47,956)	$	(30,546,335)	$	9,227,023
Exercise of stock options	1,500		120		3,775		-		-		3,895
Net proceeds from ATM	201,553		16,124		784,586		-		-		800,710
Foreign currency translation	-		-		-		(5,613)		-		(5,613)
Stock option expense	-		-		319,622		-		-		319,622
Net loss	-		-		-		-		(1,542,581)		(1,542,581)
Balances, August 31, 2021	12,510,210		1,000,815		39,944,726		(53,569)		(32,088,916)		8,803,056
Exercise of stock options	20,000		1,600		28,985		-		-		30,585
Net proceeds from ATM	162,117		12,970		870,443		-		-		883,413
Foreign currency translation	-		-		-		(4,750)		-		(4,750)
Stock option expense	-		-		314,397		-		-		314,397
Net loss	-		-		-		-		(1,125,274)		(1,125,274)
Balances, November 30, 2021	12,692,327	$	1,015,385	$	41,158,551	$	(58,319)	$	(33,214,190)	$	8,901,427

The accompanying notes are an integral part of these statements.

	November 30, 2022		May 31, 2022
Raw materials	$	1,685,000	$	1,717,000
Work in progress		811,000		763,000
Finished products		339,000		782,000
Total gross inventory	$	2,835,000	$	3,262,000
Inventory reserves		(774,000)		(846,000)
Net inventory	$	2,061,000	$	2,416,000

	Option Shares	Exercise Price Weighted Average
Outstanding May 31, 2022	2,321,616	$	3.72
Granted	146,000		3.37
Exercised	(46,500)		1.73
Cancelled or expired	(82,500)		5.07
Outstanding November 30, 2022	2,338,616	$	3.69

	Three Months Ended November 30,				Six Months Ended November 30,
	2022		2021		2022		2021
Clinical lab	$	902,000	$	642,000	$	2,048,000	$	1,528,000
Over-the-counter		466,000		534,000		679,000		613,000
Physician's office		62,000		3,359,000		245,000		3,616,000
Contract manufacturing		52,000		112,000		147,000		152,000
Total	$	1,482,000	$	4,647,000	$	3,119,000	$	5,909,000

Operating cash flows from operating leases	$	174,322
Right-of-use assets obtained in exchange for new operating lease liabilities	$	-
Weighted average remaining lease term (in years)		3.77
Weighted average discount rate		6.50%

Less than 1 year	$	357,000
1 to 2 years		368,000
2 to 3 years		379,000
3 to 4 years		298,000
4 to 5 years		0
Total undiscounted lease payments		1,402,000
Less imputed interest		154,000
Total operating lease liabilities	$	1,248,000

	Three Months Ended November 30,				Increase (Decrease)
	2022		2021		$		%
Clinical lab	$	902,000	$	642,000	$	260,000		40%
Over-the-counter		466,000		534,000		(68,000)		-13%
Physician's office		62,000		3,359,000		(3,297,000)		-98%
Contract manufacturing		52,000		112,000		(60,000)		-54%
Total	$	1,482,000	$	4,647,000	$	(3,165,000)		-68%


Exhibit No.				Description

	31.1		**	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Zackary S. Irani

	31.2		**	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Steven Sloan

	32.1		**	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act — Zackary S. Irani

	32.2		**	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act — Steven Sloan

		101 Interactive data files pursuant to Rule 405 Regulation S-T, as follows:
101.INS-XBRL Instance Document
101.SCH-XBRL Taxonomy Extension Schema Document 101.CAL-XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF–XBRL Taxonomy Extension Definition Linkbase Document 101.LAB-XBRL Taxonomy Extension Label Linkbase Document 101.PRE-XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101) * Filed herein. ** Filed herewith.

	BIOMERICA, INC.

Date: January 13, 2023
	By:	/S/ Zackary S. Irani
		Zackary S. Irani
		Chief Executive Officer
		(Principal Executive Officer)

Date: January 13, 2023
	By:	/S/ Steven Sloan
		Steven Sloan
		Chief Financial Officer
		(Principal Financial Officer)

	Six Months Ended
	November 30, 2022		November 30, 2021
Cash flows from operating activities:
Net loss	$	(3,697,964)	$	(2,667,855)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		47,690		68,668
Provision for allowance on accounts receivable		369,003		(809,638)
Inventory reserve		(71,633)		181,825
Stock option expense		621,985		634,019
Amortization of right-of-use asset		134,467		126,039
Changes in assets and liabilities:
Accounts receivable		(445,199)		1,139,450
Inventories		426,636		42,229
Prepaid expenses and other		199,562		(726,460)
Other assets		15,933		114,570
Accounts payable and accrued expenses		(302,299)		997,327
Accrued compensation		50,235		285,431
Advance from customers		(1,657)		2,150,466
Reduction in lease liability		(133,283)		(117,321)
Net cash (used in) provided by operating activities		(2,786,524)		1,418,750

Cash flows from investing activities:
Expenditures related to intangibles		-		(108,917)
Purchases of property and equipment		(58,098)		(18,212)
Net cash used in investing activities		(58,098)		(127,129)

Cash flows from financing activities:
Gross proceeds from sale of common stock		1,988,422		1,751,222
Costs from sale of common stock		(51,940)		(67,108)
Proceeds from exercise of stock options		79,155		34,480
Net cash provided by financing activities		2,015,637		1,718,594

Effect of exchange rate changes on cash		(21,477)		(10,363)
Net (decrease) increase in cash and cash equivalents		(850,462)		2,999,852

Cash and cash equivalents at beginning of year		5,916,983		4,199,311

Cash and cash equivalents at end of the period	$	5,066,521	$	7,199,163

Supplemental Disclosure of Cash Flow Information:

	Three Months Ended November 30,				Six Months Ended November 30,
	2022		2021		2022		2021
Revenues from sales to unaffiliated customers:
Asia	$	663,000	$	3,373,000	$	1,477,000	$	4,048,000
Europe		415,000		796,000		967,000		1,267,000
North America		401,000		429,000		669,000		534,000
South America		3,000		3,000		6,000		6,000
Middle East		-		46,000		-		54,000
	$	1,482,000	$	4,647,000	$	3,119,000	$	5,909,000

		Three Months Ended November 30,

	2022				2021					Increase (Decrease)
	Operating Expense		As a % of Total Revenues		Operating Expense			As a % of Total Revenues		$			%
Selling, General and Administrative Expenses	$	1,556,000		105%		$	1,354,000		29%		$	202,000		15%
Research and Development	$	462,000		31%		$	548,000		12%		$	(86,000)		-16%

		Six Months Ended November 30,

	2022				2021					Increase (Decrease)
	Operating Expense		As a % of Total Revenues		Operating Expense			As a % of Total Revenues		$			%
Selling, General and Administrative Expenses	$	3,210,000		103%		$	2,423,000		41%		$	787,000		32%
Research and Development	$	823,000		26%		$	929,000		16%		$	(106,000)		-11%