BIOMERICA INC
For the period ended Feb 29, 2024. Filed Apr 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Feb 29, 2024 · Filed Apr 12, 2024
BMRA$1.610.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-11-30; filed 2024-01-16.
0001493152-24-002331
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-02-29; filed 2024-04-12.
0001493152-24-014474
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 56 previous paragraphs and 60 current paragraphs.
32 unchanged; 17 reworded; 11 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
During fiscal 2024, we have successfully launched the inFoods IBS test with numerous GI physician groups across multiple states and regions. While our initial efforts have yielded success within the GI specialty, we are keenly aware of the opportunity to expand across the application of our product to other physician segments. We are convinced that forming partnerships in these other segments is the most effective strategy for market penetration. Currently, we are engaging in discussions with several potential partners. This strategy enables our newly formed sales team to focus on building strong relationships within the GI segment, capitalizing on the distinct advantages of the inFoods IBS product. In tandem with our expansion efforts, we are drawing from key learnings from the initial launch to enhance the ordering experience. We are now driving improvements to optimize the process for physicians to order the inFoods IBS test, send patient blood samples to the CLIA lab, and receive the test results for their patients. These improvements are directly informed by our experience and feedback from the field, ensuring a smoother and more efficient experience for both physicians and patients. With these strategic initiatives in place, grounded in our understanding of market dynamics and user needs, we anticipate continued growth in revenues from the rollout of our inFoods IBS product in the coming quarters.
Current report
Our newly developed H. pylori diagnostic test is a pivotal addition to our product portfolio, offering vital insights into patients’ H. pylori infection status. This bacterium’s prevalence underscores the critical need for accurate diagnosis, given its potential to precipitate ulcers and, in severe cases, stomach cancers if left untreated.
Current report
Additionally, on December 18, 2023, we achieved a significant milestone with FDA clearance for the H. pylori diagnostic test, paving the way for its commercialization in the United States. Leveraging this regulatory approval, we have initiated marketing efforts targeting the U.S. market, poised to capitalize on the pressing demand for reliable diagnostic solutions. Furthermore, recognizing the global significance of H. pylori infection, we have initiated discussions with international distributors to expand our market reach beyond U.S. borders. Anticipating traction in both domestic and international markets, we expect a favorable revenue trajectory during 2024.
Current report
Consolidated selling, general and administrative expenses were approximately $1,508,000 for the three months February 29, 2024, as compared to $1,379,000 for the three months ended February 28, 2023, an increase of approximately $129,000, or 9%. For the three months ended February 29, 2024, the increase was primarily driven by the establishment of a new sales force, resulting in a rise in total salaries and marketing expenses amounting to $212,000. However, these increases were partially offset by a decrease in legal expenses of $87,000.
Current report
Consolidated research and development expenses were approximately $343,000 for the three months ended February 29, 2024, as compared to $392,000 for the three months ended February 28, 2023, a decrease of approximately $49,000, or 13%. The reduction in expenses for the three months ended February 29, 2024, was primarily driven by a reduction of salary and compensation costs for the research and development team.
Current report
Nine months ended February 29, 2024
Current report
Consolidated net sales were approximately $4,299,000 for the nine months ended February 29, 2024, as compared to $4,231,000 for the nine months ended February 28, 2023, an increase of approximately $68,000, or 2%. This increase for the nine months ended February 29, 2024, shows growth across all non-COVID product lines underscoring the Company’s resilience despite the absence of COVID-related sales compared to the previous year.
Current report
The growth was primarily attributed to an increase in sales of our food intolerance products, EZ Detect, Aware, and contract manufacturing activities. Notably, this growth highlights the effectiveness of our post-pandemic strategic initiatives focusing on our diverse product segments.
Current report
Consolidated selling, general and administrative expenses were approximately $4,204,000 for the nine months ended February 29, 2024, as compared to $4,589,000 for the nine months ended February 28, 2023, a decrease of approximately $385,000, or 8%. The decrease in the nine months ended February 29, 2024, was primarily driven by reductions of $384,000 in legal expenses, and $330,000 in share-based compensation expenses.
Current report
Notably, these operating expense reductions were partially offset by investments in key areas of our business. This included an increase in marketing expenses for the recent CVS Pharmacy retail launch and the expansion of our sales team. Despite these increases, overall cost reductions compared to last year demonstrate our focus on strategically allocating our capital and maintaining financial discipline while pursuing growth opportunities.
Current report
We have taken proactive measures to address the increased expenses in research and development. Over the last three months, we have worked on cost optimization resulting in reductions in salaries and compensation costs of $63,000 per quarter.
Removed paragraphs (7)
Previous report
We are also evaluating and pursuing partnership/licensing opportunities with U.S. and multinational companies that could help us commercialize, or accelerate revenue growth of, the inFoods products in the United States and overseas.
Previous report
Our H. Pylori diagnostic test that indicates if a patient is infected with the H. Pylori bacteria. H. Pylori infection is extremely common, and if left untreated, can lead to ulcers and possibly stomach cancers. On December 18, 2023, the Company received FDA clearance for the H. Pylori product to be sold in the US. Subsequently, we have now begun marketing the product in the U.S. market. We have also begun discussions with international distributors for this product and expect to see revenues both in the U.S. market and through these international channels during 2024.
Previous report
Consolidated selling, general and administrative expenses were approximately $1,521,000 for the three months ended November 30, 2023, as compared to $1,556,000 for the three months ended November 30, 2022, a decrease of approximately $35,000, or 2%. For the three months ended November 30, 2023, the decrease was primarily due to an approximate $209,000 reduction in bad debt expense related to a customer in Vietnam, a $158,000 decrease in share-based compensation expenses, and a $128,000 decrease in legal expenses. These decreases were partially offset by a $160,000 increase in marketing expenses for the recent CVS retail launch, a $124,000 increase in salaries and wages for the sales and marketing team, and a $92,000 increase in expenses for marketing outside services.
Previous report
Consolidated research and development expenses were approximately $412,000 for the three months ended November 30, 2023, as compared to $462,000 for the three months ended November 30, 2022, a decrease of approximately $50,000, or 11%. The decrease in the three months ended November 30, 2023, was primarily due to an approximate decrease of $59,000 in inFoods research expenses.
Previous report
Six months ended November 30, 2023
Previous report
Consolidated net sales were approximately $3,281,000 for the six months ended November 30, 2023, as compared to $3,119,000 for the six months ended November 30, 2022, an increase of approximately $162,000, or 5%. This increase for the six months ended November 30, 2023, was primarily driven by an increase in demand for our food intolerance products and contract manufacturing billings, which was partially offset by a reduction in Physician’s office sales associated with COVID products. Periodic and infrequent orders may cause volatility in quarterly sales.
Previous report
Consolidated selling, general and administrative expenses were approximately $2,696,000 for the six months ended November 30, 2023, as compared to $3,210,000 for the six months ended November 30, 2022, a decrease of approximately $514,000, or 16%. For the six months ended November 30, 2023, the decrease was primarily due to an approximate $429,000 reduction in bad debt expense related to a customer in Vietnam, a $327,000 decrease in share-based compensation expenses, and a $297,000 decrease in legal expenses. These decreases were partially offset by a $160,000 increase in marketing expenses for the recent CVS retail launch, a $174,000 increase in salaries and wages for the sales and marketing team, and a $61,000 increase in expenses for marketing outside services.
Reworded paragraphs (17)
Previous wording
You should read the following discussion and analysis in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes thereto included in Part I, Item 1 of this Report andthe audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023 (our 2023 Annual Report). This discussion and analysis contains forward-looking statements that are based on our management’s current beliefs and assumptions, which statements are subject to substantial risks and uncertainties. Our actual results may differ materially from those expressed or implied by these forward-looking statements as a result of many factors, including those discussed in “Risk Factors” included in Part I, Item 1A of our 2023 Annual Report.
Current wording
You should read the following discussion and analysis in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes thereto included in Part I, Item 1 of this Report and the audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023 (our 2023 Annual Report). This discussion and analysis contains forward-looking statements that are based on our management’s current beliefs and assumptions, which statements are subject to substantial risks and uncertainties. Our actual results may differ materially from those expressed or implied by these forward-looking statements as a result of many factors, including those discussed in “Risk Factors” included in Part I, Item 1A of our 2023 Annual Report.
Previous wording
In fiscal 2023, we worked to set up the inFoods IBS test to be performed in a CLIA certified, and College of American Pathologists (“CAP”) accredited high-complexity laboratory facility and offered as a laboratory developed test (“LDT”). During the quarter ended February 28, 2023, the CLIA lab completed all validation testing necessary for the inFoods IBS product to be offered as an LDT, and patient samples are now being run at the lab. In late fiscal 2023, we trial launched this product with one large GI physician group that is now offering this product to their patients. During fiscal 2024, we are working to optimize the process for GI physicians to order the inFoods IBS test, send patient blood samples to the CLIA lab, and receive the test results for their patients. We believe ease of order and workflow for physicians, with easy to understand and actionable results for patients, is critical to our success. We have also recently hired an internal sales force to sign up additional GI physician groups who are interested in offering this product to their patients. As such, we are expecting growth in revenues from the launch of our inFoods IBS product in coming quarters.
Current wording
In fiscal 2023, we worked to set up the inFoods IBS test to be performed in a CLIA certified, and College of American Pathologists (“CAP”) accredited high-complexity laboratory facility and offered as a laboratory developed test (“LDT”). During the quarter ended February 28, 2023, the CLIA lab completed all validation testing necessary for the inFoods IBS product to be offered as an LDT, and patient samples are now being run at the lab. In late fiscal 2023, we trial launched this product with one large GI physician group that is now offering this product to their patients.
Previous wording
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. We began selling these COVID-19 related diagnostic tests during fiscal 2021, and we experienced significant revenues from such sales during fiscal 2021 and 2022 with lesser sales in fiscal 2023. Due to falling demand, there were no sales of our COVID-19 related products in the three months ended November 30, 2023. As such, our COVID-19 product sales have caused significant swings in our revenues over the past nine quarters.
Current wording
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. We began selling these COVID-19 related diagnostic tests during fiscal 2021, and we experienced significant revenues from such sales during fiscal 2021 and 2022 with lesser sales in fiscal 2023. Due to falling demand, there were no sales of our COVID-19 related products in the three months ended February 29, 2024. As such, our COVID-19 product sales have caused significant swings in our revenues over the last four years.
Previous wording
Consolidated net sales were approximately $1,567,000 for the three months ended November 30, 2023, as compared to $1,482,000 for the three months ended November 30, 2022, an increase of approximately $85,000, or 6%. This increase for the three months ended November 30, 2023, was driven primarily by larger sales in the food intolerance products and increased contract manufacturing billings. Periodic and infrequent orders may cause volatility in quarterly sales.
Current wording
Consolidated net sales were approximately $1,017,000 for the three months ended February 29, 2024, as compared to $1,111,000 for the three months ended February 28, 2023, a decrease of approximately $94,000, or 8%. This decrease for the three months ended February 29, 2024, was primarily attributed to reduced sales in food intolerance products. Sales in this segment are subject to periodic and infrequent orders, contributing to potential volatility in quarterly sales.
Previous wording
Consolidated cost of sales were approximately $1,242,000, or 79% of net sales, for the three months ended November 30, 2023, as compared to $1,130,000, or 76% of net sales, for the three months ended November 30, 2022, an increase of approximately $112,000, or 10%. The increase for the three months ended November 30, 2023, was driven primarily by correlated increased sales for the quarter.
Current wording
Consolidated cost of sales were approximately $1,166,000, or 115% of net sales, for the three months ended February 29, 2024, as compared to $991,000, or 89% of net sales of net sales, for the three months ended February 28, 2023, an increase of approximately $175,000, or 18%. The increase for the three months ended February 29, 2024 was predominantly driven by the complexities of international shipping logistics, rather than fluctuations in material and labor costs associated with our product.
Previous wording
Interest and dividend income were approximately $109,000 for the three months ended November 30, 2023, as compared to $41,000 for the three months ended November 30, 2022, an increase of $68,000, or 166%. The increase was primarily driven by higher market interest rates on our cash and cash equivalents.
Current wording
Interest and dividend income were approximately $86,000 for the three months ended February 29, 2024, as compared to $36,000 for the three months ended February 28, 2023, an increase of $50,000, or 139%. The increase was primarily driven by higher market interest rates on our cash and cash equivalents.
Previous wording
Consolidated cost of sales were approximately $2,541,000, or 77% of net sales, for the six months ended November 30, 2023, as compared to $2,822,000, or 90% of net sales, for the six months ended November 30, 2022, a decrease of approximately $281,000, or 10%. The decrease for the six months ended November 30, 2023, was primarily driven by a $90,000 increase in salary and wages for the production team, that was more than offset by a $332,000 decrease in costs associated with reduced sales of our COVID-19 products.
Current wording
Consolidated cost of sales were approximately $3,708,000, or 86% of net sales, for the nine months ended February 29, 2024, as compared to $3,814,000, or 90% of net sales, for the nine months ended February 28, 2023, a decrease of approximately $106,000, or 3%. The decrease for the nine months ended February 29, 2024, was primarily driven by a $160,000 decrease in costs associated with reduced sales of our COVID-19 products.
Previous wording
Consolidated research and development expenses were approximately $883,000 for the six months ended November 30, 2023, as compared to $823,000 for the six months ended November 30, 2022, an increase of approximately $60,000, or 7%. The increase for the six months ended November 30, 2023, was primarily due to an increase in salaries and wages of $104,000, partially offset by a decrease in share-based compensation expenses of $21,000 and lab supplies expenses of $15,000.
Current wording
Consolidated research and development expenses were approximately $1,226,000 for the nine months ended February 29, 2024, as compared to $1,215,000 for the nine months ended February 28, 2023, an increase of approximately $11,000, or 1%. The increase for the nine months ended February 29, 2024, was primarily driven by salaries and wages of $80,000, partially offset by a decrease in share-based compensation expenses of $32,500 and lab supplies expenses of $22,800.
Previous wording
Interest and dividend income were approximately $231,000 for the six months ended November 30, 2023, as compared to $41,000 for the six months ended November 30, 2022, an increase of $190,000, or 463%. The increase was primarily driven by higher market interest rates on our cash and cash equivalents.
Current wording
Interest and dividend income were approximately $317,000 for the nine months ended February 29, 2024, as compared to $77,000 for the nine months ended February 28, 2023, an increase of $240,000, or 312%. The increase was primarily driven by higher market interest rates on our cash and cash equivalents.
Previous wording
As of November 30, 2023 and May 31, 2023, the Company had cash and cash equivalents of approximately $7,134,000 and $9,719,000, respectively. As of November 30, 2023 and May 31, 2023, the Company had working capital of approximately $8,443,000 and $10,852,000, respectively. We believe that the aggregate of our existing cash and cash equivalents is sufficient to meet our operating cash requirements and strategic objectives for growth for at least the next year. To satisfy our capital requirements, including ongoing future operations, beyond next year, we are working on increasing sales, reducing expenses and may seek to raise additional financing through debt and equity financing.
Current wording
As of February 29, 2024 and May 31, 2023, the Company had cash and cash equivalents of approximately $5,319,000 and $9,719,000, respectively. As of February 29, 2024 and May 31, 2023, the Company had working capital of approximately $6,855,000 and $10,852,000, respectively. We believe that the aggregate of our existing cash and cash equivalents is sufficient to meet our operating cash requirements and strategic objectives for growth for at least the next year. To satisfy our capital requirements, including ongoing future operations, beyond next year, we are working on increasing sales, reducing expenses and may seek to raise additional financing through debt or equity financing.
Previous wording
During the six months ended November 30, 2023, cash used in operating activities was approximately $2,516,000. The primary factors that contributed to this was a loss of approximately $2,639,000, non-cash expenses of $294,000, primarily associated with depreciation and amortization, provision for allowance on accounts receivable, inventory reserves, share-based compensation, and amortization of right-of-use assets. This was partially offset by changes in asset and liability accounts of approximately $171,000.
Current wording
During the nine months ended February 29, 2024, cash used in operating activities was approximately $4,317,000. The primary factors that contributed to this was a loss of approximately $4,557,000, non-cash expenses of $723,000, primarily associated with depreciation and amortization, provision for allowance on accounts receivable, inventory reserves, share-based compensation, and amortization of right-of-use assets. This was partially offset by changes in asset and liability accounts of approximately $483,000.
Previous wording
During the six months ended November 30, 2022, cash used in operating activities was approximately $2,786,000. The primary factors that contributed to this was a loss of approximately $3,698,000, non-cash expenses of $1,101,000, primarily associated with share-based compensation and provision for allowance on accounts receivable. This was partially offset by changes in asset and liability accounts of approximately $189,000.
Current wording
During the nine months ended February 28, 2023, cash used in operating activities was approximately $4,511,000. The primary factors that contributed to this were a net loss of approximately $5,348,000, partially offset by non-cash expenses of $1,100,000, primarily associated with stock-based compensation and account receivables provisions.
Previous wording
During the six months ended November 30, 2023, cash used in investing activities was approximately $27,000 for purchases of property and equipment, and $48,000 in expenditures related to patents.
Current wording
During the nine months ended February 29, 2024, cash used in investing activities was approximately $27,000 for purchases of property and equipment, and $64,000 in expenditures related to patents.
Previous wording
During the six months ended November 30, 2022, cash used in investing activities was approximately $58,000 for purchases of property and equipment.
Current wording
During the nine months ended February 28, 2023, cash used in investing activities was approximately $64,000 for purchases of property and equipment.
Previous wording
During the six months ended November 30, 2023, cash provided by financing activities was $0, with no net proceeds from the sale of common stock or from stock option exercises.
Current wording
During the nine months ended February 29, 2024, cash provided by financing activities was $0, with no net proceeds from the sale of common stock or from stock option exercises.
Previous wording
During the six months ended November 30, 2022, cash provided by financing activities was approximately $2,015,000 which was a result of net proceeds from the sale of common stock of $1,937,000, and stock option exercises of $79,000.
Current wording
During the nine months ended February 28, 2023, cash provided by financing activities was approximately $2,040,000 which was a result of net proceeds from the sale of common stock of $1,961,000, and stock option exercises of $79,000.
Previous wording
We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These relate to revenue recognition, bad debts, inventory overhead application, inventory reserves, lease liabilities and right-of-use assets. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial condition or results of operations. We suggest that our significant accounting policies be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Please refer to Note 2 for information on Significant Accounting Policies. Our critical accounting policies are discussed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023.
Current wording
We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These relate to revenue recognition, credit losses, inventory overhead application, inventory reserves, right-of-use assets and lease liabilities and share-based compensation. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial condition or results of operations. We suggest that our significant accounting policies be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Please refer to Note 2 for information on Significant Accounting Policies. Our critical accounting policies are discussed in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023.