BMRA 10-K & 10-Q changes, risk factors and insider trading

Investing 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,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.

We have a history of operating losses.losses and negative cash flows from operations.

We have a history of operating losses,losses and negative cash flows from operations, and there is no guarantee that we will achieve profitability or positive cash flows in the future. Our ability to generate net profits and maintain positive cash flows is uncertain. Failure to achieve or sustain profitability profitabilityor positive cash flows could result in a decline in the 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 as of May 31, 2025,2026, have been prepared under the assumption that we will continue as a going concernconcern. Despite our financing activities, we continue to experience recurring losses and negative cash flows from operations. Based on our current operating plan, we believe that our existing cash and cash equivalents will be insufficient to fund our operations and meet our obligations for the next twelve months from the issuance date of our issuance.financial However,statements. ourOur independent registered public accounting firm has issued afirm’s report thaton our consolidated financial statements includes an explanatory paragraph highlighting our operational losses and expressingregarding substantial doubt about our ability to continue as a going concern for a period of at least the next twelve months from the date this report is filed.concern.

Our 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. If we are unable to generate sufficient cash flows from operations or obtain additional financing, we may be required to delay or reduce certain operating activities and expenditures. Our financial statements do not reflect reflect any adjustments that might result from the resolution of this uncertainty.

Our operating results may fluctuate adversely as a result of many factors that are outside our control, which maycould negativelyadversely impactaffect our business and the market price of our stock price.common stock.

Our operating results are subject to fluctuations due to factors outside our control, which may adversely affect our business, financial condition, results of operations and stock price. Key factors include:

Fluctuations in our operating results, for any reason, could cause increased operating losses as a result of significant fixed expenses.

We base the scope of our operations and related expenses on our estimates of future revenues. A significant portion of our operating expenses are fixed, and we may not be able to rapidly adjust our expenses if our revenues fall short of our expectations. Our revenue estimates for future periods are based, among other factors, on estimated end-user demand for our products. If end-user consumption is less than estimated, revenues from our distribution partners and other distribution channels would be expected tocould fall short of expectations, and because such a significant portion of our costs areis fixed, such revenue shortfalls could result in operating losses.

To remain competitive, we must continue to develop, obtain, and protect our proprietary technologytechnologies and intellectual property rights; otherwise, we may lose market share or need to reduce prices as a result of competitors selling technologically superior products that compete with our products,products or selling products at lower prices.

Our ability to compete successfully in the diagnostic market depends on the continued development and introduction of new products, technology, and the improvement of existing technology.products and technologies. If we cannot continue to improve upon or develop, obtain, and protect our proprietary technology,technologies and intellectual property rights, our operating results could be adversely affected.

Our operations willcould be adversely affected if our operating results do not correspondingly increase with our increased expenditures or if our technology, product, and market development efforts are unsuccessful or delayed. Furthermore, our failure to successfully introduce new technologies or products and develop new markets could have a material adverse effect on our business and prospects.

TheWe Company isare required to obtain governmentand maintain applicable governmental or regulatory certificationclearances, approvals, registrations or certifications in many countries and the European communityregions to sell itsour products in those countries or regions. There is no assurance that the Companywe will be able to retainobtain itsor certificationmaintain such regulatory authorizations in the future. This includes the possibility and risk that thecertain Company’sof our products domay not meetsatisfy the newapplicable EU IVDR testing and documentation requirements in the future as described in the above “Research and Development” section of this document.Annual Report.

Significant government regulation exists in countries in which we conduct business. A large part of the Company’sour sales is to distributors in Europe, China, and other countries, which require us to maintain certain certifications or other regulatory authorizations to sell our products. Failure to comply with current governmental regulations and quality assurance guidelines could cause the loss of these certifications, which could materially adversely affect theour results of the Company.operations. Loss of certifications could lead to temporary manufacturing shutdowns, product recalls, 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 or delay our ability to sellmarket certain IVDD products in the EU.

TheWe Company maintainsmaintain a manufacturing plant in Mexico which presents risks to the Companyus including risks associated with doing business outside the United States.

We operate a significant manufacturing facility in Mexico through our subsidiary, Biomerica de Mexico. This international presence introduces a range of risks, including exposure to local economic and political conditions. Factors such as social unrest, potential terrorism, export and import restrictions, and fluctuations in currency exchange rates could impact our operations. Additionally, there is a risk of labor shortages,shortages or increased labor costs, which could affect our manufacturing capabilities. These factors could lead to unforeseen costs and disruptions, materially impactingand could have a material adverse effect our business, financial results, and operational stability.

Our research and production processes involve the use of hazardous materials, which presentspresent inherent risks. Despite rigorous safety protocols, the possibility of accidental contamination or injury cannot be entirely eliminated. In the event of an accident, we could face significant liability for harm or damages,damage, potentially exceeding our financial resources. Compliance with environmental regulations also entails substantial costs.

Our net sales were approximately $5,311,000$4,453,000 for the fiscal year ended May 31, 2025,2026, compared to $5,415,000$5,311,000 for the fiscal year enededended May 31, 31, 2024.2025. For each of the fiscal years ended May 31, 20252026 and 2024,2025, theour Company had onelargest distributor each year that accounted for 31% andof 33% of our net sales, respectively.sales.

Total gross receivables as of May 31, 2025,2026, and 20242025 were approximately $757,000$823,000 and $966,000,$757,000, respectively. As of May 31, 20252026 and 2024,2025, thewe Companyhad hadthree and four distributors, respectively, that accounted for a total of 69%59% and 64%69% of gross accounts receivable, respectively. Of Of the 69%59% as of May 31, 2025,2026, 27%34% was owed by atwo distributordistributors 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.

A 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 foreigninternational risks, including:

Most of our international sales are negotiated and paid in U.S.United States dollars. However, currency risks remain, as fluctuations in foreign exchange exchange rates can make our products comparatively more expensive. These exchange rate changes, along with general economic conditions in international markets, could negatively impact our sales. To maintain competitive pricing, we may need to offer discounts or reduce prices, leading to lower margins on international sales. Continued changes in the values of the Euro, the Mexican peso, and other foreign currencies currencies could adversely affect our business, financial condition, and results of operations.

A significant portion of our revenues comes from sales to our distribution partner in China. Political tensions between the U.S.United States and ChinaChina, including potential sanctions, export controls, tariff escalations, or retaliatory trade measures, could disrupt or reduce our sales in the Chinese market, posing a substantial risk to our business.business, financial condition, and results of operations.

In certain markets, tariff changes and related trade uncertainties contributed to extended lead times andtimes, rescheduled shipments, and cancellation of orders from foreign vendors or end customers, which affected the total revenues and the timing of revenue recognition for certain international orders.

Our business strategy contemplates furthergrowth growth,in revenues, including scaling up our operational systems and entering new geographical markets, including including those outside the United States. This growth strategy could place additional demands on our limited employee and executive staff, potentially diverting their focus from core business activities. Furthermore, managing growth may strain our operational, financial, and management information systems.

We rely on IPintellectual property for the current products we sell and for the new products in research, development, and in clinical trials. While thewe Company triestry to protect itsour IPintellectual property with confidentiality agreements and internal policies, we still face risks that our IPintellectual property will be stolen or otherwise misappropriated, by parties inside or outside of the United States. Further, we have filed many patents around the world on much of the research and development done by the Company,us, and the proposed products to come from this research. The majoritySome of these filed patents are still under review and have not yet been allowed or issued. WeOur mayexisting patent notclaims, bealong ablewith toany attainfuture issued patent claims thatmay adequatelyprove to be inadequate to protect the companyus from competitors developing similar products or copying our products. Finally, there isare a great number of issued patents owned by others that pertain to the product categories in which we operate. While we do not know of any patents with claims that we are violating by manufacturing or selling our current products, there is a risk that certain third-party patents will come to our attention that prohibit us from selling our products or that require us to pay royalty payments. Such third-party claims could have a material negative impact on on the Company.us. Any of these IP-relatedintellectual property-related risks could cause material damage to our future revenues and to the long-term enterprisevalue of valuesour of the Company.enterprise.

Some of the products that we manufacture, sell, or use may be covered by claims in issued patents held by other persons or entities, and as such, upon notice from such persons or entity, we may be required to pay a license fee or may be required to cease all manufacture, salesale, or use of such products, which could negatively impact our financial results or operations. We cannot guarantee that such claims will not be made in the future.

Although we currently generate revenue, our company is operating at a loss due to significant costs from the early stage commercialization of our newly developed products and fromalong awith slow launch in revenues from our new products and someongoing investments in research and development and.development. To sustain and advance our business business strategy, we must continue to raise additional funds to meet our capital and operating needs. This often involves seeking public or or private debt or issuing equity. Raising funds through equity can dilute the interests of our existing stockholders.

The availability of capital, whether raised through debt or equity, is subject to fluctuations based on our financial condition and general market or industry conditions. There may be periods when private capital markets or public debt and equity markets lack liquidity, or when we are unable to sell our securities at favorable prices. In such scenarios, accessing capital on favorable terms maywill becomebe challenging.

Failure to secure adequate funding could force us to delay, reduce, or even eliminate certain development programs or commercialization efforts. The costs associated with development projects and regulatory approvals can be unpredictable and may exceed our initial estimates. As our current operations are insufficient to cover these unexpected costs, this could adversely impact our ability to execute our business strategy and achieve our long-term goals.goals, and could ultimately require us to curtail or cease operations.

The testing, manufacturing, and sale of our products are subject to regulation by numerous governmental authorities in the United States, States, principally the FDA, and corresponding state and foreign regulatory agencies. Our future performance depends on, among other matters, matters, if, when, and at what cost we will receive regulatory approval for certain new products, and if we can continue to comply with the many regulatory requirements that enable us to manufacture and sell medical related products and tests. Regulatory review can be a lengthy, expensive, and uncertain process, making the timing and costs of clearances and approvals difficult to predict. Meeting all regulatory requirements, laws and mandates, and maintaining compliance with such in order to manufacture and sell medical products can be difficult and expensive. Our results of operations and our viability would be negatively affected by failures or delays in the receipt of regulatory approvals or clearances, the loss of previously received approvals or clearances, the placement of limits on the marketing and use of our products, and restrictions on our ability to manufacture our products.

Changes in government policy could have a significant impact on our business by increasing the cost of doing business, affecting our ability to sell our products and negatively impacting our profitability. Such changes could include tariffs, embargos, trade wars, modifications to existing legislation, such as U.S.United States tax policy, or entirely new legislation, such as the Affordable HealthcareCare Act in the United States. We cannot predict the many ways that healthcare reform in the United States and internationally, and changing trade legislation and policies could adversely affect our business. It is unclear whether and to what extent, if at all, other anticipated developments, including changes due to new presidential administration priorities, or changes resulting from healthcare reform, such as a change in the number of people with health insurance, may impact us.

In addition to FDA and other regulations referred to above, numerous laws relating to such matters as safe working conditions, manufacturing manufacturing practices, data privacy, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances impact our business operations. If these laws or their interpretation change or new laws regulating any of our businesses are adopted, the costs of compliance with these laws could substantially increase our overall costs. Failure to comply with any new or existing laws, including laws regulating the manufacture and marketing of our products, could result in substantial costs and loss of sales or customers. Because of the number and extent of the laws and regulations affecting our industry, and the number of governmental agencies whose actions could affect our operations, it is impossible to reliably predict the full nature and impact of future legislation or regulatory developments relating to our industry and our products. To the extent the costs and procedures associated with meeting newexisting, new, or changing requirements are substantial, our business, results of operations and financial condition could be adversely affected.

The end-usersend users of our products are physicians, labs, other healthcare providers and direct consumers. In the United States, healthcare providersproviders, such as hospitals and physiciansphysicians, whothat purchase diagnostic products generally rely on third-party payers, principally private health insurance insurance plans, federal Medicare, and state Medicaid, to reimburse all or part of the cost of the procedure. The growth needed in the sales of our 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,With respect to our inFoods® IBS product, the Centers for Medicare & Medicaid Services has established a national Medicare payment rate of $300 under the Clinical Laboratory Fee Schedule for claims with dates of service beginning January 1, 2026. Medicare payment rates under the Clinical Laboratory Fee Schedule are subject to future adjustment. Further, the establishment of a payment rate does not guarantee coverage, utilization, or payment. If we are inunable to obtain or maintain adequate Medicare or other third-party payer coverage and reimbursement for, adoption and utilization of the processinFoods® IBS ofproduct, applyingfuture forprojected Governmentrevenues payerfrom reimbursementthis forproduct could be adversely affected, which would have a material adverse effect on our operations and our inFoods IBS® product in the US market. If we are unsuccessful in attaining reimbursement for this product, we will likely fall well short of our future revenue projections.viability.

A claim of a defect in the design or manufacture of our products could have a material adverse effect on our reputation in the industry industry and subject us to claims of liability for injuries and otherwise.otherwise, which could result in substantial legal and settlement costs. Further, a claim that one of our products is defective or does not actually meet the performance criteria we claim in our marketing materials, could require a product recall or otherwise have a substantial impact on our revenues and financial performance. Any substantial underinsured cost or loss resulting from such a claim or defect would have a material adverse effect on our operating results and financial conditionscondition and the damage to our reputation or product lines in the industry could have a material adverse effect on our business.

We face a number of business risks, including exposure to product liability claims, employment law claims, claims that the Companywe or itsour officers, directors or employees have engaged in illegal or wrongful acts, claims of violation of environmental laws, and many other possible claims. Although we maintain insurance for a number of these risks, we may face claims for types of damages, or for amounts of damages, that are not covered by our insurance. For example, although we currently carry product liability insurance for liability liability losses, there is a risk that product liability or other claims may exceed the amount of our insurance coverage or may be excluded from coverage under the terms of our policy. Also, our existing insurance may not be renewed at the same cost and level of coverage as currently in effect or may not be renewed at all. Further, we do not currently have insurance against many environmental and other risks we confront in our business. If we are held liable for a claim against which we are not insured or for damages exceeding the limits of our insurance coverage, that claim could have a material adverse effect on our results of operations.

We 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 trials. 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 PartnersorPartners 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 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.

Despite our and our Clinicalthird Researchparty Partners’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 Clinicalthird Researchparty Partnerspartners 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, disclosure of confidential client and customer information or disclosure of other confidential third-party documents held by the company,us, essential for our operations.

There is also a risk that our measures and those of our third-party vendors and partners to protect our systems from cyber-attacks may not be sufficient to prevent attacks by new sources and methods.

Future sales by the Companyus of a substantial number of shares of our common stock in the public market to raise needed capital, or the perception that that such sales may occur, could adversely affect the then prevailing market price of our common stock and could make it more difficult for for us to raise funds in the future through a public offering of our securities.

The issuance of additional shares of our common stock, or other securities, could dilute our existing stockholders’ ownership interests, potentially depress the market price of our common stock, and impair our ability to raise capital through future equity sales. In June 2026, our certificate of incorporation was amended to increase the number of authorized shares of common stock from 25,000,000 to 300,000,000, significantly increasing the number of shares that may be available for future issuance. The size and impact of future issuances on the market price of our common stock cannot be predicted. Future issuances could result in substantial dilution to existing stockholders.

In order to attainobtain neededadditional capital to operatefund the Company,our operations, 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.

Although we have Federal income tax net operating loss carryforwards of approximately $28,378,000$32,381,000 and California state income tax net operating loss carryforwards of approximately $26,921,000,$30,381,000, as of May 31, 2025,2026, use of these loss carryforwards will depend on future taxable income and in relationshipmay be subject to expirationslimitations datesand ofapplicable theseexpiration carryforwards.provisions.

We are a global biomedical technology company that develops, patents, manufactures and markets advanced diagnostic and therapeutic products. Our diagnostic test kits are used to analyze blood, urine, nasal, or fecal material from patients to aid in the diagnosis of variousdiseases, diseases, food intolerances, and other medical complications.conditions. These Theytests candetect also be used toand measure or detect the presence and levels of specific bacteria, hormones, antibodies, antigens and other substances,substances which that may exist in the human body inat extremely smalllow concentrations. Our products are designed to enhance thepatient healthoutcomes and well-being of people, while reducing total healthcare cost.costs.

OurWe extensivesell rangeour portfolio of medical diagnostic products is sold worldwide, primarily in two markets:to clinical laboratories and in point-of-care settings.settings, including physicians’ offices and over-the-counter channels. We also provide contract development and manufacturing services to third parties that utilize the technology underlying our products. In addition, we are commercializing our inFoods® IBS product through physician-directed and laboratory-based channels, including third-party reimbursement pathways. Most of our products arecarry Conformitea Conformité EuropeenneEuropéenne (“CE”) markedmarking and/or are registered with regulatory agencies in various countries for diagnostic use, with several also cleared by the U.S.United States Food and Drug Administration (“FDA”) for sale in the United States.

Technological advances in medical diagnostics have enabled diagnostic tests to be performed not only in clinical laboratories but also at home and at the point-of-care in physicians’ offices. OneWe of our key objectives has beenstrive to develop and market rapid diagnostic testsproducts that are accurate, utilize easily obtained patient specimens,specimens andand, arewhere simpleappropriate, tocan performbe performed without the need for complex instrumentation. Our home use (over-the-counter) and professional use (physicians’ office, clinics, etc.) rapid diagnostic test products help manage existing medical conditions and may save lives through early detection and diagnosis of specific diseases. Traditionally, such tests required the expertise of medical technologists and sophisticated equipment, with results often not available for days. We believe our our rapid point-of-care tests, when properly used, can be as accurate as laboratory tests. Our products require limited to no instrumentation, deliver reliable results in minutes, and can be performed with confidence at home or in a physician’s office.

We invest resources in the research and development of new products designed to diagnose and, in some cases, treat several major medical diseases. These products are either internally developed or licensed from others. Our experienced and highly trained technical personnel, including Ph.D. holderslevel scientists and other scientists,scientific and technical professionals, are dedicatedengaged to developingin new productsproduct development, product improvement, contract development projects, and managing technology transfer activities. Our technicalMany staff, manymembers of whom,our technical staff have extensive experience fromin previousdiagnostic product employmentdevelopment and manufacturing, including prior experience at large diagnostic manufacturingcompanies. companies,We bring aalso wealth of industry knowledge. Additionally, we rely onutilize our Scientific Advisory Board, comprisedwhich includes physicians and clinicians with relevant areas of leadingexpertise, medicalto doctorsprovide scientific and clinicians, to guide our clinical studiesinput andregarding certain product development efforts.programs and clinical studies.

A key outcome from our research and development efforts is our patented diagnostic-guided therapy (“DGT”) product, developed on the inFoods® technology platform. This innovative technology is designed to aid in the management of gastrointestinal conditions such as irritable bowel syndrome (“IBS”) and other inflammatory diseases. The DGT product targets chronic inflammatory illnesses that are widespread and prevalent in large markets. We have launched the inFoods® IBS product, which leverages this patented technology. The inFoods® IBS product utilizes a simple blood test to identify patient-specific foods that, when eliminated from the diet, may help reduce IBS symptoms such as pain, bloating, diarrhea, cramping, and constipation. Unlike broad and difficult to manage dietary restrictions, the inFoods® IBS product pinpoints a patient’s heightened immunoreactivity to specific foods known to frequently trigger IBS symptoms. By removing the foods identified as problematic, patients can achieve relief from IBS symptoms.

Our dedicated sales team is focused on building strong relationships within the GI segment and increasing physician adoption and utilization of inFoods® IBS, while selectively exploring opportunities to introduce inFoods® IBS to other medical specialties, including integrated health practices and primary-care providers. These efforts are intended to lay the groundwork forsupport broader adoption by showcasing the distinct clinical value of inFoods® IBS across multiple healthcare channels.

Concurrently, we are evaluatingpursuing distribution, partnership, and licensing opportunities with U.S. companies to support a scalable, broad market launch. These potential collaborations could significantly enhance thebroader commercialization trajectory of inFoods® IBS. products,These bothefforts include our previously announced marketing services agreement with Henry Schein, which supports the introduction of inFoods® IBS to physicians in the United States. We may also pursue additional commercial relationships domestically and internationally.

As we continue to pursue commercial opportunities in both U.S. and international markets, we remain attentive to evolving global economic conditions, including uncertainties related to international trade policies, tariffs, and supply chain dynamics.dynamics, wars and other political strife. Although these factors have not had a material impact on our operations to date, future changes in trade regulations, tariff structures, or logistical constraints could influence the cost, availability, or timing of materials and components used in our manufacturing processes.processes, and our ability to sell our finished products into international markets. We continue to monitor these developments closely and are actively implementing contingency plans, including alternative sourcing strategies and supplier diversification, to support supply chain continuity, maintain operational efficiency, and help mitigate potential future impacts. We are also focusing on alternative manufacturing and shipping strategies of our products through BioEurope GmbH, our European subsidiary (BioEurope),subsidiary, and Biomerica de Mexico, our Mexican subsidiary (BioMexico),subsidiary, to mitigate some of the risk thesethat tariffs and other policies may have on our revenues and operations.

In addition, in December 2023 we received FDA clearance for hp+detect™, a diagnostic test designed to detect Helicobacter pylori (H. pylori) bacteria in the gastrointestinal tract. H. pylori is a prevalent infection, affecting approximately 35% of the U.S.United States population and 45% of the population in Europe’s largest countries. This bacterium is recognized as the strongest known risk factor for gastric cancer, which remains one of the leading causes of cancer-related deaths globally. The hp+detect™ test is marketed directly to laboratories and is intended to provide physicians and medical centers with a reliable tool for diagnosing H. pylori infections and monitoring treatment effectiveness. In February 2026, hp+detect™ received registration from the United Kingdom Medicines and Healthcare products Regulatory Agency (“MHRA”). During fiscal 2026, we received our first commercial order for hp+detect™ from a large clinical laboratory chain for the United Kingdom market. We arecontinue activelyto promotingmarket hp+detect™ to largelaboratories end-customerin laboratoriesthe United States and positioningEurope theand productpursue opportunities for broader commercial adoption.

Selling, General and Administrative Expenses

Our selling, general,general and administrative expenses were approximately $4,894,000 for the fiscal year ended May 31, 2026, compared to $4,612,000 for the fiscal year ended May 31, 2025, comparedan to $5,487,000 for the fiscal year ended May 31, 2024, a decreaseincrease of $875,000,$282,000, or 16%.6%. ThisThe reductionincrease reflects our strategic financial management and was primarily attributable to a $179,000 $351,000 decreaseincrease in payrolllegal expenses followingfees, a reduction$126,000 increase in forceregulatory implementedfees, a $27,000 increase in Julysales 2024, a $327,000 decrease in stockteam compensation, a $66,000 decrease in marketing expenses for OTC products, and a $25,000 $59,000increase in outside services related to inFoods® IBS sales and marketing activities, partially offset by an $88,000 decrease in sales andcommissions. marketing outsideThe services.year-over-year Overall,increase thereflects decreasecontinued investment in SG&Aregulatory, sales and commercialization activities, while overall selling, general and administrative expenses demonstratesremained ourrelatively continuedstable commitmentcompared towith strategically allocating capitalfiscal and maintaining financial discipline while pursuing growth opportunities.2025.

DividendDividend, Interest, and InterestOther incomeIncome

DividendWe andrecognized interestan incomeunrealized washolding gain on our equity investment of approximately $165,000$335,000 for the fiscal year ended May 31, 2025,2026, compared to $431,000no such gain for the fiscal year ended May 31, 2024.2025. The decreaseincrease was due to the remeasurement of $266,000our wasinvestment primarilyin attributableDiagnosis to lower market interest ratesS.A. based on ourthe cashpurchase andprice cashset equivalents, as well as a reductionforth in cashthe andSecurities cashPurchase equivalentAgreement balances.entered into in May 2026.

TheOur Company’s ability to continue as a going concern over the next twelve months from the date these financial statements are available to be issued is influenced by several factors, including:

These factors raise substantial doubt about the Company’sour ability to continue as a going concern. Our future viability depends on the successful execution of our strategic plans, securing additional financing, and achieving profitable operations.

During the fiscal year ended May 31, 2024,2026, net cash used in operating activities was approximately $5,361,000,$3,421,000, compared to $5,474,000$3,842,000 for the fiscal fiscal year ended May 31, 2023.2025, Therepresenting primaryan factors contributing to this were a lossimprovement of approximately $5,978,000,$421,000, or 11%. The improvement primarily reflected a lower net loss in fiscal 2026, partially offset by less favorable working capital movements compared with the prior year. Cash used in operating activities during fiscal 2026 included increases in inventories and accounts receivable of approximately $140,000 and $66,000, respectively, a decrease in inventoryaccrued reserves of $205,000, an increase in accounts receivablecompensation of $215,000,approximately an increase in inventories of $115,000$162,000, and a decreasereductions in lease liability liabilities of $297,000.approximately $363,000. These uses of cash were partially offset by an increase in accounts payable and accrued expenses of $246,000,approximately $499,000 and net non-cash expenses adjustments of approximately $1,211,000.$496,000, primarily consisting of share-based compensation and amortization of right-of-use assets, partially offset by an unrealized holding gain on our equity investment and a recovery of inventory reserves.

During the fiscal year ended May 31, 2025,2026, net cash used in investing activities was approximately $37,000, as$1,000, compared to $115,000$37,000 for the fiscal year ended May 31, 2024.2025. DuringInvesting the fiscal year ended May 31, 2025, we had $37,000activities in both periods primarily consisted of expenditures related to patents.patents, Duringwhich were approximately the$1,000 in fiscal year ended May 31, 2024, we purchased approximately $51,000 of property2026 and equipment and had $64,000$37,000 in expendituresfiscal related to patents.2025.

During the fiscal years ended May 31, 20252026 and 2024,2025, we received approximately $2,015,000$1,827,000 and $0,$2,015,000, respectively, in net proceeds from thesales sale of common stock. Ourour common stock soldpursuant and issued into the ATM program. The shares sold during fiscal year2026 ended May 31, 2025 waswere issued under our shelf registration statement filed with the SEC on September 28, 2023, which was declared effective on September 29, 2023 (the “2023 Shelf Registration Statement”). Statement. On May 10, 2024, the Companywe filed a prospectus supplement to the 2023Shelf Registration Statement with the SECproviding for the sale of up to $5,500,000 in of common stock through ATM offerings,offerings as defined inunder Rule 415 underof the Securities Act. AsIn partconnection with the establishment of thisthe ATM transaction,program, the Companywe incurred approximately $81,000 inof deferred offering costs during the fiscal year ended May 31, 2024.2024 and which were fully expensed as of May 31, 2026.

During the three and sixnine months ended NovemberFebruary 30,28, 2025,2026, there were no material changes to the risks and uncertainties described in Part I, Item 1A, “Risk Factors,” of our 2025 Annual Report.

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, 2025 (our “2025 Annual Report”).

Additional factors that might cause actual results and our current expectations and projections to differ materially include, among other things, things, those discussed in this Quarterly Report as well as those under the section titled “Risk Factors,” and discussed elsewhere elsewhere in our in our 2025 Annual Report and the other risks detailed from time-to-time in our reports and registration statements filed with the Securities and Exchange Commission (“SEC”). We intend that such forward-looking statements be subject to the safe harbors for such statements. These forward-looking statements are based on the current beliefs and expectations of our management and speak only as of the date of this Quarterly Report or, in the case of documents referred to or incorporated by reference, the date of those documents. You should not place undue reliance on these forward-looking statements, which are subject to significant known and unknown risks, uncertainties and other factors, which are in some cases, beyond our control and which could materially affect results. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections.

We are a global biomedical technology company that develops, patents, manufactures and markets advanced diagnostic and therapeutic products. Our diagnostic test kits are used to analyze blood, urine, nasal,nasal or fecal material from patients in the diagnosis of various diseases, food intolerances,intolerances and other medical complications. They can also be used to measure or detect the presence and levels of specific bacteria, hormones, antibodies, antigens and other substances, which may exist in the human body in extremely small concentrations. Our products are designed to enhance thepatient health and well-being of people, while reducing total healthcare cost.costs.

Our extensive range of medical diagnostic products is sold worldwide, primarily in two markets: clinical laboratories and point-of-care settings (physicians’ offices).settings. Most of our products are ConformiteConformité EuropeenneEuropéenne (“CE”) marked and/or registered with regulatory agencies in various various countries for diagnostic use, with severalcertain alsoproducts clearedapproved by the U.S. Food and Drug Administration (“FDA”) for sale in the United States.

Technological advances in medical diagnostics have enabled diagnostic tests to be performed not only in clinical laboratories but also at home and at the point-of-care in physicians’ offices. One of our key objectives has been to develop and market rapid diagnostic tests that are accurate, utilize easily obtained patient specimens, and are simple to perform without the need for complex instrumentation. Our home use (over-the-counter) and professional use (physicians’ office, clinics, etc.) rapid diagnostic test products help manage existing medical conditions and may save lives through early detection and diagnosis of specific diseases. Traditionally, such tests required the expertise of medical technologists and sophisticated equipment, with results often not available for days. We believe our rapid point-of-care tests, when properly used, can often be as accurate as laboratory tests. Our products require limited to no instrumentation, deliver reliable results in minutes, and can be performed with confidence at home or in a physician’s office.

We invest resources in the research and development of new products designed to diagnose and, in some cases, treat several major medical diseases. These products are either internally developed or licensed from others. Our experienced and highly trained technical personnel, including Ph.D. holders and other scientists, are dedicated to developing new products and managing technology transfer activities. Our technical staff, many of whom,whom have extensive experience from previous employment at large diagnostic manufacturing companies, bring a a wealth of industry knowledge. Additionally, we rely on our Scientific Advisory Board, comprised of leading medical doctors and clinicians, to advise onguide our clinical studies and product development efforts.

A key outcome from our research and development efforts is our patented diagnostic-guided therapy (“DGT”) product, developed on the inFoods® technology platform. This innovative technology is designed to aid in the management of gastrointestinal conditions such as irritable bowel syndrome (“IBS”) and other inflammatory diseases. The DGT productsproduct targettargets chronic inflammatory illnesses that are widespread and prevalent in large markets. We have launched ourthe inFoods® IBS product, which leverages this patented technology. The inFoods® IBS product utilizes a simple blood test to identify patient-specific foods that, when eliminated from the diet, may help reduce IBS symptoms such as pain, bloating, diarrhea, cramping, and constipation. Unlike broad and difficult to manage dietary restrictions, the inFoods® IBS product pinpoints a patient’s heightened immunoreactivity to specific foods known to frequently trigger IBS symptoms. By removing the foods identified as problematic, patients can achieve relief from IBS symptoms.

We have introduced our inFoods® IBS product to select gastroenterology (“GI”) physician groups in multiple states and regions, including in collaboration with one of the largest GI physician groups in the United States.regions. This initial phase was focused on gathering real-world feedback, optimizing physician engagement, and validating operational processes. GI physician feedback has been generally positive, and we are continuing to expand our network by onboarding additional physician practices.

Our dedicated sales team is focused on building strong relationships within the GI segment while selectively exploring opportunities to introduce our inFoods® IBS products to other medical specialties, including integrated health practices and primary-care providers. These efforts efforts are intended to lay the groundwork for broader adoption by showcasing the distinct clinical value of inFoods® IBS across multiple healthcare channels.

We are currently in the process of pursuing U.S. government payment or reimbursement for the inFoods® IBS product through the Medicare Medicare system. In connection with this process, the Centers for Medicare & Medicaid Services has established and announced a national reimbursementMedicare pricepayment rate of $300 for inFoods® IBS under the Clinical Laboratory Fee Schedule, applicable to thisclaims product.with dates of service beginning January 1, 2026. While the establishment of a reimbursement pricerate does not guarantee coverage, utilization, or payment, management believes it represents an important step toward broader market access.access Onceand provides a foundation for potential increased patient access and initial claims activity. The Company has provided additional information regarding inFoods® IBS to the applicable Medicare Administrative Contractor for coverage and is awaiting response. As Medicare reimbursement becomes is achieved,established, we intend to also pursue reimbursement with private payer insurance companies. To the extent patients are able to access the inFoods® IBS product at reduced out of pocketout-of-pocket cost, we expect adoption and utilization to increase.

As we continue to pursue commercial opportunities in both U.S. and international markets, we remain attentive to evolving global economic conditions, including uncertainties related to international trade policies, tariffs, and supply chain dynamics.dynamics, wars and other political strife. Although these factors have not hadimposed a materialmoderate impact on our operations to date, future changes in trade regulations, tariff structures, or logistical constraints could influence the cost, availability, or timing of materials and components used in our manufacturing processes. processes, and our ability to sell our finished products into international markets. We continue to monitor these developments closely and are actively implementing contingency plans, including alternative sourcing strategies and supplier diversification, to support supply chain continuity, maintain operational efficiency, and help mitigate potential future impacts. We are also focusing on alternative manufacturing and shipping strategies of our products through BioEurope GmbH, our European subsidiary, and Biomerica de Mexico, our Mexican subsidiary, to mitigate some of the risk these that tariffs and other policies may have on our revenues and operations.

In addition, in December 2023 we received FDA clearance for hp+detect™, a diagnostic test designed to detect Helicobacter pylori (“H. pylori”) bacteria in the gastrointestinal tract. H. pylori is a prevalent infection, affecting approximately 35% of the U.S. population and 45% of the population in Europe’s largest countries. This bacterium is recognized as the highest known risk factor for gastric cancer, which remains one of the leading causes of cancer-related deaths globally. The hp+detect™ test is marketed directly to laboratories and is intended to provide physicians and medical centers with a reliable tool for diagnosing H. pylori infections and monitoring treatment effectiveness. We are actively marketing hp+detect™ to large end-customer laboratories and positioning the product for commercial adoptionadoption. We continuerecently toannounced balancethat revenuewe generated fromreceived our establishedfirst diagnosticcommercial productsorder and contract manufacturing services with investments in newer diagnostic-guided therapy products, including inFoods® IBS andfor hp+detect™. from Managementone believesof thisthe diversifiedlargest portfolioclinical laboratory chains operating across Europe. The initial order is for the United Kingdom market, where approachhp+detect™ supportsreceived near-termregistration cashfrom generationthe whileUK advancingMedicines longer-termand growthHealthcare initiatives.products Regulatory Agency (MHRA) in February 2026.

During the sixnine months ended NovemberFebruary 30,28, 2025,2026, we continued our phased commercialization strategy for our inFoods® IBS product, prioritizing prioritizing targeted gastroenterology practices to validate clinical workflows, refine physician education, and gather real-world feedback. This This measured approach has informed sales and marketing investments and is intended to support a scalable broader launch.

Due to the slower-than-expected launch of our key new products, inFoods® IBS and hp+detect™, we initiated initiated significant cost-cutting measures to extend our cash runway and work towards increasing revenues to cover overhead costs. Additionally, Additionally, during the sixnine months ended NovemberFebruary 30,28, 2025,2026, the Company strengthened its liquidity position through a combination of operating cost controls, and net proceeds of approximately $1,395,000$1,455,000 from the ATM offering. We are also actively exploring other major strategic opportunities to enhance and create shareholder value.

Three months ended NovemberFebruary 30,28, 20252026

Consolidated net sales were approximately $1,210,000$987,000 for the three months ended NovemberFebruary 30,28, 2025, as2026, compared to $1,636,000$1,119,000 for the three months ended NovemberFebruary 30,28, 2024, representing2025, a decrease of approximately $426,000,$132,000, or 26%.12%. The decrease was primarily attributable to lower contract salesmanufacturing revenue following the completion of Aware®a productsprior research and development project. This decrease was partially offset by increased sales in the Middleover-the-counter Eastproduct market,line, asreflecting wellvariability asin reduceddemand from international customers. Subsequent to quarter end, the Company is currently evaluating additional contract manufacturing billingsopportunities and clinichas laboratoryengaged sales,in discussions with whichpotential were impacted by the timing and periodic nature of customer orders.customers.

Consolidated cost of sales waswere approximately $1,159,000,$1,031,000, or 96%104% of net sales, for the three months ended NovemberFebruary 30,28, 2025, as2026, compared to $1,199,000,$1,100,000, or 73%98% of net sales, for the three months ended NovemberFebruary 30,28, 2024, representing2025, a decrease of approximately $40,000,$69,000, or 3%.6%. The decrease was primarily attributable to lower contract manufacturing activity, partially offset by higher costs associated with increased over-the-counter product sales. Cost of sales volumesas duringa percentage of net sales increased primarily due to product mix and lower sales volume in the current quarter compared to the prior year same period, as well as lower inventory write-offs and production adjustments.period.

Selling, General and Administrative Expenses

For the three months ended NovemberFebruary 30,28, 2025,2026, consolidated selling, general,general and administrative expenses amounted towere approximately $1,231,000,$1,076,000, representing compared to $1,173,000 for the corresponding period in 2024, an increase of $58,000$64,000, or 5%.6%, compared to $1,012,000 for the three months ended February 28, 2025. The increase was primarily attributable to to a $71,000$60,000 increase in salaries and wages primarilyrelated associated with a new hirerestructuring in the sales and marketing team,team supporting inFoods® commercialization, a $67,000$45,000 increase in regulatory creditand losscompliance expense related to aged receivables,expenses, and a $34,000$15,000 increase in outside sales-related services relatedassociated towith inFoods®. These increases were partially offset by a $42,000$37,000 decrease in stock-based compensation within theoutside administrative team, primarily due to changes in the Company’s stock price,services and a $72,000$13,000 decrease in saleslegal commissionsexpenses. resultingOverall, fromthe lowerincrease reflects salescontinued volumesinvestment in thecommercialization activities for inFoods®, partially offset by cost management efforts in other Middle East market.areas.

Dividend, Interest, and Other Income (Loss)

For the three months ended NovemberFebruary 30,28, 2025,2026, dividend, interest, and other income (loss) totaled approximately $58,000,$(6,000), compared to $40,000income of $43,000 for the correspondingthree periodmonths inended 2024,February 28, 2025, representing ana increasedecrease of $18,000,$49,000. orThe 45%. This increasechange was primarily attributable to dividend distributionslower receivedinterest income resulting from anreduced investmentcash holdingbalances entityand duringlower themarket interest current period.rates.

SixNine months ended NovemberFebruary 30,28, 20252026

For the sixnine months ended NovemberFebruary 30,28, 2025,2026, consolidated cost of sales was approximately $2,113,000,$3,145,000, or 82%88% of net sales, compared to $2,720,000,$3,820,000, or 79%84% of net sales, for the samenine periodmonths inended 2024,February 28, 2025, representing a decrease of $607,000,approximately $675,000, or 22%.18%. The decrease was primarily attributable to lower sales volumes across the clinical laboratory, OTC, and contract manufacturing businesses,activity, whichas resultedwell as reduced clinical laboratory sales. Cost of sales as a percentage of net sales increased primarily due to changes in lowerproduct labormix costs and reduced cost allocations. In addition, lower levelsoverall ofsales aged inventoryvolume during the current period led to a decrease in inventory write-offs.period.

Selling, General and Administrative Expenses

For the sixnine months ended NovemberFebruary 30,28, 2025,2026, dividend.dividend, interest, and other income totaled approximately $1,180,000,$1,174,000, compared to $97,000$140,000 for the corresponding period in 2024,2025, representing an increase of $1,083,000,$1,034,000, or 1116%.739%. TheThis increase was primarily attributable to a $1,100,000 cash refund received from the Internal Revenue Service (IRS) on July 21, 2025, related to previouslythe filedEmployee claimsRetention forCredit the ERC,(“ERC”), a refundable payroll taxpayroll-tax credit established under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The ERC was available to eligible employers for wages paid during calendar year 2021 in response to the global COVID-19 pandemic. This credit represents a one-time benefit that is not expected to recur in future periods.

Excluding the ERC refund, interest and dividend income decreased by approximately $29,000,$49,000, primarily due to lower market interest rates during the current quarter compared to the prior year.quarter.

LIQUIDITY AND CAPITAL RESOURCES AND GOING CONCERN

As of NovemberFebruary 30,28, 20252026 and May 31, 2025, we had cash and cash equivalents of approximately $2,543,000$1,336,000 and $2,399,000, respectively. As of NovemberFebruary 30,28, 20252026 and May 31, 2025, we had working capital of approximately $3,592,000$2,562,000 and $3,135,000, respectively. We have experienced variability in our revenue and a reduction in our cash position in recent periods, which has impacted our liquidity.

Management has analyzed our cash flow requirements through NovemberApril 20262027 and beyond. Based on this analysis, we believe our current cash and cash equivalents equivalents are insufficient to meet our operating cash requirements and strategic growth objectives for the next twelve months.

To address our capital needs and sustainsustaining operations beyond the next year, we are actively pursuing strategies to increase sales, reduce expenses, sell non-core assets, seek additional financing through debt or equity, and seek other strategic alternatives.

During the sixnine months ended NovemberFebruary 30,28, 2025,2026, we sold 391,125414,633 shares of itsour common stock at prices ranging from $3.34$2.42 to $4.02 pursuant to to the 2024 ATM Offering, which resulted in gross proceeds of approximately $1,432,000$1,495,000 and net proceeds to us of $1,395,000$1,455,000 after deducting commissions for each sale and legal, accounting, and other fees related to offering in the amount of $37,000.$40,000.

While we are committed to addressing our capital needs and sustainsustaining operations beyond the next year, there is no assurance that these efforts will be successful or sufficient to meet our capital requirements. Our future viability depends on the successful execution of our strategic plans, securing additional financing, and achieving profitable operations.

During the sixnine months ended NovemberFebruary 30,28, 2025,2026, cash used in operating activities was approximately $1,259,000.$2,509,000. The primary factorsdrivers that contributed toof this cash wereoutflow included a net loss of approximately $1,318,000,$2,630,000, an increase in accounts receivable of $285,000,$221,000, a decrease in lease liabilities of $175,000, $265,000, and a decrease in accrued compensation of $110,000.$47,000. These outflowsuses of cash were partially offset by a decrease in prepaid expenses and other of $78,000, an increase in accounts payable and accrued expenses of $70,000,approximately and$58,000, as well as non-cash expenses of approximately $488,000.$633,000. The non-cash expenses primarily consisted of depreciation and amortization, provision for expected credit losses on accounts receivable, inventory reserves, share-based compensation, and amortization of right-of-use assets.

During the sixnine months ended NovemberFebruary 30,28, 2024,2025, cash used in operating activities was approximately $2,135,000.$3,180,000. The primary factorsdrivers that contributed toof this cash wereoutflow included a net loss of approximately $2,266,000,$3,429,000, an increase in accounts receivable of $387,000, and$327,000, a decrease in accounts payable and accrued expenses of $290,000.$506,000, and a reduction in lease liabilities of $242,000. These outflowsuses of cash were partially offset by a decrease in inventories of $585,000approximately and$766,000, as well as non-cash expenses of approximately $439,000.$610,000. The non-cash expenses primarily consisted of depreciation and amortization, provision for expected credit losses on accounts receivable, inventory reserves, share-based compensation, and amortization of right-of-use assets.

During the sixnine months ended NovemberFebruary 30,28, 2024,2026, cash used in investing activities was $33,000approximately for$19,000, consisting of expenditures related to patents.

During the sixnine months ended NovemberFebruary 30,28, 2025,2026, net cash provided by financing activities amountedwas toapproximately $1,402,000,$1,463,000, primarily resulting fromattributable to gross proceeds of approximately $1,432,000$1,495,000 from the sale of common stock.

During the sixnine months ended NovemberFebruary 30,28, 2024,2025, net cash provided by financing activities amountedwas toapproximately $380,000,$2,116,000, primarily resultingattributable fromto gross proceeds of $392,000approximately $2,143,000 from the sale of common stock.

There were no off-balance sheet arrangements as of NovemberFebruary 30,28, 2025.2026.

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, badprovision debts,for expected credit losses, 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 conditions or results of operations. There have been no significant changes to our critical accounting policies from those disclosed in our 2025 Annual Report. 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.