BIOMERICA INC

Biomerica, Inc. is a global biomedical technology company that develops, patents, manufactures and markets advanced diagnostic and therapeutic products. The company operates in the medical diagnostics industry, selling products primarily in two markets: clinical laboratories and point-of-care settings, which include physicians' offices and over-the-counter drug stores. Most of its products are Conformite Europeenne (CE) marked and/or registered with regulatory agencies in various countries for diagnostic use, with several also cleared by the U.S. Food and Drug Administration (FDA) for sale in the United States. The company's diagnostic test kits are used to analyze blood, urine, nasal, or fecal material from patients in the diagnosis of various diseases, food intolerances, and other medical complications.

Biomerica offers several proprietary products with notable competitive advantages, including its EZ Detect colon disease home test, Aware Breast Self-Exam product, inFoods IBS product, and hp+detect for H. pylori detection. The company's competitors vary greatly in size, with many being divisions or subsidiaries of well-established medical and pharmaceutical companies that are much larger than Biomerica and expend substantially greater amounts for research and development, manufacturing, advertising, and marketing. The competitive landscape for diagnostic products is shaped by several factors, including product uniqueness, technology, quality, performance, pricing, and service. Biomerica's competitive edge is grounded in the distinctiveness of its offerings, the high quality of its products, and their rapid test results, with its strong patent portfolio further bolstering its market position despite limited marketing capabilities.

Biomerica generates revenue through the sale of its diagnostic test kits and contract manufacturing services. The company's net sales are derived from four primary market channels: clinical laboratories, over-the-counter sales, contract manufacturing, and physicians' offices. For the fiscal year ended May 31, 2025, net sales were approximately $5,311,000 ¹, compared to $5,415,000 ² for the fiscal year ended May 31, 2024. The company relies on distributors, advertising in medical and trade journals, exhibitions at trade shows, direct mailings, and an internal sales staff to market its diagnostic products. Biomerica has approximately 76 ³ current customers for its diagnostic business, of which approximately 34 ⁴ are foreign distributors, 4 ⁵ are domestic distributors and the balance are primarily domestic hospital and clinical laboratories, medical research institutions, medical schools, pharmaceutical companies, chain drugstores, wholesalers, physicians' offices, and e-commerce customers.

For the fiscal year ended May 31, 2025, clinical lab revenue was $3,181,000 ⁶, over-the-counter revenue was $1,049,000 ⁷, contract manufacturing revenue was $1,070,000 ⁸, and physicians' office revenue was $11,000 ⁹. For the fiscal year ended May 31, 2024, clinical lab revenue was $3,236,000 ¹⁰, over-the-counter revenue was $1,426,000 ¹¹, contract manufacturing revenue was $741,000 ¹², and physicians' office revenue was $12,000 ¹³. The decrease in net sales was primarily driven by reduced retail market activity, lower international over-the-counter sales due to potential tariff impacts, and volatility in clinical laboratory demand, partially offset by higher contract manufacturing billings and increased demand for the inFoods IBS product.

A key outcome from the company's research and development efforts is its patented diagnostic-guided therapy (DGT) product, developed on the inFoods technology platform. The company has launched the inFoods IBS product, which utilizes a simple blood test to identify patient-specific foods that, when eliminated from the diet, may help reduce IBS symptoms. The company has introduced this product to gastroenterology (GI) physician groups in multiple states and regions, including collaboration with one of the largest GI groups in the U.S. In December 2023, the company 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% ¹⁴ of the U.S. population and 45% ¹⁵ of the population in Europe's largest countries.

During the fiscal year, the company implemented a workforce reduction of approximately 15% ¹⁶ to optimize its cost structure and extend its cash runway. The company raised $2,015,000 ¹⁷ in net proceeds from an ATM offering filed in May 2024, providing additional liquidity to support operations. Effective April 21, 2025, the company effected a 1-for-8 reverse stock split of its common stock. The company is actively exploring strategic opportunities to enhance and create shareholder value. As of May 31, 2025, the company employed a total of 54 ¹⁸ employees, compared to 64 ¹⁹ as of May 31, 2024.

For the fiscal year ended May 31, 2025, net sales were approximately $5,311,000 ²⁰, a decrease of $104,000 ²¹, or 2% ²², compared to $5,415,000 ²³ for the fiscal year ended May 31, 2024. The net loss for fiscal 2025 was $4,973,000 ²⁴, compared to a net loss of $5,978,000 ²⁵ for fiscal 2024. Basic and diluted net loss per common share was $2.16 ²⁶ for fiscal 2025, compared to $2.84 ²⁷ for fiscal 2024. Cash and cash equivalents as of May 31, 2025 were $2,399,000 ²⁸, compared to $4,170,000 ²⁹ as of May 31, 2024.

A primary growth vector is the commercialization of the inFoods IBS product. The company has introduced this product to select gastroenterology physician groups in multiple states and regions, including collaboration with one of the largest GI groups in the U.S. The initial phase focused on gathering real-world feedback, optimizing physician engagement, and validating operational processes. The company is continuing to expand its network by onboarding additional physician practices and is evaluating distribution, partnership, and licensing opportunities with large U.S. distributors to support broader availability and sale/marketing. The company is actively pursuing insurance reimbursement for the inFoods IBS product in conjunction with its CLIA laboratory partner and is in the process of applying for U.S. government payment or reimbursement through the Medicare system. Beyond IBS, the company is pursuing additional applications for the inFoods technology for other disease states, including Functional Dyspepsia, Crohn's Disease, Ulcerative Colitis, Gastroesophageal Reflux Disease (GERD), Migraine Headaches, Depression, and Osteoarthritis, and has filed patents globally to protect the use of this technology for these indications.

A second growth vector is the commercialization of the hp+detect diagnostic test for detecting Helicobacter pylori (H. pylori). The company received FDA clearance for hp+detect in December 2023. The 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. The company is currently in discussions with large end-customer laboratories for hp+detect to position it for commercial adoption. The company is also focusing on alternative manufacturing and shipping strategies of its products through its European subsidiary (BioEurope) and its Mexican subsidiary (BioMexico) to mitigate risks from international trade policies and tariffs.

The company has initiated significant cost-cutting measures to extend its cash runway and work towards increasing revenues to cover overhead costs. These measures include a workforce reduction of nearly 15% ³⁰ during this fiscal year, which incurred costs such as severance, impacting typical cost trends and margins. The company also implemented a substantial reduction in other operating expenses. Selling, general and administrative expenses decreased by $875,000 ³¹, or 16% ³², for fiscal 2025 compared to fiscal 2024, reflecting a $351,000 ³³ decrease in payroll expenses following a reduction in force, a $327,000 ³⁴ decrease in stock compensation, a $66,000 ³⁵ decrease in marketing expenses for OTC products, and a $59,000 ³⁶ decrease in sales and marketing outside services. Research and development expenses decreased by $468,000 ³⁷, or 31% ³⁸, driven by a $311,000 ³⁹ reduction in payroll expenses following the reduction in force.

The company is actively implementing contingency plans, including alternative sourcing strategies and supplier diversification, to support supply chain continuity and maintain operational efficiency. The company is focusing on alternative manufacturing and shipping strategies through its European subsidiary (BioEurope) and its Mexican subsidiary (BioMexico) to mitigate risks from trade policies. The company maintains manufacturing and assembly operations in Mexicali, Mexico, aiming to reduce production costs. As of May 31, 2025, the company employed a total of 54 ⁴⁰ employees, down from 64 ⁴¹ as of May 31, 2024, reflecting the workforce reduction.

For the fiscal years ended May 31, 2025 and 2024, consolidated research and development expenses totaled approximately $1,023,000 ⁴² and $1,491,000 ⁴³, respectively. The company raised $2,015,000 ⁴⁴ in net proceeds from the ATM offering filed in May 2024. On September 28, 2023, the company filed a shelf registration statement on Form S-3 with the SEC, allowing the company to issue up to $20,000,000 ⁴⁵ in common shares. On May 10, 2024, the company filed a prospectus supplement to facilitate the sale of up to $5,500,000 ⁴⁶ in common stock through ATM offerings. The company has not paid any cash dividends on its common stock in the past and does not plan to pay any cash dividends on its common stock in the foreseeable future. Cash used in investing activities was approximately $37,000 ⁴⁷ for fiscal 2025, primarily for expenditures related to patents.

The company faces significant headwinds related to its ability to continue as a going concern. Management has analyzed the company's cash flow requirements through August 2026 and believes current cash and cash equivalents are insufficient to meet operating cash requirements and strategic growth objectives for the next twelve months. The company has a history of operating losses, with an accumulated deficit of approximately $53,168,000 ⁴⁸ as of May 31, 2025. The company's 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. The company is subject to SEC regulations that limit the amount of capital it can raise through issuance of its equity, with a public float of $9,945,252 ⁴⁹ as of July 24, 2025, and an offering limit of $3,315,084 ⁵⁰ under General Instruction I.B.6 of Form S-3.

The company faces risks relating to its international sales, including economic, political, and regulatory challenges. A significant amount of products are sold internationally, with substantial sales to distributors in Asia and Europe. The company relies on approximately 38 ⁵¹ independent distributors across around 30 ⁵² countries. Tariffs and trade dynamics may affect order timing, and in certain markets, tariff changes and related trade uncertainties contributed to extended lead times and rescheduled shipments. The company also faces risks related to the financial soundness of its customers, distributors, and suppliers, and the loss of key distributors could lead to reduced sales. For the fiscal years ended May 31, 2025 and 2024, the company had one distributor each year that accounted for 31% ⁵³ and 33% ⁵⁴ of net sales, respectively.

The company faces substantial doubt about its ability to continue as a going concern, as its current cash and cash equivalents of $2,399,000 ⁵⁵ are insufficient to meet operating plans for the next twelve months, with an accumulated deficit of $53,168,000 ⁵⁶ as of May 31, 2025. The company is heavily reliant on a limited number of key distributors, with one distributor accounting for 31% ⁵⁷ of net sales in fiscal 2025 and four distributors accounting for 69% ⁵⁸ of gross accounts receivable as of May 31, 2025. The company's ability to raise additional capital is constrained by SEC regulations limiting sales under its shelf registration statement to $3,315,084 ⁵⁹ based on a public float of $9,945,252 ⁶⁰. The company's new products, inFoods IBS and hp+detect, face uncertain market acceptance, and the company's ability to achieve profitability depends on successful commercialization and obtaining third-party reimbursement, including through the Medicare system. The company also faces risks from international operations, with substantial sales to Asia ($1,718,000 ⁶¹ or 32% ⁶² of net sales in fiscal 2025) and Europe ($1,297,000 ⁶³ or 24% ⁶⁴), exposing it to tariff changes, trade disputes, and geopolitical instability.

Management's message to shareholders emphasizes the company's transition from intensive product development to the commercialization phase of its key products, inFoods IBS and hp+detect. The company has initiated significant cost-cutting measures, including a workforce reduction of nearly 15% ⁶⁵ during the fiscal year, to extend its cash runway and work towards increasing revenues to cover overhead costs. Management is actively exploring strategic opportunities to enhance and create shareholder value, including distribution, partnership, and licensing opportunities with large U.S. companies to support broader availability and sale/marketing of the inFoods IBS product. The company is also actively pursuing insurance reimbursement for the inFoods IBS product through the Medicare system, with the belief that successful reimbursement will dramatically increase revenues from this product. Management acknowledges the slower-than-expected launch of inFoods IBS and hp+detect as a key factor driving the need for cost reductions and additional capital raising, including the $2,015,000 ⁶⁶ in net proceeds from the ATM offering.