Biomerica, Inc. (BMRA) 2024年年度報告「NASDAQ」.pdf

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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d)of The Securities Exchange Act of 1934 For The Fiscal Year Ended May 31,2024 or Transition Report Pursuant to Section 13 or 15(d)of The Securities Exchange Act of 1934 For The

2、Transition Period From _ To _ Commission File Number:001-37863 BIOMERICA,INC.(Exact Name of registrant as specified in its charter)Delaware(State or other jurisdiction ofIncorporation of organization)95-2645573(I.R.S.EmployerIdentification No.)17571 Von Karman Avenue,Irvine,CA(Address of principal e

3、xecutive offices)92614(Zip Code)(949)645-2111(Registrants telephone number,including area code)Securities registered under Section 12(b)of the Exchange Act:Title of each class Trading Symbols Name of each exchange on which registeredCommon Stock,par value$0.08 BMRA Nasdaq Capital Market Indicate by

4、check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities ActYes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Securities Act.Yes No Indicate by check whether the registrant(1)file

5、d all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during thepreceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for thepast 90 days.Yes No Indicate by ch

6、eck mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T(232.405of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indic

7、ate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or anemerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in R

8、ule 12b-2 of the Exchange Act.Large Accelerated Filer Accelerated Filer Non-Accelerated Filer Smaller Reporting Company Emerging Growth Company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orre

9、vised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal controlover financial reporting under Section 404(b)of the

10、 Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issuedits audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filingreflect the correction

11、 of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received byany of the registrants executive officers during the relevant recovery period pursuant to

12、 240.10D-1(b).Indicate by check mark whether the Registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the commonequity was last sold,or

13、the average bid and asked price of such common equity,as of the last business day of the registrants most recently completed secondfiscal quarter(based upon 15,639,082 shares held by non-affiliates and the closing price of$0.93 per share for Common Stock as of November 30,2023):$14,544,346.The outst

14、anding number of shares of common stock,par value$0.08,as of August 28,2024 was 16,821,646.DOCUMENTS INCORPORATED BY REFERENCE:Portions of the registrants definitive Proxy Statement on Schedule 14A relating to the registrants 2024annual meeting of stockholders,to be filed with the Securities and Exc

15、hange Commission within 120 days after the end of the fiscal year covered by thisAnnual Report on Form 10-K,are incorporated by reference in Part III,Items 10 through 14 of this Annual Report on Form 10-K.Except for the portions of theProxy Statement specifically incorporated by reference in this Fo

16、rm 10-K,the Proxy Statement and related proxy solicitation materials shall not be deemed tobe filed as part hereof.CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS Except for historical financial information contained herein,the matters discussed in this Form 10-K may be considered forward-looki

17、ng statements within themeaning of Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,as amended,and subject to the safeharbor created by the Securities Litigation Reform Act of 1995.Such statements include declarations regarding our intent,be

18、lief,or current expectations,andthose of our management.In some cases,you can identify forward-looking statements by terminology such as“may,”“will,”“should,”“expects,”“intends,”“plans,”“anticipates,”“believes,”“estimates,”“predicts,”“potential”or“continue”or the negative of these terms or other com

19、parable terminology.Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks,uncertainties andother factors,some of which are beyond our control.Actual results could differ materially from those indicated by such forward-

20、looking statements.Importantfactors that could cause actual results to differ materially from those indicated by such forward-looking statements include,but are not limited to,those risksand uncertainties identified under“Risk Factors,”in this Form 10-K and the other risks detailed from time-to-time

21、 in our reports and registration statementsfiled with the Securities and Exchange Commission,or SEC.Except as required by law,we undertake no obligation to revise or update publicly any forward-looking statements,whether as a result of new information,future events or otherwise.2 PART I ITEM 1.BUSIN

22、ESS BUSINESS OVERVIEW THE COMPANY Biomerica,Inc.(“Biomerica,”the“Company,”“we,”“us,”or“our”)was incorporated in Delaware in September 1971 as Nuclear Medical Systems,Inc.,andlater changed its name to Biomerica,Inc.The Company has two wholly owned subsidiaries,Biomerica de Mexico,which is used for as

23、sembly/manufacturing,and BioEurope GmbH,which acts as a distributor of Biomerica products in certain markets.We are a global biomedical technology company that develops,patents,manufactures and markets advanced diagnostic and therapeutic products.Ourdiagnostic test kits are utilized in the analysis

24、of blood,urine,nasal,or fecal samples for the diagnosis of various diseases,food intolerances,and other medicalconditions.These kits also measure levels of specific hormones,antibodies,antigens,and other substances,which may exist in the human body at extremelylow concentrations.Our products are des

25、igned to enhance health and well-being while reducing overall healthcare costs.Our extensive range of medical diagnostic products is sold worldwide,primarily in two markets:clinical laboratories and point-of-care settings,includingphysicians offices and over-the-counter sales at major retailers such

26、 as Walmart,CVS Pharmacy,and Amazon.Most of our products are ConformiteEuropeenne(“CE”)marked and/or registered with regulatory agencies in various countries for diagnostic use,with several also cleared for sale in the UnitedStates by the FDA.IMPACT OF COVID-19 ON REVENUES In response to the global

27、COVID-19 pandemic,we began developing,marketing,and selling COVID-19 diagnostic tests in March 2020.These testscontributed significantly to our revenues during fiscal years 2021 and 2022.However,demand sharply declined in fiscal 2023,leading to no sales of COVID-19-related products in fiscal 2024.As

28、 a result,our COVID-19 product sales have caused significant fluctuations in our revenues over the past four years.In contrast,our non-COVID-19 products,have accounted for approximately 100%and 96%of our revenues during the fiscal years ended May 31,2024,and2023,respectively,and have remained our co

29、re focus.TECHNOLOGICAL ADVANCEMENTS AND PRODUCT DEVELOPMENT Technological advances in medical diagnostics have enabled the performance of diagnostic tests not only in clinical laboratories but also at home and in point-of-care settings,such as physicians offices.A key objective for us has been the d

30、evelopment and marketing of rapid diagnostic tests that are accurate,utilizeeasily obtained patient specimens,and can be performed without the need for complex instrumentation.Our over-the-counter(home use)and professional use(physicians office,clinics,etc.)rapid diagnostic test products help manage

31、 existing medical conditions and may save lives through early detection anddiagnosis of specific diseases.Traditionally,such tests required the expertise of medical technologists and sophisticated equipment,with results often notavailable for days.We believe that properly developed and utilized rapi

32、d point-of-care tests can match the accuracy of laboratory tests,delivering reliableresults in minutes with minimal or no instrumentation.RESEARCH AND DEVELOPMENT We invest considerable resources in the research and development of new products designed to diagnose and,in some cases,treat several maj

33、or medicaldiseases.These products are both internally developed and obtained through licensing agreements.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.Many of ou

34、r technical staffhave extensive industry experience from previous employment at large diagnostic manufacturing companies.We also rely on our Scientific Advisory Board,comprised of leading medical doctors and clinicians,to guide our clinical studies and product development efforts.KEY PRODUCT LAUNCHE

35、S A key outcome of our recent research and development efforts is our patented diagnostic-guided therapy(“DGT”)product,developed on the inFoodstechnology platform.This innovative product is designed to treat gastrointestinal conditions such as irritable bowel syndrome(“IBS”)and other inflammatorydis

36、eases,targeting chronic inflammatory conditions prevalent in large markets.The inFoods IBS product,which we have already launched,uses a simpleblood test to identify patient-specific foods that,when eliminated,may alleviate IBS symptoms such as pain,bloating,diarrhea,cramping,and constipation.Unlike

37、 broad dietary restrictions,the inFoods IBS product pinpoints a patients heightened immunoreactivity to specific foods known to frequently triggerIBS symptoms,providing targeted relief.We have launched our inFoods product across numerous gastroenterology(“GI”)physician groups in various states and r

38、egions,including collaboration withone of the largest GI groups in the U.S.Feedback from GI specialty physicians has been positive,and we are actively expanding our network by onboardingadditional physician practices.Our dedicated sales team is focused on deepening relationships within the GI segmen

39、t and targeting opportunities to introduceinFoods to other medical specialties,including integrated health practices and concierge physicians.We are also evaluating distribution,partnership,andlicensing opportunities with U.S.and multinational companies to accelerate the commercialization and growth

40、 of inFoods products both domestically andinternationally.3 Beyond our inFoods product line,our additional efforts have led to a significant milestone by receiving FDA clearance in December 2023 for hp+detect,anew diagnostic test for detecting Helicobacter pylori(H.pylori)bacteria in the gastrointes

41、tinal tract.H.pylori is a widespread infection,affecting an estimated35%of the U.S.population and 45%of the population in Europes five largest countries.This bacterium is recognized as the strongest known risk factor forgastric cancer,which is the third most common cause of cancer-related deaths glo

42、bally.The hp+detect test provides physicians and medical centers with a reliable tool for diagnosing H.pylori infections and monitoring the effectiveness andsafety of treatments.The diagnostic test is marketed directly to laboratories,where patient samples are analyzed.We are actively promoting hp+d

43、etect tolarge end-customer labs to support its launch and distribution,aiming to enhance patient care through timely and accurate detection of H.pylori infections.STRATEGIC INITIATIVES AND COST MANAGEMENT Due to slower-than-expected launches of our key products,inFoods IBS and hp+detect,we have init

44、iated significant cost-cutting measures to extend ourcash runway and work towards increasing revenues to cover overhead costs.These measures include a workforce reduction of nearly 15%and a significantreduction in expenses.Additionally,we are actively exploring strategic opportunities to enhance sha

45、reholder value.OPERATIONS AND GLOBAL PRESENCE Biomerica is headquartered in Irvine,California,where it centralizes administration,finance,regulatory compliance,product development,sales,marketing,customer service,and primary manufacturing operations.To enhance global competitiveness,the Company main

46、tains manufacturing and assembly operationsin Mexicali,Mexico,aiming to reduce production costs.Additionally,Biomerica operates BioEurope GmbH in Europe,facilitating the international sales ofspecific products.Additional information about Biomerica is available on our website at .The content on any

47、website referred to in this Form 10-K is not apart of or incorporated by reference in this Form 10-K unless expressly noted.Our Annual Report on Form 10-K,Quarterly Reports on Forms 10-Q,CurrentReports on Forms 8-K,Proxy Statements and all other filings we make with the Securities and Exchange Commi

48、ssion(“SEC”)are available on our website,free of charge,as soon as reasonably practical after we file them with or furnish them to the SEC and are also available online at the SECs website atwww.sec.gov.PRODUCTION Our diagnostic test kits are manufactured and/or assembled at our facilities in Irvine

49、,California and in Mexicali,Mexico.We established our manufacturingfacility in Mexicali,Mexico in fiscal 2003 and moved a significant portion of our diagnostic packaging and assembly to that facility.Production of diagnostic tests can involve formulating component antibodies and antigens in specifie

50、d concentrations,attaching a tracer to the antigen,fillingcomponents into vials,packaging and labeling.We continually engage in quality control procedures to assure the consistency and quality of our products and tocomply with applicable FDA and international regulations.4 Our manufacturing operatio

51、ns and facilities are regulated by the FDA Good Manufacturing Practices for medical devices.We have an internal qualitydepartment that monitors and evaluates product quality and output.We also have an internal Quality Systems department whose goal is to ensure that ouroperating procedures are in com

52、pliance with current FDA,CE Mark and International Organization for Standardization(“ISO”)regulations.We either produceour own antibodies and antigens or purchase these materials from qualified vendors.We have alternate,approved sources for most critical raw materials andare working to procure alter

53、nate sources for the few that we do not have.RESEARCH AND DEVELOPMENT We employ a team of highly qualified technical personnel,including Ph.D.holders and experts with extensive experience in the development and production ofdiagnostic tests,to support our research and development(“R&D”)initiatives.O

54、ur team is actively engaged in enhancing existing products and drivingongoing innovation.R&D expenses encompass materials,supplies,personnel,consultants,facilities,outside clinical trial sites,equipment,and contractservices.For the fiscal years ended May 31,2024,and 2023,consolidated R&D expenses to

55、taled approximately$1,491,000 and$1,584,000,respectively.Weanticipate that R&D expenses will decrease significantly in the upcoming quarters as we are in the commercialization phase of inFoods and hp+detect andin an effort to preserve cash.A cornerstone of our R&D efforts is the development of our p

56、roprietary diagnostic-guided therapy,known as the inFoods technology.This platform enablesphysicians to identify patient-specific foods(e.g.,pork,milk,onions,sugar,chickpeas)that,when eliminated from the patients diet,may alleviate or improvesymptoms of IBS and other conditions.We have filed patents

57、 globally related to the use of inFoods diagnostic technology for detecting abnormal immuneresponses in patients with various diseases.Many of these patents have been recently issued,while others are in the review and prosecution phase.The UnitedStates Patent and Trademark Office(“USPTO”)has granted

58、 us two patents with broad claims protecting the inFoods IBS product.Additionally,patents havebeen issued in Australia,Japan,Korea,Mexico,and Singapore.Further patent applications related to the inFoods IBS product are pending or under review inthe United States and other countries.We are also devel

59、oping and have filed patents for additional products targeting other diseases using the inFoods technology platform.These diseases includeFunctional Dyspepsia,Crohns Disease,Ulcerative Colitis,Gastroesophageal Reflux Disease(“GERD”),Migraine Headaches,Depression,and Osteoarthritis.In addition to our

60、 issued U.S.patents,we now hold 36 foreign patents that have either been issued or for which we have received a notice of allowance,covering over 50 countries.These patents protect the use of inFoods technology for IBS and several other conditions.Notably,our first patent allowed for adisease other

61、than IBS was granted in Japan in August 2021,covering the use of inFoods technology for diagnosing and treating depression.Our additional R&D efforts have led to the 510(k)clearance of our proprietary H.pylori test,hp+detect,which is designed to provide highly accuratesensitivity and specificity for

62、 detecting H.pylori and monitoring treatment.MARKETS AND METHODS OF DISTRIBUTION Biomerica has approximately 80 current customers for its diagnostic business,of which approximately 38 are foreign distributors,12 are domestic distributorsand the balance are primarily domestic hospital and clinical la

63、boratories,medical research institutions,medical schools,pharmaceutical companies,chaindrugstores,wholesalers,physicians offices,and e-commerce customers.We employ a director of sales and marketing for Europe and South America who is headquartered in Germany.She has over 20 years of experience selli

64、ng andmarketing diagnostic and life science products across multiple diagnostics technologies and disciplines.She possesses broad international business experience,with communication skills in German,English,Spanish,French,and Portuguese,and scientific and technical understanding of gastrointestinal

65、 diagnosticproducts.She also has strong relationships with key strategic entities in Europe,Eastern Europe,Latin America,Canada,and the United States and we expectthat she will continue to help Biomerica add new distributors for existing products and add new product-lines for future distribution by

66、us.We rely on affiliated and unaffiliated distributors,advertising in medical and trade journals,exhibitions at trade shows,direct mailings,and an internal salesstaff to market our diagnostic products.We target two main markets:(a)clinical laboratories and(b)point-of-care testing(physicians offices

67、and over-the-counter drug stores).Our net sales were approximately$5,415,000 for fiscal 2024,compared to$5,339,000 for fiscal 2023.For the fiscal years ended May 31,2024,and 2023,theCompany had one distributor each year that accounted for 33%and 35%of our net sales,respectively.5 Total gross receiva

68、bles as of May 31,2024,and 2023 were approximately$966,000 and$751,000,respectively.As of May 31,2024,and 2023,the Companyhad four and one distributor,respectively,that accounted for a total of 64%and 36%of gross accounts receivable.Of the 64%as of May 31,2024,37%wasowed by a distributor in Asia.BAC

69、KLOG As of May 31,2024,and 2023,Biomericas backlog of unshipped orders was approximately$755,000 and$655,000,respectively.As of May 31,2024,themajority of this backlog consisted of orders intended for a distributor in Asia.RAW MATERIALS Biomerica utilizes a range of principal raw materials including

70、 chemicals,serums,reagents,and packaging supplies.The majority of these materials aresourced from multiple suppliers,ensuring we are not reliant on any single source.However,for certain critical materials such as antibodies,where suppliers arelimited,there exists a risk of potential supply challenge

71、s or increased costs in the future.Our inventory includes antibodies,antigens,bottles,boxes,chemicals,and reagents essential for manufacturing our test kits,along with products in variousstages of completion.During the fiscal year ended May 31,2024,purchases from one vendor accounted for 16%of our r

72、aw material procurement,primarily related to Plates.Incontrast,for the fiscal year ended May 31,2023,the Company did not experience significant vendor concentration in raw material purchases.COMPETITION We offer several proprietary products with notable competitive advantages,including our EZ Detect

73、 colon disease home test,the Aware Breast Self-Examproduct,our inFoods IBS product,and hp+detect for H.pylori detection.These products stand out due to their unique features and benefits compared tocompeting tests in the market.Our competitors vary greatly in size.Many are divisions or subsidiaries

74、of well-established medical and pharmaceutical companies which are much larger thanBiomerica and expend substantially greater amounts than we do for research and development,manufacturing,advertising,and marketing.The competitive landscape for diagnostic products is shaped by several factors,includi

75、ng product uniqueness,technology,quality,performance,pricing,andservice.Our competitive edge is grounded in the distinctiveness of our offerings,the high quality of our products,and their rapid test results.Our strong patentportfolio further bolsters our market position despite our limited marketing

76、 capabilities.GOVERNMENT REGULATION OF OUR DIAGNOSTIC BUSINESS Our primary business consists of selling products that are generally legally defined as medical devices and in vitro diagnostic medical devices.As a result,weare considered to be a medical devices and in vitro diagnostic medical devices

77、manufacturer,and as such,we are subject to the regulations issued and enforcedby of numerous governmental entities.These agencies include the FDA,Environmental Protection Agency,Federal Trade Commission,Occupational Safetyand Health Administration,U.S.Department of Agriculture(“USDA”),and Consumer P

78、roduct Safety Commission,as well as European Government agencies.Our activities are also regulated by various agencies of the states and localities in which our products are sold.These regulations govern the introduction ofnew in vitro diagnostic medical devices and medical devices,the observance of

79、 certain standards with respect to the manufacture and labeling of medicaldevices,the maintenance of certain records,the reporting of potential product problems,and other matters.The Food,Drug&Cosmetic Act of 1938(the“FDCA”)regulates medical devices in the United States by classifying them into one

80、of three classes based onthe extent of regulation believed necessary to ensure safety and effectiveness.Class I devices are those devices for which safety and effectiveness canreasonably be assured through general controls,such as device listing,adequate labeling,and adherence to the Quality System

81、Regulation(“QSR”)as well asMedical Device Reporting(“MDR”),labeling and other regulatory requirements.Some Class I medical devices are exempt from the requirement of Pre-MarketNotification or clearance.Class II devices are those devices for which safety and effectiveness can reasonably be ensured th

82、rough the use of special controls,such as performance standards,post-market surveillance and patient registries,as well as adherence to the general controls provisions applicable to Class Idevices.Class III devices are devices that generally must receive clearance prior to marketing by the FDA pursu

83、ant to a pre-market approval to ensure theirsafety and effectiveness.Generally,Class III devices are limited to life-sustaining,life-supporting,or implantable devices.However,this classification can alsoapply to novel technology or new intended uses or applications for existing devices.Our products

84、are primarily either Class I or Class II medical devices.6 Pursuant to FDA requirements,we have registered our manufacturing facility with the FDA as a medical device manufacturer and listed the medical devices wemanufacture.We are also subject to inspection on a routine basis for compliance with FD

85、A regulations.This includes the QSR,which requires that wemanufacture our products and maintain our documents in a prescribed manner with respect to issues such as design controls,manufacturing,testing,andvalidation activities.Further,we are required to comply with other FDA requirements with respec

86、t to labeling and MDR regulations which requires that weprovide information to the FDA on deaths or serious injuries alleged to have been associated with the use of our products,as well as any product malfunctionsthat are likely to cause or contribute to death or serious injury if the malfunction we

87、re to recur.We believe that we are currently in material compliance with allrelevant QSR and MDR requirements.In addition,our facility is required to have a California Medical Device Manufacturing License.The license is not transferable and must be renewed biannually.Our current license is valid unt

88、il November 19,2024.Through compliance with FDA and California regulations,we can market some of our medical devicesthroughout the United States.International sales of medical devices are also subject to the regulatory requirements of each country where the product is sold.InEurope,the directives of

89、 the European Union(“EU)require that a device have a CE Mark in order to be sold in EU countries.We comply with In VitroDiagnostic Medical Devices Directive(“IVDD”)98/79/EC and Medical Devices Regulation 2017/745(“MDR”).We also comply with ISO 13485:2016Medical Devices Quality Management Systems Req

90、uirements for Regulatory Purposes.At present,outside of the EU,the international regulatory review process varies from country to country.We work with our distributors and salesrepresentatives in the foreign countries in which we market our products to ensure that we comply with the regulatory laws

91、of those countries.We believe thatour international sales to date have been in compliance with the laws of all foreign countries in which we have made sales.Exports of most medical devices arealso subject to certain FDA regulatory controls.The designing,development,manufacturing,marketing,post-marke

92、t surveillance,distribution,advertising,and labeling of Biomericas immunoassay in vitrodiagnostic(“IVD”)medical device products are subject to regulation in the United States by the Center for Devices and Radiological Health of the FDA andstate agencies.FDA regulations require that some new products

93、 have pre-marketing clearance or approval by the FDA and require these products to bemanufactured in accordance with the FDAs current Good Manufacturing Practice(“cGMP”)regulations,to be extensively tested and to be properly labeled todisclose test results and performance claims and limitations.Afte

94、r a product that is subject to FDA regulation is placed on the market,numerous regulatoryrequirements apply,including,for example,the requirement that we comply with recordkeeping and reporting requirements,such as the FDAs medical devicereporting regulations and reporting of corrections and removal

95、s.The FDA enforces these requirements by inspection and post-market surveillance.The lastFDA announced inspection was in May 2024 and no observations were noted.We believe that all Biomerica products sold in the United States comply with theFDA and state regulations.We are an FDA regulated and ISO 1

96、3485:2016 certified In Vitro Diagnostic Medical Devices company.Our goal is to provide high quality medical diagnosticproducts that generally meet or exceed customer requirements and comply with all applicable regulatory requirements:FDA 21 CFR Part 820 QualityManagement System,ISO 13485:2016,Medica

97、l Devices Quality Management Systems Requirements for Regulatory Purposes,In Vitro Diagnostic MedicalDevices Directive 98/79/EC&and Medical Device Regulation 2017/745,Guidelines related to Medical Devices Directive/Regulation Guidance on CEMarking,among others.Biomerica involves its employees in a c

98、ontinuous improvement process to increase productivity,improve quality and maintain thesuitability,adequacy,and effectiveness of our quality management system.The EU In Vitro Diagnostic Medical Device Regulation(“IVDR”)2017/746 was effective on May 26,2022.Manufacturers need to update their technica

99、ldocumentation and processes to meet the more stringent regulatory requirements of the European Union.Notified Bodies can begin certifying devices to thenew IVDR requirements once they have been designated under IVDR by their Competent Authority.Our Notified Body is officially designated under theIV

100、DR and listed in the European Commission NANDO database since August 19,2021.We are working closely with our Notified Body to update ourtechnical documentation to comply with these more stringent IVDR requirements.7 Per IVDR 2017/746 Amendment Regulation(EU)2022/112,and published proposal 2024/0021(

101、COD),devices with a CE certificate that was issued inaccordance with IVDD may be placed on the market or put into service until December 31,2027,providing a formal application to the notified body has beenmade by May 26,2025.Exceptional Renewal of CE Certificate for IVDD Quality System was granted t

102、o Biomerica.Biomerica received an extended CE Certificate on May 24,2022,which remains effective until May 26,2025.Per IVDR 2017/746 Amendment Regulation(EU)2022/112,and published proposal 2024/0021(COD),devices without a CE certificate that was issued inaccordance with IVDD,for which a declaration

103、of conformity was drawn up prior to May 26,2022,per IVDD and for which the conformity assessmentprocedure pursuant to IVDR requires the involvement of a Notified Body,may be placed on the market,or put into service until the following dates.Biomericaalso has until the following dates to update the t

104、echnical documentation and processes to meet these regulatory requirements of IVDR 2017/746 providing aformal application to the notified body has been made:(1)December 31,2027,for class D devices,formal application to notified body by May 26,2025;(2)December 31,2028,for class C devices,formal appli

105、cation to notified body by May 26,2026;(3)December 31,2029,for class B devices,formal application to notified body by May 26,2027;and(4)December 31,2029,for class A devices placed on the market in sterile condition,formal application to notified body by May 26,2027.SEASONALITY OF BUSINESS Our busine

106、ss has not been subject to significant seasonal fluctuations.INTERNATIONAL BUSINESS The following table sets forth the dollar volume of revenue attributable to sales to domestic customers and foreign customers during our last two fiscal years:For the Year Ended May 31,2024 2023 Asia$1,881,000 35%$2,

107、021,000 38%Europe 1,438,000 27%1,798,000 34%North America 1,285,000 24%1,470,000 28%Middle East 800,000 15%39,000 1%South America 11,000 0%11,000 0%Total$5,415,000 100%$5,339,000 100%Our international operations face distinct risks that differ from those encountered in the United States.These risks

108、include economic fluctuations,regulatorychanges,geopolitical instability(such as terrorism and trade disputes),tariffs,embargoes,import/export restrictions,and potential disruptions in shipping anddistribution channels.Such factors can significantly impact our foreign sales and may complicate our ab

109、ility to collect accounts receivable in internationalmarkets during economic downturns.Each country has its own licensing requirements for diagnostic products,which can differ considerably from U.S.regulations and may change unexpectedly.Currently,our international sales rely on approximately 38 ind

110、ependent distributors across around 30 countries.These diverse factors contribute to thecomplexities and uncertainties associated with our international business operations.INTELLECTUAL PROPERTY We consider the protection of our methodologies,designs,product formulations,manufacturing processes,diag

111、nostic procedures,copyrights,service marks,trademarks,and trade secrets essential for our future success.To safeguard our proprietary rights in products and services,we utilize copyright,trademark,patent,service mark,and trade secret laws,alongside contractual restrictions.Our efforts include confid

112、entiality and invention assignment agreements withemployees and contractors,as well as nondisclosure agreements with most fulfillment and strategic partners to restrict access to and disclosure of proprietaryinformation.However,these measures may not entirely prevent unauthorized use or disclosure o

113、f our technology.8 In the past,we have licensed and may continue to license certain proprietary rights,such as trademarks,patents,trade secrets,or copyrighted material,to thirdparties.While we strive to maintain the quality of our product brands through these license agreements,we cannot guarantee t

114、hat licensees will always act in amanner that preserves the value of our proprietary rights or reputation.LICENSE OF THIRD-PARTY INTELLECTUAL PROPERTY On occasion,we in-licensed both exclusive and non-exclusive rights to intellectual property and patents owned by third parties.These license agreemen

115、tstypically require royalties and other payments.We have a royalty agreement in which we obtained rights to manufacture and market an ACTH test(used to detect chronic metabolic conditions).Royaltyexpenses of approximately$10,000 and$13,000,respectively,are included in cost of sales for this agreemen

116、t for the fiscal years ended May 31,2024 and2023.Sales of products manufactured under this agreement are not material to total sales for the fiscal years ended May 31,2024 and 2023,respectively.Wemay license other products or technology in the future as it is deemed necessary or opportunistic for co

117、nducting business.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 noticefrom such persons or entity we may be required to pay a license fee or may be required to cease all manufacture,sale or use of su

118、ch products,which couldnegatively impact us.While we have not been notified of any such claims by third parties,we cannot guarantee that such claims will not be made in the future.BRANDS AND TRADEMARKS We occasionally register our tradenames with the USPTO.Of note,we registered the tradename“InFoods

119、”on December 24,2016.Our unregisteredtradenames are“EZ Detect,”“EZ-H.P.,”and“EZ-PSA”.A trademark for“Aware”was issued and assigned in 2001,renewed in 2011 and 2021.On January 11,2020,the USPTO renewed our“FORTEL”trademark for another ten years.The laws of some foreign countries do not protect our pr

120、oprietary rights to the same extent as do the laws of the United States.Effective copyright,trademark,and trade secret protection may not be available in such jurisdictions.PATENTS AND INFOODS TECHNOLOGY We have filed over 100 international and Patent Corporation Treaty patents(“PCT”)and have multip

121、le provisional and non-provisional patents currently filedwith the USPTO.Substantially all of our patents that are pending or registered pertain to the inFoods technology platform.Our most important family of patent applications pertains to our inFoods technology platform,which is a method of diagno

122、sing and treating symptoms ofmany different inflammatory diseases.Our first product launch using this technology is the inFoods IBS product which is designed to diagnose and treat IBS.Using a patient blood sample,a physician or lab can run our test to identify specific foods(e.g.,pork,milk,onions,su

123、gar,chickpeas)that,if eliminated from anIBS patients diet,can alleviate or reduce the individuals IBS symptoms,including,but not limited to,constipation,diarrhea,bloating,cramping,severe pain,and indigestion.We have filed many patent applications with the USPTO and with other such similar agencies i

124、n other countries outside of the United Statespertaining to this inFoods technology.These patent applications include claims that address the diagnosis and treatment of several disease states includingIBS,functional dyspepsia,Crohns disease,ulcerative colitis,gastroesophageal reflux disease,osteoart

125、hritis,psoriasis,migraine headaches,and depression.These applications include the use of this technology in both humans and animals.The first inFoods patents filed by us pertained to IBS.Several of thesepatents pertaining to the inFoods IBS technology have been issued and many more are in active rev

126、iew and prosecution.In August 2018,we received our first patent pertaining to the inFoods technology platform from the Korean Intellectual Property Office,covering IBS.Sincethen,we have been granted a total of 19 patents;The USPTO has issued the Company two patents with broad claims that protect our

127、 inFoods technology intesting and treating patients with IBS.Patents have also been issued in the countries of Australia(two patents),Canada,Japan(two patents),Korea(twopatents),Mexico,Panama,Peru,and Singapore,covering our inFoods IBS technology.Additional patent applications pertaining to the inFo

128、ods IBS productare in prosecution and review at the USPTO and with the patent issuance authorities in other countries.9 We are also developing and have filed patents with claims that cover products that target other diseases utilizing the inFoods technology platform.We havedozens of patents in prose

129、cution or review pertaining to these other diseases,including:Functional Dyspepsia,Crohns disease,Ulcerative Colitis,GERD,Migraine Headaches,Depression,and Osteoarthritis.In addition,we have a family of patents that cover the use of certain information technology(“IT”)platforms and artificial intell

130、igence/machine learning(“AI/ML”)tools that could assist patients in identifying and avoiding packaged or processed food thatcontain specific foods that they are trying to eliminate from their diet.In addition to our IBS related issued patents,we have also been issued inFoods technology patents in th

131、e following countries pertaining to the followingdiseases:Australia Attention Deficit Disorder(“ADD”)and Attention Deficit Hyperactivity Disorder(“ADHD”);Australia GERD;Japan-psychologicaldepression,IT based food monitoring and elimination technology;China IT based food monitoring and elimination te

132、chnology.We believe the claims in these issued inFoods IBS patents and claims in our pending patents that protect the use of the inFoods technology to diagnose andtreat various other diseases,provide us with broad protections from other companies making or selling competing products in this highly d

133、isruptive new fieldof medicine.In addition to the use of our own patents,we have acquired from third parties the rights to manufacture and sell certain products that are protected by patents orintellectual property owned by these third parties.In some cases,royalties are paid on the sales of these p

134、roducts.We anticipate that we will license or purchasethe rights to other products or technologies in the future.We also engage in contract research and development and contract manufacturing for third party companies.The technologies that relate to this contract R&Dand manufacturing are protected b

135、y patents and other intellectual property.In these situations,this intellectual property is typically licensed to us under alimited license agreement enabling us to perform the services being contracted.We have recently launched the inFoods IBS product.Our business model for this product includes th

136、e potential out-licensing of the product and relatedpatents to a large international life sciences or technology company that could commercialize it or support us in its commercialization.Additionally,we mayexplore out-licensing opportunities for the patents or intellectual property associated with

137、other products,including our H.pylori product.EMPLOYEES As of May 31,2024 and 2023,we employed a total of 64 and 62 employees,respectively,in the United States,Mexico,UK and Germany,of which 63 and 62were full-time employees,respectively.Various employees listed in the production department also per

138、form research and development duties as a routinefunction of their job.We occasionally employ temporary employees when needed.The following is a breakdown of employees by departments:May 31,2024 2023 Administrative 6 5 Research&Development 7 9 Sales&Marketing 13 7 Production&Operations 38 41 Total 6

139、4 62 We do engage in a range of external experts,including Ph.D.s,M.D.s,and other industry specialists,as well as medical institutions,to support various aspectsof our operations.These services include technical support,regulatory guidance,marketing and public relations,financial advisory,and contra

140、ct productdevelopment and manufacturing.To safeguard the Company,we implement confidentiality agreements,intellectual property ownership clauses,andindemnification provisions with these external parties.Despite these measures,we cannot guarantee complete protection against third-party claims or pote

141、ntialintellectual property theft.10 ITEM 1A.RISK FACTORS The risks described below are not the only ones we face.Additional risks and uncertainties we are not presently aware of or that we currently believe areimmaterial may also impair our business operations.Our business could be harmed by any of

142、these risks and uncertainties.The trading price of our commonstock could decline due to any of these risks,and you may lose all or part of your investment.In assessing these risks,you should also refer to the otherinformation contained or incorporated by reference into this annual report on Form 10-

143、K,including our consolidated financial statements and related notes.RISKS RELATED TO OUR BUSINESS We have a history of operating losses.We have a history of operating losses,and there is no guarantee that we will achieve profitability in the future.Our ability to generate net profits and maintainpos

144、itive cash flows is uncertain.Failure to achieve or sustain profitability could result in a decline in the value of our common stock and may necessitateseeking additional funding under potentially unfavorable conditions.Although our financial statements have been prepared on a going concern basis,ou

145、r current level of cash and cash equivalents available to us is notsufficient 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 31,2024,have been prepared under the assumption that we w

146、ill continue as a going concern for the next twelve monthsfrom the date of issuance.However,our independent registered public accounting firm has issued a report that includes an explanatory paragraph highlightingour operational losses and expressing substantial doubt about our ability to continue a

147、s a going concern for a period of at least the next twelve months from thedate this report is filed.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 opera

148、tions.There is no assurance that we will be able to secure the necessary capital on favorable terms,achieve sufficientrevenue growth,or implement adequate cost reductions.Our financial statements do not reflect any adjustments that might result from the resolution of thisuncertainty.Our operating re

149、sults may fluctuate adversely as a result of many factors that are outside our control,which may negatively impact our stock price.Our operating results are subject to fluctuations due to factors outside our control,which may adversely affect our business,financial condition,and stockprice.Key facto

150、rs include:Regulatory Clearances:Delays or issues with obtaining regulatory approvals in the U.S.,Europe,and other markets.Regulatory Compliance:Challenges in meeting compliance requirements in various jurisdictions.Competition:Introduction of superior or lower-priced products by competitors could i

151、mpact our market share.Reimbursement Changes:Alterations in reimbursement systems or amounts could affect product usage decisions.Economic Conditions:Economic downturns,changes in healthcare spending,reduced consumer demand,inflation,and currency fluctuations.Legal and Regulatory Changes:New or amen

152、ded laws and regulations affecting our business operations.Market Penetration:Lower than expected adoption of new or recently introduced products.Distributor Dynamics:Variability in distributor inventory levels,buying patterns,and overall performance.Government Mandates:Risks from shelter-in-place o

153、rders,lockdowns,or other crisis-related directives.Health Crises:Potential resurgence of COVID-19 or new health threats.Healthcare Market Changes:Consolidation in our customer base or shifts in the healthcare market landscape.11 Fluctuations in our operating results,for any reason,could cause operat

154、ing 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 wemay not be able to rapidly adjust our expenses if our revenues fall short of our expectati

155、ons.Our revenue estimates for future periods are based,among otherfactors,on estimated end-user demand for our products.If end-user consumption is less than estimated,revenues from our distribution partners and otherdistribution channels would be expected to fall short of expectations,and because su

156、ch a significant portion of our costs are fixed,could result in operatinglosses.To remain competitive,we must continue to develop,obtain,and protect our proprietary technology rights;otherwise,we may lose market share orneed to reduce prices as a result of competitors selling technologically superio

157、r products that compete with our products,or selling products at lowerprices.Our ability to compete successfully in the diagnostic market depends on continued development and introduction of new products,technology,and theimprovement of existing technology.If we cannot continue to improve upon or de

158、velop,obtain,and protect our technology,our operating results could beadversely affected.To remain competitive,we must expend considerable resources to research new technologies and products and develop new markets,and there is noassurance our efforts to develop new technologies,products,or markets

159、will be successful or such technologies,products,or markets will becommercially viable.We devote a significant amount of financial and other resources to researching and developing new technologies,new products,and new markets.Thedevelopment,manufacture and sale of diagnostic products require a sign

160、ificant investment of resources.The development of new products and markets alsorequires a substantial investment of resources,such as new employees,offices and manufacturing facilities,consultants,and clinical trials.No assurances canbe given that our efforts to develop new technologies or products

161、 will be successful,that such technologies and products will be commercially viable,or ourexpansion into new markets will be profitable.There is also no guarantee that our new products,including our inFoods IBS products and hp+detect,will be well accepted into the marketplace.Our operations will be

162、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 newmarkets co

163、uld have a material adverse effect on our business and prospects.The Company is required to obtain government or regulatory certification in many countries and the European community to sell its products inthose countries or regions.There is no assurance that the Company will be able to retain its c

164、ertification in the future.This includes the possibility andrisk that the Companys products do not meet the new EU IVDR testing and documentation requirements in the future as described in the above“Research and Development”section of this document.Significant government regulation exists in countri

165、es in which we conduct business.A large part of the Companys sales is to distributors in Europe,China,andother countries,which require us to maintain certain certifications to sell our products.Failure to comply with current governmental regulations and qualityassurance guidelines could cause the lo

166、ss of these certifications,which could materially adversely affect the results of the Company.Loss of certificationscould lead to temporary manufacturing shutdowns,product recalls,product shortages,or delays in product manufacturing and a decline in sales.The Company maintains a manufacturing plant

167、in Mexico which presents risks to the Company including risks associated with doing business outsidethe 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 loc

168、al economic and political conditions.Factors such as social unrest,potential terrorism,export and import restrictions,and fluctuationsin currency exchange rates could impact our operations.Additionally,there is a risk of labor shortages,which could affect our manufacturing capabilities.These factors

169、 could lead to unforeseen costs and disruptions,materially impacting our business,financial results,and operational stability.12 We use hazardous materials in our research and production that may result in unexpected and substantial claims against us relating to handling,storage,or disposal.Our rese

170、arch and production processes involve the use of hazardous materials,which presents inherent risks.Despite rigorous safety protocols,the possibilityof accidental contamination or injury cannot be entirely eliminated.In the event of an accident,we could face significant liability for harm or damages,

171、potentially exceeding our financial resources.Compliance with environmental regulations also entails substantial costs.If government authorities introduce new environmental regulations or change the interpretation of existing regulations,our operations could be furtherimpacted.Such changes may impos

172、e additional costs,restrictions,or compliance requirements,which could hinder our research,development,or productionefforts.Noncompliance with these regulations may result in significant fines,penalties,or damages,and could necessitate costly remediation efforts.Furthermore,severe environmental or s

173、afety violations could lead to partial or total shutdowns of our research and manufacturing facilities,adversely affectingour business.The risk of contamination or injury from hazardous materials may also expose individuals to potential health hazards,resulting in fines orpenalties that might not be

174、 covered by insurance,thereby impacting our financial stability and operational continuity.We rely on a limited number of key distributors that account for a substantial majority of our total revenue.The loss of any key distributor or anunsuccessful effort by us to directly distribute our products c

175、ould lead to reduced sales.Our net sales were approximately$5,415,000 for fiscal 2024,compared to$5,339,000 for fiscal 2023.For the fiscal years ended May 31,2024,and 2023,theCompany had one distributor each year that accounted for 33%and 35%of our net sales,respectively.Total gross receivables as o

176、f May 31,2024,and 2023 were approximately$966,000 and$751,000,respectively.As of May 31,2024,and 2023,the Companyhad four and one distributor,respectively,that accounted for a total of 64%and 36%of gross accounts receivable.Of the 64%as of May 31,2024,37%wasowed by a distributor in Asia.Any adverse

177、changes in our relationships with key distributors,or issues related to their financial condition,performance,orpurchasing patterns,could have a significant impact on our sales and overall financial results.The loss of a key distributor,or the failure of our directdistribution efforts,could further

178、exacerbate these challenges and adversely affect our business.We face risks relating to our international sales,including inherent economic,political,and regulatory risks,which could impact our financialperformance,cause interruptions in our current business operations and impede our growth strategy

179、.We face risks relating to our international sales,including economic,political,and regulatory challenges,which could impact our financial performance,disrupt our business operations,and hinder our growth strategy.Our products are primarily sold internationally,with significant sales to distributors

180、 in Asia and Europe.We rely on distributor organizations and sales agents tomarket and sell our products abroad,which exposes us to various foreign risks,including:Compliance Challenges:We must adhere to diverse and evolving registration requirements,which can be controlled by distributors,complicat

181、ingtransitions and limiting our ability to benefit from product registrations.Regulatory Risks:We must comply with complex foreign and U.S.laws and regulations,such as import/export limitations,the Foreign CorruptPractices Act,and local laws in each market.Tariffs and Trade Barriers:As we expand int

182、o new countries and regions,we face changing tariffs and trade barriers,particularly in China,where tariffpolicies are in flux.Currency Exchange Fluctuations:Our international sales are subject to currency risks,as changes in the values of foreign currencies relative to theU.S.dollar can make our pr

183、oducts more expensive and negatively impact sales.Payment and Pricing Challenges:We encounter longer payment cycles,generally lower average selling prices,and greater difficulty in collectingaccounts receivable.Legal Enforceability:We may lack the ability to enforce receivables collections contracts

184、 in foreign legal systems.Intellectual Property Risks:There is often reduced protection for,and enforcement of,intellectual property rights in foreign markets.Political and Economic Instability:We are exposed to political and economic instability in regions where we currently sell or plan to expand

185、ourproduct sales.Tax Consequences:We face complex and potentially adverse tax implications in different jurisdictions.Product Diversion:Products sold internationally at lower prices may be diverted back to the United States,affecting our domestic sales.13 Most of our international sales are negotiat

186、ed and paid in U.S.dollars.However,currency risks remain,as fluctuations in foreign exchange rates can make ourproducts comparatively more expensive.These exchange rate changes,along with general economic conditions in international markets,could negativelyimpact our sales.To maintain competitive pr

187、icing,we may need to offer discounts or reduce prices,leading to lower margins on international sales.Continuedchanges in the values of the Euro,the Mexican peso,and other foreign currencies could adversely affect our business,financial condition,and results ofoperations.We also have supply agreemen

188、ts with foreign vendors that involve sharing foreign currency exchange fluctuation risks.We may enter into similar arrangementsin the future.A significant portion of our revenues comes from sales to our distribution partner in China.Political tensions between the U.S.and China could disrupt orreduce

189、 our sales in the Chinese market,posing a substantial risk to our business.Our results of operations and financial conditions may be adversely affected by the financial soundness of our customers,distributors,and suppliers.Our operational results and financial condition are closely linked to the fin

190、ancial health of our customers,distributors,and suppliers.If any of these partiesexperience a deterioration in their financial performance or encounter difficulties with scheduled payments or credit,it could have several adverse effects onour business.For instance,if our customers are unable to pay

191、or delay payment on accounts receivable,this would negatively impact our cash flow.Similarly,if our suppliersface financial challenges,they may restrict credit,impose more stringent payment terms,reduce or cease production of essential components,or even stopoperations entirely.Such disruptions coul

192、d directly affect our ability to procure necessary materials and maintain consistent product supply.Moreover,reductions in reimbursements or purchase volumes from state and federal government programs,or private payers,could also occur due to budgetconstraints or expenditure cuts.These reductions co

193、uld adversely impact our revenues and cash flow,further straining our financial performance.The combined effect of these potential challenges could significantly influence our operating results and financial stability.We extend credit to customers outside the United States which can be difficult to

194、collect.We extend credit to many of our customers,including those located outside the United States.Collecting receivables,particularly from international customers,can be challenging due to difficulties in obtaining reliable credit information and the complexities of enforcing collections through f

195、oreign legal systems.If weare unable to effectively manage and collect on these receivables,especially from international customers,it could have a detrimental impact on our financialperformance and liquidity.If we are not able to manage our growth strategy our operating results may be adversely aff

196、ected.Our business strategy contemplates further growth,including scaling up our operational systems and entering new geographical markets,including thoseoutside the United States.This growth strategy could place additional demands on our limited employee and executive staff,potentially diverting th

197、eir focusfrom core business activities.Furthermore,managing growth may strain our operational,financial,and management information systems.Expanding into new markets or undertaking acquisitions introduces several risks,such as higher costs,unfamiliar market conditions,and integrationchallenges.Any d

198、ifficulties in managing this growth or expanding effectively could adversely affect our operating results and financial performance.The strainon management resources and potential inefficiencies in our systems could lead to operational and financial setbacks.The industry and market segments in which

199、 we operate are highly competitive,and intense competition with other providers of diagnostic productsmay reduce our sales and margins.The diagnostic products industry and market segments in which we operate are highly competitive.Our diagnostic tests face competition from similar productsproduced b

200、y numerous multinational and regional competitors who are heavily investing in competing technologies.Additionally,some of our distributors havedeveloped,or may develop,their own products to compete directly with ours.14 Many of our competitors have substantial competitive advantages over us,includi

201、ng significantly greater financial,technical,and research resources.They alsopossess larger,more established marketing,sales,distribution,and service networks;stronger relationships with healthcare professionals;and extensiveexperience in research and development,manufacturing,clinical trials,and re

202、gulatory approvals.Furthermore,some competitors offer a broader range ofproducts and enjoy greater brand recognition.If our competitors products prove to be more effective or capture market share through superior marketing or competitive pricing,our sales and margins couldsuffer.This intense competi

203、tion could materially and adversely affect our operating results.Additionally,there has been a noticeable trend towards industry consolidation in recent years,with companies merging to strengthen or maintain their marketpositions.This trend is expected to continue as companies strive to adapt to the

204、 evolving industry landscape.Competing successfully in a consolidated industrymay become increasingly challenging,and failure to do so could adversely impact our market position and financial performance.Intellectual property risks and third-party claims of infringement,misappropriation of proprieta

205、ry rights,or other claims against us could adverselyaffect our ability to market our products,require us to redesign our products or attempt to seek licenses from third parties,result in significant costs,and materially adversely affect our operating results.Companies in or related to our industry o

206、ften aggressively protect and pursue their intellectual property rights.There are often intellectual property risksassociated with developing and producing new products and entering new markets,and we may not be able to obtain,at reasonable cost or upon commerciallyreasonable terms,if at all,license

207、s to intellectual property of others that is alleged to be part of such new or existing products.We rely on IP for the current products we sell and for the new products in research,development,and in clinical trials.While the Company tries to protect its IPwith confidentiality agreements and interna

208、l policies,we still face risks that our IP will be stolen or otherwise misappropriated,by parties inside or outside ofthe United States.Further,we have filed many patents around the world on much of the research and development done by the Company,and the proposedproducts to come from this research.

209、The majority of these filed patents are still under review and have not yet been allowed or issued.We may not be able toattain patent claims that adequately protect the company from competitors developing similar products or copying our products.Finally,there is a great numberof issued patents owned

210、 by others that pertain to the product categories in which we operate.While we do not know of any patents with claims that we areviolating 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 sellingour pro

211、ducts or that require us to pay royalty payments.Such third-party claims could have a material negative impact on the Company.Any of these IP-relatedrisks could cause material damage to future revenues and to the long-term enterprise values of the Company.We have hired and will continue to hire indi

212、viduals or contractors who have experience in medical diagnostics and these individuals or contractors may haveconfidential trade secret or proprietary information of third parties.We cannot assure that these individuals or contractors will not use this third-partyinformation in connection with perf

213、orming services for us or otherwise reveal this third-party information to us.Thus,we could be sued for misappropriation ofproprietary information and trade secrets.Such claims are expensive to defend and could divert our attention and result in substantial damage awards andinjunctions that could ha

214、ve a material adverse effect on our business,financial condition,or results of operations.In addition,to the extent that individuals orcontractors apply technical or scientific information independently developed by them to our projects,disputes may arise as to the proprietary rights to suchdata and

215、 may result in litigation.The defense and prosecution of patent and trade secret claims are both costly and time consuming.We or our customers may be sued by other parties that claimthat our products have infringed their patents or misappropriated their proprietary rights or that may seek to invalid

216、ate one or more of our patents.An adversedetermination in any of these types of disputes could prevent us from manufacturing or selling some of our products,limit or restrict the type of work thatemployees involved with such products may perform for us,increase our costs,and expose us to significant

217、 liability.In addition,the defense of such claimscould result in significant costs and divert the attention of our management and other key employees.In addition to the foregoing,we may also be required to indemnify some customers,distributors,and strategic partners under our agreements with such pa

218、rtiesif a third party alleges or if a court finds that our products or activities have infringed upon,misappropriated,or misused another persons proprietary rights.Further,our products may contain technology provided to us by other parties such as contractors,suppliers,or customers.We may have littl

219、e or no ability todetermine in advance whether such technology infringes the intellectual property rights of a third party.Our contractors,suppliers,and licensors may not berequired or financially able to indemnify us in the event that a claim of infringement is asserted against us,or they may be re

220、quired to indemnify us only up to amaximum amount,above which we would be responsible for any further costs or damages.15 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 noticefrom such persons or enti

221、ty,we may be required to pay a license fee or may be required to cease all manufacture,sale or use of such products,which couldnegatively impact our financial results or operations.We cannot guarantee that such claims will not be made in the future.We need to continue to raise additional funds to fi

222、nance our future capital or operating needs,which could have adverse consequences on ouroperations and the interests of our stockholders.Although we currently generate revenue,our company is operating at a loss due to significant investments in research and development and commercializationof newly

223、developed products and from a slow launch in revenues from our new products.To sustain and advance our business strategy,we must continue toraise additional funds to meet our capital and operating needs.This often involves seeking public or private debt or issuing equity.Raising funds through equity

224、can dilute the interests of our existing stockholders.The availability of capital,whether 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 l

225、ack liquidity,or when we are unable to sell our securities at favorableprices.In such scenarios,accessing capital on favorable terms may become challenging.Failure to secure adequate funding could force us to delay,reduce,or even eliminate certain development programs or commercialization efforts.Th

226、e costsassociated with development projects and regulatory approvals can be unpredictable and may exceed our initial estimates.As our current operations areinsufficient to cover these unexpected costs,this could adversely impact our ability to execute our business strategy and achieve our long-term

227、goals.Our business and products are highly regulated by various governmental agencies.Our results of operations would be negatively affected by failuresor delays in the receipt of regulatory approvals or clearances,the loss of previously received approvals,or other changes to the existing laws andre

228、gulations that adversely impact our ability to manufacture and market our products.The testing,manufacturing,and sale of our products are subject to regulation by numerous governmental authorities in the United States,principally the FDA,and corresponding state and foreign regulatory agencies.Our fu

229、ture performance depends on,among other matters,if,when,and at what cost we will receiveregulatory approval for new products,and if we can continue to comply with the many regulatory requirements that enable us to manufacture and sell medicalrelated products and tests.Regulatory review can be a leng

230、thy,expensive,and uncertain process,making the timing and costs of clearances and approvalsdifficult to predict.Meeting all regulatory requirements,laws and mandates,and maintaining compliance with such in order to manufacture and sell medicalproducts can be difficult and expensive.Our results of op

231、erations would be negatively affected by failures or delays in the receipt of regulatory approvals orclearances,the loss of previously received approvals or clearances,the placement of limits on the marketing and use of our products,and restrictions on ourability to manufacture our products.Changes

232、in government policy could adversely affect our business and potential profitability.Changes in government policy could have a significant impact on our business by increasing the cost of doing business,affecting our ability to sell ourproducts and negatively impacting our profitability.Such changes

233、 could include tariffs,embargos,trade wars,modifications to existing legislation,such as U.S.tax policy,or entirely new legislation,such as the Affordable Healthcare Act in the United States.We cannot predict the many ways that healthcare reform inthe United States and internationally,and changing t

234、rade legislation and policies could adversely affect our business.It is unclear whether and to what extent,ifat all,other anticipated developments,including changes due to new presidential administration priorities,or changes resulting from healthcare reform,such asa change in the number of people w

235、ith health insurance,may impact us.We are subject to numerous government regulations in addition to FDA regulations,and compliance with laws,including changed or new laws,couldincrease our costs and adversely affect our operations.There is also the risk that our facilities could fail to get the prop

236、er licensing at our nextinspection or renewal.In addition to FDA and other regulations referred to above,numerous laws relating to such matters as safe working conditions,manufacturing practices,dataprivacy,environmental protection,fire hazard control,and disposal of hazardous or potentially hazardo

237、us substances impact our business operations.If theselaws or their interpretation change or new laws regulating any of our businesses are adopted,the costs of compliance with these laws could substantiallyincrease our overall costs.Failure to comply with any laws,including laws regulating the manufa

238、cture and marketing of our products,could result insubstantial costs and loss of sales or customers.Because of the number and extent of the laws and regulations affecting our industry,and the number ofgovernmental agencies whose actions could affect our operations,it is impossible to reliably predic

239、t the full nature and impact of future legislation orregulatory developments relating to our industry and our products.To the extent the costs and procedures associated with meeting new or changingrequirements are substantial,our business,results of operations and financial condition could be advers

240、ely affected.16 Our total revenue could be affected by third-party reimbursement policies and potential cost constraints.The end-users of our products are primarily physicians,labs,and other healthcare providers.In the United States,healthcare providers such as hospitals andphysicians who purchase d

241、iagnostic products generally rely on third-party payers,principally private health insurance plans,federal Medicare,and stateMedicaid,to reimburse all or part of the cost of the procedure.Use of our products would be adversely impacted if physicians and other healthcare providers donot receive adequ

242、ate reimbursement for the cost of our products by their patients third-party payers both in the United States and in foreign markets.Our totalrevenue could also be adversely affected by changes or trends in reimbursement policies of governmental or private healthcare payers.We believe that theoveral

243、l escalating cost of medical products and services has led to,and will continue to lead to,increased pressures on the healthcare industry,both foreign anddomestic,to reduce the cost of products and services.Given the efforts to control and reduce healthcare costs in recent years,currently available

244、levels ofreimbursement may not continue to be available in the future for our existing products or products under development.Third-party reimbursement andcoverage may not be available or adequate in either the United States or foreign markets,current reimbursement amounts may be decreased in the fu

245、ture andfuture legislation,regulation,or reimbursement policies of third-party payers may reduce the demand for our products or adversely impact our ability to sellour products on a profitable basis.Unexpected increases in,or inability to meet,demand for our products could require us to spend consid

246、erable resources to meet the demand or harmour reputation and customer relationships if we are unable to meet demand.Our inability to meet customer demand for our products,whether as a result of manufacturing problems or supply shortfalls,could harm our customerrelationships and impair our reputatio

247、n within the industry.In addition,our product manufacturing of certain product lines is concentrated in our twomanufacturing sites.Weather,natural disasters(including pandemics),fires,terrorism,political change,governmental restrictions or stay-at-home orders inresponse to natural disasters(includin

248、g pandemics),failure to follow specific internal protocols and procedures,equipment malfunction,environmental factors,or damage to one or more of our facilities could adversely affect our ability to manufacture our products.This,in turn,could have a material adverse effect onour business.If we exper

249、ience unexpected increases in the demand for our products,we may be required to expend additional capital resources or engage third-partymanufacturers to meet these demands.These capital resources could involve the cost of new machinery or even the cost of new manufacturing facilities.Inaddition,eng

250、aging third-party manufacturers would increase manufacturing costs and reduce margins.This would increase our capital costs or third-partyexpenses,which could adversely affect our earnings and cash resources.If we are unable to develop or obtain necessary manufacturing capabilities in a timelymanner

251、 or to engage third-party manufacturers to meet demand,our total revenue could be adversely affected.Failure to cost-effectively increase productionvolumes,if required,or lower than anticipated yields or production problems,including those encountered as a result of changes that we may make in ourma

252、nufacturing processes to meet increased demand or changes in applicable laws and regulations,could result in shipment delays as well as increasedmanufacturing costs,which could also have a material adverse effect on our business,operating results and financial condition.Unexpected increases in deman

253、d for our products could also require us to obtain additional raw materials in order to manufacture products to meet the demand.Some raw materials require significant ordering lead time and we may not be able to timely access sufficient raw materials in the event of an unexpectedincrease in demand,p

254、articularly those obtained from a sole supplier or a limited group of suppliers.If one or more of our products is claimed to be defective or does not meet the performance criteria we claim in our marketing materials,we could besubject to product recalls,claims of liability,harm to patients or users

255、of our products,or harm to our reputation that could adversely affect ourbusiness.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 and subject us to claimsof liability for injuries and otherwise.Further,a claim th

256、at one of our products is defective or does not actually meet the performance criteria we claim in ourmarketing materials,could require a product recall or otherwise have a substantial impact on our revenues and financial performance.Any substantialunderinsured loss resulting from such a claim or de

257、fect would have a material adverse effect on our operating results and financial conditions and the damageto our reputation or product lines in the industry could have a material adverse effect on our business.17 We are exposed to business risks which,if not covered by insurance,could have an advers

258、e effect on our results of operations.We face potentialproduct liability exposure,and,if claims brought against us are successful,we could incur substantial liabilities.We face a number of business risks,including exposure to product liability claims,employment law claims,claims that the Company or

259、its officers,directors oremployees have engaged in illegal or wrongful acts,claims of violation of environmental laws,and many other possible claims.Although we maintaininsurance 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

260、 insurance.Forexample,although we currently carry product liability insurance for liability losses,there is a risk that product liability or other claims may exceed the amountof our insurance coverage or may be excluded from coverage under the terms of our policy.Also,our existing insurance may not

261、be renewed at the same costand level of coverage as currently in effect or may not be renewed at all.Further,we do not currently have insurance against many environmental risks weconfront in our business.If we are held liable for a claim against which we are not insured or for damages exceeding the

262、limits of our insurance coverage,thatclaim could have a material adverse effect on our results of operations.Clinical trials involve a lengthy and expensive process with an uncertain outcome,and results of studies and trials may not be predictive of future trialresults.Clinical trials are expensive,

263、time consuming,and difficult to design and implement.Regulatory agencies may analyze or interpret the results differently thanwe do.Even if the results of our clinical trials are favorable,the clinical trials for a number of our product candidates may take a significant amount of time tocomplete.Reg

264、ulatory authorities,including state and local authorities,may suspend,delay or terminate our clinical trials at any time,require us to conductadditional clinical trials,require a particular clinical trial to continue for a longer duration than originally planned,or require a change to our developmen

265、t planssuch that we conduct clinical trials for a product candidate in a different order.There is no assurance that the results of the clinical trials will be positive.Anegative clinical trial could affect our ability to obtain regulatory clearances and/or potential licensing partners.There is also

266、no assurance that our clinicaltrials will not be delayed or will be completed.Any of the foregoing could have a material adverse effect on our business,results of operations and financialcondition.We may rely on third parties to conduct or be part of our clinical trials.If these third parties do not

267、 successfully carry out their contractual duties ormeet expected deadlines,we may not be able to seek or obtain regulatory approval for or commercialize our product candidates.We rely on third-party contract research organizations(“CROs”),universities or/clinical sites(“Vendors”),to coordinate,monit

268、or and conduct of our clinicaltrials and to manage,analyze,and interpret data for our clinical programs.We,our Vendors,and our clinical sites are required to comply with current GoodClinical Practices(“GCPs”),regulations,and guidelines issued by the FDA and by similar governmental authorities in oth

269、er countries where we are conductingclinical trials.We have an ongoing obligation to monitor the activities conducted by our Vendors and at our clinical sites to confirm compliance with theserequirements.In the future,if we,our Vendors or our clinical sites fail to comply with applicable GCPs,the cl

270、inical data generated in our clinical trials may bedeemed unreliable and the FDA may require us to perform additional clinical trials before approving our marketing applications.If our Vendors do notsuccessfully carry out their contractual duties or obligations or meet expected deadlines,if they nee

271、d to be replaced,or if the quality or accuracy of the clinicaldata they obtain is compromised due to their failure to adhere to our clinical protocols,regulatory requirements or for other reasons,our clinical trials may beextended,delayed or terminated,and we may not be able to obtain regulatory app

272、roval 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 revenuecould be delayed.Failures in our information technology and storage sys

273、tems or data security breaches could significantly disrupt our business or force us to expendexcessive costs.Failures in our information technology and storage systems,many of which are outsourced to third parties,could significantly disrupt our business and incurexcessive costs.We rely on complex i

274、nformation technology systems,many of which are outsourced to third-party providers,to support our business operations and storecritical information.Our dependence on these third parties means that we are reliant on their performance,security measures,and ability to meet our businessneeds.Any failur

275、es or disruptions in the services provided by these third-party vendors could result in excessive costs or significant disruptions to our businessoperations.18 Specifically,any disruptions,delays,or deficiencies caused by our enterprise resource planning system or other outsourced systems could nega

276、tively impactour ability to process orders,ship products,provide services and customer support,send invoices,track payments,fulfill contractual obligations,and maintainoverall business operations.Despite our and our vendors implementation of security measures,information technology systems remain vu

277、lnerable to damage from various sources,including computer viruses,unauthorized access,telecommunications or network failures,malicious human acts,terrorism,and natural disasters.Moreover,despite network security and backup measures,some of our servers and those of our vendors may still be susceptib

278、le 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 inthe loss of vital company documentation and data,or confidential third-party documents held by the comp

279、any,essential for our operations.Despite precautionary measures to prevent unforeseen problems,sustained or repeated system failures that interrupt our ability to generate and maintain datacould materially disrupt our operations and lead to significant financial costs.Furthermore,any disruption or s

280、ecurity breach resulting in data loss or damage,or inappropriate disclosure of confidential or proprietary information,could result in regulatory actions,litigation,fines or penalties,adverse publicity,increased cybersecurity protection costs,and lost revenue.There is also a risk that our measures a

281、nd those of our third-party vendors to protect our systems from cyber-attacks may not be sufficient to prevent attacks bynew sources and methods.Our business could be negatively affected by the loss of or the inability to hire key personnel.Our future success is heavily dependent on our ability to r

282、etain key technical,sales,marketing,and executive personnel,as well as our capacity to identify andrecruit additional qualified individuals.The competition for talent is intense,both within our industry and in the regions where we operate.As we anticipategrowth in our operations,our need for additio

283、nal management and other key personnel is expected to increase.Failure to retain our existing key personnel or topromptly identify and hire qualified replacements or additional staff to support our growth could have a detrimental impact on our business.Additionally,theloss of any key personnel,parti

284、cularly in research and development,could significantly harm our business,hinder our prospects,and obstruct the achievementof our research,operational,or strategic objectives.In response to the need to reduce ongoing operating costs,we have recently implemented a substantial reduction in our workfor

285、ce.This reduction places anincreased workload on the remaining employees and may create concerns about job security.These factors could lead to the loss of key employees,who arecritical to our future success,and may make it difficult to attract and retain new talent in these roles.Sales of our commo

286、n stock in the public market could lower the market price for our common stock and adversely impact the trading price of oursecurities.Future sales by the Company of a substantial number of shares of our common stock in the public market,or the perception that such sales may occur,couldadversely aff

287、ect the then prevailing market price of our common stock and could make it more difficult for us to raise funds in the future through a publicoffering of our securities.On July 21,2020,we filed with the SEC a“shelf”registration statement on Form S-3.The registration statement registers common shares

288、 that may be issuedby the Company in a maximum aggregate amount of up to$90,000,000.Shares of our common stock may be sold from time to time under this registrationstatement for up to three years from the filing date.On January 22,2021,we filed a prospectus supplement for the sale of up to$15,000,00

289、0 of shares of ourcommon stock in an at-the-market(“ATM”)offering under the shelf registration statement,of which approximately$5,290,000 were sold under the ATM.InMarch 2023,we terminated the ATM offering and sold 3,333,333 shares of our common stock in a firm commitment public offering under the s

290、helf registrationstatement.Shares sold in the underwritten public offering were sold at a gross sales price of$2.40 per share,resulting in net proceeds from the offering,afterdeducting issuance fees and expenses,of approximately$7,300,000.At fiscal year-end 2023,the Company did not have an open ATM

291、offering in place.19 On September 28,2023,we filed a“shelf”registration statement on Form S-3 with the SEC,allowing the Company to issue up to$20,000,000 in commonshares.Under this registration statement,shares of our common stock may be sold from time to time for up to three years from the filing d

292、ate.On May 10,2024,we filed a prospectus supplement with the SEC,as part of the registration statement filed on September 28,2023,which was declared effective onSeptember 29,2023.This supplement was intended to facilitate the sale of up to$5,500,000 in common stock through ATM offerings,as defined i

293、n Rule 415under the Securities Act.The issuance of additional shares of our common stock,or other securities,could dilute our existing stockholders ownership interests,potentially depress themarket price of our common stock,and impair our ability to raise capital through future equity sales.The size

294、 and impact of future issuances on the marketprice of our common stock cannot be predicted.We also have a number of stockholders who own large blocks of our common stock.If one or more of these stockholders were to sell large portions of theirholdings in a relatively short time,for liquidity or othe

295、r reasons,the prevailing market price of shares of our common stock could be negatively affected.The price of our stock may fluctuate unpredictably in response to factors unrelated to our operating performance.The stock market can experience significant price and volume fluctuations that are unrelat

296、ed to the operating performance of individual companies.Thesebroad market fluctuations may cause the market price of our common stock to drop.In particular,our common stock has historically been volatile and maycontinue to be unpredictable in the future.Factors that could cause fluctuations in our s

297、tock price include,but are not limited to:Announcements by us or our competitors concerning technological innovations or new product introductions.Regulatory actions or changes,including those by the FDA,SEC,or international regulatory bodies.Developments or disputes related to patents or proprietar

298、y rights.Failure to meet the expectations of stock market analysts and investors.Reporting material weaknesses in our internal controls.Changes in stock market analyst recommendations or financial estimates regarding our common stock.Shifts in healthcare policy in the United States or other countrie

299、s.Lawsuits or liability claims from shareholders or other parties.Legal disputes related to intellectual property or other significant litigation.Possible recalls of our products or reports of false positive/negative results.Sales of our common stock or other securities by us or our stockholders.Cha

300、nges in trading volume of our common stock.Variations in quarterly operating results,whether actual or anticipated.Publication of research reports about us or our industry,or changes in securities analysts recommendations.Effects of natural or man-made catastrophic events,including widespread health

301、 epidemics.General stock market conditions and other factors unrelated to our operating performance.Volatility and disruptions in capital and credit markets due to economic conditions such as rising inflation and interest rates.Geopolitical events,such as wars or political unrest,that impact the mar

302、kets in which we operate.Changes in the macroeconomic environment that affect market conditions.Additionally,due to the limited trading volume of our common stock,substantial sales of our stock could adversely impact its market price.While our commonstock has been traded on the Nasdaq Capital Market

303、 since August 26,2016,liquidity may be limited,and it could be challenging to liquidate large positionswithout adversely affecting the stock price.The Company is not currently in compliance with the continued listing requirements for The Nasdaq Stock Market.If the Company does not regaincompliance a

304、nd continue to meet the continued listing requirements,our Common Stock may be delisted,which could affect the market price andliquidity for the Companys Common Stock and reduce the Companys ability to raise additional capital.The Company received a letter from the Listing Qualifications Staff of th

305、e Nasdaq Stock Market,LLC(“Nasdaq”)on or about May 7,2024,that the Companyis not in compliance with the requirement to maintain a minimum bid price of$1.00 per share for 30 consecutive trading days for continued listing on Nasdaq,as set forth in Nasdaq Listing Rule 5550(a)(2)(the“Minimum Bid Price R

306、equirement”).Since the receipt of this notice from Nasdaq,the Companys stock hasnot closed with a bid traded above$1.00 per common share.20 The Notice indicated the Company has 180 calendar days,or until November 4,2024(the“Compliance Period”),to regain compliance with the Rule.If at anytime during

307、the Compliance Period the closing bid price of the Companys common stock is at least$1.00 for a minimum of ten consecutive business days,then the Company will regain compliance.If the Company fails to regain compliance during the Compliance Period,Nasdaq may grant the Companyadditional time to regai

308、n compliance(the“Additional Compliance Period”).To qualify for the Additional Compliance Period,the Company will be required tomeet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market,with theexception of th

309、e bid price requirement,and will need to provide written notice of its intention to cure the deficiency during the Additional Compliance Period.If the Company does not meet these requirements or it appears to Nasdaq that the Company will not be able to cure the deficiency during the AdditionalCompli

310、ance Period,then Nasdaq will provide notice to the Company that its common stock will be subject to delisting.When a company receives such delisting notice,the company can request a hearing before a Nasdaq hearings panel(the“Panel”).If the Common Stock closesat or below$0.10 for ten consecutive days

311、 during the Compliance Period or any additional compliance period,the Company could receive a Staff DelistingDetermination during the Compliance Period or any additional compliance period or,if the Company receives such Staff Delisting Determination,Nasdaq maynot grant the Companys request for a hea

312、ring,or if Nasdaq grants the Companys request for a hearing,the Panel may not grant the Companys request forcontinued listing of the Common Stock on The Nasdaq Capital Market pending the Companys compliance with all applicable listing criteria,including theMinimum Bid Price Requirement,or the Compan

313、y may be unable to timely satisfy the terms of any extension that may be granted by the Panel.The Company will continue to monitor the closing bid price of its Class A Common Stock and seek to regain compliance with all applicable Nasdaqrequirements within the allotted compliance periods and may,if

314、appropriate,consider available options,including implementation of a reverse stock split,toregain compliance with the Minimum Bid Price Requirement or the Low Priced Stocks Rule,as applicable.The Company may fail to regain compliance with the Minimum Bid Price requirement during the Compliance Perio

315、d or maintain compliance with the otherNasdaq listing requirements.Any non-compliance may be costly,divert managements time and attention,and could have a material adverse effect on theCompanys business,reputation,financing,and results of operation A delisting could substantially decrease trading in

316、 the Common Stock,adversely affect themarket liquidity of the Common Stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal pre-emption of statesecurities laws,materially adversely affect its ability to obtain financing on acceptable terms,if at all,and m

317、ay result in the potential loss of confidence byinvestors,suppliers,customers and employees and fewer business development opportunities.Additionally,the market price of the Common Stock may declinefurther and stockholders may lose some or all of their investment.Our ability to use our net operating

318、 loss carry forwards in the future may be subject to limitation.Although we have Federal income tax net operating loss carryforwards of approximately$24,384,000 and California state income tax net operating losscarryforwards of approximately$22,014,000,as of May 31,2024,use of these loss carryforwar

319、ds will depend on future income in relationship to expirationsdates of these carryforwards.ITEM 1B.UNRESOLVED STAFF COMMENTS None.ITEM 1C.CYBERSECURITY We have implemented and maintain an information security program designed to identify,assess,and manage material risks from cybersecurity threats to

320、 ourcritical computer networks,third party hosted services,communications systems,hardware and software,and our critical data including intellectual property,clinical trial participant and patient-related data,and confidential information that is proprietary,strategic or competitive in nature,or col

321、lectively,InformationSystems and Data.21 Our cybersecurity threat risk management processes include the following,among others:We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture ofcybersecurity risk management p

322、articularly since we utilize a third-party IT managed services vendor.This integration ensures that cybersecurityconsiderations are an integral part of our decision-making processes at every level.Our management team works closely with our IT department andour IT managed services to continuously eva

323、luate and address cybersecurity risks in alignment with our business objectives and operational needs.Our IT managed services vendor implements and maintains various technical,and organizational measures,processes,standards and policies designedto manage and mitigate material risks from cybersecurit

324、y threats to our Information Systems and Data,including,for example:information securitypolicies,network and device security,encryption standards,incident response plans,disaster recovery plans,risk management,vulnerability detectionas well as security tools such as firewalls,malware protection tool

325、s,secure authentication tools,centralized logging and monitoring tools,threatintelligence tools,and data protection tools.We maintain continuous oversight through regular monitoring,which includes annual evaluations of Service Organization Control(SOC)reports forour providers and the implementation

326、of additional complementary controls as needed.This proactive approach is designed to mitigate risks related todata breaches or other security incidents that could originate from third-party interactions.The Board of Directors oversees cybersecurity risk management,including the practices that manag

327、ement implements to prevent,detect and address risks fromcybersecurity threats.The Board of Directors receives regular quarterly briefings on cybersecurity risks including any cybersecurity incidents or threats thatmay occur or have occurred from the CFO.The Board of Directors may also promptly rece

328、ive information regarding any material cybersecurity incident thatmay occur,including any ongoing updates regarding the same.For a description of the risks from cybersecurity threats that may materially affect us and how those risks may affect us see“Failures in our informationtechnology and storage

329、 systems or data security breaches could significantly disrupt our business or force us to expend excessive costs”under Part I,Item 1A.Risk Factors in this Annual Report on Form 10-K.ITEM 2.PROPERTIES The Company leases its facilities.On May 31,2024,the Company had approximately 22,000 square feet o

330、f floor space at its corporate headquarters at 17571Von Karman Avenue in Irvine,California,92614 which it has been leasing since 2009.This lease was scheduled to expire on August 31,2016,but theCompany had an option to extend the term of its lease for two additional sixty-month periods.On November 3

331、0,2015,the Company exercised its option toextend its lease for an additional sixty-month period and entered into the First Amendment to Lease wherein it extended its lease until August 31,2021.OnApril 9,2021,the Company exercised its second option to extend its lease for an additional five years.Whe

332、n the Company extended its lease in April 2021,itwas also granted an additional five-year lease extension option.The current rent is approximately$27,000 per month and will increase on September 1,2024,to$28,000 per month.The security deposit is approximately$22,000.In November 2016,the Companys Mex

333、ican subsidiary,Biomerica de Mexico,entered into a 10-year lease for approximately 8,100 square feet ofmanufacturing space located in Mexicali,Mexico.The Company has one 10-year option to renew at the end of the initial lease period.The current rent isapproximately$3,100 per month.Biomerica de Mexico also leases a smaller unit on a month-to-month basis for use in one manufacturing process.In addit