FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended February 28, 2003 Commission File No. 0-8765
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BIOMERICA, INC.
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(Exact name of registrant as specified in its charter)
Delaware 95-2645573
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1533 Monrovia Avenue, Newport Beach, California 92663
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (949) 645-2111
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(Not applicable)
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 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 the past 90 days.
Yes X No
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Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes No X
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,260,142 shares of common
stock as of April 9, 2003.
BIOMERICA, INC.
INDEX
PART I
Item 1. Financial Statements:
Consolidated Statements of Operations and Comprehensive Loss
(unaudited) - Nine Months and Three Months Ended
February 28, 2003 and 2002.......................................2 & 3
Consolidated Balance Sheet (unaudited) - February 28, 2003.......4 & 5
Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended February 28, 2003 and 2002.....................6 & 7
Consolidated Statement of Changes in Shareholders' Equity
(unaudited) Nine Months Ended February 28, 2003......................8
Notes to Consolidated Financial Statements........................9-15
Item 2. Management's Discussion and Analysis of Financial Condition
and Selected Financial Data......................................16-18
Item 3. Quantitative and Qualitative Disclosures about Market Risk..........18
Item 4. Procedures and controls............................................ 19
PART II Other Information...................................................19
Signatures.......................................................20-24
1
PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS (UNAUDITED)
Nine Months Ended Three Months Ended
February 28, February 28,
2003 2002 2003 2002
----------- ------------ ------------ ------------
Net sales ........................................... $6,517,414 $ 6,468,779 $ 2,291,377 $ 2,306,135
Cost of sales .................................. 4,515,017 4,384,346 1,562,663 1,487,521
----------- ------------ ------------ ------------
Gross profit ................................... $2,002,397 2,084,433 728,714 818,614
----------- ------------ ------------ ------------
Operating Expenses:
Selling, general and administrative ............ 2,113,020 2,322,817 655,151 728,778
Research and development ....................... 185,459 125,755 75,253 37,105
----------- ------------ ------------ ------------
2,298,479 2,448,572 730,404 765,883
----------- ------------ ------------ ------------
Operating (loss) income from continuing operations... (296,082) (364,139) (1,690) 52,731
----------- ------------ ------------ ------------
Other Expense (income):
Interest expense ............................... 25,273 26,087 7,573 10,834
Other (income) expense, net .................... (51,108) ( 5,222) 814 (17,136)
----------- ------------ ------------ ------------
(25,835) 20,865 8,387 (6,302)
----------- ------------ ------------ ------------
(Loss) income from continuing operations,
before minority interest in net loss of
consolidated subsidiaries ......................
and income taxes ............................... (270,247) (385,004) (10,077) 59,033
Minority interest in net (losses) profits of
consolidated subsidiaries ...................... 31,209 (4,012) 13,343 (34,867)
----------- ------------ ------------ ------------
(Loss) income from continuing operations, before
income taxes ........................................ (301,456) (380,992) (23,420) 24,166
Income Tax Expense .................................. 3,018 1,600 1,224 0
----------- ------------ ------------ ------------
Net (loss) income from continuing operations ........ (304,474) (382,592) (24,644) 24,166
2
BIOMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS (UNAUDITED)
Nine Months Ended Three Months Ended
February 28, February 28,
2003 2002 2003 2002
----------- ------------ ------------ ------------
Discontinued operations:
Loss from discontinued operations, net ......... (40,022) (78,774) (1,491) (39,533)
----------- ------------ ------------ ------------
Net loss .......................................... (344,496) (461,366) (26,135) (15,367)
Other comprehensive loss, net of tax
Unrealized loss on available-for-sale
securities...................................... (2,122) (11,001) (365) (5,815)
----------- ------------ ------------ ------------
Comprehensive loss .............................. $ (346,618) $ (472,367) $ (26,500) $ (21,182)
=========== ============ ============ ============
Basic net loss per common share:
Net income (loss) from continuing operations ... $ (.06) $ (.08) $ (.00) $ .00
Net loss from discontinued operations .......... (.01) (.01) (.00) (.00)
----------- ------------ ------------ ------------
Basic net loss per common share ................... $ (.07) $ (.09) $ (.00) $ (.00)
=========== ============ ============ ============
Diluted net loss per common share:
Net income (loss) from continuing operations ..... $ (.06) $ (.08) $ (.00) $ .00
Net income (loss) from discontinued operations ... (.01) (.01) (.00) (.00)
----------- ------------ ------------ ------------
Diluted net loss per common share ................. $ (.07) $ (.09) $ (.00) $ (.00)
=========== ============ ============ ============
Weighted average number of common and
common equivalent shares:
Basic and diluted ............................ 5,224,867 5,065,534 5,258,475 5,120,654
=========== ============ ============ ============
The accompanying notes are an integral part of these statements.
3
BIOMERICA, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
February 28,
2003
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Assets
Current Assets
Cash and cash equivalents ............................................. $ 580,147
Available-for-sale securities ......................................... 410
Accounts receivable, less allowance for doubtful accounts of $194,492.. 1,538,485
Inventory, net ........................................................ 2,504,772
Notes receivable ...................................................... 2,419
Prepaid expenses and other ............................................ 80,542
-----------
Total Current Assets ............................................ 4,706,775
Inventory, non-current .................................................... 17,000
Property and Equipment, net of accumulated depreciation and amortization... 264,917
Intangible assets, net of accumulated amortization ........................ 85,282
Other Assets .............................................................. 39,197
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$5,113,171
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The accompanying notes are an integral part of these statements.
4
BIOMERICA, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED), CONTINUED
February 28,
2003
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Liabilities and Shareholders' Equity
Current Liabilities
Line of credit ............................................ $ 478
Accounts payable and accrued liabilities .................. 956,056
Accrued compensation ...................................... 325,241
Shareholder loan........................................... 328,250
Net liabilities from discontinued operations .............. 363,914
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Total Current Liabilities ............................ 1,973,939
Minority interest .............................................. 2,134,081
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Shareholders' Equity
Unrealized loss on available-for-sale of securities........ (22,359)
Common stock, $0.08 par value authorized 25,000,000 shares,
subscribed or issued and outstanding 5,478,324 .......... 420,810
Common stock subscribed.................................... 66,600
Additional paid-in-capital ................................ 17,073,173
Accumulated deficit ....................................... (16,533,073)
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Total Shareholders' Equity ..................................... 1,005,151
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Total Liabilities and Shareholders' Equity ..................... $ 5,113,171
=============
The accompanying notes are an integral part of these statements.
5
BIOMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED FEBRUARY 28, 2003 AND 2002
2003 2002
---------- ----------
Cash flows from operating activities:
Net loss from continuing operations ......................... $(304,474) $(382,592)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization .......................... 106,138 149,211
Realized gain on sale of available for-sale securities.. -- (10,026)
Minority interest in net income (loss) of consolidated
subsidiaries ......................................... 31,209 (4,012)
Common stock issued for services rendered .............. 67,517 61,886
Provision for losses on accounts receivable ............ (1,960) (4,905)
Warrants and options issued for services rendered ...... 48,546 64,560
Changes in current assets and liabilities:
Accounts Receivable .................................. (32,181) (112,381)
Inventories .......................................... 414,240 (58,580)
Prepaid expenses and other current assets ............ 41,932 (23,209)
Accounts payable and other accrued liabilities ....... 49,866 138,214
Accrued compensation ................................. 17,259 51,482
---------- ----------
Net cash provided by (used in)operating activities .......... 438,092 (130,352)
---------- ----------
Cash flows from investing activities:
Sale of available for-sale securities .................. -- 39,116
Increase in notes receivable ........................... -- --
Purchases of property and equipment .................... (90,328) (8,341)
Other assets ........................................... (3,651) (1,971)
Purchases of intangible assets ......................... (21,987) (10,591)
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Net cash (used in) provided by investing activities ......... (115,966) 18,213
---------- ----------
Cash flows from financing activities:
Issuance of shares by subsidiary ...................... 17,980 --
Proceeds from sale of common stock subscribed ......... 25,000 --
Private placement net of offering costs ............... -- 4,400
Exercise of stock options ............................. -- 1,128
(Decrease) increase in line of credit ................. (65,191) (22,815)
Increase in shareholder loan .......................... (46,750) 215,000
---------- ----------
6
BIOMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(CONTINUED)
NINE MONTHS ENDED FEBRUARY 28, 2003 AND 2002
2003 2002
---------- ----------
Net cash (used in) provided by financing activities .. (68,961) 197,713
---------- ----------
Net cash used in discontinued operations ............. (2,295) (103,001)
---------- ----------
Net increase (decrease) in cash ...................... 250,870 (17,427)
and cash equivalents
Cash at beginning of period .......................... 329,277 136,299
---------- ----------
Cash at end of period ................................ $ 580,147 $ 118,872
========== ==========
The accompanying notes are an integral part of these statements.
7
BIOMERICA, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED FEBRUARY 28, 2003
Common Stock
Common Stock Subscribed
------------------------- ---------------------
Accumulated
Number Additional Other
of Paid-in Comprehensive Accumulated
Shares Amount Capital Shares Amount Loss (Deficit) Total
------------- ---------- ------------ --------- --------- ---------- ------------- ------------
Balances at May 31, 2002 5,172,364 $ 413,788 $16,981,982 28,333 $ 23,750 $ (20,237) $(16,188,577) $ 1,210,706
Compensation expense in
connection with options
and warrants granted -- -- 48,546 -- -- -- -- 48,546
Shares subscribed for cash -- -- -- 100,000 25,000 -- -- 25,000
Change in unrealized
gain on available
for sale securities -- -- -- -- -- (2,122) -- (2,122)
Common stock subscribed
for services rendered -- -- -- 11,667 5,250 -- -- 5,250
Common stock for
Services rendered 67,778 5,422 35,245 -- -- -- -- 40,667
Common stock issued 20,000 1,600 7,400 (20,000) (9,000) -- -- --
Common stock subscribed
For services -- -- -- 98,182 21,600 -- -- 21,600
Net loss -- -- -- -- -- -- (344,496) (344,496)
------------- ---------- ------------ --------- --------- ---------- ------------- ------------
Balances at
February 28, 2003 5,260,142 $ 420,810 $17,073,173 218,182 $ 66,600 $ (22,359) $(16,533,073) $ 1,005,151
============= ========== ============ ========= ========= ========== ============= ============
8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
February 28, 2003
(1) Reference is made to Note 2 of the Notes to Consolidated Financial
Statements contained in the Company's Annual Report on Form 10-KSB for
the fiscal year ended May 31, 2002, for a summary of significant
accounting policies utilized by the Company.
(2) The information set forth in these consolidated statements is unaudited
and may be subject to normal year-end adjustments. The information
reflects all adjustments which, in the opinion of management, are
necessary to present a fair statement of results of operations of
Biomerica, Inc., for the periods indicated. It does not include all
information and footnotes necessary for a fair presentation of
financial position, results of operations, and cash flow in conformity
with generally accepted accounting principles.
(3) Consolidated results of operations for the interim periods covered by
this Report may not necessarily be indicative of results of operations
for the full fiscal year.
(4) Reference is made to Note 3 of the Notes to Consolidated Financial
Statements contained in the Company's Annual Report on Form 10-KSB for
the fiscal year ended May 31, 2002, for a description of the
investments in affiliates and consolidated subsidiaries.
(5) Reference is made to Notes 5 & 10 of the Notes to Consolidated
Financial Statements contained in the Company's Annual Report on Form
10-KSB for the fiscal year ended May 31, 2002, for information on
commitments and contingencies.
(6) Aggregate cost of available-for-sale securities exceeded aggregate
market value by approximately $22,359 at February 28, 2003.
(7) Earnings Per Share
------------------
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards (SFAS) No. 128,
EARNINGS PER SHARE ("EPS"). SFAS No. 128 requires dual presentation of
basic EPS and diluted EPS on the face of all income statements issued
after December 15, 1997 for all entities with complex capital
structures. Basic EPS is computed as net income divided by the weighted
average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur from common shares
issuable through stock options, warrants and other convertible
securities. For all periods presented, no common stock equivalents have
been included in the computation of diluted earnings per share as they
were determined to be anti-dilutive.
The following table illustrates the required disclosure of the
reconciliation of the numerators and denominators of the basic and
diluted EPS computations.
9
For the Nine Months Ended February 28, 2003
--------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
-------------- -------------- ----------------
Basic EPS -
(Loss) gain from continuing operations $ (304,474) -- $ (.06)
(Loss) gain from discontinued operations (40,022) 5,224,867 (.01)
-------------- -------------- ----------------
Diluted EPS -
Loss attributable to common share-
holders plus assumed conversions $ (344,496) 5,224,867 $ (.07)
============== ============== ================
For the Nine Months Ended February 28, 2002
--------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
-------------- -------------- ----------------
Basic EPS -
Loss from continuing operations $ (382,592) -- $ (.08)
Loss from discontinued operations (78,774) 5,065,534 (.01)
-------------- -------------- ----------------
Diluted EPS -
Loss attributable to common share-
holders plus assumed conversions $ (461,366) 5,065,534 $ (.09)
============== ============== ================
10
For the Three Months Ended February 28, 2003
--------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
-------------- -------------- ----------------
Basic EPS -
Gain (loss) from continuing operations $ (24,644) $ (.00)
Gain from discontinued operations (1,491) 5,258,475 (.00)
-------------- -------------- ----------------
Diluted EPS -
Loss attributable to common share-
holders plus assumed conversions $ (26,135) 5,258,475 $ (.00)
============== ============== ================
For the Three Months Ended February 28, 2002
--------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
-------------- -------------- ----------------
Basic EPS -
Income from continuing operations $ 24,166 $ .00
Loss from discontinued operations (39,533) 5,120,654 (.00)
-------------- -------------- ----------------
Diluted EPS -
Loss attributable to common share-
holders plus assumed conversions $ (15,367) 5,120,654 $ (.00)
============== ============== ================
The computation of diluted loss per share excludes the effect of
incremental common shares attributable to the exercise of outstanding
common stock options and warrants because their effect was antidilutive
due to losses incurred by the Company.
As of February 28, 2003, there was a total of 2,916,595 potentially
dilutive shares of common stock.
(8) Recent Accounting Pronouncements
--------------------------------
In July 2001, the FASB issued Statement of Financial Accounting
Standards No. 142 ("SFAS 142"), "Goodwill And Intangible Assets", which
revises the accounting for purchased goodwill and intangible assets.
Under SFAS 142, goodwill and intangible assets with indefinite lives
will no longer be amortized and will be tested for impairment annually.
SFAS 142 is effective for fiscal years beginning after December 15,
2001, with earlier adoption permitted. The Company adopted SFAS 142 on
June 1, 2002. SFAS 142 did not have a material impact on the Company's
financial position or results of operations as a result of the future
adoption of SFAS 142.
11
In August 2001, the FASB issued Statement of Financial Accounting
Standards FAS No. 143 ("SFAS 143"), "Accounting for Asset Retirement
Obligations." This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. It applies
to all entities and legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction,
development and/or normal operations of long-lived assets, except for
certain obligations of leases. This statement is effective for
financial statements issued for fiscal years beginning after June 15,
2002. Management has not yet determined the impact of the adoption of
SFAS No. 143 on the Company's financial position or results of
operations.
In October 2001, FASB issued Statement of Financial Accounting
Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or
Disposal of Long-Lived Assets," or SFAS No. 144 which requires that
those long-lived assets be measured at the lower of carrying amount or
fair value less cost to sell, whether reported in continuing operations
or in discontinued operations. Therefore, discontinued operations will
no longer be measured at net realizable value or include amounts for
operating losses that have not yet occurred. SFAS No. 144 is effective
for financial statements issued for fiscal years beginning after
December 15, 2001 and, generally, is to be applied prospectively. The
adoption of SFAS 144 did not have a material impact on the Company's
financial position or results of operations.
In April 2002, the FASB issued Statement of Financial Accounting
Standards No. 145 ("SFAS 145"), "Recission of FASB Statements No. 4 and
64, Amendment of FASB Statement No. 13, and Technical Corrections, "to
update, clarify and simplify existing accounting pronouncements. FASB
Statement No. 4, which required all gains and losses from debt
extinguishments to be aggregated and, if material, classified as an
extraordinary item, net of related tax effect, was rescinded.
Consequently, FASB Statement No. 64, which amended FASB Statement No.
4, was rescinded because it was no longer necessary. The adoption of
SFAS 145 did not have a material impact on the Company's financial
position or results of operations.
In June 2002, the FASB issued Statement of Financial Accounting
Standards No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities." SFAS 146 addresses accounting and reporting for
costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring). "SFAS
No. 146 requires that a liability for a cost associated with an exit or
disposal activity be recognized and measured initially at fair value
when the liability is incurred. SFAS No. 146 is effective for exit or
disposal activities that are initiated after December 31, 2002, with
early application encouraged. We do not expect the adoption of this
statement to have a material effect on our financial statements.
In December 2002, the FASB issued SFAS No. 148 "Accounting for
Stock-Based Compensation, Transition and Disclosure, an amendment of
FASB Statement No. 123." SFAS No. 148 provides alternative methods of
transition for an entity that voluntarily changes to the fair value
based method of accounting for stock-based employee compensation. It
also amends the disclosure provisions of SFAS No. 123 to require
prominent disclosure about the effects on reported net income of an
entity's accounting policy decisions with respect to stock-based
employee compensation. Finally, this Statement amends APB Opinion No.
28, "Interim Financial Reporting," to require disclosure about those
effects in the interim financial information. The amendments to SFAS
No. 123 that provide alternative methods of transition for an entity
that voluntarily changes to the fair value based method of accounting
for stock-based employee compensation are effective for financial
statements for fiscal years ending after December 15, 2002. The
amendment to SFAS No. 123 relating to disclosure and the amendment to
Opinion 28 is effective for financial reports containing condensed
financial statements for interim periods beginning after December 15,
2002. Early application is encouraged. Management currently believes
that the adoption of SFAS No. 148 will not have a material impact on
the financial statements.
(9) Financial information about foreign and domestic operations and export
sales is as follows:
For the Nine Months Ended
2/28/03 2/28/02
------- -------
Revenues from sales to unaffiliated customers:
United States $3,453,000 $3,240,000
Asia 166,000 143,000
Europe 1,614,000 1,761,000
South America 283,000 372,000
Oceania 325,000 284,000
Other 676,000 669,000
----------- -----------
$6,517,000 $6,469,000
=========== ===========
No other geographic concentrations exist where net sales exceed 10% of
total net sales.
(10) On January 15, 2002, the Company received a Nasdaq Staff Determination
indicating that the Company failed to comply with the net tangible
assets or shareholders' equity requirements for continued listing set
forth in Marketplace Rule 4310(c)(2)(B), and that its securities were,
therefore, subject to delisting from the Nasdaq SmallCap Market
effective January 23, 2002. The Company requested a hearing before a
Nasdaq Listing Qualifications Panel to review the Staff Determination.
The request for a hearing stayed the delisting of the Company's
securities pending the Panel's decision. On February 21, 2002 the
hearing took place. In response to the hearing, on March 25, 2002, the
Company received a Nasdaq Staff Determination letter staying their
decision with respect to the continued listing of the Company's
12
securities. The Panel determined to continue the listing of the
Company's securities on the Nasdaq SmallCap Market via an exception
from the net tangible assets requirement. While the Company failed to
meet this requirement, the Company was granted a temporary exception
from the standard subject to the Company meeting certain conditions by
specified deadlines.
The Company was unable to satisfy the conditions within the deadlines
established by the Panel. Pursuant to a decision by the Nasdaq Listing
Qualifications Panel, the Company's common stock was delisted from the
Nasdaq Stock Market effective June 20, 2002, for failure to comply with
the net tangible assets or shareholders' equity requirements as set
forth in Marketplace Rule 4310(c)(2)(B). The Company's securities were
immediately eligible to trade on the OTC Bulletin Board and are traded
under the symbol BMRA.OB.
On February 14, 2002, the Company received a Nasdaq Staff Determination
letter indicating that the Company failed to comply with the minimum
$1.00 per share requirement for continued inclusion of its common stock
under Marketplace Rule 4310(c)(4), and therefore is subject to
delisting from the Nasdaq SmallCap Market. In accordance with
Marketplace Rule 4310(c)(8)(D), the Company would have been provided
180 calendar days, or until August 13, 2002, to regain compliance.
However, prior to that time, the Company was delisted according to the
above mentioned reasons.
Shares traded on the OTC Bulletin Board are not as liquid as those
traded on the Nasdaq National market or the Nasdaq SmallCap market.
The 1-for-3 reverse stock split approved by shareholders at the 2001
share- holders' meeting for the purpose of increasing the price per
share of the common stock will not be implemented.
(11) The Company has suffered substantial recurring losses from operations
over the past several years. The Company has funded its operations
through debt and equity financings, and may have to do so in the
future. Allergy Immuno Technologies operations were discontinued in May
2002. The Company plans to reduce operating costs through certain cost
reduction efforts and concentrate on its core business in Lancer and
Biomerica to increase sales. There can be no assurances that the
Company will be able to become profitable, generate positive cash flows
from operations or obtain the necessary equity or debt financing to
fund operations in the future.
As of February 28, 2003, the Company had cash and available-for-sale
securities in the amount of $580,557 and working capital of $2,732,836.
Cash and working capital totaling $568,461 and $2,897,745,
respectively, relates to the Lancer subsidiary. Lancer's line of credit
restricts Biomerica's ability to draw on Lancer's resources and, as
such, said cash, working capital and equity are not available to
Biomerica. Biomerica, Inc. and subsidiaries, are expected to fund their
operations for at least the next twelve months through their existing
available financing, working capital, and its shareholder line of
credit.
During the nine months ended February 28, 2003, the Company operations
provided cash of $438,092. This compares to cash used in operations of
$130,352 in the same period in the prior fiscal year. Cash used by
financing activities was $68,961, which resulted from the payment on
the line of credit at Lancer of $65,191 and payment of the shareholder
loan at Biomerica of $46,750, which were offset by proceeds from sale
of common stock subscribed of $25,000.
(12) At February 28, 2003, Lancer had a $400,000 revolving line of credit
with GE Capital Healthcare Financial Services, which expires October
24, 2003. Borrowings are made at prime plus 2.00%, in no event less
than 8%,(8.0% at February 28, 2003) and are limited to 80% of accounts
receivable less than 90 days old with a liquidity factor of 94%. The
outstanding balance at February 28, 2003 was $478 and the unused
portion available under the line of credit at February 28, 2003 was
approximately $310,000.
The line of credit is collateralized by substantially all the assets of
Lancer, including inventories, receivables and equipment. The lending
agreement requires, among other things, that Lancer maintain a tangible
net worth of $2,100,000 and that receivables payments be sent to a
controlled lockbox. In addition to interest, a management fee of .0425%
on the average monthly unused portion available is required. Lancer is
not required to maintain compensating balances in connection with this
lending agreement. Lancer's line of credit restricts Biomerica's
ability to draw on Lancer's resources and, as such, said cash, working
capital and equity are not available to Biomerica.
(13) Biomerica, Inc. entered into a line of credit agreement on September
12, 2000 with a shareholder whereby the shareholder will loan to the
Company, as needed, up to $500,000 for working capital needs. The line
of credit bears interest at 8%, is secured by Biomerica accounts
receivable and inventory and expires September 12, 2003. The unused
portion of the line of credit at February 28, 2003, was $181,750.
Additionally, the Company received a $10,000 unsecured loan from a
different shareholder. Such amount is included in shareholder loan in
the accompanying consolidated financial statements.
13
(14) In July 2002, 67,778 shares of Biomerica restricted common stock (at
$0.60 per share), were approved for issuance in payment of accrued
salary for two officers/directors. In connection with this issuance,
Biomerica recorded compensation expense of $40,667, the fair market
value of the stock at the time of issuance. During the nine months
ended February 28, 2003, 11,667 shares of Biomerica's restricted common
stock value at $5,250 were earned in payment to its Chief Executive
Officer for certain management services.
(15) On September 24, 2002, the Company agreed to issue 20,000 options at
the then fair market value of $.30 per share to employees. These
options will vest over four years. No compensation expense was recorded
for this transaction.
(16) The Company agreed to a bonus plan for employees of 10% to 20% of the
profit of the diagnostics' division for the year ending May 31, 2003.
The board will determine distribution percentages of profit from
diagnostics' continuing operations for any bonuses based on audited
financials as of May 31, 2003. All permanent employees, including
executive officers, will be included in the plan. As of February 28,
2003, there has been no accrual since the plan is based on profits and
year-to-date there has not been a profit in the diagnostics' division.
(17) On April 10, 2002, the Company filed a Form S-4 for the proposed
registration of between 488,200 and 984,274 shares of Biomerica common
stock. The shares were to be issued for the purchase of the assets of
the subsidiary Lancer Orthodontics, Inc. Due to market conditions, both
boards of directors have agreed not to proceed with the proposed
purchase and in July 2002 Biomerica requested that the registration
statement be withdrawn.
(18) In June 2002 the Company signed a distribution agreement with a company
in Japan for the distribution of certain kits. The Company received a
deposit of $35,000 in the month of June 2002 related to this agreement.
The Company has shipped $2,000 worth of product to date. The balance of
$33,000 is recorded in other liabilities.
(19) On September 24, 2002, the Board of Directors approved the grant of a
stock option for 7,000 shares of Biomerica common stock at an exercise
price of $.30 per share to an outside consultant. The Company also
entered into a one year consulting agree- ment with this consultant
whereby the consultant will help with business development and other
services during that period and upon achievement of certain milestones
has the opportunity to be granted two additional 7,000 share options at
a fifteen percent discount to market.
(20) On November 12, 2002, the Board of Directors approved the issuance of
98,182 shares of restricted common stock at the price of $.22 per share
in lieu of $21,600 in accrued salary to two officers/directors. These
shares were issued in March 2003.
(21) During the nine months ended February 28, 2003, $48,546 was recorded as
amortization expense for previously issued warrants and options.
(22) Lancer Orthodontics, Inc. granted non-qualified options to the Chief
Executive Officer to purchase 113,000 shares of common stock at $.30.
These options were granted on December 1, 2001 and are exercisable at
the rate of one-third per year and have a term of five years.
(23) For the nine months ended February 28, 2003, other income of $62,655
was realized from the insurance claim settlement of $144,413 for the
theft of inventory at the Lancer Orthodontics, Inc.'s Mexicali
facility, less $81,758 insurance claim receivable valued at cost.
(24) Lancer Orthodontics, Inc. issued non-qualified stock options to three
employees totaling 70,000 shares during the quarter ended November 30,
2002. The shares are at $.28 per share and expire in five years. During
the quarter ended February 28, 2003, non-qualified stock options for
70,000 options were granted to various employees.
(25) During this quarter Lancer Orthodontics approved the issuance of 53,846
shares of restricted common stock to the chief executive officer. The
shares were in payment of accrued salary of $14,000.
(26) In October 2002 the Company signed an agreement with Medical Device
Safety Service GmgH ("MDDS") wherein MDSS will act as the Company's
Authorized Representative for the purpose of obtaining a CE-Mark in
Europe.
(27) During the quarter ended February 28, 2003, $25,000 was received for
the purchase of 100,000 shares of restricted common stock with
detachable warrants to purchase 100,000 shares of restricted common
stock at $.25 per share. This was recorded as common stock subscribed
since at the end of the quarter the shares had not yet been issued.
14
(28) In November 2002 the Company signed a distribution agreement for its EZ
Detect product with a company in Spain.
(29) In January 2003 the Company signed a distribution agreement for its
Allerquant 90G IgG ELISA kit with a company in Spain.
(30) Reportable business segments for the nine months and quarter ended
February 28, 2003 and 2002 are as follows:
Nine Months Three Months
Ended February 28, Ended February 28,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Domestic sales:
Orthodontic products $ 2,323,000 $ 2,273,000 $ 756,000 $ 797,000
Medical diagnostic products 1,130,000 967,000 335,000 692,000
Foreign sales:
Orthodontic products $ 1,975,000 $ 2,232,000 $ 752,000 $ 644,000
Medical diagnostic products 1,089,000 997,000 448,000 173,000
Net sales:
Orthodontics products $ 4,298,000 $ 4,505,000 $ 1,508,000 $ 1,441,000
Medical diagnostic products $ 2,219,000 1,964,000 783,000 865,000
Total $ 6,517,000 $ 6,469,000 $ 2,291,000 $ 2,306,000
Operating profit (loss):
Orthodontic products $ 1,000 $ 39,000 $ 22,000 $ 67,000
Medical diagnostic products $ (297,000) $ (403,000) (24,000) (14,000)
Total $ (296,000) $ (364,000) $ (2,000) $ 53,000
Operating loss from discontinued Segment:
AIT $ -- $ (66,883) $ -- $ (22,936)
ReadyScript (40,022) $ (11,891) (1,491) (16,597)
Total (40,022) (78,774) (1,491) (39,533)
Depreciation and amortization
Expense:
Orthodontic products $ 64,210 $ 80,568 $ 15,976 $ 26,856
Medical diagnostic products 41,928 68,643 17,512 14,464
Total $ 106,138 $ 149,211 $ 33,488 $ 41,320
As of February 28,
2003 2002
----------- -----------
Domestic long-lived assets:
Orthodontic products $ 92,330 $ 24,056
Medical diagnostic products 156,248 193,501
Total $ 248,578 $ 217,557
Foreign long-lived assets:
Orthodontic products $ 15,668 28,946
Medical diagnostic products 3,571 0
Total $ 267,817 $ 246,503
Total assets:
Orthodontic products $3,568,000 $3,628,520
Medical diagnostic products 1,545,000 1,731,550
Total $5,113,000 $5,360,070
15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND SELECTED FINANCIAL DATA
CERTAIN INFORMATION CONTAINED HEREIN (AS WELL AS INFORMATION INCLUDED IN ORAL
STATEMENTS OR OTHER WRITTEN STATEMENTS MADE OR TO BE MADE BY BIOMERICA) CONTAINS
STATEMENTS THAT ARE FORWARD-LOOKING, SUCH AS STATEMENTS RELATING TO ANTICIPATED
FUTURE REVENUES OF THE COMPANY AND SUCCESS OR CURRENT PRODUCT OFFERINGS. SUCH
FORWARD-LOOKING INFORMATION INVOLVES IMPORTANT RISKS AND UNCERTAINTIES THAT
COULD SIGNIFICANTLY AFFECT ANTICIPATED RESULTS IN THE FUTURE, AND ACCORDINGLY,
SUCH RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING
STATEMENTS MADE BY OR ON BEHALF OF BIOMERICA. THE POTENTIAL RISKS AND
UNCERTAINTIES INCLUDE, AMONG OTHERS, FLUCTUATIONS IN THE COMPANY'S OPERATING
RESULTS DUE TO ITS NEW BUSINESS MODEL AND EXPANSION PLANS AND THE COMPETITIVE
ENVIRONMENT IN WHICH THE COMPANY WILL BE DOING BUSINESS. THESE RISKS AND
UNCERTAINTIES ALSO INCLUDE THE SUCCESS OF THE COMPANY IN RAISING NEEDED CAPITAL,
THE CONTINUAL DEMAND FOR THE COMPANY'S PRODUCTS, COMPETITIVE AND ECONOMIC
FACTORS OF THE MARKETPLACE, AVAILABILITY OF RAW MATERIALS, THE EFFECTS OF
TERRORISM, HEALTH CARE REGULATIONS AND THE STATE OF THE ECONOMY. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE HEREOF, AND THE COMPANY UNDERTAKES NO OBLIGATION TO
UPDATE THESE FORWARD-LOOKING STATEMENTS.
RESULTS OF OPERATIONS
Consolidated net sales for Biomerica were $6,517,414 for the nine
months ended February 28, 2003 as compared to $6,468,779 for the same period in
the previous year. This represents an increase of $48,635, or .7% (this includes
a decrease at Lancer of $206,823 and an increase at Biomerica of $255,458).
Sales at Lancer decreased primarily due to a decrease in foreign sales,
particularly in Europe and South America. The increase in sales at Biomerica was
due to general overall increase in diagnostic sales as well as a large
colorectal screening program in the first quarter. For the quarter then ended
sales were $2,291,377 as compared to $2,306,135 for the same period in the prior
fiscal year. This represents a decrease of $14,758, or .6% (this includes an
increase of $66,894 at Lancer and a decrease at Biomerica of $81,652.). The
decrease at Biomerica was due to no colorectal screening program in this fiscal
quarter.
Cost of sales for the nine months increased as a percentage of sales
from 67.8% to 69.3%. Cost of sales for the three months then ended increased
from 64.5% to 68.2% primarily because of increased sales of lower margin
products at the diagnostics' division. For the nine months Lancer had a decrease
in cost of sales of $1,431, however, this resulted in an increase from 68.0% to
71.2% of Lancer's sales and for the quarter an increase of $115,770, or from
67.2% to 71.9% of Lancer's sales. Lancer had an increase in the cost of goods
due to increased production costs. Biomerica had an increase of $132,102, or
from 67.2% to 65.5% of sales for the nine months due to the addition of
manufacturing personnel and a decrease of $40,628 for the three months, or from
67.2% to 65.5% of sales.
Selling, general and administrative costs decreased by $209,798, or
9.0% for the nine months. For the three months then ended these costs decreased
by $73,628, or 10.0%. Of these decreases, Lancer had a decrease for the nine
months of $233,732 and for the three months of $38,646. The decrease at Lancer
was attribu- table to decreased labor and travel costs of terminated marketing
support personnel, whose responsibilities were assumed by existing general and
administrative personnel. Biomerica had an increase of $23,934 for the nine
months and a decrease of $34,980 for the three months. The increase at Biomerica
for the nine months was attributable to higher selling and marketing expenses,
primarily related to payroll. The decrease for the quarter was due to lower
commissions.
Research and development increased by $59,704, or 47.5% for the nine
months. For the three months these costs increased by $38,148, or 102.8%. The
increases were primarily due to hiring of additional personnel at Biomerica and
resumption of product development at Lancer. For the nine months Lancer had an
increase of 66,024 and for the three months an increase of $34,842. For the nine
months Biomerica had a decrease of $6,320 and for the three months an increase
of $3,306.
Interest expense decreased by $814 for the nine months and $3,261 for
the three months compared to the previous year due to borrowings on the line of
credit at Biomerica and decreased borrowing at Lancer. For the nine months
Lancer had a decrease of $9,289 and for the three months a decrease of $5,410.
Biomerica had an increase of $8,475 for the nine months and an increase of
$2,149 for the three months.
At February 28, 2003, the Company retained a 31.1% interest in Lancer
Orthodontics. The Company maintains a 53.76% indirect voting control over Lancer
Orthodontics via agreements with certain shareholders. The Company also retains
an 88.9% interest in ReadyScript. Please refer to Note 3 in the Notes to the
Consolidated Financial Statements in the report on Form 10-KSB for the year
ended May 31, 2002, for a more in-depth discussion of subsidiaries.
16
Aside from general macroeconomic downturns, the additional material
factors that could affect future financial results include, but are not limited
to: terrorist attacks and the impact of such events; diminished access to raw
materials that directly enter into our manufacturing process; shipping labor
disruption or other major degradation of the ability to ship out products to end
users; inability to successfully control our margins which are affected by many
factors including competition and product mix; protracted shutdown of the U.S.
border due to escalation of terrorist or counter terrorist activity; the
operating and financial convenants contained in our credit line and Lancer's
which could limit our operating flexibility; any changes in our business rela-
tionships with international distributors or the economic climate they operate
in; any event that has a material adverse impact on our foreign manufacturing
operations may adversely affect our operations as a whole; failure to manage the
future expansion of our business could have a material adverse affect on our
revenues and profitability; possible costs in complying with government
regulations anda the delays in receiving required regulatory approvals or the
enactment of new, adverse regulations or regulatory requirements; numerous
competitors, some of which have substantially greater financial and other
resources than we do; potential claims and litigation brought by patients or
dental or medical professionals alleging harm caused by the use of or exposure
to our products; quarterly variations in operating results caused by a number of
factors, including business and industry conditions and other factors beyond our
control. All these factors make it difficult to predict operating results for
any particular period.
LIQUIDITY AND CAPITAL RESOURCES
As of February 28, 2003, the Company had cash and available-for-sale
securities in the amount of $580,557 and working capital of $2,732,836. Cash and
working capital totaling $568,461 and $2,897,745, respectively, relates to the
Lancer subsidiary. Lancer's line of credit restricts Biomerica's ability to draw
on Lancer's resources and, as such, said cash, working capital and equity are
not available to Biomerica. Biomerica, Inc. and its subsidiaries, are expected
to fund their operations for at least the next twelve months through their
existing available financing, working capital, and its shareholder line of
credit.
The Company has suffered substantial recurring losses from operations
over the past several years. The Company has funded its operations through debt
and equity financings, and may have to do so in the future. Allergy Immuno
Technologies' operations, were discontinued May 2002. The Company plans to
reduce operating costs through certain cost reduction efforts and concentrate on
its core business in Lancer and Biomerica to increase sales. There can be no
assurances that the Company will be able to become profitable, generate positive
cash flow from operations or obtain the necessary equity or debt financing to
fund operations in the future.
During the nine months ended February 28, 2003, the Company's
operations provided cash of $438,092. This compares to net cash used by
operations of $130,352 in the same period in the prior fiscal year. Cash used in
investing activities was $115,966 as compared to cash provided by investing
activities in the prior year of $18,213. This resulted from the purchases of
property and equipment, other assets and intangible assets. Cash used by
financing activities was $68,961, which resulted from the payment on the line of
credit at Lancer of $65,192 and payment on the shareholder loans at Biomerica of
$46,750. The interest of 8% per annum due on the loans at Biomerica is being
accrued and has not been paid to date. As of February 28, 2003 there was $39,672
in accrued interest due.
On January 15, 2002, the Company received a Nasdaq Staff Determination
indicating that the Company failed to comply with the net tangible assets or
shareholders' equity requirements for continued listing set forth in Marketplace
Rule 4310(c)(2)(B), and that its securities are, therefore, subject to delisting
from the Nasdaq SmallCap Market effective January 23, 2002. The Company
requested a hearing before a Nasdaq Listing Qualifications Panel to review the
Staff Determination. The request for a hearing stayed the delisting of the
Company's securities pending the Panel's decision. On February 21, 2002 the
hearing took place. On March 25, 2002, the Company received a Nasdaq Staff
Determination letter stating their decision with respect to the continued
listing of the Company's securities. The Panel determined to continue the
listing of the Company's securities on the Nasdaq SmallCap market via an
exception from the net tangible assets requirement. While the Company failed to
meet this requirement, the Company was granted a temporary exception from the
standard subject to the Company meeting certain conditions by specified
deadlines.
The Company was unable to satisfy the conditions within the deadlines
established by the Panel. Pursuant to a decision by the Nasdaq Listing
Qualifications Panel, the Company's common stock was delisted from the Nasdaq
Stock Market effective June 20, 2002, for failure to comply with the net
tangible assets or shareholders' equity requirements as set forth in Marketplace
Rule 4310(c)(2)(B). The Company's securities were immediately eligible to trade
on the OTC Bulletin Board and are traded under the symbol BMRA.OB.
On February 14, 2002, the Company received a Nasdaq Staff Determination
letter indicating that the Company failed to comply with the minimum $1.00 per
share requirement for continued inclusion of its common stock under Marketplace
Rule 4310(c)(4), and therefore was subject to delisting from the Nasdaq SmallCap
Market. The Company would have been provided 180 calendar days, or until August
13, 2002, to regain compliance. However, prior to that time, the Company was
delisted according to the above mentioned reasons.
17
Shares traded on the OTC Bulletin Board are not as liquid as those
traded on the Nasdaq National market or the Nasdaq SmallCap market.
At February 28, 2003, Lancer had a $400,000 revolving line of credit
with GE Capital Healthcare Financial Services, expiring October 24, 2003.
Borrowings are made at prime plus 2.00% (8.0% at February 28, 2003) and are
limited to 80% of accounts receivable less than 90 days old with a liquidity
factor of 94%. The outstanding balance at February 28, 2003 was $478 and the
unused portion available under the line of credit at February 28, 2003 was
$310,000. The line of credit expires October 24, 2003. The line of credit is
collateralized by substantially all the assets of Lancer, including inventories,
receivables and equipment. The lending agreement requires that receivables
payments be sent to a controlled lockbox. In addition to interest, a management
fee of .0425% on the average monthly unused portion available is required.
Lancer is not required to maintain compensating balances in connection with this
lending agreement. Proceeds from this line cannot be used to support the
operations of Biomerica.
Biomerica, Inc. entered into a line of credit agreement on September
12, 2000 with a shareholder whereby the shareholder will loan to the Company, as
needed, up to $500,000 for working capital needs. The line of credit bears
interest at 8%, is secured by Biomerica accounts receivable and inventory and
expires September 12, 2003. The unused portion of the line of credit at February
28, 2003, was $181,750. Additionally, the Company received a $10,000 unsecured
loan from a different shareholder. Such amount is included in shareholder loan
in the accompanying financial statements. The Company has no other line of
credit available to it.
THE COMPANY MAY FACE INTERRUPTION OF PRODUCTION AND SERVICES DUE TO
INCREASED SECURITIES MEASURES IN RESPONSE TO TERRORISM:
Biomerica's and Lancer's business depends on the free flow of products
and services through the channels of commerce. Recently, in response to
terrorists' activities and threats aimed at the United States, transportation,
mail, financial and other services have been slowed or stopped altogether.
Further delays or stoppages in transportation, mail, financial or other services
could have a material adverse effect on the Company's business, results of
operations and financial condition. Furthermore, the Company may experience an
increase in operating costs, such as costs for transportation, insurance and
security as a result of the activities and potential activities. The Company may
also experience delays in receiving payments from payers that have been affected
by the terrorist activities and potential activities. The U.S. economy in
general is being adversely affected by the terrorist activities and potential
activities and any economic downturn could adversely impact our results of
operations, impair our ability to raise capital or otherwise adversely affect
the ability to grow the Company's business.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
You should read the following factors in conjunction with the factors
discussed elsewhere in this and our other filing with the SEC and in materials
incorporated by reference in these filing. The following is intended to
highlight certain factors that may affect the financial condition and results of
operations of Biomerica and are not meant to be an exhaustive discussion of
risks that apply to companies such as Biomerica. Like other businesses,
Biomerica is susceptible to macroeconomic downturns in the United States or
abroad, as were experienced in fiscal year 2002, that may affect the general
economic climate and performance of Lancer or its customers. Aside from general
macroeconomic downturns, the additional material factors that could affect
future financial results include, but are not limited to: Terrorist attacks and
the impact of such events; diminished access to raw materials that directly
enter into our manufacturing process; shipping labor disruption or other major
degradation of the ability to ship our products to end users; inability to
successful control our margins which are affected by many factors including
competition and product mix; protracted shutdown of the US border due to an
escalation of terrorist or counter terrorist activity; the operating and
financial covenants contained in our credit line which could limit our operating
flexibility, any changes in our business relationships with international
distributors or the economic client they operate in; any event that has a
material adverse impact on our foreign manufacturing operations may adversely
affect our operations as a whole, failure to manage the future expansion of our
business could have a material adverse impact on our foreign manufacturing
operations may adversely affect our operations as a whole, failure to manage the
future expansion of our business could have a material adverse affect on our
revenues and profitability; possible costs in complying with government
regulations and the delays in receiving required regulator y approvals or the
enactment of new adverse regulations or regulatory requirements; numerous
competitors, some of which have substantially greater financial and other
resources than we do; potential claims and litigation brought by patients or
dental professionals alleging harm caused by the use of or exposure to our
products; quarterly variations in operating results caused by a number of
factors, including business and industry conditions and other factors beyond our
control. All these factors make it difficult to predict operating results for
any particular period.
18
Item 4. PROCEDURES AND CONTROLS
-----------------------
Within the 90 days prior to the date of this report, Biomerica carried
out an evaluation, under the supervision and with the participation of
Biomerica's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of
Biomerica's disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that 's disclosure controls and procedures are
effective. There were no significant changes in Biomerica's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS. Inapplicable.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. The following shares of
restricted common stock were issued during the nine months
ended February 28, 2003:
Class or Persons Price
Date Title Amount Sold to Per Share Total
------- ----- ------ -------------------- --------- -------
9/02/02 common 87,778 insiders & qualified $0.45 $39,500
investors
The exemption relied upon for the issuance of the unregistered
shares was that the shares were issued to qualified investors within
the meaning of Securities and Exchange Commission Rule 501,
Regulation D.
Item 3. DEFAULTS UPON SENIOR SECURITIES. Inapplicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Inapplicable.
Item 5. OTHER INFORMATION. Inapplicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K. A report on Form 8-K was filed
with the Securities and Exchange Commission on June 6, 2002.
(a) Exhibits
99.1 Certifications of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C., Section 1350, as adopted pursuant
to Section 302 And 906 of the Sarbanes-Oxley Act of 2002.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has fully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 9, 2003
BIOMERICA, INC.
By: /S/ Zackary S. Irani
------------------------
Zackary Irani
Chief Executive Officer
20
STATEMENT PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 BY PRINCIPAL
EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER REGARDING FACTS AND
CIRCUMSTANCES RELATING TO EXCHANGE ACT FILINGS
I, Janet Moore, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Biomerica, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the period presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and Maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14 for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and;
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: April 14, 2003
/s/ Janet Moore
Chief Financial Officer
STATEMENT PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 BY PRINCIPAL
EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER REGARDING FACTS AND
CIRCUMSTANCES RELATING TO EXCHANGE ACT FILINGS
I, Zackary Irani, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Biomerica, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the period presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and;
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: April 14, 2003
/s/ Zackary Irani
Chief Executive Officer