00
FORM 10-QSB/A
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 November 30, 2002 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,258,475 shares of common
stock as of January 10, 2003.
BIOMERICA, INC.
INDEX
PART I
Item 1. Consolidated Financial Statements:
Consolidated Statements of Operations and Comprehensive Loss
(unaudited) - Six Months and Three Months Ended November
30, 2002 and 2001.............................................. 2-3
Consolidated Balance Sheet (unaudited) - November 30, 2002..... 4-5
Consolidated Statements of Cash Flows (unaudited) Six Months
Ended November 30, 2002 and 2001............................... 6-7
Consolidated Statement of Changes in Shareholders' Equity
(unaudited) Six Months Ended November 30, 2002................. 8
Notes to Consolidated Financial Statements..................... 9-17
Item 2. Management's Discussion and Analysis of Financial Condition
and Selected Financial Data.................................... 17-19
Item 3. Quantitative and Qualitative Disclosures about Market Risk..... 19
Item 4. Procedures and controls........................................ 19
PART II Other Information.............................................. 20
Signatures..................................................... 21-25
PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS (UNAUDITED)
Six Months Ended Three Months Ended
November 30, November 30,
2002 2001 2002 2001
------------ ------------ ------------ ------------
Net sales ............................................ $ 4,226,038 $ 4,138,255 $ 2,136,529 $ 2,211,187
Cost of sales ................................... 2,952,354 2,826,192 1,517,924 1,389,423
------------ ------------ ------------ ------------
Gross profit .................................... 1,273,684 1,312,063 618,605 821,764
------------ ------------ ------------ ------------
Operating
Expenses:
Selling, general and administrative ............. 1,457,869 1,640,076 701,711 851,954
Research and development ........................ 110,206 88,650 62,329 30,815
------------ ------------ ------------ ------------
1,568,075 1,728,726 764,040 882,769
------------ ------------ ------------ ------------
Operating loss from continuing operations ............ (294,391) (416,663) (145,435) (61,005)
------------ ------------ ------------ ------------
Other Expense (income):
Interest expense ................................ 17,700 15,253 6,903 9,043
Other (income) expense, net ..................... (51,922) 12,120 (3,942) 17,761
------------ ------------ ------------ ------------
(34,222) 27,373 2,961 26,804
------------ ------------ ------------ ------------
Loss from continuing operations, before minority
interest in net loss of consolidated subsidiaries
and income taxes ................................ (260,169) (444,036) (148,396) (87,809)
------------ ------------ ------------ ------------
Minority interest in net losses (profits)
of consolidated subsidiaries ......................... (17,867) 38,880 (19,871) (49,955)
------------ ------------ ------------ ------------
Loss (income) from continuing operations, before
income taxes ......................................... (278,036) (405,156) (168,267) (137,764)
Income Tax Expense ................................... 1,794 1,600 194 1,600
------------ ------------ ------------ ------------
Net (loss) income from continuing operations ......... (279,830) (406,756) (168,461) (139,364)
2
Six Months Ended Three Months Ended
November 30, November 30,
2002 2001 2002 2001
------------ ------------ ------------ ------------
Discontinued operations:
Loss from discontinued operations, net............. 38,531 39,242 14,437 2,636
------------ ------------ ------------ ------------
Net loss ............................................. (318,361) (445,998) (182,898) (142,000)
Other comprehensive loss, net of tax
Unrealized loss on available-for-
sale securities.................................... (1,757) (5,186) (317) (1,484)
------------ ------------ ------------ ------------
Comprehensive loss.................................. $ (320,118) $ (451,184) $ (183,215) $ (143,484)
============ ============ ============ ============
Basic net loss per common share:
Net loss from continuing operations................ $ (.05) $ (.08) $ (.03) $ (.03)
Net loss from discontinued operations.............. (.01) (.01) (.00) (.00)
------------ ------------ ------------ ------------
Basic net loss per common share....................... $ (.06) $ (.09) $ (.03) $ (.03)
============ ============ ============ ============
Diluted net loss per common share:
Net loss from continuing operations................ $ (.05) $ (.08) $ (.03) $ (.03)
Net loss from discontinued operations.............. (.01) (.01) (.00) (.00)
------------ ------------ ------------ ------------
Diluted net loss per common share $ (.06) $ (.09) $ (.03) $ (.03)
============ ============ ============ ============
Weighted average number of common and common
equivalent shares:
Basic and diluted................................ 5,208,818 4,999,466 5,245,673 5,031,349
============ ============ ============ ============
The accompanying notes are an integral part of these statements.
3
BIOMERICA, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
November 30,
2002
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Assets
Current Assets
Cash and cash equivalents ................................. $ 489,963
Available-for-sale securities ............................. 775
Accounts receivable, less allowance for doubtful
accounts of $195,532 1,285,097
Inventory, net ............................................ 2,695,669
Prepaid expenses and other ................................ 118,443
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Total Current Assets ................................ 4,589,947
Inventory, non-current ........................................ 15,000
Note receivable ............................................... 2,419
Property and Equipment, net of accumulated depreciation
and amortization 255,482
Intangible assets, net of accumulated amortization ............ 98,786
Other Assets .................................................. 35,546
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$4,997,180
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The accompanying notes are an integral part of these statements.
4
BIOMERICA, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED), CONTINUED
November 30,
2002
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Liabilities and Shareholders' Equity
Current Liabilities
Line of credit .......................................... $ -0-
Accounts payable and accrued liabilities ................ 860,037
Accrued compensation .................................... 348,791
Shareholder loan......................................... 322,950
Net liabilities from discontinued operations ............ 362,423
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Total Current Liabilities .......................... 1,894,201
Minority interest ............................................ 2,113,260
Shareholders' Equity
Common stock, $0.08 par value authorized 25,000,000 shares,
subscribed or issued and outstanding 5,376,657 ........ 462,277
Additional paid-in-capital .............................. 17,056,374
Accumulated other comprehensive loss .................... (21,994)
Accumulated deficit ..................................... (16,506,938)
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Total Shareholders' Equity ................................... 989,719
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Total Liabilities and Shareholders' Equity ................... $ 4,997,180
=============
The accompanying notes are an integral part of these statements.
5
BIOMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED NOVEMBER 30, 2002 AND 2001
2002 2001
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Cash flows from operating activities:
Net loss from continuing operations ................ $(279,830) $(406,756)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization ................. 72,650 107,891
Realized gain on sale of available for-sale
securities -- (3,626)
Minority interest in net gain (loss) of consolidated
subsidiaries ................................. 28,368 (38,880)
Common stock issued for services rendered ...... 66,767 42,625
Provision for losses on accounts receivable .... (920) (361)
Warrants and options issued for services rendered 32,364 35,308
Changes in current assets and liabilities:
Accounts Receivable ............................ 220,167 39,424
Insurance claim receivable .................. -- --
Inventories ................................. 225,343 (87,470)
Prepaid expenses and other current assets ... 4,031 (7,062)
Accounts payable and other accrued liabilities (46,153) 49,402
Accrued compensation ........................ 40,809 40,757
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Net cash provided by (used in) operating activities 363,596 (228,748)
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Cash flows from investing activities:
Sale of available for-sale securities ......... -- 26,670
Purchases of property and equipment ........... (60,910) (9,890)
Other assets .................................. -- 3,220
Purchases of intangible assets ................ (21,986) (10,591)
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Net cash (used in) provided by investing activities (82,896) 9,409
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Cash flows from financing activities:
Private placement net of offering costs ....... -- 10,199
Exercise of stock options ..................... -- 1,128
Increase (decrease) in line of credit ......... (65,669) 32,845
Increase (decrease) in shareholder loan ....... (52,050) 165,000
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6
BIOMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(CONTINUED)
SIX MONTHS ENDED NOVEMBER 30, 2002 AND 2001
2002 2001
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Net cash (used in) provided by financing activities (117,719) 209,172
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Net cash used in discontinued operations............ (2,295) (72,204)
Net increase (decrease) in cash and cash equivalents 160,686 (82,371)
Cash at beginning of period......................... 329,277 136,299
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Cash at end of period............................... $ 489,963 $ 53,928
========== ==========
The accompanying notes are an integral part of these statements.
7
BIOMERICA, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2002
Common Stock
Common Stock Subscribed
-------------------------- ---------------------------
Accumulated
Number Additional Other
of Paid-in Comprehensive Accumulated
Shares Amount Capital Shares Amount Loss (Deficit) Total
------------- ----------- ------------- ------------ ------------- ----------- ------------- -------------
Balance 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 32,364 32,364
Change in unrealized
gain on available
for sale securities (1,757) (1,757)
Common stock
subscribed for 10,000 4,500 4,500
Services
Common stock
Issued for
services 67,778 5,422 35,245 40,667
Common stock 18,333 1,467 6,783 (18,333) (8,250) --
Issued
Common stock
Subscribed for
services 98,182 21,600 21,600
Net loss (318,361) (318,361)
------------- ----------- ------------- ------------ ------------- ----------- ------------- -------------
Balance at
November 30,
2002 5,258,475 $ 420,677 $ 17,056,374 118,182 $ 41,600 (21,994) $(16,506,938) $ 989,719
============= =========== ============= ============ ============= =========== ============= =============
8
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
November 30, 2002
(1) Reference is made to Note 2 of the Notes to 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 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) 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 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 Financial
Statements contained in the Company's Annual Report on Form 10-KSB
for the fiscal year ended May 31, 20012 for information on
commitments and contingencies.
(6) Aggregate cost of available-for-sale securities exceeded aggregate
market value by approximately $21,994 at November 30, 2002.
(7) Earnings Per Share
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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.
9
The following table illustrates the required disclosure of the
reconciliation of the numerators and denominators of the basic and
diluted EPS computations.
For the Six Months Ended November 30, 2002
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Income Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------ ------------
Basic EPS -
Loss from continuing operations ... $ (279,830) $ (.05)
Loss from discontinued operations . (38,531) (.01)
------------ ------------ ------------
(318,361) 5,208,818 (.06)
Diluted EPS -
Loss from continuing operations - $ (279,830) $ (.05)
Loss from discontinued operations . (38,531) (.01)
------------ ------------ ------------
$ (318,361) 5,208,818 $ (.06)
============ ============ ============
For the Six Months Ended November 30, 2001
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Income Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------ ------------
Basic EPS -
Loss from continuing operations ... $ (406,756) $ (.08)
Loss from discontinued operations . (39,242) (.01)
------------ ------------ ------------
$ (445,998) 4,994,466 (.09)
Diluted EPS -
Loss from continuing operations ... $ (406,756) $ (.08)
Loss from discontinued operations . (39,242) (.01)
------------ ------------ ------------
$ (445,998) 4,994,466 $ (.09)
============ ============ ============
For the Three Months Ended November 30, 2002
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Income Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------ ------------
Basic EPS -
Loss from continuing operations ... $ (168,461) $ (.03)
Loss from discontinued operations . (14,437) (.00)
------------ ------------ ------------
(182,898) 5,245,673 (.03)
Diluted EPS -
Loss from continuing operations ... $ (168,461) $ (.03)
Loss from discontinued operations . (14,437) (.00)
------------ ------------ ------------
$ (182,898) 5,245,673 $ (.03)
============ ============ ============
For the Three Months Ended November 30, 2001
----------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------ ------------
Basic EPS -
Income from continuing operations . $ (139,364) $ (.03)
Loss from discontinued operations . (2,636) (.00)
------------ ------------ ------------
$ (142,000) 5,031,349 (.03)
Diluted EPS -
Loss from continuing opertions .... $ (139,364) $ (.03)
Loss from discontinued operations . (2,636) (.00)
------------ ------------ ------------
$ (142,000) 5,031,349 $ (.03)
============ ============ ============
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.
10
As of November 30, 2002, there was a total of 2,983,345 potentially
dilutive shares of common Stock.
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141 ("SFAS 141"), "Business
Combinations", which eliminates the pooling method of accounting for business
combinations initiated after June 30, 2001. In addition, SFAS 141 addresses
the accounting for intangible assets and goodwill acquired in a business
combination. This portion of SFAS 141 is effective for business combinations
completed after June 30, 2001. The Company does not expect SFAS 141 will have
a material impact on the Company's financial position or results of
operations.
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 adoption of FASB 142 did not have a material impact on the
Company's financial position or results of operations.
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, the 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 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"), "Rescission of FASB Statements No. 4 and 64,
Amendment of FASB State- ment 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.
11
(8) Financial information about foreign and domestic operations and
export sales is as follows:
For the Six Months Ended
11/30/02 11/30/01
---------- ----------
Revenues from sales to unaffiliated customers:
United States $2,362,000 $1,964,000
Asia 117,000 115,000
Europe 954,000 1,151,000
South America 167,000 285,000
Oceania 208,000 183,000
Other 418,000 440,000
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$4,226,000 $4,138,000
========== ==========
No other geographic concentrations exist where net sales exceed 10% of total
net sales.
12
(9) On January 15, 2002, the Company had 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 De- termination. 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 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 securitites 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. 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 Nasdaq National market or the Nasdaq SmallCap market.
The 1-for-3 reverse stock split approved by shareholders at the 2001
shareholders' meeting for the purpose of increasing the price per share of
the common stock will not be implemented.
(10) The Company has suffered substantial recurring losses from operations
over the last couple of years. The Company has funded its operations through
debt and equity financings, and may have to do so in the future. ReadyScript
operations were discontinued in May 2001. ReadyScript was a primary
contributor to the Company's losses. The Company also 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.
13
As of November 30, 2002, the Company had cash and available-for-sale
securities in the amount of $490,738 and working capital of $2,695,746. Cash
and working capital totaling $434,312 and $2,889,348, 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.
During the six months ended November 30, 2002, the Company operations
provided cash of $363,596. This compares to cash used in operations of
$228,748 in the same period in the prior fiscal year. Cash used by financing
activities was $117,719, which resulted from the payment on the line of
credit at Lancer of $65,669 and payment of the shareholder loan at Biomerica
of $52,050.
(11) Lancer has a $400,000 line of credit with GE Capital Healthcare
Financial Services, expiring October 24, 2003. Borrowings are made at prime
plus 2.0%, in no event less than 8.0%, (8.0% at November 30, 2002) and are
limited to 80% of accounts receivable less than 90 days old with a liquidity
factor of 94%. The outstanding balance at November 30, 2002 was $.00 and the
unused portion available was approximately $336,000.
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 are 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.
(12) Biomerica, Inc. entered into a line of credit agreement on September 12,
2000 with Janet Moore, an officer and director, whereby she 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 November 30, 2002, was $187,050. 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.
(13) 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 six months ended November 30, 2002, 10,000
shares of Biomerica's restricted common stock valued at $4,500 were earned
in payment to its Chief Executive Officer for certain management services.
(14) 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.
(15) 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 diagnostic's
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 November 30,2002, there has been no impact on
revenues since the plan is based on profits and year-to-date there has not
been a profit in the diagnostics' division.
(16) 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.
(17) In June of 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, which is included in other liabilities, in the month
of June 2002 related to this agreement.
(18) 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 agreement with this consultant whereby the consultant
will help with business develop- ment 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.
14
(19) 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.
(20)During the six months ended November 30, 2002, $32,364 was recorded as
amortization expense for previously issued warrants and options.
(21)Lancer Orthodontics, Inc. issued non-qualified options granted 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.
(22)For the six months ended November 30, 2002, other income of $52,655 was
realized from the insurance claim settlement of $134,413 for the theft of
inventory at the Lancer Orthodontics, Inc.'s Mexicali facility, less $81,758
insurance claim receivable valued at cost.
(23) 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.
(24) In October 2002 the Company signed an agreement with Medical Device
Safety Service GmbH ("MDSS") wherein MDSS will act as the Company's
Authorized Representative for the purpose of obtaining a CE-Mark in Europe.
(25) Reportable business segments for the six months and quarter ended
November 30, 2002 and 2001 are as follows:
Six Months Three Months
Ended November 30, Ended November 30,
2002 2001 2002 2001
------------------------------------------------------------
Domestic sales:
Orthodontic products $1,566,000 $1,476,000 $ 812,000 $ 734,000
============================================================
Medical diagnostic products 796,000 488,000 $ 269,000 $ 363,000
============================================================
Foreign sales:
Orthodontic products $1,224,000 $1,588,000 $ 693,000 $ 896,000
============================================================
Medical diagnostic products 640,000 586,000 $ 363,000 $ 218,000
============================================================
Net sales:
Orthodontic products $2,790,000 $3,064,000 $1,505,000 $1,629,000
Medical diagnostic products 1,436,000 1,074,000 632,000 582,000
------------------------------------------------------------
Total $4,226,000 $4,138,000 $2,137,000 $2,211,000
============================================================
Operating profit (loss):
Orthodontic products $ (20,379) $ (27,766) $ 25,252 $ 98,109
Medical diagnostic products (274,012) (388,897) (170,687) (159,114)
------------------------------------------------------------
Total $(294,391) $ (416,663) $ (145,435) $ (61,005)
============================================================
Operating loss from discontinued segment:
AIT $ -0- $ 43,946 $ -0- $ 21,973
ReadyScript 38,531 (4,704) 14,437 (19,337)
------------------------------------------------------------
Total $ 38,531 $ 39,242 $ 14,437 $ 2,636
============================================================
Domestic long-lived assets:
Orthodontic products $ 52,464 $ 21,038 $ 52,464 $ 21,038
Medical diagnostic products 183,723 218,630 183,723 218,630
------------------------------------------------------------
Total $ 236,187 $ 239,668 $ 236,187 $ 239,668
============================================================
Foreign long-lived assets:
Orthodontic products $ 19,295 $ 26,549 $ 19,295 $ 26,549
Medical diagnostic products -0- -0- -0- -0-
------------------------------------------------------------
Total $ 19,295 $ 26,549 $ 19,295 $ 26,549
============================================================
Total assets:
Orthodontic products $3,532,523 $3,717,208 $3,532,523 $3,717,208
Medical diagnostic products 1,464,657 1,484,151 1,464,657 1,484,151
------------------------------------------------------------
Total $4,997,180 $5,201,359 $4,997,180 $5,201,359
============================================================
Depreciation and amortization
expense:
Orthodontic products $ 48,234 $ 53,712 $ 24,117 $ 26,856
Medical diagnostic products 24,417 54,179 12,647 30,136
------------------------------------------------------------
Total 72,650 107,891 $ 36,764 $ 56,992
============================================================
Capital expenditures:
Orthodontic products $ (35,609) -0- $ (33,545) $ -0-
Medical diagnostic products (25,302) (9,890) (24,400) -0-
------------------------------------------------------------
Total $ (60,911) $ (9,890) $ (57,945) $ -0-
============================================================
15
The net sales as reflected above consist of sales of unaffiliated
customers only as there were no significant intersegment sales during the
six months or quarter ended November 30, 2002 and 2001.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND SELECTED FINANCIAL DATA
RESULTS OF OPERATIONS
Consolidated net sales for Biomerica were $4,226,038 for the six months
ended November 30, 2002 as compared to $4,138,255 for the same period in the
previous year. This represents an increase of $87,783, or 2%. For the quarter
then ended sales were $2,136,529 as compared to $2,211,187 for the same period
in the prior fiscal year. This represents a decrease of $74,658, or 3%. The
increases for the six months were attributable to an increase in the
diagnostic product's sales of $361,501 which was offset by lower orthodontics
sales of $273,718. For the quarter sales in the diagnostics' area increased
by $49,771. With respect to orthodontics, sales were lower by $124,429 due to
lower international sales, particularly in Europe and South America.
Cost of sales for the six months increased as a percentage of sales
from 68% to 70% (from $2,826,192 to $2,952,354, or $126,162) and for the
three months increased from 63% to 71% (from $1,389,423 to $1,517,924, or
$128,501). Lancer cost of sales decreased by $117,203 for the six months and
increased by $36,615 for the three months ended November 30, 2002.
Biomerica's cost of sales increased from $730,808 to $974,173, or $243,365,
for the six months and from $371,437 to $463,323, or $91,886, for the three
months. The increase in cost of sales at Lancer was attributable to higher
production costs. For the six months, cost of sales at Biomerica were
materially constant as a percentage of sales between the two periods.
Increases at Biomerica during the quarter were attributable to a lower
margin sales mix and certain costs that remain fixed.
Selling, general and administrative costs decreased by $182,207, or
11% for the six months and by $150,243, or 18% for the three months ended
November 30, 2001. Lancer had a decrease of $195,084 for the six months and
$104,183 for the three months due to a decrease in marketing support
personnel. At Biomerica these expenses increased by $12,877 for the six
months and decreased by $46,060 for the three months. This decrease was due
to lower wages ($34,155 as compared to $48,943), rent ($11,055 compared to
$17,421), consulting expenses ($7,107 as compared to $50,860) and other cost
cutting measures.
Research and development increased by $21,556, or 24% for the six
months and $31,514, or 103% for the three months. The increases were due to
increases at Lancer of $31,182 and $15,996 for the six and three months,
respectively, a result of resumption of product development at Lancer.
Biomerica had decreases of $9,626 for the six months and an increase of
$15,518 ($11,255 in wage related expenses) for the three months due to the
hiring of new employees in the research and development during the second
quarter, where earlier in the year there had been cutbacks.
Interest expense increased by $2,447 for the six months and $2,140
for the three months compared to the previous year due to borrowings on the
line of credit at Biomerica offset by reduction of borrowing on the line of
credit at Lancer.
16
At November 30, 2002, the Company retained a direct 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.
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 relationships 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 and
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 November 30, 2002, the Company had cash and available-for-sale
securities in the amount of $490,738 and working capital of $2,695,746. Cash
and working capital totaling $434,312 and $2,889,348, 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 of $2,889,348 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 last couple of years. The Company has funded its operations through
debt and equity financings, and may have to do so in the future. ReadyScript
operations were discontinued in May 2001. ReadyScript was a primary
contributor to the Company's losses. The Company also 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 six months ended November 30, 2002, the Company used net
cash in operations of $363,596. This compares to net cash provided by
operations of $228,748 in the same period in the prior fiscal year. Cash
used by financing activities was $117,719, which resulted from the payment
on the line of credit at Lancer of $65,669. Through November 30, 2002, the
Company had made payment on the shareholder loan at Biomerica of $52,050.
The interest due on the loan of 8% per annum is being accrued and has not
been paid to date. As of November 30, 2002 there was $33,039 in accrued
interest due.
On January 15, 2002, the Company had 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 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. 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 Nasdaq National market or the Nasdaq SmallCap market.
17
Lancer has a $400,000 line of credit with GE Capital Healthcare Financial
Services, expiring October 24, 2003. Borrowings are made at prime plus 2.0%,
in no event less than 8.0%, (8.0% at November 30, 2002) and are limited to
80% of accounts receivable less than 90 days old with a liquidity factor of
94%. The outstanding balance at November 30, 2002 was $.00 and the unused
portion available was approximately $336,000.
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 are 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, 2001 with Janet Moore, an officer and director, whereby she 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 November 30, 2002, was $187,050. 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.
WE MAY FACE INTERRUPTION OF PRODUCTION AND SERVICES DUE TO INCREASED
SECURITIES MEASURES IN RESPONSE TO TERRORISM:
Our 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 our business, results of operations and financial condition.
Furthermore, we may experience an increase in operating costs, such as costs
for transportation, insurance and security as a result of the activities and
potential activities. We 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 our ability to grow our business.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
A discussion of the Company's exposure to, and management of, market risk
appears in Item 2 of this Form 10-QSB under the heading "Management's
Discussion and Analysis of Financial Condition and Selected Financial Data."
Item 4. PROCEDURES AND CONTROLS. Within the 90 days prior to the date of this
report, the Company carried out an evaluation, under the supervision and with
the participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company'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 the Company's
disclosure controls and procedures are effective. There were no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls to the date of their evaluation.
18
POTENTIAL CONSEQUENCES OF ALLERGY IMMUNO TECHNOLOGY, INC.'S FAILURE TO
CONDUCT A FORMAL STOCKHOLDER VOTE IN CONNECTION WITH OUR PURCHASE OF ASSETS
FROM IT AND ASSUMPTION OF ITS LIABILITIES
During not less than the preceding three years, AIT, a former majority-owed
subsidiary of ours, had been unprofitable and, for financial statement
reporting purposes, its losses were consolidated into our financial
statements. In March of 2002, AIT ceased its clinical testing services.
Thereafter, in late April of 2002, we entered into a transaction, pursuant
to which, at the end of May of 2002, AIT transferred its remaining assets to
us (valued on its financial statements at approximately $8,000), issued to
us approximately 808,500 shares of its restricted common stock (valued as of
the date of the transaction at approximately $19,000), and we assumed its
remaining liabilities (recorded on its financial statements at approximately
$27,000) (the "Asset/Liability Transaction"). The Asset/Liability
Transaction was approved by our board on April 22, 2002. Approval by our
stockholders was not required under Delaware corporate law. We understand
that AIT's board approved the Asset/Liability Transaction in April of 2002
and that, rather than calling a formal meeting of AIT's stockholders, our
consent to that transaction was deemed to constitute the approval of the
holders of a majority of AIT's capital stock, as permitted by Delaware
corporate law.
The Company's substantial recurring losses from operations during the
preceding years and its lack of readily available capital, other than a line
of credit from a stockholder and officer, to help fund operations were the
major factors in its decision to stop lending funds to AIT. Both
ReadyScript and AIT contributed to the Company's losses. Accordingly, the
Company discontinued operations of ReadyScript in May of 2001 and ceased
funding of AIT one year later. (See Notes 2 and 13 to the Company's Audited
Financial Statements for the year ended May 31, 2002).
At the time of the approval of the Asset/Liability Transaction, our seven
directors were Allen Barbieri, David Barrows, Carlos Beharie, M.D., Francis
R. Cano, Ph.D., Zackary S. Irani, Janet Moore, and Robert A. Orlando, M.D.,
Ph.D., three of whom (Mr. Irani, Ms. Moore, and Dr. Orlando) were also
directors of AIT. AIT's fourth director at such time was Susan Irani, whom
AIT deemed to be an affiliate of ours. Further, at such time, Mr. Irani
served as the Chief Executive Officer and Ms. Moore served as the Chief
Financial Officer and Secretary of both AIT and us. The Asset/Liability
Transaction was negotiated by management common to AIT and us and was
approved by all of our directors (including the directors constituting a
majority of our board, who did not serve in common with AIT). We were
advised that the Asset/Liability Transaction was approved by all of the AIT
directors (each of whom also served as one of our directors or was deemed
to be an affiliate of ours).
Notwithstanding the approval of the Asset/Liability Transaction by AIT's
board and its majority stockholder, AIT may not have provided prompt notice
of that approval to all of its stockholders in a manner fully consistent
with Delaware corporate law. That failure could have certain potential
consequences. Although AIT did not solicit proxies from its stockholders,
it also did not file a Schedule 14C with the Securities and Exchange
Commission in connection with the approval of the Asset/Liability
Transaction by its majority stockholder. Further, the potential exists that
one of AIT's stockholders could bring a legal action under Delaware state
law against AIT either to rescind the Asset/Liability Transaction, or to seek
damages against AIT. Because of our status as an affiliate of AIT at the
time of the Asset/Liability Transaction, such failure to file a Schedule 14C
or a potential action could also name us, our directors, and our officers.
As of the date of this amended filing, no action has been filed, and no
proceeding has been commenced, against us or any of our directors or
officers, and no person or agency has contacted us or our directors or
officers announcing an intention to bring any action or to commence any
proceeding.
We have been advised by counsel to AIT that, as of the date of this amended
filing, no action has been filed, and no proceeding has been commenced,
against AIT or any of its directors or officers, and no person or agency has
contacted AIT or its directors or officers announcing an intention to bring
any action or to commence any proceeding. AIT has informed us that its
present attorney has advised it that the likelihood of such an action or
proceeding is minimal, the possibility of its success on the merits is
remote, and the scope of any potential damages award is nominal for a
variety of reasons. For example,
No AIT stockholder or other person with potential standing to sue has
announced dissatisfaction with the Asset/Liability Transaction, although
it was announced publicly in June of 2002.
The assets that were the subject of the Asset/Liability Transaction had
historically yielded only unprofitable operations, which operations had
ceased prior to the approval of the Asset/Liability Transaction, as well
as the closing of that transaction.
The value of the assets that were the subject of the Asset/Liability
Transaction was small and less than the amount of liabilities that we
concurrently assumed; thus, any award the compensation due to any potential
plaintiffs upon a successful claim would be correspondingly small.
Any potential liability under such a claim would be incapable of precise
determination because the measure of damages under such a claim would depend
upon a subjective valuation of the assets and liabilities that were the
subject of the Asset/Liability Transaction.
We do not believe that such an action is probable, nor that a liability for
such an action, if any, could be estimated. Accordingly, we have not accrued
a liability in the accompanying consolidated financial statements related to
the aforementioned matter.
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 quarter
ended November 30, 2002:
Class or Persons Price
Date Title Amount Sold to Per Share Total
9/02 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 accredited 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: June 5, 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 amended quarterly report on Form 10-QSB/A of
Biomerica, Inc.
2. Based on my knowledge, this amended 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 amended quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended 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 amended 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
amended quarterly report (the "Evaluation Date"); and;
c) presented in this amended 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
amended 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: June 5, 2003
/s/ Janet Moore
-------------------------------
Chief Financial Officer
21
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 amended quarterly report on Form 10-QSB/A of
Biomerica, Inc.
2. Based on my knowledge, this amended 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 amended quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this amended 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 amended 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 amended 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
amended quarterly report (the "Evaluation Date"); and;
c) presented in this amended 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
amended 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: June 5, 2003
/s/ Zackary S. Irani
-------------------------------
Chief Executive Officer
22
EXHIBIT 99.1
Date: 6/05/03 CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Amended Quarterly Report on Form 10-QSB/A of Biomerica
Inc. for the quarterly period ended August 31, 2002 (the Report) as filed
with the Securities and Exchange Commission on the date hereof, I, Janet
Moore, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
#1350, as adopted pursuant to #906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
/s/ Janet Moore
Janet Moore
Chief Financial Officer
June 5, 2003
6/05/03 CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Amended Quarterly Report on Form 10-QSB/A of Biomerica
Inc. for the quarterly period ended August 31, 2002 (the Report) as filed
with the Securities and Exchange Commission on the date hereof, I, Zackary
Irani, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
#1350, as adopted pursuant to #906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
/s/ Zackary S. Irani
Zackary S. Irani
Chief Executive Officer
June 5, 2003