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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 August 31, 1995 Commission File No. 0-8765
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BIOMERICA, INC.
(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: (714) 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 3,444,569 shares of common
Stock as of October 11, 1995.
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BIOMERICA, INC.
INDEX
PART I Financial Statements:
Statement of Operations - Three Months
Ended August 31, 1995 and 1994 ....................................2
Balance Sheets - August 31, 1995 ..............................3 & 4
Statement of Cash Flows
Three Months Ended August 31, 1995 and 1994 .......................5
Statement of Changes in Shareholders' Equity -
Three Months Ended August 31, 1995 ................................6
Notes to Financial Statements .....................................7
Management's Discussion and Analysis of Financial Condition
and Selected Financial Data .......................................8
PART II Other Information .................................................9
Signatures ........................................................9
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<TABLE>
PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL INFORMATION
BIOMERICA, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
Three Months Ended
August 31,
1995 1994
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<S> <C> <C>
Net sales................................................. $2,329,288 $2,190,414
Cost of sales........................................... 1,282,968 1,251,051
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Operating Expenses:
Selling, general and administrative..................... 835,185 814,419
Research and development................................ 73,992 64,407
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909,177 878,826
Other Expense (income):
Interest expense........................................ 25,475 42,587
Other (income) expense, net............................. (24,354) (13,795)
Gain (loss) before minority interest in net profits of
consolidated subsidiaries and income taxes.............. 136,022 31,745
Minority interest in net (profits) of
consolidated subsidiaries............................... (73,317) (30,456)
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INCOME BEFORE TAXES ...................................... 62,705 1,289
Income Taxes.............................................. 2,400 0
Net Income................................................ $ 60,305 $ 1,289
============ =============
Net earnings (loss) per share............................. .02 .00
============ =============
Weighted average common shares outstanding................ 3,438,569 3,387,569
</TABLE>
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<TABLE>
BIOMERICA, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
August 31,
1995
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<S> <C>
Assets
Current Assets
Cash and cash equivalents ............................................. $ 366,579
Available for-sale securities ......................................... 337,544
Accounts receivable, less allowance for doubtful accounts ............. 1,652,853
Inventory ............................................................. 1,974,359
Notes receivable ...................................................... 36,666
Prepaid expenses and other ............................................ 69,490
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Total Current Assets ................................................. 4,437,491
Inventory, non-current................................................... 87,000
Land held for investment................................................. 46,000
Property and Equipment, less accumulated depreciation and amortization... 509,553
Intangible assets, net of accumulated amortization....................... 620,041
Other Assets............................................................. 4,400
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$ 5,704,485
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<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
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<TABLE>
BIOMERICA, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
August 31,
1995
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<S> <C>
Liabilities and Shareholders' Equity
Current Liabilities
Note payable to bank .................................................. $ 356,000
Accounts payable and accrued liabilities .............................. 545,009
Other liabilities ..................................................... 24,311
Accrued compensation .................................................. 576,403
Long-term debt and capital lease obligations (current portion) ........ 23,894
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Total Current Liabilities .......................................... 1,525,617
Note Payable to bank, net of current maturities.......................... 724,000
Long-term debt and capital lease obligations............................. 32,309
Minority interest........................................................ 1,909,022
Shareholders' Equity
Unrealized holding gain on available for-sale securities .............. 1,015
Common stock, $.04 par value authorized 10,000,000 shares,
issued and outstanding 3,444,569 in 1995 and 3,392,069 in 1994 ...... 275,566
Additional paid-in-capital ............................................ 11,333,364
Prepaid expenses ...................................................... (3,582)
Accumulated deficit ................................................... (10,092,826)
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Total Shareholders' Equity............................................... 1,513,537
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Total Liabilities and Equity............................................. $ 5,704,485
==============
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
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<TABLE>
BIOMERICA, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED AUGUST 31, 1995 AND 1994
<CAPTION>
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................. $ 60,305 $ 1,289
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization .................................. 82,795 92,028
Realized gain on sale of marketable securities ................. 0 (13,785)
Minority interest in net losses of consolidated subsidiaries ... 73,317 30,455
Provision for losses on accounts receivable .................... 0 (10,284)
Stock issued to employees ...................................... 0 21,263
Changes in current assets and liabilities:
Accounts Receivable .......................................... (106,242) (12,803)
Inventories .................................................. (210,980) 11,456
Prepaid expenses and other current assets .................... 39,726 25,749
Accounts payable and other accrued liabilities ............... (124,116) (178,970)
Accrued compensation ......................................... 11,328 (20,868)
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Net cash provided (used) by operating activities.................. (173,867) (54,470)
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Cash flows from investing activities:
Sales of marketable securities, net ............................ 0 64,858
Purchases of property and equipment ............................ (50,075) (39,165)
Other assets ................................................... 196 0
Purchases of intangible assets ................................. (3,140) (816)
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Net cash provided by investing activities......................... (53,019) 24,877
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Cash flows from financing activities:
Payments of short-term borrowings .............................. 0 (19,724)
Principal payments on note payable to bank ..................... (105,000) (109,271)
Payments of long-term debt and capital lease obligations ....... (6,699) (12,853)
Exercise of stock options ...................................... 10,600 0
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Net cash used in financing activities............................. (101,099) (141,848)
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Net increase (decrease) in cash and cash equivalents.............. (327,985) (171,441)
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Cash at beginning of quarter...................................... 694,564 804,029
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Cash at end of quarter............................................ 366,579 632,588
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<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
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<TABLE>
BIOMERICA, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED AUGUST 31, 1995
<CAPTION>
Unrealized
Common Stock Gain on
------------------------- Additional Available- Retained
Number of Paid-In For-Sale Prepaid Earnings
Shares Amount Capital Securities Expenses (Deficit) Total
----------- ----------- ------------ ----------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
May 31, 1995 3,431,319 $ 274,506 $11,323,824 $ 2,322 $ (5,142) $(10,153,131) $ 1,442,379
Change in unrealized gain
on available-for-sale
securities (1,307) (1,307)
Amortization of
prepaid expenses 1,560 1,560
Exercise of stock options 13,250 1,060 9,540 10,600
Net gain (loss) 60,305 60,305
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Balance at
August 31, 1995 3,444,569 $ 275,566 $11,333,364 $ 1,015 $ (3,582) $(10,092,826) $ 1,513,537
=========== =========== ============= =========== =========== ============== ============
<FN>
Note: The authorized capital stock consists of 10,000,000 shares of common stock, par value $.08 per share.
</TABLE>
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NOTES TO FINANCIAL STATEMENTS
August 31, 1995
(1) Reference is made to Note 1 of the Notes to Financial Statements contained
in the Company's Annual Report on Form 10-KSB for the fiscal year ended May
31, 1995, 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, however 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 Notes 2 & 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, 1995, for a description of the investments in affiliates and
consolidated subsidiaries.
(5) Reference is made to Note 5, 6, 11 and 12 of the Notes to Financial
Statements contained in the Company's Annual Report on Form 10-KSB for the
fiscal year ended May 31, 1995, for information on commitments and
litigation.
(6) Aggregate market value of available-for-sale securities exceeded aggregate
cost by approximately $1,015 at August 31, 1995.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND SELECTED FINANCIAL DATA
RESULTS OF OPERATIONS
Consolidated net sales for Biomerica were $2,329,288 for the first quarter
of fiscal 1996 as compared to $2,190,414 for the same period in the previous
year. This represents an increase of $138,874 (6%). Biomerica, Lancer and
AIT all had increases in sales. Lancer's increase was due to increases in
domestic and foreign sales. Biomerica showed some increases in the foreign
distributor sales as well as in sales of EZ Detect. Cost of sales increased
by $31,917 (3%) in part due to the increase in sales. Lancer realized
decreased cost of sales as a percentage of sales due to realization of
manufacturing efficiency. Biomerica had higher wages and higher materials
costs as a percentage of sales on some products.
Selling, general and administrative expenses increased by $20,766 (3%).
Lancer had an increase of $19,490 due to increased marketing and sales
personnel costs, which was partially offset by reduced professional fees.
Biomerica had increased costs of $2,887 due in part to increased wages, while
AIT had a decrease of $1,611. Research and development costs increased by
$9,585, primarily due to increases in materials costs and wages at Biomerica.
Interest expense decreased by $17,112 due to decreased interest expenses at
Lancer due to lower debt. Biomerica had lower debt expenses as well as
reduction of certain interests totaling $11,254, including $6,100 in interest
owed to the President.
Minority interest in net losses of consolidated subsidiaries represents
minority interests in the gain of Lancer's and AIT's other shareholders.
Please refer to Notes 2 and 3 in the Notes to the Consolidated Financial
Statements in the report on Form 10-KSB for the year ended May 31, 1995, for a
more in-depth discussion on subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
As of August 31, 1995, the Company had cash and available-for-sale
securities in the amount of $704,123. Biomerica is currently able to meet its
costs of operations through both collection of trade accounts receivable and
its working capital position. Lancer is currently able to meet its costs of
operations through collection of trade accounts receivable and its working
capital position. Biomerica alone has no material capital commitments.
Effective November 1, 1994, Lancer arranged for a two year renewal of its bank
term loan through November 1, 1996. The new bank loan requires monthly
principal payments of $23,000 during the first year and $31,000 during the
second year, plus interest at prime plus 3%. All unpaid principal and accrued
interest is due and payable on November 1, 1996.
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PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS. Inapplicable.
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. None.
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: October 9, 1995
BIOMERICA, INC.
By:
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Joseph H. Irani, President
President, Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-END> AUG-31-1995
<CASH> 366,579
<SECURITIES> 337,544
<RECEIVABLES> 1,820,575
<ALLOWANCES> 167,722
<INVENTORY> 2,061,359
<CURRENT-ASSETS> 4,437,491
<PP&E> 3,080,103
<DEPRECIATION> 2,570,550
<TOTAL-ASSETS> 5,704,485
<CURRENT-LIABILITIES> 1,525,617
<BONDS> 0
<COMMON> 275,566
0
0
<OTHER-SE> 1,237,971
<TOTAL-LIABILITY-AND-EQUITY> 5,704,485
<SALES> 2,329,288
<TOTAL-REVENUES> 2,353,642
<CGS> 1,282,968
<TOTAL-COSTS> 1,282,968
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,475
<INCOME-PRETAX> 61,105
<INCOME-TAX> 800
<INCOME-CONTINUING> 60,305
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,305
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
