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, 1999 Commission File No. 0-8765
--------------- ------
BIOMERICA, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-2645573
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1533 Monrovia Avenue, Newport Beach, California 92663
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (949) 645-2111
- --------------------------------------------------------------------------------
(Not applicable)
- --------------------------------------------------------------------------------
(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: 4,535,195 shares of common
Stock as of October 13, 1999.
<PAGE>
BIOMERICA, INC.
INDEX
PART I
Item 1 Financial Statements:
Statement of Operations and Comprehensive Loss (unaudited) -
Three Months Ended August 31, 1999 and 1998...................2 & 3
Balance Sheet (unaudited) - August 31, 1999...................4 & 5
Statement of Cash Flows (unaudited)
Three Months Ended August 31, 1999 and 1998.......................6
Statement of Changes in Shareholders' Equity (unaudited)
Three Months Ended August 31, 1999................................7
Notes to Financial Statements..................................8-12
Item 2 Management's Discussion and Analysis of Financial Condition
and Selected Financial Data...................................13-15
PART II Other Information................................................16
Signatures.......................................................15
i
<PAGE>
PART I - FINANCIAL INFORMATION
SUMMARIZED FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOMERICA, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
AND COMPREHENSIVE LOSS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
August 31,
1999 1998
--------------- ---------------
<S> <C> <C>
Net sales................................................................ $ 1,824,584 $ 2,156,005
Cost of sales........................................................ 1,275,974 1,311,476
---------------- ---------------
Gross profit......................................................... 548,610 844,529
Operating Expenses:
Selling, general and administrative.................................. 952,698 772,216
Research and development............................................. 133,387 115,452
Non-cash expense in connection with issuance of options and
warrants to strategic partners...................................... 687,780 2,619
---------------- ---------------
1,773,865 889,887
Other Expense (income):
Interest expense..................................................... 3,705 1,979
Other (income) expense, net.......................................... (203,610) (61,244)
---------------- ---------------
(Loss) income before minority interest in net losses of con-
solidated subsidiaries and income taxes (1,025,350) 13,907
Minority interest in net losses (profits) of
consolidated subsidiaries............................................ 40,550 (28,196)
---------------- ---------------
Loss before taxes ....................................................... (984,800) (14,289)
Income Taxes............................................................. 2,400 2,400
---------------- ---------------
Net loss................................................................. $ (987,200) $ (16,689)
---------------- ---------------
---------------- ---------------
Other comprehensive gain (loss), net of tax
Unrealized gain (loss) on available-for-sale securities................ 2,219 (7,637)
---------------- ---------------
Comprehensive loss..................................................... $ (984,981) $ (24,326)
---------------- ---------------
---------------- ---------------
2
<PAGE>
<CAPTION
Three Months Ended
August 31,
1999 1998
---------------- ---------------
<S> <C> <C>
Per share data:
Net loss (basic)..................................................... $ (.22) $ (.00)
---------------- ---------------
---------------- ---------------
Net loss (diluted)................................................... $ (.22) $ (.00)
---------------- ---------------
---------------- ---------------
Weighted average number of common and common
equivalent shares:
Basic and diluted.................................................... 4,469,010 3,974,909
---------------- ---------------
---------------- ---------------
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE>
BIOMERICA, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
August 31,
1999
-------------
Assets
Current Assets
Cash and cash equivalents................................... $ 3,391,564
Available for-sale securities............................... 127,969
Accounts receivable, less allowance for doubtful accounts 1,443,318
of $193,242................................................
Inventory................................................... 3,177,498
Notes receivable............................................ 35,285
Prepaid expenses and other.................................. 239,865
--------------
Total Current Assets ............................... 8,415,499
Inventory, non-current........................................ 25,000
Land held for investment...................................... 46,000
Property and Equipment, less accumulated depreciation and 447,519
amortization..................................................
Intangible assets, net of accumulated amortization............ 429,126
Other Assets.................................................. 6,756
-------------
$ 9,369,900
-------------
-------------
The accompanying notes are an integral part of these statements.
4
<PAGE>
BIOMERICA, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
August 31,
1999
-------------
Liabilities and Shareholders' Equity
Current Liabilities
Line of credit.............................................. $ 180,000
Accounts payable and accrued liabilities................. 902,152
Accrued compensation........................................ 435,160
-------------
Total Current Liabilities............................... 1,517,312
Minority interest.............................................. 2,336,774
Shareholders' Equity
Unrealized holding (loss)on available for-sale securities... (6,560)
Common stock, $.08 par value authorized 10,000,000 shares,
issued and outstanding 4,530,945.......................... 362,475
Additional paid-in-capital.................................. 15,351,774
Accumulated deficit......................................... (10,191,875)
-------------
Total Shareholders' Equity..................................... 5,515,814
-------------
Total Liabilities and Equity................................... $ 9,369,900
-------------
-------------
The accompanying notes are an integral part of these statements.
5
<PAGE>
BIOMERICA, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED AUGUST 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss................................................................. $ (987,200) $ (16,689)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization........................................ 60,651 58,860
Realized gain on sale of available for-sale securities............... 0 (39,936)
Minority interest in net (loss) profits of consolidated subsidiaries. (40,550) 28,196
Common stock issued for services rendered............................ 16,000 0
Provision for losses on accounts receivable.......................... (6,386) 0
Options issued for services rendered................................. 687,780 2,619
Changes in current assets and liabilities:
Accounts Receivable................................................ 166,325 (41,444)
Inventories........................................................ (122,403) (306,188)
Prepaid expenses and other current assets.......................... 56,875 16,567
Accounts payable and other accrued liabilities..................... (112,699) 206,871
Accrued compensation............................................... 35,824 (24,267)
------------------ ------------------
Net cash (used in) operating activities.................................. (245,783) (115,411)
------------------ ------------------
Cash flows from investing activities:
Sale of available for-sale securities................................ 0 113,041
Decrease (increase) in notes receivable.............................. 9,200 (12,400)
Purchases of property and equipment.................................. (84,090) (10,473)
Other assets......................................................... 124,073 17,158
Purchases of intangible assets....................................... 0 (26,675)
Shareholder loan repayment........................................... 1,000 14,000
------------------ ------------------
Net cash provided by investing activities................................ 50,183 94,651
------------------ ------------------
Cash flows from financing activities:
Private placement net of offering costs.............................. 1,965,557 0
Repurchase by minority interests..................................... (60,336) (5,491)
Exercise of stock options............................................ 12,738 0
Stock repurchase..................................................... 0 (12,315)
------------------ ------------------
Net cash provided by (used in) financing activities...................... 1,917,959 (17,806)
------------------ ------------------
Net increase (decrease) in cash and cash equivalents..................... 1,722,359 (38,566)
------------------ ------------------
Cash at beginning of period.............................................. 1,669,205 1,840,575
------------------ ------------------
Cash at end of period.................................................... $ 3,391,564 $ 1,802,009
------------------ ------------------
<FN> ------------------ ------------------
The accompanying notes are an integral part of these statements.
</TABLE>
6
<PAGE>
BIOMERICA, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
Accumulated
Other Com-
Common Stock Additional prehensive Accumu-
-----------------------------
Number of Paid-In Income Shareholder lated
Shares Amount Capital (Loss) Loan (Deficit) Total
------------- ------------ ------------- -------------- ------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
May 31, 1999 4,110,445 $ 328,835 $12,703,339 $ (8,779) $ (1,000) $(9,204,675) $ 3,817,720
Compensation expense
in connection with options
and warrants granted 687,780 687,780
Change in unrealized
gain on available
for sale securities 2,219 2,219
Private placement, net of
offering costs of $34,443 400,000 32,000 1,933,557 1,965,557
Shares issued for
Services rendered 8,000 640 15,360 16,000
Repayment of
Shareholder loan 1,000 1,000
Exercise of stock options 12,500 1,000 11,738 12,738
Net loss (987,200) (987,200)
------------- ------------ ------------- -------------- ------------- -------------- ------------
Balance at
August 31, 1999 4,530,945 $ 362,475 $15,351,774 $ (6,560) $ 0 $(10,191,875) $ 5,515,814
------------- ------------ ------------- -------------- ------------- -------------- ------------
------------- ------------ ------------- -------------- ------------- -------------- ------------
<FN>
Note: The authorized capital stock consists of 10,000,000 shares of common stock, par value $.08 per share.
</TABLE>
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
August 31, 1999
(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, 1999, 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, 1999, 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, 1999, for information on commitments and contingencies.
(6) Aggregate cost of available-for-sale securities exceeded aggregate market
value by approximately $6,560 at August 31, 1999.
(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.
8
<PAGE>
The following table illustrates the required disclosure of the
reconciliation of the numerators and denominators of the basic and diluted
EPS computations.
<TABLE>
<CAPTION>
For the Three Months Ended August 31, 1999
-------------------------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
-------------------- ------------------ ------------------
<S> <C> <C> <C>
Basic EPS -
Loss attributable to common
Shareholders................................ $ (987,200) 4,469,010 $ (.22)
------------------
------------------
Effect of dilutive securities - Options.......... - -
-------------------- ------------------
Diluted EPS -
Loss attributable to common share-
Holders plus assumed conversions............ $ (987,200) 4,469,010 $ (.22)
-------------------- ------------------ ------------------
-------------------- ------------------ ------------------
<CAPTION>
For the Three Months Ended August 31, 1998
-------------------------------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
-------------------- ------------------ ------------------
<S> <C> <C> <C>
Basic EPS -
Loss attributable to common
Shareholders................................ $ 16,689) 3,974,909 $ (.00)
------------------
------------------
Effect of dilutive securities - Options.......... - -
-------------------- ------------------
Diluted EPS -
Loss attributable to common share-
Holders plus assumed conversions............ $ (16,689) 3,974,909 $ (.00)
-------------------- ------------------ ------------------
-------------------- ------------------ ------------------
</TABLE>
9
<PAGE>
(8) Financial information about foreign and domestic operations and export
sales is as follows:
For the Three Months Ended
8/31/99 8/31/98
------- -------
Revenues from sales to unaffiliated customers:
United States $1,098,675 $1,154,870
Asia 70,481 109,169
Europe 319,282 418,525
South America 114,332 201,927
Other 221,814 271,514
------- -------
1,824,584 $2,156,005
No other geographic concentrations exist where net sales exceed 10% of
total net sales.
Operating profit (loss):
United States $(1,067,245) $ 10,494
Asia (18,416) (9,701)
Europe (71,608) (21,614)
South America (22,664) (8,343)
Other (45,322) (16,194)
-------- --------
$(1,225,255) (45,358)
(9) On June 11, 1999, the Company completed two private placement agreements to
sell and issue a total of 400,000 (50,000 of which were sold to related
parties) shares of the Company's common stock at $5.00 per share. The
Company also issued 8,000 shares of common stock to a consultant for
services provided.
On June 11,1999, the company issued 1,200,000 options to purchase shares of
the Company's stock to employees and non-employees. The purchase price of
the options is $3.00 per share. The options are exercisable for a period
of ten years. The Company recorded $58,806 related to the fair value of
options granted to non-employees.
One June 11, 1999, the Company issued 1,000,000 stock purchase warrants to
an unaffiliated entity for consulting and fund raising services
rendered. The holders are granted the right to purchase common stock at an
exercise price of $3.00 per share through the year 2005. The Company
valued these warrants at $1,362,880. Of this, $588,063 was expensed for
consulting services and $588,063 was recorded as reduction of paid in
capital.
On June 11, 1999, the Company entered into a Five Year Back-End Processing
Agreement with an unaffiliated entity. The unaffiliated entity will develop
customized back-end processing to enable the Company to process customer
prescription orders on-line and insurance claims and payments. In
addition, the unaffiliated entity transferred and assigned to the Company
the right, title and interest in and to the internet domain name
"TheBigRX.com" and all rights to any trademark relating thereto. The
Company issued 410,000 stock purchase warrants for these services. The
holder is granted the right to purchase common stock at an exercise price
10
<PAGE>
of $5.00. The Company valued these warrants at $333,000 and will be
expensing them over sixty months. During the three months ended August
31, 1999, $16,646 of this was expensed.
On June 11, 1999, the Company entered into a Five Year Strategic Marketing
Agreement with TheBigHub.com whereby The BigHub.com will provide strategic
placement of advertising and marketing for Biomerica's BigRX.com on its
website. "TheBigRX.com" and all rights to any trademark relating thereto.
The Company issued 250,000 stock purchase warrants for these services. The
holder is granted the right to purchase common stock at an exercise price
of $5.00. The Company valued these warrants at $203,000 and will be
expensing them over sixty months. During the quarter ended August 31,
1999, $10,150 of this was expensed.
During the three months ended August 31, 1999, the Company recorded
compensation expense of $3,112 related to the amortization of the fair
value of options to purchase common stock previously issued.
Between July 1, 1999 and October 10, 1999, the Company granted 424,000
options to purchase shares of the Company's stock to employees and non-
employees. The purchase price of the options range from $2.06 to $3.00 per
share.
On June 16, 1999, the Company entered into a Letter of Intent with an
underwriter with respect to a secondary public offering. It is anticipated
the offering will consist of approximately 1,500,000 to 1,700,000 shares of
the Company's previously unissued common stock. The offering price per
share will be subject to market and other conditions at the time of the
offering.
(10) The Year 2000 problem is the result of computer programs being written to
recognize two digits rather than four to define the applicable year. This
causes computer programs to interpret a date using "00" as the year 1900
rather than the year 2000, which could result in computer failures and
miscalculations. The effects of this issue will vary from system to system
and may adversely affect an entity's operations and its ability to prepare
financial statements. The Company has undertaken certain corrective
actions to ensure that our hardware and software systems used to manage our
business are Year 2000 compliant and will continue to function properly in
the year 2000. However, there can be no assurance that Year 2000 problems
will not be encountered or that the costs incurred to resolve such problems
will not be material. Additionally, there can be no assurance that the
Year 2000 problem will not affect the Company by causing disruptions in the
business operations of persons with whom the Company does business, such as
customers or suppliers. Year 2000 problems could have a material adverse
effect on the Company.
The Company currently operates a Microsoft-based LAN system upgraded in
1999. Biomerica and AIT have upgraded all accounting related hardware,
the server and the accounting software. Year 2000 costs to date have been
immaterial and are not expected to be material in the future. The
accounting and record-keeping software that is employed is actively
supported by the developer vendor and is in wide use.
Historically the Company has not placed orders electronically, nor does the
Company make disbursements to vendors or employees in that medium.
However, the Company anticipates establishing such orders with vendors in
the future. The Company has no way of knowing how the Year 2000 may affect
its various vendors in their ability to ship products or its customers in
their ability to purchase products. The Company believes that the Year
2000 issue will not have a material impact on our internal data records.
11
<PAGE>
The Company has conducted a vendor and service provider compliance survey
to determine which of the companies we deal with are addressing the Year
2000 issue and the progress they are making on it. No responses received
by the Company's vendors and/or service providers indicate that their Year
2000 issues will adversely affect the Company.
However, if the necessary providers of power, communications and other such
providers of important services are not fully prepared for the Year 2000,
the Year 2000 could have a material impact on the Company. The Company has
no way of knowing how the Year 2000 will affect Internet functions and if
Internet functions are interrupted, there could be a material impact on
the Company.
AIT outsources its computer needs to Biomerica. Lancer has upgraded its
accounting and MRP software for its main frame computer system to be Year
2000 compliant. This software is actively supported by the developer.
Lancer does not anticipate incurring significant additional costs too be
completely Year 2000 compliant.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND SELECTED FINANCIAL DATA
The statements in this Report on Form 10-QSB and other statements made by
Biomerica, Inc. that relate to future plans, events or performance are forward-
looking statements which involve risks and uncertainties. Actual results,
events or performance may differ materially from those anticipated in any
forward-looking statements as a result of a variety of factors, including those
set forth in this Report on Form 10-QSB.
Operations for the past two years relate to Biomerica's historic
diagnostic, orthodontic and allergy product businesses. Operations for the
Internet division began after the Company raised $2 million in equity in
June 1999. Start-up costs for this division are included in administrative
costs. The Internet division has generated no revenues to date.
RESULTS OF OPERATIONS
Consolidated net sales for Biomerica were $1,824,584 for the first quarter
of fiscal 2000 as compared to $2,156,005 for the same period in the previous
year. This represents a decrease of $331,421, or 15%. Of the total
consolidated net sales, $1,271,545 is attributable to Lancer, $24,899 to AIT and
$528,140 to Biomerica. Lancer sales decreased by $268,757 over the previous
fiscal year primarily due to decreased foreign sales in Europe and South America
attributable to economic conditions and seasonal demand. Increased discounting
contributed to slightly lower domestic sales at Lancer. Biomerica sales
decreased by $60,912 primarily due to slower foreign sales. AIT had a sales
decline of $1,752.
Cost of sales decreased by $35,502, or 4%. Lancer's cost of sales as a
percentage of sales increased from 61.1% to 70.9%. This increase was
attributable to decreased production and capitalization, while costs remained
fixed for the lower volume of sales. Biomerica's costs increased from 59.4% of
sales to 66.7% due to fixed costs and increased wages and related costs AIT had
an increase in cost of goods from 85.5% of sales to 93.1% of sales due higher
wages and materials.
Selling, general and administrative costs increased by $180,482, or 23%.
Lancer had increased selling, general and administrative costs of $14,980 due to
an increase in financial personnel and professional fees. Biomerica had an
increase of $120,178, which was due to increased payroll and other
expenses related to the BigRx.com division of Biomerica. AIT had an increase of
$45,324 due to increased legal and accounting costs associated with the filing
of AIT's Form 10-SB and Form 10-KSB.
Non-cash expenses in connection with the issuance of options and warrants
increased by $685,161 to $687,780 which was due to a one-time transaction charge
from the issuance of options and warrants to strategic partners and other
entities as described in Note 9.
Research and development increased by $17,935, or 16%. Lancer had an
increase in research and development costs of $24,343 due to the development
costs of an innovative dental amalgam. Biomerica had decreased costs of $6,258
due to lower wages and related costs. AIT had a decrease of $150.
13
<PAGE>
Interest expense increased by $1,726 compared to the previous year due to
higher borrowings at Lancer and an increase in prime rate. Other income
increased as a result of an insurance claim settlement of $279,672 for the theft
of inventory at Lancer's Mexicali facility, less $110,000 insurance claim
receivable valued at cost.
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, 1999, for a
more in-depth discussion of subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
As of August 31, 1999, the Company had cash and available-for-sale securities
in the amount of $3,519,533 and working capital of $6,898,187. The Company and
its subsidiaries are currently expected to meet their 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 generated by sales, its working capital
position and existing available financing. The Company's Internet division will
require raising a significant amount of capital to fund its planned operations
until the business can support itself through its operations.
At August 31, 1999, Lancer had a $1,000,000 line of credit with a bank
of which $180,000 was outstanding at August 31, 1999. Borrowings are made at
prime plus .75% (9.0% at August 31, 1999) and are limited to specified
percentages of eligible accounts receivable. The unused portion available under
the line of credit at August 31, 1999 was $182,442. The line of credit expires
on November 3, 1999. Lancer is not required to maintain compensating balances
in connection with this borrowing arrangement.
During the first quarter of fiscal 2000, cash and cash equivalents
increased by $1,722,359 due to the private placement of $2,000,000 in June (see
Note 9). This was offset by private placement expenses. Cash flow was also
affected by the purchase of $84,090 of property and equipment, primarily as a
result of purchases related to the BigRx.com at Biomerica. Cash flow declined
by $112,699 due to payment of accounts payables and other accrued liabilities
and by $122,403 due to an increase in inventories. Cash flow increased due to
the collection of $100,000 by AIT for consulting services, by $110,000 for the
collection by Lancer of an insurance claim and by $166,325 for decreases in
accounts receivable.
The Company intends to make significant investments in the Internet
division to complete development of and establish a market for our medication
management oriented online pharmacy and ReadyScript prescription automation
pharmacy. The Company will have to raise additional capital for this operation.
An SB-2 has been filed with the Securities and Exchange Commission for this
purpose.
14
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS. Inapplicable.
Item 2. CHANGES IN SECURITIES IN SECURITIES AND USE OF PROCEEDS
1. On June 11, 1999, pursuant to a stock purchase agreement, the
Company sold 350,000 shares of restricted common stock to RidgeRose
Capital Partners, LLC at a purchase price of $5.00 per share.
2. On June 11, 1999, pursuant to a stock purchase agreement, the
Company sold 50,000 shares of restricted common stock to Zackary
Irani and Janet Moore at a purchase price of $5.00 per share.
3. One June 11, 1999, pursuant to a back-end processing agreement, the
Company issued a warrant to purchase 660,000 shares of restricted
common stock to TheBigStore.com. The warrants are exercisable for
a period of 5 years at an exercise price of $5.00 per share.
4. One June 10, 1999, in consideration for services rendered, the
Company issued a warrant to purchase 1,000,000 shares of restricted
common stock to RJM Consulting, LLC. The warrant is exercisable
for a period of 5 years at an exercise price of $3.00 per share.
5. On June 10, 1999, pursuant to a non-qualified option agreement, the
Company granted to Zackary Irani options to purchase 1,000,000
shares of restricted common stock. The options are exercisable for
a period of 10 years at an exercise price of $3.00 per share.
6. One June 10, 1999, pursuant to non-qualified option agreements, the
Company granted to various of its directors, consultants and
employees options to purchase an aggregate of 200,000 shares of
restricted common stock. The options are exercisable for a period
of 10 years at an exercise price of $3.00 per share.
No underwriter was involved in any of the above issuances of
securities. All of the above securities were issued in reliance upon
the exemptions set forth in Section 4(2) of the Securities Act
(including, in certain instances Regulation D promulgated thereunder)
on the basis that they were issued under circumstances not involving
a public offering.
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. The Company filed a Form 8-K
on July 7, 1999.
Exhibit
No. Description
------- -----------
3.1 Certificate of Incorporatin of Registrant filed with the
Secretary of the State of Delaware on September 22, 1971
(incorporated by reference to Exhibit 3.1 filed with
Amendment No. 1 to Registration Statement on Form S-1,
Commission File No. 2-83308).
3.2 Certificate of Amendment to Certificate of Incorporation of
Registrant filed with the Secretary of the State of Delaware
on February 6, 1978 (incorporated by reference to Exhibit 3.1
filed with Amendment No. 1 to Registration Statement on Form
S-1, Commission File No. 2-83308).
3.3 Certificate of Amendment to Certificate of Incorporation of
Registrant filed with the Secretary of the State of Delaware
on February 4, 1983 (incorporated by reference to Exhibit 3.1
filed with Amendment No. 1 to Registration Statement on Form
S-1, Commission File No. 2-83308).
3.4 Certificate of Amendment to Certificate of Incorporation of
Registrant filed with the Secretary of the State of Delaware
on January 19, 1987 (incorporated by reference to Exhibit 3.4
filed with Form 8 Amendment No. 1 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended May 31, 1987.)
3.5 Certificate of Amendment of Certificate of Incorporation of
Registrant filed November 4, 1987 with the Secretary of the
State of Delaware (incorporated by reference to Exhibit 3.1
filed with Amendment No. 1 to Registration Statement on Form
S-1, Commission File No. 2-83308).
15
<PAGE>
3.6 Bylaws of the Registrant (incorporated by reference to
Exhibit 3.2 filed with Amendment No. 1 to Registration
Statement on Form S-1, Commission File No. 2-83308).
3.7 Certificate of Amendment of Certificate of Incorporation of
Registrant filed with the Secretary of the State of Delaware
on December 20, 1994 (incorporated by reference to Exhibit
3.7 filed with Registrant's Annual Report on Form 10-KSB for
the fiscal year ended May 31, 1995).
4.1 Specimen Stock Certificate of Common Stock of Registrant.
(incorporated by reference Exhibit filed with the
Registration Statement on Form SB-2 on September 16, 1999).
10.1 Stock Purchase Agreement by and between Biomerica, Inc.,
RidgeRose Capital Partners, LLC and Zackary Irani and Janet
Moore dated June 11, 1999 (incorporated by reference to
Exhibit 10.10 filed with Form 8-K on July 7, 1999).
10.2 Stock Purchase Agreement by and between Biomerica, Inc. and
Zackary Irani and Janet Moore dated June 11, 1999
(incorporated by reference to Exhibit 10.10 filed with
Form 8-K on July 7, 1999).
10.3 Back-end Processing Agreement by and between TheBigSore.com,
Inc. and Biomerica, Inc. and dated June 11, 1999
(incorporated by reference to Exhibit 10.12 filed with
Form 8-K on July 7, 1999).
10.4 Common Stock Purchase Warrant granted to TheBigStore.com,
Inc. dated June 11, 1999 (incorporated by reference to
Exhibit 10.13 filed with Form 8-K on July 7, 1999).
10.5 Common Stock Purchase Warrant granted to RJM Consulting,
LLC dated June 11, 1999 (incorporated by reference to
Exhibit 10.14 filed with Form 8-K on July 7, 1999).
10.6 Non-Qualified Option Agreement by and between Zackary
Irani and the Company dated June 10, 1999 (incorporated by
reference to Exhibit 10.15 filed with Form 8-K on July 7,
1999).
10.7 Non-Qualified Option Agreement by and between Janet Moore
and the Company dated June 10, 1999 (incorporated by
reference to Exhibit 10.16 filed with Form 8-K on July 7,
1999).
10.8 Non-Qualified Option Agreement by and between Philip
Kaplan, M.D. and the Company dated June 10, 1999
(incorporated by reference to Exhibit 10.17 filed with Form
8-K on July 7, 1999).
10.9 Non-Qualified Option Agreement by and between Robert A.
Orlando, M.D. and the Company dated June 10, 1999
(incorporated by reference to Exhibit 10.18 filed with Form
8-K on July 7, 1999).
10.10 Private Placement Memorandum of Biomerica, Inc. dated June 9,
1999 offering 400,000 shares of its Common Stock at $5.00
per share (incorporated by reference to Exhibit 10.18
filed with the Registration Statement on Form SB-2 on
September 16, 1999).
10.11 Employment Agreement entered into as of August 30, 1999 by
and between Internet division of Biomerica, Inc. and Steven
J. Goto (incorporated by reference to Exhibit 10.19 filed
with the Registration Statement on Form SB-2 on September
16, 1999).
10.12 Employment Offer Letter dated August 12, 1999 from Biomerica,
Inc. to Pete McKinley to join the Internet division of
Biomerica, Inc. (incorporated by reference to Exhibit 10.20
filed with the Registration Statement on Form SB-2 on
September 16, 1999).
10.13 Employment Offer Letter dated July 2, 1999 from Biomerica,
Inc. to Richard Jay, Pharm.D. to join the Internet division
Biomerica, Inc. (incorporated by reference to Exhibit 10.21
filed with the Registration Statement on Form SB-2 on
September 16, 1999).
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 20, 1999
BIOMERICA, INC.
By: /S/ Zackary S. Irani
-----------------------------
Zackary Irani
President, Chief Executive Officer
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> AUG-31-1999
<CASH> 3,391,564
<SECURITIES> 127,969
<RECEIVABLES> 321,211
<ALLOWANCES> 193,242
<INVENTORY> 3,177,498
<CURRENT-ASSETS> 8,415,499
<PP&E> 3,274,243
<DEPRECIATION> 2,826,724
<TOTAL-ASSETS> 9,369,900
<CURRENT-LIABILITIES> 1,517,312
<BONDS> 0
0
0
<COMMON> 362,475
<OTHER-SE> 5,153,339
<TOTAL-LIABILITY-AND-EQUITY> 9,369,900
<SALES> 1,824,584
<TOTAL-REVENUES> 1,824,584
<CGS> 1,275,974
<TOTAL-COSTS> 1,275,974
<OTHER-EXPENSES> 1,773,865
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,705
<INCOME-PRETAX> (984,800)
<INCOME-TAX> 2,400
<INCOME-CONTINUING> (987,200)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (987,200)
<EPS-BASIC> (.22)
<EPS-DILUTED> (.22)
</TABLE>
