10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2013

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-8765

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.)

17571 Von Karman Avenue, Irvine, CA                                              92614

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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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(Former name, former address and former fiscal year, if changed since last report.)

  (TITLE OF EACH CLASS)                         (NAME OF EACH EXCHANGE ON WHICH REGISTERED)

  ---------------------                   -------------------------------------------

  Common, par value $.08                                  OTC-BULLETIN BOARD

Securities registered pursuant to Section 12(g) of the Act:

(TITLE OF EACH CLASS)

COMMON STOCK, PAR VALUE $0.08

Indicate by check whether the registrant (1) 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 by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (paragraph 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

         Yes [X] No [_]

Indicate by check mark whether the registrant is a large accelerated, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

           Large Accelerated Filer [_]           Accelerated Filer [_] 

           Non-Accelerated Filer   [_]           Smaller Reporting Company [X]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).

         Yes [_] No [X]

Indicate the number of shares outstanding of each of the registrant's common stock, as of the latest practicable date:  7,291,214 shares of common stock, par value $0.08, as of January 14, 2014.

BIOMERICA, INC.
INDEX
PART I	Financial Information
Item 1.	Financial Statements:
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (unaudited) – Three and Six Months Ended November 30, 2013 and 2012	1
	Condensed Consolidated Balance Sheets (unaudited) November 30, 2013 and (audited) May 31, 2013	2
	Condensed Consolidated Statements of Cash Flows (unaudited) - Six Months Ended November 30, 2013 and 2012	3
	Notes to Condensed Consolidated Financial Statements (unaudited)	4 - 8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	9 - 10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	10
Item 4.	Controls and Procedures	10
	PART II Other Information
Item 1.	Legal Proceedings	11
		11
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities & Use of Proceeds	11
Item 3.	Defaults upon Senior Securities	11
Item 4.	Mine Safety Disclosures	11
Item 5.	Other Information	11
Item 6.	Exhibits	12
	Signatures	13

PART I - FINANCIAL INFORMATION

SUMMARIZED FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIOMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
	Six Months Ended				Three Months Ended
	November 30,				November 30,
	2013		2012		2013		2012
Net sales	$	1,948,580	$	3,585,719	$	934,841	$	1,883,771
Cost of sales		(1,432,645)		(2,084,259)		(679,197)		(1,114,560)
Gross profit		515,935		1,501,460		255,644		769,211
Operating Expenses:
Selling, general and administrative		709,160		738,094		366,357		405,968
Research and development		228,046		203,722		136,789		115,741
Total operating expenses		937,206		941,816		503,146		521,709
(Loss) income from operations		(421,271)		559,644		(247,502)		247,502
Other Income (Expense):
Dividend and interest income		10,199		2,243		4,145		1,127
Interest expense		-		(308)		-		-
Total other income		10,199		1,935		4,145		1,127
(Loss) income before income tax		(411,072)		561,579		(243,357)		248,629
Provision for income taxes		-		(33,029)		-		(11,710)
Net (loss) income	$	(411,072)	$	528,550	$	(243,357)	$	236,919
Basic net (loss) income per common share	$	(0.06)	$	0.08	$	(0.03)	$	0.03
Diluted net (loss) income per common share	$	(0.06)	$	0.07	$	(0.03)	$	0.03
Weighted average number of common and common
equivalent shares:
Basic		7,277,659		6,959,224		7,278,967		6,966,185
Diluted		7,277,659		7,282,202		7,278,967		7,385,139
Net (loss) income	$	(411,072)	$	528,550	$	(243,357)	$	236,919
Other comprehensive loss, net of tax:
Foreign currency translation		(14)		(554)		77		(473)
Comprehensive (loss) income	$	(411,086)	$	527,996	$	(243,280)	$	236,446

The accompanying notes are an integral part of these statements.

1

BIOMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
		November 30,		May 31,
		2013		2013
		(unaudited)		(audited)
Assets
Current Assets:
Cash and cash equivalents	$	1,647,559	$	2,469,796
Accounts receivable, less allowance for doubtful accounts of
$120,405 and $115,730 as of November 30, 2013 and May 31, 2013, respectively		821,571		871,660
Inventories, net		1,899,633		1,571,221
Prepaid expenses and other		186,362		196,678
Deferred tax assets, current portion		144,000		144,000
Total current assets		4,699,125		5,253,355
Property and Equipment, net of accumulated depreciation and amortization of
$1,118,240 and $1,032,009 as of November 30, 2013 and May 31, 2013, respectively		652,244		654,620
Deferred Tax Assets, net of current portion		85,000		85,000
Investments		165,324		165,324
Intangible Assets, net		154,079		165,200
Other Assets		71,388		71,388
Total Assets	$	5,827,160	$	6,394,887
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable and accrued expenses	$	279,974	$	351,917
Accrued compensation		120,618		207,976
Total current liabilities		400,592		559,893
Commitments and Contingencies (Note 5)
Shareholders' Equity:
Preferred stock, no par value authorized 5,000,000 shares, none issued
and none outstanding at November 30, 2013 and May 31, 2013		-		-
Common stock, $0.08 par value authorized 25,000,000 shares, issued
and outstanding 7,279,214 and 7,274,714 at November 30 and May 31, 2013, respectively		582,336		581,976
Additional paid-in-capital		18,036,696		18,034,396
Accumulated other comprehensive loss		(9,020)		(9,006)
Accumulated deficit		(13,183,444)		(12,772,372)
Total Shareholders' Equity		5,426,568		5,834,994
Total Liabilities and Shareholders' Equity	$	5,827,160	$	6,394,887

The accompanying notes are an integral part of these statements.

2

BIOMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	Six Months Ended
	November 30,
	2013		2012
Cash flows from operating activities:
Net (loss) income	$	(411,072)	$	528,550
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		97,352		110,822
Stock option expense		881		-
Change in provision for losses on accounts receivable		4,675		4,210
Inventory reserve		(6,713)		2,047
Decrease in deferred rent liability		(6,418)		(1,764)
Changes in assets and liabilities:
Accounts receivable		45,414		(313,358)
Inventories		(321,700)		18,921
Prepaid expenses and other assets		10,316		49,413
Accounts payable and other accrued expenses		(65,525)		(27,461)
Accrued compensation		(87,358)		25,618
Net cash (used in) provided by operating activities		(740,148)		396,998
Cash flows from investing activities:
Purchases of property and equipment		(83,855)		(242,416)
Net cash used in investing activities		(83,855)		(242,416)
Cash flows from financing activities:
Proceeds from exercise of stock options		1,780		5,999
Payments on line of credit or equipment loan		-		(43,000)
Net cash provided by (used in) financing activities		1,780		(37,001)
Effect of exchange rate changes in cash		(14)		(554)
Net (decrease) increase in cash and cash equivalents		(822,237)		117,027
Cash and cash equivalents at beginning of period		2,469,796		1,077,342
Cash and cash equivalents at end of period	$	1,647,559	$	1,194,369
Supplemental Disclosure of Cash-Flow Information:
Cash paid during the period for:
Interest	$	-	$	307
Income taxes	$	3,500	$	108,160

The accompanying notes are an integral part of these statements.

3

BIOMERICA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1: Basis of Presentation

The information set forth in these condensed consolidated financial statements is unaudited and reflects all adjustments which, in the opinion of management, are necessary to present a fair statement of the consolidated results of operations of Biomerica, Inc. and subsidiaries (the “Company”), 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 flows in conformity with generally accepted accounting principles. All adjustments that were made are of normal recurring nature.

The unaudited Condensed Consolidated Financial Statements and Notes are presented as permitted by the requirements for Form 10-Q and do not contain certain information included in our annual financial statements and notes. The condensed consolidated balance sheet data as of May 31, 2013 was derived from audited financial statements. The accompanying interim condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on November 30, 2013 for the fiscal year ended May 31, 2013. The results of operations for our interim periods are not necessarily indicative of results to be achieved for our full fiscal year.

Note 2: Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Biomerica, Inc. as well as the Company’s German subsidiary and Mexican subsidiary which have not begun operations. All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could materially differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and money market accounts with original maturities of less than three months.

Accounts Receivable

The Company extends unsecured credit to its customers on a regular basis.  International accounts are required to prepay until they establish a history with the Company and at that time, they are extended credit at levels based on a number of criteria.  Credit levels are approved by designated upper level management.  Domestic customers are extended initial credit limits until they establish a history with the Company or submit credit information.  All increases in credit limits are also approved by designated upper level management.  Management evaluates receivables on a quarterly basis and adjusts the reserve for bad debt accordingly.  Balances over ninety days old are reserved for unless collection is reasonably assured.  Management evaluates quarterly what items to charge off.  Any charge-offs are approved by upper level management prior to charging off.

Occasionally certain long-standing customers, who routinely place large orders, will have unusually large accounts receivables balances relative to the total gross accounts receivables. Management monitors the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders.

4 

Inventories

The Company values inventory at the lower of cost (determined using a combination of specific lot identification and the first-in, first-out methods) or market. Management periodically reviews inventory for excess quantities and obsolescence. Management evaluates quantities on hand, physical condition, and technical functionality as these characteristics may be impacted by anticipated customer demand for current products and new product introductions. The reserve is adjusted based on such evaluation, with a corresponding provision included in cost of sales. Abnormal amounts of idle facility expenses, freight, handling costs and wasted material are recognized as current period charges and the allocation of fixed production overhead is based on the normal capacity of the Company’s production facilities.

The approximate balances of inventories are the following at:

	November 30,		May 31,
	2013		2013
Raw materials	$	864,000	$	787,000
Work in progress		755,000		555,000
Finished products		281,000		229,000
Total	$	1,900,000	$	1,571,000

Property and Equipment

Property and equipment are stated at cost. Expenditures for additions and major improvements are capitalized. Repairs and maintenance costs are charged to operations as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts, and gains or losses from retirements and dispositions are credited or charged to income.

Depreciation and amortization are provided over the estimated useful lives of the related assets, ranging from 5 to 10 years, using the straight-line method. Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the term of the lease. Depreciation and amortization expense on property and equipment and leasehold improvements amounted to $43,452 and $65,435 for the three months ended November 30, 2013 and 2012, and $86,231 and $93,263 for the six months ended November 30, 2013 and 2012, respectively.

Intangible Assets

Intangible assets include trademarks, product rights, licenses, technology rights and patents, and are accounted for based on Accounting Standards Codification ASC 350 “Intangibles – Goodwill and Other” (ASC 350). In that regard, intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets are being amortized using the straight-line method over the useful life; not to exceed 18 years for marketing and distribution rights, 10 years for purchased technology use rights, licenses, and 17 years for patents. Amortization amounted to $3,665 and $8,779 for the three months ended November 30, 2013 and 2012, respectively, and $11,121 and $17,559 for the six months ended November 30, 2013 and 2012, respectively.

Stock-Based Compensation

The Company follows the guidance of the accounting provisions of ASC 718 “Share-based Compensation” (ASC 718), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants and options). The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected forfeiture rate, expected term, and the risk-free interest rate.

5

Expected volatilities are based on weighted averages of the historical volatility of the Company’s stock and other factors estimated over the expected term of the options. The expected forfeiture rate is based on historical forfeitures experienced. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.

The following summary presents the options and warrants granted, exercised, expired, cancelled and outstanding as of November 30, 2013:

	Option Shares	Exercise Price Weighted Average
Outstanding May 31, 2013	846,500	$	0.47
Granted	52,000	$	0.84
Exercised	(4,500)	$	0.40
Cancelled or expired	(10,000)	$	0.43
Outstanding November 30, 2013	884,000	$	0.49

     On June 10, 2013, the Board granted a stock option to purchase 20,000 shares of the Company’s common stock at the purchase price of $0.83 per share.

     On November 13, 2013, the Board granted stock options to purchase 32,000 shares of the Company’s common stock at the purchase price of $0.84 per share.

     In June 2013, options to exercise 2,000 shares of the Company’s common stock were exercised at the exercise price of $0.38 per share.  Net proceeds to the Company were $760.

     In September 2013, options to exercise 2,500 shares of the Company’s common stock were exercised at the exercise prices of $0.45 and $0.38 per share.

     In December 2013, options to exercise 12,000 shares of the Company’s common stock were exercised at the exercise price of $0.38 per share.

Revenue Recognition

Revenues from product sales are recognized at the time the product is shipped, customarily FOB shipping point, at which point title passes. An allowance is established when necessary for estimated returns as revenue is recognized. In conjunction with sales to certain customers, the Company provides free products upon attaining certain levels of purchases by the customer. The Company accounts for these free products in accordance with ASC 605-50 “Revenue Recognition – Customer Payments and Incentives” and recognizes the cost of the product as part of cost of sales.

Investments

From time-to-time, the Company makes investments in privately-held companies.  The Company determines whether the fair values of any investments in privately-held entities have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable.  If the Company considers any such decline to be other than temporary (based on various factors, including historical financial results, and the overall health of the investee’s industry), a write-down to estimated fair value is recorded.  The Company currently has not written down the investment and no events have occurred which could indicate the carrying value to be less than the fair value. Investments represent the Company’s investment in a Polish distributor which is primarily engaged in distributing medical devices.  The Company owns approximately 6% of the investee, and accordingly, applies the cost method to account for the investment.  Under the cost method, investments are recorded at cost, with gains and losses recognized as of the sale date, and income recorded when received.

6 

Shipping and Handling Fees and Costs

Shipping and handling fees billed to customers are classified as revenues, and shipping and handling costs are classified as cost of sales. The Company included shipping and handling fees billed to customers in net sales. The Company included shipping and handling costs associated with inbound freight and unreimbursed shipping to customers in cost of sales.

Research and Development

Research and development costs are expensed as incurred.

Income Taxes

The Company has provided a valuation allowance of $0 as of November 30, 2013 and May 31, 2013.   In May 2013, after analyzing the Company’s tax position, operational history and profitability for the past 3 years, management chose to remove all of the remaining allowance for the uncertainty of its future income, as the determination that it was more likely that the deferred tax asset would be realized in the future.  

Foreign Currency Translation

The subsidiary located in Germany is accounted for primarily using local functional currency. Accordingly, assets and liabilities of this subsidiary are translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period. The resulting adjustments are presented as a separate component of accumulated other comprehensive loss.

Deferred Rent

Incentive payments received from landlords are recorded as deferred lease incentives and are amortized over the underlying lease term on a straight-line basis as a reduction of rent expense. When the terms of an operating lease provide for periods of free rent, rent concessions, and/or rent escalations, the Company establishes a deferred rent liability for the difference between the scheduled rent payment and the straight-line rent expense recognized. This deferred rent liability is amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

Net Income (Loss) Per Share

Basic earnings (loss) per share are computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflect the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible securities. The total amount of anti-dilutive warrants or options not included in the earnings (loss) per share calculation for the three and six months ended November 30, 2013 was 372,816 and 379,180, respectively. There were no anti-dilutive warrants or options excluded from the earnings per share calculation for the three and six months ended November 30, 2012. 

The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.

	Six Months Ended					Three Months Ended
	November 30,				November 30,
	2013		2012			2013		2012
Numerator: (Loss)income from continuing operations	$	(411,072)	$	528,550		$	(243,357)	$	236,919
Denominator for basic net (loss) income Per common share		7,277,659		6,959,224			7,278,967		6,966,185
Effect of dilutive securities: Options and warrants		-		322,978			-		418,954
Denominator for diluted net (loss) income per common share		7,277,659		7,282,202			7,278,967		7,385,139
Basic net (loss) income per common share	$	(0.06)	$	0.08		$	(0.03)	$	0.03
Diluted net (loss) income per common share	$	(0.06)	$	0.07		$	(0.03)	$	0.03

New Accounting Pronouncements

     Management does not believe that any recently issued, but not effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated financial statements.

7

Note 3: Accounts Payable and Accrued Expenses

      The Company’s accounts payable and accrued expense balances consist of the following at:

	November 30,			May 31,
	2013		2013
Accounts payable	$	167,810	$	282,138
Accrued expenses		48,803		-
Deferred rent		63,361		69,779
Total	$	279,974	$	351,917

Note 4: Geographic Information

Financial information about foreign and domestic operations and export sales approximated as follows:

	Six Months Ended				Three Months Ended
	November 30,				November 30,
	2013		2012		2013		2012
Revenues from sales to unaffiliated customers:
United States	$	505,000	$	437,000	$	251,000	$	157,000
Asia		216,000		1,944,000		80,000		1,042,000
Europe		1,199,000		1,183,000		594,000		675,000
South America		7,000		2,000		4,000		2,000
Middle East		20,000		18,000		5,000		7,000
Other		2,000		2,000		1,000		1,000
	$	1,949,000	$	3,586,000	$	935,000	$	1,884,000

No other geographic concentrations exist where net sales exceed 10% of total net sales.

Note 5: Commitments and Contingencies

          On February 13, 2009, the Company renewed the line of credit (the "Line") with its bank which has a borrowing limit of $400,000. The Line is secured by substantially all of the Company’s assets, bears interest at 1.0% plus the Wall Street Journal Prime West Coast Edition prime rate and expires February 24, 2014. The balance at November 30, 2013 and May 31, 2013 was $0.

On June 18, 2009, the Company entered into an agreement to lease a building in Irvine, California. The lease commenced September 1, 2009 and ends August 31, 2016.  The initial base rent was set at $18,490per month with scheduled annual increases through the end of the lease term. The rent is currently set at $20,810 per month.

8 

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CERTAIN INFORMATION CONTAINED HEREIN (AS WELL AS INFORMATION INCLUDED IN ORAL STATEMENTS OR OTHER WRITTEN STATEMENTS MADE OR TO BE MADE BY BIOMERICA) CONTAINS STATEMENTS THAT ARE FORWARD-LOOKING, SUCH AS STATEMENTS RELATING TO ANTICIPATED FUTURE REVENUES OF THE COMPANY AND SUCCESS OR CURRENT PRODUCT OFFERINGS. SUCH FORWARD-LOOKING INFORMATION INVOLVES IMPORTANT RISKS AND UNCERTAINTIES THAT COULD SIGNIFICANTLY AFFECT ANTICIPATED RESULTS IN THE FUTURE, AND ACCORDINGLY, SUCH RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS MADE BY OR ON BEHALF OF BIOMERICA. THE POTENTIAL RISKS AND UNCERTAINTIES INCLUDE, AMONG OTHERS, FLUCTUATIONS IN THE COMPANY'S OPERATING RESULTS. THESE RISKS AND UNCERTAINTIES ALSO INCLUDE THE SUCCESS OF THE COMPANY IN RAISING NEEDED CAPITAL, THE ABILITY OF THE COMPANY TO MAINTAIN REQUIREMENTS TO BE LISTED ON NASDAQ, THE CONTINUAL DEMAND FOR THE COMPANY'S PRODUCTS, COMPETITIVE AND ECONOMIC FACTORS OF THE MARKETPLACE, AVAILABILITY OF RAW MATERIALS, HEALTH CARE REGULATIONS AND THE STATE OF THE ECONOMY. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF, AND THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS.

OVERVIEW

Biomerica, Inc. and Subsidiaries ("Biomerica", the "Company", "we" or "our") develops, manufactures, and markets medical diagnostic products designed for the early detection and monitoring of chronic diseases and medical conditions. Our medical diagnostic products are sold worldwide in two markets: 1) clinical laboratories and 2) point of care (physicians' offices and over-the-counter drugstores). Our diagnostic test kits are used to analyze blood, urine or stool samples from patients in the diagnosis of various diseases and other medical complications, or to measure the level of specific hormones, antibodies, antigens or other substances, which may exist in the human body in extremely small concentrations.

RESULTS OF OPERATIONS

Consolidated net sales for Biomerica were $934,841 for the three months ended November 30, 2013 as compared to $1,883,771 for the same period in the previous year. This represents a decrease of $948,930 or 50.4%. For the six month period ended November 30, 2013 as compared to 2012, net sales were $1,948,580 as compared to $3,585,719.  This represents a decrease of $1,637,139, or 45.7%.  The decrease for both periods was due to the decrease of sales in Asia which resulted from the restructuring of the Company’s distribution channel in China which is negatively impacting sales in the near term. Management anticipates that sales volume through this distribution channel shall increase in the balance of the fiscal year.  In addition, Biomerica will begin supplying two of its point of care products to a multinational pharmaceutical company for distribution in one European country with the possibility of expanding into other countries throughout Europe. In addition, the multinational company is considering distribution of other Biomerica point of care products.

 For the three months ended November 30, 2013 as compared to November 30, 2012, cost of sales increased as a percentage of sales from 59.2% of sales or $1,114,560, to 72.7% of sales or $679,197. For the six months ended November 30, 2013 as compared to 2012, cost of sales increased as a percentage of sales from 58.1% of sales or $2,084,259, to 73.5% of sales or $1,432,646. The increase in cost of sales as a percentage for both periods was a result of decreased sales without a corresponding decrease in expenses due to certain fixed costs.  Because produced units were lower, the Company did not realize the benefits of economies of scale.

         For the three months ended November 30, 2013 compared to 2012, selling, general and administrative costs decreased by $39,611, or 9.8%. For the six month period ended November 30, 2013 as compared to 2012, these expenses decreased by $28,934, or 3.9%. The overall decrease in selling, general and administrative costs was primarily due to the Mexico facility restructuring in the second quarter of 2013.

         For the three months ended November 30, 2013 compared to 2012, research and development expenses increased by $21,048 or 18.2%. For the six month period ended November 30, 2013 as compared to 2012, these expenses increased by $24,324, or 11.9%.  The increases were primarily due to materials purchased to be used in development and refining of certain products and the addition of personnel in the research and development department.

         For the three months ended November 30, 2013 as compared to November 30, 2012, dividend and interest income and interest expense remained relatively constant. 

9

LIQUIDITY AND CAPITAL RESOURCES

       As of November 30, 2013 and May 31, 2013, the Company had cash and cash equivalents in the amount of $1,647,559 and $2,469,796 and working capital of $4,298,533 and $4,693,462, respectively.

       During the six months ended November 30, 2012 the Company’s operations used cash of $740,148 as compared to cash generated of $396,998 in the same period of the prior fiscal year. Cash used by operations in fiscal 2014 was a result of a net loss of $411,072, payment of accounts payable of $65,525, increases in inventory of $321,700 of inventory, and payout of accrued compensation of $87,358. In addition to this there were non-cash charges of approximately $97,352 for depreciation and amortization expense. Cash used in investing activities in the six months ended November 30, 2013 was $83,855 as compared to $242,416 in the six months ended November 30, 2012.  Cash provided by financing activities in the six months ended November 30, 2013 was $1,780 as compared to cash used of $37,001 in the six months ended November 30, 2012.  Cash provided by financing activities for the six months ended November 30, 2013, was a result of the exercise of stock options, whereas cash used of $37,001 in the prior fiscal year was due to the payment of $43,000 on the line of credit which was offset by $5,999 for the exercise of stock options.

     On February 13, 2009, the Company renewed the line of credit (the "Line") with its bank which has a borrowing limit of $400,000. The Line is secured by substantially all of the Company’s assets, bears interest at 1.0% plus the Wall Street Journal Prime West Coast Edition prime rate and expires February 24, 2014. The balance at November 30, 2013 and May 31, 2013 was $0.

OFF BALANCE SHEET ARRANGEMENTS - None.

CRITICAL ACCOUNTING POLICIES

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These relate to revenue recognition, bad debts, inventory overhead application, and inventory reserve. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial conditions or results of operations. We suggest that our significant accounting policies be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

       We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4.  CONTROLS AND PROCEDURES

         Our management evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this report. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives and the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at the "reasonable assurance" level. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file and submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms; and (2) accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

         There have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during our last fiscal quarter that has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.

10

PART II. OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS.  None.

Item 1A. RISKS FACTORS.

         You should read the following factors in conjunction with the factors discussed elsewhere in this and our other filings with the Securities and Exchange Commission and in materials incorporated by reference in these filings. The following is intended to highlight certain factors that may affect the financial condition and results of operations of Biomerica, Inc. and are not meant to be an exhaustive discussion of risks that apply to companies such as Biomerica, Inc. Like other businesses, Biomerica, Inc. is susceptible to macroeconomic downturns in the United States or abroad, as were experienced in recent history that may affect the general economic climate and performance of Biomerica, Inc. or its customers.

         Aside from general macroeconomic downturns, the additional material factors that could affect future financial results include, but are not limited to: Terrorist attacks and the impact of such events; diminished access to raw materials that directly enter into our manufacturing process; shipping labor disruption or other major degradation of the ability to ship 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 an escalation of terrorist or counter terrorist activity; 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 effect on our revenues and profitability; possible costs or difficulty 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 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; concentrations of sales with certain distributors, which have been increasing, could adversely affect the results of the Company if the Company were to lose the sales of that distributor and other factors beyond our control; high balances carried on accounts receivables from concentrated customers; and the costs of recalls, should such occasion arise.  All these factors make it difficult to predict operating results for any particular period.

Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. None. 

Item 3.  DEFAULTS UPON SENIOR SECURITIES.  None. 

Item 4.  MINE SAFETY DISCLOSURES. None. 

Item 5.  OTHER INFORMATION.

     We held our Annual Meeting of Stockholders on December 11, 2013, to consider and vote on the matters listed below.  The proposals are described in detail in the Proxy Statement filed with the Securities and Exchange Commission on September 28, 2013.  The final voting results from the meeting are set forth below.

Proposal 1:  Election of Directors

     Based on the following votes, the individuals named below were each elected to serve as our directors until our next Annual Meeting of Stockholders.

Name                       Votes For     Votes Withheld

Zackary Irani                 2,976,867               86,697

Janet Moore                   2,989,363               74,204

Allen Barbieri                3,037,863               25,704

Dr. Francis Cano              3,037,863               25,704

Dr. Jane Emerson              3,035,538               28,029

Proposal 2: Ratification of Selection of Independent Auditors

Based on the following votes, the selection of PKF Certified Public Accountants, A Professional Corporation as our independent registered public accounting firm for the 2014 fiscal year was ratified.

Votes ForVotes AgainstAbstentions  Broker Non-Votes

       5,600,998     47,811            9,287              1,046,278

11

Item 6.  EXHIBITS.

The following exhibits are filed or furnished as part of this quarterly report on Form 10-Q:

Exhibit No.			Description
	31.1	*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Zackary S. Irani
	31.2	*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act — Janet Moore
	32.1	*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act — Zackary S. Irani
	32.2	*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act — Janet Moore
	101		Interactive data files pursuant to Rule 405 Regulation S-T, as follows:
			101.INS-XBRL Instance Document
			101.SCH-XBRL Taxonomy Extension Schema Document
			101.CAL-XBRL Taxonomy Extension Calculation Linkbase Document
			101.DEF–XBRL Taxonomy Extension Definition Linkbase Document
			101.LAB-XBRL Taxonomy Extension Label Linkbase Document
			101.PRE-XBRL Taxonomy Extension Presentation Linkbase Document
*	Filed herewith

12

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.

	BIOMERICA, INC.
Date: January 14, 2014
	By:	/S/ Zackary S. Irani
		Zackary S. Irani
		Chief Executive Officer
		(Principal Executive Officer)
Date: January 14, 2014
	By:	/S/ Janet Moore
		Janet Moore
		Chief Executive Officer
		(Principal Financial Officer)

13

EX-31

Exhibit 31.1  

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Zackary S. Irani, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Biomerica, Inc.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of our internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or other persons performing the equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably

likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 14, 2014

/s/ Zackary S. Irani

----------------------

Zackary S. Irani

Chief Executive Officer

(Principal Executive Officer) 

EX-31

EXHIBIT 31.2 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Janet Moore, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Biomerica, Inc.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

      b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

      c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

      d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of our internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or other persons performing the equivalent functions):

      a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

      b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 14, 2014

/s/ Janet Moore

-----------------------

Janet Moore

Chief Financial Officer

(Principal Financial Officer) 

EX-32

EXHIBIT 32.1   

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 Quarterly Report of Biomerica, Inc. (the "Company") on Form 10-Q for the period ending November 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Zackary Irani, Chief Executive Officer of the Company, certify, to the best of my knowledge, Pursuant to Exchange Act Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002,

i.   The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, and

ii.  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

Date: January 14, 2014

EX-32

EXHIBIT 32.2  

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 Quarterly Report of Biomerica, Inc. (the "Company") on Form 10-Q for the period ending November 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Janet Moore, Chief Financial Officer of the Company, certify, to the best of my knowledge, Pursuant to Exchange Act Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002,

i.   The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, and

ii.  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

Date: January 14, 2014

XML

Geographic Information

6 Months Ended

Nov. 30, 2013

Geographic Information Disclosure [Abstract]

Geographic Information Disclosure [Text Block]

Note 4: Geographic Information

Financial information about foreign and domestic operations and export sales approximated as follows:

	Six Months Ended				Three Months Ended
	November 30,				November 30,
	2013		2012		2013		2012
Revenues from sales to unaffiliated customers:
United States	$	505,000	$	437,000	$	251,000	$	157,000
Asia		216,000		1,944,000		80,000		1,042,000
Europe		1,199,000		1,183,000		594,000		675,000
South America		7,000		2,000		4,000		2,000
Middle East		20,000		18,000		5,000		7,000
Other		2,000		2,000		1,000		1,000
Total	$	1,949,000	$	3,586,000	$	935,000	$	1,884,000

No other geographic concentrations exist where net sales exceed 10% of total net sales.

XML

Accounts Payable and Accrued Expenses

6 Months Ended

Nov. 30, 2013

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

Note 3: Accounts Payable and Accrued Expenses

      The Company’s accounts payable and accrued expense balances consist of the following at:

		November 30,		May 31,
	2013		2013
Accounts payable	$	167,810	$	282,138
Accrued expenses		48,803		-
Deferred rent		63,361		69,779
Total	$	279,974	$	351,917

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED) (USD $)	3 Months Ended		6 Months Ended
	Nov. 30, 2013	Nov. 30, 2012	Nov. 30, 2013	Nov. 30, 2012
Net sales	$ 934,841	$ 1,883,771	$ 1,948,580	$ 3,585,719
Cost of sales	(679,197)	(1,114,560)	(1,432,645)	(2,084,259)
Gross profit	255,644	769,211	515,935	1,501,460
Operating Expenses:
Selling, general and administrative	366,357	405,968	709,160	738,094
Research and development	136,789	115,741	228,046	203,722
Total operating expenses	503,146	521,709	937,206	941,816
(Loss) income from operations	(247,502)	247,502	(421,271)	559,644
Other Income (Expense):
Dividend and interest income	4,145	1,127	10,199	2,243
Interest expense				(308)
Total other income	4,145	1,127	10,199	1,935
(Loss) income before income tax	(243,357)	248,629	(411,072)	561,579
Provision for income taxes		(11,710)		(33,029)
Net (loss) income	(243,357)	236,919	(411,072)	528,550
Basic net (loss) income per common share (in Dollars per share)	$ (0.03)	$ 0.03	$ (0.06)	$ 0.08
Diluted net (loss) income per common share (in Dollars per share)	$ (0.03)	$ 0.03	$ (0.06)	$ 0.07
Weighted average number of common and common equivalent shares:
Basic (in Shares)	7,278,967	6,966,185	7,277,659	6,959,224
Diluted (in Shares)	7,278,967	7,385,139	7,277,659	7,282,202
Net (loss) income	(243,357)	236,919	(411,072)	528,550
Other comprehensive loss, net of tax:
Foreign currency translation	77	(473)	(14)	(554)
Comprehensive (loss) income	$ (243,280)	$ 236,446	$ (411,086)	$ 527,996

XML

Basis of Presentation

6 Months Ended

Nov. 30, 2013

Disclosure Text Block [Abstract]

Basis of Accounting [Text Block]

Note 1: Basis of Presentation

The information set forth in these condensed consolidated financial statements is unaudited and reflects all adjustments which, in the opinion of management, are necessary to present a fair statement of the consolidated results of operations of Biomerica, Inc. and subsidiaries (the “Company”), 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 flows in conformity with generally accepted accounting principles. All adjustments that were made are of normal recurring nature.

The unaudited Condensed Consolidated Financial Statements and Notes are presented as permitted by the requirements for Form 10-Q and do not contain certain information included in our annual financial statements and notes. The condensed consolidated balance sheet data as of May 31, 2013 was derived from audited financial statements. The accompanying interim condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on November 30, 2013 for the fiscal year ended May 31, 2013. The results of operations for our interim periods are not necessarily indicative of results to be achieved for our full fiscal year.

XML

Commitments and Contingencies (Details) (USD $)	6 Months Ended
	Nov. 30, 2013	May 31, 2013
Commitments and Contingencies Disclosure [Abstract]
Line of Credit Facility, Maximum Borrowing Capacity (in Dollars)	$ 400,000
Line of Credit Facility, Interest Rate Description	1.0% plus the Wall Street Journal Prime West Coast Edition prime rate
Line of Credit Facility, Expiration Date	Feb. 24, 2014
Line of Credit Facility, Amount Outstanding (in Dollars)	0	0
Lease Agreement Date	Jun. 18, 2009
Lease initiation Date	Sep. 01, 2009
Lease Expiration Date	Aug. 31, 2016
Operating Leases, Rent Expense, Minimum Rentals (in Dollars)	18,490
Operating Leases, Rent Expense (in Dollars)	$ 20,810

XML

Significant Accounting Policies

6 Months Ended

Nov. 30, 2013

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 2: Significant Accounting Policies

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Biomerica, Inc. as well as the Company’s German subsidiary and Mexican subsidiary which have not begun operations. All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could materially differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and money market accounts with original maturities of less than three months.

Accounts Receivable

The Company extends unsecured credit to its customers on a regular basis.  International accounts are required to prepay until they establish a history with the Company and at that time, they are extended credit at levels based on a number of criteria.  Credit levels are approved by designated upper level management.  Domestic customers are extended initial credit limits until they establish a history with the Company or submit credit information.  All increases in credit limits are also approved by designated upper level management.  Management evaluates receivables on a quarterly basis and adjusts the reserve for bad debt accordingly.  Balances over ninety days old are reserved for unless collection is reasonably assured.  Management evaluates quarterly what items to charge off.  Any charge-offs are approved by upper level management prior to charging off.

Occasionally certain long-standing customers, who routinely place large orders, will have unusually large accounts receivables balances relative to the total gross accounts receivables.  Management monitors the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders. 

Inventories

The Company values inventory at the lower of cost (determined using a combination of specific lot identification and the first-in, first-out methods) or market. Management periodically reviews inventory for excess quantities and obsolescence. Management evaluates quantities on hand, physical condition, and technical functionality as these characteristics may be impacted by anticipated customer demand for current products and new product introductions. The reserve is adjusted based on such evaluation, with a corresponding provision included in cost of sales. Abnormal amounts of idle facility expenses, freight, handling costs and wasted material are recognized as current period charges and the allocation of fixed production overhead is based on the normal capacity of the Company’s production facilities.

The approximate balances of inventories are the following at:

	November 30,		May 31,
	2013		2013
Raw materials	$	864,000	$	787,000
Work in progress		755,000		555,000
Finished products		281,000		229,000
Total	$	1,900,000	$	1,571,000

Property and Equipment

Property and equipment are stated at cost. Expenditures for additions and major improvements are capitalized. Repairs and maintenance costs are charged to operations as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts, and gains or losses from retirements and dispositions are credited or charged to income.

Depreciation and amortization are provided over the estimated useful lives of the related assets, ranging from 5 to 10 years, using the straight-line method. Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the term of the lease. Depreciation and amortization expense on property and equipment and leasehold improvements amounted to $43,452 and $65,435 for the three months ended November 30, 2013 and 2012, and $86,231 and $93,263 for the six months ended November 30, 2013 and 2012, respectively.

Intangible Assets

Intangible assets include trademarks, product rights, licenses, technology rights and patents, and are accounted for based on Accounting Standards Codification ASC 350 “Intangibles – Goodwill and Other” (ASC 350). In that regard, intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets are being amortized using the straight-line method over the useful life; not to exceed 18 years for marketing and distribution rights, 10 years for purchased technology use rights, licenses, and 17 years for patents. Amortization amounted to $3,665 and $8,779 for the three months ended November 30, 2013 and 2012, respectively, and $11,121 and $17,559 for the six months ended November 30, 2013 and 2012, respectively.

Stock-Based Compensation

The Company follows the guidance of the accounting provisions of ASC 718 “Share-based Compensation” (ASC 718), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants and options). The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected forfeiture rate, expected term, and the risk-free interest rate.

Expected volatilities are based on weighted averages of the historical volatility of the Company’s stock and other factors estimated over the expected term of the options. The expected forfeiture rate is based on historical forfeitures experienced. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.

The following summary presents the options and warrants granted, exercised, expired, cancelled and outstanding as of November 30, 2013:

	Option Shares	Exercise Price Weighted Average
Outstanding May 31, 2013	846,500	$	0.47
Granted	52,000	$	0.84
Exercised	(4,500)	$	0.40
Cancelled or expired	(10,000)	$	0.43
Outstanding November 30, 2013	884,000	$	0.49

      On June 10, 2013, the Board granted a stock option to purchase 20,000 shares of the Company’s common stock at the purchase price of $0.83 per share.

On November 13, 2013, the Board granted stock options to purchase 32,000 shares of the Company’s common stock at the purchase price of $0.84 per share.

In June 2013, options to exercise 2,000 shares of the Company’s common stock were exercised at the exercise price of $0.38 per share.  Net proceeds to the Company were $760.

In September 2013, options to exercise 2,500 shares of the Company’s common stock were exercised at the exercise prices of $0.45 and $0.38 per share.

In December 2013, options to exercise 12,000 shares of the Company’s common stock were exercised at the exercise price of $0.38 per share.

Revenue Recognition

Revenues from product sales are recognized at the time the product is shipped, customarily FOB shipping point, at which point title passes. An allowance is established when necessary for estimated returns as revenue is recognized. In conjunction with sales to certain customers, the Company provides free products upon attaining certain levels of purchases by the customer. The Company accounts for these free products in accordance with ASC 605-50 “Revenue Recognition – Customer Payments and Incentives” and recognizes the cost of the product as part of cost of sales.

Investments

From time-to-time, the Company makes investments in privately-held companies.  The Company determines whether the fair values of any investments in privately-held entities have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable.  If the Company considers any such decline to be other than temporary (based on various factors, including historical financial results, and the overall health of the investee’s industry), a write-down to estimated fair value is recorded.  The Company currently has not written down the investment and no events have occurred which could indicate the carrying value to be less than the fair value. Investments represent the Company’s investment in a Polish distributor which is primarily engaged in distributing medical devices.  The Company owns approximately 6% of the investee, and accordingly, applies the cost method to account for the investment.  Under the cost method, investments are recorded at cost, with gains and losses recognized as of the sale date, and income recorded when received.

Shipping and Handling Fees and Costs

Shipping and handling fees billed to customers are classified as revenues, and shipping and handling costs are classified as cost of sales. The Company included shipping and handling fees billed to customers in net sales. The Company included shipping and handling costs associated with inbound freight and unreimbursed shipping to customers in cost of sales.

Research and Development

Research and development costs are expensed as incurred.

Income Taxes

The Company has provided a valuation allowance of $0 as of November 30, 2013 and May 31, 2013.   In May 2013, after analyzing the Company’s tax position, operational history and profitability for the past 3 years, management chose to remove all of the remaining allowance for the uncertainty of its future income, as the determination that it was more likely that the deferred tax asset would be realized in the future.  

Foreign Currency Translation

The subsidiary located in Germany is accounted for primarily using local functional currency. Accordingly, assets and liabilities of this subsidiary are translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period. The resulting adjustments are presented as a separate component of accumulated other comprehensive loss.

Deferred Rent

Incentive payments received from landlords are recorded as deferred lease incentives and are amortized over the underlying lease term on a straight-line basis as a reduction of rent expense. When the terms of an operating lease provide for periods of free rent, rent concessions, and/or rent escalations, the Company establishes a deferred rent liability for the difference between the scheduled rent payment and the straight-line rent expense recognized. This deferred rent liability is amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

Net Income (Loss) Per Share

Basic earnings (loss) per share are computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflect the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible securities. The total amount of anti-dilutive warrants or options not included in the earnings (loss) per share calculation for the three and six months ended November 30, 2013 was 372,816 and 379,180, respectively. There were no anti-dilutive warrants or options excluded from the earnings per share calculation for the three and six months ended November 30, 2012. 

The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.

	Six Months Ended					Three Months Ended
	November 30,				November 30,
	2013		2012			2013		2012
Numerator:
(Loss)income from continuing operations	$	(411,072)	$	528,550		$	(243,357)	$	236,919
Denominator for basic net (loss) income    Per common share		7,277,659		6,959,224			7,278,967		6,966,185
Effect of dilutive securities:
Options and warrants		-		322,978			-		418,954
Denominator for diluted net (loss) income    per common share		7,277,659		7,282,202			7,278,967		7,385,139
Basic net (loss) income per common share	$	(0.06)	$	0.08		$	(0.03)	$	0.03
Diluted net (loss) income per common share	$	(0.06)	$	0.07		$	(0.03)	$	0.03

New Accounting Pronouncements

     Management does not believe that any recently issued, but not effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated financial statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Nov. 30, 2013	May 31, 2013
Current Assets:
Cash and cash equivalents	$ 1,647,559	$ 2,469,796
Accounts receivable, less allowance for doubtful accounts of $120,405 and $115,730 as of November 30, 2013 and May 31, 2013, respectively	821,571	871,660
Inventories, net	1,899,633	1,571,221
Prepaid expenses and other	186,362	196,678
Deferred tax assets, current portion	144,000	144,000
Total current assets	4,699,125	5,253,355
Property and Equipment, net of accumulated depreciation and amortization of $1,118,240 and $1,032,009 as of November 30, 2013 and May 31, 2013, respectively	652,244	654,620
Deferred Tax Assets, net of current portion	85,000	85,000
Investments	165,324	165,324
Intangible Assets, net	154,079	165,200
Other Assets	71,388	71,388
Total Assets	5,827,160	6,394,887
Current Liabilities:
Accounts payable and accrued expenses	279,974	351,917
Accrued compensation	120,618	207,976
Total current liabilities	400,592	559,893
Commitments and Contingencies (Note 5)
Shareholders' Equity:
Preferred stock, no par value authorized 5,000,000 shares, none issued and none outstanding at November 30, 2013 and May 31, 2013
Common stock, $0.08 par value authorized 25,000,000 shares, issued and outstanding 7,279,214 and 7,274,714 at November 30 and May 31, 2013, respectively	582,336	581,976
Additional paid-in-capital	18,036,696	18,034,396
Accumulated other comprehensive loss	(9,020)	(9,006)
Accumulated deficit	(13,183,444)	(12,772,372)
Total Shareholders' Equity	5,426,568	5,834,994
Total Liabilities and Shareholders' Equity	$ 5,827,160	$ 6,394,887

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Significant Accounting Policies (Details) - Options and warrants (USD $)	0 Months Ended		1 Months Ended		6 Months Ended
	Nov. 13, 2013	Jun. 10, 2013	Sep. 30, 2013	Jun. 30, 2013	Nov. 30, 2013
Options and warrants [Abstract]
Outstanding May 31, 2013				846,500	846,500
Outstanding May 31, 2013 (in Dollars per share)				$ 0.47	$ 0.47
Granted	32,000	20,000			52,000
Granted (in Dollars per share)	$ 0.84	$ 0.83			$ 0.84
Exercised			(2,500)	(2,000)	(4,500)
Exercised (in Dollars per share)				$ 0.38	$ 0.40
Cancelled or expired					(10,000)
Cancelled or expired (in Dollars per share)					$ 0.43
Outstanding November 30, 2013					884,000
Outstanding November 30, 2013 (in Dollars per share)					$ 0.49

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Document And Entity Information	6 Months Ended
	Nov. 30, 2013	Jan. 14, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	BIOMERICA INC.
Document Type	10-Q
Current Fiscal Year End Date	--05-31
Entity Common Stock, Shares Outstanding		7,291,214
Amendment Flag	false
Entity Central Index Key	0000073290
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Nov. 30, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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Significant Accounting Policies (Details) - Reconciliation of the numerators and denominators of the basic and diluted earnings per share (USD $)	3 Months Ended		6 Months Ended
	Nov. 30, 2013	Nov. 30, 2012	Nov. 30, 2013	Nov. 30, 2012
Numerator:
(Loss)income from continuing operations (in Dollars)	$ (243,357)	$ 236,919	$ (411,072)	$ 528,550
Denominator for basic net (loss) income Per common share	7,278,967	6,966,185	7,277,659	6,959,224
Effect of dilutive securities:
Options and warrants		418,954		322,978
Denominator for diluted net (loss) income per common share	7,278,967	7,385,139	7,277,659	7,282,202
Basic net (loss) income per common share (in Dollars per share)	$ (0.03)	$ 0.03	$ (0.06)	$ 0.08
Diluted net (loss) income per common share (in Dollars per share)	$ (0.03)	$ 0.03	$ (0.06)	$ 0.07

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $)	Nov. 30, 2013	May 31, 2013
Allowance for doubtful accounts (in Dollars)	$ 120,405	$ 115,730
Accumulated depreciation and amortization (in Dollars)	$ 1,118,240	$ 1,032,009
Preferred stock, Shares authorized (in Shares)	5,000,000	5,000,000
Preferred stock, Shares Issued (in Shares)	0	0
Preferred stock, Shares Outstanding (in Shares)	0	0
Preferred stock, No Par Value (in Dollars per share)
Common stock, Par Value (in Dollars per share)	$ 0.08	$ 0.08
Common stock, Shares Authorized (in Shares)	25,000,000	25,000,000
Common stock, Shares Issued (in Shares)	7,279,214	7,274,714
Common stock, Shares Outstanding (in Shares)	7,279,214	7,274,714

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Significant Accounting Policies (Tables)

6 Months Ended

Nov. 30, 2013

Accounting Policies [Abstract]

Schedule of Inventory, Current [Table Text Block]

	November 30,		May 31,
	2013		2013
Raw materials	$	864,000	$	787,000
Work in progress		755,000		555,000
Finished products		281,000		229,000
Total	$	1,900,000	$	1,571,000

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Option Shares	Exercise Price Weighted Average
Outstanding May 31, 2013	846,500	$	0.47
Granted	52,000	$	0.84
Exercised	(4,500)	$	0.40
Cancelled or expired	(10,000)	$	0.43
Outstanding November 30, 2013	884,000	$	0.49

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Six Months Ended					Three Months Ended
	November 30,				November 30,
	2013		2012			2013		2012
Numerator:
(Loss)income from continuing operations	$	(411,072)	$	528,550		$	(243,357)	$	236,919
Denominator for basic net (loss) income    Per common share		7,277,659		6,959,224			7,278,967		6,966,185
Effect of dilutive securities:
Options and warrants		-		322,978			-		418,954
Denominator for diluted net (loss) income    per common share		7,277,659		7,282,202			7,278,967		7,385,139
Basic net (loss) income per common share	$	(0.06)	$	0.08		$	(0.03)	$	0.03
Diluted net (loss) income per common share	$	(0.06)	$	0.07		$	(0.03)	$	0.03

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Accounting Policies, by Policy (Policies)

6 Months Ended

Nov. 30, 2013

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Biomerica, Inc. as well as the Company’s German subsidiary and Mexican subsidiary which have not begun operations. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could materially differ from those estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits and money market accounts with original maturities of less than three months.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Accounts Receivable

The Company extends unsecured credit to its customers on a regular basis.  International accounts are required to prepay until they establish a history with the Company and at that time, they are extended credit at levels based on a number of criteria.  Credit levels are approved by designated upper level management.  Domestic customers are extended initial credit limits until they establish a history with the Company or submit credit information.  All increases in credit limits are also approved by designated upper level management.  Management evaluates receivables on a quarterly basis and adjusts the reserve for bad debt accordingly.  Balances over ninety days old are reserved for unless collection is reasonably assured.  Management evaluates quarterly what items to charge off.  Any charge-offs are approved by upper level management prior to charging off.

Occasionally certain long-standing customers, who routinely place large orders, will have unusually large accounts receivables balances relative to the total gross accounts receivables.  Management monitors the payments for these large balances closely and very often requires payment of existing invoices before shipping new sales orders.

Inventory, Policy [Policy Text Block]

Inventories

The Company values inventory at the lower of cost (determined using a combination of specific lot identification and the first-in, first-out methods) or market. Management periodically reviews inventory for excess quantities and obsolescence. Management evaluates quantities on hand, physical condition, and technical functionality as these characteristics may be impacted by anticipated customer demand for current products and new product introductions. The reserve is adjusted based on such evaluation, with a corresponding provision included in cost of sales. Abnormal amounts of idle facility expenses, freight, handling costs and wasted material are recognized as current period charges and the allocation of fixed production overhead is based on the normal capacity of the Company’s production facilities.

The approximate balances of inventories are the following at:

	November 30,		May 31,
	2013		2013
Raw materials	$	864,000	$	787,000
Work in progress		755,000		555,000
Finished products		281,000		229,000
Total	$	1,900,000	$	1,571,000

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Property and equipment are stated at cost. Expenditures for additions and major improvements are capitalized. Repairs and maintenance costs are charged to operations as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the accounts, and gains or losses from retirements and dispositions are credited or charged to income.

Depreciation and amortization are provided over the estimated useful lives of the related assets, ranging from 5 to 10 years, using the straight-line method. Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the term of the lease. Depreciation and amortization expense on property and equipment and leasehold improvements amounted to $43,452 and $65,435 for the three months ended November 30, 2013 and 2012, and $86,231 and $93,263 for the six months ended November 30, 2013 and 2012, respectively.

Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block]

Intangible Assets

Intangible assets include trademarks, product rights, licenses, technology rights and patents, and are accounted for based on Accounting Standards Codification ASC 350 “Intangibles – Goodwill and Other” (ASC 350). In that regard, intangible assets that have indefinite useful lives are not amortized but are tested at least annually for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. Intangible assets are being amortized using the straight-line method over the useful life; not to exceed 18 years for marketing and distribution rights, 10 years for purchased technology use rights, licenses, and 17 years for patents. Amortization amounted to $3,665 and $8,779 for the three months ended November 30, 2013 and 2012, respectively, and $11,121 and $17,559 for the six months ended November 30, 2013 and 2012, respectively.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

The Company follows the guidance of the accounting provisions of ASC 718 “Share-based Compensation” (ASC 718), which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (warrants and options). The fair value of each option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected forfeiture rate, expected term, and the risk-free interest rate.

Expected volatilities are based on weighted averages of the historical volatility of the Company’s stock and other factors estimated over the expected term of the options. The expected forfeiture rate is based on historical forfeitures experienced. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term as historically the Company had limited activity surrounding its options. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.

The following summary presents the options and warrants granted, exercised, expired, cancelled and outstanding as of November 30, 2013:

	Option Shares	Exercise Price Weighted Average
Outstanding May 31, 2013	846,500	$	0.47
Granted	52,000	$	0.84
Exercised	(4,500)	$	0.40
Cancelled or expired	(10,000)	$	0.43
Outstanding November 30, 2013	884,000	$	0.49

      On June 10, 2013, the Board granted a stock option to purchase 20,000 shares of the Company’s common stock at the purchase price of $0.83 per share.

On November 13, 2013, the Board granted stock options to purchase 32,000 shares of the Company’s common stock at the purchase price of $0.84 per share.

In June 2013, options to exercise 2,000 shares of the Company’s common stock were exercised at the exercise price of $0.38 per share.  Net proceeds to the Company were $760.

In September 2013, options to exercise 2,500 shares of the Company’s common stock were exercised at the exercise prices of $0.45 and $0.38 per share.

In December 2013, options to exercise 12,000 shares of the Company’s common stock were exercised at the exercise price of $0.38 per share.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

Revenues from product sales are recognized at the time the product is shipped, customarily FOB shipping point, at which point title passes. An allowance is established when necessary for estimated returns as revenue is recognized. In conjunction with sales to certain customers, the Company provides free products upon attaining certain levels of purchases by the customer. The Company accounts for these free products in accordance with ASC 605-50 “Revenue Recognition – Customer Payments and Incentives” and recognizes the cost of the product as part of cost of sales.

Investment, Policy [Policy Text Block]

Investments

From time-to-time, the Company makes investments in privately-held companies.  The Company determines whether the fair values of any investments in privately-held entities have declined below their carrying value whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable.  If the Company considers any such decline to be other than temporary (based on various factors, including historical financial results, and the overall health of the investee’s industry), a write-down to estimated fair value is recorded.  The Company currently has not written down the investment and no events have occurred which could indicate the carrying value to be less than the fair value. Investments represent the Company’s investment in a Polish distributor which is primarily engaged in distributing medical devices.  The Company owns approximately 6% of the investee, and accordingly, applies the cost method to account for the investment.  Under the cost method, investments are recorded at cost, with gains and losses recognized as of the sale date, and income recorded when received.

Shipping and Handling Cost, Policy [Policy Text Block]

Shipping and Handling Fees and Costs

Shipping and handling fees billed to customers are classified as revenues, and shipping and handling costs are classified as cost of sales. The Company included shipping and handling fees billed to customers in net sales. The Company included shipping and handling costs associated with inbound freight and unreimbursed shipping to customers in cost of sales.

Research and Development Expense, Policy [Policy Text Block]

Research and Development

Research and development costs are expensed as incurred.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company has provided a valuation allowance of $0 as of November 30, 2013 and May 31, 2013.   In May 2013, after analyzing the Company’s tax position, operational history and profitability for the past 3 years, management chose to remove all of the remaining allowance for the uncertainty of its future income, as the determination that it was more likely that the deferred tax asset would be realized in the future.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation

The subsidiary located in Germany is accounted for primarily using local functional currency. Accordingly, assets and liabilities of this subsidiary are translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period. The resulting adjustments are presented as a separate component of accumulated other comprehensive loss.

Deferred Charges, Policy [Policy Text Block]

Deferred Rent

Incentive payments received from landlords are recorded as deferred lease incentives and are amortized over the underlying lease term on a straight-line basis as a reduction of rent expense. When the terms of an operating lease provide for periods of free rent, rent concessions, and/or rent escalations, the Company establishes a deferred rent liability for the difference between the scheduled rent payment and the straight-line rent expense recognized. This deferred rent liability is amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

Earnings Per Share, Policy [Policy Text Block]

Net Income (Loss) Per Share

Basic earnings (loss) per share are computed as net income (loss) divided by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflect the potential dilution that could occur from common shares issuable through stock options, warrants and other convertible securities. The total amount of anti-dilutive warrants or options not included in the earnings (loss) per share calculation for the three and six months ended November 30, 2013 was 372,816 and 379,180, respectively. There were no anti-dilutive warrants or options excluded from the earnings per share calculation for the three and six months ended November 30, 2012. 

The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.

	Six Months Ended					Three Months Ended
	November 30,				November 30,
	2013		2012			2013		2012
Numerator:
(Loss)income from continuing operations	$	(411,072)	$	528,550		$	(243,357)	$	236,919
Denominator for basic net (loss) income    Per common share		7,277,659		6,959,224			7,278,967		6,966,185
Effect of dilutive securities:
Options and warrants		-		322,978			-		418,954
Denominator for diluted net (loss) income    per common share		7,277,659		7,282,202			7,278,967		7,385,139
Basic net (loss) income per common share	$	(0.06)	$	0.08		$	(0.03)	$	0.03
Diluted net (loss) income per common share	$	(0.06)	$	0.07		$	(0.03)	$	0.03

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements

     Management does not believe that any recently issued, but not effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated financial statements.

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Accounts Payable and Accrued Expenses (Details) - Accounts payable and accrued expense balances (USD $)	Nov. 30, 2013	May 31, 2013
Accounts payable and accrued expense balances [Abstract]
Accounts payable	$ 167,810	$ 282,138
Accrued expenses	48,803
Deferred rent	63,361	69,779
Total	$ 279,974	$ 351,917

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Significant Accounting Policies (Details) (USD $)	0 Months Ended		1 Months Ended		3 Months Ended		6 Months Ended		1 Months Ended	6 Months Ended			1 Months Ended	6 Months Ended	1 Months Ended	6 Months Ended
	Nov. 13, 2013	Jun. 10, 2013	Sep. 30, 2013	Jun. 30, 2013	Nov. 30, 2013	Nov. 30, 2012	Nov. 30, 2013	Nov. 30, 2012	Dec. 31, 2013 Subsequent Event [Member]	Nov. 30, 2013 Marketing And Distribution Rights [Member]	Nov. 30, 2013 Purchased Technology Use Rightsand Licenses [Member]	Nov. 30, 2013 Patents [Member]	Sep. 30, 2013 Minimum [Member]	Nov. 30, 2013 Minimum [Member]	Sep. 30, 2013 Maximum [Member]	Nov. 30, 2013 Maximum [Member]
Significant Accounting Policies (Details) [Line Items]
Property, Plant and Equipment, Useful Life														5 years		10 years
Depreciation, Depletion and Amortization (in Dollars)					$ 43,452	$ 65,435	$ 86,231	$ 93,263
Finite-Lived Intangible Asset, Useful Life										18 years	10 years	17 years
Amortization of Intangible Assets (in Dollars)					3,665	8,779	11,121	17,559
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross (in Shares)	32,000	20,000					52,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share)	$ 0.84	$ 0.83					$ 0.84
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in Shares)			2,500	2,000			4,500		12,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share)				$ 0.38			$ 0.40		$ 0.38				$ 0.38		$ 0.45
Proceeds from Stock Options Exercised (in Dollars)				760			1,780	5,999
Equity Method Investment, Ownership Percentage					6.00%		6.00%
Deferred Tax Assets, Valuation Allowance (in Dollars)					$ 0		$ 0
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares)					372,816		379,180

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Accounts Payable and Accrued Expenses (Tables)

6 Months Ended

Nov. 30, 2013

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

		November 30,		May 31,
	2013		2013
Accounts payable	$	167,810	$	282,138
Accrued expenses		48,803		-
Deferred rent		63,361		69,779
Total	$	279,974	$	351,917

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Geographic Information (Tables)

6 Months Ended

Nov. 30, 2013

Geographic Information Disclosure [Abstract]

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

	Six Months Ended				Three Months Ended
	November 30,				November 30,
	2013		2012		2013		2012
Revenues from sales to unaffiliated customers:
United States	$	505,000	$	437,000	$	251,000	$	157,000
Asia		216,000		1,944,000		80,000		1,042,000
Europe		1,199,000		1,183,000		594,000		675,000
South America		7,000		2,000		4,000		2,000
Middle East		20,000		18,000		5,000		7,000
Other		2,000		2,000		1,000		1,000
Total	$	1,949,000	$	3,586,000	$	935,000	$	1,884,000

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Significant Accounting Policies (Details) - Inventories (USD $)	Nov. 30, 2013	May 31, 2013
Inventories [Abstract]
Raw materials	$ 864,000	$ 787,000
Work in progress	755,000	555,000
Finished products	281,000	229,000
Total	$ 1,899,633	$ 1,571,221

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Geographic Information (Details) - Geographic Information (USD $)	3 Months Ended		6 Months Ended
	Nov. 30, 2013	Nov. 30, 2012	Nov. 30, 2013	Nov. 30, 2012
Revenues from sales to unaffiliated customers:
Net Sales	$ 934,841	$ 1,883,771	$ 1,948,580	$ 3,585,719
United States [Member]
Revenues from sales to unaffiliated customers:
Net Sales	251,000	157,000	505,000	437,000
Asia [Member]
Revenues from sales to unaffiliated customers:
Net Sales	80,000	1,042,000	216,000	1,944,000
Europe [Member]
Revenues from sales to unaffiliated customers:
Net Sales	594,000	675,000	1,199,000	1,183,000
South America [Member]
Revenues from sales to unaffiliated customers:
Net Sales	4,000	2,000	7,000	2,000
Middle East [Member]
Revenues from sales to unaffiliated customers:
Net Sales	5,000	7,000	20,000	18,000
Other Foreign [Member]
Revenues from sales to unaffiliated customers:
Net Sales	$ 1,000	$ 1,000	$ 2,000	$ 2,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	6 Months Ended
	Nov. 30, 2013	Nov. 30, 2012
Cash flows from operating activities:
Net (loss) income	$ (411,072)	$ 528,550
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	97,352	110,822
Stock option expense	881
Change in provision for losses on accounts receivable	4,675	4,210
Inventory reserve	(6,713)	2,047
Decrease in deferred rent liability	(6,418)	(1,764)
Changes in assets and liabilities:
Accounts receivable	45,414	(313,358)
Inventories	(321,700)	18,921
Prepaid expenses and other assets	10,316	49,413
Accounts payable and other accrued expenses	(65,525)	(27,461)
Accrued compensation	(87,358)	25,618
Net cash (used in) provided by operating activities	(740,148)	396,998
Cash flows from investing activities:
Purchases of property and equipment	(83,855)	(242,416)
Net cash used in investing activities	(83,855)	(242,416)
Cash flows from financing activities:
Proceeds from exercise of stock options	1,780	5,999
Payments on line of credit or equipment loan		(43,000)
Net cash provided by (used in) financing activities	1,780	(37,001)
Effect of exchange rate changes in cash	(14)	(554)
Net (decrease) increase in cash and cash equivalents	(822,237)	117,027
Cash and cash equivalents at beginning of period	2,469,796	1,077,342
Cash and cash equivalents at end of period	1,647,559	1,194,369
Supplemental Disclosure of Cash-Flow Information:
Interest		307
Income taxes	$ 3,500	$ 108,160

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Commitments and Contingencies

6 Months Ended

Nov. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 5: Commitments and Contingencies

          On February 13, 2009, the Company renewed the line of credit (the "Line") with its bank which has a borrowing limit of $400,000. The Line is secured by substantially all of the Company’s assets, bears interest at 1.0% plus the Wall Street Journal Prime West Coast Edition prime rate and expires February 24, 2014. The balance at November 30, 2013 and May 31, 2013 was $0.

On June 18, 2009, the Company entered into an agreement to lease a building in Irvine, California. The lease commenced September 1, 2009 and ends August 31, 2016.  The initial base rent was set at $18,490 per month with scheduled annual increases through the end of the lease term. The rent is currently set at $20,810 per month.

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Geographic Information (Details) (Geographic Concentration Risk [Member], Sales Revenue, Net [Member])	6 Months Ended
	Nov. 30, 2013
Geographic Concentration Risk [Member] | Sales Revenue, Net [Member]
Geographic Information (Details) [Line Items]
Concentration Risk, Percentage	10.00%