Accounting Policies, by Policy (Policies) | 6 Months Ended |
Nov. 30, 2013 |
Accounting Policies [Abstract] | ' |
Consolidation, Policy [Policy Text Block] | ' |
Principles of Consolidation |
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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 |
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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 |
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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 |
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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. |
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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 |
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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. |
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The approximate balances of inventories are the following at: |
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| | November 30, | May | | | | | | |
31, | | | | | | |
| | 2013 | | 2013 | | | | | | |
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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 |
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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. |
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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 |
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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 |
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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. |
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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. |
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The following summary presents the options and warrants granted, exercised, expired, cancelled and outstanding as of November 30, 2013: |
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| | Option Shares | | Exercise Price Weighted Average | | | | | | | |
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Outstanding May 31, 2013 | | 846,500 | | $ | 0.47 | | | | | | | |
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Granted | | 52,000 | | $ | 0.84 | | | | | | | |
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Exercised | | -4,500 | | $ | 0.4 | | | | | | | |
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Cancelled or expired | | -10,000 | | $ | 0.43 | | | | | | | |
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Outstanding November 30, 2013 | | 884,000 | | $ | 0.49 | | | | | | | |
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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. |
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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. |
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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. |
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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. |
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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 |
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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 |
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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 |
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Research and development costs are expensed as incurred. |
Income Tax, Policy [Policy Text Block] | ' |
Income Taxes |
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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 |
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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 |
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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 |
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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. |
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The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations. |
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| | | | Three Months Ended |
Six Months Ended |
| | November 30, | |
November 30, |
| | 2013 | | 2012 | | 2013 | | 2012 |
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Numerator: | | | | | | | | | | | | |
(Loss)income from continuing operations | | $ | -411,072 | | $ | 528,550 | | $ | -243,357 | | $ | 236,919 |
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Denominator for basic net (loss) income | | | 7,277,659 | | | 6,959,224 | | | 7,278,967 | | | 6,966,185 |
Per common share |
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Effect of dilutive securities: | | | | | | | | | | | | |
Options and warrants | | | - | | | 322,978 | | | - | | | 418,954 |
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Denominator for diluted net (loss) income | | | 7,277,659 | | | 7,282,202 | | | 7,278,967 | | | 7,385,139 |
per common share |
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Basic net (loss) income per common share | | $ | -0.06 | | $ | 0.08 | | $ | -0.03 | | $ | 0.03 |
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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 |
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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. |