Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Aug. 31, 2014 | Oct. 15, 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 | ' | 7,551,964 |
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 | 31-Aug-14 | ' |
Document Fiscal Year Focus | '2015 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED) (USD $) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Net sales | $1,034,450 | $1,013,739 |
Cost of sales | -724,539 | -753,448 |
Gross profit | 309,911 | 260,291 |
Operating Expenses: | ' | ' |
Selling, general and administrative | 338,316 | 342,802 |
Research and development | 195,706 | 91,257 |
Total operating expenses | 534,022 | 434,059 |
Loss from operations | -224,111 | -173,768 |
Other Income (Expense): | ' | ' |
Dividend and interest income | 4,861 | 6,054 |
Interest expense | -18 | ' |
Total other income | 4,843 | 6,054 |
Loss before income tax | -219,268 | -167,714 |
Provision for income taxes | ' | ' |
Net loss | -219,268 | -167,714 |
Basic net loss per common share (in Dollars per share) | ($0.03) | ($0.02) |
Diluted net loss per common share (in Dollars per share) | ($0.03) | ($0.02) |
Weighted average number of common and Common Equivalent Shares: | ' | ' |
Basic (in Shares) | 7,547,839 | 7,280,866 |
Diluted (in Shares) | 7,547,839 | 7,280,866 |
Net loss | -219,268 | -167,714 |
Other comprehensive loss, net of tax: | ' | ' |
Foreign currency translation | -934 | -91 |
Comprehensive loss | ($220,202) | ($167,805) |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Aug. 31, 2014 | 31-May-14 |
Current Assets: | ' | ' |
Cash and cash equivalents | $1,646,978 | $1,509,125 |
Accounts receivable, less allowance for doubtful accounts of $14,459 and $30,000 as of August 31, 2014 and May 31, 2014, respectively | 788,199 | 1,447,705 |
Inventories, net | 1,880,193 | 1,765,772 |
Prepaid expenses and other | 135,196 | 103,572 |
Deferred tax assets, current portion | 87,000 | 87,000 |
Total current assets | 4,537,566 | 4,913,174 |
Property and Equipment, net of accumulated depreciation & amortization | 571,538 | 614,337 |
Deferred Tax Assets, net of current portion | 359,000 | 359,000 |
Investments | 165,324 | 165,324 |
Intangible Assets, net | 370,253 | 382,181 |
Other Assets | 43,498 | 36,297 |
Total Assets | 6,047,179 | 6,470,313 |
Current Liabilities: | ' | ' |
Accounts payable and accrued expenses | 230,444 | 441,681 |
Accrued compensation | 118,281 | 114,163 |
Total Current Liabilities | 348,725 | 555,844 |
Commitments and Contingencies (Note 6) | ' | ' |
Shareholders' Equity: | ' | ' |
Preferred stock, no par value authorized 5,000,000 shares, none issued and none outstanding at August 31, 2014 and May 31, 2014 | ' | ' |
Common stock, $0.08 par value authorized 25,000,000 shares, issued and outstanding 7,551,964 and 7,543,714 at August 31 and May 31, 2014, respectively | 604,156 | 603,496 |
Additional paid-in-capital | 18,312,681 | 18,309,154 |
Accumulated other comprehensive loss | -11,083 | -10,149 |
Accumulated deficit | -13,207,300 | -12,988,032 |
Total Shareholders' Equity | 5,698,454 | 5,914,469 |
Total Liabilities and Shareholders' Equity | $6,047,179 | $6,470,313 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $) | Aug. 31, 2014 | 31-May-14 |
Allowance for doubtful accounts (in Dollars) | $14,459 | $30,000 |
Preferred stock, No Par Value (in Dollars per share) | $0 | $0 |
Preferred stock, Shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, Shares Issued | 0 | 0 |
Preferred stock, Shares Outstanding | 0 | 0 |
Common stock, Par Value (in Dollars per share) | $0.08 | $0.08 |
Common stock, Shares Authorized | 25,000,000 | 25,000,000 |
Common stock, Shares Issued | 7,551,964 | 7,543,714 |
Common stock, Shares Outstanding | 7,551,964 | 7,543,714 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($219,268) | ($167,714) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and amortization | 63,420 | 50,235 |
Change in provision for losses on accounts receivable | -15,541 | 4,675 |
Inventory reserve | 20,782 | -6,713 |
Gain on disposal of equipment | -665 | ' |
Stock option expense | 1,013 | 881 |
Decrease in deferred rent liability | -3,691 | -1,656 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | 675,047 | -36,264 |
Inventories | -135,203 | -213,509 |
Prepaid expenses and other assets | -38,825 | 15,527 |
Accounts payable and other accrued expenses | -207,546 | -25,609 |
Accrued compensation | 4,118 | 3,876 |
Net cash provided by (used in) operating activities | 143,641 | -376,271 |
Cash flows from investing activities: | ' | ' |
Purchases of property and equipment | -3,675 | -8,731 |
Proceeds from sale of equipment | 1,900 | ' |
Net cash used in investing activities | -1,775 | -8,731 |
Cash flows from financing activities: | ' | ' |
Exercise of stock options | 3,173 | 760 |
Increase in intangibles | -6,252 | ' |
Net cash (used in) provided by financing activities | -3,079 | 760 |
Effect of exchange rate changes in cash | -934 | -91 |
Net increase (decrease) in cash and cash equivalents | 137,853 | -384,333 |
Cash and cash equivalents at beginning of period | 1,509,125 | 2,469,796 |
Cash and cash equivalents at end of period | 1,646,978 | 2,085,463 |
Supplemental Disclosure of Cash-Flow Information: | ' | ' |
Cash paid during the period for: Interest | $18 | ' |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Aug. 31, 2014 | |
Disclosure Text Block [Abstract] | ' |
Basis of Accounting [Text Block] | ' |
Note 1: Basis of Presentation | |
The information set forth in these condensed consolidated 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 (collectively 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, 2014 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) for the fiscal year ended May 31, 2014. The results of operations for our interim periods are not necessarily indicative of results to be achieved for our full fiscal year. |
Significant_Accounting_Policie
Significant Accounting Policies | 3 Months Ended | |||||
Aug. 31, 2014 | ||||||
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 its 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 usually reserved for unless collection is reasonably assured. Management evaluates quarterly what items to charge off. | ||||||
Occasionally certain long-standing customers, who routinely place large orders, may have unusually large receivables balances relative to the total gross 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. | ||||||
Inventories approximate the following at: | ||||||
August 31, | May 31, | |||||
2014 | 2014 | |||||
Raw materials | $ | 883,000 | $ | 899,000 | ||
Work in progress | 732,000 | 635,000 | ||||
Finished products | 265,000 | 232,000 | ||||
Total | $ | 1,880,000 | $ | 1,766,000 | ||
Reserves for inventory obsolescence are reduced as necessary to reduce obsolete inventory to estimated realizable value or to specifically reserve for obsolete inventory that the Company intends to dispose of. | ||||||
Property and Equipment, net | ||||||
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 $45,240 and $42,779 for the three months ended August 31, 2014 and 2013, respectively. | ||||||
Intangible Assets, net | ||||||
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 $18,180 and $7,456 for the three months ended August 31, 2014 and 2013, 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 (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 August 31, 2014: | ||||||
Exercise | ||||||
Price | ||||||
Option | Weighted | |||||
Shares | Average | |||||
Outstanding May 31, 2014 | 860,500 | $ | 0.51 | |||
Exercised | -8,250 | $ | 0.38 | |||
Outstanding August 31, 2014 | 852,250 | $ | 0.51 | |||
In the quarter ended August 31, 2014 options to acquire 8,250 shares of the Company’s common stock were exercised at the exercise prices ranging from $0.38 to $0.43 per share. Net proceeds to the Company were $3,173. | ||||||
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 net sales 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 August 31, 2014 and May 31, 2014. | ||||||
The Company did not record any income tax benefit for the three months ended August 31, 2014 as the Company is expected to generate profits later in fiscal 2015. | ||||||
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 Loss Per Share | ||||||
Basic earnings (loss) per share are computed as net loss or income divided by the weighted average number of common shares outstanding for the period. Diluted (loss) income per share reflects the potential dilution that could occur from common shares issuable through stock options using the treasury stock method. The total amount of anti-dilutive warrants or options not included in the earnings per share calculation for the three months ended August 31, 2014 and 2013 was 852,250 and 864,500, respectively. | ||||||
The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations: | ||||||
Three Months Ended | ||||||
August 31, | ||||||
2014 | 2013 | |||||
Numerator: | ||||||
Loss from continuing operations | $ | -219,268 | $ | -167,714 | ||
Denominator for basic net loss per common share | 7,547,839 | 7,280,866 | ||||
Effect of dilutive securities: | ||||||
Options | - | - | ||||
Denominator for diluted net loss per common share | 7,547,839 | 7,280,866 | ||||
Basic net loss per common share | $ | -0.03 | $ | -0.02 | ||
Diluted net loss per common share | $ | -0.03 | $ | -0.02 | ||
New Accounting Pronouncements | ||||||
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (ASU 2014-09). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting, ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning December 15, 2016, and early adoption is not permitted. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations. | ||||||
Other recent ASU's issued by the FASB and guidance issued by the Securities and Exchange Commission did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements. |
Accounts_Payable_and_Accrued_E
Accounts Payable and Accrued Expenses | 3 Months Ended | |||||
Aug. 31, 2014 | ||||||
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: | ||||||
August 31, | May 31, | |||||
2014 | 2014 | |||||
Accounts payable | $ | 178,155 | $ | 385,701 | ||
Deferred rent | 52,289 | 55,980 | ||||
Total | $ | 230,444 | $ | 441,681 | ||
Shareholders_Equity
Shareholders' Equity | 3 Months Ended |
Aug. 31, 2014 | |
Stockholders' Equity Note [Abstract] | ' |
Stockholders' Equity Note Disclosure [Text Block] | ' |
Note 4: Shareholders’ Equity | |
For the three months ended August 31, 2014, options to purchase 8,250 shares of the Company’s common stock were exercised. See Note 2. |
Geographic_Information
Geographic Information | 3 Months Ended | |||||
Aug. 31, 2014 | ||||||
Geographic Information Disclosure [Text Block] [Abstract] | ' | |||||
Geographic Information Disclosure [Text Block] | ' | |||||
Note 5: Geographic Information | ||||||
Financial information about foreign and domestic operations and export sales is approximately as follows: | ||||||
Three Months Ended | ||||||
August 31, | ||||||
2014 | 2013 | |||||
Revenues from sales to unaffiliated customers: | ||||||
United States | 253,000 | $ | 255,000 | |||
Asia | 16,000 | 136,000 | ||||
Europe | 752,000 | 604,000 | ||||
South America | 3,000 | 3,000 | ||||
Middle East | 2,000 | 15,000 | ||||
Other | 9,000 | 1,000 | ||||
$ | 1,035,000 | $ | 1,014,000 | |||
No other geographic concentrations exist where net sales exceed 10% of total net sales. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Aug. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies Disclosure [Text Block] | ' |
Note 6: Commitments and Contingencies | |
In March 2014, the Company entered into a line of credit (the “Line”) with its bank which has a borrowing limit of $250,000. The line is secured by substantially all of the Company’s assets, bears interest at 2.0% plus the Wall Street Journal Prime West Coast Edition prime rate. At August 31, 2014 the Company had not drawn any funds on the line. | |
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 $21,437. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Aug. 31, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events [Text Block] | ' |
Note 7: Subsequent Events | |
On September 16, 2014, the Board of Directors approved the grant to various employees of options for 24,500 shares of common stock at the exercise price of $0.85 per share. The options are exercisable one quarter per year with the first quarter exercisable after one year and expire in five years from date of grant. | |
On September 23, 2014, the Board of Directors approved the 2014 Stock Incentive Plan for 800,000 shares for future issuances of stock options to employees, officers, directors and others expected to provide significant services to the Company, which shall be submitted to the Company’s shareholders for final approval at the December 15, 2014 annual meeting. |
Accounting_Policies_by_Policy_
Accounting Policies, by Policy (Policies) | 3 Months Ended | |||||
Aug. 31, 2014 | ||||||
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 its 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 usually reserved for unless collection is reasonably assured. Management evaluates quarterly what items to charge off. | ||||||
Occasionally certain long-standing customers, who routinely place large orders, may have unusually large receivables balances relative to the total gross 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. | ||||||
Inventories approximate the following at: | ||||||
August 31, | May 31, | |||||
2014 | 2014 | |||||
Raw materials | $ | 883,000 | $ | 899,000 | ||
Work in progress | 732,000 | 635,000 | ||||
Finished products | 265,000 | 232,000 | ||||
Total | $ | 1,880,000 | $ | 1,766,000 | ||
Reserves for inventory obsolescence are reduced as necessary to reduce obsolete inventory to estimated realizable value or to specifically reserve for obsolete inventory that the Company intends to dispose of. | ||||||
Property, Plant and Equipment, Policy [Policy Text Block] | ' | |||||
Property and Equipment, net | ||||||
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 $45,240 and $42,779 for the three months ended August 31, 2014 and 2013, respectively. | ||||||
Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block] | ' | |||||
Intangible Assets, net | ||||||
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 $18,180 and $7,456 for the three months ended August 31, 2014 and 2013, 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 (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 August 31, 2014: | ||||||
Exercise | ||||||
Price | ||||||
Option | Weighted | |||||
Shares | Average | |||||
Outstanding May 31, 2014 | 860,500 | $ | 0.51 | |||
Exercised | -8,250 | $ | 0.38 | |||
Outstanding August 31, 2014 | 852,250 | $ | 0.51 | |||
In the quarter ended August 31, 2014 options to acquire 8,250 shares of the Company’s common stock were exercised at the exercise prices ranging from $0.38 to $0.43 per share. Net proceeds to the Company were $3,173. | ||||||
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 net sales 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 August 31, 2014 and May 31, 2014. | ||||||
The Company did not record any income tax benefit for the three months ended August 31, 2014 as the Company is expected to generate profits later in fiscal 2015. | ||||||
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 Loss Per Share | ||||||
Basic earnings (loss) per share are computed as net loss or income divided by the weighted average number of common shares outstanding for the period. Diluted (loss) income per share reflects the potential dilution that could occur from common shares issuable through stock options using the treasury stock method. The total amount of anti-dilutive warrants or options not included in the earnings per share calculation for the three months ended August 31, 2014 and 2013 was 852,250 and 864,500, respectively. | ||||||
The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations: | ||||||
Three Months Ended | ||||||
August 31, | ||||||
2014 | 2013 | |||||
Numerator: | ||||||
Loss from continuing operations | $ | -219,268 | $ | -167,714 | ||
Denominator for basic net loss per common share | 7,547,839 | 7,280,866 | ||||
Effect of dilutive securities: | ||||||
Options | - | - | ||||
Denominator for diluted net loss per common share | 7,547,839 | 7,280,866 | ||||
Basic net loss per common share | $ | -0.03 | $ | -0.02 | ||
Diluted net loss per common share | $ | -0.03 | $ | -0.02 | ||
New Accounting Pronouncements, Policy [Policy Text Block] | ' | |||||
New Accounting Pronouncements | ||||||
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” (ASU 2014-09). ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. In adopting, ASU 2014-09, companies may use either a full retrospective or a modified retrospective approach. ASU 2014-09 is effective for the first interim period within annual reporting periods beginning December 15, 2016, and early adoption is not permitted. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2014-09 will have on the Company’s financial position or results of operations. | ||||||
Other recent ASU's issued by the FASB and guidance issued by the Securities and Exchange Commission did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements. |
Significant_Accounting_Policie1
Significant Accounting Policies (Tables) | 3 Months Ended | |||||
Aug. 31, 2014 | ||||||
Accounting Policies [Abstract] | ' | |||||
Schedule of Inventory, Current [Table Text Block] | ' | |||||
August 31, | May 31, | |||||
2014 | 2014 | |||||
Raw materials | $ | 883,000 | $ | 899,000 | ||
Work in progress | 732,000 | 635,000 | ||||
Finished products | 265,000 | 232,000 | ||||
Total | $ | 1,880,000 | $ | 1,766,000 | ||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | ' | |||||
Exercise | ||||||
Price | ||||||
Option | Weighted | |||||
Shares | Average | |||||
Outstanding May 31, 2014 | 860,500 | $ | 0.51 | |||
Exercised | -8,250 | $ | 0.38 | |||
Outstanding August 31, 2014 | 852,250 | $ | 0.51 | |||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | ' | |||||
Three Months Ended | ||||||
August 31, | ||||||
2014 | 2013 | |||||
Numerator: | ||||||
Loss from continuing operations | $ | -219,268 | $ | -167,714 | ||
Denominator for basic net loss per common share | 7,547,839 | 7,280,866 | ||||
Effect of dilutive securities: | ||||||
Options | - | - | ||||
Denominator for diluted net loss per common share | 7,547,839 | 7,280,866 | ||||
Basic net loss per common share | $ | -0.03 | $ | -0.02 | ||
Diluted net loss per common share | $ | -0.03 | $ | -0.02 |
Accounts_Payable_and_Accrued_E1
Accounts Payable and Accrued Expenses (Tables) | 3 Months Ended | |||||
Aug. 31, 2014 | ||||||
Payables and Accruals [Abstract] | ' | |||||
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block] | ' | |||||
August 31, | May 31, | |||||
2014 | 2014 | |||||
Accounts payable | $ | 178,155 | $ | 385,701 | ||
Deferred rent | 52,289 | 55,980 | ||||
Total | $ | 230,444 | $ | 441,681 |
Geographic_Information_Tables
Geographic Information (Tables) | 3 Months Ended | |||||
Aug. 31, 2014 | ||||||
Geographic Information Disclosure [Text Block] [Abstract] | ' | |||||
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block] | ' | |||||
Three Months Ended | ||||||
August 31, | ||||||
2014 | 2013 | |||||
Revenues from sales to unaffiliated customers: | ||||||
United States | 253,000 | $ | 255,000 | |||
Asia | 16,000 | 136,000 | ||||
Europe | 752,000 | 604,000 | ||||
South America | 3,000 | 3,000 | ||||
Middle East | 2,000 | 15,000 | ||||
Other | 9,000 | 1,000 | ||||
$ | 1,035,000 | $ | 1,014,000 |
Significant_Accounting_Policie2
Significant Accounting Policies (Details) (USD $) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Significant Accounting Policies (Details) [Line Items] | ' | ' |
Amortization of Intangible Assets | $18,180 | $7,456 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period (in Shares) | 8,250 | ' |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share) | $0.38 | ' |
Proceeds from Stock Options Exercised | 3,173 | 760 |
Equity Method Investment, Ownership Percentage | 6.00% | ' |
Deferred Tax Assets, Valuation Allowance | 0 | 0 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares) | 852,250 | 864,500 |
Property Plant And Equipment And Leasehold Improvements [Member] | ' | ' |
Significant Accounting Policies (Details) [Line Items] | ' | ' |
Depreciation, Depletion and Amortization | $45,240 | $42,779 |
Marketing And Distribution Rights [Member] | ' | ' |
Significant Accounting Policies (Details) [Line Items] | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '18 years | ' |
Purchased Technology Use Rights and Licenses [Member] | ' | ' |
Significant Accounting Policies (Details) [Line Items] | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '10 years | ' |
Patents [Member] | ' | ' |
Significant Accounting Policies (Details) [Line Items] | ' | ' |
Finite-Lived Intangible Asset, Useful Life | '17 years | ' |
Maximum [Member] | ' | ' |
Significant Accounting Policies (Details) [Line Items] | ' | ' |
Property, Plant and Equipment, Useful Life | '10 years | ' |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share) | $0.43 | ' |
Minimum [Member] | ' | ' |
Significant Accounting Policies (Details) [Line Items] | ' | ' |
Property, Plant and Equipment, Useful Life | '5 years | ' |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share) | $0.38 | ' |
Significant_Accounting_Policie3
Significant Accounting Policies (Details) - Inventories (USD $) | Aug. 31, 2014 | 31-May-14 |
Inventories [Abstract] | ' | ' |
Raw materials | $883,000 | $899,000 |
Work in progress | 732,000 | 635,000 |
Finished products | 265,000 | 232,000 |
Total | $1,880,193 | $1,765,772 |
Significant_Accounting_Policie4
Significant Accounting Policies (Details) - Options and warrants (USD $) | 3 Months Ended |
Aug. 31, 2014 | |
Options and warrants [Abstract] | ' |
Outstanding May 31, 2014 | 860,500 |
Outstanding May 31, 2014 | $0.51 |
Exercised | -8,250 |
Exercised | $0.38 |
Outstanding August 31, 2014 | 852,250 |
Outstanding August 31, 2014 | $0.51 |
Significant_Accounting_Policie5
Significant Accounting Policies (Details) - Reconciliation of the numerators and denominators of the basic and diluted earnings per share computations (USD $) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Numerator: | ' | ' |
Loss from continuing operations (in Dollars) | ($219,268) | ($167,714) |
Denominator for basic net loss per common share | 7,547,839 | 7,280,866 |
Effect of dilutive securities: | ' | ' |
Options | ' | ' |
Denominator for diluted net loss per common share | 7,547,839 | 7,280,866 |
Basic net loss per common share (in Dollars per share) | ($0.03) | ($0.02) |
Diluted net loss per common share (in Dollars per share) | ($0.03) | ($0.02) |
Accounts_Payable_and_Accrued_E2
Accounts Payable and Accrued Expenses (Details) - Accounts payable and accrued expenses balances (USD $) | Aug. 31, 2014 | 31-May-14 |
Accounts payable and accrued expenses balances [Abstract] | ' | ' |
Accounts payable | $178,155 | $385,701 |
Deferred rent | 52,289 | 55,980 |
Total | $230,444 | $441,681 |
Shareholders_Equity_Details
Shareholders' Equity (Details) | 3 Months Ended |
Aug. 31, 2014 | |
Stockholders' Equity Note [Abstract] | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 8,250 |
Geographic_Information_Details
Geographic Information (Details) (Geographic Concentration Risk [Member]) | 3 Months Ended |
Aug. 31, 2014 | |
Geographic Concentration Risk [Member] | ' |
Geographic Information (Details) [Line Items] | ' |
Concentration Risk, Percentage | 10.00% |
Geographic_Information_Details1
Geographic Information (Details) - Financial information about foreign and domestic operations and export sales (USD $) | 3 Months Ended | |
Aug. 31, 2014 | Aug. 31, 2013 | |
Revenues from sales to unaffiliated customers: | ' | ' |
Net sales | $1,034,450 | $1,013,739 |
UNITED STATES | ' | ' |
Revenues from sales to unaffiliated customers: | ' | ' |
Net sales | 253,000 | 255,000 |
Asia [Member] | ' | ' |
Revenues from sales to unaffiliated customers: | ' | ' |
Net sales | 16,000 | 136,000 |
Europe [Member] | ' | ' |
Revenues from sales to unaffiliated customers: | ' | ' |
Net sales | 752,000 | 604,000 |
South America [Member] | ' | ' |
Revenues from sales to unaffiliated customers: | ' | ' |
Net sales | 3,000 | 3,000 |
Middle East [Member] | ' | ' |
Revenues from sales to unaffiliated customers: | ' | ' |
Net sales | 2,000 | 15,000 |
Other Foreign [Member] | ' | ' |
Revenues from sales to unaffiliated customers: | ' | ' |
Net sales | $9,000 | $1,000 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 3 Months Ended |
Aug. 31, 2014 | |
Commitments and Contingencies (Details) [Line Items] | ' |
Line of Credit Facility, Maximum Borrowing Capacity | $250,000 |
Line of Credit Facility, Interest Rate Description | '2.0% plus the Wall Street Journal Prime West Coast Edition prime rate |
Line of Credit [Member] | ' |
Commitments and Contingencies (Details) [Line Items] | ' |
Debt Instrument, Basis Spread on Variable Rate | 2.00% |
Building in Irvine California [Member] | ' |
Commitments and Contingencies (Details) [Line Items] | ' |
Lease Agreement Date | 18-Jun-09 |
Lease Initiation Date | 1-Sep-09 |
Lease Expiration Date | 31-Aug-16 |
Operating Leases, Rent Expense, Minimum Rentals | 18,490 |
Operating Leases, Rent Expense | $21,437 |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent Event [Member], USD $) | Sep. 23, 2014 | Sep. 16, 2014 |
2014 Stock Incentive Plan [Member] | ||
Subsequent Events (Details) [Line Items] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | ' | 24,500 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price (in Dollars per share) | ' | $0.85 |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | ' | '5 years |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 800,000 | ' |