| 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. 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. Concentration of Credit Risk The Company maintains cash balances at certain financial institutions in excess of amounts insured by federal agencies. The Company does not believe it is exposed to significant credit risks. The Company provides credit in the normal course of business to customers throughout the United States and foreign markets. At February 28, 2018 and May 31, 2017 the Company had three customers which accounted for 74.2% and two customers which accounted for 54.2%, respectively, of gross accounts receivable. The Company had one customer which accounted for approximately 44.0% and 38.1%, of consolidated sales for the nine months ended February 28, 2018 and February 28, 2017, respectively. 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. Occasionally certain long-standing customers, who routinely place large orders, will have unusually large accounts receivable balances relative to the total gross accounts receivable. Management monitors 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 net realizable value. 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: February 28, 2018 May 31, 2017 Raw materials $ 892,000 $ 830,000 Work in progress 891,000 728,000 Finished products 171,000 171,000 Total $ 1,954,000 $ 1,729,000 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. As of February 28, 2018 and May 31, 2017 inventory reserves were approximately $35,000. 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 $28,344 and $33,688 for the three months ended February 28, 2018 and February 28, 2017, and $87,479 and $108,160 for the nine months ended February 28, 2018 and 2017, 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 that have indefinite Amortization amounted to $17,387 and $18,905 for the three months ended February 28, 2018 and February 28, 2017, respectively, and $52,385 and $55,427 for the nine months ended February 28, 2018 and 2017, respectively. Share-Based Compensation The Company follows the guidance of the accounting provisions of ASC 718 “ Share-based Compensation 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 February 28, 2018:
Exercise Price Weighted Average
Option Shares
Outstanding May 31, 2017
897,000
$
0.98
Granted
287,000
$
3.63
Exercised
(24,125)
$
0.78
Cancelled or expired
(10,625)
$
1.44
Outstanding February 28, 2018
1,149,250
$
1.64 During the nine months ended February 28, 2018 options to purchase 24,125 shares of common stock were exercised at prices ranging from $0.71 to $1.04 per share. Proceeds to the Company were $18,614. 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. As of February 28, 2018 and May 31, 2017, the allowance for returns was $0. 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” 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 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 on deferred income tax assets of approximately $1,716,000 and $1,435,000 as of February 28, 2018 and May 31, 2017, respectively. Foreign Currency Translation The subsidiaries located in Germany and Mexico are accounted for primarily using local functional currency. Accordingly, assets and liabilities of these subsidiaries 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. Basic Net Loss Per Share Basic losses per share are computed as net loss divided by the weighted average number of common shares outstanding for the period. Diluted loss 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 options not included in the loss per share calculation for the three and nine months ended February 28, 2018 was 597,645 and 569,915, respectively. The total amount of anti-dilutive options not included in the loss per share calculation for the three and nine months ended February 28, 2017 was 557,271 and 552,656, respectively. The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted loss per share computations.
Nine Months February 28,
Three Months February 28,
2018
2017
2018
2017
Numerator:
Net loss
$
(798,211)
$
(562,741)
$
(322,491)
$
(304,141)
Denominator for basic loss per common share
8,529,009
8,269,791
8,556,480
8,433,932
Effect of dilutive securities:
Options and warrants
--
--
--
--
Denominator for diluted loss per common share
8,529,009
8,269,791
8,556,480
8,433,932
Basic net loss per common share
$
(0.09)
$
(0.07)
$
(0.04)
$
(0.04)
Diluted net loss per common share
$
(0.09)
$
(0.07)
$
(0.04)
$
(0.04) New Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), which addresses “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). The amendments in this update were effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Management adopted the provisions of this statement and is taking them into account in the preparation of the accompanying financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers ” In July 2015, the FASB issued ASU 2015-11, “Simplifying the Measurement of Inventory” (ASU 2015-11). ASU 2015-11 applies to inventory that is measured using first-in, first-out (“FIFO”) or average cost. An entity should measure inventory within the scope of ASU 2015-11 at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The amendments in ASU 2015-11 more closely align the measurement of inventory in accounting principles generally accepted of the United States of America with the measurement of inventory in International Financial Reporting Standards (“IFRS”). ASU 2015-11 was effective for fiscal years beginning after December 31, 2016. Management has implemented the provisions of this statement and does not believe the adoption of ASU 2015-11 had a significant impact on the Company’s financial position or results of operations. On January 5, 2016, the FASB issued ASU 2016-01, “ Financial Instruments-Overall” ( ). On February 25, 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842)” ( On March 30, 2016, the FASB issued ASU 2016-09, “ Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” On August 26, 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): ” . On November 27, 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted ” . In January 2017 the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350), Simplifying the test for Goodwill Impairment” . On February 15, 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects From Accumulated Comprehensive Income” (ASU 2018-02). ASU 2018-02 will give companies the option to reclassify stranded tax effects caused by the newly-enacted US Tax Cuts and Jobs Act (TCJA) from accumulated other comprehensive income (AOCI) to retained earnings. ASU 2018-02 will take effect for all companies for the fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Management is evaluating the provisions of this statement and has not determined what impact the adoption of ASU 2018-02 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. |
