ACCOUNTING ESTIMATES

In order to prepare our consolidated financial statements in conformity with GAAP, we must 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. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Different assumptions or conditions may cause actual results to differ materially from these estimates. We monitor significant estimates made during the preparation of our financial statements on an ongoing basis. We believe our estimates and assumptions are reasonable under the current conditions; 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, inventory reserves, lease liabilities, right-of-use assets and share based compensation. 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 of this Quarterly Report on Form 10-Q.

LIQUIDITY AND GOING CONCERN

LIQUIDITY AND GOING CONCERN

We have incurred recurring operating losses and negative cash flows from operations and have an accumulated deficit of approximately $53,200,000 as of August 31, 2025. As of August 31, 2025, we had cash and cash equivalents of approximately $3,053,000 and working capital of approximately $4,206,000.

On September 28, 2023, we filed a new “shelf” registration statement on Form S-3 with the SEC, to replace the expiring “shelf” registration statement on Form S-3 that was filed in July 21, 2020, as amended on September 20, 2020 (the “Shelf Registration Statement”), which was declared effective on September 29, 2023, allowing the Company to issue up to $20,000,000 in shares of our common stock. Under this registration statement, shares of our common stock may be sold from time to time for up to three years from the filing date . On May 10, 2024, we filed a prospectus supplement to the Shelf Registration Statement with the SEC to facilitate the sale of up to $5,500,000 in common stock through ATM offerings, as defined in Rule 415 under the Securities Act (the “2024 ATM Offering”). As part of this transaction, we incurred $81,000 in deferred offering costs during the year ended May 31, 2025.

During the three months ended August 31, 2025, we sold 258,569 shares of our common stock at prices ranging from $3.34 to $3.69 pursuant to the 2024 ATM Offering, which resulted in gross proceeds of approximately $939,000 and net proceeds to us of $912,000 after deducting commissions for each sale and legal, accounting, and other fees related to offering in the amount of $27,000.

We intend to use the net proceeds from any funds raised through the 2024 ATM Offering for general corporate purposes, including, but not limited to, sales and marketing activities, clinical studies and product development, acquisitions of assets, businesses, companies, or securities, capital expenditures, and working capital needs.

Management assesses whether we have sufficient liquidity to fund its costs for the next twelve months from each financial statement issuance date to determine if there is a substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern over the next twelve months is influenced by several factors, including:

	●	Our need and ability to generate additional revenue from international opportunities and sales within the United States of existing products, and from our new product launches;
	●	Our need to access the capital and debt markets to meet current obligations and fund operations;
	●	Our capacity to manage operating expenses and maintain or increase gross margins as we grow;
	●	Our ability to retain key employees and maintain critical operations with a substantially reduced workforce; and
	●	Certain SEC regulations that limit the amount of capital we can raise through issuance of its equity.

Management has analyzed our cash flow requirements through November 2026 and beyond. Based on this analysis, we believe our current cash and cash equivalents are insufficient to meet our operating cash requirements and strategic growth objectives for the next twelve months.

To address our capital needs and sustain operations beyond the next year, we are actively pursuing strategies to increase sales, reduce expenses, sell non-core assets, seek additional financing through debt or equity, and seek other strategic alternatives. While we are committed to these plans, there is no assurance that these efforts will be successful or sufficient to meet our capital requirements.

As part of our efforts to reduce costs, we have implemented significant cost-cutting measures in an attempt to extend our cash runway and work towards increasing revenues to cover overhead costs.

These factors raise substantial doubt about our ability to continue as a going concern. Our future viability depends on the successful execution of our strategic plans, securing additional near-term financing, and achieving profitable operations.

Our consolidated financial statements as of August 31, 2025 were prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

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

PREPAID EXPENSES AND OTHER

PREPAID EXPENSES AND OTHER

We occasionally prepay for items such as inventory, insurance, and other items. These items are reported as prepaid expenses and other, until either the inventory is physically received, or the insurance and other items are expensed.

As of August 31, 2025 and May 31, 2025, the prepaids were approximately $168,000 and $255,000, respectively, comprised of prepayments to insurance and various other suppliers.

PROPERTY AND EQUIPMENT, NET

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 sold, retired or otherwise disposed of, the related cost and accumulated depreciation or amortization are removed from the accounts, and gains or losses from sales, 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 was approximately $15,000 and $17,000 for the three months ended August 31, 2025 and 2024, respectively.

INVESTMENTS

INVESTMENTS

We have made investments in a privately held Polish distributor, which is primarily engaged in distributing medical products and devices, including the distribution of the products sold by us. We invested approximately $165,000 into the Polish distributor and own approximately 6% of the Polish distributor.

Equity holdings in nonmarketable unconsolidated entities in which we are not able to exercise significant influence (“Cost Method Holdings”) are accounted for at our initial cost, minus any impairment (if any), plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar holding or security of the same issuer. Dividends received are recorded as other income.

We assess our equity holdings for impairment whenever events or changes in circumstances indicate that the carrying value of an equity holding may not be recoverable. Management reviewed the underlying net assets of our equity method holding as of August 31, 2025 and determined that our proportionate economic interest in the entity indicates that the equity holding was not impaired. There were no observable price changes in orderly transactions for identical or a similar holding or security of our Cost Method Holdings during the period ended August 31, 2025.

REVENUE RECOGNITION

REVENUE RECOGNITION

We have various contracts with customers, and these contracts specify the recognition of revenue based on the nature of the transaction.

Revenues from product sales are recognized at the time the product is shipped, customarily Freight on Board shipping point, which is when the transfer of control of goods has occurred and title passes. This applies to clinical lab products sold to domestic and international distributors, including hospitals, clinical laboratories, medical research institutions, medical schools, and pharmaceutical companies. OTC products are sold directly to drug stores, e-commerce customers, and distributors, while physicians’ office products are sold to physicians and distributors. We do not allow returns except in cases of defective merchandise, and therefore, do not establish an allowance for returns. Additionally, we have contracts with customers that provide purchase discounts contingent on achieving specified sales volumes. These contracts are regularly evaluated, and we do not anticipate granting any discounts through the end of the contract period.

For diagnostic testing services sold directly to patients or physician offices that require processing by a third-party CLIA-certified lab, we recognize revenue once the lab has completed the test results.

For services related to contract manufacturing, revenue is recognized when the service has been performed. Services for some contract work are invoiced and recognized as the project progresses.

As of August 31, 2025, we had approximately $54,000 in advances from domestic customers, which are prepayments on orders for future shipments.

Disaggregation of revenue:

The following is a breakdown of revenues according to markets to which the products are sold:

SCHEDULE OF DISAGGREGATION REVENUE

	2025		2024
	Three Months Ended August 31,
	2025		2024
Clinical lab	$	1,024,000	$	1,278,000
Contract manufacturing		192,000		339,000
Over-the-counter		161,000		187,000
Physician’s office		3,000		3,000
Total	$	1,380,000	$	1,807,000

See Note 4 for additional information regarding revenue concentrations.

RESEARCH AND DEVELOPMENT

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred. We expensed approximately $212,000 and $297,000 of research and development costs during the three months ended August 31, 2025 and 2024, respectively.

ADVERTISING COSTS

ADVERTISING COSTS

We report the cost of advertising as expense in the period in which those costs are incurred. Advertising costs were approximately $9,000 and $14,000 for the three months ended August 31, 2025 and 2024, respectively.

RIGHT-OF-USE ASSETS AND LEASE LIABILITY

RIGHT-OF-USE ASSETS AND LEASE LIABILITY

In February 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update which requires lessees to recognize most leases on the balance sheet with a corresponding right-of-use asset. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term. Leases are classified as financing or operating which will drive the expense recognition pattern. We have elected to exclude short-term leases. Our leases office space and copy machines, all of which are operating leases. Most leases include the option to renew and the exercise of the renewal options is at our sole discretion. Options to extend or terminate a lease are considered in the lease term to the extent that the option is reasonably certain of exercise. The leases do not include the options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term.

SEGMENT REPORTING

SEGMENT REPORTING

We define our segments on the basis in which internally reported financial information is reviewed by the Chief Operating Decision Maker (the “CODM”) to analyze financial performance, make decisions, and allocate resources. We manage our operations as a single operating and reportable segment, which focus on the development, manufacture, marketing, and sale of diagnostic products. As all material financial information is included in the consolidated results we have identified one reportable segment. The CODM uses net income (loss) and cash flow information to evaluate performance, including detailed cost information as part of the budget and forecasting process and considers budget-to-actual variances on a regular basis when making decisions about the allocation of operating and capital resources. We measure segment profit or loss is net income (loss) as reported in the consolidated financial statements.

The accounting policies used in the segment reporting are the same as those described in the summary of significant accounting policies. Our CODM is the Chief Executive Officer.

Our reportable segment product sales, net and net income (loss) during the three months ended August 31, 2025 and 2024 consisted of the following:

SCHEDULE OF SEGMENT REPORTING

	2025			2024
	For the Three Months Ended August 31,
	2025			2024
Net sales	$	1,380,000		$	1,807,000
Cost of sales		(956,000	)		(1,518,000	)
Gross profit		424,000			289,000

Operating expenses:
Sales and marketing expense		1,330,000			1,360,000
General and administrative expense
Research and development expense		212,000			297,000
Total operating expense		1,542,000			1,657,000

Loss from operations		(1,118,000	)		(1,368,000	)

Other income:
Dividend, interest, and other income		1,123,000			56,000
Total other income		1,123,000			56,000

Loss before income taxes		5,000			(1,312,000	)

Provision for income taxes		(3,000	)		(4,000	)

Net loss	$	2,000		$	(1,316,000	)

Dividend, interest, and other income for the three months ended August 31, 2025, included $1,100,000 related to the Employee Retention Credit (“ERC”), a refundable payroll-tax credit established under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. We account for ERC claims in accordance with ASC 450-30, “Gain Contingencies,” and therefore recognizes income only when all related contingencies have been resolved and receipt of the refund is realized or realizable. The ERC relates to qualified wages paid during calendar year 2021 under the COVID-19 pandemic relief programs and represents a one-time, non-recurring item that will not impact future reporting periods.