BMRA Biomerica, Inc.

Management Discussion

•       Consolidated net sales for Biomerica were $1,261,161 for the three months ended February 28, 2019 as compared to $1,375,666 for the period ended February 28, 2018. This represents a decrease of $114,505, or 8.3%. For the nine month periods ended February 28, 2019 as compared to February 28, 2018, net sales were $4,034,822 as compared to $4,433,785, a decrease of $398,963, or 9.0%. The decrease for the three month period was primarily due to lower sales to China and the decrease for the nine month period was primarily due to lower contract manufacturing sales and lower sales to China and Europe.
•      For the three months ended February 28, 2019 as compared to the three months ended February 28, 2018, cost of sales increased as a percentage of sales from 66.2% of sales, or $910,295, to 71.0% of sales, or $895,237.  For the nine months ended February 28, 2019 as compared to February 28, 2018, cost of sales as a percentage of sales increased from 66.5% of sales, or $2,947,652 to 72.5% of sales, or $2,923,615.  Increases to cost of goods as a percentage of sales for the three and nine months were due to increased material costs, a larger percent of expenses being capitalized into inventory as of February 28, 2018 as well as fixed costs in relation to lower sales during the quarter and nine months ended February 28, 2019.
•          For the three months ended February 28, 2019 compared to February 28, 2018, selling, general and administrative expenses increased by $141,412, or 32.5%. For the nine months ended February 28, 2019 as compared to February 28, 2018, general and administrative expenses increased by $79,726, or 5.7%. The increase for the quarter and nine months ended February 28, 2019 as compared to February 28, 2018, was primarily due to an increase of non-cash option expense of approximately $132,000 in the quarter ended February 28, 2019 as compared to February 28, 2018, which was offset by higher consulting fees and wages in fiscal 2018.