ACCOUNTING ESTIMATES

The preparation of our consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities as of the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. 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, provision for expected credit losses on accounts receivable, inventory overhead application, inventory reserves, and share-based compensation. We believe estimates and assumptions related to these critical accounting estimates 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 condition or results of operations. We suggest that our significant accounting policies be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report on Form 10-Q.

LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN

LIQUIDITY, CAPITAL RESOURCES, AND GOING CONCERN

We have incurred net losses and negative cash flows from operations and have an accumulated deficit of approximately $58,175,000 as of August 31, 2026. As of August 31, 2026, we had cash and cash equivalents of approximately $2,733,000 and working capital of approximately $2,572,000. As of May 31, 2026, we had cash and cash equivalents of approximately $1,308,000 and working capital of approximately $1,535,000. Based on our current operating plan, we believe that our existing cash and cash equivalents will be insufficient to fund our operations and meet our obligations for the next twelve months from the issuance date of these financial statements.

On September 28, 2023, we filed a “shelf” registration statement on Form S-3 with the SEC (the “Shelf Registration Statement”), which was declared effective on September 29, 2023, to replace the expiring “shelf” registration statement on Form S-3 that was filed on July 21, 2020, as amended on September 20, 2020, allowing us to issue up to $20,000,000 in shares of our common stock. Under the Shelf Registration Statement, shares of our common stock may be sold from time to time for up to three years from its initial effective date. The Shelf Registration Statement reached its third anniversary on September 29, 2026 and has been replaced by a new shelf registration statement, as described below.

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 at-the-market (“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, 2024, all of which had been charged against additional paid-in capital as of May 31, 2026.

On September 24, 2026, subsequent to quarter-end, we filed a replacement shelf registration statement on Form S-3 with the SEC registering up to $250,000,000 of common stock, preferred stock, debt securities and warrants, including unsold common stock carried forward from our prior shelf registration statement pursuant to Rule 415(a)(6) under the Securities Act. The replacement shelf registration statement was declared effective by the SEC on October 7, 2026. The Shelf Registration Statement does not represent committed financing. Our ability to raise capital under it is subject to applicable Form S-3 eligibility requirements and offering limitations, including General Instruction I.B.6, and market conditions.

During the three months ended August 31, 2026, we did not sell any shares of common stock pursuant to the 2024 ATM Offering. On August 26, 2026, we completed a private placement pursuant to a Securities Purchase Agreement (“SPA”) with accredited investors and issued 1,393,705 shares of our common stock at $1.60 per share, resulting in gross proceeds of approximately $2,231,000 and net proceeds after legal fees and other offering costs of approximately $2,120,000. Offering costs totaled approximately $111,000 and were accrued and unpaid as of August 31, 2026.

We intend to use the net proceeds of the August 2026 private placement and any future sales under 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.

Our ability to meet our obligations and continue as a going concern 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 and ability 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;
	●	Our ability to retain key employees and maintain critical operations; and
	●	Certain SEC regulations that limit the amount of capital we can raise through issuance of our equity.

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

Management has evaluated our cash flow requirements for the twelve months following the issuance date of these financial statements. Based on this evaluation, our existing cash and cash equivalents are insufficient to fund our operations and meet our obligations during that period.

To address our capital needs and sustain operations through the next year and beyond, we are actively pursuing strategies to increase sales, reduce expenses, sell non-core assets, seek additional financing through debt or equity issuance, and seek other strategic alternatives. If we are unable to generate sufficient cash flows from operations or obtain additional financing, we may be required to delay or reduce certain operating activities and expenditures.

While we are committed to these plans, there can be no assurance that these efforts will be successful or sufficient to meet our near-term capital requirements, or to enable the Company to continue as a going concern.

Our condensed consolidated financial statements as of August 31, 2026, 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. Our continuance as a going concern is dependent upon our ability to obtain additional operating capital and achieve revenues and attain profitability. We intend to finance our future development activities and our working capital needs primarily from the sale of equity and debt securities, combined with additional funding from other sources. However, there can be no assurance that future funding will be available to us when needed on terms that are acceptable to us, or at all or that we will be successful in these endeavors.

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 CURRENT ASSETS

PREPAID EXPENSES AND OTHER CURRENT ASSETS

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

As of August 31, 2026 and May 31, 2026, prepaids were approximately $145,000 and $216,000, respectively, composed 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 related to property and equipment was approximately $10,000 and $15,000 for the three months ended August 31, 2026 and 2025, 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 are accounted for under the measurement alternative in ASC 321 at our initial cost, minus any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar securities of the same issuer. Dividends received are recognized in dividend, interest, and 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 holding as of August 31, 2026 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 similar security of the same issuer during the three months ended August 31, 2026 and August 31, 2025.

On May 29, 2026, we entered into a SPA to sell our entire investment in Diagnosis S.A. for an aggregate purchase price of $500,000 in a related-party transaction involving our Chief Executive Officer and other purchasers. During the year ended May 31, 2026, we increased the carrying amount of the investment from approximately $165,000 to $500,000 and recognized an unrealized holding gain of approximately $335,000 based on the executed SPA. Pending completion of the applicable share transfers and required procedures under Polish law, we received $500,000 in cash and issued a secured promissory term note to our Chief Executive Officer. The note bears interest at 8% per annum, matures on May 29, 2027, and is secured by our rights and interests in the Diagnosis S.A. shares. As of August 31, 2026, the share transfer had not been completed, and we continued to recognize the investment and the related note payable. The share transfer remains in process, subject to completion of the applicable procedures required under Polish law.

As of August 31, 2026, the carrying amount of our investment in Diagnosis S.A. was approximately $500,000. Cumulative upward adjustments were approximately $335,000, and no cumulative impairment or downward adjustments had been recognized as of August 31, 2026.

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 (“FOB”) shipping point, which is when control of the goods transfers and title passes to the customer. This applies to clinical lab products sold to domestic and international distributors, including hospitals, clinical laboratories, medical research institutions, medical schools, and pharmaceutical companies. Over-the-counter (“OTC”) products are sold directly to e-commerce customers and distributors, while physicians’ office products are sold to physicians and distributors. We generally 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. For certain contracts, revenue is recognized over time as services are performed, measured based on progress toward completion.

As of August 31, 2026, we had approximately $47,000 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

	2026		2025
	Three Months Ended August 31,
	2026		2025
Clinical lab	$	775,000	$	1,024,000
Over-the-counter		291,000		161,000
Contract manufacturing		197,000		192,000
Physician’s office		2,000		3,000
Total	$	1,265,000	$	1,380,000

See Note 4 for additional information regarding geographic revenue concentrations.

RESEARCH AND DEVELOPMENT

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred. We recognized approximately $206,000 and $212,000 of research and development costs during the three months ended August 31, 2026 and August 31, 2025, respectively.

ADVERTISING COSTS

ADVERTISING COSTS

We report the cost of advertising as an expense in the period in which those costs are incurred. For the three months ended August 31, 2026, and August 31, 2025, advertising costs were approximately $8,000 and $9,000, respectively.

RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

We account for our leases in accordance with ASC 842, Leases. We lease 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. Our 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 1single operating and reportable segment, which focuses 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 (loss) income 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 in net (loss) income 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.