Item 1.01 Entry into a Material Definitive Agreement.

On February 21, 2020, Biomerica, Inc. (the "Company") entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with Palm Global Small Cap Master Fund LP ("Palm") pursuant to which the Company agreed to sell and issue to Palm, and Palm agreed to purchase from the Company, 571,429 shares of the Company's Series A Convertible Preferred Stock, $0.08 par value per share (the "Series A Preferred Shares") for a purchase price (the "Purchase Price") of approximately $2 million, or $3.50 per Series A Preferred Share (such transaction, the "Share Issuance").

On February 26, 2020, the Company completed the issuance and sale of the Series A Preferred Shares to Palm (the "Closing"). The issuance and sale of the Series A Preferred Shares was a private placement exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder.

The Company will use the proceeds from the sale of the Series A Preferred Shares to register the shares of Common Stock, $0.08 par value per share of the Company, issuable upon conversion of the Series A Preferred Shares, for resale and for the general corporate purposes of the Company.

The Stock Purchase Agreement contains customary representations, warranties and covenants. Until the third anniversary of the Closing, Palm will have certain rights to purchase a pro rata portion (based on the number of Conversion Shares beneficially owned by Palm) of any equity securities, or instruments convertible into or exchangeable for any equity securities, in certain proposed offerings by the Company (the "Participation Rights"). Palm's Participation Rights will not apply in connection with certain excluded transactions, including any acquisitions, strategic partnerships or commercial arrangements entered into by the Company or any equity compensation plans, public offerings, transactions resulting in less than $2.0M of gross proceeds to the Company, and transactions pursuant to the Company's At Market Issuance Sales Agreement, dated December 1, 2017, between the Company and B. Riley FBR, Inc.

Registration Rights Agreement

In connection with the Closing, on February 26, 2020 the Company entered into a registration rights agreement (the "Registration Rights Agreement") with the Purchaser that will, among other things, require the Company to register the shares of Common Stock, $0.08 par value per share (the "Common Stock") issuable upon conversion of the Series A Preferred Shares (the "Conversion Shares") at the request of Palm or certain transferees of Palm. Pursuant to the terms of the Registration Rights Agreement, these registration rights will not become effective until the earlier of nine months following the Closing and the date on which all Series A Preferred Shares have been converted into Conversion Shares. Palm will have one demand registration right pursuant to the Registration Rights Agreement. The costs incurred in connection with such registrations will be borne by the Company.

Series A Certificate of Designation

On February 24, 2020, as required by the Purchase Agreement, the Company filed with the Secretary of State of Delaware a certificate of designation setting forth the rights, preferences and privileges of the Series A Preferred Shares. On February 26, 2020, the Company filed with the Secretary of State of Delaware a certificate of correction, correcting certain language defects in the previously filed certificate of designation (as corrected, the "Certificate of Designation").





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The Series A Preferred Shares are convertible at the option of the holder at any time Conversion Shares at a conversion rate determined by dividing the Series A Original Issue Price by the Series A Conversion Price (each as defined in the Certificate of Designation) in effect at the time of conversion. This formula initially results in a one-to-one conversion ratio. The Series A Conversion Price is subject to adjustment for stock splits and the like subsequent to the date of issuance of the Series A Preferred Shares (the "Issuance Date"). In addition the Series A Conversion Price is subject to customary weighted-average anti-dilution adjustments in the event of certain dilutive issuances of shares of Common Stock or convertible securities subsequent to the Issuance Date.

The Company may require the conversion of all of the outstanding Series A Preferred Shares if the closing sale price of the Common Stock equals or exceeds $9.00 for a period of five (5) consecutive trading days with a minimum average trading volume of 35,000 shares per day over such period; provided, that, on . . .




Item 3.02     Unregistered Sales of Equity Securities.

Reference is made to Item 1.01 of this Current Report on Form 8-K regarding the Share Issuance Transaction. The disclosure contained in Item 1.01 with respect to the Share Issuance Transaction and the information contained in the Stock Purchase Agreement attached hereto as Exhibit 10.1 are hereby incorporated by reference in their entirety into this Item 3.02.




Item 3.03     Material Modification to Rights of Security Holders.

Reference is made to Item 1.01 of this Current Report on Form 8-K regarding the Series A Preferred Shares. The disclosure contained in Item 1.01 with respect to the rights, preferences and privileges of the Series A Preferred Shares and the information contained in the Certificate of Designation attached hereto as Exhibit 3.1 are hereby incorporated by reference in their entirety into this Item 3.03.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Reference is made to Item 1.01 of this Current Report on Form 8-K regarding the Series A Preferred Shares. The disclosure contained in Item 1.01 with respect to the rights, preferences and privileges of the Series A Preferred Shares and the information contained in the Certificate of Designation attached hereto as Exhibit 3.1 are hereby incorporated by reference in their entirety into this Item 5.03.




Item 7.01.     Regulation FD Disclosure

On February 26, 2020, the Company issued a news release in connection with entering into the Exchange Agreements and the Exchanges. The news release is attached hereto as Exhibit 99.1 of this Current Report on Form 8-K and is incorporated by reference herein.

In accordance with General Instruction B.2 of Form 8-K, the foregoing information, including Exhibit 99.1, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information and Exhibit 99.1 be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.



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Neither this Current Report on Form 8-K nor Exhibit 99.1 incorporated by reference herein constitutes an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful.




Item 9.01     Financial Statements and Exhibits.



(d)



Exhibit
Number                                  Description
3.1        Certificate of Correction of the Certificate of Designation for the
           Series A Convertible Preferred Stock, filed with the Secretary of
           State of Delaware on February 26, 2020.
10.1       Stock Purchase Agreement, dated February 21, 2020, by and among
           Biomerica, Inc., a Delaware corporation, and each purchaser listed on
           the Schedule of Purchasers attached thereto.
10.2       Registration Rights Agreement, dated February 26, 2020, by and among
           by and among Biomerica, Inc., a Delaware corporation, and each holder
           listed on the Schedule of Holders attached thereto.
10.3       Board Observer Agreement, dated February 26, 2020, by and between
           Biomerica, Inc., a Delaware corporation and Palm Global Small Cap
           Master Fund LP.
99.1       Press Release entitled "Biomerica Announces $2.0 Million Investment by
           Palm Global Small Cap Master Fund" issued by the Company on February
           26, 2020.


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