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<SEC-DOCUMENT>0001019687-07-001090.txt : 20070416
<SEC-HEADER>0001019687-07-001090.hdr.sgml : 20070416
<ACCEPTANCE-DATETIME>20070416161718
ACCESSION NUMBER:		0001019687-07-001090
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		11
CONFORMED PERIOD OF REPORT:	20070228
FILED AS OF DATE:		20070416
DATE AS OF CHANGE:		20070416

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BIOMERICA INC
		CENTRAL INDEX KEY:			0000073290
		STANDARD INDUSTRIAL CLASSIFICATION:	DENTAL EQUIPMENT & SUPPLIES [3843]
		IRS NUMBER:				952645573
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0531

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-08765
		FILM NUMBER:		07768371

	BUSINESS ADDRESS:	
		STREET 1:		1533 MONROVIA AVENUE
		CITY:			NEWPORT BEACH
		STATE:			CA
		ZIP:			92663
		BUSINESS PHONE:		9496452111

	MAIL ADDRESS:	
		STREET 1:		1533 MONROVIA AVENUE
		CITY:			NEWPORT BEACH
		STATE:			CA
		ZIP:			92663

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NMS PHARMACEUTICALS INC
		DATE OF NAME CHANGE:	19871130

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NUCLEAR MEDICAL SYSTEMS INC
		DATE OF NAME CHANGE:	19830216

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NUCLEAR INSTRUMENTS INC
		DATE OF NAME CHANGE:	19720508
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>biomerica_10qsb-022807.txt
<TEXT>
<PAGE>

                                   FORM 10-QSB
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended February 28, 2007                   Commission File No. 0-8765
                  -----------------                                       ------

                                 BIOMERICA, INC.
- --------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

Delaware                                                     95-2645573
- --------------------------------------------------------------------------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

1533 Monrovia Avenue, Newport Beach, California              92663
- --------------------------------------------------------------------------------
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number including area code:      (949) 645-2111
- --------------------------------------------------------------------------------

                                (Not applicable)
- --------------------------------------------------------------------------------
             (Former name, former address and former fiscal year, if
                           changed since last report.)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                          Yes  [X]        No  [ ]

Indicate by check mark whether the Registrant is an accelerated filer (as
Defined in Rule 12b-2 of the Exchange Act).

                          Yes  [ ]        No  [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 5,939,214 shares of common
stock as of April 13, 2007.


                                        1
<PAGE>

                                 BIOMERICA, INC.

                                      INDEX

PART I

Item 1.  Consolidated Financial Statements:

         Consolidated Statements of Operations and
         Comprehensive Loss (unaudited) - Three and Nine Months Ended
         February 28, 2007 and 2006........................................3 & 4

         Consolidated Balance Sheet (unaudited) -
         February 28, 2007.................................................5 & 6

         Consolidated Statements of Cash Flows (unaudited) -
         Nine Months Ended February 28, 2007 and 2006......................7 & 8

         Notes to Consolidated Financial Statements (unaudited).............9-22

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Selected Financial Data.......................................23-24

Item 3.  Quantitative and Qualitative Disclosures about Market Risk...........25

Item 4.  Controls and procedures..............................................25

PART II  Other Information....................................................26

Item 1.  Legal Proceedings....................................................26

Item 2.  Changes in Securities and Use of Proceeds............................26

Item 3.  Defaults upon Senior Securities......................................26

Item 4.  Submission of Matters to a Vote of Security Holders..................26

Item 5.  Other Information....................................................26

Item 6.  Exhibits and Reports on Form 8-K.....................................26

         Signatures...........................................................27


                                        2
<PAGE>

<TABLE>
<S>            <C>

THE DECONSOLIDATION OF LANCER ORTHODONTICS FROM BIOMERICA OCCURRED DECEMBER 1,
2005. THEREFORE, THE NINE MONTHS ENDED FEBRUARY 28, 2006, INCLUDES THE
OPERATIONS OF BIOMERICA FOR THE NINE MONTHS THEN ENDED AND SIX MONTHS OF
OPERATIONS FOR LANCER ORTHODONTICS. THE NINE MONTHS ENDED FEBRUARY 28, 2007
INCLUDES THE OPERATIONS OF BIOMERICA ONLY. THE THREE MONTHS ENDED FEBRUARY 28,
2007 AND 2006 INCLUDES THE OPERATIONS OF BIOMERICA ONLY. IN ORDER TO UNDERSTAND
HOW THE BIOMERICA OPERATIONS COMPARE, PLEASE REFER TO NOTE 2 FOR A BREAKDOWN OF
THE RESULTS BY COMPANY FOR THE PERIOD ENDED FEBRUARY 28, 2006.


                                                  PART I - FINANCIAL INFORMATION
                                                 SUMMARIZED FINANCIAL INFORMATION
                                                   ITEM 1. FINANCIAL STATEMENTS

                                                          BIOMERICA, INC.
                                               CONSOLIDATED STATEMENTS OF OPERATIONS
                                                AND COMPREHENSIVE LOSS (UNAUDITED)
                                                           (SEE NOTE 2)

                                                                         Nine Months Ended                Three Months Ended
                                                                             February 28,                     February 28,
                                                                        2007             2006             2007             2006
                                                                    -----------      -----------      -----------      -----------

Net sales .....................................................     $ 3,797,051      $ 5,717,260      $ 1,311,609      $   998,070

     Cost of sales ............................................      (2,427,578)      (3,820,715)        (836,204)        (649,468)
                                                                    -----------      -----------      -----------      -----------
     Gross profit .............................................       1,369,473      $ 1,896,545      $   475,405      $   348,602
                                                                    -----------      -----------      -----------      -----------

Operating Expenses:
     Selling, general and administrative ......................         943,601        1,866,470          308,403          272,890
     Research and development .................................         170,759          193,360           71,246           38,779
                                                                    -----------      -----------      -----------      -----------
                                                                      1,114,360        2,059,830          379,649          311,669
                                                                    -----------      -----------      -----------      -----------

Operating income (loss) from continuing operations ............         255,113         (163,285)          95,756           36,933
                                                                    -----------      -----------      -----------      -----------

Other Expense (income):
     Interest expense .........................................          22,626           36,751            6,385            7,248
     Other income, net ........................................         (40,040)         (45,575)         (40,005)            (730)
                                                                    -----------      -----------      -----------      -----------
                                                                        (17,414)          (8,824)         (33,620)           6,518
                                                                    -----------      -----------      -----------      -----------

Income (loss) from continuing operations, before
  minority interest in net loss of consolidated
  subsidiaries and income taxes ...............................         272,527         (154,461)         129,376           30,415

Minority interest in net losses of consolidated subsidiary ....              --          251,670               --               --
                                                                    -----------      -----------      -----------      -----------
Income from continuing operations,
  before income taxes .........................................         272,527           97,209          129,376           30,415

Income tax expense ............................................           8,006            2,400            8,006              800
                                                                    -----------      -----------      -----------      -----------

Net income from continuing operations .........................         264,521           94,809          121,370           29,615


                THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. PLEASE REFER TO NOTE 2.

                                                                 3
<PAGE>

                                                          BIOMERICA, INC.
                                               CONSOLIDATED STATEMENTS OF OPERATIONS
                                          AND COMPREHENSIVE LOSS - Continued (UNAUDITED)
                                                           (SEE NOTE 2)

                                                                          Nine Months Ended              Three Months Ended
                                                                             February 28,                     February 28,
                                                                        2007             2006             2007            2006
                                                                    ------------     ------------     ------------   ------------
Discontinued operations:
  Income from discontinued operations, net .......................       (27,869)              --              --              --
                                                                    ------------     ------------     ------------   ------------
Net income        ................................................       292,390           94,809          121,370         29,615

Other comprehensive loss, net of tax:
  Unrealized loss on available-for-sale
   securities ....................................................       (36,868)        (240,100)          (8,662)      (236,286)
                                                                    ------------     ------------     ------------   ------------

Comprehensive income (loss) income ...............................  $    255,522     $   (145,291)    $    112,708   $   (206,671)
                                                                    ============     ============     ============   ============

Basic net income per common share:

     Net income from continuing operations ................         $        .04     $        .01     $        .02   $        .00
     Net income from discontinued operations ..............                  .00              .00              .00            .00
                                                                    ------------     ------------     ------------   ------------
Basic net income per common share .........................         $        .04     $        .01     $        .02   $        .00
                                                                    ============     ============     ============   ============
Diluted net income per common share
     Net income from continuing operations ................         $        .04     $        .01     $        .02   $        .00
     Net income from discontinued operations ..............                  .00              .00              .00            .00
                                                                    ------------     ------------     ------------   ------------

Diluted net income per common share .......................         $        .04     $        .01     $        .02   $        .00
                                                                    ============     ============     ============   ============

Weighted average number of common and common equivalent shares:
     Basic .......................................................     5,925,860        5,753,831        5,939,214      5,752,912
                                                                    ============     ============     ============   ============
     Diluted .....................................................     6,368,245        6,617,955        6,371,192      6,604,035
                                                                    ============     ============     ============   ============

                THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. PLEASE REFER TO NOTE 2.

                                                                 4
<PAGE>

                                     BIOMERICA, INC.

                                BALANCE SHEET (UNAUDITED)


                                                                              February 28,
                                                                                 2007
                                                                              ----------
Assets

Current Assets
    Cash and cash equivalents .............................................   $   66,491
    Available for-sale securities .........................................          588
    Accounts receivable, less allowance for doubtful accounts of $23,415 ..      674,484
    Inventories, net of reserve of $2,864 .................................    1,411,066
    Notes receivable ......................................................        2,850
    Prepaid expenses and other ............................................       57,356
    Net assets from discontinued operations ...............................          598
                                                                              ----------

          Total Current Assets ............................................    2,213,433

Inventory, non-current ....................................................       20,529

Available-for-sale securities .............................................      375,959

Property and Equipment, net of accumulated depreciation and amortization ..      179,514

Intangible assets, net of accumulated amortization ........................        3,882

Other Assets ..............................................................       13,419
                                                                              ----------

                                                                              $2,806,736
                                                                              ==========


       The accompanying notes are an integral part of these financial statements.

                                            5
<PAGE>

                                   BIOMERICA, INC.

                 CONSOLIDATED BALANCE SHEET - Continued (UNAUDITED)


                                                                       February 28,
                                                                            2007
                                                                       ------------
Liabilities and Shareholders' Equity

Current Liabilities

     Accounts payable and accrued liabilities ......................   $   720,580
     Accrued compensation ..........................................       487,451
     Current portion of shareholder loan ...........................       234,426
     Capital lease - short-term portion ............................         4,054
                                                                       ------------

          Total Current Liabilities ................................     1,446,511

Capital lease-long-term portion ....................................         5,512

Shareholders' Equity

     Common stock, $0.08 par value authorized 25,000,000 shares,
       subscribed or issued and outstanding 5,939,214 ..............       475,136
     Additional paid-in-capital ....................................    17,135,886
     Accumulated other comprehensive loss ..........................      (263,839)
     Accumulated deficit ...........................................   (15,992,470)
                                                                       ------------
Total Shareholders' Equity .........................................     1,354,713
                                                                       ------------
Total Liabilities and Equity .......................................   $ 2,806,736
                                                                       ============


    The accompanying notes are an integral part of these financial statements.

                                         6
<PAGE>
                                            BIOMERICA, INC.
                           CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


For the nine months ended February 28,                                           2007           2006
                                                                              ---------      ---------
Cash flows from operating activities:
Net income from continuing operations ...................................     $ 264,521      $  94,809
Adjustments to reconcile net income to net cash (used in)
   operating activities:
     Depreciation and amortization ......................................        41,896        107,597
     Minority interest in net loss of consolidated subsidiary ...........            --       (251,670)
     Common stock, warrants and options issued for services rendered ....         5,357          3,739
     Provision for losses on accounts receivable ........................        16,385         16,092
     (Gain) loss on disposal of equipment ...............................       (40,000)         1,704
     Provision for losses on inventory ..................................            --           (714)
     Changes in current assets and liabilities:
       Accounts receivable ..............................................      (130,149)      (417,219)
       Inventories ......................................................      (303,565)      (311,394)
       Prepaid expenses and other current assets ........................        (2,538)       (22,098)
       Accounts payable and other accrued liabilities ...................       139,813        340,800
       Accrued compensation .............................................         4,143          2,065
                                                                              ---------      ---------
Net cash (used in) operating activities .................................        (4,137)      (436,289)
                                                                              ---------      ---------
Cash flows from investing activities:
     Purchases of property and equipment ................................      (100,138)      (247,577)
     Proceeds from sale of equipment ....................................        50,000             --
                                                                              ---------      ---------
Net cash used in investing activities ...................................       (50,138)      (247,577)
                                                                              ---------      ---------
Cash flows from financing activities:

     Payments on capital lease ..........................................        (2,722)            --
     Change in minority interest ........................................            --         37,250
     Decrease in shareholder loan ......................................       (26,516)       (33,485)
     Exercise of stock options ..........................................         5,130            398
     Increase in line of credit at subsidiary ...........................            --         65,000
     Payments of capital leases at subsidiary ...........................            --        (25,799)
     Private placement at subsidiary ....................................            --        469,800
     Proceeds from sale of common stock .................................        24,960             --
                                                                              ---------      ---------
Net cash provided by financing activities ...............................           852        513,164
                                                                              ---------      ---------
Net decrease in cash and cash equivalents ...............................       (53,423)      (170,702)

Net decrease in cash-reclassification of
    Lancer Orthodontics Inc. to the cost method .........................            --       (134,003)

Cash at beginning of period .............................................       119,914        351,881
                                                                              ---------      ---------
Cash at end of period ...................................................     $  66,491      $  47,176
                                                                              =========      =========
Supplemental Disclosure of Cash Flow Information
  Cash Paid During The Year For:
     Interest ...........................................................     $  21,675      $  36,751
                                                                              =========      =========
     Income taxes .......................................................     $   1,600      $   2,400
                                                                              =========      =========
Supplemental disclosures on non-cash investing & financing activity

  Change in unrealized holding loss on available-for-sale securities ....     $ (36,868)     $(240,626)
                                                                              =========      =========
  Change in minority interest due to subsidiary stock issuance ..........     $      --      $ (57,769)
                                                                              =========      =========
  Capital lease for purchase of fixed assets ............................     $  12,841      $ 360,593
                                                                              =========      =========
  Increase in investment due to de-consolidation of Lancer ..............     $      --      $ 632,732
                                                                              =========      =========


              The accompanying notes are an integral part of these financial statements.

                                                   7
<PAGE>

                                 BIOMERICA, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



For the nine months ended February 28,                    2007           2006
                                                      -----------    -----------

Changes due to de-consolidation of Lancer

     Accounts Receivable .........................   $       --     $ 1,590,504
     Inventories ..................................           --       1,838,698
     Prepaid expenses and other current assets ....           --          90,676
     Net fixed assets .............................           --       1,197,310
     Other ........................................           --          48,821
                                                      -----------    -----------
Subtotal assets ...................................           --       4,766,009
                                                      -----------    -----------

     Accounts payable and other accrued liabilities           --         899,483
     Line of credit ...............................           --         240,000
     Capital lease ................................           --         334,794
     Subscribed stock .............................           --          85,850
     Common stock .................................           --       5,670,565
     Accumulated deficit ..........................           --      (2,330,680)
                                                      -----------    -----------
Subtotal liabilities & equity .....................           --      (4,900,012)
                                                      -----------    -----------
Net decrease in cash .............................   $       --     $  (134,003)
                                                      ===========    ===========


   The accompanying notes are an integral part of these financial statements.

                                         8
</TABLE>
<PAGE>

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

February 28, 2007

(1) Reference is made to Note 2 of the Notes to Consolidated Financial
Statements contained in Biomerica, Inc.'s (the "Company") Annual Report on Form
10-KSB for the fiscal year ended May 31, 2006, for a summary of significant
accounting policies utilized by the Company.

(2) As of February 28, 2007 the Company had cash and available-for-sale
securities in the amount of $67,079 and working capital of $766,922. The Company
also has $375,959 of long term available-for-sale securities of Lancer Ortho-
dontics. This stock is restricted and should the Company desire to sell this
stock on the open market, it may be subject to certain trading restrictions as
imposed by the Federal Securities Act of 1933.

         These consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has had operating
and liquidity concerns due to historically reporting net losses and negative
cash flows from operations. Biomerica's shareholder's line of credit expired on
September 13, 2003 and was not renewed. The unpaid principal and interest was
converted into a note payable in the amount of $313,318 bearing interest at 8%
and payable September 1, 2004. The due date on this note has been extended each
year and is currently due September 1, 2007. This loan has been subordinated to
the Commercial Bank of California loans dated February 20, 2007. Minimum
payments are $4,000 per month plus an additional $2,000 per month (reduced from
$3,500 per month at September 1, 2006), depending on quarterly results of the
Company. The Company is currently out of compliance with this agreement due to
the fact that of the additional payments for fiscal 2006 and 2007, only $5,250
has been paid. As of February 28, 2007 $234,426 in principal was owed.

         Until two years ago Biomerica had suffered substantial recurring losses
from operations. Biomerica has funded its operations through profits as well as
debt and equity financings for the past three years and has recently obtained a
commercial line of credit from a bank which will help fund operations and
growth. Operations of ReadyScript, which was a contributor to the Company's
consolidated losses in prior fiscal years, were discontinued in May 2001. Since
then, certain ReadyScript liabilities were forgiven and thus income from
discontinued operations was recorded. The subsidiary is being reported in the
financial statements as a discontinued operation because it is no longer an
operating entity.

         In the last several years the Company has been focusing on reducing
costs where possible and concentrating on its core business to increase sales.
Management believes that cash flows from current operations will be sufficient
to fund operations for at least the next twelve months. Should the Company have
a downturn in sales or unanticipated, increased expenses, the result for the
Company could be the inability to continue as a going concern.

         Our independent registered public accounting firm has concluded that
there is substantial doubt as to the Company's ability to continue as a going
concern for a reasonable period of time, and have, therefore modified their
report in the form of an explanatory paragraph describing the events that have
given rise to this uncertainty. The consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result should the Company be unable to continue as a going concern.


                                       9
<PAGE>

         The following tables present on a pro forma basis a breakdown by
company of the Statement of Operations for the nine months ended February 28,
2006 in order that the operations of Biomerica for that period may be compared
to the nine months ended February 28, 2007 on pages 3 and 4.

<TABLE>
                                  PRO FORMA STATEMENT OF OPERATIONS BY COMPANY (UNAUDITED)


                                                                            Nine Months Ended
                                                                            February 28, 2006
                                                                            -----------------
                                                                      Intercompany           Pro-forma
                                                       Actual         Eliminations            Lancer            Biomerica
- ---------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>                <C>                   <C>                <C>
NET SALES                                         $   5,717,260                 --         $  (2,925,038)     $   2,792,222
COST OF SALES                                         3,820,715             15,780  (1)       (2,190,495)         1,646,000
- ---------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT                                          1,896,545            (15,780) (1)         (734,543)         1,146,222
- ---------------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES:
SELLING, GENERAL AND ADMIN                            1,866,470                 --            (1,029,059)           837,411
RESEARCH AND DEVELOPMENT                                193,360                 --               (42,470)           150,890
- ---------------------------------------------------------------------------------------------------------------------------

TOTAL OPERATING EXPENSES                              2,059,830                 --            (1,071,529)           988,301
- ---------------------------------------------------------------------------------------------------------------------------

    OPERATING INCOME (LOSS)                            (163,285)           (15,780) (1)          336,986            157,921

OTHER EXPENSE (INCOME)
 Interest                                                36,751                 --               (14,456)            22,295
 Other expense (income)                                 (45,575)           (15,780) (2)           33,096            (28,259)
- ---------------------------------------------------------------------------------------------------------------------------
                                                         (8,824)           (15,780) (2)           18,640             (5,964)
- ---------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS BEFORE INTEREST
    IN NET INCOME (LOSS) OF CONSOLIDATED
    SUBSIDIARIES AND INCOME TAXES                      (154,461)                --               318,346            163,885

MINORITY INTEREST IN NET LOSS (INCOME)
 OF LANCER                                              251,670           (319,146) (3)               --                 --
                                                                            67,476  (4)
- ---------------------------------------------------------------------------------------------------------------------------

INCOME (LOSS) FROM OPERATIONS
  BEFORE INCOME TAXES                                    97,209           (251,670)              318,346            163,885
- ---------------------------------------------------------------------------------------------------------------------------

INCOME TAX EXPENSE                                        2,400                 --                  (800)             1,600
- ---------------------------------------------------------------------------------------------------------------------------

NET INCOME (LOSS)                                 $      94,809      $    (251,670)        $     319,146      $     162,285
===========================================================================================================================

(1) To record the charge for rent by Lancer at the manufacturing facility in
    Mexico which was eliminated in consolidation.
(2) To record the income from Biomerica received by Lancer for rent at the
    Mexico facility, which was eliminated in consolidation.
(3) To de-consolidate Lancer's loss.
(4) Elimination of Biomerica's portion of Lancer's operations as if the
    termination of the voting agreement occurred May 31, 2005.

                                                             10
</TABLE>
<PAGE>

(3) In December 2004, the Financial Accounting Standards Board ("FASB") Issued
Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based
Payment (SFAS No. 123R). SFAS No. 123R revised SFAS No. 123, Accounting For
Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for
Stock Issued to Employees, and its related implementation guidance. SFAS No.
123R requires compensation costs related to share-based payment transactions to
be recognized in the financial statement (with limited exceptions). The amount
of compensation cost is measured based on the grant- date fair value of the
equity or liability instruments issued. Compensation cost is recognized over the
period that an employee provides service in exchange for the award. As of the
beginning of fiscal 2007, June 1, 2006, the Company was required to account for
stock-based compensation using this method.

         The Black Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

        If the Company had accounted for its options in accordance with SFAS
123(R) in fiscal 2006, the total value of options granted during the nine month
period ended February 28, 2006 would have been expensed over the vesting period
of the options. Thus, the Company's consolidated net income would have been as
follows:

Net Income                                                             2006
- -------------------------------------------------------------------------------
As reported                                                          $ 94,809
Add: Stock-based employee compensation
  expense included in reported net income                                 702
Less: Stock-based employee compensation
  expense determined using fair value
  based method for all awards                                         (17,483)
- -------------------------------------------------------------------------------
Pro forma                                                            $ 78,028
===============================================================================

Pro forma net income from
   continuing operations
   per share - basic                                                 $    .01
===============================================================================
Pro forma net income from
   continuing operations
   per share - diluted                                               $    .01
===============================================================================

For the nine months ended February 28, 2007, the Company expensed approximately
$5,357 of stock option expense due to SFAS 123(R) in its financial statements.


                                       11
<PAGE>

(4)  The following summary presents the options granted, exercised, expired, and
     outstanding as of February 28, 2007:

                                                                       Weighted
                                                                       Average
                                 Number of Options and Warrants        Exercise
                               Employee    Non-employee    Total        Price
                              ----------   ----------   ----------     --------
Outstanding
May 31, 2006                   1,748,284      152,666    1,900,950     $   0.64

Granted                           60,000           --       60,000         0.56
Exercised                        (16,533)                  (16,533)        0.31
Expired or cancelled            (190,668)     ( 4,000)    (194,668)        0.69
                              ----------   ----------   ----------     --------
Outstanding
February 28, 2007              1,601,083      148,666    1,749,749     $   0.60
                              ==========   ==========   ==========     ========

(5) The information set forth in these condensed consolidated statements is
unaudited and may be subject to normal year-end adjustments. The information
reflects all adjustments which, in the opinion of management, are necessary to
present a fair statement of the consolidated results of operations of Biomerica,
Inc., for the periods indicated. It does not include all information and
footnotes necessary for a fair presentation of financial position, results of
operations, and cash flow in conformity with generally accepted accounting
principles.

(6) Consolidated results of operations for the interim periods covered by this
report may not necessarily be indicative of results of operations for the full
fiscal year.

(7) Reference is made to Note 3 of the Notes to Consolidated Financial
Statements contained in the Company's Annual Report on Form 10-KSB for the
fiscal year ended May 31, 2006, for a description of the investments in
affiliates and consolidated subsidiaries.

(8) Reference is made to Notes 5 & 9 of the Notes to Consolidated Financial
Statements contained in the Company's Annual Report on Form 10-KSB for the
fiscal year ended May 31, 2006, for information on commitments and
contingencies.

(9) Aggregate cost exceeded market value of available-for-sale securities by
approximately $263,839 at February 28, 2007.

(10) Earnings Per Share

         In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER
SHARE ("EPS"). SFAS No. 128 requires dual presentation of basic EPS and diluted
EPS on the face of all income statements issued after December 15, 1997 for all
entities with complex capital structures. Basic EPS is computed as net income
divided by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur from common
shares issuable through stock options, warrants and other convertible
securities.


                                       12
<PAGE>

<TABLE>

The following table illustrates the required disclosure of the reconciliation of
the numerators and denominators of the basic and diluted EPS computations.

                                                     Nine Months Ended             Three Months Ended
February 28,                                        2007           2006           2007           2006
- ----------------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>            <C>            <C>
Numerator:
   Income from continuing operations            $  264,521     $   94,809     $  121,370     $   29,615
   Income from discontinued operations              27,869             --             --             --
- -------------------------------------------------------------------------------------------------------

Numerator for basic and diluted net
   income per common share                      $  292,390         94,809        121,370         29,615
=======================================================================================================

Denominator for basic net income
    per common share                             5,925,860      5,753,791      5,939,214      5,752,912
Effect of dilutive securities:
   Options and warrants                            442,385        864,164        431,978        851,123
- -------------------------------------------------------------------------------------------------------

Denominator for diluted net income
    per common share                             6,368,245      6,617,955      6,371,192      6,604,035
=======================================================================================================

Basic net income per common share:
    Income from continuing operations           $      .04     $      .01     $      .02     $       --
    Income from discontinued operations                 --             --             --             --
- -------------------------------------------------------------------------------------------------------

Basic net income per common share               $      .04     $      .01     $      .02     $       --
=======================================================================================================

Diluted net income per common share:
    Income from continuing operations           $      .04     $      .01     $      .02     $       --
    Net income from discontinued operations             --             --             --             --
- -------------------------------------------------------------------------------------------------------

Diluted net income per common share             $      .04     $      .01     $      .02     $       --
=======================================================================================================
</TABLE>


(11) In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based
Payment (SFAS No. 123R). SFAS No. 123R revised SFAS No. 123, Accounting for
Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for
Stock Issued to Employees, and its related implementation guidance. SFAS No.
123R requires compensation costs related to share-based payment transactions to
be recognized in the financial statement (with limited exceptions). The amount
of compensation cost ismeasured based on the grant-date fair value of the equity
or liability instruments issued. Compensation cost is recognized over the period
that an employee provides service in exchange for the award.


                                       13
<PAGE>

         In March 2005, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 107 ("SAB No. 107"), Share-Based Payment,
providing guidance on option valuation methods, the accounting for income tax
effects of share-based payment arrangements upon adoption of SFAS No. 123R, and
the disclosures in MD&A subsequent to the adoption. The Company has provided SAB
No. 107 required disclosures upon adoption of SFAS No. 123R on June 1, 2006.

         In April 2005, the Securities and Exchange Commission adopted a new
rule that amends the compliance dates for SFAS No. 123R. The Statement requires
that compensation cost relating to share-based payment transactions be
recognized in financial statements and that this cost be measured based on the
fair value of the equity or liability instruments issued. SFAS No. 123R covers a
wide range of share-based compensation arrangements including share options,
restricted share plans, performance-based awards, share appreciation rights, and
employee share purchase plans. The Company adopted SFAS No. 123R on June 1,
2006.

     In June 2005, the FASB issued SFAS No. 154, Accounting Changes and Errors
Corrections, a replacement of APB Opinion No. 20 and FAS No. 3. The Statement
applies to all voluntary changes in accounting principle, and changes the
requirements for accounting for and reporting of a change in accounting
principle. SFAS No. 154 requires retrospective application to prior periods'
financial statements of a voluntary change in accounting principle unless it is
impractical. APB Opinion No. 20 previously required that most voluntary changes
in accounting principle be recognized by including in net income of the period
of the change the cumulative effect of changing to the new accounting principle.
SFAS No.154 improves the financial reporting because its requirements enhance
the consistency of financial reporting between periods. The Company does not
believe the adoption of this standard will have an impact on its results of
operations.

         In February 2006, the FASB issued SFAS No. 155, Accounting for Certain
Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140
("SFAS, 155"). This statement resolves issues addressed in SFAS No. 133
Implementation Issue No. D1, Application of Statement 133 to Beneficial Interest
in Securitized Financial Assets. SFAS No. 155: a) permits fair value
remeasurement for any hybrid financial instrument that contains an imbedded
derivative that otherwise would require bifurcation; (b) clarifies which
interest-only strips and principal-only strips are not subject to the
requirements of SFAS No. 133; (c) establishes a requirement to evaluate
beneficial interests in securitized financial assets to identify interests that
are freestanding derivatives or that are hybrid financial instruments that
contain an imbedded derivative requiring bifurcation; (d) clarifies that
concentrations of credit risk in the form of subordination are not embedded
derivatives; and, (e) eliminates restriction on a qualifying special-purpose
entity's ability to hold passive derivative financial instruments that pertain
to beneficial interests that are or contain a derivative financial instrument.
SFAS No. 155 also requires presentation within the financial statements that
identifies those hybrid financial instruments for which the fair value election
has been applied and information on the income statement impact of the changes
in fair value of those instruments. The Company is required to apply SFAS No.
155 to all financial instruments acquired, issued or subject to a remeasurement
event beginning June 1, 2007. The Company does not expect the adoption of SFAS
No. 155 to have a material impact on the Company's financial statements.


                                       14
<PAGE>

         In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing
of Financial Assets, an amendment of FASB Statement No. 140 (Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities).
This Statement requires that all separately recognized servicing assets and
servicing liabilities be initially measured at fair value, if practicable. This
Statement permits, but does not require, the subsequent measurement of
separately recognized servicing assets and servicing liabilities at fair value.
The Company would be required to adopt this statement as of June 1, 2007. The
Company has not yet determined the impact, if any, of adopting SFAS 156 on its
consolidated financial statements.

         In September 2006, the FASB issued SFAS No. 157, Defining Fair Value
Measurement. The purpose of SFAS No. 157 is to eliminate the diversity in
practice that exists due to the different definitions of fair value and the
limited guidance for applying those definitions in GAAP that are dispersed among
the many accounting pronouncements that require fair value measurements. SFAS
No. 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. The
Company has not yet determined the impact, if any, of adopting SFAS 157 on its
consolidated financial statements.

         In September 2006, the FASB issued SFAS No. 158, Employers' Accounting
For Defined Benefit Pension and Other Postretirement Plans. Effective in
calendar- year 2006 (with certain exceptions) for public companies and
calendar-year 2007 (with certain exceptions) for private companies, SFAS No. 158
represents the "first phase" of a planned "two-phased" project where the FASB is
working on improving financial reporting related to pension and other
postretirement (OPB) plans. SEC registrants have been required to disclose the
"expected impact" of implementing SFAS No. 158 in filings made after September
30, 2006 and before the effective date of SFAS No. 158. The Company does not
expect the adoption of SFAS No. 158 to have a material impact on the Company's
financial statements.

         In July 2006, the FASB issued FIN 48, entitled Accounting for
Uncertainty in Income Taxes. FIN 48 interprets the guidance in SFAS No. 109,
entitled Accounting for Income Taxes. Through the interpretive guidance, the
FASB clarifies the accounting for uncertainty in income taxes, provides
recognition and measurement guidance related to accounting for income taxes, and
provides guidance related to classification and disclosure of income tax-related
financial statement components. The Company has not yet determined the impact,
if any, of adopting FIN 48 on its consolidated financial statements.


                                       15
<PAGE>

 (12) Financial information about consolidated foreign and domestic operations
and export sales is as follows. The period ended February 28, 2007, includes
nine months of sales for Biomerica. The period ended February 28, 2006 shows
consolidated sales for the nine months ended February 28, 2006, as well as a
breakdown by company:

<TABLE>
<S>     <C>
For the nine months ended 2/28/07:                 Consolidated        Lancer         Biomerica
                                                   ------------     -----------      -----------
Revenues from sales to unaffiliated customers:
United States                                      $   994,000               --      $   994,000
Asia                                                   387,000               --          387,000
Europe                                               1,854,000               --        1,854,000
South America                                           56,000               --           56,000
Oceania                                                447,000               --          447,000
Other                                                   59,000               --           59,000
                                                   -----------      -----------      -----------
                                                   $ 3,797,000               --      $ 3,797,000
                                                   ===========      ===========      ===========


For the nine months ended 2/28/06:                 Consolidated        Lancer         Biomerica
                                                   ------------     -----------      -----------

Revenues from sales to unaffiliated customers:
United States                                      $ 2,286,000      ($1,584,000)     $   702,000
Asia                                                   267,000          (23,000)         244,000
Europe                                               2,010,000         (678,000)       1,332,000
South America                                          441,000         (379,000)          62,000
Oceania                                                427,000          (17,000)         410,000
Other                                                  286,000         (244,000)          42,000
                                                   -----------      -----------      -----------
                                                   $ 5,717,000      ($2,925,000)     $ 2,792,000
                                                   ===========      ===========      ===========
</TABLE>

     No other geographic concentrations exist where net sales exceed 10% of
total net sales.

(13) During fiscal 2006 an employee of the Company exercised a stock option for
750 shares at the purchase price of $.20 per share and 750 shares at the
purchase price of $.33 per share. The total proceeds to the Company was $398.
Options for an additional 12,750 shares were exercised at the end of February
2006. Of these shares, 9,000 were at the purchase price of $.20 per share and
3,750 were at a price of $.33 per share. The proceeds to the Company for these
options was $3,038.

         In June 2005 the Company granted 111,000 stock options to purchase
shares of common stock at an exercise price of $.53 to several of the Company's
officers. The options vest over four years and have a term of five years.
Management assigned a value of $37,405 to these options.


                                       16
<PAGE>

         On September 14, 2005, the Company granted 10,000 stock options to
purchase shares of common stock at an exercise price of $.47 to an employee of
the Company. The options vest over four years and have a term of five years.
Management assigned a value of $3,200 to these options.

     On February 28, 2006, the Company granted 20,000 stock options to purchase
shares of common stock at an exercise price of $.48 to employees of the Company.
The options vest over four years and have a term of five years. Management
assigned a value of $5,520 to these options.

     In May 2006 the Company granted 498,500 stock options to purchase shares of
common stock at an exercise price of $.40 per share to various employees,
consultants, officers and directors. The options vest over three years, and have
a term of five years. Management assigned a value of $118,643 to these options.

     In May 2006 the Company granted warrants to purchase 52,000 shares of
restricted common stock at an exercise price of $.65 as part of the private
placement conducted at that time. The options vested immediately and have a term
of five years. Management assigned a value of $9,880 to these warrants.

     In July 2006 the board of directors granted a stock option for 10,000
options to an employee of the Company. The options vested one quarter
immediately and then will vest one quarter per year thereafter. The option is at
the exercise price of $.50 per share and expires in five years. Management
assigned a value of $2,830 to this option.

     In February 2007 the board of directors granted a stock option for 50,000
options to directors of the Company. The options vested one quarter immediately
and one quarter vesting in May 2007. One quarter will vest each year thereafter
on the grant date. The exercise price is $.57 per share and the option expires
in five years. Management assigned a value of $15,900 to these options.

     Options or warrants granted are assigned values according to current market
value, using the Black-Scholes model for option valuation. The term used in the
calculation of the options or warrants is the vesting period. A discount rate
equivalent to five-year (or other life of the option or warrant) Treasury
constant maturity interest rates is utilized. The historical volatility of the
stock is calculated using weekly historical closing prices for the prior year as
reported by Yahoo Finance. For purposes of the SFAS 123 footnote disclosure, the
Black-Scholes Model is also used for calculating employee options and warrants
valuations.

         When shares are issued for services or other non-cash consideration,
fair value is measured using the current market value on the day of the Board of
Directors approval of such issuance.

        During the quarter ended February 28, 2006, the Company recognized an
increase in its accumulated other comprehensive loss in the amount of $236,286
which was a result of the write-down of the stock which the Company owns in
Lancer Orthodontics. This occurred because the Company de-consolidated its
financials from Lancer, as discussed in Note 1, and the investment was written
down to current market value as reported on Yahoo Finance (Lancer is traded on
the Pink Sheets under the symbol LANZ.PK). Previous to that time, the investment
was eliminated in consolidation.


                                       17
<PAGE>

(14) Reportable business segments for the nine months and three months ended
February 28, 2007 and 2006 are as follows. THE NINE MONTH FIGURES FOR FISCAL
2006 INCLUDE SIX MONTHS OF SALES FOR LANCER ORTHODONTICS SINCE DECONSOLIDATION
OCCURRED DECEMBER 1, 2005. THE NINE MONTHS ENDED FEBRUARY 28, 2007 AND THE THREE
MONTHS ENDED FEBRUARY 28, 2007 AND 2006 INCLUDE SALES FOR BIOMERICA ONLY.

<TABLE>
                                             Nine Months                    Three Months
                                         Ended February 28,              Ended February 28,
                                    ---------------------------      ----------------------------
                                       2007             2006             2007             2006
                                    -----------     -----------      ------------     -----------
<S>                                 <C>             <C>              <C>              <C>
Domestic sales:
   Orthodontic products             $        --     $ 1,584,000      $         --     $        --
                                    ===========     ===========      ============     ===========

   Medical diagnostic products      $   994,000     $   702,000      $    284,000     $   323,000
                                    ===========     ===========      ============     ===========

Foreign sales:
   Orthodontic products             $        --     $ 1,341,000      $         --     $        --
                                    ===========     ===========      ============     ===========

   Medical diagnostic products      $ 2,803,000     $ 2,090,000      $  1,028,000     $   675,000
                                    ===========     ===========      ============     ===========


Net sales:
    Orthodontic products            $        --     $ 2,925,000      $         --     $        --
    Medical diagnostic products       3,797,000       2,792,000         1,312,000         998,000
                                    -----------     -----------      ------------     -----------

Total                               $ 3,797,000     $ 5,717,000      $  1,312,000     $   998,000
                                    ===========     ===========      ============     ===========

Operating gain (loss) income:
   Orthodontic products             $        --     $  (321,000)     $         --     $        --
   Medical diagnostic products          255,000         158,000            96,000          37,000
                                    -----------     -----------      ------------     -----------

Total                               $   255,000     $  (163,000)     $     96,000     $    37,000
                                    ===========     ===========      ============     ===========

Gain from discontinued segment:
  ReadyScript                       $    27,869     $        --      $         --     $        --
                                    -----------     -----------      ------------     -----------

Total                               $    27,869     $        --      $         --     $        --
                                    ===========     ===========      ============     ===========
</TABLE>

                                                   18
<PAGE>

                                                         As of February 28,
                                                      2007               2006
                                                   ----------         ----------
Domestic long-lived assets:
Medical diagnostic products                        $  150,000         $  103,000
                                                   ----------         ----------
Total                                              $  150,000         $  103,000
                                                   ==========         ==========

Foreign long-lived assets:
Medical diagnostic products                        $   30,000         $   20,000
                                                   ----------         ----------
Total                                              $   30,000         $   20,000
                                                   ==========         ==========

Total assets:
Medical diagnostic products                        $2,807,000         $2,346,000
                                                   ----------         ----------
Total                                              $2,807,000         $2,346,000
                                                   ==========         ==========


Capital expenditures:
Orthodontics products                              $    --            $  575,000
Medical diagnostic products                           100,000             33,000
                                                   ----------         ----------
Total                                              $  100,000         $  608,000
                                                   ==========         ==========


         The net sales as reflected above consist of sales of unaffiliated
customers only as there were no significant intersegment sales during the nine
months ended February, 2007 and 2006.

(15) In April 2003, Lancer de Mexico entered into a manufacturing subcontractor
agreement with Biomerica, Inc., to provide manufacturing services in Mexicali,
Mexico. The agreement requires reimbursement from Biomerica for discrete
expenses such as payroll, shipping, and customs fees; the lease is $2,335 and
service fees are approximately $2,900 per month.

(16) On July 29, 2005, Biomerica entered into an agreement for the research,
development and transfer of certain technology. The total of the project is
estimated to be $55,000.

(17) In August 2006, the Company and the holder of the Note payable- shareholder
agreed to the extension of the note due date until September 1, 2007, at the
same terms and conditions as the previous agreement except that additional
payments of $3,500 per month, contingent upon certain earnings, have been
reduced to $2,000 per month.


                                       19
<PAGE>

 (18) Under its bylaws, the Company has agreed to indemnify its officers and
directors for certain events or occurrences arising as a result of the officer
or director's serving in such capacity. The term of the indemnification period
is for the officer's or director's lifetime. The maximum potential amount of
future payments the Company could be required to make under these
indemnification agreements is unlimited. However, the Company has a directors
and officer liability insurance policy that limits its exposure and enables it
to recover a portion of any future amounts paid.

     As a result of its insurance policy coverage, the Company believes the
estimated fair value of these indemnification agreements is minimal and has no
liabilities recorded for these agreements as of February 28, 2007. The Company
enters into indemnification provisions under (i) its agreements with other
companies in its ordinary course of business, typically with business partners,
contractors, and customers, landlords and (ii) its agreements with investors.
Under these provisions the Company generally indemnifies and hold harmless the
indemnified party for losses suffered or incurred by the indemnified party as a
result of the Company's activities or, in some cases, as a result of the
indemnified party's activities under the agreement. These indemnification
provisions often include indemnifications relating to representations made by
the Company with regard to intellectual property rights. These indemnification
provisions generally survive termination of the underlying agreement. The
maximum potential amount of future payments the Company could be required to
make under these indemnification provisions is unlimited. The Company has not
incurred material costs to defend lawsuits or settle claims related to these
indemnification agreements. As a result, the Company believes the estimated fair
value of these agreements is minimal. Accordingly, the Company has no
liabilities recorded for these agreements as of February 28, 2007. As a result
of the Company's deconsolidation of Lancer which occurred December 1, 2005, both
companies have been required to purchase their own Directors' and Officers'
insurance, rather than have a combined policy.


(19)Commitments and Contingencies

     The Company entered into an agreement with the Commercial Bank of
California for a commercial line of credit dated February 20, 2007. The maximum
principal amount on the line of credit is $200,000. The principal balance owed
on the loan will be due September 1, 2008 with monthly interest payments of all
unpaid accrued interest at the rate of 9.75%. The loan is collateralized by all
assets of the Company. The Company has not yet borrowed any funds on this line
of credit.

The Company entered into an agreement with the Commercial Bank of
California for an equipment line of credit dated February 20, 2007. The maximum
principal amount on this line of credit shall be $200,000. Nine monthly
consecutive interest payments, beginning April 1, 2007, with an initial interest
rate of 9.500% shall be due on the loan balance. For a balance of $200,000 forty
seven monthly consecutive principal and interest payments in the initial amount
of $5,038.21 each, beginning January 1, 2008 will be due. The line of credit
shall be used for equipment. As of April 16, 2007 the Company has drawn $61,670
on this line which has been used as a down-payment on equipment which will be
delivered later in the year.

     The Company also signed a Subordination Agreement dated February 20, 2007
wherein the Company and the Company's existing note payable holder agreed that
the collateral for the note payable of $234,426 will be subordinate to the
$200,000 line of credit with the Commercial Bank of California.

     The Company signed a Second Amendment of the Note, Loan and Modification
Agreement with a shareholder/officer/director ("Moore") dated February 20, 2007,
wherein Moore agreed to enter into the Subordination Agreement with the
Commercial Bank of California, and the Company agreed to increase the existing
collateral to include the Lancer common stock (all of which is subordinated to
the bank per the Subordination Agreement). In addition, the Company agreed to
bring the past due amounts on the existing note payable agreement up to date by
August 31, 2007. Moore also was granted the right to approve of any increase in
the line of credit which may be offered in the future (while the shareholder
note payable is unpaid). Amounts due on the note that are contingent upon
certain performance by the Company have been reduced from $3,500 per month to
$2,000.


                                       20
<PAGE>

     According to the terms of the agreement with Commercial Bank of California,
the Company must comply with the following financial covenants and ratios:

Cash flow/Current Maturity (LTD) Ratio: Maintain a ratio of Cash Flow/Current
Maturity (LTD) in excess of 1.300 to 1.000.

Debt/Worth Ratio: Maintain a ratio of Debt/Worth not in excess of 2.000 to
1.000.


(20) CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations
are based on the consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these consolidated financial statements requires estimates
and assumptions that affect the reported amounts and disclosures.

We believe the following to be critical accounting policies as they require more
significant judgments and estimates used in the preparation of our consolidated
financial statements. Although we believe that our judgments and estimates are
appropriate and correct, actual future results may differ from our estimates.

In general the critical accounting policies that may require judgments or
estimates relate specifically to the recognition of revenue, the Allowance for
Doubtful Accounts, Inventory Reserves for Obsolescence and Declines in Market
Value, Impairment of Long-Lived Assets, Stock Based Compensation and Deferred
Income Tax Valuation, Valuation of Available-for-sale Securities and Allowances.

We recognize product revenues when an arrangement exists, delivery has occurred,
the price is determinable and collection is reasonably assured.

The Allowance for Doubtful Accounts is established for estimated losses
resulting from the inability of our customers to make required payments. The
assessment of specific receivable balances and required reserves is performed by
management and discussed with the audit committee. We have identified specific
customers where collection is probable and have established specific reserves,
but to the extent collection is made, the allowance will be released.
Additionally, if the financial condition of our customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances may be required.

Reserves are provided for excess and obsolete inventory, which are estimated
based on a comparison of the quantity and cost of inventory on hand to
management's forecast of customer demand. Customer demand is dependent on many
factors and requires us to use significant judgment in our forecasting process.
We must also make assumptions regarding the rate at which new products will be
accepted in the marketplace and at which customers will transition from older
products to newer products. Once a reserve is established, it is maintained
until the product to which it relates is sold or otherwise disposed of, even if
in subsequent periods we forecast demand for the product.

In the past we have been in a loss position for tax purposes, and have
established a valuation allowance against deferred tax assets, as we do not
believe it is likely that we will generate sufficient taxable income in future
periods to realize the full benefit of our deferred tax assets. Predicting
future taxable income is difficult, and requires the use of significant
judgment. At February 28, 2007, all of our deferred tax assets were reserved.
Accruals are made for specific tax exposures and are generally not material to
our operating results or financial position, nor do we anticipate material
changes to these reserves in the near future.

We have provided a full valuation reserve related to our substantial deferred
tax assets. In the future, if sufficient evidence of our ability to generate
sufficient future taxable income in certain tax jurisdictions becomes apparent,
we may be required to reduce our valuation allowances, resulting in income tax
benefits in our consolidated statement of operations. We evaluate the
realizability of the deferred tax assets and assess the need for valuation
allowance quarterly. The utilization of the net operating loss carryforwards
could be substantially limited due to restrictions imposed under federal and
state laws upon a change of ownership.

(21) Risks and Uncertainties

License Agreements - Certain of the Company's sales of products are governed by
license agreements with outside third parties. All of such license agreements to
which the Company currently is a party, are for fixed terms which will expire
after ten years from the commencement of the agreement or upon the expiration of
the underlying patents. After the expiration of the agreements or the patents,
the Company is free to use the technology that had been licensed. There can be
no assurance that the Company will be able to obtain future license agreements
as deemed necessary by management. The loss of some of the current licenses or
the inability to obtain future licenses could have an adverse affect on the
Company's financial position and operations. Historically, the Company has
successfully obtained all the licenses it believed necessary to conduct its
business.


                                       21
<PAGE>

Distribution - The Company has entered into various exclusive and non-exclusive
distribution agreements (the "Agreements") which generally specify territories
of distribution. The agreements range in term from one to five years. The
Company may be dependent upon such distributors for the marketing and selling of
its products worldwide during the terms of these agreements. Such distributors
are generally not obligated to sell any specified minimum quantities of the
Company's product. There can be no assurance of the volume of product sales that
may be achieved by such distributors.

Government Regulations - The Company's products are subject to regulation by the
FDA under the Medical Device Amendments of 1976 (the "Amendments"). The Company
has registered with the FDA as required by the Amendments. There can be no
assurance that the Company will be able to obtain regulatory clearances for its
current or any future products in the United States or in foreign markets.

European Community - The Company is required to obtain certification in the
European Community to sell products in those countries. The certification
requires the Company to maintain certain quality standards. The Company has been
granted certification on certain products. The Company recently had its yearly
CE Mark Surveillance Audit and has been notified that it has been recommended
for recertification. There is no assurance that the Company will be able to
retain its certification in future years.

Risk of Product Liability - Testing, manufacturing and marketing of the
Company's products entail risk of product liability. The Company currently has
product liability insurance. There can be no assurance, however, that the
Company will be able to maintain such insurance at a reasonable cost or in
sufficient amounts to protect the Company against losses due to product
liability. An inability to maintain such insurance at a reasonable cost or in
sufficient amounts could prevent or inhibit the commercialization of the
Company's products. In addition, a product liability claim or recall could have
a material adverse effect on the business or financial condition of the Company.


Subsequent Events

         On March 13, 2007 the Company made a commitment of $181,200 to purchase
equipment to be utilized in production. An initial down-payment of $61,670 was
made with the order, with another 50% due upon acceptance of the equipment and
15% due twenty days after delivery. The equipment line of credit with Commercial
Bank of California may be used to fund this purchase.


                                       22
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND SELECTED FINANCIAL DATA
                                     ITEM 2.

         CERTAIN INFORMATION CONTAINED HEREIN (AS WELL AS INFORMATION INCLUDED
IN ORAL STATEMENTS OR OTHER WRITTEN STATEMENTS MADE OR TO BE MADE BY BIOMERICA)
CONTAINS STATEMENTS THAT ARE FORWARD-LOOKING, SUCH AS STATEMENTS RELATING TO
ANTICIPATED FUTURE REVENUES OF THE COMPANY AND SUCCESS OF CURRENT PRODUCT
OFFERINGS. SUCH FORWARD-LOOKING INFORMATION INVOLVES IMPORTANT RISKS AND
UNCERTAINTIES THAT COULD SIGNIFICANTLY AFFECT ANTICIPATED RESULTS IN THE FUTURE,
AND ACCORDINGLY, SUCH RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY
FORWARD-LOOKING STATEMENTS MADE BY OR ON BEHALF OF BIOMERICA. THE POTENTIAL
RISKS AND UNCERTAINTIES INCLUDE, AMONG OTHERS, FLUCTUATIONS IN THE COMPANY'S
OPERATING RESULTS. THESE RISKS AND UNCERTAINTIES ALSO INCLUDE THE SUCCESS OF THE
COMPANY IN RAISING NEEDED CAPITAL, THE CONTINUAL DEMAND FOR THE COMPANY'S
PRODUCTS, COMPETITIVE AND ECONOMIC FACTORS OF THE MARKETPLACE, AVAILABILITY OF
RAW MATERIALS, HEALTH CARE REGULATIONS AND THE STATE OF THE ECONOMY. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE HEREOF, AND THE COMPANY UNDERTAKES NO OBLIGATION TO
UPDATE THESE FORWARD-LOOKING STATEMENTS.

RESULTS OF OPERATIONS

     Nine and Three Months Comparison for the period ended February 28, 2007
versus 2006.

     LANCER ORTHODONTICS WAS DECONSOLIDATED FROM BIOMERICA ON DECEMBER 1, 2005.
THEREFORE, THE NINE MONTH PERIOD ENDED FEBRUARY 28, 2006 INCLUDES SIX MONTHS OF
RESULTS FOR LANCER ORTHODONTICS (JUNE 1, 2005 THROUGH NOVEMBER 30, 2005). THE
THREE MONTHS ENDED FEBRUARY 28, 2007 AND 2006 INCLUDES RESULTS FROM BIOMERICA
DIAGNOSTICS ONLY.

         Consolidated net sales for Biomerica were $3,797,051 for the nine
months ended February, 2007 as compared to $5,717,260 for the same period in the
prior fiscal year. This represents a decrease of $1,920,209, or 33.6% for the
nine month period. The overall decrease in sales from February 28, 2007 compared
to February 28, 2006 is a result of the deconsolidation of Lancer as of December
1, 2005. On a stand-alone basis, the sales of Biomerica increased from
$2,792,222 to $3,797,051, or $1,004,829 (36.0%) for the nine months ended
February 28, 2007 as compared to 2006. For the three months ended February 28,
2007 and 2006, sales increased by $313,539, or 31.4%. Sales increased due to
higher sales to foreign distributors, as well as increased sales of certain
product lines.

         For the nine months of fiscal 2007 compared to 2006, cost of sales as a
percentage of sales decreased from 66.8% of sales to 63.9% of sales. For the
nine months of fiscal 2007 compared to 2006, Biomerica on a stand-alone basis
had an increase from 58.9% to 63.9%. For the three months ended February 28,
2007 compared to 2006, cost of goods as a percentage of sales decreased from
65.1% to 63.8%. This decrease was primarily due to the higher sales volume
relative to some fixed costs.

         Selling, general and administrative costs decreased by $922,869, or
49.4% for the nine months ended 2007. The overall decrease in selling, general
and administrative costs from February 28, 2006 to 2007 is a result of the
deconsolidation of Lancer as of December 1, 2005. On a stand-alone basis the
selling, general and administrative expenses of Biomerica increased from
$837,411 to $943,601, which represents an increase of $106,190, or 12.7%.
Selling, general and administrative expenses increased by $35,513 for the
quarter ended February 28, 2007. The increases at Biomerica for the nine and
three month periods were attributable to increased wages and advertising.

         Research and development expenses decreased by $22,601, or 11.7%, for
the nine months ended February 28, 2007. The overall decrease in research and
development expenses from February 28, 2006 to 2007 is a result of the
deconsolidation of Lancer as of December 1, 2005. On a stand-alone basis, the
research and development expenses of Biomerica increased by $19,869, primarily
due to materials and personnel required for new research projects. For the three
months ended February 28, 2007 research and development expenses increased by
$32,467 (83.7%) for the same reason that these expenses increased for the nine
months.


                                       23
<PAGE>

         For the nine months ended February 28, 2007, other income decreased
from $45,575 to $40,040, compared to the same period in the prior year. The
overall decrease in other income from February 28, 2006 to 2007 is a result of
the deconsolidation of Lancer as of December 1, 2005. On a stand-alone basis,
Biomerica's other income increased by $11,781 due to the non-sale income
realized from a contract with a customer in fiscal 2006 as compared to the one
time sale of some equipment which had been purchased in fiscal 2007. For the
three months ended February 28, 2007, other income increased by $39,275, which
was due to the one time sale of equipment which had been purchased in fiscal
2007.

         Interest expense decreased by $14,125 (38.4%) for the nine months ended
February 28, 2007 compared to the previous year. On a stand-alone basis,
Biomerica had increased interest expense of $331. For the three months ended
February 28, 2007 as compared to 2006 interest expense decreased by $863, which
was due to the reduced shareholder note payable which was offset by the small
equipment leases.

     Net income from continuing operations for the nine months ended February
28, 2007 was $264,521 as compared to $94,809 for the same period in the prior
fiscal year. On a stand-alone basis, net income for the nine month period was
$264,521 as compared to $162,285, an increase of $102,236, or 63.0%. Net income
from continuing operations for the three months ended February 2007 was $121,370
as compared to $29,615 for the three months ended February 2006. This represents
an increase of $91,755, or 309.8%.


LIQUIDITY AND CAPITAL RESOURCES

     As of February 28, 2007 the Company had cash and available-for-sale
securities in the amount of $67,079 and working capital of $766,922. The Company
also has $375,959 of long term available-for-sale securities of Lancer Ortho-
dontics. This stock is restricted and should the Company desire to sell this
stock on the open market, it may be subject to certain trading restrictions as
imposed by the Federal Securities Act of 1933.

         These consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has had operating
and liquidity concerns due to historically reporting net losses and negative
cash flows from operations. Biomerica's shareholder's line of credit expired on
September 13, 2003 and was not renewed. The unpaid principal and interest was
converted into a note payable in the amount of $313,318 bearing interest at 8%
and payable September 1, 2004. The due date on this note has been extended each
year and is currently due September 1, 2007. This loan has been subordinated to
the Commercial Bank of California loans dated February 20, 2007. Minimum
payments are $4,000 per month plus an additional $2,000 per month (as revised
from $3,500 per month), depending on quarterly results of the Company. The
Company is currently out of compliance with this agreement due to the fact that
of the additional payments due for fiscal 2006 and 2007, only $5,250 has been
paid. As of February 28, 2007, $234,426 in principal was owed.

     Until two years ago Biomerica had suffered substantial recurring losses
from operations. Biomerica has funded its operations through profits as well as
debt and equity financings for the past three years and has recently obtained a
commercial line of credit from a bank which will help fund operations and
growth. Operations of ReadyScript, which was a contributor to the Company's
consolidated losses in prior fiscal years, were discontinued in May 2001. Since
then, certain ReadyScript liabilities were forgiven and thus income from
discontinued operations was recorded. The subsidiary is being reported in the
financial statements as a discontinued operation because it is no longer an
operating entity.

         In the last several years the Company has been focusing on reducing
costs where possible and concentrating on its core business to increase sales.
Management believes that cash flows from current operations will be sufficient
to fund operations for at least the next twelve months. Should the Company have
a downturn in sales or unanticipated, increased expenses, the result for the
Company could be the inability to continue as a going concern.

         Our independent registered public accounting firm has concluded that
there is substantial doubt as to the Company's ability to continue as a going
concern for a reasonable period of time, and have, therefore modified their
report in the form of an explanatory paragraph describing the events that have
given rise to this uncertainty. The consolidated financial statements do not
include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result should the Company be unable to continue as a going concern.


                                       24
<PAGE>

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         You should read the following factors in conjunction with the factors
discussed elsewhere in this and our other filings with the SEC and in materials
incorporated by reference in these filings. The following is intended to
highlight certain factors that may affect the financial condition and results of
operations of Biomerica and are not meant to be an exhaustive discussion of
risks that apply to companies such as Biomerica. Like other businesses,
Biomerica is susceptible to macroeconomic downturns in the United States or
abroad, that may affect the general economic climate and performance of
Biomerica or its' customers. Aside from general macroeconomic downturns, the
additional material factors that could affect future financial results include,
but are not limited to: Terrorist attacks and the impact of such events;
diminished access to raw materials that directly enter into our manufacturing
process; shipping labor disruption or other major degradation of the ability to
ship our products to end users; inability to successfully control our margins
which are affected by many factors including competition and product mix;
protracted shutdown of the U.S. Border due to an escalation of terrorist or
counter terrorist activity; any changes in our business relationships with
international distributors or the economic climate they operate in; any event
that has a material adverse impact on our foreign manufacturing operations may
adversely affect our operation as a whole; failure to manage the future
expansion of our business could have an adverse affect on our revenues and
profitability; possible costs in complying with government regulations and the
delays in receiving required regulatory approvals or the enactment of new
adverse regulations or regulatory requirements; numerous competitors, most of
which have substantially greater financial and other resources than we do;
potential claims and litigation brought by patients or medical professionals
alleging harm caused by the use of or exposure to our products; quarterly
variations in operating results caused by a number of factors, including
business and industry conditions and other factors beyond our control. All of
these factors make it difficult to predict operating results for any particular
period.

Item 4.  CONTROLS AND PROCEDURES

         The Company's Chief Executive Officer and Chief Financial Officer (the
Company's principal executive officer and principal financial officer,
respectively) have concluded, based on their evaluation as of February 28, 2007,
that the design and operation of the Company's "disclosure controls and
procedures" (as defined in rules 13a-15(e) under the Securities Exchange Act of
1934, as amended ("Exchange Act") are effective to ensure that information
required to be disclosed by the Company in the reports filed or submitted by the
Company under the Exchange Act is accumulated, recorded, processed, summarized
and reported to the Company's management, including the Company's principal
executive officer and principal financial officer, as appropriate to allow
timely decisions regarding whether or not disclosure is required.

         During the quarter ended February 28, 2007, there were no changes in
the Company's "internal controls over financial reporting" (as defined in Rule
13a-15(f) under the Exchange Act) that have materially affected, or are
reasonably likely to materially affect, the Company's internal controls over
financial reporting.


                                       25
<PAGE>

                           PART II. OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS.  Inapplicable.

Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS. Inapplicable.

Item 3.  DEFAULTS UPON SENIOR SECURITIES.  Inapplicable.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.  Inapplicable.

Item 5.  OTHER INFORMATION.  Inapplicable.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K.  Inapplicable.

(a)      Exhibits

   31.1       Certification of CEO pursuant to Rules 13a-14(a) and 15d-14(a), as
              adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

   31.2       Certification of CFO pursuant to Rules 13a-14(a) and 15d-14(a), as
              adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

   32.1       Certification of CEO Pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.

   32.2       Certification of CFO Pursuant to 18 U.S.C.
              Section 1350, as adopted pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.

   99.1       Business Loan Agreement dated February 20, 2007 with Commercial
              Bank of California.

   99.2       Commercial Security Agreement (loan #0100000250) dated February
              20, 2007 with Commercial Bank of California.

   99.3       Promissory Note (loan #0100000250) dated February 20, 2007 with
              Commercial Bank of California.

   99.4       Promissory Note (loan #0100000251) dated February 20, 2007 with
              Commercial Bank of California.

   99.5       Subordination Agreement (loan #0100000250) dated February 20, 2007
              with Commercial Bank of California and Janet Moore Trust.

   99.6       Second Amendment of the Note, Loan and Mofication Agreement dated
              March 9, 2007 between Biomerica and Janet Moore Trust.


                                       26
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has fully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date:  April 13, 2007

                                             BIOMERICA, INC.

                                             By: /S/ Zackary S. Irani
                                                 -----------------------
                                                 Zackary S. Irani
                                                 Chief Executive Officer


                                       27
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>biomerica_10qsb-ex3101.txt
<TEXT>
<PAGE>

Exhibit 31.1


                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                                   PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Zackary S. Irani, certify that:

1.       I have reviewed this Quarterly Report on Form 10-QSB of Biomerica,
         Inc.;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this report;

4.       The registrant's other certifying officer and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
         registrant and we have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this report is being prepared;

         (b)      evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

         (c)      disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter that has
                  materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

5.       The registrant's other certifying officer and I have disclosed, based
         on our most recent evaluation of our internal control over financial
         reporting, to the registrant's auditors and the audit committee of
         registrant's board of directors (or persons performing the equivalent
         functions):

         a)       all significant deficiencies in the design or operation of
                  internal controls which are reasonably likely to adversely
                  affect the registrant's ability to record, process, summarize
                  and report financial information; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

Date: April 13, 2007


/s/ Zackary S. Irani
- -----------------------
Chief Executive Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>biomerica_10qsb-ex3102.txt
<TEXT>
<PAGE>

Exhibit 31.2


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
                                   PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Janet Moore, certify that:

1.       I have reviewed this Quarterly Report on Form 10-QSB of Biomerica,
         Inc.;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this report;

4.       The registrant's other certifying officer and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
         registrant and we have:

         a)       designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this report is being prepared;

         (b)      evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

         (c)      disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter that has
                  materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

5.       The registrant's other certifying officer and I have disclosed, based
         on our most recent evaluation of our internal control over financial
         reporting, to the registrant's auditors and the audit committee of
         registrant's board of directors (or persons performing the equivalent
         functions):

         a)       all significant deficiencies in the design or operation of
                  internal controls which are reasonably likely to adversely
                  affect the registrant's ability to record, process, summarize
                  and report financial information; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

Date:  April 13, 2007


/s/ Janet Moore
- -----------------------
Chief Financial Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>biomerica_10qsb-ex3201.txt
<TEXT>
<PAGE>

Exhibit 32.1


                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                                   PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Zackary S. Irani, certify that the Quarterly Report on Form 10-QSB for the
fiscal quarter ended February 28, 2007, fully complies with the requirements in
Sections 13(a) Or 15(d) of the Securities Exchange Act of 1934, and that the
information contained In such quarterly report fairly presents, in all material
respects, the financial Condition and results of operations of Biomerica, Inc.
for the periods being presented.

                                                     /s/ Zackary S. Irani
                                                     -----------------------
                                                     Zackary S. Irani
                                                     Chief Executive Officer

April 13, 2007

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>biomerica_10qsb-ex3202.txt
<TEXT>
<PAGE>

Exhibit 32.2


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
                                   PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Janet Moore, certify that the Quarterly Report on Form 10-QSB for the fiscal
quarter ended February 28, 2007, fully complies with the requirements in
Sections 13(a) Or 15(d) of the Securities Exchange Act of 1934, and that the
information contained In such quarterly report fairly presents, in all material
respects, the financial Condition and results of operations of Biomerica, Inc.
for the periods being presented.

                                                     /s/ Janet Moore
                                                     -----------------------
                                                     Janet Moore
                                                     Chief Financial Officer

April 13, 2007
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>6
<FILENAME>biomerica_10qex99-1.txt
<DESCRIPTION>BUSINESS LOAN AGREEMENT
<TEXT>
<PAGE>

                                                                    EXHIBIT 99.1

COMMERCIAL BANK
Of California

                             BUSINESS LOAN AGREEMENT
<TABLE>
<S>     <C>
- ------------------------------------------------------------------------------------------
 Principal    Loan Date    Maturity     Loan No    Call/Coll  Account   Officer   Initials
- ------------------------------------------------------------------------------------------
$200,000.00  02-20-2007   09-01-2008   0100000250    04A/03     111
- ------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability
   of this document to any particular loan or item. Any item above containing "***" has
                       been omitted due to text length limitations.
- ------------------------------------------------------------------------------------------

Borrower:  BIOMERICA, INC.                     Lender: COMMERCIAL BANK OF CALIFORNIA
           1533 MONROVIA AVENUE                        695 TOWN CENTER DRIVE, SUITE 100
           NEWPORT BEACH, CA 92663                     COSTA MESA, CA 92626
==========================================================================================
</TABLE>

THIS BUSINESS LOAN AGREEMENT dated February 20, 2007, is made and executed
between BIOMERICA, INC. ("Borrower") and COMMERCIAL BANK OF CALIFORNIA
("Lender") on the following terms and conditions. Borrower has received prior
commercial loans from Lender or has applied to Lender for a commercial loan or
loans or other financial accommodations, including those which may be described
on any exhibit or schedule attached to this Agreement ("Loan"). Borrower
understands and agrees that: (A) in granting, renewing, or extending any Loan,
Lender is relying upon Borrower's representations, warranties, and agreements as
set forth in this Agreement; (B) the granting, renewing, or extending of any
Loan by Lender at all times shall be subject to Lender's sole judgment and
discretion; and (C) all such Loans shall be and remain subject to the terms and
conditions of this Agreement.

TERM. This Agreement shall be effective as of February 20, 2007, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.

ADVANCE AUTHORITY. The following persons currently are authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender's address shown above, written notice of revocation of
their authority: ZACKARY IRANI; and JANET MOORE.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.

     Loan Documents. Borrower shall provide to Lender the following documents
     for the Loan: (1) the Note; (2) Security Agreements granting to Lender
     security interests in the Collateral; (3) financing statements and all
     other documents perfecting Lender's Security Interests; (4) evidence of
     insurance as required below; (5) subordinations; (6) together with all such
     Related Documents as Lender may require for the Loan; all in form and
     substance satisfactory to Lender and Lender's counsel.

     Borrower's Authorization. Borrower shall have provided in form and
     substance satisfactory to Lender properly certified resolutions, duly
     authorizing the execution and delivery of this Agreement, the Note and the
     Related Documents. In addition, Borrower shall have provided such other
     resolutions, authorizations, documents and instruments as Lender or its
     counsel, may require.

     Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
     charges, and other expenses which are then due and payable as specified in
     this Agreement or any Related Document.

     Representations and Warranties. The representations and warranties set
     forth in this Agreement, in the Related Documents, and in any document or
     certificate delivered to Lender under this Agreement are true and correct.

     No Event of Default. There shall not exist at the time of any Advance a
     condition which would constitute an Event of Default under this Agreement
     or under any Related Document.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:

     Organization. Borrower is a corporation for profit which is, and at all
     times shall be, duly organized, validly existing, and in good standing
     under and by virtue of the laws of the State of Delaware. Borrower is duly
     authorized to transact business in all other states in which Borrower is
     doing business, having obtained all necessary filings, governmental
     licenses and approvals for each state in which Borrower is doing business.
     Borrower maintains an office at 1533 MONROVIA AVENUE, NEWPORT BEACH, CA
     92663. Unless Borrower has designated otherwise in writing, the principal
     office is the office at which Borrower keeps its books and records
     including its records concerning the Collateral. Borrower will notify
     Lender prior to any change in the location of Borrower's state of
     organization or any change in Borrower's name.

     Assumed Business Names. Borrower has filed or recorded all documents or
     filings required by law relating to all assumed business names used by
     Borrower. Excluding the name of Borrower, the following is a complete list
     of all assumed business names under which Borrower does business: None.

     Authorization. Borrower's execution, delivery, and performance of this
     Agreement and all the Related Documents have been duly authorized by all
     necessary action by Borrower and do not conflict with, result in a
     violation of, or constitute a default under (1) any provision of (a)
     Borrower's articles of incorporation or organization, or bylaws, or (b) any
     agreement or other instrument binding upon Borrower or (2) any law,
     governmental regulation, court decree, or order applicable to Borrower or
     to Borrower's properties.

     Properties. Except as contemplated by this Agreement or as previously
     disclosed in Borrower's financial statements or in writing to Lender and as
     accepted by Lender, and except for property tax liens for taxes not
     presently due and payable, Borrower owns and has good title to all of
     Borrower's properties free and clear of all liens and security interests,
     and has not executed any security documents or financing statements
     relating to such properties. All of Borrower's properties are titled in
     Borrower's legal name, and Borrower has not used or filed a financing
     statement under any other name for at least the last five (5) years.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:

     Notices of Claims and Litigation. Promptly inform Lender in writing of (1)
     all material adverse changes in Borrower's financial condition, and (2) all
     existing and all threatened litigation, claims, investigations,
     administrative proceedings or similar actions affecting Borrower or any
     Guarantor which could materially affect the financial condition of Borrower
     or the financial condition of any Guarantor.

<PAGE>

                             BUSINESS LOAN AGREEMENT
Loan No.: 0100000250               (Continued)                            Page 2
================================================================================

     Financial Records. Maintain its books and records in accordance with
     accounting principles acceptable to Lender, applied on a consistent basis,
     and permit Lender to examine and audit Borrower's books and records at all
     reasonable times.

     Financial Statements. Furnish Lender with the following:

          Annual Statements. As soon as available, but in no event later than
          one-hundred-twenty (120) days after the end of each fiscal year
          Borrower's balance sheet and income statement for the year ended,
          audited by a certified public accountant.

          Interim Statements. As soon as available, but in no event later than
          45 days after the end of each fiscal quarter, Borrower's balance sheet
          and profit and loss statement for the period ended, prepared by
          Borrower.

          Tax Returns. As soon as available, but in no event later than 15 days
          after the applicable filing date for the tax reporting period ended,
          Federal and other governmental tax returns, prepared by a certified
          public accountant satisfactory to Lender.

          Additional Requirements. As soon as available, but in no event later
          than 45 days after the end of each quarter, Borrower's accounts
          receivable and accounts payable aging for the quarter ended, prepared
          by Borrower.

     All financial reports required to be provided under this Agreement shall be
     prepared in accordance with GAAP, applied on a consistent basis, and
     certified by Borrower as being true and correct.

     Financial Covenants and Ratios. Comply with the following covenants and
     ratios:

          Minimum Income and Cash flow Requirements. Borrower shall comply with
          the following cash flow ratio requirements:

               Cash Flow / Current Maturity (LTD) Ratio. Maintain a ratio of
               Cash Flow / Current Maturity (LTD) in excess of 1.300 to 1.000.
               The ratio "Cash Flow / Current Maturity (LTD)" means Borrower's
               Net Profits plus Depreciation divided by Borrower's Current
               Portion of Long Term Indebtedness.

          Tangible Net Worth Requirements. Borrower shall comply with the
          following net worth ratio requirements:

               Debt / Worth Ratio. Maintain a ratio of Debt / Worth not in
               excess of 2.000 to 1.000. The ratio "Debt / Worth" means
               Borrower's Total Liabilities divided by Borrower's Tangible Net
               Worth. This leverage ratio will be evaluated as of quarter-end.

          Except as provided above, all computations made to determine
          compliance with the requirements contained in this paragraph shall be
          made in accordance with accounting principles acceptable to Lender;
          applied on a consistent basis, and certified by Borrower as being true
          and correct.

     Subordination. Prior to disbursement of any Loan proceeds, deliver to
     Lender subordination agreements on Lender's forms, executed by Borrower's
     creditors named below, subordinating all of Borrower's indebtedness to such
     creditors, or such lesser amounts as may be agreed to by Lender in writing,
     and any security interests in collateral securing that indebtedness to the
     Loans and security interests of Lender.

               Name of Creditor                         Total Amount of Debt
               ----------------                         --------------------
               THE JANET MOORE TRUST DATED                      $234,426.00
               AUGUST 21, 1998 and JANET MOORE

     Loan Proceeds. Use all Loan proceeds solely for Borrower's business
     operations, unless specifically consented to the contrary by Lender in
     writing.

     Taxes, Charges and Liens. Pay and discharge when due all of its
     indebtedness and obligations, including without limitation all assessments,
     taxes, governmental charges, levies and liens, of every kind and nature,
     imposed upon Borrower or its properties, income, or profits, prior to the
     date on which penalties would attach, and all lawful claims that, if
     unpaid, might become a lien or charge upon any of Borrower's properties,
     income, or profits.

     Performance. Perform and comply, in a timely manner, with all terms,
     conditions, and provisions set forth in this Agreement, in the Related
     Documents, and in all other instruments and agreements between Borrower and
     Lender. Borrower shall notify Lender immediately in writing of any default
     in connection with any agreement.

     Operations. Maintain executive and management personnel with substantially
     the same qualifications and experience as the present executive and
     management personnel; provide written notice to Lender of any Change in
     executive and management personnel; conduct its business affairs in a
     reasonable and prudent manner.

     Compliance with Governmental Requirements. Comply with all laws,
     ordinances, and regulations, now or hereafter in effect, of all
     governmental authorities applicable to the conduct of Borrower's
     properties, businesses and operations, and to the use or occupancy of the
     Collateral, including without limitation, the Americans With Disabilities
     Act. Borrower may contest in good faith any such law, ordinance, or
     regulation and withhold compliance during any proceeding, including
     appropriate appeals, so long as Borrower has notified Lender in writing
     prior to doing so and so long as, in Lender's sole opinion, Lender's
     interests in the Collateral are not jeopardized. Lender may require
     Borrower to post adequate security or a surety bond, reasonably
     satisfactory to Lender, to protect Lender's interest.

     Inspection. Permit employees or agents of Lender at any reasonable time to
     inspect any and all Collateral for the Loan or Loans and Borrower's other
     properties and to examine or audit Borrower's books, accounts, and records
     and to make copies and memoranda of Borrower's books, accounts, and
     records. If Borrower now or at any time hereafter maintains any records
     (including without limitation computer generated records and computer
     software programs for the generation of such records) in the possession of
     a third party, Borrower, upon request of Lender, shall notify such party to
     permit Lender free access to such records at ail reasonable times and to
     provide Lender with copies of any records it may request, all at Borrower's
     expense.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate on any Collateral and paying all costs
for insuring, maintaining and preserving any Collateral. All such expenditures
incurred or paid by Lender for such' purposes will then bear interest at the
rate charged under the Note from the date incurred or paid by Lender to the date
of repayment by Borrower. All such expenses will become a part of the
indebtedness and, at Lender's option, will (A) be payable on demand; (B) be
added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

<PAGE>

                             BUSINESS LOAN AGREEMENT
Loan No.: 0100000250               (Continued)                            Page 3
================================================================================

     Continuity of Operations. (1) Engage in any business activities
     substantially different than those in which Borrower is presently engaged,
     (2) cease operations, liquidate, merge, acquire or consolidate with any
     other entity, change its name, dissolve or transfer or sell Collateral out
     of the ordinary course of business, or (3) pay any dividends on Borrower's
     stock (other than dividends payable in its stock), provided, however that
     notwithstanding the foregoing, but only so long as no Event of Default has
     occurred and is continuing or would result from the payment of dividends,
     if Borrower is a "Subchapter S Corporation" (as defined in the Internal
     Revenue Code of 1986, as amended), Borrower may pay cash dividends on its
     stock to its shareholders from time to time in amounts necessary to enable
     the shareholders to pay income taxes and make estimated income tax payments
     to satisfy their liabilities under federal and state law which arise solely
     from their status as Shareholders of a Subchapter S Corporation because of
     their ownership of shares of Borrower's stock, or purchase or retire any of
     Borrower's outstanding shares or alter or amend Borrower's capital
     structure.

     Agreements. Borrower will not enter into any agreement containing any
     provisions which would be violated or breached by the performance of
     Borrower's obligations under this Agreement or in connection herewith.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan advances or to disburse Loan proceeds if:
(A) Borrower or any guarantor is in default under the terms of this Agreement or
any other agreement that Borrower or any guarantor has with Lender; (B) Borrower
or any guarantor dies, becomes incompetent or becomes insolvent, files a
petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C)
there occurs a material adverse change in Borrower's financial condition, in the
financial condition of any guarantor, or in the value of any collateral securing
any Loan; or (D) any guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such guarantor's guaranty of the Loan or any other loan with
Lender; or (E) Lender in good faith deems itself insecure, even though no Event
of Default shall have occurred.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:

     Payment Default. Borrower fails to make any payment when due under the
     Loan.

     Other Default. Borrower fails to comply with any other term, obligation,
     covenant or condition contained in this Agreement or in any of the Related
     Documents.

     Default in Favor of Third Parties. Borrower defaults under any loan,
     extension of credit, security agreement, purchase or sales agreement, or
     any other agreement, in favor of any other creditor or person that may
     materially affect any of Borrower's property or Borrower's ability to repay
     the Loans or perform Borrower's obligations under this Agreement or any
     related document.

     False Statements. Any representation or statement made by Borrower to
     Lender is false in any material respect.

     Insolvency. The dissolution or termination of Borrower's existence as a
     going business, the insolvency of Borrower, the appointment of a receiver
     for any part of Borrower's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Borrower or by any
     governmental agency against any collateral securing the Loan.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any Guarantor of any of the Indebtedness or any Guarantor dies or
     becomes incompetent, or revokes or disputes the validity of, or liability
     under, any Guaranty of the Indebtedness. In the event of a death, Lender,
     at its option, may, but shall not be required to, permit the Guarantor's
     estate to assume unconditionally the obligations arising under the guaranty
     in a manner satisfactory to Lender, and, in doing so, cure any Event of
     Default.

     Change in Ownership. Any change in ownership of twenty-five percent (25%)
     or more of the common stock of Borrower.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement immediately will terminate
(including any obligation to make further Loan Advances or disbursements), and,
at Lender's option, all Indebtedness immediately will become due and payable,
all without notice of any kind to Borrower, except that in the case of an Event
of Default of the type described in the "Insolvency" subsection above, such
acceleration shall be automatic and not optional. In addition, Lender shall have
all the rights and remedies provided in the Related Documents or available at
law, in equity, or otherwise. Except as may be prohibited by applicable law, all
of Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Borrower or of any Grantor shall not
affect Lender's right to declare a default and to exercise its rights and
remedies.

ARBITRATION. Borrower and Lender agree that all disputes, claims and
controversies between them whether individual, joint, or class in nature,
arising from this Agreement or otherwise, including without limitation contract
and tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association in effect at the time the claim is filed, upon request
of either party. No act to take or dispose of any Collateral shall constitute a
waiver of this arbitration agreement or be prohibited by this arbitration
agreement. This includes, without limitation, obtaining injunctive relief or a
temporary restraining order; invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to Article
9 of the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness of any act, or exercise of any
right, concerning any Collateral, including any claim to rescind, reform, or
otherwise modify any agreement relating to the Collateral, shall also be
arbitrated, provided however that no arbitrator shall have the right or the
power to enjoin or restrain any act of any party. Borrower and Lender agree that
in the event of an action for judicial foreclosure pursuant to California Code
of Civil Procedure Section 726, or any similar provision in any other state, the
commencement of such an action will not constitute a waiver of the right to
arbitrate and the court shall refer to arbitration as much of such action,
including counterclaims, as lawfully may be referred to arbitration. Judgment
upon any award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Agreement shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction, interpretation, and enforcement
of this arbitration provision.

<PAGE>

                             BUSINESS LOAN AGREEMENT
Loan No.: 0100000250               (Continued)                            Page 4
================================================================================

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:

     Advance. The word "Advance' means a disbursement of Loan funds made, or to
     be made, to Borrower or on Borrower's behalf on a line of credit or
     multiple advance basis under the terms and conditions of this Agreement.

     Agreement. The word "Agreement' means this Business Loan Agreement, as this
     Business Loan Agreement may be amended or modified from time to time,
     together with all exhibits and schedules attached to this Business Loan
     Agreement from time to time.

     Borrower. The word "Borrower means BIOMERICA, INC. and includes all
     co-signers and co-makers signing the Note and all their successors and
     assigns.

     Collateral. The word "Collateral" means all property and assets granted as
     collateral security for a Loan, whether real or personal property, whether
     granted directly or indirectly, whether granted now or in the future, and
     whether granted in the form of a security interest, mortgage, collateral
     mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
     collateral chattel mortgage, chattel trust, factor's lien, equipment trust,
     conditional sale, trust receipt, lien, charge, lien or title retention
     contract, lease or consignment intended as a security device, or any other
     security or lien interest whatsoever, whether created by law, contract, or
     otherwise.

     Event of Default. The words "Event of Default" mean any of the events of
     default set forth in this Agreement in the default section of this
     Agreement.

     GAAP. The word "GAAP" means generally accepted accounting principles.

     Grantor. The word "Grantor" means each and all of the persons or entities
     granting a Security Interest in any Collateral for the Loan, including
     without limitation all Borrowers granting such a Security Interest.

     Guarantor. The word "Guarantor" means any guarantor, surety, or
     accommodation party of any or all of the Loan.

     Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
     the Note or Related Documents, including all principal and interest
     together with all other indebtedness and costs and expenses for which
     Borrower is responsible under this Agreement or under any of the Related
     Documents.

     Lender. The word "Lender" means COMMERCIAL BANK OF CALIFORNIA, its
     successors and assigns.

     Loan. The word "Loan" means any and all loans and financial accommodations
     from Lender to Borrower whether now or hereafter existing, and however
     evidenced, including without limitation those loans and financial
     accommodations described herein or described on Any exhibit or schedule
     attached to this Agreement from time to time.

     Note. The word "Note" means any and all of Borrower's indebtedness to
     Lender and is used in the most comprehensive sense and means and include
     any and all of Borrower's liabilities, obligations and debts to Lender, now
     existing or hereinafter incurred or created, together with all renewals of,
     extensions of, modifications of, refinancings of, consolidations of, and
     substitution for the Related Documents.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Loan.

     Security Agreement. The words "Security Agreement" mean and include without
     limitation any agreements, promises, covenants, arrangements,
     understandings or other agreements, whether created by law, contract, or
     otherwise, evidencing, governing, representing, or creating a Security
     Interest.

     Security Interest. The words "Security Interest" mean, without limitation,
     any and all types of collateral security, present and future, whether in
     the form of a lien, charge, encumbrance, mortgage, deed of trust, security
     deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel
     mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
     trust receipt, lien or title retention contract, lease or consignment
     intended as a security device, or any other security or lien interest
     whatsoever whether created by law, contract, or otherwise.

     Tangible Net Worth. The words "Tangible Net Worth" mean Borrower's total
     assets excluding all intangible assets (i.e., goodwill, trademarks,
     patents, copyrights, organizational expenses, and similar intangible items,
     but including leaseholds and leasehold improvements) less total debt.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED FEBRUARY 20, 2007.

BORROWER:

BIOMERICA, INC.

By: /s/ Zackary Irani
    -----------------------------------------
    ZACKARY IRANI, Chief Executive Officer of
    BIOMERICA, INC.

LENDER:

COMMERCIAL BANK OF CALIFORNIA

By: /s/ Anthony Sands
    -----------------------------------------
    ANTHONY SANDS, Vice President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>7
<FILENAME>biomerica_10qex99-2.txt
<DESCRIPTION>COMMERCIAL SECURITY AGREEMENT
<TEXT>
<PAGE>

                                                                    Exhibit 99.2

COMMERCIAL BANK
Of California

                              COMMERCIAL SECURITY AGREEMENT
<TABLE>
<S>     <C>
- ------------------------------------------------------------------------------------------
 Principal    Loan Date    Maturity     Loan No    Call/Coll  Account   Officer   Initials
- ------------------------------------------------------------------------------------------
$200,000.00  02-20-2007   09-01-2008   0100000250    04A/03               111
- ------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability
   of this document to any particular loan or item. Any item above containing "***" has
                       been omitted due to text length limitations.
- ------------------------------------------------------------------------------------------

Borrower:  BIOMERICA, INC.                     Lender: COMMERCIAL BANK OF CALIFORNIA
           1533 MONROVIA AVENUE                        695 TOWN CENTER DRIVE, SUITE 100
           NEWPORT BEACH, CA 92663                     COSTA MESA, CA 92626

==========================================================================================
</TABLE>

THIS COMMERCIAL SECURITY AGREEMENT dated February 20, 2007, is made and executed
between BIOMERICA, INC. ("Grantor") and COMMERCIAL BANK OF CALIFORNIA
("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender
a security interest In the Collateral to secure the Indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a security interest for the payment of the
Indebtedness and performance of all other obligations under the Note and this
Agreement:

     All inventory, equipment, accounts (including but not limited to all
     health-care-insurance receivables), chattel paper, instruments (including
     but not limited to all promissory notes), letter-of-credit rights, letters
     of credit, documents, deposit accounts, investment property, money, other
     rights to payment and performance, and general intangibles (including but
     not limited to all software and all payment intangibles); all oil, gas and
     other minerals before extraction; all oil, gas, other minerals and accounts
     constituting as-extracted collateral; all fixtures; all timber to be cut;
     all attachments, accessions, accessories, fittings, increases, tools,
     parts, repairs, supplies, and commingled goods relating to the foregoing
     property, and all additions, replacements of and substitutions for all or
     any part of the foregoing property; all insurance refunds relating to the
     foregoing property; all good will relating to the foregoing property; all
     records and data and embedded software relating to the foregoing property,
     and all equipment, inventory and software to utilize, create, maintain and
     process any such records and data on electronic media; and all supporting
     obligations relating to the foregoing property; all whether now existing or
     hereafter arising, whether now owned or hereafter acquired or whether now
     or hereafter subject to any rights In the foregoing property; and all
     products and proceeds (including but not limited to all insurance payments)
     of or relating to the foregoing property.

In addition, the word "Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:

     (A) All accessions, attachments, accessories, tools, parts, supplies,
     replacements of and additions to any of the collateral described herein,
     whether added now or later.

     (B) All products and produce of any of the property described in this
     Collateral section.

     (C) All accounts, general intangibles, instruments, rents, monies,
     payments, and all other rights, arising out of a sale, lease, consignment
     or other disposition of any of the property described in this Collateral
     section.

     (D) All proceeds (including insurance proceeds) from the sale, destruction,
     loss, or other disposition of any of the property described in this
     Collateral section, and sums due from a third party who has damaged or
     destroyed the Collateral or from that party's insurer, whether due to
     judgment, settlement or other process.

     (E) All records and data relating to any of the property described in this
     Collateral section, whether in the form of a writing, photograph,
     microfilm, microfiche, or electronic media, together with all of Grantor's
     right, title, and interest in and to all computer software required to
     utilize, create, maintain, and process any such records or data on
     electronic media.

CROSS-COLLATERALIZATION. In addition to the Note, this Agreement secures all
obligations, debts and liabilities, plus interest thereon, of Grantor to Lender,
or any one or more of them, as well as all claims by Lender against Grantor or
any one or more of them, whether now existing or hereafter arising, whether
related or unrelated to the purpose of the Note, whether voluntary or otherwise,
whether due or not due, direct or indirect, determined or undetermined, absolute
or contingent, liquidated or unliquidated, whether Grantor may be liable
individually or jointly with others, whether obligated as guarantor, surety,
accommodation party or otherwise, and whether recovery upon such amounts may be
or hereafter may become barred by any statute of limitations,,-and whether the
obligation to repay such amounts may be or hereafter may become otherwise
unenforceable. (Initial Here _____)

FUTURE ADVANCES. In addition to the Note, this Agreement secures all future
advances made by Lender to Grantor regardless of whether the advances are made'
a) pursuant to a commitment or b) for the same purposes.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Grantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and promises to Lender that:

     Perfection of Security Interest. Grantor agrees to take whatever actions
     are requested by Lender to perfect and continue Lender's security interest
     in the Collateral, Upon request of Lender, Grantor will deliver to Lender
     any and all of the documents evidencing or constituting the Collateral, and
     Grantor will note Lender's interest upon any and all chattel paper and
     instruments if not delivered to Lender for possession by Lender. This is a
     continuing Security Agreement and will continue in effect even though all
     or any part of the Indebtedness is paid in full and even though for a
     period of time Grantor may not be indebted to Lender.

     Notices to Lender. Grantor will promptly notify Lender in writing at
     Lender's address shown above (or such other addresses as Lender may
     designate from time to time) prior to any (1) change in Grantor's name; (2)
     change in Grantor's assumed business name(s); (3) change in the management
     of the Corporation Grantor; (4) change in the authorized signer(s); (5)
     change in Grantor's principal office address; (6) change in Grantor's state
     of organization; (7) conversion of Grantor to a new or different type of
     business entity; or (8) change in any other aspect of Grantor that directly
     or indirectly relates to any agreements between Grantor and Lender. No
     change in Grantor's name or state of organization will take effect until
     after Lender has received notice.

     No Violation. The execution and delivery of this Agreement will not violate
     any law or agreement governing Grantor or to which Grantor is a party, and
     its certificate or articles of incorporation and bylaws do not prohibit any
     term or condition of this Agreement.

     Enforceability of Collateral. To the extent the Collateral consists of
     accounts, chattel paper, or general intangibles, as defined by the Uniform
     Commercial Code, the Collateral is enforceable in accordance with its
     terms, is genuine, and fully complies with all applicable laws and
     regulations concerning form, content and manner of preparation and
     execution, and all persons appearing to be obligated on the Collateral have
     authority and capacity to contract and are in fact obligated as they appear
     to be on the Collateral. At the time any account becomes subject to a
     security interest in favor of Lender, the account shall be a good and valid
     account representing an undisputed, bona fide indebtedness incurred by the
     account debtor, for merchandise held subject to delivery instructions or
     previously shipped or delivered pursuant to a contract of sale, or for
     services previously performed by Grantor with or for the account debtor. So
     long as this Agreement remains in effect, Grantor shall not, without
     Lender's prior written consent, compromise, settle, adjust, or extend
     payment under or with regard to any such Accounts. There shall be no
     setoffs or counterclaims against any of the Collateral, and no agreement
     shall have been made under which any deductions or discounts may be claimed
     concerning the Collateral except those disclosed to Lender in writing.

<PAGE>

                          COMMERCIAL SECURITY AGREEMENT
Loan No: 0100000250                (Continued)                            Page 2

     Location of the Collateral. Except in the ordinary course of Grantor's
     business, Grantor agrees to keep the Collateral (or to the extent the
     Collateral consists of intangible property such as accounts or general
     intangibles, the records concerning the Collateral) at Grantor's address
     shown above or at such other locations as are acceptable to Lender. Upon
     Lender's request, Grantor will deliver to Lender in form satisfactory to
     Lender a schedule of real properties and Collateral locations relating to
     Grantor's operations, including without limitation the following: (1) all
     real property Grantor owns or is purchasing; (2) all real property Grantor
     is renting or leasing; (3) all storage facilities Grantor owns, rents,
     leases, or uses; and (4) all other properties where Collateral is or may be
     located.

     Removal of the Collateral. Except in the ordinary course of Grantor's
     business, including the sales of inventory, Grantor shall not remove the
     Collateral from its existing location without Lender's prior written
     consent. To the extent that the Collateral consists of vehicles, or other
     titled property, Grantor shall not take or permit any action which would
     require application for certification of title for the vehicles outside the
     State of Delaware, without Lender's prior written consent. Grantor shall,
     whenever requested, advise Lender of the exact location of the Collateral.

     Transactions Involving Collateral. Except for inventory sold or accounts
     collected in the ordinary course of Grantor's business, or as otherwise
     provided for in this Agreement, Grantor shall not sell, offer to sell, or
     otherwise transfer or dispose of the Collateral. While Grantor is not in
     default under this Agreement, Grantor may sell inventory, but only in the
     ordinary course of its business and only to buyers who qualify as a buyer
     in the ordinary course of business. A sale in the ordinary course of
     Grantor's business does not include a transfer in partial or total
     satisfaction of a debt or any bulk sale. Grantor shall not pledge,
     mortgage, encumber or otherwise permit the Collateral to be subject to any
     lien, security interest, encumbrance, or charge, other than the security
     interest provided for in this Agreement, without the prior written consent
     of Lender. This includes security interests even if junior in right to the
     security interests granted under this Agreement. Unless waived by Lender,
     all proceeds from any disposition of the Collateral (for whatever reason)
     shall be held in trust for Lender and shall not be commingled with any
     other funds; provided however, this requirement shall not constitute
     consent by Lender to any sale or other disposition. Upon receipt, Grantor
     shall immediately deliver any such proceeds to Lender.

     Title. Grantor represents and warrants to Lender that Grantor holds good
     and marketable title to the Collateral, free and clear of all liens and
     encumbrances except for the lien of this Agreement. No financing statement
     covering any of the Collateral is on file in any public office other than
     those which reflect the security interest created by this Agreement or to
     which Lender has specifically consented. Grantor shall defend Lender's
     rights in the Collateral against the claims and demands of all other
     persons.

     Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause
     others to keep and maintain, the Collateral in good order, repair and
     condition at all times while this Agreement remains in effect. Grantor
     further agrees to pay when due all claims for work done on, or services
     rendered or material furnished in connection with the Collateral so that no
     lien or encumbrance may ever attach to or be filed against the Collateral.

     Inspection of Collateral. Lender and Lender's designated representatives
     and agents shall have the right at all reasonable times to examine and
     inspect the Collateral wherever located.

     Taxes, Assessments and Liens. Grantor will pay when due all taxes,
     assessments and liens upon the Collateral, its use or operation, upon this
     Agreement, upon any promissory note or notes evidencing the Indebtedness,
     or upon any of the other Related Documents. Grantor may withhold any such
     payment or may elect to contest any lien if Grantor is in good faith
     conducting an appropriate proceeding to contest the obligation to pay and
     so long as Lender's interest in the Collateral is not jeopardized in
     Lender's sole opinion. If the Collateral is subjected to a lien which is
     not discharged within fifteen (15) days, Grantor shall deposit with Lender
     cash, a sufficient corporate surety bond or other security satisfactory to
     Lender in an amount adequate to provide for the discharge of the lien plus
     any interest, costs, reasonable attorneys' fees or other charges that could
     accrue as a result of foreclosure or sale of the Collateral. In any contest
     Grantor shall defend itself and Lender and shall satisfy any final adverse
     judgment before enforcement against the Collateral. Grantor shall name
     Lender as an additional obligee under any surety bond furnished in the
     contest proceedings. Grantor further agrees to furnish Lender with evidence
     that such taxes, assessments, and governmental and other charges have been
     paid in full and in a timely manner. Grantor may withhold any such payment
     or may elect to contest any lien if Grantor is in good faith conducting an
     appropriate proceeding to contest the obligation to pay and so long as
     Lender's interest in the Collateral is not jeopardized.

     Compliance with Governmental Requirements. Grantor shall comply promptly
     with all laws, ordinances, rules and regulations of all governmental
     authorities, now or hereafter in effect, applicable to the ownership,
     production, disposition, or use of the Collateral, including all laws or
     regulations relating to the undue erosion of highly-erodible land or
     relating to the conversion of wetlands for the production of an
     agricultural product or commodity. Grantor may contest in good faith any
     such law, ordinance or regulation and withhold compliance during any
     proceeding, including appropriate appeals, so long as Lender's interest in
     the Collateral, in Lender's opinion, is not jeopardized.

     Hazardous Substances. Grantor represents and warrants that the Collateral
     never has been, and never will be so long as this Agreement remains a lien
     on the Collateral, used in violation of any Environmental Laws or for the
     generation, manufacture, storage, transportation, treatment, disposal,
     release or threatened release of any Hazardous Substance. The
     representations and warranties contained herein are based on Grantor's due
     diligence in investigating the Collateral for Hazardous Substances. Grantor
     hereby (1) releases and waives any future claims against Lender for
     indemnity or contribution in the event Grantor becomes liable for cleanup
     or other costs under any Environmental Laws, and (2) agrees to indemnify,
     defend, and hold harmless Lender against any and all claims and losses
     resulting from a breach of this provision of this Agreement. This
     obligation to indemnify and defend shall survive the payment of the
     Indebtedness and the satisfaction of this Agreement.

     Maintenance of Casualty Insurance. Grantor shall procure and maintain all
     risks insurance, including without limitation fire, theft and liability
     coverage together with such other insurance as Lender may require with
     respect to the Collateral, in form, amounts, coverages and basis reasonably
     acceptable to Lender and issued by a company or companies reasonably
     acceptable to Lender. Grantor, upon request of Lender, will deliver to
     Lender from time to time the policies or certificates of insurance in form
     satisfactory to Lender, including stipulations that coverages will not be
     cancelled or diminished without at least thirty (30) days' prior written
     notice to Lender and not including any disclaimer of the insurer's
     liability for failure to give such a notice. Each insurance policy also
     shall include an endorsement providing that coverage in favor of Lender
     will not be impaired in any way by any act, omission or default of Grantor
     or any other person. In connection with all policies covering assets in
     which Lender holds or is offered a security interest, Grantor will provide
     Lender with such loss payable or other endorsements as Lender may require.
     If Grantor at any time fails to obtain or maintain any insurance as
     required under this Agreement, Lender may (but shall not be obligated to)
     obtain such insurance as Lender deems appropriate, including if Lender so
     chooses "single interest insurance," which will cover only Lender's
     interest in the Collateral.

     Application of Insurance Proceeds. Grantor shall promptly notify Lender of
     any loss or damage to the Collateral if the estimated cost of repair or
     replacement exceeds 10,000.00, whether or not such casualty or loss is
     covered by insurance. Lender may make proof of loss if Grantor fails to do
     so within fifteen (15) days of the casualty. All proceeds of any insurance
     on the Collateral, including accrued proceeds thereon, shall be held by
     Lender as part of the Collateral. If Lender consents to repair or
     replacement of the damaged or destroyed Collateral, Lender shall, upon
     satisfactory proof of expenditure, pay or reimburse Grantor from the
     proceeds for the reasonable cost of repair or restoration. If Lender does
     not consent to repair or replacement of the Collateral, Lender shall retain
     a sufficient amount of the proceeds to pay all of the Indebtedness, and
     shall pay the balance to Grantor. Any proceeds which have not been
     disbursed within six (6) months after their receipt and which Grantor has
     not committed to the repair or restoration of the Collateral shall be used
     to prepay the Indebtedness.

     Insurance Reserves. Lender may require Grantor to maintain with Lender
     reserves for payment of insurance premiums, which reserves shall be created
     by monthly payments from Grantor of a sum estimated by Lender to be
     sufficient to produce, at least fifteen (15) days before the premium due
     date, amounts at least equal to the insurance premiums to be paid. If
     fifteen (15) days before payment is due, the reserve funds are
     insufficient, Grantor shall upon demand pay any deficiency to Lender. The
     reserve funds shall be held by Lender as a general deposit and shall
     constitute a non-interest-bearing account which Lender may satisfy by
     payment of the insurance premiums required to be paid by Grantor as they
     become due. Lender does not hold the reserve funds in trust for Grantor,
     and Lender is not the agent of Grantor for payment of the insurance
     premiums required to be paid by Grantor. The responsibility for the payment
     of premiums shall remain Grantor's sole responsibility.

     Insurance Reports. Grantor, upon request of Lender, shall furnish to Lender
     reports on each existing policy of insurance showing such information as
     Lender may reasonably request including the following: (1) the name of the
     insurer; (2) the risks insured; (3) the amount of the policy; (4) the
     property insured; (5) the then current value on the basis of which
     insurance has been obtained and the manner of determining that value; and
     (6) the expiration date of the policy. In addition, Grantor shall upon
     request by Lender (however not more often than annually) have an
     independent appraiser satisfactory to Lender determine, as applicable, the
     cash value or replacement cost of the Collateral.

     Financing Statements. Grantor authorizes Lender to file a UCC financing
     statement, or alternatively, a copy of this Agreement to perfect Lender's
     security interest. At Lender's request, Grantor additionally agrees to sign
     all other documents that are necessary to perfect, protect, and continue
     Lender's security interest in the Property. Grantor will pay all filing
     fees, title transfer fees, and other fees and costs involved unless
     prohibited by law or unless Lender is required by law to pay such fees and
     costs. Grantor irrevocably appoints Lender to execute documents necessary
     to transfer title if there is a default. Lender may file a copy of this
     Agreement as a financing statement. If Grantor changes Grantor's name or
     address, or the name or address of any person granting a security interest
     under this Agreement changes, Grantor will promptly notify the Lender of
     such change.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any

<PAGE>

                          COMMERCIAL SECURITY AGREEMENT
Loan No: 0100000250                (Continued)                            Page 3
================================================================================

Collateral where possession of the Collateral by Lender is required by law to
perfect Lender's security interest in such Collateral. Until otherwise notified
by Lender, Grantor may collect any of the Collateral consisting of accounts. At
any time and even though no Event of Default exists, Lender may exercise its
rights to collect the accounts and to notify account debtors to make payments
directly to Lender for application to the Indebtedness. If Lender at any time
has possession of any Collateral, whether before or after an Event of Default,
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Lender takes such action for that purpose as
Grantor shall request or as Lender, in Lender's sole discretion, shall deem
appropriate under the circumstances, but failure to honor any request by Grantor
shall not of itself be deemed to be a failure to exercise reasonable care.
Lender shall not be required to take any steps necessary to preserve any rights
in the Collateral against prior parties, nor to protect, preserve or maintain
any security interest given to secure the Indebtedness.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor's failure to discharge or pay when due any amounts
Grantor is required to discharge or pay under this Agreement or any Related
Documents, Lender on Grantor's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on the Collateral and paying all
costs for insuring, maintaining and preserving the Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part
of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B)
be added to the balance of the Note and be apportioned among and be payable with
any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity. The Agreement also will secure payment of these amounts. Such right
shall be in addition to all other rights and remedies to which Lender may be
entitled upon Default.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement: Payment Default. Grantor fails to make any payment when due under the
Indebtedness.

     Other Defaults. Grantor fails to comply with or to perform any other term,
     obligation, covenant or condition contained in this Agreement or in any of
     the Related Documents or to comply with or to perform any term, obligation,
     covenant or condition contained in any other agreement between Lender and
     Grantor.

     Default in Favor of Third Parties. Should Borrower or any Grantor default
     under any loan, extension of credit, security agreement, purchase or sales
     agreement, or any other agreement, in favor of any other creditor or person
     that may materially affect any of Grantor's property or Grantor's or any
     Grantor's ability to repay the Indebtedness or perform their respective
     obligations under this Agreement or any of the Related Documents.

     False Statements. Any warranty, representation or statement made or
     furnished to Lender by Grantor or on Grantor's behalf under this Agreement
     or the Related Documents is false or misleading in any material respect,
     either now or at the time made or furnished or becomes false or misleading
     at any time thereafter.

     Defective Collateralization. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any collateral
     document to create a valid and perfected security interest or lien) at any
     time and for any reason.

     Insolvency. The dissolution or termination of Grantor's existence as a
     going business, the insolvency of Grantor, the appointment of a receiver
     for any part of Grantor's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Grantor.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Grantor or by any
     governmental agency against any collateral securing the Indebtedness. This
     includes a garnishment of any of Grantor's accounts, including deposit
     accounts, with Lender. However, this Event of Default shall not apply if
     there is a good faith dispute by Grantor as to the validity or
     reasonableness of the claim which is the basis of the creditor or
     forfeiture proceeding and if Grantor gives Lender written notice of the
     creditor or forfeiture proceeding and deposits with Lender monies or a
     surety bond for the creditor or forfeiture proceeding, in an amount
     determined by Lender, in its sole discretion, as being an adequate reserve
     or bond for the dispute.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any guarantor, endorser, surety, or accommodation party of any of the
     Indebtedness or guarantor, endorser, surety, or accommodation party dies or
     becomes incompetent or revokes or disputes the validity of, or liability
     under, any Guaranty of the Indebtedness.

     Adverse Change. A material adverse change occurs in Grantor's financial
     condition, or Lender believes the prospect of payment or performance of the
     Indebtedness is impaired.

     Cure Provisions. If any default, other than a default in payment is curable
     and if Grantor has not been given a notice of a breach of the same
     provision of this Agreement within the preceding twelve (12) months, it may
     be cured if Grantor, after receiving written notice from Lender demanding
     cure of such default: (1) cures the default within fifteen (15) days; or
     (2) if the cure requires more than fifteen (15) days, immediately initiates
     steps which Lender deems in Lender's sole discretion to be sufficient to
     cure the default and thereafter continues and completes all reasonable and
     necessary steps sufficient to produce compliance as soon as reasonably
     practical.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Delaware Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:

     Accelerate Indebtedness. Lender may declare the entire Indebtedness,
     including any prepayment penalty which Grantor would be required to pay,
     immediately due and payable, without notice of any kind to Grantor.

     Assemble Collateral. Lender may require Grantor to deliver to Lender all or
     any portion of the Collateral and any and all certificates of title and
     other documents relating to the Collateral. Lender may require Grantor to
     assemble the Collateral and make it available to Lender at a place to be
     designated by Lender. Lender also shall have full power to enter upon the
     property of Grantor to take possession of and remove the Collateral. If the
     Collateral contains other goods not covered by this Agreement at the time
     of repossession, Grantor agrees Lender may take such other goods, provided
     that Lender makes reasonable efforts to return them to Grantor after
     repossession.

     Sell the Collateral. Lender shall have full power to sell, lease, transfer,
     or otherwise deal with the Collateral or proceeds thereof in Lender's own
     name or that of Grantor. Lender may sell the Collateral at public auction
     or private sale. Unless the Collateral threatens to decline speedily in
     value or is of a type customarily sold on a recognized market, Lender will
     give Grantor, and other persons as required by law, reasonable notice of
     the time and place of any public sale, or the time after which any private
     sale or any other disposition of the Collateral is to be made. However, no
     notice need be provided to any person who, after Event of Default occurs,
     enters into and authenticates an agreement waiving that person's right to
     notification of sale. The requirements of reasonable notice shall be met if
     such notice is given at least ten (10) days before the time of the sale or
     disposition. All expenses relating to the disposition of the Collateral,
     including without limitation the expenses of retaking, holding, insuring,
     preparing for sale and selling the Collateral, shall become a part of the
     Indebtedness secured by this Agreement and shall be payable on demand, with
     interest at the Note rate from date of expenditure until repaid.

     Appoint Receiver. Lender shall have the right to have a receiver appointed
     to take possession of all or any part of the Collateral, with the power to
     protect and preserve the Collateral, to operate the Collateral preceding
     foreclosure or sale, and to collect the Rents from the Collateral and apply
     the proceeds, over and above the cost of the receivership, against the
     Indebtedness. The receiver may serve without bond if permitted by law.
     Lender's right to the appointment of a receiver shall exist whether or not
     the apparent value of the Collateral exceeds the Indebtedness by a
     substantial amount. Employment by Lender shall not disqualify a person from
     serving as a receiver.

     Collect Revenues, Apply Accounts. Lender, either itself or through a
     receiver, may collect the payments, rents, income, and revenues from the
     Collateral. Lender may at any time in Lender's discretion transfer any
     Collateral into Lender's own name or that of Lender's nominee and receive
     the payments, rents, income, and revenues therefrom and hold the same as
     security for the Indebtedness or apply it to payment of the Indebtedness in
     such order of preference as Lender may determine. Insofar as the Collateral
     consists of accounts, general intangibles, insurance policies, instruments,
     chattel paper, choses in action, or similar property, Lender may demand,
     collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
     realize on the Collateral as Lender may determine, whether or not
     Indebtedness or Collateral is then due. For these purposes, Lender may, on
     behalf of and in the name of Grantor, receive, open and dispose of mail
     addressed to Grantor; change any address to which mail and payments are to
     be sent; and endorse notes, checks, drafts, money orders, documents of
     title, instruments and items pertaining to payment, shipment, or storage of
     any Collateral. To facilitate collection, Lender may notify account debtors
     and obligors on any Collateral to make payments directly to Lender.

     Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
     Lender may obtain a judgment against Grantor for any deficiency remaining
     on the Indebtedness due to Lender after application of all amounts received
     from the exercise of the rights provided in this Agreement. Grantor shall
     be liable for a deficiency even if the transaction described in this
     subsection is a sale of accounts or chattel paper.

     Other Rights and Remedies. Lender shall have all the rights and remedies of
     a secured creditor under the provisions of the Uniform Commercial Code, as
     may be amended from time to time. In addition, Lender shall have and may
     exercise any or all other rights and remedies it may have available at law,
     in equity, or otherwise.

     Election of Remedies. Except as may be prohibited by applicable law, all of
     Lender's rights and remedies, whether evidenced by this

<PAGE>

                          COMMERCIAL SECURITY AGREEMENT
Loan No: 0100000250                (Continued)                            Page 4
================================================================================

     Agreement, the Related Documents, or by any other writing, shall be
     cumulative and may be exercised singularly or concurrently. Election by
     Lender to pursue any remedy shall not exclude pursuit of any other remedy,
     and an election to make expenditures or to take action to perform an
     obligation of Grantor under this Agreement, after Grantor's failure to
     perform, shall not affect Lender's right to declare a default and exercise
     its remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     Amendments. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement, No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
     party or parties sought to be charged or bound by the alteration or
     amendment.

     Arbitration. Grantor and Lender agree that all disputes, claims and
     controversies between them whether individual, joint, or class in nature,
     arising from this Agreement or otherwise, including without limitation
     contract and tort disputes, shall be arbitrated pursuant to the Rules of
     the American Arbitration Association in effect at the time the claim is
     filed, upon request of either party. No act to take or dispose of any
     Collateral shall constitute a waiver of this arbitration agreement or be
     prohibited by this arbitration agreement. This includes, without
     limitation, obtaining injunctive relief or a temporary restraining order;
     Invoking a power of sale under any deed of trust or mortgage; obtaining a
     writ of attachment or imposition of a receiver; or exercising any rights
     relating to personal property, including taking or disposing of such
     property with or without judicial process pursuant to Article 9 of the
     Uniform Commercial Code. Any disputes, claims, or controversies concerning
     the lawfulness or reasonableness of any act, or exercise of any right,
     concerning any Collateral, Including any claim to rescind, reform, or
     otherwise modify any agreement relating to the Collateral, shall also be
     arbitrated, provided however that no arbitrator shall have the right or the
     power to enjoin or restrain any act of any party. Judgment upon any award
     rendered by any arbitrator may be entered in any court having jurisdiction.
     Nothing in this Agreement shall preclude any party from seeking equitable
     relief from a court of competent jurisdiction. The statute of limitations,
     estoppel, waiver, !aches, and similar doctrines which would otherwise be
     applicable in an action brought by a party shall be applicable in any
     arbitration proceeding, and the commencement of an arbitration proceeding
     shall be deemed the commencement of an action for these purposes. The
     Federal Arbitration Act shall apply to the construction, interpretation,
     and enforcement of this arbitration provision.

     Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's reasonable attorneys' fees
     and Lender's legal expenses, incurred in connection with the enforcement of
     this Agreement. Lender may hire or pay someone else to help enforce this
     Agreement, and Grantor shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's reasonable attorneys' fees
     and legal expenses whether or not there is a lawsuit, including reasonable
     attorneys' fees and legal expenses for bankruptcy proceedings (including
     efforts to modify or vacate any automatic stay or injunction), appeals, and
     any anticipated post-judgment collection services. Lender may also recover
     from Grantor all court, alternative dispute resolution or other collection
     costs (including, without limitation, fees and charges of collection
     agencies) actually incurred by Lender.

     Caption Headings. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     Governing Law. With respect to procedural matters related to the perfection
     and enforcement of Lender's rights against the Collateral, this Agreement
     will be governed by federal law applicable to Lender and to the extent not
     preempted by federal law, the laws of the State of Delaware. In all other
     respects, this Agreement will be governed by federal law applicable to
     Lender and, to the extent not preempted by federal law, the laws of the
     State of California without regard to its conflicts of law provisions.
     However, if there ever Is a question about whether any provision of this
     Agreement is valid or enforceable, the provision that is questioned will be
     governed by whichever state or federal law would find the provision to be
     valid and enforceable. The loan transaction that Is evidenced by the Note
     and this Agreement has been applied for, considered, approved and made, and
     all necessary loan documents have been accepted by Lender in the State of
     California.

     Choice of Venue. If there is a lawsuit, Grantor agrees upon Lender's
     request to submit to the jurisdiction of the courts of ORANGE County, State
     of California.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Agreement unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Agreement shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Agreement. No prior waiver by
     Lender, nor any course of dealing between Lender and Grantor, shall
     constitute a waiver of any of Lender's rights or of any of Grantor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Agreement, the granting of such consent by Lender in
     any instance shall not constitute continuing consent to subsequent
     instances where such consent is required and in all cases such consent may
     be granted or withheld in the sole discretion of Lender.

     Notices. Any notice required to be given under this Agreement shall be
     given in writing, and shall be effective when actually delivered, when
     actually received by telefacsimile (unless otherwise required by law), when
     deposited with a nationally recognized overnight courier, or, if mailed,
     when deposited in the United States mail, as first class, certified or
     registered mail postage prepaid, directed to the addresses shown near the
     beginning of this Agreement. Any party may change its address for notices
     under this Agreement by giving formal written notice to the other parties,
     specifying that the purpose of the notice is to change the party's address.
     For notice purposes, Grantor agrees to keep Lender informed at all times of
     Grantor's current address. Unless otherwise provided or required by law, if
     there is more than one Grantor, any notice given by Lender to any Grantor
     is deemed to be notice given to all Grantors.

     Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable
     attorney-in-fact for the purpose of executing any documents necessary to
     perfect, amend, or to continue the security interest granted in this
     Agreement or to demand termination of filings of other secured parties.
     Lender may at any time, and without further authorization from Grantor,
     file a carbon, photographic or other reproduction of any financing
     statement or of this Agreement for use as a financing statement. Grantor
     will reimburse Lender for all expenses for the perfection and the
     continuation of the perfection of Lender's security interest in the
     Collateral.

     Severability. If a court of competent jurisdiction finds any provision of
     this Agreement to be illegal, invalid, or unenforceable as to any
     circumstance, that finding shall not make the offending provision illegal,
     invalid, or unenforceable as to any other circumstance. If feasible, the
     offending provision shall be considered modified so that it becomes legal,
     valid and enforceable. If the offending provision cannot be so modified, it
     shall be considered deleted from this Agreement. Unless otherwise required
     by law, the illegality, invalidity, or unenforceability of any provision of
     this Agreement shall not affect the legality, validity or enforceability of
     any other provision of this Agreement.

     Successors and Assigns. Subject to any limitations stated in this Agreement
     on transfer of Grantor's interest, this Agreement shall be binding upon and
     inure to the benefit of the parties, their successors and assigns. If
     ownership of the Collateral becomes vested in a person other than Grantor,
     Lender, without notice to Grantor, may deal with Grantor's successors with
     reference to this Agreement and the Indebtedness by way of forbearance or
     extension without releasing Grantor from the obligations of this Agreement
     or liability under the Indebtedness.

     Survival of Representations and Warranties. All representations,
     warranties, and agreements made by Grantor in this Agreement shall survive
     the execution and delivery of this Agreement, shall be continuing in
     nature, and shall remain in full force and effect until such time as
     Grantor's Indebtedness shall be paid in full.

     Time is of the Essence. Time is of the essence in the performance of this
     Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:

     Agreement. The word "Agreement" means this Commercial Security Agreement,
     as this Commercial Security Agreement may be amended or modified from time
     to time, together with all exhibits and schedules attached to this
     Commercial Security Agreement from time to time.

     Borrower. The word "Borrower" means BIOMERICA, INC. and includes all
     co-signers and co-makers signing the Note and all their successors and
     assigns.

     Collateral. The word "Collateral" means all of Grantor's right, title and
     interest in and to all the Collateral as described in the Collateral
     Description section of this Agreement.

     Default. The word "Default" means the Default set forth in this Agreement
     in the section titled "Default".

     Environmental Laws. The words "Environmental Laws" mean any and all state,
     federal and local statutes, regulations and ordinances relating to the
     protection of human health or the environment, including without limitation
     the Comprehensive Environmental Response, Compensation, and Liability Act
     of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
     Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
     ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
     1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
     Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the
     California Health and Safety Code, Section 25100, et seq., or other
     applicable state or federal laws, rules, or regulations adopted pursuant
     thereto.

<PAGE>

                          COMMERCIAL SECURITY AGREEMENT
Loan No: 0100000250                (Continued)                            Page 5
================================================================================

     Event of Default. The words "Event of Default" mean any of the events of
     default set forth in this Agreement in the default section of this
     Agreement.

     Grantor. The word "Grantor" means BIOMERICA, INC..

     Guaranty. The word "Guaranty" means the guaranty from guarantor, endorser,
     surety, or accommodation party to Lender, including without limitation a
     guaranty of all or part of the Note.

     Hazardous Substances. The words "Hazardous Substances" mean materials that,
     because of their quantity, concentration or physical, chemical or
     infectious characteristics, may cause or pose a present or potential hazard
     to human health or the environment when improperly used, treated, stored,
     disposed of, generated, manufactured, transported or otherwise handled. The
     words "Hazardous Substances" are used in their very broadest sense and
     include without limitation any and all hazardous or toxic substances,
     materials or waste as defined by or listed under the Environmental Laws.
     The term "Hazardous Substances" also includes, without limitation,
     petroleum and petroleum by-products or any fraction thereof and asbestos.

     Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
     the Note or Related Documents, including all principal and interest
     together with all other indebtedness and costs and expenses for which
     Grantor is responsible under this Agreement or under any of the Related
     Documents. Specifically, without limitation, Indebtedness includes the
     future advances set forth in the Future Advances provision, together with
     all interest thereon and all amounts that may be indirectly secured by the
     Cross-Collateralization provision of this Agreement.

     Lender. The word "Lender" means COMMERCIAL BANK OF CALIFORNIA, its
     successors and assigns.

     Note. The word "Note" means any and all of Borrower's indebtedness to
     Lender and is used in the most comprehensive sense and means and include
     any and all of Borrower's liabilities, obligations and debts to Lender, now
     existing or hereinafter incurred or created, together with all renewals of,
     extensions of, modifications of, refinancings of, consolidations of, and
     substitution for the Related Documents.

     Property. The word "Property" means all of Grantor's right, title and
     interest in and to all the Property as described in the "Collateral
     Description" section of this Agreement.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.


GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED FEBRUARY 20, 2007.

THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND
SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.


BORROWER:

BIOMERICA, INC.

By: /s/ Zackary Irani
    -----------------------------------------
    ZACKARY IRANI, Chief Executive Officer of
    BIOMERICA, INC.

LENDER:

COMMERCIAL BANK OF CALIFORNIA

By: /s/ Anthony Sands
    -----------------------------------------
    ANTHONY SANDS, Vice President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>8
<FILENAME>biomerica_10qex99-3.txt
<DESCRIPTION>PROMISSORY NOTE
<TEXT>
<PAGE>

                                                                    Exhibit 99.3

COMMERCIAL BANK
Of California

                                     PROMISSORY NOTE
<TABLE>
<S>     <C>
- ------------------------------------------------------------------------------------------
 Principal    Loan Date    Maturity     Loan No    Call/Coll  Account   Officer   Initials
- ------------------------------------------------------------------------------------------
$200,000.00  02-20-2007   09-01-2008   0100000250    04A/03               111
- ------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability
   of this document to any particular loan or item. Any item above containing "***" has
                       been omitted due to text length limitations.
- ------------------------------------------------------------------------------------------

Borrower:  BIOMERICA, INC.                     Lender: COMMERCIAL BANK OF CALIFORNIA
           1533 MONROVIA AVENUE                        695 TOWN CENTER DRIVE, SUITE 100
           NEWPORT BEACH, CA 92663                     COSTA MESA, CA 92626
==========================================================================================

Principal Amount: $200,000.00     Initial Rate: 9.750%     Date of Note: February 20, 2007
</TABLE>

PROMISE TO PAY. BIOMERICA, INC. ("Borrower") promises to pay to COMMERCIAL BANK
OF CALIFORNIA ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Two Hundred Thousand & 00/100 Dollars
($200,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on September 1, 2008. In addition, Borrower
will pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning April 1, 2007, with all subsequent interest payments to
be due on the same day of each month after that. Unless otherwise agreed or
required by applicable law, payments will be applied first to any accrued unpaid
interest; then to principal; then to any late charges; and then to any unpaid
collection costs. The annual interest rate for this Note is computed on a
365/360 basis; that is, by applying the ratio of the annual interest rate over a
year of 360 days, multiplied by the outstanding principal balance, multiplied by
the actual number of days the principal balance is outstanding. Borrower will
pay Lender at Lender's address shown above or at such other place as Lender may
designate in writing.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the WALL STREET
JOURNAL PRIME RATE (the "Index"). The Index is not necessarily the lowest rate
charged by Lender on its loans. If the Index becomes unavailable during the term
of this loan, Lender may designate a substitute index after notifying Borrower.
Lender will tell Borrower the current Index rate upon Borrower's request. The
interest rate change will not occur more often than each DAY. Borrower
understands that Lender may make loans based on other rates as well. The Index
currently is 8.250%. The interest rate to be applied to the unpaid principal
balance during this Note will be at a rate of 1.500 percentage points over the
Index, resulting in an initial rate of 9.750%. NOTICE: Under no circumstances
will the interest rate on this Note be more than the maximum rate allowed by
applicable law.

PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $100.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to continue
to make payments of accrued unpaid interest. Rather, early payments will reduce
the principal balance due. Borrower agrees not to send Lender payments marked
"paid in full", "without recourse", or similar language. If Borrower sends such
a payment, Lender may accept it without losing any of Lender's rights under this
Note, and Borrower will remain obligated to pay any further amount owed to
Lender. All written communications concerning disputed amounts, including any
check or other payment instrument that indicates that the payment constitutes
"payment on full" of the amount owed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount must be mailed or
delivered to: COMMERCIAL BANK OF CALIFORNIA, Loan Department, 695 TOWN CENTER
DRIVE, SUITE 100 COSTA MESA, CA 92626.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $5.00,
whichever is greater.

INTEREST AFTER DEFAULT. Upon default, the interest rate on this Note shall, if
permitted under applicable law, immediately increase by adding a 5.000
percentage point margin ("Default Rate Margin"). The Default Rate Margin shall
also apply to each succeeding interest rate change that would have applied had
there been no default.

DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note: Payment Default. Borrower fails to make any payment
when due under this Note.

     Other Defaults. Borrower fails to comply with or to perform any other term,
     obligation, covenant or condition contained in this Note or in any of the
     related documents or to comply with or to perform any term, obligation,
     covenant or condition contained in any other agreement between Lender and
     Borrower.

     Default in Favor of Third Parties. Borrower or any Grantor defaults under
     any loan, extension of credit, security agreement, purchase or sales
     agreement, or any other agreement, in favor of any other creditor or person
     that may materially affect any of Borrower's property or Borrower's ability
     to repay this Note or perform Borrower's obligations under this Note or any
     of the related documents.

     False Statements. Any warranty, representation or statement made or
     furnished to Lender by Borrower or on Borrower's behalf under this Note or
     the related documents is false or misleading in any material respect,
     either now or at the time made or furnished or becomes false or misleading
     at any time thereafter.

     Insolvency. The dissolution or termination of Borrower's existence as a
     going business, the insolvency of Borrower, the appointment of a receiver
     for any part of Borrower's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Borrower or by any
     governmental agency against any collateral securing the loan. This includes
     a garnishment of any of Borrower's accounts, including deposit accounts,
     with Lender. However, this Event of Default shall not apply if there is a
     good faith dispute by Borrower as to the validity or reasonableness of the
     claim which is the basis of the creditor or forfeiture proceeding and if
     Borrower gives Lender written notice of the creditor or forfeiture
     proceeding and deposits with Lender monies or a surety bond for the
     creditor or forfeiture proceeding, in an amount determined by Lender, in
     its sole discretion, as being an adequate reserve or bond for the dispute.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any guarantor, endorser, surety, or accommodation party of any of the
     indebtedness or any guarantor, endorser, surety, or accommodation party
     dies or becomes incompetent, or revokes or disputes the validity of, or
     liability under, any guaranty of the indebtedness evidenced by this Note.
     In the event of a death, Lender, at its option, may, but shall not be
     required to, permit the guarantor's estate to assume unconditionally the
     obligations arising under the guaranty in a manner satisfactory to Lender,
     and, in doing so, cure any Event of Default.

     Change In Ownership. Any change in ownership of twenty-five percent (25%)
     or more of the common stock of Borrower.

     Adverse Change. A material adverse change occurs in Borrower's financial
     condition, or Lender believes the prospect of payment or performance of
     this Note is impaired.

     Insecurity. Lender in good faith believes itself insecure.

     Cure Provisions. If any default, other than a default in payment is curable
     and if Borrower has not been given a notice of a breach of the same
     provision of this Note within the preceding twelve (12) months, it may be
     cured if Borrower, after receiving written notice from Lender demanding
     cure of such default: (1) cures the default within fifteen (15) days; or
     (2) if the cure requires more than fifteen (15) days, immediately initiates
     steps which Lender deems in Lender's sole discretion to be sufficient to
     cure the default and thereafter continues and completes all reasonable and
     necessary steps sufficient to produce compliance as soon as reasonably
     practical.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance under this Note and all accrued unpaid interest immediately due, and
then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and Lender's legal expenses, whether or not there is a lawsuit, including
attorneys' fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and

<PAGE>

                                 PROMISSORY NOTE
Loan No: 0100000250                (Continued)                            Page 2
================================================================================

appeals. Borrower also will pay any court costs, in addition to all other sums
provided by law.

GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Note has been
accepted by Lender in the State of California.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of ORANGE County, State of California.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $20.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in ail Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

COLLATERAL. Borrower acknowledges this Note is secured by the following
collateral described in the security instrument listed herein: inventory,
chattel paper, accounts, equipment and general intangibles described in a
Commercial Security Agreement dated February 20, 2007.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or as
provided in this paragraph. Lender may, but need not, require that all oral
requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender's
office shown above. The following persons currently are authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender's address shown above, written notice of revocation of
their authority: ZACKARY IRANI; and JANET MOORE. Borrower agrees to be liable
for all sums either: (A) advanced in accordance with the instructions of an
authorized person or (B) credited to any of Borrower's accounts with Lender. The
unpaid principal balance owing on this Note at any time may be evidenced by
endorsements on this Note or by Lender's internal records, including daily
computer print-outs.

ARBITRATION. Borrower and Lender agree that all disputes, claims and
controversies between them whether individual, joint, or class in nature,
arising from this Note or otherwise, including without limitation contract and
tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association in effect at the time the claim is filed, upon request
of either party. No act to take or dispose of any collateral securing this Note
shall constitute a waiver of this arbitration agreement or be prohibited by this
arbitration agreement. This includes, without limitation, obtaining injunctive
relief or a temporary restraining order; invoking a power of sale under any deed
of trust or mortgage; obtaining a writ of attachment or imposition of a
receiver; or 'exercising any rights relating to personal property, including
taking or disposing of such property with or without judicial process pursuant
to Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any collateral securing this Note, including
any claim to rescind, reform, or otherwise modify any agreement relating to the
collateral securing this Note, shall also be arbitrated, provided however that
no arbitrator shall have the right or the power to enjoin or restrain any act of
any party. Borrower and Lender agree that in the event of an action for judicial
foreclosure pursuant to California Code of Civil Procedure Section 726, or any
similar provision in any other state, the commencement of such an action will
not constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully may be
referred to arbitration. Judgment upon any award rendered by any arbitrator may
be entered in any court having jurisdiction. Nothing in this Note shall preclude
any party from seeking equitable relief from a court of competent jurisdiction.
The statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of an action for these purposes. The
Federal Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive any applicable statute of limitations, presentment, demand for
payment, and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
PROMISSORY NOTE.

BORROWER:

BIOMERICA, INC.

By: /s/ Zackary Irani
    -----------------------------------------
    ZACKARY IRANI, Chief Executive Officer of
    BIOMERICA, INC.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>9
<FILENAME>biomerica_10qex99-4.txt
<DESCRIPTION>PROMISSORY NOTE
<TEXT>
<PAGE>

                                                                    Exhibit 99.4

COMMERCIAL BANK
Of California

                                     PROMISSORY NOTE
<TABLE>
<S>     <C>
- ------------------------------------------------------------------------------------------
 Principal    Loan Date    Maturity     Loan No    Call/Coll  Account   Officer   Initials
- ------------------------------------------------------------------------------------------
$200,000.00  02-20-2007   12-01-2011   0100000251    04A/03               111
- ------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability
   of this document to any particular loan or item. Any item above containing "***" has
                       been omitted due to text length limitations.
- ------------------------------------------------------------------------------------------

Borrower:  BIOMERICA, INC.                     Lender: COMMERCIAL BANK OF CALIFORNIA
           1533 MONROVIA AVENUE                        695 TOWN CENTER DRIVE, SUITE 100
           NEWPORT BEACH, CA 92663                     COSTA MESA, CA 92626
==========================================================================================

Principal Amount: $200,000.00     Initial Rate: 9.500%     Date of Note: February 20, 2007
</TABLE>

PROMISE TO PAY. BIOMERICA, INC. ("Borrower") promises to pay to COMMERCIAL BANK
OF CALIFORNIA ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Two Hundred Thousand & 00/100 Dollars
($200,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in accordance with the following payment
schedule:

     9 monthly consecutive interest payments, beginning April 1, 2007, with
     interest calculated on the unpaid principal balances at an interest rate
     based on the WALL STREET JOURNAL PRIME RATE (currently 8.250%) plus a
     margin of 1.250 percentage points, resulting in an initial rate of 9.500%;
     47 monthly consecutive principal and interest payments in the initial
     amount of $5,038.21 each, beginning January 1, 2008, with interest
     calculated on the unpaid principal balances at an interest rate of 9.500%;
     and one principal and interest payment of $5,038.46 on December 1, 2011,
     with interest calculated on the unpaid principal balances at an interest
     rate of 9.500%. This estimated final payment is based on the assumption
     that all payments will be made exactly as scheduled and that the index does
     not change; the actual final payment will be for all principal and accrued
     interest not yet paid, together with any other unpaid amounts under this
     Note.

Unless otherwise agreed or required by applicable law, payments will be applied
first to any accrued unpaid interest; then to principal; then to any unpaid
collection costs; and then to any late charges. The annual interest rate for
this Note is computed on a 365/360 basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the WALL STREET
JOURNAL PRIME RATE (the "Index"). The Index is not necessarily the lowest rate
charged by Lender on its loans. If the Index becomes unavailable during the term
of this loan, Lender may designate a substitute index after notifying Borrower.
Lender will tell Borrower the current Index rate upon Borrower's request. The
interest rate change will not occur more often than each DAY. Borrower
understands that Lender may make loans based on other rates as well. The Index
currently is 8.250%. The interest rate to be applied to the unpaid principal
balance during this Note will be at a rate of 1.250 percentage points over the
Index, resulting in an initial rate of 9.500%. NOTICE: Under no circumstances
will the interest rate on this Note be more than the maximum rate allowed by
applicable law.

PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $100.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to continue
to make payments of accrued unpaid interest. Rather, early payments will reduce
the principal balance due. Borrower agrees not to send Lender payments marked
"paid in full", "without recourse", or similar language. If Borrower sends such
a payment, Lender may accept it without losing any of Lender's rights under this
Note, and Borrower will remain obligated to pay any further amount owed to
Lender. All written communications concerning disputed amounts, including any
check or other payment instrument that indicates that the payment constitutes
"payment in full" of the amount owed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount must be mailed or
delivered to: COMMERCIAL BANK OF CALIFORNIA, Loan Department, 695 TOWN CENTER
DRIVE, SUITE 100 COSTA MESA, CA 92626.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment or $5.00,
whichever is greater.

INTEREST AFTER DEFAULT. Upon default, the interest rate on this Note shall, if
permitted under applicable law, immediately increase by adding a 5.000
percentage point margin ("Default Rate Margin"). The Default Rate Margin shall
also apply to each succeeding interest rate change that would have applied had
there been no default.

DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:

     Payment Default. Borrower fails to make any payment when due under this
     Note.

     Other Defaults. Borrower fails to comply with or to perform any other term,
     obligation, covenant or condition contained in this Note or in any of the
     related documents or to comply with or to perform any term, obligation,
     covenant or condition contained in any other agreement between Lender and
     Borrower.

     False Statements. Any warranty, representation or statement made or
     furnished to Lender by Borrower or on Borrower's behalf under this Note or
     the related documents is false or misleading in any material respect,
     either now or at the time made or furnished or becomes false or misleading
     at any time thereafter.

     Insolvency. The dissolution or termination of Borrower's existence as a
     going business, the insolvency of Borrower, the appointment of a receiver
     for any part of Borrower's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Borrower or by any
     governmental agency against any collateral securing the loan. This includes
     a garnishment of any of Borrower's accounts, including deposit accounts,
     with Lender. However, this Event of Default shall not apply if there is a
     good faith dispute by Borrower as to the validity or reasonableness of the
     claim which is the basis of the creditor or forfeiture proceeding and if
     Borrower gives Lender written notice of the creditor or forfeiture
     proceeding and deposits with Lender monies or a surety bond for the
     creditor or forfeiture proceeding, in an amount determined by Lender, in
     its sole discretion, as being an adequate reserve or bond for the dispute.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any guarantor, endorser, surety, or accommodation party of any of the
     indebtedness or any guarantor, endorser, surety, or accommodation party
     dies or becomes incompetent, or revokes or disputes the validity of, or
     liability under, any guaranty of the indebtedness evidenced by this Note.
     In the event of a death, Lender, at its option, may, but shall not be
     required to, permit the guarantor's estate to assume unconditionally the
     obligations arising under the guaranty in a manner satisfactory to Lender,
     and, in doing so, cure any Event of Default.

     Change In Ownership. Any change in ownership of twenty-five percent (25%)
     or more of the common stock of Borrower.

     Adverse Change. A material adverse change occurs in Borrower's financial
     condition, or Lender believes the prospect of payment or performance of
     this Note is impaired.

     Insecurity. Lender in good faith believes itself insecure.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance under this Note and all accrued unpaid interest immediately due, and
then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and Lender's legal expenses, whether or not there is a lawsuit, including
attorneys' fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals. Borrower also
will pay any court costs, in addition to all other sums provided by law.

<PAGE>

GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of
California without regard to its conflicts of law provisions. This Note has been
accepted by Lender in the State of California.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of ORANGE County, State of California.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $20.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

COLLATERAL. Borrower acknowledges this Note is secured by the following
collateral described in the security instrument listed herein: inventory,
chattel paper, accounts, equipment and general intangibles described in a
Commercial Security Agreement dated February 20, 2007.

LINE OF CREDIT. This Note evidences a straight line of credit. Once the total
amount of principal has been advanced, Borrower is not entitled to further loan
advances. Advances under this Note may be requested either Orally or in writing
by Borrower or as provided in this paragraph. Lender may, but need not, require
that all oral requests be confirmed in writing. All communications,
instructions, or directions by telephone or otherwise to Lender are to be
directed to Lender's office shown above. The following persons currently are
authorized to request advances and authorize payments under the line of credit
until Lender receives from Borrower, at Lender's address shown above, written
notice of revocation of their authority: ZACKARY IRANI; and JANET MOORE.
Borrower agrees to be liable for ell sums either: (A) advanced in accordance
with the instructions of an authorized person or (B) credited to any of
Borrower's accounts with Lender. The unpaid principal balance owing on this Note
at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs.

ARBITRATION. Borrower and Lender agree that all disputes, claims end
controversies between them whether individual, joint, or class in nature,
arising from this Note or otherwise, including without limitation contract and
tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association in effect at the time the claim is filed, upon request
of either party. No act to take or dispose of any collateral securing this Note
shall constitute a waiver of this arbitration agreement or be prohibited by this
arbitration agreement. This includes, without limitation, obtaining injunctive
relief or a temporary restraining order; invoking a power of sale under any deed
of trust or mortgage; obtaining a writ of attachment or imposition of a
receiver; or exercising any rights relating to personal property, including
taking or disposing of such property with or without judicial process pursuant
to Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any collateral securing this Note, including
any claim to rescind, reform, or otherwise modify any agreement relating to the
collateral securing this Note, shall also be arbitrated, provided however that
no arbitrator shall have the right or the power to enjoin or restrain any act of
any party. Borrower and Lender agree that in the event of an action for judicial
foreclosure pursuant to California Code of Civil Procedure Section 726, or any
similar provision in any other state, the commencement of such an action will
not constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully may be
referred to arbitration. Judgment upon any award rendered by any arbitrator may
be entered in any court having jurisdiction. Nothing in this Note shall preclude
any party from seeking equitable relief from a court of competent jurisdiction.
The statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of an action for these purposes. The
Federal Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive any applicable statute of limitations, presentment, demand for
payment, and notice of dishonor. Upon any change in the terms of this Note, and
unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability. All such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect Lender's
security interest in the collateral; and take any other action deemed necessary
by Lender without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:

BIOMERICA, INC.

By: /s/ Zackary Irani
    -----------------------------------------
    ZACKARY IRANI, Chief Executive Officer of
    BIOMERICA, INC.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5
<SEQUENCE>10
<FILENAME>biomerica_10qex99-5.txt
<DESCRIPTION>SUBORDINATION AGREEMENT
<TEXT>
<PAGE>

                                                                    Exhibit 99.5

COMMERCIAL BANK
Of California

                                  SUBORDINATION AGREEMENT
<TABLE>
<S>     <C>
- ------------------------------------------------------------------------------------------
 Principal    Loan Date    Maturity     Loan No    Call/Coll  Account   Officer   Initials
- ------------------------------------------------------------------------------------------
$200,000.00  02-20-2007   09-01-2008   0100000250    04A/03               111
- ------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability
   of this document to any particular loan or item. Any item above containing "***" has
                       been omitted due to text length limitations.
- ------------------------------------------------------------------------------------------

Borrower:  BIOMERICA, INC.                     Lender: COMMERCIAL BANK OF CALIFORNIA
           1533 MONROVIA AVENUE                        695 TOWN CENTER DRIVE, SUITE 100
           NEWPORT BEACH, CA 92663                     COSTA MESA, CA 92626

Creditor: JANET MOORE, Trustee of THE JANET MOORE
          TRUST DATED AUGUST 21, 1998
          JANET MOORE, Individual
          1533 MONROVIA AVENUE
          NEWPORT BEACH, CA 92663
==========================================================================================
</TABLE>

THIS SUBORDINATION AGREEMENT dated February 20, 2007, is made and executed among
BIOMEIRICA, INC.; 1533 MONROVIA AVENUE; NEWPORT BEACH, CA 92663 ("Borrower");
JANET MOORE, Trustee of THE JANET MOORE TRUST DATED AUGUST 21, 1998 under the
provisions of a trust agreement dated August 21, 1998; and JANET MOORE,
Individually; 1533 MONROVIA AVENUE; NEWPORT BEACH, CA 92663 ("Creditor"); and
COMMERCIAL BANK OF CALIFORNIA, 695 TOWN CENTER DRIVE, SUITE 100, COSTA MESA, CA
92626 ("Lender").

REQUESTED FINANCIAL ACCOMMODATIONS. Creditor and Borrower each want Lender to
provide financial accommodations to Borrower in the form of (A) new credit or
loan advances, (B) an extension of time to pay or other compromises regarding
all or part of Borrower's present indebtedness to Lender, or (C) other benefits
to Borrower. Borrower and Creditor each represent and acknowledge to Lender that
Creditor will benefit as a result of these financial accommodations from Lender
to Borrower, and Creditor acknowledges receipt of valuable consideration for
entering into this Agreement. Based on the representations and acknowledgments
contained in this Agreement, Borrower and Creditor agree with Lender as follows:

SUBORDINATED INDEBTEDNESS. The words "Subordinated Indebtedness" as used in this
Agreement mean the following specific indebtedness from Borrower to Creditor,
including all renewals, extensions, modifications and substitutions for the
indebtedness, including principal, interest, and all costs and attorneys' fees,
relating to the indebtedness: $234,426.00.

SUPERIOR INDEBTEDNESS. The words "Superior Indebtedness" as used in this
Agreement mean and include all present and future indebtedness, obligations,
liabilities, claims, rights, and demands of any kind which may be now or
hereafter owing from Borrower to Lender. The term "Superior Indebtedness" is
used in its broadest sense and includes without limitation all principal, all
interest, all costs, attorneys' fees, all sums paid for the purpose of
protecting Lender's rights in security (such as paying for insurance on
collateral if the owner fails to do so), all contingent obligations of Borrower
(such as a guaranty), all obligations arising by reason of Borrower's accounts
with Lender (such as an overdraft on a checking account), and all other
obligations of Borrower to Lender, secured or unsecured, of any nature
whatsoever.

SUBORDINATION. All Subordinated Indebtedness of Borrower to Creditor is and
shall be subordinated in all respects to all Superior Indebtedness of Borrower
to Lender. If Creditor holds one or more Security Interests, whether now
existing or hereafter acquired, in any of Borrower's real property or personal
property, Creditor also subordinates all Creditor's Security Interests to all
Security Interests held by Lender, whether now existing or hereafter acquired.

PAYMENTS TO CREDITOR. Borrower will not make and Creditor will not accept, at
any time while any Superior Indebtedness is owing to Lender, (A) any payment
upon any Subordinated Indebtedness, (B) any advance, transfer, or assignment of
assets to Creditor in any form whatsoever that would reduce at any time or in
any way the amount of Subordinated Indebtedness, or (C) any transfer of any
assets as security for the Subordinated Indebtedness, except upon Lender's prior
written consent.

In the event of any distribution, division, or application, whether partial or
complete, voluntary or involuntary, by operation of law or otherwise, of all or
any part of Borrower's assets, or the proceeds of Borrower's assets, in whatever
form, to creditors of Borrower or upon any indebtedness of Borrower, whether by
reason of the liquidation, dissolution or other winding-up of Borrower, or by
reason of any execution sale, receivership, insolvency, or bankruptcy
proceeding, assignment for the benefit of creditors, proceedings for
reorganization, or readjustment of Borrower or Borrower's properties, then and
in such event, (A) the Superior Indebtedness shall be paid in full before any
payment is made upon the Subordinated Indebtedness, and (B) all payments and
distributions, of any kind or character and whether in cash, property, or
securities, which shall be payable or deliverable upon or in respect of the
Subordinated Indebtedness shall be paid or delivered directly to Lender for
application in payment of the amounts then due on the Superior Indebtedness
until the Superior Indebtedness shall have been paid in full.

In order that Lender may establish its right to prove claims and recover for its
own account dividends based on the Subordinated Indebtedness, Creditor does
hereby assign all its right, title, and interest in such claims to Lender.
Creditor further agrees to supply such information and evidence, provide access
to and copies of such of Creditor's records as may pertain to the Subordinated
Indebtedness, and execute such instruments as may be required by Lender to
enable Lender to enforce all such claims and collect all dividends, payments, or
other disbursements which may be made on account of the Subordinated
Indebtedness. For such purposes, Creditor hereby irrevocably authorizes Lender
in its discretion to make and present for or on behalf of Creditor such proofs
of claims on account of the Subordinated Indebtedness as Lender may deem
expedient and proper and to vote such claims in any such proceeding and to
receive and collect any and all dividends, payments, or other disbursements made
thereon in whatever form the same may be paid or issued and to apply the same on
account of the Superior Indebtedness.

Should any payment, distribution, security, or proceeds thereof be received by
Creditor at any time on the Subordinated Indebtedness contrary to the terms of
this Agreement, Creditor immediately will deliver the same to Lender in
precisely the form received (except for the endorsement or assignment of
Creditor if necessary), for application on or to secure the Superior
Indebtedness, whether it is due or not due, arid until so delivered the same
shall be held in trust by Creditor as property of Lender. In the event Creditor
fails to make any such endorsement or assignment, Lender, or any of its officers
on behalf of Lender, is hereby irrevocably authorized by Creditor to make the
same.

CREDITOR'S NOTES. Creditor agrees to deliver to Lender, at Lender's request, all
notes of Borrower to Creditor, or other evidence of the Subordinated
Indebtedness, now held or hereafter acquired by Creditor, while this Agreement
remains in effect. At Lender's request, Borrower also will execute and deliver
to Creditor a promissory note evidencing any book account or claim now or
hereafter owed by Borrower to Creditor, which note also shall be delivered by
Creditor to Lender. Creditor agrees not to sell, assign, pledge or otherwise
transfer any of such notes except subject to all the terms and conditions of
this Agreement.

CREDITOR'S REPRESENTATIONS AND WARRANTIES. Creditor represents and warrants to
Lender that: (A) no representations or agreements of any kind have been made to
Creditor which would limit or qualify in any way the terms of this Agreement;
(B) this Agreement is executed at Borrower's request and not at the request of
Lender; (C) Lender has made no representation to Creditor as to the
creditworthiness of Borrower; and (D) Creditor has established adequate means of
obtaining from Borrower on a continuing basis information regarding Borrower's
financial condition. Creditor agrees to keep adequately informed from such means
of any facts, events, or circumstances which might in any way affect Creditor's
risks under this Agreement, and Creditor further agrees that Lender shall have
no obligation to disclose to Creditor information or material acquired by Lender
in the course of its relationship with Borrower.

CREDITOR'S WAIVERS. Creditor waives any right to require Lender: (A) to make,
extend, renew, or modify any loan to I3orrower or to grant any other financial
accommodations to Borrower whatsoever; (B) to make any presentment, protest,
demand, or notice of any kind, including notice of any nonpayment of the
Superior Indebtedness or of any nonpayment related to any Security Interests, or
notice of any action or nonaction on the part of Borrower, Lender, any surety,
endorser, or other guarantor in connection with the Superior Indebtedness, or in
connection with the creation of new or additional Superior Indebtedness; (C) to
resort for payment or to proceed directly or at once against any person,
including Borrower; (D) to proceed directly against or exhaust any Security
Interests held by Lender from Borrower, any other guarantor, or any other
person; (E) to pursue any other remedy within Lender's power; or (F) to commit
any act or omission of any kind, at any time, with respect to any matter
whatsoever.

LENDER'S RIGHTS. Lender may take or omit any and all actions with respect to the
Superior Indebtedness or any Security Interests for the Superior Indebtedness
without affecting whatsoever any of Lender's rights under this Agreement. In
particular, without limitation, Lender may, without notice of any kind to
Creditor, (A) make one or more additional secured or unsecured loans to
Borrower; (B) repeatedly alter, compromise, renew, extend, accelerate, or
otherwise change the time for payment or other terms of the Superior
Indebtedness or any part thereof, including increases and decreases of the rate
of interest on the Superior Indebtedness; extensions may be repeated and may be
for longer than the original loan term; (C)

<PAGE>

                             SUBORDINATION AGREEMENT
Loan No: 0100000250                (Continued)                            Page 2
================================================================================

take and hold Security Interests for the payment of the Superior Indebtedness,
and exchange, enforce, waive, and release any such Security Interests, with or
without the substitution of new collateral; (D) release, substitute, 'agree not
to sue, or deal with any one or more of Borrower's sureties, endorsers, or
guarantors on any terms or manner Lender chooses; (E) determine how, when and
what application of payments and credits, shall be made on the Superior
Indebtedness; (F) apply such security and direct the order or manner of sale
thereof, as Lender in its discretion may determine; and (G) assign this
Agreement in whole or in part.

DEFAULT BY BORROWER. If Borrower becomes insolvent or bankrupt, this Agreement
shall remain in full force and effect.

DURATION AND TERMINATION. This Agreement will take effect when received by
Lender, without the necessity of any acceptance by Lender, in writing or
otherwise, and will remain in full force and effect until Creditor shall motify
Lender in writing at the address shown above to the contrary. Any such notice
shall not affect the Superior Indebtedness owed Lender by Borrower at the time
of such notice, nor shall such notice affect Superior Indebtedness thereafter
granted in compliance with a commitment made by Lender to Borrower prior to
receipt of such notice, nor shall such notice affect any renewals of or
substitutions for any of the foregoing. Such notice shall affect only
indebtedness of Borrower to Lender arising after receipt of such notice and not
arising from financial assistance granted by Lender to Borrower in compliance
with Lender's obligations under a commitment. Any notes lodged with Lender
pursuant to the section titled "Creditor's Notes" above need not be returned
until this Agreement has no further force or effect.

OTHER TERMS AND CONDITIONS. The following provisions are a part of this
Agreement: Borrower may make payments to Creditor so long as Borrower is not in
default under any agreement between Lender and Borrower.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     Amendments. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement. No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
     party or parties sought to be charged or bound by the alteration or
     amendment.

     Arbitration. Borrower and Creditor and Lender agree that all disputes,
     claims and controversies between them whether individual, joint, or class
     in nature, arising from this Agreement or otherwise, including without
     limitation contract and tort disputes, shall be arbitrated pursuant to the
     Rules of the American Arbitration Association in effect at the time the
     claim is filed, upon request of either party. No act to take or dispose of
     any Collateral shall constitute a waiver of this arbitration agreement or
     be prohibited by this arbitration agreement. This includes, without
     limitation, obtaining injunctive relief or a temporary restraining order;
     invoking a power of sale under any deed of trust or mortgage; obtaining a
     writ of attachment or imposition of a receiver; or exercising any rights
     relating to personal property, including taking or disposing of such
     property with or without judicial process pursuant to Article 9 of the
     Uniform Commercial Code. Any disputes, claims, or controversies concerning
     the lawfulness or reasonableness of any act, or exercise of any right,
     concerning any Collateral, including any claim to rescind, reform, or
     otherwise modify any agreement relating to the Collateral, shall also be
     arbitrated, provided however that no arbitrator shall have the right or the
     power to enjoin or restrain any act of any party. Borrower and Creditor and
     Lender agree that in the event of an action for judicial foreclosure
     pursuant to California Code of Civil Procedure Section 726, or any similar
     provision in any other state, the commencement of such an action will not
     constitute a waiver of the right to arbitrate and the court shall refer to
     arbitration as much of such action, including counterclaims, as lawfully
     may be referred to arbitration. Judgment upon any award rendered by any
     arbitrator may be entered in any court having jurisdiction. Nothing in this
     Agreement shall preclude any party from seeking equitable relief from a
     court of competent jurisdiction. The statute of limitations, estoppel,
     waiver, laches, and similar doctrines which would otherwise be applicable
     in an action brought by a party shall be applicable in any arbitration
     proceeding, and the commencement of an arbitration proceeding shall be
     deemed the commencement of an action for these purposes. The Federal
     Arbitration Act shall apply to the construction, interpretation, and
     enforcement of this arbitration provision.

     Attorneys' Fees; Expenses. Creditor agrees to pay upon demand elf of
     Lender's costs and expenses, including Lender's attorneys' fees and
     Lender's legal expenses, incurred in connection with the enforcement of
     this Agreement. Lender may hire or pay someone else to help enforce this
     Agreement, and Creditor shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Creditor also shall pay all court costs
     and such additional fees as may be directed by the court.

     Authority. The person who signs this Agreement as or on behalf of Creditor
     represents and warrants that he or she has authority to execute this
     Agreement and to subordinate the Subordinated Indebtedness and the
     Creditor's security interests in Creditor's property, if any.

     Caption Headings. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     Governing Law. This Agreement will be governed by federal law applicable to
     Lender and, to the extent not preempted by federal law, the laws of the
     State of California without regard to its conflicts of law provisions. This
     Agreement has been accepted by Lender in the State of California.

     Choice of Venue. If there is a lawsuit, Creditor agrees upon Lender's
     request to submit to the jurisdiction of the courts of ORANGE County, State
     of California.

     Interpretation. In all cases where there is more than one Creditor, then
     all words used in this Agreement in the singular shall be deemed to have
     been used in the plural where the context and construction so require; and
     where there is more than one Creditor named in this Agreement or when this
     Agreement is executed by more than one , the words "Creditor" shall mean
     all and any one or more of them. Reference to the phrase "Creditor"
     includes the heirs, successors, assigns, and transferees of each of them.

     Successors and Assigns. This Agreement shall be understood to be for the
     benefit of Lender and for such other person or persons as may from time to
     time become or be the holder or owner of any of the Indebtedness or any
     interest therein, and this Agreement shall be transferable to the same
     extent and with the same force and effect as any such Indebtedness may be
     transferable.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Agreement unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Agreement shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Agreement: No prior waiver by
     Lender, nor any course of dealing between Lender and Creditor, shall
     constitute a waiver of any of Lender's rights or of any of Creditor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Agreement, the granting of such consent by Lender in
     any instance shall not constitute continuing consent to subsequent
     instances where such consent is required and in all cases such consent may
     be granted or withheld in the sole discretion of Lender.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:

     Agreement. The word "Agreement" means this Subordination Agreement, as this
     Subordination Agreement may be amended or modified from time to time,
     together with all exhibits and schedules attached to this Subordination
     Agreement from time to time.

     Borrower. The word "Borrower" means BIOMERICA, INC. and includes all
     co-signers and co-makers signing the Note and all their successors and
     assigns.

     Creditor. The word "Creditor" means JANET MOORE, Trustee of THE JANET MOORE
     TRUST DATED AUGUST 21, 1998 under the provisions of a trust agreement dated
     August 21, 1998; and JANET MOORE, Individually.

     Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
     the Note or Related Documents, including all principal and interest
     together with all other indebtedness and costs and expenses for which
     Borrower is responsible under this Agreement or under any of the Related
     Documents.

     Lender. The word "Lender" means COMMERCIAL BANK OF CALIFORNIA, its
     successors and assigns.

     Note. The word "Note" means any and all of Borrower's indebtedness to
     Lender and is used in the most comprehensive sense and means and include
     any and all of Borrower's liabilities, obligations and debts to Lender, now
     existing or hereinafter incurred or created, together with all renewals of,
     extensions of, modifications of, refinancings of, consolidations of, and
     substitution for the Related Documents.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

     Security Interest. The words "Security Interest" mean, without limitation,
     any and all types of collateral security, present and future, whether in
     the form of a lien, charge, encumbrance, mortgage, deed of trust, security
     deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel
     mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
     trust receipt, lien or title retention contract, lease or consignment
     intended as a security device, or any other security or lien interest
     whatsoever whether created by law, contract, or otherwise.

<PAGE>

                             SUBORDINATION AGREEMENT
Loan No: 0100000250                (Continued)                            Page 3
================================================================================

     Subordinated Indebtedness. The words "Subordinated Indebtedness" mean the
     indebtedness described in the section of this Agreement titled
     "Subordinated Indebtedness".

     Superior Indebtedness. The words "Superior Indebtedness" mean the
     indebtedness described in the section of this Agreement titled "Superior
     Indebtedness".

BORROWER AND CREDITOR EACH ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
SUBORDINATION AGREEMENT, AND BORROWER AND CREDITOR EACH AGREE TO ITS TERMS. THIS
AGREEMENT IS DATED FEBRUARY 20, 2007.

BORROWER:


BORROWER:

BIOMERICA, INC.

By: /s/ Zackary Irani
    -----------------------------------------
    ZACKARY IRANI, Chief Executive Officer of
    BIOMERICA, INC.

CREDITOR:

/s/ Janet Moore
- ---------------------------------------------
JANET MOORE, Trustee of THE JANET MOORE
TRUST DATED AUGUST 21, 1998 under the
provisions of a Trust Agreement dated
August 21, 1998

/s/ Janet Moore
- ---------------------------------------------
JANET MOORE, Individually

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.6
<SEQUENCE>11
<FILENAME>biomerica_10qex99-6.txt
<DESCRIPTION>SECOND AMENDMENT OF THE NOTE
<TEXT>
<PAGE>

                                                                    EXHIBIT 99.6
                                SECOND AMENDMENT
                                     of the
                      Note, Loan and Modification Agreement

         This Second Amendment of the Note, Loan and Modification Agreement
(this "AMENDMENT") is effective as of March 9, 2007 by and among BIOMERICA,
INC., a Delaware corporation ("BORROWER") and Janet Moore as Trustee of the
JANET MOORE TRUST DATED AUGUST 21, 1998 ("LENDER") and JANET MOORE, as an
individual ("MOORE").

                                    Recitals
                                    --------

         A. Under the Loan Agreement, dated September 12, 2000 between Borrower
and Lender, as modified by the Loan Modification, Forbearance and Security
Agreement dated March 12, 2004 among Borrower, Lender and Moore and by the
Amendment of the Note, Loan and Modification Agreement dated as of September 1,
2004 (collectively, as amended, restated, otherwise modified or extended from
time to time, the "LOAN AGREEMENT"), Lender agreed to make a loan (the "LOAN")
to Borrower. The Loan is evidenced by the Amended and Restated Promissory Note,
dated March 19, 2004, in principal amount of $313,318.00, as the same may have
been further amended or extended from time to time (the "NOTE" and, together
with the Loan Agreement and any and all other agreements, instruments or
documents executed in connection with the Loan, the "LOAN DOCUMENTS"). This
Amendment is a Loan Document.

         B. As of the date of this Agreement, the outstanding principal balance
of the Loan is $234,426, plus accrued interest accrued from February 28, 2007.

         C. As of the date of this Agreement, Borrower has failed to pay to
Lender in the amount of $53,250 (the "OVERDUE PRINCIPAL"), which is due and
payable under the Loan Agreement. Accordingly, Borrower is currently in default
under the Loan Agreement and the other Loan Documents.

         D. Borrower has requested Lender and Moore to enter into the
Subordination Agreement dated March 9, 2007 (the "COMMERCIAL SUBORDINATION
AGREEMENT") among Borrower, Lender, Moore and Commercial Bank of California
("COMMERCIAL"), in connection with one or more loans or extensions of credit
(the "COMMERCIAL LOAN") between Borrower and Commercial. Commercial's agreement
to provide the Commercial Loan to Borrower is conditioned upon, among other
things, the execution and delivery of the Commercial Subordination Agreement.

         E. In order to induce Lender and Moore to enter into the Commercial
Subordination Agreement and to waive certain defaults under the Loan Documents,
the parties have agreed to enter into this Agreement, as set forth below.

<PAGE>

         NOW THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree to modify the Loan
Documents as follows:


                                    Agreement
                                    ---------

         1. RECITALS. Borrower, Lender and Moore agree that the Recitals above
are true and correct and are a part of this Agreement.

         2. REAFFIRMATION OF LOAN. Borrower reaffirms all of its obligations
arising under or with respect to the Loan, and Borrower acknowledges that it has
no claims, offsets or defenses with respect to the payment of sums due under the
Note, the Loan Agreement or any other Loan Documents.

         3. DEFAULTS. Lender agrees that any and all defaults or events of
default which may have occurred solely as a result of Borrower's failure to
repay the Overdue Principal when due are hereby waived, but Lender expressly
reserves any and all rights and remedies of Lender with respect to any other
defaults or events of default which may have occurred and may now be continuing
or which may occur after the date hereof.

         4. EXISTING COLLATERAL. Borrower hereby ratifies, affirms and restates
the security interests previously granted to Borrower to Lender as collateral
for the Loan, in all of Borrower's right, title and interest in and to the
assets of the Borrower, as provided in the Loan Agreement (the "EXISTING
COLLATERAL").

         5. PLEDGE OF LANCER STOCK. In addition to the Existing Collateral,
Borrower is hereby granting to Lender, and Lender shall have security interest
in and to, any capital stock owned or held by Borrower as of the date of this
Agreement in Lancer Orthodontics, Inc., a California corporation ("LANCER"), or
any rights of any kind or nature arising from or incidental to ownership of said
capital stock, including, without limitation, any rights to cash, stock and
other property, dividends and any rights issued or paid on account of or with
respect to such capital stock or proceeds thereof (the "LANCER COLLATERAL" and
together with the Original Collateral, the "COLLATERAL"). In the event Borrower
defaults under this Agreement or any other Loan Documents, Lender shall have all
rights and remedies under the Loan Documents and applicable law. Borrower hereby
irrevocably authorizes Lender at any time and from time to time to file any
financing statements, amendments thereto and continuation statements as
authorized by applicable law, to establish and maintain the validity, perfection
and priority of the security interests in the Collateral granted in this
Amendment and other Loan Documents.


         6. PAYMENTS BY BORROWER TO LENDER. This Amendment establishes the
following payments from the Borrower to the Lender for the Overdue Principal:

                                       2
<PAGE>


         Borrower shall pay Lender the total back payments due of $53,250 no
later than August 31, 2007.

         In addition, Borrower shall pay to Lender all other accrued interest,
principal and other amounts in strict accordance with the Loan Documents.

         7. ADDITIONAL INDEBTEDNESS. Borrower agrees not to have or incur, any
indebtedness or obligations in favor of Commercial or its successors or assigns
which is senior in priority of payment of security under the terms of the
Commercial Subordination Agreement to the indebtedness of Borrower to Lender,
except for, directly or indirectly, the indebtedness incurred under the
Commercial Loan in the aggregate principal amount of Two Hundred Thousand
Dollars ($200,000) and interest and expenses payable with respect to such loan.
Borrower agrees not to amend, extend or modify the Commercial Loan without the
prior consent of Lender.

         9. On August 15, 2006, Lender agreed to an extension of the due date
for the Note until September 1, 2007. Lender further agreed that, effective with
the quarter ended November 30, 2006, the payments of $3,500 per month which are
due upon the achievement of certain financial results as described in such Note,
shall be reduced to $2,000 per month upon the achievement of the same results.

         10. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Lender and Moore as follows:

                  a. All representations and warranties made and given by
         Borrower in the Loan Documents are true, accurate and correct.

                  b. The execution of and performance under the Loan Documents
         (including this Amendment) and the terms of the Commercial Loan, and
         the consummation of the transactions contemplated thereby and hereby
         will not conflict with, result in any breach of, adversely affect, or
         prevent Borrower from entering into, any agreement in connection with
         Borrower's payments of rent currently due.

         11. FEES. Borrower shall pay to Moore, in immediately available funds,
up to $750 in legal costs incurred by Moore in connection with the preparation,
review and negotiation of this Amendment and the Commercial Subordination
Agreement and related agreements, assignments and documents. Furthermore,
Borrower shall indemnify and reimburse Lender and Moore for any liabilities,
losses, claims, actions, costs and expenses (including reasonable legal costs
and expenses) in connection with the Commercial Subordination Agreement, the
enforcement thereof and any other costs and expenses of Lender or Moore required
under the Commercial Subordination Agreement.

         12. OTHER TERMS. All other terms of the Note, the Loan Agreement and
the other Loan Documents not specifically modified by this Amendment remain in
full force and effect.

                                       3
<PAGE>



                       [Signatures on the Following Page]

























                                       4
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized representatives, effective as of the day and
year first above written.

Borrower                                     Lender
- --------                                     ------
BIOMERICA, INC.                              JANET MOORE, as Trustee of the
                                             JANET MOORE TRUST DATED
                                             AUGUST 21, 1998



By: /s/ Zackary S. Irani                     By: /s/ Janet Moore
    --------------------------                   ---------------------------
Name:  Zack S. Irani                         Janet Moore, as Trustee and not
Title: Chief Executive Officer               individually



Moore
- -----

/s/ Janet Moore
- ---------------
JANET MOORE, as an individual


                                       5
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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