U. S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                   FORM 10-QSB

[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities  Exchange
    Act of 1934.
    For the quarterly period ended January 31, 1998.


[ ] Transition  report  pursuant to Section 13 or 15 (d) of the  Securities
    Exchange Act of 1934.

    For the transition period from              to


                  Commission File Number: 0-28666


                         AMERICAN BIO MEDICA CORPORATION
         -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


            New York                                  22-3378935
       -------------------------------------------------------------------
       (State or other jurisdiction                  (I.R.S. Employer
       incorporation or organization)                Identification No.)


                   102 Simons Road, Ancramdale, New York 12503
                   -------------------------------------------
                    (Address of principal executive offices)


                                  800-227-1243
                           ---------------------------
                           (Issuer's telephone number)



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


     Check whether the issuer

(1)  filed  all  reports  required  to be  filed by  Section  13 or 15(d) of the
     Exchange Act during the past 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 [ ]

     State the number of shares  outstanding of each of the issuer's  classes of
common equity as of the latest practicable date:

     13,921,846 Common  Shares  as of  January  31,  1998  60  Convertible  "B"
     Preferred  Shares as of January 31,  1998 45.4  Convertible  "C"  Preferred
     Shares as of January 31, 1998

     Transitional Small Business Disclosure Format Yes [  ]  No [X]
<PAGE>
                                     PART I
                              FINANCIAL INFORMATION

     Item 1. Financial Statements

     The condensed  financial  statements  for the period ended January 31, 1998
included  herein have been  prepared by American  Bio Medica  Corporation,  (the
"Company")  without  audit,  pursuant  to  the  rules  and  regulations  of  the
Securities  and  Exchange  Commission  (the  "Commission").  In the  opinion  of
management,  the statements include all adjustments  necessary to present fairly
the financial position of the Company as of January 31, 1998, and the results of
operations  and cash flows for the nine month periods ended January 31, 1997 and
1998.


                                        2
<PAGE>
                         AMERICAN BIO MEDICA CORPORATION
                                  BALANCE SHEET

                                           April 30,         January 31,
                                             1997               1998
                                                             (Unaudited)
                                        -------------       -------------
                                     Assets

 Current assets
  Cash and cash equivalents             $  1,762,506        $    303,939
  Marketable securities,
    available for sale                     1,053,000           1,899,609
  Accounts receivable                        337,759           1,132,918
  Loan receivable                            102,250             142,000
  Inventory                                  668,723             936,858
  Prepaid expenses                             4,425              13,819
                                        -------------       -------------
  Current assets                           3,928,663           4,429,143

Fixed assets-net                             110,834             137,409
Other assets
  License rights                              38,470
  Patent costs                                28,783              39,077
                                        -------------       -------------
  Total other asset                           67,253              39,077
                                        -------------       -------------
Total assets                            $  4,106,750        $  4,605,629
                                        =============       =============

                      Liabilities and Stockholders' Equity

Current liabilities
  Accounts payable and
   accrued expenses                     $    380,155        $    142,449
                                        -------------       -------------
Total current liabilities                    380,155             142,449

Capital stock
  Common  stock
   -authorized  30,000,000
   common shares, par value
   $.01 per share, at April 30,
   1997 and January 31, 1998
   the common shares  outstanding
   were 13,379,507 and 13,921,846
   respectively.                             133,795             139,218

  Preferred stock
   -authorized 5,000,000
    preferred  shares,  par value
    $.01 per share, at April 30,
    1997 and January 31, 1998 the
    number of preferred shares
    outstanding was 90 and 105.5
    respectively                                  1                    2

 Additional paid in capital               6,499,791            7,858,882
  Retained earnings                      (2,906,992)          (3,534,922)
                                        ------------        -------------
Total stockholders' equity                3,726,595            4,463,180
                                        ------------        -------------
Total liabilities
 and stockholders' equity               $ 4,106,750         $  4,605,629
                                        ============        =============

                 See accompanying notes to financial statements.

                                       3
<PAGE>
                         AMERICAN BIO MEDICA CORPORATION
                             STATEMENT OF OPERATIONS

                                       For the nine         For the nine
                                       months ended         months ended
                                        January 31,          January 31,
                                           1997                 1998
                                        (Unaudited)          (Unaudited)
                                        ------------        ------------

Revenue                                 $   430,501         $ 1,773,948
Less cost of
 goods sold                                 150,421             675,361
                                        ------------        ------------
Gross profit                                280,080           1,098,587

Operations:
  General and
   administrative                           583,569           1,676,196
  Depreciation and
   amortization                              72,490              73,346
Research and
  development                                74,978              96,766
                                        ------------        ------------
Total expenses                              731,037           1,846,308

Income (loss) from
  operations                               (450,957)           (747,721)


Other income and
  expenses
  Retirement of
  debt                                      126,500
  Interest income                             3,595             119,791
                                        ------------        ------------
Total other income
 and expenses                               130,095             119,791
                                        ------------        ------------
Net Profit (Loss)
 from operations                        $  (320,862)        $  (627,930)
                                        ============        ============
 Net income (loss)
  per share                                   $(.02)              ($.05)
                                        ============        ============
Weighted number of
 shares outstanding                      13,718,265          13,737,781
                                       ============        ============


                 See accompanying notes to financial statements.


                                       4
<PAGE>









                         AMERICAN BIO MEDICA CORPORATION
                             STATEMENT OF OPERATIONS

                                        For the three      For the three
                                        months ended        months ended
                                         January 31,        January 31,
                                            1997               1998
                                         (Unaudited)         (Unaudited)
                                        ------------        ------------

Revenue                                 $   381,914         $   500,224
Less cost of
 goods sold                                 124,643             174,023
                                        ------------        ------------
Gross profit                                257,271             326,201

Operations:
  General  and
   administrative                           247,456             934,720
  Depreciation and
   amortization                              49,490              24,673
Research and
  development                                 8,228              47,614
                                        ------------        ------------
Total expenses                              305,174           1,007,007

Income (loss) from
  operations                               ( 47,903)           (680,806)


Other income and
  expenses

  Interest income                             2,259              15,892
                                        ------------        ------------
Total other income
 and expenses                                 2,259              15,892
                                        ------------        ------------
Net Profit (Loss)
 from operations                        $  ( 45,644)        $  (664,914)
                                        ============        ============
 Net income (loss)
  per share                                   $(.00)              $(.05)
                                        ============        ============
Weighted number of
 shares outstanding                      13,718,265          13,737,781
                                        ============        ============













                                        5
 <PAGE>






                         AMERICAN BIO MEDICA CORPORATION
                             STATEMENT OF CASH FLOWS

                                        For the nine        For the nine
                                        months ended        months ended
                                         January 31,         January 31,
                                            1997                1998
                                         (Unaudited)         (Unaudited)
                                        ------------        ------------
CASH FLOWS FROM
 OPERATING ACTIVITIES
Net profit (loss)                        $ (320,862)        $   (627,930)
Retirement of debt                         (126,500)
Amortization and
 depreciation                                72,490               73,346

Adjustments to
 reconcile net
  income to net
 Accounts receivable                       (301,342)            (795,159)
 Prepaid expenses                            (4,425)            (  9,395)
 Inventory                                 (247,726)            (268,135)
 Loan receivable                           (100,000)            ( 39,750)
 Accounts payable
  and accrued expenses                      149,289             (237,705)
                                        ------------         ------------
TOTAL CASH FLOWS
FROM OPERATIONS                            (879,076)          (1,904,728)

CASH FLOW FROM
FINANCING ACTIVITIES
Convertible debenture                      (132,000)
Sale of common shares                     3,983,436            1,364,515
                                        ------------         ------------
TOTAL CASH FLOWS FROM
FINANCING ACTIVITIES                      3,851,436            1,364,515

CASH FLOWS FROM
INVESTING ACTIVITIES
  Marketable securities                  (1,021,867)            (846,609)
  Patent costs                              ( 2,725)            ( 22,652)
  Capital assets                            (82,734)            ( 49,093)
                                        ------------         ------------
TOTAL CASH FLOWS
FROM INVESTING
ACTIVITIES                               (1,107,326)            (918,354)

NET INCREASE
(DECREASE) IN CASH                        1,865,034           (1,458,567)
CASH BALANCE
BEGINNING OF PERIOD                         437,532            1,762,506
                                        ------------         ------------
CASH BALANCE END
 OF PERIOD                              $ 2,302,566         $    303,939
                                        ============        =============

                 See accompanying notes to financial statements.

                                       6
<PAGE>







                         AMERICAN BIO MEDICA CORPORATION
                        STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                    Additional
                    Common      Common      Preferred  Preferred     Paid-in   
 Retained
                    Stock       Stock         Stock      Stock       capital   
 Earnings      Total
                  ----------   ---------    ---------  ---------
<S>               <C>          <C>            <C>        <C>        <C>        
<C>          <C>

04-30-1996        11,977,357   $ 119,774                            $ 2,636,127
$(2,401,671)  $ 354,230
06-04-1996            11,333         113                                  8,387
                  8,500
06-04-1996            25,000         250                                 24,750
                 25,000
07-31-1996(1)        176,000       1,760                                130,240
                132,000
07-31-1996(1)         13,333         133                                  9,867
                 10,000
07-31-1996(2)        100,000       1,000                                 49,000
                 50,000
07-31-1996(3)         32,000         320                                 31,680
                 32,000
07-31-1996(4)        100,000       1,000                                 99,000
                100,000
09-09-1996(3)         18,000         180                                 17,820
                 18,000
09-23-1996(5)                                            $    1       1,409,999
              1,410,000
01-31-1997(6)        697,445       6,975                              2,085,211
              2,092,186
04-30-1997(7)        229,039       2,290                                
(2,290)                      0
04-30-1997          Net loss                                                   
   (505,321)   (505,321)
                  ----------   ---------                 -------    -
----------- ---------  -----------
04-30-1997        13,379,507   $ 133,795                 $    1      $6,499,791
$(2,906,992) $3,726,595

Unaudited
07-31-1997(7)        301,120       3,011                                 (3,011)
10-31-1997                                     (1)           (1)              1
                          0
10-31-1997(6)         10,000         100                                 29,900
                 30,000
10-31-1997(7)        102,914       1,029                                
(1,029)                      0
10-31-1997(8)                                 105.5           2         949,598
                949,600
01-31-1998(6)        128,305       1,283                                383,632
                384,915
01-31-1997         Net loss                                                    
   (627,930)   (627,930)
                  ----------   ---------     ------      -------    -----------
------------ -----------

01-31-1998        13,921,846   $ 139,218      105.5      $    2     $ 7,858,882
$(3,534,922) $4,463,180
                  ==========   =========    =======      =======     ==========
============ ===========
</TABLE>
                                        7
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                        STATEMENT OF STOCKHOLDERS' EQUITY


(1)  Common Shares issued for conversion of debt

(2)  Common Shares issued pursuant to Rule 504 at $.50 per share

(3)  Common Shares issued upon exercise of "B" Warrants

(4)  Common Shares issued upon exercise of "A" Warrants

(5)  Sale of Preferred Shares for $1,500,000 less commissions of $90,000

(6)  Common Shares issued upon exercise of options

(7)  Conversion of Preferred Shares into Common Shares

(8)  Sale of 60 Convertible B Preferred Shares and 45.5 Convertible C Preferred
     Shares




                                      8
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE NINE MONTHS ENDED JANUARY 31, 1998

1. BASIS OF PRESENTATION

     The  accompanying  unaudited  financial  statements  of American Bio Medica
Corporation, (the "Company"),  reflect all adjustments which are, in the opinion
of  management,  necessary  to a fair  statement  of the  results of the interim
periods  presented.  All such adjustments are of a normal recurring nature.  The
financial  statements  should be read in conjunction with the notes to financial
statements  contained in the Company's Annual Report on Form 10-KSB for the year
ended April 30, 1997.

2. INVENTORIES.

     Inventory  has been  recorded  at the  lower of cost or  market  under  the
first-in-first-out method. Inventory components were as follows:

                                            April 30, 1997     January 31, 1998
                                            --------------     ----------------
Books held for resale                        $   43,528          $   13,517

Workplace drug screening tests:
  Raw materials                                 292,456             365,682
  Work in process                               183,500             205,115
  Finished Goods                                149,239             352,544
                                             ----------          ----------
Total workplace drug screening
 tests:                                      $  625,195          $  923,341
                                             ----------          ----------
Total inventory                              $  668,723          $  936,858
                                             ==========          ==========

3. NET INCOME PER SHARE

     Primary  earnings  per share are based on the  weighted  average  number of
common and dilutive common  equivalent shares  outstanding  during each quarter.
The  weighted  average  shares for  computing  primary  earnings  per share were
13,718,265  and  13,737,781  for the quarters  ended  January 31, 1997 and 1998,
respectively

4. ACCOUNTING FOR INCOME TAXES

     The Company follows Statement of Financial  Accounting  Standards  ("SFAS")
No. 109,  "Accounting  for Income  Taxes," which requires an asset and liability
approach of accounting for income taxes. Deferred tax assets and liabilities are
computed  annually for  differences  between  financial  statement basis and tax
basis  of  assets,   liabilities  and  available  general  business  tax  credit
carry-forwards.  A valuation  allowance is established  when necessary to reduce
deferred tax assets to the amount expected to be realized.

                                       9
<PAGE>

5. MARKETABLE SECURITIES

     The Company adopted Financial Accounting Standards Board ("FASB") Statement
No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (the
"Statement")  which  requires that  investments in equity  securities  that have
readily   determinable  fair  values  and  investments  in  debt  securities  be
classified  in  three  categories:  held-to-maturity,   trading  and  available-
for-sale. Based on the nature of the assets held by the Company and management's
investment  strategy,   the  Company's   investments  have  been  classified  as
available-for-sale. Management determines the appropriate classification of debt
securities at the time of purchase and reevaluates  such  designation as of each
balance sheet date.

     Securities classified as  available-for-sale  are carried at estimated fair
value, as determined by quoted market prices,  with unrealized gains and losses,
net of tax, reported in a separate component of stockholders' equity. At January
31, 1998,  the Company had no  investments  that were  classified  as trading or
held-to-maturity as defined by the Statement.

     The following is a summary of cash, cash equivalents and available-for-sale
securities by balance sheet classification at April 30, 1997:

                                                                     Estimated
                                           Gross         Gross          Fair
                                        Unrealized     Unrealized      Market
                              Cost         Gains        Losses         Value
                           ---------   -------------  -----------   -----------
Cash                     $    99,039       $-0-           $-0-      $    99,039
Certificates of deposit
  90 days and less         1,663,467        -0-            -0-        1,663,467
                         -----------   -------------  -----------   -----------
Total cash and cash
   equivalents           $ 1,762,506       $-0-           $-0-      $ 1,762,506
                         ===========   =============  ===========   ===========
Marketable Securities
  Due in one year or
  less Certificates of
  Deposit                $ 1,053,000       $-0-          $-0-       $ 1,053,000
                         ===========   =============  ===========   ===========


                                       10
<PAGE>

     The following is a summary of cash, cash equivalents and available-for-sale
securities by balance sheet classification at January 31, 1998:

                                                                     Estimated
                                           Gross         Gross          Fair
                                        Unrealized     Unrealized      Market
                              Cost         Gains        Losses         Value
                           ---------   -------------  -----------   -----------

Cash                     $   303,939       $-0-          $-0-       $   303,939
Certificates of deposit
  90 days and less              -0-         -0-           -0-               -0-
                         -----------  --------------  -----------   -----------
Total cash and cash
   equivalents           $   303,939       $-0-          $-0-       $   303,939
                         =========== ===============  ===========   ===========
Marketable Securities
  Due in one year or
  less Certificates of
  Deposit                $ 1,899,609       $-0-          $-0-       $ 1,899,609
                         =========== ===============  ===========   ===========

6. Issuance of Capital Stock

a.   Issuance of Common Shares

     The Company  sold  138,305  Common  Shares  through the exercise of 138,305
options for an aggregate consideration of $414,915 or $3.00 per share.

b.   Series B Convertible Preferred Shares

     In September,  1997, the Company sold 60 8% Series B Convertible  Preferred
Shares, ("B Preferred Shares") at $10,000 each for an aggregate of $600,000 less
an 8% commission of $48,000 for net proceeds of $552,000. Each B Preferred Share
(plus  accumulated  but unpaid  dividends)  is  convertible  into common  shares
calculated  by  dividing  $10,000 by the  lesser of $3.50 or 75% of the  average
closing price of the Common Shares for the 20 trading days preceding conversion.
Neither  the  Preferred  Shares  nor the  Common  Shares  into which they may be
converted  may be sold or  transferred  in public  markets  without an effective
registration under the Securities Act of 1933.

     During the period the B Preferred Shares are outstanding, no dividend shall
be paid or set apart for  payment  on the  Common  Shares or any other  class of
shares ranking  junior to the B Preferred  Shares in either payment of dividends
or liquidation  unless full dividends on all outstanding B Preferred Shares have
been  paid in full for all  past  dividend  periods  and the  dividends  for the
current period have been paid or declared and sufficient funds set apart.

     The Company  has agreed to  register  the Common  Shares  underlying  the B
Preferred Shares.
                                       11

<PAGE>

c.   Series C Convertible Preferred Shares

     During  the  month of  September,  1997 the  Company  sold 45.5 8% Series C
Convertible Preferred Shares ("C Preferred Shares") for an aggregate of $455,000
less a 10% commission of $45,500 for net proceeds of $409,500.  Each C Preferred
Share (plus accumulated  dividends) is convertible into Common Shares calculated
by dividing  $10,000 by the lesser of $3.50 or 75% of the average  closing price
of the Common Shares for the 20 trading days preceding conversion. Neither the C
Preferred  Shares nor the Common  Shares into which they may be converted may be
sold or transferred in public markets  without an effective  registration  under
the Securities Act of 1933.

     The Company  has agreed to  register  the Common  Shares  underlying  the C
Preferred Shares.

7. Subsequent Events

     The registration  statement  relating to the Common Shares underlying the B
and C Preferred Shares has become effective.



                                       12

<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
               for the nine months ended January 31, 1997 and 1998
              -----------------------------------------------------

     The Private Securities Litigation Reform Act of 1995 provides a safe harbor
for  forward-looking  statements.  In order to comply with the terms of the safe
harbor,  the Company notes that except for the  description of historical  facts
contained herein,  this Form 10-QSB contains certain forward looking  statements
that involve risks and uncertainties as detailed herein and from time to time in
the Company's filings with the Securities and Exchange Commission and elsewhere.
Such statements are based on management's  current  expectations and are subject
to a number of factors and  uncertainties  which could cause  actual  results to
differ materially from those described in the forward-looking statements.  These
factors  include,  among  others:  (a) the Company's  fluctuations  in sales and
operating   results,   risks  associated  with   international   operations  and
regulatory,  competitive and contractual risks and product development;  (b) the
ability to  achieve  strategic  initiatives,  including  but not  limited to the
ability  to  achieve  sales  growth  across  the  business  segments  through  a
combination  of increased  pricing,  enhanced  sales force,  new  products,  and
improved customer service; and acquisitions.

Results  of  operations  for the nine  months  ended  January  31,  1998 as
compared to the nine months ended January 31, 1997.
--------------------------------------------------------------------------------

     Revenues  from the book segment of the business  were $410,254 for the nine
months ended  January 31, 1998 as compared to $237,538 for the nine months ended
January 31, 1997,  representing an increase of $172,716 or 72.7%.  This increase
in book sales is directly  attributable to the Company's  reorganization  of its
telemarketing  activities and a bulk inventory purchase. Costs of goods sold for
the nine months ended January 31, 1998, were $102,642 as compared to $87,820 for
the nine  months  ended  January  31,  1997  representing  a cost of goods  sold
percentage  of 25.0% of sales for the nine  months  ended  January  31,  1998 as
compared to 37.0% of sales for the nine months ended January 31, 1997.

                                       13
<PAGE>

     Revenues from the sales of drug testing kits were  $1,363,916  for the nine
months ended January 31, 1998 as compared to $ 192,963 for the nine months ended
January 31, 1997,  representing an increase of $1,170,953 or 707%. This increase
in sales of drug testing kits is directly attributable to the implementation and
positive response to the Company's marketing program. Cost of goods sold for the
nine months ended January 31, 1998 was $572,719 or 42.0% of sales as compared to
a cost of  goods  sold of  $62,601  or  32.4%  of  sales.  The  increase  in the
percentage of cost of goods sold is attributable to additional  overhead.

     General and administrative costs for the nine months ended January 31, 1998
were  $1,676,176  or 99.9% of sales as compared to $583,569 or 135% of sales for
the nine months ended January 31, 1997,  representing an increase of $1,092,627.
These  increased costs are the result of hiring  additional  employees in sales,
marketing, accounting and executive positions. For the nine months ended January
31,  1998,  personnel  costs were  $491,512,  legal and  professional  expenses,
$143,712,  office  expense,  $241,297,   marketing  expense,  $502,255,  product
development,  $75,606, rent, $21,437 and bad debt expense of $200,377.  Research
and  development  expense was $96,766 for the nine months ended January 31, 1998
compared to $74,978 during the nine months ended January 31, 1997. This increase
in research and development is the result of the development of three additional
drug tests during the quarter.

     Results of  operations  for the three  months  ended  January  31,  1998 as
compared to the three months ended January 31, 1997.
--------------------------------------------------------------------------------

     Revenues  from the book segment of the business were $144,906 for the three
months ended January 31, 1998 as compared to $220,415 for the three months ended
January 31, 1997, representing an decrease of $75,509 or 34.3%. This decrease in
book sales is directly  attributable to the Company's delayed delivery of a bulk
inventory  purchase.  Costs of goods sold for the three months ended January 31,
1998, were $36,171 as compared to $82,255 for the three months ended January 31,
1997  representing  a cost of goods  sold  percentage  of 25.0% of sales for the
three months ended  January 31, 1998 as compared to 37.3% of sales for the three
months ended January 31, 1997.

     Revenues  from the sales of drug testing  kits were  $355,540 for the three
months ended January 31, 1998 as compared to $161,498 for the three months ended
January 31, 1997,  representing an increase of $194,042 or 120.1%. This increase
in sales of drug testing kits is directly attributable to the implementation and
positive response to the Company's marketing program. Cost of goods sold for the
three months  ended  January 31, 1998 was $137,852 or 38.8% of sales as compared
to a cost of goods  sold of  $40,288  or 24.9% of  sales.  The  increase  in the
percentage of cost of goods sold is attributable to additional overhead.


                                       14
<PAGE>

     General and  administrative  costs for the three months  ended  January 31,
1998 were  $934,720 or 186.8% of sales as compared to $247,456 or 64.8% of sales
for the three  months  ended  January  31,  1997,  representing  an  increase of
$734,878. These increased costs are the result of hiring additional employees in
sales, marketing, accounting and executive positions. For the three months ended
January  31,  1998,  personnel  costs  were  $138,298,  legal  and  professional
expenses,  $24,248,  office  expense,  $143,140,  marketing  expense,  $368,863,
product  development,  $48,536,  rent, $11,258 and bad debt expense of $200,377.
Research and development  expense was $47,614 for the three months ended January
31, 1998 compared to $8,228 during the three months ended January 31, 1997. This
increase in research and  development is the result of the  development of three
additional drug tests during the quarter.

     Liquidity  and capital  resources  as of the end of the nine  months  ended
January 31, 1998.
--------------------------------------------------------------------------------

     The Company's cash balance was $303,939 and working  capital was $4,286,694
as at January 31,  1998.  The Company  completed a series of private  placements
generating additional cash aggregating  $1,055,000 before payment of $ 93,500 in
commissions  and issuing  138,305  Common Shares through the exercise of options
for an  aggregate  consideration  of $414,915.  Cash  generated  from  financing
activities was utilized for the purchase of machinery and equipment for $49,093,
additional  patent  costs  of  $22,652  and an  increase  in the  investment  in
marketable  securities  of $846,609  and an increase in accounts  receivable  of
$795,159.

     The Company's  primary  short-term needs for capital,  which are subject to
change,  are  for  expansion  of its  manufacturing  capacity,  an  increase  in
inventory levels to fill larger anticipated orders and an increase in associated
accounts receivables. As of January 31, 1998, two customers account for 44.2% of
the Company's  accounts  receivable and no one customer  accounted for more than
10% of drug test kit sales during the quarter.

     Management  believes  that the present cash balance will pay the  immediate
ongoing  cost of the  biomedical  business  but the Company may seek  additional
funding sources for continued  research and development  into new products.  The
Company is in full scale commercial production of its drug testing kits.

     Income  tax:  As  of  January  31,  1998,   the  Company  had  a  tax  loss
carry-forward  of  $3,534,922.  The Company's  ability to utilize its tax credit
carry-forward in future years will be subject to an annual  limitation  pursuant
to the "Change in  Ownership  Rules" under  Section 382 of the Internal  Revenue
Code of 1986, as amended. However, any annual limitation is not expected to have
a material  adverse  effect on the  Company's  ability to utilize its tax credit
carry-forwards.

     The Company  currently plans to expend  approximately  $2.0 million for the
expansion  and   development  of  its   manufacturing,   marketing  and  general
administrative  capabilities in connection with the fulfillment of its marketing
program and the anticipated launch of the Company's new products currently under
development.   Additionally,  the  Company  will  utilize  cash  generated  from
operating activities to meet its capital requirements.

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<PAGE>

     The  Company  expects its capital  requirements  to increase  over the next
several years as it commences new research and development  efforts,  undertakes
new product development,  increases sales and administration  infrastructure and
embarks on  increasing  development  efforts  related to in-house  manufacturing
capabilities and facilities.  The Company's future liquidity and capital funding
requirements will depend on numerous factors,  including the extent to which the
Company's products under development are successfully  developed and gain market
acceptance,  the timing of regulatory actions regarding the Company's  potential
products,   the  costs  and  timing  of  expansion  of  sales,   marketing   and
manufacturing   activities,   facilities   expansion   needs,   procurement  and
enforcement of patents important to the Company's business,  results of clinical
investigations and competition.

     The Company  believes that its available cash and cash from operations will
be  sufficient  to satisfy  its  funding  needs for at least the next 24 months.
Thereafter,  if cash generated from  operations is  insufficient  to satisfy the
Company's working capital and capital expenditure requirements,  the Company may
be required to sell additional  equity or debt  securities or obtain  additional
credit facilities.  There can be no assurance that such financing,  if required,
will be available on satisfactory terms, if at all.

                                       16
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                                     PART II
                                OTHER INFORMATION

Item 1. Legal Proceedings.

     No legal proceedings were brought, are pending or are threatened during the
quarter.

     The  Company,   however,  is  awaiting  a  judicial  determination  of  the
entitlement  to common  shares by the  estate  of Robert  Friedenberg,  a former
stockholder of two companies the purchase of which the Company rescinded. A jury
has  determined in favor of the Company on two of three fraud claims against the
estate and has awarded the  Company  $300,000 in damages.  The judge is bound by
the jury verdict.

     In June, 1995, the Company filed a lawsuit against Jackson Morris, Esq. for
breach of the  attorney-client  relationship  and of his  fiduciary  duty to the
Company for  subsequently  providing  legal  services to Dr.  Friedenberg in his
dispute with the Company. The Company's lawsuit demands damages in the amount of
$1,000,000. Mr. Morris has counterclaimed for common shares. The court has set a
trial date of September 14, 1998.

Item 2. Changes in Securities

     None.

Item 3. Defaults upon Senior Securities

     None.

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

     None.


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                                   SIGNATURES



     In accordance with the requirements of the Securities Exchange Act of 1934,
the  registrant  has  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                   AMERICAN BIO MEDICA CORPORATION
                                       (Registrant)

                                    By: /s/Stan Cipkowski
                                        ------------------
                                        Stan Cipkowski,
                                        President and Principal
                                        Executive Officer


                                    By: /s/John F. Murray
                                        --------------------
                                        John F. Murray,
                                        Treasurer and Principal
                                        Financial Officer







   Dated: March 9, 1998







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