**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D. C. 20549


**FORM
      10-QSB/A**





x
      Quarterly report under
      Section 13 or 15(d) of the Securities Exchange Act
      of
      1934.


For the quarterly period ended June 30, 2006.








oTransition
      report under
      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**
              **14-1702188**
 -----------------------------------------------------------------------------
 (State
                  or other jurisdiction of
              (I.R.S.
                  Employerincorporation
                  or organization)
              Identification
                  No.)






**122
      Smith Road, Kinderhook, New York 12106**


-------------------------------------------


(Address
      of principal executive offices)








**800-227-1243**


---------------------------


(Issuer's
      telephone number)








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 o





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





21,719,768
      Common Shares as of March 2, 2007









Transitional
      Small Business Disclosure Format: Yes [ ] No [X]





PART
      I


FINANCIAL
      INFORMATION


**American
                Bio Medica Corporation****Balance
                Sheets**
            
            **June
                30,**
            
            **December
                31,****2006**
            
            **2005****(Unaudited)****Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            591,000
            
            $
            446,000Accounts
                receivable, net of allowance of $105,000 at both June 30, 2006 and
                December 31, 2005
            
            
            1,811,000
            
            
            1,370,000Inventory-net
                  of reserve for slow moving andobsolete
                  inventory of $250,000 at both June 30, 2006 and December 31,
                  2005
            
            
            3,706,000
            
            
            4,444,000Prepaid
                and other current assets
            
            
            238,000
            
            
            109,000Total
                current assets
            
            
            6,346,000
            
            
            6,369,000Property,
                plant and equipment, net
            
            
            1,376,000
            
            
            1,562,000Other
                assets
            
            
            107,000
            
            
            7,000Total
                assets
            
            $
            7,829,000
            
            $
            7,938,000**Liabilities
                and Stockholders’ Equity**Current
                liabilities:Accounts
                payable
            
            $
            776,000
            
            $
            1,380,000Accrued
                liabilities
            
            
            113,000
            
            
            130,000Wages
                payable
            
            
            180,000
            
            
            177,000Line
                of credit
            
            
            230,000Current
                portion of mortgages and notes payable
            
            
            23,000
            
            
            36,000Current
                portion of unearned grant
            
            
            10,000
            
            
            10,000Total
                current liabilities
            
            
            1,332,000
            
            
            1,733,000Long
                term portion of mortgages and notes payable
            
            
            582,000
            
            
            592,000Long
                term portion of unearned grant
            
            
            60,000
            
            
            60,000Other
                long term liabilities
            
            
            104,000Total
                liabilities
            
            
            2,078,000
            
            
            2,385,000Stockholders’
                equity:Preferred
                stock; par value $.01 per share; 5,000,000 shares authorized; none
                issued
                and outstandingCommon
                stock; par value $.01 per share; 50,000,000 shares authorized; 21,459,768
                and 21,359,768 shares issued and outstanding at June 30, 2006 and
                December
                31, 2005, respectively
            
            
            215,000
            
            
            214,000Additional
                paid-in capital
            
            
            18,942,000
            
            
            18,853,000Accumulated
                deficit
            
            
            (13,406,000
            )
            
            (13,514,000
            )Total
                stockholders’ equity
            
            
            5,751,000
            
            
            5,553,000Total
                liabilities and stockholders’ equity
            
            $
            7,829,000
            
            $
            7,938,000The
                accompanying notes are an integral part of the financial
                statements


2





**American
                Bio Medica Corporation****Statements
                of Operations****(Unaudited)******For
                The Six Months Ended****
              ******June
                30,****2006**
            
            **2005**Net
                sales
            
            
            
            
            $
            7,093,000
            
            $
            6,736,000Cost
                of goods sold
            
            
            
            
            
            3,677,000
            
            
            3,338,000Gross
                profit
            
            
            
            
            
            3,416,000
            
            
            3,398,000Operating
                expenses:Research
                and development
            
            
            
            
            
            311,000
            
            
            332,000Selling
                and marketing
            
            
            
            
            
            1,630,000
            
            
            1,681,000General
                and administrative
            
            
            
            
            
            1,327,000
            
            
            1,146,0003,268,000
            
            
            3,159,000Operating
                income
            
            
            
            
            
            148,000
            
            
            239,000Other
                income (expense):Other
                income
            
            
            
            
            
            
            
            
            14,000Interest
                income
            
            
            
            
            
            2,000
            
            
            2,000Interest
                expense
            
            
            
            
            
            (36,000
            )
            
            (27,000
            )(34,000
            )
            
            (11,000
            )Income
                before provision for income taxes
            
            
            
            
            
            114,000
            
            
            228,000Income
                taxes
            
            
            
            
            
            6,000
            
            
            6,000Net
                income
            
            
            
            
            $
            108,000
            
            $
            222,000Basic
                income per common share
            
            
            
            
            $
            0.01
            
            $
            0.01Diluted
                income per common share
            
            
            
            
            $
            0.00
            
            $
            0.01Weighted
                average shares outstanding -basic
            
            
            
            
            
            21,338,635
            
            
            21,284,768Dilutive
                effect of stock options and warrants
            
            
            
            
            
            138,935
            
            
            71,550Weighted
                average shares outstanding -diluted
            
            
            
            
            
            21,477,570
            
            
            21,356,318The
                accompanying notes are an integral part of the financial
                statements


3





**American
                Bio Medica Corporation****Statements
                of Operations****(Unaudited)****For
                  The Three Months Ended** June
                30,**2006**
            
            **2005**Net
                sales
            $
            3,670,000
            $
            3,614,000Cost
                of goods sold
            
            1,897,000
            
            1,858,000Gross
                profit
            
            1,773,000
            
            1,756,000Operating
                expenses:Research
                and development
            
            156,000
            
            174,000Selling
                and marketing
            
            847,000
            
            924,000General
                and administrative
            
            654,000
            
            490,0001,657,000
            
            1,588,000Operating
                income
            
            116,000
            
            168,000Other
                income (expense):Interest
                income
            
            1,000
            
            1,000Interest
                expense
            
            (20,000)
            
            (16,000)(19,000)
            
            (15,000)Income
                before provision for income taxes
            
            97,000
            
            153,000Income
                taxes
            
            
            
            (5,000)Net
                income
            $
            97,000
            $
            148,000Basic
                income per common share
            $
            0.00
            $
            0.01Diluted
                income per common share
            $
            0.00
            $
            0.01Weighted
                average shares outstanding -basic
            
            21,317,735
            
            21,284,768Dilutive
                effect of stock options and warrants
            
            145,233
            
            7,397Weighted
                average shares outstanding -diluted
            
            21,462,968
            
            21,292,165The
                accompanying notes are an integral part of the financial
                statements




4




**American
                Bio Medica Corporation****Statements
                of Cash Flows****(Unaudited)****For
                The Six Months Ended****June
                30,****2006**
            
            **2005****Cash
                flows from operating activities:**Net
                income
            
            $
            108,000
            
            $
            222,000Adjustments
                to reconcile net income to net cash used in operating
                activities:Depreciation
            
            
            188,000
            
            
            185,000Provision
                for doubtful accounts
            
            
            24,000
            
            
            12,000Non
                cash compensation expense
            
            
            5,000Changes
                in:Accounts
                receivable
            
            
            (464,000
            )
            
            (498,000
            )Inventory
            
            
            744,000
            
            
            363,000Prepaid
                and other current assets
            
            
            (130,000
            )
            
            (32,000
            )Accounts
                payable
            
            
            (602,000
            )
            
            (717,000
            )Accrued
                liabilities
            
            
            (14,000
            )
            
            13,000Unearned
                Grant
            
            
            
            
            
            (5,000
            )Wages
                payable
            
            
            2,000
            
            
            (8,000
            )Net
                cash used in operating activities
            
            
            (139,000
            )
            
            (465,000
            )**Cash
                flows from investing activities:**Purchase
                of property, plant and equipment
            
            
            (12,000
            )
            
            (99,000
            )Net
                cash used in investing activities
            
            
            (12,000
            )
            
            (99,000
            )**Cash
                flows from financing activities:**Proceeds
                from exercise of warrants
            
            
            
            
            
            3,000Proceeds
                from exercise of options
            
            
            85,000Debt
                payments
            
            
            (19,000
            )
            
            (38,000
            )Proceeds
                from line of credit
            
            
            230,000
            
            
            176,000Line
                of credit paymentsProceeds
                from grant
            
            
            
            
            
            25,000Net
                cash provided by financing activities
            
            
            296,000
            
            
            166,000**Net
                increase / (decrease) in cash and cash
                equivalents**
            
            
            145,000
            
            
            (398,000
            )Cash
                and cash equivalents - beginning of period
            
            
            446,000
            
            
            995,000**Cash
                and cash equivalents - end of period**
            
            $
            591,000
            
            $
            597,000**Supplemental
                disclosures of cash flow information**Cash
                paid during period for interest
            
            $
            36,000
            
            $
            27,000Issuance
                of note payable for purchase of equipment
            
            
            
            
            $
            85,000The
                accompanying notes are an integral part of the financial
                statements


5





Notes
      to
      financial statements (unaudited)





June
      30,
      2006





Note
      A – Basis of Reporting




The
      accompanying unaudited financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial information and with the instructions to Form 10-QSB.
      Accordingly, they do not include all of the information and footnotes required
      by accounting principles generally accepted in the United States of America
      for
      complete financial statements. In the opinion of management, such statements
      include all adjustments, which are considered necessary for a fair presentation
      of the financial position of American Bio Medica Corporation (the "Company"
      or
      "ABMC") at June 30, 2006, and the results of its operations, and cash flows
      for
      the six-month and three-month periods ended June 30, 2006 and 2005. The results
      of operations for the six-month and three-month periods ended June 30, 2006
      are
      not necessarily indicative of the operating results for the full year. These
      financial statements should be read in conjunction with the Company's audited
      financial statements and related disclosures for the year ended December 31,
      2005 included in the Company's Form 10-KSB.





During
      the year ended December 31, 2005, the Company incurred a net loss of $376,000
      from net sales of $13,015,000, and had net cash used in operating activities
      of
      $372,000. During the six months ended June 30, 2006, the Company earned a net
      income of $108,000 from net sales of $7,093,000. The Company had net cash
      outflows from operating activities of $139,000 for the first six months of
      2006
      primarily as a result of increases in accounts receivable and prepaid expenses,
      and reductions in accrued expenses and accounts payable offset by reductions
      in
      inventory. The reduction in accounts payable stems from payments for inventory
      purchases made in the first quarter of 2006. During the first half of 2006,
      the
      Company continued to take steps to improve its financial prospects including
      focusing on research and development and selling and marketing.




The
      Company's continued existence is dependent upon several factors, including
      its
      ability to raise revenue levels and reduce costs to generate positive cash
      flows, and to sell additional shares of the Company's common stock to fund
      operations, if necessary.








NEW
      ACCOUNTING STANDARDS





In
      December 2004, the FASB issued FAS No. 123 (revised 2004), “Share-Based
      Payment”, ("FAS No. 123(R)"), which amends FAS No. 123, Accounting for
      Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting for
      Stock Issued to Employees. FAS No. 123(R) requires compensation expense to
      be
      recognized for all share-based payments made to employees based on the fair
      value of the award at the date of grant, eliminating the intrinsic value
      alternative allowed by FAS No. 123. Generally, the approach to determining
      fair
      value under the original pronouncement has not changed. However, there are
      revisions to the accounting guidelines established, such as accounting for
      forfeitures, which will change our accounting for stock-based awards in the
      future.





FAS
      No.
      123(R) must be adopted in the first interim or annual period beginning after
      December 15, 2005. The statement allows companies to adopt its provisions using
      either of the following transition alternatives:





(i)
                The modified prospective method, which results in the recognition
                of
                compensation expense using FAS 123(R) for all share-based awards
                granted
                after the effective date and the recognition of compensation expense
                using
                FAS 123 for all previously granted share-based awards that remain
                unvested
                at the effective date; or




6




(ii)
      The
      modified retrospective method, which results in applying the modified
      prospective method and restating prior periods by recognizing the financial
      statement impact of share-based payments in a manner consistent with the pro
      forma disclosure requirements of FAS No. 123. The modified retrospective method
      may be applied to all prior periods presented or previously reported interim
      periods of the year of adoption.





ABMC
      adopted FAS No. 123(R) on January 1, 2006 using the modified prospective method.
      Because we previously accounted for share-based payments to our employees using
      the intrinsic value method, our results of operations have not included the
      recognition of compensation expense for the issuance of stock option awards.
      The
      Company accelerated the vesting of all outstanding stock options to December
      14,
      2005. Options granted to two employees during the second quarter of 2006 were
      accounted for in accordance with FAS No. 123(R).





FAS
      No.
      123(R) also requires the benefits of tax deductions in excess of recognized
      compensation cost to be reported as a financing cash flow, rather than as an
      operating cash flow as required under current literature. This requirement
      may
      reduce our net operating cash inflows and increase our net financing cash flows
      in periods after adoption. The impact that this change in reporting will have
      on
      future periods cannot be determined at this time because the benefit recognized
      is dependent upon attributes that vary for each option exercise.





In
      May
      2005, the FASB issued FAS No. 154. “Accounting Changes and Error Corrections”
which replaced APB Opinion No. 20 and FASB Statement No. 3, *Reporting
      Accounting Changes in Interim Financial Statements,* and
      changes the requirements for the accounting for and reporting of a change in
      accounting principle. This statement shall be effective for accounting changes
      and corrections of errors made in fiscal years beginning after December 15,
      2005. FAS No. 154 requires retrospective application to prior periods’ financial
      statements of changes in accounting principle, unless it is impracticable to
      determine either the period-specific effects or the cumulative effect of the
      change. This Statement defines *retrospective
      application* as the
      application of a different accounting principle to prior accounting periods
      as
      if that principle had always been used or as the adjustment of previously issued
      financial statements to reflect a change in the reporting entity. FAS No. 154
      also requires that a change in depreciation, amortization, or depletion method
      for long-lived, non-financial assets be accounted for as a change in accounting
      estimate effected by a change in accounting principle. The Company does not
      believe that the adoption of FAS No. 154 will have a significant effect on
      its
      financial statements.





In
      February 2006 the FASB issued FAS No. 155 “Accounting for Certain Hybrid
      Financial Instruments—an amendment of FASB Statements No. 133 and 140”. This
      Statement amends FASB Statements No. 133, *Accounting
      for Derivative Instruments and Hedging Activities,* and No.
      140, *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities.*




This
      Statement:




a.
            Permits
                fair value remeasurement for any hybrid financial instrument that
                contains
                an embedded derivative that otherwise would require bifurcation




b.
            Clarifies
                which interest-only strips and principal-only strips are not subject
                to
                the requirements of Statement 133




c.
            Establishes
                a requirement to evaluate interests in securitized financial assets
                to
                identify interests that are freestanding derivatives or that are
                hybrid
                financial instruments that contain an embedded derivative requiring
                bifurcation




d.
            Clarifies
                that concentrations of credit risk in the form of subordination are
                not
                embedded derivatives






7


e.
            Amends
                Statement 140 to eliminate the prohibition on a qualifying special-purpose
                entity from holding a derivative financial instrument that pertains
                to a
                beneficial interest other than another derivative financial
                instrument.




This
      Statement is effective for all financial instruments acquired or issued after
      the beginning of an entity’s first fiscal year that begins after September 15,
      2006. The Company does not believe that the adoption of FAS No. 155 will have
      a
      significant effect on its financial statements.




In
      March
      2006 the FASB issued FAS No. 156 “Accounting for Servicing of Financial
      Assets—an amendment of FASB Statement No. 140”. This Statement amends FASB
      Statement No. 140, *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities,* with
      respect to the accounting for separately recognized servicing assets and
      servicing liabilities.




This
      Statement is effective as of the beginning of the Company’s first fiscal year
      that begins after September 15, 2006. The Company does not have any financial
      assets requiring servicing accordance with FAS No. 156 and does not believe
      that
      the adoption of FAS No. 156 will have a significant effect on its financial
      statements.








Note
      B – Net Income Per Common Share




Basic
      net
      income or loss per share is calculated by dividing the net income or loss by
      the
      weighted average number of outstanding common shares during the period. Diluted
      net income or loss per share includes the weighted average dilutive effect
      of
      stock options and warrants.


Potential
      common shares outstanding as of June 30, 2006 and 2005 are as
      follows:





**June
                30,**
              **2006**
            **June
                30,**
              **2005****Warrants**
            2,023,420
            2,243,420**Options**
            3,993,080
            4,166,080




For
      the
      three months and six months ended June 30, 2006 the number of securities not
      included in the diluted EPS, because the effect would have been anti-dilutive,
      were 4,474,500 each. For the three months and six months ended June 30, 2005
      the
      number of securities not included in the diluted EPS, because the effect would
      have been anti-dilutive, were 5,783,000 and 5,284,500 respectively.





ABMC
      adopted FAS 123(R) (see “New Accounting Standards” above) effective January 1,
      2006. FAS 123(R) requires compensation expense to be recognized for all
      share-based payments made to employees based on the fair value of the award
      at
      the date of grant, eliminating the intrinsic value alternative allowed by FAS
      No. 123. The following pro forma information, presented for 2005, gives effect
      to fair value of the options on the date of grant using the Black-Scholes
      option-pricing model with the following assumptions: dividend yield of 0%,
      volatility of 75% to 77%, risk free interest rates ranging from 4.26% to 4.91%,
      and an expected life of 10 years. The pro-forma net income represents six months
      amortization of expense associated with the option grants.




8




**Six
                  monthsended**
                **June
                  30,**
              **Six
                  monthsended**
                **June
                  30,****2006**
              **2005**Net
                  Income/(loss):As
                  reported
              $
                  108,000
              $
                  222,000Pro
                  forma
              $
                  108,000
              $
                  (283,000)Basic
                  income/(loss) per shareAs
                  reported
              $
                  .01
              $
                  .01Pro
                  forma
              $
                  .01
              $
                  (.01)Diluted
                  income/(loss) per shareAs
                  reported
              $
                  .00
              $
                  .01Pro
                  forma
              $
                  .00
              $
                  (.01)





Note
      C – Litigation





The
      Company has been named in legal proceedings in connection with matters that
      arose during the normal course of its business, and that in the Company’s
      opinion are not material. While the ultimate result of any litigation cannot
      be
      determined, it is management’s opinion based upon consultation with counsel,
      that it has adequately provided for losses that may be incurred related to
      these
      claims. If the Company is unsuccessful in defending any or all of these claims,
      resulting financial losses could have an adverse effect on the financial
      position, results of operations and cash flows of the Company.  ****





Note
      D – Reclassifications





Certain
      items have been reclassified to conform to the current
      presentation.





Note
      E – Line of Credit





The
      Company has available a line of credit with First Niagara Financial Group,
      Inc.
      ("FNFG") and has a maximum available line of $350,000, not to exceed 70% of
      accounts receivable less than 60 days. The interest rate is .25% above the
      FNFG
      prime rate and the Company is required to pay the principal down to $0 for
      a 30
      consecutive day period in each 12 month period during which the line is
      available.





The
      Company obtained an additional line of credit from FNFG for $75,000 during
      the
      first quarter of 2006. The line of credit is to be used exclusively for payments
      on a sublicense agreement entered into during the first quarter of 2006. The
      interest rate is .50% above the FNFG prime rate and principal may be repaid
      at
      any time and borrowed again as needed. There is no requirement for repayment
      of
      all principal annually on this line of credit. The Company intends to repay
      the
      funds drawn down on this line within one year to allow borrowing of additional
      amounts related to future payments due under the Sublicense Agreement.





Note
      F – Sublicense Agreement




On
      February 28, 2006, the Company entered into a non-exclusive Sublicense Agreement
      (the "Agreement") related to certain patents to allow the Company to expand
      its
      contract manufacturing operations. Under this Agreement, the Company is
      committed to pay a non-refundable fee of $175,000 over the course of 2 years.
      The Company would also be required to pay royalties for products the Company
      manufactures that fall within the scope of these patents. The Company does
      not
      currently manufacture any products that fall within the scope of these patents,
      and therefore, no royalty payments are currently required.




9





Note
      G – Integrated Bio Technology Agreement





On
      March
      29, 2006, the Company entered into a royalty agreement with Integrated Bio
      Technology Corporation (“IBC”). IBC is the owner of the RSV test and previously
      purchased the tests from the Company, via a contract manufacturing agreement,
      for resale to its distributor. At December 31, 2005 IBC had outstanding amounts
      due to ABMC totaling approximately $119,000. To address this outstanding
      balance, and to streamline the delivery of product to IBC’s distributor, the
      Company agreed to work directly with IBC’s distributor to receive orders,
      manufacture product and execute all invoicing and collection directly from
      the
      distributor. Effective January 1, 2006, the Company will pay a royalty equal
      to
      20% of total sales to IBC. The Company will pay only 25% of royalties earned
      during the first two years, with the remaining 75% applied to amounts currently
      owed to ABMC by IBC. If the entire amount receivable from IBC is not earned
      through royalties during the first two years of the term of the royalty
      Agreement, all payments to IBC will cease until the full amount owed to the
      Company is satisfied. During the first six months of 2006 ABMC manufactured
      and
      sold approximately $413,000 of the RSV tests to IBC’s distributor. The royalties
      earned on these sales were approximately $83,000. During the six months ended
      June 30, 2006 ABMC reduced the amounts owed from IBC by $62,000, from $119,000
      to $57,000 and made payments to IBC totaling approximately $21,000.





Note
      H – Stock Option Grants





In
      June
      2006, the Company’s Board of Directors granted a stock option to purchase 72,000
      shares of the Company’s common stock to the Company’s Chief Financial Officer,
      and an option to purchase 3,000 shares of the Company’s common stock to an
      employee in the Company’s R&D division. Both option grants have exercise
      prices of $1.05 (the closing price of the Company’s common shares on the date of
      grant) and vest 100% on the one-year anniversary of the date of the grant.
      In
      accordance with FAS 123(R) (see “New Accounting Standards”), the Company will
      recognize $63,347 in non-cash compensation expense related to these grants
      over
      the next twelve months. Included in the three months and six months ended June
      30, 2006 is $5,279 of this non-cash compensation expense.







**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
      THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005




The
      following discussion of the Company's financial condition and the results of
      operations should be read in conjunction with the Financial Statements and
      Notes
      thereto appearing elsewhere in this document.





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 in addition to the description of historical
      facts contained herein, this report contains certain forward-looking statements
      that involve risks and uncertainties as detailed herein and from time to time
      in
      the Company's other 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; (b) risks associated with international
      business; (c) regulatory, competitive and contractual risks; (d) product
      development risks; and (e) 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 enhanced sales force, new products,
      and customer service.




10




Critical
      accounting policies





During
      the six months ended June 30, 2006, except for the adoption of FAS 123(R),
      there
      were no significant changes to the Company's critical accounting policies,
      which
      are included in the Company's Annual Report on Form 10-KSB for the year ended
      December 31, 2005.





Results
      of operations for the six months ended June 30, 2006 as compared to the six
      months ended June 30, 2005





Net
      sales
      were $7,093,000 for the six months ended June 30, 2006 as compared to $6,736,000
      for the six months ended June 30, 2005, an increase of $357,000 or 5.3%.
      Increases in sales of Rapid Drug Screen® (RDS®) InCup®, Oralstat® oral fluid
      test, Rapid TOXTM (the cassette product introduced by the Company in late 2005),
      and contract manufacturing were offset by a decrease in RDS sales during the
      first six months of 2006 compared to the same period a year ago. The Company
      anticipates continued growth in sales of the Rapid TOX product as it gains
      market acceptance and continued growth in its contract manufacturing operations
      as the Company is currently working with several new entities on contract
      manufacturing projects.





During
      the six months ended June 30, 2006, the Company continued its extensive program
      to market and distribute their urine and oral fluid based point of collection
      tests for drug of abuse. The Company also continued marketing its Rapid ReaderTM,
      the first all inclusive drug screen interpretation and data management system
      cleared by the Food and Drug Administration (“FDA”).





In
      the
      first half of 2006, the Company filed three 510(k) marketing applications with
      the FDA. One related to a drug screen for Buprenorphine, one for the Company’s
      Rapid TOX cassette product and one related to a new detection level for the
      Company’s drug screen for cocaine. In May 2006, the Company received 510(k)
      clearance from the FDA for its Rapid TOX product and in June 2006, the Company
      received 510(k) clearance from the FDA for the new detection level for the
      Company’s drug screen for cocaine. As of the date of this report, the Company is
      still awaiting a response from the FDA concerning clearance of the Company’s
      drug screen for Buprenorphine.





The
      Company continued its contract manufacturing operations for unaffiliated third
      parties during the first half of 2006. Development continued on the production
      of a point of collection test for HIV for one of the Company’s contract
      manufacturing customers, which is currently being evaluated by the FDA. The
      Company is also evaluating several other requests for contract manufacturing
      including incorporation of the Company’s drugs of abuse tests into another test
      manufactured by an unrelated third party that is used in hospitals, emergency
      rooms and clinics, and development of variations of the Company’s current oral
      fluid product to meet specific market demands in Europe.





Cost
      of
      goods sold for the six months ended June 30, 2006 was $3,677,000 or 51.8% of
      net
      sales as compared to $3,338,000 or 49.6% of net sales for the six months ended
      June 30, 2005. The increase in cost of goods sold is due to increases in the
      cost of labor in manufacturing, stemming from the greater diversity and
      complexity of new products. While the cost of labor and overhead rose in 2006
      compared to a year ago, cost of materials has remained relatively consistent
      and
      the Company continued its efforts to control the costs to produce its products.
      Increased price pressure in the marketplace has limited the Company’s ability to
      recover cost increases while maintaining market share. The Company continues
      to
      evaluate all aspects of its manufacturing and assembly processes to identify
      any
      areas of cost savings to improve gross margins.





Operating
      expenses increased 3.5% to $3,268,000 in the first six months of 2006, compared
      to $3,159,000 in the same period in 2005. An increase of $181,000 in general
      and
      administrative expense was offset by decreases of $21,000 and $51,000 in
      research and development and selling and marketing expense respectively. Driving
      the increase in general and administrative expense were investor relations
      expense and royalty expense as well as increases in general and administrative
      salaries and wages. Operating expenses decreased from 46.9% of net sales in
      the
      first six months of 2005 to 46.1% for the same period in 2006.





11




Research
      and development





Research
      and development expenses for the six months ended June 30, 2006 were $311,000,
      or 4.4%, of net sales compared to $332,000, or 4.9%, of net sales for the six
      months ended June 30, 2005. The decrease in expense is primarily due to
      decreases in research and development salaries and wages and supplies resulting
      from the departure of an R&D manager in late 2005, as well as decreases in
      spending on supplies, offset by an increase in FDA compliance costs. Management
      continues its overall strategy to: focus on new product development to meet
      the
      changing needs of the point of collection drug of abuse testing market; develop
      test components for an HIV test currently under development for a third party
      and being evaluated by the FDA; and develop new uses of immunoassay lateral
      flow
      technology.





Selling
      and marketing expense





Selling
      and marketing expense was $1,630,000, or 23.0%, of net sales in the first six
      months of 2006. This represents a decrease of $51,000, from $1,681,000 or 25.0%
      of net sales in the same six months in 2005. This decrease is primarily
      attributable to reductions in commissions expense stemming from a restructuring
      of the commission plan in 2006, savings in travel and travel related expenses
      and decreases in expenses for trade shows, offset by increases in consulting
      fees, outside service fees and postage. The increase in postage expense
      represents postage in excess of amounts received from customers for shipping
      and
      handling and was previously reported as general and administrative expense
      in
      2005. During 2006, the Company implemented new internal reporting of this
      expense in more detail enabling them to attribute these shipping and handling
      excesses to the appropriate sales division rather than charging them to general
      and administrative expense. This reclassification allows the Company to evaluate
      the impact of these charges on the business and more specifically on each of
      the
      sales divisions. This reporting was not **** available
      in 2005. **** The
      Company’s sales strategy continues to be a focus on direct sales as well as an
      inside direct sales group of seven.





General
      and administrative expense





General
      and administrative (G&A) expense was $181,000 higher in the first six months
      of 2006 than the same period in 2005. Total G&A expense for the six months
      ended June 30, 2006 was $1,327,000, or 18.7%, of net sales compared to
      $1,146,000, or 17.0%, of net sales in the first six months of 2005. Expenses
      totaling $179,000 for investor relations and royalty expense were primarily
      responsible for the increase. The investor relations expense relates to a
      contract signed in 2005 with an investor relations firm. The contract with
      this
      firm is for one year and it expires in September 2006. Royalty expense relates
      to the agreement entered into with IBC (see note G) and the sublicense agreement
      entered into during the first quarter of this year (see note F). Also affecting
      G&A expense in the first six months of 2006 were increases in salaries and
      wages and outside service fees in the Company’s quality assurance department.
      Offsetting these increases were savings in insurance costs resulting from
      changes in insurance carriers during the fourth quarter of 2005 and first
      quarter of 2006. In addition, a reclassification of postage expense as a selling
      and marketing expense, described above, resulted in a decrease in warehouse
      costs. In addition the Company reduced spending in taxes, utilities, accounting
      fees and insurance in the first half of 2006.





Results
      of operations for the three months ended June 30, 2006 as compared to the three
      months ended June 30, 2005





Net
      sales
      were $3,670,000 for the three months ended June 30, 2006 as compared to
      $3,614,000 for the three months ended June 30, 2005, representing an increase
      of
      $56,000, or 1.6%. Direct sales accounted for 70.6%, or $2,592,000, of sales
      for
      the second quarter compared to $2,678,000, or 74.1%, a year ago. Telemarketing,
      international and other sales contributed $1,078,000, or 29.4%, of the net
      sales
      for the second quarter of 2006, compared to $936,000, or 25.9%, of the net
      sales
      for the same period in 2005. Also contributing to the increase in sales were
      contract manufacturing sales of $112,000 during the second quarter of 2006,
      compared to $74,000 during the same period in 2005.





12




During
      the three months ended June 30, 2006, the Company continued its extensive
      program to market and distribute their urine and oral fluid based point of
      collection tests for drug of abuse. The Company also continued marketing its
      Rapid ReaderTM, the first all inclusive drug screen interpretation and data
      management system cleared by the Food and Drug Administration (“FDA”).





In
      May
      2006, the Company received 510(k) clearance from the FDA for its Rapid TOX
      product and in June 2006, the Company received 510(k) clearance from the FDA
      for
      the new detection level for the Company’s drug screen for cocaine. Both of these
      applications were filed in the first quarter of 2006 along with an application
      filed for the Company’s drug screen for Buprenorphine. As of the date of this
      report, the Company is still awaiting a response from the FDA concerning
      clearance of the Company’s drug screen for Buprenorphine.





The
      Company continued its contract manufacturing operations for unaffiliated third
      parties during the second quarter of 2006. Development continued on the
      production of a point of collection test for HIV for one of the Company’s
      contract manufacturing customers, which is currently being evaluated by the
      FDA.
      The Company is also evaluating several other requests for contract manufacturing
      including incorporation of the Company’s drugs of abuse tests into another test
      manufactured by an unrelated third party that is used in hospitals, emergency
      rooms and clinics, and development of variations of the Company’s current oral
      fluid product to meet specific market demands in Europe.





Cost
      of
      goods sold for the three months ended June 30, 2006 was $1,897,000, or 51.7%,
      of
      net sales as compared to $1,858,000, or 51.4%, of net sales for the three months
      ended June 30, 2005. The increase in cost of goods sold is due to increases
      in
      the cost of labor in manufacturing, stemming from the greater diversity and
      complexity of new products, and the disposal of some obsolete Oralstat inventory
      components during the second quarter. While the cost of labor and overhead
      rose
      in 2006 compared to a year ago, materials have remained relatively consistent
      and the Company continued its efforts to control the costs to produce its
      products. Increased price pressure in the marketplace has limited the Company’s
      ability to recover cost increases while maintaining market share. The Company
      continues to evaluate all aspects of its manufacturing and assembly processes
      to
      identify any areas of cost savings to improve gross margins.





Operating
      expenses increased $69,000, or 4.3%, to $1,657,000 in the second quarter of
      2006, compared to $1,588,000 in the same period in 2005. This is attributable
      to
      increases in G&A expense of $164,000, offset by savings in R&D expenses
      of $18,000 and selling and marketing expenditures of $77,000.





Research
      and development





Research
      and development (“R&D”) expenses for the three months ended June 30, 2006
      were $156,000, or 4.3%, of net sales compared to $174,000, or 4.8%, of net
      sales
      for the three months ended June 30, 2005. The decrease in expense is primarily
      due to a decrease in research and development salaries and wage expense
      resulting from the departure of an R&D manager in late 2005, as well as
      decreases in spending on supplies. The primary focus of the R&D group in the
      second quarter of 2006 was refining modifications to the Company’s products,
      including OralStat, and preparing these modifications for production and sale.
      Management continues its overall strategy to: focus on new product development
      to meet the changing needs of the point of collection drug of abuse testing
      market; develop test components for an HIV test currently under development
      for
      a third party and being evaluated by the FDA; and develop new uses of
      immunoassay lateral flow technology.





13




Selling
      and marketing expense





Selling
      and marketing expense was $847,000, or 23.1%, of net sales in the second quarter
      of 2006, a decrease of $77,000, from $924,000, or 25.6%, of net sales in the
      same three months in 2005. This decrease is primarily attributable to the
      reductions in commissions expense resulting from a restructuring of the
      commission plan in 2006, as well as decreases in travel and travel related
      spending and systems costs. These decreases were offset by increases in postage
      expense resulting from a change to internal reporting that the Company
      implemented in 2006. The new reporting of this expense is done in more detail
      enabling them to attribute these shipping and handling excesses to the
      appropriate sales division rather than charging them to general and
      administrative expense. This reclassification allows the Company to evaluate
      the
      impact of these charges on the business and more specifically on each of the
      sales divisions. The primary focus of spending in selling and marketing is
      to
      increase coverage through direct sales in the marketplace coordinated with
      telemarketing efforts through an in-house sales group.





General
      and administrative expense





General
      and administrative expense increased by $164,000 in the second quarter of 2006
      compared to the same period in 2005. Total G&A expense in the second quarter
      of 2006 was $654,000, or 17.8%, of net sales compared to $490,000, or 13.6%,
      of
      net sales in the three months ended June 30, 2005. Primarily responsible for
      the
      increase in G&A expense in the second quarter is investor relations expense
      related to contracting with an investor relations firm during 2005, and royalty
      and sublicense fees related to agreements executed in the first quarter of
      2006
      (see notes F and G). Increases in bad debts resulting from two account write
      offs totaling $12,000, directors fees and expenses, outside service fees,
      accounting fees and general and administrative salaries and wages were offset
      by
      savings insurance and a reclassification of postage expenses, described above.





LIQUIDITY
      AND CAPITAL RESOURCES AS OF JUNE 30, 2006




The
      Company's cash requirements depend on numerous factors, including product
      development activities, ability to penetrate the direct sales market, market
      acceptance of its new products, and effective management of inventory levels
      in
      response to sales forecasts. The Company expects to devote substantial capital
      resources to continue its product development, expand manufacturing capacity,
      and support its direct sales efforts. The Company will examine other growth
      opportunities including strategic alliances and expects such activities will
      be
      funded from existing cash and cash equivalents, issuance of additional equity
      or
      debt securities or additional borrowings subject to market and other conditions.
      The Company believes that its current cash balances, and cash generated from
      future operations will be sufficient to fund operations for the next twelve
      months. 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 obtain additional credit facilities.
      There is no assurance that such financing will be available or that the Company
      will be able to complete financing on satisfactory terms, if at
      all.





Management
      believes that research and development, selling and marketing and general and
      administrative costs may increase as the Company continues its investment in
      long term growth and creates the necessary infrastructure to: achieve its
      worldwide drug test marketing and sales goals, continue its penetration of
      the
      direct sales market, support research and development projects and leverage
      new
      product initiatives. However, management has implemented programs to control
      the
      rate of increase of these costs to be consistent with the expected sales growth
      rate of the Company.





The
      Company has working capital of $5,014,000 at June 30, 2006 compared to working
      capital of $4,636,000 at December 31, 2005. The Company has historically
      satisfied its net working capital requirements, if needed, through cash
      generated by proceeds from private placements of equity securities with
      institutional investors. The Company has never paid any dividends on its common
      shares and anticipates that all future earnings, if any, will be retained for
      use in the Company's business and it does not anticipate paying any cash
      dividends.





14




Net
      cash
      used in operating activities was $139,000 for the six months ended June 30,
      2006
      compared to net cash used in operating activities of $465,000 for the six months
      ended June 30, 2005. Operating cash flow improved for the six months ended
      June
      30, 2006 primarily because of increases in accounts receivable and prepaid
      expense, offset by reductions in inventory, accounts payable and accrued
      expenses. Reductions in accounts payable pertain to purchases of inventory
      materials in the first quarter of 2006, paid for in the second quarter of
      2006.





Net
      cash
      used in investing activities was $12,000 for the six months ended June 30,
      2006
      compared to net cash used in investing activities of $99,000 for the six months
      ended June 30, 2005. The net cash used in both years was for investment in
      property plant and equipment. The cash used in 2005 was specifically for costs
      associated with the completion of the Company’s HIV room and equipment purchases
      in the Company’s New Jersey facility and additional equipment purchases for new
      hires. Cash used in 2006 was for equipment purchases.





Net
      cash
      provided by financing activities was $296,000 for the six months ended June
      30,
      2006 consisting of proceeds from the Company’s lines of credit and $85,000 from
      the exercise of 100,000 options by an employee. Net cash provided in the first
      six months of 2005 was $166,000 resulting from the exercise of warrants,
      proceeds from the Company’s line of credit and proceeds of $25,000 from a
      Columbia County Economic Development Grant offset by payments on mortgage and
      notes payable.





The
      Company has available two lines of credit with First Niagara Financial Group,
      Inc. ("FNFG"). The first line has a maximum available line of $350,000, not
      to
      exceed 70% of accounts receivable less than 60 days for general operating use.
      The interest rate is .25% above the FNFG prime rate and the Company is required
      to pay the principal down to $0 for a 30 consecutive day period in each 12-month
      period during which the line is available. The amount outstanding on this line
      of credit was $174,000 at June 30, 2006 and $176,000 at June 30, 2005. The
      second line of credit was obtained during the first quarter of 2006 for the
      limited purpose of paying amounts associated with a sublicense agreement
      executed during the first quarter. This line is for a maximum of $75,000 with
      an
      interest rate of .50% above the FNFG prime rate and the Company is not required
      to pay the principal down to $0 during each twelve-month period. The amount
      outstanding on this line of credit at June 30, 2006 was $56,000.





At
      June
      30, 2006, the Company had cash and cash equivalents of $591,000.





The
      Company's primary short-term capital and working capital needs relate to
      continued support of its research and development programs, opening new
      distribution opportunities, focusing sales efforts on segments of the drugs
      of
      abuse testing market that will yield high volume sales, increasing its
      manufacturing and production capabilities, establishing adequate inventory
      levels to support expected sales and instituting controls necessary to comply
      with financial disclosure controls as necessitated by new regulatory
      requirements.








ITEM
      3.
      CONTROLS AND PROCEDURES





As
      of the
      end of the period covered by this report, American Bio Medica Corporation
      carried out an evaluation, under the supervision and with the participation
      of
      the Chief Financial Officer and the Chief Executive Officer, to evaluate the
      effectiveness of the disclosure controls and procedures (as defined in Rule
      13a-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange
      Act")). Based on that evaluation, the Chief Financial Officer and the Chief
      Executive Officer have concluded that American Bio Medica Corporation's
      disclosure controls and procedures as of the date of this report are effective
      for recording, processing, summarizing, and reporting information that is
      required to be disclosed in their reports under the Exchange Act, as amended,
      within the time periods specified in the Securities and Exchange Commission's
      rules and forms. Additionally, based upon this most recent evaluation, we have
      concluded that there were no significant changes in internal controls or other
      factors that have materially affected or are likely to materially affect the
      Company’s internal control over financial reporting during the period covered by
      this report.




15




PART
      II





OTHER
      INFORMATION





Item
      1.
      Legal Proceedings:




See
“Note
      C - Litigation” in the Notes to Financial Statements included in this report for
      a description of pending legal proceedings in which the Company is a
      party.





Item
      2.
      Changes in Securities





None.





Item
      3.
      Defaults upon Senior Securities





None.





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




The
      following matters were voted upon at the Company’s Annual Meeting of
      Shareholders (the “Meeting”) held at the Holiday Inn, in East Greenbush, New
      York on June 13, 2006.








**PROPOSAL
      1 - ELECTION OF DIRECTORS**








**Total
      shares in attendance:**  **19,800,354**   **Outstanding
      shares:** 21,359,768








****  ****




**Proposal
                No. 1 - Election of Directors**
              **Votes
                  Cast:
                  19,800,354**  Director
                For
                Pct.
                Withheld
                Pct.Anthony
                    Costantino
                19,578,976
                98.9
                221,808
                1.1Carl
                    Florio
                19,647,279
                99.2
                153,505
                0.8Edmund
                    Jaskiewicz
                19,638,076
                99.2
                162,708
                0.8Daniel
                    W. Kollin
                17,855,037
                90.2
                1,945,747
                9.8Stan
                    Cipkowski
                19,614,476
                99.1
                186,308
                0.9Richard
                    Koskey
                19,674,286
                99.4
                126,498
                0.6





All
      six
      nominees for election to the Board of Directors were elected for staggered
      terms
      commencing with the ensuing year and until the years noted below or until their
      successors shall be elected and duly qualified.





·Anthony
                G. Costantino, Ph.D. (2007)
            ·Carl
                Florio (2007)·Edmund
                M. Jaskiewicz (2008)
            ·Daniel
                W. Kollin (2008)·Stan
                Cipkowski (2009)
            ·Richard
                P. Koskey (2009)




16




**Proposal
                  No. 2 Classification of Board terms**
              
              **Votes
                  Cast:**
              
              **7,128,163**For:
              
              
              6,564,986
              
              
              92.1
              %Against:
              
              
              404,682
              
              
              5.7
              %Abstain:
              
              
              158,495
              
              
              2.2
              %Broker
                  Non-Votes:
              
              
              12,672,621


Item
      5.
      Other Information





None.





Item
      6.
      Exhibits




31.1
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Executive
                Officer  31.2
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Financial Officer  32.1
            Certification of the Chief Executive
              Officer
              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 the Chief Financial
              Officer
              pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
              906 of
              the Sarbanes-Oxley Act of 2002.



















17


SIGNATURES











In
      accordance with the requirements of the Exchange Act, 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/ Keith
              E. PalmerEVP
                of Finance, Chief Financial Officer and Treasurer (Principal Accounting
                Officer and duly authorized Officer)Dated: March 2, 2007







18