**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D. C. 20549


**FORM
      10-Q**





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




For
      the
      quarterly period ended **March
      31, 2008**





o Transition
      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 registrant as specified in its
                  charter)
  ******New****York**
              **14-1702188**(State
                  or other jurisdictionofincorporation
                  or organization)
              (I.R.S.
                  Employer Identification
                  No.)
 
 **122
                  Smith Road, Kinderhook, New York**
              **12106**(Address
                  of principal executive offices)
              (Zip
                  Code)
 
 **518-758-8158**(Registrant's
                  telephone number, including area
                  code)


Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or 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  x
      Yes o No





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer”, “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer o    Accelerated
      filer o





Non-accelerated
      filer o  Smaller
      reporting company x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act)


o Yes 
x No





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date:





21,744,768
      Common Shares as of May 13, 2008




1




**American
      Bio Medica Corporation**





**Index
      to Quarterly Report on Form 10-Q**


**For
      the quarter ended March 31, 2008**




**PART
                  I - FINANCIAL INFORMATION**
              **PAGE**Item
                  1.
              Financial
                  Statements
              3Balance
                  Sheets as of March 31, 2008 (unaudited) and December 31,
                  2007
              3Statements
                  of Operations for the three months ended March 31, 2008 and March
                  31, 2007
                  (unaudited)
              4Statements
                  of Cash Flows for the three months ended March 31, 2008 and March
                  31, 2007
                  (unaudited)
              5Notes
                  to Financial Statements
              6Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              9Item
                  3.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              11Item
                  4.
              Controls
                  and Procedures
              12**PART
                  II - OTHER INFORMATION**12Item
                  1.
              Legal
                  Proceedings
              12Item
                  1A.
              Risk
                  Factors
              12Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              12Item
                  3.
              Defaults
                  Upon Senior Securities
              12Item
                  4
              Submission
                  of Matters to a Vote of Security Holders
              12Item
                  5.
              Other
                  Information
              12Item
                  6.
              Exhibits
              12**Signatures**
  2


**PART
      I - FINANCIAL INFORMATION**





**Item
      1. Financial Statements**





**American
                Bio Medica Corporation****Balance
                Sheets**
            
            **March
                31,**
            
            **December
                31,****2008**
            
            **2007****ASSETS**
            
            **(Unaudited)**Current
                assetsCash
                and cash equivalents
            
            $
            377,000
            
            $
            336,000Accounts
                receivable - net of allowance for doubtful accounts of $105,000 at
                both
                March 31, 2008 and December 31, 2007
            
            
            1,508,000
            
            
            1,365,000Inventory
                - net of reserve for slow moving and obsolete inventory of $250,000
                at
                both March 31, 2008 and December 31, 2007
            
            
            5,073,000
            
            
            4,994,000Prepaid
                and other current assets
            
            
            177,000
            
            
            181,000Total
                current assets
            
            
            7,135,000
            
            
            6,876,000Property,
                plant and equipment, net
            
            
            2,178,000
            
            
            2,267,000Other
                assets
            
            
            7,000
            
            
            7,000Total
                assets
            
            $
            9,320,000
            
            $
            9,150,000**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilitiesAccounts
                payable
            
            $
            1,639,000
            
            $
            1,403,000Accrued
                expenses
            
            
            425,000
            
            
            220,000Wages
                payable
            
            
            340,000
            
            
            332,000Patent
                sublicense current
            
            
            
            
            
            50,000Line
                of credit
            
            
            723,000
            
            
            723,000Current
                portion of long term debt
            
            
            123,000
            
            
            121,000Current
                portion of unearned grant
            
            
            10,000
            
            
            10,000Total
                current liabilities
            
            
            3,260,000
            
            
            2,859,000Other
                liabilities
            
            
            48,000
            
            
            48,000Long-term
                debt
            
            
            1,075,000
            
            
            1,107,000Unearned
                grant
            
            
            40,000
            
            
            40,000Total
                liabilities
            
            
            4,423,000
            
            
            4,054,000COMMITMENTS
                AND CONTINGENCIESStockholders'
                equity:Preferred
                stock; par value $.01 per share; 5,000,000 shares authorized, none
                issued
                and outstanding at March 31, 2008 and December 31, 2007Common
                stock; par value $.01 per share; 50,000,000 shares authorized; 21,744,768
                issued and outstanding at both March 31, 2008 and December 31, 2007
            
            
            217,000
            
            
            217,000Additional
                paid-in capital
            
            
            19,267,000
            
            
            19,267,000Accumulated
                deficit
            
            
            (14,587,000
            )
            
            (14,388,000
            )Total
                stockholders’ equity
            
            
            4,897,000
            
            
            5,096,000Total
                liabilities and stockholders’ equity
            
            $
            9,320,000
            
            $
            9,150,000*The
                accompanying notes are an integral part of the financial
                statements*




3


**American
                Bio Medica Corporation****Statements
                of Operations****(Unaudited)****For
                  The Three Months Ended**March 31**2008**
            
            **2007**Net
                sales
            
            
            
            
            $
            3,299,000
            
            $
            3,175,000Cost
                of goods sold
            
            
            
            
            
            1,872,000
            
            
            1,916,000Gross
                profit
            
            
            
            
            
            1,427,000
            
            
            1,259,000Operating
                expenses:Research
                and development
            
            
            
            
            
            138,000
            
            
            169,000Selling
                and marketing
            
            
            
            
            
            768,000
            
            
            692,000General
                and administrative
            
            
            
            
            
            683,000
            
            
            672,0001,589,000
            
            
            1,533,000Operating
                loss
            
            
            
            
            
            (162,000
            )
            
            (274,000
            )Other
                income (expense):Interest
                income
            
            
            
            
            
            1,000
            
            
            4,000Interest
                expense
            
            
            
            
            
            (34,000
            )
            
            (27,000
            )Other
                expense
            
            
            
            
            
            (4,000
            )(37,000
            )
            
            (23,000
            )**Loss
                before tax**
            
            
            
            
            
            (199,000
            )
            
            (297,000
            )Income
                tax**Net
                loss after tax**
            
            
            
            
            $
            (199,000
            )
            $
            (297,000
            )**Basic
                and diluted loss per common share**
            
            
            
            
            $
            (0.01
            )
            $
            (0.01
            )Weighted
                average number of shares outstanding - basic & diluted
            
            
            
            
            
            21,744,768
            
            
            21,719,768*The
                accompanying notes are an integral part of the financial
                statements*




4





**American
                Bio Medica Corporation****Statements
                of Cash Flows****(Unaudited)****For
                The Three Months Ended****March
                31,****2008**
            
            **2007****Cash
                flows from operating activities:**Net
                loss
            
            $
            (199,000
            )
            $
            (297,000
            )Adjustments
                to reconcile net loss to net cash provided by / (used in) operating
                activities:Depreciation
            
            
            92,000
            
            
            117,000Loss
                on disposal of fixed assets
            
            
            4,000Non-cash
                compensation expense
            
            
            
            
            
            16,000Changes
                in:Accounts
                receivable
            
            
            (143,000
            )
            
            (12,000
            )Inventory
            
            
            (79,000
            )
            
            (253,000
            )Prepaid
                and other current assets
            
            
            4,000
            
            
            (62,000
            )Accounts
                payable
            
            
            236,000
            
            
            79,000Accrued
                expenses
            
            
            205,000
            
            
            (199,000
            )Other
                liabilities
            
            
            (50,000
            )Wages
                payable
            
            
            8,000
            
            
            (2,000
            )Net
                cash provided by / (used in) operating activities
            
            
            78,000
            
            
            (613,000
            )**Cash
                flows from investing activities:**Purchase
                of property, plant and equipment
            
            
            (7,000
            )
            
            (460,000
            )Net
                cash used in investing activities
            
            
            (7,000
            )
            
            (460,000
            )**Cash
                flows from financing activities:**Debt
                payments
            
            
            (30,000
            )
            
            (20,000
            )Proceeds
                from debt financing
            
            
            
            
            
            539,000Proceeds
                from line of credit
            
            
            
            
            
            500,000Line
                of credit payments
            
            
            
            
            
            (120,000
            )Net
                cash (used in) / provided by financing activities
            
            
            (30,000
            )
            
            899,000**Net
                increase / (decrease) in cash and cash
                equivalents**
            
            
            41,000
            
            
            (174,000
            )Cash
                and cash equivalents - beginning of period
            
            
            336,000
            
            
            641,000**Cash
                and cash equivalents - end of period**
            
            $
            377,000
            
            $
            467,000**Supplemental
                disclosures of cash flow information**Cash
                paid during period for interest
            
            $
            34,000
            
            $
            27,000*The
                accompanying notes are an integral part of the financial
                statements*





5




Notes
      to
      financial statements (unaudited)





March
      31,
      2008





**Note
      A - Basis of Reporting**





The
      accompanying unaudited financial statements of American Bio Medica Corporation
      (the “Company”) have been prepared in accordance with generally accepted
      accounting principles in the United States of America for interim financial
      information and in accordance with the instructions to Form 10-Q and Regulation
      S-X. Accordingly, they do not include all information and footnotes required
      by
      generally accepted accounting principles for complete financial statement
      presentation. In the opinion of management, the financial statements include
      all
      normal, recurring adjustments, which are considered necessary for a fair
      presentation of the financial position of the Company at March 31, 2008, and
      the
      results of its operations for the three month periods ended March 31, 2008
      and
      March 31, 2007, and cash flows for the three-month periods ended March 31,
      2008
      and 2007.





Operating
      results for the three months ended March 31, 2008 are not necessarily indicative
      of results that may be expected for the year ending December 31, 2008. Amounts
      at December 31, 2007 are derived from the Company’s audited financial
      statements. For further information, refer to the audited financial statements
      and notes thereto included in the Company’s Annual Report on Form 10-KSB for the
      fiscal year ended December 31, 2007.





During
      the three months ended March 31, 2008, 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, 2007.




The
      preparation of these financial statements requires the Company to make estimates
      and judgments that affect the reported amounts of assets, liabilities, revenues
      and expenses, and related disclosure of contingent assets and liabilities.
      On an
      on-going basis, the Company evaluates its estimates, including those related
      to
      product returns, bad debts, inventories, income taxes, warranty obligations,
      and
      contingencies and litigation. The Company bases its estimates on historical
      experience and on various other assumptions that are believed to be reasonable
      under the circumstances, the results of which form the basis for making
      judgments about the carrying values of assets and liabilities that are not
      readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.





These
      unaudited financial statements have been prepared assuming that the Company
      will
      continue as a going concern and, accordingly, do not include any adjustments
      that might result from the outcome of this uncertainty. The Company's
      independent registered public accounting firm's report of the financial
      statements included in the Company's Annual Report on Form 10-KSB for the year
      ended December 31, 2007, contained an explanatory paragraph regarding the
      Company's ability to continue as a going concern.





**Recently
      Adopted Accounting Standards**





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      No. 157”). SFAS No. 157 established a common definition for fair value to be
      applied to U.S. GAAP guidance requiring use of fair value, established a
      framework for measuring fair value, and expanded disclosure about such fair
      value measurements. SFAS No. 157 became effective for our financial assets
      and
      liabilities on January 1, 2008.  The FASB has deferred the implementation
      of the provisions of SFAS No. 157 relating to certain nonfinancial assets and
      liabilities until January 1, 2009. SFAS No. 157 did not materially affect how
      we
      determine fair value.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities Including an Amendment of SFAS No.
      115 ” (“SFAS No. 159”). This new standard permits entities to choose to measure
      many financial instruments and certain warranty and insurance contracts at
      fair
      value on a contract-by-contract basis. SFAS No. 159 became effective on January
      1, 2008. We have not elected the fair value option for any of our existing
      financial instruments on the effective date and have not determined whether
      or
      not we will elect this option for any eligible financial instruments we acquire
      in the future.





In
      December 2007, the FASB issued SFAS No. 141(R), “Business Combinations,” (“SFAS
      No. 141(R)”) and SFAS No. 160, “Noncontrolling Interests in Consolidated
      Financial Statements” (“SFAS No. 160”). Effective for the Company as of January
      1, 2009, SFAS No. 141(R) requires the acquiring entity in a business combination
      to recognize all (and only) the assets acquired and liabilities assumed in
      the
      transaction; establishes the acquisition-date fair value as the measurement
      objective for all assets acquired and liabilities assumed; and requires the
      acquirer to disclose to investors and other users all of the information they
      need to evaluate and understand the nature and financial effect of the business
      combination. Effective January 1, 2009, SFAS No. 160 requires all entities
      to
      report noncontrolling (minority) interests in subsidiaries as equity in the
      consolidated financial statements. Moreover, SFAS No. 160 eliminates the
      diversity that currently exists in accounting for transactions between an entity
      and noncontrolling interests by requiring they be treated as equity
      transactions. Management is evaluating the impact of adopting SFAS No. 141(R)
      and SFAS No. 160, if any, on the Company’s financial statements.




6




In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities - an Amendment of FASB Statement No. 133” (“SFAS No.
      161”). SFAS No. 161 expands the disclosure requirements in SFAS No. 133,
      regarding an entity’s derivative instruments and hedging activities. SFAS No.
      161 is effective on January 1, 2009. Management is evaluating the impact of
      adopting SFAS No. 161, if any, on the Company’s financial
      statements.





**Note
      B - Net Income/(Loss) 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 March 31, 2008 and 2007:





**March
                31,****2008**
            **March
                31,****2007****Warrants**
            150,000
            150,000**Options**
            3,768,080
            3,993,080





For
      the
      three months ended March 31, 2008 and March 31, 2007, the number of securities
      not included in the diluted EPS because the effect would have been anti-dilutive
      were 3,918,080 and 4,143,080 respectively.





**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 - Lines of Credit and Long Term Debt**





On
      November 6, 2006, the Company obtained a real estate mortgage related to its
      facility in Kinderhook, New York. The loan through First Niagara Financial
      Group
      (“FNFG”) is in the amount of $775,000 and has a term of ten (10) years with a
      twenty (20) year amortization. The interest rate is fixed at 7.50% for the
      first
      five (5) years. Beginning with year six (6) and through the end of the loan
      term, the rate changes to 2% above the Federal Home Loan Bank of New York five
      (5) year term, fifteen (15) year Amortization Advances Rate. The loan is
      collateralized by the Company's facility in Kinderhook, New York and its
      personal property. The amount outstanding on this mortgage at March 31, 2008,
      was $753,000.




The
      Company has a line of credit with FNFG. The maximum amount available under
      this
      line of credit is $875,000. The maximum available line of $875,000 is not to
      exceed 70% of accounts receivable less than 60 days. The purpose of the line
      of
      credit is to provide working capital. The interest rate is .25% above the FNFG
      prime rate. The Company is required to maintain certain financial covenants
      such
      as net worth (stockholders’ equity) greater than $5 million and working capital
      greater than $4 million. Further, the Company is required to maintain a minimum
      Debt Service Coverage Ratio of not less than 1.2:1.0 measured at each fiscal
      year end beginning December 31, 2006. Debt Service Coverage Ratio is defined
      as
      Net Operating Income divided by annual principal and interest payments on all
      loans relating to subject property. There is no requirement for annual repayment
      of all principal on this line of credit; it is payable on demand. The amount
      outstanding on this line of credit at March 31, 2008 was $690,000.





7


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 annual
      repayment of all principal on this line of credit. The amount outstanding on
      this line of credit at March 31, 2008 was $33,000.





On
      January 22, 2007, the Company entered into a Term Note (the “Note”) with FNFG in
      the amount of $539,000. The term of the Note is five (5) years with a fixed
      interest rate of 7.17%. The Company’s monthly payment is $10,714 and payments
      commenced on February 1, 2007, with the final payment being due on January
      1,
      2012. The Company has the option of prepaying the Note in full or in part at
      any
      time during the term without penalty. There were no closing costs associated
      with this Note. The loan is secured by Company assets now owned or to be
      acquired. The proceeds received were used for the purchase of three (3) pieces
      of automation equipment to enhance the Company's manufacturing process in its
      New Jersey facility. The amount outstanding on this Note at March 31, 2008
      was
      $430,000.





At
      March
      31, 2008, the Company is not in compliance with the financial covenants under
      the line of credit agreement. On April 30, 2008, the Company was notified by
      FNFG that the Company was in violation of the minimum debt service coverage
      ratio covenant, and that FNFG has the right to declare all obligations of the
      Company to FNFG immediately due and payable. The total amount of these
      obligations outstanding as of April 30, 2008 was $1,897,347.43. The Company
      has
      requested, and FNFG is willing to forbear, until May 21, 2008, from exercising
      its rights and remedies with respect to the Company’s default. On or before May
      21, 2008, the Company expects to enter into a forbearance agreement with FNFG
      that would expire July 31, 2008.





On
      May 8,
      2007, the Company purchased a copier through an equipment lease with RICOH
      in
      the amount of $17,000. The term of the lease is five (5) years with an interest
      rate of 14.11%. The amount outstanding on this lease at March 31, 2008 was
      $15,000.





**Note
      F -Sublicense Agreement**




On
      February 28, 2006, the Company entered into a non-exclusive Sublicense Agreement
      (the “Agreement”) with an unaffiliated third party related to certain patents
      allowing us to expand our contract manufacturing operations. Under this
      Sublicense Agreement, the Company must pay a non-refundable fee of $175,000
      over
      the course of 2 years, of which $75,000 was paid in the first quarter of 2006
      and $50,000 was paid in the first quarter of 2007. The remaining $50,000 was
      paid in the first quarter of 2008. The Company is also required to pay royalties
      for products it manufactures that fall within the scope of these patents. The
      Company was not obligated to pay any royalties in 2006 or 2007. Beginning with
      the year ended December 31, 2007, the Company is obligated to pay a $20,000
      annual minimum royalty (“MAR”) that can be applied against royalties on sales of
      products that fall within the scope of the sublicensed patents in the fiscal
      year ending December 31, 2008. The first MAR payment was made in January 2008
      and there were not any sales of products made in the three months ended March
      31, 2008 that would be applied against the MAR.





**Note
      G - Integrated Biotechnology Agreement**





In
      March
      2006, the Company entered into a royalty agreement with Integrated Biotechnology
      Corporation (“IBC”). IBC is the owner of the RSV (Respiratory Syncytial Virus)
      test that the Company manufactures for one of IBC’s distributors. The agreement
      was entered into to address amounts that IBC owed to the Company at the end
      of
      fiscal year 2005, and to streamline the order and fulfillment process of IBC’s
      RSV product. All outstanding amounts due to the Company were satisfied by the
      end of the third quarter of 2007. The Company continues to work directly with
      IBC’s distributor under the agreement and pay a 20% royalty of total sales to
      IBC. During the first quarter of 2008, IBC earned royalties in the amount of
      $20,000.





**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 then 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 vested 100% on the one-year anniversary of the date of the grant
      (although the options granted to the former Chief Financial Officer expired
      in
      January 2008). In accordance with FAS 123(R), the Company recognized $63,347
      in
      non-cash compensation expense related to these grants from June 2006 through
      May
      2007. Included in the three months ended March 31, 2007 is $16,000 of this
      non-cash compensation expense.




8




**Note
      I - Employment Agreements**





The
      Company has entered into employment agreements with its Chief Executive Officer
      Stan Cipkowski, Chief Science Officer Martin R. Gould and Chief Financial
      Officer Stefan Parker providing for aggregate annual salaries of $475,000. The
      agreement with Chief Executive Officer Cipkowski provides for a $206,000 annual
      salary, is for a term of one year and automatically renews unless either party
      gives advance notice of 60 days. The
      agreement with Chief Science Officer Gould provides for a $149,000 annual
      salary, is for a term of one year and automatically renews unless either party
      gives advance notice of 60 days. The agreement with Chief Financial Officer
      Parker provides for a $120,000 annual salary, is for a term of one year and
      automatically renews unless either party gave advance notice of 60 days.
      Effective April 28, 2008, the Company entered into an employment agreement
      with
      Douglas Casterlin who was appointed to Executive Vice President, Operations.
      The
      agreement provides for a $149,000 annual salary, is for a term of one year
      and
      automatically renews unless either party gives advance notice of 60 days. Copies
      of Cipkowski and Gould’s employment agreements were filed as exhibits to its
      Quarterly Report on Form 10-QSB filed with the Securities and Exchange
      Commission (the “Commission”) on August 13, 2007. A copy of Parker’s employment
      agreement was filed as an exhibit to the Company’s Current Report on Form 8K
      filed with the Commission on August 24, 2007. A copy of Casterlin’s employment
      agreement was filed as an exhibit to the Company’s Current Report on Form 8-K
      filed with the Commission on May 1, 2008.




**Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations**





**General**




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 Quarterly Report on Form 10-Q. This discussion contains,
      in
      addition to historical statements, forward-looking statements that involve
      risks
      and uncertainties. Our actual future results could differ significantly from
      the
      results discussed in the forward-looking statements. Factors that could cause
      or
      contribute to such differences include, but are not limited to, the factors
      discussed in the section titled "Risk Factors" in our Annual Report on Form
      10-KSB for the year ended December 31, 2007. Any forward-looking statement
      speaks only as of the date on which such statement is made and we do not intend
      to update any such forward-looking statements.





**Overview**




During
      the year ended December 31, 2007, the Company sustained a net loss of $990,000
      from net sales of $13,872,000, and had net cash used in operating activities
      of
      $605,000. During the three months ended March 31, 2008, the Company sustained
      a
      net loss of $199,000 from net sales of $3,299,000. The Company had net cash
      provided by operating activities of $78,000 for the first three months of 2008.





During
      the first three months of 2008, the Company continued to take steps to improve
      its financial position including focusing on research and development, new
      products, selling and marketing, and manufacturing efficiencies. 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.





In
      February 2008, the Company commenced manufacturing diagnostic test strips for
      Syphilis for a privately held manufacturer of rapid diagnostic tests for
      infectious diseases.





In
      February 2008, Jean Neff, former Senior Vice President of New Business
      Development of the Occupational Testing Services division of Laboratory
      Corporation of America (LabCorp), was appointed to the Company’s Board of
      Directors.





In
      February 2008, the Company signed a Distribution Agreement with Devor Global,
      LLP, a privately held company located in the Republic of Panama. Under the
      agreement, Devor has been granted the exclusive right to distribute the
      Company’s Rapid STATTM oral fluid drug test and its Rapid TOX CupTM urine based
      drug test in Latin America, subject to achieving and maintaining annual volume
      requirements.





**Plan
      of Operations**





The
      Company’s sales strategy continues to be a focus on direct sales and inside
      direct sales, while identifying new contract manufacturing operations and
      pursuing new national accounts.




9




**Results
      of operations for the three months ended March 31, 2008 compared to the three
      months ended March 31, 2007**





During
      the three months ended March 31, 2008, the Company continued its program to
      market and distribute its urine and oral fluid based point of collection tests
      for drugs of abuse and its Rapid Reader drug screen results and data management
      system. Contract manufacturing operations also continued in the first three
      months of 2008.





**NET
      SALES** :
      Net
      sales for the quarter ended March 31, 2008 were $3,299,000, compared to
      $3,175,000 for the quarter ended March 31, 2007. This represents an increase
      of
      $124,000, or 3.9%. Increases in national account sales and contract
      manufacturing were offset primarily by a decrease in international sales, as
      well as smaller declines in outside sales and in-house sales. International
      sales were affected by the loss of one of our international distributors as
      well
      as decreased sales to one of our top distributors as a result of the slowing
      economy.





When
      comparing the first quarter of 2008 to the first quarter of 2007, sales of
      Rapid
      TOX®, Rapid Drug Screen®, and Rapid ONE® product lines increased. The first
      quarter of 2008 also included sales of Rapid TOX Cup®, our urine based all
      inclusive cup product and Rapid STAT®, our oral fluid based product, both
      launched in the third quarter of 2007. Increases in these product lines were
      offset by declines in sales of InCup®, Rapid TEC® and OralStat®. The Company
      believes that the attrition in these product lines is a result of customers
      switching from one product line to another due to either increased ease of
      use
      (in the case of the OralStat and Rapid STAT) or lower cost (in the case of
      InCup
      and Rapid TOX Cup).





The
      Company’s contract manufacturing operations currently include the manufacture of
      a HIV test, a test for fetal amniotic membrane rupture, a test for RSV and
      other
      infectious disease and agricultural testing products. The Company also provides
      its drug testing strips to an unaffiliated third party for incorporation into
      one of the party’s tests that is used in hospitals, emergency rooms and clinics.
      Contract manufacturing sales during the first quarter of 2008 totaled $131,000,
      up from $70,000 in the same period a year ago.





**COST
      OF GOODS** :
      Cost of
      goods sold for the three months ending March 31, 2008 was $1,872,000, or 56.7%
      of net sales, compared to $1,916,000, or 60.3% of net sales for the three months
      ending March 31, 2007. This decrease in cost of goods is a result of a one-time
      inventory disposal charge of $123,000 that occurred in the first quarter of
      2007, which did not occur in the first quarter of 2008. This was offset by
      increases in material, labor and overhead costs stemming from greater diversity
      of our product lines.





**OPERATING
      EXPENSES:** As a
      percentage of sales, operating expenses were unchanged. Operating expenses
      were
      $1,589,000, or 48.2% of net sales, in the first quarter of 2008, compared to
      $1,533,000, or 48.3% of net sales, in the first quarter of 2007. The decrease
      in
      research and development expense was offset by increases in selling and
      marketing and general and administrative expenses.




Research
      and development (R&D) expense





R&D
      expenses for the first three months of 2008 were $138,000, or 4.2% of net sales,
      compared to $169,000, or 5.3% of net sales for the same period last year.
      Savings in supply and material costs, consulting fees, travel, utility costs
      and
      depreciation were offset by slight increases in salaries and employee related
      benefits and facilities rental. In the first quarter of 2007, the efforts of
      the
      Company’s R&D department were primarily focused on the development of the
      Company’s Rapid TOX Cup and Rapid STAT devices that were ultimately introduced
      to the market in the third quarter of 2007. Such extensive efforts on new
      product development did not occur in the first quarter of 2008.





Selling
      and marketing expense





Selling
      and marketing expenses were $768,000, or 23.3% of net sales, in the first
      quarter of 2008, compared to $692,000, or 21.8% of net sales, in the same period
      a year ago. This increase in selling and marketing expense is a result of
      increases in commission costs due to the increase in sales, postage, increased
      royalties payable to IBC as a result of increased sales of RSV tests,
      advertising and promotion costs and marketing consulting costs. These increases
      were partially offset by decreases in dues and subscriptions and trade show
      expenses and depreciation.




10




General
      and administrative (G&A) expense





G&A
      expenses were $683,000, or 20.7% of net sales, in the first quarter of 2008,
      compared to $672,000, or 21.2% of net sales, in the first quarter of 2007.
      As a
      percentage of net sales this is relatively unchanged, however, increased
      expenses related to quality assurance, accounting fees, costs associated with
      our CLIA (Clinical Laboratory Improvement Act) waiver application, utility
      costs, supplies and bad debts, partially offset by decreases in outside service
      and consulting fees, noncash compensation expense related to stock option
      grants, repairs and maintenance and insurance costs accounted for the actual
      increase in G&A expenses.





**Liquidity
      and Capital Resources as of March 31, 2008**




The
      Company has working
      capital of $3,875,000 at March 31, 2008 compared to working capital of
      $4,017,000 at December 31, 2007. The Company has historically satisfied its
      net
      working capital requirements, if needed, through operations, cash generated
      by
      proceeds from private placements of equity securities with institutional
      investors and debt financing. 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.





The
      Company's cash requirements depend on numerous factors, including product
      development activities, sales and marketing efforts, 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, refine manufacturing efficiencies, 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 does not believe that its current cash balances, and cash generated
      from
      future operations, will be sufficient to fund operations for the next twelve
      months. 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 taken measures to control the
      rate
      of increase of these costs to be consistent with the expected sales growth
      rate
      of the Company.





Net
      cash
      provided by operating activities was $78,000 for the three months ended March
      31, 2008, compared to net cash used in operating activities of $613,000 for
      the
      three months ended March 31, 2007. The net cash provided by operating activities
      for the three months ended March 31, 2008 resulted primarily from increases
      in
      accrued liabilities and accounts payable, offset by increases in accounts
      receivable and inventory balances.





Net
      cash
      used in investing activities was $7,000 for the three months ended March 31,
      2008, compared to net cash used in investing activities of $460,000 for the
      three months ended March 31, 2007. Net cash in both years was for investment
      in
      property, plant and equipment. Included in the three months ended March 31,
      2007
      is $270,000 representing an initial payment of 50% of the cost of equipment,
      delivered to the Company in the first quarter of 2007, for the automation of
      the
      Company’s Rapid TOX product line.




Net
      cash
      used in financing activities was $30,000 for the three months ended March 31,
      2008, which consisted of debt payments. Net cash provided by financing
      activities for the three months ended March 31, 2007 was $899,000 and consisted
      of proceeds of $539,000 from a five year term note and $500,000 from the
      Company’s lines of credit. These proceeds were offset by debt and line of credit
      payments.





At
      March
      31, 2008, the Company had cash and cash equivalents of $377,000.





The
      Company's primary short-term capital and working capital needs relate to
      continued support of its research and development programs, exploring new
      distribution opportunities, focusing sales efforts on segments of the drugs
      of
      abuse testing market that will yield high volume sales, refining its
      manufacturing and production capabilities, and establishing adequate inventory
      levels to support expected sales.





**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk**





Not
      applicable




11




**Item
      4. Controls and Procedures**





*(a)*
            *Evaluation
                of Disclosure Controls and
                Procedures*





Our
      Chief
      Executive Officer (Principal Executive Officer) and Chief Financial Officer
      (Principal Financial Officer), together with other members of management, have
      reviewed and evaluated the effectiveness of our “disclosure controls and
      procedures” (as defined in the Securities Exchange Act of 1934 Rule 13a-15(e)
      and 15d-15(e)) as of the end of the period covered by this report. Based on
      this
      review and evaluation, our Principal Executive Officer and Principal Financial
      Officer have concluded that our disclosure controls and procedures are effective
      to ensure that material information relating to the Company is recorded,
      processed, summarized, and reported in a timely manner.





*(b)
      Changes in Internal Control Over Financial Reporting*





There
      have been no changes in the Company's internal control over financial reporting
      during the last quarterly period covered by this report that have materially
      affected, or are reasonably likely to materially affect, the Company's internal
      control over financial reporting.





**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
      1A. Risk Factors**





Not
      applicable





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**




None.





**Item
      3. Defaults upon Senior Securities**





None.





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




None.





**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




12


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/Stefan
              ParkerChief
                Financial Officer
              Eecutive
                Vice President, Finance
              Principal
                Accounting Officer and duly authorized
                Officer




Dated:
      May 15, 2008





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