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

[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended January 31, 1997.

[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934.
For the transition period from ______________ to ________________


         Commission File Number: 00028666


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


                   New York                             14-1702188
        -------------------------------------------------------------------
          (State or  other jurisdiction               (I.R.S.Employer
         incorporation or organization               Identification No.)


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

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

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

     Check whether the issuer

     (1) filed all  reports  required  to be filed by Section 13 or 15(d) of the
Exchange  Act  during the past 12 months (or for such  shorter  period  that the
registrant was required to file such reports), and

     (2) has been subject to such filing  requirements for the past 90 days.

     Yes X No

     State the number of shares  outstanding of each of the issuer's  classes of
common equity as of the latest practicable date: 
     13,197,872 common shares as of January 31, 1997
     150 Convertible Class "A" Preferred Shares as of January 31, 1997

Transitional Small Business Disclosure Format Yes   No X 
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

     Item 1. Financial Statements

     The condensed  financial  statements for the periods ended January 31, 1997
included  herein have been  prepared by American  Bio Medica  Corporation,  (the
"Company")  without  audit,  pursuant  to  the  rules  and  regulations  of  the
Securities  and  Exchange  Commission  (the  "Commission").  In the  opinion  of
management,  the statements include all adjustments  necessary to present fairly
the financial position of the Company as of January 31, 1997, and the results of
operations and cash flows for the three and nine month periods ended January 31,
1996 and 1997.


                                       2
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                                  BALANCE SHEET
<TABLE>
<CAPTION>

                                                April 30,         January 31,
                                                  1996               1997
                                                --------           ---------
                                     Assets
<S>                                              <C>             <C>

Current assets
  Cash                                           $437,532        $2,302,566
  Investments-short term                                          1,021,867
  Accounts receivable                              34,500           335,841
  Loan receivable                                                   100,000
  Inventory                                        22,301           270,027
  Prepaid expenses                                                    4,425
                                                   ------         ---------
  Current assets                                  494,333         4,034,726

Capital assets-net                                 20,575            86,019

Other assets
  License rights                                  110,070            56,870
  Patent costs                                     21,000            21,725
                                                  -------            ------
  Total other asset                               131,070            78,595
                                                  -------         ---------
Total assets                                     $645,978        $4,199,340
                                                 ========        ==========

                      Liabilities and Stockholders' Equity

Current liabilities
  Accounts payable and accrued expenses           $33,248          $182,537
  Convertible debenture payable                   132,000                 
                                                  -------           -------
Total current liabilities                         165,248           182,537

Long term liabilities
  Note payable                                    126,500
                                                  -------
  Total long term liabilities                     126,500

Capital stock
  Capital stock-authorized 30,000,000
  common shares, par value $.01 each,
  at April 30, 1996 and January  31, 1997,
  the shares outstanding were 12,089,561
  and 13,297,872 respectively.                    120,895           132,977

  Preferred stock-authorized 5,000,000
  preferred shares, par value $.01 each,
  at October 31, 1996, the number of shares
  outstanding was 150                                                     1
  Additional paid in capital                    2,635,006         6,606,358
                                                ---------         ---------
  Deficit accumulated during development stage (2,401,671)       (2,722,533)
                                               ----------        ----------
Total stockholders' equity                        354,230         4,016,803
                                               ----------        ----------
Total liabilities and stockholders' equity       $645,978        $4,199,340
                                               ==========        ==========
</TABLE>

                 See accompanying notes to financial statements.

                                       3
<PAGE>


                         AMERICAN BIO MEDICA CORPORATION
                             STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
                                           For the year     For the year    
For the nine    For the nine
                                              ended            ended        
months ended    months ended
                                             April 30,        April 30,      
January 31,      January 31,
                                               1995             1996           
 1996            1997
                                               ----             ----           
 ----            ----   
<S>                                           <C>              <C>             
<C>             <C>
                                    
Income                                        $137,891         $158,105        
$120,261        $430,501
Less cost of goods sold                         45,204           96,444        
  61,409         150,421
Gross profit                                    92,687           61,661        
  58,852         280,080

Operations:
  General and administrative                   129,719          518,826        
 292,749         583,569
  Depreciation and amortization                 75,600           77,600        
  57,700          72,490
  Research and development                     135,412          358,844        
 228,622          74,978
  Total expense                                340,731          955,270        
 579,071         731,037

Income (loss) before other income and         (248,044)        (893,609)       
(520,219)        (45,095)
expenses

Other income and expenses
  Cancellation  of  debt (Note E)                                              
                 126,500
  Interest income                               10,145              356        
     778           3,593
  Interest expense                             (67,429)        (103,205)       
 (75,385)               
  Total other income and                       (57,284)        (102,849)       
 (74,607)        130,093
expenses
Net Profit (Loss)                            $(305,328)       $(996,458)      
$(594,826)      $(320,862)
from operations

Net income (loss) per share                     $(.05)          $(.02)         
 $(.02)          $(.08)
Number of shares outstanding                13,297,872       13,297,872      
13,297,872      13,297,872 

</TABLE>



                 See accompanying notes to financial statements.

                                       4
<PAGE>
                         AMERICAN BIO MEDICA CORPORATION
                             STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
                                               For the three      For the three
                                                months ended       months ended
                                                 January 31,        January 31,
                                                    1996               1997
                                                ------------      -------------
<S>                                             <C>                 <C>

Income                                             $37,845            $381,914
Less cost of goods sold                             35,036             124,643
Gross profit                                         2,809             257,271

Operations:
  General and administrative                       226,077             247,456
  Depreciation and amortization                     19,900              49,490
  Research and development                         130,221               8,228
  Total expense                                    376,198             305,174

Income (loss) before other income and expenses    (373,389)            (47,903)

Other income and expenses
  Cancellation  of  debt (Note E)
  Interest income                                     (422)              2,258
  Interest expense                                 (27,819) 
                                                                               
   
                                                                           
  Total other income and expenses                  (28,241)              2,258
Net Profit (Loss) from operations                $(401,630)           $(45,645)

Net income (loss)  per share                         $(.03)              $(.00)
Number of shares outstanding                    13,297,872          13,297,872 

</TABLE>






                       See accompanying notes to financial statements.

                                       5
<PAGE>


                                     AMERICAN BIO MEDICA CORPORATION
                                         STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>

                                            For the year    For the year   For
the nine     For the nine
                                               ended           ended      
months ended     months ended
                                              April 30,       April 30,    
January 31,      January 31,
                                                1995            1996         
1996              1997
                                            -----------      -----------  
------------     -------------
<S>                                          <C>              <C>           
<C>              <C>  

CASH FLOWS FROM OPERATING ACTIVITIES
  Net profit (loss)                            (305,328)      (996,458)     
(594,826)         (320,862)
  Amortization and depreciation                  75,600         77,600        
57,700            72,490
  Consulting fees                                              306,250       
250,000
  Compensation agreement                                       125,000       
100,000
  Retirement of debt (Note 9)                                                  
               (126,500)
                                                                               
     
Adjustments to reconcile net income to                                      
(187,126)         (374,872)
net cash
  Loan receivable                                                              
               (100,000)
  Accounts receivable                           (55,234)        38,079        
42,521          (301,342)
  Inventory                                     (19,420)         5,250         
7,688          (247,726)
  Prepaid expenses                              (40,683)        15,089        
(2,200)           (4,425)
 Accounts payable                               (36,151)       (30,828)       
39,992           149,289
TOTAL CASH FLOWS FROM OPERATIONS               (381,216)      (460,018)      
(99,125)         (879,076)
CASH FLOWS FROM FINANCING ACTIVITIES
  Convertible debenture                         446,278        693,000       
436,750          (132,000)
  Notes payable                                                (89,258)      
(44,567)
  Sale of  stock                                               150,000         
              3,983,436
  Issuance of stock for services                                61,006         
                       
                                                                               
       
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES      446,278        814,717       
392,183         3,851,436
CASH FLOWS FROM INVESTING ACTIVITIES
  Investment short term                                                        
             (1,021,867)
  Patent costs                                                                 
                 (2,725)
  Capital assets                                                               
                (82,734)
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES                                     
             (1,107,326)
NET INCREASE (DECREASE) IN CASH                  65,062        354,699       
293,058         1,865,034
CASH BALANCE BEGINNING OF PERIOD                147,895         82,833        
82,833           437,532
CASH BALANCE END OF PERIOD                       82,833        437,532       
375,891         2,302,566
</TABLE>

                 See accompanying notes to financial statements.

                                       6
<PAGE>
                         AMERICAN BIO MEDICA CORPORATION
                        STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                          Common       Common      Preferred        Additional 
         Retained
                           Stock        Stock        Stock        paid-in
capital        Earnings   Total
                          ------       ------     ----------      
---------------       --------   -----
   <S>                   <C>           <C>          <C>                <C>     
     <C>           <C>


   4-10-1986(1)          1,600,000     $16,000                         $11,727 
                    $27,727
   4-11-1986(1)            200,000       2,000                                 
                      2,000
   4-30-1986             Net Loss                                              
         (612)         (612)
                                                                             
   4-30-1986             1,800,000      18,000                          11,727 
         (612)       29,115

   7-09-1986(2)            200,000       2,000                          42,888 
                     44,888
   4-30-1987(3)            360,935       3,609                         357,326 
                    360,935
   4-30-1987(4)                                                        (74,854)
                    (74,854)
   4-30-1987             Net profit                                            
       45,981        45,981
                                                                         
                                   
   4-30-1987             2,360,935      23,609                         337,087 
       45,369       406,065
                                                                               
               
   4-30-1988(5)                                                         67,056 
                     67,056
   4-30-1988              Net loss                                             
     (417,760)     (417,760)
                                                                         
   4-30-1988             2,360,935      23,609                         404,143 
     (372,391)       55,361

   4-30-1989                25,000         250                           6,000 
                      6,250
   4-30-1989              Net loss                                             
      (51,677)      (51,677)
   4-30-1989(5)                                                         19,520 
                     19,520
                                                                               
             
                                   
   4-30-1989             2,385,935      23,859                         429,663 
     (424,068)       29,454

   4-30-1990             Net profit                                            
      (13,352)      (13,352)
                                                                             
                                   
   4-30-1990             2,385,935      23,859                         429,663 
     (437,420)       16,102

   4-30-1991(9)            742,000       7,420                         193,229 
                    200,649
   4-30-1991              Net loss                                             
     (419,654)     (419,654)
                                                                             
   4-30-1991             3,127,935      31,279                         622,892 
     (857,074)     (202,903)

   4-30-1992(6)            474,800       4,748                                 
                      4,748
   4-30-1992              Net loss                                             
      (51,194)      (51,194)
                                                                             
                                   
   4-30-1992             3,602,735      36,027                         622,892 
     (908,268)     (249,349)
</TABLE>


                                       7
<PAGE>
                         AMERICAN BIO MEDICA CORPORATION
                        STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                          Common       Common      Preferred        Additional 
     Retained
                           Stock        Stock        Stock        paid-in
capital    Earnings       Total
                         ---------      ------     ---------     
---------------    --------      -------
  <S>                   <C>            <C>          <C>              <C>       
   <C>            <C>

   4-30-1992             3,602,735      36,027                         622,892 
     (908,268)     (249,349)

   4-30-1993(12)         1,717,771      17,177                          11,833 
                     29,010
   4-30-1993(7)          6,029,872      60,299                          90,448 
                    150,747
   4-30-1993            Net profit                                             
      (42,374)      (42,374)
                                                                          
   4-30-1993            11,350,378     113,503                         725,173 
     (950,642)     (111,966)

   4-30-1994              Net loss                                             
     (149,243)     (149,243)
                                                                          
   4-30-1994            11,350,378     113,503                         725,173 
   (1,099,885)     (261,209)

  10-18-1995(8)         (3,000,000)    (30,000)                         30,000
   4-30-1995                                                                   
     (305,328)     (305,328)
                                                                           
                                   
   4-30-1995             8,350,378      83,503                         755,173 
   (1,405,213)     (566,537)
  11-03-1995               500,000       5,000                         120,000 
                    125,000
   4-30-1996(10)         1,700,002      17,000                       1,258,000 
                  1,275,000
   4-30-1996(11)            25,000         250                          24,750 
                     25,000
   4-30-1996(12)           250,000       2,500                         122,500 
                    125,000
   4-30-1996(13)           489,181       4,892                          56,083 
                     60,975
   4-30-1996(14)           125,000       1,250                          61,250 
                     62,500
   4-30-1996(15)           100,000       1,000                          64,000 
                     65,000
   4-30-1996(16)           550,000       5,500                         173,250 
                    178,750
   4-30-1996               Net loss                                            
     (996,458)     (996,458)
                                                                               
    
   4-30-1996            12,089,561     120,895                       2,635,006 
   (2,401,671)      354,230
 Unaudited
   6-04-1996                11,333         113                           8,387 
                      8,500
   6-04-1996                25,000         250                          24,750 
                     25,000
   7-31-1996(10)           176,000       1,760                         130,240 
                    132,000
   7-31-1996(10)            13,333         133                           9,867 
                     10,000
   7-31-1996(14)           100,000       1,000                          49,000 
                     50,000
   7-31-1996(17)            32,000         320                          31,680 
                     32,000
   7-31-1996(18)           100,000       1,000                          99,000 
                    100,000
   9-09-1996(17)            18,000         180                          17,820 
                     18,000
   9-23-1996(19)                                           1         1,409,999 
                  1,410,000
   1-31-1997(20)           732,645       7,326                       2,190,609 
                  2,197,935
   1-31-1997              Net loss                                             
     (320,862)     (320,862)
                                 
   1-31-1997            13,297,872    $132,977            $1        $6,606,358 
   (2,722,533)   $4,016,803

</TABLE>

                                       8
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                        STATEMENT OF STOCKHOLDERS' EQUITY

     (1) Issuance of common shares for initial capital contribution

     (2) Sale of common shares through private placement at $.25 per share

     (3) Sale of common shares through unit offering at $1.00 per share plus one
     warrant

     (4) Write off of related offering expense

     (5) Forgiveness of back salary

     (6) Sale of common shares at $.01 par value for cash

     (7) Common shares issued pursuant to acquisition

     (8) Return of common shares by Edmund Jaskiewicz

     (9) Issuance of common shares to Jay Bendis pursuant to employment contract
     at $.25 per share

     (10) Common shares issued for conversion of debt

     (11) Common shares issued pursuant to sale of 25,000 Units

     (12) Common shares issued for warrant conversion at $.50

     (13) Common shares issued in consideration for services at $.125 per share

     (14) Common shares issued pursuant to Rule 504 at $.50 per share

     (15) Common shares issued under Rule 504 at $.65 per share

     (16) Common shares issued pursuant at $.325 per share

     (17) Common shares issued upon exercise of "B" Warrants

     (18) Common shares issued upon exercise of "A" Warrants

     (19) Sale of preferred shares for $1,500,000 less commission of $90,000

     (20) Common  shares  issued  pursuant to  exercise  of  nonstatutory  stock
     options at $3.00








                See accompanying notes to financial statements.



                                       9
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                JANUARY 31, 1997

NOTE A--BASIS OF PRESENTATION

     In the opinion of the American Bio Medica Corporation (the "Company"),  the
accompanying  unaudited condensed  financial  statements contain all adjustments
(consisting of only normal  accruals)  necessary to present fairly the condensed
balance  sheet as of January 31, 1997 and the related  statements  of operations
and  deficit  for the nine and three month  periods  ended  January 31, 1996 and
1997.

NOTE B--EARNINGS PER SHARE

     Earnings  per share  have  been  computed  on the basis of total  number of
common shares outstanding. The total number of shares outstanding at January 31,
1997 was 13,297,872.

NOTE C--COMMITMENTS ANDCONTINGENT LIABILIES

     a. Leased Office Space

     The Company leases 2,200 square feet of office and warehouse  space from an
unrelated party on a month to month basis at $400 per month.

     b. Lawsuits

     1.  In  February,  1994,  Robert  Friedenberg,  as  owner  of  two  medical
technology companies, MDI and Gendex, acquired by the Company, filed suit in the
name of these  corporations to have the share exchange agreement relating to the
acquisition  rescinded on the grounds of breach of  contract.  In order to avoid
the imposition of damages  against it, the Company filed a cross claim, in July,
1994,  against  Dr.  Friedenberg,  seeking  enforcement  of the  share  exchange
agreement.   In  November,   1995,  after  a  trial,  the  court  dismissed  Dr.
Friedenberg's lawsuit and allowed the Company's cross claim to proceed to trial.
The Company  never issued any common shares to Dr.  Friedenberg  pursuant to the
share exchange agreement and has rescinded the transaction.

     2. In June,  1995, the Company filed a lawsuit against Jackson Morris,  Dr.
Friedenberg's  counsel,  for the breach of attorney-client  relationship and his
fiduciary duty and negligence in representing the Company in matters relating to
Dr.  Friedenberg  and in the  preparation  of the  Agreement  of  Exchange.  The
Company's lawsuit demands damages in the amount of $1,000,000.

NOTE D--PREFERRED SHARES

     The Company  amended  its  certificate  of  incorporation  authorizing  the
issuance  of  5,000,000  preferred  shares  $.01 par  value  each.  The board of
directors  of the  Company  has the  authority,  without  further  action by the
holders of the outstanding common shares, to issue preferred shares from time to
time in one or more classes or series, to fix the number of shares  constituting
any class or series and the stated  value  thereof,  if  different  from the par
value,  and to fix the terms of any such  series or  class,  including  dividend
rights, dividend rates, conversion or exchange rights, voting rights, rights and
terms of redemption  (including  sinking fund provisions),  the redemption price
and the liquidation preference of such class or series.

                                       10
<PAGE>

     The Company sold 150 8% Convertible Series "A" preferred shares for $10,000
per  share  for  an  aggregate  consideration  of  $1,500,000  less  $90,000  in
commissions  and  $5,000  in  offering  expenses  for  a  net  consideration  of
$1,405,000.  Each preferred share is convertible  into common shares pursuant to
the  following  formula:  $10,000  divided  by the lesser of $6.07 or 75% of the
average of the daily  closing bid prices for the five  consecutive  trading days
ending  on the  trading  day  prior to the day on  which  preferred  shares  are
converted  to common  shares.  All accrued but unpaid  dividends  are payable in
cash.  The Company has  registered  the common shares  underlying  the preferred
shares with the Securities and Exchange Commission.

     The  Company  has  reserved  a maximum  of  600,000  common  shares for the
conversion of preferred shares.

     The Company has issued 24,712 common share purchase warrants.  The warrants
are exercisable at $3,00 per share until January 21, 1998.

NOTE E -- SECURED LOAN

     On March 9, 1990,  the Company  entered into an security  agreement  with a
finance company to borrow money secured by the Company's  receivables  evidenced
by invoices.  At the time, the Company was engaged in selling  educational books
to municipal school districts and public libraries throughout the United States.
The finance  company  agreed to lend an amount  equal to 60% of the net value of
all the Company's accounts receivable.  Accounts receivable funding ceased as of
July 31, 1990.

     The Company  instituted a lawsuit  against the finance  company on November
26, 1990 for damages  due to its failure  lend to the 60% credit  limit based on
its calculations and for forgiveness of the loan based on the finance  company's
charging,  based on its own billings,  at an interest rate in excess of the rate
of 25% per annum as  prescribed  in the sections  dealing with usury in New York
Penal State Law.  Although  company  counsel  had opined that the Company  would
prevail in the action and that all indebtedness incurred in the principal amount
$126,500  plus  interest  and fees  would be voided  by  reason  of the  finance
company's  violation  of the usury  provisions  of the Penal Law,  by  agreement
between the Company and the finance company,  the lawsuit was withdrawn  without
prejudice as the Company,  at that time,  lacked the  resources  for  protracted
litigation.  In April,  1996,  the  obligation,  if any, to the finance  company
became barred by New York State's six-year  statute of limitations.  The Company
wrote off the obligation during the second quarter of fiscal 1997.

NOTE F -- NONSTATUTORY OPTION PLAN

     The Company has adopted the Fiscal 1996  Nonstatutory  Stock  Option  Plan.
2,000,000  common shares were reserved under the plan. The plan is  administered
by the Company's board of directors.

     Stock  options  under  the  plan may be  granted  to  employees,  officers,
directors,  consultants  of the  Company  or any other  parties  who have made a
significant  contribution  to the  business  and  success  of the  Company.  The
exercise  price  under  the  plan may be  more,  equal to or less  than the then
current market price of the common shares as deemed to be appropriate.

     As of July 31, 1996, the Company had issued  1,500,000  options pursuant to
the plan and had  reserved  1,500,000  common  shares for the  exercise of these
options All options  were  exercisable  for a period of three years at $3.00 per
share.

     As of  January  31,  1997,  732,645  nonstatutory  stock  options  had been
exercised for an aggregate consideration of $2,197,935.

                                       11
<PAGE>

NOTE G -- PUBLIC RELATIONS AGREEMENT

     In  February,  1996,  the  Company  entered  into  an  agreement  with  OTC
Communications   ("OTC")  for  financial  public  relations  and  communications
services to the Company and to serve when requested as the Company's liaison and
spokesman to the financial and investment community. In March, 1996, the Company
granted to OTC the right to receive 100,000 common shares at a value of $.65 per
share for a total  consideration of $65,000 in lieu of initial payment,  monthly
retainers or expense reimbursement,  including  communications and mailing for a
period of one year and 550,000 common shares for years 2 and 3 under  Regulation
D to the  Securities  Act  of  1933  for a  consideration  of  $.325  per  share
representing  one-half the market price of the common  shares at March 14, 1996,
the date of the contract,  reflecting the receipt of unregistered  common shares
and the risk of the  holding  period  until  they may be sold  publicly.  Of the
550,000  shares,  50,000  shares were  allocated  to expense  reimbursement  and
500,000  shares   allocated  to  public   relations   consulting.   Certificates
representing  the 100,000 common shares were issued in July, 1996. As of January
31,  1997,  certificates   representing  the  500,000  common  shares  had  been
authorized  but not  issued.  The  Company  has also  issued to OTC  500,000 "A"
Options  which are  exercisable  at $1.00 through March 14, 1999 and 500,000 "B"
Options,  which  are  exercisable  at $2.00  through  March  14,  1999.  Until a
registration  statement  relating to the common shares underlying the options is
effective,  certificates  representing  the shares  into which the  options  are
exercised will bear a legend restricting transfer in the absence of an effective
registration with the Commission or an exemption therefrom.

NOTE H -- ISSUANCE OC COMMON STOCK

     On June 4, 1996,  the Company  sold $8,500 of  convertible  debentures  and
converted them into 11,333 common shares.

     On June 4, 1996, the Company sold $25,000 of common shares at $1.00 through
the exercise of 25,000 "A" Warrants.

     As of  July  31,  1996,  the  Company  had  converted  the  balance  of the
outstanding convertible debentures in the amount of $132,000 into 176,000 common
shares at $.75 per share.

     As of July 31, 1996, the Company sold $10,000 of convertible debentures and
converted them in to 13,333 shares of common stock.

     As of July 31, 1996, the Company sold an additional  convertible  debenture
in the amount of $10,000 which was  converted  into 13,333 common shares at $.75
per share.

     As of July 31, 1996,  the Company sold  $100,000 of common  shares at $1.00
through the exercise of 100,000 "A" Warrants.

     As of July 31, 1996, the Company sold $32,000 of common shares at $1.00 per
share through the exercise of 32,000 "B" Warrants.

     As of July 31, 1996, the Company issued 50,000 common shares  pursuant to a
private  placement  under Rule 504 of the  Securities Act of 1933, as amended at
$.50 per share for an aggregate consideration of $25,000.

     As of September  30, 1996,  the Company sold 18,000  common shares at $1.00
per  share  through  the  exercise  of  18,000  "B"  Warrants  for an  aggregate
consideration of $18,000.

     As of January 31, 1997, 732,645  nonstatutory options were exercised for an
aggregate consideration of $2,197,935.

                                       12
<PAGE>

NOTE  I -- EMPLOYMENT AGREEMENT

     a. Employment Agreement with Jay Bendis

     On  November  3, 1995,  the Company  entered  into a three year  employment
agreement  with Jay  Bendis,  Vice-President-Marketing  and  Sales.  Under  this
agreement,  Mr. Bendis received an annual salary of $24,000 per year until April
30, 1996 and presently  receives $48,000 per year. When the Company generates an
aggregate of $500,000 gross revenues from the sale of biomedical  products,  Mr.
Bendis'  salary will be  increased  to $60,000  per year.  In  addition,  to his
salary,  Mr. Bendis will receive a bonus equal to 2% of the gross revenus of the
Company  of  $1,000,000  per  fiscal  year  until  such  annual  revenues  reach
$3,000,000,  1.5% of gross revenues  between  $3,000,000 and $5,000,000 per year
and 1% thereafter.

     In addition,  in  consideration of past services valued at $125,000 or $.25
per share,  Mr.  Bendis  received the right to receive  500,000  common  shares.
Certificates  representing  400,000  common shares are being held by the Company
and shall not vest until the happening of the following events:

     100,000 shares upon the Company's achieving $,000,00 in gross revenues from
sales of biomedical products;

     100,000  shares upon the Company's  achieving  $2,000,00 in gross  revenues
from sales of biomedical products;

     100,000  shares upon the Company's  achieving  $3,000,00 in gross  revenues
from sales of biomedical products;

     100,000  shares upon the Company's  achieving  $4,000,00 in gross  revenues
from sales of biomedical products.

     Certificates  representing  shares which have not vested on or before April
30, 1998 (or the end of the next succeeding fiscal year in the event the Company
changes its fiscal year) will be returned to the Company's  stock transfer agent
for  cancellation.  No bonuses  will be paid or shares  vest  subsequent  to any
election by Mr.  Bendis to terminate  agreement or his  discharge for cause from
employment  by the  Company.  Mr.  Bendis  also is  entitled  to receive  health
insurance,  participating  in stock  option or similar  plans or other  benefits
offered  generally to management  employees and  reimbursement  of out-of-pocket
expenses.

     b. Employment Agreement with Edmund Jaskiewicz

     On  November  3, 1995,  the Company  entered  into a three year  employment
agreement with Jay Bendis, Executive  Vice-President.  Under this agreement, Mr.
Jaskiewicz  received  an annual  salary of $24,000 per year until April 30, 1996
and presently receives $48,000 per year. When the Company generates an aggregate
of $500,000 gross revenues from the sale of biomedical products, Mr. Jaskiewicz'
salary will be increased to $60,000 per year.  In addition,  to his salary,  Mr.
Jaskiewicz will receive a bonus equal to 2% of the gross revenues of the Company
of $1,000,000 per fiscal year until such annual revenues reach $3,000,000,  1.5%
of gross revenues between  $3,000,000 and $5,000,000 per year and 1% thereafter.
No bonuses  will be paid or shares  vest  subsequent  to any  election by Edmund
Jaskiewicz  to  terminate  this  agreement  or  his  discharge  for  cause  from
employment by the Company.  Mr.  Jaskiewicz  also is entitled to receive  health
insurance,  participating  in stock  option or similar  plans or other  benefits
offered  generally to management  employees and  reimbursement  of out-of-pocket
expenses.

                                       13
<PAGE>

     c. Employment Agreement with Stan Cipkowski

     On  November  3, 1995,  the Company  entered  into a three year  employment
agreement with Stan Cipkowski,  President.  Under this agreement,  Mr. Cipkowski
received an annual salary of $36,000 per year until April 30, 1996 and presently
receives  $60,000 per year. When the Company  generates an aggregate of $500,000
gross revenues from the sale of biomedical products, Mr. Cipkowski's salary will
be increased to $72,000 per year. In addition, to his salary, Mr. Cipkowski will
receive a bonus equal to 2% of the gross  revenus of the  Company of  $1,000,000
per fiscal  year until such  annual  revenues  reach  $3,000,000,  1.5% of gross
revenues  between  $3,000,000  and  $5,000,000  per year and 1%  thereafter.  No
bonuses will be paid or shares vest subsequent to any election by Mr.  Cipkowski
to  terminate  agreement  or his  discharge  for cause  from  employment  by the
Company.   Mr.   Jaskiewicz  also  is  entitled  to  receive  health  insurance,
participating  in stock  option  or  similar  plans or  other  benefits  offered
generally to management employees and reimbursement of out-of-pocket expenses.

NOTE J - DEVELOPMENT STAGE

     The Company was  considered to be a  development  stage company with little
operating  history  subsequent to its  reorganization  and the  commencement  of
development of its newly acquired bio-medical technolgies which are, at present,
its core business.  The Company has funded these activities  through the sale of
convertible  debentures which were subsequently converted into common shares and
through warrant and nonstatory stock option  exercise.  During the quarter ended
January 31, 1997,  the Company  started  commercial  production of its drug test
kits and has what managment maintains are adequate resources  adequately to fund
its continuing operations.

NOTE K - SUBSEQUENT EVENT

     Subsequent  to the  date of the  financial  statements,  20 8%  Series  "A"
Preferred Shares were converted into 75,641 common shares.


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

     Development Stage Activities
--------------------------------------------------------------------------------
     Until 1991,  the Company was  involved in marketing  educational  books and
software to schools and municipal libraries and audiovisual educational packages
throughout the United States.  In 1991, the Company reduced its concentration on
this market because of competition,  increasing costs of doing business and slow
collections from municipalities and sought new technologies in emerging markets.
The Company has continued one small  segment of its original  business,  that of
selling audiovisual packages to libraries.

     The Company was  considered to be a  development  stage company with little
operating  history  subsequent to its  reorganization  and the  commencement  of
development of its newly acquired bio-medical technolgies which are, at present,
its core  business.  These  activities  have  been  funded  through  the sale of
convertible  debentures aggregating $1,425,500 which were subsequently converted
to common shares at $.75 per share,  and received  $175,000 through the exercise
of 143,000 "A" warrants at $1.00 and 32,000 "B" warrants at $1.00 per share. The
Company also sold 150 convertible  preferred  shares at $10,000 per share for an
aggregate  consideration  of $1,500,000  and net proceeds of  $1,405,000.  As of
January 31,  1997,  the Company  sold  732,645  common  shares for an  aggregate
consideration of $2,197,935  through the exercise of nonstatutory stock options.
As of January 31, 1997,  the Company has started  commercial  production  of its
drug testing kits and has what  managment  maintains  are adequate  resources to
adequately fund its operations.

                                       14
<PAGE>

     Results  of  Operations  for the Nine  Months  Ended  January  31,  1997 as
Compared to the Nine Months Ended January 31, 1996.
--------------------------------------------------------------------------------
     Revenues  from the book segment of the business were $ 237,538 for the nine
months ended  January 31, 1997 as compared to $120,261 for the nine months ended
Januray 31, 1996  representing a increase of $117,277 or 197%.  This increase in
book sales is  directly  attributable  to the  Company's  reorganization  of its
telemarketing  activities and a bulk inventory purchase at significant  savings.
Costs of goods sold for the nine months  ended  January 31, 1997 were $87,820 as
compared to $61,409 for the nine months ended  January 31, 1996  representing  a
cost of goods sold  percentage  of 36.9 % for the nine months ended  January 31,
1997 as compared to 51.1% for the nine months ended January 31, 1996.  This cost
reduction is the result of the  purchase of a  significant  book  inventory at a
greatly reduced cost.

     Revenues  from the initial sales of drug testing kits were $192,963 for the
nine  months  ended  January 31,  1997.  Costs of goods sold for the nine months
ended January 31, 1997 was $62,601 or 32.4%. This cost represents a reduction of
31.8% from the cost  ratio as of  October  31,  1996 due to the  purchasing  raw
material in commercial amounts.

     General and administrative costs for the nine months ended January 31, 1997
were  $583,569,  an  increase of 99.3% over  expenses  of $292.749  for the nine
months ended  January 31, 1996.  These  increased  costs are the result of labor
costs for executive  and office  personnel of $255,849,  legal and  professional
expenses of $37,292, office expense of $137,391,  marketing expense of $145,604,
product  development  of $49,887 and rent of $7,433.  Research  and  development
expense of $74,978 for the nine months ended  January 31, 1997 was $153,644 less
than the $228,622  expended  during the nine months ended January 31, 1996. This
decrease in research  and  development  is the result of gradual  completion  of
development of the drug testing delivery system.

     Results of  Operations  for the Three  Months  Ended  January  31,  1997 as
Compared to the Three Months Ended January 31, 1996.
--------------------------------------------------------------------------------
     Revenues  from the book segment of the business were $188,951 for the three
months ended  January 31, 1997 as compared to $37,845 for the three months ended
January 31, 1996  representing a increase of $151,106 or 399%.  This increase in
book sales is  directly  attributable  to the  Company's  reorganization  of its
telemarketing  activities and a bulk inventory purchase at significant  savings.
Costs of goods sold for the three months ended  January 31, 1997 were $62,042 as
compared to $35,036 for the three months ended January 31, 1996  representing  a
cost of goods sold  percentage  of 32.8 % for the three months ended January 31,
1997 as compared to 92.6% for the three months ended January 31, 1996. This cost
reduction is the result of the  purchase of a  significant  book  inventory at a
greatly reduced cost.

     Revenues from sales of drug testing kits were $192,963 for the three months
ended  January  31, 1997  compared  to $-0- for the same period in fiscal  1996.
Costs of goods sold for the three months  ended  January 31, 1997 was $62,601 or
32.4%.

     General and  administrative  costs for the three months  ended  January 31,
1997 were  $247,456,  an increase of 1% over  expenses of $226,077 for the three
months ended  January 31,  1996.  The increase of $21,379 is the result of labor
costs for executive and office  personnel.  Research and development  expense of
$8,228 for the three  months ended  January 31, 1997 was $121,993  less than the
$130,221  expended during the three months ended January 31, 1996. This decrease
in research  and  development  is the result of gradual  completion  of research
leading to the development of the drug testing delivery system.

                                       15
<PAGE>

     Liquidity  And  Capital  Resources  As Of The End Of Fiscal  Period  Ending
October 31, 1996.
--------------------------------------------------------------------------------
     The Company's cash balance was $2,302,566 with $1,021,867 in treasury bills
and  certificates  of deposit  invested  for six months and working  capital was
$3,852,189 as at January 31, 1997. These balances are the result of the sale and
conversion of  convertible  debentures  in the  principal  amount of $18,500 and
$175,000 through the exercise of 143,000 "A" warrants and 32,000 "B" warrants at
$1.00 per share.  The  Company  also sold 150  convertible  preferred  shares at
$10,000 per share for an aggregate  consideration of $1,500,000.  Finally, as of
January 31,  1997,  the Company  sold  732,645  common  shares for an  aggregate
consideration of $2,197,935 through the exercise of nonstatutory stock options.

     Management believes that the present cash balance will pay the ongoing cost
of the  biomedical  business.  As of January 31,  1997,  the Company has started
commercial production of its drug testing kits and no longer considers itself to
be a development stage company.


                                       16
<PAGE>

                                     PART II
                                OTHER INFORMATION

Item 1. Legal Proceedings.

     1. In  February,  1994,  Robert  Friedenberg,  as owner of the two  medical
technology  companies,  MDI and Gendex,  acquired by the Company, in the name of
these corporations, filed suit to have the Share Exchange Agreement rescinded on
the grounds of breach of contract.  In order to avoid the  imposition of damages
against  it,  the  Company  filed  cross  claim,  in  July,  1994,  against  Dr.
Friedenberg,  seeking  enforcement  of the  Agreement of Exchange.  In November,
1995, after a trial, the court dismissed Dr.  Friedenberg's  lawsuit and allowed
the  Company's  cross claim to proceed to trial.  The Company  never  issued any
common shares to Dr.  Friedenberg  pursuant to the Share Exchange  Agreement and
has rescinded the transaction.

     2. In June,  1995, the Company filed a lawsuit against Jackson Morris,  Dr.
Friedenberg's  counsel,  for the breach of attorney-client  relationship and his
fiduciary duty and negligence in representing the Company in matters relating to
Dr.  Friedenberg  and in the  preparation of the Share Exchange  Agreement.  The
Company's lawsuit demands damages in the amount of $1,000,000.

Item 2. Changes in Securities

     The Company  amended  its  certificate  of  incorporation  authorizing  the
issuance of 5,000,000 shares of preferred stock,  $.01 par value each. The board
of directors of the Company has the  authority,  without  further  action by the
holders of the outstanding common shares, to issue preferred shares from time to
time in one or more classes or series, to fix the number of shares  constituting
any class or series and the stated  value  thereof,  if  different  from the par
value,  and to fix the terms of any such  series or  class,  including  dividend
rights, dividend rates, conversion or exchange rights, voting rights, rights and
terms of redemption  (including  sinking fund provisions),  the redemption price
and the liquidation preference of such class or series.

     The Company sold 150 convertible  preferred shares at $10,000 per share for
an aggregate  consideration of $1,500,000 less $90,000 in commissions and $5,000
in offering expenses for a net consideration of $1,405,000. Each preferred share
is convertible  into common shares  pursuant to the following  formula:  $10,000
divided by the lesser of $6.07 or 75% of the  average of the daily  closing  bid
prices for the five consecutive  trading days ending on the trading day prior to
the day on which  Preferred  Shares are converted to common shares.  All accrued
but unpaid  dividends are payable in cash. The Company has registered the common
shares  underlying  the  preferred  shares  with  the  Securities  and  Exchange
Commission.

     The  Company  has  reserved  a maximum  of  600,000  common  shares for the
conversion of preferred shares.

     The Company has issued 24,712 common share purchase warrants.  The warrants
are exercisable at $3.00 per share for a period of two years from the date of an
effective registration statement relating to the underlying common shares.

     On July 23, 1996, the Company filed a registration  statement on Form 10-SB
pursuant  to  the  Securities  Exchange  Act  of  1934  ("Exchange  Act").  That
registration statement became effective in September, 1996 and, as a result, the
Company  is  subject  to the  informational  requirements  of said act and files
reports,  proxy  statements,  and  other  information  with the  Securities  and
Exchange Commission.

     The Company's  registration statement on Form SB-2 the purpose of which was
to register  600,000  common shares  underlying  the conversion of the preferred
shares and 24,712  common  shares  underlying  the  exercise of the Warrants was
declared effective in January, 1997.

Item 3. Defaults upon Senior Securities

     None.

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

     Holders of a majority of the issued and outstanding  common shares approved
an amendment to the Company's  certificate  of  incorporation  which  authorized
5,000,000  preferred shares,  $.01 par value per share and ratified the adoption
of the Company's 1996 Nonstatutory Option Plan.


                                       17
<PAGE>

                                   SIGNATURES



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




                                    AMERICAN BIO MEDICA CORPORATION
                                               (Registrant)

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



              Dated: March 12, 1997







                                       18
<PAGE>