**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D. C. 20549




**FORM
      10-QSB**





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




For
      the
      quarterly period ended March 31, 2007.





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





For
      the
      transition period from ____________ to ____________





Commission
      File Number: 0-28666





**AMERICAN
      BIO MEDICA CORPORATION**


(Exact
      name of small business issuer as specified in its charter)





**New
                York**
            **14-1702188**(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)




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


(Address
      of principal executive offices)





**800-227-1243**


(Issuer's
      telephone number)





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes
xNo
o





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





21,719,768
      Common Shares as of May 10, 2007





Transitional
      Small Business Disclosure Format: Yes oNo x







PART
      I


FINANCIAL
      INFORMATION




**American
        Bio Medica Corporation**
 **Balance
          Sheets**


**March
                31,**
            
            **December
                31,****2007**
            
            **2006****(Unaudited)****Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            467,000
            
            $
            641,000Accounts
                receivable, net of allowance of $105,000 at both March 31, 2007 and
                December 31, 2006
            
            
            1,325,000
            
            
            1,313,000Inventory-net
                of reserve for slow moving andobsolete
                inventory of $250,000 at both March 31, 2007 and December 31,
                2006
            
            
            5,111,000
            
            
            4,859,000Prepaid
                and other current assets
            
            
            228,000
            
            
            165,000Total
                current assets
            
            
            7,131,000
            
            
            6,978,000Property,
                plant and equipment, net
            
            
            2,326,000
            
            
            1,982,000Other
                assets
            
            
            56,000
            
            
            57,000Total
                assets
            
            $
            9,513,000
            
            $
            9,017,000**Liabilities
                and Stockholders’ Equity**Current
                liabilities:Accounts
                payable
            
            $
            1,170,000
            
            $
            1,091,000Accrued
                liabilities
            
            
            311,000
            
            
            509,000Wages
                payable
            
            
            266,000
            
            
            269,000Line
                of credit
            
            
            556,000
            
            
            176,000Current
                portion of mortgages and notes payable
            
            
            111,000
            
            
            17,000Other
                current liabilities
            
            
            60,000
            
            
            60,000Total
                current liabilities
            
            
            2,474,000
            
            
            2,122,000Long
                term portion of mortgages and notes payable
            
            
            1,183,000
            
            
            758,000Other
                long term liabilities
            
            
            100,000
            
            
            100,000Total
                liabilities
            
            
            3,757,000
            
            
            2,980,000Stockholders’
                equity:Preferred
                stock; par value $.01 per share; 5,000,000 shares authorized; none
                issued
                and outstandingCommon
                stock; par value $.01 per share; 50,000,000 shares authorized; 21,719,768
                and 21,719,768 shares issued and outstanding at March 31, 2007 and
                December 31, 2006, respectively
            
            
            217,000
            
            
            217,000Additional
                paid-in capital
            
            
            19,234,000
            
            
            19,218,000Accumulated
                deficit
            
            
            (13,695,000
            )
            
            (13,398,000
            )Total
                stockholders’ equity
            
            
            5,756,000
            
            
            6,037,000Total
                liabilities and stockholders’ equity
            
            $
            9,513,000
            
            $
            9,017,000




The
      accompanying notes are an integral part of the financial statements




2




**American
                Bio Medica Corporation****Statements
                of Operations****(Unaudited)****For
                The Three Months Ended****March
                31,****2007**
            
            **2006**Net
                sales
            
            $
            3,175,000
            
            $
            3,423,000Cost
                of goods sold
            
            
            1,916,000
            
            
            1,781,000Gross
                profit
            
            
            1,259,000
            
            
            1,642,000Operating
                expenses:Research
                and development
            
            
            169,000
            
            
            154,000Selling
                and marketing
            
            
            692,000
            
            
            811,000General
                and administrative
            
            
            672,000
            
            
            645,0001,533,000
            
            
            1,610,000Operating
                income
            
            
            (274,000
            )
            
            32,000Other
                income (expense):Interest
                income
            
            
            4,000
            
            
            1,000Interest
                expense
            
            
            (27,000
            )
            
            (17,000
            )(23,000
            )
            
            (16,000
            )Income/(loss)
                before provision for income taxes
            
            
            (297,000
            )
            
            16,000Income
                taxes
            
            
            
            
            
            (5,000
            )Net
                income/(loss)
            
            $
            (297,000
            )
            $
            11,000Basic
                and diluted income/(loss) per common share
            
            $
            (.01
            )
            $
            0.00Weighted
                average shares outstanding -basic
            
            
            21,719,768
            
            
            21,359,768Dilutive
                effect of stock options and warrants
            
            
            
            
            
            150,372Weighted
                average shares outstanding -diluted
            
            
            21,719,768
            
            
            21,510,140




The
      accompanying notes are an integral part of the financial statements




3




**American
                Bio Medica Corporation****Statements
                of Cash Flows****(Unaudited)****For
                The Three Months Ended****March
                31,****2007**
            
            **2006****Cash
                flows from operating activities:**Net
                income/(loss)
            
            $
            (297,000
            )
            $
            11,000Adjustments
                to reconcile net income to cash:Depreciation
            
            
            117,000
            
            
            95,000Non
                cash compensation expense
            
            
            16,000Changes
                in:Accounts
                receivable
            
            
            (12,000
            )
            
            (45,000
            )Inventory
            
            
            (253,000
            )
            
            522,000Prepaid
                and other current assets
            
            
            (62,000
            )
            
            (172,000
            )Accounts
                payable
            
            
            79,000
            
            
            (700,000
            )Accrued
                liabilities
            
            
            (199,000
            )
            
            25,000Wages
                payable
            
            
            (2,000
            )
            
            6,000Net
                cash used in operating activities
            
            
            (613,000
            )
            
            (258,000
            )**Cash
                flows from investing activities:**Purchase
                of property, plant and equipment
            
            
            (460,000
            )
            
            (6,000
            )Net
                cash used in investing activities
            
            
            (460,000
            )
            
            (6,000
            )**Cash
                flows from financing activities:**Debt
                payments
            
            
            (20,000
            )
            
            (15,000
            )Proceeds
                from debt financing
            
            
            539,000Proceeds
                from line of credit
            
            
            380,000
            
            
            359,000Net
                cash provided by financing activities
            
            
            899,000
            
            
            344,000**Net
                increase / (decrease) in cash and cash
                equivalents**
            
            
            (174,000
            )
            
            80,000Cash
                and cash equivalents - beginning of period
            
            
            641,000
            
            
            446,000**Cash
                and cash equivalents - end of period**
            
            $
            467,000
            
            $
            526,000**Supplemental
                disclosures of cash flow information**Cash
                paid during period for interest
            
            $
            27,000
            
            $
            17,000




The
      accompanying notes are an integral part of the financial statements




4





Notes
      to
      financial statements (unaudited)





March
      31,
      2007





Note
      A -
      Basis of Reporting





The
      accompanying unaudited financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial information and with the instructions to Form 10-QSB.
      Accordingly, they do not include all of the information and footnotes required
      by accounting principles generally accepted in the United States of America
      for
      complete financial statements. In the opinion of management, such statements
      include all adjustments, which are considered necessary for a fair presentation
      of the financial position of American Bio Medica Corporation (the "Company"
      or
      "ABMC") at March 31, 2007, and the results of its operations, and cash flows
      for
      the three-month periods ended March 31, 2007 and 2006. The results of operations
      for the three-month period ended March 31, 2007 are not necessarily indicative
      of the operating results for the full year. These financial statements should
      be
      read in conjunction with the Company's audited financial statements and related
      disclosures for the year ended December 31, 2006 included in the Company's
      Form
      10-KSB.





During
      the year ended December 31, 2006, the Company earned a net income of $196,000
      from net sales of $13,838,000, and had net cash provided by operating activities
      of $342,000. During the three months ended March 31, 2007, the Company sustained
      a net loss of $297,000 from net sales of $3,175,000. The Company had net cash
      used in operating activities of $613,000 for the first three months of 2007
      primarily as a result of a net loss, reductions of accrued liabilities and
      increases in inventory. During the first three months of 2007, the Company
      continued to take steps to improve its financial prospects including focusing
      on
      research and development and selling and marketing, while investing in
      automation equipment and expanding manufacturing capacity to meet the expected
      need for increased production.





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





NEW
      ACCOUNTING STANDARDS





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





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





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





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




5





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





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





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




In
      June
      2006 the FASB issued FIN 48 “Accounting for Uncertainty in Income Taxes—an
      interpretation of FASB Statement No. 109”. This Interpretation clarifies the
      accounting for uncertainty in income taxes recognized in an enterprise’s
      financial statements in accordance with FASB Statement No. 109, “Accounting for
      Income Taxes” *.* This
      Interpretation prescribes a recognition threshold and measurement attribute
      for
      the financial statement recognition and measurement of a tax position taken
      or
      expected to be taken in a tax return. This Interpretation also provides guidance
      on derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure, and transition.




The
      evaluation of a tax position in accordance with this Interpretation is a
      two-step process. The first step is recognition: The enterprise determines
      whether it is more likely than not that a tax position will be sustained upon
      examination, including resolution of any related appeals or litigation
      processes, based on the technical merits of the position. In evaluating whether
      a tax position has met the more-likely-than-not recognition threshold, the
      enterprise should presume that the position will be examined by the appropriate
      taxing authority that would have full knowledge of all relevant information.
      The
      second step is measurement: A tax position that meets the more-likely-than-not
      recognition threshold is measured to determine the amount of benefit to
      recognize in the financial statements. The tax position is measured at the
      largest amount of benefit that is greater than 50 percent likely of being
      realized upon ultimate settlement.




Differences
      between tax positions taken in a tax return and amounts recognized in the
      financial statements will generally result in one of the following:




a.
            An
                increase in a liability for income taxes payable or a reduction of
                an
                income tax refund receivable  b.
            A reduction in a deferred tax asset or an increase
              in a
              deferred tax liability  c.
            Both (a) and (b).




An
      enterprise that presents a classified statement of financial position should
      classify a liability for unrecognized tax benefits as current to the extent
      that
      the enterprise anticipates making a payment within one year or the operating
      cycle, if longer. An income tax liability should not be classified as a deferred
      tax liability unless it results from a taxable temporary difference (that is,
      a
      difference between the tax basis of an asset or a liability as calculated using
      this Interpretation and its reported amount in the statement of financial
      position). This Interpretation does not change the classification requirements
      for deferred taxes.




6





Tax
      positions that previously failed to meet the more-likely-than-not recognition
      threshold should be recognized in the first subsequent financial reporting
      period in which that threshold is met. Previously recognized tax positions
      that
      no longer meet the more-likely-than-not recognition threshold should be
      derecognized in the first subsequent financial reporting period in which that
      threshold is no longer met. Use of a valuation allowance as described in
      Statement 109 is not an appropriate substitute for the derecognition of a tax
      position. The requirement to assess the need for a valuation allowance for
      deferred tax assets based on the sufficiency of future taxable income is
      unchanged by this Interpretation. The Company does not believe that the adoption
      of FIN 48 will have a significant effect on its financial
      statements.





In
      September 2006 the FASB issued FAS No. 157 "Fair Value Measurements". FAS No.
      157 defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), and expands disclosures about
      fair value measurements. This Statement is effective for financial statements
      issued for fiscal years beginning after November 15, 2007, and interim periods
      within those fiscal years. This Statement applies under other accounting
      pronouncements that require or permit fair value measurements, the FASB having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, this Statement does not require
      any
      new fair value measurements. However, for some entities, the application of
      this
      Statement will change current practice. The Company does not believe that the
      adoption of FAS No. 157 will have a significant effect on its financial
      statements.





In
      September 2006 the Securities and Exchange Commission issued Staff Accounting
      Bulletin (SAB) 108. The interpretation expresses the staff’s views regarding the
      process of quantifying financial statement misstatements. The staff is aware
      that certain registrants do not consider the effects of prior year errors on
      current year financial statements, thereby allowing improper assets or
      liabilities to remain unadjusted. While these errors may not be material if
      considered only in relation to the balance sheet, correcting the errors could
      be
      material to the current year income statement. The interpretations in this
      Staff
      Accounting Bulletin were issued to address diversity in practice in quantifying
      financial statement misstatements and the potential under current practice
      for
      the build up of improper amounts on the balance sheet.





SAB
      108
      notes that a materiality evaluation must be based on all relevant quantitative
      and qualitative factors. This analysis generally begins with quantifying
      potential misstatements to be evaluated. The diversity in approaches for
      quantifying the amount of misstatements primarily stems from the effects of
      misstatements that were not corrected at the end of the prior year (“prior year
      misstatements”). These prior year misstatements should be considered in
      quantifying misstatements in current year financial statements.





If
      the
      misstatement that exists after recording the adjustment in the current year
      financial statements is material (considering all relevant quantitative and
      qualitative factors), the prior year financial statements should be corrected,
      even though such revision previously was and continues to be immaterial to
      the
      prior year financial statements. Correcting prior year financial statements
      for
      immaterial errors would not require previously filed reports to be
      amended.  Such correction is permitted to be made the next time the
      registrant files the prior year financial statements.





To
      provide full disclosure, registrants electing not to restate prior periods
      should reflect the effects of initially applying this guidance in their annual
      financial statements covering the first fiscal year ending after November 15,
      2006. The cumulative effect of the initial application should be reported in
      the
      carrying amounts of assets and liabilities as of the beginning of that fiscal
      year, and the offsetting adjustment should be made to the opening balance of
      retained earnings for that year. Registrants should disclose the nature and
      amount of each individual error being corrected in the cumulative adjustment.
      The disclosure should also include when and how each error being corrected
      arose
      and the fact that the errors had previously been considered
      immaterial.




7





Prior
      to
      SAB 108, the Company used the “roll-over” method for accounting for audit
      differences. It was determined that under the roll-over method, a vacation
      accrual was not material to the financial statements taken as a whole in any
      given year. At December 31, 2006 unpaid vacation was estimated to be
      approximately $80,000, which is material to the Financial Statements of the
      Company under the SAB 108. This liability of $80,000 has accumulated steadily
      over a ten-year period. A change in accounting principle was recorded in 2006
      financial statements that had not been previously recorded. The adjustment
      is
      included in the beginning balances (December 31, 2005) of wages payable and
      the
      accumulated deficit.





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, 2007 and 2006:





**March
                31,**
              **2007**
            
            **March
                31,**
              **2006****Warrants**
            
            
            150,000
            
            
            2,223,420**Options**
            
            
            3,993,080
            
            
            4,118,080





For
      the
      three months ended March 31, 2007 and 2006 the number of securities not included
      in the diluted Earnings Per Share, because the effect would have been
      anti-dilutive, were 4,143,080 and 4,624,500 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 from prior periods to conform to the current period
      presentation.





Note
      E -
      Lines of Credit





On
      October 5, 2006, the Company was notified that the maximum amount available
      under its line of credit with First Niagara Financial Group, Inc. (“FNFG”) was
      increased from $350,000 to $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 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 repayment of all
      principal annually on this line of credit. The amount outstanding on this line
      of credit at March 31, 2007 was $506,000.





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 (see
      Note G). The interest rate is .50% above the FNFG prime rate and principal
      may
      be repaid at any time and borrowed again as needed. There is no requirement
      for
      repayment of all principal annually on this line of credit. The Company intends
      to repay the funds drawn down on this line within one year to allow borrowing
      of
      additional amounts related to future payments due under the Sublicense
      Agreement. The amounts outstanding on this line of credit at March 31, 2007
      and
      March 31, 2006 were $50,000 and $75,000 respectively.




8





Note
      F -
      Term loan





On
      January 22, 2007, the Company entered into a Term Note (the “Note”) with First
      Niagara Financial Group (“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 Registrant's monthly
      payment will be $10,714 and payments will commence 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





Note
      G
      -Sublicense Agreement




On
      February 28, 2006, the Company entered into a non-exclusive Sublicense Agreement
      (the "Agreement") related to certain patents to allow the Company to expand
      its
      contract manufacturing operations. Under this Agreement, the Company is
      committed to pay a non-refundable fee of $175,000 over the course of 2 years,
      of
      which $75,000 was paid in the first quarter of 2006. The next payment of $50,000
      was paid in February 2007. The Company would also be required to pay royalties
      for products the Company manufactures that fall within the scope of these
      patents. The Company has not manufactured any products that fall within the
      scope of these patents, and therefore, no royalty payments are currently
      required.





Note
      H -
      Integrated Bio Technology Agreement





On
      March
      29, 2006, the Company entered into a royalty agreement with Integrated Bio
      Technology Corporation (“IBC”). IBC is the owner of the RSV test and previously
      purchased the tests from the Company, via a contract manufacturing agreement,
      for resale to its distributor. At December 31, 2005 IBC had outstanding amounts
      due to ABMC totaling approximately $119,000. To address this outstanding
      balance, and to streamline the delivery of product to IBC’s distributor, the
      Company agreed to work directly with IBC’s distributor to receive orders,
      manufacture product and execute all invoicing and collection directly from
      the
      distributor. Effective January 1, 2006, the Company will pay a royalty equal
      to
      20% of total sales to IBC and/or its distributor. The Company will pay only
      25%
      of royalties earned during the first two years, with the remaining 75% applied
      to amounts currently owed to ABMC by IBC. If the entire amount receivable from
      IBC is not earned through royalties during the first two years of the term
      of
      the royalty Agreement, all payments to IBC will cease until the full amount
      owed
      to the Company is satisfied. From the inception of the agreement with IBC
      through the first three months of 2007, ABMC manufactured and sold approximately
      $681,000 of the RSV tests to IBC’s distributor. The royalties earned on these
      sales are approximately $137,000, of which $104,000 has been applied to the
      prepaid royalty, leaving a balance of approximately $15,000 as of March 31,
      2007. Payments to IBC will cease until approximately $75,000 in sales of the
      RSV
      test have occurred, in accordance with the agreement.





Note
      I -
      Stock Option Grants





In
      June
      2006, the Company’s Board of Directors granted a stock option to purchase 72,000
      shares of the Company’s common stock to the Company’s Chief Financial Officer,
      and an option to purchase 3,000 shares of the Company’s common stock to an
      employee in the Company’s R&D division. Both option grants have exercise
      prices of $1.05 (the closing price of the Company’s common shares on the date of
      grant) and vest 100% on the one-year anniversary of the date of the grant.
      In
      accordance with FAS 123(R) (see “New Accounting Standards”), the Company will
      recognize $63,347 in non-cash compensation expense related to these grants
      over
      twelve months. Included in the three months ended March 31, 2007 is $16,000
      of
      this non-cash compensation expense.




9




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





MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR
      THE
      THREE MONTHS ENDED MARCH 31, 2007 AND 2006





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





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





Critical
      accounting policies





During
      the three months ended March 31, 2007, 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, 2006.





Results
      of operations for the three months ended March 31, 2007 as compared to the
      three
      months ended March 31, 2006





Net
      sales
      were $3,175,000 for the three months ended March 31, 2007 as compared to
      $3,423,000 for the three months ended March 31, 2006, a decrease of $248,000
      or
      7.2%. Increases in national account sales and international sales were offset
      by
      declines in direct, in-house and contract manufacturing sales. The largest
      decline is in the area of contract manufacturing sales, which was $291,000
      less
      in the first quarter of 2007 than in the first quarter of 2006. While the
      Company saw a decrease in contract manufacturing sales on a comparative quarter
      to quarter basis, the Company does not expect to see a decline in contract
      manufacturing sales in fiscal year 2007 as compared to fiscal year 2006.





First
      quarter sales of the Company’s Rapid Drug Screen® (RDS®) InCup® were up slightly
      over 2006 as were sales of the Oralstat® oral fluid test and the Rapid TOXTM
cassette product. These increases were offset by declines in RDS and Rapid
      TEC®
sales during the first three months of 2007, compared to the same period a
      year
      ago. Some of the RDS attrition is a result of customers ordering the InCup
      (rather than the RDS) due to its “all inclusive” cup format and the Rapid TOX
      (rather than the RDS) due to its lower cost. The Company anticipates continued
      growth in sales of the Rapid TOX product as it continues to gain market
      acceptance and penetrates new markets. The Company also anticipates continued
      growth in its Oralstat oral fluid test and contract manufacturing
      operations.





During
      the three months ended March 31, 2007, the Company continued its extensive
      program to market and distribute its urine and oral fluid based point of
      collection tests for drugs of abuse. The Company also continued marketing its
      Rapid Reader®, the first all inclusive drug screen interpretation and data
      management system cleared by the Food and Drug Administration (“FDA”). Sales of
      the Rapid Reader totaled $13,000 during the three months ended March 31, 2007
      compared to $17,000 during the first quarter of 2006.





10





The
      Company continued its contract manufacturing operations for unaffiliated third
      parties during the first three months of 2007. The Company is evaluating several
      other requests for contract manufacturing including incorporation of the
      Company’s drugs of abuse tests into another test manufactured by an unrelated
      third party that is used in hospitals, emergency rooms and clinics, and
      development of variations of the Company’s current oral fluid product to meet
      specific market demands in Europe. Contract manufacturing sales during the
      first
      quarter of 2007 totaled $69,000, down from $360,000 a year ago.





The
      Company was notified during the third quarter of 2006, by one of the parties
      for
      whom the development of an HIV product was being done, that they had entered
      into a royalty agreement with a developer and a distributor, to share in the
      profits of sales of an already FDA cleared HIV test. The Company was
      subsequently notified that the party entering into a royalty agreement would
      no
      longer require our contract manufacturing services. The Company continues to
      manufacture an HIV test for another distributor. Further, the Company is
      currently evaluating its options related to securing FDA clearance, and
      identifying distribution channels through other contract manufacturing customers
      or other sources.





Cost
      of
      goods sold for the three months ended March 31, 2007 was $1,916,000 or 60.3%
      of
      net sales as compared to $1,781,000 or 52.0% of net sales for the three months
      ended March 31, 2006. The increase in cost of goods sold is due to fluctuations
      in the average cost of labor and overhead during the first quarter of 2007,
      stemming from the greater diversity and complexity of new products along with
      preparation for fulfilling anticipated orders during the remainder of 2007.
      Also
      affecting cost of goods are disposals of some inventory components manufactured
      during the introduction of the new Rapid TOX product in the fourth quarter
      of
      2005. These factors combined, resulted in charges of $185,000, or 5.8% of sales,
      to cost of sales in the first quarter of 2007.





While
      the
      Company has been able to control the cost of labor and overhead, the costs
      of
      some materials have risen since the first quarter of 2006. The Company continues
      its efforts to control the costs to produce its products. Since the summer
      of
      2006, the Company has invested nearly $1 million in equipment and facilities
      to
      both increase capacity and automate assembly. The single largest investment
      was
      approximately $654,000 for equipment at its facility in New Jersey to assemble
      and pouch the Rapid TOX product automatically. This automation will increase
      output and reduce the number of assemblers necessary to meet expected demand.
      Further, the Company acquired additional manufacturing space at its New Jersey
      facility during the fourth quarter of 2006, increasing manufacturing space
      by
      nearly 100%. Increased price pressure in the marketplace has limited the
      Company’s ability to recover manufacturing cost increases while maintaining
      market share. The Company continues to evaluate all aspects of its manufacturing
      and assembly processes to identify any areas of cost savings to improve gross
      margins.





Operating
      expenses decreased $77,000, or 4.8%, to $1,533,000 in the first three months
      of
      2007, compared to $1,610,000 in the same period in 2006. Increases of $27,000
      in
      general and administrative expense and $15,000 in research and development
      expense were offset by a decrease of $119,000 in selling and marketing expense.
      The increase in general and administrative expense was primarily due to
      increases in investor relations expense, salaries and wages, and non-cash
      compensation stemming from options granted during the second quarter of 2006.
      Operating expenses increased from 47.0% of net sales in the first three months
      of 2006, to 48.3% for the same period in 2007.





Research
      and development





Research
      and development (“R&D”) expenses for the three months ended March 31, 2007
      were $169,000, or 5.3%, of net sales compared to $154,000, or 4.5%, of net
      sales
      for the three months ended March 31, 2006. The increase in expense is primarily
      due to increases in salaries and wages, supplies, facilities expenses, and
      consulting fees offset by a decrease in FDA compliance costs. Management
      continues its overall strategy to: focus on new product development to meet
      the
      changing needs of the point of collection drug of abuse testing market; respond
      to requests from other contract manufacturing inquiries; and develop new uses
      of
      immunoassay lateral flow technology.




11





Selling
      and marketing expense





Selling
      and marketing expense was $692,000, or 21.8%, of net sales in the first three
      months of 2007. This represents a decrease of $119,000, from $811,000 or 23.7%
      of net sales in the same three months in 2006. This decrease is primarily
      attributable to reductions in personnel costs, advertising, royalty and
      miscellaneous expenses offset by increases in travel and trade show expense.
      Royalty expense relates to the agreement entered into with IBC (see Note H)
      and
      the sublicense agreement entered into during the first quarter of 2007(see
      Note
      G). 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.





General
      and administrative expense





General
      and administrative (G&A) expense increased $27,000 in the first three months
      of 2007 than the same period in 2006. Total G&A expense for the three months
      ended March 31, 2007 was $672,000, or 21.2% of net sales, compared to $645,000,
      or 18.8%, of net sales in the first three months of 2006. Increases in investor
      relations expense, personnel expenses, consulting fees, repairs to facilities,
      patents and license expense, and non-cash compensation were primarily
      responsible for the increase. The investor relations expense relates to two
      contracts signed in 2005 and 2006 with two investor relations firms. The
      contracts, one renewed on a month-to-month basis in February of 2007, together
      total $11,500 per month. Offsetting these increases were savings in
      telecommunications, bad debts and insurance.





LIQUIDITY
      AND CAPITAL RESOURCES AS OF MARCH 31, 2007





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





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





The
      Company has working capital of $4,657,000 at March 31, 2007 compared to working
      capital of $4,856,000 at December 31, 2006. The Company has historically
      satisfied its net working capital requirements, if needed, through cash
      generated by proceeds from private placements of equity securities with
      institutional investors. The Company has never paid any dividends on its common
      shares. The Company 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.





Net
      cash
      used in operating activities was $613,000 for the three months ended March
      31,
      2007 compared to net cash used in operating activities of $258,000 for the
      three
      months ended March 31, 2006. The net cash used in operating activities for
      the
      three months ended March 31, 2007 resulted primarily from a net loss, increases
      in inventory, and decreases in accrued liabilities.




12





Net
      cash
      used in investing activities was $460,000 for the three months ended March
      31,
      2007 compared to net cash used in investing activities of $6,000 for the three
      months ended March 31, 2006. The net cash used in both years was for investment
      in property, plant and equipment. Included in cash used in 2007 is $270,000
      representing 50% of the cost of automation equipment purchased for use in the
      Company’s New Jersey manufacturing facility. Delivery of the new equipment
      occurred in the first quarter of 2007. This investment is for machinery that
      will be used to assemble the Rapid TOX cassette product and in preparation
      for
      significant growth in demand expected for 2007.





Net
      cash
      provided by financing activities was $899,000 for the three months ended March
      31, 2007 consisting of proceeds of $380,000 from the Company’s lines of credit
      and $539,000 in proceeds from a five year term note entered into in the first
      quarter of 2007. The term note proceeds were used for the purchase of automation
      equipment in the New Jersey manufacturing facility. The term note was entered
      into w ith
      First
      Niagara Financial Group (“FNFG”). The term of the note is five (5) years with a
      fixed interest rate of 7.17%. The Company's monthly payment will be $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 term note in full
      or in part at any time during the term without penalty. There were no closing
      costs associated with this term note. The loan is secured by Company assets
      now
      owned or to be acquired. Net
      cash
      provided by financing activities in the first three months of 2006 was $344,000,
      representing proceeds from the Company’s line of credit offset by debt payments.





The
      Company has available two lines of credit with FNFG. The first line has a
      maximum available line of $875,000, not to exceed 70% of accounts receivable
      less than 60 days for general operating use. The interest rate is .25% above
      the
      FNFG prime rate. The Company is required to maintain net worth (stockholder’s
      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 repayment of all principal
      annually on this line of credit. The amount outstanding on this line of credit
      was $506,000 at March 31, 2007 and $284,000 at March 31, 2006. The second line
      of credit was obtained during the first quarter of 2006 for the limited purpose
      of paying amounts associated with a sublicense agreement executed during the
      first quarter. This line is for a maximum of $75,000 with an interest rate
      of
      .50% above the FNFG prime rate and the Company is not required to pay the
      principal down to $0 during each twelve-month period. The amount outstanding
      on
      this line of credit at March 31, 2007 was $50,000 and $75,000 at March 31,
      2006.





At
      March
      31, 2007, the Company had cash and cash equivalents of $467,000.





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





ITEM
      3.
      CONTROLS AND PROCEDURES





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




13





PART
      II





OTHER
      INFORMATION





Item
      1.
      Legal Proceedings:





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





Item
      2.
      Changes in Securities





None.





Item
      3.
      Defaults upon Senior Securities





None.





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




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.





14





SIGNATURES





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


AMERICAN
                BIO
                MEDICA CORPORATION
              (Registrant)By:
            /s/
              Keith E. PalmerEVP of Finance, Chief Financial Officer and Treasurer
              (Principal Accounting Officer and duly authorized
                Officer)


Dated:
      May 11, 2007




15