U. S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                   FORM 10-QSB-1A

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

     For the quarterly period ended October 31, 1996.

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

     For the transition period from                      to

     Commission File Number: 0-28666


                         AMERICAN BIO MEDICA CORPORATION
--------------------------------------------------------------------------------
              (Exact name of registrant as specified in its charter


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

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

                                  800-227-1243
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

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

     Indicate by check mark, whether the registrant::  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Exchange  Act of 1934 during
the  preceding 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             No  X 


     Indicate the number of shares  outstanding of each of the issuer's  classes
of stock as of the close of the period covered by this report.

       Class                                     Number of Shares Outstanding

       Common Shares                                   12,565,227

       Convertible Class "A" Preferred Shares                 150
<PAGE>

                                     PART I

                              FINANCIAL INFORMATION

     Item 1. Financial Statements

     The condensed  financial  statements for the periods ended October 31, 1996
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 October 31, 1996, and the results of
operations  and cash flows for the six month  periods ended October 31, 1995 and
1996.

     The Company's  results of operations during the six months of the Company's
fiscal year are not necessarily indicative of the results to be expected for the
full fiscal year.


                                       2
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                          (A Development Stage Company)
                                  BALANCE SHEET
<TABLE>
<CAPTION>

                                                                October 31, 1996
                                                 April 30, 1996  (unaudited)
                                                 --------------  --------------

                                             Assets
<S>                                                 <C>              <C>

Current assets
  Cash                                              $437,532          $188,479
  Investments-short term                                             1,411,866
  Accounts receivable                                 34,500            48,214
  Inventory                                           22,301            51,042
                                                      ------            ------
  Current assets                                     494,333         1,699,601

Capital assets-net                                    20,575            78,073

Other assets
  License rights                                     110,070            92,070
  Patent-costs                                        21,000            22,595
                                                      ------            ------ 
  Total other assets                                 131,070           114,665
                                                     -------           ------- 
Total assets                                        $645,978        $1,892,339
                                                    ========        ==========
</TABLE>
<TABLE>
<CAPTION>
                      Liabilities and Stockholders' Equity

<S>                                                  <C>              <C>
Current liabilities
  Accounts payable and accrued expenses              $33,248          $ 27,827
  Notes payable
  Convertible debenture payable                      132,000
                                                     -------            ------
Total current liabilities                            165,248            27,827

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

Capital stock
  Capital stock-authorized 30,000,00
   Common Shares,  par value $.01 each,
   at April 30, 1995 and 1996 and
   October 31, 1996, the shares 
   outstanding were 8,350,378, 12,089,561
   and 12,565,227 respectively.                      120,895           125,651

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        4,415,749
  Deficit accumulated during development stage     (2,401,671)      (2,676,889)
                                                   -----------      -----------
Total stockholders' equity                            354,230        1,864,512
                                                   -----------      -----------
Total liabilities and stockholders' equity           $645,978       $1,892,339
                                                   ===========      ===========
</TABLE>

                 See accompanying notes to financial statements.

                                       3
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                          (A Development Stage Company)
                             STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
 
                                       For the six    For the six   Inception
                   For the   For the   months ended   months ended,  April 10,
                 year ended year ended   October 31,  October 31      1986 to
                  April 30,  April 30,      1995        1996        October 31,
                    1995       1996     (unaudited)  (unaudited)      1996   
                    ----       ----     -----------  -----------     ----------
<S>                <C>       <C>          <C>           <C>          <C>

Income             $137,891   $158,105     $82,416       $48,587     $5,389,882
Less cost of
 goods sold          45,204     96,444      26,373        25,778      3,149,900
                    -------     ------      ------        ------      ---------

Gross profit         92,687     61,661      56,043        22,809      2,239,982

Operations:
  General and
   administrative   129,719    518,826      66,672       336,113      3,757,056
  Depreciation and
   amortization      75,600     77,600      37,800        23,000        312,664
  Research and
   development      135,412    358,844      98,401        66,750        631,936

                    -------    -------      ------        ------       
--------
 Total expense      340,731    955,270     202,873       425,863      4,701,656

 Loss before
   other income    (248,044)  (893,609)   (146,830)     (403,054)    (2,461,674)
Other income
   and expenses
  Retirement of
   debt (Note 9)                                         126,500        126,500
  Interest income    10,145        356       1,200         1,336         15,356
  Interest expense  (67,429)  (103,205)    (47,566)                   (357,071)

                     ------    -------      ------        ------        -------
  Total other income(57,284)  (102,849)    (46,366)      127,836      
(215,215) 
    and expenses
                    -------   ---------   --------      ---------    ----------
Net Profit (Loss) $(305,328) $(996,458)  $(193,196)    $(275,218)   $(2,676,889)
 from operations
                   =========  =========  ==========    ==========   
===========  
Net income (loss) 
 per share           $(0.02)    $(0.08)     $(0.02)       $(0.02)        $(0.21)
                   =========  =========  ==========    ==========    ===========
Number of shares
 outstanding     12,565,227 12,565,227  12,565,227    12,565,227     12,565,227

                 ========== ==========  ==========    ==========     ==========

</TABLE>




                 See accompanying notes to financial statements.


                                       4
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                          (A Development Stage Company)
                             STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>

                                             For the     For the
                        For the    For the  six months  six months    Inception
                         year       year      ended        ended      April 10,
                        ended       ended    October      October     1986) to
                       April 30,  April 30,  31, 1995      1996      October 31,
                        1995        1996   (unaudited)  (unaudited)      1996
                        ----        ----   ----------    ----------   ---------
<S>                  <C>         <C>        <C>          <C>        <C> 

CASH FLOWS FROM
 OPERATING ACTIVITIES
  Net profit (loss)  $(305,328)  $(996,458) $(193,196)  $(275,218)  $(2,676,889)
  Amortization
   and depreciation     75,600      77,600     37,800      23,000       312,664
  Consulting fees                  306,250                 50,000       356,250
  Compensation
   agreement                       125,000                              125,000
  Retirement of debt
   (Note 9)                                               126,500      (126,500)
Adjustments to
 reconcile net
 income to net cash
  Accounts receivable  (55,234)     38,079      3,722     (13,714)      (48,214)
  Inventory            (19,420)      5,250      2,923     (28,741)      (51,042)
  Prepaid expenses     (40,683)     15,089      7,391
 Accounts payable      (36,151)    (30,828)     5,489      (5,421)       27,827

                       --------    --------     -----      -------       ------
TOTAL CASH FLOWS
 FROM OPERATIONS      (381,216)   (460,018)  (135,871)   (123,594)   (2,080,904)
CASH FLOWS
 FROM FINANCING
ACTIVITIES
  Convertible
   debenture           446,278     693,000    180,500    (132,000)    1,407,000
  Notes payable                    (89,289)                             126,500
  Sale of  stock                   150,000              1,481,903     2,209,819
  Issuance of
   stock for services               61,006                               99,253

                       -------     -------    -------   ---------     ---------
TOTAL CASH FLOWS
 FROM FINANCING        446,278     814,717    180,500   1,349,903     3,842,572
ACTIVITIES
CASH FLOWS
 FROM INVESTING
ACTIVITIES
  Patent costs                                             (2,000)       (2,000)
  Investments
   short term                                          (1,411,866)   (1,411,866)
  Capital assets                                          (61,496)     (159,323)
                                                          --------     ---------
TOTAL CASH FLOWS
 FROM INVESTING                                        (1,475,362)   (1,573,189)
ACTIVITIES
NET INCREASE
 (DECREASE) IN CASH     65,062     354,699     44,629    (249,053)      188,479
CASH BALANCE
 BEGINNING OF PERIOD   147,895      82,833     82,833     437,532          -0-
                       -------      ------     ------     -------       -------
CASH BALANCE
 END OF PERIOD         $82,833    $437,532    $38,204    $188,479      $188,479
                       =======    ========    =======    ========      ========
 

                See accompanying notes to financial statements.
</TABLE>


                                       5
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                          (A Development Stage Company)
                        STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                            Deficit
                                                          accumulated
                                                            during
                                               Additional development
               Common     Common    Preferred    paid in     stage      Total
  Date         Stock      Stock       Stock      capital
  ----         -----      -----       -----      -------   ---------    ------
<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

7-9-1986(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 Loss                                     (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 loss                                     (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>

                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                            Deficit
                                                          accumulated
                                                            during
                                               Additional development
               Common     Common    Preferred    paid in     stage      Total
  Date         Stock      Stock       Stock      capital
  ----         -----      -----       -----      -------   ---------    ------
<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

11-3-1995       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
6-4-1996         11,333         113                 8,387                 8,500
6-4-1996         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
9-9-1996(17)     18,000         180                17,820                18,000
9-23-1996(19)                               $1  1,409,999             1,410,000
10-31-1996     Net loss                                     (275,218)  (275,218)
               --------     -------         --  ---------  ---------  ---------
     
10-31-1996   12,565,227    $125,651         $1 $4,415,749 $2,676,889)$1,864,512
             ==========    ========         ==  =======   =========== ==========
</TABLE>

                                       7
<PAGE>

     (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 Unit plus
          one warrant

     (4)  Write off of related offering expense

     (5)  Forgiveness of salary

     (6)  Sale of Common Shares at $.001 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 Bender 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 under Regulation D
          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 Regulation D at $.325 per share

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

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

     (19) Shares of  preferred  stock for  $1,500,000  less  $90,000 in offering
          expense











                 See accompanying notes to financial statements.


                                       8
<PAGE>


                         AMERICAN BIO MEDICA CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS

     NOTE A--BASIS OF PRESENTATION

     In the  opinion  of  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 October
31, 1996 and the related  statements of  operations  and deficit for the
six month periods ended October 31, 1995 and 1996.

     NOTE B--EARNINGS PER SHARE

     Earnings  per share  have  been  computed  on the basis of total  number of
shares  outstanding  as  of  October  31,  1996.  The  total  number  of  shares
outstanding at October 31, 1995 and 1996 was 12,565,227 for each period.

     NOTE B--COMMITMENTS and CONTINGENT LIABILIES

     a. Leased Office Space
        -------------------

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

     b. Lawsuits
     ----------- 

     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 Agreement of Exchange  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  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.  A pretrial  hearing was held in
December, 1996 which set a trial date of April 28, 1997. In September, 1996, Dr.
Friedenberg  died. The implications of his death vis-a-vis the lawsuit cannot be
assessed at this time.

     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. The court has set
a trial date of September 14, 1998.
  
     NOTE C--Preferred Stock

     The Company  amended its  certificate  of  incorporation  to authorize  the
issuance  of  5,000,000  preferred  shares,  $.01  par  value  each  ("Preferred
Shares").  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.


                                       9
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS

     The Company sold 150 8% Cumulative  Convertible  Series A Preferred  Shares
for an aggregate of $1,500,000  ($10,000 per share) less  commissions of $90,000
and $5,000 in  offering  expenses  for 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
agreed to register  the Common  Shares  underlying  the  Preferred  Shares on or
before March 22, 1997.

     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
were  originally  exercisable  at $6.07 per share for a period of two years from
the date of an  effective  registration  statement  relating  to the  underlying
Common  Shares.  By  agreement  between the Company and the  warrantholder,  the
exercise price was reduced to $3.00.

     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 on September 21, 1996 and, as a result,
the Company is subject to the informational requirements of the Exchange Act and
files  periodic  reports,  proxy  statements,  and  other  information  with the
Securities and Exchange Commission.

     The Company is involved in the preparation of offering  documents  relating
to a  registration  statement  on Form SB-2 the  purpose of which is to register
600,000  Common Shares  underlying  the  conversion of the Preferred  Shares and
24,712 Common Shares underlying the exercise of the Warrants.

NOTE D -- Secured Loan

     On March 9, 1990,  the Company  entered into an security  agreement  with a
finance  company  (the  "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.


                                       10
<PAGE>


                         AMERICAN BIO MEDICA CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS

     The Company  instituted a lawsuit  against the Finance  Company on November
26, 1990 for damages due to its  alleged  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 State Penal Law. Although  litigation counsel to the Company 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 financial
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 Board of Directors of the Company has elected to write-off the
obligation.

     NOTE E -- Nonstatutory Option Plan

     The Company has adopted the Fiscal 1996 Nonstatutory Stock Option Plan (the
"Plan").  2,000,000  Common  Shares were  reserved  under the Plan.  The Plan is
administered  by the Board of  Directors.  The Company  has  scheduled a special
meeting of shareholders to ratify the action of the 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 October 31, 1995, the Company had issued  1,500,000  options pursuant
to the 1996  Nonstatutory  Option Plan. All options are exercisable for a period
of three years at $3.00 per share. In November, 1996, the Company issued 131,000
Nonstatutory  Options  exercisable  at $3.00  for a period of three  years.  The
Company has reserved 1,631,000 Common Shares for the exercise of these options.

     NOTE F -- 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 under  Regulation D to
the  Securities  Act at a value of $.65 per share for a total  consideration  of
$65,000  in  lieu  of  an  initial   payment,   monthly   retainers  or  expense
reimbursement,  including  communications and mailing, for a period of one year.
The  Company  granted  OTC the right to receive  550,000  Common  Shares for the
second and third years at a consideration  of $.325 per share  representing  1/2
the market  price of the Common  Shares at the date of the  Contract,  March 14,
1996 of which 50,000 shares were allocated to expense  reimbursement and 500,000
shares allocated to public relations consulting. The Company agreed to value the
550,000  shares  at  1/2  market  price  in   consideration   of  OTC  receiving
unregistered  Common Shares and the risk of the holding period until they may be
sold publicly.  Certificates  representing the 100,000 Common Shares were issued
in July,  1996. As at October 31, 1996,  certificates  representing  the 550,000
Common Shares had been authorized but not issued.


                                       11
<PAGE>


                        AMERICAN BIO MEDICA CORPORATION
                         (A Development Stage Company)
                         NOTES TO FINANCIAL STATEMENTS

     The  Company has also  issued to OTC  500,000  Class "A" Options  which are
exercisable at $1.00 through March 14, 1999 and 500,000 Class "B" Options, which
are exercisable at $2.00 through March 14, 1999. Until a registration  statement
relating to the Common Shares  underlying  exercise of 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 G -- Sale of Common Shares

     On June 4, 1996,  the Company sold $8,500 of convertible  debentures  which
were converted 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,  holders had converted the balance of the  outstanding
convertible  debentures  in the  aggregate  principal  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 which were converted into 13,333 Common Shares.

     As of July 31, 1996, the Company sold an additional  convertible  debenture
in the principal 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.


                                       12
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS


     NOTE H -- Employment Agreements

     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 a salary of $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 above $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 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  $1,000,00 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; and

     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 his  employment  agreement or subsequent to
his  discharge  for cause from  employment  by the Company.  Mr.  Bendis also is
entitled to receive health insurance,  to participate in stock option or similar
plans or other benefits  offered  generally to management  employees and to have
out-of-pocket expenses reimbursed.


                                       13
<PAGE>

                         AMERICAN BIO MEDICA CORPORATION
                          (A Development Stage Company)
                          NOTES TO FINANCIAL STATEMENTS


     b. Employment Agreement with Edmund Jaskiewicz

     On  November  3, 1995,  the Company  entered  into a three year  employment
agreement  with  Edmund  Jaskiewicz,   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's  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 above $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  his  employment
agreement  or  subsequent  to his  discharge  for cause from  employment  by the
Company.  Mr.  Jaskiewicz  also is  entitled  to receive  health  insurance,  to
participate in stock option or similar plans or other benefits offered generally
to management employees and to have out-of-pocket expenses reimbursed.

     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  revenues  of the  Company  above
$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 his  employment  agreement or subsequent to his discharge for cause
from employment by the Company. Mr. Cipkowski also is entitled to receive health
insurance,  to  participate  in stock option or similar plans or other  benefits
offered  generally to management  employees and to have  out-of-pocket  expenses
reimbursed.


                                       14
<PAGE>

   
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (April 10, 1986) to October 31, 1996

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 has been a development
stage  enterprise since its date of business  reformulation  in September,  1992
when the Company  entered the  biotechnology  field through the  acquisition  of
technologies of three companies.  Subsequently,  the acquisition of two of these
companies was rescinded.  With the technology  gained through the acquisition of
Protein Resources, Inc., the development of proprietary drug testing technology,
and the  employment  of medical and marketing  specialists  in the field of drug
testing,  the Company has  developed  products,  field and market  tested  these
products,  applied for patents and copyrights and has begun initial shipments of
product.  These  activities  have been funded  through  the sale of  convertible
debentures  aggregating  $1,407,000.   As  of  October  31,  1996,  all  of  the
convertible  debentures  had been  converted to Common Shares at $.75 per share.
The  Company has not as yet  generated  sufficient  revenues  during its limited
operating  history to meet its ongoing  operating  expenses.  The  Company  sold
additional  convertible debentures for $18,500 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. As of September 30, 1996, the Company also sold 150 shares of convertible
preferred  shares  at  $10,000  per  share  for an  aggregate  consideration  of
$1,500,000  and net  proceeds of  $1,405,000.  The Company is using the proceeds
from the sale of the  preferred  shares to expand  its  marketing  campaign  and
increase production of its workplace drug testing kits.

     Results of Operations for the six months ended October 31, 1996 as compared
to the six months ended October 31, 1995.
--------------------------------------------------------------------------------

     Revenues  from the book segment of the  business  were $82,416 for the year
six months  ended  October  31,  1995 as  compared to $17,123 for the six months
ended  October  31,  1996  representing  a decrease  of  $65,293 or 79.2%.  This
decrease in book sales is directly attributable to the Company's  reorganization
of its  telemarketing  activities.  Costs of goods sold for the six months ended
October  31, 1995 were  $26,373 as  compared to $5,565 for the six months  ended
October 31, 1996  representing a cost of goods sold percentage of 32.0 % for the
six months ended  October 31, 1995 as compared to 32.5% for the six months ended
October 31,  1996.  Revenues  from the initial  sales of drug  testing kits were
$31,464 for the six months ended  October 31, 1996.  Costs of goods sold for the
six months ended October 31, 1996 was $20,213 or 64.2%. This high level of costs
of  materials  is  the  result  of  initial   shipments  of  drug  testing  kits
manufactured in small lots of materials and supplies. General and administrative
costs for the six months ended  October 31, 1996 were  $336,113,  an increase of
504% over expenses of $66,672 for the six months ended  October 31, 1995.  These
increased costs are the result of increased labor costs for office personnel and
consulting expenses of $75,000. Research and development expenses of $66,750 for
the six months  ended  October 31, 1996  decreased by $31,651 or 32.2% less than
the amount  expended of $98,401 for the six months ended October 31, 1995.  This
decrease in expenses is the result of gradual  completion of  development of the
products drug testing delivery system, experimentation and improvement of active
ingredient test chemicals, laboratory and field trial testing.


                                       15
<PAGE>


     Liquidity  And  Capital  Resources  As Of The End Of Fiscal  Period  Ending
October 31, 1996.
--------------------------------------------------------------------------------

     The Company's cash balance was $188,479 with and  additional  $1,411,866 in
treasury bills and certificates of deposit invested for six months;  and working
capital was $1,671,774 as at October 31, 1996.  These balances are the result of
the sale and  conversion of convertible  debentures  for $18,50,  the receipt of
$175,000  through the  exercise of 143,000 "A"  warrants at $1.00 and 32,000 "B"
warrants at $1.00 per share and the sale of 150 convertible  preferred shares at
$10,000 per share for an aggregate gross proceeds of $1,500,000 and net proceeds
of  $1,405,000.  The Company has expended  $631,936 to date for the research and
development of its biomedical products.

     Management believes that the present cash balance will pay the ongoing cost
of entering the workplace drug testing business.  Management believes that until
profitable operations are achieved, the Company must expend resources (albeit on
a decreasing  basis) on research and  development,  design and  marketing of its
workplace drug test kit.


                                       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 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 agreed to register the
Common Shares  underlying  the  preferred  shares within 180 days of the date of
purchase, September 23, 1996.

     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.


                                       17
<PAGE>

     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 on September 21, 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 is involved in the  preparation of a registration  statement on
Form SB-2 the purpose of which is to register  600,000 Common Shares  underlying
the conversion of the Preferred  Shares and 24,712 Common Shares  underlying the
exercise of the Warrants.

     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
a resolution  of the Board of Directors  which  authorized  5,000,000  Preferred
Shares, $.01 par value per share.


                                       18
<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)

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



     Dated: December 20, 1996