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

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

     For the quarterly period ended 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: 00028666


                         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

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

                      Liabilities and Stockholders' Equity

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

                 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
                                                                    months
ended    months ended
                                      For the year   For the year   October 31,
     October 31,       Inception
                                          ended          ended           1995  
        1996       (April 10, 1986)
                                     April 30, 1995    April 30,    
(unaudited)     (unaudited)     to October 31,
                                                        1996                   
                         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

Income  (loss) before other income       (248,044)      (893,609)     
(146,830)       (403,054)        (2,461,674)
and expenses

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 six
      For the six        Inception
                                                                    months
ended     months ended     (April 10, 1986)
                                     For the year  For the year     October 31,
   October 31, 1996          to
                                         ended         ended           1995    
     (unaudited)       October 31,
                                       April 30,     April 30,      (unaudited)
                            1996
                                         1995          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           305,250
  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)       (2,131,904)
CASH FLOWS FROM FINANCING
ACTIVITIES
  Convertible debenture                 446,278        693,000          180,500
         (132,000)        1,407,000
  Notes payable                                        (89,258)                
                            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)         (108,323)
                                                                               
           -------          --------
TOTAL CASH FLOWS FROM INVESTING                                                
       (1,475,362)       (1,522,189)
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
                                                                               
     development
                           Common      Common      Preferred      Additional
paid       stage        Total
                            Stock       Stock        Stock           in capital
                            ------     -------     ---------       
------------      ---------      ------              Total
<S>                      <C>           <C>          <C>           <C>          
     <C>             <C>

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

   7-9-1986(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 profit                                             
      (13,352)        13,352 
                        ----------                                             
      --------        ------                       
                                   
   4-30-1990             2,385,935      23,859                         429,663 
     (437,420)        16,102

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

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

                                       6
<PAGE>

<TABLE>
<CAPTION>

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

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

 4-30-1993(12)           1,717,771      17,177                          11,833 
                      29,010
 4-30-1993(7)            6,029,872      60,299                          90,448 
                     150,747
 4-30-1993              Net profit                                             
       (42,374)      (42,374)
                        ----------     -------                         ------- 
       --------      --------       
 4-30-1993              11,350,378    $113,503                        $725,173 
      (950,642)     $111,966
 4-30-1994              Net loss                                               
      (149,243)     (149,243)
                        ----------     -------                         ------- 
     ----------     ---------                   
 4-30-1994              11,350,378     113,503                         725,173 
    (1,099,885)      261,209
 10-18-1995(8)           3,000,000      30,000                          30,000
 4-30-1995                                                                     
      (305,328)     (305,328)          
 4-30-1995               8,350,378      83,503                         755,173 
    (1,405,213)      566,537
 11-3-1995                 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
 9-30-1996                Net loss                                             
      (275,218)     (275,218)
                        ==========    ========             ==       ========== 
   ============   ===========           
9-30-1996               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 each of the
six months in the period 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.  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 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 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 Share Exchange Agreement.  In November,
1995, after a trial, the court dismissed Dr.  Friedenberg's  lawsuit and allowed
the  Company's  cross claim to proceed to trial.  The Company  never  issued any
Common Shares to Dr.  Friedenberg  pursuant to the Share Exchange  Agreement and
has rescinded the transaction.

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

     NOTE C--Preferred Stock

     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, con version 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 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 $6.07 per share for a period of two years from the date of an
effective registration statement relating to the underlying Common Shares.

     On July 23, 1996, the Company filed a registration  statement on Form 10-SB
pursuant  to  the  Securities  Exchange  Act  of  1934  ("Exchange  Act").  That
registration  statement became effective 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 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 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 failure  lend to the 60% credit  limit based on
its calculations and for forgiveness of the loan based on the Finance  Company's
charging,  based on its own billings,  at an interest rate in excess of the rate
of 25% per annum as  prescribed  in the sections  dealing with usury in New York
Penal State Law.  Although  company  counsel  had opined that the Company  would
prevail in the action and that all indebtedness incurred in the principal amount
$126,500  plus  interest  and fees  would be voided  by  reason  of the  Finance
Company's  violation  of the usury  provisions  of the Penal Law,  by  agreement
between the Company and the Finance Company,  the lawsuit was withdrawn  without
prejudice as the Company,  at that time,  lacked the  resources  for  protracted
litigation.  In April,  1996,  the  obligation,  if any, to the Finance  Company
became barred by New York State's six-year statute of limitations.  The 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.

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

     As of July 31, 1995, the Company has 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. The company has reserved 1,500,000 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 at a value of $.65 per
share for a total  consideration of $65,000 in lieu of initial payment,  monthly
retainers or expense reimbursement,  including  communications and mailing for a
period of one year and 550,000 Common Shares for years 2 and 3 under  Regulation
D to the Securities Act 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,  50,000  shares  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 of 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  "A"  Options  which are are
exercisable  at $1.00 through March 14, 1999 and 500,000 "B" Options,  which are
exercisable  at $2.00 through  March 14, 1999.  Until a  registration  statement
relating to the Common Shares underlying the Options is effective,  certificates
representing  the shares into which the Options are exercised will bear a legend
restricting  transfer  in the  absence  of an  effective  registration  with the
Commission or an exemption therefrom.

     NOTE G -- Sale of Common Stock

     On June 4, 1996,  the Company  sold $8,500 of  convertible  debentures  and
converted them in to 11,333 Common Shares.

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

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

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

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

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

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

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

     As of September  30, 1996,  the Company sold 18,000  Common Shares at $1.00
per share through the exercise of 18,000 "B" Warrants.


                                       12
<PAGE>

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


     NOTE H -- Employment Agreement

     a. Employment Agreement with Jay Bendis

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

     In addition,  in  consideration of past services valued at $125,000 or $.25
per share,  Mr.  Bendis  received the right to receive  500,000  Common  Shares.
Certificates  representing  400,000  Common Shares are to be 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;

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

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


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

     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 of  $1,000,000
per fiscal  year until such  annual  revenues  reach  $3,000,000,  1.5% of gross
revenues  between  $3,000,000  and  $5,000,000  per year and 1%  thereafter.  No
bonuses will be paid or shares vest subsequent to any election by Mr.  Cipkowski
to  terminate  agreement  or his  discharge  for cause  from  employment  by the
Company.   Mr.   Cipkowski  also  is  entitled  to  receive  health   insurance,
participating  in stock  option  or  similar  plans or  other  benefits  offered
generally to management employees and reimbursement of out-of-pocket expenses.


                                       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. 

     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  $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  additional  convertible  debentures  for $18,500 and has 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 October 31, 1996,  the Company also sold 150
shares of  convertible  preferred  shares at $10,000 per share for an  aggregate
consideration of $1,500,000.  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 $6.07 per share for a period of two years from the date of an
effective registration statement relating to the underlying Common Shares.

     On July 23, 1996, the Company filed a registration  statement on Form 10-SB
pursuant  to  the  Securities  Exchange  Act  of  1934  ("Exchange  Act").  That
registration  statement became effective 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.


                                       17
<PAGE>

     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: November 22, 1996