FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
(Mark One)

[ X ]  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
       EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED JULY 26, 1997
                                            OR

[   ]  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: 0-14922

                        ABC DISPENSING TECHNOLOGIES, INC.
           (Name changed from American Business Computers Corporation)
             (Exact name of registrant as specified in its charter)

         Florida                                         59-2001203
         -------------------------------                 ------------------  
         (State or other jurisdiction of                 (I.R.S. Employer
         incorporation or organization)                  Identification No.)

         451 Kennedy Road   Akron, Ohio                  44305
         ---------------------------------------         ---------  
         (Address of principal executive offices)        (Zip Code)

       Registrant's telephone number, including area code: (330) 733-2841

      Securities registered pursuant to Section 12(b) of the Act: None
                                                                  ----

      Securities registered pursuant to Section 12(g) of the Act:

                                                 Common Stock, Par Value $.01
                                                 ---------------------------- 
                                                       (Title of class)

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

      The number of shares  outstanding of each of the  registrant's  classes of
common stock as of the latest practicable date is:

      Common Stock outstanding at September 1, 1997 was 17,079,279 shares.


                                      -1-


<PAGE>
                                                  Index


                            ABC Dispensing Technologies, Inc. and Subsidiaries
<TABLE>
<CAPTION>


Part I   Financial Information                                                                          Page No.
___________________________________________________________________________________________________________________

<S>                                                                                                    <C>
Item 1.  Financial Statements (Unaudited)

         Consolidated balance sheets -July 26, 1997 and April 26, 1997                                     3

         Consolidated statements of operations - Three months ended July 26, 1997 and
         July 27, 1996                                                                                     4

         Consolidated statements of cash flows - Three months ended July 26, 1997 and July 27, 1996        5

         Consolidated statement of stockholders' equity - Three months ended July 26, 1997                 6

         Notes to consolidated financial statements                                                     7-13

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations         14-15


Part II  Other Information
___________________________________________________________________________________________________________________

Item 1.  (Not Applicable)

Item 2.  (Not Applicable)

Item 3.  (Not Applicable)

Item 4.  (Not Applicable)

Item 5.  (Not Applicable)

Item 6.  (A)  Exhibits and Reports                                                                        16



Signature                                                                                                 17

</TABLE>






















                                                      -2-



<PAGE>


                        ABC DISPENSING TECHNOLOGIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                                    UNAUDITED
<TABLE>
<CAPTION>

         ASSETS                                                          July 26, 1997    April 26, 1997
-----------------------------------------------------------------------------------------------------------
<S>                                                                       <C>             <C>         
Current assets:
         Cash and cash equivalents                                        $    103,000    $    445,000
         Trade receivables:
           Accounts receivable, less allowance for doubtful accounts
             of $70,000 as of July 26 and $191,000 as of April 26              839,000         327,000
         Inventories (Note 4)                                                1,261,000       1,431,000
                                                                          ------------    ------------
                  Total current assets                                       2,203,000       2,203,000

Property, Plant, and Equipment (Note 11)                                       687,000         704,000

Other assets:
         Intangible assets, less accumulated amortization of $568,000
            as of July 26 and $552,000 as of April 26                           85,000         102,000
         Patents pending and deferred charges                                  250,000         341,000
                                                                          ------------    ------------
                                                                               335,000         443,000
                                                                          ------------    ------------
Total Assets                                                              $  3,225,000    $  3,350,000
                                                                          ------------    ------------

LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------

Current liabilities:

         Accounts payable                                                 $    570,000    $    877,000
         Line of credit                                                        467,000           2,000
              Current portion of long-term debt (Note 5)                        38,000          36,000
         Accrued liabilities:
           Employee compensation and benefits (Notes 7 & 12)                   194,000         224,000
           Warranty reserve                                                     80,000          88,000
            Other                                                              163,000         177,000
           Deferred income                                                       2,000          28,000
                                                                          ------------    ------------
                  Total current liabilities                                  1,514,000         432,000

Long-term debt (Note 5)                                                        270,000         283,000

Stockholders' equity (Note 7):
         Preferred Stock, 9% cumulative; authorized 320 shares
           271 shares issued                                                 3,538,000       3,388,000
         Common Stock, $.01 par value; authorized 50,000,000
           shares; 17,114,279 shares issued                                    171,000         171,000
         Additional paid-in capital ($36,785 restricted for the cost of
           treasury shares held)                                            19,014,000      19,014,000
         Retained earnings (deficiency)                                    (21,195,000)    (20,850,000)
                                                                          ------------    ------------
                                                                             1,528,000       1,723,000
         Less notes receivable - stockholders                                  (50,000)        (51,000)
         Less cost of treasury stock, 35,000 shares                            (37,000)        (37,000)
                                                                          ------------    ------------
            Total Stockholders' Equity                                       1,441,000       1,635,000
                                                                          ------------    ------------
Total Liabilities and Stockholders' Equity                                $  3,225,000    $  3,350,000
                                                                          ------------    ------------
</TABLE>





                             See accompanying notes.

                                       -3-




<PAGE>


                        ABC DISPENSING TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                    UNAUDITED
<TABLE>
<CAPTION>

                                              Three Months Ended  Three Months Ended
                                                 July 26, 1997      July 27, 1996
----------------------------------------------------------------------------------------
<S>                                                <C>             <C>         
Revenues:
         Products and services                     $  1,336,000    $  1,178,000
         Royalties                                          -0-             -0-
                                                   ------------    ------------
                                                      1,336,000       1,178,000

Cost and expenses:
         Products and services                          927,000       1,036,000
         General and administrative                     398,000         554,000
         Selling and marketing                          113,000         156,000
         Research and development                       285,000         178,000
                                                   ------------    ------------

                                                      1,723,000       1,924,000
                                                   ------------    ------------

Loss from operations                                   (387,000)       (746,000)


Other income (expense)
         Interest expense                               (22,000)        (33,000)
         Interest income                                  4,000           4,000
         Other income (expense), net                     60,000          (6,000)
                                                   ------------    ------------
                                                         42,000          23,000
                                                   ------------    ------------


Net loss                                           $   (345,000)   $   (769,000)
                                                   ============    ============

Weighted average number of shares outstanding        17,079,279      16,989,655
                                                   ============    ============

Net loss per share                                 $      (0.02)   $      (0.05)
                                                   ============    ============

</TABLE>

















                             See accompanying notes.

                                       -4-


<PAGE>


                        ABC DISPENSING TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                    UNAUDITED
<TABLE>
<CAPTION>
                                                   Three Months Ended  Three Months Ended
                                                      July 26, 1997       July 27, 1996
-------------------------------------------------------------------------------------------
<S>                                                          <C>          <C>       

Cash flows from operating activities:
-------------------------------------

Net loss                                                     $(345,000)   $(769,000)

      Adjustments to reconcile net loss to net cash
         used in operating activities:
         Depreciation and amortization                         121,000       32,000

      Changes in operating assets and liabilities:
         Receivables                                          (512,000)     (60,000)
         Inventories                                           170,000     (405,000)
         Patents pending and deferred charges                   10,000       29,000
         Accounts payable                                     (307,000)    (139,000)
         Accrued liabilities                                   (52,000)      68,000
         Selling rights                                           --        (36,000)
         Deferred income                                       (26,000)         -0-
                                                             ---------    ---------
      Total adjustments                                       (596,000)     299,000
                                                             ---------    ---------

Net cash used in operating activities                         (941,000)    (470,000)

Cash flows from investing activities:
-------------------------------------

      Additions to patents                                        --         (6,000)
      Additions to property, plant, and equipment               (1,000)         -0-
      Investment in Virtual Squeeze                             (5,000)        --
                                                             ---------    ---------

Net cash used in investing activities                           (6,000)      (6,000)

Cash flows from financing activities:
-------------------------------------

      Proceeds from private placement                          150,000      131,000
      Proceeds from line of credit                             465,000       60,000
      Proceeds from collection of stockholders receivables       1,000        3,000
      Payment of miscellaneous notes                              --         (5,000)
      Repayment of notes payable and loan costs                (11,000)    (105,000)
                                                             ---------    ---------

Net cash provided by financing activities                      605,000       84,000
                                                             ---------    ---------

Net decrease in cash and cash equivalents                     (342,000)    (392,000)
Cash and cash equivalents at beginning of year                 445,000      448,000
                                                             ---------    ---------

Cash and cash equivalents at end of period                   $ 103,000    $  96,000
                                                             =========    =========
</TABLE>


                             See accompanying notes.

                                       -5-


<PAGE>


                        ABC DISPENSING TECHNOLOGIES, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        Three months ended July 26, 1997
                                    Unaudited
<TABLE>
<CAPTION>
                                                      Common
                                        Number of      Stock                Additional   Retained       Notes
                                        Shares of    $.01 Par    Preferred    Paid-in     Earnings    Receivable  Treasury
                                      Common Stock     Value       Stock      Capital   (Deficiency) Stockholders   Stock
----------------------------------------------------------------------------------------------------------------------------

<S>                                    <C>          <C>         <C>         <C>          <C>            <C>        <C>      
Balance at April 26, 1997              17,114,279   $171,000    $3,388,000  $19,014,000  $(20,850,000)  $(51,000)  $(37,000)

     Preferred Stock private
        placement  (Note 8)                                    $   150,000

     Collection on notes receivable-
          stockholders                                                                                     1,000

     Net loss                                                                                (345,000)

                                       --------------------------------------------------------------------------------------
Balance at July 26, 1997               17,114,279   $171,000    $3,583,000  $19,014,000  $(21,195,000)  $(51,000)  $(37,000)
-----------------------------------------------------------------------------------------------------------------------------

</TABLE>























































                                                        See accompanying notes.

                                                                   -6-



<PAGE>
                        ABC DISPENSING TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    BUSINESS DESCRIPTION

ABC Dispensing Technologies, Inc. (the "Company") designs proprietary dispensing
systems to  dispense  and blend  liquids,  powders  and other  ingredients  to a
uniform and high degree of accuracy. The Company provides training, installation
and product service and also custom designs and manufactures its own proprietary
dispensing  equipment  to meet the  needs of its  customers  which  are  located
primarily in the United States. To date, the Company has focused its development
and marketing efforts on the Beverage and Paint Industries.

2.    SIGNIFICANT ACCOUNTING POLICIES

BASIS  OF  PRESENTATION  - The  accompanying  unaudited  consolidated  financial
statements have been prepared in accordance with generally  accepted  accounting
principles. In the opinion of management,  all adjustments (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included.  Operating  results for the three month period ended July 26, 1997 are
not  necessarily  indicative  of the results  that may be expected  for the year
ended April 25, 1998.  For further  information,  refer to the Form 10-K for the
year ended April 26, 1997.

YEAR END - The Company's  fiscal  year-end is the Saturday  closest to April 30,
which  results in a fifty-two  or  fifty-three  week year.  Both fiscal 1998 and
fiscal  1997  consist  of  fifty-two  weeks  ending on April  25,  and April 26,
respectively.  References to the years 1998 and 1997 refer to fiscal years ended
April 25, 1998, and April 26, 1997, respectively.

CONSOLIDATION - The consolidated  financial  statements  include the accounts of
the Company and its subsidiaries, ABC Dispensing Technologies, Inc. and ABC Tech
Corp. Significant intercompany transactions and balances have been eliminated in
consolidation.

USE OF ESTIMATES - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

CASH  EQUIVALENTS - The Company  considers all highly liquid  investments with a
maturity of three months or less when purchased to be cash equivalents.

FINANCIAL  INSTRUMENTS  - The carrying  value of the  Company's  cash,  accounts
receivable,  accounts  payable and notes  payable are a  reasonable  estimate of
their  fair  value  due to the  short-term  nature  of  these  instruments.  The
Company's  long-term  debt  has  variable  interest  rates  and  carrying  value
approximates fair market value at July 26, 1997.

CONCENTRATION  OF CREDIT - In the normal course of business,  the Company enters
into transactions to meet the financing needs of customers. The Company performs
ongoing  credit  evaluations  of  customers'  financial  condition and generally
requires collateral from customers who finance purchases beyond thirty days. The
Company's  exposure  to credit  risk  associated  with  nonperformance  on these
transactions  is limited  to amounts  reflected  in the  Company's  consolidated
financial statements, less the value, if any, of the secured equipment.

INVENTORIES - Inventories  are valued at the lower of cost or market,  using the
first-in, first-out (FIFO) method.

PROPERTY,  PLANT AND  EQUIPMENT - Property,  plant and  equipment are carried at
cost. Depreciation is provided primarily by use of the straight-line method over
the estimated useful lives of the assets, which are five years for machinery and
equipment and thirty years for buildings.

INTANGIBLE  ASSETS - Intangible  assets consist of patents and purchased selling
rights  which  are  recorded  at  cost.   Amortization  is  provided  using  the
straight-line method over a period of five years or less.

REVENUE  RECOGNITION - Revenue on equipment sales is recognized when the product
is shipped and title transfers. Revenue for development services and for service
and  support is  recognized  when the  service is  performed  unless  there is a
service contract.  Revenue from service contracts is recognized ratably over the
contract  term,  generally one year.  Royalty income is recognized in accordance
with the terms of the royalty agreement, which generally provides that royalties
are based on units shipped.



                                       -7-


<PAGE>
                        ABC DISPENSING TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.    SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

MAJOR  CUSTOMERS - Revenues  from The Home Depot,  Inc.  was 72 percent of total
revenues  for  the  three  months  ended  July  26,  1997.   Revenues  from  The
Sherwin-Williams Company were 70 percent of the Company's total revenues for the
three months ended July 27, 1996.  The Company  currently has no orders from The
Sherwin-Williams  Company,  and in the future expects revenues from sales to The
Sherwin-Williams Company to decrease significantly.

PROVISION  FOR WARRANTY  CLAIMS - Estimated  warranty  costs are provided at the
time of sale of the warranted products.

STOCK-BASED  COMPENSATION  - The Company grants stock options for a fixed number
of shares to employees  generally with an exercise price equal to the fair value
of the  shares  at the date of  grant.  The  Company  accounts  for  stock-based
compensation  in accordance  with  Accounting  Principles  Board Opinion No. 25,
"Accounting  for Stock Issued to Employees,  " and,  accordingly,  recognizes no
compensation  expense  for  the  stock  option  grants.  Additional  disclosures
relating to stock option  activity  which are required by Statement of Financial
Accounting  Standards No. 123 - "Accounting  for Stock Based  Compensation"  are
included in note 7.

NET LOSS PER SHARE - Net loss per  share is  computed  on the basis of  weighted
average number of shares  outstanding for the period.  Common stock  equivalents
are not material, and therefore,  are not included in the computation of primary
shares outstanding.

In February,  1997, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No. 128,  Earnings per Share.  This  statement
simplifies the standards for computing earnings per share ("EPS") and makes them
comparable  to  international  EPS  standards.  This  statement is effective for
financial  statements  issues for periods  ending after  December 15, 1997.  The
Company  does  not  believe  that the  adoption  of SFAS  No.  128  will  have a
significant impact on reported EPS.

LONG-LIVED  ASSETS  - In  1997,  the  Company  adopted  Statement  of  Financial
Accounting  Standards  ("SFAS")  No.  121,  Accounting  for  the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of. This  requires
impairment  losses to be recorded on long-lived  assets used in operations  when
indicators of impairment are present and the  undiscounted  cash flows estimated
to be generated by those assets are less than the assets' carrying amounts.  The
adoption of SFAS No. 121 had no effect on the financial statements.

3.    GOING CONCERN UNCERTAINTY

The  Company  has  reported  a net loss for each  year of  operation  since  its
inception except for 1989, and as of July 26, 1997, has an accumulated  retained
earnings  deficiency  of  $21,195,000.  The Company's  cash flow from  operating
activities was a negative $941,000 for the three months ended July 26, 1997, and
a  negative  $2,684,000  for the  year  ended  April  26,  1997.  Cash  and cash
equivalents declined from $1,309,000 at the beginning of fiscal 1996 to $103,000
at July,  26, 1997.  Management  expects that the Company will continue to incur
losses and use cash in operations in the near future.

Management  recognizes  the Company  must  generate  additional  funds to assure
continuation  of operations.  The Company has been successful in raising capital
from private  investors and raised  $5,370,000 over the past three years through
private placements of both preferred and common stock. The Company is continuing
in it efforts to raise capital  through  private  placements  of 9%  Convertible
Cumulative Preferred Stock. The Preferred Stock is convertible into common stock
at $1 per  share.  Proceeds  from  private  placements  will be  used to  reduce
accounts payable and provide  additional  working capital.  No assurances can be
given  that the  Company  will be  successful  in  raising  additional  capital.
Further,  there can be no assurance,  assuming the Company  successfully  raises
additional  funds,  that the  Company  will  achieve  profitable  operations  or
positive cash flow. These conditions raise substantial doubt about the Company's
ability  to  continue  as a going  concern.  No  adjustments  to the  amounts or
classification  of assets and liabilities which could result from the outcome of
this uncertainty are reflected in the consolidated financial statements.


                                       -8-




<PAGE>
                        ABC DISPENSING TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.    INVENTORIES

At July 26, 1997 and April 26, 1997, inventories consisted of the following:

                                         July 26, 1977        April 26, 1997
                                         -------------        --------------

Raw Materials                              $   870,000          $   927,000
Work-in-process                                 77,000              118,000
Finished goods                                 314,000              386,000
                                           -----------          ----------- 
                                            $1,261,000          $ 1,431,000
                                           ===========          ===========

The above amounts are net of obsolescence reserves of $838,000 at July 26, 1997,
and April 26, 1997, respectively.

5.    FINANCING ARRANGEMENTS

NOTES PAYABLE
In June 1994, the Company purchased its headquarters facility in Akron, Ohio for
$490,000.  A note  payable was  entered  into  during  fiscal 1995 to  partially
finance this purchase which was previously leased from the former chairman.  The
note payable has an adjustable  interest rate (9.25% at July 26, 1997, and April
26,  1997)  which may not  increase or decrease by more than 2% once every three
years.  The  maximum  increase  or  decrease  is 6% over the  life of the  loan.
Principal and interest  payments of $3,026 are payable  monthly with the balance
of $143,000 due October 1, 2005. The note payable is secured by the headquarters
facility.  At July 26, 1997,  the facility and  improvements  thereto have a net
book value of $555,000.

At July 26, 1997 and April 26, 1997, notes payable consisted of the following:

                                             July 26, 1997      April 26, 1997
                                             --------------     --------------
Note payable to bank                             $265,000           $268,000
Other                                              43,000             51,000
                                             --------------       ------------
                                                  308,000            319,000
Less amounts due within one year                ( 38,000)          ( 36,000)
                                             --------------       ------------
Total long-term debt                             $270,000           $283,000
                                             ==============       ============

Maturaties of notes payable for the five years subsequent to April 26, 1997, are
as  follows:  1998--$35,000;  1999--$32,000;  2000--$20,000;  2001--$16,000  and
2002--$17,000.

Interest  paid by the Company  approximates  interest  expense for the  quarters
ended July 26, 1997 and July 27, 1996.

MEZZANINE NOTE
On  January  17,  1996,  the  Company   obtained  a  $500,000   working  capital
asset-secured  loan  from the  Mezzanine  Financial  Fund,  L.P.  ("Mezzanine").
Interest  is due  monthly at the rate of 18% per  annum.  In  consideration  for
providing the loan, Mezzanine received a five (5) year warrant to acquire shares
of common  stock at a price equal to the lower of seventy  percent  (70%) of the
30-day  average  trading  price  prior to  closing  of the loan,  or $2.50  (the
"Price").  The warrant  exercise price was therefore  determined to be $2.04 per
share.  The  number of shares  subject  to the  warrant  will be  determined  by
dividing  the  Price  into an amount  equal to 10% of the  average  annual  loan
balance  multiplied by the number of years the loan is outstanding (the "Warrant
Fee"). The resulting maximum number of warrants that could be issued are 58,910.
At  Mezzanine's  election,  all or any part of the Warrant Fee may be put to the
Company  upon  repayment  of the loan for payment in cash in the amount equal to
70% of such Warrant Fee, paid in equal monthly  payments over the same number of
months that the loan was outstanding. Additionally, Mezzanine received a closing
fee  equal  to 2% of the  amount  of the  loan and  reimbursement  for  expenses
associated  with  the  making  of the  loan.  On  July  24,  1996,  the  Company
distributed 125,000 shares of common stock to Mezzanine.  Mezzanine subsequently
sold  90,000 of the  shares to  satisfy  interest  charges  from  April  through
September, 1996, prepayment penalties and other fees. On September 24, 1994, the
Company repaid the $500,000  principal  balance of the loan in full. On December
31, 1996, the loan agreement was terminated and Mezzanine returned 35,000 shares
of Common  Stock to the  Company.  The Company is holding  the 35,000  shares in
treasury.
                                    -9-


<PAGE>
                        ABC DISPENSING TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.    FINANCING ARRANGEMENTS (CONTINUED)

Herbert M.  Pearlman,  who resigned as Chairman of the Board of Directors of the
Company on February 5, 1997, is a director, officer and principal stockholder of
the general partner of Mezzanine. Mr. Pearlman is also Chairman, chief executive
officer and a principal  stockholder of Helm Resources,  Inc., a publicly traded
company which holds an approximately 14% equity stake in Mezzanine.

BRIDGE NOTES
On June 13, 1995, the Company  initiated a private  offering to sell 20 units of
$25,000 10% Senior  Subordinate Notes due June 1, 1998 and three year redeemable
warrants to  purchase  12,500  shares of the  Company's  common  stock at $2 per
share. The transaction was exempt from registration  under the Securities Act of
1933. Nineteen units were issued under the offering,  providing the Company with
$475,000 in proceeds.  The notes  included a repayment  provision  requiring the
Company to apply 40% of the net proceeds  received by it from the sale of any of
its common  stock other than common  stock issued upon the exercise of employee,
director,  or consultant stock options,  to the pro-rata  repayment of the Notes
within  sixty  (60) days of the  receipt of such  proceeds.  As a result of this
repayment provision, the notes were paid in full on February 16, 1996.

LINE OF CREDIT
On December 18, 1995, the Company  established a $750,000 line of credit secured
by accounts receivable and other assets of the Company.  In February,  1996, the
line of credit was reduced from  $750,000 to  $450,000.  As of June 30, 1997 the
line of credit  was  increased  to  $500,000.  At July 26,  1997,  $467,000  was
outstanding. The line of credit bears an interest rate of prime plus four points
(12.50% at July 26, 1997), which equals the  weighted-average  interest rate for
the period.

6.    INCOME TAXES

Deferred  income taxes are provided for the  temporary  differences  between the
financial reporting basis and the tax basis of Company assets and liabilities.

The  components  of the  Company's  deferred  income taxes at April 26, 1997 and
April 27, 1996 are as follows:
                                                  1997               1996
                                             ---------------     -------------

Net operating loss carryforwards             $    6,650,000     $   5,450,000
Inventories                                         413,000           495,000
Other                                               170,000           255,000
                                             ---------------     -------------
   Total deferred tax asset                       7,233,000         6,200,000
Valuation allowance for deferred taxes           (7,233,000)       (6,200,000)
                                             ---------------     -------------
   Net deferred taxes                         $         -0-      $        -0-
                                             ===============     =============

At April 26, 1997 and April 27, 1996, the Company had Federal net operating loss
carryforwards  for tax  reporting  purposes  of  approximately  $17,500,000  and
$14,800,000,  respectively.  The net operating loss carryforwards  expire in the
years 1998 to 2012. It is uncertain if benefits  relating to these  deferred tax
assets are realizable and accordingly, a valuation allowance equal to the amount
of such deferred tax assets has been recorded.

7.    COMMON STOCK

Stock Option Plans
------------------

The Company has non-qualified stock option plans under which directors, officers
and key employees may be granted incentive stock options for the purchase of the
Company's  common stock An aggregate of 500,000  shares of the Company's  common
stock were reserved for issuance  under the Company's 1990 Stock Option Plan and
750,000  shares were reserved for issuance under the Company's 1995 Stock Option
Plan. All granted options are  exercisable  after six months from the grant date
provided  the employee has at least one year of service.  Grant  options  expire
five years after grant date. The Company also may grant incentive stock warrants
to directors,  officers and key employees. The stock warrants can be redeemed to
purchase the common stock of the Company.





                                      -10-

<PAGE>
                        ABC DISPENSING TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.       COMMON STOCK (CONTINUED)
<TABLE>
<CAPTION>

A summary  of the  Company's  stock  option  plans  and  employee  stock  warrants,  and  related
information for the three months ended July 26, 1997, and July 27, 1996, is as follows:

                                            July 26, 1997                 July 27, 1996
                                       ----------------------------------------------------------

                                                      Weighted                       Weighted
                                                       Average                        Average
                                          Shares   Exercise price       Shares     Exercise Price
                                       ----------  --------------       -------    -------------- 
<S>                                     <C>            <C>              <C>          <C>    
Outstanding at beginning of period      1,518,323      $ 2.46           510,966      $  2.46

     Granted                              365,000      $ 1.13           300,000      $  1.38
                                       ----------                       -------

Outstanding at end of period            1,883,323      $ 2.20           810,966      $  2.06
                                       ==========                       =======

Exercisable at end of period            1,089,652      $ 1.89           560,966      $  2.38
                                       ==========                       =======

Available for grant                       341,677                       894,034
                                       ==========                       =======

Weighted average fair value of options
     granted during the period            $ 1.13                         $ 1.38


The  following  table  summarizes  information  about stock options and employee  stock  warrants
outstanding and exercisable by price range as of July 26, 1997:


                                            Outstanding                     Exercisable
                              ----------------------------------------  -------------------------  
                                            Weighted
                                             Average
                                            Remaining     Weighted                   Weighted
                                           Contractual     Average                    Average
Range of exercise prices        Shares        Life      Exercise Price   Shares    Exercise Price
-----------------------      ---------   ----------    --------------  --------   --------------
<S>                           <C>             <C>        <C>             <C>       <C>       
   $1.00 - $1.63              1,520,421       4.07       $   1.26        726,750   $     1.33

   $2.00 - $2.50                 41,652       3.57       $   2.17         41,652   $     2.17

   $2.50 - $3.44                321,250       2.67       $   3.09        321,250   $     3.09
                              ---------                                 --------

                              1,883,323                                1,089,652
                              =========                                =========
</TABLE>

Accounting for Stock Based Compensation
---------------------------------------

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25) and related interpretations in
accounting for its employee stock based compensation. The exercise price of each
stock  options  and  employee  stock  warrant  equals  the  market  price of the
Company's stock on the date of grant. Accordingly, no compensation cost has been
recognized for the plans.

During  1995,  the  Financial  Accounting  Standard  Board  issued  Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based  Compensation
(SFAS 123).  SFAS 123 defines a fair valued  based method of  accounting  for an
employee stock option and similar equity  instrument and encourages all entities
to adopt that method of accounting for all of their employee stock  compensation
plans.  However,  SFAS 123 allows an entity to continue to measure  compensation
cost for those  plans  using  the  method of  accounting  prescribed  in APB 25.
Entities that elect to continue using APB 25 must make pro forma  disclosures of
net  income  and  earnings  per  share  as if the fair  value  based  method  of
accounting defined in SFAS 123 had been adopted.

                                      -11-

<PAGE>
                        ABC DISPENSING TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.    COMMON STOCK (CONTINUED)

The Company has computed,  for pro forma disclosure  purposes,  the value of all
options  granted during the three months ended July 26, 1997, and July 27, 1996,
using the Black-Scholes option pricing model as prescribed by SFAS 123 using the
following weighted average assumptions:

Risk-free interest rate             6.54%

Dividend yield                        0 %

Volatility                            79%

Average life                      5 years

Using the Black-Scholes  methodology,  the total value of options granted during
the three  months  ended July 26,  1997,  and July 27,  1996,  was  $284,000 and
$51,000,  respectively.  If  the  Company  had  accounted  for  its  stock-based
compensation  plans in accordance  with SFAS 123, the Company's net loss and net
loss per share would approximate the pro forma disclosures below:

                                                   July 26, 1997  July 27, 1996
                                                   -------------  -------------

     Net Loss                      As reported      $  (345,000)    $  (769,000)

                                   Pro forma        $  (457,000)    $  (779,000)

     Primary earnings per share    As reported         $ (0.02)        $ (0.05)

                                   Pro forma           $ (0.03)        $ (0.05)

Warrants
--------

On May 15, 1997, the Company  issued 365,000  warrants at $1.125 per share to 38
employees of the Company.

8.    PREFERRED STOCK

The  shareholders  of the Company have  approved an  amendment to the  Company's
Certificate of Incorporation to authorize 5,000,000 shares of Preferred stock.

The Company  offered shares of 9% Convertible  Cumulative  Redeemable  Preferred
Stock,  Series A ("Series A Preferred  Stock") in exchange for the  surrender of
the Company's outstanding $25,000, 9% Convertible  Subordinated Redeemable Notes
due August 1, 1999 ("Notes").

As of July 26, 1997, through private  placements,  the Company issued 283 shares
of Series A  Preferred  Stock in exchange  for notes or $12,500  cash per share,
generating gross proceeds of $3,538,000 to the Company.

The Series A Preferred  Stock is  convertible  at the option of the  holder,  in
whole or in part,  at any time  after  March 1,  1997 (the  "Initial  Conversion
Date")  into Common  Stock of the  Company at a price per share of Common  Stock
equal to (i) $1.00 per share,  or (ii) such  adjusted  price as may form time to
time be adjusted (the "Conversion  Price"). If converted into Common Stock, each
Preferred Share will entitle the holder to receive warrants to purchase a number
of shares of Common Stock at a price of $1.25 per share,  equal to the number of
shares of Common  Stock into which the  Preferred  Shares  were  converted.  The
warrants  will be valid for a period of five years  commencing  from the date of
issuance.








                                      -12-



<PAGE>


                        ABC DISPENSING TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.    PREFERRED STOCK (CONTINUED)

The Preferred Shares pay dividends  semi-annually each February 1, and August 1,
commencing  on February 1, 1997.  The Company may elect to pay  dividends in the
form of Common  Stock of the Company  issued at 90% of the then  current  market
price of the Common Stock.  A cash  adjustment  shall be paid for any fractional
shares that are due under the  dividend  calculation.  For the  purposes of this
calculation  the  "current  market  price"  shall mean the  average of the daily
closing  prices for each of the thirty  consecutive  business days prior to such
dividend date.

On May 30, 1997, the Board of Directors  declared a Preferred  Stock dividend of
514  shares  of  Common  Stock  and  $0.39  cash  payable  on July 1,  1997,  to
shareholders  of record  as of the close of  business  on June 13,  1997.  As of
September  1,  1997,  the  Company is in arrears  with  respect to the  dividend
declared on May, 30, 1997.


9.    RELATED PARTY TRANSACTIONS

From  February,  1995,  to August,  1996,  the Company  leased  office space for
Herbert M.  Pearlman from Helm  Resources,  Inc. for  approximately  $21,000 per
year.  Mr.  Pearlman  is  Chairman,  Chief  Executive  Officer  and a  principal
stockholder in Helm Resources,  Inc. (see footnote 5). Mr. Pearlman  resigned as
Chairman of the Board of Directors of the Company on February 5, 1997.


10.   OPERATING LEASES

For the three months ended July 26, 1997,  and July 27, 1996,  aggregate  rental
expense was $3,000 and $9,000, respectively.


11.   PROPERTY, PLANT AND EQUIPMENT

Property,  plant and  equipment  consisted of the following at July 26, 1997 and
April 26, 1997:


                                                  July 26, 1997   April 26, 1997
                                                ----------------  --------------

Land                                              $    57,000       $    57,000
Building and building improvements                    572,000           572,000
Machinery and equipment                               933,000           934,000
                                                  -----------       -----------
                                                    1,562,000         1,563,000
Less accumulated depreciation                        (875,000)         (859,000)
                                                  -----------       -----------
                                                  $   687,000       $   704,000
                                                  ===========       ===========

12.   RETIREMENT BENEFITS

The Company  sponsors a 401(k) plan which  covers  substantially  all  full-time
employees.  Eligible employees may contribute up to 14% of their compensation to
this plan. The Company has agreed to match  participants'  contributions  at the
rate of 25  cents  on the  dollar  up to a  maximum  of 4% of the  participants'
compensation.  The cost of the  Company's  matching  contribution  for the three
months ended July 26, 1997, and July 27, 1996,  was $3,000.  The Company has the
discretion to make a profit-sharing  contribution,  but no such contribution has
been made by the Company.


13.   LITIGATION SETTLEMENT/CONTINGENCIES

The Company from time to time is subject to routine litigation incidental to its
business. The Company believes that any liability that may finally be determined
would not have a material adverse effect on its financial statements.




                                      -13-

<PAGE>

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS


JOINT VENTURE AGREEMENT

On June 25, 1997, the Company entered into a joint venture  agreement with Damon
Industries,  a privately-owned  national juice manufacturer with headquarters in
Sparks,  Nevada, to form "Virtual  Squeeze",  a 50-50 business  enterprise.  The
purpose of the joint  venture  is to provide  shelf-stable  juice  products  and
state-of-the-art  dispensing  technology  to health  care  facilities  with high
volume juice  consumption.  Under the  agreement,  the Company will  manufacture
dispensing  equipment and provide  technical  support to the joint venture,  and
Damon will  manufacture  fruit juice and provide  marketing  and  administrative
support for the joint  venture.  The joint  venture will finance the  dispensing
equipment through sale/leaseback arrangements.  The dispensing equipment will be
placed in a customer's  facility at no charge  providing the customer commits to
purchasing all of its juice from the Virtual Squeeze. The revenue from the juice
sales will cover the cost of equipment,  juice,  and  operating  expenses of the
joint venture. Resulting profits from the juice sales will be split 50-50 by the
Company and Damon.


RESULTS OF OPERATIONS

Quarter ended July 26, 1997 compared to quarter ended July 27, 1996

The net loss for the quarter ended July 26, 1997 was $345,000, down 55% from the
$769,000 loss for the same period of the prior year.

REVENUES
Total  revenues  for the  current  quarter  increased  $158,000,  or  13.4%,  to
$1,336,000 from $1,178,000 for the first quarter of the prior year. The increase
in revenues was  attributable  to revenues from sales of  industrial  dispensers
increasing  $193,000,  or 25%, to $961,000 in the first quarter from $768,000 in
the first quarter of Fiscal 1997. This increase was partially offset by sales of
beverage equipment decreasing $12,000, or 5%, to $220,000 in the current quarter
from  $232,000  in the first  quarter of the prior year.  Additionally,  Service
Sales decreased  $23,000,  or 13%, to $155,000,  down from $178,000 in the prior
year.

EXPENSES
Product and Service costs decreased $109,000, or 10.5%, to $927,000 in the first
quarter,  down from $1,036,000 in the first quarter of the prior year. Increased
gross  margin on paint  colorant  dispensers  responsible  for  $107,000  of the
decrease.

General and Administrative  expenses decreased $156,000,  or 28%, to $398,000 in
the first quarter,  down from $554,000 in the same period of the prior year. The
first  quarter of the prior year  included  $145,000 in severance  expenses that
caused  general  and  administrative  expenses  to be higher than usual for that
period.  The  remaining  decrease  of $11,000 is  attributable  to  individually
immaterial decreases and offsetting individually immaterial increases in various
expense accounts.

Selling and Marketing expenses decreased  $43,000,  or 27.5%, to $113,000,  from
$156,000 in the same period of the prior year. The decrease is  attributable  to
lower sales and marketing salaries.






                                      -14-



<PAGE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS


Research and Development expenses increased $107,000, or 60%, to $285,000,  from
$178,000 in the first quarter of the prior year. The increase is attributable to
work performed to develop the Royal Match Paint Colorant Dispenser.

Interest expense decreased $11,000, or 33%, to $22,000, down from $33,000 in the
first quarter of the prior year.  Decreased debt levels are  attributable to the
decrease in interest expense.

OTHER INCOME
Other income  increased  $54,000,  or 933%, to 60,000,  from $6,000 in the first
quarter of the prior year.  The  increase is  attributable  to the reversal of a
liability and related expense that were recorded but never incurred in the prior
year.


LIQUIDITY AND CAPITAL RESOURCES

The  Company's  cash  balance  decreased  to  $103,000  as of July 26, 1997 from
$1,309,000 as of April 29, 1995.

Operations during the three months ended July 27, 1997 required cash of $941,000
which resulted from a net loss of $345,000,  an increase in net operating assets
of $332,000,  a decrease in net  operating  liabilities  of $385,000,  offset by
depreciation and amortization of $121,000.

Consistent with prior years, the Company's  primary source of liquidity has been
private placements of equity instruments.  From August 1, 1996, through July 26,
1997, the Company issued 283 shares of Series A Preferred  Stock in exchange for
notes of $12,500 cash per share,  generating  $3,538,000  cash (see footnote 8).
Near term cash  requirements  will be obtained using this same  Preferred  Stock
vehicle.

In  addition  to private  placements  of  equity,  management  uses an  accounts
receivable-based credit line to meet short-term cash requirements (see note 5 to
the financial statements).  The credit line bears an interest rate of prime plus
four points.  As of July 26, 1997,  the credit limit was set at $500,000 with an
outstanding balance of $467,000.

If the above sources of cash do not become available or are not sufficient,  the
Company may be forced to curtail marketing and research & development activities
which  would  adversely  affect  future  operating  results.   Additionally,  if
management is successful in raising additional funds, there is no guarantee that
the company will achieve profitable operations, or positive cash flow.

The current liquidity position of the Company and the inability of operations to
generate positive cash flow raises doubt about the company's ability to continue
as a  going  concern  (see  note  3 to  the  financial  statements).  Management
recognizes these weaknesses and is taking  aggressive steps to increase revenues
through increased sales and marketing efforts.
















                                      -15-

<PAGE>



PART IV - OTHER INFORMATION

ITEM 6 -  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits:

      11.   Statement regarding computation of per share earnings (see Financial
            Statements at Item 1 of this Quarterly Report on Form 10-Q).

      27.   Financial Data Schedule (for S.E.C. electronic filing only)


(b)   Current reports on Form 8-K during the quarter ended July 26, 1997.

      During the first  quarter of Fiscal 1998,  the Company filed no reports on
      Form 8-K.


















































                                      -16-

<PAGE>

                                    SIGNATURE



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.





                                           ABC Dispensing Technologies, Inc.
                                     -------------------------------------------


Date:    September 15, 1997
                                            /s/ Charles M. Stimac, Jr.
                                     -------------------------------------------
                                                Charles M. Stimac, Jr.
                                                    President/CEO














































                                      -17-