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 OCTOBER 25, 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 November 21, 1997 was 17,320,347.





<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 - October 25, 1997 and April 26, 1997                                      3

         Consolidated statements of operations - Six months ended October 25, 1997 and
         October 26, 1996                                                                                       4

         Consolidated statements of cash flows - Six months ended October 25, 1997 and October 26, 1996         5

         Consolidated statement of stockholders' equity - Six months ended October 25, 1997                     6

         Notes to consolidated financial statements - October 25, 1997                                       7-12

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations              13-15


Part II  Other Information
_________________________________________________________________________________________________________________

Item 1.  (Not Applicable)

Item 2.  (Not Applicable)

Item 3.  (Not Applicable)

Item 4.  Submission of Matters to a Vote of Security Holders                                                   16

Item 5.  (Not Applicable)

Item 6.  Exhibits and Reports                                                                                  17

Signature                                                                                                      18

</TABLE>
































                                                    2

<PAGE>


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


ASSETS                                                                October 25, 1997  April 26, 1997
------------------------------------------------------------------------------------------------------
<S>                                                                       <C>             <C>         
Current assets:
         Cash and cash equivalents                                        $    288,000    $    445,000
         Trade receivables:
           Accounts receivable, less allowance for doubtful accounts
             of $75,000 as of October 25 and $191,000 as of April 26           747,000         327,000
         Inventories (Note 4)                                                1,474,000       1,431,000
                                                                          ------------    ------------
                  Total current assets                                       2,509,000       2,203,000

Property, Plant, and Equipment                                                 681,000         704,000

Other assets:
         Intangible assets, less accumulated amortization of $592,000
            as of October 25 and $552,000 as of April 26                        64,000         102,000
         Patents pending and deferred charges                                  164,000         341,000
                                                                          ------------    ------------
                 Total other assets                                            228,000         443,000

Total Assets                                                              $  3,418,000    $  3,350,000
                                                                          ============    ============

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

Current liabilities:

         Accounts payable                                                 $    864,000    $    877,000
         Line of credit                                                        390,000           2,000
         Current portion of long-term debt (Note 5)                             34,000          36,000
         Accrued liabilities                                                   376,000         517,000
                                                                          ------------    ------------
                  Total current liabilities                                  1,664,000       1,432,000

Long-term debt (Note 5)                                                        580,000         283,000

Stockholders' equity (Note 6):
             Preferred Stock, 9% cumulative; authorized 320 shares
               297 shares issued at October 25 (271 at April 26)             3,713,000       3,388,000
             Common Stock, $.01 par value; authorized 50,000,000
               shares; 17,320,347 shares issued at October 25
               (17,114,279 at April 26)                                        174,000         171,000
             Additional paid-in capital ($36,785 restricted for cost of
               treasury shares held)                                        19,230,000      19,014,000
             Retained earnings (deficiency)                                (21,858,000)    (20,850,000)
                                                                          ------------    ------------
                                                                             1,259,000       1,723,000
             Less notes receivable - stockholders                              (48,000)        (51,000)
             Less cost of treasury stock, 35,000 shares                        (37,000)        (37,000)
                                                                          ------------    ------------
               Total Stockholders' Equity                                    1,174,000       1,635,000
                                                                          ------------    ------------
Total Liabilities and Stockholders' Equity                                $  3,418,000    $  3,350,000
                                                                          ============    ============
</TABLE>










                             See accompanying notes.

                                       3
                        


<PAGE>


                             ABC DISPENSING TECHNOLOGIES, INC.
                           CONSOLIDATED STATEMENT OF OPERATIONS
         Six months and three months ended October 25, 1997 and October 26, 1996
                                        Unaudited
<TABLE>
<CAPTION>
                                             Six Months Ended               Three Months Ended
                                       Oct. 25, 1997   Oct. 26, 1996    Oct. 25, 1997  Oct. 26, 1996
----------------------------------------------------------------------------------------------------
<S>                                     <C>             <C>            <C>             <C>         
Revenues:
         Products and services          $  2,516,000    $  2,138,000   $  1,180,000    $    960,000


Cost and expenses:
         Products and services             1,760,000       1,763,000        834,000         727,000
         General and administrative          733,000       1,013,000        334,000         459,000
         Selling and marketing               222,000         305,000        109,000         149,000
         Research and development            606,000         391,000        321,000         213,000
                                        ------------    ------------   ------------    ------------

         Total cost and expenses           3,321,000       3,472,000      1,598,000       1,548,000

Loss from operations                        (805,000)     (1,334,000)      (418,000)       (588,000)


Other income and expense:
         Interest expense                    (48,000)        (62,000)       (30,000)        (29,000)
         Other income                         64,000          12,000          4,000           2,000
                                        ------------    ------------   ------------    ------------

         Total other income/(expense)         16,000         (50,000)       (26,000)        (27,000)


Net loss (Note 3)                       ($   789,000)   ($ 1,384,000)  ($   444,000)   ($   615,000)
                                        ------------    ------------   ------------    ------------

Weighted average number of
  shares outstanding                      17,104,445      17,048,720     17,129,611      17,109,160
                                        ------------    ------------   ------------    ------------

Net loss per share                      ($      0.05)   ($      0.08)  ($      0.03)   ($      0.04)
                                        ============    ============   ============    ============

</TABLE>

















                                          See accompanying notes.
                                                     4


<PAGE>


                        ABC DISPENSING TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                    Unaudited
<TABLE>
<CAPTION>
                                                       Six Months Ended  Six Months Ended
                                                       October 25, 1997  October 26, 1996
-----------------------------------------------------------------------------------------
<S>                                                          <C>             <C>      
Net cash used in operating activities                        (1,154,00)      (   614,000)
-------------------------------------

Cash used in investing activities                            (   14,00)      (    21,000)
---------------------------------------

Cash flows from financing activities:

      Proceeds from private placements of Preferred Stock       325,00         1,293,000
      Proceeds (advances) from line of credit - net             388,00       (    67,000)
      Repayment of notes payable and loan costs              (   25,00)      (   616,000)
      Proceeds from issuance of notes payable                   310,00               -
      Other                                                      13,00             9,000
                                                             ---------       -----------

Net cash provided by financing activities                     1,011,00           619,000
                                                             ---------       -----------

Net decrease in cash and cash equivalents                    (  157,00)      (    16,000)
Cash and cash equivalents at beginning of year                  445,00           488,000
                                                             ---------       -----------

Cash and cash equivalents at end of period                  $   288,00      $    472,000
                                                            ==========      ============

</TABLE>


























                             See accompanying notes.


                                       5



<PAGE>


                                    ABC DISPENSING TECHNOLOGIES, INC.
                             CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                    Six months ended October 25, 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)                                        $325,000

     Preferred Stock Dividend             241,068      3,000                    216,000      (219,000)
         (Note 8)

     Collection on notes receivable-
          stockholders                                                                                    3,000

     Net loss                                                                                (789,000)

     Treasury Stock 
                                    ---------------------------------------------------------------------------------------  
Balance at October 25, 1997            17,355,347   $174,000    $3,713,000  $19,230,000  $(21,858,000) $(48,000)  $(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 six month period ended October 25, 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 October 25, 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 and installation 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 80 percent of total
revenues  for  the  six  months  ended  October  25,  1997.  Revenues  from  The
Sherwin-Williams Company were 72 percent of the Company's total revenues for the
six months ended October 26, 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 common stock shares  outstanding for the period.  Common stock
equivalents  would be  anti-dilutive,  and  therefore,  are not  included in the
computation of the net loss per share.

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  issued 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 October  25,  1997,  has an  accumulated
retained  earnings  deficiency  of  $21,858,000.  The  Company's  cash flow from
operating  activities was a negative $1,158,000 for the six months ended October
25, 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
$288,000 at October 25, 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  $5,695,000 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 October 25, 1997 and April 26, 1997, inventories consisted of the following:

                                              October 25,           April 26,
                                                 1997                  1997
                                             --------------        -------------

Raw Materials                                 $  1,015,000         $    927,000
Work-in-process                                    101,000              118,000
Finished goods                                     358,000              386,000
                                             --------------        -------------
                                              $  1,474,000           $1,431,000
                                             ==============        =============

The above  amounts are net of  obsolescence  reserves of $838,000 at October 25,
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 (9.03% at October 25, 1997,  and
9.25% at 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 October 25,  1997,  the  facility  and  improvements
thereto have a net book value of $541,000.

In August, 1997 the Company began issuing notes payable at a discount. The notes
are sold in multiples of $12,500, or fractions thereof,  and pay interest at the
rate of 10%, with principal and interest paid at maturity.  The initial maturity
date is June 30, 1998, however, the Company may, at its sole option,  extend the
maturity  date to December 31,  1998.  Attached to notes are  redeemable  common
stock purchase  warrants to purchase 5,000 shares of the Company's  common stock
at a price of $1.25 per share. The warrants are exercisable for a period of five
years commencing on the date of issuance. The notes have not been discounted for
the  warrants  issued  since  the  value of such  warrants  is not  deemed to be
material. As of November 14, 1997, the Company has issued notes in the aggregate
of $310,000.

At  October  25,  1997 and  April  26,  1997,  notes  payable  consisted  of the
following:

                                                 October 25,          April 26,
                                                    1997                1997
                                               --------------       ------------
Note payable to bank                            $   262,000           $268,000
Notes payable                                       310,000                 -
Other                                                42,000             51,000
                                               --------------       ------------
                                                    614,000            319,000
Less amounts due within one year                    (34,000)          ( 36,000)
                                               --------------       ------------
Total long-term debt                            $   580,000           $283,000
                                               ==============       ============

Maturities of notes payable for the five years subsequent to April 26, 1997, are
as  follows:  1998--$36,000;  1999--$344,000  2000--$23,000;  2001--$19,000  and
2002--$18,000.

                                       9

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

6.    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
1,750,000  shares were  reserved for  issuance  under the  Company's  1995 Stock
Option Plan and amendments  thereto.  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.

A summary of the Company's stock option plans and employee stock  warrants,  and
related  information  for the six months ended October 25, 1997, and October 26,
1996, is as follows:

<TABLE>
<CAPTION>
                                                  October 25, 1997          October 26, 1996
                                          ----------------------------------------------------------
                                                            Weighted                    Weighted
                                                             Average                     Average
                                              Shares     Exercise price    Shares     Exercise Price
                                           ----------    --------------   --------    --------------    
<S>                                         <C>             <C>            <C>          <C>    
Outstanding at beginning of period          1,518,323       $ 1.68         510,966      $  2.46

     Granted                                  476,000       $ 1.07         488,109      $  1.37

     Cancelled                               (156,689)      $ 1.81               -            -
                                          -----------                     --------

Outstanding at end of period                1,837,634       $ 1.51         999,075      $  1.93
                                          ===========                     ========

Exercisable at end of period                1,216,634       $ 1.53         810,966      $  2.38
                                          ===========                     ========

Available for grant                         1,022,366                      740,925
                                          ===========                     ========

Weighted average fair value of options
     granted during the period                 $ 1.07                       $ 1.37
</TABLE>

The  following  table  summarizes  information  about stock options and employee
stock  warrants  outstanding  and  exercisable  by price range as of October 25,
1997:

<TABLE>
<CAPTION>
                                        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>    
   $0.84 - $1.25           1,215,732      4.93          $   1.13      819,732      $  1.14

   $1.38 - $2.50             421,652      7.41          $   1.44      196,652      $  1.52

   $2.88 - $3.50             200,250      3.17          $   3.13      200,250      $  3.13
                          ----------                               ----------

                           1,837,634                                1,216,634
                          ==========                               ==========
</TABLE>
                                       10

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


6.    COMMON STOCK (CONTINUED)

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 option 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.

The Company has computed,  for pro forma disclosure  purposes,  the value of all
options  granted  during the six months ended October 25, 1997,  and October 26,
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 six months ended  October 25, 1997,  and October 26, 1996,  was $361,000 and
$251,000,  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:

                                            October 25, 1997   October 26, 1996
                                            ----------------   ----------------

   Net Loss                      As reported  $   (789,000)     $ (1,384,000)

                                 Pro forma    $ (1,100,000)     $ (1,635,000)

   Primary earnings per share    As reported  $      (0.05)     $      (0.08)

                                 Pro forma    $      (0.06)     $      (0.10)


Warrants
--------

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

On October 10, 1997, the Company granted warrants to C. Rand Michaels,  Director
(20,000), Herbert L. Luxenburg, Director (20,000), and Frank E. Vaughn, Director
(40,000) at $0.844 per share.

                                       11

<PAGE>

                        ABC DISPENSING TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


7.    PREFERRED STOCK

From August 1, 1996,  to October  30,  1996,  the  Company  issued 132 shares of
Preferred  Stock in exchange  for the  surrender  of the  Company's  outstanding
$25,000, 9% Convertible Subordinated Redeemable Notes due August 1, 1999, in the
aggregate principal amount of $1,650,000.

As of October 25,  1997,  through  private  placements,  the Company  issued 165
shares of Series A  Preferred  Stock in exchange  for notes or $12,500  cash per
share, generating gross proceeds of $2,063,000 to the Company.

On  October  7,  1997,  the  Company  paid its  February  1, and August 1, 1997,
Preferred Stock dividend  requirements by issuing common stock. The total number
of common shares issued for the February 1, 1997 dividend was 61,240. The shares
were valued at $1.09359 per share.  The total number of common shares issued for
the August 1, 1997 dividend was 179,828.  The shares were valued at $0.84375 per
share.


8.    OPERATING LEASES

For the six months  ended  October 25,  1997,  and October 26,  1996,  aggregate
rental expense was $21,000 and $18,000, respectively.


9.    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 six months
ended  October  25,  1997,   and  October  25,  1996,   was  $7,000  and  $8,000
respectively.   The  Company  has  the  discretion  to  make  a   profit-sharing
contribution, but no such contribution has been made by the Company.


10.   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.






















                                       12

<PAGE>

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


RESULTS OF OPERATIONS

For the first two quarters of fiscal 1998 the net loss was $789,000,  a decrease
of $595,000,  or 42.9%, from the $1,384,000 net loss for corresponding period of
the prior year. The net loss for the second quarter of fiscal 1998 was $444,000,
a decrease of  $171,000,  or 27.8%,  from the  $615,000  net loss for the second
quarter of the prior year.

REVENUES
                             Two Quarters Ended        Second Quarter Ended
                          October 25,  October 26,    October 25,  October 26,
                              1997       1996            1997         1996
(in thousands)
Equipment sales             $ 2,231     $ 1,812         $ 1,040     $  812
Service revenues                285         326             140        148
                            -------     -------         -------     ------
          TOTAL             $ 2,516     $ 2,138         $ 1,180     $  960
                            =======     =======          ======     ======

Equipment  sales for the first two quarters of fiscal 1998 increased  23.1% over
the first two quarters of fiscal 1997. Equipment sales for the second quarter of
fiscal  1998  increased  28% over the  second  quarter  of  fiscal  1997.  These
increases  are due  primarily  to sales of the ROYAL  MATCH (TM) paint  colorant
dispensers   to  The  Home   Depot,   Inc.   Additionally,   shipments   to  the
Sherwin-Williams Company ceased in the middle of the second quarter of the prior
year.

Service  revenues for the first two quarters of fiscal 1998 were down 12.5% from
the first  two  quarters  of  fiscal  1997.  The  decrease  was due to a $71,000
decrease in sales of replacement  parts which was partially  offset by a $30,000
increase in service labor revenues.  Service  revenues for the second quarter of
fiscal 1998  decreased 5.4% from the second quarter of fiscal 1997. The decrease
was due to a $40,000 decrease in sales of replacement  parts which was partially
offset by a $32,000  increase in service labor  revenues.  Sales of  replacement
parts are down due to  discontinuation  of the  TINT-A-COLOR(TM)  paint colorant
dispensers and the Omnitron(TM)  soft drink  dispensers.  Service labor revenues
have  increased due to  installation  charges on sales of ROYAL MATCH (TM) paint
colorant dispensers.

GROSS MARGINS
                             Two Quarters Ended        Second Quarter Ended
                          October 25,  October 26,    October 25,  October 26,
                              1997       1996            1997         1996

Equipment                     36.8 %    28.0 %           33.7 %     32.6 %
Service                      (12.7)%   (17.9)%           (6.8)%    (21.7)%
                             -------   -------          -------    -------
             TOTAL            31.2 %    23.7 %           28.9 %     24.2 %
                             =======   =======          ======     =======

For the first two quarters of fiscal 1998, gross margin as a percentage of sales
on  equipment  increased  8.8 points over the first two quarters of fiscal 1997.
For the second quarter of fiscal 1998,  gross margin as a percentage of sales on
equipment  increased  1.1 points over the second  quarter of fiscal 1997.  These
increases are due to changes in product mix.

For the first two  quarters of fiscal  1998,  gross  margin as a  percentage  of
service  revenues  increased  5.2 points  over the first two  quarters of fiscal
1997.  For the second  quarter of fiscal 1998,  gross margin as a percentage  of
service  revenues  increased 14.9 points over the second quarter of fiscal 1997.
These  increases  are  primarily due to equipment  installation  revenues  being
recognized with no  corresponding  expense in the current period (see footnote 2
to the  financial  statements).  Additionally,  the decline in low (or negative)
margin service on soft drink equipment resulting from the discontinuation of the
Omnitron (TM) soft drink dispensers also contributed to the increase.

                                       13

<PAGE>

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


GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses decreased $280,000, or 27.7%, to $733,000 in
the first two quarters of fiscal 1998,  down from  $1,013,000  for the first two
quarters of fiscal 1997. Severance expense of $221,000 which was incurred in the
first two quarters of fiscal 1997 and a decreases in payroll  expense and travel
expense of $206,000 and $330,000, respectively, during the first two quarters of
fiscal 1998 are primarily  responsible  for the decrease.  These  decreases were
partially  offset by an increase in amortization of deferred charges of $160,000
and increased legal fees of $17,000 in the first two quarters of fiscal 1998.

For the second  quarter of fiscal  1998,  general  and  administrative  expenses
decreased  $125,000,  or 27.2%,  to $334,000,  down from $459,000 for the second
quarter of fiscal 1997.  Severance  expense of $77,000 which was incurred in the
second  quarter of fiscal 1997 and a decrease in payroll  expense of $134,000 in
the second  quarter of fiscal 1998 are primarily  responsible  for the decrease.
These decreases were partially offset by an increase in amortization of deferred
charges of $75,000 and increased  legal fees of $40,000 in the second quarter of
fiscal 1998.


SELLING AND MARKETING EXPENSES

For the first two  quarters  of fiscal  1998,  selling  and  marketing  expenses
decreased $83,000,  or 27.2%, to $222,000,  down from $305,000 for the first two
quarters of fiscal 1997.  The decrease was due to decreased  payroll  expense of
$83,000  and  decreases  expenses  for  fees,   subscriptions,   promotions  and
literature  aggregating  $30,000.  These  decreases  were  partially  offset  by
increases  in travel  expenses of $20,000 and  increased  subcontractor  fees of
$10,000.

Selling and marketing  expense decreased  $40,000,  or 26.8%, to $109,000 in the
second  quarter of fiscal 1998 due to  decreased  payroll  expense.  Selling and
marketing expenses for the second quarter of fiscal 1997 were $149,000.


RESEARCH AND DEVELOPMENT EXPENSES

For the first two  quarters of fiscal 1998  research  and  development  expenses
increased  $215,000,  or 55%, to  $606,000,  up from  $391,000 for the first two
quarters of fiscal  1997.  The increase is  primarily  due to increased  payroll
expense of $207,000.

Research and development expenses increased $108,000, or $50.7%, to $321,000, up
from  $213,000  in the second  quarter of fiscal  1997.  The  increase is due to
increased  payroll expense of $121,000 which was partially  offset by a decrease
in parts  and  supplies  expense  of  $13,000.  These  expenses  are a result of
continued  development  of,  and  enhancements  to,  the ROYAL  MATCH (TM) paint
colorant dispenser,  the CHECK MATE (TM) software which controls the ROYAL MATCH
(TM), and the VIRTUAL SQUEEZE (TM) juice dispenser.


OTHER INCOME AND EXPENSE

For the first two quarters of fiscal 1998,  interest expense decreased  $14,000,
or 22.6%, to $48,000 from $62,000 for the first two quarters of fiscal 1997. The
decrease is due to lower debt balances in the first two quarters of fiscal 1998.

Other income  increased  $52,000,  or 433%,  in the first two quarters of fiscal
1998, up from $12,000 for the first two quarters of fiscal 1997. The increase is
attributable  to the  reversal of a  liability  and  related  expense  that were
recorded but never incurred in the prior year.


                                       14

<PAGE>


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


LIQUIDITY AND CAPITAL RESOURCES

The  Company's  cash  balance  decreased to $288,000 as of October 25, 1997 from
$445,000 as of April 26, 1997.

Operations during the first two quarters ended October 25, 1997 required cash of
$1,154,000  which  resulted  from a net loss of  $789,000,  an  increase  in net
operating  assets of  $458,000,  a  decrease  in net  operating  liabilities  of
$154,000, offset by depreciation and amortization of $247,000.

Consistent with prior years, the Company's  primary source of liquidity has been
private placements of equity and equity derivative  instruments.  From August 1,
1996, to October 30, 1996,  the Company  issued 132 shares of Series A Preferred
Stock in exchange for the surrender of the  Company's  outstanding  $25,000,  9%
Convertible  Subordinated  Redeemable  Notes Payable in the aggregate  principal
amount of $1,650,000. From August 1, 1996, through October 25, 1997, the Company
issued 165 shares of Series A Preferred  Stock in exchange  for $12,500 cash per
share,  generating $2,063,000 cash (see footnote 8). Near term cash requirements
will be obtained using this same Preferred Stock vehicle.

In August,  1997, to raise additional working capital, the Company began issuing
short term promissory  notes. The notes are sold in multiples of $12,500 and pay
interest at the rate of 10%, with  principal and interest paid at maturity.  The
initial  maturity date is June 30, 1998,  however,  the Company may, at its sole
option, extend the maturity date to December 31, 1998. As November 14, 1997, the
Company has generated $310,000 in cash by issuing the notes.

In addition to private  placements  of equity and notes  receivable,  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 October 25,  1997,  the credit
limit was set at $450,000 with an outstanding balance of $390,000.

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 II     OTHER INFORMATION


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------


      The 1997 Annual Meeting of Shareholders of the Company was held on October
13, 1997.

      The Director nominees,  Charles M. Stimac, Jr., Herbert L. Luxenburg,  and
C. Rand Michaels were elected with  13,185,435  shares of common stock voting in
favor of their election and 77,513 shares voting against.

      A proposed  amendment to the Company's 1995 Stock Option Plan  authorizing
an additional 1,000,000 shares of common stock for issuance upon the exercise of
options  granted  under the plan passed with  4,608,993  shares of common  stock
voting in favor of the amendment,  717,632 shares voting against,  and 7,936,323
shares abstaining.

      The  appointment  of  GRANT  THORNTON  LLP  as the  Company's  independent
auditors for the  Company's  fiscal year ended April 25, 1998 was ratified  with
13,066,919  shares of common  stock voting in favor of the  appointment,  19,690
shares voting against, and 86,939 shares abstaining.

































                                       16

<PAGE>




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.

(b)   Current reports on Form 8-K during the quarter ended October 25, 1997.

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







































                                       17

<PAGE>




                                    SIGNATURE


Pursuant to 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.
                                    --------------------------------------------
                                                     (Registrant)



Date:    December 5, 1997                   /s/ Charles M. Stimac, Jr.
     -------------------------      --------------------------------------------
                                                Charles M. Stimac, Jr.
                                                President/CEO























                                       18