Document:

EXHIBIT
4.10

    

    FORM OF
PRIVATE PLACEMENT MEMORANDUM

    Memorandum
No. _________A

     

    

    

    CONFIDENTIAL
PRIVATE PLACEMENT OFFERING MEMORANDUM

    American
Bio Medica Corporation

    $1,500,000
(U.S. Dollars)

     

    $750,000
10% Subordinated Convertible Debentures, Series A due 2012

    $750,000
10% Subordinated Convertible Debentures, Series B due Four (4) Years from
Issuance

     

    These subordinated convertible
debentures (“Debentures”) are being offered by American Bio Medica Corporation
(the “Company”) in denominations of $500, or integral multiples thereof, with a
minimum subscription of $10,000 and integral multiples of $500 in excess of
$10,000. Holders of Debentures due 2012 (the “Series A Debentures”) may convert
their Debentures into shares of our common stock at a conversion rate of 666.67
shares per $500 principal amount of Debentures (representing a conversion price
of approximately $0.75 per share); the conversion price for the Debentures due
four years from issuance (the “Series B Debentures”) will be established by the
Company if, as and when the Series B Debentures are offered for sale. The right
of conversion may be exercised at any time after the earlier of (a) one hundred
twenty (120) days after the date hereof or (b) the effective date of a
registration statement filed by the Company with respect to the Debentures. Each
Debenture bears an interest rate of 10% per annum, computed on the basis of a year of 365
or 366 days, as applicable, for the actual number of days elapsed, and shall be
payable semiannually in arrears, in such coin or currency described above, on
the first business days of January and July of each
year.  Cantone Research, Inc., (the “Placement Agent”) will act
as the Company’s placement agent in the offering of the Debentures.

     

    PURCHASE OF THE DEBENTURES IS
SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK (SEE “RISK
FACTORS”).

     

    THE INFORMATION CONTAINED HEREIN HAS
BEEN PREPARED TO ASSIST INTERESTED PARTIES IN MAKING THEIR OWN EVALUATION OF
AMERICAN BIO MEDICA CORPORATION AND DOES NOT PURPORT TO CONTAIN ALL OF THE
INFORMATION THAT A PROSPECTIVE INVESTOR MAY REQUIRE. FOR FURTHER INFORMATION,
PROSPECTIVE INVESTORS ARE ENCOURAGED TO REVIEW AMERICAN BIO MEDICA CORPORATION’S
PERIODIC AND CURRENT REPORTS FILED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION. FURTHERMORE, INTERESTED PARTIES SHOULD CONDUCT THEIR OWN
INVESTIGATION AND ANALYSIS OF AMERICAN BIO MEDICA CORPORATION AND THE DATA SET
FORTH IN THIS CONFIDENTIAL MEMORANDUM AND IN AMERICAN BIO MEDICA CORPORATION’S
FILINGS WITH THE COMMISSION.

     

    THE DEBENTURES ARE NOT RATED, AND NO
APPLICATION WILL BE MADE TO OBTAIN A RATING THEREON.  PURCHASE OF THE
DEBENTURES SHOULD ONLY BE MADE BY INVESTORS WHO (A) CAN BEAR THE ECONOMIC RISK
OF THE DEBENTURES, (B) HAVE SUCH KNOWLEDGE AND EXPERIENCE IN BUSINESS AND
FINANCIAL MATTERS AS TO BE CAPABLE OF EVALUATING THE RISKS AND MERITS OF THE
DEBENTURES, (C) ACKNOWLEDGE THAT THE DEBENTURES ARE SUITABLE ONLY FOR INCLUSION
IN A DIVERSIFIED PORTFOLIO OF HIGH YIELD, HIGH RISK SECURITIES, AND (D) HAVE
UNDERTAKEN THE RESPONSIBILITY FOR OBTAINING ALL INFORMATION THAT IS DEEMED
NECESSARY AND DESIRABLE TO FORM A DECISION TO PURCHASE THE
DEBENTURES

     

    THE COMMISSION DOES NOT PASS UPON THE
MERITS OF, OR GIVE ITS APPROVAL TO THE DEBENTURES OFFERED OR THE TERMS OF ANY
OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY MEMORANDUM
OR OTHER SELLING LITERATURE. THE DEBENTURES ARE OFFERED IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    THE
DEBENTURES ARE OFFERED SUBJECT TO PRIOR SALE WHEN, AS AND IF DELIVERED TO AND
ACCEPTED BY THE COMPANY AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS BY
COUNSEL AND TO CERTAIN OTHER CONDITIONS. THE COMPANY RESERVES THE RIGHT TO
WITHDRAW, MODIFY OR CANCEL THE OFFERING WITHOUT NOTICE AND TO REJECT
SUBSCRIPTIONS IN WHOLE OR IN PART.

     

    THIS MEMORANDUM IS SUBMITTED IN
CONNECTION WITH THE PRIVATE PLACEMENT OF THE DEBENTURES AND MAY NOT BE
REPRODUCED OR USED FOR ANY OTHER PURPOSE. THOSE PERSONS NOT PURCHASING
DEBENTURES MUST RETURN THE MEMORANDUM TO THE PLACEMENT AGENT.

     

    BECAUSE AN INVESTMENT IN THE OFFERING
INVOLVES A HIGH DEGREE OF RISK, IT IS SUITABLE ONLY FOR THOSE INVESTORS THAT ARE
“ACCREDITED INVESTORS”, AS DEFINED BY RULE 501 OF THE SECURITIES AND EXCHANGE
COMMISSION.

     

    NO OFFERING LITERATURE OR ADVERTISING
IN ANY FORM SHALL BE EMPLOYED IN THE OFFERING EXCEPT TO THE EXTENT AUTHORIZED BY
THE COMPANY. NO PERSON, INCLUDING BUT NOT LIMITED TO THE PLACEMENT AGENT, HAS
BEEN AUTHORIZED TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.

     

    PROSPECTIVE INVESTORS ARE NOT TO
CONSTRUE THE CONTENTS OF THE MEMORANDUM AS EITHER LEGAL, BUSINESS OR TAX ADVICE.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT HIS OR HER PERSONAL COUNSEL, ACCOUNTANT
OR OTHER ADVISORS AS TO LEGAL, TAX, ECONOMIC AND RELATED MATTERS CONCERNING AN
INVESTMENT IN THE COMPANY AND ITS SUITABILITY FOR HIM OR HER.

     

    THE OFFICERS OF THE COMPANY SHALL MAKE
AVAILABLE TO EACH PROSPECTIVE INVESTOR OR HIS REPRESENTATIVE, PRIOR TO THE SALE
OF THE DEBENTURES TO SUCH PROSPECTIVE INVESTOR, THE OPPORTUNITY TO ASK QUESTIONS
OF, AND RECEIVE ANSWERS FROM, THEM AND ANY OTHER PERSON AUTHORIZED TO ACT ON
THEIR BEHALF CONCERNING ANY ASPECT OF THE INVESTMENT. PROSPECTIVE INVESTORS MAY
VERIFY THE ACCURACY OF THE INFORMATION CONTAINED IN THE MEMORANDUM TO THE EXTENT
THAT THE COMPANY POSSESSES SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT
UNREASONABLE EFFORT OR EXPENSE.

     

    SALES OF THE DEBENTURES CAN BE
CONSUMMATED ONLY BY THE COMPANY’S ACCEPTANCE OF OFFERS TO PURCHASE DEBENTURES
THAT ARE TENDERED TO THE COMPANY BY PROSPECTIVE INVESTORS.

     

    NEITHER THE DELIVERY OF THIS MEMORANDUM
NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE COMPANY’S AFFAIRS SINCE THE DATE
HEREOF.  THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION
BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR
IN WHICH THE PERSON MAKING THE SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION.

    
      
         

      

      
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    FORWARD
LOOKING STATEMENTS

     

    Except
for the historical information contained in this Confidential Memorandum, the
matters discussed in this Memorandum or otherwise incorporated by reference into
this Memorandum are “forward-looking statements” within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). These statements can be identified by the
use of forward-looking terminology such as “believes,” “expects,” “may,” “will,”
“should,” or “anticipates” or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy that involve risks and
uncertainties. The safe harbor provisions of the Exchange Act, the Securities
Act and the Private Securities Litigation Reform Act of 1995, as amended, apply
to forward-looking statements made by the Company. These forward-looking
statements involve risks and uncertainties, including those identified within
the “Risk Factors” section of this Memorandum and elsewhere in, or incorporated
by reference into, this Memorandum. Although our management believes the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, we cannot assure investors that these expectations will
prove correct, and the actual results that we achieve may differ materially from
any forward-looking statements, due to such risks and
uncertainties.

     

    These
forward-looking statements are based on current expectations, and we assume no
obligation to update this information. Readers are urged to carefully review and
consider the various disclosures made by us in this Memorandum that attempt to
advise interested parties of the risks and factors that may affect the Company’s
business. Each prospective investor must make his or her own evaluation of the
merits and risks of a purchase of the Debentures.

     

    All
inquiries regarding us should be made through the contacts listed
below.

     

    For
further information, please call or E-mail:

     

    
      
        	
                Stan
      Cipkowski

              	
                (800)
      227-1243

              
	
                American
      Bio Medica Corporation

              	
                scipkowski@abmc.com

              
	 
      	 
      
	
                Anthony
      J. Cantone

              	
                (732)
    450-3500

              
	
                Cantone
      Research Inc.

              	
                ajcantone@cantone.com

              

      

    

    
      
         

      

      
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    TABLE
OF CONTENTS

    

    
      
        
          
            	 
      	 
      	
                    PAGE

                  
	 
      	 
      	 
      
	
                    Summary
      of Offering Terms

                  	 
      	
                    1

                  
	
                    Summary
      Fact Sheet

                  	 
      	
                    4

                  
	
                    General
      Summary

                  	 
      	
                    5

                  
	
                    Risk
      Factors

                  	 
      	
                    6

                  
	
                    Our
      Products

                  	 
      	
                    13

                  
	
                    Contract
      Manufacturing

                  	 
      	
                    15

                  
	
                    Market
      Overview

                  	 
      	
                    16

                  
	
                    Manufacturing/Property

                  	 
      	
                    17

                  
	
                    Headquarters
      and Website

                  	 
      	
                    17

                  
	
                    Summary
      of Historical Financial Data

                  	 
      	
                    18

                  
	
                    Use
      of Proceeds

                  	 
      	
                    19

                  
	
                    Price
      Range of Common Shares

                  	 
      	
                    19

                  
	
                    Officers
      and Senior Management

                  	 
      	
                    20

                  
	
                    Summary
      Compensation of Executive Officers

                  	 
      	
                    22

                  
	
                    Principal
      Stockholders

                  	 
      	
                    24

                  
	
                    Our
      Securities

                  	 
      	
                    26

                  
	
                    Dilution

                  	 
      	
                    26

                  
	
                    Plan
      of Distribution

                  	 
      	
                    27

                  
	
                    Financial
      Statements with Notes as of March 31, 2008

                  	 
      	
                    28

                  

          

        

      

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    SUMMARY
OF OFFERING TERMS

    

    
      
        
          
            	
                    Issuer:

                  	 
      	
                    American
      Bio Medica Corporation

                  
	 
      	 
      	 
      
	
                    Issue/Maturity:

                  	 
      	
                    Series
      A: A minimum of $250,000 and a maximum of $750,000 subordinated
      convertible debentures to mature July 1, 2012

                  
	 
      	 
      	 
      
	 
      	 
      	
                    Series
      B – A minimum of $250,000 and a maximum of $750,000 subordinated
      convertible debentures to mature fours years from the date of
      issuance

                  
	 
      	 
      	 
      
	
                    Investors:

                  	 
      	
                    Purchasers
      must qualify as Accredited Investors

                  
	 
      	 
      	 
      
	
                    Closing
      Date expected:

                  	 
      	
                    The
      Closing Date of the Series A offering is expected to occur no later than 14 days
      after the Company and the Placement Agent execute the definitive Debenture
      Purchase Agreement relating to the Series A Debentures (the
      “DPA”).

                  
	 
      	 
      	 
      
	
                    Debenture
      price:

                  	 
      	
                    $10,000
      and integral multiples of $500 in excess of $10,000

                  
	 
      	 
      	 
      
	
                    Frequency
      of Interest:

                  	 
      	
                    Interest
      on the Series A Debentures is payable by the Company to Holders
      semiannually in cash, beginning on or about January 1, 2009. Interest on
      the Series B Debentures will be payable by the Company to the Holders
      semiannually in cash, beginning on or about six months from the date of
      issuance.

                  
	 
      	 
      	 
      
	
                    Interest
      rate:

                  	 
      	
                    10%
      simple interest (20%, but not exceeding the highest rate allowable by law,
      in event of default)

                  
	 
      	 
      	 
      
	
                    Conversion
      rate:

                  	 
      	
                    Each
      $500 in principal amount of the Debentures is convertible into 666.67
      shares of common stock representing a conversion price of approximately
      $0.75 per share.

                  
	 
      	 
      	 
      
	
                    Adjustment
      of Conversion Price:

                  	 
      	
                    The conversion price is subject to
      adjustment in the event that the closing price of the Company’s Common
      Stock exceeds $0.75 per share on the Closing Date, in which case the
      conversion price will be an amount equal to one hundred twenty five (125%)
      percent of such price

                  
	 
      	 
      	 
      
	
                    Registration:

                  	 
      	
                    The
      Company is expected to register the underlying shares within eight months
      of the completion of the Series A offering. Such registration would
      include a Series B offering if undertaken. Registration shall be subject
      to a $250,000 minimum sale under the Series A offering

                  
	 
      	 
      	 
      
	
                    Call
    provision:

                  	 
      	
                    Series A Debentures: If the closing price of
      the
      Company’s Common
      stock exceeds $2.00 per share for twenty consecutive trading days,
      the Series
      A Debentures are
      subject to redemption by the Company, upon 60 days notice, at a price
      equal to par value plus $0.05 per underlying share, or $525 per $500 of principal amount of
      the Debentures.  Upon such redemption notice, the Debenture
      Holder may elect to accept the redemption price or convert to Common
      Stock

                  
	 
      	 
      	 
      
	 
      	
                      

                  	
                    Series B Debentures:
      If the closing price
      of the
      Company’s Common
      Stock exceeds twice the price per share established by the Company for
      the conversion of the Series B Debentures for twenty consecutive trading
      days, the Series B
      Debentures will be subject to redemption by the Company, upon 60 days
      notice, at a price equal to par value plus $0.05 per underlying share, or
      $525 per $500 of principal amount of the Debentures. Upon such redemption notice, the
      Debenture Holder may elect to accept the redemption price or convert to
      Common
Stock

                  

          

        

      

    

    
      
         

      

      
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                                    Future
      Offerings:

                                  	 
      	
                                    The
      Company shall provide reasonable prior written notice to any Debenture
      Holder, through the Placement Agent as its agent, of any new offering of
      securities undertaken by the Company, and Debenture Holders will have an
      opportunity to participate in such offering, if
  qualified

                                  
	 	 	 
	
                                    Additional
      Covenants:

                                  	 
      	
                                    The
      Debentures will contain provisions prohibiting the Company from issuing
      variable priced debt or variable priced equity linked
      Securities

                                  
	 	 	 
	
                                    Documentation
      Counsel:

                                  	 
      	
                                    To
      be selected by the Placement Agent. Reasonable fees to be paid by the
      Company

                                  
	 	 	 
	
                                    Placement
      agent fee:

                                  	 
      	
                                    7%
      of the gross principal amount of Debentures places by the Placement Agent
      and accepted by the Company. No cash commission shall be paid to the
      Placement Agent on subscriptions and monies received from investors as a
      result of the Company’s efforts

                                  
	 	 	 
	 
      	 
      	
                                    Placement
      agent fee shall be payable within five days of month end in which
      Debentures were placed, or upon completion of the initial Series A
      offering, if applicable, and upon completion of the Series B “second”
      offering, if applicable

                                  
	 	 	 
	 
      	 
      	
                                    The Placement Agent shall receive
      warrants to purchase shares of the Company’s Common Stock as
      follows:

                                  
	 	 	 
	 
      	 
      	
                                    Within
      thirty (30) days following the Series A Completion Date (as defined in the
      DPA), the Company shall issue the Placement Agent, in respect of each
      $500.00 in principal amount of Series A Debentures placed by the Placement
      Agent (which placement was accepted by the Company), warrants exercisable
      within four (4) years of the issuance date thereof, to purchase 50 shares
      of the Company's common stock (the "Warrants").  The exercise
      price under the Warrants shall be: (i) with respect to all Series A
      Debentures placed by the Placement Agent (which placement was accepted by
      the Company) on or as of the Closing Date (as defined in the DPA), a price
      equal to the publicly traded closing price of the shares of the Company's
      common stock on the Closing Date; and (ii) with respect to all Series A
      Debentures placed by the Placement Agent (which placement was accepted by
      the Company) on or as of any date after the Closing Date through and
      including the Series A Completion Date, a price equal to the publicly
      traded closing price of the shares of the Company's common stock on the
      Series A Completion Date ..

                                  
	 	 	 
	
                                    Due
      diligence/legal fee:

                                  	 
      	
                                    A
      due diligence fee of $15,000 and a retainer fee of $5,000 for the
      Placement Agent’s counsel has previously been paid by the Company to the
      Placement Agent

                                  
	 	 	 
	 
      	 
      	
                                    In
      addition, the Company will reimburse the Placement Agent for actual
      out-of-pocket expenses (not in excess of $5,000) and additional (in excess
      of $5,000, but not in excess of an additional $5,000) reasonable fees and
      expenses of the Placement Agent’s legal counsel.  As soon as
      practicable after the Series A Completion Date, the Placement Agent will
      provide the Company with an accounting of its actual out-of-pocket
      expenses, and its legal counsel will provide the Company with a statement
      for any reasonable fees and expenses in excess of $5,000, and the Company
      agrees to promptly pay the same.

                                  
	 	 	 
	 
      	
                                      

                                  	
                                    If
      the Series B placement is completed under this same offering, there shall
      be no additional due diligence fees due to the Placement Agent by the
      Company

                                  

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
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    SUMMARY
FACT SHEET

    (Information
as of July 3, 2008)

    

    
      
        
          
            	
                    Recent
      Stock Price

                  	
                    $0.60
      (average closing price)

                  
	
                    52
      week range

                  	
                    $1.43
      - $0.33

                  
	
                    Average
      Daily Volume(1)

                  	
                    24,842

                  
	
                    Shares
      Outstanding(2)

                  	
                    21,744,768

                  
	
                    Market
      Cap

                  	
                    approximately
      $10.5M

                  
	
                    Net
      Sales in FYE 12-31-07

                  	
                     $13,872,000

                  
	
                    Net
      sales in QE 3-31-08

                  	
                     $
      3,299,000

                  
	
                    Stockholders
      Equity as of 3-31-08

                  	 
      

          

        

      

    

    

    
      	
              1)

            	
              Represents
      trading for the period from May 3, 2008 to July 3,
  2008.

            

    

    
      	
              2)

            	
              Excludes
      3,768,080 shares of common stock issuable upon the exercise of outstanding
      stock options, 150,000 shares of common stock issuable upon the exercise
      of outstanding warrants, up to 150,000 shares of common stock issuable
      upon the exercise of warrants issued to the Placement Agent in connection
      with this Offering and excludes any shares of common stock issuable upon
      the conversion of the Debentures issued as a result of this
      Offering.

            

    

    
      
         

      

      
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    GENERAL
SUMMARY

     

    The
following summary is qualified in its entirety by more detailed information and
financial statements appearing elsewhere in this Confidential Memorandum. An
investment in the Debentures offered by this Memorandum involves a high degree
of risk. Investors should carefully consider the information set forth under the
section titled “Risk Factors”. Unless the context otherwise requires, “Us”, “We”
and “Our” refer to American Bio Medica Corporation.

     

    We were
incorporated on April 2, 1986 under the laws of the State of New York under the
name American Micro Media, Inc. On September 9, 1992, we filed an amendment to
our Certificate of Incorporation to change our name to American Bio Medica
Corporation. Our principal business office is located at 122 Smith Road,
Kinderhook, New York, 12106. We also have a research & development
(“R&D”) and production facility located at 603 Heron Drive, Unit #3, Logan
Township, New Jersey, 08085.

     

    We develop, manufacture and sell
immunoassay diagnostic test kits, primarily for immediate, point of collection
testing (“POCT”) for drugs of abuse in urine and oral fluids (saliva). Our drugs
of abuse screening products offer employers, law enforcement, government, health
care, laboratory and education professionals, self-contained, cost effective,
user friendly screening devices capable of accurately identifying drugs of abuse
within minutes.

     

    In
addition to the manufacture and sale of drugs of abuse screening products, we
provide contract strip manufacturing services for other POCT diagnostic
companies. While we do not currently derive a significant portion of our
revenues from contract manufacturing, we expect to continue to explore
additional applications for our technology and as a result, contract
manufacturing could become a greater portion of our revenues in the
future.

     

    In 2007 we reported net sales of
$13,872,000, compared to net sales of $13,838,000 in 2006.

    
      
         

      

      
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    RISK
FACTORS

    

    THE
COMPANY’S SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
PROSPECTIVE PURCHASERS OF THE DEBENTURES SHOULD CAREFULLY CONSIDER THE FOLLOWING
RISK FACTORS AS WELL AS OTHER INFORMATION SET FORTH IN THIS MEMORANDUM AND OTHER
INFORMATION CONTAINED IN THE COMPANY’S REPORTS FILED WITH THE
COMMISSION.

     

    WE HAVE A HISTORY OF
INCURRING NET LOSSES.

     

    Since
inception in 1992 through the fiscal transition period ending December 31, 2001,
we incurred net losses. We began earning profits in the fiscal year ending
December 31, 2002 and continued to be profitable through December 31, 2004.
However, in the fiscal year ending December 31, 2005, we incurred a net loss of
$376,000. In the fiscal year ending December 31, 2006, we reported net income of
$196,000, and in the fiscal year ending December 31, 2007, we incurred a net
loss of $990,000. As of December 31, 2007, we have an accumulated deficit of
$14,388,000. We expect to continue to make substantial expenditures for sales
and marketing, product development and other purposes. Our ability to achieve
profitability in the future will primarily depend on our ability to increase
sales of our products, reduce production and other costs and successfully
introduce new products and enhanced versions of our existing products into the
marketplace. There can be no assurance that we will be able to increase our
revenues at a rate that equals or exceeds expenditures. Our failure to do so
will result in our incurring additional losses.

     

    QUALIFIED AUDITORS’
OPINION

     

    The
Company’s financial statements for the fiscal year ended December 31, 2007 have
been prepared assuming the Company will continue as a going concern. However, as
noted in the report of UHY LLP approving these financial statements, in 2007 the
Company suffered a significant net loss, generated negative cash flows from
operations, and at December 31, 2007 was not in compliance with certain
financial covenants required under its line of credit obligation. In our auditor’s opinion, these
factors raise substantial doubt as to the Company’s ability to continue as a
going concern.

     

    WE MAY
NEED ADDITIONAL FUNDING FOR OUR EXISTING AND FUTURE OPERATIONS.

     

    On April
30, 2008, our principal lender, First Niagara Financial Group (“FNFG”), gave
notice that the Company was in violation of its minimum debt service ratio
covenant, so that FNFG has the right to declare all obligations of the Company
to FNFG immediately due and payable.  The total amount of these
obligations outstanding as of April 30, 2008 was $1,897,347.43.  As of
May 22, 2008, the Company has entered into a forbearance agreement with FNFG
that will expire July 31, 2008 (the “Forbearance Agreement”).

     

    Pursuant
to the Forbearance Agreement, FNFG will reduce its total lending commitment on
the Company’s lines of credit from $875,000 to $750,000.  The
aggregate outstanding balance on these lines of credit was $723,148.95 as of
April 30, 2008.  FNFG’s continued forbearance for the term of the
Forbearance Agreement is contingent upon the Company’s compliance with reduced
minimum net worth and minimum net working capital covenants set froth in the
FNFG loan documents, and is further contingent upon the Company showing a net
loss no greater than $225,000 at April 30, 2008, $200,000 at May 31, 2008 and
$175,000 at June 30, 2008.  The Company expects that it will be able
to satisfy these contingencies, and that FNFG will agree to extend its
forbearance upon expiration of the Forbearance Agreement, but there can be no
assurance that the Company’s cash flow from operations will be sufficient for
that purpose.  A copy of the Forbearance Agreement is available for
inspection at the office of the Company upon request.

     

    Management
recognizes that cash generated from operations will likely be insufficient to
satisfy the Company’s working capital and capital expenditure requirements, and
that the Company is required to sell additional equity or obtain additional
credit facilities in order to continue as a going concern. The Company believes
that the proceeds of this Debenture Offering, together with its current cash
balances, and cash generated from future operations, will be sufficient to fund
operations for the next twelve months. This estimate is based on certain
assumptions, including that sales of Debentures will yield at least $1,000,000
for working capital.  There can be no assurance that the Offering will
be successful, or that unanticipated costs will not be incurred. Future events,
including the problems, delays, expenses and difficulties which may be
encountered in establishing and maintaining a substantial market for our
products, could make cash on hand insufficient to fund
operations.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    WE RELY ON A SINGLE CUSTOMER
FOR A SIGNIFICANT PERCENTAGE OF OUR SALES.

     

    One of
our customers accounted for approximately 9.3% of the total sales of the Company
for the fiscal year ended December 31, 2007. Although we have entered into a
written purchase agreement with this customer, this customer does not have any
minimum purchase obligations and could stop buying our products with 90 days
notice. A reduction, delay or cancellation of orders from this customer or the
loss of this customer could reduce the Company’s revenues and profits. The
Company cannot provide assurance that this customer or any of its current
customers will continue to place orders, that orders by existing customers will
continue at current or historical levels or that the Company will be able to
obtain orders from new customers.

     

    ALTHOUGH THE COMPANY WILL
ENTER INTO A REGISTRATION AGREEMENT WITH EACH PURCHASER OF DEBENTURES, THE
SHARES INTO WHICH THE DEBENTURES ARE CONVERTIBLE MAY NEVER BE
REGISTERED.

     

    Pursuant
to the Registration Agreement to be entered into with each purchaser of
Debentures, the Company will undertake to use commercially reasonable efforts to
prepare and file with the SEC, no later than eight (8) months following the
completion of the Series A Debenture Offering, an effective Registration
Statement on Form S-3 registering the Shares for resale by the Holder, subject
to the requirement that the gross proceeds of the Series A Offering exceed
$250,000. There can be no assurance that this threshold can be
met.  Furthermore, there can be no assurance, despite the best efforts
of the Company, that the SEC will accept such Registration Statement for filing,
in which case the Shares would be subject to restrictions on sale or transfer,
and could only be sold in compliance with Rule 144 of the Securities
Act.

     

    IF WE FAIL TO MEET THE
CONTINUED LISTING REQUIREMENTS OF THE NASDAQ CAPITAL MARKET, OUR SECURITIES
COULD BE DELISTED.

     

    Our
securities are listed on the NASDAQ Capital Market. The NASDAQ Stock Market's
Marketplace Rules impose requirements for companies listed on the NASDAQ Capital
Market to maintain their listing status, including but not limited to minimum
common share bid price of $1.00, and  $2,500,000 in shareholders'
equity or $500,000 in net income in the last fiscal year. As of the date of this
Offering Memorandum our common shares are trading below the minimum bid
requirement and our common shares have traded at levels lower than the minimum
bid requirement within the last twelve months (see Current Report on Form 8-K
filed with the Securities and Exchange Commission (“SEC”) on November 13, 2007).
On May 13, 2008, we received a 180-day extension, or until November 10, 2008,
from NASDAQ to regain compliance with the $1.00 minimum bid price rule.
Continued failure to meet the minimum bid requirements may result in delisting
of the Company’s securities, which, in turn could have an adverse effect on the
marketability of the Debentures and the Shares.

     

    Delisting
could reduce the ability of investors to purchase or sell our securities as
quickly and as inexpensively as they have done historically and could subject
transactions in our securities to the penny stock rules. Furthermore, failure to
obtain listing on another market or exchange may make it more difficult for
traders to sell our securities. Broker-dealers may be less willing or able to
sell or make a market in our securities because of the penny stock disclosure
rules. Not maintaining a listing on a major stock market may result in a
decrease in the trading price of our securities due to a decrease in liquidity
and less interest by institutions and individuals in investing in our
securities. Delisting from the NASDAQ Capital Market would also make it more
difficult for us to raise capital in the future.

     

    OUR PRODUCTS ARE SOLD IN
LIMITED MARKETS AND THE FAILURE OF ANY OF THEM TO ACHIEVE AND CONTINUE TO
ACHIEVE WIDESPREAD MARKET ACCEPTANCE WOULD SIGNIFICANTLY HARM OUR RESULTS OF
OPERATION.

     

    We offer
a number of point of collection tests for drugs of abuse that are sold in
limited markets, and we currently derive most of our revenues from sales of our
point of collection tests for drugs of abuse. Based upon actual results in 2007
and given current levels of operating expenses, we must achieve approximately
$4.1 million in quarterly revenues to attain break-even results of operations.
In addition, the markets in which we sell our products are cost competitive. If
we are required to lower our prices to our customers, our revenue levels could
be negatively impacted which would adversely affect our gross profit
margins.  If our products do not achieve and maintain this level of
revenue, or maintain certain gross profit margins, our results of operations
would be significantly harmed.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    We began
selling our RDS and Rapid One point of collection tests for drugs of abuse in
1996, later than most of our primary competitors. Achieving continued market
acceptance for our drug tests requires substantial marketing efforts and the
expenditure of significant funds to inform potential customers and distributors
of the distinctive characteristics, benefits and advantages of our test kits. A
number of our products have only recently been introduced in the marketplace,
with our most recent additions being the Rapid TOX introduced in July 2005 and
the OralStat EX, the Rapid STAT and the Rapid TOX Cup all introduced in 2007. We
have no history upon which to base market or customer acceptance of these
products. Introduction of these new products has required, and may continue to
require substantial marketing efforts and costs.

     

    WE RELY ON THIRD PARTIES FOR
RAW MATERIALS USED IN OUR DRUGS OF ABUSE PRODUCTS AND IN OUR CONTRACT
MANUFACTURING PROCESSES.

     

    We
currently have approximately 85 suppliers who provide us with the raw materials
necessary to manufacture our point of collection drug testing strips and our
point of collection tests for drugs of abuse. For most of our raw materials we
have multiple suppliers, but there are a few chemical raw materials for which we
only have one supplier.  The loss of one or more of these suppliers,
the non-performance of one or more of their materials or the lack of
availability of raw materials could suspend our manufacturing process related to
our drugs of abuse products. This interruption of the manufacturing process
could impair our ability to fill customers’ orders as they are placed, which
would put us at a competitive disadvantage.

     

    Furthermore,
we rely on a number of third parties for supply of the raw materials necessary
to manufacture the test components we supply to other diagnostic companies under
contract manufacturing agreements. For most of these raw materials we have
multiple suppliers, however, there are a few chemical raw materials for which we
only have one supplier. The loss of one or more of these suppliers could suspend
the strip manufacturing process and this interruption could impair our ability
to perform contract manufacturing services.

     

    WE HAVE A SIGNIFICANT AMOUNT
OF RAW MATERIAL AND “WORK IN PROCESS” INVENTORY ON HAND THAT MAY NOT BE USED IN
THE NEXT TWELVE MONTHS IF THE EXPECTED CONFIGURATION OF SALES ORDERS IS NOT
RECEIVED AT OUR PROJECTED LEVELS.

     

    At
December 31, 2007 we had approximately $2.3 million in raw material components
for the manufacture of our products. The non-chemical raw material components
may be retained and used in production indefinitely and the chemical raw
materials components have lives in excess of 20 years. In addition to the raw
material inventory, we have approximately $2.5 million in manufactured testing
strips, or other “work in process” inventory at December 31, 2007. The
components of this work in process inventory have lives of 12-24 months. If
sales orders received are not for devices that would utilize the raw material
components, or if product developments make the raw materials obsolete, we may
be required to dispose of the unused raw materials. Beginning in 2004, we
established a reserve for obsolete or slow moving inventory. In late 2005, we
increased this reserve to $250,000.  There can be no assurance that
this reserve will be adequate for 2008.

     

     WE FACE
SIGNIFICANT COMPETITION IN THE DRUG TESTING MARKET AND POTENTIAL TECHNOLOGICAL
OBSOLESCENCE.

     

    We face
competition from other manufacturers of point of collection tests for drugs of
abuse. Manufacturers such as Varian, Inc., Medtox Scientific, Inc., Biosite
Diagnostics and OraSure Technologies, Inc. are better known and some have far
greater financial resources than we do. In addition to these competitors there
are a number of smaller privately held companies as well as foreign
manufacturers that compete with us.

     

    WE DEPEND ON KEY PERSONNEL
TO MANAGE OUR BUSINESS EFFECTIVELY.

     

    We are
dependent on the expertise and experience of our senior management such as Stan
Cipkowski, Chief Executive Officer, Martin Gould, Chief Scientific Officer and
Todd Bailey, Vice President, Sales & Marketing for our future success. The
loss of Messrs. Cipkowski, Gould or Bailey could negatively impact our business
and results of operations. We currently maintain key man insurance for Messrs.
Cipkowski and Gould. Although we have employment agreements in place with
Messrs. Cipkowski and Gould there can be no assurance that any of our senior
management will continue their employment.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    ANY ADVERSE CHANGES IN OUR
REGULATORY FRAMEWORK COULD NEGATIVELY IMPACT OUR BUSINESS.

     

    Approval
from FDA is not currently required for the sale of our products in non-clinical
markets, but is required in the clinical and over-the-counter (“OTC”) markets.
Although our point of collection drug tests have met FDA requirements for
professional use, we have not obtained OTC clearance or a waiver under the
Clinical Laboratory Improvement Amendments of 1988 (“CLIA“) from FDA. The
workplace and government/corrections/law enforcement markets are currently our
primary markets and if any additional FDA clearance is required to sell in these
markets, this additional cost may cause us to raise the price of our products,
making it difficult to compete with other point of collection products or
laboratory based testing, thereby negatively impacting our revenues.
Furthermore, there can be no assurance that, if we are required to apply for
additional FDA clearances, they will be granted.  If such clearances
are not granted, we would be unable to sell our products in the workplace and
government/corrections/law enforcement markets, and our revenues would suffer.
Although we are currently unaware of any changes in regulatory standards related
to any of our markets, if regulatory standards were to change in the future,
there can be no assurance that FDA will grant us the approvals, if and when we
apply for them, required to comply with the changes.

     

    WE RELY ON INTELLECTUAL
PROPERTY RIGHTS, AND WE MAY NOT BE ABLE TO OBTAIN PATENT OR OTHER PROTECTION FOR
OUR TECHNOLOGY, PRODUCTS OR SERVICES.

     

    We rely
on a combination of patent, copyright, trademark and trade secret laws,
confidentiality procedures and contractual provisions to protect our proprietary
technology, products and services. We also believe that factors such as the
technological and creative skills of our personnel, new product developments,
frequent product enhancements and name recognition are essential to establishing
and maintaining our technology leadership position. Our personnel are bound by
non-disclosure agreements. If personnel leave our employment, in some cases we
would be required to protect our intellectual property rights pursuant to common
law theories, which may be less protective than provisions of employment,
non-competition or non-disclosure agreements.

     

    We seek
to protect our proprietary products under trade secret and copyright laws, which
afford only limited protection. We currently have a total of 25 U.S. and foreign
patents relating to the RDS, Rapid One and OralStat products. We have additional
patent applications pending in the United States and other countries, related to
our point of collection drug tests. We have trademark applications pending in
the United States. Certain trademarks have been registered in the United States
and in other countries. There can be no assurance that the additional patents
and/or trademarks will be granted or that, if granted, they will withstand
challenge.

     

    Despite
our efforts to protect our proprietary rights, unauthorized parties may attempt
to copy aspects of our products or to obtain information that we regard as
proprietary. We may be required to incur significant costs to protect our
intellectual property rights in the future. In addition, the laws of some
foreign countries do not ensure that our means of protecting our proprietary
rights in the United States or abroad will be adequate. Policing and enforcement
against the unauthorized use of our intellectual property rights could entail
significant expenses and could prove difficult or impossible.

     

    POTENTIAL ISSUANCE AND
EXERCISE OF NEW OPTIONS AND WARRANTS AND EXERCISE OF OUTSTANDING OPTIONS AND
WARRANTS COULD ADVERSELY AFFECT THE VALUE OF OUR SECURITIES.

     

    As of the
date of this Memorandum, there were 3,768,080 options issued and outstanding
under the Company’s Stock Option Plans. In the fiscal year ended December 31,
2005, the Company’s Board of Directors accelerated the vesting periods of all
outstanding options not yet fully vested to vest 100% on December 14, 2005. As
of December 31, 2007 3,968,080 options were exercisable. As of the date of this
Memorandum, there were 9,500 options available for issuance under the Fiscal
2000 Plan and 739,420 options available for issuance under the Fiscal 2001
Plan.

     

    As of the
date of this Memorandum, there were 150,000 warrants outstanding and
exercisable. On December 2, 2003, we issued a warrant, exercisable during a five
year period beginning December 2, 2003, to purchase 300,000 common shares of our
stock at an exercise price of $1.15 per share to Brean Murray as compensation as
our financial advisor. In June 2004, we amended the December 2, 2003 Financial
Advisory Agreement with Brean Murray and Brean Murray surrendered 150,000 of the
300,000 warrants to purchase common stock (a copy of this amendment was filed as
Exhibit 10.19.1 to the Company’s Form 10QSB for the quarter ended June 30,
2004).

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    As a
component of the Placement Agent’s compensation for placing the Debentures, the
Company will issue the Placement Agent warrants to purchase shares of our common
stock (exercisable within four years) in a minimum amount of 5,000 of such
shares in the event that subscriptions for only the minimum in principal amount
of Debentures ($250,000) shall be accepted by the Company, up to 150,000 of such
shares if subscriptions for the maximum in principal amount ($1,500,000) of the
Debentures shall be accepted by the Company.  The Placement Agent
warrants shall be issued on the Closing Date of the Series A offering and the
Series A Completion Date. The exercise price of these warrants shall be equal to
the price of the Company’s Common Stock on the date of issuance.

     

    If these
options or warrants are exercised, the common shares issued will be freely
tradable, increasing the total number of common shares issued and
outstanding.  If these shares are offered for sale in the public
market, the sales could adversely affect the prevailing market price by lowering
the bid price of our securities. The exercise of any of these options or
warrants could also materially impair our ability to raise capital through the
future sale of equity securities because issuance of the common shares
underlying the options and warrants would cause further dilution of our
securities. The options and warrants are subject to or contain certain
anti-dilution protections that may result in the issuance of additional shares
under some circumstances including, but not limited to, declaration of a
dividend in common shares, or a dividend payable in a form other than common
shares in an amount that has a material effect on the price of common shares, a
combination or consolidation of the outstanding common shares, by
reclassification or otherwise, into a lesser number of common shares, a
recapitalization, a spin-off or a similar occurrence, or in the case of the
warrants, a sale of our common shares, or a security convertible into common
shares, for a consideration per share less than the exercise price of the
warrants.

     

    SUBSTANTIAL RESALE OF
RESTRICTED SECURITIES MAY DEPRESS THE MARKET PRICE OF OUR
SECURITIES.

     

    There are
4,018,155 common shares presently issued and outstanding as of the date of this
Memorandum that are “restricted securities” as that term is defined under the
Securities Act of 1933, as amended, (the “Securities Act”) and that in the
future may be sold in compliance with Rule 144 of the Securities Act, or
pursuant to a registration statement filed under the Securities Act. Rule 144
provides that a person holding restricted securities for a period of one year or
more may, in any three month period, sell those securities in unsolicited
brokerage transactions or in transactions with a market maker, in an amount
equal to the greater of one percent of our outstanding common shares or the
average weekly trading volume for the prior four weeks. Sales of unrestricted
shares by affiliates of the Company are also subject to the same limitation upon
the number of shares that may be sold in any three-month period. Investors
should be aware that sales under Rule 144, or pursuant to a registration
statement filed under the Securities Act, may depress the market price of our
Company’s securities in any market that may develop for such
shares.

     

    OUR ABILITY TO RETAIN AND
ATTRACT MARKET MAKERS IS IMPORTANT TO THE CONTINUED TRADING OF OUR
SECURITIES.

     

    Our
common shares trade on the NASDAQ Capital Market under the symbol “ABMC”. In the
event that a sufficient number of NASD broker-dealers are unwilling to make a
market in our common shares, public trading of our securities would be adversely
affected or could cease entirely.

     

    WE MAY INCUR SIGNIFICANT
INCREASED COSTS IN CONNECTION WITH OUR INTERNAL CONTROLS OVER FINANCIAL
REPORTING.

     

    Our
testing, or the subsequent testing by our independent registered public
accounting firm, may reveal deficiencies in our internal controls over financial
reporting that are deemed to be material weaknesses. Our compliance with Section
404 of the Sarbanes-Oxley Act of 2002 may require that we incur substantial
accounting expense and expend significant management efforts. We currently do
not have an internal audit group, and we may need to hire additional accounting
and financial staff with appropriate public company experience and technical
accounting knowledge to ensure compliance with these regulations.

     

    Moreover,
if we are not able to comply with the requirements of Section 404 in a timely
manner, or if we or our independent registered public accounting firm identify
deficiencies in our internal controls over financial reporting that are deemed
to be material weaknesses, the market price of our stock could decline, and we
could be subject to sanctions or investigations by the SEC or other regulatory
authorities, which would require additional financial and management
resources.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    OUR
PRODUCTS

     

    Rapid Drug Screen®:
Our primary product line, the Rapid Drug Screen, or RDS® is a patented, rapid,
POCT kit that detects the presence or absence of 2 to 10 drugs of abuse
simultaneously in a single urine specimen. We offer a number of standard
configurations of the RDS and we can also produce, on special order, or if a
market demands, tests that can screen for any quantity (from 2 to 10) or
configuration of classes of drugs.

     

    Rapid One®: Our
patented Rapid One product line consists of single drug tests, each of which
screens for the presence or absence of a single drug of abuse in a urine
specimen. The Rapid One product line utilizes the same technology as the RDS. It
includes a single dip platform, an identification and date area, and does not
require the use of pipettes or reagents. The Rapid One is designed for those
situations in which the person subject to substance abuse testing is known to
use a specific drug.

     

    Rapid TEC®: The
patented Rapid TEC contains one or two drug testing strips and each of these
strips includes the chemistry to detect more than one class of drug. The Rapid
TEC is designed for those customers who require a less expensive product but
still need to test for more than one drug of abuse utilizing one urine
sample.

     

    OralStat®: Our
OralStat is a patent-pending, innovative POCT system for the detection of drugs
of abuse in oral fluids. The technology of OralStat provides test results within
minutes with enhanced sensitivity and detection comparable to laboratory based
oral fluids tests. The test requires no messy saliva collection or handling.
OralStat can simultaneously test for six drugs in each device.

     

    Rapid Reader®: The
Rapid Reader is a compact, portable device that captures a picture of the test
results on an ABMC drug screen using a high-resolution camera. The Rapid
Reader’s proprietary software analyzes this image and interprets the results.
The information is then sent to a data management system, which enables the user
to interpret, store, transmit and print the drug test results. The Rapid Reader
system can only be used to interpret and record the results of ABMC drug
screens. As of the date of this Memorandum, the Rapid Reader is the only FDA
cleared drug interpretation and data management system on the
market.

     

    RDS InCup®: The RDS
InCup is an all-inclusive point of collection test for drugs of abuse that
incorporates collection and testing of the sample in a single device. Once the
donor provides a sample, the results are available within a few minutes without
any manipulation of the sample or the device.  The Company offers a
number of standard versions of the RDS InCup and we can custom manufacture any
configuration or combination of 2 to 12 drugs per device.

     

    Rapid TOX®: The Rapid
TOX is a cost effective drug screen in a horizontal cassette platform that
simultaneously detects 2 to 10 drugs of abuse in a single urine specimen. The
Rapid TOX uses the same drug testing strip that is in the Rapid TEC. Rapid TOX
can be used by pipetting (dropping) a urine specimen into a channel in the
cassette, or the cassette can be dipped into a urine specimen.

     

    OralStat EX: In
February 2007, we launched the OralStat EX is an oral fluid point of collection
test that dramatically improves the limits of detection over other oral fluid
tests on the market and was specifically designed to make both point of
collection testing and confirmation testing simple. The OralStat EX is simple to
perform and the results are ready to read within minutes.

     

    Rapid STATTM: We
launched the Rapid STAT in October 2007. The Rapid STAT is an oral fluid point
of collection test that combines the incubation benefits of the OralStat with
the Rapid TOX cassette product platform. The Rapid STAT also utilizes the same
sample handling procedure of the OralStat EX, thus maximizing drug recovery and
providing a transport container for confirmation of positive results. The Rapid
STAT provides faster test results, making it ideal for those market
applications, such as roadside testing, in which portability and time is
crucial.

     

    Rapid TOX Cup®: We
launched the Rapid TOX Cup in October 2007. The Rapid TOX Cup is an
all-inclusive drug testing cup. The Rapid TOX Cup doesn’t require any
manipulation of the device; the donor simply provides a sample in the cup. The
larger cup allows for easier specimen collection. A temperature strip is affixed
to the cup to ensure specimen integrity, with the option to add an adulterant
test strip. Results obtained with the Rapid TOX Cup can also be photocopied for
record keeping purposes. Its fully integrated design permits collection, testing
and shipment for confirmation in one device. In June 2008, we received FDA
510(k) clearance of the Rapid TOX Cup thus allowing the product to be sold in
the clinical markets.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    Other
products

     

    In
addition to the products we manufacture, we also distribute a number of point of
collection tests that detect the presence or absence of adulterants, alcohol and
nicotine. These tests are manufactured by unaffiliated third parties. Two of
these products are sold under our own trademarks; the Rapid AlcoTECTM alcohol
test and the Rapid CheckTM test for adulterant. We do not derive a significant
portion of our revenues from the sale of these products.

     

    CONTRACT
MANUFACTURING

     

    We
provide bulk strip contract manufacturing services to a number of non-affiliated
POCT diagnostic companies. Currently we manufacture test components for the
detection of:

     

    
      	
               
      

            	
              ·

            	
              TB
      (Tuberculosis: a highly contagious disease responsible for more deaths
      than any other infectious disease according to the World Health
      Organization)

            

    

     

    
      	
               
      

            	
              ·

            	
              HIV
      (Human Immunodeficiency Virus: the virus that causes
  AIDS)

            

    

     

    
      	
               
      

            	
              ·

            	
              RSV
      (Respiratory Syncytial Virus: the most common cause of lower respiratory
      tract infections in children
worldwide)

            

    

     

    
      	
               
      

            	
              ·

            	
              Fetal
      amniotic membrane rupture

            

    

     

    
      	
               
      

            	
              ·

            	
              Lactoferin:
      a protein with documented anti-viral, anti-microbial, and immune
      modulating/enhancing effects

            

    

     

    
      	
               
      

            	
              ·

            	
              Fumonisins:
      environmental toxins produced by molds that grow on agricultural
      commodities in the field or during
storage

            

    

     

    
      	
               
      

            	
              ·

            	
              Aflatoxins:
      potent toxic, carcinogenic, mutagenic, immunosuppressive agents, produced
      as secondary metabolites on a variety of food
  products

            

    

     

    
      	
               
      

            	
              ·

            	
              DON
      (deoxynivalenol): a type B trichothecene (a biological toxin) that occurs
      in grains such as wheat, barley, oats, rye, and maize, rice, sorghum. DON
      poisonings occur both in humans and farm
animals

            

    

     

    
      	
               
      

            	
              ·

            	
              Ige
      (Immunoglobulin E): One of five classes of immunoglobulins made by humans
      that seems to protect against invading
parasites

            

    

     

    We do not
currently derive a significant portion of our revenues from contract
manufacturing.

     

    MARKET
OVERVIEW

     

    According
to an industry report distributed by Life Science Intelligence in 2007, the
global POCT market will experience dramatic growth from $10.3 billion in 2005 to
$18.7 billion by 2011. Our long-term objective is to provide an extensive
product portfolio to this expanding POCT market. Our markets is divided into the
following segments:

     

    Corporate/Workplace

     

    Our
direct sales force and our inside sales representatives sell our products to the
Corporate/Workplace market. We also have a nationwide network of distributors
and administrators of workplace drug testing programs that sell our drugs of
abuse product lines in this market.

     

    Government, Corrections and
Law Enforcement

     

    Our
direct and inside sales teams sell our drugs of abuse screening products in the
Government, Corrections and Law Enforcement market. This market includes
federal, state and county level agencies, including: correctional facilities,
pretrial agencies, probation, drug courts and parole departments at the federal
and state levels and juvenile correctional facilities.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    Rehabilitation
Centers

     

    Our
direct sales team and our network of distributors sell our products in the
Rehabilitation Center market. This market for our products includes people in
treatment for substance abuse.  There is a high frequency of testing
in this market. For example, in many residence programs, patients are tested
each time they leave the facility and each time they return. In outpatient
programs, patients are generally tested on a weekly basis.

     

    International
Markets

     

    We sell
our products primarily through distributors in the International market. We have
entered into distribution agreements (exclusive and non-exclusive) with
companies in several countries and are pursuing a course of multinational
distribution of our products through both clinical and non-clinical distribution
companies.

     

    Clinics, Physicians, and
Hospitals

     

    The
Clinic, Physician and Hospital market includes emergency rooms, physician
offices, hospitals and clinics and rehabilitation facilities associated with
hospitals. Our products are ideal for this market as they provide accurate
results when time is critical. In August 2006, we announced that we entered into
a non-exclusive Supply Agreement with Nanogen (NASDAQ:NGEN) under which Nanogen
will market our point of collection drug tests, under their own brand name, to
customers in hospital-related markets. In October 2007, we shipped our first
order of product to Nanogen and they launched the product in November 2007. As
of the date of this Memorandum, it is too early to predict the impact that sales
of this product will have on our sales in the Clinic, Physician and Hospital
market.

     

    Educational
Market

     

    We
believe our products could be an integral part of helping schools implement
testing programs due to their ease of use and immediate, accurate results. We
have not yet focused considerable sales and marketing efforts in the Educational
market therefore sales in this market are currently minimal. The Company may
expand its efforts in the future and derive more significant sales from this
market in the future.

     

    Consumer/Over-the-Counter

     

    As of the
date of this Memorandum, our point of collection drug tests are not currently
available for sale in this market, as we have not yet received the necessary
marketing clearance from the Food and Drug Administration (“FDA”).

     

    Additional
Markets

     

               We
believe that the Department of Transportation (“DOT”) and the federally
regulated markets could be a future market for our products. Presently, the DOT
market is not available to any point of collection drug of abuse testing
device.  Federal law requires that anyone with a commercial driver’s
license be randomly tested for use of drugs of abuse and that certified
laboratories be used in these testing situations.

     

    MANUFACTURING/PROPERTY

     

    In
November 2001, we purchased our Kinderhook, New York facility and the
surrounding 107 acres. On March 31, 2003 the Company sold approximately 85 acres
of land at its Kinderhook headquarters for $150,000. We currently have a
mortgage in the amount of $775,000 with First Niagara Financial Group (“FNFG”).
We currently lease 14,400 square feet of space for our New Jersey facility. Our
facility in Kinderhook, New York houses assembly and packaging of our products
in addition to the company’s administration. We continue to outsource the
printing and manufacture of plastic components used in our
products.  We manufacture all of our own individual test strips and we
manufacture test strips for unaffiliated third parties at our R&D and bulk
manufacturing facility in Logan Township, New Jersey. We contract with a third
party for the manufacture of the Rapid Reader product.

     

    HEADQUARTERS
AND WEBSITE

     

    Our headquarters are located at 122
Smith Road, Kinderhook, New York 12106. Our phone numbers are (800) 227-1243 and
(518) 758-8158. Our website is www.abmc.com.
The information on our website is not a part of these offering
materials.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    SUMMARY
OF HISTORICAL FINANCIAL DATA

    

    Statements
of Operations

    
      
        
          	 
      	 	
                  For the year ended December 31,

                	 
	 
      	 	
                  2007

                	 	 	
                  2006

                	 	 	
                  2005

                	 
	 
      	 	 	 	 	 	 	 	 	 
	
                  Net
      Sales

                	 	$	13,872,000	 	 	$	13,838,000	 	 	$	13,015,000	 
	
                  Cost
      of Goods

                	 	 	8,141,000	 	 	 	7,035,000	 	 	 	6,970,000	 
	
                  Gross
      Profit

                	 	 	5,731,000	 	 	 	6,803,000	 	 	 	6,045,000	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Operating
      Expenses:

                	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Research
      and Development

                	 	 	669,000	 	 	 	606,000	 	 	 	683,000	 
	
                  Selling
      and Marketing

                	 	 	3,091,000	 	 	 	3,325,000	 	 	 	3,345,000	 
	
                  General
      and Administrative

                	 	 	2,827,000	 	 	 	2,621,000	 	 	 	2,357,000	 
	
                  Total
      Operating Expenses

                	 	 	6,587,000	 	 	 	6,552,000	 	 	 	6,385,000	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Operating
      Income/(Loss)

                	 	 	(856,000	)	 	 	251,000	 	 	 	(340,000	)
	 
      	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Other
      Income/(Expense)

                	 	 	(131,000	)	 	 	(50,000	)	 	 	(35,000	)
	
                  Income/(Loss)
      Before Tax

                	 	 	(987,000	)	 	 	201,000	 	 	 	(375,000	)
	
                  Income
      Tax

                	 	 	(3,000	)	 	 	(5,000	)	 	 	(1,000	)
	
                  Net
      Income/(Loss) After Tax

                	 	$	(990,000	)	 	$	196,000	 	 	$	(376,000	)
	
                  Basic
      and Diluted Income/(Loss) per share

                	 	$	(0.05	)	 	$	0.01	 	 	$	(0.02	)
	
                  Weighted
      Average Shares Outstanding-basic

                	 	 	21,737,000	 	 	 	21,484,000	 	 	 	21,310,000	 
	
                  Dilutive
      Effect of Options & Warrants

                	 	 	 	 	 	 	89,000	 	 	 	122,000	 
	
                  Weighted
      Average Shares Outstanding-diluted

                	 	 	21,737,000	 	 	 	21,573,000	 	 	 	21,432,000	 

        

      

    

    

    Balance
Sheets

    
      
        
          	 
      	 	
                  March 31, 2008

                  (unaudited)

                	 	 	
                  December 31,

                  2007

                	 
	 
      	 	 	 	 	 	 
	
                  Cash
      and Cash Equivalents

                	 	$	377,000	 	 	$	336,000	 
	
                  Working
      Capital

                	 	$	3,875,000	 	 	$	4,017,000	 
	
                  Total
      Assets

                	 	$	9,320,000	 	 	$	9,150,000	 
	
                  Total
      Liabilities

                	 	$	4,423,000	 	 	$	4,054,000	 
	
                  Stockholders’
      Equity

                	 	$	4,897,000	 	 	$	5,096,000	 

        

      

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

    USE
OF PROCEEDS

     

    The net
proceeds to the Company, if the Series A Debentures are fully subscribed, are
expected to be approximately $650,000, after deducting the Placement Agent fee
of $52,500 (7% of the gross proceeds) and estimated offering expenses. If the
Series B offering is completed and fully subscribed, the net additional proceeds
to the Company are expected to be approximately $650,000, after deducting the
Placement Agent fee of $52,500 and estimated offering expenses. We intend to use
the net proceeds from both the Series A Debentures and Series B Debentures (if
offered) for working capital. We reserve the right to change the use of proceeds
if unanticipated developments in our business, or changes in economic,
regulatory or competitive conditions make shifts in the allocation of net
proceeds necessary or desirable.

     

    PRICE
RANGE OF COMMON SHARES

     

    Our
common shares trade on the National Association of Securities Dealers Automated
Quotation System Capital Market (NASDAQ Capital Market) under the symbol
ABMC.

     

    From
January 1, 2006 through August 21, 2006 our common stock purchase warrants
(“warrants”) traded on the NASDAQ Capital Market under the symbol ABMCW. The
common stock purchase warrants expired on August 22, 2006 and ceased
trading.

     

    The
following table sets forth the high and low sale prices of our securities as
reported by the NASDAQ Capital Market for the periods indicated.

     

    Common
Shares

    
      
        
          
            
              
                	
                        Fiscal year ending December 31, 2007

                      	 	
                        High

                      	 	 	
                        Low

                      	 
	 
      	 	 	 	 	 	 
	
                        Quarter
      ending December 31, 2007

                      	 	$	1.00	 	 	$	0.36	 
	
                        Quarter
      ending September 30, 2007

                      	 	$	1.43	 	 	$	0.94	 
	
                        Quarter
      ending June 30, 2007

                      	 	$	1.31	 	 	$	0.90	 
	
                        Quarter
      ending March 31, 2007

                      	 	$	1.33	 	 	$	0.89	 

              

            

          

        

      

    

    

    
      
        
          
            
              
                
                  
                    	
                            Fiscal year ending December 31,
      2006

                          	 	
                            High

                          	 	 	
                            Low

                          	 
	 
      	 	 	 	 	 	 
	
                            Quarter
      ending December 31, 2006

                          	 	$	0.99	 	 	$	0.87	 
	
                            Quarter
      ending September 30, 2006

                          	 	$	1.03	 	 	$	0.85	 
	
                            Quarter
      ending June 30, 2006

                          	 	$	1.17	 	 	$	0.87	 
	
                            Quarter
      ending March 31, 2006

                          	 	$	1.15	 	 	$	0.87	 
	
                            Fiscal quarter ending March 31,
      2008

                          	 	
                            High

                          	 	 	
                            Low

                          	 
	 
      	 	 	 	 	 	 	 	 
	
                            Quarter
      ending March 31, 2008

                          	 	$	0.98	 	 	$	0.46	 

                  

                

              

            

          

        

      

    

     

    Warrants

    
      
        
          
            
              
                	
                        Fiscal year ending December 31,
      2006

                      	 	
                        High

                      	 	 	
                        Low

                      	 
	 
      	 	 	 	 	 	 
	
                        Quarter
      ending December 31, 2006

                      	 	
                        NA

                      	 	 	
                        NA

                      	 
	
                        Quarter
      ending September 30, 2006(1)

                      	 	$	0.17	 	 	$	0.01	 
	
                        Quarter
      ending June 30, 2006

                      	 	$	1.00	 	 	$	0.03	 
	
                        Quarter
      ending March 31, 2006

                      	 	$	0.40	 	 	$	0.03	 

              

            

          

        

      

    

    (1) Notes
trading July 1, 2006 through August 21, 2006. Common stock purchase warrants
that had been trading expired on August 22, 2006. Actual last date of trading
due to expiration was August 17, 2006.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    OFFICERS
AND SENIOR MANAGEMENT

    

    
      
        
          
            
              
                	
                        Name

                      	 
      	
                        Age

                      	 
      	
                        Position(s) held

                      	 
      	
                        Since

                      
	
                        Stan
      Cipkowski

                      	 
      	
                        60

                      	 
      	
                        Chief
      Executive Officer/Director

                      	 
      	
                        1986

                      
	
                        Edmund
      M. Jaskiewicz

                      	 
      	
                        84

                      	 
      	
                        President

                      	 
      	
                        1992

                      
	
                        Martin
      R. Gould

                      	 
      	
                        56

                      	 
      	
                        CSO,
      Exec Vice Pres., Technology

                      	 
      	
                        1998

                      
	
                        Stefan
      Parker

                      	 
      	
                        39

                      	 
      	
                        CFO,
      Exec. Vice Pres. Finance, Treasurer

                      	 
      	
                        2007

                      
	
                        Douglas
      Casterlin

                      	 
      	
                        61

                      	 
      	
                        Exec.
      Vice President, Operations

                      	 
      	
                        2008

                      
	
                        Todd
      Bailey

                      	 
      	
                        37

                      	 
      	
                        Vice
      President, Sales & Marketing

                      	 
      	
                        2001

                      
	
                        Melissa
      A. Waterhouse

                      	
                          

                      	
                        37

                      	
                          

                      	
                        VP,
      Chief Compliance Officer, Corp Secretary

                      	
                          

                      	
                        1997

                      

              

            

          

        

      

    

    

    Stan
Cipkowski founded our predecessor in 1982. He has been a member of our Board of
Directors since our incorporation in April 1986 and was Chief Executive Officer
until January 2001.  He was re-appointed Chief Executive Officer in
September 2004 and continues to serve in that capacity. From January 2001
through July 2003, Mr. Cipkowski served as an Executive Vice President of the
Company. Mr. Cipkowski remained an employee of the Company after his resignation
as Executive Vice President before re-assuming the position of Chief Executive
Officer in September 2004. He reorganized the Company as American Bio Medica
Corporation in 1992 and is the inventor of the Rapid Drug Screen®. Mr. Cipkowski
attended Mater Christi Seminary and St. Louis University from 1965 to
1969.

     

    Edmund M.
Jaskiewicz has been one of our directors since 1992 and served as our Chairman
of the Board of Directors from 1992 until 1999.  He was appointed
President in September 2003 and was re-appointed Chairman of the Board in
September 2004 and continues to serve in that capacity. Mr. Jaskiewicz is a
lawyer-engineer.  He has practiced international patent and corporate
law as a sole practitioner since 1963. He received his J.D. in 1952 from George
Washington University Law School and his B.S. in Engineering from the University
of Connecticut in 1947.

     

    Martin R.
Gould joined us in 1998. He was appointed our Executive Vice President,
Technology in 2003 and currently also services as our Chief Science Officer.
Prior to becoming our CSO, he was our Vice President of Technology. Mr. Gould is
a biomedical scientist with more than 35 years of experience in the diagnostic
and chemical fields. He has an extensive background in research and development,
manufacturing, quality control/assurance, as well as business development and
sales and marketing. Mr. Gould served as Vice President and General Manager of
Neogen Corp. (NASDAQ:NEOG) until 1997. Mr. Gould received a Masters in
Biomedical Science and Biomedical Engineering from Drexel University in 1982,
and a BS degree from Delaware Valley College in 1973.

     

    Stefan
Parker joined us in March 2005 as our Controller. Upon the resignation of our
former Chief Financial Officer, he was appointed interim CFO in July 2007 and
appointed CFO and EVP Finance in August 2007. Prior to joining the Company, Mr.
Parker spent four years with Mechanical Technology, Inc. as Accounting Manager.
Mr. Parker obtained his bachelors degree in finance from Siena
College.

     

    Douglas
Casterlin joined us in April 2008. From September 2004 until April 2008, Mr.
Casterlin was employed by Beacon Group SW, Inc as its Vice President, Business
Operations. Prior to his position at Beacon Group SW, Inc., Mr. Casterlin served
as the Company’s Executive Vice President, Operations from May 1997 to January
2004. Mr. Casterlin studied Engineering at Lehigh University from 1965 to 1966
and received his B.A. degree in Psychology in 1973 from the State University of
New York at New Paltz.

     

    Todd
Bailey joined us in April 2001 as a Director of Business Development and
subsequently was promoted to Director of National Accounts. In September 2003,
he was appointed Vice President of Sales & Marketing. Prior to joining us,
Mr. Bailey was Substance Abuse Account Manager for Roche Diagnostics Corporation
where he was responsible for territory sales of point-of-collection tests for
drugs of abuse to Fortune 500 manufacturers and state agencies. Mr. Bailey
received a B.S. in communications from St. Cloud University in
1994.

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    Melissa
A. Waterhouse joined us in 1997. Since that time she has held various management
positions in Investor Relations, Marketing and Public Relations. She was
appointed our Corporate Secretary in September 2003. She currently serves as
Vice President and Chief Compliance Officer.

     

    SUMMARY
COMPENSATION OF EXECUTIVE OFFICERS

    

    The
following table sets forth for fiscal years ended December 31, 2007 and December
31, 2006, the compensation paid by the Company to its Chief Executive Officer,
Chief Financial Officer, former Chief Financial Officer, and Chief Science
Officer/Executive Vice President, Technology.

     

    
      SUMMARY
COMPENSATION TABLE(1)

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          Name
      and principal position

                                        	 	
                                          Year

                                        	 	
                                          Salary

                                          ($)

                                        	 	 	
                                          
                                          

                                          Bonus

                                        	 	 	
                                          Option
      Awards ($)

                                        	 	 	
                                          All
      Other

                                          Compensation
      ($)

                                        	 	 	
                                          Total

                                          ($)

                                        	 
	
                                          Stan
      Cipkowski

                                        	 	
                                          12/31/07

                                        	 	$	205,900	

                                          (2)

                                        	 	$	0	 	 	$	0	 	 	$	23,000	

                                          (3)

                                        	 	$	228,900	 
	
                                          Chief
      Executive Officer

                                        	 	
                                          12/31/06

                                        	 	$	197,600	 	 	$	0	 	 	$	0	 	 	$	23,400	

                                          (4)

                                        	 	$	221,000	 
	
                                          Keith
      E. Palmer(5)

                                        	 	
                                          12/31/07

                                        	 	$	86,700	

                                          (6)

                                        	 	$	0	 	 	$	0	 	 	$	12,300	

                                          (7) 

                                        	 	$	99,000	 
	
                                          Chief
      Financial Officer

                                        	 	
                                          12/31/06

                                        	 	$	142,800	

                                          (8)

                                        	 	$	0	 	 	$	60,800	

                                          (9)

                                        	 	$	21,000	

                                          (10)

                                        	 	$	224,600	 
	
                                          Exec
      VP Finance

                                        	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                          Martin
      R. Gould

                                        	 	
                                          12/31/07

                                        	 	$	148,000	

                                          (11)

                                        	 	$	0	 	 	$	0	 	 	$	10,900	

                                          (12) 

                                        	 	$	158,900	 
	
                                          Chief
      Science Officer

                                        	 	
                                          12/31/06

                                        	 	$	130,000	 	 	$	0	 	 	$	0	 	 	$	11,500	

                                          (13)

                                        	 	$	141,500	 
	Exec VP
      Technology 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

                                          Stefan Parker(14)

                                        	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                          

                                            Chief
      Financial Officer

                                          

                                        	 	
                                          12/31/07

                                        	 	$	98,000	

                                          (15)

                                        	 	$	10,000	

                                          (16)

                                        	 	$	0	 	 	$	10,300	

                                          (17)

                                        	 	$	118,300	 
	
                                          Exec
      VP Finance

                                        	 	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                          Douglas
      Casterlin

                                        	 	
                                          12/31/07

                                        	

                                          (18)

                                        	 	

                                          ---------

                                        	 	 	 	--------	 	 	 	

                                          -------------

                                        	 	 	 	

                                          -------------

                                        	 	 	 	

                                          ---------

                                        	 

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      	
              1)

            	
              There
      were no amounts paid to the named executive officers related to Stock
      Awards, Non-Equity Incentive Plan Compensation or Nonqualified Deferred
      Compensation Earnings, therefore these portions of the table have been
      omitted.

            

    

    
      	
              2)

            	
              Pursuant
      to his employment agreement, Mr. Cipkowski’s annual salary for the fiscal
      year ended December 31, 2007 was
$205,900.

            

    

    
      	
              3)

            	
              Includes:
      car allowance of $9,400, $11,500 for health insurance premiums, and $1,000
      for a club membership paid by the Company. Also included is $1,100 for
      premiums, paid by the Company for Mr. Cipkowski’s benefit, for long-term
      disability and life insurance, both of which are provided to all employees
      of the Company.

            

    

    
      	
              4)

            	
              Includes:
      car allowance of $9,100, $12,000 for health insurance premiums, and $1,000
      for a club membership paid by company. Also included is $1,300 for
      premiums, paid by the Company for Mr. Cipkowski’s benefit, for long-term
      disability and life insurance, both of which are provided to all employees
      of the Company.

            

    

    
      	
              5)

            	
              Mr.
      Palmer resigned as Chief Financial Officer and Executive Vice President,
      Finance of the Company effective July 9,
2007.

            

    

    
      	
              6)

            	
              Pursuant
      to his employment agreement, Mr. Palmer’s salary for the fiscal year ended
      December 31, 2007 was $149,000.

            

    

    
      	
              7)

            	
              Includes:
      car allowance of $5,100 and $6,600 for health and dental insurance
      premiums. Also included is $600 for premiums, paid by the Company for Mr.
      Palmer’s benefit, for long-term disability and life insurance, both of
      which are provided to all employees of the
  Company.

            

    

    
      	
              8)

            	
              Pursuant
      to his employment agreement, Mr. Palmer’s annual salary for the fiscal
      year ended December 31, 2007 was
$143,000.

            

    

    
      	
              9)

            	
              Mr.
      Palmer’s option grants representing 41,500 (issued April 25, 2001) and
      30,500 (issued April 30, 2001), both with exercise prices of $0.94,
      naturally expired on April 25, 2006 and April 30, 2006
      respectively.  Mr. Palmer was issued a new grant representing
      72,000 common shares on June 13, 2006 at an exercise price of $1.05. This
      grant vested 100% on June 13,
2007.

            

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    
      	
              10)

            	
              Includes:
      car allowance of $8,400 and $11,500 for health and dental insurance
      premiums paid by the Company. Also includes $1,100 for premiums, paid by
      the Company, for Mr. Palmer’s benefit, for long-term disability and life
      insurance, both of which are provided to all employees of the
      Company.

            

    

    
      	
              11)

            	
              Pursuant
      to this employment agreement, Mr. Gould’s annual salary for the fiscal
      year ended December 31, 2007 was
$149,000.

            

    

    
      	
              12)

            	
              Includes:
      car allowance of $9,900. Also includes $1,000 for premiums, paid by the
      Company, for long-term disability and life insurance, both of which are
      provided to all employees of the
Company.

            

    

    
      	
              13)

            	
              Includes:
      car allowance of $10,500 and $1,000 for premiums, paid by the Company, for
      Mr. Gould’s benefit, for long-term disability and life insurance, both of
      which are provided to all employees of the
  Company.

            

    

    
      	
              14)

            	
              Mr.
      Parker was appointed interim Chief Financial Officer effective July 9,
      2007, and appointed Chief Financial Officer and Executive Vice President,
      Finance effective August 22, 2007.

            

    

    
      	
              15)

            	
              Upon
      Mr. Parker’s appointment as interim Chief Financial Officer, he received
      an annual salary of $110,000 and annual car allowance of $10,000 paid
      monthly. Pursuant to his employment agreement, Mr. Parker’s annual salary
      for fiscal year ended December 31, 2007 was
  $120,000.

            

    

    
      	
              16)

            	
              Mr.
      Parker received this bonus upon the timely filing of the Company’s
      Quarterly Report on Form 10-QSB for the fiscal quarter ending June 30,
      2007.

            

    

    
      	
              17)

            	
              Includes:
      car allowance of $4,200 and $5,400 for health insurance premiums. Also
      included is $700 for premiums, paid by the Company for Mr. Parker’s
      benefit, for long-term disability and life insurance, both of which are
      provided to all employees of the
Company.

            

    

    
      	
              18)

            	
              Mr.
      Casterlin was appointed as Executive Vice President, Operations effective
      April 28, 2008. He receives an annual salary of $149,000 and an annual car
      allowance of $10,000 paid
monthly.

            

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    

    PRINCIPAL
STOCKHOLDERS

    

    The
following table sets forth, as of April 21, 2008, the beneficial ownership of
the Company's common shares by each of our executive officers and directors and
each shareholder, known to management of the Company, to beneficially own more
than five percent (5%) of the outstanding common shares.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              Title of Class

                                            	 	
                                              Name and Address 

                                              of Beneficial Owner

                                            	 	
                                              Amount and Nature 

                                              of Beneficial Ownership *

                                            	 	 	
                                              Percent of Class

                                            	 
	
                                              Common

                                            	 	
                                              Stan
      Cipkowski

                                              C/O
      122 Smith Road

                                              Kinderhook,
      NY 12106

                                            	 	 	2,331,500	

                                              (1)

                                            	 	 	10.3	%
	
                                              Common

                                            	 	
                                              Edmund
      M. Jaskiewicz

                                              C/O
      122 Smith Road

                                              Kinderhook,
      NY 12106

                                            	 	 	2,068,155	

                                              (2)

                                            	 	 	9.5	%
	
                                              Common

                                            	 	
                                              Martin
      R. Gould

                                              C/O
      122 Smith Road

                                              Kinderhook,
      NY 12106

                                            	 	 	365,000	

                                              (3)

                                            	 	 	1.7	%
	
                                              Common

                                            	 	
                                              Richard
      P. Koskey

                                              C/O
      122 Smith Road

                                              Kinderhook,
      NY 12106

                                            	 	 	118,750	

                                              (4)

                                            	 	 	**	 
	
                                              Common

                                            	 	
                                              Daniel
      W. Kollin

                                              C/O
      122 Smith Road

                                              Kinderhook,
      NY 12106

                                            	 	 	75,750	

                                              (5)

                                            	 	 	**	 
	
                                              Common

                                            	 	
                                              Anthony
      G. Costantino

                                              C/O
      122 Smith Road

                                              Kinderhook,
      NY 12106

                                            	 	 	62,000	

                                              (6)

                                            	 	 	**	 
	
                                              Common

                                            	 	
                                              Carl
      A. Florio

                                              C/O
      122 Smith Road

                                              Kinderhook,
      NY 12106

                                            	 	 	61,830	

                                              (7)

                                            	 	 	**	 
	
                                              Common

                                            	 	
                                              Stefan
      Parker

                                              C/O
      122 Smith Road

                                              Kinderhook,
      New York 12106

                                            	 	 	25,000	

                                              (8)

                                            	 	 	**	 
	
                                              Common

                                            	 	
                                              Jean
      Neff

                                              C/O
      122 Smith Road

                                              Kinderhook,
      NY 12106

                                            	 	 	0	 	 	 	0	%
	
                                              Common

                                            	 	
                                              Marathon
      Capital Management

                                              4 N
      Park Drive, Suite 106

                                              Hunt
      Valley, MD 21030

                                            	 	 	1,539,229	 	 	 	7.1	%
	
                                              Common

                                            	 	
                                              Directors
      and Executive Officers

                                              as
      a group (9 persons)

                                            	 	 	5,107,985	

                                              (9)

                                            	 	 	21.8	%

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    Unless
otherwise noted, the number of shares noted for each individual is based upon
information obtained from their Section 16(a) or Rule 13d filings with the
United States Securities and Exchange Commission.

    
      	
              **

            	
              Less
      than one percent (1%).

            

    

     

    
      	
              (1)

            	
              Includes
      838,500 common shares subject to stock options exercisable within 60 days
      of April 21, 2008.

            

    

    
      	
              (2)

            	
              Includes
      151,500 common shares subject to stock options exercisable within 60 days
      of April 21, 2008.

            

    

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    
      	
              (3)

            	
              Includes
      360,000 common shares subject to stock options exercisable within 60 days
      of April 21, 2008.

            

    

    
      	
              (4)

            	
              Includes
      98,750 common shares subject to stock options exercisable within 60 days
      of April 21, 2008.

            

    

    
      	
              (5)

            	
              Includes
      75,750 common shares subject to stock options exercisable within 60 days
      of April 21, 2008.

            

    

    
      	
              (6)

            	
              Includes
      62,000 common shares subject to stock options exercisable within 60 days
      of April 21, 2008.

            

    

    
      	
              (7)

            	
              Includes
      49,830 common shares subject to stock options exercisable within 60 days
      of April 21, 2008.

            

    

    
      	
              (8)

            	
              Includes
      25,000 common shares subject to stock options exercisable within 60 days
      of April 21, 2008.

            

    

    
      	
              (9)

            	
              Includes
      an aggregate of 1,661,330 common shares subject to stock options
      exercisable within 60 days of April 21,
2008.

            

    

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    

    OUR
SECURITIES

     

    Common & Preferred
Shares: The Company’s authorized capital stock consists of 50,000,000
common shares, $0.01 par value each, of which 21,744,768 are issued and
outstanding as of the date of this Memorandum, and 5,000,000 preferred shares,
$0.01 par value each, of which 0 are issued and outstanding as of the date of
this Memorandum.

     

    Warrants: On December 2,
2003, we issued a warrant, exercisable during a five year period beginning
December 2, 2003, to purchase 300,000 common shares of our stock at an exercise
price of $1.15 per share to Brean Murray as compensation as our financial
advisor. In June 2004, we amended the December 2, 2003 Financial Advisory
Agreement with Brean Murray and Brean Murray surrendered 150,000 of the 300,000
warrants to purchase common stock (a copy of this amendment was filed as Exhibit
10.19.1 to the Company’s Form 10QSB for the quarter ended June 30, 2004). As of
the date of this Memorandum, there are 150,000 warrants
outstanding.

     

    Options: The Company
currently has two nonstatutory Stock Option Plans providing for options grants
to employees, directors, and consultants. As of the date of this Memorandum,
there were 3,768,080 options issued and outstanding under both plans combined,
all of which are currently exercisable. As of December 31, 2007, there were
9,500 options available for issuance under the Fiscal 2000 Plan and 739,420
options available for issuance under the Fiscal 2001 Plan.

     

    DILUTION

     

    As of the date of this Memorandum,
21,744,768 common shares were issued and outstanding.  If the Series A
Debentures are fully subscribed and the maximum number of Placement Agent
warrants are issued and thereafter converted to common shares, 22,569,768 shares
will be issued and outstanding. If the Series B Debentures are offered and fully
subscribed and the maximum number of Placement Agent warrants are issued and
thereafter converted to common shares, 23,394,768 shares will be issued and
outstanding. If both the Series A Debentures and the Series B Debentures are
fully subscribed and the maximum number of Placement Agent warrants are issued
and thereafter converted and all other options and warrants outstanding are
exercised, 27,312,848 common shares will be issued and outstanding.

     

    PLAN
OF DISTRIBUTION

     

    The Company has retained Cantone
Research, Inc. (the “Placement Agent”) to act as its agent in connection with
arranging the private placement of the Debentures offered hereby.

     

    The Placement Agent will offer Series A
Debentures up to $750,000 in principal amount, for which it will receive a
commission of 7% of the aggregate gross proceeds of the sales of Series A
Debentures. If the Series B offering is undertaken, the Placement Agent. will
offer the remaining $750,000 principal amount of Debentures for which it will
receive a further commission of 7% of the aggregate gross proceeds on the sales
of Series B Debentures.

     

    In
addition, the Company will issue the Placement Agent warrants to purchase shares
of our common stock (exercisable within four years) in a minimum amount of
25,000 of such shares in the event that subscriptions for only the minimum in
principal amount of Debentures ($250,000) shall be accepted by the Company, up
to 150,000 of such shares if subscriptions for the maximum in principal amount
($1,500,000) of the Debentures shall be accepted by the Company.  The
Placement Agent warrants shall be issued on the Closing Date of the Series A
offering and the Series A Completion Date. The exercise price of this warrants
shall be equal to the price of the Company’s Common Stock on the date of
issuance. The Placement Agent warrants shall be issued on the Closing Date of
the Series B offering and the Series B Completion Date. The exercise price of
this warrants shall be equal to the price of the Company’s Common Stock on the
date of issuance.

     

    The Company has also agreed to
reimburse the Placement Agent  for reasonable out-of-pocket expenses
incurred in connection with this Offering. Such expenses shall not exceed
$5,000. The Company has also paid the Placement Agent $15,000 for due diligence
fees associated with this offering and has reimbursed the Placement Agent an
additional $5,000 for legal fees..

     

    The Series A Debentures are expected to
be offered until approximately July 28, 2008; however, the Company and the
Placement Agent. reserve the right to extend the offering period upon mutual
consent.

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    

    FINANCIAL
STATEMENTS

    (unaudited)

    American Bio Medica
Corporation

    Balance Sheets

    
      
        
          
            
              	 
      	 	
                      March 31,

                    	 	 	
                      December
31,

                    	 
	 
      	 	
                      2008

                    	 	 	
                      2007

                    	 
	 
      	 	
                      (Unaudited)

                    	 	 	 	 
	
                      ASSETS

                    	 	 	 	 	 	 
	
                      Current
      assets

                    	 	 	 	 	 	 
	
                      Cash
      and cash equivalents

                    	 	$	377,000	 	 	$	336,000	 
	
                      Accounts
      receivable - net of allowance for doubtful accounts of $105,000 at both
      March 31, 2008 and December 31, 2007

                    	 	 	1,508,000	 	 	 	1,365,000	 
	
                      Inventory
      – net of reserve for slow moving and obsolete inventory of $250,000 at
      both March 31, 2008 and December 31, 2007

                    	 	 	5,073,000	 	 	 	4,994,000	 
	
                      Prepaid
      and other current assets

                    	 	 	177,000	 	 	 	181,000	 
	
                      Total
      current assets

                    	 	 	7,135,000	 	 	 	6,876,000	 
	 
      	 	 	 	 	 	 	 	 
	
                      Property,
      plant and equipment, net

                    	 	 	2,178,000	 	 	 	2,267,000	 
	
                      Other
      assets

                    	 	 	7,000	 	 	 	7,000	 
	
                      Total
      assets

                    	 	$	9,320,000	 	 	$	9,150,000	 
	 
      	 	 	 	 	 	 	 	 
	
                      LIABILITIES AND STOCKHOLDERS'
      EQUITY

                    	 	 	 	 	 	 	 	 
	
                      Current
      liabilities

                    	 	 	 	 	 	 	 	 
	
                      Accounts
      payable

                    	 	$	1,639,000	 	 	$	1,403,000	 
	
                      Accrued
      expenses

                    	 	 	425,000	 	 	 	220,000	 
	
                      Wages
      payable

                    	 	 	340,000	 	 	 	332,000	 
	
                      Patent
      sublicense current

                    	 	 	 	 	 	 	50,000	 
	
                      Line
      of credit

                    	 	 	723,000	 	 	 	723,000	 
	
                      Current
      portion of long term debt

                    	 	 	123,000	 	 	 	121,000	 
	
                      Current
      portion of unearned grant

                    	 	 	10,000	 	 	 	10,000	 
	
                      Total
      current liabilities

                    	 	 	3,260,000	 	 	 	2,859,000	 
	 
      	 	 	 	 	 	 	 	 
	
                      Other
      liabilities

                    	 	 	48,000	 	 	 	48,000	 
	
                      Long-term
      debt

                    	 	 	1,075,000	 	 	 	1,107,000	 
	
                      Unearned
      grant

                    	 	 	40,000	 	 	 	40,000	 
	
                      Total
      liabilities

                    	 	 	4,423,000	 	 	 	4,054,000	 
	 
      	 	 	 	 	 	 	 	 
	
                      COMMITMENTS
      AND CONTINGENCIES

                    	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	
                      Stockholders'
      equity:

                    	 	 	 	 	 	 	 	 
	
                      Preferred
      stock; par value $.01 per share; 5,000,000 shares authorized, none issued
      and outstanding at March 31, 2008 and December 31, 2007

                    	 	 	 	 	 	 	 	 
	
                      Common
      stock; par value $.01 per share; 50,000,000 shares authorized; 21,744,768
      issued and outstanding at both March 31, 2008 and December 31,
      2007

                    	 	 	217,000	 	 	 	217,000	 
	
                      Additional
      paid-in capital

                    	 	 	19,267,000	 	 	 	19,267,000	 
	
                      Accumulated
      deficit

                    	 	 	(14,587,000	)	 	 	(14,388,000	)
	 
      	 	 	 	 	 	 	 	 
	
                      Total
      stockholders’ equity

                    	 	 	4,897,000	 	 	 	5,096,000	 
	 
      	 	 	 	 	 	 	 	 
	
                      Total
      liabilities and stockholders’ equity

                    	 	$	9,320,000	 	 	$	9,150,000	 

            

          

        

      

    

    

    The accompanying notes are an integral
part of the financial statements

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    

    American Bio Medica
Corporation

     Statements of
Operations

    (Unaudited)

    
      
        
          
            
              
                	 
      	 	
                        For The Three Months Ended

                      	 
	 
      	 	
                        March 31

                      	 
	 
      	 	
                        2008

                      	 	 	
                        2007

                      	 
	 
      	 	 	 	 	 	 
	
                        Net
      sales

                      	 	$	3,299,000	 	 	$	3,175,000	 
	 
      	 	 	 	 	 	 	 	 
	
                        Cost
      of goods sold

                      	 	 	1,872,000	 	 	 	1,916,000	 
	 
      	 	 	 	 	 	 	 	 
	
                        Gross
      profit

                      	 	 	1,427,000	 	 	 	1,259,000	 
	 
      	 	 	 	 	 	 	 	 
	
                        Operating
      expenses:

                      	 	 	 	 	 	 	 	 
	
                        Research
      and development

                      	 	 	138,000	 	 	 	169,000	 
	
                        Selling
      and marketing

                      	 	 	768,000	 	 	 	692,000	 
	
                        General
      and administrative

                      	 	 	683,000	 	 	 	672,000	 
	 
      	 	 	1,589,000	 	 	 	1,533,000	 
	 
      	 	 	 	 	 	 	 	 
	
                        Operating
      loss

                      	 	 	(162,000	)	 	 	(274,000	)
	 
      	 	 	 	 	 	 	 	 
	
                        Other
      income (expense):

                      	 	 	 	 	 	 	 	 
	
                            Interest
      income

                      	 	 	1,000	 	 	 	4,000	 
	
                            Interest
      expense

                      	 	 	(34,000	)	 	 	(27,000	)
	
                            Other
      expense

                      	 	 	(4,000	)	 	 	 	 
	 
      	 	 	(37,000	)	 	 	(23,000	)
	 
      	 	 	 	 	 	 	 	 
	
                        Loss
      before tax

                      	 	 	(199,000	)	 	 	(297,000	)
	 
      	 	 	 	 	 	 	 	 
	
                        Income
      tax

                      	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	
                        Net
      loss after tax

                      	 	$	(199,000	)	 	$	(297,000	)
	 
      	 	 	 	 	 	 	 	 
	
                        Basic
      and diluted loss per common share

                      	 	$	(0.01	)	 	$	(0.01	)
	 
      	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 
	
                        Weighted
      average number of shares outstanding – basic & diluted

                      	 	 	21,744,768	 	 	 	21,719,768	 

              

            

          

        

      

    

     

    The accompanying notes are an integral
part of the financial statements

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    

    American Bio Medica
Corporation

     Statements of Cash
Flows

    (Unaudited)

    
      
        
          	 
      	 	
                  For The Three Months Ended

                	 
	 
      	 	
                  March 31,

                	 
	 
      	 	
                  2008

                	 	 	
                  2007

                	 
	
                  Cash flows from operating
      activities:

                	 	 	 	 	 	 
	
                   Net
    loss

                	 	$	(199,000	)	 	$	(297,000	)
	
                  Adjustments to reconcile net loss
      to net cash provided by / (used in) operating
      activities:

                	 	 	 	 	 	 	 	 
	
                  Depreciation

                	 	 	92,000	 	 	 	117,000	 
	
                  Loss on disposal of fixed
      assets

                	 	 	4,000	 	 	 	 	 
	
                  Non-cash compensation
      expense

                	 	 	 	 	 	 	16,000	 
	
                  Changes in:

                	 	 	 	 	 	 	 	 
	
                  Accounts
      receivable

                	 	 	(143,000	)	 	 	(12,000	)
	
                  Inventory

                	 	 	(79,000	)	 	 	(253,000	)
	
                  Prepaid and other current
      assets

                	 	 	4,000	 	 	 	(62,000	)
	
                  Accounts
      payable

                	 	 	236,000	 	 	 	79,000	 
	
                  Accrued
      expenses

                	 	 	205,000	 	 	 	(199,000	)
	
                  Other
      liabilities

                	 	 	(50,000	)	 	 	 	 
	
                  Wages
    payable

                	 	 	8,000	 	 	 	(2,000	)
	
                  Net cash provided by / (used in)
      operating activities

                	 	 	78,000	 	 	 	(613,000	)
	 
      	 	 	 	 	 	 	 	 
	
                  Cash flows from investing
      activities:

                	 	 	 	 	 	 	 	 
	
                  Purchase of property, plant and
      equipment

                	 	 	(7,000	)	 	 	(460,000	)
	
                  Net cash used in investing
      activities

                	 	 	(7,000	)	 	 	(460,000	)
	 
      	 	 	 	 	 	 	 	 
	
                  Cash flows from financing
      activities:

                	 	 	 	 	 	 	 	 
	
                  Debt
    payments

                	 	 	(30,000	)	 	 	(20,000	)
	
                  Proceeds from debt
      financing

                	 	 	 	 	 	 	539,000	 
	
                  Proceeds from line of
      credit

                	 	 	 	 	 	 	500,000	 
	
                  Line of credit
      payments

                	 	 	 	 	 	 	(120,000	)
	
                  Net cash (used in) / provided by
      financing activities

                	 	 	(30,000	)	 	 	899,000	 
	 
      	 	 	 	 	 	 	 	 
	
                  Net increase / (decrease) in cash
      and cash equivalents

                	 	 	41,000	 	 	 	(174,000	)
	
                  Cash and cash equivalents -
      beginning of period

                	 	 	336,000	 	 	 	641,000	 
	 
      	 	 	 	 	 	 	 	 
	
                  Cash and cash equivalents - end of
      period

                	 	$	377,000	 	 	$	467,000	 
	 
      	 	 	 	 	 	 	 	 
	
                  Supplemental disclosures of cash
      flow information

                	 	 	 	 	 	 	 	 
	
                  Cash paid during period for
      interest

                	 	$	34,000	 	 	$	27,000	 

        

      

    

    

    The accompanying notes are an integral
part of the financial statements

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

    Notes to
financial statements (unaudited)

     

    March 31,
2008

     

    Note A -
Basis of Reporting

     

    The
accompanying unaudited financial statements of American Bio Medica Corporation
(the “Company”) have been prepared in accordance with generally accepted
accounting principles in the United States of America for interim financial
information and in accordance with the instructions to Form 10-Q and Regulation
S-X. Accordingly, they do not include all information and footnotes required by
generally accepted accounting principles for complete financial statement
presentation. In the opinion of management, the financial statements include all
normal, recurring adjustments, which are considered necessary for a fair
presentation of the financial position of the Company at March 31, 2008, and the
results of its operations for the three month periods ended March 31, 2008 and
March 31, 2007, and cash flows for the three-month periods ended March 31, 2008
and 2007.

     

    Operating
results for the three months ended March 31, 2008 are not necessarily indicative
of results that may be expected for the year ending December 31, 2008. Amounts
at December 31, 2007 are derived from the Company’s audited financial
statements. For further information, refer to the audited financial statements
and notes thereto included in the Company’s Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2007.

     

               During
the three months ended March 31, 2008, there were no significant changes to the
Company's critical accounting policies, which are included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2007.

     

    The
preparation of these financial statements requires the Company to make estimates
and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. On an
on-going basis, the Company evaluates its estimates, including those related to
product returns, bad debts, inventories, income taxes, warranty obligations, and
contingencies and litigation. The Company bases its estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

     

    These
unaudited financial statements have been prepared assuming that the Company will
continue as a going concern and, accordingly, do not include any adjustments
that might result from the outcome of this uncertainty. The Company's
independent registered public accounting firm's report of the financial
statements included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2007, contained an explanatory paragraph regarding the
Company's ability to continue as a going concern.

     

    Note B –
Net Income/(Loss) Per Common Share

     

               Basic
net income or loss per share is calculated by dividing the net income or loss by
the weighted average number of outstanding common shares during the period.
Diluted net income or loss per share includes the weighted average dilutive
effect of stock options and warrants.

     

    Potential
common shares outstanding as of March 31, 2008 and 2007:

     

    
      
        
          
            
              
                
                  	 
      	 	
                          March
      31, 2008

                        	 	 	
                          March
      31, 2007

                        	 
	 	 	 	 	 	 	 	 	 
	
                          Warrants

                        	 	 	150,000	 	 	 	150,000	 
	 	 	 	 	 	 	 	 	 
	
                          Options

                        	 	 	3,768,080	 	 	 	3,993,080	 

                

              

            

          

        

      

    

    
      
        
           

        

      

    

    For the
three months ended March 31, 2008 and March 31, 2007, the number of securities
not included in the diluted EPS because the effect would have been anti-dilutive
were 3,918,080 and 4,143,080 respectively.

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    Note C –
Litigation

     

    The Company has been named in legal
proceedings in connection with matters that arose during the normal course of
its business, and that in the Company’s opinion are not
material.  While the ultimate result of any litigation cannot be
determined, it is management’s opinion, based upon consultation with counsel,
that it has adequately provided for losses that may be incurred related to these
claims.  If the Company is unsuccessful in defending any or all of
these claims, resulting financial losses could have an adverse effect on the
financial position, results of operations and cash flows of the
Company.

     

    Note D –
Reclassifications

     

    Certain items have been reclassified to
conform to the current presentation.

     

    Note E –
Lines of Credit and Long Term Debt

     

    On November 6, 2006, the Company
obtained a real estate mortgage related to its facility in Kinderhook, New York.
The loan through First Niagara Financial Group (“FNFG”) is in the amount of
$775,000 and has a term of ten (10) years with a twenty (20) year amortization.
The interest rate is fixed at 7.50% for the first five (5) years. Beginning with
year six (6) and through the end of the loan term, the rate changes to 2% above
the Federal Home Loan Bank of New York five (5) year term, fifteen (15) year
Amortization Advances Rate. The loan is collateralized by the Company's facility
in Kinderhook, New York and its personal property.  The amount
outstanding on this mortgage at March 31, 2008, was $753,000.

     

    The
Company has a line of credit with FNFG. The maximum amount available under this
line of credit is $875,000. The maximum available line of $875,000 is not to
exceed 70% of accounts receivable less than 60 days.  The purpose of
the line of credit is to provide working capital. The interest rate is .25%
above the FNFG prime rate. The Company is required to maintain certain financial
covenants such as net worth (stockholders’ equity) greater than $5 million and
working capital greater than $4 million.  Further, the Company is
required to maintain a minimum Debt Service Coverage Ratio of not less than
1.2:1.0 measured at each fiscal year end beginning December 31,
2006.  Debt Service Coverage Ratio is defined as Net Operating Income
divided by annual principal and interest payments on all loans relating to
subject property. . There is no requirement for annual repayment of all
principal on this line of credit; it is payable on demand.  The amount
outstanding on this line of credit at March 31, 2008 was $690,000.

     

    The Company obtained an additional line
of credit from FNFG for $75,000 during the first quarter of 2006. The line of
credit is to be used exclusively for payments on a sublicense agreement entered
into during the first quarter of 2006. The interest rate is .50% above the FNFG
prime rate and principal may be repaid at any time and borrowed again as needed.
There is no requirement for annual repayment of all principal on this line of
credit. The amount outstanding on this line of credit at March 31, 2008 was
$33,000.

     

    On
January 22, 2007, the Company entered into a Term Note (the “Note”) with FNFG in
the amount of $539,000. The term of the Note is five (5) years with a fixed
interest rate of 7.17%. The Company’s monthly payment is $10,714 and payments
commenced on February 1, 2007, with the final payment being due on January 1,
2012. The Company has the option of prepaying the Note in full or in part at any
time during the term without penalty. There were no closing costs associated
with this Note.  The loan is secured by Company assets now owned or to
be acquired. The proceeds received were used for the purchase of three (3)
pieces of automation equipment to enhance the Company's manufacturing process in
its New Jersey facility. The amount outstanding on this Note at March 31, 2008
was $430,000.

     

    At March
31, 2008, the Company is not in compliance with the financial covenants under
the line of credit agreement. On April 30, 2008, the Company was notified by
FNFG that the Company was in violation of the minimum debt service coverage
ratio covenant, and that FNFG has the right to declare all obligations of the
Company to FNFG immediately due and payable.  The total amount of
these obligations outstanding as of April 30, 2008 was
$1,897,347.43.  The Company has requested, and FNFG is willing to
forbear, until May 21, 2008, from exercising its rights and remedies with
respect to the Company’s default. On or before May 21, 2008, the Company expects
to enter into a forbearance agreement with FNFG that would expire July 31,
2008.

     

    On May 8,
2007, the Company purchased a copier through an equipment lease with RICOH in
the amount of $17,000.  The term of the lease is five (5) years with
an interest rate of 14.11%.  The amount outstanding on this lease at
March 31, 2008 was $15,000.

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

     

    Note F
–Sublicense Agreement

     

    On
February 28, 2006, the Company entered into a non-exclusive Sublicense Agreement
(the “Agreement”) with an unaffiliated third party related to certain patents
allowing us to expand our contract manufacturing operations. Under this
Sublicense Agreement, the Company must pay a non-refundable fee of $175,000 over
the course of 2 years, of which $75,000 was paid in the first quarter of 2006
and $50,000 was paid in the first quarter of 2007.  The remaining
$50,000 was paid in the first quarter of 2008. The Company is also required to
pay royalties for products it manufactures that fall within the scope of these
patents. The Company was not obligated to pay any royalties in 2006 or 2007.
Beginning with the year ended December 31, 2007, the Company is obligated to pay
a $20,000 annual minimum royalty (“MAR”) that can be applied against royalties
on sales of products that fall within the scope of the sublicensed patents in
the fiscal year ending December 31, 2008. The first MAR payment was made in
January 2008 and there were not any sales of products made in the three months
ended March 31, 2008 that would be applied against the MAR.

     

    Note G –
Integrated Biotechnology Agreement

     

    In March
2006, the Company entered into a royalty agreement with Integrated Biotechnology
Corporation (“IBC”). IBC is the owner of the RSV (Respiratory Syncytial Virus)
test that the Company manufactures for one of IBC’s distributors. The agreement
was entered into to address amounts that IBC owed to the Company at the end of
fiscal year 2005, and to streamline the order and fulfillment process of IBC’s
RSV product. All outstanding amounts due to the Company were satisfied by the
end of the third quarter of 2007. The Company continues to work directly with
IBC’s distributor under the agreement and pay a 20% royalty of total sales to
IBC. During the first quarter of 2008, IBC earned royalties in the amount of
$20,000.

     

     Note
H – Stock Option Grants

     

    In June 2006, the Company’s Board of
Directors granted a stock option to purchase 72,000 shares of the Company’s
common stock to the Company’s then Chief Financial Officer, and an option to
purchase 3,000 shares of the Company’s common stock to an employee in the
Company’s R&D division. Both option grants have exercise prices of $1.05
(the closing price of the Company’s common shares on the date of grant) and
vested 100% on the one-year anniversary of the date of the grant (although the
options granted to the former Chief Financial Officer expired in January 2008).
In accordance with FAS 123(R), the Company recognized $63,347 in non-cash
compensation expense related to these grants from June 2006 through May
2007.  Included in the three months ended March 31, 2007 is $16,000 of
this non-cash compensation expense.

     

    Note I –
Employment Agreements

     

    The Company has entered into employment
agreements with its Chief Executive Officer Stan Cipkowski, Chief Science
Officer Martin R. Gould and Chief Financial Officer Stefan Parker providing for
aggregate annual salaries of $475,000.  The agreement with Chief
Executive Officer Cipkowski provides for a $206,000 annual salary, is for a term
of one year and automatically renews unless either party gives advance notice of
60 days.  The agreement with Chief Science Officer Gould provides for
a $149,000 annual salary, is for a term of one year and automatically renews
unless either party gives advance notice of 60 days. The agreement with Chief
Financial Officer Parker provides for a $120,000 annual salary, is for a term of
one year and automatically renews unless either party gave advance notice of 60
days. Effective April 28, 2008, the Company entered into an employment agreement
with Douglas Casterlin who was appointed to Executive Vice President,
Operations. The agreement provides for a $149,000 annual salary, is for a term
of one year and automatically renews unless either party gives advance notice of
60 days. Copies of Cipkowski and Gould’s employment agreements were filed as
exhibits to its Quarterly Report on Form 10-QSB filed with the Securities and
Exchange Commission (the “Commission”) on August 13, 2007. A copy of Parker’s
employment agreement was filed as an exhibit to the Company’s Current Report on
Form 8K filed with the Commission on August 24, 2007. A copy of Casterlin’s
employment agreement was filed as an exhibit to the Company’s Current Report on
Form 8-K filed with the Commission on May 1, 2008

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    AMERICAN
BIO MEDICA CORPORATION

     

    
      
        
          
            
              	 
      
	         
      
	
                      Stan
      Cipkowski

                    
	        
      
	
                      Chief
      Executive
Officer

                    

            

          

        

      

    

    
      
         

      

      
        31EXHIBIT
4.11

      

      FORM OF
SECURITY PURCHASE AGREEMENT

       

      THIS
SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set forth
below, is entered into by and between AMERICAN BIO MEDICA CORPORATION, a New
York corporation, with headquarters located at 122 Smith Road, Kinderhook, New
York 12106 (the "Company"), and the undersigned (the "Buyer").

       

      WITNESSETH:

       

      WHEREAS,
the Company and the Buyer are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the
1933 Act; and

       

      WHEREAS,
the Company has delivered to Buyer and Buyer acknowledges receipt of a copy of
the Confidential Private Placement Offering Memorandum, dated July 7, 2008,
bearing identification number ___________ (together with all exhibits and any
amendments or supplements thereto, the “Disclosure Document”); and

       

      WHEREAS,
the Buyer wishes to purchase, upon the terms and subject to the conditions of
this Agreement, 10% Subordinated Convertible Debentures Series A of the Company
(the "Debentures"), which will be convertible into shares of Common Stock, $0.01
par value per share of the Company (the "Common Stock"), upon the terms and
subject to the conditions of such Debentures (the Common Stock and the
Debentures sometimes referred to herein as the "Securities"), and subject to
acceptance of this Agreement by the Company;

       

      NOW
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

       

      1.           DEFINITIONS

       

      Capitalized
terms used herein shall have the same meanings as are ascribed to such terms in
the Disclosure Document unless otherwise defined herein.

       

      2.           AGREEMENT
TO PURCHASE; PURCHASE PRICE.

       

      a.           Purchase.
The undersigned hereby agrees to purchase from the Company Series A Debentures,
in the principal amount set forth on the signature page of this Agreement,
having the terms and conditions and being in the form attached hereto as Annex
I, out of a total offering of up to $1,500,000 of the Series A & Series B
Debentures. The purchase price for the Series A Debentures (the “Purchase
Price”) shall be as set forth on the signature page hereto and shall be payable
in United States Dollars.

       

      b.           Form
of Payment. The Buyer shall pay the purchase price for the Debentures by
delivering immediately available good funds in United States Dollars to Cantone
Research, Inc. (the “Placement Agent”) in an amount equal to the principal
amount of Debentures being so purchased. Promptly following payment by the Buyer
to the Placement Agent of the purchase price of the Debentures, the Placement
Agent shall deliver the Debentures duly executed on behalf of the Company to the
Buyer.

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      c.           Closing
Date. The Closing Date shall be that date designated by the Placement Agent for
the delivery by the Company to the Placement Agent of the executed Series A
Debentures and the Private Placement Memoranda. The Closing Date shall not be
more than fourteen (14) days after the date of the Series A Debenture Placement
Agreement.

       

      d.           Series
A Completion Date. The Series A Completion Date shall be that date on which the
Placement Agent shall have notified the Company in writing that (i) it has
placed (and to the best of its knowledge, the Company has accepted the placement
of) $750,000 in principal amount of Series A Debentures, or (ii) after having
used its best efforts, it has placed all of the Series A Debentures that it is
able to place with investors willing to purchase the same; or (b) the Company
shall have notified the Placement Agent in writing that it is exercising the
Company's Limitation Right (as defined in the Series A Debenture Placement
Agreement).

       

      e.           The
Buyer understands that the funds which accompany this Purchase Agreement will be
held in escrow by the Placement Agent, in accordance with Securities and
Exchange Commission Rule 15c2-4, and will be returned promptly, together with
any net interest earned and received thereon, in the event that at least
$250,000 in principal amount of Debentures are not subscribed for and accepted
and the payments therefore are not received by July 28, 2008, unless such date
is extended by mutual agreement of the Company and the Placement
Agent.

       

      3.           BUYER
REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT
INVESTIGATION.

       

      The Buyer
represents and warrants to, and covenants and agrees with, the Company as
follows:

       

      a.           Without
limiting Buyer's right to sell the Common Stock pursuant to the Registration
Statement (as defined below), the Buyer is purchasing the Debentures and will be
acquiring the shares of Common Stock issuable upon conversion of the Debentures
(the “Shares”) for its own account for investment only and not with a view
towards the public sale or distribution thereof and not with a view to or for
sale in connection with any distribution thereof;

       

      b.           The
Buyer is (i) an "accredited investor" as that term is defined in Rule 501(a) of
Regulation D issued under the 1933 Act and (ii) experienced in making
investments of the kind described in this Agreement and the related documents,
(iii) able to understand and appreciate the risks of such investments, and, by
reason of the business and financial experience of its officers (if an entity)
and professional advisors (who are not affiliated with or compensated in any way
by the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iv) able to afford the entire loss of its investment
in the Securities;

       

      c.           All
subsequent offers and sales of the Debentures and the Shares by the Buyer shall
be made pursuant to registration of the Shares under the 1933 Act or pursuant to
an exemption from registration;

       

      d.           The
Buyer understands that the Debentures are being offered and sold, and the Shares
are being offered, to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgements
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Debentures and to receive an offer of the Shares;

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      e.           The
Buyer and its advisors, if any, have been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Debenture and the offer of the Shares, which have
been requested by the Buyer. The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and have received
complete and satisfactory answers to any such inquiries. Without limiting the
generality of the foregoing, the Buyer has also had the opportunity to obtain
and to review the Company's SEC Documents (as defined in Paragraph 4.g
below).

       

      f.           The
Buyer understands that its investment in the Securities involves a high degree
of risk;

       

      g.           The
Buyer understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or
endorsement of the Securities;

       

      h.           This
Agreement has been duly and validly authorized, executed and delivered on behalf
of the Buyer and is a valid and binding agreement of the Buyer enforceable in
accordance with its terms, subject as to enforceability to general principles of
equity and to bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors' rights generally.

       

      i.           Neither
the Buyer, nor any affiliate of the Buyer, will enter into, any put option,
short position, or other similar position with respect to the Debentures or the
Shares.

       

      j.           Notwithstanding
the provisions hereof or of the Debentures, in no event, unless otherwise
provided herein, shall the holder be entitled to convert any Debenture to the
extent that, after such conversion, the sum of (1) the number of shares of
Common Stock beneficially owned by the Buyer and its affiliates (other than
shares of Common Stock which may be deemed beneficially owned through the
ownership of the unconverted portion of the Debenture), and (2) the number of
shares of Common Stock issuable upon the conversion of the Debenture with
respect to which the determination of this proviso is being made, would result
in beneficial ownership by the Buyer and its affiliates of more than 4.99% of
the outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). In addition, the Company and Buyer agree that until the
Company either obtains shareholder approval of the issuance of the shares of
Common Stock upon conversion of the Debentures and exercise of the Warrants
herein described, or an exemption from NASDAQ’s corporate governance rules as
they may apply to such issuable shares, the Buyer may not and will not convert
the Debentures into more than 19.9% of the shares of Company's Common Stock
outstanding on the date hereof (the "Common Share Limit").

       

      4.           COMPANY
REPRESENTATIONS, ETC.

       

      The
Company represents and warrants to the Buyer that:

       

      a.           Concerning
the Shares. The Company’s Certificate of Incorporation grants no preemptive
rights to any stockholder of the Company to acquire the Common
Stock.

       

      b.           Reporting
Company Status. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York, and has the
requisite corporate power to own its properties and to carry on its business as
now being conducted. The Company is duly qualified as a foreign corporation to
do business and is in good standing in each jurisdiction where the nature of the
business conducted or property owned by it makes such qualification necessary
other than those jurisdictions in which the failure to so qualify would not have
a material and adverse effect on the business, operations, properties, prospects
or condition (financial or otherwise) of the Company. The Company has registered
its Common Stock pursuant to Section 12 of the Exchange Act, and the Common
Stock is listed and traded on the NASDAQ Capital Market. The Company shall
promptly provide to holders of the Debentures copies of any notices it receives
regarding the continued eligibility of the Common Stock for listing on the
NASDAQ Capital Market.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      c.           Authorized
Shares. The Company has sufficient authorized and unissued Shares as may be
reasonably necessary to effect the conversion of the Debentures. The Shares have
been duly authorized and, when issued upon conversion of the Debentures, will be
duly and validly issued, fully paid and non-assessable and will not subject the
holder thereof to personal liability by reason of being such
holder.

       

      d.           Securities
Purchase Agreement; Registration Rights Agreement and Stock. This Agreement and
the Registration Rights Agreement, the form of which is attached hereto as Annex
II (the "Registration Rights Agreement"), and the transactions contemplated
thereby, have been duly and validly authorized by the Company, this Agreement
has been duly executed and delivered by the Company and this Agreement is, and
the Registration Rights Agreement, when executed and delivered by the Company,
will be, valid and binding agreements of the Company enforceable in accordance
with their respective terms, subject as to enforceability to general principles
of equity and to bankruptcy, insolvency, moratorium, and other similar laws
affecting the enforcement of creditors' rights generally; and the Debentures
will be duly and validly authorized and, when executed and delivered on behalf
of the Company in accordance with this Agreement, will be valid and binding
obligations of the Company in accordance with their terms, subject to general
principles of equity and to bankruptcy, insolvency, moratorium, or other similar
laws affecting the enforcement of creditors' rights generally.

       

      e.           Non-contravention.
The execution and delivery of this Agreement and the Registration Rights
Agreement by the Company, the issuance of the Securities, and the consummation
by the Company of the other transactions contemplated by this Agreement, the
Registration Rights Agreement, and the Debentures do not and will not conflict
with or result in a breach by the Company of any of the terms or provisions of,
or constitute a default under (i) the articles of incorporation or by-laws of
the Company, (ii) any indenture, mortgage, deed of trust, or other material
agreement or instrument to which the Company is a party or by which it or any of
its properties or assets are bound, including any listing agreement for the
Common Stock except as herein set forth, (iii) to its knowledge, any existing
applicable law, rule, or regulation or any applicable decree, judgment, or (iv)
to its knowledge, any order of any court, United States federal or state
regulatory body, administrative agency, or other governmental body having
jurisdiction over the Company or any of its properties or assets, except such
conflict, breach or default which would not have a material adverse effect on
the transactions contemplated herein. The Company is not in violation of any
material laws, governmental orders, rules, regulations or ordinances to which
its property, real, personal, mixed, tangible or intangible, or its businesses
related to such properties, are subject.

       

      f.           Approvals.
No authorization, approval or consent of any court, governmental body,
regulatory agency, self-regulatory organization, or stock exchange or market is
required to be obtained by the Company for the issuance and sale of the
Securities to the Buyer as contemplated by this Agreement, except such
authorizations, approvals and consents that have been obtained.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      g.           SEC
Documents, Financial Statements. The Common Stock of the Company is registered
pursuant to Section 12(g) of the Exchange Act and, except as set forth in the
Disclosure Document, the Company has filed on a timely basis all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Exchange Act, including
material filed pursuant to Section 13(a) or 15(d), in addition to one or more
registration statements and amendments thereto heretofore filed by the Company
with the SEC under the Act (all of the foregoing including filings incorporated
by reference therein being referred to herein as the " Company’s SEC
Documents"). The Company, through its agent, has delivered to the Buyer true and
complete copies of any and all SEC Documents (except for exhibits and
incorporated documents) requested by the Buyer. The Company has not provided to
the Buyer any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed, other than with respect to the transactions contemplated by
this Agreement.

       

      As of
their respective dates, the SEC Documents complied in all material respects with
the requirements of the Act or the Exchange Act as the case may be and the rules
and regulations of the SEC promulgated thereunder and other federal, state and
local laws, rules and regulations applicable to such SEC Documents, and none of
the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

       

      h.           Absence
of Certain Changes. Except as set forth in the Disclosure Document or the
Company’s SEC Documents, since December 31, 2007, there have been no material
adverse change and no material adverse development in the business, properties,
operations, financial condition, or results of operations of the
Company.

       

      i.           Full
Disclosure. There is no fact known to the Company (other than general economic
conditions known to the public generally) or as disclosed in the documents
referred to in Section 3(e), that has not been disclosed in writing to the Buyer
that (i) would reasonably be expected to have a material adverse effect on the
business or financial condition of the Company or (ii) would reasonably be
expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement.

       

      j.           Absence
of Litigation. Except as disclosed in the Company’s SEC Documents, which the
Buyer has reviewed, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, wherein
an unfavorable decision, ruling or finding would have a material adverse effect
on the business or financial condition of the Company or the transactions
contemplated by this Agreement or any of the documents contemplated hereby or
which would adversely affect the validity or enforceability of, or the authority
or ability of the Company to perform its obligations under, this Agreement or
any of such other documents.

       

      k.           Absence
of Events of Default. Except as set forth in the Disclosure Document or the
Company’s SEC Documents, no Event of Default, as defined in the respective
agreement to which the Company is a party, and no event which, with the giving
of notice or the passage of time or both, would become an Event of Default (as
so defined), has occurred and is continuing, which would have a material adverse
effect on the Company's financial condition or results of
operations.

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      l.           Prior
Issues. During the twelve (12) months preceding the date hereof, the Company has
not issued any convertible securities.

       

      5.           CERTAIN
COVENANTS AND ACKNOWLEDGMENTS.

       

      a.           Transfer
Restrictions. The Buyer acknowledges that (1) the Debentures have not been and
are not being registered under the provisions of the 1933 Act and, except as
provided in the Registration Rights Agreement, the Shares have not been and are
not being registered under the 1933 Act, and may not be transferred unless (A)
subsequently registered thereunder or (B) the Buyer shall have delivered to the
Company an opinion of counsel, reasonably satisfactory in form, scope and
substance to the Company, to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from such
registration; (2) any sale of the Securities made in reliance on Rule 144
promulgated under the 1933 Act may be made only in accordance with the terms of
said Rule and further, if said Rule is not applicable, any resale of such
Securities under circumstances in which the seller, or the person through whom
the sale is made, may be deemed to be an underwriter, as that term is used in
the 1933 Act, may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (3) neither the
Company nor any other person is under any obligation to register the Securities
(other than pursuant to the Registration Rights Agreement) under the 1933 Act or
to comply with the terms and conditions of any exemption
thereunder.

       

      b.           Restrictive
Legend. The Buyer acknowledges and agrees that the Debentures, and, until such
time as the Shares has been registered under the 1933 Act as contemplated by the
Registration Rights Agreement and sold in accordance with an effective
registration statement ("Registration Statement"), the Shares issued to the
Holder upon conversion of the Debentures shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the Debentures and such Shares):

       

      THE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT, OR THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR
OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.

       

      c.           Registration
Rights Agreement. The parties hereto agree to enter into the Registration Rights
Agreement, in substantially the form attached hereto as Annex II, simultaneously
with the signing of this Securities Purchase Agreement.

       

      d.           Filings.
The Company undertakes and agrees to make all necessary filings in connection
with the sale of the Debentures to the Buyer under any United States laws and
regulations, or by any domestic securities exchange or trading
market.

       

      e.           Reporting
Status. So long as the Buyer beneficially owns any of the Debentures, the
Company shall file all reports required to be filed with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.

      f.           Use
of Proceeds. The Company will use the proceeds from the sale of the Debentures
(excluding amounts paid by the Company for its costs of issuance in connection
with the sale of the Debentures) for working capital, and shall not, directly or
indirectly, use such proceeds for any loan to or investment in any other
corporation, partnership enterprise or other person.

      

        
          
             

          

          
            6

            
              

            

          

          
             

          

        

      

       

      g.           Call
Option. The Company shall have the right to redeem any Debentures which have not
theretofore been surrendered for conversion, which right shall be exercised by
delivering a notice of redemption to the Holder, at any time within ninety (90)
days after any date upon which the closing price of the Common Stock on the
NASDAQ Capital Market for a period of twenty (20) consecutive trading days has
equaled or exceeded $2.00 per share.  The redemption price shall be an
amount equal to the Debenture’s face value plus $0.05 per underlying common
share, or $525 for each $500 in principal amount of the Debentures. The Company
shall give the Buyer sixty (60) days notice to either convert the Debenture to
Shares of Common Stock or the Company will redeem as set forth
above.

       

      h.           Available
Shares. The Company shall have at all times authorized and reserved for
issuance, free from preemptive rights, shares of Common Stock sufficient to
yield the number of shares of Common Stock issuable at conversion as may be
required to satisfy the conversion rights of the Buyer pursuant to the terms and
conditions of the Debentures.

       

      i.           Right
of Participation. As long as the Debentures remain outstanding and payable to
the Buyer, the Company shall provide reasonable prior written notice to the
Buyer, through Cantone Research, Inc. as its agent, of any new offering of
securities undertaken by the Company, and the Buyer shall have an opportunity to
participate in such offering, if qualified.

       

      j.           Non-Public
Information. The Company shall in no event disclose non-public information to
the Buyer, advisors to or representatives of the Buyer unless prior to
disclosure of such information the Company marks such information as "Non-Public
Information - Confidential" and provides the Buyer, such advisors and
representatives with a reasonable opportunity to accept or refuse to accept such
non-public information for review. Nothing herein shall require the Company to
disclose non-public information to the Buyer or its advisors or representatives,
and the Company represents that it does not disseminate non-public information
to any Buyers who purchase stock in the Company in a public offering, to money
managers or to securities analysts; provided, however, that notwithstanding
anything herein to the contrary, the Company will, as hereinabove provided,
immediately notify the advisors and representatives of the Buyer and, if any,
underwriters, of any event or the existence of any circumstance (without any
obligation to disclose the specific event or circumstance) of which it becomes
aware, constituting non-public information (whether or not requested of the
Company specifically or generally during the course of due diligence by such
persons or entities), which, if not disclosed in the prospectus included in the
registration statement, would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order
to make the statements, therein, in light of the circumstances in which they
were made, not misleading. Nothing herein shall be construed to mean that such
persons or entities other than the Buyer (without the written consent of the
Buyer prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of a material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.

       

      k.           Additional
Covenant. As long as there are Debentures outstanding and payable to Buyers, the
Company shall be prohibited from issuing any variable priced equity linked
securities.

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      6.           CONVERSION
PROCEDURES

       

      a.  Each
$500 in principal amount of the Debentures shall be convertible into 666.67
shares of Common Stock.

       

      b.  In
order to effect the conversion of all or part of the Debenture, the
Debentureholder shall issue a notice of conversion substantially in the form
attached hereto as Exhibit A to Annex I  (the "Notice of Conversion")
which may be by facsimile and surrender the Debenture for conversion if the
Debenture is not already in possession of the Company. Each conversion of all or
any portion of the Debenture will be deemed to have been effected as of the
close of business on the date on which such Notice of Conversion is delivered to
the principal office of the Company via facsimile. At such time as such
conversion has been effected, to the extent that any portion of the Debenture is
converted, the rights of the Debentureholder with respect to such portion of the
Debenture shall cease and the Debentureholder shall be deemed to have become the
holder of record of the shares of Common Stock represented thereby.

       

      c.  No
fractional shares of Common Stock shall be issued upon conversion of the
Debenture. In lieu of any fractional share to which the holder would otherwise
be entitled, the Company shall round up to the nearest whole of Common
Share.

       

      d.  The
Company shall, immediately upon receipt of a Notice of Conversion, issue and
deliver to or upon the order of such Debentureholder, against delivery of the
Debentures which have been converted, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled and such
certificate or certificates shall not bear any restrictive legend; provided (a)
the shares of Common Stock evidenced thereby are sold pursuant to an effective
registration statement under the 1933 Act, (b) the holder provides the Company
with an opinion of counsel reasonably acceptable to the Company to the effect
that a public sale of such shares may be made without registration under the
1933 Act, or (c) such holder provides the Company with reasonable assurance that
such shares can be sold free of any limitations imposed by Rule 144, promulgated
under the 1933 Act. The Company shall cause such issuance and delivery to be
effected within five (5) business days and shall transmit the certificates by
messenger or overnight delivery service, or via the DWAC system, to reach the
address designated by such holder within five (5) business days after the
receipt of such notice.

       

      7.           GOVERNING
LAW:  MISCELLANEOUS.

       

      This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New York. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of Albany or the
state courts of the State of New York sitting in the City of Albany in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original. The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      8.           NOTICES.
Any notice required or permitted hereunder shall be given in writing (unless
otherwise specified herein) and shall be deemed effectively given, (i) on the
date delivered, (a) by personal delivery, or (b) by fax or electronic messaging
(with confirmation of receipt), (ii) seven business days after deposit in the
United States Postal Service by regular or certified mail, or (iii) three
business days mailing by international express courier, with postage and fees
prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by ten
(10) days advance written notice to each of the other parties
hereto.

       

      
        
          
            
              
                
                  
                    
                      	 	
                              COMPANY:

                            	
                              AMERICAN
      BIO MEDICA CORPORATION

                            
	 	 
      	
                              122
      Smith Road

                            
	 	 
      	
                              Kinderhook,
      New York 12106

                            
	 	 
      	
                              ATTN:
      Corporate Secretary/Chief Compliance Officer

                            
	 	 
      	
                              Telephone:
      518-758-8158

                            
	 	 
      	
                              Facsimile:
      518-758-8171

                            
	 	 
      	
                              Email:
      mdwaterhouse@abmc.com

                            
	 	 
	 	
                              With
      a copy (which shall not constitute notice) to:

                            
	 	 	 
	 	 
      	
                              NOLAN
      & HELLER, LLP

                            
	 	 
      	
                              39
      N. Pearl Street

                            
	 	 
      	
                              Albany,
      New York 12207

                            
	 	 
      	
                              ATTN:
      Richard L. Burstein, Esq.

                            
	 	 
      	
                              Telephone:
      518-449-3300

                            
	 	 
      	
                              Facsimile:
      518-432-3123

                            
	 	 
      	
                              Email:
      rburstein@nolanandheller.com

                            
	 	 	 
	 	
                              BUYER:

                            	
                              At
      the address set forth on the signature page of this
    Agreement.

                            

                    

                  

                

              

            

          

        

      

      9.           SURVIVAL
OF REPRESENTATIONS AND WARRANTIES. Company's representations and warranties
shall survive the execution and delivery hereof of this Agreement and the
delivery of the Debentures and the Purchase Price, and shall inure to the
benefit of the Buyer and the successors and assigns thereof.

       

      10.           SUCCESSORS
AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted
assigns.

       

      (signature
page follows)

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

       

      SIGNATURE(S)
FOR INDIVIDUALS

       

      IN
WITNESS WHEREOF, the undersigned represents that the foregoing statements are
true and correct and that it has caused this Agreement to be duly executed on
this ____ day of ______, 2008.

       

      Printed
Name of Buyer:

      
        
          
            	
                    Address:

                  	
                    C/O
      Cantone Research, Inc.

                  
	 
      	
                    766
      Shrewsbury Avenue

                  
	 
      	
                    Tinton
      Falls, NJ 07724

                  

          

        

      

       

      Telephone:
732-450-3500 (Cantone Research, Inc.)

       

      Social
Security No.:_______________________________

       

      Signed
by:_______________________________                                                

       

      AGGREGATE
PURCHASE PRICE OF DEBENTURE:   ___________

       

      SIGNATURE(S)
FOR ENTITIES

      

               IN
WITNESS WHEREOF, the undersigned represents that the foregoing statements are
true and correct and that it has caused this Agreement to be duly executed on
its behalf by the Buyer or one of its officers this ____ day of ______,
2008.

       

      Printed
Name of Buyer:

      
        
          
            	
                    Address:

                  	
                      C/O
      Cantone Research, Inc.

                  
	 
      	
                      766
      Shrewsbury Avenue

                  
	 
      	
                      Tinton
      Falls, NJ 07724

                  

          

        

      

       

      Telephone:
732-450-3500 (Cantone Research, Inc.)

       

      EIN:___________________________

       

      Signed
by:___________________________

       

      Printed
Name & Title:___________________________

       

      AGGREGATE
PURCHASE PRICE OF DEBENTURE:__________

       

             This
Agreement has been accepted as of the date set forth below.

       

      AMERICAN
BIO MEDICA CORPORATION

       

      
        
          
            	
                    By:

                  	  
      
	 
      	
                    Stan
      Cipkowski, Chief Executive
Officer

                  

          

        

      

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      

      ANNEX
I

      To
Securities Purchase Agreement

       

      FORM OF
SERIES A DEBENTURE

       

      (FILED
WITH THIS REGISTRATION STATEMENT AS EXHIBIT 4.12)

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      ANNEX
II

       

      REGISTRATION
RIGHTS AGREEMENT

      

      (FILED
WITH THIS REGISTRATION STATEMENT AS EXHIBIT 4.13)

      
        
           

        

        
          12

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