As filed with the Securities and Exchange Commission on May 5,2009

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-3
Amendment No. 1 to
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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

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

122 Smith Road
Kinderhook, New York 12106
(518) 758-8158
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)


Melissa A. Waterhouse
Corporate Secretary
Vice President & Chief Compliance Officer
122 Smith Road
Kinderhook, New York 12106
(518) 758-8158

Copies to:
Richard L. Burstein, Esq.
Nolan & Heller, LP
39 N. Pearl Street
Albany, New York 12207
(518) 449-3300
(Name, address, including zip code, and telephone number, including area code of agent for service)


At such time or times after the Registration Statement becomes effective
(Approximate date of commencement of proposed sale to the public)


If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ¨
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.   x
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ¨
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
 
If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ¨
 
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instructions I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ¨
 
Indicate by check mark whether the registrant is a large accelerated filed, a non-accelerated filer, or a smaller reporting company.
 
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
x

 The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said section 8(a), may determine.
 

 
PROSPECTUS
 
Registration No. 333- 158582

AMERICAN BIO MEDICA CORPORATION

1,075,001 SHARES OF COMMON STOCK

This prospectus covers a total of up to 1,075,001 shares of American Bio Medica Corporation (“ABMC” or the “Company”) common stock, par value $.01 per share, which may be offered from time to time by the selling shareholders named on page 15 of this prospectus. The shares being offered by this prospectus consist of common stock underlying securities issued in our August 2008 10% Subordinated Convertible Debentures Series A (as the “Series A Debentures”) private placement, including:
 
 
·
up to 1,000,001 shares issuable upon the conversion of the principal of our Debentures issued by us to the selling shareholders; and
 
 
·
up to 75,000 shares issuable upon the exercise of private placement agent warrants (referred to herein as “Warrants”), issued by us to Cantone Research, Inc. (“CRI”), as placement agent
 
The Debentures and Warrants are sometimes referred to herein as Securities.
 
We are registering these shares of our common stock for resale by the selling shareholders named in this prospectus, or their respective successors and permitted assigns. We will not receive any proceeds from the sale of these shares by the selling shareholders, but we will receive proceeds from the exercise of the Warrants, if exercised. These shares are being registered to permit the selling shareholders to sell shares from time to time, in amounts, at prices and on terms determined at the time of offering. The selling shareholders may sell this common stock through ordinary brokerage transactions, directly to market makers of our shares or through any other means described in the section entitled “Plan of Distribution” beginning on page 18.
 
Our common stock is traded on the NASDAQ Capital Market under the symbol “ABMC.” On May 4, 2009, the last reported sale price of our common stock was $0.17 per share .
 
An investment in the shares of our common stock being offered by this prospectus involves a high degree of risk. You should read the “Risk Factors” section beginning on page 7 before you decide to purchase any shares of our common stock.
 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
The date of this prospectus is May 5, 2009.
 

 
TABLE OF CONTENTS

   
PAGE
     
Note On Forward Looking Statements
 
4
Prospectus Summary
 
5
The Company
 
5
Market Overview
 
5
Manufacturing/Property
 
7
The Offering
 
7
Risk Factors
 
9
Use Of Proceeds
 
17
Price Range of Common Shares & Dividend Policy
 
17
Description of Securities, Dilution & Securities We May Offer
 
18
Selling Shareholders
 
19
Plan Of Distribution
 
22
Transfer Agent
 
24
Legal Matters
 
24
Where You Can Find Additional Information
 
24
Incorporation Of Certain Documents By Reference
 
25
PARTII
   
Item 14. Other Expenses Of Issuance & Distribution
 
26
Item 15. Indemnification Of Directors & Officers
 
26
Item 16. Exhibits
 
26
Item 17. Undertakings
 
27
Signatures (including power of attorney)
 
S-1
Exhibits
 
E-1
 
You should rely only upon the information contained in this prospectus and the registration statement of which this prospectus is a part. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date. This prospectus is based on information provided by us and other sources that we believe are reliable. We have summarized certain documents and other information in a manner we believe to be accurate, but we refer you to the actual documents for a more complete understanding of what we discuss in this prospectus. In making an investment decision, you must rely on your own examination of our business and the terms of the offering, including the merits and risks involved.
 
2

 
We obtained statistical data, market data and other industry data and forecasts used throughout, or incorporated by reference in, this prospectus from market research, publicly available information and industry publications. Industry publications generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy and completeness of the information. Similarly, while we believe that the statistical data, industry data and forecasts and market research are reliable, we have not independently verified the data, and we do not make any representation as to the accuracy of the information. We have not sought the consent of the sources to refer to their reports appearing or incorporated by reference in this prospectus.
 
This prospectus may contain, or may incorporate by reference, trademarks, tradenames, service marks and service names of American Bio Medica Corporation and other companies.
 
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NOTE ON FORWARD LOOKING STATEMENTS
 
Except for the historical information contained in this prospectus, the matters discussed in this prospectus or otherwise incorporated by reference into this prospectus are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (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. These statements are only predictions based on current information and expectations and involve a number of risks and uncertainties. The underlying information and expectations are likely to change over time. Actual events or results may differ materially from those projected in the forward-looking statements due to various factors, including, but not limited to, those set forth under the caption “Risk Factors” and elsewhere in this prospectus. Readers are urged to carefully review and consider the various disclosures made by us in this prospectus that attempt to advise interested parties of the risks and factors that may affect our business. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
4

 
PROSPECTUS SUMMARY
 
The Securities and Exchange Commission, or SEC, allows us to “incorporate by reference” certain information that we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file later with the SEC will update automatically, supplement and/or supersede this information. Any statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any other document which also is or is deemed to be incorporated by reference in this prospectus modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. You should read the following summary together with the more detailed information regarding our company, our common stock and our financial statements and notes to those statements appearing elsewhere in this prospectus or incorporated herein by reference.
 
THE COMPANY
 
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.
 
Our principal executive offices are located at 122 Smith Road, Kinderhook, New York 12106. Our phone numbers are (800) 227-1243 and (518) 758-8158. Our website address is www.abmc.com.
 
MARKET OVERVIEW
 
We have a two-pronged distribution strategy that focuses both on growing business through our direct sales team and with valued third party distributors. Our direct sales team consists of highly experienced and well-trained sales professionals with drugs of abuse testing experience, and our distributors are unaffiliated entities that resell our POCT devices either as a stand-alone product or as part of a service they provide to their customers.
 
We promote our products through direct mail campaigns, selected advertising, participation at high profile trade shows, use of key point of collection advocate consultants and other marketing activities. We expect to continue to recruit and utilize experienced, valued third party distributors, in addition to selling directly in our markets and to our key customers.
 
According to a BCC Research and Consulting market research report released in July 2008, the global drugs of abuse (DOA) testing market generated $1.9 billion in 2007. This is expected to increase to $2.0 billion in 2008 and $2.6 billion in 2014, for a compound annual growth rate of 4.6%. In addition, according to an industry report distributed by Espicom Business Intelligence in December 2007, the global point of care testing (“POC”) market (which includes the POCT market) was estimated to be worth $11.3 billion in 2007 and is growing at 11% a year. POC accounts for approximately 34% of the $33.6 billion global in-vitro diagnostic testing market. Our long-term objective is to provide an extensive product portfolio to this expanding POCT market. Our markets are divided into the following segments:
 
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Corporate/Workplace
 
Corporate/Workplace testing consists of pre-employment test of job applicants, and random, cause and post accident testing of an employee. Many employers recognize the financial and safety benefits of implementing Drug Free Workplace Programs, of which drug testing is an integral part. Government incentives encourage employers to adopt Drug Free Workplace Programs. 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
 
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. A significant number of individuals on parole or probation, or within federal, state and local correctional facilities and jails, have one or more conditions to their sentence required by the court or probation agency which includes periodic drug testing and substance abuse treatment. 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. Our direct sales force sells in this market.
 
Clinics, Physicians, and Hospital
 
This market includes emergency rooms, physician offices, hospitals and clinics and rehabilitation facilities associated with hospitals. In August 2008, the Drug Abuse Warning Network (a public health surveillance system that monitors drug-related visits to hospital emergency departments and drug-related deaths investigated by medical examiners and coroners) estimated that in 2006 over 1.7 million emergency department visits were associated with drug misuse or abuse. To address this issue, drug testing is performed in this market so healthcare professionals are able to ascertain the drug status of a patient before they administer pharmaceuticals or treatment.  Our direct sales forces sells into this market and we continue to look for a global, strategic partner/distributor to sell into this market also.
 
International Markets
 
The International Market consists of various markets outside of the United States. Although Corporate/Workplace testing is not as prevalent outside of the United States as within, the Government/Corrections/Law Enforcement and Clinical/Physician/Hospital markets are somewhat in concert with their United States counterparts. One market that is significantly more prevalent outside of the United States is roadside drug testing. Countries including but not limited to, France, Australia, Malaysia, New Zealand, Portugal, Finland, Germany, Norway, Switzerland and Canada, already conduct roadside drug testing, are currently in a pilot phase of drug testing, or have put laws in place to allow drug testing.  We sell our products primarily through distributors in the International market.
 
Rehabilitation Centers
 
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. Our direct sales force and our network of distributors sell our products in the Rehabilitation Center market.
 
6

 
Educational Market
 
According to the December 2008 University of Michigan Monitoring the Future study, 14.1% of 8th graders, 26.9% of 10th graders and 36.6% of 12th graders have used an illicit drug within the 12 months prior to the study. Furthermore, the study reported that a little less than half of young people have tried an illicit drug by the time they finish high school. In June 2002, the Supreme Court ruled that students in extracurricular activities including athletics, band, choir, and other activities could be drug tested at the start of the school year and randomly throughout the year. 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 prospectus, 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. The balance of the mortgage held by First Niagara Financial Group (“FNFG”) on the Kinderhook property was approximately $739,000 at fiscal year end December 31, 2008. We currently lease 14,400 square feet of space for our R&D and bulk manufacturing facility in Logan Township, New Jersey. 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 New Jersey facility. We contract with a third party for the manufacture of the Rapid Reader product.
 
THE OFFERING
 
This is an offering of: (a) up to 1,075,001 common shares, par value $0.01 a share, of ABMC, of which 1,000,001 are common shares of ABMC issuable upon conversion of the Series A Debentures (the “Conversion Shares”) and 75,000 are common shares issuable upon the exercise of warrants. All of these securities are being offered by the Selling Shareholders. On August 15, 2008, the Company completed the Series A Debenture offering and received gross proceeds of $750,000. The Series A Debentures were sold pursuant to the exemption from registration afforded by Rule 506 under Regulation D ("Regulation D") as promulgated by the Commission under the Securities Act and/or Section 4(2) of the Securities Act.
 
7

 
The Series A Debentures accrue interest at a rate of 10% per annum (payable by the Company semi-annually) and mature on August 1, 2012. The payment of principal and interest on the Series A Debentures is subordinate and junior in right of payment to all Senior Obligations, as defined under the Series A Debentures. Holders of the Series A Debentures have the right to convert the Series A Debentures into shares of the common stock of the Company (“Common Stock”) at a conversion rate of 666.67 shares per $500 in principal amount of the Series A Debentures (representing a conversion price of approximately $0.75 per share). If these rights are exercised with respect to the entire $750,000 in principal amount of Series A Debentures, a total of 1,000,001 Conversion Shares would be issuable by the Company. This conversion right can be exercised at any time, commencing the earlier of (a) 120 days after the date of the Series A Debentures, or (b) the effective date of a Registration Statement to be filed by the Company with respect to the Conversion Shares. The Company has the right to redeem any Series A Debentures that have not been surrendered for conversion at a price equal to the Series A Debentures’ face value plus $0.05 per underlying common share, or $525 per $500 in principal amount of the Series A Debentures, representing an aggregate conversion price of $787,500. This redemption right can be exercised by the Company at any time within 90 days after any date when the closing price of the Common Stock has equaled or exceeded $2.00 per share for a period of 20 consecutive trading days.
 
As placement agent, CRI received a Placement Agent fee of $52,500, or 7% of the gross principal amount of Series A Debentures sold. In addition, the Company issued CRI total of 75,000 warrants, including a four year warrant to purchase 30,450 shares of the Company’s common stock at an exercise price of $0.37 per share (the closing price of the Company’s common shares on the Closing Date) and a four year warrant to purchase 44,550 shares of the Company’s common stock at an exercise price of $0.40 per share (the closing price of the Company’s common stock on the Series A Completion Date), (the “Placement Agent Warrants”). All warrants issued to CRI are immediately exercisable.
 
8

 
RISK FACTORS
 
An investment in our company is extremely risky. You should carefully consider the following risks, in addition to the other information presented in this prospectus before deciding to buy or exercise our securities. If any of the following risks actually materialize, our business and prospects could be seriously harmed, the price and value of our securities could decline and you could lose all or part of your investment.
 
We have a history of incurring net losses, and our accountants have questioned our ability to continue as a going concern.
 
Since the Company’s 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. In the fiscal year ending December 31, 2006, we reported net income of $196,000. We incurred net losses of $990,000 and $850,000 in fiscal years ended December 31, 2007 and 2008, respectively. As of December 31, 2008, we have an accumulated deficit of $15,238,000. We expect to continue to make substantial expenditures for sales and marketing, product development and other business 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. In the fiscal year ended December 31, 2008, our sales were negatively impacted by the global economic crisis, which affected our results of operations. Our failure to increase sales while maintaining or reducing administrative, research and development and production costs will result in the Company incurring additional losses.
 
The financial statements as of and for each of the two years in the period ended December 31, 2008, incorporated in this prospectus by reference from our Annual Report on Form 10-K for the year ended December 31, 2008, have been audited by UHY, LLP, our independent registered public accounting firm, as stated in their report (which report includes an explanatory statement that the Company has experienced recurring net losses and negative cash flows from operations that raise substantial doubt about the Company's ability to continue as a going concern) incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
 
Our products are sold in limited markets and the failure of any one 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 2008 and given current levels of operating expenses, we must achieve approximately $3.7 million in quarterly net sales 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 sales of 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.
 
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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 (the Rapid STAT and the Rapid TOX Cup were both 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 expenditure of funds.
 
If we fail to keep up with technological factors or fail to develop our products we may be at a competitive disadvantage.
 
The point of collection drug testing market is highly competitive. Several companies produce drug tests that compete directly with our drugs of abuse product line, including Varian, Inc., Biosite Diagnostics and Medtox Scientific, Inc. in the urine point of collection testing market and OraSure Technologies, Inc. and Varian, Inc. in the oral fluid point of collection testing market.   As new technologies become introduced into the point of collection testing market, we may be required to commit considerable additional effort, time and resources to enhance our current product portfolio or develop new products. Our success will depend upon new products meeting targeted product costs and performance, in addition to timely introduction into the marketplace. We are subject to all of the risks inherent in product development, which could cause material delays in manufacturing.
 
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 67 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 the Company 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 are not received at our projected levels.
 
We currently have approximately $3.1 million in raw material components for the manufacture of our products at December 31, 2008. 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 $2.2 million in manufactured testing strips, or other “work in process” inventory at December 31, 2008. The components for much 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. In addition, since the components for much of the “work in process” inventory have lives of 12-24 months, if sales orders within the next 12-24 months are not for devices that contain the components of the “work in process” inventory, we may need to discard the unused “work in process” inventory. Beginning in 2004, we established a reserve for obsolete or slow moving inventory. In 2008, we increased this reserve to $308,000. There can be no assurance that this reserve will be adequate for 2009 and/or that it will not have to be increased.
 
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We depend on our R&D team for product development and/or product enhancement.
 
 Our R&D team performs product development and/or enhancement. There can be no assurance that our R&D team can successfully complete the enhancement of our current products and/or complete the development of new products. Furthermore, the loss of one or more members of our R&D team could result in the interruption or termination of new product development and/or current product enhancement, affecting our ability to provide new or improved products to the marketplace, which would put the Company at a competitive disadvantage.
 
Our products must be cost competitive and perform to the satisfaction of our customers.
 
Cost competitiveness and satisfactory product performance are essential for success in the point of collection drug testing market. There can be no assurance that new products we may develop will meet projected price or performance objectives. In fact, price competition is increasing in the point of collection testing markets as additional foreign (i.e. non-U.S. based companies) manufacturers enter the market. Many foreign manufacturers have lower manufacturing costs and therefore can offer their products at a lower price than a U.S. manufacturer. These lower costs include, but are not limited to, costs for labor, materials, regulatory compliance and insurance.
 
Due to the variety and complexity of the environments in which our customers operate, our products may not operate as expected, unanticipated problems may arise with respect to the technologies incorporated into our test kits or product defects affecting product performance may become apparent after commercial introduction of new test kits we put on the market. In the event that we are required to remedy defects in any of our products after commercial introduction, the costs to the Company could be significant. Any of these issues could result in cancelled orders, delays and increased expenses. In addition, the success of competing products and technologies, pricing pressures or manufacturing difficulties could further reduce our profitability and the price of our securities.
 
One of our customers accounted for approximately 11.2% of the total net sales of the Company for the fiscal year ended December 31, 2008. 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.
 
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 ABMC. In addition to these manufacturers, there are a number of smaller privately held companies, as well as foreign manufacturers, that serve as our competitors. The markets for point of collection tests for drugs of abuse are highly competitive. Currently, the pricing of our products is cost competitive, but competing on a cost basis against foreign manufacturers becomes more difficult as costs to produce our products in the United States continue to increase. Furthermore, some of our competitors can devote substantially more resources than we can to business development and they may adopt more aggressive pricing policies. We expect other companies to develop technologies or products that will compete with our products.
 
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Possible inability to hire and retain qualified personnel.
 
We will need additional skilled sales and marketing, technical and production personnel to grow the business. If we fail to retain our present staff or hire additional qualified personnel our business could suffer.
 
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 and/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.
 
Failure to effectively manage growth and expansion could adversely affect our business and operating results.
 
We may expand our operations in the future. Any failure to manage our growth effectively will result in less efficient operations, which could adversely affect our operating and financial results.
 
§
To effectively manage our growth, we must, among other things:
 
§
accurately estimate the number of employees we will require and the areas in which they will be required;
 
§
upgrade and expand our office infrastructure so that it is appropriate for our level of activity;
 
§
manage expansion into additional geographic areas; and
 
§
improve and refine our operating and financial systems
 
We expect to devote considerable resources and management time to improving our operating and financial systems to manage our growth. Failure to accomplish any of these objectives would impede our ability to deliver products and services in a timely fashion, fulfill existing customer orders and attract and retain new customers.  These impediments would have a material adverse effect on our financial condition, results of operations and cash flows.
 
Any adverse changes in our regulatory framework could negatively impact our business.
 
           Marketing clearance 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. Our point of collection drug tests are 510(k) cleared and have met FDA requirements for professional use (with the exception of the OralStat and Rapid STAT which are not 510(k) cleared and are therefore for forensic use only) and we have been granted a CLIA waiver from FDA related to our Rapid TOX product line. 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 and make 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 that they will be granted.  If such clearance(s) is/are not granted, we would be unable to sell our products in the Workplace and/or Government/Corrections/Law Enforcement markets, and our revenues would be negatively impacted. 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.
 
12

 
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, product enhancements and name recognition are essential to establishing and maintaining our technology leadership position. Our personnel are bound by non-disclosure agreements. However, in some instances, some courts have not enforced all aspects of such 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 26 U.S. and foreign patents related to our POCT products. We have additional patent applications pending in the United States, and other countries, related to our POCT products. 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, along with the conversion of outstanding Convertible Debentures could adversely affect the value of our securities.
 
The Board of Directors of the Company has adopted four Non-statutory Stock Option Plans providing for the granting of options to employees, directors, and consultants, however, two of those plans, the Fiscal 1997 Plan and the Fiscal 1998 Plan, have no options available for issuance and there are no options issued and outstanding under either plan. As of December 31, 2008 there were 990,500 options issued and outstanding under the Fiscal 2000 Plan and 2,771,580 options issued and outstanding under the Fiscal 2001 Plan, for a total of 3,762,080 options issued and outstanding as of December 31, 2008. All of these options are fully vested. As of December 31, 2008, there were 9,500 options available for issuance under the Fiscal 2000 Plan and 945,420 options available for issuance under the Fiscal 2001 Plan.
 
On August 15, 2008, the Company completed an offering of Series A Debentures and received gross proceeds of $750,000 (see Current Report on Form 8-K and amendment on Form 8-K/A-1 filed with the Commission on August 8, 2008 and August 18, 2008 respectively). Holders of the Series A Debentures have a right to convert the Series A Debentures into shares of Common Stock at a conversion rate of 666.67 shares per $500 in principal amount of the Series A Debentures (representing a conversion price of approximately $0.75 per share). If these rights are exercised with respect to the entire $750,000 in principal amount of Series A Debentures, a total of 1,000,001 Conversion Shares would be issuable by the Company. This conversion right can be exercised at any time, commencing the earlier of (a) 120 days after the date of the Series A Debentures, or (b) the effective date of a Registration Statement to be filed by the Company with respect to the Conversion Shares. The Company has the right to redeem any Series A Debentures that have not been surrendered for conversion at a price equal to the Series A Debentures’ face value plus $0.05 per underlying common share, or $525 per $500 in principal amount of the Series A Debentures. The Company can exercise this redemption right at any time within 90 days after any date when the closing price of the Common Stock has equaled or exceeded $2.00 per share for a period of 20 consecutive trading days.
 
13

 
As placement agent, CRI received a placement agent fee, and was also issued a total of 75,000 Placement Agent Warrants, including a four year warrant to purchase 30,450 shares of Common Stock at an exercise price of $0.37 per share (the closing price of the Company’s common shares on the Closing Date) and a four year warrant to purchase 44,550 shares of Common Stock at an exercise price of $0.40 per share (the closing price of the Company’s common shares on the Series A Completion Date). All Warrants issued to CRI are immediately exercisable.
 
If these Options, Conversion Shares or Placement Agent 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, Debenture Conversion Shares or Placement Agent 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, Debenture Conversion Shares or Placement Agent Warrants would cause further dilution of our securities. In addition, in the event of any change in the outstanding shares of our common stock by reason of any recapitalization, stock split, reverse stock split, stock dividend, reorganization consolidation, combination or exchange of shares, merger or any other changes in our corporate or capital structure or our common shares, the number and class of shares covered by the Options and/or the exercise price of the Options may be adjusted as set forth in their plans.
 
Substantial resale of restricted securities may depress the market price of our securities.
 
There are 3,993,155 common shares presently issued and outstanding as of the date hereof that are “restricted securities” as that term is defined under the Securities Act, and 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 144(k), or pursuant to a registration statement filed under the Act, may depress the market price of our securities in any market that may develop for such shares.
 
We believe we will need additional funding for our existing and future operations.
 
Our financial statements for the fiscal year ended December 31, 2008 have been prepared assuming we will continue as a going concern. We do not believe, based on certain assumptions, including our expectation that the overall global economic crisis will continue to have a negative impact on our business in 2009, that our current cash balances, and cash generated from future operations will be sufficient to fund operations for the next twelve months. 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. If cash generated from operations is insufficient to satisfy our working capital and capital expenditure requirements, we may be required to sell additional equity or debt securities or obtain additional credit facilities.  There can be no assurance that such financing will be available or that we will be able to complete financing on satisfactory terms, if at all. Any such equity financing may result in further dilution to existing shareholders.
 
14

 
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 the market makers cease to function as such, public trading of our securities will be adversely affected or may cease entirely.
 
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 (“NASDAQ”) 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 report and for the past twelve months our common shares are trading and have traded below the minimum bid requirement. In October 2008, NASDAQ advised us that, because of the extraordinary market conditions, NASDAQ was suspending enforcement of the bid price and market value requirements through January 16, 2009. In December 2008, NASDAQ further extended this suspension until April 20, 2009, and in March 2009, NASDAQ further extended this suspension until July 19, 2009. Although these suspensions have provided us more time to regain compliance with the minimum bid price requirement, there can be no assurance that these suspensions will in fact enable us to regain compliance. Our continued failure to regain compliance with NASDAQ listing requirements will more than likely result in delisting of our securities.
 
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 NASDAQ could also make it more difficult for us to raise capital in the future.  
 
We may incur additional significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.
 
We may incur significant legal, accounting and other expenses as a result of our required compliance with certain regulations. More specifically, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), as well as new rules subsequently implemented by the SEC, has imposed various new requirements on public companies. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations are expected to increase our legal and financial compliance costs and may make some activities more time-consuming and costly.
 
The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, in our fiscal year ended December 31, 2007, management was required to perform system and process evaluation and testing of the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Commencing in our fiscal year ending December 31, 2009, our independent registered public accounting firm will report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act.
 
15

 
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. As a result, our compliance with Section 404 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 identifies deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our common shares 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.
 
As of the date of this report, we are not in compliance with certain financial covenants required by our primary financial institution, First Niagara Financial Group (“FNFG”), and such non-compliance could cause FNFG to accelerate our loans.
 
We currently have a line of credit, a real estate mortgage and a term note (“Credit Facilities”) with FNFG (See Note D and Note E to the Company’s financial statements for the fiscal year ended December 31, 2008, filed with our Annual Report on Form 10-K). As of March 31, 2008, the Company was not in compliance with the financial covenants under the line of credit agreement, and 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 reserved the right to declare all obligations of the Company to FNFG immediately due and payable. On May 22, 2008, the Company and FNFG entered into a forbearance agreement under which FNFG agreed to forbear, until July 31, 2008, from exercising its rights and remedies with respect to the Company’s default. On August 7, 2008, the Company entered into amendments of the Credit Facilities, which required the Company to sell at least $500,000 in subordinated debentures by September 1, 2008. On February 4, 2009, we received a letter from FNFG notifying the Company that an event of default had occurred under our Letter Agreement and other documents (the “Loan Documents”), related to the Credit Facilities; more specifically, we failed to comply with the maximum monthly net loss covenant set forth in the Letter Agreement.  Pursuant to the terms of the Loan Documents, all obligations of the Company to FNFG under the Loan Documents can be declared by FNFG to be immediately due and payable. The principal amount totals $1,636,635.97, plus interest and other charges through February 4, 2009 (collectively, the “Debt”).
 
The February 4, 2009 notice also stated that, as an accommodation to the Company, FNFG decided not to immediately accelerate the Debt, and that they expected to enter into a Forbearance Agreement with the Company memorializing measures and conditions required by FNFG. FNFG also notified the Company that they were reducing the commitment on our line of credit to $650,000 (previously the line of credit commitment was $750,000), and placing a hold on one of our accounts held at FNFG, which had a balance of $108,000 as of February 4, 2009.
 
On March 12, 2009, we entered into a second Forbearance Agreement (the “Agreement”) with FNFG. The Agreement addresses the Company’s non-compliance with the maximum monthly net loss and the minimum debt service coverage ratio covenants (“Existing Defaults”) under the Credit Facilities. Under the terms of the Agreement, FNFG will forbear from exercising its rights and remedies arising under the Loan Documents from the Existing Defaults. The Agreement is in effect until (i) June 1, 2009; or (ii) the date on which FNFG elects to terminate the Agreement upon the occurrence of an event of default under the Agreement or under the Loan Documents (other than an Existing Default); or (iii) the date on which any subsequent amendment to the Agreement becomes effective (the “Forbearance Period”).
 
16

 
Under the Agreement, during the Forbearance Period: FNFG will waive any further default relating to the maximum monthly net loss covenant and minimum debt service coverage ratio provided the Company shows a net loss no greater than $300,000 for the quarter ending March 31, 2009, and on or before May 1, 2009, the Company must produce to FNFG a legally binding and executed commitment letter from a bona-fide third party lender setting forth the terms of a full refinancing of the Debt to close on or before June 1, 2009.
 
During the Forbearance Period, FNFG will continue to place a hold on one of our accounts, but will release up to $5,000 per month from the account to be used for the purpose of paying a financial advisory firm engaged by the Company to find and evaluate alternative funding sources; the financial advisory firm was referred to the Company by FNFG.
 
The maximum available under the line of credit during the Forbearance Period will be the lesser of $650,000, or the Net Borrowing Capacity. Net Borrowing Capacity is defined as Gross Borrowing Capacity less the Inventory Value Cap. Gross Borrowing Capacity is defined as (i) the sum of 80% of eligible accounts receivable, (ii) 20% of raw material inventory and (iii) 40% of finished goods inventory. Inventory Value Cap is defined as the lesser of $400,000, or the combined value of items (ii) and (iii) of Gross Borrowing Capacity. Since September 2008, the Company’s Net Borrowing Capacity has declined from $1,195,000 to $795,000 as of the date of this report.
 
During the Forbearance Period, interest shall accrue on the line of credit at the rate of prime plus 4%, an increase from prime plus 1%. Interest accruing on the real estate mortgage during the Forbearance Period shall remain unchanged at the fixed rate of 7.5% and interest on the term note shall remain unchanged at the fixed rate of 7.17%. In the event of default under the Agreement, interest under the line of credit shall increase to the greater of prime plus 6% or 10%. The line of credit shall terminate on June 1, 2009.
 
If we are unable to maintain compliance with any of the conditions during the Forbearance Period, or if we are unable to secure a full refinancing of the Debt on or before June 1, 2009, FNFG will have the right to accelerate the Debt. We could request an extension of the Forbearance Period, but if FNFG did not agree to an extension and were to exercise its right to accelerate the Debt, it is likely that the Company would not have the funds available to pay the Debt. In that event, FNFG would be entitled to enforce its rights and remedies available under the Loan Documents, including but not limited to foreclosure of its liens on the Company’s assets.
 
USE OF PROCEEDS
 
We will not receive any of the proceeds from the sale of the 1,075,001 shares of Common Stock underlying the Series A Debentures. If and when all of the Warrants are exercised, we will receive the proceeds from the sale of 75,000 Warrants. The selling shareholders are under no obligation to exercise their Warrants. If all of the Warrants are exercised in full, we will receive approximately $29,086. We expect to use such proceeds, if any, for working capital and general corporate purposes.
 
PRICE RANGE OF COMMON SHARES AND DIVIDEND POLICY
 
Our common stock is traded on the Nasdaq Capital Market under the symbol “ABMC”. The last reported sale price of our common shares on May 4, 2009 on the Nasdaq Capital Market was $0.17 per share. The following table sets forth the high and low sale prices for our common stock for the periods indicated as reported on the Nasdaq Capital Market.
 
17

 
Fiscal year ending December 31, 2008
 
High
   
Low
 
             
     Quarter ending December 31, 2008
  $ 0.54     $ 0.08  
     Quarter ending September 30, 2008
  $ 0.95     $ 0.32  
     Quarter ending June 30, 2008
  $ 0.98     $ 0.33  
     Quarter ending March 31, 2008
  $ 0.98     $ 0.46  
 
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  
 
We have not declared any dividends on our common shares and do not expect to do so in the foreseeable future. Future earnings, if any, will be retained for use in our business.
 
DESCRIPTION OF SECURITIES, DILUTION AND SECURITIES WE MAY OFFER
General
The following description of our capital stock (which includes a description of securities we may offer pursuant to the registration statement of which this prospectus, as the same may be supplemented, forms a part) does not purport to be complete and is subject to and qualified in its entirety by our certificate of incorporation and bylaws and by the applicable provisions of New York law.
 
We, directly or through agents, dealers or underwriters designated from time to time, may offer, issue and sell, together or separately:
 
 
·
up to $50,000,000 in the aggregate of common stock
 
·
up to 5,000,000 in the aggregate of preferred stock
 
·
secured or unsecured debt securities consisting of notes, debentures or other evidences of indebtedness which may be senior debt securities, senior subordinated debt securities or subordinated debt securities, each of which may be convertible into equity securities
 
·
warrants or options to purchase shares of our common stock
 
·
units comprised of, or other combinations of, the foregoing securities
 
Common Stock
 
We are authorized to issue up to 50,000,000 shares of common stock, $0.01 par value. For more information about our common stock, please refer to our amended and restated articles of incorporation and by-laws. As of May 5, 2009, we have 21,744,768 common shares issued and outstanding.
 
18

 
Preferred Stock
 
We are authorized to issue up to 5,000,000 shares of preferred stock. Our Board of Directors may divide the preferred shares into one or more series and issue such preferred shares from time to time with such performance, privileges, limitations, and relative rights as it may determine. As of May 5, 2009, we have no preferred shares issued and outstanding.
 
Warrants
 
We may issue warrants for the purchase of our common stock, preferred stock or debt securities or any combination thereof. Warrants may be issued independently or together with our common stock, preferred stock or debt securities and may be attached to or separate from any offered securities. As of May 5, 2009, the Warrants within this Registration Statement (75,000) are the only warrants issued and outstanding.
 
Options
 
We currently have two nonstatutory Stock Option Plans (the Fiscal 2000 Plan and the Fiscal 2001 Plan) providing for options grants to employees, directors, and consultants. As of May 5, 2009, there were 3,762,080 options issued and outstanding under both plans combined, all of which are currently exercisable, and there were 9,500 options available for issuance under the Fiscal 2000 Plan and 945,420 options available for issuance under the Fiscal 2001 Plan.
 
Debt Securities
 
As used in this prospectus, debt securities means the debentures, notes, bonds and other evidences of indebtedness that we may issue from time to time. The debt securities will either be senior debt securities, senior subordinated debt or subordinated debt securities. We may also issue convertible debt securities. As of May 5, 2009, the Debentures within this Registration Statement are the only debt securities issued and outstanding. Unless otherwise specified, the debt securities will not be listed on any securities exchange. Debt securities may bear interest at a fixed rate or a variable rate. In addition, we may sell debt securities bearing no interest or interest at a rate that at the time of issuance is below the prevailing market rate, or at a discount below their stated principal amount.
 
Dilution
 
As of May 5, 2009, 21,744,768 common shares were issued and outstanding.  If the Debentures are fully converted to common shares and the Warrants are fully exercised and converted to common shares, 22,819,773 shares will be issued and outstanding. If the Debentures are fully converted to common shares and the Warrants are fully exercised and converted to common shares, and all other options and warrants outstanding are exercised, 26,581,853 common shares will be issued and outstanding.
 
SELLING SHAREHOLDERS
 
On behalf of the selling shareholders named in the table below (including their respective successors or permitted assigns), who receive any of the shares covered by this prospectus), we are registering, pursuant to the registration statement of which this prospectus is a part, 1,075,001 shares of our common stock, 1,000,001 of which are issuable upon conversion of the principal of the Debentures and 75,000 of which are issuable upon exercise of the Warrants held by the selling shareholders. The Debentures and Warrants were issued in our August 2008 private placement and are described in our Current Report on Form 8-K filed with the SEC on August 8, 2008 and further amended on August 18, 2008, which is incorporated into this registration statement by reference. We are registering the shares being offered under this prospectus pursuant to registration rights agreements that were entered into between us and the selling shareholders in connection with the private placement, and pursuant to a Debenture Placement Agreement, dated July 7, 2008 that was entered into between us and the placement agent (also a selling shareholder) in connection with the private placement.

 
19

 

We are registering the shares to permit the selling shareholders to offer these shares for resale from time to time. The selling shareholders may sell all, some or none of the shares covered by this prospectus. All information with respect to beneficial ownership has been furnished to us by the selling shareholders. For more information, see the section of this prospectus entitled “PLAN OF DISTRIBUTION.”
 
Beneficial ownership is determined in accordance with Rule 13d-3 promulgated by the SEC, and generally includes voting or investment power with respect to securities. In computing the number of shares beneficially owned by the holder and the percentage ownership of the holder, shares of common stock issuable upon conversion of the Debentures or the Warrants that are currently convertible or are exercisable or convertible within 60 days after the date of the table are deemed outstanding.
 
The percent of beneficial ownership for the selling shareholders is based on shares of common stock outstanding as of May 5, 2009. Shares of common stock subject to warrants, options and other convertible securities that are currently exercisable or exercisable within 60 days of May 5, 2009, are considered outstanding and beneficially owned by a selling shareholder who holds those warrants, options or other convertible securities for the purpose of computing the percentage ownership of that selling shareholder but are not treated as outstanding for the purpose of computing the percentage ownership of any other shareholder.
 
The shares of Common Stock being offered under this prospectus may be offered for sale from time to time during the period the registration statement of which this prospectus is a part remains effective, by or for the account of the selling shareholders. After the date of effectiveness of the registration statement of which this prospectus is a part, the selling shareholders may have sold or transferred, in transactions covered by this prospectus or in transactions exempt from the registration requirements of the Securities Act, some or all of their Common Stock. Information about the selling shareholders may change over time.
 
Any changed information will be set forth in an amendment to the registration statement or supplement to this prospectus, to the extent required by law.
 
The table below lists the selling shareholders and information regarding their ownership of common stock as of May 5, 2009:
 
   
 
   
Principal
   
 
   
Number of Shares Owned After Offering (1)
 
 
Name of Selling
Shareholder
 
Number of
Shares
Beneficially
Owned Prior to
Offering
   
Amount of
Series A
Debentures
Owned Prior to
Offering
   
Maximum
Number of
Shares to be
sold pursuant to
this Prospectus
   
Number (1)
   
Percentage (2)
 
                               
Anglin, Monte D & Janet S
    0       21,000       28,000       0       *  
Bluth, Mordecai
    4,000       12,750       17,000       4,000       *  
Bottelli, Armando
    0       21,000       28,000       0       *  

 
20

 
 
Boxer, Robert
    20,000       10,500       14,000       20,000       *  
Cant, Geoffrey
    3,500       15,000       20,000       3,500       *  
Cantone Research, Inc.
    75,0000
(3)
    100,000       208,334       0       *  
Daniels, Peter
    10,000       30,000       40,000       10,000       *  
Embry, William
    0       50,000       66,667       0       *  
Fish, Hamilton
    5,000       10,500       14,000       5,000       *  
Fishman, Joseph
    9,000       24,000       32,000       9,000       *  
Franklin, Richard
    4,600       10,500       14,000       4,600       *  
Gaur, Jean
    0       10,500       14,000       0       *  
Gefken, Henry & Christine
    0       21,000       28,000       0       *  
Ginsberg, Stanley E & Arlene D
    5,000       10,500       14,000       5,000       *  
Hinkle, Jeff & Kimberley
    5,800       21,000       28,000       5,800       *  
Landewehr, Ralph
    3,800       10,500       14,000       3,800       *  
Landewehr, Rita
    0       19,500       26,000       0       *  
Manning, Arnold
    0       10,500       14,000       0       *  
Matthes, Alan & Lori
    0       15,000       20,000       0       *  
Meyer, Martin & Francine
    3,500       10,500       14,000       3,500       *  
Moose, Hoy Jr.
    0       10,500       14,000       0       *  
Nedbalek, Bobby
    8,500       50,000       66,667       8,500       *  
Newman, Larry & Elsie
    0       20,250       27,000       0       *  
Ragonese, Patsy III
    10,000       15,000       20,000       10,000       *  
Rahaim, Thomas Michael
    10,000       15,000       20,000       10,000       *  
Rinehart, Marlyn W.
    7,500       20,000       93,333       7,500       *  

 
21

 
 
Seifert, Robert & Carolyn
    0       50,000       14,000       0       *  
Steinle, Shelton & Jeanette
    0       10,500       14,000       0       *  
Suntup, Alan
    0       10,500       14,000       0       *  
Suntup, Paul
    0       10,500       14,000       0       *  
Telfair, William B & Carole H
    9,200       10,500       14,000       9,200       *  
Walters, Jeffrey
    10,000       10,500       26,000       10,000       *  
West, Pat Sterling & Patricia Key
    0       19,500       14,000       0       *  
Whitman, Edward
    8,000       10,500       14,000       8,000       *  
Young, James & June
    10,000       10,500       28,000       10,000       *  
Zito, Santo & Josephine
    14,673       21,000       28,000       14,673       *  
TOTALS
    162,073               1,075,001       162,073       *  
 
(1)
Assumes that the shareholders dispose of all the shares of common stock covered by this prospectus and do not acquire or dispose of any additional shares of common stock. The selling shareholders are not representing, however, that any of the shares covered by this prospectus will be offered for sale, and the selling shareholders reserve the right to accept or reject, in whole or in part, any proposed sale of shares.
 
(2)
The percentage of shares of common stock beneficially owned is based on 21,744,768 shares of common stock outstanding on May 5, 2009.
 
(3) 
Placement Agent Warrants immediately exercisable.
 
* Less than 1% of the outstanding common shares
 
NOTE: Except for being holders of our Securities listed in the table above, none of the selling shareholders (other than CRI) has had any position, office, or other material relationship with us in the past three years.  
 
PLAN OF DISTRIBUTION
 
The Selling Shareholders (the “Selling Shareholders”), or their respective successors or authorized assigns may offer the shares of common stock covered by this prospectus to the public or otherwise from time to time. We are registering the Selling Shareholders' resale of these shares of common stock pursuant to registration rights agreements between the Selling Shareholders and us. Pursuant to these agreements, we have agreed to keep the registration statement related to this prospectus effective for until the earliest of (i) the date that is four (4) years after the date of the Series A Completion Date (ii) the date when the Selling Shareholders may sell all of the shares of common stock under Rule 144 or (iii) the date no Selling Shareholder any longer owns any of the Conversion Shares.
 
22

 
Each Selling Shareholder of the shares of common stock and any of their respective successors or authorized assigns, may from time to time, sell any or all of their shares of common stock on the Nasdaq Capital Market or any other stock exchange, market or trading facility on which the shares are traded or in private transactions. The registration of these shares of common stock does not necessarily mean that any of them will be offered or sold by the selling shareholders. Sales may be at fixed or negotiated prices. A Selling Shareholder may use any one or more of the following methods when selling shares:
 
• 
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
• 
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
• 
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
• 
an exchange distribution in accordance with the rules of the applicable exchange;
• 
privately negotiated transactions;
• 
settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
• 
broker-dealers may agree with the Selling Shareholders to sell a specified number of such shares at a stipulated price per share;
• 
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
• 
a combination of any such methods of sale; or
• 
any other method permitted pursuant to applicable law.
 
The Selling Shareholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
 
Broker-dealers engaged by the Selling Shareholders may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary and fair brokerage commission in compliance with NASD Rule 2440; and in the case of a principal transaction a markup or markdown computed in compliance with NASD IM-2440-1.
 
In connection with the sale of the shares of common stock or interests therein, the Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares of common stock in the course of hedging the positions they assume. The Selling Shareholders may also sell shares of the common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions for the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares of common stock offered by this prospectus, which shares of common stock such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
 
The Selling Shareholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
 
23

 
We are bearing all of the costs related to the registration of the shares of common stock. We have agreed to indemnify the Selling Shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act or the Exchange Act.
 
We will not receive any of the proceeds from sales of the Conversion Shares by the Selling Shareholders.  We will receive gross proceeds of up to $29,086 if all of the Warrants are exercised.
 
The Selling Shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, which may limit the timing of purchases and sales of Conversion Shares by the Selling Shareholders or any other person. We will make copies of this prospectus available to the Selling Shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
 
TRANSFER AGENT
 
The transfer agent for our common stock is Registrar and Transfer Company. Their address is 10 Commerce Drive, Cranford, New Jersey and their phone number is 800-368-5948.
 
LEGAL MATTERS
 
The validity of the shares of common stock offered by this prospectus has been passed upon for us by Nolan and Heller, 39 N. Pearl Street, Albany, New York 12207.
 
WHERE YOU CAN FIND ADDITIONAL INFORMATION
 
We have filed a registration statement with the Securities and Exchange Commission under the Securities Act with respect to the shares of our Common Stock offered by this prospectus. This prospectus is part of that registration statement and does not contain all the information included in the registration statement. For further information with respect to our common stock and us, you should refer to the registration statement, its exhibits and the material incorporated by reference therein. Portions of the exhibits have been omitted as permitted by the rules and regulations of the Securities and Exchange Commission. Statements made in this prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete. In each instance, we refer you to the copy of the contracts or other documents filed as an exhibit to the registration statement, and these statements are hereby qualified in their entirety by reference to the contract or document. The registration statement may be inspected and copied at the public reference facilities maintained by the Securities and Exchange Commission at Room 1024, Judiciary Plaza, 100 F Street, N.E., Washington, D.C. 20549 and the Regional Offices at the Commission located in the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and at 233 Broadway, New York, New York 10279. Copies of those filings can be obtained from the Commission’s Public Reference Section, Judiciary Plaza, 100 F Fifth Street, N.E., Washington, D.C. 20549 at prescribed rates and may also be obtained from the web site that the Securities and Exchange Commission maintains at http://www.sec.gov. You may also call the Commission at 1-800-SEC-0330 for more information. We file annual, quarterly and current reports and other information with the Securities and Exchange Commission. You may read and copy any reports, statements or other information on file at the Commission’s public reference room in Washington, D.C. You can request copies of those documents upon payment of a duplicating fee, by writing to the Securities and Exchange Commission.

 
24

 
 
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
The Securities and Exchange Commission allows us to incorporate by reference into this prospectus the information we file with the Securities and Exchange Commission, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information we file later with the Securities and Exchange Commission will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made by us with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the sale of all of the shares of common stock that are part of this offering. The documents we are incorporating by reference are as follows:
 
•  our Annual Report on Form 10-K for fiscal year ended December 31, 2008 (as filed with the SEC on March 30, 2009);
• 
our Quarterly Report on Form 10-Q for fiscal quarter ended September 30, 2008 (as filed with the SEC on November 14, 2008);
• 
our Quarterly Report on Form 10-Q for fiscal quarter ended June 30, 2008 (as filed with the SEC on August 14, 2008);
•  our Quarterly Report on Form 10-Q for fiscal quarter ended March 31, 2008 (as filed with the SEC on May 15, 2008);
 
our Current Reports on Form 8-K as filed with the SEC on February 14, 2008, May 1, 2008, May 14, 2008, May 28, 2008, August 8, 2008 (as amended in a Form 8-K/A filed with the SEC on August 18, 2008), October 30, 2008, December 23, 2008, February 11, 2009, March 18, 2009 (as amended in a Form 8-K/A filed with the SEC on March 25, 2009), and March 27, 2009;
 
• 
our Annual Proxy Statement (Schedule 14(A)) for our Annual Shareholders’ Meeting (as filed with the SEC on April 27, 2009);
 
• 
The description of our common shares in our prospectus included in our registration statement filed with the Securities and Exchange Commission on November 21, 1996, on Form 10-SB under the caption  “Description of Securities” on page 18 of the prospectus and incorporated by reference into any reports filed for the purpose of updating such description.
 
• 
All documents that we file with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act subsequent to the date of this registration statement and prior to the filing of a post-effective amendment to this registration statement that indicates that all securities offered under this prospectus have been sold, or that deregisters all securities then remaining unsold, will be deemed to be incorporated in this registration statement by reference and to be a part hereof from the date of filing of such documents.
 
Any statement contained in a document we incorporate by reference will be modified or superseded for all purposes to the extent that a statement contained in this prospectus (or in any other document that is subsequently filed with the Securities and Exchange Commission and incorporated by reference) modifies or is contrary to that previous statement. Any statement so modified or superseded will not be deemed a part of this prospectus except as so modified or superseded.
 
You may request a copy of these filings at no cost (other than exhibits unless such exhibits are specifically incorporated by reference) by writing or telephoning us at the following address and telephone number:
 
American Bio Medica Corporation
122 Smith Road
Kinderhook, NY 12106
Attention: Melissa A. Waterhouse
518-758-8158

 
25

 

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
 
Item 14. Other Expenses Of Issuance And Distribution
 
The expenses payable by us in connection with the issuance and distribution of the Securities are estimated as follows:
 
   
AMOUNT
 
       
SEC Registration Fee
  $ 10  
Placement Agent Fees
  $ 67,500  
Legal Fees and Expenses
  $ 50,000  
Accounting
  $ 3,500  
Miscellaneous
  $ 3,500  
         
Total:
  $ 124,500  
 
Item 15. Indemnification of Directors and Officers
 
Under the New York Business Corporation Law (“NYBCL”), a corporation may indemnify any person made, or threatened to be made, a party to any action or proceeding, except for shareholder derivative suits, by reason of the fact that he or she was a director or officer of the corporation, provided such director or officer acted in good faith for a purpose which he or she reasonably believed to be in the best interests of the corporation and, in criminal proceedings, in addition, had no reasonable cause to believe his or her conduct was unlawful.  In the case of shareholder derivative suits, the corporation may indemnify any person by reason of the fact that he or she was a director or officer of the corporation if he or she acted in good faith for a purpose which he or she reasonably believed to be in the best interests of the corporation, except that no indemnification may be made in respect of (i) a threatened action, or a pending action which is settled or otherwise disposed of; or (ii) any claim, issue or matter as to which such person has been adjudged to be liable to the corporation, unless and only to the extent that the court on which the action was brought, or, if no action was brought, any court of competent jurisdiction, determines upon application that, in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for that portion of the settlement amount and expenses as the court deems proper.
 
The indemnification described above under the NYBCL is not exclusive of other indemnification rights to which a director or officer may be entitled, whether contained in the certificate of incorporation or by-laws, or when authorized by (i) such certificate of incorporation or by-laws; (ii) a resolution of shareholders; (iii) a resolution of directors; or (iv) an agreement providing for such indemnification, provided that no indemnification may be made to or on behalf of any director or officer if a judgment or other final adjudication adverse to the director or officer establishes that his or her acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled.
 
Item 16. Exhibits
 
See Exhibit List on page E-1.
 
26

 
Item 17. Undertakings
 
The undersigned registrant hereby undertakes:
 
 
1.
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
 
i.
To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
 
ii.
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.
 
iii.
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
 
Provided however, that:
 
 
A.
Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement; and
 
 
B.
Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
 
 
2.
That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
 
 
3.
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 
27

 

 
4.
If the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.
 
 
5.
That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
 
i.
If the registrant is relying on Rule 430B (230.430B of this chapter):
 
 
A.
Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
 
 
B.
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

 
28

 

ii.
If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
 
 
6.
That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
 
i.
Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
 
ii.
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
 
iii.
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
 
iv.
Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
 
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
 
The undersigned registrant hereby undertakes to supplement the prospectus, after the expiration of the subscription period, to set forth the results of the subscription offer, the transactions by the underwriters during the subscription period, the amount of unsubscribed securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof. If any public offering by the underwriters is to be made on terms differing from those set forth on the cover page of the prospectus, a post-effective amendment will be filed to set forth the terms of such offering.
 
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 
29

 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this amended registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Kinderhook and State of New York on May 5, 2009
 
 
AMERICAN BIO MEDICA CORPORATION
   
 
(Registrant)
     
 
By:
/s/ Stan Cipkowski
   
Stan Cipkowski
   
Chief Executive Officer & Director
   
(Principal Executive Officer)
     
 
By:
/s/ Stefan Parker
   
Stefan Parker
   
Chief Financial Officer, Exec Vice President, Finance
   
(Principal Financial Officer)
 
POWER OF ATTORNEY
 
Each of the undersigned officers and directors of American Bio Medica Corporation whose signature appears below hereby appoints Stan Cipkowski and Melissa A. Waterhouse as true and lawful attorneys-in-fact for the undersigned with full power of substitution and resubstitution, for him in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any Rule 462(b) Registration Statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agent, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
 
Pursuant to the requirements of the Securities Act of 1933, this amended registration statement has been signed by the following persons in the capacities indicated on May 5, 2009:
 
 
Chief Executive Officer & Director
Stan Cipkowski
 
(Principal Executive Officer)
     
/s/ Edmund Jaskiewicz
 
Chairman and President
Edmund Jaskiewicz
   
     
/s/ Stefan Parker
 
Chief Financial Officer, Exec Vice President, Finance
Stefan Parker
 
(Principal Financial Officer)
     
/s/Richard P. Koskey
 
Director
Richard P. Koskey
   
     
/s/ Daniel W. Kollin
 
Director
Daniel W. Kollin
   
     
/s/ Carl A. Florio
 
Director
Carl A. Florio
   
     
 
Director
Jean Neff
   
 
S-1

 
American Bio Medica Corporation
Index to Exhibits

Number
 
Description of Exhibits
     
3.50
 
Amended & Restated Bylaws, filed as the exhibit number listed to the Company’s Form 10-KSB filed on April 15, 2002 and incorporated herein by reference
3.7
 
Sixth Amendment to the Certificate of Incorporation, filed as the exhibit number listed to the Company’s Form 10-KSB filed on April 15, 2002 and incorporated herein by reference
4.9*
 
Form of Debenture Placement Agreement
4.10*
 
Form of Private Placement Memorandum
4.11*
 
Form of Security Purchase Agreement
4.12*
 
Form of Series A Debenture
4.13*
 
Form of Registration Rights Agreement
4.14*
 
Form of Placement Agent Warrant Agreement
5.1*
 
Opinion and Consent of Nolan and Heller, LLP
23.1*
 
Consent of UHY, LLP
23.2*
 
Consent of Nolan & Heller, LLP (contained in Exhibit 5.1)
24.1*
 
Powers of Attorney (included on page S-1)
 

*
Filed with this registration statement.

 
E-1

 
EXHIBIT 4.9

FORM OF DEBENTURE PLACEMENT AGREEMENT
 
July 7 , 2008
 
American Bio Medica Corporation
122 Smith Road
Kinderhook, New York 12106
Attention:  Chief Executive Officer
 
Re:            Placement of Subordinated Convertible Debentures
 
Dear Ladies and Gentlemen:
 
Cantone Research, Inc. (the "Placement Agent") offers to enter into this Series A Debenture Placement Agreement (this "Series A Debenture Placement Agreement") with American Bio Medica Corporation, a New York corporation ("the Company"), which, upon acceptance of this offer by the Company, will be binding upon the Company and the Placement Agent.  This offer is made subject to written acceptance hereof by the Company at or before 6:00 P.M., Eastern Time, on the date hereof, unless extended by agreement by the parties.
 
BACKGROUND AND INTRODUCTION
 
The Company proposes to issue certain subordinated convertible debentures (the "Series A Debentures").  The Series A Debentures, and the terms and conditions relevant thereto, shall be as more fully described and set forth in Exhibit A, attached hereto and made a part hereof, or with such changes thereto as shall be agreed upon by the Placement Agent and the Company.  The Company may also wish to issue, within six months of the date hereof, a second series of subordinated convertible debentures (the "Series B Debentures").  Except as otherwise specifically stated herein, this Series A Debenture Placement Agreement relates only to the Series A Debentures.  The Company and the Placement Agent agree that, if the Company should elect to issue the Series B Debentures, the Placement Agent will act as placement agent in respect thereof, and the Company and the Placement Agent will, with respect to such issuance and placement, enter into a Series B Debenture Placement Agreement, which shall be substantially in the form of this Series A Debenture Agreement.  Provided, however, that the due diligence fee referred to in Paragraph 9(b) hereof shall constitute payment of the Placement Agent's due diligence expenses for both of the Series A Debentures and the Series B Debentures, and no additional due diligence fee shall be payable with respect to the Series B Debentures.
 
SECTION 1. PLACEMENT OF THE SERIES A DEBENTURES
 
Based upon the terms and conditions and upon the representations herein set forth, the Placement Agent hereby agrees to place, as placement agent for the Company, on a best-efforts basis, not less than $250,000 nor more than $750,000 in principal amount of the Series A Debentures.  The Company reserves the right to terminate the offering of the Series A Debentures at any time after the Closing Date (as hereafter defined) (the "Company's Limitation Right").  The offering of the Series A Debentures shall commence on the date hereof and shall be complete when the first of the following shall have occurred: (a) 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.  The date of such completion is herein called the "Series A Completion Date".

 
1

 
 
SECTION 2. DELIVERY OF THE SERIES A DEBENTURES, ETC., AND CLOSING
 
 (a)   Delivery of the Series A Debentures .  At 10:00 a.m. (Eastern Time), or at such other time, and on such date, as to which the Company and the Placement Agent shall mutually agree (the "Closing Date"), the Company will duly execute and deliver to the Placement Agent, at its offices in Tinton Falls, New Jersey, or such other place as to which the Company and the Placement Agent may mutually agree, the Series A Debentures, which shall be substantially in the form of Annex I to the form of Securities Purchase Agreement which is attached hereto and made a part hereof as Exhibit B, in such authorized denominations, and registered in such names, as the Placement Agent may request at least two (2) business days prior to the Closing Date, and duly executed by the Company.
 
(b)   Delivery of Related Documents .  Contemporaneously with the delivery of the Series A Debentures, in accordance with the provisions of Paragraph 2(a), the Company shall duly execute and deliver to the Placement Agent, at its offices as aforesaid, the Securities Purchase Agreement, in the form of Exhibit B hereto, and the Registration Rights Agreement, in the form of Annex II to the Securities Purchase Agreement, that relate to such Series A Debentures.
 
(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 referred to in Section 3 hereof.  The Closing Date shall not be more than fourteen (14) days after the date hereof.
 
SECTION 3. PRIVATE PLACEMENT MEMORANDUM    The Company shall duly execute and deliver to the Placement Agent, promptly after the acceptance by the Company of this Series A Debenture Placement Agreement, such number of copies of the Private Placement Memorandum, dated July 3, 2008, and substantially in the form of Exhibit C, attached hereto and made a part hereof, as the Placement Agent shall have reasonably requested.  The Company agrees to notify the Placement Agent of any material changes that become known to the Company prior to the Closing Date, that relate to the Company and might affect the accuracy and completeness of the Private Placement Memorandum.
 
By its acceptance of this Series A Debenture Placement Agreement, the Company authorizes the use, in connection with the sale of the Series A Debentures, of copies of the documents referred to in Paragraphs 2(a) and 2(b), the Private Placement Memorandum, and all other documents referred to or defined in this Series A Debenture Placement Agreement or in the Private Placement Memorandum that relate to the Series A Debentures or the placement thereof (collectively, the "Transaction Documents").
 
The Company hereby deems the Private Placement Memorandum final.
 
SECTION 4. REPRESENTATIONS AND AGREEMENTS OF THE PLACEMENT AGENT
 
The Placement Agent represents to and agrees with the Company that, as of the date hereof and the Closing Date:
 
(a)   The Placement Agent is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, having all requisite corporate power and authority to carry on its business as now constituted.
 
(b)  The documents relating to the placement of the Series A Debentures have been reviewed by the Placement Agent and contain terms acceptable to, and agreed to by, the Placement Agent.
 
 
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(c)  The Placement Agent has the requisite authority to enter into this Series A Debenture Placement Agreement.  This Series A Debenture Placement Agreement has been duly executed and delivered by the Placement Agent and, assuming the due authorization, execution and delivery by the other parties hereto, is the binding and valid obligation of the Placement Agent, enforceable in accordance with its terms, except that the enforceability hereof may be limited by applicable bankruptcy, insolvency, moratorium or other similar laws or equitable principles affecting creditors' rights or remedies generally.
 
(d)  The Placement Agent will offer the Series A Debentures only pursuant to the Private Placement Memorandum and will not make any statements in connection with the offering and placement of the Series A Debentures that are inconsistent with the information contained in the Private Placement Memorandum.
 
(e)  The Placement Agent will place the Series A Debentures only with "accredited investors" as that term is defined in Rule 501(a) of Regulation D, issued under the Securities Act of 1933 ("Accredited Investors").  The Placement Agent will place the Series A Debentures only in states in which the Company has advised the Placement Agent that the Company has made all filings and has paid all fees required by the securities laws of such states for such placement.
 
(f)  The Placement Agent will review the Private Placement Memorandum and make such investigation as may be appropriate in order to have a reasonable basis for concluding that the Private Placement Memorandum does not contain any untrue statement of a material fact and does not omit any material fact necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading.
 
SECTION 5. REPRESENTATIONS AND AGREEMENTS OF THE COMPANY
 
The Company represents to and agrees with the Placement Agent that, as of the date hereof and the Closing Date:
 
(a)   Existence.   The Company is a corporation, duly formed and validly existing in good standing under the laws of the State of New York.
 
(b)   Authority.   The Company has the requisite power and authority to execute and deliver this Series A Debenture Placement Agreement and the other Transaction Documents, and to enter into and consummate all other transactions contemplated on the Company's part by this Series A Debenture Placement Agreement and the other Transaction Documents.
 
(c) Due Execution and Delivery.   This Series A Debenture Placement Agreement has been duly executed and delivered by the Company and, when executed and delivered by the Placement Agent, will be a legal, valid and binding agreement of the Company, enforceable in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws in effect from time to time affecting the rights of creditors generally and to the availability of equitable relief and applicable securities laws.  The other Transactions Documents, when executed and delivered by the Company (and, if applicable by the other parties thereto), will be legal, valid and binding agreements of the Company, enforceable in accordance with their respective terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws in effect from time to time affecting the rights of creditors generally and to the availability of equitable relief and applicable securities laws.
 
 
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(d)   No Conflicts.   The acceptance, execution and delivery of this Series A Debenture Placement Agreement and the compliance with the provisions hereof and the other Transaction Documents do not and will not violate or conflict with any other resolution adopted by the Company and, to the knowledge of the Company, do not and will not conflict with or violate, or result in or constitute a breach of or default under, any indenture, mortgage, deed of trust, guaranty, lease, agreement or other instrument to which the Company is a party or by which the Company or any of its property is bound, which would have a materially adverse effect on the transactions contemplated by this Series A Debenture Placement Agreement or the other Transaction Documents, or, to the knowledge of the Company, conflict with or violate any provision of any law, administrative rule or regulation, or any judgment, order or decree to which the Company or any of its property is subject.
 
(e)   Litigation.   There is no claim, action, temporary restraining order, injunction, suit, proceedings, inquiry or investigation, at law or in equity, before or by any judicial or administrative court, governmental agency, public board or body, pending or, to the best of the Company's knowledge, threatened against or affecting, or involving the Company or its properties or businesses, or any securities of, the Company nor, to the best of the Company's knowledge, is there any basis therefor, (i) contesting the existence, status or powers of the Company, or (ii) seeking to prohibit, restrain or enjoin the sale of the Series A Debentures or the use of the Private Placement Memorandum, or (iii) challenging the validity or enforceability of any of the Transaction Documents or contesting the power and authority of the Company to execute and deliver or to consummate the transactions contemplated on the Company's part by the Transaction Documents, or (iv) wherein an unfavorable decision, ruling or finding would adversely affect the financial condition or the operation of the Company or the transactions contemplated on the Company's part by this Series A Debenture Placement Agreement or the Private Placement Memorandum.
 
(f) Exemption of the Series A Debentures from Registration.   The Company will furnish such information, execute and file such instruments, and take all such other action (all at its sole cost), as may be necessary or desirable to ensure that (provided only that the Placement Agent complies with its obligations under Paragraphs 4(d) and (e) hereof) the Transaction Documents and the placement of the Series A Debentures are and will continue to be exempt from registration under the securities laws of the United States and the states in which the Placement Agent shall place the Series A Debentures, including rules and regulations promulgated under any thereof.
 
(g)   Governmental Filings.   The Company has made all filings with, and has obtained all approvals and consents from, all federal, state and local regulatory agencies having jurisdiction to the extent, if any, required by any provision of law or regulation applicable to the Company to be made or to be obtained in connection with the execution and delivery of the Transaction Documents, the performance of the Company's obligations hereunder, or the placement of the Series A Debentures, and the consummation of the transactions contemplated on the Company's part hereby.
 
(h)   Governmental Approvals.   No approval, permit, consent, authorization or order of any court or any governmental or public agency, authority or person not already obtained or effected, is required with respect to the Company in connection with the performance by the Company of its obligations under the Transaction Documents, or the placement of the Series A Debentures.
 
(i)  Certificates and Representations.   Any certificate signed by an authorized representative of the Company delivered to the Placement Agent at the Closing shall be deemed a representation and warranty by the Company to such parties as to the statements made therein.  The Company covenants that between the date hereof and the Closing it will not take any action that will cause the representations and warranties made herein to be untrue as of the Closing.
 
 
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SECTION 6. INDEMNIFICATION
 
(a)   Scope of Indemnification by the Company.   The Company hereby agrees to indemnify, protect, defend and hold harmless the Placement Agent, each director, officer and employee thereof, and each person, if any, who controls the Placement Agent within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (any such person being herein sometimes called an "Indemnified Party"), against all losses, claims, damages, liabilities or expenses, whether joint or several, to which any such Indemnified Party may become subject, under any statute or regulation at law or in equity or otherwise insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon any (a) breach of any warranty, representation or agreement of the Company set forth in this Series A Debenture Placement Agreement, or (b) untrue statement or alleged untrue statement of a material fact set forth in the Private Placement Memorandum, or any amendment or supplement thereof, or arise out of or are based upon (i) the omission or alleged omission to state therein a material fact required to be stated therein or which is necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading in any material respect, and will reimburse any legal or other expenses reasonably incurred by any such Indemnified Party in connection with investigating or defending any such loss, claim, damage, liability or action.  Provided, however, that such indemnity shall not extend to any Indemnified Party if the loss, claim, damage or liability is caused by the gross negligence or misconduct of the Indemnified Party.  This indemnity agreement shall not be construed as a limitation on any other liability that the Company may otherwise have to any Indemnified Party, provided that in no event shall the Company be obligated for double indemnification.
 
(b)   Procedure.   An Indemnified Party shall, promptly after the receipt of notice of the commencement of any action against such Indemnified Party, in respect of which indemnification may be sought against the Company, notify the Company in writing of the commencement thereof.  Failure of the Indemnified Party to give such notice will reduce the liability of the Company by the amount of damages attributable to the failure of the Indemnified Party to give such notice to the Company, but the omission to notify the Company of any such action shall not relieve the Company from any liability that it may have to such Indemnified Party otherwise than under this section.  In case any such action shall be brought against an Indemnified Party and such Indemnified Party shall notify the Company of the commencement thereof, the Company may, or if so requested by such Indemnified Party shall, participate therein or assume the defense thereof, with counsel satisfactory to such Indemnified Party (it being understood that, except as hereinafter provided, the Company shall not be liable for the expenses of more than one separate counsel representing the Indemnified Parties in such action), and after notice from the Company to such Indemnified Party of an election so to assume the defense thereof, the Company will not be liable to such Indemnified Party under this Section for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that unless and until the Company assume the defense of any such action at the request of such Indemnified Party, the Indemnified Party shall have the right to participate at its own expense in the defense of any such action.  If the Company shall not have employed counsel to take charge of the defense of any such action, or if an Indemnified Party shall have reasonably concluded that there may be defenses available to it or other Indemnified Parties that are different from or additional to those available to the Company (in which cases the Company shall not have the right to direct the defense of such action on behalf of such Indemnified Party) or to other Indemnified Parties, legal and other expenses, including the expenses of separate counsel incurred by such Indemnified Party, shall be borne by the Company.
 
 
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(c)   Placement Agent's Agreement.   The Placement Agent agrees, at its expense, to indemnify, promptly defend (by counsel reasonably satisfactory to the Company) and hold harmless the Company, and its officers, directors, employees and each person, if any, who has the power, directly or indirectly, to direct or cause the direction of the management and policies of the Company, from and against any and all losses, claims, damages, demands, liabilities, costs or expenses, including reasonable attorneys' fees and expenses, if such losses, claims, damages, demands, liabilities, costs or expenses arise out of, or are materially increased by, or would not exist but for, a breach by the Placement Agent of its duties under, or failure to abide by any of its covenants in, this Agreement.
 
SECTION 7. CONDITIONS OF PLACEMENT AGENT'S OBLIGATIONS
 
The Placement Agent has entered into this Series A Debenture Placement Agreement in reliance upon the representations and agreements of the Company herein and the performance by the Company of its obligations hereunder, both as of the date hereof and as of the Closing Date.  The Placement Agent's obligations under this Series A Debenture Placement Agreement are and shall be subject to the following further conditions:
 
(a) Conditions at or Prior to Closing.   Receipt by the Placement Agent of the following documents at or prior to the Closing:
 
(i)  The opinion of counsel to the Company, dated the Closing Date, in such form, and with respect to such matters, as is normal and usual in transactions similar in scope and magnitude to that which is described herein, and with respect to any additional matters as the Placement Agent may reasonably request;
 
(ii)  A certificate, dated the Closing Date, signed by an authorized official of the Company, and satisfactory to the Placement Agent, to the effect that (A) each of the representations and warranties of the Company contained in this Series A Debenture Placement Agreement is true, accurate and complete on the Closing Date as if made on and as of the Closing Date, and (B) each of the agreements of the Company to be complied with and each of the obligations of the Company to be performed hereunder or under any other Transaction Document, on or prior to the Closing Date, have been complied with and performed, and (C) as of the Closing Date, there has been no material adverse change in the status, business, condition or prospects (financial or otherwise) of the Company;
 
(iii)  Duly executed counterparts (or, where applicable, photocopies) of each of the Transaction Documents;
 
 (iv)  Such additional certificates or other documents as the Placement Agent may reasonably request.
 
(b) Failure to Satisfy Conditions.   If there shall be a failure to satisfy any of the conditions to the Placement Agent's obligations contained in this Series A Debenture Placement Agreement, or if the Placement Agent's obligations shall be terminated for any reason permitted by this Series A Debenture Placement Agreement, this Series A Debenture Placement Agreement shall terminate and neither the Placement Agent or the Company shall have any further obligation hereunder, except as provided in Section 9 hereof.
 
 
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SECTION 8. TERMINATION
 
The Placement Agent shall have the right to terminate this Series A Debenture Placement Agreement by notifying the Company of its election to do so, if at the time of such notification, between the date hereof and the Closing Date, (i) legislation shall be enacted by the Congress of the United States or adopted by either House thereof, or a decision by a court of the United States shall be rendered, or a ruling, regulation or official statement by or on behalf of any agency of federal government shall be made, and which in the reasonable opinion of the Placement Agent would materially adversely affect the a marketability of the Series A Debentures; (ii) there shall have occurred any new outbreak of hostilities or other unforeseen national or international calamity or crisis, the effect of such new outbreak, calamity or crisis on the financial markets of the United States being such in the reasonable judgment of the Placement Agent as to materially adversely affect the marketability of the Series A Debentures; (iii) there shall be in force a general suspension of trading on the New York Stock Exchange or minimum or maximum prices for trading shall have been fixed and be in force or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange, whether by virtue of a determination by that Exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction; a general banking moratorium shall have been established by federal or New Jersey authorities; any event, not caused by the Placement Agent, shall have occurred or shall exist which, in the reasonable opinion of the Placement Agent, makes untrue or incorrect, as of such time, in any material respect, any material statement or information contained in this Series A Debenture Placement Agreement or the Private Placement Memorandum, or makes the Private Placement Memorandum inadequate by reason of the omission of information which should be reflected therein in order to make the statements and information contained therein not misleading as of such time; (vi) a stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission shall be issued or made to the effect that the issuance, offering or sale of the Series A Debentures, or of obligations of the general character of the Series A Debentures as contemplated hereby, is in violation of any provision of the 1933 Act, the Securities Exchange Act of 1934, as amended, or the Trust Indenture Act of 1939, as amended; or (vii) the Placement Agent shall have learned of any material adverse fact or circumstance concerning the Company that, in the reasonable judgment of the Placement Agent, would materially and adversely affect the marketability of the Series A Debentures.
 
SECTION 9.    PAYMENT OF EXPENSES
 
(a)   Payment by the Company.   Except as provided in Paragraph (b) below, the Company shall pay all expenses incident to the sale of the Series A Debentures, including but without limitation, (i) the cost of the preparation (including printing, duplicating and distribution) of this Series A Debenture Placement Agreement, the Transaction Documents, the Private Placement Memorandum and any amendment or supplement thereto, (ii) the cost of the preparation, printing, execution, authentication and delivery of the Series A Debentures, (iii) the cost of preparation of any government registration or filing, and (iv) the fees of the Placement Agent, Placement Agent's Counsel, the Company's Counsel, and any other counsel, experts or consultants retained by the Company.
 
(b)   Limitation on Payment by the Company .  Payment of the fees and expenses of the Placement Agent and its counsel will be subject to the limitations of this Paragraph 10(b).  The Company has paid the Placement Agent a non-refundable due diligence fee of $15,000, and has reimbursed the Placement Agent the $5,000.00 that the Placement Agent paid its legal counsel as a retainer.  In addition, the Company will reimburse the Placement Agent for actual out-of-pocket expenses (not in excess of $5,000.00) 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.
 
SECTION 10.    ADDITIONAL AGREEMENTS OF THE COMPANY. In consideration of the Placement Agent's entering into this Agreement, and undertaking its obligations hereunder, the Company agrees with the Placement Agent as follows:
 
(a)  The Company and the Placement Agent agree that the Placement Agent shall act as underwriter or placement agent with respect to the Series B Debentures, if the Company elects undertake the Series B Debenture offering.
 
 
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(b)  The Company agrees that, for so long as any of the Series A Debentures or Series B Debentures shall remain outstanding, it shall not issue any variable priced indebtedness or variable priced equity linked securities.
 
(c)  The Company will pay the Placement Agent a placement fee equal to seven percent (7.00%) of the principal amount of all Series A Debentures placed by the Placement Agent (which placement was accepted by the Company).  Such fee will be earned as and when each Series A Debenture shall be placed by the Placement Agent (if such placement was accepted by the Company), and the Company shall pay it no later than the fifth day of the month next following the month in which such fee was earned, or the fifth day next following the Series A Completion Date, whichever shall first occur.
 
(d)  Within thirty (30) days following the Series A Completion Date, 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, 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 . The Warrants shall be issued pursuant to an agreement substantially in the form of Exhibit D, attached hereto and made a part hereof.
 
SECTION 11. NOTICES
 
Any notices or other communication to be given under this Series A Debenture Placement Agreement may be given by delivering the same in writing as follows:
 
 
As to the Company:
 
American Bio Medica Corporation
   
122 Smith Road
   
Kinderhook, New York 12106
   
Attn: Chief Compliance Officer
 
 
As to the Placement Agent:
 
Cantone Research, Inc.
   
766 Shrewsbury Avenue
   
Tinton Falls, New Jersey 07724
   
Attention: Anthony J. Cantone
 
or to such different address written notice of which is given to the other parties hereto.
 
SECTION 12. PARTIES IN INTEREST AND SURVIVAL OF REPRESENTATIONS
 
(a)   Parties in Interest.   This Series A Debenture Placement Agreement is made solely for the benefit of the Company and the Placement Agent (including their respective successors or assigns), and no other person, partnership, association or corporation shall acquire or have any right hereunder or by virtue hereof.
 
 
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(b)   Survival of Representations.   All representations and agreements of the Company in this Series A Debenture Placement Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Placement Agent and all representations and agreements of the Company and the Placement Agent shall survive the delivery of and payment for the Series A Debentures.
 
SECTION 13. MISCELLANEOUS
 
(a)   Headings.   The headings of the sections and paragraphs of this Series A Debenture Placement Agreement are inserted for convenience only and shall not be deemed to be a part hereof.
 
(b)   Governing Law.   This Series A Debenture Placement Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey.
 
(c)   Counterparts.   This Series A Debenture Placement Agreement may be executed, accepted and approved in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute and accept or approve this Series A Debenture Placement Agreement by signing any such counterpart.
 
If you agree with the foregoing, please sign the enclosed counterpart of this Series A Debenture Placement Agreement and return it to the Placement Agent.  This Series A Debenture Placement Agreement shall become a binding agreement by and among the Company and the Placement Agent when at least one counterpart of this Series A Debenture Placement Agreement shall have been signed by or on behalf of each of the parties hereto.
 
 
Very truly yours,
 
CANTONE RESEARCH, INC.
 
By:
  
 
   
Anthony J. Cantone  
 
   
President
 
 
Accepted as of the date first above written:
 
AMERICAN BIO MEDICA CORPORATION
 
By:
   
   
Stan Cipkowski
   
Chief Executive Officer
 
 
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EXHIBIT A
 
TERMS OF THE DEBENTURE

 
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TERMS OF THE SERIES A DEBENTURES
 
Principal Amount :
 
Up to $750,000, with a $250,000 required minimum amount.
     
Authorized Denominations :
 
$10,000 and integral multiples of $500 in excess thereof.
     
Maturity :
 
July 1, 2012, with no prior principal payments.
     
Par Amount :
100% of the principal amount of each Series A Debenture.
   
Interest :
10% simple interest (20%, but not exceeding the highest rate allowable by law, in event of
default), payable by the Company to investors every six months in cash, with the first interest payment expected on or about January 1, 2009.
   
Conditions to Pricing :
The publicly traded price of the shares of the Company's common stock, par value $0.01 per share (the "Shares"), shall remain below $0.75 per Share until the Closing Date.
   
Subordination :
Payment of the Series A Debentures will be subordinated to not more than $2,500,000 in principal amount of indebtedness owed to First Niagara Financial Group.
   
Conversion :
Each $500 in principal amount of the Series A Debentures shall be convertible into 666.67 Shares at any time until such time as all principal of the Series A Debenture shall have been paid in full. Provided, however, that, if the publicly traded price of the Shares should close at an amount in excess of $0.75 per Share on the Closing Date, then, the conversion price will be in an amount equal to 125% of such publicly traded closing price.
   
Company Call :
Any time the Shares trade above $2.00 per Share for 20 consecutive trading days, the Company can call all (but not less than all) of the Series A Debentures at a redemption price equal $525 per$500 of principal amount of the Series A Debentures, subject to the individual rights of the investors, within 60 days of such call, to elect to convert rather than to be redeemed.
   
Registration :
The Company is expected to register the Shares underlying the Series A Debentures within eight months of the Series A Completion Date.
   
Participation Rights :
For as long as any of the Series A Debentures shall remain outstanding, the holders thereof shall have a right of participation in any new securities offering (including the Series B Debentures) of the Company.

 
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EXHIBIT B

FORM OF SECURITIES PURCHASE AGREEMENT

(FILED WITH THIS REGISTRATION STATEMENT AS EXHIBIT 4.11)

 
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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
 
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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.
 
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.
 
2

 
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.
 
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.
 
3

 
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

4

 
TABLE OF CONTENTS

 
PAGE
   
Summary of Offering Terms
6
Summary Fact Sheet
9
General Summary
10
Risk Factors
11
Our Products
17
Contract Manufacturing
18
Market Overview
19
Manufacturing/Property
20
Headquarters and Website
20
Summary of Historical Financial Data
21
Use of Proceeds
22
Price Range of Common Shares
22
Officers and Senior Management
23
Summary Compensation of Executive Officers
24
Principal Stockholders
26
Our Securities
28
Dilution
28
Plan of Distribution
28
Financial Statements with Notes as of March 31, 2008
30
 
5

 
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
 
6

 
 
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
   
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 ..
 
7

 
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

8

 
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.
 
9

 
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.
 
10

 
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.
 
11

 
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.
 
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.
 
12

 
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.
 
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.
 
13

 
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.
 
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.
 
14

 
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).
 
15

 
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.
 
16

 
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.
 
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.
 
17

 
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 STAT™: 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.
 
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 AlcoTEC™ alcohol test and the Rapid Check™ 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
 
18

 
 
·
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.
 
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.
 
19

 
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.
 
20

 
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  

21


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  
 
22

 
(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.

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.
 
23

 
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.
 
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)
 
12/31/07
  $ 98,000 (15)     $ 10,000 (16)    $ 0     $ 10,300 (17)   $ 118,300  
Chief Financial Officer
                                           
Exec VP Finance
                                           
                                             
Douglas Casterlin
 
12/31/07
(18)  
                           
 
24

 
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.
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.
 
25

 
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 %
 
26


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.
(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.
 
27

 
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.
 
28

 
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.
 
29

 
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
 
30

 
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
31

 
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

32

 
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.
 
33

 
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.
 
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.
 
34

 
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.
 
35

 
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
 
AMERICAN BIO MEDICA CORPORATION
 
   
  
 
Stan Cipkowski
 
Chief Executive Officer
 

36


EXHIBIT 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;

 
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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.

 
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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.

 
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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.

 
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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.

 
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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.

 
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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 Debenture holder 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 Debenture holder with respect to such portion of the Debenture shall cease and the Debenture holder 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 Debenture holder, 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.

 
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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.
 
 
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

 
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ANNEX I
To Securities Purchase Agreement
 
FORM OF SERIES A DEBENTURE

(FILED WITH THIS REGISTRATION STATEMENT AS EXHIBIT 4.12)

 
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ANNEX II
 
REGISTRATION RIGHTS AGREEMENT

(FILED WITH THIS REGISTRATION STATEMENT AS EXHIBIT 4.13)

 
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EXHIBIT 4.12

FORM OF SERIES A DEBENTURE
 
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE " 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.

 
No.        2008 A -_________________
US $_________________
 

AMERICAN BIO MEDICA CORPORATION
 
10% CONVERTIBLE DEBENTURE DUE JULY 1, 2012
 
THIS DEBENTURE is one of a duly authorized issue up to $1,500,000 in Series A and Series B Debentures of AMERICAN BIO MEDICA CORPORATION, a corporation duly organized and existing under the laws of the State of New York (the "Company") designated as its 10% Convertible Debentures, Series A, due July 1, 2012.  Capitalized terms used herein shall have the same meanings as are ascribed to such terms in the Securities Purchase Agreement dated as of July ___, 2008 by and between the registered holder hereof (the "Holder"), unless otherwise defined herein.
 
FOR VALUE RECEIVED, the Company promises to pay to ________________, the Holder, the principal sum of (US $            ) Dollars on July 1, 2012 (the "Maturity Date") and to pay interest, in arrears on the principal sum outstanding from time to time in arrears, on a semi annual basis on July 1 and January 1 of each year with the first payment to be made on January 1, 2009, at the rate of 10% per annum accruing from the date of initial issuance. Accrual of interest shall commence on the date hereof until payment in full of the principal sum has been made or duly provided for. Subject to the provisions of paragraph 4 below, the principal of, and interest on, this Debenture are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time. The Company will pay the principal of and interest upon this Debenture on the Maturity Date, less any amounts required by law to be deducted, to the registered holder of this Debenture as of the tenth day prior to the Maturity Date and addressed to such holder at the last address appearing on the Debenture Register. The forwarding of such check shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal and interest on this Debenture to the extent of the sum represented by such check plus any amounts so deducted.
 
This Debenture is subject to the following additional provisions:
 
1.           The Debentures are issuable in denominations of Ten Thousand Dollars (US$10,000) and of $500 in excess of $10,000. The Debentures are exchangeable for an equal aggregate principal amount of Debentures of different authorized denominations, as requested by the Holders surrendering the same. No service charge will be made for such registration or transfer or exchange.
 
2.           The Company shall be entitled to withhold from all payments of principal of, and interest on, this Debenture any amounts required to be withheld under the applicable provisions of the United States income tax laws or other applicable laws at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith.
 
3.           This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Act, and other applicable state and foreign securities laws. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in the name of such other person, that it receive reasonable transfer documentation including opinions that the issuance of the Debenture in such other name does not and will not cause a violation of the Act or any applicable state or foreign securities laws. Prior to due presentment for transfer of this Debenture, the Company and any agent of the Company may treat the person in whose name this Debenture is duly registered on the Company's Debenture Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Debenture be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

 
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4.           Subordination.
 
a.           The payment of principal of and interest on this Debenture shall be subordinate and junior in right of payment, to the extent and in the manner hereinafter set forth, to all Senior Obligations (as hereinafter defined).
 
b.           If, and to the extent that, after giving pro forma effect to a scheduled payment of principal of, or interest on, this Debenture, the Company, in good faith, shall conclude that the making of such payment would cause an Event of Default (as defined in any agreement or instrument creating, evidencing, or modifying the terms of, any Senior Obligation) to occur, then, and in such event, the Company shall have the right to defer such payment (but only to the extent that it would cause such an Event of Default) until (but not later than) such time as the same might be made without causing any such Event of Default to occur.  After making any such conclusion, the Company will promptly transmit, to the registered Holder of this Debenture, a notification thereof, which notification shall set forth, in summary form, the computation upon which such conclusion was based.
 
c.           In the event of any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization or other similar proceedings in connection therewith relative to the Company or to its property, or in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy, then the holders of Senior Obligations shall be entitled to receive payment in full of the Senior Obligations before the holder of this Debenture is entitled to receive any payment on account of principal of or interest on this Debenture.  To that end (but subject to the power of a court of competent jurisdiction to make other equitable provisions reflecting the rights conferred by these provisions upon the holder of this Debenture and the holders of Senior Obligations by a lawful plan of reorganization under applicable bankruptcy law), each holder of Senior Obligations shall be entitled to receive, to the extent necessary to make payment in full of such Senior Obligations, for application in payment thereof, any payment or distribution of any kind or character whether in cash or property or securities, which may be payable or deliverable in any such proceedings in respect of this Debenture.
 
d.           In the event the Company shall default in the payment of the principal of or premium, if any, or interest on any Senior Obligation when the same shall become due and payable, whether at stated maturity or at a date fixed for prepayment or by declaration, demand or automatic acceleration or otherwise (under circumstances when the provisions of the foregoing Paragraph (b) shall not be applicable), then, unless and until such default shall have been cured or waived or shall have ceased to exist, the holders of the Senior Obligations shall be entitled to receive payment in full of the Senior Obligations before the holder of this Debenture is entitled to receive any payment on account of principal of or interest on this Debenture.
 
e.           The foregoing provisions as to subordination are solely for the purpose of defining the relative rights of the holders of Senior Obligations on the one hand, and the holder of this Debenture on the other hand, and none of such provisions shall impair, as between any holder of this Debenture and the Company, the obligation of the Company to pay to such holder the principal hereof and interest hereon in accordance with the terms hereof, nor shall any such provisions prevent any holder of this Debenture upon default hereunder from exercising, subject to the rights of the holders of Senior Obligations to receive the cash, property or securities otherwise payable or deliverable to the holder of this Debenture, any of its rights or remedies with respect to the enforcement of this Debenture.

 
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f.           "Senior Obligations" shall mean the principal of, premium, if any, and unpaid interest on:  (i) any obligation for borrowed money due from the Company to First Niagara Financial Group (the “Senior Lender”), whether now outstanding or hereafter incurred or assumed;  (ii) any guaranty or other contingent obligation incurred by the Company in favor of the Senior Lender whether now outstanding or hereafter incurred or assumed; and  (iii)  all modifications, deferrals, renewals, extensions and refundings of any of the items described in the foregoing Clauses (i) and (ii).  Provided, however, that the following shall not constitute Senior Obligations:  (1)  any obligation as to which, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is expressly provided that such obligation is subordinate in right of payment to all other indebtedness of the Company;  (2)  any obligation which by its terms refers explicitly to this Debenture and states that such obligation shall not be senior in right of payment thereto; and (3) any obligation of the Company which, in accordance with the provisions of this Paragraph 4(f) (except for this Clause (3)), would constitute a Senior Obligation, if, and to the extent that, after giving effect to the incurrence by the Company of such obligation, the aggregate amount of all outstanding Senior Obligations would exceed the sum of $2,500,000.
 
5.           Subject to the terms and conditions of this Debenture, the Holder of this Debenture shall have a right of conversion, at any time commencing the earlier of (a) one hundred twenty (120) days after the date of this Debenture, or (b) the effective date of the Registration Statement filed pursuant to the Registration Rights Agreement between the Company and the Holder, or the Holder's predecessor in interest, of the principal amount of this Debenture into Shares of Common Stock of the Company, at a conversion rate of 666.67 shares per $500 in principal amount of this Debenture (representing an approximate conversion price of approximately $0.75 per share), unless the closing price of Common Stock exceeds $0.75 on the date of Closing Date of the Series A offering, in which case the conversion rate per $500 in principal amount of this Debenture will be an amount equal to $500 divided by one hundred twenty five (125%) percent of such price. Conversion shall be effectuated by surrendering the Debentures to be converted to the Company with the form of Notice of Conversion notice attached hereto as Exhibit A, executed by the Holder of the Debenture evidencing such Holder's intention to convert this Debenture or a specified portion (as above provided) hereof, and accompanied, if required by the Company, by proper assignment hereof in blank. Interest (and penalties) accrued or accruing from the date of issuance to the date of conversion shall, at the option of the Company, be paid in cash. No fraction of Shares or scrip representing fractions of Shares will be issued on conversion, but the number of Shares issuable shall be rounded up to the nearest whole share. The date on which a Notice of Conversion is given (the "Conversion Date") shall be deemed to be the date on which the Holder has delivered this Debenture, with the Notice of Conversion duly executed, to the Company or, the date set forth in such facsimile or electronic delivery of the Notice of Conversion if the Debenture is received by the Company within three (3) business days therefrom. Facsimile delivery of the Notice of Conversion shall be accepted by the Company at facsimile number (518-758-8171); ATTN: Corporate Secretary). Common Stock upon conversion will be delivered in certificate form via messenger or overnight delivery or via the DWAC system within five (5) business days from the date the Notice of Conversion with the original Debenture is delivered to the Company.
 
6.           a.           The Company shall have the right to redeem any Debentures which have not theretofore been surrendered for conversion at a price (the “Redemption Price”) equal to the face value thereof plus $0.05 per underlying common share, or $525 per $500 in principal amount of the Debentures, which right shall be exercised by delivering a notice (a “Notice of Redemption”) to the Holder, at any time within ninety (90) days after the occurrence of a “Triggering Event”.  A "Triggering Event" shall be deemed to have occurred on any date when the closing price of the Common Stock on any exchange where the Common Stock is traded has equaled or exceeded $2.00 per share for a period of twenty (20) consecutive trading days.
 
  b.           Within sixty (60) days after the date of the Notice of Redemption, the Holder shall either (i) surrender its Debentures against receipt of the Redemption Price in immediate funds, or (ii) exercise its right of conversion by delivering a Notice of Conversion with the original Debenture to the Company as provided in Section 5.

 
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c.           The Redemption Price shall be paid to the Holder within ten (10) days from the date of surrender of its Debentures for redemption. . In the event such payment is not timely made, the Notice of Redemption shall be null and void.
 
7.           No provision of this Debenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture and all other Debentures now or hereafter issued of similar terms are direct obligations of the Company.
 
8.           No recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.
 
9.           If the Company merges or consolidates with another corporation or sells or transfers all or substantially all of its assets to another person and the holders of the Common Stock are entitled to receive stock, securities or property in respect of or in exchange for Common Stock, then as a condition of such merger, consolidation, sale or transfer, the Company and any such successor, purchaser or transferee hereby agree that this Debenture may thereafter be converted, in the manner, and at the conversion price set forth above, into the kind and amount of stock, securities or property receivable upon such merger, consolidation, sale or transfer by a holder of the number of shares of Common Stock into which this Debenture might have been converted immediately before such merger, consolidation, sale or transfer, subject to adjustments which shall be as nearly equivalent as may be practicable. In the event of any proposed merger, consolidation or sale or transfer of all or substantially all of the assets of the Company (a "Sale"), the Holder hereof shall have the right to convert by delivering a Notice of Conversion to the Company within fifteen (15) days of receipt of notice of such Sale from the Company. In the event the Holder hereof shall elect not to convert, the Company may prepay all outstanding principal and accrued interest on this Debenture, less all amounts required by law to be deducted, upon which tender of payment following such notice, the right of conversion shall terminate.
 
10.         The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or the Shares issuable upon conversion thereof except under circumstances which will not result in a violation of the Act or any applicable state or federal laws or similar laws relating to the sale of securities.
 
11.         This Debenture shall be governed by and construed 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 coveniens, to the bringing of any such proceeding in such jurisdictions.
 
12.         The following shall constitute an "Event of Default":
 
a.           The Company shall default in the payment of principal upon the Maturity Date; or
 
b.           The Company shall default in the payment of interest on this Debenture and such default shall remain unremedied for twenty (20) days after the due date of such payment of interest; or
 
c.           Any of the representations or warranties made by the Company herein, in the Securities Purchase Agreement, or in any certificate or financial or other written statements furnished by the Company in connection with the execution and delivery of this Debenture or the Securities Purchase Agreement shall be false or misleading in any material respect at the time made; or

 
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d.           The Company fails to issue shares of Common Stock to the Holder or to cause its Transfer Agent to issue shares of Common Stock upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Debenture, fails to transfer or to cause its Transfer Agent to transfer any certificate for shares of Common Stock issued to the Holder upon conversion of this Debenture and when required by this Debenture or the Registration Rights Agreement, or fails to remove any restrictive legend or to cause its Transfer Agent to transfer on any certificate or any shares of Common Stock issued to the Holder upon conversion of this Debenture as and when required by this Debenture, the Securities Purchase Agreement or the Registration Rights Agreement and any such failure shall continue uncured for three (3) business day after the Company has been notified of such failure in writing by Holder; or
 
e.           The Company shall fail to perform or observe, in material respect, any other covenant, term, provision, condition, agreement or obligation of the Company under this Debenture and such failure shall continue uncured for a period of thirty (30) days after written notice from the Holder of such failure; or
 
f.           The Company shall (1) admit in writing its inability to pay its debts generally as they mature; (2) make an assignment for the benefit of creditors or commence proceedings for its dissolution; or (3) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; or
 
g.           A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within sixty (60) days after such appointment; or
 
h.           Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within sixty (60) days thereafter; or
 
i.           Any money judgment, writ or warrant of attachment, or similar process in excess of Five Hundred Thousand Dollars  ($500,000) in the aggregate shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of sixty (60) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or
 
j.           Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtor shall be instituted by or against the Company and, if instituted against the Company, shall not be dismissed within sixty (60) days after such institution or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding.
 
Then, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Debenture immediately due and payable, without presentment, demand, protest or notice of any kinds, all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law.  Upon the occurrence of an Event of Default, the rate of interest on this Debenture will be increased to the lesser of: (i) twenty percent (20%) per annum, or (ii) the highest interest rate allowable by applicable law.

 
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13.         Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof.
 
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized.
 
Dated: ________ __, 2008
 
AMERICAN BIO MEDICA CORPORATION
 
   
   
   
 
   
(Title)
 

 
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EXHIBIT A
NOTICE OF CONVERSION
 
(To be Executed by the Holder in order to Convert the Debenture)
 
The undersigned hereby irrevocably elects to convert $ _______________ of the principal amount of Debenture No. 2008A-_____ into shares of Common Stock of AMERICAN BIO MEDICA CORPORATION (the "Company") according to the conditions hereof, as of the date written below. In converting the Debenture No. 2008A-_______, the undersigned hereby confirms and acknowledges that the shares of Common Stock are being acquired solely for the account of the undersigned and not a nominee for any other party, and that the undersigned will not offer, sell or otherwise dispose of any such shares of Common Stock, except under circumstances that will not result in a violation of the Securities Act of 1933, as amended.
 
Date of Conversion*  ___________________________________
 
Applicable Conversion Price  _____________________________
 
Signature:  ___________________________________________
 
Printed Name:  ________________________________________
 
Address:  ____________________________________________
 
            _______________________________________________
 
* This original Debenture and Notice of Conversion must be received by the Company by the third business date following the Date of Conversion.

 
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EXHIBIT 4.13
 
FORM OF REGISTRATION RIGHTS AGREEMENT
 
THIS REGISTRATION RIGHTS AGREEMENT, dated as of July __, 2008 (this "Agreement"), is made by and between AMERICAN BIO MEDICA CORPORATION, a New York corporation (the "Company"), and the person or entity named on the signature page hereto (the "Buyer").
 
WITNESSETH:
 
WHEREAS, upon the terms and subject to the conditions of the Securities Purchase Agreement, dated as of July __, 2008, between the Buyer and the Company (the "Securities Purchase Agreement"), the Company has agreed to issue and sell to the Buyer one or more 10% Convertible Debentures, Series A of the Company, in an aggregate principal amount not exceeding $750,000 (collectively, the "Debentures"), which Debentures will be convertible into shares of the common stock, $0.01 par value (the "Common Stock"), of the Company (the "Conversion Shares") upon the terms and subject to the conditions of such Debentures; and
 
WHEREAS, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "Securities Act"), with respect to the Conversion Shares; and
 
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 Company and the Buyer hereby agree as follows:
 
1.           Definitions.
 
a.           As used in this Agreement, the following terms shall have the following meanings:
 
i.           "Buyer" means the Buyer and any permitted transferee or assignee of the Buyer that agrees to become bound by the provisions of this Agreement in accordance with Section 9 hereof, and “Buyers” means all of the foregoing as a group.
 
ii.           "Register," "Registered," and "Registration" refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement by the United States Securities and Exchange Commission (the "SEC").
 
iii.           "Potential Material Event" means any of the following: (a) the possession by the Company of material information not ripe for disclosure in a registration statement, which shall be evidenced by determinations in good faith by the Board of Directors of the Company that disclosure of such information in the registration statement would be detrimental to the business and affairs of the Company; or (b) any material engagement or activity by the Company which would, in the good faith determination of the Board of Directors of the Company, be adversely affected by disclosure in a registration statement at such time, which determination shall be accompanied by a good faith determination by the Board of Directors of the Company that the registration statement would be materially misleading absent the inclusion of such information.
 
iv.           "Registrable Securities" means the Conversion Shares and up to 150,000 shares of Common Stock issuable under warrants to be issued to Cantone Research, Inc., as placement agent fee for the Debentures.

 
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v.           "Registration Statement" means a registration statement of the Company under the Securities Act.
 
b.           Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement.
 
2.           Registration.
 
a.           Mandatory Registration. The Company shall 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 not less than the aggregate number of Registrable Securities.
 
b.           Minimum Sale Requirement. The Company shall have no obligation to prepare a Registration Statement on Form S-3 for filing with the SEC unless the gross proceeds of the Series A Debentures offering exceed $250,000. If the minimum sale requirement is met under the Series A offering and the Company elects to undertake the Series B offering, the Registration Statement on Form S-3 shall register the aggregate number of Registrable Securities under the Series A Debenture offering and the Series B Debenture offering.
 
3.           Obligations of the Company.  In connection with the registration of the Registrable Securities, the Company shall do each of the following.
 
a.           Use commercially reasonable efforts to prepare and file with the SEC a Registration Statement with respect to not less than the number of Registrable Securities provided in Section 2(a), above, and thereafter use its reasonable best efforts to cause such Registration Statement relating to Registrable Securities to become effective the earlier of (a) 5 days after notice by the SEC that it may be declared effective, and keep the Registration Statement effective at all times until the earliest (the "Registration Period") of (i) the date that is four (4) years after the date of the Series A Completion Date (ii) the date when the Buyers may sell all Registrable Securities under Rule 144 or (iii) the date no Buyer any longer owns any of the Registrable Securities, which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading;
 
b.           Prepare and file with the SEC such amendments (including post-effective amendments) and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration effective at all times during the Registration Period, and, during the Registration Period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement;
 
c.           Furnish to each Buyer whose Registrable Securities are included in the Registration Statement and such Buyer’s legal counsel identified to the Company, (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one (1) copy of the Registration Statement and each amendment thereto, and (ii) such number of copies of a prospectus, and all amendments thereto and such other documents, as such Buyer may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Buyer;
 
d.           As promptly as practicable after becoming aware of such event, notify each Buyer of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and use its best efforts promptly to prepare an amendment to the Registration Statement or other appropriate filing with the SEC to correct such untrue statement or omission, and deliver a number of copies of such supplement or amendment to each Buyer as such Buyer may reasonably request;

 
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e.           As promptly as practicable after becoming aware of such event, notify each Buyer who holds Registrable Securities being sold of the issuance by the SEC of a notice of effectiveness or any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time;
 
f.           Notwithstanding the foregoing, if at any time or from time to time after the date of effectiveness of the Registration Statement, the Company notifies the Buyers in writing of the existence of a Potential Material Event, no Buyer shall offer or sell any Registrable Securities, or engage in any other transaction involving or relating to the Registrable Securities, from the time of the giving of notice with respect to a Potential Material Event until such Buyer receives written notice from the Company that such Potential Material Event either has been disclosed to the public or no longer constitutes a Potential Material Event; provided, however, that the Company may not so suspend the right of any Buyer for more than two twenty (20) day periods in the aggregate during any 12-month period ("Suspension Period") with at least a ten (10) business day interval between such periods, during the periods the Registration Statement is required to be in effect;
 
g.           Provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than the effective date of the Registration Statement;
 
h.           Cooperate with the Buyers who hold Registrable Securities being offered to facilitate the timely preparation and delivery of certificates for the Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates for the Registrable Securities to be in such denominations or amounts as the case may be, as the Buyers may reasonably request, and, within three (3) business days after a Registration Statement which includes Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registrable Securities (with copies to the Buyers whose Registrable Securities are included in such Registration Statement) an appropriate instruction and opinion of such counsel; and
 
i.           Take all other reasonable actions necessary to expedite and facilitate disposition by the Buyer of the Registrable Securities pursuant to the Registration Statement.
 
4.           Obligations of the Buyers.  In connection with the registration of the Registrable Securities, the Buyers shall have the following obligations:
 
a.           It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Buyer that such Buyer shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least five (5) days prior to the first anticipated filing date of the Registration Statement, the Company shall notify each Buyer of the information the Company requires from each such Buyer (the "Requested Information") if such Buyer elects to have any of such Buyer's Registrable Securities included in the Registration Statement.
 
b.           Each Buyer by such Buyer's acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder, unless such Buyer has notified the Company in writing of such Buyer's election to exclude all of such Buyer's Registrable Securities from the Registration Statement; and
 
c.           Each Buyer agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(d) or 3(e), above, such Buyer will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Buyer's receipt of the copies of the amended prospectus contemplated by Section 3(d) or 3(e) and, if so directed by the Company, such Buyer shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in such Buyer's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

 
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5.           Expenses of Registration. All expenses, other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Section 3, but including, without limitation, all registration, listing, and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company, shall be borne by the Company.
 
6.           Indemnification.  In the event any Registrable Securities are included in a Registration Statement under this Agreement:
 
a.           To the extent permitted by law, the Company will indemnify and hold harmless each Buyer who holds such Registrable Securities, the directors, if any, of such Buyer, the officers, if any, of such Buyer, each person, if any, who controls any Buyer within the meaning of the Securities Act or the Exchange Act (each, an "Indemnified Party", against any losses, claims, damages, liabilities or expenses (joint or several) (including reasonable attorneys fees) incurred (collectively, "Claims") to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any of the following statements, omissions or violations in the Registration Statement, or any post-effective amendment thereof, or any prospectus included therein: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended, if the Company files any amendment thereof with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"). Subject to clause (b) of this Section 6, the Company shall reimburse the Buyers, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a) shall not (I) apply to a Claim by any Indemnified Party arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such Indemnified Party expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof, (II) be available to an Indemnified Party to the extent such Claim is based on a failure of such Indemnified Party to deliver or cause to be delivered the prospectus made available by the Company; or (III) apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Each Buyer will indemnify the Company and its officers, directors and agents against any claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of such Buyer, expressly for use in connection with the preparation of the Registration Statement, subject to such limitations and conditions as are applicable to the Indemnification provided by the Company to this Section 6. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9;

 
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b.           Promptly after receipt by an Indemnified Party under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Party, as the case may be. In case any such action is brought against any Indemnified Party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof, subject to the provisions herein stated and after notice from the indemnifying party to such Indemnified Party of its election so to assume the defense thereof, the indemnifying party will not be liable to such Indemnified Party under this Section 6 for any legal or other reasonable out-of-pocket expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation, unless the indemnifying party shall not pursue the action of its final conclusion. The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and reasonable out-of-pocket expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the action with counsel reasonably satisfactory to the Indemnified Party or Indemnified Party. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.
 
7.           Contribution. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (b) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation; and (c) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.
 
8.           Reports under Exchange Act. With a view to making available to the Buyers the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Buyers to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to:
 
a.           make and keep public information available, as those terms are understood and defined in Rule 144;
 
b.           file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and
 
c.           furnish to each Buyer so long as such Buyer owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and (iii) such other information as may be reasonably requested to permit the Buyers to sell such securities pursuant to Rule 144 without registration.
 
9.           Assignment of the Registration Rights. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assigned by the Buyers to any transferee of the Registrable Securities (or all or any portion of any Debenture which is convertible into such securities) only if: (a) the Buyer agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment, (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee and (ii) the securities with respect to which such registration rights are being transferred or assigned, (c) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, and (d) at or before the time the Company received the written notice contemplated by clause (b) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein. In the event of any delay in filing or effectiveness of the Registration Statement as a result of such assignment, the Company shall not be liable for any damages arising from such delay.

 
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10.         Amendment of Registration Rights. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Buyers who hold an eighty (80%) percent interest of the Registrable Securities of all Buyers.  Any amendment or waiver affected in accordance with this Section 10 shall be binding upon each Buyer and the Company.
 
11.         Miscellaneous.
 
a.           A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.
 
b.           Notices required or permitted to be given hereunder shall be in writing and shall be deemed to be sufficiently given when personally delivered (by hand, by courier, by facsimile transmission or electronic messaging, receipt confirmed, or other means) or sent by certified mail, return receipt requested, properly addressed and with proper postage pre-paid (i) if to the Company, AMERICAN BIO MEDICA CORPORATION, 122 Smith Road, Kinderhook, New York 12106, ATTN: Corporate Secretary, Facsimile Number: 518-758-8171 or email: mdwaterhouse@abmc.com; with a copy to Nolan & Heller, LLP, 39 N. Pearl Street, Albany, NY 12207 Attention: Richard L. Burstein, Esq. Facsimile Number: 518-432-3123; (ii) if to the Buyer, at the address set forth under its name in the Securities Purchase Agreement, (iii) or at such other address as each such party furnishes by notice given in accordance with this Section 11(b), and shall be effective, when personally delivered, sent via facsimile or electronic messaging (receipt confirmed), upon receipt and, when so sent by certified mail, four (4) calendar days after deposit with the United States Postal Service.
 
c.           Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.
 
d.           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 coveniens, 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.
 
e.           This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.
 
f.           Subject to the requirements of Section 9 hereof, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.
 
g.           Neither party shall be liable for consequential damages.

 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.
 
AMERICAN BIO MEDICA CORPORATION
 
   
 
Stan Cipkowski, Chief Executive Officer
 
     
By:
   

Printed Name:
   

 
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EXHIBIT 4.14
 
FORM OF PLACEMENT AGENT WARRANT AGREEMENT
 
        WARRANT AGREEMENT dated as of June 25, 2008, between American Bio Medica Corporation, a New York corporation ("Company"), and Cantone Research, Inc. ("Agent”).
 
WITNESSETH
 
        WHEREAS, the Agent has agreed to act as the placement agent in connection with the Company's proposed private placement (the "Private Placement") of a minimum of $250,000 and a maximum of $1,500,000, of $750,000 of 10% Subordinated Convertible Debentures, Series A due 2012 (the “Series A Debentures”) and $750,000 of 10% Subordinated Convertible Debentures, Series B due Four (4) Years from Issuance the “Series B Debentures”) of the Company, which are convertible into shares of the Company’s common stock, $0.01 par value per share (the “Common Stock”); and
 
        WHEREAS, the Company proposes to issue to the Agent, warrants ("Agent Warrants") to purchase 50 shares of Common Stock for every $500 in principal amount of Series A Debentures placed by the Agent, and accepted by the Company in the Private Placement; and
 
        WHEREAS, the Agent Warrants to be issued pursuant to this Agreement will be issued by the Company to the Agent in consideration for, and as part of the Agent’s compensation in connection with the Agent acting as the placement agent in the Private Placement upon the Company’s receipt of not less than $250,000 in gross sales of Series A Debentures
 
        NOW, THEREFORE, the parties hereto agree as follows:
 
        1.    Grant.    In consideration of $1.00 and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Company, the Company hereby grants to the Agent, and its assigns (each, a "Holder"), by issuance of the Agent Warrants, the right to purchase, at any time during the term ("Warrant Exercise Term") commencing on the date hereof and ending at 5:00 p.m., Eastern Time, on the fourth anniversary of the date hereof, an aggregate number of shares of Common Stock equal to 50 such shares for every $500 in principal amount of Series A Debentures placed by the Agent and accepted by the Company in the Private Placement at an exercise price equal to the publicly traded closing price of the shares of the Company’s Common Stock on the NASDAQ Capital Market on the Closing Date (the “Exercise Price”). As used herein, “Closing Date” shall have the meaning given such term, and shall be determined in accordance with the provisions of, the Securities Purchase Agreement, dated June __, 2008, by and between the Company and the Agent.
 
       2.    Certificates Evidencing the Agent Warrants.    The Agent Warrants shall be evidenced by a warrant certificate ("Warrant Certificate") in the form attached as Exhibit A hereto. The Warrant Certificate, as well as the certificate evidencing the Common Stock underlying the Agent Warrants and issuable upon exercise of the Agent Warrants (the "Agent Shares"), shall be duly and properly executed by the Company.
 
        3.    Exercise of the Agent Warrants
 
           3.1    Exercise of the Agent Warrants.    The Agent Warrants may be exercised, in whole or in part (but not as to fractional shares), by surrender of the Warrant Certificate with the annexed Form of Election to Purchase duly executed, together with payment in the form of a certified or bank cashier’s check payable to the order of the Company in an amount equal to the Exercise Price multiplied by the number of Agent Warrants being exercised at the Company's principal offices which, at the date hereof, is: American Bio Medica Corporation, Attn: Corporate Secretary, 122 Smith Road, Kinderhook, New York 12106.
 
In the case of the purchase of less than all the Agent Shares purchasable under the Warrant Certificate, the Company shall cancel the Warrant Certificate and shall execute and deliver a new Warrant Certificate of like tenor for the unexercised balance of the Agent Warrants. The date on which all deliveries required to be made to the Company upon exercise of Agent Warrants pursuant to this Section 3.1 shall have been made shall mean the "Exercise Date".
 
 
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            3.2    Issuance of Certificates for Agent Shares. Upon the exercise of the Agent Warrants, the issuance of certificates for Agent Shares shall be made forthwith (and in any event such issuance shall be made within ten (10) business days from the Exercise Date) without charge to the Holder thereof, including, without limitation, any tax which may be payable in respect of the issuance thereof, and such certificates shall (subject to the provisions of Section 5 hereof) be issued in the name of, or in such names as may be directed by, the Holder thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
 
        4.    Transfer of Securities.    The Agent, by acceptance of the Warrant Certificate, covenants and agrees that it is acquiring the Agent Warrants evidenced thereby, and, upon exercise thereof, the Agent Shares, for its own account as an investment and not with a view to distribution thereof.
 
The Agent acknowledges that the Agent Warrants have not been, and are not being registered under the Securities Act of 1933, as amended, (the “1933 Act”), and as of the date hereof, the Agent Shares have not been registered under the 1933 Act. The Agent acknowledges and agrees that the Agent Warrants, and until such time as the Agent Shares have been registered under the 1933 Act and sold in accordance with an effective Registration Statement (the “Registration Statement”), shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the Agent Warrant and Agent Shares).
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR THE SECURITIES LAWS OF ANY STATE. THEY 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.
 
Any purported transfer of any Agent Warrants or Agent Shares not in compliance with the provisions of this Section 4 shall be null and void.
 
5.    Registration Rights.
 
5.1     The Company shall use commercially reasonable efforts to prepare and file with the Securities and Exchange Commission (“SEC”), no later than eight (8) months following the completion of the Series A offering under the Private Placement, an effective Registration Statement on Form S-3 registering not less than the aggregate number of (1) shares into which all Series A Debentures and Series B Debentures would be convertible, plus (2) shares issuable pursuant to the Agent Warrants, then entitled to registration and exercisable at the time of filing of the Form S-3 (collectively, the “Registrable Securities”).
 
5.2     Minimum Sale Requirement. The Company shall have no obligation to prepare a Registration Statement on Form S-3 for filing with the SEC with respect to the Registrable Securities unless the gross proceeds of either the Series A Debentures offering or the Series B Debenture offering exceed $250,000 (the “Minimum Sale Requirement”).
 
5.3       Obligations of the Company.  In connection with the registration of the Registrable Securities, the Company shall do each of the following.
 
 
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a)    Use commercially reasonable efforts to prepare and file with the SEC a Registration Statement with respect to not less than the number of Registrable Securities provided in Sub-Section 5.1, above, and thereafter use its reasonable best efforts to cause such Registration Statement relating to Registrable Securities to become effective the earlier of (a) 5 days after notice by the SEC that it may be declared effective, and keep the Registration Statement effective at all times until the earliest (the "Registration Period") of (i) the date that is four (4) years after the date of the closing of the Private Placement (ii) the date when the buyers of the Debentures (the “Buyers”) may sell all Registrable Securities under Rule 144 or (iii) the date no Buyer or Holder any longer owns any of the Registrable Securities, which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.
 
b)    Use commercially reasonable efforts to prepare and file with the SEC such amendments (including post-effective amendments) and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and, during the Registration Period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement.
 
c)     Furnish to the Agent and the Agent’s legal counsel identified to the Company, (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one (1) copy of the Registration Statement and each amendment thereto, and (ii) such number of copies of a prospectus, and all amendments thereto and such other documents, as the Agent may reasonably request in order to facilitate the disposition of any Registrable Securities owned by the Agent.
 
d)     As promptly as practicable after becoming aware of such event, notify the Agent of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and use its best efforts promptly to prepare an amendment to the Registration Statement or other appropriate filing with the SEC to correct such untrue statement or omission, and deliver a number of copies of such supplement or amendment to the Agent if requested.
 
e)     As promptly as practicable after becoming aware of such event, notify the Agent of the issuance by the SEC of a notice of effectiveness or any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time.
 
f)      Notwithstanding the foregoing, if at any time or from time to time after the date of effectiveness of the Registration Statement, the Company notifies the Agent in writing of the existence of (a) the possession by the Company of material information not ripe for disclosure in a registration statement, which shall be evidenced by determinations in good faith by the Board of Directors of the Company that disclosure of such information in the registration statement would be detrimental to the business and affairs of the Company; or (b) any material engagement or activity by the Company which would, in the good faith determination of the Board of Directors of the Company, be adversely affected by disclosure in a registration statement at such time, which determination shall be accompanied by a good faith determination by the Board of Directors of the Company that the registration statement would be materially misleading absent the inclusion of such information “Potential Material Event”), the Agent shall not offer or sell any Agent Shares, or engage in any other transaction involving or relating to the Agent Shares, from the time of the giving of notice with respect to a Potential Material Event until the Agent receives written notice from the Company that such Potential Material Event either has been disclosed to the public or no longer constitutes a Potential Material Event; provided, however, that the Company may not so suspend the right of the Agent for more than two twenty (20) day periods in the aggregate during any 12-month period ("Suspension Period") with at least a ten (10) business day interval between such periods, during the periods the Registration Statement is required to be in effect.
 
 
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g)     Provide a transfer agent and registrar, which may be a single entity, for the Agent Shares no later than the effective date of the Registration Statement.
 
h)     Cooperate with the Agent to facilitate the timely preparation and delivery of certificates for the Agent Shares to be offered pursuant to the Registration Statement and enable such certificates for the Agent Shares to be in such denominations or amounts as the case may be, as the Agent may reasonably request, and, within three (3) business days after a Registration Statement which includes the Agent Shares is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Agent Shares (with copies to the Agent) an appropriate instruction and opinion of such counsel.
 
i)      Take all other reasonable actions necessary to expedite and facilitate disposition by the Agent.
 
5.4          Obligations of the Agent. In connection with the registration of the Registrable Securities, the Agent shall have the following obligations:
 
a)         It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities, including but not limited to the Agent Shares, that the Agent shall furnish to the Company such information regarding itself, the Agent Shares, and the intended method of disposition of the Agent Shares held by it, as shall be reasonably required to effect the registration of the Agent Shares, and shall execute such documents in connection with such registration as the Company may reasonably request. At least ten (10) days prior to the first anticipated filing date of the Registration Statement, the Company shall notify the Agent of the information the Company requires from the Agent (the "Requested Information") if the Agent elects to have the Agent Shares included in the Registration Statement.
 
b)         The Agent agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder, unless the Agent has notified the Company in writing of the Agent’s election to exclude the Agent Shares from the Registration Statement.
 
c)         The Agent agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Sub-Section 5.3(d) or 5.3(e), above, the Agent will immediately discontinue disposition of Agent Shares pursuant to the Registration Statement covering the Agent Shares until the Agent's receipt of the copies of the amended prospectus contemplated by Sub-Section 5.3(d) or 5.3(e) and, if so directed by the Company, the Agent shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Agent’s possession, of the prospectus covering the Agent Shares current at the time of receipt of such notice.
 
5.5          Expenses of Registration. All expenses, other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Section 5, but including, without limitation, all registration, listing, and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company, shall be borne by the Company.
 
5.6          Indemnification.  In the event the Agent Shares are included in a Registration Statement:
 
 
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a)  To the extent permitted by law, the Company will indemnify and hold harmless the Agent, its directors, officers, each person, if any, who controls the Agent within the meaning of the Securities Act or the Exchange Act (each, an "Indemnified Party", against any losses, claims, damages, liabilities or expenses (joint or several) (including reasonable attorneys fees) incurred (collectively, "Claims") to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any of the following statements, omissions or violations in the Registration Statement, or any post-effective amendment thereof, or any prospectus included therein: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended, if the Company files any amendment thereof with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"). Subject to clause (b) of this Section 5.6, the Company shall reimburse the Agent, promptly as such expenses are incurred and are due and payable, for the reasonable legal fees or other reasonable expenses incurred by it in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 5.6(a) shall not (I) apply to a Claim by any Indemnified Party arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such Indemnified Party expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof, (II) be available to an Indemnified Party to the extent such Claim is based on a failure of such Indemnified Party to deliver or cause to be delivered the prospectus made available by the Company; or (III) apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. The Agent will indemnify the Company and its officers, directors and agents against any claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of the Agent, expressly for use in connection with the preparation of the Registration Statement, subject to such limitations and conditions as are applicable to the Indemnification provided by the Company to this Sub-Section 5.6. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Party and shall survive the transfer of the Agent Shares by the Agent pursuant to Section 5.8 .
 
 
b)  Promptly after receipt by an Indemnified Party under this Section 5.6 of notice of the commencement of any action (including any governmental action), such Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 5.6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Party, as the case may be. In case any such action is brought against any Indemnified Party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof, subject to the provisions herein stated and after notice from the indemnifying party to such Indemnified Party of its election so to assume the defense thereof, the indemnifying party will not be liable to such Indemnified Party under this Section 5.6 for any legal or other reasonable out-of-pocket expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation, unless the indemnifying party shall not pursue the action of its final conclusion. The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and reasonable out-of-pocket expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the action with counsel reasonably satisfactory to the Indemnified Party. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Party under this Section 5.6, except to the extent that the indemnifying party is thereby prejudiced in its ability to defend such action. The indemnification required by this Section 5.6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable.
 
 
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c)
Contribution. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Sub-Section 5.6 to the fullest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Sub-Section 5.6; (b) no seller of Agent Shares guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Agent Shares who was not guilty of such fraudulent misrepresentation; and (c) contribution by any seller of Agent Shares shall be limited in amount to the net amount of proceeds received by such seller from the sale of the Agent Shares.
 
5.7          Reports under Exchange Act. With a view to making available to the Agent the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Agent to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to:
 
a)         make and keep public information available, as those terms are understood and defined in Rule 144;
 
b)         file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and
 
c)         furnish to the Agent so long as the Agent owns Agent Shares, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and (iii) such other information as may be reasonably requested to permit the Agent to sell such securities pursuant to Rule 144 without registration.
 
5.8          Assignment of Registration Rights. The rights to have the Company register the Agent Shares shall be automatically assigned by the Agent to any transferee of the Agent Shares (or all or any portion of the Agent Warrants which are convertible into such securities) only if: (a) the Agent agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment, (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee and (ii) the securities with respect to which such registration rights are being transferred or assigned, (c) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, and (d) at or before the time the Company received the written notice contemplated by clause (b) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein. In the event of any delay in filing or effectiveness of the Registration Statement as a result of such assignment, the Company shall not be liable for any damages arising from such delay.
 
5.9          Amendment of Registration Rights. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Agent. Any amendment or waiver affected in accordance with this Sub-Section 5.9 shall be binding upon the Agent and the Company.
 
        6.     Exchange and Replacement of Warrant Certificates. Each Warrant Certificate is exchangeable without expense, upon the surrender thereof by the Agent at the principal office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of securities in such denominations as shall be designated by the Agent at the time of such surrender.
 
        Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrants, if mutilated, the Company will make and deliver a new Warrant Certificate of like tenor, in lieu thereof.
 
 
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        7.     Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of shares of Common Stock upon the exercise of the Agent Warrants, but instead shall pay cash in lieu of such fractional interests to the Agent based on the Exercise Price.
 
        8.     Reservation and Listing of Securities. The Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon the exercise of the Agent Warrants, such number of shares of Common Stock as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Agent Warrants and payment of the Exercise Price, all shares of Common Stock issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any stockholder.
 
        9.   Notice to Agent as Warrant Holder. Nothing contained in this Agreement shall be construed as conferring upon Agent as a Warrant Holder, the right to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company.
 
        10.   Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered, mailed by registered or certified mail, return receipt requested, or sent by facsimile or electronic delivery with confirmation of delivery:
 
        (a)   If to the Agent, to the address shown on the books of the Company; or
 
        (b)   If to the Company, to the address set forth in Section 3.1 hereof, or to such other address as the Company may designate by notice to the Agent.
 
        11.   Supplements and Amendments. The Company and the Agent may from time to time supplement or amend this Agreement in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any provision herein, or to make any other provisions in regard to matters or questions arising hereunder which the Company and the Agent may deem necessary or desirable and which the Company and the Agent deem shall not adversely affect the interests of any Holder of the Debentures.
 
        12.   Successors. All the covenants and provisions of this Agreement shall be binding upon and inure to the benefit of the Company, the Agent and their respective successors and assigns hereunder.
 
        13.   Termination. This Agreement shall terminate at the close of business on the fourth anniversary of the date hereof. Notwithstanding the foregoing, the indemnification provisions of Section 5.5 hereof shall survive such termination until the close of business on the tenth anniversary of the date hereof.
 
        14.  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.
 
(Signature page follows)
 
 
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        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written.
 
AMERICAN BIO MEDICA CORPORATION
 
By:
 
________________________________________________   
Name: Stan Cipkowski
Title: Chief Executive Officer
 
CANTONE RESEARCH, INC.
 
By:
 
________________________________________________   
Name: Anthony J. Cantone
Title: President

 
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FORM OF AGENTS WARRANT CERTIFICATE
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR THE SECURITIES LAWS OF ANY STATE. THEY 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 COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
 
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE AGENT WARRANT AGREEMENT REFERRED TO HEREIN.
 
No. AW-  ________
___________ Warrants
 
AGENT'S WARRANT CERTIFICATE
 
        This Agent Warrant Certificate certifies that Cantone Research, Inc., or its assigns, is the Holder of ____________ Warrants (the "Agent Warrants") to purchase initially, at any time after the date hereof until 5:00 p.m. Eastern Time on the fourth anniversary of the date hereof, ("Expiration Date"), up to __________ shares of common stock ("Common Stock"), of American Bio Medica Corporation, a New York corporation (the "Company"), at the exercise price of $_______ per share of Common Stock (“Exercise Price”) upon surrender of this Agent Warrant Certificate and payment of the Exercise Price, subject to the conditions set forth herein and in the Placement Agent Warrant Agreement dated June 25, 2008 between the Company and Cantone Research, Inc. (the "Warrant Agreement"). Capitalized terms used herein and not defined herein shall have the meanings ascribed to such terms by the Warrant Agreement. Payment of the Exercise Price shall be in the form of a certified or bank cashier’s check payable to the order of the Company in an amount equal to the Exercise Price multiplied by the number of Agent Warrants being exercised.
 
        No Warrant may be exercised after 5:00 p.m., Eastern Time, on the Expiration Date, at which time all Agent Warrants evidenced hereby, unless exercised prior thereto, hereby shall thereafter be void.
 
        The Agent Warrants evidenced by this Agent Warrant Certificate are part of a duly authorized issue of Agent Warrants issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company and the Holders of the Agent Warrants.
 
        Upon due presentment for registration of transfer of this Agent Warrant Certificate and executed form of assignment as attached hereto at the office of the Company set forth in the Warrant Agreement, a new Agent Warrant Certificate or Agent Warrant Certificates of like tenor and evidencing in the aggregate a like number of Agent Warrants shall be issued to the transferee(s) in exchange for this Agent Warrant Certificate, subject to the limitations provided herein and in the Warrant Agreement, without any charge except for any tax or other governmental charge imposed in connection with such transfer.
 
        Upon the exercise of less than all of the Agent Warrants evidenced by this Certificate, the Company shall forthwith issue to the holder hereof a new Agent Warrant Certificate representing such unexercised Agent Warrants.
 
        The Company may deem and treat the Holder(s) hereof as reflected on the records of the Company as the absolute owner(s) of this Agent Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, and of any distribution to the Holder(s) hereof, and for all other purposes, and the Company shall not be affected by any notice to the contrary.
 
        IN WITNESS WHEREOF, the Company has caused this Agent Warrant Certificate to be duly executed under its corporate seal.
 
Dated as of
 
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________, 2008
 
 American Bio Medica Corporation
 
________________________________________________ 
BY: Stan Cipkowski
ITS: Chief Executive Officer
(AFFIX CORPORATE SEAL)
 
 
10

 
 
FORM OF ELECTION TO PURCHASE
 
        The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to purchase ___________ Shares of Common Stock.
 
        In accordance with the terms of Section 3.1 of the Placement Agent Warrant Agreement dated as of June 25, 2008, between American Bio Medica Corporation. and Cantone Research, Inc., the undersigned requests that a certificate for such Common Stock be registered in the name of  ______whose address is ______________     and that such Certificate be delivered to                           whose address is _______________________________________________________.
 
Dated: _________________, 20____
 
Signature:
 
_____________________________________________________________
BY:
 
ITS:
 
(Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.)
 
__________________________________
 (Insert Social Security or Other Identifying Number of Holder)
 
 
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FORM OF ASSIGNMENT
 
(To be executed by the Holder if such Holder to transfer the Agent Warrant Certificate.)
 
FOR VALUE RECEIVED
 
_____________________________________________________hereby sells, assigns and transfers unto
 
_________________________________________________________________________________________
 
_________________________________________________________________________________________
 
________________________ (Please print name and address of transferee)
 
this Agent Warrant Certificate, together with all right, title and interest therein, and does hereby authorize the transfer of the within Warrant Certificate on the books of American Bio Medica Corporation, with full power of substitution.
 
Dated:
 
______________________________________
Signature:
 
__________________________________________
(Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate.)
 
____________________________________
(Insert Social Security or Other Identifying Number of Holder)
 
 
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EXHIBIT 5.1
May 5, 2009
American Bio Medica Corporation
122 Smith Road
Kinderhook, New York 12106
 
Re: Registration Statement on Form S-3
 
Ladies and Gentlemen:
 
We have acted as special counsel to American Bio Medica Corporation, a New York corporation (the “Company”), in connection with the Registration Statement on Form S-3 (the “Registration Statement”) filed by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), relating to the resale of up to 1,000,001 shares (the “Conversion Shares”), of the Company’s common stock, par value $0.01 per share (the “Common Stock”), initially issuable (i) upon conversion of $750,000aggregate principal amount of the Company’s 10% Subordinated Convertible Debentures, Series A due 2012 (the “Debentures”), issued in an offering under Regulation D under the Securities Act and completed August 15, 2008, and (ii) up to 75,000 shares of Common Stock that may be issued upon the exercise of private placement agent warrants (the “Warrants”), issued by us to Cantone Research, Inc., as placement agent. This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.
 
We have examined and relied upon originals or copies, certified or otherwise identified to our satisfaction, of the Registration Statement, the Company’s 2009 Annual Proxy Statement, the Debentures, the Debenture Placement Agreement, the Securities Purchase Agreement, the Warrants, the Certificate of Incorporation of the Company as currently amended and filed with the Secretary of State of the State of New York, the Bylaws of the Company as currently amended and restated and in effect, a form of the share certificate, and such records of the Company and such agreements, certificates of public officials, certificates of officers or other representatives of the Company and others, and such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein.
 
In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as copies, that the parties to all executed documents (other than the Company) had all requisite power to enter into and perform all obligations thereunder, the due authorization by all requisite action of such documents, the due execution and delivery by such parties of such documents (where due execution and delivery are a prerequisite to the effectiveness thereof), and the validity and binding effect of such documents on such parties. As to any facts material to the opinions expressed herein which we have not independently established or verified, we have assumed and relied upon the truth, accuracy and completeness of the information, statements and representations contained in the records, documents, instruments and certificates we have reviewed.
 
Based upon the foregoing, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that:
 
1.           The Debentures constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to the limitations under any applicable bankruptcy, insolvency, fraudulent conveyance or transfer, equitable subordination, reorganization, moratorium or similar laws relating to or affecting creditors’ rights generally and except as enforcement thereof is subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).
 
2.           The Conversion Shares initially issuable upon conversion of the Debentures, when issued and delivered in accordance with the provisions of the Debentures and the Securities Purchase Agreement, and the shares of Common Stock issuable upon exercise of the Warrants, when issued and delivered in accordance with the provisions of the Debenture Placement Agreement, will be validly issued, fully paid and non-assessable.
 
We are licensed to practice law in the State of New York, and we express no opinion as to the law of any jurisdiction other than the laws of the State of New York and the federal laws of the United States of America.  Our opinions are subject to the effects of, and we express no opinion with respect to the application of or compliance with, state securities or “blue sky” laws, statutes, rules or regulations.
 
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This opinion is furnished as of the date hereof and we assume no responsibility to advise you of any changes in law or fact which may hereafter come to our attention.
 
We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the reference to our firm under the caption “Legal Matters” in the prospectus included in the Registration Statement.  In giving such consent, however, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission issued thereunder.
 
 
Very truly yours,
 
NOLAN & HELLER, LLP
 
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EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement on Form S-3, Amendment No. 1 (File No. 333-158582), pertaining to the Series A Debentures of American Bio Medica Corporation, of our report dated March 30, 2009, included in its Annual Report on Form 10-K dated March 30, 2009, relating to the financial statements of American Bio Medica Corporation as of December 31, 2008 and 2007 and for each of the years then ended.
 
UHY LLP
 
Albany, New York
 
May 5, 2009