-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CQNAsOtk+8xEAC3cVazcfuCltnyRUHY2LB+Tg2gcJB7Gfui1Jq42kojO13dAPoYj wzdjEymTiMOs74+jRkLs8A== 0000896747-98-000013.txt : 19980930 0000896747-98-000013.hdr.sgml : 19980930 ACCESSION NUMBER: 0000896747-98-000013 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19980928 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BIO MEDICA CORP CENTRAL INDEX KEY: 0000896747 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 223378935 STATE OF INCORPORATION: NY FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-64469 FILM NUMBER: 98716739 BUSINESS ADDRESS: STREET 1: 102 SIMMONS RD CITY: ANCRAMDALE STATE: NY ZIP: 12503 BUSINESS PHONE: 5183294485 MAIL ADDRESS: STREET 1: 102 SIMONS ROAD CITY: ANCRAMDALE STATE: NY ZIP: 12503 S-3 1 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on September 28, 1998 Registration No. 333-16535 ---------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D. C. FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AMERICAN BIO MEDICA CORPORATION ---------------------------------------------- (Exact Name of Registration as Specified in its Charter) New York 22-3378935 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 300 Fairview Avenue, Hudson, New York 12534 800-227-1243 ------------------------------------------------------------- (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) Stan Cipkowski, 300 Fairview Avenue, Hudson, New York 12534 800-227-1243 -------------------------------------------------------------------------- (Name, address, including zip code, and telephone number, including area code, of agent for service) Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement. 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 registrations statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE Proposed Maximum Title of each class Amount maximum aggregate Amount of of securities to be offering price offering registration to be registered registered per item price (1) fee - -------------------------------------------------------------------------------- Common Shares 96,506 $2.1565 $ 208,115.18 $ 61.39 Shares Common Shares (2) Underlying conversion of Series "D" 1,647,597 $2.1565 $3,553,042.90 $1,048.15 Preferred Shares Shares Common Shares Underlying exercise of Common Share Purchase 107,355 $4.81 $ 516,377.55 $ 152.33 Warrants Warrants --------- .00295 Total registration fee $1,261.87 (1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended (the "Securities Act") on the basis of the average of the high and low sales prices for such Common Stock on September 10, 1998 as reported on the Nasdaq SmallCap Market. (2) For purposes of estimating the number of common shares, par value $.01 per share ("Common Shares"), of American Bio Medica Corporation (the "Registrant") to be included in this registration statement (the "Registration Statement"), the Registrant calculated 200% of the number of Common Shares issuable upon the conversion at maturity of 2,250 of the Registrant's Series D Convertible Preferred Shares, par value $.01 per share (the "Series D Preferred Shares"), or otherwise pursuant to the Certificate of Designation of the Series D Preferred Shares, based on a conversion price of $2.73125 per share. (3) Pursuant to Rule 416, the Registration Statement also registers an indeterminate number of Common Shares as may be issued or become issuable upon conversion of the Series D Preferred Shares and exercise of the Warrants in accordance with their respective terms to prevent dilution resulting from stock splits, stock dividends or similar transactions. The Registrant hereby amends the 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 the Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. ii PROSPECTUS AMERICAN BIO MEDICA CORPORATION 1,851,458 Common Shares This prospectus (the "Prospectus") relates to the offer and sale by certain persons listed under "Selling Shareholders" (collectively, the "Selling Shareholders") of an aggregate of up to (a) 1,744,103 common shares, par value $.01 per share (the "Common Shares") of American Bio Medica Corporation (the "Company") issued and/or issuable upon the conversion of the Company's Series "D" Convertible Preferred Shares (the "Series 'D' Preferred Shares") and (b) up to 107,355 Shares issuable upon the exercise of common share purchase warrants (the "Warrants"). (See "Selling Shareholders" and "Plan of Distribution.") The Company will not receive any proceeds from the sale of Common Shares. The Company has agreed to pay the expenses of registration of the Common Shares, including legal and accounting fees. The Company has agreed to file an additional registration statement or registration statements to register sufficient shares such that, from time to time, the number of shares registered for resale upon conversion of the Series "D" Preferred Shares is twice the number of shares issuable under the applicable conversion formula. The Selling Shareholders currently hold 2,250 Series "D" Preferred Shares and 96,506 Common Shares. Each Series "D" Preferred Share is convertible at the lesser of (a) 95% of the "Market Price" (the average of the closing bid prices of the Common Shares over any three trading days, selected by the holder of the Series "D" Preferred Shares (the "Holder"), in the 20 trading days immediately preceding the date of conversion ("Conversion Date") and (b) $4.625. Each Warrant entitles the holders ("Warrantholders") to purchase one Common Share at a price of $4.81 per share until April 24, 2001. The exercise price of the Warrants has been determined through negotiation between the Company, the Warrantholders and the Selling Agent (the "Selling Agent") and such price does not necessarily bear any direct relationship to the current market value, asset value or net book value of the Company or other generally accepted criteria of value. The formula for the conversion of the Series "D" Preferred Shares has been determined by the Company, the Holder and the Selling Agent and bears no relation to the Company's assets, book value, or any other customary investment criteria, including the Company's prior operating history. (See "Risk Factors--Determination of Conversion/Exercise Prices) The Common Shares trade on the National Association of Securities Dealers, Inc. Automatic Quotation Market ("Nasdaq SmallCap") under the symbol "ABMC". On September 10, 1998, the average of the high and low sales prices for the Common Shares, as reported on the Nasdaq SmallCap Market was $2.703 per share. Nonetheless, there can be no assurance that a public market in the Common Shares will be sustained during the period of exercise of conversion of the Series "D" Preferred Shares. The Common Shares offered hereby may be sold by the Selling Shareholders or by pledgees, donees, transferees or other successors in interest that receive such shares as a gift, partnership distribution or other non-sale related transfer. The Common Shares may be sold from time to time in transactions in the over-the-counter market, in negotiated transactions, or a combination of such methods of sale, at fixed prices which may be changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. The Selling Shareholders may effect such transactions by selling the Common Shares to or through broker-dealers, including block trades in which brokers or dealers will attempt to sell the Common Shares as agent but may position and resell the block as principal, or in one or more underwritten offerings on a firm commitment or best efforts basis. (For a more complete description of the manner in which Common Shares may be offered and sold pursuant hereto see "Plan of Distribution.") THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. THE COMMON SHARES SHOULD BE PURCHASED ONLY BY INVESTORS WHO ARE ABLE TO AFFORD THE RISK OF LOSS OF THEIR ENTIRE INVESTMENT. (SEE "RISK FACTORS" starting on page 6.) -------------------------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE OR JURISDICTION, NOR HAS THE COMMISSION OR ANY STATE OR JURISDICTION PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of the Prospectus is September 28, 1998. All expenses of this offering will be paid by the Company except for commissions, fees and discounts of any underwriters, brokers, dealers or agents retained by the Selling Shareholders. Estimated expenses payable by the Company in connection with this offering are approximately $31,000. The aggregate proceeds to the Selling Shareholders from the Common Stock will be the purchase price of the Common Shares sold less the aggregate agents' commissions and underwriters' discounts, if any. The Company has agreed to indemnify the Selling Shareholders and certain other persons against certain liabilities, including liabilities under the Securities Act. CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE EFFECT THE PRICE OF THE COMMON SHARES, INCLUDING THE ENTRY OF STABILIZING BIDS OR PENALTY BIDS, EFFECTING SYNDICATE COVERING TRANSACTIONS AND PASSIVE MARKET MAKING. No dealer, salesperson or other individual has been authorized to give any information or to make any representations not contained in this Prospectus in connection with the offering covered by the Prospectus. If given or made, such information or representations must not be relied upon as having been authorized by the Company. The Prospectus does not constitute an offer to sell or a solicitation of an offer to buy the Common Shares in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation. Neither the delivery of the Prospectus nor any sale hereunder shall under any circumstances, create any implication that there has not been any change in the facts set forth in the Prospectus or in the affairs of the Company since the date hereof. 2 TABLE OF CONTENTS Available Information............................................ 3 Incorporation of Certain Documents by Reference.................. 4 The Company...................................................... 5 Risk Factors..................................................... 6 Selling Shareholders............................................ 12 Plan of Distribution............................................ 14 Legal Matters................................................... 15 Experts......................................................... 15 AVAILABLE INFORMATION The Prospectus, which constitutes a part of a registration statement (the "Registration Statement") filed by the Company with the Securities and Exchange Commission (the "Commission") under the Securities Act, omits certain information contained in the Registration Statement, and reference is hereby made to the Registration Statement and to the exhibits relating thereto for further information with respect to the Company and the Common Shares offered hereby. Statements contained herein concerning provisions of any documents are not necessarily complete, and each statement is qualified in its entirety by reference to the copy of such document filed with the Commission. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Securities Exchange Act"), and in accordance therewith files reports, proxy statements, and other information with the Commission. Such reports, proxy statements, and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549-1004; and at the following Regional Offices of the Commission: Northeast Regional Office, 7 World Trade Center, New York, New York 10007; and Chicago Regional Office, Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549-1004 at prescribed rates. The Commission also maintains a World Wide Web site on the Internet at http://www.sec.gov. that contains copies of reports, proxy and information statements and other information regarding registrants, including the Company, which electronically file reports with the Commission. 3 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, filed or to be filed with the Commission under the Securities Exchange are hereby incorporated by reference into the Prospectus: (1) The Company's Annual Report on Form 10-KSB for the year ended April 30, 1998; (2) The Company's Quarterly Report on Form 10-QSB for the quarter ended July 31, 1998; (3) The Company's Registration Statement on Form 8-A registering the Common Shares under Section 12(g) of the Securities Exchange Act; and (4) The Company's Proxy Statement for its Fiscal 1999 Annual Meeting of Shareholders filed September 11, 1998. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act after the date of the Prospectus and prior to the termination of the offering shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing such documents. Any statements contained in the Prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed documents which also is or is deemed to be incorporated by reference herein 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. The Company will provide without charge to each person, including any beneficial owner, to whom the Prospectus has been delivered, upon written or oral request of such person, a copy of any or all of the documents that have been incorporated by reference herein (not including exhibits to such documents unless such exhibits are specifically incorporated by reference herein or into such documents). Such requests may be directed to John F. Murray, Chief Financial Officer, American Bio Medica Corporation, 300 Fairview Avenue, Hudson, New York 12534, telephone (800) 227-1243. 4 THE COMPANY The following summary is qualified in its entirety by reference to the detailed information, financial statements and related notes appearing elsewhere in the Prospectus including information under the caption "Risk Factors." Each investor is urged to read the Prospectus in its entirety. American Bio Medica Corporation (the "Company") is primarily engaged in acquiring, developing and marketing biomedical technologies and products. The Company owns a technology for screening drugs of abuse, trademarked the "Rapid Drug Screen." The Company's common shares ("Common Shares") trade on the Nasdaq SmallCap Market. The Company produces several version of a "drugs of abuse" screening test, called the "Rapid Drug Screen Test" at its manufacturing facility in Columbia County, New York. The Rapid Drug Screen Test is a one-step test kit that allows a small urine sample to be tested for the presence or absence of drugs of abuse. The competitively priced test is self-contained preventing exposure of the test administrator to the urine sample. In the opinion of the Management ("Management"), the Rapid Drug Screen Test, which requires no mixing of reagents, is easier to use than any competitive product. In addition, hundreds of controlled tests conducted by independent laboratories compared the Rapid Drug Screen Test with results produced by EMIT II, a standard laboratory test, and found a 100% correlation of both positive and negative test results. As a result, Management believes that the Rapid Drug Screen Test is as accurate as that laboratory test. Versions of the Rapid Drug Screen Tests include a two panel (cocaine and marijuana), five panel (cocaine, marijuana, opiates, amphetamine and PCP) and an eight panel (THC, cocaine, opiates, PCP, amphetamines, benzodiazepines, methamphetamines and barbiturates) test. All have been cleared by the Federal Drug Administration (the "FDA") and can thus be sold in clinical as well as workplace markets. The Company has also completed a test for tricyclic antidepressants which it has submitted to the FDA for approval and which it intends to market in the near future as part of a nine-panel test. The Company has recently developed nine tests trademarked "Rapid One", each of which detects one drug of abuse and a low volume 8 panel test which requires as little as two milliliters of urine, compared with the usual 15-30 milliliters. The low volume 8 panel Rapid Drug Screen, which has received FDA 510(k) clearance, is ideal for use in hospital settings as well as for compliance with laboratory certification and quality control requirements. The Company has installed and uses equipment at its manufacturing facility suitable for the mass production of workplace drug screening tests. The Company's output was initially hampered by its inability to secure reliable supplies of reagents. This problem was rectified in May, 1997 through improved reliability of its suppliers and the addition of a third supplier. The Company also owns a patented low cost method for producing keratin proteins. The Company has no intention of developing or marketing its keratin technology, but intends to concentrate on the production and marketing of its drug screen tests and pursuing development and acquisition strategies related to substance abuse testing. 5 The Company may develop or acquire additional biomedical technologies or products in the future unrelated to substance abuse. From its inception in 1986 until 1991, the Company was involved in marketing educational books and software to schools and municipal libraries and audiovisual educational packages to educational institutions and to corporations throughout the United States. In 1991, the Company, because of heightened competition, increased costs of doing business and slow collections from municipalities, reduced its involvement in this market to that of selling audiovisual packages to libraries and commenced seeking new technologies in emerging medical markets. The Company's headquarters are located at 300 Fairview Avenue, Hudson, New York 12534. Its telephone number at that address is 800-227-1243 and its fax number is 518-822-0391. Its e-mail address is abmc@taconic.net. RISK FACTORS Except for the description of historical facts contained herein, the Prospectus contains certain forward looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company's filings with the Commission and elsewhere. Forward looking statements herein are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on Management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described in the forward-looking statements. These factors include, among others, the Company's fluctuations in sales and operating results, risks associated with international operations and regulatory, competitive and contractual risks and product development. PURCHASE OF COMMON SHARES IS HIGHLY SPECULATIVE, INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE MADE ONLY BY INVESTORS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. A PROSPECTIVE PURCHASER, PRIOR TO MAKING AN INVESTMENT DECISION, SHOULD CAREFULLY CONSIDER, ALONG WITH OTHER MATTERS REFERRED TO HEREIN, THE FOLLOWING RISK FACTORS: 1. Limited Operating History. Although the Company was formed in 1986, as far as the development, manufacture and sale of drug testing kits are concerned, it has extremely limited operational history upon which investors may base an evaluation of its performance or any assumption as to the likelihood that the Company will be profitable. The Company's prospects must be considered in light of the risks, expenses, delays, problems and difficulties frequently encountered in the establishment of a new business, the development and commercialization of new products based on innovative technology and the competitive environment in which the Company operates. Since the Company's entry into the biomedical business, the Company has generated limited revenues. There can be no assurance that the Company will be able to generate significant revenues or achieve profitable operations. 6 2. Technological Factors; Uncertainty of Product Development; Unproven Technology. Although the Company's development efforts relating to the technological aspects of the workplace drug testing kit are completed, the Company is continually seeking to refine and improve its design and performance and to develop additional versions. The Company's efforts remain subject to all of the risks inherent in new product development, including unanticipated technical, regulatory or other problems which could result in material delays in product development or commercialization or significantly increased costs. The Company may be required to commit considerable additional efforts, time and resources to develop production versions of its additional products. The Company's success will depend upon such products meeting targeted product costs and performance, and may also depend upon their timely introduction into the marketplace. There can be no assurance that development of the Company's proposed products will be successfully completed on a timely basis, if at all, that they will meet projected price or performance objectives, satisfactorily perform all of the functions for which they are being designed, or prove to be sufficiently reliable in widespread commercial application. Moreover, there can be no assurance that unanticipated problems will not arise with respect to technologies incorporated into its test kits or that product defects will not become apparent after commercial introduction of its additional test kits. In the event that the Company is required to remedy defects in any of its products after commercial introduction, the costs to the Company could be significant, which could have a material adverse effect on the Company revenues or earnings. 3. Uncertainty of Continued Market Acceptance. The Company's drug test kits have been well received by customers, including corporations, distributors and correctional institutions. As is typically the case with an emerging company, demand and market acceptance for newly introduced products is subject to a high level of uncertainty. Achieving continued market acceptance for its drug tests will require substantial marketing efforts and expenditure of significant funds to inform potential distributors and customers of the distinctive characteristics, benefits and advantages of its kits. There can be no assurance that its drug test kits will become generally accepted or that the Company's efforts will result in successful product commercialization or initial or continued market acceptance for its other drug testing products. In addition, continued market acceptance will depend on the Company's ability to upgrade its technology 4. Competition in the Drug Testing Market; Technological Obsolescence. The Company faces competition for every existing and proposed product from drug manufacturers and other manufacturers of drug test kits. Some of its competitors are well known and have far greater financial resources than the Company. To the best of Management's knowledge, and in its opinion, no competitors have introduced products which equal the ease of use combined with the accuracy of the Company's drug test kits. The markets for drug test kits and related products are highly competitive. There can be no assurance that other technologies or products which are functionally similar to those of the Company are not currently under development. In addition, there can be no assurance that other companies with the expertise or resources that would encourage them to attempt to develop or market competing products will not develop new products directly competitive with the Company's drug test kits. Despite the protections which would be available to the Company in the event its pending application for a design patent is granted, the Company expects other companies to attempt to develop technologies or products which will compete with the Company's products. In addition, continued market acceptance will depend on the Company's ability to upgrade its technology to meet any future competitive technologies. 7 5. Dilution as a Result of Conversion of Series "D" Preferred Shares and Exercise of Warrants. The Selling Shareholders purchased 2,500 Series "D" Preferred Shares, converted 250 Series "D" Preferred Shares into 96,506 Common Shares and now hold 2,250 Series "D" Preferred Shares of the Company, which are convertible into Common Shares. See "Selling Shareholders." Each Series "D" Preferred Share is convertible into a number of Common Shares equal to (i) $1,000 (ii) divided by a conversion price which is the lesser of (a) 95% of the "Market Price" (the average of the closing bid prices of the Common Shares over any three trading days, selected by the holder of the Series "D" Preferred Shares in the 20 trading days immediately preceding the date of conversion) and (b) $4.625. Under the applicable conversion formulas of the Series "D" Preferred Shares, the number of Common Shares issuable upon conversion is inversely proportional to the market price of the Common Shares at the time of conversion (i.e., the number of shares increases as the market price of the Common Shares decreases); and except with respect to certain redemption rights of the Company for the Series "D" Preferred Shares and the limitation under Nasdaq SmallCap regulations which limit the aggregate amount of Common Shares which the Company may issue at a discount from market price upon conversion of the Series "D" Preferred Shares and Warrants without shareholder approval, (such shareholder approval will be requested by the Company), there is no cap on the number of shares of Common Shares which may be issued. In addition, the number of Common Shares issuable upon the conversion of the Series "D" Preferred Shares and the exercise of Warrants is subject to adjustment upon the occurrence of certain dilutive events. For a further description of the rights of holders of Series "D" Preferred Shares, see the Certificate of Amendment of Certificate of Incorporation of American Bio Medica Corporation filed as an exhibit to the Company's Current Report on Form 8-K, dated April 27, 1998. The Selling Shareholders also hold outstanding Warrants to acquire a total of 107,355 Common Shares at a price of $4.81 share. All of such Common Shares are covered by the registration statement containing this Prospectus or will be covered by subsequent registration statements filed by the Company, if necessary. The exercise of such Warrants and conversion of such Series "D" Preferred Shares and the sale of such Common Shares could have a significant negative effect on the market price of the Common Shares and could materially impair the Company's ability to raise capital through the future sale of equity securities. 6. Possible Inability to Find and Attract Qualified Personnel. The Company currently has sufficient management expertise and depth to develop its business. It has recently added marketing and manufacturing management and has added to its scientific advisory board. However, it will need additional skilled and dedicated marketing personnel as well as technical and production personnel in the future. There is no guarantee that the Company can retain its present staff or that capable personnel with relevant skills will be available. 7. Dependence on Management. The Company is dependent on the expertise and experience of Stan Cipkowski, President, Jay Bendis, Vice-President-Marketing, and Douglas Casterlin, Vice-President and General Manager, for its operations. The loss of Messrs. Cipkowski, Bendis and Casterlin, or any of them, will seriously inhibit the Company's operations. The Company does not maintain key man insurance for any of its management employees. 8 8. Possible Adverse Changes in Regulatory Framework. Clearance from the FDA is not required for the sale of workplace drug test kits, but is required for clinical drug test kits. The Company has received "510(k)" clearance from the FDA for its two, five and eight panel drug test kits. It is awaiting FDA clearance of one test of its nine panel drug test kit and is preparing the application for its Rapid One drug test kit. However, regulatory standards may change in the future and there is no assurance that if and when the Company applies for additional clearances from the FDA they will be granted. 9. Resale of Restricted Securities. 5,220,571 Common Shares presently issued and outstanding as of the date hereof are "restricted securities" as that term is defined under the Securities Act of 1933, as amended, (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, in essence, that a person holding restricted securities for a period of one year may sell those securities in unsolicited brokerage transactions or in transactions with a market maker, in an amount equal to one percent of the Company's outstanding Common Shares every three months. 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. Such information is deemed available if the issuer satisfies the reporting requirements of sections 13 or 15(d) of the Securities and Exchange Act of 1934 (the "Securities Exchange Act") or of Rule 15c2-11 thereunder. Rule 144(k) also permits the termination of certain restrictions on sales of restricted securities by persons who were not affiliates of the Company at the time of the sale and have not been affiliates in the preceding three months. Such persons must satisfy a two year holding period. There is no limitation on such sales and there is no requirement regarding adequate current public information. Investors should be aware that sales under Rule 144 or 144(k), or pursuant to a registration statement filed under the Act, may have a depressive effect on the market price of the Company's securities in any market which may develop for such shares. 10. Need for Additional Financing. The Company expects that its cash on hand will be sufficient to fund the Company's proposed operations for at least 12 months from the date of the Prospectus. This estimate is based on certain assumptions and there can be no assurance that unanticipated unbudgeted 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 the Company's drug test kits and other technologies could make cash on hand insufficient to fund the Company's proposed operations. There can be no assurance that the Company will be able to obtain any necessary additional financing on terms acceptable to it, if at all. In addition, financing may result in further dilution to the Company's then existing stockholders. The Company has no established borrowing arrangements or available lines of credit. 9 11. No Dividends. The payment of dividends rests within the discretion of the Company's Board of Directors. No dividends have been paid on the Common Shares and the Company does not anticipate the payment of cash dividends in the foreseeable future. If the operations of the Company become profitable, it is anticipated that, for the foreseeable future, any income received therefrom would be devoted to the Company's future operations and that cash dividends would not be paid to the Company's shareholders. 12. Control by Management. Management of the Company owns in excess of 36% of the outstanding Common Shares and is in a position to control the election of the Board of Directors. The certificate of incorporation of the Company does not provide for cumulative voting and, as a result, purchasers of the Company's securities will not be able to elect any directors or exert any control over the general policies of the Company. 13. Ability to Retain and Attract Market Makers. The Common Shares trade on the Nasdaq SmallCap Market. In the event that the market makers cease to function as such, public trading in the Common Shares will be adversely affected or may cease entirely. Presently, market makers for the Company's Common Shares include GVR Co., Fahnestock & Co., Inc., Hill Thompson Magid & Co., J.B. Oxford & Co., Kalb Voorhis & Co., LLC, Nash Weiss & Co., Inc., Paragon Capital Corp., Troster Singer Corp., Comprehensive Capital Corp., Herzog, Heine, Geduld, Inc., Mayer & Schweitzer, Inc., Knight Securities, Ltd., Naib Trading Corp., National Financial Securities Corp., Sharpe Capital, Inc. and Wien Securities Corp., Sherwood Securities Corp., H. J. Meyers & Co., Inc., M. H. Meyerson & Co., Inc. and National Financial Service Corp. 14. Anti-Takeover Provisions in Certificate of Incorporation. The Company's certificate of incorporation authorizes the issuance of 5,000,000 Preferred Shares. The Board of Directors has the authority, without further action by the Common Shareholders, to issue Preferred Shares from time to time in one or more classes or series, to fix the number of shares constituting any class or series and the stated value thereof, if different from the par value, and to fix the terms of any such series or class, including dividend rights, dividend rates, conversion or exchange rights, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption price and the liquidation preference of such class or series. Thus, the Board of Directors, in order to avoid a hostile takeover, could issue Preferred Shares with supervoting rights, conversion rights into Common Shares, liquidation preference or a combination of rights and preferences which could inhibit success of such attempt. 10 15. Determination of Conversion/Exercise Prices. The formula for the conversion of the Series "D" Preferred Shares and the exercise of the Warrants into Common Shares has been determined by the Company and the holders thereof and bears no relation to the Company's assets, book value, or any other customary investment criteria, including the Company's prior operating history. 16. Patents and Trademarks. The Company has registered "ABM" and its logo in the United States, Canada, Chile and Mexico and has registered "Rapid Drug Screen" in Mexico. The Company has additional trademark applications pending in the United States, Canada, Philippines and in 15 European countries. The Company's trademark counsel, Edmund Jaskiewicz, Esq., Executive Vice-President, has opined that there are no similar marks and, as a consequence, the Company feels confident that such marks will be registered. The Company has applied for various patents directly in numerous countries, including the United States, Canada, Australia, Argentina, Brazil, China, Japan, Germany, Mexico, Philippines, Poland and the United Kingdom and has filed patent applications with three regional associations covering 33 additional member countries. Stan Cipkowski, President, has assigned to the Company for no consideration, his application for a utility and design patent in the United States and Canada on the drug screen kit as an entity. Mr. Jaskiewicz, as patent counsel, has opined that a search has revealed no competing patented products. However, there can no assurance that a patent will be granted or that, if granted, it will withstand challenge. 17. Litigation Relating to Acquisition of Technologies. In February 1994, Robert Friedenberg, as owner of the two medical technology companies acquired by the Company, in the name of those corporations, filed suit to have a share exchange agreement rescinded on the grounds of breach of contract. In order to preserve a claim for damages, the Company filed a third-party claim against Dr. Friedenberg, for breach of the Share Exchange Agreement. In November 1995, after a trial, the court dismissed Dr. Friedenberg's lawsuit and allowed the Company's third-party claim to proceed to trial. In September, 1996, Dr. Friedenberg died. That trial was decided by a jury on May 5, 1997. The verdict determined that Dr. Friedenberg breached various contracts, including the Share Exchange Agreement, when he failed to deliver technology to the Company. The jury also found in favor of the Company on two of the three fraud claims against Dr. Friedenberg and awarded the Company approximately $321,000 in damages. Dr. Friedenberg's estate, just prior to the jury trial, filed a supplemental claim for the shares of the Company's stock which he would have received under the Share Exchange Agreement which the trial judge took under advisement. The trial judge, on July 17, 1998 ruled that the estate of Dr. Friedenberg is entitled to 5,907,154 common shares of the Company. The Company has taken an appeal. Management of the Company in consultation with counsel is of the opinion that the trial judge's award of the shares to Dr. Friedenberg's estate will be reversed on appeal. 11 SELLING SHAREHOLDERS The following table sets forth the names of the Selling Shareholders, the number of Common Shares owned beneficially by each of the Selling Shareholders as of July 31, 1998, and the number of Common Shares which may be offered for sale pursuant to the Prospectus. Because the Selling Shareholders may offer all, some or none of their Common Shares, no definitive estimate as to the number of Common Shares that will be held by the Selling Shareholders after such offering can be provided and the following table has been prepared on the assumption that all Common Shares covered by this Prospectus will be sold. The Company has agreed initially to register 1,744,103 Common Shares for resale after conversion of the Series "D" Preferred Shares, all of which are covered by this Prospectus and to register for resale the 107,355 Common Shares issuable upon exercise of the Warrants. Unless otherwise indicated, the persons and entities named in the table have sole voting and sole investment power with respect to all Common Shares beneficially owned, subject to community property laws where applicable. Except, as noted below, the Selling Shareholders have not held any position or office, or had any material relationship with the Company or any of its predecessors or affiliates within the last three years.
PERCENTAGE SHARES OF NUMBER OF PERCENTAGE OF COMMON SHARES COMMON SHARES PREFERRED SHARES BENEFICIALLY BENEFICIALLY SHARES BENEFICIALLY BENEFICIALLY OWNED PRIOR TO OWNED PRIOR OWNED PRIOR BEING OWNED AFTER OWNED AFTER NAME OFFERING TO OFFERING (1) TO OFFERING OFFERED OFFERING OFFERING ---- --------------- -------------- ------------- ------- ------------- ------------- CC Investments, LDC 2,250 740,099 (2) 4.9 (2)(3) 1,844,103 -0- 0% Shoreline Pacific Institutional Finance -0- 7,355 (3) * 7,355 -0- 0% - -------------- * less than 1%
12 (1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities and includes any securities which the person has the right to acquire within 60 days of September 10, 1998 through the conversion or exercise of any security or other right. (2) Includes 96,506 Common Shares, and 823,799 Common Shares issuable upon conversion of the Series "D" Preferred Shares calculated using an assumed conversion price of $2.73125 per share (representing 95% of a $2.875 per share assumed Market Price) and the stated value of the Series "D" Preferred Shares. The Series "D" Preferred Shares were issued pursuant to a Securities Purchase Agreement, dated April 24, 1998 (the "Closing Date"). Each Series "D" Preferred Share has a face amount of $1,000 and converts, subject to certain restrictions, into a number of Common Shares equal to $1,000 divided by a variable conversion rate equal to the lower of (a) 95% of the Market Price and (b) $4.625. Pursuant to the terms of the Series "D" Preferred Shares and the Warrants, no holder thereof can convert any portion of such Series "D" Preferred Shares or exercise any Warrants if such conversion or exercise would increase such holder's beneficial ownership of Common Shares to in excess of 4.9%. Absent such limitations at the $2.73125 per share conversion price the Series "D" Preferred Shares held by CC Investments, LDC would have been convertible into 823,799 Common Shares, which, when added to the 96,506 Common Shares received from the conversion of 250 Series "D" Preferred Shares and 100,000 shares issuable upon exercise of Warrants, would have represented 6.7% of the Common Shares. (The ownership limitations may be waived by a holder of Series "D" Preferred Shares or Warrants (the "Selling Shareholder") on 90 days notice.) The number of Common Shares registered pursuant to the Registration Statement on behalf of the Selling Shareholder holding Series "D" Preferred Shares and the number of Common Shares offered hereby by such holder have been determined by agreement between the Company and such Selling Shareholder. Because the number of Common Shares that will ultimately be issued upon conversion of the Series "D" Preferred Shares is dependent, subject to certain limitations, upon the average of certain closing bid prices of the Common Shares prior to conversion, as described above, and certain antidilution adjustments, such number of Common Shares (and therefore the number of Common Shares to ultimately be offered hereby) cannot be determined at this time. Moreover, pursuant to Nasdaq SmallCap regulations, the Company may be subject to a limitation that, in the absence of shareholder approval, the aggregate number of Common Shares issuable to the Selling Shareholders at a discount from market price upon conversion of the Series "D" Preferred Shares and exercise of the Warrants may not exceed 20% of the outstanding Common Shares. Unless shareholder approval is obtained to issue Common Shares to the Selling Shareholders in excess of such maximum amount set forth above, none of the Selling Shareholders will be entitled to acquire more than its proportionate share of such maximum amount. Any Series "D" Preferred Shares which may not be converted and any Warrants which may not be exercised because of such limitation must be redeemed by the Company (3) Consists of Warrants to purchase 7,355 Common Shares by Shoreline Pacific Institutional Finance in connection with such company's role as Selling Agent for the private placement of the Series "D" Preferred Shares in April, 1998. 13 PLAN OF DISTRIBUTION The Common Shares will be offered and sold by the Selling Shareholders for their own accounts. The Company will not receive any proceeds from the sale of the Common Shares pursuant to this Prospectus. The Company has agreed to pay the expenses of registration of the Common Shares, including legal and accounting fees. The Common Shares offered hereby may be sold by the Selling Shareholders or by pledgees, donees, transferees or other successors in interest that receive such shares as a gift, partnership distribution or other non-sale related transfer. The Common Shares may be sold from time to time in transactions in the over-the-counter market, in negotiated transactions, or a combination of such methods of sale, at fixed prices which may be changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. The Selling Shareholders may effect such transaction by selling the Common Shares to or through broker-dealers, including block trades in which brokers or dealers will attempt to sell the Common Shares as agent but may position and resell the block as principal, or in one or more underwritten offerings on a firm commitment or best efforts basis. Sales of Selling Shareholders' Common Shares may also be made pursuant to Rule 144 under the Securities Act, where applicable. To the extent required under the Securities Act, the aggregate amount of Selling Shareholders' Common Shares being offered and the terms of the offering, the names of any such agents, brokers, dealers or underwriters and any applicable commission with respect to a particular offer will be set forth in an accompanying Prospectus supplement. Any underwriters, dealers, brokers or agents participating in the distribution of the Common Shares may receive compensation in the form of underwriting discounts, concessions, commissions or fees from a Selling Shareholder and/or purchasers of Selling Shareholders' Common Shares, for whom they may act (which compensation as to a particular broker-dealer might be in excess of customary commissions). From time to time, one or more of the Selling Shareholders may transfer, pledge, donate or assign such Selling Shareholders' Common Shares to lenders or others and each of such persons will be deemed to be a "Selling Shareholder" for purposes of this Prospectus. The number of Selling Shareholders' Common Shares beneficially owned by those Selling Shareholders who so transfer, pledge, donate or assign Selling Shareholders' Common Shares will decrease as and when they take such actions. The plan of distribution for Selling Shareholders' Common Shares sold hereunder will otherwise remain unchanged, except that the transferees, pledgees, donees or other successors will be Selling Shareholders hereunder. A Selling Shareholder may enter into hedging transactions with broker-dealers and the broker-dealers may engage in short sales of the Common Shares in the course of hedging the positions they assume with such Selling Shareholder, including, without limitation, in connection with distributions of the Common Shares by such broker-dealers. In addition, a Selling Shareholder may, from time to time, sell short the Common Shares of the Company, and in such instances, this Prospectus may be delivered in connection with such short sales and the Common Shares offered hereby may be used to cover such short sales. A Selling Shareholder may also enter into option or other transactions with broker-dealers that involve the delivery of the Common Shares to the broker-dealers, who may then resell or otherwise transfer such Common Shares. A Selling Shareholder may also loan or pledge the Common Shares to a broker-dealer and the broker-dealer may sell the Common Shares so loaned or upon a default may sell or otherwise transfer the pledged Common Shares. 14 Common Shares to be sold hereunder may be issued upon conversion of the Series "D" Preferred Shares in accordance with their terms, or in other transactions with the Company involving the Series "D" Preferred Shares, including, without limitation, issuance of Common Shares in exchange for Series "D" Preferred Shares and issuance of Common Shares pursuant to modification of the terms of the Series "D" Preferred Shares, or in settlement of claims with respect to rights of holders of Series "D" Preferred Shares. In order to comply with the securities laws of certain states, if applicable, the Common Shares will be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states the Common Shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. The Selling Shareholders and any broker-dealer or agents that participate with the Selling Shareholders in the distribution of the Shares may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any commissions received by them and any profit on the resale of the Common Shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. LEGAL MATTERS The validity of the securities offered by the Prospectus is being passed upon for the Company by Joel Pensley, Esq., 276 Fifth Avenue, New York, New York 10023. Joel Pensley is the owner of 5,000 Common Shares and 30,000 Nonstatutory Options. EXPERTS The financial statements of the Company as of April 30, 1997 appearing in the Annual Report of the Company for the fiscal year ended April 30, 1997 have been audited by Thomas P. Monahan, CPA, an independent public accountant, as indicated in his report with respect thereto, and are included herein in reliance upon his report given as an expert in accounting and auditing. The financial statements of American Bio Medica Corporation as of and for the year ended April 30, 1998 included in the Annual Report on Form 10-KSB of the Company for the fiscal year ended April 30, 1998 and incorporated by reference herein have been audited by Richard A. Eisner & Company, LLP, independent auditors, as indicated in their report with respect thereto, and are included herein in reliance upon their report given as experts in accounting and auditing. 15 AMERICAN BIO MEDICA CORPORATION Part II Information Not Required in Prospectus Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The expenses payable by the Registrant in connection with the issuance and distribution of the securities are estimated as follows: Amount -------- SEC Registration Fee $ 1,262 Legal Fees and Expenses $ 20,000 Accounting $ 7,500 Transfer Agent Fees $ 1,000 Miscellaneous $ 1,238 -------- Total $ 31,000 Item 15. Indemnification of Directors and Officers The New York Business Corporation Law provides for the indemnification of the Company's officers, directors and corporate employees and agents under certain circumstances as follows: 721 NONEXCLUSIVITY OF STATUTORY PROVISIONS FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS. The indemnification and advancement of expenses granted pursuant to, or provided by, this article shall not be deemed exclusive of any other rights to which a director or officer seeking indemnification or advancement of expenses may be entitled, whether contained in the certificate of incorporation or the by-laws or, when authorized by such certificate of incorporation or by-laws, (i) a resolution of shareholders, (ii) a resolution of directors, or (iii) 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 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 personally gained in fact a financial profit or other advantage to which he was not legally entitled. Nothing contained in this article shall affect any rights to indemnification to which corporate personnel other than directors and officers may be entitled by contract or otherwise under law. iii 722 AUTHORIZATION FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS. (a) A corporation may indemnify any person, made, or threatened to be made, a party to an action or proceeding other than one by or in the right of the corporation to procure a judgment in its favor, whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the corporation served in any capacity at the request of the corporation, by reason of the fact that he, his testator or intestate, was a director or officer of the corporation, or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation and, in criminal actions or proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful. (b) The termination of any such civil or criminal action or proceeding by judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not in itself create a presumption that any such director or officer did not act, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation or that he had reasonable cause to believe that his conduct was unlawful. (c) A corporation may indemnify any person made, or threatened to be made, a party to an action by or in the right of the corporation to procure a judgment in its favor by mason of the fact that he, his testator or intestate, is or was a director or officer of the corporation, or is or was seeing at the request of the corporation as a director or officer of any other corporation of any type or kind, domestic or foreign, of any partnership, joint venture, trust, employee benefit plan or other enterprise, against amounts paid in settlement and reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense or settlement of such action, or in connection with an appeal therein if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation, except that no indemnification under this paragraph shall be made in respect of (1) a threatened action, or a pending action which is settled or otherwise disposed of, or (2) any claim issue or matter as to which such person shall have 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 such portion of the settlement amount and expenses as the court deems proper. iv (d) For the purpose of this section, a corporation shall be deemed to have requested a person to serve an employee benefit plan where the performance by such person of his duties to the corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to applicable law shall be considered fines; and action taken or omitted by a person with respect to an employee benefit plan in the performance of such person's duties for a purpose reasonably believed by such person to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the corporation. 723 PAYMENT OF INDEMNIFICATION OTHER THAN BY COURT AWARD. (a) A person who has been successful, on the merits or otherwise, in the defense of a civil or criminal action or proceeding of the character described in section 722 shall be entitled to indemnification as authorized in such section. (b) Except as provided in paragraph (a), any indemnification under section 722 or otherwise permitted by section 721, unless ordered by a court under section 724 (Indemnification of directors and officers by a court), shall be made by the corporation, only if authorized in the specific case: (1) By the board acting by a quorum consisting of directors who are not parties to such action or proceeding upon a finding that the director or officer has met the standard of conduct set forth in section 722 or established pursuant to section 721, as the case may be, or, (2) If a quorum under subparagraph (1) is not obtainable or, even if obtainable, a quorum of disinterested directors so directs; (A) By the board upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in such sections has been met by such director or officer, or (B) By the shareholders upon a finding that the director or officer has met the applicable standard of conduct set forth in such sections. (c) Expenses incurred in defending a civil or criminal action or proceeding may be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount as, and to the extent, required by paragraph (a) of section 725. v 724 INDEMNIFICATION OF DIRECTORS AND OFFICERS BY A COURT. (a) Notwithstanding the failure of a corporation to provide indemnification, and despite any contrary resolution of the board or of the shareholders in the specific case under section 723 (Payment of indemnification other than by court award), indemnification shall be awarded by a court to the extent authorized under section 722 (Authorization for indemnification of directors and officers) and paragraph (a) of section 723. Application therefore may be made, in every case, either: (1) In the civil action or proceeding in which the expenses were incurred or the amounts were paid, or (2) To the supreme court in a separate proceeding, in which case the application shall set forth the disposition of any previous application made to any court for the same or similar relief and also reasonable cause for the failure to make application for such relief in the action or proceeding in which the expenses were incurred or other amounts were paid. (b) The application shall be made in such manner and form as may be required by the applicable rules of court or, in the absence thereof, by direction of a court to which it is made. Such application shall be upon notice to the corporation. The court may also direct that notice by given at the expense of the corporation to the shareholder and such other person as it may designate in such manner as it may require. (c) Where indemnification is sought by judicial action, the court may allow a person such reasonable expenses, including attorneys' fees, during the pendency of the litigation as are necessary in connection with his defense therein, if the court shall find that the defendant has by his pleadings or during the course of the litigation raised genuine issues of fact or law. 725 OTHER PROVISIONS AFFECTING INDEMNIFICATION OF DIRECTORS AND OFFICERS. (a) All expenses incurred in defending a civil or criminal action or proceeding which are advanced by the corporation under paragraph (c) of section 723 (Payment of indemnification other than by court award) or allowed by a court under paragraph (c) of section 724 (Indemnification of directors and officers by a court) shall be repaid in case the person receiving such advancement or allowance is ultimately found, under the procedure set forth in this article, not to be entitled to indemnification or, where indemnification is granted, to the extent the expenses so advanced by the corporation or allowed by the court exceed the indemnification to which he is entitled. vi (b) No indemnification, advancement or allowance shall be made under this article in any circumstance where it appears: (1) That the indemnification would be inconsistent with the law of the jurisdiction of incorporation of a foreign corporation which prohibits or otherwise limits such indemnification; (2) That the indemnification would be inconsistent with a provision of the certificate of incorporation, a by-law, a resolution of the board or of the shareholders, an agreement or other proper corporate action, in effect at the time of the accrual of the alleged cause of action asserted in the threatened or pending action or proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (3) If there has been a settlement approved by the court, that the indemnification would be inconsistent with any condition with respect to indemnification expressly imposed by the court in approving the settlement. (c) If any expenses or other amounts are paid by way of indemnification, otherwise than by court order or action by the shareholders, the corporation shall, not later than the next annual meeting of shareholders unless such meeting is held within three months from the date of such payment, and in any event, within fifteen months from the date of such payment, mail to its shareholders of record at the time entitled to vote for the election of directors a statement specifying the persons paid, the amounts paid, and the nature and status at the time of such payment of the litigation or threatened litigation. (d) If any action with respect to indemnification of directors and officers is taken by way of amendment of the by-laws, resolution of directors, or by agreement, then the corporation shall, not later than the next annual meeting of shareholders, unless such meeting is held within three months from the date of such action, and, in any event, within fifteen months from the date of such action, mail to its shareholders of record at the time entitled to vote for the election of directors a statement specifying the action taken. (e) Any notification required to be made pursuant to the foregoing paragraph (c) or (d) of this section by any domestic mutual insurer shall be satisfied by compliance with the corresponding provisions of section one thousand two hundred sixteen of the insurance law. (f) The provisions of this article relating to indemnification of directors and officers and insurance therefor shall apply to domestic corporations and for corporations doing business in this state, except as provided in section 1320 (Exemption from certain provisions). vii 726 INSURANCE FOR INDEMNIFICATION OF DIRECTORS AND OFFICERS. a) Subject to paragraph (b), a corporation shall have power to purchase and maintain insurance: (1) To indemnify the corporation for any obligation which it incurs as a result of the indemnification of directors and officers under the provisions of this article, and (2) To indemnify directors and officers in instances in which they may be indemnified by the corporation under the provisions of this article, and (3) To indemnify directors and officers in instances in which they may not otherwise be indemnified by the corporation under the provisions of this article provided the contract of insurance covering such directors and officers provides, in a manner acceptable to the superintendent of insurance, for a retention amount and for coinsurance. (b) No insurance under paragraph (a) may provide for any payment, other than cost of defense, to or on behalf of any director or officer: (1) if a judgment or other final adjudication adverse to the insured director or officer establishes that his acts of active and deliberate dishonesty were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled, or (2) in relation to any risk the insurance of which is prohibited under the insurance law of this state. (c) Insurance under any or all subparagraphs of paragraph (a) may be included in a single contract or supplement thereto. Retrospective rated contracts are prohibited. (d) The corporation shall, within the time and to the persons provided in paragraph (c) of section 725 (Other provisions affecting indemnification of directors or officers), mail a statement in respect of any insurance it has purchased or renewed under this section, specifying the insurance carrier, date of the contract, cost of the insurance, corporate positions insured, and a statement explaining all sums, not previously reported in a statement to shareholders, paid under any indemnification insurance contract. (e) This section is the public policy of this state to spread the risk of corporate management, notwithstanding any other general or special law of this state or of any other jurisdiction including the federal government. viii Item 16. EXHIBITS Exhibits Exhibit List 3.07 Fifth Amendment to Certificate of Incorporation** 4.09 Specimen Certificate, Series "D" Preferred Stock* 4.10 Form of Securities Purchase Agreement between the Company and the Purchaser* 4.11 Form of Registration Rights Agreement by and among the Company, the Selling Agent and the Purchaser* 4.12 Form of Common Stock Purchase Warrant Certificate* 4.13 Form of Certificate of Designation relating to Series "D" Preferred Shares* 5.06 Opinion and Consent of Joel Pensley, Esq. 23.12 Consent of Thomas P. Monahan, CPA 23.13 Consent of Richard A. Eisner & Company, LLP 23.14 Consent of Joel Pensley, Esq. relating to Post Effective Amendment No. 1 (contained in Exhibit 5.06) --------------------------- * Previously submitted as exhibits to Form 8-K filed on April 30, 1998 ** Previously submitted as an exhibit to Registration Statement on Form SB-2 filed on May 20, 1998 ix Item 17. Undertakings Insofar as indemnification for liabilities arising under the Securities Act 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. The undersigned hereby undertakes: (a) 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 this 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 this Registration Statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post effective amendment by these paragraphs is contained in periodic reports filed by the Company pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated by reference in this Registration Statement. (b) that, for the purposes of determining any liability under said Act, 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; (c) 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; (d) That, for purposes of determining any liability under the Act, each filing of the Company's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (and, where applicable, each filing of an employee benefit's plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. x 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 post effective amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hudson and State of New York on the 22 day of September, 1998. AMERICAN BIO MEDICA CORPORATION (Registrant) By: /s/Stan Cipkowski ------------------ Stan Cipkowski, President and Principal Executive Officer By: /s/John F. Murray -------------------- John F. Murray, Treasurer and Principal Financial Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated: /s/Stan Cipkowski - --------------------- Director September 22, 1998 Stan Cipkowski /s/Edmund Jaskiewicz - --------------------- Edmund Jaskiewicz Director September 22, 1998 /s/Jay Bendis - --------------------- Jay Bendis Director September 22, 1998 /s/John F. Murray - --------------------- John F. Murray Director September 22, 1998 - --------------------- Jasper R. Clay, Jr. Director - --------------------- Karen Russo Director xi EX-5 2 OPINION AND CONSENT OF JOEL PENSLEY Exhibit 5.6 Opinion and Consent of Joel Pensley Joel Pensley Attorney at Law 276 Fifth Avenue (Suite 715) New York, New York 10001 212-725-7110 Fax: 212-725-7527 September 22, 1998 American Bio Medica Corporation 300 Fairview Avenue Hudson, New York 12534 Re: Registration Statement on Form S-3 Gentlemen: I refer to the registration statement on Form S-3 (the "Registration Statement") of American Bio Medica Corporation, a New York corporation (the "Company"), to be delivered for electronic filing to the Securities and Exchange Commission, relating to an aggregate of 1,744,103 common shares, $.01 par value each ("Common Shares") issued or issuable upon conversion of underlying Series "D" convertible preferred shares (the "Series D Preferred Shares") (subject to adjustment pursuant to Rule 416 to the Securities Act of 1933, as amended, and pursuant to the Certificate of Designation relating to the Series "D" Preferred Shares) and to 107,355 Common Shares underlying the exercise of common share purchase warrants (the "Warrants"). In my capacity as counsel to the Company, I have examined the Company's Certificate of Incorporation and By-laws, as amended to date, and the minutes and other corporate proceedings of the Company. With respect to factual matters, I have relied upon statements and certificates of officers of the Company. I have also reviewed such other matters of law and examined and relied upon such other documents, records and certificates as we have deemed relevant hereto. In all such examinations I have assumed conformity with the original documents of all documents submitted to us as conformed or photostatic copies, the authenticity of all documents submitted to me as originals and the genuineness of all signatures on all documents submitted to me. (i) The Company has been duly incorporated and is a validly existing corporation in good standing under the laws of the State of New York. (ii) The Common Shares issued or to be issued upon conversion of the Series "D" Preferred Shares or exercise of the Warrants pursuant to the Registration Statement have been duly authorized and, when issued, will be validly issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference made to me under the caption "Legal Matters" in the prospectus incorporated in the Registration Statement. Very truly yours, /s/Joel Pensley --------------- Joel Pensley EX-23 3 CONSENT OF THOMAS P. MONAHAN, CPA Exhibit 23.12 Consent of Thomas P. Monahan, CPA CONSENT I consent to the reference to me under the caption "Experts" in the Registration Statement on Form S-3 and related Prospectus of American Bio Medica Corporation and to the incorporation by reference therein of my report on my audit of the financial statements of American Bio Medica Corporation, as of April 30, 1997 and for the year then ended included in its Annual Report for the fiscal year ended April 30, 1998 on Form 10-KSB filed with the Securities and Exchange Commission. I also consent to the reference under the caption "Experts" in the Prospectus. Dated: September 22, 1998 /s/Thomas P. Monahan -------------------- Thomas P. Monahan EX-23 4 CONSENT OF RICHARD A. EISNER & COMPANY, LLP Exhibit 23.13 Consent of Richard A. Eisner & Company, LLP CONSENT We consent to the incorporation by reference in the Registration Statement on Form S-3 of American Bio Medica Corporation of our report dated June 14, 1998 (with respect to the second paragraph of Note K(3), July 23, 1998) on our audit of the financial statements of American Bio Medica Corporation, as of April 30, 1998 and for the year then ended included in its Annual Report on Form 10-KSB. We also consent to the reference of our firm under the caption "Experts" in the Prospectus. New York, New York September 21, 1998 /s/Richard A. Eisner & Company, LLP ----------------------------------- Richard A. Eisner & Company, LLP -----END PRIVACY-ENHANCED MESSAGE-----