-----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, Pw5zakYKmoNuMLe8veTLNusc+q9UzCSADS+mj899aSu12XJsoeV90TeMEaHAyvu0 UuN4//ZHPzQbf5c8udK7WA== 0000950137-99-003290.txt : 19990903 0000950137-99-003290.hdr.sgml : 19990903 ACCESSION NUMBER: 0000950137-99-003290 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990731 FILED AS OF DATE: 19990902 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BIO MEDICA CORP CENTRAL INDEX KEY: 0000896747 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 141702188 STATE OF INCORPORATION: NY FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-28666 FILM NUMBER: 99704947 BUSINESS ADDRESS: STREET 1: 300 FAIRVIEW AVENUE CITY: HUDSON STATE: NY ZIP: 12534 BUSINESS PHONE: 8002271243 MAIL ADDRESS: STREET 1: 300 FAIRVIEW AVENUE CITY: HUDSON STATE: NY ZIP: 12534 10QSB 1 FORM 10-QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-QSB [x] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended July 31, 1999. [ ] Transition report under Section 13 or 15 (d) of the Securities Exchange Act of 1934. For the transition period from to Commission File Number: 0-28666 AMERICAN BIO MEDICA CORPORATION ----------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) New York 14-1702188 ------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 300 Fairview Avenue, Hudson, New York 12534 ------------------------------------------- (Address of principal executive offices) 800-227-1243 --------------------------- (Issuer's telephone number) (Not Applicable) ---------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer: (1)filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: 14,875,190 Common Shares as of August 27,1999 Transitional Small Business Disclosure Format: Yes [ ] No [X] 2 PART I FINANCIAL INFORMATION AMERICAN BIO MEDICA CORPORATION BALANCE SHEETS
APRIL 30 JULY 31, 1999 1999 (UNAUDITED) -------------- ---------------- ASSETS ------ Current assets Cash and cash equivalents $ 131,000 $ 39,000 Investments - available for sale 719,000 446,000 Accounts receivable - net of allowance 1,021,000 1,351,000 Inventory 1,834,000 1,727,000 Prepaid expenses 97,000 90,000 -------------- ---------------- Total current assets 3,802,000 3,653,000 Property, plant and equipment, net 351,000 358,000 Due from officer 280,000 284,000 Other assets 2,000 7,000 -------------- ---------------- Total assets $ 4,435,000 $ 4,302,000 ============== ================ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities Accounts payable and accrued expenses $ 1,149,000 $ 1,185,000 Payable to preferred stockholder 130,000 32,000 Note payable - stockholder 125,000 128,000 Current portion of capital lease obligations 11,000 12,000 -------------- ---------------- Total current liabilities 1,415,000 1,357,000 Long term portion of capital lease obligations 47,000 43,000 -------------- ---------------- Total liabilities 1,462,000 1,400,000 -------------- ---------------- Stockholders' equity: Preferred stock; par value $.01 per share; 5,000,000 shares authorized; 1,536 and 1,565 shares Series D, 8% cumulative convertible, issued and outstanding (face values $1,536,000 and $1,565,000 at April 30,1999 and July 31, 1999) 0 0 Common stock; par value $.01 per share; 30,000,000 shares authorized; 14,875,190 shares issued and outstanding at April 30, 1999 and July 31, 1999 149,000 149,000 Additional paid-in capital 12,326,000 12,358,000 Subscription receivable (9,000) (9,000) Unearned portion of compensatory options (13,000) (13,000) Unrealized loss on investments available for sale (56,000) (100,000) Accumulated deficit (9,424,000) (9,483,000) -------------- ---------------- Total stockholders' equity 2,973,000 2,902,000 -------------- ---------------- -------------- ---------------- Total Liabilities and Stockholders' Equity $ 4,435,000 $ 4,302,000 ============== ================
See accompanying notes to financial statements 2 3 AMERICAN BIO MEDICA CORPORATION STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED JULY 31, ------------------------------------------ 1998 1999 ------------------- ------------------- Net Sales $ 1,308,000 $ 2,127,000 Cost of goods sold 514,000 1,082,000 ------------------- ------------------- Gross profit 794,000 1,045,000 ------------------- ------------------- Operating expenses: Selling, general and administrative 1,031,000 890,000 Depreciation and amortization 18,000 9,000 Research and development 50,000 235,000 Write-off of bad debts 0 17,000 ------------------- ------------------- 1,099,000 1,151,000 ------------------- ------------------- Operating loss (305,000) (106,000) ------------------- ------------------- Other income and expense: Gain on sale of marketable securities 0 58,000 Interest income 29,000 27,000 Interest expense 0 (6,000) ------------------- ------------------- 29,000 79,000 ------------------- ------------------- Net loss $ (276,000) $ (27,000) Adjustments: Preferred stock beneficial conversion feature (123,000) (123,000) Preferred stock dividends (54,000) (32,000) ------------------- ------------------- Net loss attributable to common shareholders $ (453,000) $ (182,000) =================== =================== Basic and diluted net loss per common share $ (0.03) $ (0.01) Weighted average shares outstanding - basic and diluted 14,291,462 14,875,190 =================== =================== AMERICAN BIO MEDICA CORPORATION STATEMENT OF COMPREHENSIVE LOSS Net loss $ (276,000) $ (27,000) Other comprehensive loss: Unrealized loss on investments (44,000) ------------------- ------------------- Comprehensive loss $ (276,000) $ (71,000) =================== ===================
See accompanying notes to financial statements 3 4 AMERICAN BIO MEDICA CORPORATION STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED JULY 31, ----------------------------------- 1998 1999 ---------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (276,000) $ (27,000) Adjustments to reconcile net loss to net cash used in operating activities: Amortization and depreciation 18,000 24,000 Provision for bad debts 17,000 Accrued interest (4,000) Changes in: Accounts receivable (297,000) (347,000) Inventory (176,000) 107,000 Prepaid expenses and other current assets (88,000) 7,000 Other assets (12,000) (5,000) Accounts payable and accrued expenses (203,000) 41,000 ---------------- ---------------- Net cash used in operating activities (1,034,000) (187,000) ---------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment (109,000) (31,000) Purchase of investments (73,000) Sale and maturity of investments 342,000 Gain on sale of investments (39,000) Loans to officer (13,000) ---------------- ---------------- Net cash (used in) provided by investing activities (122,000) 199,000 ---------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of warrants and options 6,000 Settlement of registration rights agreement (100,000) Capital lease payments (4,000) ---------------- ---------------- Net cash provided by (used in) financing activities 6,000 (104,000) ---------------- ---------------- NET (DECREASE) IN CASH AND CASH EQUIVALENTS (1,150,000) (92,000) Cash and cash equivalents - beginning of period 3,239,000 131,000 ---------------- ---------------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 2,089,000 $ 39,000 ================ ================ NONCASH ACTIVITIES: Stock dividends paid to holders of preferred stock 31,000 Dividend accrued not yet paid 32,000
See accompanying notes to financial statements 4 5 Notes to Financial Statements July 31, 1999 Note A - Basis of Reporting The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the financial position of American Bio Medica Corporation (the "Company") at July 31, 1999, and the results of its operations, and cash flows for the three-month period then ended. The results of operations for the three-month period ended July 31, 1999 are not necessarily indicative of the operating results for the full year. It is suggested that these financial statements be read in conjunction with the financial statements and related disclosures for the year ended April 30, 1999 included in the Company's Form 10-KSB. During the year ended April 30, 1999, the Company sustained a net loss of $1,691,000 and had net cash outflows from operating activities of $2,008,000. The Company is in the process of taking a number of steps to improve its financial prospects including focusing its efforts on sales of existing products, implementing certain cost reductions and production efficiencies and taking other measures to enhance profit margins. As a result the Company was able to reduce its net loss to $27,000 and its net cash outflows to $187,000 for the three-month period ended July 31, 1999. Note B - Net Loss Per Share of Common Stock The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share," in the year ended April 30, 1998. Accordingly, the presentation of per share information includes calculations of basic and dilutive loss per share. The effect of potential common shares such as warrants, options, and convertible preferred stock has not been included, as the effect would be anti-dilutive. When preferred stock is convertible to common stock at a conversion rate that is the lower of a rate fixed at issuance or a fixed discount from the common stock market price at the time of conversion, the discounted amount is an assured incremental yield, the "beneficial conversion feature", to the preferred shareholders and should be accounted for as an embedded dividend to preferred shareholders. As such, the loss per common share was adjusted for this feature. Note C - Litigation In February 1994, Robert Friedenberg, as former owner of the two medical technology companies. MDI and Gendex, acquired by the Company, in the name of these corporations, filed for a declaratory judgment in Maryland that a Share Exchange Agreement had been rescinded. In order to make a claim for damages, the Company filed a third-party claim against Dr. Friedenberg for breach of the Share Exchange Agreement and fraud. In November 1995, after a trial, the court denied Dr. Friedenberg's request for a declaration of rescission and allowed the Company's third-party claim to proceed to trial. In September 1996, Dr. Friedenberg died. The Company's third party claim was decided by a jury on May 5, 1997. The verdict determined that Dr. Friedenberg breached the Share Exchange Agreement when he failed to deliver drug screening know how technology to the Company. The jury also found in favor of the Company on two of 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 which he would have received under the Share Exchange Agreement. 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 appealed that ruling and on April 1, 1999 a hearing was held in the Court of Special Appeals in Maryland. The Company is awaiting the appellate decision. Management, 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. 5 6 Pending the resolution of the Company's appeal, the trial judge has ordered that the shares be issued in the name of Dr. Friedenberg's wife and placed in escrow or that the Company post a bond. The Company has applied for a stay of this order. If the trial judge's order is not stayed, the issuance of such shares or the posting of the required bond could have a significant negative effect on the market price of the shares. Pending the resolution of the Company's appeal of the trial judge's award of the shares to Dr. Friedenberg's estate, the Company's ability to raise capital through the future sale of equity securities may be materially impaired. If the trial judge's award of the shares is not reversed on appeal, the issuance of such shares would have a significant negative effect on the market price of the shares. In June 1995, the Company filed a lawsuit against Jackson Morris, the lawyer who was in charge of drafting and advising it on the Share Exchange Agreement. Mr. Morris, who had been recommended to the Company by Dr. Friedenberg, is alleged by the Company to have breached his fiduciary duty to the Company by later advising Dr. Friedenberg, individually, on how to rescind the Share Exchange Agreement. Mr. Morris is also charged with negligence in drafting the Share Exchange Agreement. The Company's lawsuit demands damages in the amount of $1,000,000. Mr. Morris has counterclaimed as a party to the Share Exchange Agreement and seeks common shares. No trial date has been set. The Company is vigorously contesting the Morris claim. On January 26, 1999, the Company was granted a U.S. Patent for the design of the Multiple Test Card. On April 7, 1999, the Company filed suit in the federal court in Delaware against Phamatech, Inc. of California, Peninsula Drug Analysis Co., Inc. and James T. Ramsey of Virginia, as well as Dipro Diagnostic Products, Inc. and Dipro Diagnostic Products of North America claiming patent infringement, trademark dilution, and unfair competition. On the following day, Phamatech Inc. filed suit in the federal court in San Diego, California asking for a declaration that the Company's patent is invalid. It also claimed breach of contract damages for an alleged non-payment of invoices by the Company. Over Phamatech's objection and at the request of the Company, the California suit has been stayed by the San Diego court pending a decision by the Delaware court on the defendant's motions that they are not subject to jurisdiction in Delaware and that the trial should be in California. A decision by the Delaware court is expected by mid-August, 1999. If it retains the Company's case, all pending claims would be decided in that proceeding. In June 1999, an individual filed suit in New York claiming that two private placement memoranda dated respectively September 15, 1992 and February 5, 1993, obligated the Company to issue him 1,555,601 common shares of the Company. The claim is that he is entitled to the common shares in consideration of brokering the acquisitions subject to the Share Exchange Agreement with Dr. Friedenburg. In addition, the individual is claiming a finder's fee of five percent of the funds raised by the September 1992 private placement. He alleges that a sum of one million dollars was raised. Finally, he claims that he is entitled to a consulting fee of $24,000. Management denies the claims and intends to vigorously contest the suit. Note D - Registration Penalty On May 28, 1999, the Company entered into a definitive Agreement as of April 30, 1999 (the "1999 Agreement") to settle all claims against the Company, including the late registration penalty and certain other claims under the Securities Purchase Agreement dated April 24, 1998. Pursuant to the 1999 Agreement, the Company gave as consideration $225,000 on June 1, 1999 ($100,000 in cash and a one-year promissory note in the principal amount of $125,000 accruing interest at the rate of 14% annually). 6 7 Item 2. Management's Discussion and Analysis or Plan of Operation MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for the three months ended July 31, 1999 and 1998 The following discussion of the Company's financial condition and results of operations should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this document. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that except for the description of historical facts contained herein, the Registration Statement 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 Securities and Exchange Commission and elsewhere. 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: (a) the Company's fluctuations in sales and operating results, risks associated with international operations and regulatory, competitive and contractual risks and product development; (b) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (c) acquisitions. Year 2000 Issues The Company has completed its assessment of Year 2000 compliance with respect to its products that are currently being sold to customers and has concluded that all significant products are compliant. With respect to third parties, the Company is in the process of identifying and contacting its significant suppliers and will shortly begin to contact its major customers to determine the extent to which the Company may be vulnerable to such third parties' failure to address their own year 2000 issues. As a result, the Company's assessment will be substantially dependent on information provided by third parties. The Company expects to materially complete this assessment process before December 1999. Based upon the Company's current estimates, additional out-of-pocket costs associated with its Year 2000 compliance are expected to be minimal. Such costs do not include internal management time, which is not expected to be material to the Company's results of operations or financial condition. 7 8 Results of operations for the three months ended July 31, 1999 as compared to the three months ended July 31, 1998. - -------------------------------------------------------------------------------- During the three months ended July 31, 1999, the Company continued its extensive program to market and distribute its primary product, the Rapid Drug Screen(TM). As a result, revenues from the sale of the test kits were $2,031,000 for the three months ended July 31, 1999 as compared to $1,165,000 for the three months ended July 31, 1998, representing an increase of $866,000 or 74.3% over the preceding year. With respect to drug test kits, cost of goods sold for the three months ended July 31, 1999 was $1,061,000 or 52.2% of drug test revenues as compared to $487,000 or 41.8% of drug test revenues for the three months ended July 31, 1998. In an effort to lower this cost, the Company has undertaken an extensive cost reduction program aimed specifically at its in-place production process and expects further savings in the coming year. It is expected that with the commencement of its in-house manufacturing of drug test strips, that further significant savings can be achieved. Revenues from book sales were $96,000 for the three months ended July 31, 1999 as compared to $143,000 for the three months ended July 31, 1998 representing an decrease of $47,000 or 32.9%. Cost of goods sold for the three months ended July 31, 1999 was $21,000 (21.9% of book sales) as compared to $27,000 (18.9% of book sales) for the three months ended July 31, 1998. The Company is currently negotiating to sell the book segment business. General and administrative costs for the three months ended July 31, 1999 were $890,000, a decrease of 13.7% over expenses of $1,031,000 for the three months ended July 31, 1998. As a percent of sales, this cost decreased 37.0% during the current year. These costs are expected to continue to decrease despite anticipated sales growth. As a result of relocating its marketing department to New York, marketing and promotion costs amounted to $54,000 or 2.5% of sales for the three months ended July 31,1999. Depreciation and amortization was $24,000 and $18,000 for the three months ended July 31, 1999 and 1998, respectively. Research and development expense amounted to $235,000 for the three months ended July 31, 1999 as compared to $50,000 for the three months ended July 31,1998. This increase in research and development represents a continuation of managements efforts to develop improved methods to reduce the cost of manufacturing its drug test kits. Net loss from operations amounted to $(27,000) for the three months ended July 31, 1999 as compared to $(276,000) for the three months ended July 31, 1998, due primarily to increased sales and a decrease in selling, general and administrative expenditures. 8 9 Liquidity and capital resources as of the three months ended July 31, 1999. - -------------------------------------------------------------------------------- The Company's cash and cash equivalents combined with short-term investments amounted to $485,000 at July 31, 1999 representing a decrease of $365,000 or 42.9% over $850,000 as of the year ended April 30, 1999. Working capital decreased $91,000 or 3.8% to $2,296,000 as of the three months ended July 31, 1999, over $2,387,000 recorded as of the year ended April 30, 1999. The decrease in working capital resulted primarily from payment of $100,000 in partial settlement of a late registration penalty demanded by the Series D preferred shareholders in June 1999. On May 28, 1999, the Company entered into a definitive Agreement as of April 30, 1999 (the "1999 Agreement") to settle all claims against the Company, including the late registration penalty and certain other claims under the Securities Purchase Agreement dated April 24, 1998. Pursuant to the 1999 Agreement, the Company gave as consideration $225,000 on June 1, 1999 ($100,000 in cash and a one-year promissory note in the principal amount of $125,000 accruing interest at the rate of 14% annually). The Company has entered into a one-year lease agreement with option to purchase a 26,000 square foot fully constructed building in Kinderhook, N.Y. for $1.3 million subject to the removal of certain existing zoning restrictions. This move will permit the consolidation of its marketing effort and provide space necessary for continued growth. As a result of strong three-month sales of the Rapid Drug Screen, accounts receivable increased $330,000 or 32.3% to $1,351,000 for the three months ended July 31, 1999 compared to $1,021,000 for the year ended April 30, 1999. Inventories decreased 5.8% to $1,727,000 for the three months ended July 31, 1999 or $107,000 below $1,834,000 recorded for the year ended April 30, 1999. Prepaid expenses primarily for future trade shows and conferences decreased $7,000 to $90,000 for the three months ended July 31, 1999. Accounts payable and accrued expenses increased $36,000 for the three months ended July 31, 1999 due primarily to an increase in legal fees. The Company's primary short-term needs are to increase its manufacturing capabilities, decrease current inventory levels and continue to support its research and development programs. The Company currently plans to expend approximately $0.3 million for the expansion and development of its manufacturing facilities in addition to its marketing and general administrative programs. The Company expects its capital requirements to increase over the next several years as it continues its research and development efforts and improves its manufacturing capabilities and facilities. The Company's future liquidity and capital funding requirements will depend on numerous factors, including the extent to which the Company's products under development are successfully developed and gain market acceptance, the timing of regulatory actions regarding the Company's potential products, the costs and timing of expansion of sales, marketing and manufacturing activities, facilities expansion needs, procurement and enforcement of patents important to the Company's business, results of clinical investigations and competition. The Company believes that its available cash and cash from operations will be sufficient to satisfy its funding needs to April 30, 2000. Thereafter, if cash generated from operations is insufficient to satisfy the Company's working capital and capital expenditure requirements, the Company may be required to sell additional equity or debt securities or obtain additional credit facilities. Pending the resolution of the Company's appeal of the trial judge's award of the shares to Dr. Friedenberg's estate, the Company's ability to raise capital through the future sale of equity securities or obtain additional credit facilities may be materially impaired. As a result, there can be no assurance that such financing, if required, will be available on satisfactory terms, if at all. 9 10 PART II OTHER INFORMATION Item 1. Legal Proceedings. In February 1994, Robert Friedenberg, as former owner of the two medical technology companies, MDI and Gendex, acquired by the Company, in the name of these corporations, filed for a declaratory judgement that a Share Exchange Agreement had been rescinded. In order to make a claim for damages, the Company filed a third-party claim against Dr. Friedenberg for breach of the Share Exchange Agreement and fraud. In November 1995, after a trial, the court denied Dr. Friedenberg's request for a declaration of rescission and allowed the Company's third-party claim to proceed to trial. In September, 1996, Dr. Friedenberg died. The Company's third-party claim was decided by a jury on May 5, 1997. The verdict determined that Dr. Friedenberg breached the Share Exchange Agreement, when he failed to deliver drug screening know how technology to the Company. The jury also found in favor of the Company on two of the three fraud claims against Friedenberg and awarded the Company approximately $321,000 in damages. 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. The trial judge took this supplemental claim 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 filed 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. Pending the resolution of the Company's appeal, the trial judge has ordered that the shares be issued in the name of Dr. Friedenberg's wife and placed in escrow or that the Company post a bond. The Company has applied for a stay of this order. If the trial judge's order is not stayed, the issuance of such shares or the posting of the required bond could have a significant negative effect on the market price of the shares. Pending the resolution of the Company's appeal of the trial judge's award of the shares to Dr. Friedenberg's estate, the Company's ability to raise capital through the future sale of equity securities may be materially impaired. If the trial judge's award of the shares is not reversed on appeal, the issuance of such shares would have a significant negative effect on the market price of the shares. In June 1995, the Company filed against Jackson Morris, the lawyer who was in charge of drafting and advising it on the Share Exchange Agreement. Mr. Morris, who had been recommended to the Company by Dr. Friedenberg, is alleged by the Company to have breached his fiduciary duty to the Company by later advising Dr. Friedenberg, individually, on how to rescind the Share Exchange Agreement. Mr. Morris is also charged with negligence in drafting the Share Exchange Agreement. The Company's lawsuit demands damages in the amount of $1,000,000. Mr. Morris has counterclaimed as a party to the Share Exchange Agreement and seeks common shares. No trial date has been set. The Company is vigorously contesting the Morris Claim. Item 2. Changes in Securities None. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security-Holders None. 10 11 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 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 Dated: August 30, 1999 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED JULY 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS APR-30-1999 JUL-31-1999 39,000 446,000 1,399,000 48,000 1,727,000 3,653,000 499,000 141,000 4,302,000 1,357,000 0 0 0 149,000 2,753,000 4,302,000 2,127,000 2,127,000 1,082,000 1,151,000 (85,000) 0 6,000 (27,000) 0 (27,000) 0 0 0 (27,000) (0.01) (0.01)
-----END PRIVACY-ENHANCED MESSAGE-----