CORRESP 1 filename1.txt American Bio Medica Corporation 122 Smith Road Kinderhook, New York 12106 December 28, 2006 Division of Corporation Finance United States Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: American Bio Medica Corporation Form 10-KSB for Fiscal Year Ended December 31, 2005 Form 10-QSB for the Quarterly Period Ended June 30, 2006 File No. 000-28666 Dear Sir or Madam: On behalf of American Bio Medica Corporation (the "Company"), this letter serves as the Company's response to the additional items raised in your telephone call to our corporate counsel Richard L. Burstein on December 18, 2006, furnishing the further comments of the United States Securities and Exchange Commission (the "Commission") relating to the Company's Form 10-KSB for the fiscal year ended December 31, 2005. Form 10-KSB for the Fiscal Year Ended December 31, 2005 Financial Statements, page F-1 Notes to financial statements, page F-7 Note A - The Company and Its Significant Accounting Policies, page F-7 [ 13 ] Accounting for stock -based compensation:, page F-9 (a) Please refer to Comment 1 in our November 9, 2006 and November 14, 2006 response and Comment 1 indicated to you on November 20, 2006. As the options were not exercisable prior to when the acceleration of their vesting was effective and as the options appear to have been in the money when acceleration was effective, it appears additional compensation cost should have been recognized under Paragraph 36 of FIN44. As such please (a) restate the financial statements in this filing and subsequent filed Forms 10-QSB to reflect these additional costs and to properly classify the prepaid expense in your response to prior Comment 2, and (b) file an Item 402 8-K disclosing to the investors that they cannot rely on your financial statements. Otherwise, tell us why restatement is not necessary. Company's Reply: Compensation cost must be recognized in connection with modifications to options that affect the life of the award, the exercise price or the number of shares to be issued. In the case of a modification accelerating vesting, such a modification can effectively extend the life of an option if the option would have expired unexercisable absent the acceleration. Specifically, paragraph 36 of FIN44 states, "A modification to accelerate the vesting of a fixed award effectively results in the renewal of that award if, after the modification, an employee is able to exercise (vest in) an award that, under the original terms, would have expired unexercisable (unvested)." United States Securities and Exchange Commission November 9, 2006-Response of December __, 2006 Page 2 The earliest that any of the options that had their vesting accelerated to 12/14/05 will expire according to their terms is January 14, 2012. The acceleration of vesting, did not effectively extend the life of those options and they would not have "expired unexercisable" in the absence of the acceleration. Accordingly, paragraph 36 of FIN44 does not require the recognition of any compensation cost. Restatement of the financial statements in the Company's annual reports on Form 10-KSB for the fiscal year ended December 31, 2005 and subsequent filings on Forms 10-QSB, and the filing of an Item 402 in a Current Report on Form 8-K is not necessary. Form 10-QSB for the Quarterly Period Ended June 30, 2006 Part I - Financial Information, page 2 Company Reply: As previously noted in the Company's correspondence to the Commission dated November 16, 2006 and December 14, 2006, in response to comments received from the Commission, the Company plans to amend its Form 10-QSB for the quarterly period ended June 30, 2006. The pages of the filing that will be affected by changes are attached to this correspondence in redline form as Attachment A in order to expedite the Commission's review. The Company acknowledges that: o it is responsible for the adequacy and accuracy of the disclosure in its filings. o Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings. o it may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. Please direct any additional questions or comments to our counsel, Richard L. Burstein, Esq. at 518-463-3990, who would welcome the opportunity to discuss any such questions or comments in advance of the preparation of any written response by the Commission. Thank you. Very truly yours, AMERICAN BIO MEDICA CORPORATION By: /s/ Keith E. Palmer ------------------------------- Keith E. Palmer Executive Vice President of Finance Chief Financial Officer and Treasurer Principal Financial Officer United States Securities and Exchange Commission November 9, 2006-Response of December __, 2006 ATTACHMENT A Page 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-QSB/A |X| Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended June 30, 2006. |_| 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.) 122 Smith Road, Kinderhook, New York 12106 ------------------------------------------- (Address of principal executive offices) 800-227-1243 --------------------------- (Issuer's telephone number) 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: 21,459,768 Common Shares as of December __, 2006 Transitional Small Business Disclosure Format: Yes |_| No |X| United States Securities and Exchange Commission November 9, 2006-Response of December __, 2006 ATTACHMENT A Page 2 PART I FINANCIAL INFORMATION American Bio Medica Corporation Balance Sheets
June 30, December 31, 2006 2005 (Unaudited) ------------ ------------ Assets Current assets: Cash and cash equivalents $ 591,000 $ 446,000 Accounts receivable, net of allowance of $105,000 at both June 30, 2006 and December 31, 2005 1,811,000 1,370,000 Inventory-net of reserve for slow moving and obsolete inventory of $250,000 at both June 30, 2006 and December 31, 2005 3,706,000 4,444,000 Prepaid and other current assets 238,000 109,000 ------------ ------------ Total current assets 6,346,000 6,369,000 Property, plant and equipment, net 1,376,000 1,562,000 Other assets 107,000 7,000 ------------ ------------ Total assets $ 7,829,000 $ 7,938,000 ============ ============ Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 776,000 $ 1,380,000 Accrued liabilities 113,000 130,000 Wages payable 180,000 177,000 Line of credit 230,000 Current portion of mortgages and notes payable 23,000 36,000 Current portion of unearned grant 10,000 10,000 ------------ ------------ Total current liabilities 1,332,000 1,733,000 Long term portion of mortgages and notes payable 582,000 592,000 Long term portion of unearned grant 60,000 60,000 Other long term liabilities 104,000 ------------ ------------ Total liabilities 2,078,000 2,385,000 ------------ ------------ Stockholders' equity: Preferred stock; par value $.01 per share; 5,000,000 shares authorized; none issued and outstanding Common stock; par value $.01 per share; 50,000,000 shares authorized; 21,459,768 and 21,359,768 shares issued and outstanding at June 30, 2006 and December 31, 2005, respectively 215,000 214,000 Additional paid-in capital 18,942,000 18,853,000 Accumulated deficit (13,406,000) (13,514,000) ------------ ------------ Total stockholders' equity 5,751,000 5,553,000 ------------ ------------ Total liabilities and stockholders' equity $ 7,829,000 $ 7,938,000 ============ ============
The accompanying notes are an integral part of the financial statements United States Securities and Exchange Commission November 9, 2006-Response of December __, 2006 ATTACHMENT A Page 3 SIGNATURES In accordance with the requirements of the Exchange Act, 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/Keith E. Palmer ------------------------------------------------------ EVP of Finance, Chief Financial Officer and Treasurer (Principal Accounting Officer and duly authorized Officer) Dated: December __, 2006 United States Securities and Exchange Commission November 9, 2006-Response of December __, 2006 ATTACHMENT A Page 4 Exhibit 31.1 CERTIFICATIONS I, Stan Cipkowski, certify that: 1. I have reviewed this quarterly report on Form 10-QSB/A of American Bio Medica Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [omitted]; and c) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. /s/ Stan Cipkowski ----------------------- Chief Executive Officer Date: December __, 2006 United States Securities and Exchange Commission November 9, 2006-Response of December __, 2006 ATTACHMENT A Page 5 Exhibit 31.2 CERTIFICATIONS I, Keith E. Palmer, certify that: 1. I have reviewed this quarterly report on Form 10-QSB/A of American Bio Medica Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [omitted]; and c) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. /s/ Keith E. Palmer -------------------------------------------------- Chief Financial Officer & Executive Vice President Date: December__, 2006 United States Securities and Exchange Commission November 9, 2006-Response of December __, 2006 ATTACHMENT A Page 6 EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of American Bio Medica Corporation (the "Company") on Form 10-QSB/A for the period ending June 30, 2006 as filed with the Securities and Exchange Commission on December __, 2006 (the "Report"), I, Stan Cipkowski, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Stan Cipkowski ----------------------- Chief Executive Officer December __, 2006 United States Securities and Exchange Commission November 9, 2006-Response of December __, 2006 ATTACHMENT A Page 7 EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of American Bio Medica Corporation (the "Company") on Form 10-QSB/A for the period ending June 30, 2006 as filed with the Securities and Exchange Commission on December __, 2006 (the "Report"), I, Keith E. Palmer, Chief Financial Officer and Executive Vice President of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Keith E. Palmer --------------------------- Keith E. Palmer Chief Financial Officer and Executive Vice President December __, 2006