American Bio Medica Posts 253% Rise in Fiscal 1998 Net Revenues With Gross Profit Up 214%.

HUDSON, N.Y.--(BUSINESS WIRE)--Aug. 13, 1998--

-- 296% Increase in Net Revenues, Gross Profit up 378%, and Non-cash Compensation Expenses Taken in Fourth Quarter --

American Bio Medica Corporation (NASDAQ:ABMC) today announced results for the three and twelve months ended April 30, 1998.

Net revenues for fiscal 1998 rose 253% to $2,154,000 from $611,000 in the previous fiscal year, primarily due to the Company's extensive marketing and distribution program for the Rapid Drug Screen*. Gross profit was also up for the year ended April 30, 1998 to $1,103,000, representing a 214% increase from $351,000 in fiscal 1997. In an effort to lower cost of goods sold, the Company is developing a cost reduction program aimed specifically at its in-place production process and expects further savings in fiscal 1999.

Net income was $(4,390,000) or $(.32) per share for fiscal 1998 versus $(505,000) or $(.04) per share for the prior fiscal year. The $(2,214,000) or 50.4% of current net income results from a non-cash accounting rule that applies current stock values to shares issued to key employees. The remaining $(2,106,000) or 49.6% of current net income is primarily due to increased selling, general, and administrative costs undertaken to create the necessary infrastructure to meet the Company's worldwide marketing and production goals. As an outgrowth of increasing sales, the Company expects selling, general, and administrative costs to continue to increase but at a slower rate. As a percentage of net revenues, this cost declined 15 percentage points during fiscal 1997 and is expected to continue decreasing in the future.

Net revenues were up 296% in the fourth quarter fiscal 1998 to $714,000 from $180,000 for the comparable period last fiscal year. Cost of sales fell to $376,000 for the three months ended April 30, 1998 versus $109,000 for the fourth quarter fiscal 1997. Gross profit for the last three months of fiscal 1998 improved to $339,000 from $71,000 in the fourth quarter of the prior fiscal year. Net income was $(3,248,000) or $(.25) per share for the quarter ended April 30, 1998, which includes the non-cash valuation mentioned above, versus $(184,000) or $(.02) per share for the same period in fiscal 1997.

Total assets were $5,356,000 as of April 30, 1998, up from $4,107,000 as of April 30, 1997. Working capital and total stockholders' equity also rose 26% to $4,480,000 and 31% to $4,870,000, respectively.

The Company's primary short-term needs are to expand its manufacturing capabilities, increase inventory levels, and continue to support its research and development programs. Cash generated from financing activities in fiscal 1998 was utilized to improve operations and purchase machinery and equipment. Inventory levels were up 48.1% for fiscal 1998 while research and development expenses doubled as a result of the Company's ongoing development of new products as well as improved methods to reduce the costs of its drug test delivery system.

The Company generally utilizes cash generated from financing and operating activities to meet on-going capital requirements and currently plans to expend approximately $2.0 million for the expansion and development of its manufacturing facilities in addition to its marketing and general administrative programs.

According to Company President and CEO Stan Cipkowski, "Fiscal 1998 was a remarkable year as evidenced by our listing on Nasdaq, FDA marketing clearances, expanded product offering with the ability to screen for nine drugs of abuse, a growing global presence, strategic distribution alliance with Abbott Laboratories, and continued record-breaking monthly sales.

"I am also extremely pleased with the extensive team of seasoned sales and marketing executives we have brought on board as well as our plans for the new facility which will enable us to improve margins by bringing all production in-house. With our commitment to decreasing cost of sales while increasing overall revenues, I am confident that fiscal 1999 will bring improved profitability and shareholder value," Cipkowski added.

American Bio Medica Corporation develops, manufactures, and markets rapid, inexpensive, and easy to use diagnostic kits and support services to substance abuse testing markets worldwide. ABMC's drug detection strip is proven to correlate 100% with results produced by the screening test used as a standard in laboratories.

Forward-looking statements in this release are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, continued acceptance of the Company's products, increased levels of competition for the Company, new products and technological changes, the Company's dependence upon third-party suppliers, intellectual property