EXHIBIT 10.39

                                     3240 Whipple Road, Union City, CA 94587
                                     Phone 510 . 675 . 6500 Fax 510 . 441 . 6150
                                     www.abaxis.com

July 11, 2005

Clint Severson
Abaxis, Inc.
3240 Whipple Road
Union City, CA 94587

     Re: Employment Agreement

Dear Clint:

Pursuant to our board resolution, this letter sets forth the terms of your
continued employment by Abaxis, Inc. ("Abaxis"). Abaxis believes that your
contributions will be important to its future success, and thus enters into this
Agreement in order to retain your services. The terms and conditions of our
future employment relationship are set forth below.

1.   Position and Duties: You shall be employed by Abaxis as its Chairman,
     President and Chief Executive Officer, reporting to Abaxis' Board of
     Directors (the "Board"); provided that, if requested by the Board, you will
     immediately resign as an officer of Abaxis. You accept continued employment
     with Abaxis on the terms and conditions set forth in this Agreement, and
     you agree to devote your full business time, energy and skill to the duties
     assigned to you by the Board.

2.   At-Will Employment: Your employment with Abaxis is at-will employment and
     may be terminated by you or Abaxis at any time, with or without cause. Upon
     the termination of your employment with Abaxis for any reason, and subject
     to paragraphs 4 and 5 below, neither you nor Abaxis shall have any further
     obligation or liability to the other.

3.   Compensation: You shall be compensated by Abaxis for your services as
     follows:

     (a)  Salary: Commencing April 1, 2005, you shall be paid a monthly salary
          of $ 26,000.00 ($ 312,000.00 per year), and a bonus of $ 385,000.00
          based on meeting company goals, subject to applicable withholding, in
          accordance with Abaxis' normal payroll procedures. Such salary shall
          be subject to periodic review and adjustment in accordance with
          Abaxis' salary review policies/practices then in effect for its senior
          management.

     (b)  Benefits: You shall have the right, on the same basis as other
          executive staff employees of Abaxis, to participate in and to receive
          benefits under any Abaxis employee benefit plan, including medical,
          disability or other group insurance plans. In addition, you shall be
          entitled to the benefits afforded to other senior management under
          Abaxis' business expense reimbursement policies. Finally, you shall
          receive six (6) weeks vacation annually.

<PAGE>

4.   Benefits Upon Other Termination: You agree that your employment may be
     terminated by Abaxis at any time, with or without cause. In the event of
     the termination of your employment by Abaxis for the reasons set forth
     below, you shall be entitled to the following:

     (a)  Termination for Cause: If your employment is terminated by Abaxis for
          cause as defined below, you shall be entitled to no compensation or
          benefits from Abaxis other than those earned under paragraph 3 through
          the date of your termination.

          For purposes of this Agreement, a termination "for cause" occurs if
          you are terminated for any of the following reasons:

          (i)     theft, dishonesty, or falsification of any employment or
                  company records;

          (ii)    improper disclosure of Abaxis confidential or proprietary
                  information;

          (iii)   any intentional act by you which has a material detrimental
                  effect on Abaxis' reputation or business;

          (iv)    your failure or inability to perform any reasonable assigned
                  duties after written notice from Abaxis of, and a reasonable
                  opportunity to cure, such failure or inability; and

          (v)     any material breach of this Agreement, which breach is not
                  cured within 10 days following written notice of such breach
                  from Abaxis.

     (b)  Termination for Other Than Cause: If your employment is terminated by
          Abaxis for any reason other than cause, or you resign for a good
          reason then, subject to paragraph 6 below, you shall be entitled to
          the following compensation and benefits:

          (i)     Within ten (10) days of the date of the termination of your
                  employment with Abaxis, you shall receive a lump sum payment,
                  subject to applicable withholding, of two (2) years' salary
                  and bonus

          (ii)    For a period of two (2) years after termination of your
                  employment with Abaxis, Abaxis shall reimburse your premium
                  payments for any medical or other employee insurance coverage
                  which you elect to continue in accordance with federal law;
                  and

          (iii)   Any of your unvested options to purchase Abaxis Common Stock
                  shall become fully vested on the date of your termination and
                  you will have two years to exercise all stock options.

          (iv)    The term "good reason" shall mean:

               a) a diminution of your compensation, unless such diminution is
                  consistent with other employees at your level or is agreed to;

               b) a diminution of your position, job responsibilities, duties
                  and/or status within the company;

               c) a change in control of the company.

               You will not be eligible for compensation and benefits payment
               unless you provide the Board of Directors with a 60 day written
               notice of your intent to resign for a good reason and allow the
               Board of Directors to take action to correct the good reason
               within 30 days. If not corrected your good reason resignation
               shall become effective.
<PAGE>

5.   Covenants: You agree with Abaxis that both prior to and after termination
     of your employment with Abaxis, as follows:

     (a)  For a period of one (1) year after termination of your employment with
          Abaxis, you shall refrain from, directly or indirectly, soliciting the
          services of or in any manner persuading employees or customers of
          Abaxis from discontinuing that person's or entity's relationships with
          Abaxis as an employee or customer; and

     (b)  You shall not make any critical or disparaging statements about Abaxis
          or any of its employees, directors or products to any other person or
          entity.

6.   Exclusive Remedy: Subject to paragraphs 4 and 5 above, you shall be
     entitled to no compensation for any damage or injury arising out of the
     termination of your employment by Abaxis. Provided, however, that nothing
     contained in this Agreement shall limit your right to be indemnified by
     Abaxis for your actions as its officer or employee, pursuant to the
     Indemnity Agreement dated December 10, 1991, between Abaxis and you.

7.   Proprietary Rights Agreement: You agree to abide by the terms and
     conditions of Abaxis' standard confidentiality and/or proprietary rights
     agreements previously executed by you.

8.   Dispute Resolution: In the event of any dispute or claim relating to or
     arising out of our employment relationship or this Agreement, we agree that
     all such disputes shall be fully and finally resolved by binding
     arbitration conducted by the American Arbitration Association in Palo Alto,
     California; provided, however, that this arbitration provision shall not
     apply to any disputes or claims relating to or arising out of the misuse or
     misappropriation of Abaxis' trade secrets or proprietary information.

9.   Attorneys' Fees: The prevailing party shall be entitled to recover from the
     losing party its attorneys' fees and costs incurred in any action required
     to enforce any right arising out of this Agreement.

10.  Interpretation: We agree that this Agreement shall be interpreted in
     accordance with and governed by the laws of the State of California.

11.  Successors and Assigns: This Agreement shall inure to the benefit of and be
     binding upon Abaxis and its successors and assigns. In view of the personal
     nature of the services to be performed under this Agreement by you, you
     shall not have the right to assign or transfer any of your rights,
     obligations or benefits under this Agreement, except as otherwise noted
     herein.

<PAGE>

12.  Entire Agreement: This Agreement constitutes the entire employment
     agreement between you and Abaxis regarding the terms and conditions of your
     employment, with the exception of (i) any stock option and/or stock
     purchase agreements between you and Abaxis (which shall be deemed amended
     in the manner set forth in subparagraph 4(b)(iii) and (ii) the
     confidentiality and/or proprietary rights agreements described in paragraph
     8. This Agreement supersedes all prior negotiations, representations or
     agreements between you and Abaxis, whether written or oral, concerning your
     employment by Abaxis.

13.  No Representations: You acknowledge that you are not relying, and have not
     relied, on any promise, representation or statement made by or on behalf of
     Abaxis which is not set forth in this Agreement.

14.  Modification: This Agreement may only be modified or amended by a
     supplemental written agreement signed by you and Abaxis.

Please sign this letter in the space provided below to acknowledge your
acceptance of the terms of this Agreement.

Sincerely,

ABAXIS, Inc.

By:  /s/ Richard Bastiani
     --------------------------------
     Richard Bastiani
     Chairman, Compensation Committee

I agree to and accept employment with Abaxis, Inc. on the terms and conditions
set forth in this Agreement.

Dated: 8/2/05

/s/ Clint Severson
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Clint Severson