##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
 Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended March
    31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File Number
    000-19720
 ABAXIS, INC.
 (Exact name of registrant as
    specified in its charter)
  California

77-0213001(State or other jurisdiction
    of incorporation or organization)

(I.R.S. Employer
    Identification No.)3240 Whipple Road, Union City, California

94587(Address of principal executive
    offices)

(Zip code)   Registrants telephone number, including area code:
 (510) 675-6500
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Class

Name of Each Exchange on Which RegisteredCommon Stock, no par value

The NASDAQ Stock Market, Inc.   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o

Smaller reporting company o(Do not check if a smaller reporting
    company)   Rule 12b-2 o þ




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##### 





Abaxis,
    Inc.
  Annual
    Report on
    Form 10-K
 For The
    Fiscal Year Ended March 31, 2008
  TABLE OF CONTENTS
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


14Item 1B.


Unresolved Staff Comments


26Item 2.


Properties


26Item 3.


Legal Proceedings


26Item 4.


Submission of Matters to a Vote of Security
    Holders


26PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


27Item 6.


Selected Financial Data


29Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


30Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


50Item 8.


Financial Statements and Supplementary Data


52Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


81Item 9A.


Controls and Procedures


81Item 9B.


Other Information


83PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


83Item 11.


Executive Compensation


86Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


102Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


104Item 14.


Principal Accountant Fees and Services


105PART IVItem 15.


Exhibits and Financial Statement Schedules


105Exhibit Index


107Signatures


109EXHIBIT 10.21EXHIBIT 10.22EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   2




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##### Table of Contents



PART I  FORWARD-LOOKING
    STATEMENTS
  forward-looking
  Form 10-K Form 10-Q Form 8-K,
  Item 1.
    Business  GENERAL
  (510) 675-6500
  OUR
    INDUSTRY: IN VITRO DIAGNOSTIC TESTING
     3




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##### Table of Contents



ABAXIS
    PRODUCTS
    Point-of-Care
    Blood Chemistry Analyzer
    
    Medical Market:  We currently market the blood
    analysis system in the medical market under the name Piccolo
    xpresstm.
    Through October 2006, we marketed the blood analysis system in
    the medical market as the
    Piccolo®,
    now referred to as the Piccolo Classic. We continue to support
    and service our current population of Piccolo xpress and Piccolo
    Classic chemistry analyzers.
    Veterinary Market:  We currently market the
    blood analysis system in the veterinary market under the name
    VetScan
    VS2®.
    Through March 2006, we marketed the blood analysis system in the
    veterinary market as the
    VetScan®,
    now referred to as the VetScan Classic. We continue to support
    and service our current population of VetScan VS2 and VetScan
    Classic chemistry analyzers.  Reagent
    Discs
     4




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##### Table of Contents



Test MethodsAlanine aminotransferase

ALT

Lactate dehydrogenase

LDAlbumin

ALB

Magnesium

MGAlkaline phosphatase

ALP

Phosphorous

PHOSAmylase

AMY

Potassium

K+Aspartate aminotransferase

AST

Sodium

NA+Bile acids

BA

Thyroxine

T4Calcium

CA

Total bilirubin

TBILChloride

CL-

Total carbon dioxide

tCO2Creatine kinase

CK

Total cholesterol

CHOLCreatinine

CRE

Total protein

TPDirect bilirubin

DBIL

Triglycerides

TRIGGamma glutamyltransferase

GGT

Urea nitrogen

BUNGlucose

GLU

Uric acid

UAHigh-density lipoprotein cholesterol

HDL   4
    Piccolo Panels

Description of the Test PanelsBasic Metabolic Panel (CLIA waived)

BUN, CA, CL-, CRE, GLU, K+, NA+,
    tCO2.Basic Metabolic Panel Plus

BUN, CA, CL-, CRE, GLU, K+, LD, MG, NA+,
    tCO2.Comprehensive Metabolic Panel (CLIA waived)

ALB, ALP, ALT, AST, BUN, CA, CL-, CRE, GLU, K+, NA+, TBIL,
    tCO2,
    TP.Electrolyte Panel (CLIA waived)

CL-, K+, NA+,
    tCO2.General Chemistry 6 (CLIA waived)

ALT, AST, BUN, CRE, GGT, GLU.General Chemistry 13 (CLIA waived)

ALB, ALP, ALT, AMY, AST, BUN, CA, CRE, GGT, GLU, TBIL, TP, UA.Hepatic Function Panel

ALB, ALP, ALT, AST, DBIL, TBIL, TP.Kidney Check (CLIA waived)

BUN, CRE.Lipid Panel (CLIA waived)

CHOL, CHOL/HDL RATIO, HDL, LDL, TRIG, VLDL.Lipid Panel Plus (CLIA waived)

ALT, AST, CHOL, CHOL/HDL RATIO, GLU, HDL, LDL, TRIG, VLDL.Liver Panel Plus (CLIA waived)

ALB, ALP, ALT, AMY, AST, GGT, TBIL, TP.Metlyte 8 Panel

BUN, CK , CL-, CRE, GLU, K+, NA+,
    tCO2.Renal Function Panel

ALB, BUN, CA, CL-, CRE, GLU, K+, NA+, PHOS,
    tCO2.   CLIA waived
 5




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##### Table of Contents



VetScan Profile

Description of the Test PanelsAvian/Reptilian Profile Plus

ALB, AST, BA, CA, CK, GLOB, GLU, K+, NA+, PHOS, TP, UA.Comprehensive Diagnostic Profile

ALB, ALP, ALT, AMY, BUN, CA, CRE, GLOB, GLU, K+, NA+, PHOS,
    TBIL, TP.Critical Care Plus

ALT, BUN, CL-, CRE, GLU, K+, NA+,
    tCO2.Equine Profile Plus

ALB, AST, BUN, CA, CK, CRE, GGT, GLOB, GLU, K+, NA+, TBIL,
    tCO2,
    TP.Large Animal Profile

ALB, ALP, AST, BUN, CA, CK, GGT, GLOB, MG, PHOS, TP.Mammalian Liver Profile

ALB, ALP, ALT, BA, BUN, CHOL, GGT, TBIL.Prep Profile II

ALP, ALT, BUN, CRE, GLU, TP.Thyroxine
    (T4)/Cholesterol
    Profile

CHOL,
    T4.   Hematology
  tm tm
  Orbos
    Process
  ®
  Future
    Products
    CUSTOMERS
    AND DISTRIBUTION
   6




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##### Table of Contents



Customers
    Medical
    Market
    Veterinary
    Market
    Distribution
    Within North America
  Medical
    Market
        Veterinary
    Market
   7




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##### Table of Contents



Distribution
    Outside of North America
          MANUFACTURING
     8




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##### Table of Contents




    In April 2001, the State of California Food and Drug Branch
    granted our manufacturing facility in compliance
    status, based on the regulations for Good Manufacturing
    Practices for medical devices.
    In May 2001, the State of California Food and Drug Branch
    granted licensing for our manufacturing facility in Union City,
    California.
    In May 2002, we received our ISO 9001 certification, expanding
    our compliance with international quality standards.
    In December 2003, we received ISO 13485 Quality System
    certification as required by the 2003 European In Vitro Device
    Directive. This certified our quality system specifically to
    medical devices.
    In both March 2003 and September 2005, the FDA conducted a
    facility inspection and verified our compliance with the
    21 CFR 820 Regulation.
    In November 2006, we received our recertification to the ISO
    13485:2003 Quality System Standard for medical devices.      
    Point-of-Care Blood Chemistry Analyzer:  The
    analyzer used in the Piccolo and VetScan systems employs a
    variety of components designed or specified by us, including a
    variable speed motor, microprocessors, a liquid crystal display,
    a printer, a spectrophotometer and other electronic components.
    These components are manufactured by several third-party vendors
    that have been qualified and approved by us and then assembled
    by our contract manufacturers. The components are assembled at
    our facility in Union City into the finished product and
    completely tested to ensure that the finished product meets
    product specifications. The analyzer uses
    technologically-advanced components, many of which are available
    only from single source vendors. Currently, the technologically
    advanced components are purchased from the following two single
    source vendors, PerkinElmer, Inc. and UDT Sensors (a division of
    OSI Optoelectronics). We do not have supply agreements with any
    of these companies and they are not contractually obligated to
    continue supplying us with components in the quantities or at
    the prices that such companies have done historically.
    Reagent Discs:  The molded plastic discs used
    in the manufacture of the reagent disc are manufactured to our
    specifications by established injection-molding manufacturers.
    To achieve the precision required for accurate test results, the
    discs must be molded to very strict tolerances. To date, we have
    only qualified two manufacturers, C. Brewer & Co. and
    Nypro, Inc. to mold the discs. We do not have supply agreements
    with either of these companies and they are under no contractual
    obligation to continue supplying us with discs either in the
    quantities or at the prices that such companies have done
    historically. We are also working with our suppliers to improve
    yields and increase capacity on the existing production molds.
    While we have increased the number of disc molding tools to
    strengthen and better protect our line of supply, an inability
    by our injection-molding manufacturers to supply sufficient
    discs would have a material adverse impact on our results of
    operations. We assemble the reagent discs by using the molded
    plastic discs, loading the disc with reagents and then
    ultrasonically welding together the top and bottom pieces.
    Reagent Beads:  The reagent discs contain
    diluent and all the dry reagent chemistry beads necessary to
    perform blood analyses. We purchase chemicals from third-party
    suppliers and formulate the raw materials, using proprietary
    processes, into beads at the proper concentration and
    consistency to facilitate placement in the reagent disc and
    provide homogeneous dissolution and mixing when contacted by the
    diluted plasma. We are dependent on the following companies who
    are our single source providers of one or more chemicals that 9




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##### Table of Contents



we use in the reagent production process: Amano Enzyme USA Co.,
    Ltd., Genzyme Corporation, Kikkoman Corporation Biochemical
    Division, Microgenics Corporation, Roche Molecular Biochemicals
    of Roche Diagnostics Corporation, a division of F.
    Hoffmann-La Roche, Ltd., Shinko American Inc. and
    Sigma Aldrich Inc. We do not have supply agreements with
    any of these companies and they are under no contractual
    obligation to continue supplying us in the quantities or at the
    price such companies have done historically. Although we believe
    all of the chemicals provided by these companies would be
    readily available elsewhere and we continue to evaluate vendor
    sources to protect and improve our lines of supply, the loss of
    any of these companies as a supplier could materially adversely
    affect our manufacturing activities and results of operations.    MATERIAL
    RELATIONSHIPS WITH SUPPLIERS AND OTHER THIRD PARTIES
  Diatron Messtechnik GmbH.
  DVM Resources.
  COMPETITION
  on-site.
     10




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##### Table of Contents



GOVERNMENT
    REGULATION
  U.S.
    Food and Drug Administration Clearance
      Clinical
    Laboratory Improvements Act Regulations
    (CL-), 2
     11




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##### Table of Contents



Other
    Regulations
    
    In December 2003, we received certification from the British
    Standards Institute to the ISO 13485:1996 quality system
    standard for medical devices. This quality system certification,
    along with successful completion of product testing to 2003
    European standards and the translation of Piccolo product
    documentation into the required languages, enabled us to meet
    the compliance requirements of the CE Mark and the 2003 European
    In Vitro Device Directive.
    In September 2005, we received the Canadian Medical Device
    Conformity Assessment System stamp on our ISO 13485 certificate
    to signify compliance with Health Canada regulations.
    In March 2006, we received our certification to the 2003 version
    of the ISO 13485 quality system standard for medical devices.
    In November 2006, we received our recertification to the ISO
    13485:2003 Quality System Standard for medical devices.    RESEARCH
    AND DEVELOPMENT
    PATENTS
    AND PROPRIETARY TECHNOLOGIES
    Patent No.

Description

Issue Date

Expiration Date5,061,381

Apparatus and Method for Separating Cells from Biological Fluids

October 29, 1991

June 4, 20105,122,284

Apparatus and Method for Optically Analyzing Biological Fluids

June 16, 1992

June 4, 20105,173,193

Centrifugal Rotor Having Flow Partition

December 22, 1992

April 1, 20115,242,606

Sample Metering Port for Analytical Rotor Having Overflow Chamber

September 7, 1993

September 7, 20105,275,016

Cryogenic Apparatus

January 4, 1994

April 24, 20125,304,348

Reagent Container for Analytical Rotor

April 19, 1994

February 11, 20125,384,247

Determination of Sodium Ions in Fluids

January 24, 1995

January 24, 20125,403,415

Method and Device for Ultrasonic Welding

April 4, 1995

November 17, 20135,409,665

Simultaneous Cuvette Filling with Means to Isolate Cuvettes

April 25, 1995

September 1, 20135,409,814

Determination of Ions in Fluids

April 25, 1995

April 25, 20125,413,732

Reagent Compositions for Analytical Testing

May 9, 1995

May 9, 2012 12




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##### Table of Contents



Patent No.

Description

Issue Date

Expiration Date5,457,053

Reagent Container for Analytical Rotor

October 10, 1995

October 10, 20125,472,603

Analytical Rotor with Dye Mixing Chamber

December 5, 1995

December 5, 20125,478,750

Methods for Photometric Analysis

December 26, 1995

March 31, 20135,501,958

Determination of Potassium Ions in Fluids

March 26, 1996

March 26, 20135,518,930

Simultaneous Cuvette Filling with Means to Isolate Cuvettes

May 21, 1996

September 1, 20135,590,052

Error Checking in Blood Analyzer

December 31, 1996

April 14, 20145,591,643

Simplified Inlet Channels

January 7, 1997

January 7, 20145,599,411

Method and Device for Ultrasonic Welding

February 4, 1997

November 17, 20135,624,597

Reagent Compositions for Analytical Testing

April 29, 1997

April 29, 20145,693,233

Methods of Transporting Fluids Within An Analytical Rotor

December 2, 1997

April 2, 20125,776,563

Dried Chemical Compositions

July 7, 1998

July 7, 20155,998,031

Dried Chemical Compositions

December 7, 1999

August 19, 20116,068,971

Process for Determination of Ions in Fluids by Masking of
    Interfering Ions

May 30, 2000

May 30, 20176,235,531

Modified Siphons for Improved Metering Precision

May 22, 2001

September 1, 20136,251,684

Dried Chemical Compositions

June 26, 2001

August 18, 20116,752,961

Modified Siphons for Improved Metering Precision

June 22, 2004

September 1, 20136,818,415

Sodium Activation of Amylase

November 16, 2004

June 22, 20217,177,767

Systems and Methods for the Detection of Short and Long Samples

February 13, 2007

January 13, 2024     EMPLOYEES
    
    33 in research and development;
    144 in manufacturing operations;
    129 in sales and marketing (including customer support); and
    15 in general and administrative.   13




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INFORMATION
    AVAILABLE TO INVESTORS
  Form 10-K, Form 10-Q, Form 8-K http://www.sec.gov. 1-800-SEC-0330,
  Item 1A.
    Risk
    Factors  RISK
    FACTORS THAT MAY AFFECT OUR PERFORMANCE
  Form 10-K.
  We are
    not able to predict sales in future quarters and a number of
    factors affect our periodic results, which makes our quarterly
    operating results less predictable.
          
    new product announcements made by us or our competitors;
    changes in our pricing structures or the pricing structures of
    our competitors;
    our ability to develop, introduce and market new products on a
    timely basis;
    our manufacturing capacities and our ability to increase the
    scale of these capacities;
    the mix of product sales between our blood chemistry analyzers
    and our reagent disc products; 14




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##### Table of Contents




    the amount we spend on research and development; and
    changes in our strategy.  We
    would fail to achieve anticipated revenue if the market does not
    accept our products.
        We
    could fail to achieve anticipated revenue if problems related to
    the manufacture of our new blood chemistry analyzers are not
    resolved.
    We
    have invested a significant portion of our cash in auction rate
    securities, the market for which is currently illiquid. Funds
    associated with certain of our auction rate securities may not
    be accessible for an undetermined period of time and our auction
    rate securities may experience an other than temporary decline
    in value, which would adversely affect our statement of
    operations.
   15




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We
    rely on patents and other proprietary information, the loss of
    which would negatively affect our business.
      We
    must continue to develop our sales, marketing and distribution
    experience in the human diagnostic market or our business will
    not grow.
    
    we will be able to establish and maintain effective distribution
    arrangements in the human diagnostic market;
    any distribution arrangements that we are able to establish will
    be successful in marketing our products; or
    the costs associated with sales, marketing and distributing our
    products will not be excessive. 16




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##### Table of Contents



We
    must increase sales of our Piccolo and VetScan products or we
    may not be able to maintain profitability.
    
    continue to improve our existing products and develop new and
    innovative products;
    increase our sales and marketing activities;
    effectively manage our manufacturing activities; and
    effectively compete against current and future competitors.    We may
    inadvertently produce defective products, which may subject us
    to significant warranty liabilities or product liability claims
    and we may have insufficient product liability insurance to pay
    material uninsured claims.
      We
    must effectively train and integrate the members of our sales
    team in order to achieve our anticipated revenue or expand our
    business.
   17




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##### Table of Contents



We
    need to successfully manufacture and market additional reagent
    discs for the human diagnostic market if we are to compete in
    that market.
    We
    rely primarily on distributors to sell our products and we rely
    on sole distributor arrangements in a number of countries. Our
    failure to successfully develop and maintain these relationships
    could adversely affect our business.
           18




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##### Table of Contents



We
    depend on sole suppliers for several key components in our
    products, many of whom we have not entered into contractual
    relationships with and failure of our suppliers to provide the
    components to us could harm our business.
    
    Reagent Discs:  Two injection-molding
    manufacturers, C. Brewer & Co. and Nypro, Inc.,
    currently make the molded plastic discs which, when loaded with
    reagents and welded together, form our reagent disc products. We
    believe that only a few manufacturers are capable of producing
    these discs to the narrow tolerances that we require. To date,
    we have only qualified these two manufacturers to manufacture
    the molded plastic discs.
    Reagent Chemicals:  We currently depend on the
    following single source vendors for some of the chemicals that
    we use to produce the dry reagent chemistry beads that are
    either inserted in our reagent discs or sold as stand-alone
    products: Amano Enzyme USA Co., Ltd., Genzyme Corporation,
    Kikkoman Corporation Biochemical Division, Microgenics
    Corporation, Roche Molecular Biochemicals of Roche Diagnostics
    Corporation, a division of F. Hoffmann-La Roche, Ltd.,
    Shinko American Inc. and Sigma Aldrich Inc.
    Blood Chemistry Analyzer Components:  Our blood
    analyzer products use several technologically-advanced
    components that we currently purchase from two single source
    vendors, PerkinElmer, Inc. and UDT Sensors (a division of OSI
    Optoelectronics). Our analyzers also use a printer that is
    primarily made by Seiko North America Corporation. The loss of
    the supply of any of these components could force us to redesign
    our blood chemistry analyzers.
    Hematology Instruments and Reagents:  Our
    hematology instruments are manufactured by Diatron Messtechnik
    GmbH in Hungary and are purchased by us as a completed
    instrument. In addition, to date, we have qualified only three
    suppliers to produce the reagents for our hematology
    instruments: Clinical Diagnostic Solutions, Inc., Diatron and
    Mallinckrodt Baker BV.     19




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##### Table of Contents



We may
    not be able to compete effectively with larger, more established
    entities or their products, or with future organizations or
    future products, which could cause our sales to
    decline.
    
    commercial clinical laboratories;
    hospitals clinical laboratories; and
    manufacturers of bench top multi-test blood analyzers and other
    testing systems that health care providers can use
    on-site
    (a listing of our competitors is listed below).    
    range of tests offered;
    immediacy of results;
    cost effectiveness;
    ease of use; and
    reliability of results.      Changes
    in third-party payor reimbursement regulations can negatively
    affect our business.
  pay-per-service
 20




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We are
    subject to numerous governmental regulations and regulatory
    changes are difficult to predict and may be damaging to our
    business.
  Need for
    FDA Certification for Our Medical Device Products
      Need to
    Comply with Manufacturing Regulations
    
    In April 2001, the State of California Food and Drug Branch
    granted our manufacturing facility in compliance
    status, based on the regulations for Good Manufacturing
    Practices for medical devices.
    In May 2001, the State of California Food and Drug Branch
    granted licensing for our manufacturing facility in Union City,
    California.
    In May 2002, we received our ISO 9001 certification, expanding
    our compliance with international quality standards.
    In December 2003, we received ISO 13485 Quality System
    certification as required by the 2003 European In Vitro Device
    Directive. This certified our quality system specifically to
    medical devices.
    In both March 2003 and September 2005, the FDA conducted a
    facility inspection and verified our compliance with the
    21 CFR 820 Regulation.
    In November 2006, we received our recertification to the ISO
    13485:2003 Quality System Standard for medical devices.    Effects
    of the Clinical Laboratory Improvement Amendments on Our
    Products
   21




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##### Table of Contents




    waived;
    moderately complex; and
    highly complex.    (CL-), 2
      Need to
    Comply with Various Federal, State, Local and International
    Regulations
    
    In December 2003, we received certification from the British
    Standards Institute to the ISO 13485:1996 quality system
    standard for medical devices. This quality system certification,
    along with successful completion of product testing to 2003
    European standards and the translation of Piccolo product
    documentation into the required languages, enabled us to meet
    the compliance requirements of the CE Mark and the 2003 European
    In Vitro Device Directive.
    In September 2005, we received the Canadian Medical Device
    Conformity Assessment System stamp on our ISO 13485 certificate
    to signify compliance with Health Canada regulations.
    In March 2006, we received our certification to the 2003 version
    of the ISO 13485 Quality System Standard for medical devices.
    In November 2006, we received our recertification to the ISO
    13485:2003 Quality System Standard for medical devices. 22




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We
    have incurred and may continue to incur, in future periods,
    significant share-based compensation charges under
    SFAS No. 123(R), which may adversely affect our
    reported financial results.
    We
    depend on key members of our management and scientific staff
    and, if we fail to retain and recruit qualified individuals, our
    ability to execute our business strategy and generate sales
    would be harmed.
    We are
    subject to increasingly complex requirements from recent
    legislation requiring companies to evaluate internal control
    over financial reporting.
     23




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We may
    need additional funding in the future and these funds may not be
    available to us.
  Form 10-K.
    
    further commercialization of our products and development of new
    test methods to allow us to further penetrate the human
    diagnostic market and the veterinary diagnostic market;
    our need to acquire capital equipment for our manufacturing
    facilities, which includes the ongoing costs related to the
    continuing development of our current and future products;
    research and design costs related to the continuing development
    of our current and future products; and
    additional pre-clinical testing and clinical trials for our
    current and future products.  and/or
  We
    must comply with strict and potentially costly environmental
    regulations or we could pay significant fines.
  and/or
 24




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Our
    facilities and manufacturing operations are vulnerable to
    natural disasters and other unexpected losses; system failures
    or delays may harm our business.
      Fluctuations
    in foreign exchange rates and the possible lack of financial
    stability in foreign countries could prevent overseas sales
    growth.
    Our
    operating results could be materially affected by unanticipated
    changes in our tax provisions or exposure to additional income
    tax liabilities.
    Our
    stock price is highly volatile and investing in our stock
    involves a high degree of risk, which could result in
    substantial losses for investors.
    
    fluctuation in our operating results;
    announcements of technological innovations or new commercial
    products by us or our competitors;
    changes in governmental regulation in the United States and
    internationally;
    prospects and proposals for health care reform;
    governmental or third-party payors controls on prices that
    our customers may pay for our products; 25




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
    developments or disputes concerning our patents or our other
    proprietary rights;
    product liability claims and public concern as to the safety of
    our devices or similar devices developed by our
    competitors; and
    general market conditions.    Our
    shareholders rights plan and our ability to issue preferred
    stock may delay or prevent a change of control of
    Abaxis.
      Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   26




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PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information for Common Stock
  intra-day
  PricesFiscal 2008


Fiscal 2007High


Low


High


LowQuarter ended June 30

$
27.00


$
20.50


$
26.85


$
16.47Quarter ended September 30


22.89



17.54



24.59



18.81Quarter ended December 31


40.00



22.07



25.45



18.50Quarter ended March 31


38.09



20.83



25.62



16.94       Dividends
   27




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##### Table of Contents



Stock
    Performance Graph(1)
      COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
    
  3/31/2003


3/31/2004


3/31/2005


3/31/2006


3/31/2007


3/31/2008Abaxis, Inc.


$
100.00



$
533.33



$
232.28



$
595.28



$
639.63



$
608.14Russell 2000


$
100.00



$
163.83



$
172.70



$
217.34



$
230.18



$
200.25NASDAQ Medical Equipment Securities


$
100.00



$
164.13



$
168.80



$
219.34



$
220.26



$
221.48   (1)
    
    This section is not soliciting material, is not
    deemed filed with the Securities and Exchange
    Commission and is not to be incorporated by reference in any
    filing of Abaxis under the Securities Act of 1933, as amended,
    or the Securities Exchange Act of 1934, as amended, whether made
    before or after the date hereof and irrespective of any general
    incorporation language contained in any such filing. 28




---



##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  Year Ended March 31,2008(1)


2007(1)


2006


2005


2004(In thousands, except per share data)Statements of Operations Data:Revenues

$
100,551


$
86,221


$
68,928


$
52,758


$
46,874Cost of revenues


45,507



39,362



30,075



24,811



22,966Gross profit


55,044



46,859



38,853



27,947



23,908Operating expenses:Research and development


6,966



6,180



6,127



5,150



4,757Sales and marketing


23,689



20,569



16,219



10,820



10,701General and administrative


6,681



5,735



5,775



4,881



3,730Total operating expenses


37,336



32,484



28,121



20,851



19,188Income from operations


17,708



14,375



10,732



7,096



4,720Interest and other income (expense), net


2,096



1,774



787



269



105Income before income taxes


19,804



16,149



11,519



7,365



4,825Income tax provision (benefit)


7,301



6,076



4,044



2,514



(19,208
)Net income


12,503



10,073



7,475



4,851



24,033Preferred dividends


















(419
)Net income attributable to common shareholders

$
12,503


$
10,073


$
7,475


$
4,851


$
23,614Net income per share:Basic net income per share

$
0.58


$
0.49


$
0.37


$
0.25


$
1.30Diluted net income per share

$
0.56


$
0.46


$
0.35


$
0.22


$
1.16Shares used in the calculation of net income per share:Weighted average common shares outstanding  basic


21,499



20,643



19,985



19,696



18,128Weighted average common shares outstanding  diluted


22,261



21,846



21,492



21,662



20,387     (1)
    
    On April 1, 2006, we adopted Statement of Financial Accounting
    Standards No. 123 (revised 2004), Share-Based
    Payment and included share-based compensation for employee
    share-based awards in our statements of operations.  As of March 31,2008


2007


2006


2005


2004(In thousands)Balance Sheet Data:Cash and cash equivalents

$
17,219


$
10,183


$
10,164


$
5,776


$
9,324Short-term investments


6,991



35,028



20,372



16,858



7,998Working capital


52,500



74,517



49,949



38,744



25,865Long-term investments


35,463















Total assets


120,903



102,715



83,078



71,009



61,898Long-term liabilities


2,161



2,167



1,679



1,629



938Total shareholders equity


104,649



87,812



71,038



61,667



54,572  29




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K. Form 10-K.
  BUSINESS
    OVERVIEW
    
    Medical Market:  We currently market the blood
    analysis system in the medical market under the name Piccolo
    xpresstm.
    Through October 2006, we marketed the blood analysis system in
    the medical market as the
    Piccolo®,
    now referred to as the Piccolo Classic. We continue to support
    and service our current population of Piccolo xpress and Piccolo
    Classic chemistry analyzers.
    Veterinary Market:  We currently market the
    blood analysis system in the veterinary market under the name
    VetScan
    VS2®.
    Through March 2006, we marketed the blood analysis system in the
    veterinary market as the
    VetScan®,
    now referred to as the VetScan Classic. We continue to support
    and service our current population of VetScan VS2 and VetScan
    Classic chemistry analyzers.  tm tm
    CRITICAL
    ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS
   30




---



##### Table of Contents



Form 10-K.
  Revenue Recognition and Deferred Revenue.
      Distributor and Customer Rebates.
     31




---



##### Table of Contents



Balance atBeginning








Balance atof Year


Provisions


Payments


End of YearYear Ended March 31, 2008:Distributor rebates

$
229


$
498


$
(587
)

$
140Customer rebates


168







(168
)


Total distributor and customer rebates

$
397


$
498


$
(755
)

$
140Year Ended March 31, 2007:Distributor rebates

$
90


$
781


$
(642
)

$
229Customer rebates


36



328



(196
)


168Total distributor and customer rebates

$
126


$
1,109


$
(838
)

$
397Year Ended March 31, 2006:Distributor rebates

$
177


$
781


$
(868
)

$
90Customer rebates






578



(542
)


36Total distributor and customer rebates

$
177


$
1,359


$
(1,410
)

$
126   Sales and Other Allowances.
  Allowance for Doubtful Accounts.
  Fair Value of Investments.
 32




---



##### Table of Contents



Warranty Reserves.
      Inventories. first-in,
  Long-Lived Assets.
  Income Taxes.
  Share-Based Compensation Expense.
   33




---



##### Table of Contents




    Risk-free interest rate:  The risk-free
    interest rate is based on U.S. Treasury yields in effect at
    the time of grant for the expected term of the option.
    Expected stock price volatility:  We estimate
    the volatility of our common stock at the date of grant based on
    the historical volatility of our common stock.
    Expected term:  We estimate the expected term
    of stock options granted based on historical exercise and
    post-vesting termination patterns, which we believe are
    representative of future behavior.
    Expected dividends:  We have not paid cash
    dividends on our common stock and we do not anticipate paying
    cash dividends in the foreseeable future; consequently, we use
    an expected dividend yield of zero.      Form 10-K.
  RESULTS
    OF OPERATIONS
    Total
    Revenues
  Revenues by Geographic Region and by Product
    Category.
  Year Ended March 31,


Change 2007 to 2008


Change 2006 to 2007Increase/


Percent


Increase/


PercentRevenues by Geographic Region

2008


2007


2006


(Decrease)


Change


(Decrease)


ChangeNorth America

$
83,830


$
72,015


$
58,747


$
11,815



16
%

$
13,268



23
%Percentage of total revenues


84
%


84
%


85
%Europe


13,472



10,370



7,354



3,102



30
%


3,016



41
%Percentage of total revenues


13
%


12
%


11
%Asia Pacific and rest of the world


3,249



3,836



2,827



(587
)


(15
)%


1,009



36
%Percentage of total revenues


3
%


4
%


4
%Total revenues

$
100,551


$
86,221


$
68,928


$
14,330



17
%

$
17,293



25
%   34




---



##### Table of Contents



Year Ended March 31,


Change 2007 to 2008


Change 2006 to 2007Increase/


Percent


Increase/


PercentRevenues by Product Category

2008


2007


2006


(Decrease)


Change


(Decrease)


ChangeInstruments

$
30,011


$
28,899


$
21,864


$
1,112



4
%

$
7,035



32
%Percentage of total revenues


30
%


34
%


32
%Reagent discs and kits


61,928



50,741



41,606



11,187



22
%


9,135



22
%Percentage of total revenues


62
%


59
%


60
%Other products


6,583



4,775



4,086



1,808



38
%


689



17
%Percentage of total revenues


6
%


5
%


6
%Product sales, net


98,522



84,415



67,556



14,107



17
%


16,859



25
%Percentage of total revenues


98
%


98
%


98
%Development and licensing revenue


2,029



1,806



1,372



223



12
%


434



32
%Percentage of total revenues


2
%


2
%


2
%Total revenues

$
100,551


$
86,221


$
68,928


$
14,330



17
%

$
17,293



25
%   Fiscal
    2008 Compared to Fiscal 2007
  North America.
  Instruments.
        Reagent discs and kits.
        Other products.
  Development and licensing.
 35




---



##### Table of Contents



Significant concentration.
  Europe.
  Instruments.
        Reagent discs and kits.
        Other products.
  Asia Pacific and rest of the world.
  Instruments.
        Reagent discs and kits.
        Other products.
 36




---



##### Table of Contents



Fiscal
    2007 Compared to Fiscal 2006
  North America.
  Instruments.
        Reagent discs and kits.
        Other products.
  Development and licensing.
  Significant concentration.
   37




---



##### Table of Contents



Europe.
  Instruments.
        Reagent discs and kits.
        Other products.
  Asia Pacific and rest of the
    world.
  Instruments.
        Reagent discs and kits.
        Other products.
 38




---



##### Table of Contents



Segment
    Results
  Fiscal
    2008 Compared to Fiscal 2007
    Year Ended March 31,


ChangePercent of





Percent of


Increase/


Percent2008


Revenues(1)


2007


Revenues(1)


(Decrease)


ChangeRevenues:Medical Market

$
22,764



100
%

$
17,455



100
%

$
5,309



30
%Percentage of total revenues


23
%






20
%Veterinary Market


71,091



100
%


63,851



100
%


7,240



11
%Percentage of total revenues


71
%






74
%Other(2)


6,696







4,915







1,781



36
%Percentage of total revenues


6
%






6
%Total revenues


100,551







86,221







14,330



17
%Cost of revenues:Medical Market


11,340



50
%


8,549



49
%


2,791



33
%Veterinary Market


31,812



45
%


29,021



45
%


2,791



10
%Other(2)


2,355







1,792







563



31
%Total cost of revenues


45,507







39,362







6,145



16
%Gross profit:Medical Market


11,424



50
%


8,906



51
%


2,518



28
%Veterinary Market


39,279



55
%


34,830



55
%


4,449



13
%Other(2)


4,341







3,123







1,218



39
%Gross profit

$
55,044






$
46,859






$
8,185



17
%     (1)
    
    The percentage reported is based on revenues by operating
    segment.(2)
    
    Represents unallocated items, not specifically identified to any
    particular business segment.  Medical
    Market
  Revenues
    for Medical Market Segment
    Instruments.
  Reagent discs.
 39




---



##### Table of Contents



Gross
    Profit for Medical Market Segment
    Veterinary
    Market
  Revenues
    for Veterinary Market Segment
    Instruments.
       Reagent discs and kits.
     40




---



##### Table of Contents



Gross
    Profit for Veterinary Market Segment
    Fiscal
    2007 Compared to Fiscal 2006
    Year Ended March 31,


ChangePercent of





Percent of


Increase/


Percent2007


Revenues(1)


2006


Revenues(1)


(Decrease)


ChangeRevenues:Medical Market

$
17,455



100
%

$
10,888



100
%

$
6,567



60
%Percentage of total revenues


20
%






16
%Veterinary Market


63,851



100
%


53,841



100
%


10,010



19
%Percentage of total revenues


74
%






78
%Other(2)


4,915







4,199







716



17
%Percentage of total revenues


6
%






6
%Total revenues


86,221







68,928







17,293



25
%Cost of revenues:Medical Market


8,549



49
%


4,890



45
%


3,659



75
%Veterinary Market


29,021



45
%


23,856



44
%


5,165



22
%Other(2)


1,792







1,329







463



35
%Total cost of revenues


39,362







30,075







9,287



31
%Gross profit:Medical Market


8,906



51
%


5,998



55
%


2,908



48
%Veterinary Market


34,830



55
%


29,985



56
%


4,845



16
%Other(2)


3,123







2,870







253



9
%Gross profit

$
46,859






$
38,853






$
8,006



21
%     (1)
    
    The percentage reported is based on revenues by operating
    segment.(2)
    
    Represents unallocated items, not specifically identified to any
    particular business segment.  Medical
    Market
  Revenues
    for Medical Market Segment
    Instruments.
 41




---



##### Table of Contents



Reagent discs and kits.
  Gross
    Profit for Medical Market Segment
    Veterinary
    Market
  Revenues
    for Veterinary Market Segment
    Instruments.
      Reagent discs and kits.
   42




---



##### Table of Contents



Gross
    Profit for Veterinary Market Segment
    Cost
    of Revenues
    Year Ended March 31,

Change 2007 to 2008

Change 2006 to 2007Increase/

Percent

Increase/

Percent2008

2007

2006

(Decrease)

Change

(Decrease)

ChangeCost of revenues

$
45,507


$
39,362


$
30,075


$
6,145



16
%

$
9,287



31
%Percentage of total revenues


45
%


46
%


44
%     Fiscal
    2008 Compared to Fiscal 2007
    Fiscal
    2007 Compared to Fiscal 2006
   43




---



##### Table of Contents



Operating
    Expenses
  Research
    and Development
    Year Ended March 31,

Change 2007 to 2008

Change 2006 to 2007Increase/

Percent

Increase/

Percent2008

2007

2006

(Decrease)

Change

(Decrease)

ChangeResearch and development

$
6,966


$
6,180


$
6,127


$
786



13
%

$
53



1
%Percentage of total revenues


7
%


7
%


9
%     Fiscal
    2008 Compared to Fiscal 2007
      Fiscal
    2007 Compared to Fiscal 2006
    Sales
    and Marketing
    Year Ended March 31,

Change 2007 to 2008

Change 2006 to 2007Increase/

Percent

Increase/

Percent2008

2007

2006

(Decrease)

Change

(Decrease)

ChangeSales and marketing expenses

$
23,689


$
20,569


$
16,219


$
3,120



15
%

$
4,350



27
%Percentage of total revenues


24
%


24
%


24
%    44




---



##### Table of Contents



Fiscal
    2008 Compared to Fiscal 2007
    Fiscal
    2007 Compared to Fiscal 2006
    General
    and Administrative
    Year Ended March 31,

Change 2007 to 2008

Change 2006 to 2007Increase/

Percent

Increase/

Percent2008

2007

2006

(Decrease)

Change

(Decrease)

ChangeGeneral and administrative expenses

$
6,681


$
5,735


$
5,775


$
946



16
%

$
(40
)


(1
)%Percentage of total revenues


7
%


7
%


8
%     Fiscal
    2008 Compared to Fiscal 2007
    Fiscal
    2007 Compared to Fiscal 2006
    Interest
    and Other Income (Expense), Net
    Year Ended March 31,

Change 2007 to 2008

Change 2006 to 2007Increase/

Percent

Increase/

Percent2008

2007

2006

(Decrease)

Change

(Decrease)

ChangeInterest and other income (expense), net

$
2,096


$
1,774


$
787


$
322



18
%

$
987



125
%    45




---



##### Table of Contents



Fiscal
    2008 Compared to Fiscal 2007
    Fiscal
    2007 Compared to Fiscal 2006
    Income
    Tax Provision
    Year Ended March 31,2008

2007

2006Income tax provision

$
7,301


$
6,076


$
4,044Effective tax rate


37
%


38
%


35
%   Fiscal
    2008 Compared to Fiscal 2007
      Fiscal
    2007 Compared to Fiscal 2006
    LIQUIDITY
    AND CAPITAL RESOURCES
    March 31,2008


2007


2006Cash and cash equivalents

$
17,219


$
10,183


$
10,164Short-term investments


6,991



35,028



20,372Long-term investments


35,463







Total cash, cash equivalents and investments

$
59,673


$
45,211


$
30,536Percentage of total assets


49
%


44
%


37
%  46




---



##### Table of Contents



Cash
    Flow Changes
    Year Ended March 31,2008


2007


2006Net cash provided by operating activities

$
14,966


$
11,822


$
8,768Net cash used in investing activities


(12,557
)


(17,701
)


(5,702
)Net cash provided by financing activities


4,627



5,898



1,322Net increase in cash and cash equivalents

$
7,036


$
19


$
4,388   Operating
    Activities
             47




---



##### Table of Contents



Investing
    Activities
    Investments.
  Property and Equipment.
  Financing
    Activities
    Contractual
    Obligations
    Payments Due by PeriodDue in FiscalTotal


2009


2010


2011


2012


2013


ThereafterOperating leases

$
3,609


$
1,267


$
1,247


$
973


$
86


$
36


$
Purchase commitments


7,290



7,290



















Total contractual obligations

$
10,899


$
8,557


$
1,247


$
973


$
86


$
36


$
   Operating Leases.
  Purchase Commitments.
  Line of Credit.
 48




---



##### Table of Contents




    We must have a minimum net income of $25,000 before preferred
    stock dividends and accretion on preferred stock in any three
    quarters of a fiscal year, provided that any loss before
    preferred stock dividends and accretion on preferred stock
    incurred in the remaining quarter is not to exceed $250,000.
    We are required to be profitable, as defined, on a fiscal year
    to date basis beginning with the six month period ended
    September 30, 2007 and to have net income before preferred
    stock dividends and accretion on preferred stock of
    $1.2 million for the fiscal year ended March 31, 2008.    Financial Covenants

RequirementsQuick ratio, as defined

Not less than 2.00 to 1.00Cash flow coverage, as defined

Not less than 1.25 to 1.00Debt to net worth ratio, as defined

Not greater than 1.00 to 1.00Tangible effective net worth, as defined

Not less than $25.7 million
     Contingencies
    Off-Balance
    Sheet Arrangements
    RECENT
    ACCOUNTING PRONOUNCEMENTS
  157-1, FAS 157-1  (FSP 157-1). FAS 157-2 (FSP 157-2) FSP 157-2 FSP 157-1 FSP 157-2.
   49




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
         50




---



##### Table of Contents



Foreign
    Currency Rate Fluctuations
   51




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data  ABAXIS,
    INC.
  INDEX TO
    FINANCIAL STATEMENTS
   
 Description

PageReport of Independent Registered Public
    Accounting Firm


53Balance Sheets at March 31, 2008 and 2007


54Statements of Operations for the Years Ended
    March 31, 2008, 2007 and 2006


55Statements of Shareholders Equity and
    Comprehensive Income for the Years Ended March 31, 2008,
    2007 and 2006


56Statements of Cash Flows for the Years Ended
    March 31, 2008, 2007 and 2006


57Notes to Financial Statements


58   52




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     Form 10-K
           
    53




---



##### Table of Contents



ABAXIS,
    INC.
 BALANCE
    SHEETS  March 31,2008


2007(In thousands,except share data)ASSETSCurrent assets:Cash and cash equivalents

$
17,219


$
10,183Short-term investments


6,991



35,028Trade receivables (net of allowances of $272 in 2008 and $542 in
    2007)


20,873



16,929Inventories, net


18,657



14,813Prepaid expenses


427



1,321Net deferred tax asset  current


2,426



8,979Total current assets


66,593



87,253Long-term investments


35,463



Property and equipment, net


14,599



12,662Intangible assets, net


375



450Other assets


5



38Net deferred tax asset  non-current


3,868



2,312Total assets

$
120,903


$
102,715LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
6,421


$
6,505Accrued payroll and related expenses


4,277



3,830Other accrued liabilities


1,369



1,169Deferred revenue


807



917Warranty reserve


1,219



315Total current liabilities


14,093



12,736Non-current liabilities:Deferred rent


286



391Deferred revenue


1,146



1,244Warranty reserve


729



532Total non-current liabilities


2,161



2,167Commitments and contingencies (Note 8)Shareholders equity:Preferred stock, no par value: 5,000,000 authorized shares; no
    shares issued and outstanding in 2008 and 2007






Common stock, no par value: 35,000,000 authorized shares;
    21,706,000 and 21,207,000 shares issued and outstanding in
    2008 and 2007, respectively


109,031



103,282Accumulated deficit


(2,967
)


(15,470
)Accumulated other comprehensive loss


(1,415
)


Total shareholders equity


104,649



87,812Total liabilities and shareholders equity

$
120,903


$
102,715    54




---



##### Table of Contents



ABAXIS,
    INC.
 STATEMENTS
    OF OPERATIONS  Year Ended March 31,2008


2007


2006(In thousands, except per share data)Revenues

$
100,551


$
86,221


$
68,928Cost of revenues


45,507



39,362



30,075Gross profit


55,044



46,859



38,853Operating expenses:Research and development


6,966



6,180



6,127Sales and marketing


23,689



20,569



16,219General and administrative


6,681



5,735



5,775Total operating expenses


37,336



32,484



28,121Income from operations


17,708



14,375



10,732Interest and other income (expense), net


2,096



1,774



787Income before income taxes


19,804



16,149



11,519Income tax provision


7,301



6,076



4,044Net income

$
12,503


$
10,073


$
7,475Net income per share:Basic net income per share

$
0.58


$
0.49


$
0.37Diluted net income per share

$
0.56


$
0.46


$
0.35Shares used in the calculation of net income per share:Weighted average common shares outstanding  basic


21,499



20,643



19,985Weighted average common shares outstanding  diluted


22,261



21,846



21,492    55




---



##### Table of Contents



ABAXIS,
    INC.
  STATEMENTS
    OF SHAREHOLDERS EQUITY AND COMPREHENSIVE
    INCOME
  AccumulatedOther


TotalCommon Stock


Accumulated


Comprehensive


Shareholders


ComprehensiveShares


Amount


Deficit


Income (Loss)


Equity


Income(In thousands, except share data)Balances at March 31, 2005


19,892,000


$
94,614


$
(33,018
)

$
71


$
61,667Common stock issued for employee benefit plans


3,000



43











43Common stock issued under stock option exercises


174,000



990











990Issuance of common stock upon exercise of warrants


66,000



348











348Share-based compensation expense adjustment






(12
)










(12
)Tax benefits from stock option exercises






523











523Components of comprehensive income:Net income










7,475







7,475


$
7,475Change in unrealized gain on investments, net of tax














4



4



4Comprehensive income





















$
7,479Balances at March 31, 2006


20,135,000



96,506



(25,543
)


75



71,038Common stock issued for employee benefit plans


3,000



66











66Common stock issued under stock option exercises


931,000



4,506











4,506Issuance of common stock upon exercise of warrants


138,000



823











823Share-based compensation






812











812Excess tax benefits from share-based awards






569











569Components of comprehensive income:Net income










10,073







10,073


$
10,073Change in unrealized gain on investments, net of tax














(75
)


(75
)


(75
)Comprehensive income





















$
9,998Balances at March 31, 2007


21,207,000



103,282



(15,470
)






87,812Common stock issued under stock option exercises


483,000



3,128











3,128Common stock issued in settlement of restricted stock units, net
    of shares withheld for employee taxes


16,000



(110
)










(110
)Share-based compensation






1,122











1,122Excess tax benefits from share-based awards






1,609











1,609Components of comprehensive income:Net income










12,503







12,503


$
12,503Change in unrealized gain (loss) on investments, net of tax














(1,415
)


(1,415
)


(1,415
)Comprehensive income





















$
11,088Balances at March 31, 2008


21,706,000


$
109,031


$
(2,967
)

$
(1,415
)

$
104,649    56




---



##### Table of Contents



ABAXIS,
    INC.
  STATEMENTS
    OF CASH FLOWS
  Year Ended March 31,2008


2007


2006(In thousands)Cash flows from operating activities:Net income

$
12,503


$
10,073


$
7,475Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


3,497



2,685



2,136Loss on disposal of property and equipment


2



37



7Share-based compensation expense


1,108



799



(12
)Tax benefits from stock option exercises










523Excess tax benefits from share-based awards


(1,609
)


(569
)


Deferred income taxes


6,400



5,178



3,240Common stock issued for employee benefit plans






66



43Changes in assets and liabilities:Trade receivables, net


(3,944
)


(2,291
)


(4,129
)Inventories, net


(5,572
)


(6,755
)


(3,081
)Prepaid expenses


894



(306
)


(164
)Other assets


33



42



16Accounts payable


(84
)


1,891



764Accrued payroll and related expenses


447



(60
)


2,023Other accrued liabilities


503



464



(123
)Deferred rent


(105
)


(87
)


16Deferred revenue


(208
)


284



(176
)Warranty reserve


1,101



375



227Other long-term liabilities






(4
)


(17
)Net cash provided by operating activities


14,966



11,822



8,768Cash flows from investing activities:Purchases of available-for-sale investments


(20,575
)


(67,483
)


(58,359
)Purchases of held-to-maturity investments


(21,167
)


(25,868
)


Proceeds from maturities of available-for-sale investments






71,330



54,899Proceeds from maturities of held-to-maturity investments


32,804



7,240



Purchases of property and equipment


(3,619
)


(2,920
)


(2,242
)Net cash used in investing activities


(12,557
)


(17,701
)


(5,702
)Cash flows from financing activities:Proceeds from issuance of common stock under stock plans, net


3,018



4,506



990Proceeds from exercise of warrants






823



348Excess tax benefits from share-based awards


1,609



569



Repayment of capital lease obligations










(16
)Net cash provided by financing activities


4,627



5,898



1,322Net increase in cash and cash equivalents


7,036



19



4,388Cash and cash equivalents at beginning of year


10,183



10,164



5,776Cash and cash equivalents at end of year

$
17,219


$
10,183


$
10,164Supplemental disclosure of cash flow information:Cash paid for interest

$
4


$
15


$
17Cash paid for income taxes, net of refunds

$
319


$
503


$
552Supplemental disclosure of non-cash flow information:Change in unrealized gain (loss) on investments, net of tax

$
(1,415
)

$
(75
)

$
4Transfers of equipment between inventory and property and
    equipment

$
1,742


$
2,351


$
1,049Capitalized share-based compensation

$
14


$
13


$
Common stock withheld for employee taxes in connection with
    share-based compensation

$
110


$



$
    57




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS
 YEARS
    ENDED MARCH 31, 2008, 2007 AND 2006
  NOTE 1.
    DESCRIPTION
    OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES  Description of Business.
  Use of Estimates in Preparation of Financial
    Statements.
  Certain Significant Risks and
    Uncertainties.
  Reclassification.
  Cash and Cash Equivalents.
  Investments.
     58




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      held-to-maturity.
    Concentration of Credit Risk.
    Allowance for Doubtful Accounts.
  Inventories. (first-in,
 59




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Property and Equipment.
  Asset Classification

Estimated Useful LifeMachinery and equipment

2-10 yearsFurniture and fixtures

3-8 yearsComputer equipment

2-7 yearsLeasehold improvements

Shorter of estimated useful life or lease term, including any
    lease term extensions that the Company has the right and
    intention to execute     Long-Lived Assets.
  Intangible Assets.
  Fair Value of Financial Instruments.
  Revenue Recognition and Deferred
    Revenue.
  
    Evidence of an arrangement exists:  Persuasive
    evidence of an arrangement with a customer that reflects the
    terms and conditions to deliver products must exist in order to
    recognize revenue.
    Upon shipment of the products to the
    customer:  Delivery is considered to occur at the
    time of shipment of products to a distributor or direct
    customer, as title and risk of loss have been transferred to the
    distributor or direct customer on delivery to the common
    carrier. Rights of return are not provided.
    Fixed or determinable sales price:  When the
    sales price is fixed or determinable that amount is recognized
    as revenue.
    Collection is reasonably assured:  Collection
    is deemed probable if a customer is expected to be able to pay
    amounts under the arrangement as those amounts become due.
    Revenue is recognized when the resulting receivable is
    reasonably assured.     60




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
        Distributor and Customer Rebates.
  Shipping and Handling. No. 00-10,
  Research and Development Costs.
  Advertising Expenses.
  Income Taxes.
  Share-Based Compensation Expense.
   61




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      
    Risk-free interest rate:  The risk-free
    interest rate is based on U.S. Treasury yields in effect at
    the time of grant for the expected term of the option.
    Expected stock price volatility:  The Company
    estimates the volatility of its common stock at the date of
    grant based on the historical volatility of its common stock.
    Expected term:  The Company estimates the
    expected term of stock options granted based on historical
    exercise and post-vesting termination patterns, which it
    believes are representative of future behavior.
    Expected dividends:  The Company has not paid
    cash dividends on its common stock and does not anticipate
    paying cash dividends in the foreseeable future; consequently,
    the Company uses an expected dividend yield of zero.      Net Income Per Share.
  Comprehensive Income.
    Year Ended March 31,2008


2007


2006Net income

$
12,503


$
10,073


$
7,475Other comprehensive income:Change in unrealized gain (loss) on investments, net of tax


(1,415
)


(75
)


4Comprehensive income

$
11,088


$
9,998


$
7,479  62




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Recent
    Accounting Pronouncements
  157-1, FAS 157-1  (FSP 157-1). FAS 157-2 (FSP 157-2) FSP 157-2 FSP 157-1 FSP 157-2.
    
     63




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  NOTE 2.
    INVESTMENTS    March 31, 2008Unrealized


FairCost


Gain (Loss)


ValueShort-term investmentsHeld-to-maturity:Certificate of deposits

$
2,974


$



$
2,974Municipal bonds


4,017







4,017Total short-term investments in held-to-maturity

$
6,991


$



$
6,991Long-term investmentsAvailable-for-sale:Auction rate securities

$
36,975


$
(1,512
)

$
35,463Total long-term investments in available-for-sale

$
36,975


$
(1,512
)

$
35,463   March 31, 2007Unrealized


FairCost


Gain (Loss)


ValueShort-term investmentsAvailable-for-sale:Auction rate securities

$
16,400


$



$
16,400Total short-term investments in available-for-sale


16,400







16,400Held-to-maturity:Corporate debt securities


18,628







18,628Total short-term investments in held-to-maturity


18,628







18,628Total short-term investments

$
35,028


$



$
35,028        64




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  NOTE 3.
    INVENTORIES,
    NET    March 31,2008


2007Raw materials

$
9,067


$
7,974Work-in-process


4,315



3,203Finished goods


5,275



3,636Inventories, net

$
18,657


$
14,813   NOTE 4.
    PROPERTY
    AND EQUIPMENT, NET    March 31,2008


2007Machinery and equipment

$
19,197


$
16,877Furniture and fixtures


1,446



1,406Computer equipment


1,937



1,336Leasehold improvements


6,179



5,924Construction in progress


3,001



1,65531,760



27,198Accumulated depreciation and amortization


(17,161
)


(14,536
)Property and equipment, net

$
14,599


$
12,662     NOTE 5.
    INTANGIBLE
    ASSETS, NET    March 31,2008


2007Cost

$
750


$
750Accumulated amortization


(375
)


(300
)Intangible assets, net

$
375


$
450     Estimated Future Annual Amortization ExpenseFiscal Year Ending March 31,Total

2009

2010

2011

2012

2013

ThereafterAmortization expense

$
375


$
75


$
75


$
75


$
75


$
75


$
  65




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  NOTE 6.
    WARRANTY
    RESERVES    Instruments.
  Reagent Discs.
      Year Ended March 31,2008


2007


2006Balance at beginning of period

$
847


$
472


$
245Provision for warranty expense


2,036



611



374Warranty costs incurred


(935
)


(236
)


(147
)Balance at end of period


1,948



847



472Non-current portion of warranty reserve


729



532



259Current portion of warranty reserve

$
1,219


$
315


$
213   NOTE 7.
    LINE OF
    CREDIT   66




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    
    The Company must have a minimum net income of $25,000 before
    preferred stock dividends and accretion on preferred stock in
    any three quarters of a fiscal year, provided that any loss
    before preferred stock dividends and accretion on preferred
    stock incurred in the remaining quarter is not to exceed
    $250,000.
    The Company is required to be profitable, as defined, on a
    fiscal year to date basis beginning with the six month period
    ended September 30, 2007 and to have net income before
    preferred stock dividends and accretion on preferred stock of
    $1.2 million for the fiscal year ended March 31, 2008.
    The Company is required to comply with certain financial
    covenants as follows:  Financial Covenants

RequirementsQuick ratio, as defined

Not less than 2.00 to 1.00Cash flow coverage, as defined

Not less than 1.25 to 1.00Debt to net worth ratio, as defined

Not greater than 1.00 to 1.00Tangible effective net worth, as defined

Not less than $25.7 million
     NOTE 8.
    COMMITMENTS
    AND CONTINGENCIES    Payments Due by PeriodDue in FiscalTotal


2009


2010


2011


2012


2013


ThereafterOperating leases

$
3,609


$
1,267


$
1,247


$
973


$
86


$
36


$
Purchase commitments


7,290



7,290



















Total contractual obligations

$
10,899


$
8,557


$
1,247


$
973


$
86


$
36


$
   Operating Leases.
    Purchase Commitments.
 67




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Litigation.
  NOTE 9.
    EMPLOYEE
    BENEFIT PLAN    NOTE 10.
    SHARE-BASED
    COMPENSATION    Year Ended March 31,2008


2007Cost of revenues

$
127


$
72Research and development


153



117Sales and marketing


325



292General and administrative


503



318Share-based compensation expense before income taxes


1,108



799Income tax benefit


(442
)


(219
)Total share-based compensation expense after income taxes

$
666


$
580Net impact of share-based compensation on:Basic net income per share

$
0.03


$
0.03Diluted net income per share

$
0.03


$
0.03    68




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Cash
    Flow Impact
    Equity
    Compensation Plans
    2005 Equity Incentive Plan.
      1992 Outside Directors Stock Option
    Plan.
    Stock
    Options
   69




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Valuation
    and Expense Recognition Method for Stock Options
    Year EndedMarch 31, 2006Expected term of option


6 yearsRisk-free interest rate


3.76
%Dividend yield


0.00
%Volatility


53
%    70




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Stock
    Option Activity
    Weighted


WeightedAverage


AverageExercise


Remaining


AggregateNumber of


Price


Contractual


IntrinsicShares


per Share


Life (Years)


Value(In thousands)Outstanding at March 31, 2005(2,088,000 shares exercisable at a weighted average
    exercise price of $4.82 per share)


2,763,000


$
6.76Granted (weighted average fair value of $4.31 per share)


60,000



7.89Exercised


(174,000
)


5.69Canceled or forfeited


(117,000
)


8.71Outstanding at March 31, 2006(2,317,000 shares exercisable at a weighted average
    exercise price of $6.61 per share)


2,532,000


$
6.77Granted






Exercised


(931,000
)


4.84Canceled or forfeited


(24,000
)


12.93Outstanding at March 31, 2007(1,522,000 shares exercisable at a weighted average
    exercise price of $7.69 per share)


1,577,000


$
7.82Granted






Exercised


(483,000
)


6.48Canceled or forfeited


(50,000
)


20.71Outstanding at March 31, 2008


1,044,000


$
7.82



3.78


$
16,029Vested and expected to vest at March 31, 2008


1,043,000


$
7.82



3.77


$
16,012Exercisable at March 31, 2008


1,026,000


$
7.75



3.72


$
15,828    71




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Options Outstanding


Options ExercisableWeighted


Weighted





WeightedAverage


Average





AverageNumber


Remaining


Exercise


Number


Exerciseof Shares


Contractual


Price


of Shares


PriceRange of Exercise Prices

Outstanding


Life (Years)


per Share


Exercisable


per Share$ 1.50 - $ 2.00


107,000



0.74


$
1.67



107,000


$
1.67$ 2.25 - $ 3.84


93,000



2.80



2.80



93,000



2.80$ 3.85 - $ 3.85


151,000



5.06



3.85



151,000



3.85$ 4.13 - $ 4.75


41,000



3.25



4.32



41,000



4.32$ 4.87 - $ 4.87


222,000



3.07



4.87



222,000



4.87$ 4.94 - $ 6.41


108,000



2.76



5.98



108,000



5.98$ 6.46 - $12.99


108,000



3.98



8.88



96,000



8.64$13.00 - $19.65


55,000



6.09



15.39



49,000



15.52$21.45 - $21.45


2,000



6.04



21.45



2,000



21.45$21.65 - $21.65


157,000



6.05



21.65



157,000



21.65$ 1.50 - $21.65


1,044,000



3.78


$
7.82



1,026,000


$
7.75   Stock
    Option Acceleration
    Restricted
    Stock Units
    
    Restricted stock unit awards to
    employees:  Four year time-based vesting as
    follows: five percent vesting after the first year; additional
    ten percent after the second year; additional 15 percent
    after the third year; and the remaining 70 percent after
    the fourth year of continuous employment with the Company.
    Restricted stock unit awards to non-employee
    directors:  100 percent vesting after one
    year of continuous service to the Company. 72




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
   and/or
  Valuation
    and Expense Recognition Method for Restricted Stock
    Unit
    Restricted
    Stock Unit Activity
    WeightedAverageNumber of


Grant DateShares


Fair Value(1)Unvested at March 31, 2006





$
Granted


305,000



24.56Vested






Canceled or forfeited


(10,000
)


21.43Unvested at March 31, 2007


295,000


$
24.66Granted


267,000



21.73Vested


(22,000
)


25.06Canceled or forfeited


(46,000
)


23.11Unvested at March 31, 2008


494,000


$
23.21     (1)
    
    The weighted average grant date fair value of restricted stock
    units is based on the number of shares granted and the closing
    market price of the Companys common stock on the date of
    grant.   73




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  Pro
    Forma Information for Period Prior to Adoption of
    SFAS No. 123(R)
    Year EndedMarch 31, 2006Net income, as reported

$
7,475Less: Pro forma share-based compensation expense determined
    under the fair
    value-based
    accounting method for all awards, net of related tax effects


(2,534
)Pro forma net income

$
4,941Basic and diluted net income per share:As reported  basic

$
0.37Pro forma  basic

$
0.25As reported  diluted

$
0.35Pro forma  diluted

$
0.23     NOTE 11.
    COMMON
    STOCK  Stock Purchase Rights.
    Common Stock Warrants.
 74




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  NOTE 12.
    NET
    INCOME PER SHARE    Year Ended March 31,2008


2007


2006Numerator:Net income

$
12,503


$
10,073


$
7,475Denominator:Weighted average common shares outstanding  basic


21,499,000



20,643,000



19,985,000Weighted average effect of dilutive securities:Stock options


701,000



1,082,000



1,374,000Restricted stock units


58,000



4,000



Warrants


3,000



117,000



133,000Weighted average common shares outstanding  diluted


22,261,000



21,846,000



21,492,000Net income per share:Basic net income per share

$
0.58


$
0.49


$
0.37Diluted net income per share

$
0.56


$
0.46


$
0.35     Year Ended March 31,2008


2007


2006Weighted average number of shares underlying antidilutive stock
    options






222,000



291,000Weighted average exercise price per share underlying
    antidilutive stock options


N/A


$
21.65


$
20.70     Year Ended March 31,2008


2007


2006Weighted average number of shares underlying antidilutive
    restricted stock units


9,000



199,000



N/A  75




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
  NOTE 13.
    INCOME
    TAXES    Year Ended March 31,2008


2007


2006Current:Federal

$
368


$
405


$
169State


533



493



110Total current provision for income taxes


901



898



279Deferred:Federal


5,838



4,930



3,518State


562



248



247Total deferred provision for income taxes


6,400



5,178



3,765Total provision for income taxes

$
7,301


$
6,076


$
4,044     Year Ended March 31,2008


2007


2006Income taxes at federal income tax rate

$
6,931


$
5,652


$
4,032State income taxes, net of federal benefits


880



635



476Share-based compensation


6



93



Research and development tax credits


(242
)


(350
)


(174
)Extraterritorial income exclusion






(27
)


(80
)Tax-exempt interest income


(336
)






Other


62



73



(210
)Provision for income taxes

$
7,301


$
6,076


$
4,044  76




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Year Ended March 31,2008


2007


2006Deferred tax assets:Net operating loss carryforwards

$



$
5,328


$
11,770Research and development tax credit carryforwards


3,007



3,713



4,287Capitalized research and development






86



105Inventory reserves


364



140



70Deferred revenue from extended maintenance agreements and
    warranty reserves


1,172



864



625Accrued vacation


424



383



320Share-based compensation


378



192



Alternative minimum tax credits


675



485



351Other


496



725



457Valuation allowance for deferred tax assets






(352
)


(543
)Total deferred tax assets


6,516



11,564



17,442Deferred tax liabilities:Depreciation

$
(145
)

$
(189
)

$
(935
)Other


(77
)


(84
)


(88
)Total deferred tax liabilities


(222
)


(273
)


(1,023
)Net deferred tax assets

$
6,294


$
11,291


$
16,419        77




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      NOTE 14.
    SEGMENT
    REPORTING INFORMATION      Medical
    Market
    Veterinary
    Market
   78




---



##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
      Year Ended March 31,2008


2007


2006Revenues:Medical Market

$
22,764


$
17,455


$
10,888Veterinary Market


71,091



63,851



53,841Other(1)


6,696



4,915



4,199Total revenues


100,551



86,221



68,928Cost of revenues:Medical Market


11,340



8,549



4,890Veterinary Market


31,812



29,021



23,856Other(1)


2,355



1,792



1,329Total cost of revenues


45,507



39,362



30,075Gross profit:Medical Market


11,424



8,906



5,998Veterinary Market


39,279



34,830



29,985Other(1)


4,341



3,123



2,870Gross profit

$
55,044


$
46,859


$
38,853     (1)
    
    Represents unallocated items, not specifically identified to any
    particular business segment.  NOTE 15.
    REVENUES
    BY PRODUCT CATEGORY AND GEOGRAPHIC REGION AND SIGNIFICANT
    CONCENTRATIONS  Revenue
    Information
    Year Ended March 31,Revenues by Product Category

2008


2007


2006Instruments

$
30,011


$
28,899


$
21,864Reagent discs and kits


61,928



50,741



41,606Other products


6,583



4,775



4,086Product sales, net


98,522



84,415



67,556Development and licensing revenue


2,029



1,806



1,372Total revenues

$
100,551


$
86,221


$
68,928  79




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##### Table of Contents



ABAXIS,
    INC.
  NOTES TO
    FINANCIAL STATEMENTS  (Continued)
    Year Ended March 31,Revenues by Geographic Region

2008


2007


2006North America

$
83,830


$
72,015


$
58,747Europe


13,472



10,370



7,354Asia Pacific and rest of the world


3,249



3,836



2,827Total revenues

$
100,551


$
86,221


$
68,928   Significant
    Concentrations
    Geographical

Year Ended March 31,Distributor

Location

2008

2007

2006Walco International, Inc., d/b/a DVM Resources

United States


12
%


15
%


13
%Henry Schein, Inc.

United States


<10
%


<10
%


17
%     NOTE 16.
    QUARTERLY
    RESULTS OF OPERATIONS (UNAUDITED)    Quarter EndedJune 30


September 30


December 31


March 31Fiscal Year Ended March 31, 2008:Revenues

$
22,931


$
25,192


$
25,690


$
26,738Gross profit

$
13,016


$
13,857


$
13,609


$
14,562Net income

$
3,098


$
2,888


$
3,205


$
3,312Net income per share  basic

$
0.15


$
0.13


$
0.15


$
0.15Net income per share  diluted

$
0.14


$
0.13


$
0.14


$
0.15Fiscal Year Ended March 31, 2007:Revenues

$
20,358


$
21,037


$
22,018


$
22,808Gross profit

$
11,437


$
11,558


$
11,579


$
12,285Net income

$
2,401


$
2,114


$
2,776


$
2,782Net income per share  basic

$
0.12


$
0.10


$
0.13


$
0.13Net income per share  diluted

$
0.11


$
0.10


$
0.13


$
0.13  80




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Managements
    Report on Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
    Attestation
    Report of the Independent Registered Public Accounting
    Firm
    Changes
    in Internal Control over Financial Reporting
  Rule 13a-15(f) 15d-15(f)
 81




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL
    CONTROLS OVER FINANCIAL REPORTING
                 
    82




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##### Table of Contents



Item 9B.
    Other
    Information   PART III Item 10.
    Directors,
    Executive Officers and Corporate Governance    Name

Age

TitleClinton H. Severson


60


Chairman of the Board, President and Chief Executive OfficerRichard J. Bastiani, Ph.D.(1)(2)(3)


65


DirectorHenk J. Evenhuis(1)(3)


65


DirectorBrenton G. A. Hanlon(1)(2)(3)


62


DirectorPrithipal Singh, Ph.D.(1)(3)


69


DirectorErnest S. Tucker, III, M.D.(1)(3)


75


DirectorAlberto R. Santa Ines


61


Chief Financial Officer and Vice President of FinanceKenneth P. Aron, Ph.D.


55


Chief Technology OfficerDonald P. Wood


56


Vice President of OperationsVladimir E. Ostoich, Ph.D.


62


Vice President of Government Affairs and Vice President of
    Marketing for the Pacific Rim, FounderChristopher M. Bernard


40


Vice President of Sales and Marketing for the Domestic Medical
    MarketMartin V. Mulroy


47


Vice President of Veterinary Sales and Marketing for North
    America     (1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee(3)
    
    Member of the Nominating and Corporate Governance Committee  Clinton H. Severson
  Richard J. Bastiani, Ph.D.
  Henk J. Evenhuis
 83




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##### Table of Contents



Brenton G. A. Hanlon
  Prithipal Singh, Ph.D.
  Ernest S. Tucker, III, M.D.
  Alberto R. Santa Ines
  Kenneth P. Aron, Ph.D.
  Donald P. Wood
  Vladimir E. Ostoich, Ph.D.
  Christopher M. Bernard
 84




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##### Table of Contents



Martin V. Mulroy
  Term and
    Number of Directors
      Identification
    of Audit Committee and Financial Expert
      Section 16(a)
    Beneficial Ownership Reporting Compliance
      Code of
    Business Conduct and Ethics
   85




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##### Table of Contents



Form 8-K
  Item 11.
    Executive
    Compensation  COMPENSATION
    DISCUSSION AND ANALYSIS
  Overview
      
    to align our executive compensation with our strategic business
    objectives;
    to align the interests of our executive officers with both
    short-term and long-term shareholder interests; and
    to place a substantial portion of our executives
    compensation at risk such that actual compensation depends on
    both overall company performance and individual performance.  Executive
    Compensation Program Objectives and Framework
      Role
    of Our Compensation Committee
  and/or
 86




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##### Table of Contents



Competitive
    Benchmarking
    Abiomed

Conceptus

Palomar Medical TechnologiesAdeza Biomedical

Cutera

SurmodicsAngiodynamics

Digene

ThoratecAspect Medical Systems

Intralase

VivusATS Medical

Kensey Nash

VNUS Medical TechnologiesBiosite

Meridian BioscienceCholestech

Orasure Technologies     
    total shareholder return;
    revenue; and
    EBITDA (earnings before income tax, depreciation and
    amortization).    Compensation
    Determinations
   87




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##### Table of Contents



Elements
    of Compensation
  Base
    Salary
      Fiscal 2008


Fiscal 2009Named Executive Officer

Base Salary


Base SalaryClinton H. Severson

$
338,000


$
360,000Alberto R. Santa Ines

$
185,000


$
200,000Kenneth P. Aron, Ph.D.

$
193,000


$
210,000Vladimir E. Ostoich, Ph.D.

$
203,000


$
210,000Christopher M. Bernard

$
175,000


$
185,000     Fiscal 2008


Fiscal 2009Percent Increase


Percent IncreaseNamed Executive Officer

in Base Salary


in Base SalaryClinton H. Severson


4.0
%


6.5
%Alberto R. Santa Ines


5.7
%


8.1
%Kenneth P. Aron, Ph.D.


4.3
%


8.8
%Vladimir E. Ostoich, Ph.D.


4.1
%


3.5
%Christopher M. Bernard


16.7
%


5.7
%  88




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##### Table of Contents



Annual
    Cash Incentive Bonus
        Fiscal 2008


Fiscal 2008Named Executive Officer

Target Bonus


Bonus AwardedClinton H. Severson

$
480,000


$
456,000Alberto R. Santa Ines

$
275,000


$
261,250Kenneth P. Aron, Ph.D.

$
275,000


$
261,250Vladimir E. Ostoich, Ph.D.

$
275,000


$
261,250Christopher M. Bernard

$
250,000


$
231,250   and/or
   89




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##### Table of Contents



Fiscal 2009Named Executive Officer

Target BonusClinton H. Severson

$
525,000Alberto R. Santa Ines

$
300,000Kenneth P. Aron, Ph.D.

$
300,000Vladimir E. Ostoich, Ph.D.

$
300,000Christopher M. Bernard

$
275,000   and/or
    Long-term
    Equity Incentive Compensation
    Stock
    Options
   90




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##### Table of Contents



Restricted
    Stock Units
  Fiscal 2008 Restricted Stock Unit Grants.
    
    five percent vesting after the first year of continuous
    employment;
    additional ten percent after the second year of continuous
    employment;
    additional 15 percent after the third year of continuous
    employment; and
    the remaining 70 percent after the fourth year of
    continuous employment.    Fiscal 2009 Restricted Stock Unit Grants.
  Other
    Compensation and Benefits
    Employment
    Agreements
   91




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##### Table of Contents



Change
    in Control Agreements
        
    a lump sum payment equal to two times the sum of the
    participants annual base salary and the participants
    target annual bonus amount for the year in which the change of
    control occurs;
    a lump sum payment relating to all options or equity
    instruments, which were not exercised as of the termination
    date, in an amount equal to the difference between the share
    price established in the change of control transaction and the
    exercise price of the instrument;
    payment of 24 months of premiums for medical, dental,
    disability and life insurance benefits, provided, however, that
    if the participant becomes eligible to receive comparable
    benefits under another employers plan, the Companys
    benefits shall be secondary to those provided under such other
    plan; and
    payment of an amount equal to any excise tax imposed under
    Section 4999 of the Internal Revenue Code of 1986, as
    amended (the Code).    Tax
    Considerations
  Deductibility
    of Executive Compensation
   92




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##### Table of Contents



COMPENSATION
    COMMITTEE
    REPORT1
  Form 10-K
  Form 10-K
    Richard J. Bastiani, Ph.D., Chair     1
 93




---



##### Table of Contents



EXECUTIVE
    COMPENSATION
  Summary
    Compensation Table
    Non-EquityStock

Option

Incentive Plan

All OtherFiscal

Salary

Bonus

Awards

Awards

Compensation

Compensation

TotalName and Principal Position

Year

($)

($)

($)(1)

($)(1)

($)(2)

($)(3)

($)Clinton H. Severson


2008



336,500







253,941



1,099



456,000



11,535
(4)


1,059,075President, Chief Executive


2007



323,500







101,040



8,603



500,250



13,823
(4)


947,216Officer and Chairman of the BoardAlberto R. Santa Ines


2008



183,846







64,597



879



261,250



10,972
(5)


521,544Chief Financial Officer and


2007



174,008







22,453



8,997



287,500



13,227
(5)


506,185Vice President of FinanceKenneth P. Aron, Ph.D.


2008



192,077







64,597



879



261,250



20,753
(6)


539,556Vice President of Research


2007



184,054







22,453



6,882



287,500



22,592
(6)


523,481and Development(7)Vladimir E. Ostoich, Ph.D.


2008



202,077







64,597



879



261,250



16,599
(8)


545,402Vice President of Government


2007



194,100







22,453



6,882



287,500



17,013
(8)


527,948Affairs and Vice President of Marketing for the Pacific RimChristopher M. Bernard


2008



172,115







64,597







231,250



22,256
(10)


490,218Vice President of Sales and Marketing for the Domestic Medical
    Market(9)     (1)
    
    Amounts listed in this column represent the compensation cost
    recognized by us for financial statement reporting purposes for
    fiscal 2008 and 2007 related to stock options and restricted
    stock unit awards granted to the Named Executive Officers during
    fiscal 2008 and 2007 and prior to fiscal 2007. These amounts
    have been calculated in accordance with Statement of Financial
    Accounting Standards No. 123 (revised 2004),
    Share-Based Payment
    (SFAS No. 123(R)). For a discussion of the
    assumptions used in determining the fair value of awards of
    stock options and restricted stock units in the above table, see
    Note 10 of the Notes to Financial Statements included in
    this Annual Report on
    Form 10-K.(2)
    
    Represents aggregate cash performance bonuses earned during each
    fiscal year based on achievement of corporate financial
    performance goals, as described under Executive
    Compensation  Compensation Discussion and
    Analysis above. These bonuses were paid in four quarterly
    installments within one month following the end of the
    applicable quarter. Amounts do not include bonuses paid during a
    fiscal year, with respect to bonuses earned in a prior fiscal
    year.(3)
    
    Amounts listed are based upon our actual costs expensed in
    connection with such compensation.(4)
    
    In fiscal 2008, consists of $4,378 in supplemental health plan
    expenses reimbursed by us, $780 in group life insurance paid by
    us, $752 in disability insurance premiums paid by us and $5,625
    in matching contributions made by us to Mr. Seversons
    401(k) account. In fiscal 2007, consists of $4,366 in
    supplemental health plan expenses reimbursed by us, $780 in
    group life insurance paid by us, $812 in disability insurance
    premiums paid by us and $7,865 in matching contributions made by
    us to Mr. Seversons 401(k) account.(5)
    
    In fiscal 2008, consists of $4,490 in supplemental health plan
    expenses reimbursed by us, $420 in group life insurance paid by
    us, $437 in disability insurance premiums paid by us and $5,625
    in matching contributions made by us to Mr. Santa
    Ines 401(k) account. In fiscal 2007, consists of $4,505 in
    supplemental health plan expenses reimbursed by us, $420 in
    group life insurance paid by us, $437 in disability insurance
    premiums paid by us and $7,865 in matching contributions made by
    us to Mr. Santa Ines 401(k) account.(6)
    
    In fiscal 2008, consists of $14,222 in supplemental health plan
    expenses reimbursed by us, $444 in group life insurance paid by
    us, $462 in disability insurance premiums paid by us and $5,625
    in matching contributions 94




---



##### Table of Contents



made by us to Mr. Arons 401(k) account. In fiscal
    2007, consists of $14,186 in supplemental health plan expenses
    reimbursed by us, $444 in group life insurance paid by us, $462
    in disability insurance premiums paid by us and $7,500 in
    matching contributions made by us to Mr. Arons 401(k)
    account.(7)
    
    Dr. Aron was promoted to Chief Technology Officer in April
    2008.(8)
    
    In fiscal 2008, consists of $10,043 in supplemental health plan
    expenses reimbursed by us, $444 in group life insurance paid by
    us, $487 in disability insurance premiums paid by us and $5,625
    in matching contributions made by us to Mr. Ostoichs
    401(k) account. In fiscal 2007, consists of $10,058 in
    supplemental health plan expenses reimbursed by us, $468 in
    group life insurance paid by us, $487 in disability insurance
    premiums paid by us and $6,000 in matching contributions made by
    us to Mr. Ostoichs 401(k) account.(9)
    
    Mr. Bernard was not a Named Executive Officer for fiscal
    2007.(10)
    
    In fiscal 2008, consists of $14,222 in supplemental health plan
    expenses reimbursed by us, $360 in group life insurance paid by
    us, $375 in disability insurance premiums paid by us and $7,299
    in matching contributions made by us to Mr. Bernards
    401(k) account.  Salary and Bonus in Proportion to Total
    Compensation.
  Annual CashBase Salary


Incentive BonusAs a Percentage of


As a Percentage ofNamed Executive Officer

Total Compensation


Total CompensationClinton H. Severson


32
%


43
%Alberto R. Santa Ines


35
%


50
%Kenneth P. Aron, Ph.D.


36
%


48
%Vladimir E. Ostoich, Ph.D.


37
%


48
%Christopher M. Bernard


35
%


47
%   CEO Employment Agreement.
  Grants of
    Plan-Based Awards in Fiscal 2008
    All OtherStockAwards:

Grant DateNumber

Fair ValueEstimated Future Payouts Under

Estimated Future Payouts Under

of Shares

of StockNon-Equity Incentive Plan Awards(1)

Equity Incentive Plan Awards

of Stock

and OptionGrant

Threshold

Target

Maximum

Threshold

Target

Maximum

or Units

AwardsName

Date

($)

($)

($)

(#)

(#)

(#)(2)

(#)

($)(3)Clinton H. Severson


5/15/2007























50,000







1,056,500120,000



480,000



960,000Alberto R. Santa Ines


5/15/2007























20,000







422,60068,750



275,000



550,000Kenneth P. Aron, Ph.D.


5/15/2007























20,000







422,60068,750



275,000



550,000Vladimir E. Ostoich, Ph.D.


5/15/2007























20,000







422,60068,750



275,000



550,000Christopher M. Bernard


5/15/2007























20,000







422,60062,500



250,000



500,000  95




---



##### Table of Contents



(1)
    
    Actual cash performance bonuses, which were approved by the
    Board of Directors upon recommendation by the Compensation
    Committee based on achievement of corporate financial
    performance goals for fiscal 2008, were paid in four quarterly
    installments within one month following the end of the
    applicable quarter and are shown in the Non-Equity
    Incentive Plan Compensation column of the Summary
    Compensation Table above.(2)
    
    Each of the equity-based awards reported in the Grants of
    Plan-Based Awards table was granted under, and is subject
    to, the terms of our 2005 Equity Incentive Plan. The time-based
    vesting schedule of restricted stock unit grants during fiscal
    2008 are described above in Restricted Stock Units.(3)
    
    Represents the fair value of the restricted stock unit award on
    the date of grant, pursuant to SFAS No. 123(R). See
    Note 10 of the Notes to Financial Statements included in
    this Annual Report on
    Form 10-K
    for additional information.  Outstanding
    Equity Awards at Fiscal Year End 2008
    Option Awards

Stock AwardsEquityIncentive

EquityPlan

IncentiveAwards:

Plan Awards:Number of

Market orNumber

Market

Unearned

Payout ValueNumber of

Number of





of Shares

Value of

Shares,

of UnearnedSecurities

Securities





or Units

Shares or

Units or

Shares, UnitsUnderlying

Underlying





of Stock

Units of

Other

or OtherUnexercised

Unexercised

Option



That

Stock That

Rights That

Rights ThatOptions

Options

Exercise

Option

Have Not

Have Not

Have Not

Have Not(#)

(#)

Price

Expiration

Vested

Vested

Vested

VestedName

Exercisable(1)

Unexercisable

($)(2)

Date

(#)

($)

(#)

($)(3)Clinton H. Severson


70,000







1.5625



1/26/2009150,000







4.87



4/24/201110,417







3.85



4/22/201350,000
(4)






21.65



4/20/201438,000
(5)


880,46047,500
(5)


1,100,57550,000
(6)


1,158,500Alberto R. Santa Ines


37,432







3.00



7/23/201225,000







3.85



4/22/201340,000
(4)






21.65



4/20/201419,000
(5)


440,23020,000
(6)


463,400Kenneth P. Aron, Ph.D.


3,109







7.5625



2/7/201050,000







6.31



10/31/20104,500







5.47



7/24/201140,000
(4)






21.65



4/20/201419,000
(5)


440,23020,000
(6)


463,400Vladimir E. Ostoich, Ph.D.


25,000







1.875



10/26/200825,000







2.25



4/27/200916,000







8.125



1/25/20109,500







5.47



7/24/201140,000







3.85



4/22/201322,000
(4)






21.65



4/20/201419,000
(5)


440,23020,000
(6)


463,400Christopher M. Bernard


























19,000
(5)


440,23020,000
(6)


463,400  96




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##### Table of Contents



(1)
    
    Options granted to the Named Executive Officers expire ten years
    after the grant date. All options vest one-fourth on the first
    anniversary date of grant and vests at a rate of 1/48th for each
    full month thereafter, except as otherwise noted.(2)
    
    Represents the fair value of our common stock on the grant date
    of the option.(3)
    
    The value of the equity award is based on the closing price of
    our common stock of $23.17 on March 31, 2008, as reported
    on the NASDAQ Global Select Market.(4)
    
    These options were accelerated in full by our Board of Directors
    and became fully vested on December 5, 2005. However,
    pursuant to a
    lock-up and
    consent agreement entered into with each of our Named Executive
    Officers, these options may not be exercised prior to the date
    on which the exercise would have been permitted under the
    vesting schedule set forth in footnote 1, or earlier upon the
    Named Executive Officers last day of employment or a
    change in control. On April 20, 2008, the restrictions
    under the
    lock-up and
    consent agreements expired and 100% of these shares became
    exercisable.(5)
    
    The four-year time-based vesting terms of the restricted stock
    units is as follows, assuming continuous employment: five
    percent of the shares vest on April 25, 2007; ten percent
    of the shares vest on April 25, 2008; 15 percent of
    the shares vest on April 25, 2009; and 70 percent of
    the shares vest on April 25, 2010. Additionally, these
    restricted stock unit awards are also subject to accelerated
    vesting upon achieving the following performance-based
    milestones: upon attainment of certain pre-tax income goals by
    March 31, 2007, vesting will accelerate to an aggregate of
    25% within one year from grant date; by March 31, 2008,
    vesting will accelerate to an aggregate of 25% within two years
    from grant date; by March 31, 2009, vesting will accelerate
    to an aggregate of 30%, within three years of grant date; hence,
    meeting pre-tax income goals in each of the fiscal years ended
    March 31, 2007, 2008 and 2009 can result in a cumulative
    vesting of 80% over three years; upon attainment of certain product development
    objectives prior to June 30, 2007, an additional vesting of
    10% would be awarded; upon satisfaction of certain regulatory requirements
    prior to March 31, 2008, an additional vesting of 10% would
    be awarded; or upon attainment of a certain level of operating
    income per share for any fiscal year during the four-year
    vesting period, the restricted stock units will accelerate in
    full.To date, none of the foregoing performance-based milestones
    required for acceleration has been achieved. In each case,
    vesting of the equity award is conditioned upon the Named
    Executive Officers continuous employment through the
    applicable vesting date.(6)
    
    The four-year time-based vesting terms of the restricted stock
    units is as follows, assuming continuous employment: five
    percent of the shares vest on April 30, 2008; ten percent
    of the shares vest on April 30, 2009; 15 percent of
    the shares vest on April 30, 2010; and 70 percent of
    the shares vest on April 30, 2011.  Option
    Exercises and Stock Vested in Fiscal 2008
    Option Awards


Stock AwardsNumber of Shares





Number of SharesAcquired on


Value Realized


Acquired on


Value RealizedExercise


on Exercise


Vesting


on VestingName

(#)


($)(1)


(#)


($)(2)Clinton H. Severson


70,000



2,200,160



4,500



102,735Alberto R. Santa Ines


62,568



1,347,913



1,000



22,830Kenneth P. Aron, Ph.D.


59,391



1,011,227



1,000



22,830Vladimir E. Ostoich, Ph.D.


56,000



817,289



1,000



22,830Christopher M. Bernard










1,000



22,830  97




---



##### Table of Contents



(1)
    
    The value realized equals the difference between the option
    exercise price and the fair market value of our common stock on
    the date of exercise, as reported on the NASDAQ Global Market,
    multiplied by the number of shares for which the option was
    exercised.(2)
    
    The value realized on vesting of restricted stock units equals
    the fair market value of our common stock on the settlement
    date, multiplied by the number of shares that vested.  Severance
    and Change in Control Agreements
  Employment
    Agreement
    Executive
    Change of Control Severance Plan
        
    a lump sum payment equal to two times the sum of the
    participants annual salary and the participants
    target annual bonus amount for the year in which the change of
    control occurs;
    a lump sum payment relating to all options or equity
    instruments, which were not exercised as of the termination
    date, in an amount equal to the difference between the share
    price established in the change of control transaction and the
    exercise price of the instrument;
    payment of 24 months of premiums for medical, dental,
    disability and life insurance benefits, provided, however, that
    if the participant becomes eligible to receive comparable
    benefits under another employers plan, the Companys
    benefits shall be secondary to those provided under such other
    plan; and
    payment of an amount equal to any excise tax imposed under
    Section 4999 of the Internal Revenue Code of 1986, as amended.   98




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##### Table of Contents



Incentive
    Plans
  and/or
    and/or
 99




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##### Table of Contents



Potential
    Payments Upon Termination or Change in Control
  InvoluntaryInvoluntary





Termination withoutTermination





Cause Following awithout


Change in Control


Change in ControlExecutive Benefits and Payments Upon Separation

Cause(1)


(No Termination)


(2)Clinton H. SeversonSalary and bonus

$
1,714,000






$
1,714,000Vesting of restricted stock units(3)

$
3,139,535


$
3,139,535


$
3,139,535Health and welfare benefits

$
11,820






$
11,820Total

$
4,865,355


$
3,139,535


$
4,865,355Alberto R. Santa InesSalary and bonus









$
962,692Vesting of restricted stock units(3)





$
903,630


$
903,630Health and welfare benefits









$
10,694Excise tax reimbursement(4)









$
79,588Total





$
903,630


$
1,956,604Kenneth P. Aron, Ph.D.Salary and bonus









$
980,224Vesting of restricted stock units(3)





$
903,630


$
903,630Health and welfare benefits









$
30,256Total





$
903,630


$
1,914,110Vladimir E. Ostoich, Ph.D.Salary and bonus









$
1,001,193Vesting of restricted stock units(3)





$
903,630


$
903,630Health and welfare benefits









$
21,948Total





$
903,630


$
1,926,771Christopher M. BernardSalary and bonus









$
874,657Vesting of restricted stock units(3)





$
903,630


$
903,630Health and welfare benefits









$
29,914Excise tax reimbursement(5)









$
158,640Total





$
903,630


$
1,966,841     (1)
    
    Amounts relate to payments to Mr. Severson equal to two
    years of salary, bonus and benefits if his employment with us is
    terminated for any reason other than cause (as defined in
    Mr. Seversons employment agreement).(2)
    
    Amounts assume that the Named Executive Officer was terminated
    without cause or due to constructive termination during the
    18-month
    period following a change in control.(3)
    
    The value of the restricted stock unit assumes that the market
    price per share of our common stock on the date of termination
    of employment was equal to the closing price of our common stock
    of $23.17 on March 31, 2008, as reported on the NASDAQ
    Global Select Market.(4)
    
    For purposes of computing the excise tax reimbursement payments,
    base amount calculations are based on Mr. Santa Ines
    taxable wages for the fiscal years 2003 through 2008.(5)
    
    For purposes of computing the excise tax reimbursement payments,
    base amount calculations are based on Mr. Bernards
    taxable wages for the fiscal years 2006 through 2008, when he
    joined us in fiscal 2006. 100




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##### Table of Contents



DIRECTOR
    COMPENSATION
  Director
    Compensation Table
    Fees Earned or








All OtherPaid in Cash


Stock Awards


Option Awards


Compensation


TotalName(1)

($)


($)(2)(3)(4)


($)(5)


($)(6)


($)Richard J. Bastiani, Ph.D.


24,000



32,548











56,548Henk J. Evenhuis


27,000



32,548











59,548Brenton G. A. Hanlon


23,000



32,548











55,548Prithipal Singh, Ph.D.


22,000



32,548











54,548Ernest S. Tucker, III, M.D.


22,000



32,548







938



55,486     (1)
    
    Clinton H. Severson, our Chief Executive Officer and Director,
    is not included in this table as he is an employee of the
    Company and receives no compensation for his services as a
    director. The compensation received by Mr. Severson as an
    employee is shown in the Summary Compensation Table
    above.(2)
    
    Amounts listed in this column represent our accounting expense
    for these awards, over the requisite service period, in
    accordance with SFAS No. 123(R). For a discussion of the
    assumptions used in determining the fair value of awards of
    restricted stock units in the above table, see Note 10 of
    the Notes to Financial Statements in this Annual Report on
    Form 10-K.
    Restricted stock units were not granted to non-employee
    directors prior to fiscal 2007. No stock awards were forfeited
    by any of our non-employee directors during fiscal 2008.(3)
    
    Each non-employee director listed in the table above was granted
    an award of 1,500 restricted stock units on May 15, 2007
    under our 2005 EIP. The grant date fair value, as determined in
    accordance with SFAS No. 123(R), of the restricted
    stock units granted during fiscal 2008 for each of the directors
    listed in the table above was $31,695.(4)
    
    As of March 31, 2008, each of our non-employee directors
    held 1,500 shares of unvested restricted stock units.(5)
    
    No options were awarded to our non-employee directors in fiscal
    2007 or fiscal 2008. As of March 31, 2008, the non-employee
    director held the following number of outstanding options:
    Dr. Bastiani, 28,000; Mr. Evenhuis, 18,000;
    Mr. Hanlon, 28,000; Dr. Singh, 26,000; and
    Dr. Tucker, 13,000 shares.(6)
    
    Represents the reimbursement of travel expenses.  Cash
    Compensation Paid to Board Members
    Equity
    Compensation Paid to Board Members
   101




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##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Percent of AbaxisShares


Common StockBeneficially


BeneficiallyName and Address of Beneficial Owner

Owned


Owned(1)Five Percent Holders:Next Century Growth Investors, LLC.(3)


1,756,185



7.8
%Brown Capital Management, Inc.(4)


1,606,215



7.1
%Kayne Anderson Rudnick Investment Management, LLC(5)


1,491,156



6.6
%Wasatch Advisors, Inc.(6)


1,191,183



5.3
%Executive Officers:(2)Clinton H. Severson(7)


658,801



2.9
%Vladimir E. Ostoich, Ph.D.(8)


401,356



1.8
%Alberto R. Santa Ines(9)


122,990



*Kenneth P. Aron, Ph.D.(10)


109,098



*Christopher M. Bernard(11)


2,569



*Outside Directors:(2)Richard J. Bastiani, Ph.D.(12)


78,000



*Brenton G. A. Hanlon(13)


31,000



*Prithipal Singh, Ph.D.(14)


29,000



*Ernest S. Tucker, III, M.D.(15)


13,000



*Henk J. Evenhuis(16)


21,000



*Executive officers and directors as a group
    (12 persons)(17)


1,483,434



6.6
%     *
    
    Less than one percent.  (1)
    
    The percentages shown in this column are calculated based on
    21,748,392 shares of common stock outstanding on
    May 31, 2008 and includes shares of common stock that such
    person or group had the right to acquire on or within
    60 days after that date, including, but not limited to,
    upon the exercise of options.(2)
    
    The business address of the beneficial owners listed is
    c/o Abaxis,
    Inc., 3240 Whipple Road, Union City, CA 94587.(3)
    
    Based on information set forth in a Schedule 13G filed with
    the SEC on February 14, 2008 by Next Century Growth
    Investors, LLC., reporting shared power to vote and dispose of
    1,756,185 shares. The business address for Next Century
    Growth Investors, LLC, Thomas L. Press and Donald M. Longlet is
    5500 Wayzata Boulevard, Suite 1275, Minneapolis, MN 55416.(4)
    
    Based on information set forth in a Schedule 13G/A filed
    with the SEC on February 12, 2008 by Brown Capital
    Management, Inc., reporting sole power to vote and dispose of
    728,600 and 1,606,215 shares, respectively. The business
    address for Brown Capital Management, Inc. is 1201 North Calvert
    Street, Baltimore, MD 21202.(5)
    
    Based on information set forth in a Schedule 13G filed with
    the SEC on February 11, 2008 by Kayne Anderson Rudnick
    Investment Management, LLC, reporting sole power to vote and
    dispose of 1,491,156 shares. The business address for Kayne
    Anderson Rudnick Investment Management, LLC is 1800 Avenue of
    the Stars, 2nd Floor, Los Angeles, CA 90067. 102




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##### Table of Contents



(6)
    
    Based on information set forth in a Schedule 13G/A filed
    with the SEC on February 11, 2008 by Wasatch Advisors,
    Inc., reporting sole power to vote and dispose of
    1,191,183 shares. The business address for Wasatch
    Advisors, Inc. is 150 Social Hall Avenue, Salt Lake City, UT
    84111.(7)
    
    Includes:  
    378,484 shares held by Mr. Severson; and
    280,317 shares subject to stock options exercisable by
    Mr. Severson within sixty days of May 31, 2008.  (8)
    
    Includes:  
    97,773 shares held by Dr. Ostoich;
    26,355 shares held by Dr. Ostoichs IRA;
    22,400 shares held by Mrs. Ostoichs IRA;
    117,328 shares held by the Vladimir Ostoich and Liliana
    Ostoich Trust Fund, for the benefit of Dr. Ostoich and
    his wife; and
    137,500 shares subject to stock options exercisable by
    Dr. Ostoich within sixty days of May 31, 2008.  (9)
    
    Includes:  
    20,558 shares held by Mr. Santa Ines; and
    102,432 shares subject to stock options exercisable by
    Mr. Santa Ines within sixty days of May 31, 2008.  (10)
    
    Includes:  
    11,489 shares held by Dr. Aron; and
    97,609 shares subject to stock options exercisable by
    Dr. Aron within sixty days of May 31, 2008.  (11)
    
    Reflects:  
    2,569 shares held by Mr. Bernard.  (12)
    
    Includes:  
    50,000 shares held by Dr. Bastiani; and
    28,000 shares subject to stock options exercisable by
    Dr. Bastiani within sixty days of May 31, 2008.  (13)
    
    Includes:  
    3,000 shares held by Mr. Hanlon; and
    28,000 shares subject to stock options exercisable by
    Mr. Hanlon within sixty days of May 31, 2008.  (14)
    
    Includes:  
    7,000 shares held by Dr. Singh; and
    22,000 shares subject to stock options exercisable by
    Dr. Singh within sixty days of May 31, 2008.  (15)
    
    Reflects:  
    13,000 shares subject to stock options exercisable by
    Dr. Tucker within sixty days of May 31, 2008.  (16)
    
    Includes:  
    3,000 shares held by Mr. Evenhuis; and
    18,000 shares subject to stock options exercisable by
    Mr. Evenhuis within sixty days of May 31, 2008.  (17)
    
    Includes:  
    743,885 shares held by all executive officers and directors
    as a group; and
    739,549 shares subject to stock options exercisable by all
    executive officers and directors as a group within sixty days of
    May 31, 2008.  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
   103




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##### Table of Contents



Equity
    Compensation Information
  Number ofSecurities to be





Number of SecuritiesIssued Upon





Remaining AvailableExercise of


Weighted-Average


for Future IssuanceOutstanding


Exercise Price of


Under EquityOptions, Warrants


Outstanding Options,


CompensationPlan Category

and Rights


Warrants and Rights


Plans(1)Equity compensation plans approved by our shareholders:2005 Equity Incentive Plan(2)


1,483,000


$
8.00
(3)


442,0001992 Outside Directors Stock Option Plan


55,000


$
4.55



Equity securities not approved by our shareholders:










Total:


1,538,000


$
7.82
(3)


442,000     (1)
    
    The shares are available for award grant purposes under the
    Equity Incentive Plan and excludes shares listed under the
    column Number of Securities to be Issued Upon Exercise of
    Outstanding Options, Warrants and Rights.(2)
    
    The Equity Incentive Plan amended and restated the 1998 Stock
    Option Plan in October 2005. To date, share-based awards granted
    under the Equity Incentive Plan includes stock options and
    restricted stock units.(3)
    
    Excludes outstanding and unvested restricted stock unit awards,
    for which there is no exercise price.  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  Certain
    Relationships and Related Transactions
    Indemnification
    Agreements
    Related-Person
    Transactions Policy and Procedures
   104




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##### Table of Contents



Item 14.
    Principal
    Accountant Fees and Services    Year Ended March 31,2008


2007Audit Fees(1)

$
614,000


$
580,000Audit-Related Fees






Tax Fees






All Other Fees(2)






Total All Fees

$
614,000


$
580,000     (1)
    
    Audit fees represent fees for professional services provided in
    connection with the audit of our financial statements and review
    of our quarterly financial statements, including attestation
    services related to Section 404 of the Sarbanes-Oxley Act
    of 2002.(2)
    
    All other fees consist of fees for products and services other
    than the services reported above.  Pre-Approval
    Policies and Procedures
   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    1.
    Financial Statements  The Financial
    Statements required by this item are listed on the Index to
    Financial Statements in Part II, Item 8 of this
    report, which is incorporated by reference herein.2.
    Financial Statement Schedules   
    Schedule II  Valuation and Qualifying Accounts
    and Reserves
    Other financial statement schedules are not included because
    they are not required or the information is otherwise shown in
    the financial statements or notes thereto.  3.
    Exhibits  The exhibits listed on the
    accompanying Exhibit Index are filed as part of, or are
    incorporated by reference into, this report.     105




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##### Table of Contents



Abaxis,
    Inc.
    Schedule II
    Valuation and Qualifying Accounts and Reserves
    Years ended March 31, 2008, 2007 and 2006
  Balance at


Additions


Deductions


Balance atBeginning of


Charged to


from


End ofDescription

Year


Expenses


Reserves


YearYear ended March 31, 2008:Allowance for Doubtful Accounts

$
174,000


$
114,000


$
42,000


$
246,000Reserve for Sales Allowances


368,000



51,000



393,000



26,000Total Reserve for Doubtful Accounts and Sales Allowances

$
542,000


$
165,000


$
435,000


$
272,000Year ended March 31, 2007:Allowance for Doubtful Accounts

$
109,000


$
78,000


$
13,000


$
174,000Reserve for Sales Allowances


234,000



849,000



715,000



368,000Total Reserve for Doubtful Accounts and Sales Allowances

$
343,000


$
927,000


$
728,000


$
542,000Year ended March 31, 2006:Allowance for Doubtful Accounts

$
204,000


$
83,000


$
178,000


$
109,000Reserve for Sales Allowances


278,000



549,000



593,000



234,000Total Reserve for Doubtful Accounts and Sales Allowances

$
482,000


$
632,000


$
771,000


$
343,000  106




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##### Table of Contents



Exhibit Index  ExhibitNo.

Description of Document3
.1

Restated Articles of Incorporation (Filed with the Securities
    and Exchange Commission as an exhibit with our Annual Report on
    Form 10-K for the fiscal year ended March 31, 1993 and
    incorporated herein by reference.)3
.2

By-laws (Filed with the Securities and Exchange Commission in
    our Registration Statement No. 33-44326 on December 11, 1991 and
    incorporated herein by reference.)3
.3

Amendment to the By-laws (Filed with the Securities and Exchange
    Commission as an exhibit with our Current Report on Form 8-K on
    July 30, 2007 and incorporated herein by reference.)4
.1

Registration Rights Agreement, dated as of March 29, 2002 (Filed
    with the Securities and Exchange Commission as an exhibit with
    our Current Report on Form 8-K on May 13, 2002 and incorporated
    herein by reference.)4
.2

Form of Warrant Agreement issued to purchasers of Series E
    Convertible Preferred Stock (Filed with the Securities and
    Exchange Commission as an exhibit with our Current Report on
    Form 8-K on May 13, 2002 and incorporated herein by reference.)4
.3

Abaxis, Inc. and Equiserve Trust Company, N.A. as Rights Agent,
    Rights Agreement, dated as of April 23, 2003 (Filed with the
    Securities and Exchange Commission as an exhibit with our
    Current Report on Form 8-K on May 16, 2003 and incorporated
    herein by reference.)4
.4

Reference is made to Exhibit 3.1, Exhibit 3.2 and Exhibit 3.3.10
.1*

1989 Stock Option Plan, as amended and restated as the 1998
    Stock Option Plan (Filed with the Securities and Exchange
    Commission as an exhibit with our Quarterly Report on Form 10-Q
    for the quarter ended December 31, 2004 and incorporated herein
    by reference.)10
.2*

1992 Outside Directors Stock Option Plan and forms of agreement
    (Filed with the Securities and Exchange Commission as an exhibit
    with our Def 14A Proxy Statement on August 10, 1992 and
    incorporated herein by reference.)10
.3*

401(k) Defined Contribution Plan (Filed with the Securities and
    Exchange Commission in our Registration Statement No. 33-44326
    on December 11, 1991 and incorporated herein by reference.)10
.4+

Licensing agreement between Abaxis, Inc. and Pharmacia Biotech,
    Inc., dated October 1, 1994 (Filed with the Securities and
    Exchange Commission as an exhibit with our Quarterly Report on
    Form 10-Q for the quarter ended September 30, 1994 and
    incorporated herein by reference.)10
.5

Lease Agreement with Principal Development Investors, LLC, dated
    June 21, 2000 (Filed with the Securities and Exchange Commission
    as an exhibit with our Registration Statement on Form S-3 on
    January 10, 2001 and incorporated herein by reference.)10
.6

Loan and Security Agreement with Comerica Bank California, dated
    March 13, 2002 (Filed with the Securities and Exchange
    Commission as an exhibit with our Quarterly Report on Form 10-Q
    for the quarter ended June 30, 2002 and incorporated herein by
    reference.)10
.7

First and Second Modification to Loan and Security Agreement
    with Comerica Bank California, dated March 29, 2002 (Filed with
    the Securities and Exchange Commission as an exhibit with our
    Quarterly Report on Form 10-Q for the quarter ended June 30,
    2002 and incorporated herein by reference.)10
.8

Loan Revision/Extension Agreement with Comerica Bank California,
    dated March 29, 2002 (Filed with the Securities and Exchange
    Commission as an exhibit with our Quarterly Report on Form 10-Q
    for the quarter ended June 30, 2002 and incorporated herein by
    reference.)10
.9

Loan Revision/Extension Agreement with Comerica Bank California,
    dated September 23, 2002 (Filed with the Securities and Exchange
    Commission as an exhibit with our Quarterly Report on Form 10-Q
    for the quarter ended September 30, 2002 and incorporated herein
    by reference.)10
.10+

Letter Setting Forth Additional Terms of Relationship Between
    Abaxis, Inc. and Pharmacia Biotech, dated as of June 9, 1997
    (Filed with the Securities and Exchange Commission as an exhibit
    with our Quarterly Report on Form 10-Q for the quarter ended
    September 30, 2002 and incorporated herein by reference.)10
.11+

Private Label Manufacturing and Supply Agreement by and between
    Diatron Messtechnik GmbH and Abaxis, Inc., dated November 13,
    2003 (Filed with the Securities and Exchange Commission as an
    exhibit with our Annual Report on Form 10-K for the fiscal year
    ended March 31, 2004 and incorporated herein by reference.) 107




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##### Table of Contents



ExhibitNo.

Description of Document10
.12

Distribution Agreement by and between Scil Animal Care Company
    GmbH and Abaxis, Inc., dated September 1, 2001 (Filed with the
    Securities and Exchange Commission as an exhibit with Amendment
    Number One to our Annual Report on Form 10-K/A for the fiscal
    year ended March 31, 2002, on December 24, 2002 and incorporated
    herein by reference.)10
.13

Loan and Security Agreement by and between Abaxis, Inc. and
    Comerica Bank California, dated as of September 8, 2003 (Filed
    with the Securities and Exchange Commission as an exhibit with
    our Quarterly Report on Form 10-Q for the quarter ended
    September 30, 2003 and incorporated herein by reference.)10
.14

First Modification to Business Loan Agreement with Comerica Bank
    California, dated September 15, 2004 (Filed with the Securities
    and Exchange Commission as an exhibit with our Quarterly Report
    on Form 10-Q for the quarter ended September 30, 2004 and
    incorporated herein by reference.)10
.15*

Employment Agreement with Mr. Clinton H. Severson, dated July
    11, 2005 (Filed with the Securities and Exchange Commission as
    an exhibit with our Quarterly Report on Form 10-Q for the
    quarter ended June 30, 2005 and incorporated herein by
    reference.)10
.16*

2005 Equity Incentive Plan, including related agreements and
    forms (Filed with the Securities and Exchange Commission as an
    exhibit with our Annual Report on Form 10-K for the fiscal year
    ended March 31, 2006 and incorporated herein by reference.)10
.17*

Abaxis, Inc. Executive Change of Control Severance Plan (Filed
    with the Securities and Exchange Commission as an exhibit with
    our Quarterly Report on Form 10-Q for the quarter ended June 30,
    2006 and incorporated herein by reference.)10
.18+

Amendment, dated September 21, 2006, to the Private Label
    Manufacturing and Supply Agreement by and between Diatron
    Messtechnik GmbH and Abaxis, Inc., dated November 13, 2003
    (Filed with the Securities and Exchange Commission as an exhibit
    with our Quarterly Report on Form 10-Q for the quarter ended
    September 30, 2006 and incorporated herein by reference.)10
.19+

Distribution Agreement by and between Walco International, Inc.
    (d/b/a DVM Resources) and Abaxis, Inc., dated April 1, 2006.
    (Filed with the Securities and Exchange Commission as an exhibit
    with our Quarterly Report on Form 10-Q for the quarter ended
    September 30, 2006 and incorporated herein by reference.)10
.20*

Fiscal 2009 Base Salary and Target Bonus for the Named Executive
    Officers (Filed with the Securities and Exchange Commission as
    an exhibit with our Current Report on Form 8-K on April 29, 2008
    and incorporated herein by reference.)10
.21++

Addendum, dated February 28, 2008, to the Private Label
    Manufacturing and Supply Agreement by and between Diatron
    Messtechnik GmbH and Abaxis, Inc., dated November 13, 200310
.22*

Form of Indemnification Agreement entered into by Abaxis, Inc.
    with each of its directors and executive officers23
.1

Consent of Burr, Pilger & Mayer LLP, Independent Registered
    Public Accounting Firm24
.1

Power of Attorney.  Reference is made to the Signature Page
    hereto.31
.1

Certification of Chief Executive Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 200231
.2

Certification of Chief Financial Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 200232
.1#

Certification of Chief Executive Officer pursuant to Section 906
    of the Sarbanes-Oxley Act of 200232
.2#

Certification of Chief Financial Officer pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002     +
    
    Confidential treatment of certain portions of this agreement has
    been granted by the Securities and Exchange Commission.++
    
    Confidential treatment of certain portions of this agreement has
    been requested from the Securities and Exchange Commission.*
    
    Management contract or compensatory plan or arrangement.#
    
    This certification accompanies the
    Form 10-K
    to which it relates, is not deemed filed with the Securities and
    Exchange Commission and is not to be incorporated by reference
    into any filing of the Registrant under the Securities Act of
    1933, as amended, or the Securities Exchange Act of 1934, as
    amended (whether made before or after the date of the
    Form 10-K),
    irrespective of any general incorporation language contained in
    such filing. 108




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##### Table of Contents



SIGNATURES       By:
    /s/  Clinton
    H. Severson   
  POWER
    OF ATTORNEY
  attorney-in-fact, Form 10-K,
    Signature

Title

Date/s/  Clinton
    H. SeversonClinton
    H. Severson

President, Chief Executive Officer and Director
    (Principal Executive Officer)

June 13, 2008/s/  Alberto
    R. Santa InesAlberto
    R. Santa Ines

Chief Financial Officer and
    Vice President of Finance
    (Principal Financial and Accounting Officer)

June 13, 2008/s/  Richard
    J. Bastiani, Ph.D.Richard
    J. Bastiani, Ph.D.

Director

June 13, 2008/s/  Henk
    J. EvenhuisHenk
    J. Evenhuis

Director

June 13, 2008/s/  Brenton
    G. A. HanlonBrenton
    G. A. Hanlon

Director

June 13, 2008/s/  Prithipal
    Singh, Ph.D.Prithipal
    Singh, Ph.D.

Director

June 13, 2008/s/  Ernest
    S. Tucker IIIErnest
    S. Tucker III

Director

June 13, 2008  109