##### 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,
    2010oro

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(State or other jurisdiction
    of incorporation or organization)

77-0213001(I.R.S. Employer
    Identification No.)3240 Whipple Road, Union City, California(Address of principal
    executive offices)

94587(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-T o 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    Rule 12b-2 o þ




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##### 





Abaxis,
    Inc.
    Annual Report on
    Form 10-K
    For The Fiscal Year Ended March 31, 2010
  TABLE OF
    CONTENTS
  PagePART IItem 1.


Business


3Item 1A.


Risk Factors


14Item 1B.


Unresolved Staff Comments


26Item 2.


Properties


26Item 3.


Legal Proceedings


27Item 4.


Removed and Reserved


27PART 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


52Item 8.


Financial Statements and Supplementary Data


54Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


83Item 9A.


Controls and Procedures


83Item 9B.


Other Information


85PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


85Item 11.


Executive Compensation


88Item 12.


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


106Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


108Item 14.


Principal Accounting Fees and Services


109PART IVItem 15.


Exhibits and Financial Statement Schedules


110Exhibit Index


112Signatures


115EX-10.23EX-10.24EX-10.25EX-10.26EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



PART I  FORWARD-LOOKING
    STATEMENTS
    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®

    Xpress. 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 Methods



Test MethodsAlanine aminotransferase

ALT

High-density lipoprotein cholesterol

HDLAlbumin

ALB

Lactate dehydrogenase

LDAlkaline phosphatase

ALP

Magnesium

MGAmylase

AMY

Phosphorous

PHOSAspartate aminotransferase

AST

Potassium

K+Bile acids

BA

Sodium

NA+C-reactive protein

CRP

Thyroxine

T4Calcium

CA

Total bilirubin

TBILCanine heartworm antigen

CHW

Total carbon dioxide

tCO2Chloride

CL-

Total cholesterol

CHOLCreatine kinase

CK

Total protein

TPCreatinine

CRE

Triglycerides

TRIGDirect bilirubin

DBIL

Urea nitrogen

BUNGamma glutamyltransferase

GGT

Uric acid

UAGlucose

GLU   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)(1)

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 (CLIA waived)

BUN, CK, CL-, CRE, GLU, K+, NA+,
    tCO2.MetLyte Plus CRP(1)

BUN, CK, CL-, CRE, CRP, GLU, K+, NA+,
    tCO2.Renal Function Panel (CLIA waived)

ALB, BUN, CA, CL-, CRE, GLU, K+, NA+, PHOS,
    tCO2.     CLIA waived means the FDA has granted our
    application to classify the product as having waived status with
    respect to the Clinical Laboratory Improvement Amendments
    (CLIA) of 1988. See Government
    Regulation in this section for additional information on
    CLIA.(1)
    
    The panel is offered only on our Piccolo Xpress. 5




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VetScan Profile

Description of the Test PanelsAvian/Reptilian Profile Plus

ALB, AST, BA, CA, CK, GLOB, GLU, K+, NA+, PHOS, TP, UA.Canine Heartworm Antigen Test Kit including Canine Wellness
    Profile(1)

ALB, ALP, ALT, BUN, CA, CRE, CHW, GLU, GLOB, PHOS, TBIL, TP.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.     (1)
    
    The panel is offered only on our VetScan VS2.  Hematology
    Coagulation
  pro pro
  Canine
    Heartworm Rapid Test
  Dirofilaria immitis
 6




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##### Table of Contents



i-STAT
  ®
  Orbos
    Process
  ®
  Future
    Products
    CUSTOMERS
    AND DISTRIBUTION
    Customers
    Medical
    Market
   7




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##### Table of Contents



Veterinary
    Market
    Distribution
    Within North America
  Medical
    Market
        Veterinary
    Market
       8




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##### Table of Contents



Distribution
    Outside of North America
          MANUFACTURING
  pro i-STAT
    
    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 August 2008, the FDA conducted an additional facility
    inspection to verify our compliance with 21 CFR 820
    Regulation.
    In October 2009 and November 2006, we received our
    recertification to the ISO 13485:2003 Quality System Standard
    for medical devices. 9




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##### Table of Contents




    In October 2009, we received a United States Veterinary
    Biologics Establishment License from the United States
    Department of Agriculture.      
    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, we purchase
    technologically advanced components from a single source
    supplier, including components from Hamamatsu Corporation 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
    historically provided.
    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 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., SA Scientific Co., Sigma Aldrich
    Inc. and Toyobo Specialties (formerly Shinko American 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.   10




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##### Table of Contents



MATERIAL
    RELATIONSHIPS WITH SUPPLIERS AND OTHER THIRD PARTIES
  Diatron Messtechnik GmbH.
  Scandinavian Micro Biodevices APS.
  Inverness Medical Switzerland GmbH.
    Abbott Point of Care Inc. ®
  DVM Resources.
  COMPETITION
   11




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##### Table of Contents



on-site.
      GOVERNMENT
    REGULATION
  U.S. Food
    and Drug Administration Clearance
      and/or
   12




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##### Table of Contents



APHIS
    Licensure of Veterinary Biologics
      Clinical
    Laboratory Improvements Act Regulations
      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. 13




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##### Table of Contents




    In March 2006, we received our certification to the 2003 version
    of the ISO 13485 Quality System standard for medical devices.    RESEARCH
    AND DEVELOPMENT
    PATENTS
    AND PROPRIETARY TECHNOLOGIES
    EMPLOYEES
    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.
 14




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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;
    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.
     15




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We
    rely on patents and other proprietary information, the loss of
    which would negatively affect our business.
      We
    must increase sales of our Piccolo and VetScan products or we
    may not be able to increase 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
    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; 16




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
    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.    We
    must effectively train and integrate the members of our sales
    team in order to achieve our anticipated revenue or expand our
    business.
    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.
         17




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##### Table of Contents



We
    depend on limited or 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., SA
    Scientific Co., Sigma Aldrich Inc. and Toyobo Specialties
    (formerly Shinko American Inc.).
    Blood Chemistry Analyzer Components:  Our blood
    analyzer products use several technologically-advanced
    components that we currently purchase from a limited number of
    vendors, including certain components from a single-source
    supplier, including components from Hamamatsu Corporation 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 Medical
    Instruments PLC. 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
    Medical Instruments PLC. and Mallinckrodt Baker BV.
    Coagulation Analyzers and Cartridges:Our coagulation
    analyzers and cartridges are manufactured by Scandinavian
    MicroBiodevices APS in Denmark and are purchased by us as
    completed products.
    i-STAT Analyzers and Cartridges:Our i-STAT 1
    analyzers and cartridges are manufactured by Abbott Point of
    Care Inc. in North America and are purchased by us as completed
    products. 18




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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.     19




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##### Table of Contents



Changes
    in third-party payor reimbursement regulations can negatively
    affect our business.
  pay-per-service
  We are
    subject to numerous governmental regulations and regulatory
    changes are difficult to predict and may be damaging to our
    business.
  Need for
    Government Regulation for Our Products
      and/or
    APHIS
    Licensure of Veterinary Biologics
   20




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##### Table of Contents



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 August 2008, the FDA conducted an additional facility
    inspection to verify our compliance with 21 CFR 820
    Regulation.
    In October 2009 and November 2006, we received our
    recertification to the ISO 13485:2003 Quality System Standard
    for medical devices.
    In October 2009, we received a United States Veterinary
    Biologics Establishment License from the United States
    Department of Agriculture.    Effects
    of the Clinical Laboratory Improvement Amendments on Our
    Products
    
    waived;
    moderately complex; and
    highly complex. 21




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##### Table of Contents



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 October 2009, we received our recertification to the ISO
    13485:2003 Quality System Standard for medical devices.      We
    have incurred and may continue to incur, in future periods,
    significant share-based compensation charges which may adversely
    affect our reported financial results.
   22




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##### Table of Contents



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 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
    could fail to achieve anticipated revenue if we experience
    problems related to the manufacture of our blood chemistry
    analyzers.
   23




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##### Table of Contents



We are
    subject to increasingly complex requirements from recent
    legislation requiring companies to evaluate internal control
    over financial reporting.
      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.   24




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##### Table of Contents



and/or
  We
    must comply with strict and potentially costly environmental
    regulations or we could pay significant fines.
  and/or
  Our
    facilities and manufacturing operations are vulnerable to
    natural disasters and other unexpected losses. Any such losses
    or 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.
   25




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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;
    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   26




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##### Table of Contents



Item 3.
    Legal
    Proceedings    Item 4.
    Removed
    and Reserved 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 2010


Fiscal 2009High


Low


High


LowQuarter ended June 30

$
20.73


$
13.54


$
30.62


$
22.74Quarter ended September 30


29.80



18.54



24.80



17.81Quarter ended December 31


27.97



21.95



20.43



10.17Quarter ended March 31


28.50



22.38



19.49



13.24       Dividends
   27




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##### Table of Contents



Stock
    Performance
    Graph1
      COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN
    Among Abaxis, Inc., the Russell 2000 Index
    and the NASDAQ Medical Equipment Securities Index
  
  3/31/2005


3/31/2006


3/31/2007


3/31/2008


3/31/2009


3/31/2010Abaxis, Inc.


$
100.00



$
256.27



$
275.37



$
261.81



$
194.80



$
307.23Russell 2000


$
100.00



$
125.85



$
133.28



$
115.95



$
72.47



$
117.95NASDAQ Medical Equipment Securities


$
100.00



$
132.59



$
135.15



$
138.94



$
78.15



$
138.63     1
 28




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
  Year Ended March 31,2010(1)


2009(1)


2008(1)


2007(1)


2006(In thousands, except per share data)Consolidated Statements of Income Data:Revenues

$
124,557


$
105,562


$
100,551


$
86,221


$
68,928Cost of revenues


52,435



46,937



45,507



39,362



30,075Gross profit


72,122



58,625



55,044



46,859



38,853Operating expenses:Research and development


10,688



8,361



6,966



6,180



6,127Sales and marketing


30,138



24,712



23,689



20,569



16,219General and administrative


10,521



7,757



6,681



5,735



5,775Total operating expenses


51,347



40,830



37,336



32,484



28,121Income from operations


20,775



17,795



17,708



14,375



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


630



1,271



2,096



1,774



787Income before income tax provision


21,405



19,066



19,804



16,149



11,519Income tax provision


8,382



7,053



7,301



6,076



4,044Net income

$
13,023


$
12,013


$
12,503


$
10,073


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

$
0.59


$
0.55


$
0.58


$
0.49


$
0.37Diluted net income per share

$
0.58


$
0.54


$
0.56


$
0.46


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


22,021



21,826



21,499



20,643



19,985Weighted average common shares outstanding  diluted


22,606



22,324



22,261



21,846



21,492     (1)
    
    Includes share-based compensation for employee share-based
    awards in our consolidated statements of income in accordance
    with ASC 718, Compensation-Stock Compensation.  As of March 31,2010


2009


2008


2007


2006(In thousands)Consolidated Balance Sheets Data:Cash and cash equivalents

$
27,857


$
49,237


$
17,219


$
10,183


$
10,164Short-term investments


32,343



20,776



6,991



35,028



20,372Working capital


89,327



101,815



52,500



74,517



49,949Long-term investments


36,319



4,886



35,463







Total assets


167,816



140,711



120,903



102,715



83,078Non-current liabilities


1,682



2,270



2,161



2,167



1,679Total shareholders equity


147,119



126,892



104,649



87,812



71,038  29




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##### 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®

    Xpress. 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.      pro pro point-of-care
  Dirofilaria immitis
 30




---



##### Table of Contents



® i-STAT
    CRITICAL
    ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS
    Form 10-K.
  Revenue Recognition and Deferred Revenue.
   31




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##### Table of Contents



Distributor and Customer Rebates.
      Balance atBeginning





Balance atof Year

Provisions

Payments

End of YearYear Ended March 31, 2010

$
96


$
268


$
(316
)

$
48Year Ended March 31, 2009

$
140


$
294


$
(338
)

$
96Year Ended March 31, 2008

$
397


$
498


$
(755
)

$
140   Sales and Other Allowances.
 32




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##### Table of Contents



Allowance for Doubtful Accounts.
  Fair Value Measurements.
  Level 1:
  Level 2:
  Level 3:
  held-to-maturity
  Warranty Reserves.
 33




---



##### Table of Contents



Inventories. first-in,
  Valuation of Long-Lived Assets.
  Income Taxes.
   34




---



##### Table of Contents



Share-Based Compensation Expense.
        Form 10-K.
  RESULTS
    OF OPERATIONS
   35




---



##### Table of Contents



Total
    Revenues
  Revenues by Geographic Region and by Product
    Category.
  Change 2009 to 2010


Change 2008 to 2009Year Ended March 31,


Increase/


Percent


Increase/


PercentRevenues by Geographic Region

2010


2009


2008


(Decrease)


Change


(Decrease)


ChangeNorth America

$
101,391


$
87,801


$
83,830


$
13,590



15
%

$
3,971



5
%Percentage of total revenues


81
%


83
%


84
%Europe


18,547



14,045



13,472



4,502



32
%


573



4
%Percentage of total revenues


15
%


13
%


13
%Asia Pacific and rest of the world


4,619



3,716



3,249



903



24
%


467



14
%Percentage of total revenues


4
%


4
%


3
%Total revenues

$
124,557


$
105,562


$
100,551


$
18,995



18
%

$
5,011



5
%Change 2009 to 2010


Change 2008 to 2009Year Ended March 31,


Increase/


Percent


Increase/


PercentRevenues by Product Category

2010


2009


2008


(Decrease)


Change


(Decrease)


ChangeInstruments

$
28,787


$
28,194


$
30,011


$
593



2
%

$
(1,817
)


(6
)%Percentage of total revenues


23
%


27
%


30
%Consumables


85,819



69,072



61,928



16,747



24
%


7,144



12
%Percentage of total revenues


69
%


65
%


62
%Other products


6,809



5,170



6,583



1,639



32
%


(1,413
)


(21
)%Percentage of total revenues


5
%


5
%


6
%Product sales, net


121,415



102,436



98,522



18,979



19
%


3,914



4
%Percentage of total revenues


97
%


97
%


98
%Development and licensing revenue


3,142



3,126



2,029



16



1
%


1,097



54
%Percentage of total revenues


3
%


3
%


2
%Total revenues

$
124,557


$
105,562


$
100,551


$
18,995



18
%

$
5,011



5
%   Fiscal
    2010 Compared to Fiscal 2009
  North America.
  
    Sales of our Piccolo chemistry analyzers in North America
    (excluding the U.S. government) decreased 35%, or
    $1.7 million, primarily due to inventory stock adjustments
    by distributors during the first nine months of fiscal 2010.
    Sales of our Piccolo chemistry analyzers to the
    U.S. government decreased 45%, or $957,000, primarily due
    to a decrease in the U.S. Militarys needs for our
    products, primarily in the third quarter of fiscal 2010, which
    were not predictable.
    Medical reagent discs sales in North America (excluding the
    U.S. government) increased 11%, or $1.2 million,
    primarily due to an increase in units sold resulting from an
    expanded installed base of our Piccolo chemistry analyzers.
    Sales of our VetScan chemistry analyzers in North America
    decreased 9%, or $808,000, primarily due to lower average
    selling prices. 36




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##### Table of Contents




    Veterinary reagent discs sales in North America increased 11%,
    or $4.3 million, primarily due to an increase in units sold
    resulting from an expanded installed base of our VetScan
    chemistry analyzers and higher average selling prices.
    Total sales of our VetScan hematology instruments and hematology
    reagent kits in North America increased 6%, or $660,000,
    primarily due to an increase in units of hematology reagent kits
    sold resulting from an expanded installed base of our VetScan
    hematology instruments.
    Total sales from our original equipment manufacturer
    (OEM) supplied products increased $9.5 million
    during fiscal 2010 in North America. Our OEM supplied products
    include our VetScan VSprocoagulation analyzers and
    related consumables (launched in the fourth quarter of fiscal
    2009), i-STAT analyzers and related consumables (launched in
    fiscal 2010), and canine heartworm rapid tests (launched in the
    fourth quarter of fiscal 2009).
    Revenues from other products in North America increased 29%, or
    $1.4 million. The net increase was primarily due to
    (a) a decrease in maintenance contracts offered to
    customers from time to time as incentives in the form of free
    goods in connection with the sale of our products, for which
    revenue is deferred and recognized ratably over the life of the
    maintenance contract and (b) an increase in demand for
    products using the
    Orbos®

    Discrete Lyophilization Process, which is strongly affected by
    customer demands.  Significant concentration.
  Europe.
  
    Sales of our Piccolo chemistry analyzers in Europe increased
    25%, or $306,000, primarily due to our promotion strategy and
    increased sales to distributors.
    Medical reagent discs sales in Europe increased 11%, or
    $229,000, primarily due to higher average selling prices.
    Sales of our VetScan chemistry analyzers in Europe increased
    44%, or $1.1 million, primarily due to our promotion
    strategy and increased marketing activities by our distributors.
    Veterinary reagent discs sales in Europe increased 27%, or
    $2.0 million, primarily due to an increase in units sold
    resulting from an expanded installed base of our VetScan
    chemistry analyzers.
    Total sales of our VetScan hematology instruments and hematology
    reagent kits in Europe increased 60%, or $426,000, primarily due
    to an increase in units of hematology instruments sold resulting
    from our promotion strategy for our VetScan hematology
    instruments.
    Total sales from our OEM supplied products increased $267,000
    during fiscal 2010 in Europe. Our OEM supplied products include
    our i-STAT analyzers and related consumables (launched in fiscal
    2010) and canine heartworm rapid tests (launched in the
    fourth quarter of fiscal 2009).  Asia Pacific and rest of the
    world.
  
    Total sales of our VetScan chemistry analyzers and veterinary
    reagent discs in Asia Pacific and rest of the world increased
    16%, or $398,000, primarily due to increased sales to various
    distributors.
    Total sales from our OEM supplied products increased $226,000
    during fiscal 2010 in Asia Pacific and rest of the world. Our
    OEM supplied products include our VetScan VSpro
    coagulation analyzers and related consumables (launched in the
    fourth quarter of fiscal 2009), i-STAT analyzers and related
    consumables (launched in fiscal 2010), and canine heartworm
    rapid tests (launched in the fourth quarter of fiscal 2009). 37




---



##### Table of Contents



Fiscal
    2009 Compared to Fiscal 2008
  North America.
  Instruments.
        pro
  Consumables.
          Other products.
  Development and licensing.
  Significant concentration.
 38




---



##### Table of Contents



Europe.
  Instruments.
        Consumables.
        Other products.
  Asia Pacific and rest of the
    world.
  Instruments.
        Consumables.
        Other products.
 39




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##### Table of Contents



Segment
    Results
  Fiscal
    2010 Compared to Fiscal 2009
    Year Ended March 31,


ChangePercent of





Percent of


Increase/


Percent2010


Revenues(1)


2009


Revenues(1)


(Decrease)


ChangeRevenues:Medical Market

$
24,176



100
%

$
24,796



100
%

$
(620
)


(3
)%Percentage of total revenues


19
%






23
%Veterinary Market


92,411



100
%


74,046



100
%


18,365



25
%Percentage of total revenues


74
%






70
%Other(2)


7,970







6,720







1,250



19
%Percentage of total revenues


7
%






7
%Total revenues


124,557







105,562







18,995



18
%Cost of revenues:Medical Market


10,704



44
%


12,407



50
%


(1,703
)


(14
)%Veterinary Market


37,785



41
%


31,052



42
%


6,733



22
%Other(2)


3,946







3,478







468



13
%Total cost of revenues


52,435







46,937







5,498



12
%Gross profit:Medical Market


13,472



56
%


12,389



50
%


1,083



9
%Veterinary Market


54,626



59
%


42,994



58
%


11,632



27
%Other(2)


4,024







3,242







782



24
%Gross profit

$
72,122






$
58,625






$
13,497



23
%     (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.
  Consumables.
 40




---



##### Table of Contents



Gross
    Profit for Medical Market Segment
    Veterinary
    Market
  Revenues
    for Veterinary Market Segment
    
    Sales of our VetScan chemistry analyzers increased 4%, or
    $455,000, during fiscal 2010, as compared to fiscal 2009. The
    changes were primarily attributed to (a) an increase in
    revenues in Europe of 44%, or $1.1 million, primarily due
    to our promotion strategy and increased marketing activities by
    our distributors, and (b) an increase in revenues in Asia
    of 33%, or $210,000, primarily due to increased sales to various
    distributors. The net increase in total revenues was partially
    offset by a decrease in revenues in North America by 9%, or
    $808,000, primarily due to lower average selling prices.
    Total revenues from veterinary reagent discs increased 13%, or
    $6.5 million, during fiscal 2010, as compared to fiscal
    2009. The increase in revenues was primarily attributed to
    (a) an increase in revenues in North America of 11%, or
    $4.3 million, primarily due to an increase in units sold
    resulting from an expanded installed base of our VetScan
    chemistry analyzers and higher average selling prices,
    (b) an increase in revenues in Europe of 27%, or
    $2.0 million, primarily due to an increase in units sold
    resulting from an expanded installed base of our VetScan
    chemistry analyzers, and (c) an increase in revenues in
    Asia Pacific and rest of the world of 10%, or $188,000,
    primarily due to increased sales to various distributors.
    Total sales of our VetScan hematology instruments and hematology
    reagent kits increased 10%, or $1.2 million, primarily
    attributed to (a) an increase in revenues in North America
    of 6%, or $660,000, primarily due to an increase in units of
    hematology reagent kits sold resulting from an expanded
    installed base of our VetScan hematology instruments, and
    (b) an increase in revenues in Europe of 60%, or $426,000,
    primarily due to an increase in units sold resulting from our
    promotion strategy for our VetScan hematology instruments.
    Total sales from our OEM supplied products increased
    $10.0 million, during fiscal 2010, primarily in North
    America. Our OEM supplied products include our VetScan VSprocoagulation analyzers and related consumables (launched in
    the fourth quarter of fiscal 2009), i-STAT analyzers and related
    consumables (launched in fiscal 2010), and canine heartworm
    rapid tests (launched in the fourth quarter of fiscal 2009).  Gross
    Profit for Veterinary Market Segment
  i-STAT
 41




---



##### Table of Contents



Fiscal
    2009 Compared to Fiscal 2008
    Year Ended March 31,


ChangePercent of





Percent of


Increase/


Percent2009


Revenues(1)


2008


Revenues(1)


(Decrease)


ChangeRevenues:Medical Market

$
24,796



100
%

$
22,764



100
%

$
2,032



9
%Percentage of total revenues


23
%






23
%Veterinary Market


74,046



100
%


71,091



100
%


2,955



4
%Percentage of total revenues


70
%






71
%Other(2)


6,720







6,696







24



<1
%Percentage of total revenues


7
%






6
%Total revenues


105,562







100,551







5,011



5
%Cost of revenues:Medical Market


12,407



50
%


11,340



50
%


1,067



9
%Veterinary Market


31,052



42
%


31,812



45
%


(760
)


(2
)%Other(2)


3,478







2,355







1,123



48
%Total cost of revenues


46,937







45,507







1,430



3
%Gross profit:Medical Market


12,389



50
%


11,424



50
%


965



8
%Veterinary Market


42,994



58
%


39,279



55
%


3,715



9
%Other(2)


3,242







4,341







(1,099
)


(25
)%Gross profit

$
58,625






$
55,044






$
3,581



7
%     (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.
 42




---



##### Table of Contents



Consumables.
  Gross
    Profit for Medical Market Segment
    Veterinary
    Market
  Revenues
    for Veterinary Market Segment
    Instruments.
      pro
  Consumables.
   43




---



##### Table of Contents



Gross
    Profit for Veterinary Market Segment
    Cost
    of Revenues
    Change 2009 to 2010

Change 2008 to 2009Year Ended March 31,

Increase/

Percent

Increase/

Percent2010

2009

2008

(Decrease)

Change

(Decrease)

ChangeCost of revenues

$
52,435


$
46,937


$
45,507


$
5,498



12
%

$
1,430



3
%Percentage of total revenues


42
%


44
%


45
%     Fiscal
    2010 Compared to Fiscal 2009
  pro
  Fiscal
    2009 Compared to Fiscal 2008
   44




---



##### Table of Contents



Gross
    Profit
    Change 2009 to 2010

Change 2008 to 2009Year Ended March 31,

Increase/

Percent

Increase/

Percent2010

2009

2008

(Decrease)

Change

(Decrease)

ChangeTotal gross profit

$
72,122


$
58,625


$
55,044


$
13,497



23
%

$
3,581



7
%Total gross margin


58
%


56
%


55
%   Fiscal
    2010 Compared to Fiscal 2009
    Fiscal
    2009 Compared to Fiscal 2008
    Operating
    Expenses
  Research
    and Development
    Change 2009 to 2010

Change 2008 to 2009Year Ended March 31,

Increase/

Percent

Increase/

Percent2010

2009

2008

(Decrease)

Change

(Decrease)

ChangeResearch and development

$
10,688


$
8,361


$
6,966


$
2,327



28
%

$
1,395



20
%Percentage of total revenues


9
%


8
%


7
%     Fiscal
    2010 Compared to Fiscal 2009
   45




---



##### Table of Contents



Fiscal
    2009 Compared to Fiscal 2008
      Sales
    and Marketing
    Change 2009 to 2010

Change 2008 to 2009Year Ended March 31,

Increase/

Percent

Increase/

Percent2010

2009

2008

(Decrease)

Change

(Decrease)

ChangeSales and marketing expenses

$
30,138


$
24,712


$
23,689


$
5,426



22
%

$
1,023



4
%Percentage of total revenues


24
%


23
%


24
%     Fiscal
    2010 Compared to Fiscal 2009
    Fiscal
    2009 Compared to Fiscal 2008
   46




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##### Table of Contents



General
    and Administrative
    Change 2009 to 2010

Change 2008 to 2009Year Ended March 31,

Increase/

Percent

Increase/

Percent2010

2009

2008

(Decrease)

Change

(Decrease)

ChangeGeneral and administrative expenses

$
10,521


$
7,757


$
6,681


$
2,764



36
%

$
1,076



16
%Percentage of total revenues


8
%


7
%


7
%     Fiscal
    2010 Compared to Fiscal 2009
    Fiscal
    2009 Compared to Fiscal 2008
    Interest
    and Other Income (Expense), Net
    Change 2009 to 2010

Change 2008 to 2009Year Ended March 31,

Increase/

Percent

Increase/

Percent2010

2009

2008

(Decrease)

Change

(Decrease)

ChangeInterest and other income (expense), net

$
630


$
1,271


$
2,096


$
(641
)


(50
)%

$
(825
)


(39
)%     Fiscal
    2010 Compared to Fiscal 2009
    Fiscal
    2009 Compared to Fiscal 2008
   47




---



##### Table of Contents



Income
    Tax Provision
    Year Ended March 31,2010

2009

2008Income tax provision

$
8,382


$
7,053


$
7,301Effective tax rate


39
%


37
%


37
%   Fiscal
    2010 Compared to Fiscal 2009
        Fiscal
    2009 Compared to Fiscal 2008
    LIQUIDITY
    AND CAPITAL RESOURCES
    March 31,2010


2009


2008Cash and cash equivalents

$
27,857


$
49,237


$
17,219Short-term investments


32,343



20,776



6,991Long-term investments


36,319



4,886



35,463Total cash, cash equivalents and investments

$
96,519


$
74,899


$
59,673Percentage of total assets


58
%


53
%


49
%  48




---



##### Table of Contents



Cash Flow
    Changes
    Year Ended March 31,2010


2009


2008Net cash provided by operating activities

$
22,672


$
14,331


$
14,966Net cash (used in) provided by investing activities


(46,624
)


10,673



(12,557
)Net cash provided by financing activities


2,565



7,066



4,627Effect of exchange rate changes on cash and cash equivalents


7



(52
)


Net (decrease) increase in cash and cash equivalents

$
(21,380
)

$
32,018


$
7,036       Operating
    Activities
        pro i-STAT
           49




---



##### Table of Contents



Investing
    Activities
    Investments.
  Property and Equipment.
  Financing
    Activities
   50




---



##### Table of Contents



Contractual
    Obligations
    Payments Due by PeriodTotal

2011

2012-2013

2014-2015

After 2015Operating leases

$
11,919


$
1,141


$
2,175


$
2,128


$
6,475   Operating Leases.
  Purchase Commitments.
  Patent Licensing Agreement.
    Line of Credit. Form 10-K.
  Contingencies
    Off-Balance
    Sheet Arrangements
   51




---



##### Table of Contents



Financial
    Condition
    RECENT
    ACCOUNTING PRONOUNCEMENTS
  Form 10-K.
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
             52




---



##### Table of Contents



Foreign
    Currency Rate Fluctuations
       53




---



##### Table of Contents



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

PageReport of Independent Registered Public
    Accounting Firm


55Consolidated Balance Sheets at March 31,
    2010 and 2009


56Consolidated Statements of Income for the Years
    Ended March 31, 2010, 2009 and 2008


57Consolidated Statements of Shareholders
    Equity and Comprehensive Income for the Years Ended
    March 31, 2010, 2009 and 2008


58Consolidated Statements of Cash Flows for the
    Years Ended March 31, 2010, 2009 and 2008


59Notes to Consolidated Financial Statements


60  54




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM     Form 10-K
      Internal Control  Integrated
    Framework
  
    55




---



##### Table of Contents



ABAXIS,
    INC.
 CONSOLIDATED
    BALANCE SHEETS  March 31,2010


2009(In thousands,except share data)ASSETSCurrent assets:Cash and cash equivalents

$
27,857


$
49,237Short-term investments


32,343



20,776Receivables (net of allowances of $446 in 2010 and $388 in 2009)


23,962



21,983Inventories


19,067



15,735Prepaid expenses


1,340



957Net deferred tax assets, current


3,773



4,676Total current assets


108,342



113,364Long-term investments


36,319



4,886Property and equipment, net


15,544



14,798Intangible assets, net


4,600



5,175Net deferred tax assets, non-current


2,935



2,464Other assets


76



24Total assets

$
167,816


$
140,711LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
9,404


$
3,963Accrued payroll and related expenses


5,615



3,698Accrued taxes


400



34Other accrued liabilities


1,256



1,116Deferred revenue


1,157



1,024Warranty reserve


1,183



1,714Total current liabilities


19,015



11,549Non-current liabilities:Deferred rent


163



137Deferred revenue


1,359



1,550Warranty reserve


160



583Total non-current liabilities


1,682



2,270Commitments and contingencies (Note 9)Shareholders equity:Preferred stock, no par value: 5,000,000 shares authorized;
    no shares issued and outstanding in 2010 and 2009






Common stock, no par value: 35,000,000 shares authorized;
    22,112,000 and 21,933,000 shares issued and outstanding in
    2010 and 2009, respectively


125,050



117,846Retained earnings


22,069



9,046Total shareholders equity


147,119



126,892Total liabilities and shareholders equity

$
167,816


$
140,711    56




---



##### Table of Contents



ABAXIS,
    INC.
 CONSOLIDATED
    STATEMENTS OF INCOME  Year Ended March 31,2010


2009


2008(In thousands, except per share data)Revenues

$
124,557


$
105,562


$
100,551Cost of revenues


52,435



46,937



45,507Gross profit


72,122



58,625



55,044Operating expenses:Research and development


10,688



8,361



6,966Sales and marketing


30,138



24,712



23,689General and administrative


10,521



7,757



6,681Total operating expenses


51,347



40,830



37,336Income from operations


20,775



17,795



17,708Interest and other income (expense), net


630



1,271



2,096Income before income tax provision


21,405



19,066



19,804Income tax provision


8,382



7,053



7,301Net income

$
13,023


$
12,013


$
12,503Net income per share:Basic net income per share

$
0.59


$
0.55


$
0.58Diluted net income per share

$
0.58


$
0.54


$
0.56Shares used in the calculation of net income per share:Weighted average common shares outstanding  basic


22,021



21,826



21,499Weighted average common shares outstanding  diluted


22,606



22,324



22,261    57




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##### Table of Contents



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


AccumulatedEarnings


Other


TotalCommon Stock


(Accumulated


Comprehensive


Shareholders


ComprehensiveShares


Amount


Deficit)


Income (Loss)


Equity


Income(In thousands, except share data)Balances 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
)


104,649Common stock issued under stock option exercises


194,000



636











636Common stock issued in settlement of restricted stock units, net
    of shares withheld for employee taxes


33,000



(281
)










(281
)Share-based compensation






1,749











1,749Excess tax benefits from share-based awards






6,711











6,711Components of comprehensive income:Net income










12,013







12,013


$
12,013Change in unrealized gain (loss) on investments, net of tax














1,415



1,415



1,415Comprehensive income





















$
13,428Balances at March 31, 2009


21,933,000



117,846



9,046







126,892Common stock issued under stock option exercises


128,000



915











915Common stock issued in settlement of restricted stock units, net
    of shares withheld for employee taxes


51,000



(446
)










(446
)Share-based compensation






5,398











5,398Excess tax benefits from share-based awards and other tax
    adjustments






1,337











1,337Components of comprehensive income:Net income










13,023







13,023


$
13,023Change in unrealized gain (loss) on investments, net of tax






















Comprehensive income





















$
13,023Balances at March 31, 2010


22,112,000


$
125,050


$
22,069


$



$
147,119    58




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##### Table of Contents



ABAXIS,
    INC.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  Year Ended March 31,2010


2009


2008(In thousands)Cash flows from operating activities:Net income

$
13,023


$
12,013


$
12,503Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation and amortization


4,935



4,492



3,497Investment premium amortization


211







Loss on disposals of property and equipment


104



16



2Loss on foreign exchange translation


60



137



Share-based compensation expense


5,337



1,743



1,108Excess tax benefits from share-based awards


(2,096
)


(6,711
)


(1,609
)Provision for deferred income taxes


1,245



4,813



6,400Changes in assets and liabilities:Receivables, net


(2,035
)


(1,221
)


(3,944
)Inventories


(5,068
)


1,051



(5,572
)Prepaid expenses


(383
)


(295
)


894Other assets


(52
)


(21
)


33Accounts payable


5,436



(2,440
)


(84
)Accrued payroll and related expenses


1,917



(576
)


447Accrued taxes


884



30



Other accrued liabilities


140



479



503Deferred rent


26



(149
)


(105
)Deferred revenue


(58
)


621



(208
)Warranty reserve


(954
)


349



1,101Net cash provided by operating activities


22,672



14,331



14,966Cash flows from investing activities:Purchases of
    available-for-sale
    investments


(3,030
)






(20,575
)Purchases of
    held-to-maturity
    investments


(70,562
)


(32,950
)


(21,167
)Proceeds from redemptions of
    available-for-sale
    investments


3,000



36,975



Proceeds from maturities and redemptions of
    held-to-maturity
    investments


27,381



14,279



32,804Purchases of property and equipment


(3,413
)


(2,651
)


(3,619
)Proceeds from disposals of property and equipment






20



Purchase of intangible assets






(5,000
)


Net cash (used in) provided by investing activities


(46,624
)


10,673



(12,557
)Cash flows from financing activities:Proceeds from issuance of common stock under stock plans, net


469



355



3,018Excess tax benefits from share-based awards


2,096



6,711



1,609Net cash provided by financing activities


2,565



7,066



4,627Effect of exchange rate changes on cash and cash equivalents


7



(52
)


Net (decrease) increase in cash and cash equivalents


(21,380
)


32,018



7,036Cash and cash equivalents at beginning of year


49,237



17,219



10,183Cash and cash equivalents at end of year

$
27,857


$
49,237


$
17,219Supplemental disclosure of cash flow information:Cash paid for income taxes, net of refunds

$
6,349


$
1,491


$
319Supplemental disclosure of non-cash flow information:Change in unrealized gain (loss) on investments, net of tax

$



$
1,415


$
(1,415
)Transfers of equipment between inventory and property and
    equipment, net

$
1,797


$
1,877


$
1,742Net change in capitalized share-based compensation

$
61


$
6


$
14Common stock withheld for employee taxes in connection with
    share-based compensation

$
446


$
281


$
110    59




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##### Table of Contents



ABAXIS,
    INC.
 NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    YEARS ENDED MARCH 31, 2010, 2009 AND 2008  NOTE 1.
    DESCRIPTION
    OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES  Description of Business.
    Principles of Consolidation.
  Use of Estimates.
  Certain Significant Risks and
    Uncertainties.
  Reclassification.
  Cash and Cash Equivalents.
  Investments. available-for-sale held-to-maturity. available-for-sale
 60




---



##### Table of Contents



held-to-maturity
    other-than-temporary other-than-temporary,
  Concentration of Credit Risk.
    Allowance for Doubtful Accounts.
  Fair Value of Financial Instruments.
    Inventories. first-in,
 61




---



##### Table of Contents



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 remaining lease term       Valuation of Long-Lived Assets.
  Intangible Assets.
  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.   62




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##### Table of Contents



Distributor and Customer Rebates.
  Shipping and Handling.
  Research and Development Costs.
  Advertising Expenses.
  Income Taxes.
   63




---



##### Table of Contents



Share-Based Compensation Expense.
        Net Income Per Share.
  Comprehensive Income. net-of-tax available-for-sale
  Foreign Currency Translations. end-of-period
  Recent
    Accounting Pronouncements
     64




---



##### Table of Contents



No. 2010-09, 2010-09). ASC 855-10 2010-09
           65




---



##### Table of Contents



NOTE 2.
    INVESTMENTS    March 31, 2010Cost orAmortized


Gross Unrealized


FairCost


Gain (Loss)


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

$
15,767


$



$
15,767Corporate bonds


10,549







10,549Municipal bonds


6,027







6,027Total short-term investments in
    held-to-maturity

$
32,343


$



$
32,343Long-term investmentsHeld-to-maturity:Certificates of deposits

$
6,562


$



$
6,562Corporate bonds


5,720







5,720Municipal bonds


3,407







3,407U.S. agency securities


20,630







20,630Total long-term investments in
    held-to-maturity

$
36,319


$



$
36,319   March 31, 2009Cost orAmortized


Gross Unrealized


FairCost


Gain (Loss)


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

$
20,776


$



$
20,776Total short-term investments in
    held-to-maturity

$
20,776


$



$
20,776Long-term investmentsHeld-to-maturity:Certificates of deposits

$
2,376


$



$
2,376Corporate bonds


2,510







2,510Total long-term investments in
    held-to-maturity

$
4,886


$



$
4,886       March 31, 2010


March 31, 2009Investments

Fair Value


Fair ValueDue in less than one year

$
32,343


$
20,776Due in 1 to 4 years


36,319



4,886$
68,662


$
25,662  66




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##### Table of Contents



NOTE 3.
    FAIR
    VALUE MEASUREMENTS    Level 1:
  Level 2:
  Level 3:
    As of March 31, 2010Quoted Prices inActive Markets for


Significant Other


SignificantIdentical Assets


Observable Inputs


Unobservable InputsLevel 1


Level 2


Level 3


TotalAssetsCash equivalents

$
4,618


$



$



$
4,618Total assets at fair value

$
4,618


$



$



$
4,618   As of March 31, 2009Quoted Prices inActive Markets for


Significant Other


SignificantIdentical Assets


Observable Inputs


Unobservable InputsLevel 1


Level 2


Level 3


TotalAssetsCash equivalents

$
43,322


$



$



$
43,322Total assets at fair value

$
43,322


$



$



$
43,322      67




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##### Table of Contents



Auction RateSecuritiesBalance at April 1, 2008

$
35,463Redemptions during the period


(36,975
)Transfers


Total gain or loss (realized or unrealized):Included in earnings (loss)


Included in other comprehensive income (loss)


1,512Balance at March 31, 2009

$
   NOTE 4.
    INVENTORIES    March 31,2010


2009Raw materials

$
8,936


$
8,539Work-in-process


3,421



2,592Finished goods


6,710



4,604Inventories

$
19,067


$
15,735   NOTE 5.
    PROPERTY
    AND EQUIPMENT, NET    March 31,2010


2009Machinery and equipment

$
23,617


$
22,223Furniture and fixtures


1,356



1,621Computer equipment


2,179



2,353Leasehold improvements


6,298



6,195Construction in progress


4,840



3,37638,290



35,768Accumulated depreciation and amortization


(22,746
)


(20,970
)Property and equipment, net

$
15,544


$
14,798    68




---



##### Table of Contents



NOTE 6.
    INTANGIBLE
    ASSETS, NET    Accumulated


Net BookCost


Amortization


ValueBalance, March 31, 2010Licenses

$
5,000


$
625


$
4,375Patents


750



525



225Total purchased intangible assets

$
5,750


$
1,150


$
4,600Balance, March 31, 2009Licenses

$
5,000


$
125


$
4,875Patents


750



450



300Total purchased intangible assets

$
5,750


$
575


$
5,175       Estimated Future Annual Amortization ExpenseFiscal Year Ending March 31,Total

2011

2012

2013

2014

2015

ThereafterAmortization expense

$
4,600


$
575


$
575


$
575


$
500


$
500


$
1,875   NOTE 7.
    WARRANTY
    RESERVES    Instruments.
    Reagent Discs.
 69




---



##### Table of Contents



Year Ended March 31,2010


2009


2008Balance at beginning of period

$
2,297


$
1,948


$
847Provision for warranty expense


762



1,558



2,036Warranty costs incurred


(816
)


(1,209
)


(935
)Adjustment to pre-existing warranties


(900
)






Balance at end of period


1,343



2,297



1,948Non-current portion of warranty reserve


160



583



729Current portion of warranty reserve

$
1,183


$
1,714


$
1,219   NOTE 8.
    LINE OF
    CREDIT      
    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 respect to the current fiscal
    year, with the six month period ended September 30, 2009
    and to have net income before preferred stock dividends and
    accretion on preferred stock of at least $1.2 million for
    the fiscal year ended March 31, 2010.
    We are 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    70




---



##### Table of Contents



NOTE 9.
    COMMITMENTS
    AND CONTINGENCIES    Payments Due by PeriodDue in FiscalTotal

2011

2012

2013

2014

2015

ThereafterOperating leases

$
11,919


$
1,141


$
1,109


$
1,066


$
1,063


$
1,065


$
6,475   Operating Leases.
    Purchase Commitments.
  Patent Licensing Agreement.
    Litigation.
  NOTE 10.
    EMPLOYEE
    BENEFIT PLAN   71




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##### Table of Contents



NOTE 11.
    SHARE-BASED
    COMPENSATION    Year Ended March 31,2010


2009


2008Cost of revenues

$
374


$
152


$
127Research and development


849



240



153Sales and marketing


1,255



508



325General and administrative


2,859



843



503Share-based compensation expense before income taxes


5,337



1,743



1,108Income tax benefit


(1,741
)


(704
)


(442
)Total share-based compensation expense after income taxes

$
3,596


$
1,039


$
666Net impact of share-based compensation on:Basic net income per share

$
0.16


$
0.05


$
0.03Diluted net income per share

$
0.16


$
0.05


$
0.03     Cash Flow
    Impact
    Equity
    Compensation Plans
    2005 Equity Incentive Plan.
   72




---



##### Table of Contents



1992 Outside Directors Stock Option
    Plan.
    Stock
    Options
     73




---



##### Table of Contents



Stock
    Option Activity
    Weighted


WeightedAverage


Average


AggregateExercise


Remaining


IntrinsicNumber of


Price


Contractual


ValueShares


per Share


Life (Years)


(In thousands)Outstanding 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(1,026,000 shares exercisable at a weighted average
    exercise price of $7.75 per share)


1,044,000


$
7.82Granted






Exercised


(194,000
)


3.27Canceled or forfeited


(2,000
)


11.85Outstanding at March 31, 2009(848,000 shares exercisable at a weighted average exercise
    price of $8.86 per share)


848,000


$
8.86Granted






Exercised


(128,000
)


7.18Canceled or forfeited






Outstanding at March 31, 2010


720,000


$
9.15



2.52


$
12,998Vested and expected to vest at March 31, 2010


720,000


$
9.15



2.52


$
12,998Exercisable at March 31, 2010


720,000


$
9.15



2.52


$
12,998    74




---



##### Table of Contents



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$ 3.00 - $ 3.84


48,000



2.38


$
3.08



48,000


$
3.08$ 3.85 - $ 3.85


139,000



3.06



3.85



139,000



3.85$ 4.18 - $ 4.65


18,000



2.27



4.26



18,000



4.26$ 4.87 - $ 4.87


206,000



1.07



4.87



206,000



4.87$ 5.27 - $ 6.31


78,000



0.80



5.95



78,000



5.95$ 6.33 - $18.98


69,000



4.33



12.77



69,000



12.77$19.12 - $19.12


1,000



3.71



19.12



1,000



19.12$19.45 - $19.45


2,000



4.22



19.45



2,000



19.45$21.45 - $21.45


2,000



4.04



21.45



2,000



21.45$21.65 - $21.65


157,000



4.05



21.65



157,000



21.65$ 3.00 - $21.65


720,000



2.52


$
9.15



720,000


$
9.15   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.  and/or
   75




---



##### Table of Contents



Restricted
    Stock Unit Activity
    WeightedAverageNumber of


Grant DateShares


Fair Value(1)Unvested at March 31, 2007


295,000


$
24.66Granted


267,000



21.73Vested(2)


(22,000
)


25.06Canceled or forfeited


(46,000
)


23.11Unvested at March 31, 2008


494,000


$
23.21Granted


254,000



23.68Vested(2)


(45,000
)


23.34Canceled or forfeited


(13,000
)


20.09Unvested at March 31, 2009


690,000


$
23.43Granted


309,000



18.33Vested(2)


(75,000
)


23.72Canceled or forfeited


(60,000
)


23.56Unvested at March 31, 2010


864,000


$
21.57     (1)
    
    The weighted average grant date fair value of restricted stock
    units is based on the number of shares and the closing market
    price of our common stock on the date of grant.(2)
    
    The number of restricted stock units vested includes shares that
    we withheld on behalf of our employees to satisfy the statutory
    tax withholding requirements.    NOTE 12.
    COMMON
    STOCK  Stock Purchase Rights.
    Common Stock Warrants.
 76




---



##### Table of Contents



NOTE 13.
    NET
    INCOME PER SHARE    Year Ended March 31,2010


2009


2008Numerator:Net income

$
13,023


$
12,013


$
12,503Denominator:Weighted average common shares outstanding  basic


22,021,000



21,826,000



21,499,000Weighted average effect of dilutive securities:Stock options


399,000



467,000



701,000Restricted stock units


186,000



31,000



58,000Warrants










3,000Weighted average common shares outstanding  diluted


22,606,000



22,324,000



22,261,000Net income per share:Basic net income per share

$
0.59


$
0.55


$
0.58Diluted net income per share

$
0.58


$
0.54


$
0.56     Year Ended March 31,2010

2009

2008Weighted average number of shares underlying antidilutive stock
    options and warrants






159,000



Weighted average exercise price per share underlying
    antidilutive stock options and warrants


N/A


$
21.65



N/A     Year Ended March 31,2010

2009

2008Weighted average number of shares underlying antidilutive
    restricted stock units


65,000



195,000



9,000  77




---



##### Table of Contents



NOTE 14.
    INCOME
    TAXES    Year Ended March 31,2010


2009


2008Current:Federal

$
5,353


$
1,000


$
368State


1,448



1,204



533Foreign


336



36



Total current income tax provision


7,137



2,240



901Deferred:Federal


1,296



4,794



5,838State


(51
)


19



562Total deferred income tax provision


1,245



4,813



6,400Total income tax provision

$
8,382


$
7,053


$
7,301     Year Ended March 31,2010


2009


2008United States

$
20,264


$
18,941


$
19,804Foreign


1,141



125



Income before income tax provision

$
21,405


$
19,066


$
19,804     Year Ended March 31,2010


2009


2008Income taxes at federal income tax rate

$
7,492


$
6,673


$
6,931State income taxes, net of federal benefits


937



920



880Non-deductible compensation


358



(5
)


6Research and development tax credits


(183
)


(62
)


(242
)Tax-exempt interest income


(14
)


(241
)


(336
)Qualified production activities income benefit


(274
)


(51
)


Other


66



(181
)


62Total income tax provision

$
8,382


$
7,053


$
7,301  78




---



##### Table of Contents



Year Ended March 31,2010


2009


2008Deferred tax assets:Research and development tax credit carryforwards

$
665


$
2,417


$
3,007Capitalized research and development


272



266



Inventory reserves


308



297



364Deferred revenue from extended maintenance agreements and
    warranty reserves


1,491



1,864



1,172Accrued payroll and other accrued expenses


923



704



630Share-based compensation


1,673



648



378Alternative minimum tax credits


23



710



675Depreciation


516







Other


912



385



290Total deferred tax assets


6,783



7,291



6,516Deferred tax liabilities:Depreciation

$



$
(51
)

$
(145
)Other


(75
)


(100
)


(77
)Total deferred tax liabilities


(75
)


(151
)


(222
)Net deferred tax assets

$
6,708


$
7,140


$
6,294             NOTE 15.
    SEGMENT
    REPORTING INFORMATION   79




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##### Table of Contents



Medical
    Market
    Veterinary
    Market
  pro
    Year Ended March 31,2010


2009


2008Revenues:Medical Market

$
24,176


$
24,796


$
22,764Veterinary Market


92,411



74,046



71,091Other(1)


7,970



6,720



6,696Total revenues


124,557



105,562



100,551Cost of revenues:Medical Market


10,704



12,407



11,340Veterinary Market


37,785



31,052



31,812Other(1)


3,946



3,478



2,355Total cost of revenues


52,435



46,937



45,507Gross profit:Medical Market


13,472



12,389



11,424Veterinary Market


54,626



42,994



39,279Other(1)


4,024



3,242



4,341Gross profit

$
72,122


$
58,625


$
55,044     (1)
    
    Represents unallocated items, not specifically identified to any
    particular business segment. 80




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##### Table of Contents



NOTE 16.
    REVENUES
    BY PRODUCT CATEGORY AND GEOGRAPHIC REGION AND SIGNIFICANT
    CONCENTRATIONS  Revenue
    Information
    Year Ended March 31,Revenues by Product Category

2010


2009


2008Instruments(1)

$
28,787


$
28,194


$
30,011Consumables(2)


85,819



69,072



61,928Other products


6,809



5,170



6,583Product sales, net


121,415



102,436



98,522Development and licensing revenue


3,142



3,126



2,029Total revenues

$
124,557


$
105,562


$
100,551     (1)
    
    Instruments include chemistry analyzers, hematology instruments,
    coagulation analyzers and i-STAT analyzers.(2)
    
    Consumables include reagent discs, hematology reagent kits,
    coagulation cartridges, i-STAT cartridges and canine heartworm
    rapid tests.    Year Ended March 31,Revenues by Geographic Region

2010


2009


2008North America

$
101,391


$
87,801


$
83,830Europe


18,547



14,045



13,472Asia Pacific and rest of the world


4,619



3,716



3,249Total revenues

$
124,557


$
105,562


$
100,551   Significant
    Concentrations
    Geographical

Year Ended March 31,Distributor

Location

2010

2009

2008Walco International, Inc., d/b/a DVM Resources


United States



10
%


10
%


12
%    81




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##### Table of Contents



NOTE 17.
    SUMMARY
    OF QUARTERLY DATA (UNAUDITED)    Quarter EndedJune 30


September 30


December 31


March 31Fiscal Year Ended March 31, 2010:Revenues

$
29,625


$
30,262


$
31,005


$
33,665Gross profit

$
17,155


$
17,851


$
18,296


$
18,820Income tax provision

$
2,482


$
2,081


$
1,982


$
1,837Net income

$
3,756


$
3,197


$
3,430


$
2,640Net income per share  basic

$
0.17


$
0.15


$
0.16


$
0.12Net income per share  diluted

$
0.17


$
0.14


$
0.15


$
0.12Fiscal Year Ended March 31, 2009:Revenues

$
24,572


$
27,688


$
26,964


$
26,338Gross profit

$
13,503


$
15,342


$
15,105


$
14,675Income tax provision

$
1,703


$
1,843


$
1,762


$
1,745Net income

$
2,776


$
3,297


$
3,356


$
2,584Net income per share  basic

$
0.13


$
0.15


$
0.15


$
0.12Net income per share  diluted

$
0.12


$
0.15


$
0.15


$
0.12   NOTE 18.
    SUBSEQUENT
    EVENT   82




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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)
 83




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
    INTERNAL CONTROLS OVER FINANCIAL REPORTING
     Internal Control  Integrated Framework
              
   84




---



##### Table of Contents



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

Age

TitleClinton H. Severson


62


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


67


DirectorHenk J. Evenhuis(1)(2)(3)


67


DirectorPrithipal Singh, Ph.D.(1)(2)(3)


71


DirectorErnest S. Tucker, III, M.D.(1)(2)(3)


77


DirectorAlberto R. Santa Ines


63


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


57


Chief Technology OfficerDonald P. Wood


58


Chief Operations OfficerVladimir E. Ostoich, Ph.D.


64


Vice President of Government Affairs and Vice President of
    Marketing for the Pacific Rim, FounderMartin V. Mulroy


49


Vice President of Veterinary Sales and Marketing for North
    AmericaBrenton G.A. Hanlon(4)


64


Vice President of North American Medical Sales and MarketingAchim Henkel


52


Managing Director of Abaxis Europe GmbH     (1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee (Mr. Evenhuis,
    Dr. Singh and Dr. Tucker became a member starting in
    October 2009.)(3)
    
    Member of the Nominating and Corporate Governance Committee(4)
    
    Mr. Hanlon resigned from the Board of Directors and each
    committee of the Board of Directors as of August 10, 2009,
    and was appointed as Vice President of North American Medical
    Sales and Marketing in September 2009.  Clinton H. Severson
  Richard J. Bastiani, Ph.D.
 85




---



##### Table of Contents



Henk J. Evenhuis
  Prithipal Singh, Ph.D.
  Ernest S. Tucker, III, M.D.
  Alberto R. Santa Ines
  Kenneth P. Aron, Ph.D.
  Donald P. Wood
 86




---



##### Table of Contents



Vladimir E. Ostoich, Ph.D.
  Martin V. Mulroy
  Brenton G. A. Hanlon
  Achim Henkel
  Term and
    Number of Directors
      Identification
    of Audit Committee and Financial Expert
     87




---



##### Table of Contents



Section 16(a)
    Beneficial Ownership Reporting Compliance
      Code of
    Business Conduct and Ethics
  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
   88




---



##### Table of Contents



Role
    of Our Compensation Committee
  and/or
      Competitive
    Benchmarking
   89




---



##### Table of Contents



Abiomed
    Adeza Biomedical
    Angiodynamics
    Aspect Medical Systems
    ATS Medical
    Biosite
    Cholestech

Conceptus
    Cutera
    Digene
    Intralase
    Kensey Nash
    Meridian Bioscience
    Orasure Technologies

Palomar Medical Technologies
    Surmodics
    Thoratec
    Vivus
    VNUS Medical Technologies     
    total shareholder return;
    revenue; and
    EBITDA (earnings before income tax, depreciation and
    amortization).    Compensation
    Determinations
    Elements
    of Compensation
  Base
    Salary
       90




---



##### Table of Contents



Fiscal 2010

Fiscal 2011Named Executive Officer

Base Salary

Base SalaryClinton H. Severson

$
360,000


$
375,000Alberto R. Santa Ines

$
200,000


$
208,000Kenneth P. Aron, Ph.D.

$
210,000


$
218,000Vladimir E. Ostoich, Ph.D.

$
210,000


$
218,000Donald P. Wood

$
200,000


$
208,000     Fiscal 2010

Fiscal 2011Percent Increase

Percent IncreaseNamed Executive Officer

in Base Salary

in Base SalaryClinton H. Severson



%


4.2
%Alberto R. Santa Ines



%


4.0
%Kenneth P. Aron, Ph.D.



%


3.8
%Vladimir E. Ostoich, Ph.D.



%


3.8
%Donald P. Wood


5.3
%


4.0
%   Annual
    Cash Incentive Bonus
       91




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##### Table of Contents



Fiscal 2010

Fiscal 2010Named Executive Officer

Target Bonus

Bonus AwardedClinton H. Severson

$
525,000


$
611,600Alberto R. Santa Ines

$
300,000


$
349,500Kenneth P. Aron, Ph.D.

$
300,000


$
349,500Vladimir E. Ostoich, Ph.D.

$
300,000


$
349,500Donald P. Wood

$
300,000


$
349,500   and/or
    Fiscal 2011Named Executive Officer

Target BonusClinton H. Severson

$
525,000Alberto R. Santa Ines

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

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

$
300,000Donald P. Wood

$
300,000   and/or
 92




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##### Table of Contents



Long-term
    Equity Incentive Compensation
    Stock
    Options
    Restricted
    Stock Units
  Fiscal 2010 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.   93




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##### Table of Contents



Fiscal 2011 Restricted Stock Unit Grants.
  Other
    Compensation and Benefits
    Employment
    Agreements
    Change
    in Control Agreements
       94




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##### Table of Contents




    on the 60th day after the termination date, a lump sum cash
    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;
    payment of up to 24 months of premiums for medical, dental
    and vision 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;
    reimbursement, on a monthly basis, of up to 24 months of
    premiums for disability and life insurance benefits if the
    participant elects to convert his or her disability
    and/or life
    insurance benefits under the Companys plans into
    individual policies following termination; and
    payment of an amount equal to any excise tax imposed under
    Section 4999 of the Code, provided, however, that payment
    of such amount is capped at $1,000,000 per participant.    Tax
    Considerations
  Deductibility
    of Executive Compensation
    Compensation
    Committee Interlocks and Insider Participation
  Form 10-K.
 95




---



##### Table of Contents



COMPENSATION
    COMMITTEE REPORT
    (1)
  Form 10-K
  Form 10-K
     
    (1)
    
    The material in this report is not soliciting
    material, is not deemed filed with the SEC and
    is not to be incorporated by reference into 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. 96




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##### Table of Contents



EXECUTIVE
    COMPENSATION
  Summary
    Compensation Table
    Non-EquityStock

Option

Incentive Plan

All OtherSalary

Bonus

Awards

Awards

Compensation

Compensation

TotalName and Principal Position

Fiscal Year

($)

($)

($)(1)

($)

($)(2)

($)(3)

($)Clinton H. Severson


2010



360,000







833,250







611,626



12,168
(4)


1,817,044President, Chief


2009



355,770







1,250,000







226,406



9,311
(4)


1,841,487Executive Officer and


2008



336,500







1,056,500







456,000



11,535
(4)


1,860,535Chairman of the BoardAlberto R. Santa Ines


2010



200,000







378,750







349,500



11,456
(5)


939,706Chief Financial Officer


2009



197,115







500,000







129,375



8,949
(5)


835,439and Vice President of


2008



183,846







422,600







261,250



10,972
(5)


878,668FinanceKenneth P. Aron, Ph.D.


2010



210,000







378,750







349,500



22,471
(6)


960,721Chief Technology Officer


2009



206,730







500,000







129,375



19,585
(6)


855,6902008



192,077







422,600







261,250



20,753
(6)


896,680Vladimir E. Ostoich, Ph.D.


2010



210,000







378,750







349,500



17,917
(7)


956,167Vice President of


2009



208,654







500,000







129,375



14,552
(7)


852,581Government Affairs and


2008



202,077







422,600







261,250



16,599
(7)


902,526Vice President ofMarketing for thePacific RimDonald P. Wood


2010



196,923







378,750







349,500



17,934
(9)


943,107Chief OperationsOfficer(8)     (1)
    
    Awards consist of restricted stock units granted to the Named
    Executive Officer in the fiscal year specified. Amounts listed
    in this column represent the grant date fair value of the awards
    granted in the fiscal year indicated as computed in accordance
    with Accounting Standards Codification (ASC) 718,
    Compensation-Stock Compensation (ASC
    718). Amounts shown do not reflect whether the Named
    Executive Officer has actually realized a financial benefit from
    the awards (such as by vesting in a restricted stock unit
    award). For a discussion of the assumptions used in determining
    the fair value of awards of restricted stock units in the above
    table, see Note 11 of the Notes to Consolidated 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 upon achieving the established quarterly net
    sales and quarterly pre-tax income goals for that 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 2010, consists of $4,769 in supplemental health plan
    expenses reimbursed by us, $648 in group life insurance paid by
    us, $626 in disability insurance premiums paid by us and $6,125
    in matching contributions made by us to Mr. Seversons
    401(k) account. In fiscal 2009, consists of $4,652 in
    supplemental health plan expenses reimbursed by us, $648 in
    group life insurance paid by us, $626 in disability insurance
    premiums paid by us and $3,385 in matching contributions made by
    us to Mr. Seversons 401(k) account. In fiscal 2008,
    consists of $4,378 in supplemental health plan expenses
    reimbursed by us, $780 in group life insurance paid by 97




---



##### Table of Contents



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.(5)
    
    In fiscal 2010, consists of $4,419 in supplemental health plan
    expenses reimbursed by us, $432 in group life insurance paid by
    us, $480 in disability insurance premiums paid by us and $6,125
    in matching contributions made by us to Mr. Santa
    Ines 401(k) account. In fiscal 2009, consists of $4,652 in
    supplemental health plan expenses reimbursed by us, $432 in
    group life insurance paid by us, $480 in disability insurance
    premiums paid by us and $3,385 in matching contributions made by
    us to Mr. Santa Ines 401(k) account. 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.(6)
    
    In fiscal 2010, consists of $15,388 in supplemental health plan
    expenses reimbursed by us, $454 in group life insurance paid by
    us, $504 in disability insurance premiums paid by us and $6,125
    in matching contributions made by us to Dr. Arons
    401(k) account. In fiscal 2009, consists of $14,959 in
    supplemental health plan expenses reimbursed by us, $451 in
    group life insurance paid by us, $502 in disability insurance
    premiums paid by us and $3,673 in matching contributions made by
    us to Dr. Arons 401(k) account. 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 made by us to Dr. Arons 401(k)
    account.(7)
    
    In fiscal 2010, consists of $10,897 in supplemental health plan
    expenses reimbursed by us, $454 in group life insurance paid by
    us, $504 in disability insurance premiums paid by us and $6,062
    in matching contributions made by us to Dr. Ostoichs
    401(k) account. In fiscal 2009, consists of $10,599 in
    supplemental health plan expenses reimbursed by us, $451 in
    group life insurance paid by us, $502 in disability insurance
    premiums paid by us and $3,000 in matching contributions made by
    us to Dr. Ostoichs 401(k) account. 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 Dr. Ostoichs
    401(k) account.(8)
    
    Mr. Wood was not a Named Executive Officer for fiscal 2008
    or 2009.(9)
    
    In fiscal 2010, consists of $10,897 in supplemental health plan
    expenses reimbursed by us, $432 in group life insurance paid by
    us, $480 in disability insurance premiums paid by us and $6,125
    in matching contributions made by us to Mr. Wood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


20
%


34
%Alberto R. Santa Ines


21
%


37
%Kenneth P. Aron, Ph.D.


22
%


36
%Vladimir E. Ostoich, Ph.D.


22
%


37
%Donald P. Wood


21
%


37
%   CEO Employment Agreement.
 98




---



##### Table of Contents



Grants of
    Plan-Based Awards in Fiscal 2010
    All Other

GrantStock

DateAwards:

FairEstimated Future Payouts

Estimated Future Payouts

Number of

Value ofUnder Non-Equity Incentive

Under Equity Incentive

Shares of

Stock andPlan Awards(1)

Plan Awards

Stock or

OptionThreshold

Target

Maximum

Threshold

Target

Maximum

Units

AwardsName

Grant Date

($)

($)

($)

(#)

(#)

(#)

(#)(2)

($)(3)Clinton H. Severson


5/1/2009



131,250



525,000



1,050,000















55,000



833,250Alberto R. Santa Ines


5/1/2009



75,000



300,000



600,000















25,000



378,750Kenneth P. Aron, Ph.D.


5/1/2009



75,000



300,000



600,000















25,000



378,750Vladimir E. Ostoich, Ph.D.


5/1/2009



75,000



300,000



600,000















25,000



378,750Donald P. Wood


5/1/2009



75,000



300,000



600,000















25,000



378,750     (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 2010, were paid in four quarterly
    installments within one month following the end of the
    applicable quarter upon achieving the established quarterly net
    sales and quarterly pre-tax income goals. Actual cash
    performance bonuses 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
    2010 is described above in Restricted Stock Units.(3)
    
    Represents the fair value of the restricted stock unit award on
    the date of grant, pursuant to ASC 718. See Note 11 of
    the Notes to Consolidated Financial Statements included in this
    Annual Report on
    Form 10-K
    for additional information. 99




---



##### Table of Contents



Outstanding
    Equity Awards at Fiscal Year End 2010
    Option Awards


Stock AwardsEquity Incentive


Equity IncentiveNumber of














Market


Plan Awards:


Plan Awards:Securities


Number of








Number


Value of


Number of


Market or PayoutUnderlying


Securities








of Shares


Shares or


Unearned Shares,


Value of UnearnedUnexercised


Underlying








or Units


Units of


Units or Other


Shares, Units orOptions


Unexercised


Option





of Stock


Stock


Rights


Other Rights(#)


Options


Exercise


Option


That Have


That Have


That Have


That HaveExercisable


(#)


Price


Expiration


Not Vested


Not Vested


Not Vested


Not VestedName

(1)


Unexercisable


($)(2)


Date


(#)


($)


(#)


($)(3)Clinton H. Severson


150,000







4.87



4/24/201110,417







3.85



4/22/201350,000
(4)






21.65



4/20/201428,000
(5)


761,32035,000
(5)


951,65042,500
(6)


1,155,57547,500
(6)


1,291,52555,000
(6)


1,495,450Alberto R. Santa Ines


37,432







3.00



7/23/201225,000







3.85



4/22/201340,000
(4)






21.65



4/20/201414,000
(5)


380,66017,000
(6)


462,23019,000
(6)


516,61025,000
(6)


679,750Kenneth P. Aron, Ph.D.


40,625







6.31



10/31/20104,500







5.47



7/24/201140,000
(4)






21.65



4/20/201414,000
(5)


380,66017,000
(6)


462,23019,000
(6)


516,61025,000
(6)


679,750Vladimir E. Ostoich, Ph.D.


9,500







5.47



7/24/201140,000







3.85



4/22/201322,000
(4)






21.65



4/20/201414,000
(5)


380,66017,000
(6)


462,23019,000
(6)


516,61025,000
(6)


679,750Donald P. Wood


























17,000
(6)


462,23019,000
(6)


516,61025,000
(6)


679,750     (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 $27.19 on March 31, 2010, 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. 100




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##### Table of Contents



(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.    (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 after the first year; ten percent of
    the shares vest after the second year; 15 percent of the
    shares vest after the third year; and 70 percent of the
    shares vest after the fourth year.  Option
    Exercises and Stock Vested in Fiscal 2010
    Option Awards

Stock AwardsNumber of



Number ofShares



SharesAcquired

Value Realized on

Acquired

Value Realized onon Exercise

Exercise

on Vesting

VestingName

(#)

($)(1)

(#)

($)(2)Clinton H. Severson














21,000



320,725Alberto R. Santa Ines














6,000



91,930Kenneth P. Aron, Ph.D.






12,484



259,103



6,000



91,930Vladimir E. Ostoich, Ph.D.






16,000



288,560



6,000



91,930Donald P. Wood














3,000



62,800     (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 Select
    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
   101




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Executive
    Change of Control Severance Plan
        
    on the 60th day after the termination date, a lump sum cash
    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;
    payment of up to 24 months of premiums for medical, dental
    and vision 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;
    reimbursement, on a monthly basis, of up to 24 months of
    premiums for disability and life insurance benefits if the
    participant elects to convert his or her disability
    and/or life
    insurance benefits under the Companys plans into
    individual policies following termination; and
    payment of an amount equal to any excise tax imposed under
    Section 4999 of the Code, provided, however, that payment
    of such amount is capped at $1,000,000 per participant.    Incentive
    Plans
   102




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##### Table of Contents



and/or
    and/or
 103




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##### Table of Contents



Potential
    Payments Upon Termination or Change in Control
  InvoluntaryInvoluntary



Termination withoutTermination without

Change in Control

Cause Following aExecutive Benefits and Payments Upon Separation

Cause(1)

(No Termination)

Change in Control(2)Clinton H. SeversonSalary and bonus

$
1,853,077






$
1,853,077Vesting of restricted stock units(3)





$
5,655,520


$
5,655,520Health and welfare benefits(4)

$
12,086






$
12,086Excise tax reimbursement(5)









$
62,436Total

$
1,865,163


$
5,655,520


$
7,583,119Alberto R. Santa InesSalary and bonus









$
1,046,154Vesting of restricted stock units(3)





$
2,039,250


$
2,039,250Health and welfare benefits(4)









$
10,662Excise tax reimbursement(5)









$
309,084Total





$
2,039,250


$
3,405,150Kenneth P. Aron, Ph.D.Salary and bonus









$
1,068,462Vesting of restricted stock units(3)





$
2,039,250


$
2,039,250Health and welfare benefits(4)









$
32,692Excise tax reimbursement(5)









$
105,715Total





$
2,039,250


$
3,246,119Vladimir E. Ostoich, Ph.D.Salary and bonus









$
1,068,462Vesting of restricted stock units(3)





$
2,039,250


$
2,039,250Health and welfare benefits(4)









$
23,710Excise tax reimbursement(5)









$
125,079Total





$
2,039,250


$
3,256,501Donald P. WoodSalary and bonus









$
1,015,045Vesting of restricted stock units(3)





$
1,658,590


$
1,658,590Health and welfare benefits(4)









$
23,618Excise tax reimbursement(6)









$
362,570Total





$
1,658,590


$
3,059,823     (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 $27.19 on March 31, 2010, as reported on the NASDAQ
    Global Select Market.(4)
    
    Health and welfare benefits include payment of 24 months of
    premiums for medical, dental, vision, disability and life
    insurance benefits.(5)
    
    For purposes of computing the excise tax reimbursement payments,
    base amount calculations are based on the Named Executive
    Officers taxable wages for fiscal years 2006 through 2010.(6)
    
    For purposes of computing the excise tax reimbursement payments,
    base amount calculations are based on Mr. Woods
    taxable wages for fiscal years 2008 through 2010, when he joined
    us in fiscal 2008. 104




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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)

($)

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


23,000



33,330











56,330Henk J. Evenhuis


27,000



33,330











60,330Prithipal Singh, Ph.D.


21,000



33,330











54,330Ernest S. Tucker, III, M.D.


22,000



33,330











55,330     (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)
    
    Each non-employee director listed in the table above was granted
    an award of 2,200 restricted stock units on May 1, 2009
    under our 2005 Plan. Amounts listed in this column represent the
    grant date fair value of the awards in accordance with
    ASC 718. Amounts shown do not reflect whether the
    non-employee director has actually realized a financial benefit
    from the awards (such as by vesting in a restricted stock unit
    award). For a discussion of the assumptions used in determining
    the fair value of awards of restricted stock units in the above
    table, see Note 11 of the Notes to Consolidated Financial
    Statements in this Annual Report on
    Form 10-K.
    No stock awards were forfeited by our non-employee directors
    during fiscal 2010, except for Mr. Hanlon, upon his
    resignation as director in August 2009.(3)
    
    As of March 31, 2010, each of our non-employee directors
    held 2,200 shares of unvested restricted stock units.(4)
    
    No options were awarded to our non-employee directors in fiscal
    2010, 2009 or 2008. As of March 31, 2010, the non-employee
    directors held the following number of outstanding options:
    Dr. Bastiani, 20,000; Mr. Evenhuis, 18,000;
    Dr. Singh, 16,000; and Dr. Tucker, 8,000 shares.  Cash
    Compensation Paid to Board Members
    Equity
    Compensation Paid to Board Members
   105




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##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Percent of AbaxisCommon StockShares Beneficially

Beneficially OwnedName and Address of Beneficial Owner

Owned

(1)Five Percent Holders:Brown Capital Management, Inc.(3)


2,525,782



11.3
%Kayne Anderson Rudnick Investment Management, LLC(4)


1,743,638



7.8
%BlackRock, Inc.(5)


1,666,521



7.5
%Neuberger Berman Group LLC, Neuberger Berman LLC and Neuberger
    Berman Management LLC(6)


1,472,304



6.6
%Executive Officers:(2)Clinton H. Severson(7)


710,618



3.2
%Vladimir E. Ostoich, Ph.D.(8)


409,826



1.8
%Alberto R. Santa Ines(9)


139,441




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


80,535




*Donald P. Wood(11)


4,561




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


83,700




*Prithipal Singh, Ph.D.(13)


32,700




*Henk J. Evenhuis(14)


24,700




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


8,000




*Executive officers and directors as a group
    (12 persons)(16)


1,573,706



6.9
%     *
    
    Less than one percent.(1)
    
    The percentages shown in this column are calculated based on
    22,273,342 shares of common stock outstanding on
    May 31, 2010 and includes shares of common stock that such
    person or group had the right to acquire on or within
    sixty 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/A filed
    with the SEC on January 27, 2010 by Brown Capital
    Management, Inc., reporting sole power to vote and dispose of
    1,138,734 and 2,525,782 shares, respectively. The business
    address for Brown Capital Management, Inc. is 1201 North Calvert
    Street, Baltimore, MD 21202.(4)
    
    Based on information set forth in a Schedule 13G/A filed
    with the SEC on February 9, 2010 by Kayne Anderson Rudnick
    Investment Management, LLC, reporting sole power to vote and
    dispose of 1,743,638 shares. The business address for Kayne
    Anderson Rudnick Investment Management, LLC is 1800 Avenue of
    the Stars, Second Floor, Los Angeles, CA 90067. 106




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##### Table of Contents



(5)
    
    Based on information set forth in a Schedule 13G filed with
    the SEC on January 29, 2010 by BlackRock, Inc., reporting
    sole power to vote and dispose of 1,666,521 shares. The
    business address for BlackRock, Inc. is 40 East 52nd Street, New
    York, NY 10022.(6)
    
    Based on information set forth in a Schedule 13G/A filed
    with the SEC on May 6, 2010 by Neuberger Berman Group LLC,
    reporting shared power to vote and dispose of 1,125,884 and
    1,472,304 shares, respectively; by Neuberger Berman LLC,
    reporting shared power to vote and dispose of 1,125,884 and
    1,472,304 shares, respectively; and by Neuberger Berman
    Management LLC, reporting shared power to vote and dispose of
    1,117,300 shares. The business address for Neuberger Berman
    Group LLC, Neuberger Berman LLC and Neuberger Berman Management
    LLC is 605 Third Avenue, New York, NY 10158.(7)
    
    Includes:  
    500,201 shares held by Mr. Severson; and
    210,417 shares subject to stock options exercisable by
    Mr. Severson within sixty days of May 31, 2010.  (8)
    
    Includes:  
    172,993 shares held by Dr. Ostoich;
    26,355 shares held by Dr. Ostoichs IRA;
    22,400 shares held by Mrs. Ostoichs IRA;
    116,578 shares held by the Vladimir Ostoich and Liliana
    Ostoich Trust Fund, for the benefit of Dr. Ostoich and
    his wife; and
    71,500 shares subject to stock options exercisable by
    Dr. Ostoich within sixty days of May 31, 2010.  (9)
    
    Includes:  
    37,009 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, 2010.  (10)
    
    Includes:  
    26,035 shares held by Dr. Aron; and
    54,500 shares subject to stock options exercisable by
    Dr. Aron within sixty days of May 31, 2010.  (11)
    
    Includes:  
    4,561 shares held by Mr. Wood.  (12)
    
    Includes:  
    63,700 shares held by Dr. Bastiani; and
    20,000 shares subject to stock options exercisable by
    Dr. Bastiani within sixty days of May 31, 2010.  (13)
    
    Includes:  
    24,700 shares held by Dr. Singh; and
    8,000 shares subject to stock options exercisable by
    Dr. Singh within sixty days of May 31, 2010.  (14)
    
    Includes:  
    6,700 shares held by Mr. Evenhuis; and
    18,000 shares subject to stock options exercisable by
    Mr. Evenhuis within sixty days of May 31, 2010.  (15)
    
    Reflects:  
    8,000 shares subject to stock options exercisable by
    Dr. Tucker within sixty days of May 31, 2010. 107




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##### Table of Contents



(16)
    
    Includes:  
    1,054,316 shares held by all executive officers and
    directors as a group; and
    519,390 shares subject to stock options exercisable by all
    executive officers and directors as a group within sixty days of
    May 31, 2010.  Securities
    Authorized for Issuance Under Equity Compensation
    Plans
        Equity
    Compensation Plan Information
  Number of Securities





Number of Securitiesto be Issued Upon


Weighted-Average


Remaining Available forExercise of


Exercise Price of


Future Issuance UnderOutstanding Options,


Outstanding Options,


Equity CompensationPlan Category

Warrants and Rights


Warrants and Rights


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


1,568,000


$
9.25
(3)


454,0001992 Outside Directors Stock Option Plan


16,000


$
4.88



Equity compensation plans not approved by our
    shareholders:










Total:


1,584,000


$
9.15
(3)


454,000     (1)
    
    The shares are available for award grant purposes under the 2005
    Plan and exclude shares listed under the column Number of
    Securities to be Issued Upon Exercise of Outstanding Options,
    Warrants and Rights.(2)
    
    The 2005 Plan amended and restated the 1998 Stock Option Plan in
    October 2005. To date, share-based awards granted under the 2005
    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
   108




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##### Table of Contents



Related-Person
    Transactions Policy and Procedures
      Item 14.
    Principal
    Accounting Fees and Services    Year Ended March 31,2010


2009Audit Fees(1)

$
670,000


$
636,000Audit-Related Fees(2)


13,000



48,000Tax Fees






All Other Fees






Total All Fees

$
683,000


$
684,000     (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 and Abaxis tax deferral savings plan.(2)
    
    Audit-related fees represent fees for assurance and related
    services that are reasonably related to the performance of the
    audit or review of our financial statements and are not reported
    under Audit Fees. In fiscal 2010, these services
    include
    agreed-upon
    procedures. In fiscal 2009, these services include due diligence
    services pertaining to potential acquisitions.  Pre-Approval
    Policies and Procedures
   109




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##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules    Financial Statements
  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 consolidated financial statements or notes thereto.  Exhibits
     110




---



##### Table of Contents



Abaxis,
    Inc.
  Schedule II
  Valuation
    and Qualifying Accounts and Reserves
 Years
    ended March 31, 2010, 2009 and 2008
  Balance at

Additions

Deductions

Balance atBeginning

Charged

from

End ofDescription

of Year

to Expenses

Reserves

YearTotal Reserve for Doubtful Accounts and Sales Allowances:Year ended March 31, 2010

$
388,000


$
302,000


$
(244,000
)

$
446,000Year ended March 31, 2009

$
272,000


$
236,000


$
(120,000
)

$
388,000Year ended March 31, 2008

$
542,000


$
165,000


$
(435,000
)

$
272,000  111




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##### Table of Contents



Exhibit Index  Exhibit No.

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

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
.3

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+

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
.4

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
.5

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
.6

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
.7

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
.8

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
.9+

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
.10+

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.)10
.11

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.) 112




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##### Table of Contents



Exhibit No.

Description of Document10
.12

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
.13

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
.14*

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
.15*

2005 Equity Incentive Plan, as amended as of October 28,
    2008 (Filed with the Securities and Exchange Commission as an
    exhibit with our Current Report on
    Form 8-K
    on November 3, 2008 and incorporated herein by reference.)10
.16*

Abaxis, Inc. Executive Change of Control Severance Plan, as
    amended as of December 23, 2008 (Filed with the Securities
    and Exchange Commission as an exhibit with our Quarterly Report
    on
    Form 10-Q
    for the quarter ended December 31, 2008 and incorporated
    herein by reference.)10
.17+

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
.18+

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
.19*

Fiscal 2011 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 May 4, 2010 and incorporated herein by reference.)10
.20+

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, 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, 2008 and incorporated
    herein by reference.)10
.21*

Form of Indemnification Agreement entered into by Abaxis, Inc.
    with each of its directors and executive officers (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, 2008 and incorporated
    herein by reference.)10
.22+

License Agreement by and between Inverness Medical Switzerland
    GmbH and Abaxis, Inc., dated January 5, 2009 (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, 2009 and incorporated
    herein by reference.)10
.23

First Amendment to Lease Agreement with Principal Development
    Investors, LLC, dated August 28, 200010
.24

Second Amendment to Lease Agreement with Principal Development
    Investors, LLC, dated November 20, 200010
.25

Third Amendment to Lease Agreement with Crossroads Technology
    Partners and Nearon Crossroads, LLC, as successors in interest
    to Principal Development Investors, LLC, dated April 10,
    200210
.26

Fourth Amendment to Lease Agreement with Whipple Road Holdings,
    LLC, SFP Crossroads, LLC and Woodstock Bowers, LLC, dated
    March 11, 201021
.1

Subsidiaries of the Company23
.1

Consent of Burr Pilger Mayer, Inc., 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 2002 113




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##### Table of Contents



Exhibit No.

Description of Document32
.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.*
    
    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. 114




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##### Table of Contents



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

Title

Date/s/  Clinton
    H. SeversonClinton
    H. Severson

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

June 14, 2010/s/  Alberto
    R. Santa InesAlberto
    R. Santa Ines

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

June 14, 2010/s/  Richard
    J. Bastiani, Ph.D.Richard
    J. Bastiani, Ph.D.

Director

June 14, 2010/s/  Henk
    J. EvenhuisHenk
    J. Evenhuis

Director

June 14, 2010/s/  Prithipal
    Singh, Ph.D.Prithipal
    Singh, Ph.D.

Director

June 14, 2010/s/  Ernest
    S. Tucker IIIErnest
    S. Tucker III

Director

June 14, 2010  115