Document:

EXHIBIT 10.38

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY
FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST.
OMISSIONS ARE DESIGNATED AS [*]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                       NON-EXCLUSIVE DISTRIBUTOR AGREEMENT

This Agreement made and entered into this 5th day of April 2004 by and between
the Veterinary Division of Henry Schein with its principal office at 135 Duryea
Road, Melville, NY 11747, (hereinafter called "Distributor"); and ABAXIS, Inc.,
a California corporation with its principal office at 3240 Whipple Rd, Union
City, California 94587 (hereinafter called "ABAXIS").

WHEREAS, ABAXIS is a manufacturer of products for the in vitro analysis of
various components in body fluids and whereas ABAXIS desires to further the sale
of its products to veterinarians' offices, clinics, hospitals, etc.

WHEREAS, DISTRIBUTOR conducts a business which sells medical products to such
veterinarian sites as those mentioned above and is interested in becoming a
distributor of ABAXIS veterinary products;

NOW, THEREFORE, the parties hereto agree as follows:

1.   Definitions

     As used in this Agreement, the terms defined below shall have the following
     meanings;

     A.   "Distribute", "Distributed" or "Distribution" shall mean to sell,
          distribute, market, promote, stimulate interest in, solicit Orders for
          and provide services in connection with those activities.

     B.   "Distributor Price" shall mean the price listed in Appendix A and
          Appendix A-1.

     C.   "End User" shall mean any provider of veterinarian medical care.

     D.   "Order" shall mean a written Purchase Order that describes Products
          being purchased by Distributor.

     E.   "Order Terms" shall mean, notwithstanding any conflicting terms set
          forth on an Order, the terms and conditions contained in this
          Agreement, and in any modifications thereto as may be agreed in
          writing.

     F.   "Professional Use" shall mean use of Products in connection with
          animal (non-human) care, conducted or supervised by trained
          veterinarian personnel who have the authority under applicable laws,
          regulations or statutes to use such Products.

                                     Page 1
<PAGE>

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY
FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST.
OMISSIONS ARE DESIGNATED AS [*]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

     G.   "Products" shall mean the ABAXIS products listed in Appendix A and
          Appendix A-1 and such other ABAXIS products as ABAXIS and Distributor
          shall from time to time agree, in writing, to add to Appendix A and
          Appendix A-1.

     H.   "Instrument" shall mean the VetScan analyzer and HMT Hematology
          analyzer, which are electromechanical diagnostic blood chemistry and
          cell counting devices.

     I    "Reagent Rotor" shall mean the plastic disk containing chemical
          reagents.

     J.   "Minimum Purchase Requirements" shall be as set forth in Appendix B.

     K.   "Territory" shall mean the geographical area served by distributor
          branches in the United States of America its protectorates and
          territories, as well as Federal Government installations. Expansion of
          the territory may occur only after written authorization from ABAXIS
          and mutual consent of both parties.

     L.   "Trademarks", "Trade names" and "Copyrights" shall mean the
          trademarks, trade names and copyrights owned or controlled by ABAXIS
          whether registered or arising by applicable law, and used in
          connection with the Products.

2.   Appointment

     ABAXIS hereby grants to Distributor the non-exclusive right to Distribute
     Products to End Users for Professional Use in the Territory. Distributor is
     not authorized to sell ABAXIS Products to resellers, other than to a
     leasing company which leases the Product to End Users. By entering into
     this Agreement ABAXIS is interested in facilitating the availability of its
     Products and the availability of proper training and technical support to
     the End Users of its Products.

3.   Obligations of Distributor.

     Distributor's obligations under this Agreement shall, without limitation,
     include the following:

     A.   Distributor shall use all reasonable efforts to Distribute Products.

     B.   Distributor shall agree to include Abaxis in their [*].

     C.   Distributor shall maintain adequate written procedures for warehouse
          control and Distribution of Products. Distributor shall maintain
          adequate records of shipments to End Users for at least two (2) years
          or to the end of the useful life of the Products, whichever is longer.
          The written records shall be in such a form as to enable ABAXIS to
          trace the location of all Products.

                                     Page 2
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY
FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST.
OMISSIONS ARE DESIGNATED AS [*]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

     D.   Distributor shall maintain and comply with adequate written procedures
          to ensure that all used ABAXIS Products which may be returned directly
          to Distributor shall not be cleaned or otherwise refurbished and
          re-sold or re-used by Distributor or others, without ABAXIS' prior
          written consent.

     E.   Distributor shall submit all advertising and promotional materials for
          Products to ABAXIS prior to use or distribution of such materials. In
          the event that ABAXIS provides comments or suggests changes in a
          timely manner of the receipt of such materials, Distributor will
          revise the materials accordingly.

     F.   Distributor shall comply with all relevant governmental rules and
          regulations in the Territory.

     G.   Distributor will make no representations or warranties with respect to
          the Products other than those specifically authorized in writing by
          ABAXIS.

     H.   Distributor agrees to on going training and sales meetings as required
          by ABAXIS so as to be able to adequately describe, demonstrate and
          sell Products in the clinic setting.

     I.   Distributor will stock and/or assist customers in obtaining proper
          blood transfer devices. A list of approved devices is described in
          ABAXIS Product Operators' Manual. Other devices may interfere with
          product performance and should not be used without the written consent
          of Abaxis

     J.   Distributor will provide ABAXIS a monthly forecast of Orders for three
          months running, which forecasts shall be given to ABAXIS 30 days prior
          to the first day of January, April, July and October of each year
          during the term of this Agreement. This will help facilitate
          production planning and assure continuity of supply for Distributor.
          Absence such forecasting, subjects Distributor to potential product
          back orders or shortages. Said forecasts for the first month shall
          constitute a binding obligation of Distributor to purchase the
          quantities and types of Product as forecast. The forecasts for the
          months two and three shall be Distributor's non-binding, best
          estimates for future Orders.

     K.   Distributor agrees to maintain a 30-day inventory of Product (both
          Reagent Rotor, HMT reagents and Instruments) at Distributor's
          warehouse.

4.   Obligations of ABAXIS

     ABAXIS shall have the following obligations under this Agreement.

     A.   ABAXIS shall provide marketing direction and guidance to Distributor.

     B.   ABAXIS agrees to maintain comprehensive "occurrence" general liability
          insurance, including "occurrence" product liability, contractual
          liability insurance and advertising injury coverage, with minimum
          limits of liability of [*] and to deliver to Distributor a certificate
          thereof with Account and its subsidiaries as an additionally named
          insured thereon.

                                     Page 3
<PAGE>

     C.   ABAXIS shall provide to Distributor a reasonable quantity of
          literature, brochures, and other materials.

     D.   ABAXIS shall maintain warranty and post-warranty repair services for
          the Products pursuant to its then applicable warranty policies for
          such Products.

     E.   ABAXIS will supply Reagent Rotors with a minimum of 66% of shelf life
          from the date of shipment from ABAXIS which is no less than 6 months
          for T4-Cholesterol Rotor and Critical Care Profile Rotor and 8 months
          for all other Rotors currently available per Attachment A, provided
          that the storage and transportation guidelines in Appendix C are
          followed. ABAXIS will make reasonable efforts to provide Product with
          the longest dating feasible.

     F.   ABAXIS will ship Product within 30 days after receiving a faxed or
          mailed Order from Distributor as long as Order does not exceed
          submitted forecast per Section 3. J. (Obligations of Distributor) by
          greater than 10%, in which case Abaxis will have up to an additional
          30 days to deliver Product exceeding 10% over the forecast.

5.   Orders

     A.   Orders for Products by Distributor shall be placed with ABAXIS by mail
          or facsimile (or by phone with explicit approval from ABAXIS) at the
          following address and telephone numbers:

                    ABAXIS, Inc.
                    3240 Whipple Road
                    Union City, CA 94587
                    Tel:  800-822-2947
                    Fax: 510-675-6500

     B.   Orders shall be subject to acceptance by ABAXIS.

     C.   ABAXIS reserves the right to reject any Order or to cancel any Order
          previously accepted in writing if, in ABAXIS' discretion, ABAXIS
          determines that such Order will not be paid for in accordance with the
          Order Terms or that the Products will not be Distributed in accordance
          with the terms and conditions set forth in this Agreement.

                                     Page 4
<PAGE>

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY
FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST.
OMISSIONS ARE DESIGNATED AS [*]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

          Upon a determination that ABAXIS intends to cancel a previously
          accepted Order, ABAXIS shall give Distributor, prompt written notice
          of such cancellation and ABAXIS will be under no further obligation to
          deliver Products under that Order, unless Distributor provides
          adequate assurances to ABAXIS that Distributor will comply fully with
          Distributor's obligations under this Agreement.

6.   Price and Payment Terms

     A.   The price payable by Distributor to ABAXIS for any Product shall be
          the Distributor Price on the date of the Order for such Product as
          shown in Appendix and Appendix A-1. Should Distributor sell an
          aggregate amount of Instruments equal to or great than shown in the
          Table A. below in a given quarter during the first year of the
          Agreement, then Abaxis will provide Distributor with margins for
          Product reagents purchased and shipped from Abaxis in that given
          quarter of the Agreement as follows:

          Table A. Qualifiers for Additional Reagent Margins

          Agreement Quarters                      Q1      Q2      Q3      Q4
          ------------------------------------   -----   -----   -----   -----
          Instrument Sales to End User            [*]     [*]     [*]     [*]
          Reagent Margin %                        [*]     [*]     [*]     [*]

          Annually, Abaxis will adjust the performance targets for the following
          4 quarters to include consumable targets starting on the next annual
          renewal.

     B.   All Orders shall be paid within 30 days of the date of invoice. If
          payment is not received by ABAXIS within said 30 days, the payment
          shall bear a late payment charge equal to 1.5% per month (or partial
          month) that the payment is delayed.

     C.   All Products sold and all prices quoted by ABAXIS are F.O.B. Union
          City, California or other ABAXIS distribution locations. Distributor
          shall be responsible for selecting the carrier responsible for
          transporting Products to Distributor's warehouse in accordance with
          the guidelines laid out in Appendix C. ABAXIS will work with
          Distributor to minimize transportation and associated costs.

     D.   Distributor shall pay for all transportation costs and all costs for
          insuring the Product while the Product is in transit and while the
          Product is in Distributor's control.

     E.   Title and risk of loss for the Product shall shift from ABAXIS to
          Distributor when the Product is delivered to the common carrier
          transportation company for shipment to Distributor.

                                     Page 5
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7.   Warranty and Service Policy

     A.   Instruments

          ABAXIS warrants each Instrument to be free from defects in performance
          for its intended use for a period of one year (the "Warranty Period")
          from its initial sale by Distributor to the original customer. In the
          event of failure of an Instrument during the Warranty Period, ABAXIS
          will, at its option, repair or replace such failed Instrument free of
          charge except in the circumstances as listed below.

          (1)  Any Instrument that has been subject to abuse, accident,
               alteration, modification, tampering, negligence or misuse;

          (2)  Any Instrument that has been repaired or serviced by anyone not
               authorized by ABAXIS to render such service;

          (3)  Any Instrument whose model or serial number has been altered,
               tampered with, defaced or removed.

     B.   Reagent Rotor

          ABAXIS will replace or credit Distributor or Customer for any Reagent
          Rotor that the Instrument's detection system has found to have a
          manufacturing defect. In the event that the Distributor or Customer
          finds any rotor to be defective, Distributor or Customer should call
          Abaxis Customer Service immediately to report pertinent information,
          including the lot number of the defective Reagent Rotor and for
          authorization for credit or replacement. ABAXIS will not be
          responsible for Reagent Rotors that are mishandled or stored or
          shipped improperly.

     C.   ABAXIS represents and warrants that: (i) it has the unrestricted right
          and authority to enter into this Agreement, and to grant the rights
          and licenses contemplated hereunder with respect to the Products and
          (ii) it has all rights in and to all patents, copyrights, trademarks,
          trade secrets or other proprietary rights associated with the Products
          that are necessary to market, distribute, and license the Products.

8.   Termination

     A.   Distributor's authorization to Distribute Products shall remain in
          full force and effect for one year from the date of this Agreement,
          and such authorization shall renew automatically for one year
          successive terms; provided however that at any time during the initial
          term or any renewal term, this Agreement may be terminated as follows:

          (1)  By either party without cause, after sixty (60) days written
               notice of termination;

          (2)  By ABAXIS, at its sole discretion, in the event that Distributor
               shall have failed to purchase the Minimum Performance requirement
               for any two consecutive quarters as shown in Appendix B (Minimum
               Performance Requirements from Abaxis);

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          (3)  By either party, upon giving notice to the other party that such
               other party is in breach of its obligations under this Agreement,
               if such other party fails to cure the breach within 10 days after
               receipt of written notice of the breach;

     B.   Upon the effective date of termination of this Agreement for whatever
          reason, the right of Distributor to Distribute Products will cease and
          Distributor will immediately discontinue all use of ABAXIS' Trade
          names, Trade marks and Copyrights. Distributor will return to ABAXIS
          all price lists, catalogs, sales literature, operating and service
          manuals, advertising literature, operating and other materials
          relating to the Products. Upon termination, ABAXIS may purchase, but
          shall not be obligated to purchase, all or part of the Products
          remaining in Distributor's inventory at the ABAXIS selling price to
          Distributor. If ABAXIS does not repurchase all of Distributor's
          inventory, Distributor will have the right, for a period not to exceed
          120 days, to sell any Products remaining in inventory and to continue
          to use the sales literature, manuals and other materials necessary for
          selling the remaining inventory of Products.

     C.   Upon any termination of this Agreement, the provisions in Section 1,
          7, 10, 11, 12, 13 14, 16, 18 and 19 shall remain in effect as
          necessary to carry out the purpose of those Sections after
          termination. Additionally, to the extent that Distributor is allowed
          to retain and sell its remaining inventory of the Products, all
          provisions of this Agreement shall remain in effect as applicable for
          said sales of the remaining inventory.

9.   Assignment

     Neither party may assign any of its rights or obligations under this
     Agreement without the prior written consent of the other party, which
     consent will not be commercially unreasonably withheld

10.  No Damages Arising From Termination

     Distributor acknowledges and agrees that ABAXIS shall be under no
     obligation to renew or extend this Agreement notwithstanding any Orders
     placed by Distributor or other actions taken by the parties prior to
     termination of this Agreement. Upon termination of the Agreement, neither
     party shall be liable to the other for any damages (whether direct,
     consequential, or incidental and including expenditures, loss of profits or
     prospective profits of any kind) sustained or ensuring out of, or alleged
     to have been sustained or to have arisen out of, such termination.

11.  Warranty Disclaimer and Waiver of Consequential Damages:

     EXCEPT FOR THE EXPRESS WARRANTY CONCERNING PRODUCTS CONTAINED IN SECTION 7
     HEREIN, ABAXIS MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED
     (INCLUDING IMPLIED WARRANTIES OF MERCHANT ABILITY AND FITNESS FOR A
     PARTICULAR PURPOSE) CONCERNING ANY PRODUCT OR OTHERWISE CONCERNING MATTERS
     CONTEMPLATED BY THIS AGREEMENT.

                                     Page 7
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     DISTRIBUTOR ACKNOWLEDGES AND AGREES THAT ABAXIS' SOLE RESPONSIBILITY IN THE
     CASE OF ANY BREACH OF WARRANTY SHALL BE FOR ABAXIS TO COMPLY WITH ABAXIS'
     POLICY AS SET FORTH IN SECTION 7 ABOVE. .

     Waiver of Consequential Damages:

     IN NO EVENT SHALL EITHER PARTY BE LIABLE OR OBLIGATED IN ANY MANNER FOR ANY
     SPECIAL, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND
     (INCLUDING WITHOUT LIMITATION LOST PROFITS) REGARDLESS OF THE FORM OF
     ACTION, WHETHER IN CONTRACT, TORT, NEGLIGENCE, STRICT PRODUCT LIABILITY, OR
     OTHERWISE, EVEN IF SUCH PARTY HAS BEEN INFORMED OF THE POSSIBILITY OF ANY
     SUCH DAMAGES IN ADVANCE.

12.  Legal Relationship; Indemnity

     A.   The relationship between ABAXIS and Distributor is that of supplier
          and purchaser. Distributor is an independent contractor and is not the
          legal representative, agent, joint venture, partner, or employee of
          ABAXIS for any purpose whatsoever. Distributor has no right or
          authority to assume or create any obligations of any kind or to make
          any representations or warranties, whether express or implied, on
          behalf of ABAXIS, or to bind ABAXIS in any respect whatsoever.

     B.   Each party shall indemnify and hold harmless the other party from any
          claims, injuries, and damages, including all reasonable costs and
          expenses (such as attorneys' fees), as a result, whether direct or
          indirect, stemming from the negligence, recklessness, or willful
          misconduct of the other party or such other party's officers,
          employees or agents.

     C.   Intellectual Property Indemnification:

          ABAXIS agrees to defend, indemnify and hold Distributor harmless from
          and against damages, costs, liabilities, expenses (including, without
          limitation, reasonable attorneys' fees) and settlement amounts
          incurred in connection with any suit, claim or action by any third
          party (a "Claim") alleging that the Products when used according to
          the documentation accompanying the Products, infringes an intellectual
          property right of a third party. The foregoing obligation shall not
          extend to any Claims of infringement arising out of or related to (i)
          a modification of the Products by anyone other than ABAXIS; or (ii) a
          combination of the Products with any third party software or equipment
          to the extent that such combination is the cause of such infringement.
          ABAXIS' obligation to defend, indemnify and hold Distributor harmless
          is subject to Distributor (i) giving ABAXIS prompt written notice of
          any such Claim; (ii) giving ABAXIS sole control over the defense and
          settlement of any such Claim (provided that ABAXIS may not use any
          non-monetary assets of Distributor in a non-monetary settlement
          without Distributor's prior written consent); (iii) providing full
          cooperation for the defense of any such Claim, at ABAXIS' expense; and
          (iv) not entering into any settlement or compromise of any such Claim
          without ABAXIS' prior written approval. In the event any Product is
          alleged to infringe or is believed by ABAXIS to infringe upon

                                     Page 8
<PAGE>

          any intellectual property right of a third party, ABAXIS may, at its
          sole option and expense, elect to (i) modify the Product so that such
          Product become non-infringing; (ii) replace the Product with a
          non-infringing product which is functionally substantially equivalent
          or (iii) obtain a license for Distributor to continue to sell the
          Product. The remedies granted to Distributor under this Section shall
          be Distributor's sole and exclusive remedies for any infringement by
          the Products.

13.  Use of ABAXIS Trademarks and Copyrighted Material

     Distributor may use materials furnished by ABAXIS which contain ABAXIS
     Trademarks, Trade names and Copyrights only with respect to distribution
     and sale of said Products, in accordance with the terms of this Agreement.
     Any further use by Distributor of ABAXIS Trademarks, Trade names and
     Copyrights shall be subject and limited to specific written authorization
     from ABAXIS, on a case by case basis. Any such use shall be on a
     non-transferable, non sublicenceable, and non-exclusive basis. Distributor
     shall not be required to notate, or otherwise credit Abaxis beyond use of
     name for individual product trademarks.

14.  Proprietary Rights

     ABAXIS will retain all of its rights and title to and ownership of all
     Copyrights, Trademarks, Trade names, trade secrets, patents, and all other
     intellectual property embodied in the Products. Except as otherwise
     expressly provided in this Agreement, Distributor will have no right, title
     or interest in the intellectual property embodied in the Products,
     excepting only Distributor's limited rights to use Trademarks, Trade names
     and Copyrights as specified in Section 13 hereof.

15.  Patent Marking

     Distributor agrees to include on the Products and on all labels, packaging
     and sales materials such patent marking as is reasonably requested by
     ABAXIS.

16.  Confidential Information

     Each party agrees that it will maintain the confidentiality of all
     electronic, verbal and written communications from the other party which
     are designated, or which should reasonably be regarded in the normal
     commercial view, as constituting confidential information, business secrets
     or proprietary information.

     Confidential information shall not include any such information which (i)
     is or becomes generally available to the public other than as a result of
     unauthorized disclosure by either party; (ii) has been or is made available
     to either party from a third party which is not under an obligation of
     confidentiality to either party or its affiliates; (iii) was previously
     known by the receiving party prior to disclosure by the other party; or
     (iv) was developed independently of any disclosures make hereunder. In the
     event either party is required to make disclosure of Confidential
     Information regarding the other due to legal process, such party shall
     immediately notify the other and reasonably cooperate with the owner of
     such Confidential Information in any efforts to limit or object to such
     disclosures being made.

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     This confidentiality provision shall survive termination of this Agreement.

17.  Force Majeure

     Except as to the timely payment by Distributor of the purchase price of
     Products purchased by it under this Agreement, no failure or omission to
     carry out or observe any of the terms, provisions, or conditions of this
     Agreement will give rise to any claim by one party against the other, or be
     a breach of this Agreement, if the same is caused by or arises out of one
     or more of the following conditions: acts of God; acts, regulations or laws
     of any government; war; civil commotion; destruction of facilities or
     materials by fire, earthquake or storm; labor disturbance; epidemic;
     failure of public utilities or of suppliers; or any other event, matter or
     thing wherever occurring and whether or not of the same class or kind as
     those set forth above, which is not reasonably within the control of the
     affected party. However, the parties will endeavor to avoid, remove, or
     cure all such conditions as soon as is reasonably feasible.

18.  Choice of Law

     This Agreement shall be governed by and construed and enforced in
     accordance with the laws of the State of New York, without regard to the
     New York rules for conflicts of laws.

19.  Complete Agreement

     This Agreement constitutes the entire contract between ABAXIS and
     Distributor. All prior or contemporaneous agreements, proposals,
     understandings and communications between or involving ABAXIS and
     Distributor are replaced in their entirety by this Agreement, except that
     this Agreement shall not relieve either party from making payments which
     may be due and owing under any agreements or contract made prior to the
     date hereof. This Agreement may be amended only by a written instrument
     executed by authorized representatives of ABAXIS and Distributor.

20.  Counterparts

     This Agreement is signed in two identical counterpart originals each of
     which is to be considered the original.

     In Witness Whereof, the parties have caused this Agreement to be executed
     in duplicate by their duly authorized representatives on the date below
     written.

     Distribuor                              ABAXIS, Inc.

     By:     /s/ Wilson Constantine          By:    /s/ Richard Schoen
             ----------------------                 ----------------------------
     Title:  General Manager

     Date:   3/29/04                         Date:  4/5/04

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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY
FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST.
OMISSIONS ARE DESIGNATED AS [*]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                   APPENDIX A

<TABLE>
<CAPTION>
                                                                                                      MFG. SUG.
CATALOG NO.                PRODUCTS                                                   DIST. PRICE   RETAIL PRICE
--------------  -------------------------------------------------------------------   -----------   ------------
<S>             <C>                                                                       <C>           <C>
INSTRUMENTS
200-0000        VetScan Chemistry Analyzer - Includes Accessory Kit,                      [*]           [*]
                0.1CC Minipette, 0.1CC Disposable Tips (96), Manual, Power
                Cord, Power Supply, 10 Heparin Lithium Tubes, Screw Driver,
                12/Pk Result Cards

REAGENT ROTORS  (Box of 10, unless otherwise noted.)
500-0026        Prep Profile II- ALT, ALP, BUN, CRE, GLU & TP                             [*]           [*]
500-0256        Package of 25 Rotors                                                      [*]           [*]
500-0002        Diagnostic Profile Plus                                                   [*]           [*]
                ALB, ALP, ALT, AMY, BUN, CA++, CHOL, CRE, GLOB*, GLU, K+, TBIL & TP
500-0052        Package of 25 Rotors                                                      [*]           [*]
500-0038-10     Comprehensive Diagnostic Profile - ALT, ALB, ALP, AMY, CA++,              [*]           [*]
                PHOS, CRE, GLOB*,GLU, K+, Na+, TBIL, TP & BUN
500-0038-25     Package of 25 Rotors                                                      [*]           [*]
500-0017        Critical Care Profile- ALT, tCO(2), CRE, GLU, K+, Na & BUN                [*]           [*]
500-0037        T(4) - Cholesterol  - T(4), CHOL                                          [*]           [*]
500-0014        Equine Profile - ALB, AST, BUN, CA++, CK, CRE, GLU, GGT, GLOB*,           [*]           [*]
                TBIL, & TP
500-0023        Large Animal Profile (Bovine)- ALB, ALP, AST, CA++, CK, GGT,              [*]           [*]
                GLOB*, MG, PHOS, TP, & BUN
500-0022        Avian/Reptilian Profile - ALB,AST,BUN, Ca++,CK,GLOB*,Glu,K+,              [*]           [*]
                Na+,PHOS,TP,UA                                   *Calculated Value
ACCESSORIES
100-9001        Instrument Carrying Case with wheels                                      [*]           [*]
100-8001        Plug Lighter Adapter                                                      [*]           [*]
200-7001        VetScan Operator's Manual                                                 [*]           [*]
400-7000        Result Cards, Blank - 12/package                                          [*]           [*]
500-9008        Screw Driver (Software Panel)                                             [*]           [*]
981-0090        Power Cord                                                                [*]           [*]
988-0008        Power Supply                                                              [*]           [*]

Ancillary Products
500-9002        0.1 cc Drummond Capillary pipettes - 100/package                          [*]           [*]
500-9003        Heparin Lithium Tubes (Green top) 100/box                                 [*]           [*]
500-9006        Minipet, 0.1 cc, Grey                                                     [*]           [*]
500-9007        0.1 cc Disposable pipette tips - 96/rack                                  [*]           [*]
100-1503        Glucometer strips - 50/box                                                [*]           [*]
100-1501        Glucometer - 50/box                                                       [*]           [*]

</TABLE>

** Effective May 1, 2004 Distributor transfer pricing will increase by [*] per
   rotor (See Appendix A - 1)

                                    Page 11
<PAGE>

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY
FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST.
OMISSIONS ARE DESIGNATED AS [*]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                   APPENDIX A

                                    CONTINUED

<TABLE>
<CAPTION>
                                                                                                     MFG. SUG.
CATALOG NO.                PRODUCTS                                                   DIST. PRICE   RETAIL PRICE
-------------   ----------------------------------------------------------------      -----------   ------------
<S>             <C>                                                                       <C>            <C>
INSTRUMENTS
700-0000        VetScan HMT Hematology                                                    [*]*           [*]
                Includes -Operator's Manual, Installation Guide,
                Power Cord, Keyboard, Reagent Tubing,
                Collection Tube Adapters, Cover Keys and
                VetScan DxS Quick Reference Guide
REAGENTS
700-9000        VetScan HMT Reagent Pack                                                  [*]           [*]
                Includes - (1) Thermal Printer Paper Roll,
                (2) Clot Filters and (1) Probe Cleaning Wire
700-9003        Dog Control, (1) 2 cc vial                                                [*]           [*]
700-9004        Cat Control, (1) 2 cc vial                                                [*]           [*]
700-9005        Human Calibrator, (1) 2 cc vial                                           [*]           [*]

ACCESSORIES
988-0013        Keyboard                                                                  [*]           [*]
987-0008        Clot Filters 2/pkg                                                        [*]           [*]
999-0044        Collection tube adapter, Red                                              [*]           [*]
999-0045        Collection tube adapter, White                                            [*]           [*]
999-0046        Collection tube adapter, Blue                                             [*]           [*]
999-0066        Collection tube adapter, Green                                            [*]           [*]
700-9002        Reagent Tubing Kit                                                        [*]           [*]
981-0090        Power Cord                                                                [*]           [*]
999-0043        Cover Keys                                                                [*]           [*]
700-7003        Operator's Manual                                                         [*]           [*]
700-7001        Thermal Printer Paper Roll                                                [*]           [*]
                (minimum order: 3)

ANCILLARY PRODUCTS
980-0204        HMT-VetScan/Computer Interface Cable                                      [*]           [*]
700-1500        Color Printer                                                             [*]           [*]
980-0206        HMT Printer Cable                                                         [*]           [*]
700-1501        VetScan Rocker                                                            [*]           [*]
700-1502        Vortex Mixer                                                              [*]           [*]
988-0009        Uninterruptible Power Supply                                              [*]           [*]
</TABLE>

                * Quantity Pricing - with the purchase and delivery of [*] or
                more VetScan Chemistry Analyzers and VetScan HMT Analyzers in a
                single order, Abaxis will sell the VetScan HMT Analyzer for[*]
                per unit

                                    Page 12
<PAGE>

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY
FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST.
OMISSIONS ARE DESIGNATED AS [*]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

          APPENDIX A - 1 EFFECTIVE MAY 1, 2004 FOR VETSCAN CONSUMABLES

<TABLE>
<CAPTION>
                                                                                                      MFG. SUG.
CATALOG NO.                PRODUCTS                                                   DIST. PRICE   RETAIL PRICE
-------------   ----------------------------------------------------------------      -----------   ------------
<S>             <C>                                                                       <C>           <C>
INSTRUMENTS
200-0000        VetScan Chemistry Analyzer - Includes Accessory Kit,                      [*]           [*]
                0.1CC Minipette, 0.1CC Disposable Tips (96), Manual, Power
                Cord, Power Supply, 10 Heparin Lithium Tubes, Screw Driver,
                12/Pk Result Cards
REAGENT ROTORS (Box of 10, unless otherwise noted.)
500-0026        Prep Profile II- ALT, ALP, BUN, CRE, GLU & TP                             [*]           [*]
500-0256        Package of 25 Rotors                                                      [*]           [*]
500-0002        Diagnostic Profile Plus                                                   [*]           [*]
                ALB, ALP, ALT, AMY, BUN, CA++, CHOL, CRE, GLOB*, GLU, K+, TBIL & TP
500-0052        Package of 25 Rotors                                                      [*]           [*]
500-0038-10     Comprehensive Diagnostic Profile - ALT, ALB, ALP, AMY, CA++,              [*]           [*]
                PHOS, CRE, GLOB*,GLU, K+, Na+, TBIL, TP & BUN
500-0038-25     Package of 25 Rotors                                                      [*]           [*]
500-0017        Critical Care Profile- ALT, tCO(2), CRE, GLU, K+, Na & BUN                [*]           [*]
500-0037        T(4) - Cholesterol  - T(4), CHOL                                          [*]           [*]
500-0014        Equine Profile - ALB, AST, BUN, CA++, CK, CRE, GLU, GGT, GLOB*,           [*]           [*]
                TBIL, & TP
500-0023        Large Animal Profile (Bovine)- ALB, ALP, AST, CA++, CK, GGT,              [*]           [*]
                GLOB*, MG, PHOS, TP, & BUN
500-0022        Avian/Reptilian Profile - ALB,AST,BUN, Ca++,CK,GLOB*,Glu,K+,              [*]           [*]
                Na+,PHOS,TP,UA                                *Calculated Value
ACCESSORIES
100-9001        Instrument Carrying Case with wheels                                      [*]           [*]
100-8001        Plug Lighter Adapter                                                      [*]           [*]
200-7001        VetScan Operator's Manual                                                 [*]           [*]
400-7000        Result Cards, Blank - 12/package                                          [*]           [*]
500-9008        Screw Driver (Software Panel)                                             [*]           [*]
981-0090        Power Cord                                                                [*]           [*]
988-0008        Power Supply                                                              [*]           [*]

Ancillary Products
500-9002        0.1 cc Drummond Capillary pipettes - 100/package                          [*]           [*]
500-9003        Heparin Lithium Tubes (Green top) 100/box                                 [*]           [*]
500-9006        Minipet, 0.1 cc, Grey                                                     [*]           [*]
500-9007        0.1 cc Disposable pipette tips - 96/rack                                  [*]           [*]
100-1503        Glucometer strips - 50/box                                                [*]           [*]
100-1501        Glucometer - 50/box                                                       [*]           [*]
</TABLE>

                                    Page 13
<PAGE>

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY
FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST.
OMISSIONS ARE DESIGNATED AS [*]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                   APPENDIX B

                    MINIMUM PURCHASE REQUIREMENTS FROM ABAXIS

                         VetScan Chemistry            VetScan HMT Hematology
                         -----------------            ----------------------
Initial Order                   [*]                             [*]

First Quarter                   [*]                             [*]

Second Quarter                  [*]                             [*]

Third Quarter                   [*]                             [*]

Fourth Quarter                  [*]                             [*]

                                    Page 14
<PAGE>

                                   APPENDIX C

                      STORAGE AND TRANSPORTATION GUIDELINES

1.0  Reagent discs must be stored refrigerated at 2-8 degrees C.

2.0  Discs must be shipped in insulated shipping containers with frozen gel ice
     packs. Cold shipper is to be placed in corrugated shipping box.

     Insulated containers may be ice chest type, or any other type Styrofoam
     configuration, designed to maintain cold temperatures for a minimum of 24
     hours. Walls of the Styrofoam containers must be a minimum of 7/8" wall
     thick, and be enclosed in a corrugated shipping box.

     Gel ice packs must be a minimum 1 1/2 lb. in weight. (Generally, smaller
     sizes will not remain frozen adequately during shipment.)

3.0  Corrugated shipping boxes are to be clearly marked with temperature
     requirements - "Refrigerate at 2-8 degrees C" - and are to be clearly
     labeled "Refrigerate Upon Arrival."

4.0  Any carrier who provides next day delivery services may be used. The only
     requirement is that the shipment arrive at destination within twenty-four
     (24) hours.

5.0  In general, when the shipment arrives, the product should feel cold to the
     touch, and the gel packs should be frozen or partially frozen.

6.0  Caution: Under no circumstances are the reagent discs be shipped
     unprotected, either in a corrugated box without Styrofoam, without gel
     packs, or via any shipping method that takes longer than twenty-four (24)
     hours.

                                     Page 15EXHIBIT 10.39

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

July 11, 2005

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

     Re: Employment Agreement

Dear Clint:

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

               c) a change in control of the company.

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

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

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

Sincerely,

ABAXIS, Inc.

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

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

Dated: 8/2/05

/s/ Clint Severson
------------------
Clint Severson

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