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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 000-19720
ABAXIS, INC.
(Exact name of registrant as specified in its charter)
California 77-0213001
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1320 Chesapeake Terrace
Sunnyvale, California 94089
(Address of principal executive offices)
Telephone: (408) 734-0200
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d)
Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), Yes X No
--- ---
and
(2) has been subject to such filing requirements for the 90 days.
Yes X No
--- ---
At November 4, 1996, 9,878,553 shares of common stock, no par value, were
outstanding.
This report on Form 10-Q, including all exhibits, contains 13 pages.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
<S> <C>
Facing Sheet 1
Table of Contents 2
Part I. Financial Information
Item 1. Financial Statements:
Condensed Statements of Operations - Three Months
and Six Months Ended September 30, 1996 and 1995 3
Condensed Balance Sheets - September 30, 1996 and
March 31, 1996 4
Condensed Statements of Cash Flows - Six Months Ended
September 30, 1996 and 1995 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
2
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PART 1-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ABAXIS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 1,776,000 $ 434,000 $ 2,949,000 $ 974,000
Development and licensing revenue 37,000 3,000 75,000 65,000
--------------------------------------------------------------------
Total revenues 1,813,000 437,000 3,024,000 1,039,000
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Costs and operating expenses:
Cost of product sales 1,789,000 1,053,000 3,611,000 2,180,000
Research and development 318,000 287,000 709,000 563,000
Selling, general, and administrative 1,329,000 783,000 2,590,000 1,558,000
--------------------------------------------------------------------
Total costs and operating expenses 3,436,000 2,123,000 6,910,000 4,301,000
--------------------------------------------------------------------
Loss from operations (1,623,000) (1,686,000) (3,886,000) (3,262,000)
Interest income, net 61,000 161,000 153,000 282,000
--------------------------------------------------------------------
Net loss $(1,562,000) $(1,525,000) $(3,733,000) $(2,980,000)
====================================================================
Net loss per share $ (0.16) $ (0.16) $ (0.38) $ (0.33)
--------------------------------------------------------------------
Shares used in calculating
net loss per share 9,868,596 9,465,615 9,873,554 9,106,233
====================================================================
</TABLE>
See notes to condensed financial statements.
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ABAXIS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 MARCH 31, 1996
------------------------------------
(unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,272,000 $ 1,591,000
Short-term investments 3,946,000 6,187,000
Trade and other receivables 1,183,000 690,000
Interest receivable 8,000 41,000
Inventories 1,533,000 1,456,000
Prepaid expenses 70,000 92,000
--------------------------------
Total current assets 12,012,000 10,057,000
Property and equipment - net 2,332,000 2,427,000
Long-term investments -- 500,000
Deposits and other assets 62,000 62,000
--------------------------------
Total assets $ 14,406,000 $ 13,046,000
================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 992,000 $ 1,017,000
Accrued payroll and related expenses 520,000 417,000
Other accrued liabilities 391,000 225,000
Warranty reserve 330,000 249,000
Deferred rent 20,000 94,000
Deferred revenue 142,000 143,000
--------------------------------
Total current liabilities 2,395,000 2,145,000
--------------------------------
Customer deposits 170,000 175,000
--------------------------------
Shareholders' equity:
Convertible preferred stock, no par value: authorized
shares - 5,000,000; 500,000 issued and outstanding 4,780,000 --
on September 30, 1996 and none issued and outstanding on
March 31, 1996
Common stock, no par value: authorized shares --
20,000,000; 9,878,553 issued and outstanding on
September 30, 1996 and 9,857,628 on March 31, 1996 53,624,000 53,556,000
Accumulated deficit (46,563,000) (42,830,000)
--------------------------------
Total shareholders' equity 11,841,000 10,726,000
--------------------------------
Total liabilities and shareholders' equity $ 14,406,000 $ 13,046,000
================================
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
Note: The balance sheet at March 31, 1996 has been derived from the audited
financial statements at that date but does not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
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ABAXIS, INC
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
1996 1995
------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(3,733,000) $(2,980,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 474,000 478,000
Amortization of deferred compensation -- 40,000
Changes in assets and liabilities:
Trade and other receivables (493,000) (128,000)
Interest receivable 33,000 --
Inventories (77,000) (91,000)
Prepaid expenses 22,000 (13,000)
Accounts payable (25,000) 69,000
Accrued payroll and related expenses 103,000 48,000
Other accrued liabilities 173,000 (67,000)
Deferred revenue (1,000) 10,000
Customer deposits (5,000) (5,000)
------------------------------
Net cash used in operating activities (3,529,000) (2,639,000)
------------------------------
INVESTING ACTIVITIES:
Purchase of available-for-sale securities (5,409,000) (1,963,000)
Maturities of available-for-sale securities 7,650,000 687,000
Sales of available-for-sale securities 500,000 --
Purchase of property and equipment (379,000) (127,000)
------------------------------
Net cash provided (used) by investing activities 2,362,000 (1,403,000)
------------------------------
FINANCING ACTIVITIES :
Proceeds from issuance of Common Stock 68,000 6,183,000
Proceeds from issuance of Series A Preferred Stock 4,780,000 --
------------------------------
Net cash provided by financing activities 4,848,000 6,183,000
------------------------------
Increase in cash and cash equivalents 3,681,000 2,141,000
Cash and cash equivalents at beginning of period 1,591,000 3,460,000
------------------------------
Cash and cash equivalents at end of period $ 5,272,000 $ 5,601,000
==============================
</TABLE>
See notes to condensed financial statements.
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NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed financial statements for the periods ended September 30, 1996 and
1995 are unaudited, but include all adjustments (consisting only of normal
recurring adjustments) that the management of Abaxis, Inc. believes to be
necessary for the fair presentation of the financial position, results of
operations and cash flows for the periods presented. Interim results are not
necessarily indicative of results to be expected for the full year. The
financial statements should be read in conjunction with the audited financial
statements for the year ended March 31, 1996, included in the Company's annual
report on Form 10-K filed with the Securities and Exchange Commission.
Through March 31, 1996, the Company was in the development stage and its
financial statements were presented in accordance with Statement of Financial
Accounting Standards No. 7 "Accounting and Reporting by Development Stage
Enterprises". During the quarter ended June 30, 1996, the Company completed the
launch of its Piccolo Systems. Based on the commercial launch of this product
combined with sales of previously offered products, management believes that it
no longer meets the definition of a development stage enterprise.
2. PER SHARE INFORMATION
Per share information for the periods ended September 30, 1996 and 1995 is based
solely on weighted average shares of common stock outstanding during the period.
Common equivalent shares have not been considered in the computation since their
inclusion would have an antidilutive effect.
3. INVENTORY
Inventories are stated at the lower of cost (first-in, first-out) or market and
consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 MARCH 31, 1996
<S> <C> <C>
Raw materials $ 851,000 $ 829,000
Work-in-process 282,000 467,000
Finished goods 400,000 160,000
-------------------------------
$1,533,000 $1,456,000
===============================
</TABLE>
4. PRIVATE EQUITY FINANCING
In September 1996, the Company completed a private equity financing in which it
issued 500,000 shares of its convertible Series A Preferred Stock for an
aggregate net purchase price of $4,780,000 to certain off-shore investors. The
Preferred Stock may be converted at any time after November 3, 1996 into common
stock at a conversion rate equal to 71% to 80% of the then current market price
of the Company's Common Stock. The discount increases over a period of nine
months. Holders of preferred stock are entitled to receive cumulative dividends
of $0.15 per share in stock or cash, at the discretion of the Board of
Directors, on each of the 90th, 180th and 270th day after the issuance date.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
This Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements which reflect the
Company's current views with respect to future events and financial performance.
These forward-looking statements are subject to certain risks and uncertainties,
including but not limited to, those discussed below that could cause actual
results to differ materially from historical results or those anticipated. In
this report, the words "anticipates", "believes", expects", "future", "intends",
and similar expressions identify forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof.
Abaxis develops, manufactures and markets portable blood analysis systems for
use in any patient-care setting to provide clinicians with rapid blood
constituent measurements. The Company's products consist of a compact 6.9
kilogram analyzer and a series of single-use plastic disks called reagent discs
that contain all the chemicals required to perform a panel of up to 12 tests.
The system can be operated with minimal training and performs multiple routine
tests on whole blood using either venous or fingerstick samples. The system
provides test results in less than 14 minutes with the precision and accuracy
equivalent to a clinical laboratory. The Company currently markets this system
to veterinarians under the name VetScan(R) and in the human market under the
name Piccolo(TM).
During the quarter ended September 30, 1996, the Company continued to increase
its customer base in the veterinary market in the United States, and its Piccolo
Systems internationally. The Company established an alliance with the Veterinary
Centers of America, the largest animal hospital chain in the country, resulting
in shipment of 43 VetScan Systems during the quarter ended September 30, 1996.
The Company continued to place VetScan systems with veterinarian practices both
in the United States and internationally. Since inception through September 30,
1996, the Company has placed a total of approximately 466 VetScan Systems with
veterinarians in the United States and with another 103 through its
international distributors. With the exception of the veterinary hospitals in
the Veterinary Centers of America, the majority of these VetScan analyzers are
in small veterinary practices that typically consume on average approximately
two to three reagent discs per day. Additionally, since inception through
September 30, 1996, the Company has shipped 103 Piccolo Systems, mostly to its
international distributors.
In August 1996, the Company announced that its Piccolo Systems received
regulatory approval from the Japanese Ministry of Health and Welfare, permitting
sales and distribution to human clinical markets throughout Japan. The Piccolo
Systems are sold under the name "Lunaspin" in Japan. The Company has shipped
approximately 80 Piccolo Systems to its Japanese distributor. In addition, the
Company shipped 40 VetScan Systems to its Japanese distributor to place in the
animal health market in Japan, under the name "ABAXIS-EA". As of September 30,
1996, Japan was the biggest market for the Company's blood analysis products
outside the United States.
In July 1996, the Company formally introduced the Piccolo System at the
International Congress of Clinical Chemistry in London, United Kingdom. The
Company believes the Piccolo System was well received by the meeting attendees
and some attendees expressed interest in distributing the Piccolo Systems or the
VetScan Systems. The Company has conducted detailed interviews and evaluations
of some of these potential distributors. The Company will continue to identify
additional international markets for its blood analysis systems in both human
and animal health markets. As a result of the Company identifying additional
international markets, the Company revised its agreement with its German
distributors to include better defined performance criteria after preparing a
more specifically targeted marketing plan. The Company will continue to evaluate
its existing distributors as well as new distributors. There can be no assurance
that the Company will continue all of its current distribution arrangements, or
be able to sign on any additional distributors, or that if it does sign
additional distributors, that the distributors can successfully place Piccolo or
VetScan Systems into the marketplace.
To produce and commercially ship Piccolo products, the Company must obtain a
license to manufacture medical products in the State of California, where the
Company conducts its principal manufacturing activities, and obtain approval
from the Food and Drug Administration (the "FDA") as a medical device
manufacturer. In September 1996, the Company
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announced that the FDA had granted the Company's manufacturing facility "in
compliance" status, according to the regulations for "Good Manufacturing
Practices" for medical devices. The Company previously announced in May 1996
that it had received its license to manufacture from the State of California.
Receipt of these licenses also allowed the Company to obtain a Certificate for
Products for Export from the FDA. The Company will now be scheduled for
inspection on a routine basis, typically once every 24 months. However, there
can be no assurance that the Company can successfully comply with all current or
future government manufacturing requirements and regulations. Failure of the
Company to successfully comply with government regulations could have a material
adverse effect on the results of operations and financial condition of the
Company.
Market acceptance of the Company's Piccolo products will depend in part on
future regulations affecting the conditions under which a health care
practitioner may conduct medical tests using the Company's products. In
addition, third party payer reimbursement policies may indirectly affect the
pricing or relative attractiveness of the Company's products by regulating the
maximum amount of reimbursement for blood testing services. Finally, the
Company's success will depend on its ability to introduce point-of-care systems
and compete with laboratories removed from the patient-care setting and with
other companies that offer near-patient testing for the alternate-site market.
The imposition of more stringent government regulations or failure to achieve
success in these areas could have a materially adverse effect on the results of
operations and financial condition of the Company.
Sales for any future periods are not predictable with significant degree of
certainty. The Company generally operates with limited order backlog because its
products typically are shipped shortly after orders are received. As a result,
product sales in any quarter are generally dependent on orders booked and
shipped in that quarter. The Company believes that period to period comparisons
of its results of operations are not necessarily meaningful. Until sales volume
of the Company's products, particularly its reagent discs, increase
significantly so as to offset associated fixed costs and to realize certain
manufacturing economies of scale, sales of the Company's products will result in
further losses and adversely affect the Company's results of operations and
financial condition.
The Company's periodic operating results have in the past varied and in the
future may vary significantly depending on, but not limited to a number of
factors, including the level of competition; the size and timing of sales
orders; market acceptance of the current and new products; new product
announcements by the Company or its competitors; changes in pricing by the
Company or its competitors; the ability of the Company to develop, introduce and
market new products on a timely basis; component costs and supply constraints;
manufacturing capacities and ability to scale up production; the mix of product
sales between the analyzers and the reagent discs; mix in sales channels; levels
of expenditure on research and development; changes in Company strategy;
personnel changes; regulatory changes; and general economic trends.
The Company continues to explore the application of its proprietary technology
used to produce the dry reagents used in the reagent discs, called the Orbos
Discrete Lypholization Process, to other companies' products. This process
allows the production of an accurate, precise amount of active chemical
ingredients in the form of a soluble bead. The Company believes that the Orbos
process has broad applications in products where delivery of active ingredients
in a stable, pre-metered format is desired. The Company has a supply agreement
with Becton Dickinson Immunocytometry Systems to provide products for flow and
image cytometry using the Company's Orbos technology. The Company also has a
licensing agreement with Pharmacia Biotech, Inc., granting Pharmacia exclusive
use of the Company's Orbos technology in the manufacture and sale of reagents
for molecular biology research. Revenues from these contracts are primarily
dependent upon sales of products using the Orbos technology by these other
parties, which is completely out of the control of the Company and therefore,
may vary significantly from quarter to quarter. As resources permit, the Company
will continue to pursue other development, licensing or manufacturing agreement
opportunities for its Orbos technology with other companies. There can be no
assurances, however, that other applications will be identified or that
additional agreements with the Company will result.
RESULTS OF OPERATIONS
During the three-month period ended September 30, 1996, the Company reported
total revenues of $1,813,000, ($1,513,000 from product sales, $263,000 from
product sales of Orbos beads and $37,000 from Orbos technology agreements), as
compared to $437,000, ($434,000 from product sales and $3,000 from Orbos
technology agreements) for the same period in
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1995. For the six months ended September 30, 1996, revenues were $3,024,000
($2,617,000 from product sales, $332,000 from product sales of Orbos beads and
$75,000 from Orbos technology agreements), compared to $1,039,000 ($994,000 from
product sales and $45,000 from Orbos technology agreements), for the same
six-month period in 1995. The increase in revenues in the second quarter ended
September 30, 1996, compared to the quarter ended September 30, 1995 was due to
new system sales of VetScan units in the United States, new system sales of both
Piccolo and VetScan units in the international market, increased new and repeat
reagent disc sales in the domestic and international market, and an increase in
revenues from its Orbos contracts.
Cost of product sales includes the cost of all manufacturing activities for the
Company's products as well as the costs associated with the Company's
manufacturing capacity, which is underutilized at its current production volume.
Cost of product sales during the quarter ended September 30, 1996 was
$1,789,000, or 99% of total revenues, as compared to $1,053,000, or 241% of
total revenues for the quarter ended September 30, 1995. For the six-month
period ended September 30, 1996, cost of sales was $3,611,000 as compared to
$2,180,000 for the same period in 1995. The increase in cost of product sales in
the quarter and six month period ended September 30, 1996 as compared to the
same quarter and six month period in 1995, was primarily a function of the
increase in sales volume, partially offset by higher efficiency resulting from
better manufacturing capacity utilization.
Research and development expenses were $318,000 during the second quarter of
fiscal 1997, as compared to $287,000 in the same period in fiscal 1996. For the
first six months of fiscal 1997 research and development expenses were $709,000
as compared to $563,000 in the first six months of fiscal 1996. The increase in
expenses during the quarter and six month period ended September 30, 1996, as
compared to the quarter and six month period ended September 30, 1995, is
primarily due to increased research and development activities, including
clinical trials for both human and veterinary markets, clinical studies for
waived status applications, and feasibility studies of new test methods to be
initiated in development during this fiscal year. The Company expects research
and development costs to increase in fiscal 1997 from fiscal 1996 as the Company
plans to undertake development of new test methods to expand its test menus as
well as other development projects. There can be no assurance, however, that
such research and development projects will be undertaken.
Selling, general and administrative expenses totaled approximately $1,329,000
and $2,590,000 for the three and six month periods ended September 30, 1996,
respectively, compared to $783,000 and $1,558,000 for the same periods in 1995.
The increase in the quarter ending September, 30, 1996 compared to 1995 was
primarily due to costs incurred in building sales and marketing infrastructures
to support increased sales and marketing activities both in the United States
and internationally. Increases in the six month period ending September 30, 1996
compared to the six month period ending September 30, 1995, related primarily to
the preparation of launching the Piccolo products worldwide and increases in
sales and marketing staffing. While some of the costs related to the Piccolo
launch activities are non-recurring, the Company expects marketing and sales
expenditures to increase in absolute dollars in future periods as the Company
expands marketing and distribution activities worldwide for both the VetScan and
Piccolo products.
Net interest income totaled $61,000 for the quarter ended September 30, 1996,
compared to approximately $161,000 in the comparable quarter in 1995. Net
interest income totaled $153,000 for the first six months of fiscal 1997 and
$282,000 for the same period in fiscal 1996. The decrease in interest income was
primarily due to decreased short-term investment levels during fiscal 1997 as
compared to fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
Through September 30, 1996, the Company had raised a total of approximately
$57,263,000 in equity financing ($4,780,000 from a private placement in
September 1996, $6,050,000 from a private placement in July 1995, $9,222,000
from a registered direct placement in October 1994, $25,101,000 from its initial
public offering in January 1992, and $12,110,000 from the sale of stock prior to
its initial public offering), and had generated $4,231,000 in net interest
income. Through September 30, 1996, the Company has recorded $8,179,000 in
revenues, of which $6,410,000 were from product sales, $769,000 were from Orbos
technology contracts and $1,000,000 was received from Teramecs in December 1991
as payment for the marketing and distribution rights for its products in Japan.
The Company has used cash in its operating activities totaling $41,519,000 from
its inception through September 30, 1996. From inception through
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September 30, 1996, the Company has purchased a total of approximately
$7,613,000 in property and equipment to support its activities.
Net cash used in operating activities during the six months ended September 30,
1996 was $3,529,000, compared to $2,639,000 for the same period ended September
30, 1995. The increase in net cash used in operating activities was primarily
due to the increase in net loss for the six months ended September 30, 1996. Net
cash provided by investing activities during the six months ended September 30,
1996 was $2,362,000, compared to $1,403,000 of net cash used in investing
activities during the six months ended September 30, 1995. The change from net
cash used in the six months ended September 30, 1995 to net cash provided in the
six months ended September 30, 1996 was primarily the result of an increase in
maturities and sales of short-term investments, offset by purchases of the
short-term investments. Net cash provided by financing activities for the six
month period ended September 30, 1996 was $4,848,000, compared to $6,183,000 for
the same period in 1995. Net cash provided by financing activities for the six
month period ended 1996 and 1995 was primarily the result of offshore private
placements of Preferred Stock and Common Stock respectively.
As of September 30, 1996, the Company had approximately $5,272,000 in cash and
cash equivalents and $3,946,000 in short-term investments, for total cash and
investment resources of $9,218,000. In September 1996, the Company announced
that it completed a private equity financing, raising a total of $4,780,000 from
off-shore investors. The Company currently has no credit facilities. The Company
expects to incur substantial additional costs to support its future operations,
including commercialization of its Piccolo products; development of a sales and
marketing organization to support sales and marketing activities for the Piccolo
and VetScan products; acquisition of capital equipment for the Company's
manufacturing facilities, which includes the ongoing development and
implementation of a fully automated manufacturing line to provide capacity for
commercial volumes; costs related to continuing development of its current and
future products; additional pre-clinical testing and clinical trials for its
current and future products; and expansion of administrative support activities.
The Company is currently contracting with a vendor to build a fully automated
disc assembly line to provide anticipated capacity for future demand and to
improve production efficiency. The Company currently believes the cost of this
new production line will be approximately $1,500,000 of which approximately
$500,000 was paid through September 30, 1996. Additional manufacturing equipment
will also need to be added to provide sufficient production capabilities.
Additionally, inventories and receivables related to the commercialization of
the VetScan and Piccolo systems could increase significantly in future periods,
which would require significant capital resources.
The Company anticipates that its existing capital resources and anticipated
revenue from the sale of VetScan and Piccolo products will be adequate to
satisfy its financial requirement through at least the remainder of fiscal 1997.
The Company's future capital requirements will largely depend upon the increased
market acceptance of its VetScan and Piccolo products. To the extent that
existing resources and anticipated revenue from the sale of the Piccolo and
VetScan systems are insufficient to fund the Company's activities, additional
funds will be required to be raised from the issuance of public or private
securities. There can be no assurance that any financing will be available, or
if available, be available at terms acceptable to the Company.
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Brown v. Abaxis, Inc., et al.
Santa Clara County Superior Court
Case No. CV 752703
Plaintiff Jack Brown ("Brown") filed his unverified complaint in this matter on
or about September 27, 1995 and the complaint was served in November 1995. The
complaint alleges causes of action against the Company for breach of contract,
fraud, negligent misrepresentation and wrongful termination. The complaint seeks
damages based on Brown's
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salary and punitive damages. The complaint arises out of the termination of
Brown's employment with the Company in October 1994. The Company answered the
complaint on or about December 20, 1995, denying all the material allegations of
the complaint and raising several affirmative defenses. On or about August 8,
1996 the Company filed a motion for summary judgment or, alternatively, summary
adjudication of each cause of action in the complaint. On or about September 24,
1996 the Court denied the Company's motion for summary judgment but granted the
Company's motion with respect to each of the causes of action that alleged
punitive damages or lost wages. The remaining allegations of the complaint seek
recovery of a "severance" payment that was allegedly promised to Brown, which
severance Brown alleges to be no more than one year's salary (approximately
$90,000). There are no allegations of punitive damages remaining in the
complaint and there is no claim for any lost income over one year's salary.
Based on the allegations remaining in the complaint, the matter no longer
constitutes a material loss contingency to the Company and therefore this matter
will not be reported in the future.
Idexx Laboratories v. Abaxis, Inc., et al.
United States District Court (S.D. CA)
Case No. 96-1113 K (CM)
Plaintiff Idexx Laboratories filed a complaint on June 20, 1996 alleging federal
and state unfair competition and trade libel arising from the distribution of a
publication concerning Idexx testing equipment. The complaint seeks injunctive
relief and unspecified compensatory and punitive damages. The parties stipulated
to a preliminary injunction. The Company answered the complaint on or about July
10, 1996, denying the material allegations and raising several affirmative
defenses. Discovery is ongoing and Abaxis is vigorously defending the complaint.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits included herein (numbered in accordance with Item 601 of
Regulation S-K)
<TABLE>
Exhibit Number Description Sequential Page Number
<S> <C> <C>
Exhibit 27 Financial Data Schedule 13
</TABLE>
(b) Reports on Form 8-K
None
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SIGNATURE
Pursuant to the requirements of The Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABAXIS, INC.
November 12, 1996 by: /s/Clinton H. Severson
Date -------------------------------------------
Clinton H. Severson
President and Chief Executive Officer
(Principal Executive Officer)
November 12, 1996 by: /s/ Ting W. Lu
Date --------------------------------------------
Ting W. Lu
Vice President of Finance & Administration
and Chief Financial Officer
(Principal Financial and Accounting Officer)
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EXHIBIT INDEX
Exhibit Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENT OF OPERATIONS AND CONDENSED BALANCE SHEET AND IS QUALIFIED
IN ITS ENTIRETY TO SUCH COMPANY'S QUARTERLY REPORT ON FORM 10Q FOR THE QUARTER
ENDED SEPTEMBER 30, 1996.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 5,272,000
<SECURITIES> 3,946,000
<RECEIVABLES> 1,183,000
<ALLOWANCES> (55,000)
<INVENTORY> 1,533,000
<CURRENT-ASSETS> 12,012,000
<PP&E> 6,177,000
<DEPRECIATION> (3,845,000)
<TOTAL-ASSETS> 14,406,000
<CURRENT-LIABILITIES> 2,395,000
<BONDS> 0
0
4,780,000
<COMMON> 53,624,000
<OTHER-SE> (46,563,000)
<TOTAL-LIABILITY-AND-EQUITY> 14,406,000
<SALES> 1,776,000
<TOTAL-REVENUES> 1,813,000
<CGS> 1,789,000
<TOTAL-COSTS> 1,789,000
<OTHER-EXPENSES> 1,647,000
<LOSS-PROVISION> 14,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,562,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,562,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,562,000)
<EPS-PRIMARY> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
