ABAXIS reports third fiscal quarter financial results.

SUNNYVALE, Calif.--(BUSINESS WIRE)--Jan. 23, 1997--ABAXIS Inc. (Nasdaq NM:ABAX), Thursday reported operating results for its third fiscal quarter and nine-month period ended Dec. 31, 1996.

For the third fiscal quarter, net revenues increased 112 percent to $1,891,000, from net revenues of $892,000 in the same period last year. Net loss for the quarter amounted to $1,260,000, or 12 cents per share (based on 10.4 million weighted average shares outstanding) compared with a net loss of $1,556,000, or 16 cents per share, in the same period last year (based on 9.8 million weighted average shares outstanding).

For the nine-month period ended Dec. 31, 1996, ABAXIS posted net revenues of $4,915,000, representing a 155 percent increase over net revenues of $1,931,000 for the comparable period last year. Net loss for the nine months was $4,994,000, or 50 cents per share (based on 10 million weighted average shares outstanding) compared with $4,536,000, or 49 cents per share, a year ago (based on 9.3 million weighted average shares outstanding).

Through the first three quarters of this fiscal year, the company has registered an average 21 percent improvement quarter over quarter in net losses, due largely to a 56 percent increase in net revenue from the first to the third quarter, as well as improved operating efficiency which resulted in higher gross margins and lower operating expenses.

"I consider these operating results a significant achievement for ABAXIS," said Clint H. Severson, president and chief executive officer. "Our goal is to build a solid business in market segments that allow us the best return on investment. So far this year, we have clearly demonstrated that we are capable of improving our bottom line while sustaining revenue growth."

This quarter's revenue increase reflects higher sales of the company's VetScan blood testing products in the U.S. veterinary market, as well as continued growth overseas for VetScan and Piccolo, ABAXIS' product for the human health care market. Sales in the veterinary market accounted for approximately 78 percent of net revenues for the third quarter.

By product, VetScan and Piccolo analyzers accounted for 67 percent of net revenue, reagent disc sales represented 29 percent of net revenue and Orbos contracts comprised the remaining four percent of net revenues for the quarter. Nearly 64 percent of net revenues were derived from the domestic market.

As expected, operating expenses for the three- and nine-month periods increased over the corresponding prior year periods as the company continued its investment in sales and marketing infrastructure for ongoing product roll-out.

During the quarter, ABAXIS signed a definitive agreement with Freiheit Medizintechnik AG who will be the company's exclusive distributor in Germany. In addition, the company has submitted a solicitation for bid to the U.S. Navy for orders of ABAXIS' Piccolo system.

This press release contains words that identify forward-looking statements which are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

The future events described in such statements involve risks and uncertainties, among them, but not limited to, risks and uncertainties related to the market acceptance of its products and the continuing development of the company's products, including required FDA clearance and other governmental approvals, risks associated with manufacturing and distributing its products on a commercial scale, including complying with federal and state food and drug regulations, general market conditions, competition and other risks detailed from time to time in ABAXIS' periodic reports filed with the United States Securities and Exchange Commission.

Founded in 1989, 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 system consists of a compact, 6.9 kilogram, portable analyzer and a series of 8 cm diameter single-use plastic disks, called reagent discs, that contain all the reagents necessary to perform a fixed menu of tests.

The system can be operated with minimal training and perform multiple routine tests on whole blood using either venous or fingerstick samples. The system provides test results in approximately 14 minutes with the precision and accuracy comparable to a clinical laboratory. -0-

                                ABAXIS, Inc.
                  Summary Condensed Financial Information
                   (in thousands, except per share data)

                              Three Months Ended    Nine Months Ended
                                   Dec. 31,              Dec. 31,
                               1996        1995      1996       1995
                                  (Unaudited)           (Unaudited)

Statements of Operations Data:

Net revenues                     $ 1,891  $    892      $4,915 $   1,931

Costs and operating expenses:
  Cost of product sales            1,860     1,334       5,471     3,514
  Research and development           327       402       1,036       965
  Selling, general and
   administrative                  1,088       859       3,682     2,417
     Total costs and
      operating expenses           3,275     2,595      10,189     6,896

Loss from operations              (1,384)   (1,703)     (5,274)   (4,965)
Other income, net                    124       147         280       429
Net loss                         $(1,260)  $(1,556)    $(4,994)  $(4,536)

Net loss per share               $  (.12)  $  (.16)    $  (.50)  $  (.49)

Shares used in calculating
   net loss per share             10,410     9,803      10,052     9,339


                                     Dec. 31, 1996     March 31, 1996/a
(in thousands)                        (Unaudited)         (Audited)
Balance Sheet Data:

Cash, cash equivalents and
   short-term investments            $   7,277             $ 7,778

Total current assets                    10,826              10,057

Property, plant and equipment, net       2,534               2,427

Other non-current assets                    60                 562

Total assets                            13,420              13,046

Current liabilities                      2,697               2,145

Long term liabilities                      170                 175

Total shareholders' equity              10,553              10,726

Total liabilities and
 shareholders' equity                   13,420              13,046

a/ Derived from the company's audited financial statements.

CONTACT: Pondel Parsons & Wilkinson

Rob Whetstone, 310/207-9300

Internet: [e-mail]

or

ABAXIS Inc.

Ting Lu, 408/745-6851