UNITED STATES SECURITIES AND EXCHANGE ~~COMMISSIONWashington~~COMMISSION Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ~~For the fiscal year ended March 31, 2017~~

For the fiscal year ended March 31, 2018

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-19720

ABAXIS, INC.~~(Exact name of registrant as specified in its charter)~~

California(State or other jurisdiction of incorporation or organization)	77-0213001(I.R.S. Employer Identification No.)
3240 Whipple Road, Union City, California(Address of principal executive offices)	94587 (Zip code)

(Exact name of registrant as specified in its charter)

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

California	77-0213001
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3240 Whipple Road, Union City, California	94587
(Address of principal executive offices)	(Zip code)

~~Title~~Registrant’s oftelephone ~~Class~~number, ~~Name~~including ofarea ~~Each~~code: ~~Exchange~~(510) on675-6500 Securities ~~Which~~registered ~~Registered~~pursuant ~~Common~~to ~~Stock,~~Section no12(b) ~~par~~of ~~value~~the ~~NASDAQ~~Act: ~~Global Select Market~~

Title of Class	Name of Each Exchange on Which Registered
Common Stock, no par value	Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☒ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o	Emerging growth company o
		(Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No ☒

The aggregate market value of the voting stock held by non-affiliates of Abaxis as of September 30, ~~2016~~2017, the last business day of the second fiscal quarter, based upon the closing price of such stock on the NASDAQ Global Select Market on September 30, ~~2016~~2017, was $~~677~~569,~~280~~936,000. For purposes of this disclosure, 9,~~412~~926,000 shares of common stock held by persons who hold more than 10% of the outstanding shares of the registrant’s common stock and shares held by executive officers and directors of the registrant have been excluded because such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily conclusive for any other purpose.

As of May 2625, ~~2017~~2018, there were 22,~~654~~871,000 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

Abaxis, Inc. Annual Report on Form 10-~~KFor~~K For The Fiscal Year Ended March 31, ~~2017~~2018

TABLE OF CONTENTS

		Page		~~Page~~
PART I
Item 1.	Business		1		1
Item 1A.	Risk Factors		15		12
Item 1B.	Unresolved Staff Comments		29		25
Item 2.	Properties		29		26
Item 3.	Legal Proceedings		30		26
Item 4.	Mine Safety Disclosures		30		26
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		31		27
Item 6.	Selected Consolidated Financial Data		33		29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		34		30
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		62		58
Item 8.	Financial Statements and Supplementary Data		65		60
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		105		~~100~~
Item 9A.	Controls and Procedures		105		~~100~~
Item 9B.	Other Information		107		~~102~~
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		107		~~102~~
Item 11.	Executive Compensation		107		~~102~~
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		107		~~102~~
Item 13.	Certain Relationships and Related Transactions, and Director Independence		107		~~102~~
Item 14.	Principal Accounting Fees and Services		107		~~102~~
PART IV
Item 15.	Exhibits and Financial Statement Schedules		108		~~103~~
Item 16.	Form 10-K Summary		109		~~104~~
Signatures					105
Exhibit Index			110
Exhibit Index					106
Signatures			114

TABLE OF CONTENTS

PART I

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Sections 21E of the Securities Exchange Act of 1934, as amended that reflect Abaxis’ current view with respect to future events and financial performance. All statements contained in this report, other than statements of historical fact, including statements regarding our future results of operations and financial condition, our business strategy and plans, and our objectives for our business, are forward-looking statements. The words “will,” “anticipates,” “believes,” “expects,” “intends,” “plans,” “future,” “projects,” “estimates,” “would,” “may,” “could,” “should,” “might,” and similar expressions identify forward-looking statements. 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. Such risks and uncertainties relate to our manufacturing operations, including the vulnerability of our manufacturing operations to potential interruptions and delays and our ability to manufacture products free of defects, fluctuations in our quarterly results of operations and difficulty in predicting future results, our dependence on Abbott Point of Care, Inc., (“Abbott”) for our U.S. medical sales, the performance of our independent distributors and our ability to manage their inventory levels effectively, market acceptance of our existing and future products, our dependence on certain sole or limited source suppliers, expansion of our sales, marketing and distribution efforts, the effect of exchange rate fluctuations on international operations, fluctuations in our effective tax rate, including those resulting from changes in tax laws, dependence on key personnel, the protection of our intellectual property and claims of infringement of intellectual property asserted by third parties, competition, our potential merger with Zoetis Inc. and other risks detailed under “Risk Factors” in this Annual Report on Form 10-K.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Abaxis assumes no obligation to update any forward-looking statements as circumstances change. Readers are advised to read this Annual Report on Form 10-K in its entirety, paying careful attention to the risk factors set forth in this and other reports or documents filed by Abaxis from time to time with the Securities and Exchange Commission (“SEC”), particularly the quarterly reports on Form 10-Q and any current reports on Form 8-K, copies of which may be obtained from Abaxis or from the SEC at its website at www.sec.gov.

When used in this report, the terms “we,” “us,” “our,” “the Company” and “Abaxis” refer to Abaxis, Inc. and our subsidiaries. Our fiscal year ends on March 31, and accordingly, the terms “fiscal ~~2017~~2018,” “fiscal ~~2016~~2017” and “fiscal ~~2015~~2016” in this report refer to the years ended March 31, ~~2017~~2018, ~~2016~~2017 and ~~2015~~2016, respectively.

Item 1.

Business

General

Abaxis, Inc. is a worldwide developer, manufacturer and marketer of portable blood analysis systems that are used in a broad range of medical specialties in human or veterinary patient care to provide clinicians with rapid blood constituent measurements., ~~Our~~and ~~mission~~ is toa ~~improve~~leading ~~the~~global ~~efficiency~~provider of ~~care~~veterinary ~~delivery to and the quality~~ point-of-care ~~life~~diagnostic ~~of patients in the medical and veterinary markets~~products. We provide leading edge technology, tools and services that support best medical practices, enabling physicians and veterinarians to respond to the health needs of their clients at the point of care while operating economical and profitable practices.

Our primary products are as follows:

•

point-of-care diagnostic instruments and consumables used in the medical market; and

•

point-of-care diagnostic instruments and consumables used in the veterinary market.

~~Abaxis~~Our isportable ablood ~~California~~chemistry ~~corporation~~analysis ~~and~~systems ~~was~~are ~~incorporated~~used in ~~1989.~~a ~~Since~~broad ~~our~~range ~~company’s~~of ~~formation,~~medical ~~our~~specialties ~~sales~~in ~~have~~human ~~increased~~or inveterinary ~~part~~patient ~~due~~care to ~~the~~provide ~~increased~~clinicians ~~installed~~with ~~base~~rapid ~~of our~~ blood ~~chemistry~~constituent ~~analyzers~~measurements. ~~and~~We ~~the~~also ~~expansion~~sell point-of-care ~~test~~diagnostic ~~methods that we provide to the medical and veterinary markets. Additionally~~products, ~~over~~including ~~the past several years~~instruments, weconsumables ~~have expanded our diagnostic products~~ and ~~service~~rapid ~~offerings~~tests into ~~the~~help ~~veterinary market. While we offer~~ our ~~direct~~ customers aimprove ~~range~~the ofefficiency ~~diagnostic products~~ and ~~services,~~effectiveness ~~our business and revenue model is focused on recurring revenue. Recurring revenues consist primarily~~ of ~~consumable~~their ~~revenue. We believe that the breadth of our product portfolio enables us to compete in the worldwide~~ healthcare ~~market~~operations.

1Abaxis is a California corporation and was incorporated in 1989. Since our Company’s formation, our sales have increased in part due to the increased installed base of our blood chemistry analyzers and the expansion of test methods that we provide to the medical and veterinary markets. Additionally, over the past several years, we have expanded our diagnostic products and service offerings in the veterinary market. While we offer our direct

~~TABLE OF CONTENTS~~1

~~Discontinued~~TABLE ~~Operations~~OF CONTENTS

~~Until~~customers ~~March~~a ~~2015,~~range weof ~~provided veterinary reference laboratory~~ diagnostic products and ~~consulting~~ services, ~~for~~our ~~veterinarians~~business ~~through~~and ~~our~~revenue ~~Abaxis~~model ~~Veterinary~~is ~~Reference~~focused ~~Laboratories~~on ~~(“AVRL”)~~recurring ~~division~~revenue. OnRecurring ~~March~~revenues ~~31,~~consist ~~2015,~~primarily ~~we sold substantially all~~ of ~~the~~consumable ~~assets of AVRL to Antech Diagnostics, Inc~~revenue., ~~the~~We ~~VCA~~believe ~~laboratory~~that ~~division (“Antech”), for $21.0 million in cash pursuant to an asset purchase agreement as described in more detail in~~ the ~~section~~breadth of ~~this~~our ~~report~~product ~~entitled~~portfolio ~~“Management’s~~enables ~~Discussion~~us ~~and Analysis of Financial Condition and Results of Operations - Discontinued Operations” and Note 3~~ to ~~the~~compete ~~Consolidated Financial Statements~~ in ~~Part~~the ~~II,~~worldwide ~~Item~~healthcare ~~8 of this report~~market.

WeDiscontinued have reclassified the assets and liabilities of AVRL as discontinued operations on our consolidated balance sheets for all periods presented and the results of operations of AVRL as discontinued operations on our consolidated statements of income for all periods presented.Operations

~~Business~~Until ~~Segments~~March 2015, we provided veterinary reference laboratory diagnostic and ~~Products~~consulting services for veterinarians through our Abaxis Veterinary Reference Laboratories (“AVRL”) division. On March 31, 2015, we sold substantially all of the assets of AVRL to Antech Diagnostics, Inc., the VCA laboratory division (“Antech”), for $21.0 million in cash pursuant to an asset purchase agreement as described in more detail in the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Discontinued Operations” and Note 2 to the Consolidated Financial Statements in Part II, Item 8 of this report.

We ~~manage~~have ~~our~~reclassified ~~business in two reportable business segments,~~ the ~~medical~~assets ~~market~~ and ~~the~~liabilities ~~veterinary~~of ~~market,~~AVRL ~~which~~as ~~are~~discontinued ~~based~~operations on ~~the~~our ~~diagnostic~~consolidated ~~products~~balance ~~sold~~sheets ~~and~~for ~~services~~all ~~provided~~periods bypresented ~~market~~ and ~~customer group. For products that we sell that are not specifically identified to any particular business segment, we categorize~~ the ~~revenue~~results asof ~~Other.~~operations ~~A description~~ of ~~our~~AVRL ~~business~~as ~~segments~~discontinued isoperations ~~set~~on ~~forth below. Financial information regarding~~ our ~~reportable~~consolidated ~~business~~statements ~~segments is included under “Results~~ of ~~Operations”~~income infor ~~Item~~all 7periods ~~of this report and Note 20 to the Consolidated Financial Statements in Part II, Item 8 of this report~~presented.

~~Medical~~Merger ~~Market~~with Zoetis

~~Customer~~On ~~Base~~May 15, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Zoetis Inc., a Delaware corporation (“Zoetis”), and Zeus Merger Sub, Inc., a California corporation and an indirect wholly-owned subsidiary of Zoetis (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a wholly-owned subsidiary of Zoetis. As a result of the Merger, each share of common stock, no par value, of the Company (the “Company Common Stock) issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) (other than shares, if any, held by the Company, Zoetis, Merger Sub or any of their subsidiaries and shares with respect to which dissenters rights have been properly demanded in accordance with the Corporations Code of the State of California) will be converted into the right to receive $83.00 in cash, without interest, per share (the “Merger Consideration”).

~~Our~~Subject ~~products~~to ~~sold~~the toterms and conditions of the ~~medical~~Merger ~~market~~Agreement, ~~are~~certain ~~used~~Company bytime- aand ~~diverse~~performance-based ~~range~~restricted stock unit awards will vest automatically upon the occurrence of ~~medical~~the ~~specialties~~Effective ~~requiring~~Time ~~accurate,~~in ~~real~~accordance ~~time~~with ~~results~~their existing terms and will be cancelled and automatically converted into the right to ~~enable~~receive ~~rapid~~the ~~clinical~~Merger ~~decisions~~Consideration in ~~the~~respect ~~area~~of each share of ~~human~~Company ~~diagnostics~~Common Stock underlying such awards. ~~The~~Subject ~~current~~to ~~customer~~the ~~focus~~terms and conditions of ~~our~~the ~~medical~~Merger ~~products~~Agreement, ~~include:~~all ~~physicians’~~other ~~office~~Company ~~practices~~time- ~~across~~and ~~multiple~~performance-based ~~specialties,~~restricted ~~urgent~~stock ~~care,~~unit ~~outpatient~~awards will be cancelled and ~~walk-in~~automatically ~~clinics~~converted ~~(free-standing~~at orthe ~~hospital~~Effective Time into time-~~connected),~~vesting ~~health~~restricted ~~screening~~stock ~~operations~~unit awards with respect to shares of common stock, ~~home~~par ~~care~~value ~~providers~~$0.01 ~~(national~~per share, ~~regional~~of orZoetis ~~local~~(the “Zoetis Common Stock”), ~~nursing~~with ~~homes,~~the ~~ambulance~~number ~~companies,~~of ~~oncology~~underlying ~~treatment~~shares ~~clinics,~~adjusted ~~dialysis~~to ~~centers,~~reflect ~~pharmacies,~~an ~~hospital~~exchange ~~laboratories,~~ratio ~~military~~based ~~installations~~on ~~(ships,~~the ~~field~~closing ~~hospitals~~prices of shares of Company Common Stock and ~~mobile~~Zoetis ~~care~~Common ~~units)~~Stock ~~pharmaceutical~~for ~~clinical~~the ~~trials~~ten ~~and~~full ~~cruise~~trading ~~ship~~days ~~lines.~~before ~~Revenues~~the inclosing of the ~~medical~~Merger, ~~market~~and ~~accounted~~on ~~for~~substantially ~~16%,~~the ~~17%~~same terms and ~~17%~~conditions of(including ~~our~~the ~~total~~time-based ~~revenues~~vesting ~~for~~schedule) ~~fiscal~~as ~~2017,~~were ~~2016~~applicable ~~and~~to ~~2015~~such Company restricted stock unit awards immediately prior to the Effective Time, ~~respectively.~~except that any performance goals underlying such Company performance-based restricted stock unit awards will be deemed satisfied as of the Effective Time.

~~Products~~The Merger Agreement contains representations and warranties customary for transactions of this type. The Company has agreed to various customary covenants and agreements, including, among others, covenants (a) to use commercially reasonable to conduct its operations in the ordinary course of business consistent with past practice during the period between the date of the Merger Agreement and the Effective Time, (b) to use reasonable best efforts to obtain required regulatory approvals, subject to certain exceptions, (c) not to engage in certain specified transactions or activities during such period without Zoetis’s prior consent, (d) not to solicit, or enter into discussions with third parties relating to, alternative business combination transactions during the period between the execution of the Merger Agreement and the Effective Time, subject to certain exceptions, (e) to call and hold a special meeting of the Company’s shareholders to approve the Merger Agreement, the Merger and the principal terms thereof, and (f) subject to certain exceptions, for the Board of Directors of the Company to recommend that the shareholders approve the Merger Agreement, the Merger and the principal terms thereof and not withdraw or modify such recommendation to the Company’s shareholders.

~~Our~~The ~~point-~~completion of~~-care~~ ~~products~~the inMerger is subject to the ~~medical~~satisfaction ~~market~~or ~~consist~~waiver of ~~our~~a ~~Piccolo~~number ~~chemistry~~of ~~analyzers~~closing ~~and~~conditions, ~~consumable~~including, ~~products~~among others, as(i) ~~described~~approval ~~below.~~of the Merger Agreement, the Merger and the principal terms thereof by

Piccolo Chemistry Analyzers. We develop, manufacture and sell the Piccolo Xpress chemistry analyzer for use in human patient care to provide clinicians with rapid blood constituent measurements. The Piccolo Xpress chemistry analyzer provides on the spot routine multi-chemistry and electrolyte results using a small patient sample size in any treatment setting. The Piccolo Xpress chemistry analyzer can be operated with minimal training and performs multiple routine general chemistry tests on whole blood, serum or plasma samples. The system provides test results in approximately 12 minutes with precision and accuracy comparable to a clinical laboratory analyzer. The Piccolo Xpress analyzer has a sophisticated Intelligent Quality Control (iQC) system and proprietary algorithms that assure quality and dependable results. We continue to support and service previous versions of our Piccolo chemistry analyzers.2

2TABLE OF CONTENTS

~~TABLE~~holders OFof ~~CONTENTS~~a majority of the outstanding shares of Company Common Stock, (ii) the absence of any “material adverse effect” with respect to the Company, (iii) the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR”), and the rules and regulations promulgated thereunder, and receipt of applicable competition law approvals in Germany, (iv) the absence of any legal prohibitions or certain governmental proceedings restricting the closing of the Merger and (v) subject to certain materiality qualifications, the continued accuracy of each party’s representations and warranties, and continued compliance by each party with its covenants and obligations, in each case under the Merger Agreement, as of the closing of the Merger.

~~Piccolo~~The ~~Profiles.~~Merger WeAgreement ~~manufacture~~provides ~~the~~that ~~Piccolo~~Zoetis ~~profiles~~and ~~used~~Abaxis ~~with~~will ~~the~~use ~~Piccolo~~reasonable ~~chemistry~~best ~~analyzers.~~efforts ~~The~~to ~~Piccolo~~complete ~~profiles~~the ~~are~~Merger ~~packaged~~as soon as ~~single-use~~reasonably ~~medical~~practicable, ~~reagents~~including using reasonable best efforts to obtain regulatory clearance, ~~configured~~provided, however, that Zoetis and Merger Sub are not obligated to ~~aid~~offer, innegotiate, ~~disease~~commit ~~diagnosis~~to, or ~~monitor~~effect, ~~disease~~and ~~treatment.~~Abaxis Wewill not offer, 16negotiate, ~~multi-test~~commit ~~reagent~~to, ~~disc~~or effect, without Zoetis’s prior written request, (a) the sale, divestiture or other disposition of any assets, rights, products inor businesses of Zoetis, Abaxis or any of their respective subsidiaries; or (b) any other restrictions on the ~~medical~~activities ~~market.~~of ~~The~~Zoetis, ~~reagent~~Abaxis, ~~discs~~or ~~offered~~any ~~with~~of ~~our~~their ~~Piccolo~~respective ~~chemistry~~subsidiaries, ~~analyzers~~except ~~are~~for asthe ~~follows:~~divestiture of limited product lines of Zoetis.

Piccolo Profiles	Description of the Test Panels
AmLyte13	ALB, ALT, AMY, AST, BUN, Ca, CK, CRE, CRP, GLU, K+, Na+, TBIL
Basic Metabolic Panel (CLIA waived)	BUN, CA, CL-, CRE, GLU, K+, NA+, tCO2.
Basic Metabolic Panel Plus	BUN, CA, CL-, CRE, GLU, K+, LD, MG, NA+, tCO2.
BioChemistry Panel Plus(1)	ALB, ALP, ALT, AMY, AST, BUN, CA, CRE, CRP, GGT, GLU, TP, UA.
Comprehensive Metabolic Panel (CLIA waived)	ALB, ALP, ALT, AST, BUN, CA, CL-, CRE, GLU, K+, NA+, TBIL, tCO2, TP.
Electrolyte Panel (CLIA waived)	CL-, K+, NA+, tCO2.
General Chemistry 6 (CLIA waived)	ALT, AST, BUN, CRE, GGT, GLU.
General Chemistry 13 (CLIA waived)	ALB, ALP, ALT, AMY, AST, BUN, CA, CRE, GGT, GLU, TBIL, TP, UA.
Hepatic Function Panel	ALB, ALP, ALT, AST, DBIL, TBIL, TP.
Kidney Check (CLIA waived)(1)	BUN, CRE.
Lipid Panel (CLIA waived)	CHOL, CHOL/HDL RATIO, HDL, LDL, TRIG, VLDL.
Lipid Panel Plus (CLIA waived)	ALT, AST, CHOL, CHOL/HDL RATIO, GLU, HDL, LDL, TRIG, VLDL.
Liver Panel Plus (CLIA waived)	ALB, ALP, ALT, AMY, AST, GGT, TBIL, TP.
MetLac 12 Panel (1)	ALB, BUN, CA, CL-, CRE, GLU, K+, LAC, MG, NA+, PHOS, tCO2.
MetLyte 8 Panel (CLIA waived)	BUN, CK, CL-, CRE, GLU, K+, NA+, tCO2.
MetLyte Plus CRP (1)	BUN, CK, CL-, CRE, CRP, GLU, K+, NA+, tCO2.
Renal Function Panel (CLIA waived)	ALB, BUN, CA, CL-, CRE, GLU, K+, NA+, PHOS, tCO2.

The Merger Agreement contains certain customary termination rights, including, among others, (1) the right of either Zoetis or the Company to terminate the Merger Agreement if the Company’s shareholders fail to adopt and approve the Merger Agreement, (2) the right of Zoetis to terminate the Merger Agreement if the Board of Directors of the Company changes or withdraws its recommendation in favor of the Merger Agreement and the transactions contemplated thereby, including the Merger, (3) the right of either Zoetis or the Company to terminate the Merger Agreement if the Merger has not occurred by November 15, 2018, subject to certain conditions, provided that such date may be extended, in certain circumstances, by Zoetis to May 15, 2019 (such date, as may be extended, the “Outside Date”), (4) the right of either Zoetis or the Company to terminate the Merger Agreement due to a material breach by the other party of any of its representations, warranties or covenants which would result in the closing conditions not being satisfied, subject to certain conditions, and (5) the right of either Zoetis or the Company to terminate the Merger Agreement if a final and non-appealable order, injunction, decree or ruling has been issued by a court or other governmental entity which prohibits the Merger. Upon termination of the Merger Agreement by the Company or Zoetis upon specified conditions, a termination fee of $70 million may be payable by the Company to Zoetis.

Additionally, the Merger Agreement provides that (1A) ~~The~~a ~~panel~~termination isfee ~~offered~~of ~~only~~$60 onmillion ~~our~~may ~~Piccolo~~be ~~Xpress~~payable by Zoetis to the Company upon certain terminations of the Merger Agreement if the parties fail to obtain the required regulatory approvals and Zoetis does not exercise its right to extend the Outside Date by six months, and (B) a termination fee of $120 million may be payable by Zoetis to the Company upon certain terminations of the Merger Agreement if Zoetis exercised its right to extend the Outside Date by six months and the parties fail to obtain the required regulatory approvals.

~~“CLIA~~The ~~waived”~~foregoing ~~means~~description of the ~~U.S.~~Merger ~~Food~~Agreement ~~and~~does ~~Drug~~not ~~Administration~~purport ~~(“FDA”)~~to ~~has~~be ~~categorized~~complete ~~the~~and ~~test~~is asqualified ~~having~~in ~~waived~~its ~~status~~entirety ~~with~~by ~~respect~~reference to the ~~Clinical~~Merger ~~Laboratory~~Agreement, ~~Improvement~~a ~~Amendments~~copy of ~~1988~~which ~~(“CLIA”)~~was filed as Exhibit 2.1 ~~See~~to ~~“Government~~our ~~Regulation”~~Current inReport ~~this~~on ~~section~~Form ~~for~~8-K ~~additional~~filed ~~information~~with the SEC on ~~CLIA~~May 16, 2018.

~~Veterinary~~Business ~~Market~~Segments and Products

~~Customer~~We ~~Base~~manage our business in two reportable business segments, the medical market and the veterinary market, which are based on the diagnostic products sold and services provided by market and customer group. For products that we sell that are not specifically identified to any particular business segment, we categorize the revenue as Other. A description of our business segments is set forth below. Financial information regarding our reportable business segments is included under “Results of Operations” in Item 7 of this report and Note 19 to the Consolidated Financial Statements in Part II, Item 8 of this report.

InMedical the veterinary market, our VetScan products serve a worldwide customer group consisting of companion animal hospitals, animal clinics with mixed practices of small animals, birds and reptiles, equine and bovine practitioners, veterinary emergency clinics, veterinary referral hospitals, universities, government, pharmaceutical companies, biotechnology companies and private research laboratories. Revenues in the veterinary market accounted for 82%, 81% and 81% of our total revenues for fiscal 2017, 2016 and 2015, respectively. Market

~~Products~~Customer Base

Our ~~product~~products ~~and~~sold ~~service~~to ~~offerings in~~ the ~~veterinary~~medical market are ~~described~~used ~~below~~by a diverse range of medical specialties requiring accurate, real time results to enable rapid clinical decisions in the area of human diagnostics. The current customer focus of our medical products include: physicians’ office practices across multiple specialties, urgent care, outpatient

VetScan Point-of-Care Blood Chemistry Instruments. We develop, manufacture and sell the VetScan VS2 chemistry analyzers in the veterinary market segment. The VetScan VS2 is a chemistry, electrolyte, immunoassay and blood gas analyzer that delivers results from a sample of whole blood, serum or plasma. The VetScan VS2 chemistry analyzer utilizes Intelligent Quality Control (iQC), consisting of a series of automatic checks that verify the chemistry, optics and electronic functions of the analyzer during each run and ensures that operators in a wide range of environments report only accurate and reliable results. The system can be operated with minimal training and performs multiple routine general chemistry tests on whole blood, serum or plasma samples. We continue to support and service previous versions of our VetScan chemistry analyzers.3

3TABLE OF CONTENTS

~~TABLE~~and OFwalk-in ~~CONTENTS~~clinics (free-standing or hospital-connected), health screening operations, home care providers (national, regional or local), nursing homes, ambulance companies, oncology treatment clinics, dialysis centers, pharmacies, hospital laboratories, military installations (ships, field hospitals and mobile care units), pharmaceutical clinical trials and cruise ship lines. Revenues in the medical market accounted for 16%, 16% and 17% of our total revenues for fiscal 2018, 2017 and 2016, respectively.

VetScan Profiles. The VetScan chemistry analyzers use consumables that we manufacture. The VetScan profiles are packaged as single-use plastic veterinary reagent discs. Each reagent disc contains a diluent and all the profiles necessary to perform a complete multi-chemistry blood analysis. We offer 13 multi-test reagent disc products used in our VetScan chemistry analyzers in the veterinary market as described below.Products

•Our ~~Avian/Reptilian~~point-of-care ~~Profile~~products ~~Plus~~in isthe ~~ideal~~medical ~~for~~market ~~measuring~~consist ~~analytes~~of ~~that~~our ~~represent~~Piccolo ~~the~~chemistry ~~most~~analyzers ~~important~~and ~~areas~~consumable ofproducts, ~~concern~~as indescribed ~~avian and reptilian patients~~below.

•Piccolo ~~Canine~~Chemistry ~~Wellness~~Analyzers. ~~Profile~~We ~~including~~develop, ~~Heartworm~~manufacture isand ~~ideal~~sell the Piccolo Xpress chemistry analyzer for ~~performing~~use in human patient care to provide clinicians with rapid blood constituent measurements. The Piccolo Xpress chemistry analyzer provides on the spot routine multi-chemistry and electrolyte results using a ~~comprehensive~~small ~~wellness~~patient sample size in any treatment setting. The Piccolo Xpress chemistry ~~panel~~analyzer can be operated with minimal training and ~~testing~~performs ~~for~~multiple ~~heartworm~~routine ~~antigen~~general ~~simultaneously~~chemistry tests on whole blood, ~~running~~serum ~~wellness~~or ~~exams~~plasma onsamples. ~~canines~~The ~~greater~~system ~~than~~provides 6test ~~months~~results ofin ~~age,~~approximately ~~implementing~~12 minutes with precision and accuracy comparable to a ~~comprehensive~~clinical ~~wellness~~laboratory ~~program~~analyzer. orThe ~~streamlining~~Piccolo ~~existing~~Xpress ~~wellness~~analyzer ~~programs~~has ~~while~~a ~~increasing~~sophisticated ~~profit~~Intelligent ~~and~~Quality ~~cost~~Control ~~savings~~(“iQC”) system and ~~reducing~~proprietary ~~technician~~algorithms ~~time~~that assure quality and dependable results. ~~The~~We ~~panel~~continue isto ~~offered~~support ~~only~~and onservice previous versions of our ~~VetScan~~Piccolo ~~VS2~~chemistry analyzers.

•Piccolo ~~Comprehensive~~Profiles. ~~Diagnostic~~We ~~Profile~~manufacture isthe ~~ideal~~Piccolo ~~for~~profiles ~~providing~~used ~~complete~~with the Piccolo chemistry ~~and~~analyzers. ~~electrolyte~~The ~~analysis~~Piccolo ~~for~~profiles ~~pre~~are packaged as single-~~anesthetic,~~use ~~general~~medical ~~health~~reagents, ~~ill~~configured ~~patient,~~to ~~geriatric~~aid ~~and~~in ~~wellness~~disease ~~testing~~diagnosis or monitor disease treatment. We offer 16 multi-test reagent disc products in the medical market. The reagent discs offered with our Piccolo chemistry analyzers are as follows:

• Critical Care Profile Plus is ideal for serial testing, rechecks, fluid therapy and monitoring hospitalized patients.

Piccolo Profiles	Description of the Test Panels
AmLyte13	ALB, ALT, AMY, AST, BUN, Ca, CK, CRE, CRP, GLU, K+, Na+, TBIL
Basic Metabolic Panel (CLIA waived)	BUN, CA, CL-, CRE, GLU, K+, NA+, tCO₂.
Basic Metabolic Panel Plus	BUN, CA, CL-, CRE, GLU, K+, LD, MG, NA+, tCO₂.
BioChemistry Panel Plus⁽¹⁾	ALB, ALP, ALT, AMY, AST, BUN, CA, CRE, CRP, GGT, GLU, TP, UA.
Comprehensive Metabolic Panel (CLIA waived)	ALB, ALP, ALT, AST, BUN, CA, CL-, CRE, GLU, K+, NA+, TBIL, tCO₂, TP.
Electrolyte Panel (CLIA waived)	CL-, K+, NA+, tCO₂.
General Chemistry 6 (CLIA waived)	ALT, AST, BUN, CRE, GGT, GLU.
General Chemistry 13 (CLIA waived)	ALB, ALP, ALT, AMY, AST, BUN, CA, CRE, GGT, GLU, TBIL, TP, UA.
Hepatic Function Panel	ALB, ALP, ALT, AST, DBIL, TBIL, TP.
Kidney Check (CLIA waived)⁽¹⁾	BUN, CRE.
Lipid Panel (CLIA waived)	CHOL, CHOL/HDL RATIO, HDL, LDL, TRIG, VLDL.
Lipid Panel Plus (CLIA waived)	ALT, AST, CHOL, CHOL/HDL RATIO, GLU, HDL, LDL, TRIG, VLDL.
Liver Panel Plus (CLIA waived)	ALB, ALP, ALT, AMY, AST, GGT, TBIL, TP.
MetLac 12 Panel⁽¹⁾	ALB, BUN, CA, CL-, CRE, GLU, K+, LAC, MG, NA+, PHOS, tCO₂.
MetLyte 8 Panel (CLIA waived)	BUN, CK, CL-, CRE, GLU, K+, NA+,tCO₂.
MetLyte Plus CRP⁽¹⁾	BUN, CK, CL-, CRE, CRP, GLU, K+, NA+, tCO₂.
Renal Function Panel (CLIA waived)	ALB, BUN, CA, CL-, CRE, GLU, K+, NA+, PHOS, tCO₂.

•(1) ~~Electrolyte~~The ~~Profile~~panel ~~Plus~~ is ~~ideal~~offered ~~for~~only ~~regulation of acid/base and osmotic balance for baseline~~ on ~~hospitalized~~our ~~patients.~~Piccolo ~~The Electrolyte Plus provides important information for monitoring fluid therapy and acid-base values~~Xpress.

•“CLIA ~~Equine~~waived” ~~Profile~~means ~~Plus~~the isU.S. ~~ideal~~Food ~~for~~and ~~routine~~Drug ~~equine~~Administration ~~checkups,~~(“FDA”) ~~wellness~~has ~~testing,~~categorized ~~ill~~the ~~patient~~test ~~diagnostics~~as ~~and~~having ~~pre-purchase~~waived ~~examinations~~status ~~for~~with ~~equine~~respect ~~hospitals,~~to ~~ambulatory~~the ~~practitioners,~~Clinical ~~critical~~Laboratory ~~care~~Improvement ~~units~~Amendments ~~and~~of ~~mixed~~1988 ~~animal~~(“CLIA”). ~~hospitals~~See “Government Regulation” in this section for additional information on CLIA.

•Veterinary Kidney Profile Plus is ideal for kidney evaluation and monitoring in cats and dogs of all ages, implementing and streamlining renal function monitoring protocol. The panel is offered only on our VetScan VS2.Market

•Customer ~~Large Animal Profile is ideal for herd health assessment and monitoring, prognostic indicator and diagnostic tool for beef and dairy cattle.~~Base

•In ~~Mammalian~~the ~~Liver~~veterinary ~~Profile~~market, isour ~~ideal~~VetScan ~~for~~products ~~obtaining~~serve ~~baseline~~a ~~liver~~worldwide ~~values~~customer group consisting of companion animal hospitals, ~~diagnosis~~animal ~~and~~clinics ~~monitoring~~with mixed practices of ~~hepatic~~small ~~disease~~animals, birds and ~~monitoring~~reptiles, ~~hepatic~~equine ~~function~~and ~~while~~bovine ~~administering~~practitioners, ~~nonsteroidal~~veterinary ~~anti-inflammatory~~emergency ~~drugs~~clinics, ~~(NSAIDs)~~veterinary orreferral ~~other~~hospitals, ~~potentially~~universities, ~~hepatotoxic~~governments, ~~medications~~pharmaceutical companies, biotechnology companies and private research laboratories. Revenues in the veterinary market accounted for 82%, 82% and 81% of our total revenues for fiscal 2018, 2017 and 2016, respectively.

• Phenobarbital Profile is ideal for monitoring the level of phenobarbital treatment to achieve maximal seizure control while avoiding harmful side effects. The Phenobarbital Profile evaluates the level of phenobarbital, and provides additional liver values all in one panel.4

•TABLE ~~Prep~~OF Profile II is a basic health screen for pre-anesthetic evaluation and testing minimal values for baselines of young, healthy patients or recheck profile for some disease states. The Prep Profile II provides important information for renal, hepatic, and diabetic patients being hospitalized, monitored, or undergoing long-term treatment.CONTENTS

~~• Preventive Care Profile Plus is ideal for providing thorough chemistry and a complete electrolyte analysis for pre-anesthetic, general health, ill patient, geriatric and wellness testing.~~Products

•Our ~~Thyroxine~~product ~~(T4) / Cholesterol Profile is ideal for routine screening of hypothyroidism in dogs~~ and ~~diagnostic~~service ~~for~~offerings ~~hyperthyroidism~~ in ~~cats,~~the ~~titrating~~veterinary ~~and~~market ~~monitoring~~are ~~patients~~described ~~on thyroid hormone replacement therapy or patients being treated for hyperthyroid disease~~below.

~~Hematology~~VetScan ~~Instruments~~Point-of-Care ~~and~~Blood ~~Consumables~~Chemistry Instruments. We ~~market~~develop, manufacture and ~~distribute~~sell the VetScan ~~hematology~~VS2 ~~instruments~~chemistry ~~and~~analyzers ~~related~~in ~~consumables~~the veterinary market segment. ~~Our~~The VetScan ~~HM5~~VS2 is a ~~fully~~chemistry, ~~automated~~electrolyte, ~~five-part~~immunoassay ~~cell~~and ~~counter~~blood ~~offering~~gas analyzer that delivers results from a ~~comprehensive~~sample ~~22-parameter~~of ~~complete~~whole blood, ~~count~~serum ~~analysis~~or plasma. The VetScan VS2 chemistry analyzer utilizes iQC, ~~including~~consisting ~~direct~~of ~~eosinophil~~a ~~counts~~series ~~and~~of ~~eosinophil~~automatic ~~percentage~~checks that verify the chemistry, ~~specifically~~optics ~~designed~~and ~~for~~electronic ~~veterinary~~functions ~~applications~~of the analyzer during each run and ensures that operators in ~~veterinary~~a ~~clinics,~~wide ~~research~~range ~~laboratories,~~of ~~pharmaceutical~~environments report only accurate and ~~biotech~~reliable ~~companies~~results. The system can be operated with minimal training and performs multiple routine general chemistry tests on whole blood, serum or plasma samples. We continue to support and service previous versions of our VetScan chemistry analyzers.

4VetScan Profiles. The VetScan chemistry analyzers use consumables that we manufacture. The VetScan profiles are packaged as single-use plastic veterinary reagent discs. Each reagent disc contains a diluent and all the profiles necessary to perform a complete multi-chemistry blood analysis. We offer 13 multi-test reagent disc products used in our VetScan chemistry analyzers in the veterinary market as described below.

~~TABLE~~• OFAvian/Reptilian ~~CONTENTS~~Profile Plus is ideal for measuring analytes that represent the most important areas of concern in avian and reptilian patients.

We• ~~currently~~Canine ~~purchase~~Wellness ~~the~~Profile ~~VetScan~~including ~~HM5~~Heartworm ~~hematology~~is ~~instruments~~ideal ~~from~~for ~~Diatron~~performing MIa ~~PLC~~comprehensive ~~(“Diatron”)~~wellness ofchemistry ~~Budapest,~~panel ~~Hungary.~~and Wetesting ~~also~~for ~~continue~~heartworm toantigen ~~support~~simultaneously, ~~and~~running ~~service~~wellness ~~our~~exams ~~previous~~on ~~versions~~canines ~~and~~greater ~~current~~than ~~population~~6 months of ~~hematology~~age, ~~instruments~~implementing ~~comprised~~a ofcomprehensive ~~VetScan~~wellness ~~HM2,~~program ~~VetScan~~or ~~HMII~~streamlining ~~and~~existing ~~VetScan~~wellness ~~HMT.~~programs ~~Our~~while ~~VetScan~~increasing ~~hematology~~profit ~~instruments~~and ~~use~~cost ~~consumables~~savings ~~consisting~~and ofreducing ~~hematology~~technician ~~reagent~~time. ~~kits~~The ~~that~~panel weis ~~currently~~offered ~~purchase~~only ~~from~~on ~~Clinical~~our ~~Diagnostic~~VetScan ~~Solutions, Inc~~VS2. ~~and Diatron.~~

~~VSpro~~• ~~Specialty~~Comprehensive ~~Analyzers~~Diagnostic ~~and~~Profile ~~Consumables.~~is Weideal ~~market~~for ~~and~~providing ~~distribute~~complete ~~VetScan~~chemistry ~~VSpro, an on-site specialty analyzer,~~ and ~~related~~electrolyte ~~consumables.~~analysis ~~The~~for ~~VSpro specialty analyzer assists in the diagnosis and evaluation of suspected bleeding disorders~~pre-anesthetic, ~~toxicity/poisoning,~~general ~~evaluation of disseminated intravascular coagulation~~health, ~~hepatic~~ill ~~disease and in monitoring therapy and the progression of disease states. We offer two tests~~patient, ageriatric ~~PT/aPTT combination test~~ and awellness ~~fibrinogen test, which are used with the VetScan VSpro specialty analyzer, as described below~~testing.

• ~~The~~Critical ~~VetScan~~Care ~~VSpro~~Profile ~~Coagulation~~Plus ~~Test~~is ~~includes~~ideal ~~the evaluation of both the prothrombin time (PT) and the Activated Partial Thromboplastin Time (aPTT). A combination assay (PT and aPTT)~~ for ~~canine~~serial ~~and feline coagulation~~ testing, isrechecks, ~~used~~fluid ~~with~~therapy ~~the~~and ~~VSpro~~monitoring ~~specialty~~hospitalized ~~analyzer to provide results from a single drop of citrated whole blood in minutes prior to surgery~~patients.

• ~~The~~Electrolyte ~~VetScan~~Profile ~~VSpro~~Plus ~~Fibrinogen~~is ~~Test~~ideal ~~provides~~for ~~quantitative~~regulation ~~in-vitro determination~~ of ~~fibrinogen~~acid/base ~~levels~~and inosmotic ~~equine~~balance ~~platelet~~for ~~poor~~baseline ~~plasma~~on ~~from~~hospitalized ~~a citrated stabilized whole blood sample~~patients. ~~Fibrinogen~~The isElectrolyte anPlus provides important ~~parameter~~information ~~that~~for ismonitoring ~~commonly~~fluid ~~tested~~therapy and ~~evaluated~~acid-base ~~as a marker of inflammation in many species, primarily equine and large animals~~values.

We• ~~currently~~Equine ~~purchase~~Profile ~~the~~Plus ~~specialty~~is ~~analyzers~~ideal ~~and~~for ~~related~~routine ~~consumables~~equine ~~from~~checkups, ~~Scandinavian~~wellness ~~Micro~~testing, ~~Biodevices~~ill ~~APS~~patient ~~(“SMB”)~~diagnostics ofand ~~Farum~~pre-purchase examinations for equine hospitals, ~~Denmark.~~ambulatory ~~SMB~~practitioners, ~~was~~critical ~~recently~~care ~~acquired~~units byand ~~Zoetis~~mixed ~~Inc.~~animal hospitals.

~~i-STAT~~• ~~Instruments~~Kidney ~~and~~Profile ~~Consumables.~~Plus ~~We market and distribute VetScan i-STAT analyzers and related consumables. Our VetScan i-STAT~~ is aideal ~~handheld~~for ~~analyzer~~kidney ~~used~~evaluation ~~to deliver accurate blood gas, electrolyte, chemistry~~ and ~~hematology~~monitoring ~~results~~ in ~~minutes~~cats ~~from~~and ~~2-3~~dogs ~~drops~~ of ~~whole~~all ~~blood. The VetScan i-STAT offers a variety of disposable~~ages, ~~single-use~~implementing ~~cartridges (10) including tests for acid/base analysis, blood gases, chemistry, hematology, electrolytes,~~ and ~~some~~streamlining ~~specialty~~renal ~~tests~~function ~~including~~monitoring ~~Lactate, ACT and Cardiac Troponin I~~protocol. ~~These~~The ~~cartridges~~panel ~~are~~is ~~configured~~offered ~~with~~only ~~parameters that can give a clear patient’s condition depending~~ on ~~the~~our ~~clinical situation. The~~ VetScan ~~i-STAT has reference ranges for cats, dogs and horses~~VS2. ~~We currently purchase the VetScan i-STAT analyzers and related consumables from Abbott.~~

~~Rapid~~• ~~Tests.~~Large InAnimal ~~the~~Profile ~~veterinary~~is ~~market,~~ideal ~~our~~for ~~VetScan~~herd ~~Rapid~~health ~~Test~~assessment ~~product~~and ~~line~~monitoring, ~~consists~~prognostic ofindicator ~~individual~~and ~~rapid~~diagnostic ~~tests~~tool ~~that~~for ~~aid~~beef inand ~~the~~dairy ~~detection of various specific diseases~~cattle. ~~The lateral flow immunoassay technology in the rapid tests provides immediate results. We offer the following VetScan Rapid Tests in the veterinary market, as described below.~~

• ~~The~~Mammalian ~~VetScan~~Liver ~~Canine~~Profile ~~Anaplasma Rapid Test~~ is aideal ~~highly~~for ~~sensitive~~obtaining ~~and~~baseline ~~specific~~liver ~~test~~values, ~~for~~diagnosis ~~the~~and ~~detection~~monitoring of ~~antibodies~~hepatic todisease A.and ~~phagocytophilum~~monitoring ~~and/or~~hepatic A.function ~~platys~~while inadministering ~~canine~~nonsteroidal ~~whole~~anti-inflammatory ~~blood,~~drugs ~~serum~~(“NSAIDs”) or ~~plasma~~other potentially hepatotoxic medications.

• ~~The~~Phenobarbital ~~VetScan~~Profile ~~Canine~~is ~~Ehrlichia~~ideal ~~Rapid~~for ~~Test~~monitoring isthe alevel ~~rapid~~of ~~test~~phenobarbital ~~for~~treatment ~~the~~to ~~qualitative~~achieve ~~detection~~maximal ofseizure ~~antibodies~~control towhile E.avoiding ~~canis,~~harmful Eside effects. ~~chaffeensis,~~The ~~and/or~~Phenobarbital E.Profile ~~ewingii~~evaluates inthe ~~canine~~level ~~whole~~of ~~blood~~phenobarbital, ~~serum~~and orprovides ~~plasma~~additional liver values all in one panel.

• ~~The~~Prep ~~VetScan~~Profile ~~Feline~~II ~~FeLV/FIV Rapid Test~~ is a ~~rapid~~basic ~~test~~health screen for ~~the~~pre-anesthetic ~~detection~~evaluation and testing minimal values for baselines of ~~antibodies~~young, tohealthy ~~Feline~~patients ~~Immunodeficiency~~or ~~Virus~~recheck ~~and~~profile ~~Antigen~~for tosome ~~Feline~~disease ~~Leukemia~~states. ~~Virus~~The inPrep ~~feline~~Profile ~~whole~~II ~~blood~~provides important information for renal, ~~serum~~hepatic, and diabetic patients being hospitalized, monitored, or ~~plasma~~undergoing long-term treatment.

• ~~The~~Preventive ~~VetScan~~Care ~~Canine~~Profile ~~Heartworm~~Plus ~~Rapid Test~~ is aideal ~~rapid~~for ~~test~~providing ~~for~~thorough ~~the~~chemistry ~~qualitative~~and ~~detection~~a ofcomplete ~~Dirofilaria~~electrolyte ~~immitis~~analysis infor ~~canine~~pre-anesthetic, orgeneral ~~feline~~health, ~~whole~~ill ~~blood~~patient, ~~serum~~geriatric orand ~~plasma~~wellness testing.

~~• The VetScan Canine Lyme Rapid Test is a rapid test for the qualitative detection of antibodies to Borrelia burgdorferi in canine whole blood, serum or plasma.~~5

•TABLE ~~The~~OF VetScan Canine Parvovirus Rapid Test is a rapid test for the qualitative detection of canine parvovirus antigen in feces. It uses a unique combination of monoclonal antibodies that detects parvovirus antigens in feces, allowing the veterinarian to screen for and diagnose the infection.CONTENTS

• ~~The~~Thyroxine ~~VetScan~~(T4) ~~Giardia~~/ ~~Rapid~~Cholesterol ~~Test~~Profile is aideal ~~rapid~~for ~~test~~routine ~~for~~screening ~~the~~of ~~qualitative~~hypothyroidism ~~detection~~in ofdogs ~~Giardia~~and ~~cyst~~diagnostic ~~antigens~~for hyperthyroidism in ~~canine~~cats, ~~feces~~titrating and monitoring patients on thyroid hormone replacement therapy or patients being treated for hyperthyroid disease.

Hematology Instruments and Consumables. We ~~currently~~market ~~purchase~~and ~~substantially~~distribute ~~all~~VetScan ofhematology ~~the~~instruments and related consumables. Our VetScan ~~Rapid~~HM5 ~~Tests~~is ~~from~~a SAfully ~~Scientific~~automated ~~Co.~~five-part cell counter offering a comprehensive 22-parameter complete blood count analysis, including direct eosinophil counts and eosinophil percentage, specifically designed for veterinary applications in ~~the~~veterinary ~~United~~clinics, ~~States~~research laboratories, pharmaceutical and biotech companies.

5We currently purchase the VetScan HM5 hematology instruments from Diatron MI PLC (“Diatron”) of Budapest, Hungary. We also continue to support and service our previous versions and current population of hematology instruments comprised of VetScan HM2, VetScan HMII and VetScan HMT. Our VetScan hematology instruments use consumables consisting of hematology reagent kits that we currently purchase from Clinical Diagnostic Solutions, Inc. and Diatron.

~~TABLE~~VSpro OFSpecialty ~~CONTENTS~~Analyzers and Consumables. We market and distribute VetScan VSpro, an on-site specialty analyzer, and related consumables. The VSpro specialty analyzer assists in the diagnosis and evaluation of suspected bleeding disorders, toxicity/poisoning, evaluation of disseminated intravascular coagulation, hepatic disease and in monitoring therapy and the progression of disease states. We offer two tests, a PT/aPTT combination test and a fibrinogen test, which are used with the VetScan VSpro specialty analyzer, as described below.

~~Services~~• The VetScan VSpro Coagulation Test includes the evaluation of both the prothrombin time (“PT”) and the Activated Partial Thromboplastin Time (“aPTT”). A combination assay (PT and aPTT) for canine and feline coagulation testing is used with the VSpro specialty analyzer to provide results from a single drop of citrated whole blood in minutes prior to surgery.

~~AVRL.~~• WeThe ~~sold~~VetScan ~~our~~VSpro ~~entire~~Fibrinogen ~~AVRL~~Test ~~business,~~provides ~~which~~quantitative ~~provided~~in-vitro ~~veterinary~~determination ~~reference~~of ~~laboratory~~fibrinogen ~~diagnostic~~levels ~~and consulting services for veterinarians~~ in ~~the~~equine ~~United~~platelet ~~States~~poor toplasma ~~Antech,~~from ~~which~~a ~~transaction~~citrated ~~closed~~stabilized onwhole ~~March~~blood ~~31, 2015~~sample. InFibrinogen ~~connection~~is ~~with~~an ~~this~~important ~~sale~~parameter ofthat ~~assets,~~is wecommonly ~~terminated~~tested ~~our strategic alliance with Kansas State University, K-State Veterinary Diagnostic Lab~~ and ~~Kansas~~evaluated ~~State University Institute for Commercialization (formerly known~~ as ~~National~~a ~~Institute~~marker ~~for~~of ~~Strategic~~inflammation ~~Technology~~in ~~Acquisition~~many ~~and Commercialization)~~species, toprimarily ~~provide~~equine ~~veterinary diagnostic~~ and ~~laboratory~~large ~~testing and related services~~animals.

~~Other~~The specialty analyzers and related consumables that we currently sell are purchased from Scandinavian Micro Biodevices APS (“SMB”) of Farum, Denmark. SMB was acquired by Zoetis in August 2016.

Wei-STAT ~~also~~Instruments ~~generate~~and ~~revenues~~Consumables. ~~from~~We ~~the~~market ~~sale~~and ofdistribute ~~products~~VetScan ~~using~~i-STAT ~~our~~and ~~patented~~VetScan ~~Orbos~~i-STAT ~~Discrete~~Alinity ~~Lyophilization~~v ~~Process~~analyzers ~~(the~~and ~~“Orbos~~related ~~process”)~~consumables. toOur ~~companies~~VetScan ~~for~~i-STAT ~~other~~instrument ~~applications.~~is ~~The~~a ~~Orbos~~handheld ~~process~~analyzer ~~involves~~used ~~flash-freezing~~to adeliver ~~drop~~accurate ofblood ~~liquid~~gas, ~~reagent~~electrolyte, tochemistry ~~form~~and ahematology ~~solid~~results ~~bead~~in ~~and~~minutes ~~then~~from ~~freeze~~2-~~drying~~3 ~~the~~drops ~~bead~~of towhole ~~remove water~~blood. The ~~Orbos~~VetScan ~~beads~~i-STAT ~~are~~offers ~~stable~~a invariety ~~dry~~of ~~form~~disposable, ~~and~~single-use ~~dissolve~~cartridges ~~rapidly~~(10) inincluding ~~aqueous~~tests ~~solutions.~~for ~~The~~acid/base ~~dry~~analysis, ~~reagents~~blood ~~used~~gases, inchemistry, ~~our~~hematology, ~~reagent~~electrolytes, ~~discs~~and ~~are~~some ~~produced~~specialty ~~using~~tests ~~the~~including ~~Orbos~~Lactate, ~~process.~~ACT ~~This~~and ~~process~~Cardiac ~~allows~~Troponin ~~the~~I. ~~production~~These ofcartridges aare ~~precise~~configured ~~amount~~with ofparameters ~~active~~that ~~chemical~~can ~~ingredient~~give ina ~~the~~clear ~~form~~patient’s ofcondition adepending ~~soluble~~on ~~bead.~~the Weclinical ~~believe~~situation. ~~that~~The ~~the~~VetScan ~~Orbos~~i-STAT ~~process~~ has ~~broad~~reference ~~applications~~ranges infor ~~products~~cats, ~~where~~dogs ~~delivery~~and ofhorses. ~~active~~We ~~ingredients~~currently inpurchase athe ~~stable,~~VetScan ~~pre~~i-~~metered~~STAT ~~format~~analyzers isand ~~desired~~related consumables from Abbott.

WeVetScan ~~have~~UA aInstruments ~~supply~~and ~~contract~~Consumables. ~~with~~We ~~Becton,~~market ~~Dickinson~~ and ~~Company~~distribute ~~(“BD”) for products using~~ the ~~Orbos~~VetScan ~~process. In January 2011~~UA, ~~we entered into~~ a ~~ten~~two-part ~~year~~urinalysis ~~supplier~~solution ~~agreement~~consisting ~~with~~of ~~Becton,~~the ~~Dickinson and Company to supply products using~~ Abaxis’ ~~patented~~Urine ~~Orbos~~Chemistry process. In our agreement, BD will be subject to purchase minimum quantities on an annual basis to maintain specified pricing based on volume purchasing during each calendar year 2011 through 2021. Actual purchases by BD in the future will be based on their demand, and ~~therefore,~~Sediment ~~may vary from period to period~~Analyzers. The agreement will expire in January 2021 and can be extended. From time to time, we license the technology underlying the Orbos process to third parties. Revenues from these arrangements, however, are unpredictable.

~~Sales~~VetScan SA Sediment Analyzers and ~~Marketing~~Consumables. We market and distribute the VetScan SA, which is designed to perform urine microscopy with consistency, efficiency, reliability and accuracy at the point-of-care.

WeVetScan ~~market and sell our products worldwide by maintaining direct sales forces and through independent distributors~~Fuse. We ~~primarily~~market ~~sold our veterinary reference laboratory diagnostic~~ and ~~consulting~~distribute ~~services in~~ the ~~United~~VetScan ~~States through our direct sales force. Our sales force is primarily located in the United States. Abaxis Europe GmbH~~Fuse, ~~our~~a ~~wholly-owned~~bidirection ~~subsidiary~~integration inworkflow ~~Germany,~~between ~~markets~~practice ~~and~~management ~~distributes~~software ~~diagnostic systems for medical~~ and ~~veterinary uses in the European markets.~~ Abaxis ~~Asia,~~analyzers our wholly-owned subsidiary in Hong Kong, markets and distributes diagnostic systems for medical and veterinary uses in the Asia Pacific markets. Sales and marketing expenses were $45.2 million, $42.5 million and $42.1 million, or 20%, 19% and 21% of our total revenues in fiscal 2017, 2016 and 2015, respectively. Starting in the third quarter of fiscal 2015, Abaxis UK, our wholly-owned subsidiary in the United Kingdom, distributes laboratory instrumentation and consumables to ~~the~~send ~~veterinary~~test ~~profession~~results inautomatically ~~the~~via ~~United Kingdom. Abaxis UK was formed by~~ our ~~acquisition~~practice ofmanagement ~~Quality Clinical Reagents Limited and Trio Diagnostics (Ireland) Ltd in November 2014~~software.

~~Distribution within North America~~ 6

~~Medical~~TABLE ~~Market~~OF CONTENTS

~~For~~Rapid ~~our~~Tests. ~~products~~In in the ~~human~~veterinary ~~medical~~ market, ~~we employ primarily independent distributors to market~~ our ~~products.~~VetScan ~~Starting~~Rapid inTest ~~January~~product ~~2013,~~line weconsists ~~transitioned the majority~~ of ~~our~~individual ~~medical~~rapid ~~product~~tests ~~sales~~that toaid ~~Abbott as our exclusive distributor~~ in the ~~medical~~detection ~~market.~~of ~~Pursuant~~various tospecific ~~our~~diseases. ~~Exclusive~~The ~~Agreement~~lateral ~~with~~flow ~~Abbott~~immunoassay ~~(the~~technology ~~“Abbott Agreement”), Abbott obtained the exclusive right to sell and distribute our Piccolo Xpress chemistry analyzers and associated consumables~~ in the ~~professionally-attended~~rapid ~~human~~tests ~~healthcare~~provides ~~market~~immediate ~~in the United States and China (including Hong Kong)~~results. ~~Effective~~We ~~September~~offer ~~2013, we amended~~ the ~~Abbott~~following ~~Agreement~~VetScan toRapid ~~limit~~Tests ~~Abbott’s territory under such agreement to the United States. Under the Abbott Agreement, we have certain responsibilities for providing technical support and warranty services to Abbott~~ in ~~support of its marketing and sales efforts. The initial term of~~ the ~~Abbott~~veterinary ~~Agreement ends on December 31~~market, ~~2017,~~as ~~and~~described after the initial term, the Abbott Agreement renews automatically for successive one-year periods unless terminated by either party based upon a notice of non-renewal six months prior to the then-current expiration datebelow. ~~Abbott accounted for 10%, 10% and 11% of our total worldwide revenues in fiscal 2017, 2016 and 2015, respectively.~~

6• The VetScan Canine Anaplasma Rapid Test is a highly sensitive and specific test for the detection of antibodies to A. phagocytophilum and/or A. platys in canine whole blood, serum or plasma.

~~TABLE~~• OFThe ~~CONTENTS~~VetScan Canine Ehrlichia Rapid Test is a rapid test for the qualitative detection of antibodies to E. canis, E. chaffeensis, and/or E. ewingii in canine whole blood, serum or plasma.

We• ~~will~~The ~~continue~~VetScan toFeline ~~sell~~Leukemia ~~and~~Virus ~~distribute~~Antigen-Feline ~~these~~Immunodeficiency ~~medical~~Virus ~~products~~Antibody ~~outside~~(“FeLV/FIV”) ofRapid ~~the~~Test. ~~market~~is ~~segments~~a asrapid totest ~~which~~for ~~Abbott~~the ~~has~~detection ~~exclusive~~of ~~rights.~~antibodies ~~Under~~to ~~our~~Feline ~~Abbott~~Immunodeficiency ~~Agreement,~~Virus ~~we will continue to sell~~ and ~~distribute~~Antigen to ~~Catapult~~Feline ~~Health~~Leukemia ~~LLC~~Virus ~~and specified customer segments~~ in ~~the~~feline ~~United~~whole ~~States~~blood, ~~including~~serum ~~pharmacy~~or ~~and retail store clinics, shopping malls, contract research organizations and cruise ship lines~~plasma.

~~Veterinary~~• ~~Market~~The VetScan Giardia Rapid Test is a rapid test for the qualitative detection of Giardia cyst antigens in canine feces.

~~For~~• ~~our~~The ~~products~~VetScan inCanine ~~the~~Heartworm ~~veterinary~~Rapid ~~market,~~Test weis ~~employ~~ a ~~combination~~rapid oftest ~~direct~~for sales and independent distributors. Veterinarians are served typically by local distributors, some with national affiliations. We work with various independent distributors to sell our instruments and consumable products. In the ~~United~~qualitative ~~States,~~detection our distributors include, among others, Henry Schein Animal Health, Merritt Veterinary Supplies, Inc., MWI Veterinary Supply, Inc. (“MWI”), Northeast Veterinary Supply, Patterson Companies, Inc. (including both Patterson’s veterinary business and Animal Health International, Inc., as a result of ~~Patterson’s~~Dirofilaria ~~acquisition~~immitis ~~of Animal Health International~~ in ~~our~~canine ~~second~~or ~~quarter~~feline ofwhole ~~fiscal 2016) and Penn Veterinary Supply~~blood, ~~Inc.~~serum Inor ~~Canada, our distributors of veterinary products include Associated Veterinary Purchasing Co~~plasma. ~~Ltd., CDMV, Midwest Veterinary Purchasing Cooperative Ltd., Veterinary Purchasing Company Limited and Western Drug Distribution Center Limited.~~

In• ~~September~~The ~~2012,~~VetScan weCanine ~~entered~~Lyme ~~into~~Rapid aTest ~~non-exclusive~~is ~~distributor~~a ~~agreement~~rapid ~~with~~test ~~MWI. MWI accounted~~ for ~~21%, 20% and 19% of our total worldwide revenues in fiscal 2017, 2016 and 2015, respectively. Starting in~~ the ~~second~~qualitative ~~quarter~~detection of ~~fiscal~~antibodies ~~2016,~~to ~~our~~Borrelia ~~revenues~~burgdorferi from Patterson Companies, Inc. include both Patterson’s veterinary business and Animal Health International, Inc., as a result of Patterson’s acquisition of Animal Health International, Inc. Patterson Companies, Inc. accounted for 11% and 11% of our total worldwide revenues in ~~fiscal~~canine ~~2017~~whole ~~and 2016~~blood, ~~respectively.~~serum ~~Starting~~or ~~in fiscal 2016, our revenues from Henry Schein, Inc~~plasma., include both Henry Schein Animal Health and scil animal care company GmbH, as a result of Henry Schein Inc.’s acquisition of scil animal care company GmbH in Europe. Henry Schein, Inc. accounted for 14% and 13% of our total worldwide revenues in fiscal 2017 and 2016, respectively.

In• ~~addition~~The ~~to selling through distributors, we also directly supply our~~ VetScan ~~products~~Canine toPancreatic ~~large~~Lipase ~~group purchasing organizations, hospital networks and other buying groups in the United States, such as Veterinary Centers of America~~ (~~“VCA”~~cPL), aRapid ~~veterinary~~is ~~hospital chain in North America that operates more than 700 animal hospitals. In May 2014, we entered into~~ a ~~product~~highly ~~supply~~sensitive ~~agreement with VCA to supply our VetScan chemistry analyzers~~ and ~~diagnostic~~specific ~~reagent~~semi-quantitative ~~discs~~immunoassay for placement at VCA’s animal hospitals located in North America. In May 2014, we entered into a non-exclusive co-marketing agreement with VCA’s Antech Diagnostic laboratory services to supply our VetScan chemistry analyzers in combination with Antech Diagnostic laboratory services as a diagnostic solution to serve veterinary practices throughout North America. In the ~~third~~detection ~~quarter~~ of ~~fiscal 2016, we also entered into a five~~pancreas-~~year~~specific ~~supply~~lipase agreement with Banfield Pet Hospital, an organization with more than 900 pet hospitals within the United States and Puerto Rico. Under our supply agreement, we provide our VetScan hematology analyzers and associated consumables to all of Banfield’s pet hospital locations, for which installation and training began in ~~April~~canine ~~2016~~serum ~~and~~or ~~was completed at the end of September 2016~~plasma.

~~Distribution~~• ~~Outside~~The VetScan Canine Parvovirus Rapid Test is a rapid test for the qualitative detection of ~~North~~canine ~~America~~parvovirus antigen in feces. It uses a unique combination of monoclonal antibodies that detects parvovirus antigens in feces, allowing the veterinarian to screen for and diagnose the infection.

~~Our~~• ~~medical~~The ~~and~~VetScan ~~veterinary~~FLEX4 ~~products~~Rapid ~~are~~Test ~~sold~~is ~~worldwide.~~for ~~For~~the ~~reporting~~qualitative ~~purposes,~~detection ~~we organize our operations outside~~ of ~~North~~antibodies ~~America~~to asAnaplasma ~~follows:~~phagocytophilum, ~~Europe and Asia Pacific and rest of the world~~A. ~~International revenues accounted for approximately 20%~~platys, ~~20%~~Borrelia ~~and 19% of our revenues in fiscal 2017~~burgdorferi, ~~2016~~Ehrlichia ~~and 2015~~canis, ~~respectively~~E. ~~Maintaining~~chaffeensis, ~~and expanding our international presence is an important component of our long-term growth strategy~~E. ~~Internationally~~ewingii, ~~we use primarily distributors who offer our medical or veterinary diagnostic products in certain countries~~ and ~~markets.~~Dirofilaria ~~Our~~immitis ~~international~~antigens ~~sales and marketing objectives include identifying and defining the market segments~~ in ~~each~~canine ~~country~~whole byblood, ~~product~~serum ~~and~~or ~~then focusing on specific objectives for each segment in each country~~plasma. ~~These specific objectives include modification and expansion of distribution and distributor training and monitoring to ensure the attainment of sales goals.~~

We currently ~~have~~purchase ~~distributors~~substantially ~~that~~all ~~carry~~of ~~either our medical or veterinary products in~~ the ~~following~~VetScan ~~countries:~~Rapid ~~Australia,~~Tests ~~Austria,~~from ~~Belgium,~~SA ~~Czech~~Scientific Republic, Denmark, France, Germany, Hong Kong, India, Indonesia, Israel, Italy, Japan, Korea, the Netherlands, New Zealand, Portugal, Romania, Russia, Singapore, Spain, Switzerland, Turkey, the United Arab Emirates and the United KingdomCo. ~~Our distributor~~ in ~~each of these countries is responsible for obtaining~~ the ~~necessary~~United ~~approvals to sell our new and existing products~~States. ~~A discussion of the risks associated with our international revenues is included in Item 1A of this Annual Report. Revenues in Europe~~

7Services

~~TABLE~~AVRL. OFWe ~~CONTENTS~~sold our entire AVRL business, which provided veterinary reference laboratory diagnostic and consulting services for veterinarians in the United States to Antech, which transaction closed on March 31, 2015. In connection with this sale of assets, we terminated our strategic alliance with Kansas State University, K-State Veterinary Diagnostic Lab and Kansas State University Institute for Commercialization (formerly known as National Institute for Strategic Technology Acquisition and Commercialization), to provide veterinary diagnostic and laboratory testing and related services.

accounted for 14%, 14% and 15% of our total revenues for fiscal 2017, 2016 and 2015, respectively. Revenues in Asia Pacific and rest of the world accounted for 6%, 6% and 4% of our total revenues for fiscal 2017, 2016 and 2015, respectively.Other

~~Manufacturing~~We also generate revenues from the sale of products using our patented Orbos Discrete Lyophilization Process (the “Orbos process”) to companies for other applications. The Orbos process involves flash-freezing a drop of liquid reagent to form a solid bead and ~~Suppliers~~then freeze-drying the bead to remove water. The Orbos beads are stable in dry form and dissolve rapidly in aqueous solutions. The dry reagents used in our reagent discs are produced using the Orbos process. This process allows the production of a precise amount of active chemical ingredient in the form of a soluble bead. We believe that the Orbos process has broad applications in products where delivery of active ingredients in a stable, pre-metered format is desired.

We ~~manufacture~~have ~~our~~a ~~Piccolo~~supply ~~and~~contract ~~VetScan~~with ~~blood~~Becton, ~~chemistry~~Dickinson ~~instruments~~ and ~~the~~Company ~~associated~~(“BD”) ~~reagent~~for ~~discs~~products atusing ~~our~~the ~~facility~~Orbos ~~located~~process. inIn ~~Union~~January ~~City~~2011, ~~California.~~we Weentered ~~utilize~~into ~~standardized~~a ~~manufacturing~~ten ~~processes,~~year ~~quality~~supplier ~~control~~agreement ~~and~~with ~~cost~~Becton, ~~reduction~~Dickinson and ~~inventory~~Company ~~management~~to ~~programs~~supply ~~for~~products ~~our~~using ~~manufacturing~~Abaxis’ ~~operations.~~patented WeOrbos ~~continue~~process. toIn ~~review~~ our ~~operations~~agreement, ~~and~~BD ~~facilities~~will inbe ansubject ~~effort~~ to ~~reduce~~purchase ~~costs,~~minimum ~~increase~~quantities ~~manufacturing~~on ~~capacity~~an ~~and~~annual ~~increase~~basis ~~efficiencies.~~to ~~Our~~maintain ~~manufacturing~~specified ~~activities~~pricing ~~are~~based ~~concentrated~~on involume ~~the~~purchasing ~~following~~during ~~three~~each ~~primary~~calendar ~~areas:~~year

• Point-of-Care Blood Chemistry Instruments: Our Piccolo and VetScan systems employ a variety of components designed or specified by us, including a variable speed motor, microprocessors, a liquid crystal display, a printer, a spectrophotometer and other electronic components. These components are manufactured by several third-party suppliers that have been qualified and approved by us and then assembled by our contract manufacturers. The components are assembled at our facility into the finished product and completely tested to ensure that the finished product meets product specifications. Our blood analyzer products use several technologically-advanced components that we currently purchase from a limited number of suppliers, including certain components from our single-source supplier, Hamamatsu Corporation. Our analyzers also use a printer that is primarily made by Advanced Printing Systems.7

•TABLE ~~Reagent~~OF Discs: The molded plastic discs used in the manufacture of the reagent disc are manufactured to our specifications by established injection-molding manufacturers. To achieve the precision required for accurate test results, the discs must be molded to very strict tolerances. To date, we have qualified two injection-molding manufacturers, Balda C. Brewer, and Nypro, Inc., a subsidiary of Jabil Circuit, to make the molded plastic discs that, when loaded with reagents and welded together, form our reagent disc products. We assemble the reagent discs by loading the molded plastic discs with reagents and then ultrasonically welding together the top and bottom pieces.CONTENTS

•2011 ~~Reagent~~through ~~Beads and Reagents: Our reagent discs contain dry reagent chemistry beads and diluents to perform blood analyses~~2021. ~~Lateral~~Actual ~~flow~~purchases ~~rapid~~by ~~tests~~BD ~~contain~~in ~~reagents~~the ~~and~~future ~~diluents~~will ~~necessary~~be tobased ~~perform~~on ~~blood~~their ~~analyses.~~demand, ~~We purchase chemicals from third-party suppliers~~ and ~~formulate the raw materials~~therefore, ~~using~~may ~~proprietary~~vary ~~processes,~~from ~~into~~period ~~beads~~to atperiod. ~~the~~The ~~proper~~agreement ~~concentration~~will ~~and~~expire ~~consistency to facilitate placement~~ in ~~the~~January ~~reagent~~2021 ~~disc~~ and ~~provide~~can ~~homogeneous~~be ~~dissolution~~extended. ~~and~~From ~~mixing~~time ~~when~~to ~~contacted~~time, bywe ~~the~~license ~~diluted sample. We are dependent on~~ the ~~following~~technology ~~companies~~underlying ~~as single source providers of one or more chemicals that we use in~~ the ~~reagent~~Orbos ~~production~~ process: ~~Amano~~to ~~Enzyme~~third ~~USA Co~~parties., ~~Ltd.,~~Revenues ~~Kikkoman~~from ~~Corporation~~these ~~Biochemical Division~~arrangements, ~~Microgenics Corporation~~however, aare ~~division of Thermo Fisher Scientific, Roche Molecular Biochemicals of Roche Diagnostics Corporation, a division of F~~unpredictable. ~~Hoffmann-La Roche, Ltd., SA Scientific Co., Sekisui Diagnostics, Sigma Aldrich Inc. and Toyobo Specialties.~~

~~Although~~Sales ~~we believe that there may be potential alternate suppliers available for these critical components, to date we have not qualified additional vendors beyond those referenced above~~ and cannot assure you that we would be able to enter into arrangements with additional vendors on favorable terms, or at all. We primarily operate on a purchase order basis with most of our suppliers and, therefore, these suppliers are under no contractual obligation to supply us with their products or to do so at specified prices. Marketing

InWe market and sell our products worldwide by maintaining direct sales forces and through independent distributors. We primarily sold our veterinary ~~market~~reference laboratory diagnostic and consulting services in the United States through our direct sales force. Our sales force is primarily located in the United States. Abaxis Europe GmbH, weour ~~also~~wholly-owned ~~market~~subsidiary ~~instruments~~in Germany, markets and ~~consumables~~distributes ~~that~~diagnostic ~~are~~systems ~~manufactured~~for bymedical ~~third~~and ~~parties~~veterinary uses in the European markets. Abaxis Asia, our wholly-owned subsidiary in Hong Kong, markets and wedistributes ~~rely~~diagnostic onsystems ~~third~~for ~~parties~~medical toand ~~supply~~veterinary ususes ~~with~~in ~~these~~the ~~specific~~Asia ~~products~~Pacific markets. ~~These~~Abaxis ~~original~~UK, ~~manufacturer~~our wholly-~~supplied~~owned ~~products~~subsidiary ~~are~~in ~~currently~~the ~~available~~United ~~from~~Kingdom, ~~limited~~distributes ~~sources~~laboratory asinstrumentation ~~discussed~~and ~~below~~consumables to the medical and veterinary profession in the United Kingdom. Sales and marketing expenses were $53.3 million, $45.2 million and $42.5 million, or 22%, 20% and 19% of our total revenues in fiscal 2018, 2017 and 2016, respectively.

•Distribution ~~Hematology~~within ~~Instruments~~North ~~and~~America Reagent Kits: Our VetScan hematology instruments are manufactured by Diatron in Hungary and are purchased by us as a completed instrument. In addition, we currently have qualified two suppliers to produce the reagent kits for our hematology instruments: Clinical Diagnostic Solutions, Inc. and Diatron.

8Medical Market

~~TABLE~~For OFour ~~CONTENTS~~products in the human medical market, we employ primarily independent distributors to market our products. Starting in January 2013, we transitioned the majority of our medical product sales to Abbott as our exclusive distributor in the medical market. Pursuant to our Exclusive Agreement with Abbott (the “Abbott Agreement”), Abbott obtained the exclusive right to sell and distribute our Piccolo Xpress chemistry analyzers and associated consumables in the professionally-attended human healthcare market in the United States and China (including Hong Kong). Effective September 2013, we amended the Abbott Agreement to limit Abbott’s territory under such agreement to the United States. Under the Abbott Agreement, we have certain responsibilities for providing technical support and warranty services to Abbott in support of its marketing and sales efforts. The initial term of the Abbott Agreement ends on December 31, 2017, and after the initial term, the Abbott Agreement renews automatically for successive one-year periods unless terminated by either party based upon a notice of non-renewal six months prior to the then-current expiration date. Abbott accounted for 10%, 10% and 10% of our total worldwide revenues in fiscal 2018, 2017 and 2016, respectively.

•We ~~VSpro~~will ~~Specialty~~continue ~~Analyzers~~to sell and ~~Cartridges:~~distribute ~~Our~~these ~~VetScan~~medical ~~VSpro~~products ~~specialty~~outside ~~analyzers~~of the market segments as to which Abbott has exclusive rights. Under our Abbott Agreement, we will continue to sell and ~~cartridges~~distribute ~~are~~to ~~manufactured~~Catapult byHealth ~~SMB~~LLC and specified customer segments in ~~Denmark~~the ~~and~~United ~~are~~States, ~~purchased~~including bypharmacy usand asretail ~~completed~~store ~~products.~~clinics, ~~SMB~~shopping ~~was~~malls, ~~recently~~contract ~~acquired~~research byorganizations ~~Zoetis~~and ~~Inc~~cruise ship lines.

•Veterinary i-STAT Analyzers and Cartridges: The VetScan i-STAT 1 analyzers and cartridges are manufactured by Abbott and are purchased by us as completed products. We are subject to minimum purchase and minimum sales requirement if we want to maintain as an exclusive distributor of the related products. The initial term of the agreement ended in December 2014. After this initial term, our agreement continues automatically for successive one-year periods unless terminated by either party.Market

•For ~~Rapid~~our ~~Tests:~~products ~~Substantially~~in ~~all~~the veterinary market, we employ a combination of ~~our~~direct ~~VetScan~~sales ~~Rapid~~and ~~Tests~~independent distributors. Veterinarians are ~~manufactured~~served typically by alocal ~~single~~distributors, ~~source~~some ~~supplier~~with national affiliations. We work with various independent distributors to sell our instruments and consumable products. In the United States, SAour ~~Scientific~~distributors Coinclude, among others, Henry Schein Animal Health (including its acquisition of Merritt Veterinary Supplies, Inc. in our third quarter of fiscal 2018), ~~located~~MWI Veterinary Supply, Inc. (“MWI”) (including its acquisition of Northeast Veterinary Supply in ~~the~~our ~~United~~third ~~States~~quarter of fiscal 2018), Patterson Companies, Inc. (including its acquisition of Animal Health International in our second quarter of fiscal 2016) and Penn Veterinary Supply, Inc. In Canada, our distributors of veterinary products include Associated Veterinary Purchasing Co. Ltd., CDMV, Midwest Veterinary Purchasing Cooperative Ltd., Veterinary Purchasing Company Limited and Western Drug Distribution Center Limited.

~~For~~In ~~the~~September ~~suppliers~~2012, ofwe ~~original~~entered ~~equipment~~into ~~manufactured~~a ~~products~~non-exclusive distributor agreement with ~~which~~MWI. weMWI ~~have~~accounted ~~long-term~~for ~~contracts~~22%, ~~there~~21% ~~can~~and be20% noof ~~assurance~~our ~~that~~total ~~these~~worldwide ~~suppliers~~revenues ~~will~~in ~~always~~fiscal ~~fulfill~~2018, ~~their~~2017 ~~obligations~~and ~~under~~2016, ~~these~~respectively. ~~contracts,~~Starting orin ~~that~~the ~~any~~second ~~suppliers~~quarter ~~will~~of ~~not~~fiscal ~~experience~~2016, ~~disruptions~~our inrevenues ~~their~~from ~~ability~~Patterson toCompanies, ~~supply~~Inc. ~~our~~include ~~requirements~~both ~~for~~Patterson’s ~~products.~~veterinary Inbusiness ~~addition~~and Animal Health International, ~~under~~Inc., ~~some~~as ~~contracts~~a ~~with~~result ~~suppliers~~of wePatterson’s ~~have~~acquisition ~~minimum~~of ~~purchase~~Animal ~~obligations~~Health International, Inc. Patterson Companies, Inc. accounted for 11%, 11% and 11% of our ~~failure~~total toworldwide ~~satisfy~~revenues ~~those~~in ~~obligations~~fiscal ~~may~~2018, ~~result~~2017 inand ~~loss~~2016, ofrespectively. ~~some~~Starting orin ~~all~~fiscal of2016, our ~~rights~~revenues ~~under~~from ~~these~~Henry ~~contracts~~Schein, Inc., include both Henry

We generally operate with a limited order backlog because our products are typically 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. 8

~~Competition~~TABLE OF CONTENTS

~~Competition~~Schein inAnimal ~~the~~Health ~~human medical~~ and ~~veterinary~~scil ~~diagnostic~~animal ~~markets~~care iscompany ~~intense.~~GmbH, ~~The~~as ~~diagnostic market is~~ a ~~well-established~~result ~~field~~of inHenry ~~which~~Schein ~~there~~Inc.’s ~~are~~acquisition ~~a number~~ of ~~competitors~~scil ~~that~~animal ~~have~~care ~~substantially~~company ~~greater~~GmbH ~~financial~~in ~~resources~~Europe. ~~and~~Henry ~~larger~~Schein, ~~more established marketing, sales and service organizations than we do~~Inc. Weaccounted ~~compete~~for ~~primarily with the following organizations: commercial clinical laboratories~~16%, ~~hospitals’~~14% ~~clinical laboratories~~ and ~~manufacturers~~13% of ~~bench~~our ~~top~~total ~~multi-test~~worldwide ~~blood~~revenues ~~analyzers~~in ~~and~~fiscal ~~other~~2018, ~~testing~~2017 ~~systems~~and ~~that~~2016, ~~health care providers can use at the point of care~~respectively.

~~Historically~~In addition to selling through distributors, ~~hospitals~~we ~~and~~also ~~commercial~~directly ~~laboratories~~supply ~~perform~~our ~~most~~VetScan ofproducts ~~the~~to ~~human~~large ~~diagnostic~~group ~~testing~~purchasing organizations, hospital networks and ~~veterinary~~other ~~specialized~~buying ~~commercial~~groups ~~laboratories~~in ~~perform~~the ~~most~~United States, such as Veterinary Centers of ~~the~~America (“VCA”), a veterinary ~~medical~~hospital ~~testing.~~chain Wein ~~have~~North ~~identified~~America ~~five~~that ~~principal~~operates ~~factors~~more ~~that~~than 800 animal hospitals. In May 2014, we ~~believe~~entered ~~customers~~into ~~typically~~a ~~use~~product supply agreement with VCA to ~~evaluate~~supply our ~~products~~VetScan chemistry analyzers and ~~those~~diagnostic ofreagent ~~our~~discs ~~competitors.~~for ~~These~~placement ~~factors~~at ~~include~~VCA’s ~~the~~animal ~~following:~~hospitals ~~range~~located ofin ~~tests~~North ~~offered,~~America. ~~immediacy~~In ofMay ~~results~~2014, ~~cost~~we ~~effectiveness,~~entered ~~ease~~into ofa ~~use~~non-exclusive ~~and~~co-marketing ~~reliability~~agreement ofwith ~~results.~~VCA’s WeAntech ~~believe~~Diagnostic ~~that~~laboratory weservices ~~compete~~to ~~effectively~~supply onour ~~each~~VetScan ofchemistry ~~these~~analyzers ~~factors~~in ~~except~~combination ~~for~~with ~~the~~Antech ~~range~~Diagnostic oflaboratory ~~tests~~services ~~offered.~~as ~~Clinical~~a ~~laboratories~~diagnostic ~~are~~solution ~~effective~~to atserve ~~processing~~veterinary ~~large~~practices ~~panels~~throughout ofNorth ~~tests~~America. ~~using~~In ~~skilled~~the ~~technicians~~third ~~and~~quarter ~~complex~~of ~~equipment.~~fiscal ~~Currently~~2016, ~~while~~we ~~our~~also ~~offering~~entered ofinto ~~instruments~~a ~~and~~five-year ~~reagent~~supply ~~discs~~agreement ~~does~~with ~~not~~Banfield ~~provide~~Pet ~~the~~Hospital, ~~same~~an ~~broad~~organization ~~range~~with ofmore ~~tests~~than as900 pet hospitals ~~and~~within ~~commercial~~the ~~laboratories,~~United weStates ~~believe~~and ~~that~~Puerto inRico. ~~certain~~Under ~~markets~~our supply agreement, we provide our ~~products~~VetScan ~~provide~~hematology aanalyzers ~~sufficient~~and ~~breadth~~associated consumables to all of ~~test~~Banfield’s ~~menus~~pet tohospital ~~compete~~locations, ~~successfully~~for ~~with~~which ~~clinical~~installation ~~laboratories~~and ~~given~~training ~~the~~began ~~advantages~~in ofApril ~~our~~2016 ~~products~~and ~~with~~was ~~respect~~completed toat the ~~other~~end ~~four~~of ~~factors~~September 2016.

~~Our~~Distribution ~~principal~~Outside ~~competitors in the point-~~of~~-care~~ ~~human~~North ~~medical~~America diagnostic market are Alere Inc., Alfa Wassermann S.P.A., Ortho Clinical Diagnostics, Inc. and F. Hoffmann-La Roche Ltd. Additionally, in certain segments of the human medical diagnostic market, we compete with Abbott’s i-STAT division. Many of our competitors in the human medical diagnostic market have significantly larger product lines to offer and greater financial and other resources than we do. In particular, many of these competitors have large sales forces and well-established distribution channels and brand names.

Our ~~principal~~medical ~~competitors~~and inveterinary products are sold worldwide. For reporting purposes, we organize our operations outside of North America as follows: Europe and Asia Pacific and rest of the ~~veterinary~~world. ~~diagnostic~~International ~~market~~revenues ~~are~~accounted ~~Idexx~~for ~~Laboratories~~approximately 20%, ~~Inc~~20% and 19% of our revenues in fiscal 2018, 2017 and 2016, respectively. Maintaining and ~~Heska~~expanding ~~Corporation~~our international presence is an important component of our long-term growth strategy. ~~Idexx~~Internationally, ~~has~~we ause ~~larger~~primarily distributors who offer our medical or veterinary diagnostic products in certain countries and markets. Our international sales and marketing objectives include identifying and defining the market segments in each country by product and ~~service~~then ~~offering~~focusing ~~than~~on wespecific doobjectives for each segment in each country. These specific objectives include modification and aexpansion ~~large~~of ~~sales~~distribution ~~infrastructure~~and ~~network~~distributor training and amonitoring ~~well-established~~to ~~brand~~ensure ~~name~~the attainment of sales goals.

~~Government~~We ~~Regulation~~currently have distributors that carry either our medical or veterinary products in the following countries: Australia, Austria, Belgium, China, Czech Republic, Denmark, France, Germany, Hong Kong, India, Indonesia, Israel, Italy, Japan, Korea, the Netherlands, New Zealand, the Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Singapore, Slovenia, Spain, Switzerland, Taiwan, Turkey, the United Arab Emirates and the United Kingdom. Our distributor in each of these countries is responsible for obtaining the necessary approvals to sell our new and existing products. A discussion of the risks associated with our international revenues is included in Item 1A of this Annual Report. Revenues in Europe accounted for approximately 15%, 14% and 14% of our total revenues for fiscal 2018, 2017 and 2016, respectively. Revenues in Asia Pacific and rest of the world accounted for approximately 5%, 6% and 6% of our total revenues for fiscal 2018, 2017 and 2016, respectively.

~~Regulation~~Manufacturing ~~by governmental authorities in the U.S.~~ and ~~foreign~~Suppliers countries is a significant factor in the manufacture and marketing of our current and future products and in our ongoing product research and development activities. We are not required to comply with all of the FDA government regulations applicable to the human medical market when manufacturing our VetScan products; however, we intend for all of our

9We manufacture our Piccolo and VetScan blood chemistry instruments and the associated reagent discs at our facility located in Union City, California. We utilize standardized manufacturing processes, quality control and cost reduction and inventory management programs for our manufacturing operations. We continue to review our operations and facilities in an effort to reduce costs, increase manufacturing capacity and increase efficiencies. Our manufacturing activities are concentrated in the following three primary areas:

~~TABLE~~• OFPoint-of-Care ~~CONTENTS~~Blood Chemistry Instruments: Our Piccolo and VetScan systems employ a variety of components designed or specified by us, including a variable speed motor, microprocessors, a liquid crystal display, a printer, a spectrophotometer and other electronic components. These components are manufactured by several third-party suppliers that have been qualified and approved by us and then assembled by our contract manufacturers. The components are assembled at our facility into the finished product and completely tested to ensure that the finished product meets product specifications. Our blood analyzer products use several technologically-advanced components that we currently purchase from a limited number of suppliers, including certain components from our single-source supplier, Hamamatsu Corporation. Our analyzers also use a printer that is primarily made by Advanced Printing Systems.

manufacturing operations to be compliant with the Quality System Regulation to help ensure product quality and integrity regardless of end use or patient. As we continue to sell in foreign markets, we may have to obtain additional governmental clearances in those markets. The government regulations for our medical and veterinary products vary. 9

~~FDA~~TABLE ~~Regulation~~OF ~~of Human Medical Devices~~CONTENTS

~~Our~~• ~~Piccolo~~Reagent ~~products~~Discs: ~~are~~The inmolded ~~vitro~~plastic ~~diagnostic~~discs ~~medical~~used ~~devices~~in ~~subject to regulation by~~ the ~~FDA,~~manufacture ~~under~~of the ~~Federal~~reagent ~~Food,~~disc ~~Drug,~~are ~~and~~manufactured ~~Cosmetic~~to ~~Act~~our ~~(“FDCA”).~~specifications ~~Medical~~by ~~devices,~~established toinjection-molding bemanufacturers. ~~commercially~~To ~~distributed~~achieve in the ~~United~~precision ~~States,~~required ~~must~~for ~~receive~~accurate ~~either~~test ~~510(k)~~results, ~~premarket clearance or Premarket Approval (“PMA”) from~~ the ~~FDA~~discs ~~prior~~must tobe ~~marketing.~~molded ~~Devices deemed~~ to ~~pose~~very ~~relatively~~strict ~~less~~tolerances. ~~risk~~To ~~are~~date, ~~placed~~we inhave ~~either~~qualified ~~class~~two Iinjection-molding ~~or II~~manufacturers, ~~which~~Balda ~~generally requires the manufacturer to submit a premarket notification requesting permission for commercial distribution; this is known as 510(k) clearance~~C. ~~Most lower risk~~Brewer, orand ~~class I~~Nypro, ~~devices are exempted from this requirement~~Inc., ~~Devices~~a ~~deemed~~subsidiary byof ~~the~~Jabil ~~FDA~~Circuit, to ~~pose~~make the ~~greatest~~molded ~~risk,~~plastic ~~such~~discs ~~as life-sustaining~~that, ~~life~~when ~~supporting~~loaded orwith ~~implantable~~reagents ~~devices,~~and orwelded ~~devices deemed not substantially equivalent to a previously 510(k) cleared device or a preamendment class III device for which PMA applications have not been called~~together, ~~are~~form ~~placed~~our inreagent ~~class~~disc ~~III requiring PMA approval~~products. ~~The~~We ~~FDA~~assemble ~~has~~the ~~classified~~reagent ~~our~~discs ~~Piccolo~~by ~~products~~loading asthe ~~class~~molded Iplastic ordiscs ~~class~~with IIreagents ~~devices,~~and ~~depending~~then onultrasonically ~~their~~welding ~~specific~~together ~~intended~~the ~~uses~~top and ~~indications~~bottom ~~for use~~pieces.

To• ~~obtain~~Reagent ~~510(k)~~Beads ~~clearance,~~and aReagents: ~~manufacturer~~Our ~~must~~reagent ~~submit~~discs acontain ~~premarket~~dry ~~notification~~reagent ~~demonstrating~~chemistry ~~that~~beads ~~the~~and ~~proposed~~diluents ~~device~~to isperform ~~substantially~~blood ~~equivalent~~analyses. inLateral ~~intended~~flow ~~use,~~rapid ~~principles~~tests ofcontain ~~operation,~~reagents and ~~technological~~diluents ~~characteristics~~necessary to aperform ~~previously~~blood ~~510(k)~~analyses. ~~cleared~~We ~~device~~purchase orchemicals afrom ~~device~~third-party ~~that~~suppliers ~~was~~and informulate ~~commercial~~the ~~distribution~~raw ~~before~~materials, ~~May~~using 28proprietary processes, ~~1976~~into ~~for~~beads ~~which~~at the ~~FDA~~proper ~~has~~concentration ~~not~~and ~~called~~consistency ~~for~~to ~~submission~~facilitate ofplacement ~~PMA~~in ~~applications~~the reagent disc and provide homogeneous dissolution and mixing when contacted by the diluted sample. ~~The~~We ~~FDA’s~~are ~~510(k)~~dependent ~~clearance~~on ~~pathway~~the ~~usually~~following ~~takes~~companies ~~from~~as ~~three~~single tosource ~~six~~providers ~~months,~~of ~~but~~one itor ~~can~~more ~~take~~chemicals ~~longer.~~that ~~After~~we ause ~~device~~in ~~receives~~the ~~510(k)~~reagent ~~clearance~~production process: Amano Enzyme USA Co., ~~any~~Ltd., ~~modification~~Kikkoman ~~that~~Corporation ~~could~~Biochemical ~~significantly~~Division, ~~affect~~Microgenics ~~its~~Corporation, ~~safety~~a ordivision ~~effectiveness~~of Thermo Fisher Scientific, orRoche ~~that~~Molecular ~~would~~Biochemicals ~~constitute~~of Roche Diagnostics Corporation, a ~~major~~division ~~change~~of inF. ~~its~~Hoffmann-La ~~intended~~Roche, ~~use~~Ltd., ~~requires~~SA aScientific ~~new~~Co., ~~510(k)~~Sekisui ~~clearance~~Diagnostics, orSigma ~~could~~Aldrich ~~require~~Inc. aand ~~PMA~~Toyobo ~~approval~~Specialties.

AsAlthough ofwe ~~March~~believe ~~31,~~that ~~2017,~~there wemay ~~currently~~be ~~have~~potential ~~received~~alternate ~~FDA~~suppliers ~~premarket~~available ~~clearance~~ for ~~our~~these ~~Piccolo~~critical ~~chemistry~~components, ~~analyzer~~to ~~and~~date ~~27 reagent tests that~~ we have onnot 17qualified ~~reagent~~additional ~~discs.~~vendors Webeyond ~~are~~those ~~currently~~referenced ~~developing~~above ~~additional~~and ~~tests~~cannot assure you that we ~~will~~would ~~have~~be able to ~~clear~~enter into arrangements with ~~the~~additional ~~FDA~~vendors ~~through~~on ~~the~~favorable ~~510(k)~~terms, ~~notification~~or ~~process~~at all. ~~The~~We ~~FDA~~primarily ~~may~~operate ~~disagree~~on a purchase order basis with most of our ~~assessment~~suppliers and, ~~require~~therefore, usthese tosuppliers ~~seek~~are ~~PMA~~under ~~approval~~no orcontractual ~~require~~obligation to supply us with their products or to ~~meet~~do ~~significant~~so ~~postmarketing~~at ~~requirements~~specified prices.

~~Our~~In ~~Piccolo~~our ~~products~~veterinary ~~are~~market, we also ~~subject~~market toinstruments ~~the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”). The current CLIA regulations divide laboratory tests into three categories: “waived,” “moderately complex”~~ and ~~“highly~~consumables ~~complex.”~~that Weare ~~currently~~manufactured ~~offer~~by ~~Basic~~third ~~Metabolic~~parties ~~Panel, Comprehensive Metabolic Panel, Electrolyte Panel, General Chemistry 6, General Chemistry 13, Kidney Check, Lipid Panel, Lipid Panel Plus, Liver Panel Plus, MetLyte 8 Panel~~ and ~~Renal~~we ~~Function~~rely ~~Panel~~on ~~tests~~third ~~under~~parties ~~waived status, which permits personnel not subject~~ to ~~CLIA~~supply ~~imposed~~us ~~training~~with ~~requirements to run the Piccolo chemistry analyzer using~~ these ~~tests~~specific ~~and~~products. ~~thus~~These ~~allows~~original ~~for marketing to more sites (doctors’ offices and other point~~manufacturer-~~of-care~~supplied ~~environments that maintain a CLIA certificate of waiver) than our other~~ products ~~that~~ are ~~subject~~currently toavailable ~~the~~from ~~other~~limited ~~categories.~~sources ~~For example, six of the panels performed using the Piccolo system are in the “moderately complex” category. This category requires that any location in which testing is performed be certified~~ as adiscussed ~~laboratory~~below. Hence, we can only sell some Piccolo products to customers who meet the standards of a laboratory, which requires a testing facility to be certified by the Centers for Medicare and Medicaid Services, or CMS, and meet the CLIA regulations. As a result, the market for these non-waived products is more limited.

In• ~~March~~Hematology ~~2014,~~Instruments ~~the~~and ~~FDA~~Reagent ~~granted~~Kits: ~~CLIA~~Our ~~waived~~VetScan ~~status~~hematology ~~for~~instruments ~~fingerstick~~are ~~draw~~manufactured ~~for~~by ~~total~~Diatron ~~cholesterol,~~in ~~high-density~~Hungary ~~lipoprotein cholesterol~~ and ~~triglycerides~~are ~~blood~~purchased ~~tests.~~by Asus as a ~~result,~~completed ~~combined~~instrument. ~~with~~In ~~existing CLIA waived tests for liver diagnostics and glucose using fingerstick samples~~addition, we ~~now~~currently have qualified two ~~complete~~suppliers ~~lipid panels that can be used by healthcare professionals~~ to ~~diagnose,~~produce ~~treat~~the ~~and~~reagent ~~monitor~~kits ~~hyperlipidemia~~for ~~patients~~our ~~using~~hematology ainstruments: ~~sample~~Clinical ~~obtained~~Diagnostic ~~from~~Solutions, ~~either venous blood or a fingerstick draw~~Inc. ~~This enables U.S. healthcare professionals to perform lipid~~ and ~~liver diagnostics, as well as measure glucose levels with a simple fingerstick using the Piccolo chemistry analyzer~~Diatron.

~~USDA~~• ~~Licensure~~VSpro ofSpecialty ~~Veterinary~~Analyzers ~~Biologics~~and Cartridges: Our VetScan VSpro specialty analyzers and cartridges are manufactured by SMB in Denmark and are purchased by us as completed products. SMB was acquired by Zoetis Inc. in August 2016.

~~Our~~• ~~rotor~~i-~~based~~STAT ~~Canine~~Analyzers ~~Heartworm~~and ~~Antigen~~Cartridges: ~~Test~~The ~~(“CHW”)~~VetScan i-STAT 1 and ~~our~~VetScan ~~lateral~~i-STAT ~~flow~~Alinity ~~tests,~~v ~~including~~analyzers ~~Canine~~and ~~Borrelia~~cartridges ~~Burgdorferi~~are ~~Antibody~~manufactured ~~Test~~by ~~Kit~~Abbott ~~(rapid~~and ~~test~~are ~~for~~purchased ~~Lyme~~by ~~disease~~us inas ~~dogs),~~completed ~~Canine~~products. ~~Ehrlichia~~We ~~Antibody~~are ~~Test~~subject ~~Kit~~to minimum purchase and ~~Canine~~minimum ~~Anaplasma~~sales ~~Test~~requirement ~~Kit,~~if ~~are~~we ~~regulated~~want to maintain as ~~veterinary~~an ~~biologics~~exclusive ~~under~~distributor of the ~~Virus,~~related ~~Serum,~~products. ~~and~~The ~~Toxin~~initial ~~Act~~term of ~~1913~~the agreement ended in December 2014. ~~Both~~After ~~tests~~this ~~require~~initial ~~licensure~~term, ofour ~~both~~agreement ~~the~~continues ~~product~~automatically ~~and~~for ~~manufacturing~~successive ~~facilities.~~one-year ~~Biologics~~periods ~~products~~unless ~~are~~terminated ~~subject~~by toeither party.

10• Rapid Tests: Substantially all of our VetScan Rapid Tests are manufactured by a single source supplier, SA Scientific Co., located in the United States.

~~TABLE~~Our OFVetScan ~~CONTENTS~~UA instruments and related consumables, VetScan SA sediment analyzers and related consumables and VetScan Fuse are supplied by sole and single source suppliers. We purchase the VetScan UA and VetScan SA products from the same manufacturer under a three year supply agreement and after the initial term the agreement renews automatically for a successive two-year period unless terminated by either party based upon a notice of non-renewal ninety days prior to the expiration date.

~~more~~For ~~extensive testing to establish their purity, safety, potency, and efficacy and any failure to comply with~~ the ~~United~~suppliers ~~States Department~~ of ~~Agriculture’s~~original ~~Animal~~equipment ~~and~~manufactured ~~Plant~~products ~~Health~~with ~~Inspection~~which ~~Service~~we ~~(APHIS)~~have ~~Center for Veterinary Biologics (“CVB”) licensure or post~~long-~~marketing~~term ~~approval~~contracts, ~~requirements~~there can ~~result~~be inno ~~the~~assurance ~~inability~~that tothese ~~obtain~~suppliers ~~and~~will ~~maintain~~always ~~required~~fulfill ~~licenses~~their ~~for~~obligations ~~our~~under ~~products~~these ~~and~~contracts, ~~there~~or ~~can be no assurances~~ that ~~our~~any ~~products~~suppliers ~~can~~will benot ~~maintained~~experience todisruptions ~~the~~in ~~required~~their ~~quality~~ability ~~levels necessary~~ to ~~continue~~supply toour ~~market~~requirements ~~these~~for products. In addition, weunder ~~are~~some ~~currently~~contracts ~~developing~~with ~~additional~~suppliers ~~tests~~we ~~that~~have ~~will~~minimum bepurchase ~~subject~~obligations and our failure to ~~CVB~~satisfy ~~licensure~~those asobligations ~~veterinary~~may ~~biologics~~result ~~and~~in ~~licensure~~loss ~~under~~of ~~CVB~~some ~~cannot~~or beall ~~assured~~of ~~for~~our rights under these ~~products~~contracts.

~~Manufacturing and International Regulations~~10

~~The~~TABLE ~~1976~~OF Medical Device Amendments also require us to manufacture our Piccolo products in accordance with Good Manufacturing Practices guidelines. Current Good Manufacturing Practice requirements are set forth in the FDA’s Quality System Regulation. These requirements regulate the methods used in, and the facilities and controls used for the design, manufacture, packaging, storage, installation and servicing of our medical devices intended for human use. Our manufacturing facility is subject to periodic inspections. In addition, various state regulatory agencies may regulate the manufacture of our products. CONTENTS

~~Federal,~~We ~~state,~~generally ~~local~~operate ~~and~~with ~~international~~a ~~regulations~~limited ~~regarding~~order ~~the~~backlog ~~manufacture~~because ~~and~~our ~~sale~~products ofare ~~health~~typically ~~care~~shipped ~~products~~shortly ~~and~~after ~~diagnostic~~orders ~~devices~~are ~~may change~~received. InAs ~~addition,~~a ~~as we continue to sell in foreign markets~~result, weproduct ~~may~~sales ~~have to obtain additional governmental clearances~~ in ~~those~~any ~~markets.~~quarter Toare ~~date,~~generally wedependent ~~have~~on ~~complied~~orders ~~with~~booked ~~what we believe to be all applicable federal, state, local~~ and ~~international~~shipped ~~regulatory~~in ~~requirements~~that ~~and standards, including those of the FDA, USDA, State of California Food and Drug Branch and International Organization for Standardization for medical devices~~quarter.

~~Research and Development~~Competition

WeCompetition ~~are~~in ~~focused~~the onhuman ~~the~~medical ~~development~~and ofveterinary ~~new~~diagnostic ~~products~~markets ~~and~~is onintense. ~~improvements~~The todiagnostic ~~existing~~market ~~products.~~is ~~Research~~a ~~and~~well-established ~~development~~field ~~activities~~in ~~relate~~which tothere ~~development~~are a number of ~~new~~competitors ~~tests~~that ~~and~~have ~~test~~substantially ~~methods,~~greater ~~clinical~~financial ~~trials~~resources and larger, ~~product~~more ~~design~~established marketing, sales and ~~development,~~service ~~product~~organizations ~~improvements~~than we do. We compete primarily with the following organizations: commercial clinical laboratories, ~~optimization~~hospitals’ clinical laboratories and ~~enhancement~~manufacturers of ~~existing~~bench ~~products~~top multi-test blood analyzers and ~~expenses~~other ~~related~~testing tosystems ~~regulatory~~that ~~and~~health ~~quality~~care ~~assurance~~providers can use at the point of care.

~~Development~~Historically, ofhospitals ~~tests~~and ~~for~~commercial ~~point-~~laboratories perform most of~~-care~~ ~~diagnostics~~the ~~will~~human bediagnostic ~~targeted~~testing, atand ~~specific~~veterinary ~~applications~~specialized ~~based~~commercial onlaboratories ~~fulfilling~~perform ~~clinical~~most ~~needs~~of the veterinary medical testing. InWe ~~September~~have ~~2016,~~identified five principal factors that we ~~completed~~believe ~~the~~customers ~~development~~typically use to evaluate our products and those of our ~~connectivity~~competitors. ~~product,~~These factors include the ~~VetScan~~following: ~~FUSE~~range of tests offered, ~~which~~immediacy isof ~~currently~~results, incost ~~beta-testing.~~effectiveness, ~~The~~ease ~~VetScan~~of ~~FUSE~~use isand areliability ~~web-based~~of ~~integration~~results. ~~system~~We believe that ~~provides~~we ~~connectivity~~compete ~~between~~effectively ~~our~~on ~~point-~~each of~~-care~~ ~~diagnostic~~these ~~instruments~~factors ~~and~~except for the ~~veterinary~~range ~~practice~~of ~~management~~tests ~~systems~~offered. ~~During~~Clinical ~~fiscal~~laboratories ~~2017,~~are ineffective ~~the~~at ~~veterinary~~processing ~~market~~large panels of tests using skilled technicians and complex equipment. Currently, wewhile ~~also~~our ~~launched~~offering ~~the~~of ~~following~~instruments ~~three~~and reagent ~~disc~~discs ~~products,~~does ~~Electrolyte~~not ~~Plus,~~provide ~~Preventative~~the ~~Care~~same ~~Profile~~broad ~~Plus~~range of tests as hospitals and ~~Phenobarbital~~commercial ~~Panel~~laboratories, ~~all~~we believe that in certain markets, our products provide a sufficient breadth of ~~which~~test ~~are~~menus ~~used~~to incompete successfully with clinical laboratories given the advantages of our ~~VetScan~~products ~~chemistry~~with ~~analyzers~~respect to the other four factors.

AsOur ~~part~~principal competitors in the point-of-care ~~our~~human ~~product~~medical ~~portfolio~~diagnostic ~~expansion~~market ~~strategies~~are Alere Inc., ~~during~~Alfa ~~fiscal~~Wassermann ~~2018~~S.P.A., weOrtho ~~expect~~Clinical toDiagnostics, ~~launch~~Inc. aand ~~new~~F. ~~point~~Hoffmann-~~of-care~~La ~~urine~~Roche ~~sediment~~Ltd. ~~analyzer~~Additionally, ~~into~~in certain segments of the ~~veterinary~~human medical diagnostic market, aswe ~~well~~compete aswith aAbbott’s ~~new point~~i-~~of-care~~STAT ~~urine~~division. ~~chemistry~~Many ~~analyzer.~~of ~~Additionally,~~our competitors in ~~fiscal~~the ~~2018,~~human wemedical ~~expect~~diagnostic market have significantly larger product lines to ~~launch~~offer ~~the~~and ~~VetScan~~greater ~~Canine~~financial ~~Pancreatic~~and ~~Lipase~~other ~~Rapid~~resources ~~Test~~than we do. In particular, amany ~~rapid~~of ~~test~~these ~~for~~competitors ~~the~~have ~~detection~~large ofsales ~~pancreas-specific~~forces ~~lipase~~and inwell-established ~~canine~~distribution ~~serum~~channels orand ~~plasma~~brand names.

Our ~~research~~principal ~~and~~competitors ~~development~~in ~~expenses,~~the ~~which~~veterinary ~~consist~~diagnostic ofmarket ~~personnel~~are ~~costs~~Idexx Laboratories, ~~consulting~~Inc. ~~expenses~~ and ~~materials~~Heska ~~and~~Corporation. ~~related~~Idexx ~~expenses,~~has ~~were~~a ~~$19.8~~larger ~~million,~~veterinary ~~$18.4~~product ~~million~~ and ~~$16.3~~service ~~million,~~offering orthan ~~9%,~~we 8%do and 8%a oflarge ~~our~~sales ~~total~~infrastructure ~~revenues,~~network ~~in fiscal 2017, 2016~~ and ~~2015, respectively. Research and development expense as~~ a ~~percentage of total revenues remained consistent over the same periods, reflecting our continued commitment to invest in long~~well-~~term~~established ~~growth~~brand ~~opportunities~~name.

WeGovernment ~~anticipate~~Regulation that we will continue to make expenditures for research and development as we seek to provide new products to maintain and improve our competitive position. We will continue to develop new products that we believe will provide further opportunities for growth in the human medical and veterinary markets.

~~Patents~~Regulation by governmental authorities in the U.S. and foreign countries is a significant factor in the manufacture and marketing of our current and future products and in our ongoing product research and development activities. We are not required to comply with all of the FDA government regulations applicable to the human medical market when manufacturing our VetScan products; however, ~~Proprietary~~we ~~Technologies~~intend for all of our manufacturing operations to be compliant with the FDA’s Quality System Regulation (“QSR”) to help ensure product quality and ~~Licenses~~integrity regardless of end use or patient. As we continue to sell in foreign markets, we may have to obtain additional governmental clearances in those markets. The government regulations for our medical and veterinary products vary.

~~Our~~FDA ~~products~~Regulation ~~sold~~of inHuman ~~both~~Medical the medical and veterinary markets are based on complex, rapidly-developing technologies. These technologies are covered by patents that we own. Our practice is to obtain patent protection on our products and processes where possible. Devices

11Our Piccolo products are in vitro diagnostic medical devices subject to regulation by the FDA, under the Federal Food, Drug, and Cosmetic Act (“FDCA”). Medical devices, to be commercially distributed in the United States, must receive either 510(k) premarket clearance or Premarket Approval (“PMA”) from the FDA prior to marketing. Devices deemed to pose relatively less risk are placed in either class I or II, which generally requires the manufacturer to submit a premarket notification requesting permission for commercial distribution; this is known as 510(k) clearance. Most lower risk, or class I, devices are exempted from this requirement. Devices deemed by the FDA to pose the greatest risk, such as life-sustaining, life supporting or implantable devices, or devices deemed not substantially equivalent to a previously 510(k) cleared device or a preamendment class III device for which PMA applications have not been called, are placed in class III requiring PMA approval. The FDA has classified our Piccolo products as class I or class II devices, depending on their specific intended uses and indications for use.

~~TABLE OF CONTENTS~~11

WeTABLE ~~have~~OF pursued the development of a patent portfolio to protect our proprietary technology. Our policy is to file patent applications to protect technology, inventions and improvements that are important to the development of our business. As of March 31, 2017, 86 patent applications have been filed on our behalf with the United States Patent and Trademark Office, of which 47 patents have been issued and 19 patents are currently active. The expiration dates of our active patents with the United States Patent and Trademark Office range from December 2017 to October 2034. In addition, we have 23 issued and active foreign patents and 65 foreign patent applications pending, of which one is a Patent Cooperation Treaty international application to be filed nationally in foreign countries. CONTENTS

WeTo ~~protect~~obtain ~~trade~~510(k) ~~secrets~~clearance, ~~trademarks,~~a ~~know-how~~manufacturer must submit a premarket notification demonstrating that the proposed device is substantially equivalent in intended use, ~~continuing~~principles ~~technological~~of ~~innovations~~operation, and ~~licensing~~technological ~~opportunities~~characteristics to ~~develop~~a ~~and~~previously ~~maintain~~510(k) ~~our~~cleared ~~competitive~~device ~~position.~~or ~~Our~~a ~~success~~device ~~depends~~that was in ~~part~~commercial ondistribution ~~obtaining~~before ~~patent~~May ~~protection~~28, 1976 for ~~our~~which ~~products~~the ~~and~~FDA ~~processes~~has not called for submission of PMA applications. The FDA’s 510(k) clearance pathway usually takes from three to six months, ~~preserving~~but ~~trade~~it ~~secrets~~can take longer. After a device receives 510(k) clearance, ~~patents~~any ~~and~~modification ~~trademarks~~that could significantly affect its safety or effectiveness, ~~operating~~or ~~without~~that ~~infringing~~would ~~the~~constitute ~~proprietary~~a ~~rights~~major ofchange ~~third~~in ~~parties~~its intended use, ~~and~~requires ~~acquiring~~a ~~licenses~~new ~~for~~510(k) ~~technology~~clearance or ~~products~~could require a PMA approval.

InAs ~~the future, we may enter into license agreements or other arrangements with third parties relating to various aspects~~ of ~~our~~March ~~products~~31, ~~as necessary. In the past~~2018, ~~some~~we ofcurrently ~~our~~have ~~existing~~received ~~products~~FDA ~~were~~premarket ~~manufactured~~clearance orfor ~~sold~~our ~~under~~Piccolo ~~the~~chemistry ~~terms~~analyzer ofand ~~license~~27 ~~agreements~~reagent tests that ~~required~~we ushave ~~to pay royalties to the licensor based~~ on ~~the~~17 ~~sales~~reagent ~~of products containing the licensed technology~~discs. ~~From~~We ~~January~~are ~~2009~~currently todeveloping ~~February~~additional ~~2015,~~tests that we ~~licensed~~will ~~co-exclusively~~have ~~certain worldwide patent rights related~~ to ~~lateral~~clear ~~flow~~with ~~immunoassay technology in~~ the ~~field~~FDA ofthrough ~~animal health diagnostics in~~ the ~~professional~~510(k) ~~marketplace~~notification ~~from Alere~~process. The ~~license~~FDA ~~agreement~~may ~~enabled~~disagree uswith toour ~~develop~~assessment and ~~market~~require ~~products~~us under rights from Alere in the animal health and laboratory animal research markets. Effective February 2015, we terminated our license agreement with Alere as the licensed patents that we used had expired. While it may be necessary in the future to seek orPMA ~~renew~~approval ~~licenses~~or ~~relating~~require us to ~~various~~meet ~~aspects~~significant ofpostmarketing ~~our products, we believe, based upon past experience and industry practice, such licenses generally can be obtained on commercially reasonable terms~~requirements.

~~Employees~~Our Piccolo products are also subject to the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”). The current CLIA regulations divide laboratory tests into three categories: “waived,” “moderately complex” and “highly complex.” We currently offer Basic Metabolic Panel, Comprehensive Metabolic Panel, Electrolyte Panel, General Chemistry 6, General Chemistry 13, Kidney Check, Lipid Panel, Lipid Panel Plus, Liver Panel Plus, MetLyte 8 Panel and Renal Function Panel tests under waived status, which permits personnel not subject to CLIA imposed training requirements to run the Piccolo chemistry analyzer using these tests and thus allows for marketing to more sites (doctors’ offices and other point-of-care environments that maintain a CLIA certificate of waiver) than our other products that are subject to the other categories. For example, six of the panel tests performed using the Piccolo system are in the “moderately complex” category. This category requires that any location in which testing is performed be certified as a laboratory. Hence, we can only sell some Piccolo products to customers who meet the standards of a laboratory, which requires a testing facility to be certified by the Centers for Medicare and Medicaid Services (“CMS”) and meet the CLIA regulations. As a result, the market for these non-waived products is more limited.

AsIn of March 312014, ~~2017,~~the weFDA ~~had~~granted ~~584~~CLIA ~~full~~waived status for fingerstick draw for total cholesterol, high-~~time~~density ~~employees~~lipoprotein cholesterol and triglycerides blood tests. ~~None~~As ofa ~~our~~result, ~~employees~~combined iswith ~~covered~~existing CLIA waived tests for liver diagnostics and glucose using fingerstick samples, we now have two complete lipid panels that can be used by healthcare professionals to diagnose, treat and monitor hyperlipidemia patients using a ~~collective~~sample ~~bargaining~~obtained ~~agreement~~from either venous blood or a fingerstick draw. This enables U.S. healthcare professionals to perform lipid and weliver ~~consider~~diagnostics, ~~our~~as ~~relations~~well as measure glucose levels with ~~our~~a ~~employees~~simple tofingerstick beusing ~~good~~the Piccolo chemistry analyzer.

~~Financial~~USDA ~~Information~~Licensure ~~About~~of ~~Geographic~~Veterinary ~~Areas~~Biologics

~~For~~Our arotor-based ~~description~~Canine Heartworm Antigen Test (“CHW”) and certain of our ~~revenue~~lateral flow tests, including Canine Borrelia Burgdorferi Antibody Test Kit (rapid test for Lyme disease in dogs), Canine Ehrlichia Antibody Test Kit and ~~long-lived~~Canine ~~assets~~Anaplasma byTest ~~geographic~~Kit, ~~location~~are regulated as veterinary biologics under the Virus, ~~see~~Serum, ~~Note~~and 21Toxin toAct of 1913. Both tests require licensure of both the ~~Consolidated~~product ~~Financial~~and ~~Statements~~manufacturing infacilities. ~~Part~~Biologics IIproducts are subject to more extensive testing to establish their purity, ~~Item~~safety, 8potency, and efficacy and any failure to comply with the United States Department of ~~this~~Agriculture’s ~~report.~~Animal ~~See~~and ~~“Risk~~Plant ~~Factors~~Health Inspection Service (APHIS) Center for Veterinary Biologics (“CVB”) licensure or post-marketing approval requirements can result in ~~Part~~the I,inability ~~Item~~to 1Aobtain ~~below~~and maintain required licenses for ~~information~~our ~~regarding~~products ~~risks~~and ~~associated~~there ~~with~~can be no assurances that our ~~international~~products ~~operations~~can be maintained to the required quality levels necessary to continue to market these products. In addition, we are currently developing additional tests that will be subject to CVB licensure as veterinary biologics and licensure under CVB cannot be assured for these products.

~~Information~~Manufacturing ~~Available~~and toInternational ~~Investors~~Regulations

The ~~Company’s~~1976 ~~website~~Medical isDevice ~~www.abaxis.com.~~Amendments ~~This~~also ~~Annual~~require ~~Report~~us onto ~~Form~~manufacture ~~10-K,~~ our ~~Quarterly~~Piccolo ~~Reports~~products onin ~~Form~~accordance ~~10-Q,~~with ~~our~~Good ~~Current~~Manufacturing ~~Reports~~Practices onguidelines. ~~Form~~Current ~~8-K~~Good ~~and~~Manufacturing ~~any~~Practice ~~amendments~~requirements ~~hereto and thereto~~ are ~~made~~set ~~available~~forth ~~without~~in ~~charge on~~ the ~~Investor~~FDA’s ~~Relations~~Quality ~~section~~System ~~of our website, filed under “SEC Filings”~~Regulation. These ~~materials~~requirements ~~are~~regulate ~~available on~~ the ~~website~~methods asused ~~soon as reasonably practicable after filing these materials with~~in, orand ~~furnishing them to,~~ the ~~Securities~~facilities and ~~Exchange~~controls ~~Commission.~~used Infor ~~addition~~the design, ~~copies~~manufacture, ofpackaging, ~~our reports~~storage, ~~proxy~~installation ~~statements~~ and ~~other~~servicing ~~information~~of ~~filed~~our ~~electronically~~medical ~~with~~devices ~~the~~intended ~~SEC~~for ~~may~~human ~~be accessed at http://www~~use.~~sec.gov.~~ ~~The~~Our ~~public~~manufacturing ~~may~~facility ~~also~~is ~~submit~~subject ~~a written request~~ to ~~the~~periodic ~~SEC,~~inspections. ~~Office~~In ~~of FOIA/PA Operations~~addition, ~~100~~various Fstate ~~Street,~~regulatory ~~NE,~~agencies ~~Washington, DC 20549. This information~~ may ~~also~~regulate ~~be obtained by calling~~ the ~~SEC~~manufacture atof ~~202-551-8300,~~our ~~by sending an electronic message to the SEC at publicinfo@sec~~products.~~gov~~ ~~or by sending a fax to the SEC at 202-772-9337.~~

~~Item~~Federal, 1Astate, local and international regulations regarding the manufacture and sale of health care products and diagnostic devices may change. ~~Risk~~In ~~Factors~~addition, as we continue to sell in foreign markets, we may have to obtain

~~RISK FACTORS~~ 12

~~Our~~TABLE ~~future~~OF performance is subject to a number of risks. If any of the following risks actually occur, our business could be harmed and the trading price of our common stock could decline. In evaluating our business, you should carefully consider the following risks in addition to the other information in this Annual Report on Form 10-K. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. It is not possible to predict or identify all such factors and, therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we face.CONTENTS

12additional governmental clearances in those markets. To date, we have complied with what we believe to be all applicable federal, state, local and international regulatory requirements and standards, including those of the FDA, USDA, State of California Food and Drug Branch and International Organization for Standardization for medical devices.

~~TABLE~~Research OFand ~~CONTENTS~~Development

~~Our~~We ~~facilities~~are ~~and~~focused ~~manufacturing~~on ~~operations~~the ~~are~~development ~~vulnerable~~of new products and on improvements to ~~interruption~~existing asproducts. aResearch ~~result~~and development activities relate to development of ~~natural~~new ~~disasters~~tests and test methods, ~~system~~clinical ~~failures~~trials, product design and ~~other~~development, ~~business~~product ~~disruptions.~~improvements, ~~Any~~optimization ~~such~~and ~~interruption~~enhancement ~~may~~of ~~harm~~existing ~~our~~products ~~business~~and expenses related to regulatory and quality assurance.

~~Our~~Development ~~business~~of ~~depends~~tests onfor ~~the efficient and uninterrupted operation~~ point-of-care ~~our~~diagnostics ~~manufacturing~~will ~~operations,~~be ~~which~~targeted ~~are~~at ~~co-located~~specific ~~with~~applications ~~our~~based ~~corporate~~on ~~headquarters~~fulfilling inclinical ~~Union City, California~~needs. ~~These~~As ~~manufacturing~~part ~~operations~~of ~~are~~our ~~vulnerable~~product toportfolio ~~damage~~expansion ~~or interruption from earthquakes~~strategies, ~~fire,~~we ~~floods,~~launched ~~power~~six ~~loss,~~products ~~telecommunications~~in ~~failures,~~fiscal ~~break-ins and similar events~~2018. AIn ~~failure~~June ~~of manufacturing operations~~2017, bewe itlaunched ~~in the development and manufacturing of~~ our ~~Piccolo or~~ VetScan ~~blood~~Canine ~~chemistry~~Pancreatic ~~analyzers~~Lipase orRapid ~~the~~Test ~~reagent~~into ~~discs used in~~ the ~~blood~~veterinary ~~chemistry~~market ~~analyzers~~and, ~~could result~~ in ~~our~~September ~~inability~~2017, towe ~~supply~~launched ~~customer~~VetScan ~~demand.~~UA, Wea dohand ~~not~~held ~~have~~point-of-care aurine ~~backup~~chemistry ~~facility~~analyzer tointo ~~provide~~the ~~redundant~~veterinary ~~manufacturing~~market. ~~capacity~~In in the ~~event~~second quarter of afiscal ~~system~~2018, ~~failure~~we orlaunched ~~other~~the ~~significant~~VetScan ~~loss or problem~~Fuse. ~~Accordingly,~~In ifthe ~~our~~fourth ~~manufacturing~~quarter ~~operations~~of infiscal ~~Union City~~2018, ~~California were interrupted,~~ we ~~may~~launched ~~be required to bring an alternative facility online,~~ a ~~process~~new ~~that~~point-of-care ~~could~~urine ~~take~~sediment ~~several~~analyzer ~~weeks~~into tothe ~~several~~veterinary ~~months~~market, orthe ~~more.~~VetScan ~~The~~SA, ~~occurrence of~~ a ~~business~~new ~~disruption~~VetScan ~~could~~i-STAT ~~harm~~Alinity ~~our~~v ~~revenue~~analyzer and ~~financial~~a ~~condition~~combination ~~and~~test ~~increase~~for ~~our~~heartworm, ~~costs~~lyme, ~~and~~ehrlichia ~~expenses. Although we carry property~~ and ~~business~~anaplasma, ~~interruption insurance to insure against~~ the ~~financial~~VetScan ~~impact~~FLEX4 ofRapid ~~certain events of this nature, our coverage may not be adequate to compensate us for all losses that may occur~~Test.

WeOur ~~face~~research ~~significant~~and ~~competition.~~development Weexpenses, ~~may~~which ~~not~~consist beof ~~able~~personnel tocosts, ~~compete~~consulting ~~effectively~~expenses ~~with~~and ~~larger~~materials and related expenses, ~~more~~were ~~established~~$23.3 ~~entities~~million, or$19.8 ~~their~~million ~~products~~and $18.4 million, or ~~with~~10%, ~~future~~9% ~~organizations~~and or8% ~~future~~of ~~products~~our total revenues, ~~which~~in ~~could~~fiscal ~~cause~~2018, 2017 and 2016, respectively. Research and development expense as a percentage of total revenues remained consistent over the same periods, reflecting our ~~sales~~continued commitment to ~~decline~~invest in long-term growth opportunities.

~~The~~We ~~diagnostic~~anticipate ~~market~~that iswe awill ~~well-established~~continue ~~field~~to inmake ~~which~~expenditures ~~there~~for ~~are~~research aand ~~number~~development ofas ~~competitors~~we ~~that~~seek ~~have~~to ~~substantially~~provide ~~greater~~new ~~financial~~products ~~and~~to ~~operational~~maintain ~~resources~~ and ~~larger,~~improve ~~more~~our ~~established~~competitive ~~marketing, sales and service organizations than we do~~position. We ~~compete~~will ~~primarily~~continue ~~with~~to ~~the~~develop ~~following~~new ~~organizations:~~products ~~commercial~~that ~~clinical~~we ~~laboratories,~~believe ~~hospitals’~~will ~~clinical~~provide ~~laboratories,~~further ~~and~~opportunities ~~manufacturers~~for ofgrowth ~~bench~~in ~~top~~the ~~multi-test~~human ~~blood~~medical ~~analyzers~~ and ~~other~~veterinary ~~testing systems that health care providers can use at the point of care~~markets.

~~Historically~~Patents, ~~hospitals~~Proprietary ~~and~~Technologies ~~commercial laboratories perform most of the human diagnostic testing,~~ and veterinary specialized commercial laboratories perform most of the veterinary medical testing. We have identified five principal factors that we believe customers typically use to evaluate our products and those of our competitors. These factors include the following: range of tests offered, immediacy of results, cost effectiveness, ease of use and reliability of results. We believe that we compete effectively on each of these factors except for the range of tests offered. Clinical laboratories are effective at processing large panels of tests using skilled technicians and complex equipment. Currently, while our offering of instruments and reagent discs does not provide the same broad range of tests as hospitals and commercial laboratories, we believe that in certain markets, our products provide a sufficient breadth of test menus to compete successfully with clinical laboratories given the advantages of our products with respect to the other four factors. In addition, we cannot assure you that we will continue to be able to compete effectively on cost effectiveness, ease of use, immediacy of results or reliability of results. We also cannot assure you that we will ever be able to compete effectively on the basis of range of tests offered.Licenses

Our ~~principal~~products ~~competitors~~sold in both the ~~point-of-care human~~ medical ~~diagnostic market are Alere, Alfa Wassermann S.P.A., Ortho Clinical Diagnostics, Inc.~~ and F.veterinary ~~Hoffmann-La~~markets ~~Roche~~are ~~Ltd.~~based ~~Additionally,~~on ~~in certain segments of the human medical diagnostic market~~complex, ~~we compete with Abbott’s i~~rapidly-~~STAT~~developing ~~division~~technologies. Many of ~~our~~these ~~competitors~~technologies inare ~~the~~covered ~~human~~by ~~medical~~patents ~~diagnostic~~that ~~market have significantly larger product lines to offer and greater financial and other resources than~~ we doown. InOur ~~particular,~~practice ~~many~~is ofto ~~these~~obtain ~~competitors~~patent ~~have~~protection ~~large~~on ~~sales~~our ~~forces~~products and ~~well-established~~processes ~~distribution~~where ~~channels and brand names~~possible.

~~Our~~We ~~principal~~have ~~competitors~~pursued in the ~~veterinary~~development ~~diagnostic~~of ~~market~~a ~~are~~patent ~~Idexx~~portfolio ~~Laboratories,~~to ~~Inc.~~protect ~~and~~our ~~Heska~~proprietary ~~Corporation~~technology. ~~Idexx~~Our ~~has~~policy ais ~~larger~~to ~~veterinary~~file ~~product~~patent ~~and~~applications ~~service~~to ~~offering~~protect ~~than~~technology, weinventions do and aimprovements ~~large~~that ~~sales~~are ~~infrastructure~~important ~~network~~to ~~and~~the ~~well-established~~development ~~brand~~of ~~name~~our business. ~~Consequently~~As of March 31, we2018, ~~must~~94 ~~develop~~patent applications have been filed on our ~~distribution~~behalf ~~channels~~with the United States Patent and ~~significantly~~Trademark ~~expand~~Office, of which 55 patents have been issued and 26 patents are currently active. The expiration dates of our ~~direct~~active ~~sales~~patents ~~force~~with inthe ~~order~~United toStates ~~compete~~Patent ~~more~~and ~~effectively~~Trademark inOffice ~~these~~range ~~markets~~from August 2021 to August 2036. IfIn addition, we ~~are~~have ~~unable~~32 toissued ~~effectively~~and ~~manage~~active ~~our~~foreign ~~distribution~~patents ~~channels~~and in60 ~~our~~foreign ~~highly~~patent ~~competitive~~applications ~~industry~~pending, weof ~~may~~which ~~fail~~two toare ~~retain~~Patent ~~customers~~Cooperation orTreaty ~~obtain~~international ~~new~~applications ~~customers~~to ~~and~~be ~~our~~filed ~~business~~nationally ~~will~~in ~~suffer~~foreign countries.

We ~~would~~protect ~~fail~~trade secrets, trademarks, know-how, continuing technological innovations and licensing opportunities to ~~achieve~~develop ~~anticipated~~and ~~revenues~~maintain ifour competitive position. Our success depends in part on obtaining patent protection for our products and processes, preserving trade secrets, patents and trademarks, operating without infringing the ~~market~~proprietary ~~does~~rights ~~not~~of ~~accept~~third parties, and acquiring licenses for technology or products. In the future, we may enter into license agreements or other arrangements with third parties relating to various aspects of our products as necessary. In the past, some of our existing products were manufactured or sold under the terms of license agreements that required us to pay royalties to the licensor based on the sales of products containing the licensed technology

We believe that our core compact blood chemistry analyzer product differs substantially from current blood chemistry analyzers on the market. We compete with centralized laboratories that offer a greater number of tests than our products, at a lower cost, but require more time. We also compete with other point-of-care analyzers that often require more maintenance and offer a narrower range of tests. However, these point-of-care analyzers Employees

13As of March 31, 2018, we had 656 full-time employees worldwide. None of our employees is covered by a collective bargaining agreement and we consider our relations with our employees to be good.

~~TABLE OF CONTENTS~~13

~~are~~TABLE ~~generally~~OF ~~marketed by larger companies which have greater resources for sales and marketing, in addition to a recognized brand name and established distribution relationships.~~ CONTENTS

InFinancial ~~the~~Information ~~human~~About ~~medical~~Geographic market, we believe that our blood chemistry analyzers offer customers many advantages, including substantial improvements in clinical efficiencies. However, the implementation of point-of-care diagnostics in the current healthcare environment involves changes to current standard practices, such as using large clinical laboratories, and adopting our technology requires a shift in both the procedures and mindset of care providers. The human medical market in particular is highly regulated, structured and subject to government and managed care influences; accordingly, the market can be difficult to penetrate and slower to adapt to new technologies. If we or our distribution partner, Abbott, are unable to convince large numbers of medical clinics, hospitals and other point-of-care environments of the benefits of our Piccolo blood chemistry analyzers and our other products, we could fail to achieve anticipated revenue. Areas

~~Historically,~~For ina ~~the~~description ~~veterinary~~of ~~market, we have marketed~~ our ~~VetScan~~revenue ~~products~~and ~~through~~long-lived ~~both~~assets ~~direct~~by ~~sales~~geographic ~~and~~location, ~~distribution~~see ~~channels~~Note to20 ~~veterinarians. We continue~~ to ~~develop~~the ~~new~~Consolidated ~~animal~~Financial ~~blood~~Statements ~~tests~~in toPart ~~expand our product offerings; however~~II, weItem ~~cannot~~8 beof ~~assured~~this ~~that these products will be accepted by the veterinary market~~report. ~~Any~~See ~~failure~~“Risk toFactors” ~~achieve~~in ~~market~~Part ~~acceptance with our current or future products would harm our business and financial condition. Moreover~~I, weItem ~~may~~1A ~~identify~~below ~~new areas~~ for ~~serving~~information ~~our~~regarding ~~veterinary~~risks ~~market~~associated ~~customers~~with ~~and~~ our ~~offerings~~international ~~in these areas may not be accepted by the market or achieve our financial goals to increase revenues and profitability at acceptable levels~~operations. ~~For example, we sold our AVRL business in March 2015, as it failed to perform to our expectations.~~

WeInformation ~~need~~Available to ~~successfully market additional products in the veterinary diagnostic market if we are to compete in that market.~~ Investors

WeThe ~~continue~~Company’s towebsite ~~develop~~is ~~products,~~www.abaxis.com. ~~such~~This asAnnual ~~VetScan~~Report ~~FUSE,~~on aForm ~~web~~10-~~based~~K, ~~integration~~our ~~system~~Quarterly ~~that~~Reports ~~provides~~on ~~connectivity~~Form ~~between~~10-Q, our ~~point~~Current Reports on Form 8-~~of-care~~K ~~diagnostic~~and ~~instruments~~any amendments hereto and ~~the~~thereto ~~veterinary~~are ~~practice~~made ~~management~~available ~~systems;~~without acharge ~~new~~on ~~point-~~the Investor Relations section of~~-care~~ ~~urine~~our ~~sediment~~website, filed under “SEC Filings”. These materials are available on the website as soon as reasonably practicable after filing these materials with, or furnishing them to, the Securities and ~~chemistry~~Exchange ~~analyzers~~Commission. In addition, copies of our reports, proxy statements and ~~new~~other ~~animal~~information ~~blood~~filed ~~tests~~electronically with the SEC may be accessed at http://www.sec.gov. The public may also submit a written request to ~~expand~~the ~~our~~SEC, ~~product~~Office ~~offerings;~~of ~~however~~FOIA/PA Operations, we100 ~~cannot~~F beStreet, ~~assured~~NE, ~~that~~Washington, ~~these~~DC ~~products~~20549. ~~will~~This information may also be ~~accepted~~obtained by calling the ~~veterinary~~SEC ~~market.~~at ~~Any~~202-551-8300, ~~failure~~by tosending ~~achieve~~an ~~market~~electronic ~~acceptance~~message ~~with~~to ~~our~~the ~~current~~SEC at publicinfo@sec.gov or ~~future~~by ~~products~~sending ~~would~~a ~~harm~~fax ~~our~~to ~~business~~the ~~and~~SEC ~~financial~~at ~~condition~~202-772-9337.

We are not able to predict sales in future quarters and a number of factors affect our periodic results, which may result in significant variance in our quarterly results of operations and may negatively impact our stock price.14

WeTABLE ~~are~~OF not able to accurately predict our sales in future quarters. Our revenues in the medical and veterinary markets are derived primarily by selling to distributors that resell our products to the ultimate user. While we are better able to predict sales of our reagent discs and other consumable products, as we sell these discs primarily for use with our instruments that we sold in prior periods, we generally are unable to predict with much certainty sales of our instruments, as we typically sell our instruments to new users or as an upgrade for to our existing customers, which can fluctuate on a quarterly basis. We generally operate with a limited order backlog, because we ship our products shortly after we receive the orders from our customers. As a result, our product sales in any quarter are generally dependent on orders that we receive and ship in that quarter. Accordingly, our sales in any one quarter or period are not indicative of our sales in any future period.CONTENTS

~~The~~Item ~~sales cycle for our products can fluctuate, which may cause revenue and results of operations to vary significantly from period to period~~1A. WeRisk believe this fluctuation is primarily due (i) to seasonal patterns in the decision making processes by our independent distributors and direct customers, (ii) to inventory or timing considerations by our distributors and (iii) on the purchasing requirements of the U.S. government to acquire our products. Accordingly, we believe that period to period comparisons of our results of operations are not necessarily meaningful. In the future, our periodic results of operations may vary significantly depending on, but not limited to, a number of factors, including:Factors

•RISK ~~new~~FACTORS ~~product or service announcements made by us or our competitors;~~

•Our ~~changes~~future inperformance is subject to a number of risks. If any of the following risks actually occur, our ~~pricing~~business ~~structures~~could orbe harmed and the ~~pricing~~trading ~~structures~~price of our ~~competitors;~~common stock could decline. In evaluating our business, you should carefully consider the following risks in addition to the other information in this Annual Report on Form 10-K. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. It is not possible to predict or identify all such factors and, therefore, you should not consider the following risks to be a complete statement of all the potential risks or uncertainties that we face.

•Our ~~the~~facilities ~~sales~~and ~~performance~~manufacturing operations are vulnerable to interruption as a result of ~~our~~natural ~~independent~~disasters, ~~distributors;~~system failures and other business disruptions. Any such interruption may harm our business.

14Our business depends on the efficient and uninterrupted operation of our manufacturing operations, which are co-located with our corporate headquarters in Union City, California. These manufacturing operations are vulnerable to damage or interruption from earthquakes, fire, floods, power loss, telecommunications failures, break-ins and similar events. A failure of manufacturing operations, be it in the development and manufacturing of our Piccolo or VetScan blood chemistry analyzers or the reagent discs used in the blood chemistry analyzers, could result in our inability to supply customer demand. We do not have a backup facility to provide redundant manufacturing capacity in the event of a system failure or other significant loss or problem. Accordingly, if our manufacturing operations in Union City, California were interrupted, we may be required to bring an alternative facility online, a process that could take several weeks to several months or more. The occurrence of a business disruption could harm our revenue and financial condition and increase our costs and expenses. Although we carry property and business interruption insurance to insure against the financial impact of certain events of this nature, our coverage may not be adequate to compensate us for all losses that may occur.

~~TABLE~~We OFface ~~CONTENTS~~significant competition. We may not be able to compete effectively with larger, more established entities or their products, or with future organizations or future products, which could cause our sales to decline.

•The ~~excess~~diagnostic ~~inventory~~market ~~levels~~is a well-established field in which there are a number of competitors that have substantially greater financial and ~~inventory~~operational ~~imbalances~~resources and larger, more established marketing, sales and service organizations than we do. We compete primarily with the following organizations: commercial clinical laboratories, hospitals’ clinical laboratories, and manufacturers of bench top multi-test blood analyzers and other testing systems that health care providers can use at ~~our~~the ~~independent~~point ~~distributors;~~of care.

•Historically, ~~our~~hospitals ~~ability~~and commercial laboratories perform most of the human diagnostic testing, and veterinary specialized commercial laboratories perform most of the veterinary medical testing. We have identified five principal factors that we believe customers typically use to ~~develop~~evaluate our products and those of our competitors. These factors include the following: range of tests offered, ~~introduce~~immediacy of results, cost effectiveness, ease of use and ~~market~~reliability ~~new~~of ~~products~~results. orWe ~~services~~believe that we compete effectively on each of these factors except for the range of tests offered. Clinical laboratories are effective at processing large panels of tests using skilled technicians and complex equipment. Currently, while our offering of instruments and reagent discs does not provide the same broad range of tests as hospitals and commercial laboratories, we believe that in certain markets, our products provide a ~~timely~~sufficient ~~basis~~breadth of test menus to compete successfully with clinical laboratories given the advantages of our products with respect to the other four factors. In addition, we cannot assure you that we will continue to be able to compete effectively on cost effectiveness, ease of use, immediacy of results or atreliability ~~all;~~of results. We also cannot assure you that we will ever be able to compete effectively on the basis of range of tests offered.

•Our ~~our~~principal ~~manufacturing~~competitors ~~capacities~~in the point-of-care human medical diagnostic market are Alere, Alfa Wassermann S.P.A., Ortho Clinical Diagnostics, Inc. and F. Hoffmann-La Roche Ltd. Additionally, in certain segments of the human medical diagnostic market, we compete with Abbott’s i-STAT division. Many of our ~~ability~~competitors in the human medical diagnostic market have significantly larger product lines to ~~increase~~offer ~~the~~and ~~scale~~greater financial and other resources than we do. In particular, many of these ~~capacities;~~competitors have large sales forces and well-established distribution channels and brand names.

•Our principal competitors in the ~~mix~~veterinary ofdiagnostic ~~sales~~market ~~among~~are ~~our~~Idexx ~~instruments~~Laboratories, Inc. and ~~consumable~~Heska ~~products;~~Corporation. Idexx has a larger veterinary product and service offering than we do and a large sales infrastructure network and

~~• the amount of our research and development, sales and marketing and general and administrative expenses; and~~15

•TABLE ~~changes~~OF ~~in our strategies.~~CONTENTS

Aswell-established abrand ~~result~~name. Consequently, itwe ismust ~~likely~~develop ~~that in some periods~~ our ~~operating~~distribution ~~results~~channels ~~will~~and ~~not~~significantly ~~meet~~expand ~~investor~~our ~~expectations~~direct orsales ~~those~~force ~~of public market analysts. Any unanticipated change~~ in ~~revenues~~order ~~or operating results is likely~~ to ~~cause~~compete ~~our~~more ~~stock~~effectively ~~price~~in tothese ~~fluctuate~~markets. ~~because~~If ~~such~~we ~~changes~~are ~~reflect~~unable ~~new information available~~ to ~~investors~~effectively ~~and~~manage ~~analysts.~~our ~~Any~~distribution ~~fluctuations~~channels in our ~~quarterly~~highly ~~results~~competitive ~~may~~industry, ~~not~~we ~~accurately~~may ~~reflect~~fail ~~the~~to ~~underlying~~retain ~~performance~~customers ofor ~~our~~obtain ~~business~~new customers and ~~could cause a decline in the trading price of~~ our ~~common~~business ~~stock~~will suffer.

AWe ~~failure~~would fail to ~~manage~~achieve ~~the~~anticipated ~~inventory~~revenues ~~levels~~if ofthe ~~our~~market ~~distributors~~does ~~effectively~~not ~~could~~accept ~~adversely affect~~ our ~~revenues, gross margins and results of operations~~products.

We ~~must~~believe ~~manage~~that ~~the inventory of~~ our ~~products~~core ~~held~~compact byblood ~~our~~chemistry ~~distributors~~analyzer ~~effectively. Any excess or shortage of inventory held by our distributors could affect our results of operations. Our distributors may increase orders during periods of~~ product ~~shortages~~differs ~~and~~substantially cancel or delay orders if their inventory is too high. They also may adjust their orders in response to the supply of our products, the products of our competitors that are available to them, and in response to seasonal fluctuations in customer demand. Revenues from ~~sales~~current toblood ~~our~~chemistry ~~distributors~~analyzers ~~generally~~on ~~are recognized based upon shipment of our products to~~ the distributors, net of estimated sales allowances, discounts and rebates. Inventory management remains an area of focus as we balance inventory levels of our instruments and consumables, especially in our United States veterinary market ~~distribution channel, consisting of both national and regional distributors~~. We ~~must~~compete ~~also~~with ~~balance~~centralized ~~the~~laboratories ~~need~~that tooffer ~~maintain~~a ~~sufficient~~greater ~~inventory~~number ~~levels in the distribution channel against the risk~~ of ~~inventory~~tests ~~obsolescence~~than ~~because of the shelf life of~~ our ~~consumable~~ products, ~~and customer demand. If we ultimately determine that we have excess inventory~~ at ~~our~~a ~~distributors~~lower ~~or inventory imbalances in the distribution channel~~cost, webut ~~may~~require ~~have~~more ~~to reduce our selling prices, which could result in lower gross margins~~time. ~~For~~We ~~example,~~also ~~during~~compete ~~the~~with ~~second~~other ~~half~~ point-of-care ~~fiscal~~analyzers ~~2014,~~that asoften ~~compared~~require tomore ~~the~~maintenance ~~same period in fiscal 2013, our revenues were adversely impacted in the United States veterinary market by excess channel inventory~~ and ~~inventory~~offer ~~imbalances and resulted to~~ a ~~decrease~~narrower ofrange ~~sales orders from our largest distributors in the veterinary market. The excess channel inventory was the result~~ of ~~our distributors not selling our products to end customers at the same rate as they were purchasing products from us~~tests. ~~In addition~~However, wethese ~~only began selling through our distributors Henry Schein Animal Health and Patterson Companies, Inc. in the third quarter~~ point-of-care ~~fiscal~~analyzers ~~2015~~are ~~and~~generally ~~our~~marketed ~~revenues in future quarters may be impacted~~ by ~~the~~larger ~~timing~~companies ofwhich ~~purchases~~have ofgreater ~~our~~resources ~~products~~for ~~sold by them as these new distributors integrate our products into their~~ sales ~~process.~~and ~~Should~~marketing, ~~our~~in ~~efforts~~addition to ~~monitor~~a ~~and~~recognized ~~manage~~brand ~~channel~~name ~~inventory be unsuccessful, our business, financial condition~~ and ~~results~~established ofdistribution ~~operations are likely to be adversely affected~~relationships.

WeIn ~~rely~~the ~~primarily~~human onmedical ~~distributors~~market, towe ~~sell~~believe that our ~~products~~blood ~~and~~chemistry weanalyzers ~~rely~~offer oncustomers ~~sole~~many ~~distributor~~advantages, ~~arrangements~~including substantial improvements in clinical efficiencies. However, the implementation of point-of-care diagnostics in the current healthcare environment involves changes to current standard practices, such as using large clinical laboratories, and adopting our technology requires a ~~number~~shift in both the procedures and mindset of ~~countries~~care providers. ~~Our~~The ~~failure~~human medical market in particular is highly regulated, structured and subject to ~~successfully~~government ~~develop~~and managed care influences; accordingly, ~~manage~~the market can be difficult to penetrate and ~~maintain~~slower ~~these~~to ~~relationships~~adapt ~~could~~to ~~adversely~~new ~~affect~~technologies. If we or our ~~business~~distribution partner, ~~financial~~Abbott, ~~condition~~are unable to convince large numbers of medical clinics, hospitals and ~~results~~other point-of-care ~~operations~~environments of the benefits of our Piccolo blood chemistry analyzers and our other products, we could fail to achieve anticipated revenue.

WeHistorically, ~~sell~~in ~~our~~the ~~medical~~veterinary ~~and~~market, ~~veterinary~~we ~~products~~marketed ~~primarily~~our VetScan products through aboth ~~limited~~direct ~~number~~sales ofand ~~distributors~~distribution channels to veterinarians. AsWe acontinue ~~result~~to develop new animal blood tests to expand our product offerings; however, we ~~are~~cannot ~~dependent~~be ~~upon~~assured that these ~~distributors~~products will be accepted by the veterinary market. Any failure to ~~sell~~achieve market acceptance with our ~~products~~current ~~and~~or tofuture ~~assist~~products uswould inharm ~~promoting~~our business and ~~creating~~financial acondition. ~~demand~~Moreover, we may identify new areas for serving our ~~products.~~veterinary Wemarket ~~operate~~customers onand aour ~~purchase~~offerings ~~order~~in ~~basis~~these ~~with~~areas ~~the~~may ~~distributors~~not ~~and~~be accepted by the ~~distributors~~market ~~are~~or ~~under~~achieve noour ~~contractual~~financial ~~obligation~~goals to ~~continue~~increase ~~carrying~~revenues ~~our~~and ~~products~~profitability at acceptable levels. ~~Further~~For example, ~~many~~we ofsold our ~~distributors~~AVRL ~~may~~business ~~carry~~in ~~our~~March ~~competitors’ products~~2015, ~~and~~as ~~may~~it ~~promote~~failed ~~our~~to ~~competitors’~~perform ~~products~~to ~~over~~ our ~~own products~~expectations.

We ~~depend~~need onto asuccessfully ~~number of distributors in North America who distribute our VetScan products. In the United States veterinary~~ market ~~segment,~~additional we rely on our distribution network, consisting of both national distributors and independent regional distributors, and our ability to effectively manage this network. We depend on our distributors to assist us in promoting our products in the veterinary diagnostic market, ~~and accordingly,~~ if ~~one~~we orare ~~more of our distributors were~~ to ~~stop~~compete ~~selling our products~~ in ~~the~~that ~~future, we may experience a temporary sharp decline or delay in our sales revenues until our customers identify another distributor or purchase products directly from us~~market.

15We continue to develop products, such as VetScan FUSE, a web-based integration system that provides connectivity between our point-of-care diagnostic instruments and the veterinary practice management systems; a new point-of-care urine sediment and chemistry analyzers and new animal blood tests to expand our product offerings; however, we cannot be assured that these products will be accepted by the veterinary market. Any failure to achieve market acceptance with our current or future products would harm our business and financial condition.

~~TABLE~~We OFare ~~CONTENTS~~not able to predict sales in future quarters and a number of factors affect our periodic results, which may result in significant variance in our quarterly results of operations and may negatively impact our stock price.

~~Internationally,~~We weare ~~rely~~not onable ~~only~~to aaccurately ~~few~~predict ~~distributors for~~ our ~~products~~sales in ~~both~~future quarters. Our revenues in the medical and veterinary ~~diagnostic~~ markets. Weare ~~currently~~derived ~~rely~~primarily onby selling to distributors that ~~carry~~resell ~~either~~ our ~~medical or veterinary~~ products into the ~~following~~ultimate ~~countries:~~user. ~~Australia,~~While ~~Austria,~~we ~~Belgium,~~are ~~Canada,~~better ~~China,~~able ~~Czech~~to ~~Republic,~~predict ~~Denmark,~~sales ~~France,~~of ~~Germany,~~our ~~Hong~~reagent ~~Kong,~~discs ~~India,~~and ~~Indonesia,~~other ~~Israel,~~consumable ~~Italy~~products, ~~Japan,~~as ~~Korea,~~we ~~Mexico,~~sell ~~the~~these ~~Netherlands,~~discs ~~New~~primarily ~~Zealand,~~for ~~the~~use ~~Philippines,~~with ~~Portugal,~~our ~~Romania,~~instruments ~~Russia,~~that ~~Singapore,~~we ~~Spain,~~sold ~~Sweden,~~in ~~Switzerland,~~prior ~~Turkey~~periods, ~~the~~we ~~United~~generally ~~Arab~~are ~~Emirates,~~unable ~~the~~to ~~United~~predict ~~Kingdom~~with ~~and~~much ~~the~~certainty ~~United~~sales ~~States. Our distributors in each~~ of ~~these~~our ~~countries~~instruments, ~~are~~as ~~responsible~~we ~~for~~typically ~~obtaining~~sell ~~the~~our ~~necessary~~instruments ~~approvals~~ to ~~sell our~~ new ~~and~~users ~~existing~~or ~~products.~~as ~~These~~an ~~distributors~~upgrade ~~may not be successful in obtaining proper approvals~~ for to our ~~new and~~ existing ~~products in their respective countries~~customers, ~~and~~which ~~they~~can ~~may~~fluctuate ~~not~~on bea ~~successful~~quarterly ~~in marketing our products~~basis. ~~Furthermore,~~We angenerally ~~inability~~operate ~~of,~~with ora ~~any~~limited ~~delays~~order bybacklog, ~~our~~because ~~distributor~~we inship ~~receiving the necessary approvals for~~ our ~~new~~products orshortly ~~other~~after ~~products~~we ~~can~~receive ~~adversely~~the ~~impact~~orders from our ~~revenues~~customers. inAs a ~~country.~~result, Weour ~~plan~~product tosales ~~continue~~in toany ~~enter~~quarter ~~into~~are ~~additional~~generally ~~distributor~~dependent ~~relationships~~on toorders ~~expand~~that ~~our~~we ~~international~~receive ~~distribution base~~ and ~~presence.~~ship ~~However, we may not be successful~~ in ~~entering~~that ~~into additional distributor relationships on favorable terms, or at all~~quarter. ~~In addition~~Accordingly, our ~~distributors~~sales ~~may~~in ~~terminate their relationship with us at~~ any ~~time.~~one ~~Historically,~~quarter weor ~~have~~period ~~experienced~~are anot ~~high~~indicative ~~degree~~ of ~~turnover among~~ our ~~international~~sales ~~distributors. This turnover makes it difficult for us to establish a steady distribution network overseas. Consequently, we may not be successful~~ in ~~marketing~~any ~~our~~future ~~Piccolo and VetScan products internationally, and our business and financial condition may be harmed as a result~~period.

In the United States, we rely on Abbott as our exclusive distributor in certain medical markets to sell our products. Our dependency on Abbott means that any failure to successfully develop products and maintain this relationship could adversely affect our business, financial condition and results of operations.16

~~Abbott~~TABLE ~~has~~OF the exclusive right to sell and distribute our Piccolo Xpress chemistry analyzer and associated consumables in the United States professionally-attended human healthcare market, excluding sales and distribution to Catapult Health LLC and specified customer segments, which includes pharmacy and retail store clinics, shopping malls, clinical research organizations and cruise ship lines. As a result of the Abbott Agreement, we no longer have control over the marketing and sale of our primary medical products into most of the U.S. medical market and are dependent upon the efforts and priorities of Abbott in promoting and creating a demand for such products in such market. We do not have any control over pricing, inventory levels, distribution efforts and other factors that may impact the level of sales achieved, timing of revenue recognized and other adjustments that may impact our reported sales. Moreover, we are dependent upon Abbott’s forecasts and sales efforts and maintenance of pre-existing sub-distributor agreements that were assigned to Abbott. As a result, if Abbott’s efforts are unsuccessful, our business, financial condition and results of operations are likely to be adversely affected. For example, the transition of this U.S. medical business had an adverse effect on our revenues during fiscal 2014, with respect to lower average selling prices of Piccolo products sold to Abbott and the timing of purchases of our products now sold by Abbott as it integrated our products into its sales process.CONTENTS

InThe ~~addition,~~sales ascycle afor ~~result~~our ofproducts ~~the~~can ~~Abbott Agreement~~fluctuate, wewhich ~~have~~may ~~substantially~~cause ~~reduced~~revenue ~~the~~and ~~size~~results of ~~our~~operations ~~United~~to ~~States~~vary ~~medical~~significantly ~~sales~~from ~~force.~~period ~~The~~to ~~initial~~period. ~~term~~We ofbelieve ~~the~~this ~~Abbott~~fluctuation ~~Agreement~~is ~~ends~~primarily ondue ~~December~~(i) ~~31,~~to ~~2017,~~seasonal ~~and~~patterns ~~after~~in the ~~initial~~decision ~~term,~~making ~~the~~processes ~~agreement~~by ~~renews~~our ~~automatically~~independent ~~for~~distributors ~~successive~~and ~~one-year~~direct ~~periods~~customers, ~~unless~~(ii) ~~terminated~~to byinventory ~~either~~or ~~party~~timing ~~based~~considerations ~~upon~~by aour ~~notice~~distributors ofand ~~non-renewal~~(iii) ~~six~~on ~~months~~the ~~prior~~purchasing torequirements of the ~~then-current expiration date~~U.S. Ingovernment ~~the~~to ~~event~~acquire ~~the~~our ~~agreement~~products. ~~is terminated~~Accordingly, we ~~would~~believe bethat ~~required~~period to ~~invest~~period ~~and~~comparisons ~~re-establish~~of ~~presence~~our ~~and~~results ~~sales~~of ~~capabilities~~operations inare ~~markets~~not ~~that~~necessarily ~~were~~meaningful. ~~served~~In bythe ~~Abbott and/or identify one or more suitable replacement distribution partner(s)~~future, ~~which~~our ~~would~~periodic ~~require~~results ~~significant time and effort. We could not be assured~~ of ~~replacing~~operations ~~the~~may ~~capabilities~~vary ofsignificantly ~~Abbott~~depending ~~in those markets. New sales personnel and distribution partners take time to train and gain full productivity with customers~~on, ~~and~~but ifnot welimited ~~are unable~~ to ~~accomplish this successfully~~, ~~our~~a ~~business,~~number ~~financial condition and results~~ of ~~operations~~factors, ~~could be adversely affected.~~including:

We• ~~depend~~new onproduct ~~limited~~ or ~~sole~~service ~~suppliers,~~announcements ~~many~~made ofby ~~whom~~us ~~we do not have long-term contracts with, and failure of our suppliers to provide the components~~ or ~~products to us could harm~~ our ~~business~~competitors;

We• ~~use~~changes ~~several~~in ~~key~~our ~~components~~pricing ~~that~~structures ~~are currently available from limited~~ or ~~sole~~the ~~sources~~pricing asstructures ~~discussed~~of ~~below.~~our competitors;

• Blood Chemistry Analyzer Components: Our blood analyzer products use several technologically-advanced components that we currently purchase from a limited number of suppliers, including certain components from our single source supplier, Hamamatsu Corporation. Our analyzers also use a printer that is primarily made by Advanced Printing Systems. The loss of the ~~supply~~sales ofperformance ~~any~~ of ~~these components could force us to redesign~~ our ~~blood~~independent ~~chemistry analyzers.~~distributors;

16• excess inventory levels and inventory imbalances at our independent distributors;

~~TABLE~~• OFour ~~CONTENTS~~ability to develop, introduce and market new products or services on a timely basis, or at all;

• ~~Reagent~~our ~~Discs:~~manufacturing ~~Two~~capacities ~~injection-molding manufacturers, Balda C. Brewer~~ and ~~Nypro,~~our ~~Inc.,~~ability ato ~~subsidiary~~increase ~~of Jabil Circuit, currently make~~ the ~~molded~~scale ~~plastic discs that, when loaded with reagents and welded together, form our reagent disc products. We believe that only a few manufacturers are capable~~ of ~~producing~~ these ~~discs to the narrow tolerances that we require. To date, we have only qualified these two manufacturers to manufacture the molded plastic discs.~~capacities;

• ~~Reagent Chemicals: We currently depend on~~ the ~~following~~mix ~~single source vendors for some~~ of ~~the~~sales ~~chemicals~~among ~~that we use to produce the reagents and dry reagent chemistry beads that are either inserted in~~ our ~~reagent~~instruments discs, lateral flow rapid tests or sold as stand-alone products: Amano Enzyme USA Co., Ltd., Kikkoman Corporation Biochemical Division, Microgenics Corporation, a division of Thermo Fisher Scientific, Roche Molecular Biochemicals of Roche Diagnostics Corporation, a division of F. Hoffmann-La Roche, Ltd., SA Scientific Co., Sekisui Diagnostics, Sigma Aldrich Inc. and ~~Toyobo~~consumable ~~Specialties.~~products;

We• ~~market~~the ~~original~~amount ~~equipment~~of ~~manufacturer~~our ~~supplied~~research ~~products~~and ~~that~~development, ~~are~~sales ~~currently~~and ~~available~~marketing ~~from~~and ~~limited~~general ~~sources~~and asadministrative ~~discussed~~expenses; ~~below.~~and

• ~~Hematology~~changes ~~Instruments and Reagent Kits: Our VetScan hematology instruments are manufactured by Diatron~~ in ~~Hungary and are purchased by us as a completed instrument. In addition, we currently have qualified two suppliers to produce the reagent kits for~~ our ~~hematology instruments: Clinical Diagnostic Solutions, Inc~~strategies. ~~and Diatron.~~

•As ~~VSpro~~a ~~Specialty~~result, ~~Analyzers~~it ~~and~~is ~~Cartridges:~~likely ~~Our~~that ~~VetScan~~in ~~VSpro~~some ~~specialty~~periods ~~analyzers~~our ~~and~~operating ~~cartridges~~results ~~are~~will ~~manufactured~~not bymeet ~~SMB~~investor expectations or those of public market analysts. Any unanticipated change in ~~Denmark~~revenues ~~and~~or ~~are~~operating ~~purchased~~results byis uslikely asto ~~completed~~cause ~~products~~our stock price to fluctuate because such changes reflect new information available to investors and analysts. ~~SMB~~Any ~~was~~fluctuations ~~recently~~in ~~acquired~~our byquarterly ~~Zoetis~~results ~~Inc~~may not accurately reflect the underlying performance of our business and could cause a decline in the trading price of our common stock.

•A ~~i-STAT~~failure ~~Analyzers~~to ~~and~~manage ~~Cartridges:~~the ~~Our~~inventory ~~VetScan~~levels ~~i-STAT~~of ~~analyzers~~our ~~and~~distributors ~~cartridges~~effectively ~~are~~could ~~manufactured~~adversely byaffect ~~Abbott~~our ~~and~~revenues, ~~are~~gross ~~purchased~~margins byand usresults asof ~~completed products~~operations.

•We ~~Rapid~~must ~~Tests:~~manage ~~Substantially~~the ~~all~~inventory of our ~~VetScan~~products ~~Rapid~~held ~~Tests~~by ~~are~~our ~~manufactured~~distributors effectively. Any excess or shortage of inventory held by aour ~~single~~distributors ~~source~~could ~~supplier~~affect our results of operations. Our distributors may increase orders during periods of product shortages and cancel or delay orders if their inventory is too high. They also may adjust their orders in response to the supply of our products, SAthe ~~Scientific~~products Coof our competitors that are available to them, and in response to seasonal fluctuations in customer demand. Revenues from sales to our distributors generally are recognized based upon shipment of our products to the distributors, ~~located~~net of estimated sales allowances, discounts and rebates. Inventory management remains an area of focus as we balance inventory levels of our instruments and consumables, especially in our United States veterinary market distribution channel, consisting of both national and regional distributors. We must also balance the need to maintain sufficient inventory levels in the distribution channel against the risk of inventory obsolescence because of the shelf life of our consumable products and customer demand. If we ultimately determine that we have excess inventory at our distributors or inventory imbalances in the distribution channel, we may have to reduce our selling prices, which could result in lower gross margins. For example, during the second half of fiscal 2014, as compared to the same period in fiscal 2013, our revenues were adversely impacted in the United States veterinary market by excess channel inventory and inventory imbalances and resulted to a decrease of sales orders from our largest distributors in the veterinary market. The excess channel inventory was the result of our distributors not selling our products to end customers at the same rate as they were purchasing products from us. In addition, we only began selling through our distributors Henry Schein Animal Health (a division of Henry Schein, Inc.) and Patterson Companies, Inc. in the third quarter of fiscal 2015 and our revenues in future quarters may be impacted by the timing of purchases of our products sold by them as these new distributors integrate our products into their sales process. Should our efforts to monitor and manage channel inventory be unsuccessful, our business, financial condition and results of operations are likely to be adversely affected.

We currently have purchase obligations with Diatron to purchase Diatron hematology products. However, with our other suppliers, we primarily operate on a purchase order basis and, therefore, these suppliers are under no contractual obligation to supply us with their products or to do so at specified prices. Although we believe that there may be potential alternate suppliers available for these critical components, to date we have not qualified additional vendors beyond those referenced above and cannot assure you we would be able to enter into arrangements with additional vendors on favorable terms, or at all. For the suppliers of original equipment manufactured products with which we have long-term contracts, there can be no assurance that these suppliers will always fulfill their obligations under these contracts, or that any suppliers will not experience disruptions in their ability to supply our requirements for products. In addition, under some contracts with suppliers we have minimum purchase obligations and our failure to satisfy those obligations may result in a loss of some or all of our rights under these contracts.17

~~Because~~TABLE weOF are dependent on a limited number of suppliers and manufacturers for our products, we are particularly susceptible to any interruption in the supply of these products or the viability of our assembly arrangements. The loss of any one of these suppliers or a disruption in our manufacturing arrangements could adversely affect our business, financial condition and results of operations. CONTENTS

We ~~must~~rely ~~increase~~primarily ~~sales~~on ofdistributors to sell our ~~Piccolo~~products and ~~VetScan~~we ~~products~~rely oron wesole ~~may~~distributor ~~not~~arrangements bein ~~able~~a number of countries. Our failure to ~~increase~~successfully ordevelop, ~~sustain~~manage ~~profitability~~and maintain these relationships could adversely affect our business, financial condition and results of operations.

~~Our~~We ~~ability~~sell toour ~~continue~~medical toand beveterinary ~~profitable~~products ~~and~~primarily tothrough ~~increase~~a ~~profitability~~limited ~~will~~number ~~depend,~~of indistributors. ~~part~~As a result, onwe ~~our~~are ~~ability~~dependent upon these distributors to ~~increase~~sell our ~~sales~~products ~~volumes~~and ofto ~~our~~assist ~~Piccolo~~us in promoting and ~~VetScan~~creating a demand for our products. ~~Increasing~~We operate on a purchase order basis with the ~~sales~~distributors ~~volume~~and ofthe distributors are under no contractual obligation to continue carrying our products. ~~will~~Further, ~~depend~~many ~~upon~~of our distributors may carry our competitors’ products, ~~among~~and ~~other~~may ~~things:~~promote our competitors’ products over our own products.

•We ~~the~~depend ~~sales~~on ~~performance~~a number of distributors in North America who distribute our VetScan products. In the United States veterinary market segment, we rely on our distribution network, consisting of both national distributors and independent regional distributors;, and our ability to effectively manage this network. We depend on our distributors to assist us in promoting our products in the veterinary market, and accordingly, if one or more of our distributors were to stop selling our products in the future, we may experience a temporary sharp decline or delay in our sales revenues until our customers identify another distributor or purchase products directly from us.

•Internationally, we rely on only a few distributors for our ~~ability~~products in both the medical and veterinary diagnostic markets. We currently have distributors that carry either our medical or veterinary products in the following countries: Australia, Austria, Belgium, China, Czech Republic, Denmark, France, Germany, Hong Kong, India, Indonesia, Israel, Italy, Japan, Korea, the Netherlands, New Zealand, the Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Singapore, Slovenia, Spain, Switzerland, Taiwan, Turkey, the United Arab Emirates and the United Kingdom. Our distributors in each of these countries are responsible for obtaining the necessary approvals to ~~improve~~sell our new and existing products. These distributors may not be successful in obtaining proper approvals for our new and ~~develop~~existing products in their respective countries, and they may not be successful in marketing our products. Furthermore, an inability of, or any delays by, our distributor in receiving the necessary approvals for our new or other products can adversely impact our revenues in a country. We plan to continue to enter into additional distributor relationships to expand our international distribution base and ~~innovative~~presence. However, we may not be successful in entering into additional distributor relationships on favorable terms, or at all. In addition, our distributors may terminate their relationship with us at any time. Historically, we have experienced a high degree of turnover among our international distributors. This turnover makes it difficult for us to establish a steady distribution network overseas. Consequently, we may not be successful in marketing our Piccolo and VetScan products; internationally, and our business and financial condition may be harmed as a result.

•In the United States, we rely on Abbott as our ~~ability~~exclusive distributor in certain medical markets to ~~increase~~sell our ~~sales~~products. Our dependency on Abbott means that any failure to successfully develop products and ~~marketing~~maintain ~~activities;~~this relationship could adversely affect our business, financial condition and results of operations.

17Abbott has the exclusive right to sell and distribute our Piccolo Xpress chemistry analyzer and associated consumables in the United States professionally-attended human healthcare market, excluding sales and distribution to Catapult Health LLC and specified customer segments, which includes pharmacy and retail store clinics, shopping malls and cruise ship lines. As a result of the Abbott Agreement, we no longer have control over the marketing and sale of our primary medical products into most of the U.S. medical market and are dependent upon the efforts and priorities of Abbott in promoting and creating a demand for such products in such market. We do not have any control over pricing, inventory levels, distribution efforts and other factors that may impact the level of sales achieved, timing of revenue recognized and other adjustments that may impact our reported sales. Moreover, we are dependent upon Abbott’s forecasts and sales efforts and maintenance of pre-existing sub-distributor agreements that were assigned to Abbott. As a result, if Abbott’s efforts are unsuccessful, our business, financial condition and results of operations are likely to be adversely affected. For example, the transition of this U.S. medical business had an adverse effect on our revenues during fiscal 2014, with respect to lower average selling prices of Piccolo products sold to Abbott and the timing of purchases of our products now sold by Abbott as it integrated our products into its sales process.

~~TABLE~~In OFaddition, ~~CONTENTS~~as a result of the Abbott Agreement, we substantially reduced the size of our United States medical sales force. The initial term of the Abbott Agreement ended on December 31, 2017, and after the initial term, the agreement renews automatically for successive one-year periods unless terminated by either party based upon a notice of non-renewal six months prior to the then-current expiration date. In the event the agreement is terminated, we would be required to invest and re-establish presence and sales capabilities in markets that were served by Abbott and/or identify one or more suitable replacement distribution partner(s), which would require

~~• our ability to effectively manage our manufacturing activities; and~~18

•TABLE ~~our~~OF ~~ability to effectively compete against current and future competitors.~~CONTENTS

Wesignificant ~~cannot~~time ~~assure~~and ~~you~~effort. ~~that~~We wecould ~~will~~not be ~~able~~assured toof ~~successfully~~replacing ~~increase~~ the capabilities of Abbott in those markets. New sales ~~volumes~~personnel ofand ~~our~~distribution ~~products~~partners take time to ~~increase~~train orand ~~sustain~~gain ~~profitability~~full productivity with customers, and if we are unable to accomplish this successfully, our business, financial condition and results of operations could be adversely affected.

We ~~must~~depend ~~continue~~on tolimited ~~increase~~or ~~our~~sole ~~sales~~suppliers, ~~marketing~~many of whom we do not have long-term contracts with, and ~~distribution~~failure ~~efforts~~of inour ~~the~~suppliers ~~human~~to ~~diagnostic~~provide ~~market~~the components or ~~our~~products ~~business~~to ~~will~~us ~~not~~could ~~grow~~harm our business.

~~The~~We ~~human~~use ~~diagnostic~~several ~~market~~key iscomponents ~~fragmented,~~that ~~heavily~~are ~~regulated~~currently ~~and~~available ~~constantly~~from ~~changing. Our~~ limited ~~sales,~~or ~~marketing~~sole ~~and~~sources ~~distribution~~as ~~capabilities~~discussed ~~are continually challenged to translate these changes into compelling value propositions for our prospective customers~~below. ~~Accordingly, we cannot assure you that:~~

• Blood Chemistry Analyzer Components: Our blood analyzer products use several technologically-advanced components that we ~~will~~currently bepurchase ~~able~~from toa ~~maintain~~limited ~~consistent~~number ~~growth~~of ~~through~~suppliers, ~~Abbott~~including ~~and~~certain components from our ~~other~~single ~~independent~~source ~~distributors;~~supplier, Hamamatsu Corporation. Our analyzers also use a printer that is primarily made by Advanced Printing Systems. The loss of the supply of any of these components could force us to redesign our blood chemistry analyzers.

• Reagent Discs: Two injection-molding manufacturers, Balda C. Brewer and Nypro, Inc., a subsidiary of Jabil Circuit, currently make the ~~costs~~molded ~~associated~~plastic ~~with~~discs ~~sales~~that, ~~marketing~~when loaded with reagents and ~~distributing~~welded together, form our reagent disc products. ~~will~~We ~~not~~believe bethat ~~excessive;~~only ora few manufacturers are capable of producing these discs to the narrow tolerances that we require. To date, we have only qualified these two manufacturers to manufacture the molded plastic discs.

• ~~government~~Reagent ~~regulations~~Chemicals: orWe ~~private~~currently ~~insurer~~depend ~~policies~~on ~~will~~the ~~not~~following ~~adversely~~single ~~affect~~source ~~our~~vendors ~~ability~~for some of the chemicals that we use to beproduce ~~successful~~the reagents and dry reagent chemistry beads that are either inserted in our reagent discs, lateral flow rapid tests or sold as stand-alone products: Amano Enzyme USA Co., Ltd., Kikkoman Corporation Biochemical Division, Microgenics Corporation, a division of Thermo Fisher Scientific, Roche Molecular Biochemicals of Roche Diagnostics Corporation, a division of F. Hoffmann-La Roche, Ltd., SA Scientific Co., Sekisui Diagnostics, Sigma Aldrich Inc. and Toyobo Specialties.

We ~~depend~~market onoriginal ~~key~~equipment ~~members~~manufacturer ofsupplied ~~our~~products ~~management~~that ~~and~~are ~~scientific~~currently ~~staff~~available ~~and,~~from iflimited wesources ~~fail~~as todiscussed ~~retain and recruit qualified individuals, our ability to execute our business strategy and generate sales would be harmed~~below.

~~Our~~• ~~future~~Hematology ~~success~~Instruments ~~depends, to a great degree, on the principal members of our management~~ and ~~scientific~~Reagent ~~staff.~~Kits: ~~The~~Our ~~loss~~VetScan ofhematology ~~any~~instruments ofare ~~these~~manufactured ~~key~~by ~~personnel,~~Diatron ~~including~~ in ~~particular~~Hungary ~~Clinton H. Severson, our Chief Executive Officer~~ and ~~Chairman~~are ofpurchased ~~our~~by ~~Board~~us ofas ~~Directors,~~a ~~might~~completed ~~impede the achievement of our business objectives~~instrument. WeIn ~~may not be able to continue to attract and retain skilled and experienced marketing~~addition, ~~sales~~we ~~and~~currently ~~manufacturing~~have ~~personnel~~qualified ontwo ~~acceptable~~suppliers ~~terms~~to inproduce the ~~future~~reagent ~~because~~kits ~~numerous medical products and other high technology companies compete~~ for ~~the services of these qualified individuals. If we are unable to hire and train qualified personnel, we may not be able to maintain or expand~~ our ~~business.~~hematology ~~Additionally,~~instruments: ifClinical weDiagnostic ~~are unable to retain key personnel~~Solutions, ~~we may not be able to replace them readily or on terms that are reasonable, which also could hurt our business~~Inc. Weand ~~currently do not maintain key man life insurance on any of our employees~~Diatron.

We• ~~may~~VSpro ~~experience~~Specialty ~~manufacturing~~Analyzers ~~problems~~and ~~related~~Consumables: toOur ~~our~~VetScan ~~instruments~~VSpro specialty analyzers and consumables are manufactured by SMB in Denmark, which ~~could~~was ~~adversely~~acquired ~~affect~~by ~~our~~Zoetis ~~business~~Inc. in August 2016, ~~financial~~and ~~condition~~are orpurchased ~~results~~by ofus ~~operations~~as completed products.

We• ~~manufacture our point~~i-~~of-care~~STAT ~~chemistry~~Analyzers analyzers at our manufacturing facility in Union City, California. Should we experience problems related to the manufacture of our blood chemistry analyzer, we could fail to achieve anticipated revenues or we may incur an additional increase in our cost of revenues. These problems may include manufacturing defects and ~~product~~Consumables: ~~failures,~~Our ~~defects~~VetScan ini-STAT ~~raw~~1 ~~materials acquired from our suppliers, delays in receipt of raw materials from our suppliers, obsolescence, increases in raw materials costs~~ and ~~labor~~VetScan ~~disturbances.~~i-STAT ~~There~~Alinity ~~can~~v be no assurance that our efforts to resolve manufacturing difficulties will be successful or that similar problems will not arise in the future. If we are unable to prevent such problems from occurring in the future, we may not be able to manufacture sufficient quantities to meet anticipated demand and, therefore, will not be able to effectively market and sell our blood chemistry analyzers ~~or other instruments that we market~~ and ~~sell;~~consumables ~~accordingly,~~are ~~our~~manufactured ~~business,~~by ~~financial~~Abbott ~~condition~~ and ~~results~~are ofpurchased ~~operations~~by ~~could~~us beas ~~adversely~~completed ~~affected~~products.

We• ~~need~~Rapid toTests: ~~successfully~~Substantially ~~manufacture~~all ~~and~~of ~~market~~our ~~additional~~VetScan ~~reagent~~Rapid ~~discs~~Tests ~~for~~are ~~the~~manufactured ~~human~~by ~~diagnostic~~a ~~market~~single ifsource wesupplier, ~~are~~SA toScientific ~~compete~~Co., located in ~~that~~the ~~market~~United States.

WeOur ~~believe~~VetScan ~~that~~UA weinstruments ~~must~~and ~~develop~~related consumables, VetScan SA sediment analyzers and ~~obtain~~related ~~regulatory~~consumables ~~clearance~~and VetScan Fuse are supplied by sole and ~~third-party~~single ~~payor~~source ~~reimbursement~~suppliers. ~~for~~We ~~additional~~purchase ~~series~~the ofVetScan ~~reagent~~UA ~~discs~~and ~~with~~VetScan ~~various~~SA ~~tests~~products ~~for~~from ~~use~~the ~~with~~same ~~our~~manufacturer ~~Piccolo~~under ~~chemistry~~a ~~analyzers~~three ifyear wesupply ~~are~~agreement toand ~~successfully~~after ~~compete~~the ininitial term the ~~human~~agreement ~~medical~~renews ~~market.~~automatically ~~Our~~for ~~failure~~a tosuccessive ~~meet~~two-year ~~these~~period ~~challenges~~unless ~~will~~terminated ~~materially~~by ~~adversely~~either ~~affect~~party ~~our~~based ~~operating~~upon ~~results~~a ~~and~~notice ~~financial~~of ~~condition~~non-renewal ninety days prior to the expiration date.

We ~~rely~~currently have purchase obligations with Diatron to purchase Diatron hematology products. However, with our other suppliers, we primarily operate on ~~patents~~a purchase order basis and, ~~other~~therefore, ~~proprietary~~these ~~information~~suppliers are under no contractual obligation to supply us with their products or to do so at specified prices. Although we believe that there may be potential alternate suppliers available for these critical components, to date we have not qualified additional vendors beyond those referenced above and cannot assure you we would be able to enter into arrangements with additional vendors on favorable terms, or at all. For the ~~loss~~suppliers of original equipment manufactured products with which ~~would~~we ~~negatively~~have ~~affect~~long-term ~~our~~contracts, ~~business.~~there can be no assurance that these suppliers will always fulfill their obligations under these contracts, or that any suppliers will not experience disruptions in

~~As of March 31, 2017, 86 patent applications have been filed on our behalf with the United States Patent and Trademark Office (“USPTO”), of which 47 patents have been issued and~~ 19 patents are currently active. Additionally, we have filed several international patent applications covering the same subject matter as our domestic applications. The patent position of any medical device manufacturer, including us, is uncertain and

18TABLE OF CONTENTS

~~TABLE~~their OFability ~~CONTENTS~~to supply our requirements for products. In addition, under some contracts with suppliers we have minimum purchase obligations and our failure to satisfy those obligations may result in a loss of some or all of our rights under these contracts.

~~may~~Because ~~involve complex legal and factual issues. Consequently,~~ we ~~may~~are ~~not~~dependent beon ~~issued~~a ~~any~~limited ~~additional~~number ~~patents,~~of ~~either~~suppliers ~~domestically~~and ormanufacturers ~~internationally.~~for ~~Furthermore,~~ our ~~patents~~products, ~~may~~we ~~not~~are ~~provide~~particularly ~~significant~~susceptible ~~proprietary~~to ~~protection~~any ~~because~~interruption ~~there~~in isthe asupply ~~chance~~of ~~that~~these ~~they~~products ~~will be circumvented~~ or ~~invalidated. We cannot be certain that we were~~ the ~~first~~viability ~~creator~~ of ~~the inventions covered by~~ our ~~issued~~assembly ~~patents~~arrangements. orIf ~~pending patent applications, or that~~ we ~~were~~lose ~~the~~any ~~first~~of toour ~~file~~key ~~patent applications for these inventions~~suppliers, ~~because~~our ~~(1)~~manufacturing ~~the~~efforts ~~USPTO~~could ~~maintains~~be ~~all~~significantly ~~patent~~hampered ~~applications~~and ~~that~~we ~~are~~could ~~not~~be ~~filed~~prevented infrom ~~any~~timely ~~foreign~~producing ~~jurisdictions~~and inselling ~~secrecy~~products ~~until~~to itour ~~issues~~customers. ~~the~~Delays ~~patents~~in ~~(when~~receiving araw ~~patent~~materials ~~application~~could ~~owner~~result ~~files~~in ahigher ~~request~~costs ~~for nonpublication)~~ and ~~(2)~~cause ~~publications~~us ofto ~~discoveries~~delay ~~in the scientific~~ or ~~patent~~reduce ~~literature~~production ~~tend~~of toour ~~lag~~products. ~~behind~~The ~~actual~~loss ~~discoveries~~of byany ~~several~~one ~~months.~~of Wethese ~~may~~suppliers ~~have~~or toa ~~participate~~disruption in ~~interference~~our ~~proceedings,~~manufacturing ~~which~~arrangements ~~are~~could ~~proceedings~~adversely inaffect ~~front~~our ~~of the USPTO~~business, tofinancial ~~determine~~condition ~~who will be issued a patent. These proceedings could be costly~~ and ~~could~~results beof ~~decided against us~~operations.

We ~~also~~must ~~rely~~increase ~~upon~~sales ~~copyrights,~~of ~~trademarks~~our ~~and~~Piccolo ~~unpatented trade secrets. Others may independently develop substantially equivalent proprietary information~~ and ~~techniques~~VetScan ~~that~~products ~~would undermine our proprietary technologies. Further, others may gain access to our trade secrets~~ or ~~disclose such technology. Although~~ we ~~require~~may ~~our~~not ~~employees,~~be ~~consultants~~able ~~and advisors~~ to ~~execute~~increase agreements that require that our corporate information be kept confidential and that any inventions by these individuals are property of Abaxis, there can be no assurance that these agreements will provide meaningful protection or ~~adequate~~sustain ~~remedies for our trade secrets in the event of unauthorized use or disclosure of such information~~profitability. ~~The unauthorized dissemination of our confidential information would negatively impact our business.~~

~~Changes~~Our inability ~~health~~to ~~care~~continue ~~regulations~~to be profitable and ~~third-party~~to ~~payor~~increase ~~reimbursement~~profitability ~~can~~will ~~negatively~~depend, ~~affect~~in part, on our ~~business~~ability to increase our sales volumes of our Piccolo and VetScan products. Increasing the sales volume of our products will depend upon, among other things:

By• ~~regulating~~ the ~~availability~~sales ~~of,~~performance ~~or the maximum amount~~ of reimbursement provided for blood testing services, third-party payors, such as managed care organizations, pay-per-service insurance plans, and the Centers for Medicare and Medicaid Services (“CMS”), can indirectly affect the pricing or the relative attractiveness of our ~~human~~independent testing products. For example, in the United States, the CMS set the national level of reimbursement of fees for blood testing services for Medicare beneficiaries. If third-party payors decrease the reimbursement amounts for blood testing services, it may decrease the likelihood that physicians and hospitals will adopt point-of-care diagnostics as a viable means of care delivery. Consequently, we would need to charge less for our products. If the government and third-party payors do not provide for adequate coverage and reimbursement levels to allow health care providers to use our products, the demand for our products will decrease and our business and financial condition would be harmed.distributors;

In• ~~the~~our ~~United~~ability ~~States, there have been and continue~~ to beimprove aour ~~number~~existing ofproducts ~~legislative initiatives to contain healthcare costs. For example, the Patient Protection~~ and ~~Affordable~~develop ~~Care~~new ~~Act, as amended by the Health Care~~ and ~~Education~~innovative Reconciliation Act, collectively, the ACA, enacted in March 2010, made changes that significantly impact the medical device industries and clinical laboratories. On January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. Congress may continue to consider subsequent legislation to replace or repeal elements of the ACA. Thus, the full future impact of the ACA on our business remains unclear.products;

On• April 1, 2014, the Protecting Access to Medicare Act of 2014, or PAMA, was signed into law, which, among other things, significantly altered the payment methodology under the Medicare Clinical Laboratory Fee Schedule, or CLFS. Some commercial payors are guided by the CLFS in establishing their reimbursement rates. Clinicians may decide not to order clinical diagnostic tests if third party payments are inadequate, and we cannot predict whether third-party payors will offer adequate reimbursement for tests utilizing our ~~products~~ability to make them commercially attractive. Changes in healthcare policy, such as the creation of test utilization limits for diagnostic products in general or requirements that Medicare patients pay for portions of clinical laboratory tests or services received, could substantially impact the sales of our tests, increase ~~costs and divert management’s attention from~~ our ~~business.~~sales ~~We expect that additional state~~ and ~~federal~~marketing healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand or additional pricing pressures. In addition, sales of our tests outside of the United States will subject us to foreign regulatory requirements, which may also change over time.activities;

19• our ability to effectively manage our manufacturing activities; and

~~TABLE~~• OFour ~~CONTENTS~~ability to effectively compete against current and future competitors.

We ~~may~~cannot beassure ~~subject,~~you ~~directly~~that orwe ~~indirectly,~~will tobe ~~federal~~able ~~and~~to ~~state~~successfully ~~healthcare~~increase ~~fraud~~the ~~and~~sales ~~abuse~~volumes ~~laws~~of ~~and other federal and state laws applicable to~~ our ~~sales~~products ~~and marketing practices. If we are unable~~ to ~~comply,~~increase or ~~have~~sustain ~~not complied, with such laws, we could face substantial penalties~~profitability.

~~Our~~We ~~operations~~must ~~are~~continue ~~directly, or indirectly through our customers, subject~~ to ~~various~~increase federal and state fraud and abuse laws, including, without limitation, the federal and state anti-kickback statutes, physician payment transparency laws and false claims laws. These laws may impact, among other things, our sales, ~~and~~ marketing and ~~education~~distribution ~~programs~~efforts ~~and~~in require us to implement additional internal systems for tracking certain marketing expenditures and reporting them to government authorities. In addition, we may be subject to patient privacy regulation by both the ~~federal~~human ~~government~~diagnostic ~~and~~market ~~the states in which we conduct our business. If our operations are found to be in violation of any of these laws~~ or any other governmental regulations that apply to us, we may be subject to penalties, without limitation, including civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of our ~~operations, exclusion from participation in federal and state healthcare programs and imprisonment, any of which could adversely affect our ability to operate our~~ business ~~and~~will ~~our~~not ~~results of operations~~grow.

~~Approval~~The human diagnostic market is fragmented, heavily regulated and~~/or~~ ~~clearance~~constantly bychanging. ~~the~~Our ~~FDA~~limited sales, ~~USDA~~marketing and ~~foreign~~distribution ~~regulatory~~capabilities ~~authorities~~are continually challenged to translate these changes into compelling value propositions for our ~~products~~prospective ~~requires~~customers. ~~significant~~Accordingly, ~~time~~we ~~and~~cannot ~~expenditures.~~assure you that:

~~Before~~• we ~~may~~will commercialize our human medical diagnostic products in the United States, we are required to obtain either 510(k) clearance or pre-marketing approval (“PMA”) from the FDA, unless an exemption from pre-market review applies. In our veterinary market, certain products that we sell are subject to regulations pertaining to veterinary biologics, for which we must obtain approval from the USDA’s Center for Veterinary Biologics. The process of obtaining regulatory clearances or approvals to market a medical device can be ~~costly and time consuming, and we may not be~~ able to ~~successfully~~maintain ~~obtain~~consistent ~~510(k)~~growth ~~clearance~~through ~~from~~Abbott ~~the FDA or may be subject to the more costly~~ and ~~time-consuming~~our ~~PMA~~other ~~process.~~independent distributors;

In• ~~addition,~~the ~~governmental~~costs ~~agencies~~associated ~~may~~with ~~change their clearance or approval policies~~sales, ~~adopt~~marketing ~~additional~~and ~~regulations~~distributing ~~or revise existing regulations, or take other actions that may prevent or delay approval or clearance of~~ our products ~~under~~will ~~development~~not orbe ~~impact~~excessive; ~~our ability to modify our currently approved~~ or cleared products on a timely basis. Any delay in, or failure to receive or maintain, clearance or approval for our products could prevent us from generating revenue from these products and adversely affect our business operations and financial results.

~~The~~• ~~FDA~~government and other regulatory authorities have broad enforcement powers. For example, the manufacture of medical devices must comply with the FDA’s Quality System Regulation (“QSR”). In addition, manufacturers must register their manufacturing facilities, list the products with the FDA, and comply with requirements relating to labeling, marketing, complaint handling, adverse event and medical device reporting, reporting of corrections and removals, and import and export. The FDA monitors compliance with the QSR and these other requirements through periodic inspections. If our facilities or those of our manufacturers or suppliers are found to be in violation of applicable laws and regulations, or ifprivate weinsurer orpolicies ~~our~~will ~~manufacturers~~not oradversely ~~suppliers~~affect ~~fail to take satisfactory corrective action in response to an adverse inspection, the regulatory authority could take enforcement actions that could impair~~ our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands, and could have a material adverse effect on our reputation, business, results of operations and financial condition. We may also be ~~required to bear other costs or take other actions that may have a negative impact on our future sales and our ability to generate profits~~successful.

~~Sales~~We ofdepend ~~our~~on ~~products~~key ~~outside~~members ~~the~~of ~~United~~our ~~States~~management ~~are~~and ~~subject~~scientific tostaff ~~foreign regulatory requirements governing vigilance reporting~~and, ~~marketing~~if ~~approval,~~we ~~manufacturing,~~fail ~~product~~to ~~licensing,~~retain ~~pricing~~ and ~~reimbursement.~~recruit ~~These~~qualified ~~regulatory requirements vary greatly from country to country. As a result~~individuals, ~~the~~our ~~time~~ability ~~required~~ to ~~obtain~~execute ~~approvals~~our ~~outside~~business ~~the~~strategy ~~United States may differ from that required to obtain FDA clearance or USDA approval,~~ and wegenerate ~~may~~sales ~~not~~would be ~~able to obtain foreign regulatory approvals on a timely basis or at all~~harmed. Clearance or approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure clearance or approval by regulatory authorities in other countries or by the FDA.

AOur ~~recall~~future success depends, to a great degree, on the principal members of our ~~products~~management and scientific staff. The loss of any of these key personnel, orincluding ~~the~~in ~~discovery~~particular Clinton H. Severson, our Chief Executive Officer and Chairman of ~~serious~~our ~~safety~~Board ~~issues~~of ~~with~~Directors, might impede the achievement of our business objectives. We may not be able to continue to attract and retain skilled and experienced marketing, sales and manufacturing personnel on acceptable terms in the future because numerous medical products ~~that~~and ~~leads~~other high technology companies compete for the services of these qualified individuals. If we are unable to ~~corrective~~hire ~~actions~~and train qualified personnel, ~~could~~we ~~have~~may anot ~~significant~~be ~~adverse~~able ~~impact~~to onmaintain or expand our business. Additionally, ~~financial~~if ~~condition~~we are unable to retain key personnel, we may not be able to replace them readily or ~~results~~on terms that are reasonable, which also could hurt our business. We currently do not maintain key man life insurance on any of ~~operations~~our employees.

~~The~~We ~~FDA,~~may ~~USDA~~experience ~~and~~manufacturing ~~similar~~problems ~~foreign~~related ~~governmental authorities have the authority~~ to ~~require~~our ~~the~~instruments, ~~recall~~which ofcould ~~commercialized~~adversely ~~products~~affect inour ~~the~~business, ~~event~~financial ofcondition ~~material deficiencies~~ or ~~defects~~results ~~in design or manufacture~~ of ~~a product or~~ operations.

20We manufacture our point-of-care chemistry analyzers at our manufacturing facility in Union City, California. Should we experience problems related to the manufacture of our blood chemistry analyzer, we could fail to achieve anticipated revenues or we may incur an additional increase in our cost of revenues. These problems

~~TABLE OF CONTENTS~~20

inTABLE ~~the~~OF event that a product poses an unacceptable risk to health. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by us or one of our distributors could occur as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. We are required to report to the FDA any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury. Repeated product malfunctions may result in a voluntary or involuntary product recall. Recalls of any of our products would divert managerial and financial resources and could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands, any of which could have an adverse effect on our business, financial condition and results of operations. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines. We may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as face significant adverse publicity or regulatory consequences, which could harm our business, financial condition or results of operations.CONTENTS

We may ~~inadvertently~~include ~~design~~manufacturing ordefects ~~produce~~and ~~defective~~product ~~products~~failures, ~~which~~defects ~~may~~in ~~subject~~raw usmaterials acquired from our suppliers, delays in receipt of raw materials from our suppliers, obsolescence, increases in raw materials costs and labor disturbances. There can be no assurance that our efforts to ~~significant~~resolve ~~warranty~~manufacturing ~~liabilities~~difficulties will be successful or ~~product~~that ~~liability~~similar ~~claims~~problems will not arise in the future. WeIf we are unable to prevent such problems from occurring in the future, we may ~~have~~not ~~insufficient~~be ~~product~~able ~~liability~~to ~~insurance~~manufacture sufficient quantities to ~~pay~~meet ~~uninsured~~anticipated ~~claims~~demand and, therefore, will not be able to effectively market and sell our blood chemistry analyzers or other instruments that we market and sell; accordingly, our business, financial condition and results of operations could be adversely affected.

~~Our~~We ~~business~~need ~~exposes us~~ to ~~potential~~successfully ~~warranty~~manufacture and ~~product~~market ~~liability~~additional ~~risks~~reagent ~~that~~discs ~~are~~for ~~inherent in~~ the ~~design, testing, manufacturing and marketing of~~ human ~~and~~diagnostic ~~veterinary~~market ~~medical~~if ~~products. Although~~ we ~~have~~are ~~established procedures for quality control on both the raw materials that we receive from suppliers as well as the design and manufacturing of our products, these procedures may prove inadequate~~ to ~~detect~~compete ain ~~design or manufacturing defect. In addition, our Piccolo and VetScan chemistry analyzers may be unable to detect all errors~~ that ~~could result in the misdiagnosis of human or veterinary patients~~market.

We ~~may~~believe ~~be subject to substantial claims for defective products under our warranty policy or product liability laws. In addition, our policy is to credit medical providers for any defective product~~ that we ~~produce,~~must ~~including~~develop ~~those~~and ~~reagent~~obtain ~~discs~~regulatory ~~that~~clearance ~~are rejected by our Piccolo~~ and ~~VetScan~~third-party ~~chemistry~~payor ~~analyzers.~~reimbursement ~~Therefore,~~for ~~even~~additional ifseries ~~a mass defect within a lot or lots~~ of reagent discs ~~were~~with ~~detected~~various bytests ~~our~~for ~~Piccolo~~use ~~and~~with ~~VetScan~~our Piccolo chemistry analyzers, ~~the~~if ~~replacement~~we ofare ~~such~~to ~~reagent~~successfully ~~discs~~compete ~~free of charge would be costly and could adversely affect our business, financial condition and results of operations. Further,~~ in the ~~event that a product defect is not detected in our Piccolo chemistry analyzer, our expansion into the~~ human medical market ~~greatly increases the risk that the amount of damages involved with just one product defect would adversely impact our business, financial condition and results of operations~~. Our ~~product~~failure ~~liability insurance and cash may be insufficient~~ to ~~cover~~meet ~~potential~~these ~~liabilities.~~challenges Inwill ~~addition,~~materially in the future the coverage that we require may be unavailable on commercially reasonable terms, if at all. Even with our current insurance coverage, a mass product defect, product liability claim or recall could subject us to claims above the amount of our coverage and could adversely affect our ~~business,~~operating ~~our~~results and financial condition ~~or results of operations~~.

~~Acquisitions,~~We ~~strategic~~rely ~~investments,~~on ~~partnerships,~~patents orand ~~alliances~~other ~~could~~proprietary ~~be difficult to identify and integrate~~information, ~~divert~~ the ~~attention~~loss of ~~management,~~which ~~disrupt~~would ~~our~~negatively ~~business, dilute shareholder value, and adversely~~ affect our business~~, financial condition or results of operations~~.

WeAs ~~have~~of inMarch ~~the~~31, ~~past~~2018, ~~and~~94 ~~may~~patent inapplications ~~the~~have ~~future~~been ~~seek~~filed toon ~~acquire~~our orbehalf ~~invest~~with inthe ~~businesses,~~United ~~products,~~States orPatent ~~technologies~~and ~~that~~Trademark weOffice, ~~believe~~(the ~~could~~“USPTO”), ~~complement~~of orwhich ~~expand~~55 ~~our~~patents ~~products,~~have ~~enhance~~been ~~our~~issued ~~capabilities,~~and or26 ~~otherwise~~patents ~~offer~~are ~~growth~~currently ~~opportunities~~active. ~~For example~~Additionally, we ~~acquired~~have ~~Quality~~filed ~~Clinical~~several ~~Reagents~~international ~~Limited~~patent ~~(“QCR”)~~applications ~~and~~covering ~~Trio~~the ~~Diagnostics~~same ~~(Ireland)~~subject ~~Ltd~~matter ~~(“Trio”)~~as inour ~~November~~domestic ~~2014~~applications. ~~Any~~The ~~acquisition~~patent ~~may~~position ~~divert~~of ~~the~~any ~~attention~~medical ofdevice ~~management~~manufacturer, ~~and~~including ~~cause~~ us, tois ~~incur~~uncertain ~~various~~and ~~expenses~~may ininvolve ~~identifying,~~complex ~~investigating,~~legal and ~~pursuing~~factual ~~suitable~~issues. ~~acquisitions~~Consequently, ~~whether~~we ormay not ~~the~~be ~~acquisitions~~issued ~~are~~any ~~completed~~additional patents, ~~and~~either ~~may~~domestically ~~result~~or ininternationally. ~~unforeseen~~Furthermore, ~~operating~~our ~~difficulties~~patents ~~and~~may ~~expenditures.~~not Inprovide ~~particular,~~significant weproprietary ~~may~~protection ~~encounter~~because ~~difficulties~~there ~~assimilating~~is ora ~~integrating~~chance ~~the~~that ~~businesses,~~they ~~technologies,~~will ~~products,~~be ~~personnel,~~circumvented or ~~operations~~invalidated. ofWe ~~the~~cannot ~~acquired~~be ~~companies,~~certain ~~particularly~~that ifwe were the ~~key~~first ~~personnel~~creator of the ~~acquired~~inventions ~~company~~covered ~~choose~~by ~~not~~our issued patents or pending patent applications, or that we were the first to ~~work~~file patent applications for usthese inventions, ~~their~~because ~~products~~(1) the USPTO maintains all patent applications that are not ~~easily~~filed ~~adapted~~in toany ~~work~~foreign ~~with~~jurisdictions ~~ours,~~in orsecrecy weuntil ~~have~~it ~~difficulty~~issues ~~retaining~~ the ~~customers~~patents of(when ~~any~~a ~~acquired~~patent ~~business~~application ~~due~~owner tofiles ~~changes~~a request for nonpublication) and (2) publications of discoveries in ~~ownership,~~the ~~management,~~scientific or ~~otherwise~~patent literature tend to lag behind actual discoveries by several months. ~~Acquisitions~~We may ~~also~~have ~~disrupt~~to ~~our~~participate ~~business,~~in ~~divert~~interference ~~our resources~~proceedings, ~~and~~which ~~require~~are ~~significant~~proceedings ~~management~~in ~~attention~~front ~~that~~of ~~would~~the ~~otherwise~~USPTO, beto ~~available~~determine ~~for~~who ~~development~~will ofbe ~~our~~issued ~~existing~~a ~~business~~patent. ~~Any~~These ~~acquisitions~~proceedings wecould ~~are~~be ~~able~~costly toand ~~complete~~could ~~may~~be ~~not~~decided ~~result~~against in us.

21We also rely upon copyrights, trademarks and unpatented trade secrets. Others may independently develop substantially equivalent proprietary information and techniques that would undermine our proprietary technologies. Further, others may gain access to our trade secrets or disclose such technology. Although we require our employees, consultants and advisors to execute agreements that require that our corporate information be kept confidential and that any inventions by these individuals are property of Abaxis, there can be no assurance that these agreements will provide meaningful protection or adequate remedies for our trade secrets in the event of unauthorized use or disclosure of such information. The unauthorized dissemination of our confidential information would negatively impact our business.

~~TABLE~~Changes OFin ~~CONTENTS~~health care regulations and third-party payor reimbursement can negatively affect our business.

~~any~~By ~~synergies~~regulating orthe ~~other~~availability ~~benefits~~of, weor ~~had~~the ~~expected~~maximum toamount ~~achieve,~~of ~~which~~reimbursement ~~could~~provided ~~result~~for inblood ~~impairment~~testing ~~charges~~services, ~~that~~third-party ~~could~~payors, besuch ~~substantial.~~as Inmanaged ~~addition~~care organizations, wepay-per-service ~~may~~insurance ~~not~~plans, beand ~~able~~the toCenters ~~find~~for Medicare and ~~identify~~Medicaid ~~desirable~~Services, ~~acquisition~~(the ~~targets~~“CMS”), orcan beindirectly ~~successful~~affect inthe ~~entering~~pricing ~~into~~or anthe ~~agreement~~relative ~~with~~attractiveness ~~any~~of ~~particular~~our ~~target.~~human ~~Acquisitions~~testing ~~could~~products. ~~also~~For ~~result~~example, in ~~dilutive~~the ~~issuances~~United ofStates, ~~equity~~the ~~securities~~CMS orset the ~~incurrence~~national level of ~~debt,~~reimbursement ~~which~~of ~~could~~fees ~~adversely~~for ~~affect~~blood ~~our~~testing ~~financial~~services ~~condition~~for orMedicare ~~results~~beneficiaries. ofIf ~~operations.~~third-party Inpayors ~~addition,~~decrease ifthe anreimbursement ~~acquired~~amounts ~~business~~for blood testing services, ~~including~~it ~~QCR~~may ordecrease ~~Trio~~the likelihood that physicians and hospitals will adopt point-of-care diagnostics as a viable means of care delivery. Consequently, ~~fails~~we would need to ~~meet~~charge ~~our~~less ~~expectations,~~for our ~~business,~~products. ~~financial~~If ~~condition~~the orgovernment ~~results~~and ofthird-party ~~operations~~payors ~~may~~do ~~suffer~~not orprovide wefor ~~may~~adequate becoverage ~~exposed~~and toreimbursement ~~risks~~levels orto ~~liabilities~~allow ~~that~~health ~~were~~care ~~unknown~~providers to ususe atour products, the ~~time~~demand offor ~~the~~our ~~acquisition~~products will decrease and our business and financial condition would be harmed.

~~Divestitures~~In orthe ~~other~~United ~~dispositions~~States, ~~could~~there ~~negatively~~have ~~impact~~been ~~our~~and ~~business~~continue to be a number of legislative initiatives to contain healthcare costs. For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, enacted in March 2010 (the “ACA”), made changes that significantly impact the

On an ongoing basis, we assess opportunities for improved operational effectiveness and efficiency and may divest, spin-off, split-off, or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment. For example, we sold our AVRL business to Antech in March 2015, and we sold our equity ownership interest in SMB in connection with Zoetis Inc.’s acquisition of SMB in August 2016. These transactions pose risks and challenges that could negatively impact our business. For example, when we decide to sell or otherwise dispose of a business or assets, the sale is typically subject to satisfaction of pre-closing conditions that may not become satisfied. In addition, divestitures or other dispositions may dilute our earnings per share, have other adverse financial and accounting impacts, distract management, disrupt our business, negatively impact market perception of our prospects and involve the loss of key employees, and disputes may arise with buyers. In addition, we may retain responsibility for or agree to indemnify buyers against contingent liabilities, which could have a material effect on our financial statements. Divestitures may also result in significant asset impairment charges, including those related to goodwill and other intangible assets, which could have a material adverse effect on our financial condition and results of operations. We cannot assure you that divestiture or other disposition efforts will be successful in generating improved operating efficiencies. In addition, past disposition activities may not be a good indication of future disposition opportunities, and any divestiture or other disposition of any business may leave us with reduced financial and marketing resources to develop products and services to compete against our competitors. 21

WeTABLE ~~may~~OF ~~be subject to litigation for a variety of claims, which could adversely affect our business, financial condition or results of operations.~~CONTENTS

Inmedical ~~addition~~device toindustries ~~product~~and ~~liability~~clinical ~~claims,~~laboratories. weThere ~~and~~have ~~our~~been ~~directors~~judicial and ~~officers~~congressional ~~may~~challenges ~~be subject~~ to ~~claims~~the ~~arising~~ACA, ~~from~~as ~~our~~well ~~normal~~as ~~business~~efforts ~~activities.~~by ~~These~~the ~~may~~Trump ~~include~~Administration ~~claims,~~to ~~suits,~~repeal ~~and~~or ~~proceedings~~replace ~~involving~~certain ~~shareholder~~aspects ~~and~~of ~~fiduciary~~the ~~matters,~~ACA. ~~intellectual~~President ~~property,~~Trump ~~labor~~has ~~and~~signed ~~employment,~~two ~~wage~~Executive ~~and~~Orders ~~hour,~~designed ~~commercial~~to ~~and~~delay ~~other~~the ~~matters.~~implementation ~~The~~of ~~outcome~~certain provisions of ~~any~~the ~~litigation,~~ACA ~~regardless~~or ofotherwise ~~its~~circumvent ~~merits,~~some isof ~~inherently~~the ~~uncertain.~~requirements ~~Any~~for ~~claims~~health ~~and~~insurance ~~lawsuits,~~mandated ~~and~~by the ~~disposition~~ACA. ofWhile ~~such~~Congress ~~claims~~has ~~and~~not ~~lawsuits,~~passed ~~could~~comprehensive berepeal ~~time-consuming~~legislation, ~~and~~two ~~expensive~~bills toaffecting ~~resolve,~~the ~~divert~~implementation ~~management~~of ~~attention~~certain ~~and~~taxes ~~resources,~~under ~~and~~the ~~lead~~ACA tohave ~~attempts~~been onsigned ~~the~~into ~~part~~law, ofincluding ~~other~~a ~~parties~~bill tothat, ~~pursue~~among ~~similar~~other ~~claims.~~things, ~~Any~~extends ~~adverse~~the ~~determination~~suspension ~~related~~of tothe ~~litigation~~ACA’s ormedical ~~settlement~~device orexcise ~~other~~tax ~~resolution~~until ofJanuary a1, ~~legal~~2020. ~~matter~~Congress ~~could~~may ~~adversely~~continue ~~affect~~to ~~our~~consider ~~business,~~subsequent ~~financial~~legislation ~~condition~~to replace or ~~results~~repeal elements of ~~operations~~the ACA. Thus, ~~harm~~the ~~our~~full ~~reputation~~future orimpact ~~otherwise~~of ~~negatively~~the ~~impact~~ACA on our business. remains unclear.

~~Our~~On ~~stock~~April ~~price~~1, is2014, ~~highly~~the ~~volatile~~Protecting Access to Medicare Act of 2014, or PAMA, was signed into law, which, among other things, significantly altered the payment methodology under the Medicare Clinical Laboratory Fee Schedule, or CLFS. Some commercial payors are guided by the CLFS in establishing their reimbursement rates. Clinicians may decide not to order clinical diagnostic tests if third party payments are inadequate, and ~~investing~~we cannot predict whether third-party payors will offer adequate reimbursement for tests utilizing our products to make them commercially attractive. Changes in healthcare policy, such as the creation of test utilization limits for diagnostic products in general or requirements that Medicare patients pay for portions of clinical laboratory tests or services received, could substantially impact the sales of our ~~stock~~tests, ~~involves~~increase acosts ~~high~~and ~~degree~~divert management’s attention from our business. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of ~~risk~~which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in ~~substantial~~reduced ~~losses~~demand ~~for~~or ~~investors~~additional pricing pressures. In addition, sales of our tests outside of the United States will subject us to foreign regulatory requirements, which may also change over time.

~~The~~We ~~market~~may ~~price~~be ~~of our common stock~~subject, ~~like~~directly ~~the~~or ~~securities of many other medical products companies~~indirectly, ~~fluctuates~~to ~~over~~federal ~~a wide range,~~ and ~~will~~state ~~continue~~healthcare tofraud beand ~~highly~~abuse ~~volatile~~laws inand ~~the~~other ~~future.~~federal ~~During~~and ~~the~~state ~~quarter~~laws ~~ended~~applicable ~~March~~to ~~31, 2017, the closing sale prices of~~ our ~~common~~sales ~~stock on the NASDAQ Global Select Market ranged from $47.20 to $55.02 per share~~ and ~~the~~marketing ~~closing sale price on March 31, 2017, was $48~~practices.50 ~~per~~If ~~share.~~we ~~During~~are ~~the~~unable ~~last~~to ~~eight fiscal quarters ended March 31~~comply, ~~2017,~~or ~~our~~have ~~stock~~not ~~price closed at a high of $64.56 per share on April 28~~complied, ~~2015~~with ~~and~~such ~~a low of $38.65 per share on February 11~~laws, ~~2016.~~we ~~Many~~could ~~factors~~face ~~may~~substantial ~~affect the market price of our common stock, including:~~penalties.

•Our ~~fluctuation~~operations are directly, or indirectly through our customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal and state anti-kickback statutes, physician payment transparency laws and false claims laws. These laws may impact, among other things, our sales and marketing and education programs and require us to implement additional internal systems for tracking certain marketing expenditures and reporting them to government authorities. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our ~~operating~~business. If our operations are found to be in violation of any of these laws or any other governmental regulations that apply to us, we may be subject to penalties, without limitation, including civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare programs and imprisonment, any of which could adversely affect our ability to operate our business and our results; of operations.

•Approval ~~announcements~~and/or ofclearance ~~technological~~by ~~innovations~~the orFDA, ~~new~~USDA ~~commercial~~and ~~products~~foreign byregulatory usauthorities orfor our ~~competitors;~~products requires significant time and expenditures.

•Before ~~changes~~we inmay ~~governmental~~commercialize ~~regulation~~our human medical diagnostic products in the United States, we are required to obtain either 510(k) clearance or pre-marketing approval, or PMA, from the U.S. Food and ~~internationally;~~Drug Administration, or FDA, unless an exemption from pre-market review applies. In our veterinary market, certain products that we sell are subject to regulations pertaining to veterinary biologics, for which we must obtain approval from the U.S. Department of Agriculture, or USDA, Center for Veterinary Biologics. The process of obtaining regulatory clearances or approvals to market a medical device can be costly and time consuming, and we may not be able to successfully obtain 510(k) clearance from the FDA or may be subject to the more costly and time-consuming PMA process.

•In ~~prospects~~addition, ~~and~~governmental ~~proposals~~agencies may change their clearance or approval policies, adopt additional regulations or revise existing regulations, or take other actions that may prevent or delay approval or clearance of our products under development or impact our ability to modify our currently approved or cleared products on a timely basis. Any delay in, or failure to receive or maintain, clearance or approval for ~~health~~our ~~care~~products ~~reform;~~could prevent us from generating revenue from these products and adversely affect our business operations and financial results.

TABLE OF CONTENTS

•The ~~governmental~~FDA orand ~~third-party~~other ~~payors~~regulatory authorities have broad enforcement powers. For example, the manufacture of medical devices must comply with the FDA’s ~~controls~~Quality onSystem ~~prices~~Regulation (the “QSR”). In addition, manufacturers must register their manufacturing facilities, list the products with the FDA, and comply with requirements relating to labeling, marketing, complaint handling, adverse event and medical device reporting, reporting of corrections and removals, and import and export. The FDA monitors compliance with the QSR and these other requirements through periodic inspections. If our facilities or those of our manufacturers or suppliers are found to be in violation of applicable laws and regulations, or if we or our manufacturers or suppliers fail to take satisfactory corrective action in response to an adverse inspection, the regulatory authority could take enforcement actions that could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands, and could have a material adverse effect on our reputation, business, results of operations and financial condition. We may ~~pay~~also ~~for~~be required to bear other costs or take other actions that may have a negative impact on our ~~products;~~future sales and our ability to generate profits.

•Sales of our products outside the United States are subject to foreign regulatory requirements governing vigilance reporting, marketing approval, manufacturing, product ~~liability~~licensing, ~~claims~~pricing and ~~public~~reimbursement. ~~concern~~These asregulatory requirements vary greatly from country to country. As a result, the ~~safety~~time ofrequired ~~our~~to ~~devices~~obtain approvals outside the United States may differ from that required to obtain FDA clearance or ~~similar~~USDA ~~devices~~approval, ~~developed~~and we may not be able to obtain foreign regulatory approvals on a timely basis or at all. Clearance or approval by ~~our~~the ~~competitors;~~FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure clearance or approval by regulatory authorities in other countries or by the FDA.

•A ~~developments~~recall of our products, or ~~disputes~~the ~~concerning~~discovery of serious safety issues with our ~~patents~~products orthat leads to corrective actions, could have a significant adverse impact on our ~~other~~business, ~~proprietary~~financial ~~rights;~~condition ~~and~~or results of operations.

•The ~~general~~FDA, ~~market~~USDA ~~conditions~~and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture of a product or in the event that a product poses an unacceptable risk to health. Manufacturers may, under their own initiative, recall a product if any material deficiency in a device is found. A government-mandated or voluntary recall by us or one of our distributors could occur as a result of component failures, manufacturing errors, design or labeling defects or other deficiencies and issues. We are required to report to the FDA any incident in which our product may have caused or contributed to a death or serious injury or in which our product malfunctioned and, if the malfunction were to recur, would likely cause or contribute to death or serious injury. Repeated product malfunctions may result in a voluntary or involuntary product recall. Recalls of any of our products would divert managerial and financial resources and could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands, any of which could have an adverse effect on our business, financial condition and results of operations. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines. We may also be required to bear other costs or take other actions that may have a negative impact on our sales as well as face significant adverse publicity or regulatory consequences, which could harm our business, financial condition or results of operations.

InWe ~~the~~may ~~past,~~inadvertently ~~stockholders~~design ~~have~~or ~~filed~~produce ~~securities~~defective ~~class action litigation following periods of market volatility. If we were to become involved in such securities litigation~~products, itwhich ~~could~~may subject us to ~~substantial~~significant ~~costs,~~warranty ~~divert~~liabilities ~~resources and the attention of management from our business, and adversely affect our business, financial condition~~ or ~~results~~product ofliability ~~operations~~claims. ~~Because~~We ~~our~~may ~~stock~~have ~~price~~insufficient isproduct soliability ~~volatile,~~insurance ~~investing in our common stock is highly risky. A potential investor must be able~~ to ~~withstand~~pay ~~the~~uninsured ~~loss of his entire investment in our common stock~~claims.

~~Fluctuations~~Our business exposes us to potential warranty and product liability risks that are inherent in ~~foreign~~the ~~exchange~~design, ~~rates~~testing, ~~could~~manufacturing ~~adversely~~and ~~affect~~marketing of human and veterinary medical products. Although we have established procedures for quality control on both the raw materials that we receive from suppliers as well as the design and manufacturing of our ~~business~~products, ~~financial~~these ~~condition~~procedures may prove inadequate to detect a design or ~~results~~manufacturing defect. In addition, our Piccolo and VetScan chemistry analyzers may be unable to detect all errors that could result in the misdiagnosis of ~~operations~~human or veterinary patients.

~~For~~We ~~our~~may ~~international~~be ~~sales~~subject ~~denominated~~to insubstantial ~~U.S.~~claims ~~dollars,~~for andefective ~~increase~~products inunder ~~the~~our ~~value~~warranty ofpolicy ~~the~~or ~~U.S.~~product ~~dollar~~liability ~~relative~~laws. toIn ~~foreign~~addition, ~~currencies could make~~ our ~~products~~policy ~~less~~is ~~competitive~~to incredit ~~international~~medical ~~markets.~~providers ~~For~~for ~~our~~any ~~sales~~defective ~~denominated~~product inthat ~~foreign~~we ~~currencies~~produce, weincluding ~~are~~those ~~subject~~reagent todiscs ~~fluctuations~~that inare ~~exchange~~rejected ~~rates~~by ~~between~~our ~~the~~Piccolo ~~U.S. dollar~~ and ~~the~~VetScan ~~particular~~chemistry ~~foreign~~analyzers. ~~currency~~Therefore, ~~and~~even ~~changes~~if ina ~~such~~mass ~~exchange~~defect ~~rates~~within ~~could~~a ~~adversely~~lot ~~affect~~or ~~our~~lots ~~reported~~of ~~results~~reagent ofdiscs ~~operations~~were ~~and~~detected ~~distort~~by ~~period~~our toPiccolo ~~period~~and ~~comparisons.~~VetScan ~~Our~~chemistry ~~business~~analyzers, ~~financial~~the ~~condition~~replacement ~~or results~~ of ~~operations~~such ~~could~~reagent ~~also~~discs befree ~~adversely~~of ~~affected~~charge bywould ~~the~~be ~~seasonality~~costly ~~of international sales~~ and ~~the~~could ~~economic~~adversely ~~conditions~~affect of our ~~overseas~~business, ~~markets.~~

Our subsidiaries in Europe and the United Kingdom increase our exposure to foreign currency fluctuation risks. These risks include uncertainty regarding the Euro and the British pound sterling, that could adversely impact our results of operations based on the movements of the applicable foreign currency exchange rates in relation to the U.S. dollar. Fluctuating exchange rates cause the value of items on both the assets and liabilities side of the balance sheet to change, which could also negatively impact our results of operations. Our financial results will therefore be sensitive to movements in foreign exchange rates. A depreciation of non-U.S. dollar currencies relative to the U.S. dollar could have a material adverse impact on our results of operations and could cause our results of operations to differ from our expectations and the expectations of our investors. For example, in June 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union, which caused significant volatility in global stock markets and currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar against foreign currencies in which we conduct business. Additionally, such foreign currency exchange rate fluctuations could make it more difficult to detect underlying trends in our business and results of operations. We do not currently engage in hedging transactions to mitigate foreign currency exchange risks.23

~~Our~~TABLE ~~international~~OF ~~operations subject us to unique risks different than those faced by us in the United States and we may not be able to effectively manage our international business.~~ CONTENTS

Wefinancial ~~have~~condition ~~operations~~and ~~outside~~results of operations. Further, in the ~~United~~event ~~States.~~that Wea ~~expect~~product defect is not detected in our Piccolo chemistry analyzer, our expansion into the human medical market greatly increases the risk that wethe ~~will~~amount ~~continue~~of todamages ~~expand~~involved with just one product defect would adversely impact our ~~international~~business, financial condition and results of operations. Our product liability insurance and cash may be insufficient to cover potential liabilities. In addition, in the future the coverage that we require may be unavailable on commercially reasonable terms, if at all. ~~International~~Even ~~operations~~with ~~inherently~~our current insurance coverage, a mass product defect, product liability claim or recall could subject us to aclaims ~~number~~above the amount of ~~risks~~our coverage and ~~uncertainties~~could adversely affect our business, ~~including:~~our financial condition or results of operations.

•Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify and integrate, divert the ~~increased~~attention ~~complexity~~of management, disrupt our business, dilute shareholder value, and ~~costs~~adversely ~~inherent~~affect inour ~~managing~~business, ~~international~~financial condition or results of operations;.

•We ~~diverse~~have ~~regulatory~~in the past and ~~compliance~~may ~~requirements~~in the future seek to acquire or invest in businesses, products, or technologies that we believe could complement or expand our products, enhance our capabilities, or otherwise offer growth opportunities. For example, we acquired Quality Clinical Reagents Limited (“QCR”), and Trio Diagnostics (Ireland) Ltd, (“Trio”), in November 2014. Any acquisition may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not the acquisitions are completed, and may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel, or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, their products are not easily adapted to work with ours, or we have difficulty retaining the customers of any acquired business due to changes in ~~those~~ownership, ~~requirements~~management, or otherwise. Acquisitions may also disrupt our business, divert our resources, and require significant management attention that ~~could~~would ~~restrict~~otherwise be available for development of our existing business. Any acquisitions we are able to complete may not result in any synergies or ~~our~~other ~~distributors’~~benefits ~~ability~~we had expected to ~~manufacture~~achieve, ~~market~~which could result in impairment charges that could be substantial. In addition, we may not be able to find and identify desirable acquisition targets or ~~sell~~be successful in entering into an agreement with any particular target. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our ~~products;~~financial condition or results of operations. In addition, if an acquired business, including QCR or Trio, fails to meet our expectations, our business, financial condition or results of operations may suffer or we may be exposed to risks or liabilities that were unknown to us at the time of the acquisition.

•Divestitures ~~our limited knowledge of and relationships with distributors, contractors, suppliers~~ or other ~~parties~~dispositions incould ~~these~~negatively ~~areas;~~impact our business.

•On ~~political~~an ongoing basis, we assess opportunities for improved operational effectiveness and ~~economic~~efficiency ~~instability;~~and may divest, spin-off, split-off, or otherwise dispose of businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment. For example, we sold our AVRL business to Antech in March 2015, and we sold our equity ownership interest in SMB in connection with Zoetis Inc.’s acquisition of SMB in August 2016. These transactions pose risks and challenges that could negatively impact our business. For example, when we decide to sell or otherwise dispose of a business or assets, the sale is typically subject to satisfaction of pre-closing conditions that may not become satisfied. In addition, divestitures or other dispositions may dilute our earnings per share, have other adverse financial and accounting impacts, distract management, disrupt our business, negatively impact market perception of our prospects and involve the loss of key employees, and disputes may arise with buyers. In addition, we may retain responsibility for or agree to indemnify buyers against contingent liabilities, which could have a material effect on our financial statements. Divestitures may also result in significant asset impairment charges, including those related to goodwill and other intangible assets, which could have a material adverse effect on our financial condition and results of operations. We cannot assure you that divestiture or other disposition efforts will be successful in generating improved operating efficiencies. In addition, past disposition activities may not be a good indication of future disposition opportunities, and any divestiture or other disposition of any business may leave us with reduced financial and marketing resources to develop products and services to compete against our competitors.

•A ~~diminished~~change ~~protection~~in ofour ~~intellectual~~effective ~~property~~tax inrate ~~some~~can ~~countries~~have ~~outside~~a ofsignificant ~~the~~adverse ~~United~~impact ~~States;~~on our business.

•Recent ~~trade~~changes ~~protection~~to ~~measures~~U.S. tax laws will significantly impact how U.S. multinational corporations are taxed on foreign earnings. We earn profits in, and ~~import~~are ortherefore ~~export~~potentially ~~licensing~~subject ~~requirements;~~to taxes in, the U.S. and numerous foreign jurisdictions, including Germany, Hong Kong and the United Kingdom, the countries in which we earn

~~• complexity and costs associated with staffing and managing international development and operations;~~24

•TABLE ~~differing~~OF ~~labor regulations and business practices;~~CONTENTS

23the majority of our non-U.S. profits. Due to economic, political or other conditions, tax rates in those jurisdictions may be subject to significant change. A number of factors may adversely impact our future effective tax rates, such as the jurisdictions in which our profits are determined to be earned and taxed; changes in the tax rates imposed by those jurisdictions; expiration and non-renewal of tax holidays in certain jurisdictions; the resolution of issues arising from tax audits with various tax authorities; changes in the valuation of our deferred tax assets and liabilities; adjustments to estimated taxes upon finalization of various tax returns; increases in expenses not deductible for tax purposes, including changes in available tax credits; changes in share-based compensation expense; changes in tax laws or the interpretation of such tax laws; changes in generally accepted accounting principles; and the repatriation of earnings from outside the U.S. for which we have not previously provided for U.S. or foreign taxes. A change in our effective tax rate can materially and adversely impact our results from operations.

~~TABLE~~On OFDecember ~~CONTENTS~~22, 2017, H.R. 1, also known as the “Tax Cuts and Jobs Act” (the “Tax Act”), was signed into law. The Tax Act introduces significant changes to U.S. income tax law that will impact our provision for income taxes. Accounting for the income tax effects of the Tax Act requires significant judgements and estimates in the interpretation and calculations of the provisions of the Tax Act. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we made estimates of the effects and recorded provisional amounts in our consolidated financial statements for the year ended March 31, 2018. We continue to assess and analyze the impact of the Tax Act on our business and our Company and the possibility that the final impact of the Tax Act on our consolidated financial results may be materially different from our current estimates based on our actual results for future periods, our further assessment and analysis of the Tax Act, any additional Congressional administrative and Financial Accounting Standards Board Accounting Standards actions, or other guidance related to the Tax Act and any actions that we may take as a result of the Tax Act.

•We ~~potentially~~may ~~negative~~be ~~consequences~~subject ~~from~~to ~~changes~~litigation infor ora ~~interpretations~~variety of ~~tax~~claims, ~~laws;~~which could adversely affect our business, financial condition or results of operations.

•In ~~changes~~addition into ~~international~~product ~~medical~~liability ~~reimbursement~~claims, ~~policies~~we and ~~programs;~~our directors and officers may be subject to claims arising from our normal business activities. These may include claims, suits, and proceedings involving shareholder and fiduciary matters, intellectual property, labor and employment, wage and hour, commercial and other matters. The outcome of any litigation, regardless of its merits, is inherently uncertain. Any claims and lawsuits, and the disposition of such claims and lawsuits, could be time-consuming and expensive to resolve, divert management attention and resources, and lead to attempts on the part of other parties to pursue similar claims. Any adverse determination related to litigation or settlement or other resolution of a legal matter could adversely affect our business, financial condition or results of operations, harm our reputation or otherwise negatively impact our business.

•Our ~~financial~~stock ~~risks~~price ~~such~~is ashighly ~~longer~~volatile ~~payment~~and ~~cycles,~~investing ~~difficulty~~in ~~collecting~~our ~~accounts~~stock ~~receivable~~involves ~~and~~a ~~exposure~~high todegree ~~fluctuations~~of risk, which could result in ~~foreign~~substantial ~~currency~~losses ~~exchange~~for ~~rates;~~investors.

•The ~~regulatory~~market ~~and~~price ~~compliance~~of ~~risks~~our ~~that~~common ~~relate~~stock, tolike ~~maintaining~~the ~~accurate~~securities ~~information~~of ~~and~~many ~~control~~other medical products companies, fluctuates over ~~sales~~a wide range, and ~~distributors’~~will continue to be highly volatile in the future. During the quarter ended March 31, 2018, the closing sale prices of our common stock on the Nasdaq Global Select Market ranged from $49.51 to $76.00 per share and ~~service~~the ~~providers’~~closing ~~activities~~sale ~~that~~price ~~may~~on ~~fall~~March ~~within~~29, 2018, the ~~purview~~last day of trading for the ~~Foreign~~quarter ~~Corrupt~~ended ~~Practices~~March ~~Act~~31, (2018, was $70.62 per share. During the ~~“FCPA”);~~last eight fiscal quarters ended March 31, 2018, our stock price closed at a high of $76.00 per share on January 29, 2018 and a low of $43.22 per share on May 12, 2016. Many factors may affect the market price of our common stock, including:

• ~~regulations~~fluctuation ~~relating~~in toour ~~data~~operating ~~security and the unauthorized use of, or access to, commercial and personal information.~~results;

~~Any~~• announcements of ~~these~~technological ~~factors~~innovations ~~may, individually~~ or ~~as a group, have a material adverse effect on our business and results of operations. As our international operations grow, we may encounter~~ new ~~risks.~~commercial ~~For~~products ~~example,~~by tous build our international sales and distribution networks in new geographic regions, we must continue to develop relationships with qualified local distributors. If we are not successful in developing and maintaining these relationships, we may not be able to grow sales in these geographic regions. These or ~~other similar risks could adversely affect~~ our ~~revenue and profitability.~~competitors;

We• ~~are~~changes ~~dependent~~in ongovernmental ~~information~~regulation ~~technology~~in ~~systems,~~the ~~infrastructure~~United States and ~~data.~~internationally;

We• ~~are~~prospects ~~dependent upon information technology systems, infrastructure~~ and ~~data.~~proposals Wefor ~~operate~~health ~~and~~care manage our business by relying on several information systems to maintain financial records, process customer orders, manage inventory, process shipments to customers and operate other critical functions. Information technology system failures, network disruptions and breaches of data security could disrupt our operations. If we were to experience a system disruption in the information technology systems that enable us to interact with customers and suppliers, it could result in the loss of sales and customers, delays or cancellation of orders, impeding the manufacture or shipment of products, processing transactions and reporting financial results and significant incremental costs.reform;

~~The~~• ~~multitude~~governmental ~~and complexity of our computer systems make them inherently vulnerable to service interruption~~ or ~~destruction,~~third-party ~~malicious~~payors’ ~~intrusion~~controls ~~and~~on ~~random~~prices ~~attack. Likewise, data privacy or security breaches by employees or others may pose a risk~~ that ~~sensitive data, including~~ our ~~intellectual property, trade secrets or personal information of our employees,~~ customers ~~or other business partners and any patient information~~ may bepay ~~exposed~~for to unauthorized persons or to the public. Cyberattacks are increasing in their frequency, sophistication and intensity. Cyberattacks could include the deployment of harmful malware, denial-of-service, social engineering and other means to affect service reliability and threaten data confidentiality, integrity and availability. Our business partners face similar risks and any security breach of their systems could adversely affect our ~~security posture.~~ products;

~~Management~~• ~~has~~product ~~taken~~liability ~~steps~~claims ~~to address these concerns by implementing network security~~ and ~~internal~~public ~~control~~concern ~~measures.~~as ~~While we have invested, and continue~~ to ~~invest, in~~ the ~~protection~~safety of our ~~data~~devices ~~and information technology infrastructure, there can be no assurance that our efforts will prevent service interruptions,~~ or ~~identify~~similar ~~breaches~~devices indeveloped ~~our~~by ~~systems, that could adversely affect~~ our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business or reputational harm to us. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches.competitors;

~~We are subject to complex requirements from legislation requiring companies to evaluate internal control over financial reporting.~~25

~~Rules~~TABLE ~~adopted~~OF by the Securities and Exchange Commission pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require an assessment of internal control over financial reporting by our management and an attestation of the effectiveness of our internal control over financial reporting by an independent registered public accounting firm. We have an ongoing program to perform the assessment, testing and evaluation to comply with these requirements and we expect to continue to incur significant expenses for Section 404 compliance on an ongoing basis.CONTENTS

We• ~~cannot~~developments ~~predict~~or ~~the~~disputes ~~outcome~~concerning of our ~~testing~~patents inor ~~future periods. In the event that~~ our ~~internal~~other ~~control~~proprietary ~~over~~rights; ~~financial reporting is not effective as defined under Section 404, or any failure to implement required new or~~ and

24• general market conditions.

~~TABLE~~In OFthe ~~CONTENTS~~past, shareholders have filed securities class action litigation following periods of market volatility. If we were to become involved in such securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business, financial condition or results of operations. Because our stock price is so volatile, investing in our common stock is highly risky. A potential investor must be able to withstand the loss of his entire investment in our common stock.

~~improved~~Fluctuations ~~controls,~~in orforeign ~~difficulties~~exchange ~~encountered~~rates ~~in implementation~~ could ~~harm~~adversely ~~results~~affect ~~of operations or prevent us from accurately reporting financial results or cause a failure to meet~~ our ~~reporting~~business, ~~obligations in the future. If management cannot assess internal control over~~ financial ~~reporting~~condition ~~is effective,~~ or ~~our~~results ~~independent~~of ~~registered public accounting firm is unable to provide an unqualified attestation report on such assessment, investor confidence and our share value may be negatively impacted~~operations.

WeFor ~~must~~our ~~comply~~international ~~with~~sales ~~strict~~denominated in U.S. dollars, an increase in the value of the U.S. dollar relative to foreign currencies could make our products less competitive in international markets. For our sales denominated in foreign currencies, we are subject to fluctuations in exchange rates between the U.S. dollar and ~~potentially~~the ~~costly~~particular ~~environmental~~foreign ~~regulations~~currency and changes in such exchange rates could adversely affect our reported results of operations and distort period to period comparisons. Our business, financial condition or weresults of operations could ~~pay~~also ~~significant~~be ~~fines~~adversely affected by the seasonality of international sales and the economic conditions of our overseas markets.

WeOur ~~are~~subsidiaries ~~subject~~in Europe and the United Kingdom increase our exposure to ~~stringent~~foreign ~~federal,~~currency ~~state~~fluctuation ~~and~~risks. ~~local~~These ~~laws,~~risks ~~rules,~~include ~~regulations~~uncertainty ~~and~~regarding ~~policies~~the ~~that~~Euro ~~govern~~and the ~~use,~~British ~~generation,~~pound ~~manufacture~~sterling, ~~storage,~~that ~~air~~could ~~emission,~~adversely ~~effluent~~impact ~~discharge,~~our ~~handling~~results ~~and~~of ~~disposal~~operations based on the movements of ~~certain~~the ~~materials~~applicable ~~and~~foreign ~~wastes~~currency exchange rates in relation to the U.S. Indollar. ~~particular,~~Fluctuating weexchange ~~are~~rates ~~subject~~cause tothe ~~laws,~~value ~~rules~~of ~~and~~items ~~regulations~~on ~~governing~~both the ~~handling~~assets and ~~disposal~~liabilities side of ~~biohazardous~~the ~~materials~~balance ~~used~~sheet into ~~the~~change, ~~development~~which ~~and~~could ~~testing~~also ofnegatively impact our ~~products~~results of operations. Our ~~costs~~financial results will therefore be sensitive to ~~comply~~movements ~~with~~in ~~applicable~~foreign ~~environmental~~exchange ~~regulations~~rates. ~~consist~~A ~~primarily~~depreciation of ~~handling~~non-U.S. ~~and~~dollar ~~disposing~~currencies ofrelative ~~human~~to ~~and~~the ~~veterinary~~U.S. ~~blood~~dollar ~~samples~~could ~~for~~have ~~testing~~a ~~(whole~~material ~~blood,~~adverse ~~plasma~~impact on our results of operations and ~~serum).~~could ~~Although~~cause weour ~~believe~~results ~~that~~of weoperations ~~have~~to ~~complied~~differ ~~with~~from ~~applicable~~our ~~laws~~expectations and ~~regulations~~the expectations of our investors. For example, in ~~all~~June ~~material~~2016, ~~respects~~the ~~and~~United ~~have~~Kingdom ~~not~~held ~~been~~a ~~required~~referendum toin ~~take~~which ~~any~~voters ~~action~~approved toan ~~correct~~exit ~~any~~from ~~noncompliance~~the European Union, wewhich ~~may~~caused ~~have~~significant tovolatility ~~incur~~in ~~significant~~global ~~costs~~stock tomarkets ~~comply~~and ~~with~~currency ~~environmental~~exchange ~~regulations~~rate iffluctuations ~~our~~that ~~manufacturing~~resulted toin ~~commercial~~the ~~levels~~strengthening ~~continues~~of tothe ~~increase~~U.S. Indollar ~~addition,~~against ifforeign acurrencies ~~government~~in ~~agency~~which ~~determines~~we ~~that~~conduct webusiness. ~~have~~Additionally, ~~not~~such ~~complied~~foreign ~~with~~currency ~~these~~exchange ~~laws,~~rate ~~rules~~fluctuations ~~and~~could ~~regulations,~~make weit ~~may~~more ~~have~~difficult to ~~pay~~detect ~~significant~~underlying ~~fines~~trends in our business and~~/or~~ ~~take~~results ~~remedial~~of ~~action~~operations. ~~that~~We ~~would~~do benot ~~expensive~~currently ~~and~~engage wein dohedging ~~not~~transactions ~~carry~~to ~~environmental-related~~mitigate ~~insurance~~foreign ~~coverage~~currency exchange risks.

WeOur ~~are~~international operations subject us to ~~taxation~~unique inrisks ~~multiple~~different ~~jurisdictions.~~than ~~Our~~those ~~financial~~faced ~~condition~~by ~~and~~us ~~results~~in ofthe ~~operations~~United ~~could~~States beand ~~adversely~~we ~~affected~~may bynot ~~unanticipated~~be ~~changes~~able ~~in our tax provisions or exposure~~ to ~~additional~~effectively ~~income~~manage ~~tax~~our ~~liabilities~~international business.

We ~~are~~have ~~subject~~operations tooutside ~~taxation in, and to the tax laws and regulations~~ of, ~~multiple jurisdictions as a result of~~ the ~~international~~United ~~scope of our operations and our corporate and financing structure~~States. We ~~are~~expect ~~also~~that ~~subject~~we towill ~~transfer~~continue ~~pricing laws with respect~~ to ~~our~~expand ~~intercompany transactions, including those relating to the flow of funds among~~ our ~~companies.~~international ~~Adverse~~operations ~~developments~~ in ~~these laws or regulations, or any change in position regarding~~ the ~~application,~~future. ~~administration~~International ~~or interpretation thereof, in any applicable jurisdiction, could have a material adverse effect on our business, consolidated financial condition or results of our~~ operations. ~~Our~~inherently ~~determination of our tax liability is~~ subject tous ~~review by tax authorities in any applicable jurisdiction, including the United States, who may disagree with the positions we have taken or intend~~ to ~~take regarding the tax treatment or characterization of any of our transactions. Any adverse outcome of such~~ a ~~review~~number ~~could have an adverse effect on our results~~ of ~~operations~~risks and ~~financial condition. In addition~~uncertainties, ~~the determination of our provision for income taxes and other tax liabilities requires significant judgment~~ including our determination of whether a valuation allowance against deferred tax assets is required. Our ultimate tax liability may differ from the amounts recorded in our consolidated financial statements and may adversely affect our financial condition and results of operations.:

~~Our~~• ~~ability~~the toincreased ~~issue~~complexity ~~preferred~~and ~~stock~~costs ~~may~~inherent ~~delay~~in ormanaging ~~prevent~~international ~~a change of control of Abaxis.~~operations;

~~Our~~• ~~board~~diverse ofregulatory ~~directors has the authority to issue up to 5,000,000 shares of preferred stock~~ and tocompliance ~~determine the price~~requirements, ~~rights, preferences, privileges~~ and ~~restrictions,~~changes ~~including~~in ~~voting rights, of~~ those ~~shares~~requirements ~~without~~that ~~any~~could ~~further~~restrict ~~vote~~our or ~~action~~our bydistributors’ ~~the~~ability ~~shareholders, except~~ to ~~the extent required by NASDAQ rules. The issuance of preferred stock~~manufacture, ~~while~~market ~~providing flexibility in connection with possible financings~~ or ~~acquisitions~~sell ~~or other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of~~ our ~~outstanding voting stock and, consequently, negatively affect our stock price.~~products;

~~Item~~• ~~1B.~~our ~~Unresolved~~limited ~~Staff~~knowledge ~~Comments~~of and relationships with distributors, contractors, suppliers or other parties in these areas;

~~Not~~• ~~applicable.~~political and economic instability;

25• diminished protection of intellectual property in some countries outside of the United States;

~~TABLE~~• OFtrade ~~CONTENTS~~protection measures and import or export licensing requirements;

~~Item~~• 2.complexity ~~Properties~~and costs associated with staffing and managing international development and operations;

We• ~~are~~differing ~~headquartered~~labor inregulations ~~Union City, California, where we lease approximately 158,378 square feet of office, research~~ and ~~development~~business ~~and manufacturing space, pursuant to a lease expiring in March 2026, with two options to extend the term for an additional five years each.~~ practices;

~~Additionally,~~• ~~our~~potentially ~~facilities~~negative ~~include~~consequences ~~the~~from ~~following:~~changes in or interpretations of tax laws;

• Inchanges ~~Union~~in ~~City,~~international ~~California,~~medical wereimbursement ~~lease~~policies ~~approximately~~and ~~38,856 square feet of warehousing space expiring in fiscal 2026.~~programs;

~~• In Germany, we lease approximately 32,722 square feet of office and warehousing space expiring in fiscal 2025.~~26

•TABLE InOF ~~the United Kingdom, we own approximately 2,600 square feet of office and warehousing space and we lease approximately 4,300 square feet of office and warehousing space expiring in fiscal 2026.~~CONTENTS

We• ~~believe~~financial ~~that~~risks ~~our~~such ~~existing~~as ~~facilities~~longer ~~are~~payment ~~adequate~~cycles, todifficulty ~~meet~~collecting ~~our~~accounts ~~current~~receivable ~~requirements,~~ and ~~that~~exposure ~~we will be able~~ to ~~obtain~~fluctuations ~~additional~~in ~~facilities~~foreign ~~space~~currency onexchange ~~commercially reasonable terms, if and when they are required.~~rates;

~~Item~~• 3.regulatory ~~Legal~~and ~~Proceedings~~compliance risks that relate to maintaining accurate information and control over sales and distributors’ and service providers’ activities that may fall within the purview of the Foreign Corrupt Practices Act (the “FCPA”); and

We• ~~are~~regulations ~~not~~relating ~~currently party~~ to ~~any~~data ~~material~~security ~~pending~~and ~~legal proceedings. We are involved from time to time in various litigation matters in~~ the ~~normal~~unauthorized ~~course~~use of, ~~business. There can be no assurance that existing~~ or ~~future~~access ~~legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business~~to, ~~consolidated~~commercial ~~financial~~and ~~position,~~personal ~~results of operations or cash flows~~information.

~~Item~~Any 4of these factors may, individually or as a group, have a material adverse effect on our business and results of operations. ~~Mine~~As ~~Safety~~our ~~Disclosures~~international operations grow, we may encounter new risks. For example, to build our international sales and distribution networks in new geographic regions, we must continue to develop relationships with qualified local distributors. If we are not successful in developing and maintaining these relationships, we may not be able to grow sales in these geographic regions. These or other similar risks could adversely affect our revenue and profitability.

~~Not~~We ~~applicable~~are dependent on information technology systems, infrastructure and data.

26We are dependent upon information technology systems, infrastructure and data. We operate and manage our business by relying on several information systems to maintain financial records, process customer orders, manage inventory, process shipments to customers and operate other critical functions. Information technology system failures, network disruptions and breaches of data security could disrupt our operations. If we were to experience a system disruption in the information technology systems that enable us to interact with customers and suppliers, it could result in the loss of sales and customers, delays or cancellation of orders, impeding the manufacture or shipment of products, processing transactions and reporting financial results and significant incremental costs.

~~TABLE~~The OFmultitude ~~CONTENTS~~and complexity of our computer systems make them inherently vulnerable to service interruption or destruction, malicious intrusion and random attack. Likewise, data privacy or security breaches by employees or others may pose a risk that sensitive data, including our intellectual property, trade secrets or personal information of our employees, customers or other business partners and any patient information may be exposed to unauthorized persons or to the public. Cyberattacks are increasing in their frequency, sophistication and intensity. Cyberattacks could include the deployment of harmful malware, denial-of-service, social engineering and other means to affect service reliability and threaten data confidentiality, integrity and availability. Our business partners face similar risks and any security breach of their systems could adversely affect our security posture.

~~PART~~Management IIhas taken steps to address these concerns by implementing network security and internal control measures. While we have invested, and continue to invest, in the protection of our data and information technology infrastructure, there can be no assurance that our efforts will prevent service interruptions, or identify breaches in our systems, that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business or reputational harm to us. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches.

~~Item~~In 5addition, the collection and use of personal data in the European Union, presently governed by the provisions of the Data Protection Directive, will be replaced with the General Data Protection Regulation (“GDPR”) in May 2018. ~~Market~~GDPR will impose several requirements relating to the collection, use, processing and transfer of personal data, such as requirements for ~~Registrant~~using consent or other legal grounds to process personal data, providing information to individuals about how their personal data is used, maintaining adequate security and data protection measures, giving data breach notifications, complying with individuals’s ~~Common~~requests ~~Equity~~to access, ~~Related~~correct ~~Stockholder~~or ~~Matters~~delete their personal data and ~~Issuer~~using ~~Purchases~~third party processors of ~~Equity~~personal ~~Securities~~data. GDPR will also maintain the European Union’s strict rules limiting the transfer of personal data out of the European Economic Area. Failure to comply with the requirements of GDPR and the applicable national data protection laws of the European Union Member States may result in fines and other administrative penalties. GDPR will introduce substantial potential fines for violations and increase our responsibility and liability in relation to personal data that we process. To comply with the GDPR we may be required to put in place additional technical and administrative measures and controls mechanisms. This may be onerous and adversely affect our business, financial condition, results of operations and prospects.

~~Market Information for Common Stock~~27

~~Our~~TABLE ~~common~~OF stock is traded on the NASDAQ Global Select Market under the symbol “ABAX.” The following table sets forth the quarterly high and low intra-day per share sales prices for the common stock from April 1, 2016 through March 31, 2017 as reported on the NASDAQ Global Select Market:CONTENTS

	Prices
	Fiscal 2017				Fiscal 2016
	High		Low		High		Low
Quarter ended June 30	$	47.58	$	41.78	$	64.95	$	50.52
Quarter ended September 30		54.98		46.02		56.79		42.55
Quarter ended December 31		55.95		45.57		58.15		41.53
Quarter ended March 31		55.44		45.00		55.29		37.71

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

~~Holders~~Rules adopted by the Securities and Exchange Commission pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) require an assessment of internal control over financial reporting by our management and an attestation of the effectiveness of our internal control over financial reporting by an independent registered public accounting firm. We have an ongoing program to perform the assessment, testing and evaluation to comply with these requirements and we expect to continue to incur significant expenses for Section 404 compliance on an ongoing basis.

AsWe cannot predict the outcome of ~~May~~our ~~26,~~testing ~~2017~~in future periods. In the event that our internal control over financial reporting is not effective as defined under Section 404, ~~there~~or ~~were~~any 22failure to implement required new or improved controls,~~654,000~~ ~~shares~~or difficulties encountered in implementation could harm results of operations or prevent us from accurately reporting financial results or cause a failure to meet our ~~common~~reporting ~~stock~~obligations ~~outstanding~~in the future. If management cannot assess internal control over financial reporting is effective, ~~held~~or byour 83independent ~~shareholders~~registered ofpublic ~~record.~~accounting firm is unable to provide an unqualified attestation report on such assessment, investor confidence and our share value may be negatively impacted.

~~Dividends~~We must comply with strict and potentially costly environmental regulations or we could pay significant fines.

~~During~~We ~~fiscal~~are ~~2017~~subject to stringent federal, ~~2016~~state and ~~2015~~local laws, ~~our~~rules, ~~total~~regulations ~~quarterly~~and ~~dividend~~policies ~~payout~~that ~~was~~govern ~~$11.7~~the ~~million~~use, ~~$10.0~~generation, ~~million~~manufacture, ~~and~~storage, ~~$9.0~~air ~~million~~emission, ~~respectively.~~effluent ~~The~~discharge, ~~amount~~handling and disposal of ~~quarterly~~certain ~~dividends~~materials ~~declared~~and ~~with~~wastes. ~~respect~~In particular, we are subject to ~~the~~laws, ~~Company’s~~rules ~~common~~and ~~stock~~regulations ~~during~~governing the ~~past~~handling ~~two~~and ~~fiscal~~disposal ~~years~~of ~~appears~~biohazardous materials used in ~~Note~~the 22development and testing of our products. Our costs to ~~the~~comply ~~Consolidated~~with ~~Financial~~applicable ~~Statements~~environmental regulations consist primarily of handling and disposing of human and veterinary blood samples for testing (whole blood, plasma and serum). Although we believe that we have complied with applicable laws and regulations in ~~Part~~all IImaterial respects and have not been required to take any action to correct any noncompliance, ~~Item~~we 8may ofhave ~~this~~to ~~report~~incur significant costs to comply with environmental regulations if our manufacturing to commercial levels continues to increase. In addition, if a government agency determines that we have not complied with these laws, rules and regulations, we may have to pay significant fines and/or take remedial action that would be expensive and we do not carry environmental-related insurance coverage.

OnWe ~~April~~are ~~26,~~subject ~~2017,~~to ~~our~~taxation ~~Board~~in ofmultiple ~~Directors~~jurisdictions. ~~declared~~Our afinancial ~~quarterly~~condition ~~cash~~and ~~dividend~~results of ~~$0.14~~operations ~~per~~could ~~share on our outstanding common stock to~~ be ~~paid~~adversely onaffected ~~June~~by ~~15,~~unanticipated ~~2017~~changes toin ~~all~~our ~~shareholders~~tax ofprovisions ~~record~~or asexposure ~~of the close of business on June 1, 2017. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject~~ to ~~the~~additional ~~final~~income ~~determination~~tax ~~of our Board of Directors~~liabilities.

~~Issuer~~We ~~Purchases~~are subject to taxation in, and to the tax laws and regulations of, ~~Equity~~multiple ~~Securities~~jurisdictions as a result of the international scope of our operations and our corporate and financing structure. We are also subject to transfer pricing laws with respect to our intercompany transactions, including those relating to the flow of funds among our companies. Adverse developments in these laws or regulations, or any change in position regarding the application, administration or interpretation thereof, in any applicable jurisdiction, could have a material adverse effect on our business, consolidated financial condition or results of our operations. Our determination of our tax liability is subject to review by tax authorities in any applicable jurisdiction, including the United States, Germany, Hong Kong or the United Kingdom, who may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our transactions. Any adverse outcome of such a review could have an adverse effect on our results of operations and financial condition. In addition, the determination of our provision for income taxes and other tax liabilities requires significant judgment including our determination of whether a valuation allowance against deferred tax assets is required. Our ultimate tax liability may differ from the amounts recorded in our consolidated financial statements and may adversely affect our financial condition and results of operations.

~~Between~~Our ~~August~~ability ~~2011 and July 2013, our Board of Directors authorized the repurchase of up~~ to aissue ~~total~~preferred ~~of $67.3 million of our common~~ stock. Inmay ~~July~~delay ~~2016,~~or ~~our~~prevent ~~Board of Directors approved~~ a ~~$30.0~~change ~~million increase to our existing share repurchase program, for an aggregate~~ of ~~$97.3~~control ~~million. As~~ of ~~March 31, 2017, $54~~Abaxis.~~0 million was available to purchase common stock under our share repurchase program.~~

~~Since~~Our ~~the~~Board ~~share~~of ~~repurchase~~Directors ~~program~~has ~~began,~~the ~~through~~authority ~~March~~to ~~31,~~issue ~~2017,~~up weto ~~have~~5,000,000 ~~repurchased 1.6 million~~ shares of ~~our~~preferred ~~common~~ stock atand ato ~~total~~determine ~~cost~~the ofprice, ~~$43.3~~rights, ~~million~~preferences, ~~including~~privileges ~~commission~~and ~~expense.~~restrictions, ~~During~~including ~~fiscal~~voting ~~2017 and fiscal 2015~~rights, weof ~~did~~those ~~not~~shares ~~repurchase~~without any ~~shares~~further ofvote ~~our~~or ~~common~~action ~~stock.~~by ~~During~~the ~~fiscal 2016~~shareholders, weexcept ~~repurchased~~to ~~325,000~~the ~~shares~~extent ofrequired ~~our~~by ~~common~~Nasdaq ~~stock~~rules. atThe aissuance ~~total~~of ~~cost~~preferred ofstock, ~~$13.0~~while ~~million~~providing ~~and~~flexibility anin ~~average~~connection ~~per~~with ~~share~~possible ~~cost~~financings ~~including~~or ~~commission~~acquisitions ~~expense~~or ofother ~~$40.18.~~corporate ~~The~~purposes, ~~repurchases~~could ~~are~~have ~~made~~the ~~from~~effect ~~time~~of tomaking ~~time~~it onmore ~~the~~difficult ~~open~~for ~~market~~a atthird ~~prevailing~~party ~~market~~to ~~prices~~acquire ora inmajority ~~negotiated~~of ~~transactions~~our ~~off~~outstanding ~~the~~voting ~~market.~~stock ~~Repurchased~~and, ~~shares~~consequently, ~~are~~negatively ~~retired.~~affect our stock price.

2728

TABLE OF CONTENTS

~~Stock~~If ~~Performance~~our ~~Graph(1)~~proposed merger with Zoetis is not completed, our business could be materially and adversely affected and our stock price could decline.

~~The~~On ~~graph~~May ~~below~~15, ~~compares~~2018, we entered into a definitive agreement with Zoetis Inc., a Delaware corporation (“Zoetis”), and Zeus Merger Sub, Inc., a California corporation and an indirect wholly-owned subsidiary of Zoetis (“Merger Sub”), pursuant to which, upon the ~~cumulative~~terms ~~total~~and ~~shareholder~~subject ~~return~~to the conditions set forth therein, Merger Sub would merge with and into us and we would continue on anas ~~investment~~a insurviving entity and wholly-owned, indirect subsidiary of Zoetis. The merger is subject to closing conditions, including the adoption of the merger agreement by the holders of a majority of the outstanding shares of our common stock. Therefore, the ~~Russell~~merger ~~2000~~may ~~Index~~not ~~and~~be ~~the~~completed ~~NASDAQ~~or ~~Medical~~may ~~Equipment~~not ~~Securities~~be ~~Index~~completed ~~over~~as quickly as expected. If the ~~past~~merger ~~five~~agreement ~~year~~is ~~period~~terminated, ~~ended~~the ~~March~~market 31price of our common stock will likely decline, ~~2017.~~as ~~The~~we ~~shareholder~~believe ~~return~~that ~~shown~~our market price reflects an assumption that the merger will be completed. For example, on May 15, 2018, the ~~graph~~last isfull ~~not~~trading ~~necessarily~~day ~~indicative~~prior to the public announcement of ~~future~~the ~~performance~~proposed merger, the closing price for our common stock was $71.75, and on the next trading day, following the announcement of our entering into the merger agreement, our stock price increased to a closing price of $83.34 per share. In addition, our stock price may be adversely affected as a result of the fact that we dohave incurred and will continue to incur significant expenses related to the merger that will not ~~make~~be orrecovered ~~endorse~~if ~~any~~the ~~predictions~~merger asis not completed. If the merger agreement is terminated under certain circumstances, we may be obligated to ~~future~~pay ~~shareholder~~Zoetis ~~returns~~a termination fee of $70.0 million. As a consequence of the failure of the merger to be completed, as well as of some or all of these potential effects of the termination of the merger agreement, our business could be materially and adversely affected.

The ~~graph~~fact ~~assumes~~that ~~the~~there ~~investment~~is ofa ~~$100~~merger onwith ~~March~~Zoetis ~~31,~~pending ~~2012~~could inhave ~~our~~an ~~common~~adverse ~~stock,~~effect ~~the~~on ~~Russell~~our ~~2000~~business, ~~Index~~revenue and ~~the~~results ~~NASDAQ~~of ~~Medical Equipment Securities Index and assumes dividends, if any, are reinvested~~operations.

~~COMPARISON~~While OFthe 5merger ~~YEAR~~is ~~CUMULATIVE~~pending, ~~TOTAL~~it ~~RETURNAmong~~creates ~~Abaxis,~~uncertainty ~~Inc~~about our future. As a result of this uncertainty, ~~the~~customers ~~Russell~~may ~~2000~~decide ~~Index~~to delay, defer, or cancel purchases of our products and services, pending completion of the ~~NASDAQ~~merger ~~Medical~~or ~~Equipment~~termination ~~Securities~~of ~~Index~~the merger agreement. If these decisions represent a significant portion of our anticipated revenue, our results of operations and quarterly revenues could be substantially below the expectations of market analysts.

	3/31/2012		3/31/2013		3/31/2014		3/31/2015		3/31/2016		3/31/2017
Abaxis, Inc.	$	100.00	$	166.79	$	137.04	$	227.78	$	162.78	$	175.74
Russell 2000	$	100.00	$	116.30	$	145.26	$	157.19	$	141.85	$	179.03
NASDAQ Medical Equipment Securities	$	100.00	$	100.05	$	116.56	$	137.50	$	139.14	$	173.73

In addition, while the merger is pending, we are subject to a number of risks that may adversely affect our business, revenue and results of operations, including:

~~(1)~~• ~~This~~the ~~section~~diversion isof ~~not~~management ~~“soliciting material,” is not deemed “filed” with the Securities~~ and ~~Exchange~~employee ~~Commission~~attention and ~~is not to be incorporated by reference in any filing of Abaxis under~~ the ~~Securities~~unavoidable ~~Act~~disruption ofto ~~1933,~~our asrelationships ~~amended,~~with orcustomers ~~the~~and ~~Securities~~vendors ~~Exchange~~may ~~Act~~detract offrom ~~1934,~~our asability ~~amended,~~to ~~whether~~grow ~~made~~revenues ~~before or after the date hereof~~ and ~~irrespective~~minimize ~~of any general incorporation language contained in any such filing.~~costs;

28• we have incurred and will continue to incur significant expenses related to the merger;

~~TABLE~~• OFthe ~~CONTENTS~~fact that, pursuant to the merger agreement, we must generally conduct our business in the ordinary course and we are subject to a variety of other restrictions on the conduct of our business prior to the closing of the merger or termination of the merger agreement; and

~~Item~~• 6.we ~~Selected~~may ~~Consolidated~~be ~~Financial~~unable ~~Data~~to respond effectively to competitive pressures, industry developments and future opportunities.

~~The~~If ~~following table sets forth selected consolidated financial data of Abaxis for each year in~~ the ~~five~~merger ~~year~~with ~~period~~Zoetis ~~ended March 31~~occurs, ~~2017.~~our ~~The~~shareholders ~~following~~will ~~selected~~not ~~consolidated~~be ~~financial~~able ~~data is qualified by reference~~ to ~~and~~participate ~~should be read~~ in ~~conjunction~~any ~~with~~upside ~~“Management’s~~to ~~Discussion~~our and Analysis of Financial Condition and Results of Operations” and with the consolidated financial statements, related notes thereto and other financial information included elsewhere in this Annual Report on Form 10-Kbusiness.

OnUpon ~~March~~consummation ~~31,~~of ~~2015, we completed~~ the ~~sale~~merger, of our ~~AVRL~~shareholders ~~business~~will toreceive ~~Antech~~$83.00 Wein ~~have~~cash ~~reclassified~~per ~~the~~share ~~assets, liabilities, results~~ of ~~operations~~our ~~and~~common ~~the~~stock ~~gain~~owned onby ~~sale~~them, ofbut ~~AVRL~~will innot ~~our~~receive ~~consolidated~~any ~~balance~~shares ~~sheets and statements~~ of ~~income~~Zoetis ~~for~~common ~~all periods presented to reflect them as discontinued operations~~stock. ~~Previously~~As ~~reported~~a ~~financial~~result, ~~information~~if ~~have~~our ~~been~~business ~~revised~~following ~~to reflect~~ the ~~reclassification~~merger ofperforms ~~AVRL~~well, ~~within~~ our ~~veterinary~~current ~~market~~shareholders ~~segment~~will asnot areceive ~~discontinued~~any ~~operation.~~additional ~~See~~consideration, ~~Note~~and 3will totherefore ~~the~~not ~~Consolidated~~receive ~~Financial~~any ~~Statements~~benefit infrom ~~Part~~the ~~II,~~performance ~~Item 8~~ of ~~this~~our ~~report for additional information~~business.

	Year Ended March 31,
	2017			2016			2015			2014			2013
	(In thousands, except per share data)
Statements of Income Data:
Continuing Operations:
Revenues	$	227,220		$	218,901		$	202,593		$	162,031		$	180,878
Cost of revenues		101,375			95,649			93,623			78,081			79,903
Gross profit		125,845			123,252			108,970			83,950			100,975
Operating expenses:
Research and development		19,795			18,388			16,327			13,647			13,577
Sales and marketing		45,249			42,526			42,147			34,742			43,800
General and administrative		16,314			15,984			16,192			11,333			12,825
Gain from legal settlement		—			—			—			—			(17,250	)
Total operating expenses		81,358			76,898			74,666			59,722			52,952
Income from operations		44,487			46,354			34,304			24,228			48,023
Interest and other income (expense), net		6,625			793			(1,262	)		994			253
Income from continuing operations before income tax provision		51,112			47,147			33,042			25,222			48,276
Income tax provision		18,333			16,073			12,239			8,993			17,149
Income from continuing operations	$	32,779		$	31,074		$	20,803		$	16,229		$	31,127
Net income per share from continuing operations:
Basic	$	1.46		$	1.37		$	0.92		$	0.73		$	1.42
Diluted	$	1.44		$	1.36		$	0.91		$	0.72		$	1.39
Discontinued Operations:
Loss from discontinued operations, net of tax	$	(63	)	$	(3	)	$	(1,154	)	$	(2,044	)	$	(3,668	)
Gain on sale of discontinued operations, net of tax	$	—		$	559		$	7,682		$	—		$	—
Net income (loss) per share from discontinued operations:
Basic	$	(0.01	)	$	0.03		$	0.29		$	(0.09	)	$	(0.17	)
Diluted	$	—		$	0.02		$	0.29		$	(0.09	)	$	(0.16	)
Consolidated Operations:
Net income	$	32,716		$	31,630		$	27,331		$	14,185		$	27,459
Net income per share:
Basic	$	1.45		$	1.40		$	1.21		$	0.64		$	1.25
Diluted	$	1.44		$	1.38		$	1.20		$	0.63		$	1.23
Shares used in the calculation of net income per share:
Weighted average common shares outstanding - basic		22,515			22,661			22,497			22,270			21,946
Weighted average common shares outstanding - diluted		22,797			22,883			22,787			22,575			22,381
Cash dividends declared per share	$	0.52		$	0.44		$	0.40		$	—		$	1.00

Item 1B.

Unresolved Staff Comments

29Not applicable.

~~TABLE~~Item OF2. ~~CONTENTS~~Properties

	Year Ended March 31,
	2017		2016		2015		2014		2013
	(In thousands)
Consolidated Balance Sheets Data(1):
Cash and cash equivalents	$	91,332	$	88,323	$	107,015	$	73,589	$	54,910
Short-term investments		51,561		41,474		26,109		29,102		23,354
Working capital		199,735		183,026		168,576		148,553		132,944
Long-term investments		22,171		22,458		24,181		18,491		17,000
Total assets		305,646		271,380		269,064		217,380		201,763
Non-current liabilities		5,979		5,896		7,585		6,205		5,550
Total shareholders' equity	$	266,224	$	236,312	$	220,194	$	193,916	$	176,194

We are headquartered in Union City, California, where we lease approximately 158,378 square feet of office, research and development and manufacturing space, pursuant to a lease expiring in March 2026, with two options to extend the term for an additional five years each.

~~(1) Consolidated balance sheets data reported in the table includes continuing and discontinued operations.~~29

~~Item~~TABLE 7.OF ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~CONTENTS

~~The~~Additionally, ~~following discussion and analysis should be read in conjunction with~~ our ~~consolidated~~facilities ~~financial~~include statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under Item 1A. “Risk Factors” and elsewhere in this Annual Report on Form 10-K.following:

~~Business~~• ~~Overview~~In Union City, California, we lease approximately 64,986 square feet of warehousing space expiring in fiscal 2026.

~~Abaxis,~~• ~~Inc.~~In ~~is a worldwide developer~~Germany, ~~manufacturer~~we ~~and~~lease ~~marketer~~approximately of32,722 ~~portable~~square ~~blood~~feet ~~analysis systems that are used in a broad range~~ of ~~medical~~office ~~specialties in human or veterinary patient care to provide clinicians with rapid blood constituent measurements. Until March 2015, Abaxis also provided veterinary reference laboratory diagnostic~~ and ~~consulting~~warehousing ~~services~~space ~~for~~expiring ~~veterinarians~~in ~~through~~fiscal ~~AVRL~~2025. ~~See the section below entitled “Discontinued Operations” for further information.~~

~~Our~~• ~~corporate~~In ~~headquarters~~the ~~are~~United ~~located in Union City~~Kingdom, ~~California, from which~~ we ~~conduct~~own ~~our~~approximately ~~manufacturing~~2,600 ~~warehousing,~~square ~~research~~feet ~~and~~of ~~development,~~office ~~regulatory, sales~~ and ~~marketing~~warehousing ~~and~~space ~~administrative activities. We market~~ and ~~sell~~we ~~our~~lease ~~products~~approximately ~~worldwide primarily through independent distributors~~4,300 ~~supplemented~~square byfeet ~~our~~of ~~direct~~office ~~sales force. Our sales force is primarily located in the United States. Abaxis Europe GmbH, our wholly-owned subsidiary, markets~~ and ~~distributes~~warehousing ~~diagnostic~~space ~~systems~~expiring ~~for medical and veterinary uses~~ in ~~the~~fiscal ~~European and Asia Pacific markets~~2026.

We ~~manage~~believe that our ~~business~~existing infacilities ~~two~~are ~~operating~~adequate ~~segments,~~to ~~the~~meet ~~medical~~our ~~market~~current requirements, and ~~veterinary~~that ~~market,~~we aswill ~~described~~be ~~below.~~able ~~See~~to ~~“Segment~~obtain ~~Results”~~additional infacilities ~~this~~space ~~section~~on ~~for~~commercially areasonable ~~detailed~~terms, ~~discussion~~if ofand ~~financial~~when ~~results~~they are required.

~~Medical~~Item ~~Market~~3. WeLegal serve a worldwide customer group in the medical market consisting of physicians’ office practices across multiple specialties, urgent care, outpatient and walk-in clinics (free-standing or hospital-connected), health screening operations, home care providers (national, regional or local), nursing homes, ambulance companies, oncology treatment clinics, dialysis centers, pharmacies, hospital laboratories, military installations (ships, field hospitals and mobile care units), pharmaceutical clinical trials and cruise ship lines. Proceedings

~~For~~We ~~our~~are ~~products~~not incurrently ~~the~~party ~~human medical market, we employ primarily independent distributors~~ to ~~market~~any ~~our~~material ~~products.~~pending ~~Starting~~legal ~~in January 2013, we transitioned the majority of our medical product sales to Abbott as our exclusive distributor in the medical market~~proceedings. ~~Pursuant~~We toare ~~our~~involved ~~Abbott~~from ~~Agreement,~~time ~~Abbott obtained the exclusive right~~ to ~~sell~~time ~~and distribute our Piccolo Xpress chemistry analyzers and associated consumables~~ in ~~the~~various ~~professionally-attended~~litigation ~~human~~matters ~~healthcare market~~ in the ~~United~~normal ~~States~~course ~~and~~of ~~China (including Hong Kong)~~business. ~~Effective~~There ~~September~~can ~~2013,~~be weno ~~amended~~assurance ~~the~~that ~~Abbott~~existing ~~Agreement~~or tofuture ~~limit~~legal ~~Abbott’s~~proceedings ~~territory~~arising ~~under~~in ~~such agreement to~~ the ~~United~~ordinary ~~States.~~course ~~Under the Abbott Agreement, we have certain responsibilities for providing technical support and warranty services to Abbott in support~~ of ~~its~~business ~~marketing~~or ~~and~~otherwise ~~sales~~will ~~efforts.~~not ~~The~~have ~~initial~~a ~~term~~material ofadverse ~~the~~effect ~~Abbott Agreement ends~~ on ~~December~~our 31business, ~~2017,~~consolidated ~~and~~financial ~~after the initial term~~position, ~~the~~results ~~Abbott Agreement renews automatically for successive one-year periods unless terminated by either party based upon a notice~~ of ~~non-renewal~~operations ~~six~~or ~~months~~cash ~~prior to the then-current expiration date~~flows.

30Item 4. Mine Safety Disclosures

~~TABLE~~Not ~~OF CONTENTS~~applicable.

We will continue to sell and distribute these medical products outside of the market segments as to which Abbott has exclusive rights. Under our Abbott Agreement, we will continue to sell and distribute to Catapult Health LLC and specified customer segments in the United States, including pharmacy and retail store clinics, shopping malls, clinical research organizations and cruise ship lines. 30

~~Veterinary~~TABLE ~~Market.~~OF Our VetScan products serve a worldwide customer group in the veterinary market consisting of companion animal hospitals, animal clinics with mixed practices of small animals, birds and reptiles, equine and bovine practitioners, veterinary emergency clinics, veterinary referral hospitals, universities, government, pharmaceutical companies, biotechnology companies and private research laboratories. CONTENTS

WePART depend on a number of distributors in North America that distribute our VetScan products. In the United States veterinary market segment, we also rely on various independent regional distributors. In September 2012, we entered into a distribution agreement with MWI to purchase, market and sell the full line of Abaxis veterinary products throughout the United States. In October 2014, we entered into distribution agreements with Henry Schein Animal Health and Patterson Companies, Inc. to sell the full line of Abaxis veterinary products throughout the United States. We depend on our distributors to assist us in promoting our VetScan products, and accordingly, if one or more of our distributors were to stop selling our products in the future, we may experience a temporary sharp decline or delay in our sales revenues until our customers identify another distributor or purchase products directly from us. In addition to selling through distributors, we also directly supply our VetScan products to large group purchasing organizations, hospital networks and other buying groups in the United States, such as Veterinary Centers of America (VCA), a veterinary hospital chain in North America. In May 2014, we entered into a product supply agreement with VCA to supply our VetScan chemistry analyzers and diagnostic reagent discs for placement at VCA’s animal hospitals located in North America that operates more than 700 animal hospitals. In May 2014, we entered into a non-exclusive co-marketing agreement with VCA’s Antech Diagnostic laboratory services to supply our VetScan chemistry analyzers in combination with Antech Diagnostic laboratory services as a diagnostic solution to serve veterinary practices throughout North America. In the third quarter of fiscal 2016, we also entered into a five-year supply agreement with Banfield Pet Hospital, an organization with more than 900 pet hospitals within the United States and Puerto Rico. Under our supply agreement, we will provide our VetScan hematology analyzers and associated consumables to all of Banfield’s pet hospital locations, for which installation and training began in April 2016 and was completed at the end of September 2016. II

~~Discontinued~~Item ~~Operations~~5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

InMarket ~~March~~Information 2015, we entered into an asset purchase agreement with Antech pursuant to which we sold substantially all of the assets of our AVRL business to Antech. The transaction closed on March 31, 2015. We determined that our AVRL business met the criteria to be classified as a discontinued operation, which required retrospective application to financial information for ~~all~~Common periods presented. Accordingly, the historical financial statements appearing in this report have been revised to reflect this reclassification. Unless otherwise noted, references to revenues and expenses in this report are to our revenues and expenses excluding those from AVRL operations. See Note 3 to the Consolidated Financial Statements in Part II, Item 8 of this report for more information. Stock

~~The~~Our ~~total~~common ~~purchase~~stock ~~price~~is ~~under~~traded on the ~~asset~~Nasdaq ~~purchase~~Global ~~agreement~~Select ~~was~~Market ~~$21.0~~under ~~million~~the insymbol ~~cash~~“ABAX.” WeThe ~~received~~following ~~$20.1~~table ~~million~~sets inforth ~~cash proceeds during~~ the ~~fourth~~quarterly ~~quarter~~high ~~of fiscal 2015~~ and welow ~~recognized a pre~~intra-~~tax~~day ~~gain~~per ofshare ~~$12.3~~sales ~~million~~prices ~~($7.7~~for ~~million~~the ~~after-tax)~~common onstock ~~sale~~from ofApril ~~discontinued operations during fiscal 2015. Additionally~~1, ~~upon~~2017 ~~meeting~~through ~~certain conditions by the first anniversary of the closing date in~~ March ~~2016~~31, we2018 ~~recognized~~as areported ~~pre-tax gain of $0.9 million ($0.6 million after-tax)~~ on ~~sale~~the ofNasdaq ~~discontinued~~Global ~~operations~~Select ~~during fiscal 2016.~~ Market:

The pre-tax gain on this sale reflects the excess of the sum of the cash proceeds received over the costs incurred in connection with the sale of AVRL. During the fourth quarter of fiscal 2015, we recorded costs of $7.8 million related to cash payments for employee-related costs, including severance, contract termination and other associated costs. In connection with the transaction, we recorded disposal and an impairment charge on long-lived assets of $1.9 million during fiscal 2015. These items partially offset the cash proceeds that we received in accordance with the terms of the asset purchase agreement.

	Prices
	Fiscal 2018				Fiscal 2017
	High		Low		High		Low
Quarter ended June 30	$	54.08	$	44.12	$	47.58	$	41.78
Quarter ended September 30		53.94		43.66		54.98		46.02
Quarter ended December 31		51.74		44.70		55.95		45.57
Quarter ended March 31		78.53		48.58		55.44		45.00

~~Overview of Financial Results~~Holders

InAs ~~fiscal~~of ~~2017~~May 25, ~~total~~2018, ~~revenues~~there were ~~$227.2 million~~22, ~~an increase of 4% from fiscal 2016. The net increase in revenues was primarily attributable to revenues from consumable sales of $175.3 million~~871,000 anshares ~~increase~~ of 6%our ~~over~~common ~~fiscal~~stock ~~2016~~outstanding, ~~due~~held toby ~~(a)~~77 anshareholders ~~increase in the unit sales~~ of ~~medical~~record. ~~discs due to an expanded instrument installed~~

31Dividends

~~TABLE~~During OFfiscal ~~CONTENTS~~2018, 2017 and 2016, our total quarterly dividend payout was $13.6 million, $11.7 million and $10.0 million, respectively. The amount of quarterly dividends declared with respect to the Company’s common stock during the past two fiscal years appears in Note 21 to the Consolidated Financial Statements in Part II, Item 8 of this report.

~~base,~~On anApril ~~increase~~26, in2018, ~~the unit sales hematology reagent kits primarily attributable to~~ our ~~supply~~Board ~~agreement with Banfield Pet Hospitals starting in the first quarter~~ of ~~fiscal~~Directors ~~2017~~declared ~~and~~a anquarterly ~~increase~~cash individend ~~the unit sales~~ of ~~VetScan rapid tests~~$0.18 ~~Revenues~~per ~~from~~share ~~instrument~~on ~~sales~~our ~~were~~outstanding ~~$39.3~~common ~~million,~~stock ato ~~decrease~~be ofpaid 9%on ~~from~~June ~~fiscal 2016~~15, ~~due~~2018 to ~~(a)~~all ashareholders ~~decrease~~of inrecord ~~the~~as ~~unit sales~~ of ~~Piccolo~~the ~~chemistry~~close ~~analyzers sold to Abbott and impacted by sales~~ of ~~Piccolo~~business ~~chemistry~~on ~~analyzers~~June ~~to Fuzhou Kelian Medical Devices~~1, ~~Ltd~~2018., aFuture ~~point-~~declarations of~~-care~~ ~~diagnostics~~quarterly ~~distributor~~dividends ~~based~~and ~~in China, in~~ the ~~third~~establishment ~~quarter~~ of ~~fiscal~~future ~~2016~~record and ~~(b)~~payment adates ~~decrease~~are insubject to the ~~unit~~final ~~sales~~determination of ~~VetScan~~our ~~hematology~~Board ~~instruments~~of ~~sold to various distributors in North America~~Directors.

~~Gross~~Issuer ~~profit~~Purchases ~~in fiscal 2017 was $125.8 million, an increase~~ of 2%Equity ~~from fiscal 2016, primarily impacted by changes in the product mix in our veterinary market, primarily attributable to higher unit sales of VetScan hematology reagent kits and VetScan rapid tests.~~ Securities

~~Total~~Between ~~operating~~August ~~expenses~~2011 inand ~~fiscal~~July ~~2017~~2016, ~~were~~our ~~$81.4~~Board ~~million,~~of anDirectors ~~increase~~authorized the repurchase of ~~$4.5~~up ~~million,~~to ora ~~6%,~~total ~~from~~of $7697.93 million inof ~~fiscal~~our ~~2016,~~common ~~primarily~~stock. ~~attributable~~In toOctober an2017, ~~increase~~our inBoard ~~research~~of ~~and~~Directors ~~development~~approved ~~spending~~a ~~and~~$21.0 ~~promotional~~million ~~and~~increase ~~marketing~~to ~~expenses~~our toexisting ~~support~~share ~~our~~repurchase ~~growth~~program. inAs ~~both~~of ~~North~~March ~~America~~31, ~~and~~2018, in$75.0 ~~the~~million ~~international~~was ~~markets,~~available ~~partially~~to ~~offset~~purchase bycommon astock ~~decrease~~under inour ~~personnel-related~~share ~~expenses~~repurchase program.

~~Net~~Since ~~income~~the ~~for~~share ~~fiscal~~repurchase ~~2017~~program ~~was~~began, ~~$32.7~~through ~~million~~March 31, an2018, ~~increase~~we ofhave 3%repurchased ~~from $31~~1.6 million inshares ~~fiscal~~of ~~2016,~~our ~~primarily~~common ~~due~~stock toat a ~~net~~total ~~increase~~cost inof ~~revenues~~$43.3 million, ~~discussed~~including ~~above,~~commission ~~and~~expense. aDuring ~~gain~~fiscal ~~from~~2018 ~~the~~and ~~sale~~2017, ofwe andid ~~equity~~not ~~method~~repurchase ~~investment~~any shares of $3our common stock.8 ~~million~~During ~~after~~fiscal ~~tax~~2016, ~~offset~~we inrepurchased ~~part~~325,000 byshares anof ~~increase~~our incommon ~~operating~~stock ~~expenses~~at a total cost of $13.0 ~~Our~~million ~~diluted~~and ~~net~~an ~~income~~average per share ~~increased~~cost toincluding ~~$1.44~~commission inexpense ~~fiscal~~of ~~2017 from~~ $140.3818. inThe ~~fiscal~~repurchases ~~2016.~~are ~~Our~~made ~~diluted~~from ~~net~~time ~~income~~to ~~per~~time ~~share~~on ~~from~~the ~~continuing~~open ~~operations~~market ~~increased~~at toprevailing ~~$1.44~~market prices or in ~~fiscal~~negotiated ~~2017~~transactions ~~from~~off $1the market.36 inRepurchased ~~fiscal~~shares ~~2016~~are retired.

~~Cash, cash equivalents and investments increased by $12.8 million during fiscal 2017 to a total of $165.1 million at March~~ 31, 2017. During fiscal 2017, operating cash flows were $33.2 million, an increase of $5.1 million compared to $28.1 million during fiscal 2016, primarily attributable to higher payments in fiscal 2016, related to accrued liabilities for bonus, taxes and discontinued operations recorded at the end of fiscal 2015. Key non-operating uses of cash during fiscal 2017 included payments of $3.0 million for an investment in a privately-held company, $10.2 million to purchase property and equipment, payments of $2.2 million made for tax withholdings related to net share settlements of restricted stock units and payment of $11.7 million in cash dividends to shareholders.

~~Factors~~TABLE ~~that~~OF ~~May Impact Future Performance~~CONTENTS

~~Our~~Stock ~~industry~~Performance isGraph(1) impacted by numerous competitive, regulatory and other significant factors. Our sales for any future periods are not predictable with a significant degree of certainty, and may depend on a number of factors outside of our control. In particular, we are highly dependent upon the efforts and priorities of our distributors in promoting and creating a demand for our products and as such, we do not have full control over the marketing and sale of our products into these markets. Should these efforts be unsuccessful, or should we fail to maintain or effectively manage these relationships, our business, financial condition and results of operations are likely to be adversely affected. We generally operate with a limited order backlog because our products are typically shipped shortly after orders are received. Product sales in any quarter are generally dependent on orders booked and shipped in that quarter. As a result, any shortfall in product sales during a quarter would negatively affect our results of operations and financial condition during that quarter. In addition, our sales may be adversely impacted by pricing pressure from competitors. Our ability to increase our revenues and profitability will depend, in part, on our ability to increase the sales volumes of our products, to increase the sales performance of our independent distributors, and to successfully compete with our competitors.

~~Abbott~~The ~~controls~~graph ~~the~~below ~~marketing~~compares ~~and~~the ~~sale~~cumulative oftotal ~~our~~shareholder ~~primary~~return ~~medical~~on ~~products~~an ~~into~~investment ~~most~~in ofour ~~the~~common ~~U.S. medical market and~~stock, ~~accordingly, we are dependent upon~~ the ~~efforts~~Russell ~~and~~2000 ~~priorities~~Index ~~of Abbott in promoting~~ and ~~creating~~the aNasdaq ~~demand~~Medical ~~for~~Equipment ~~such~~Securities ~~products~~Index inover ~~such~~the ~~market.~~past ~~Should~~five ~~these~~year ~~efforts~~period beended ~~unsuccessful,~~March ~~our business~~31, ~~financial condition and results of operations may be adversely affected~~2018. ~~For~~The ~~example,~~shareholder ~~during~~return ~~fiscal~~shown ~~2014,~~on wethe ~~were~~graph ~~adversely~~is ~~impacted~~not bynecessarily ~~the~~indicative ~~timing~~ of ~~purchases~~future ~~of our medical products sold to Abbott as it integrated our products into its sales process and sold its inventory~~performance, and ~~in the third and fourth quarters of fiscal 2017,~~ we ~~were~~do ~~similarly~~not ~~negatively~~make ~~impacted~~or byendorse aany ~~reduction~~predictions ~~of orders from Abbott~~ as ato ~~result~~future ofshareholder ~~excess instrument inventory~~returns.

InThe ~~the~~graph ~~United~~assumes ~~States~~the ~~veterinary~~investment ~~market,~~of we$100 ~~rely~~ on ~~our~~March ~~national~~31, ~~and~~2013 ~~independent~~in ~~regional~~our ~~distributors.~~common Westock, ~~are also dependent upon~~ the ~~efforts~~Russell ~~and~~2000 ~~priorities~~Index ~~of these distributors in promoting~~ and ~~creating~~the aNasdaq ~~demand~~Medical ~~for~~Equipment ~~our~~Securities ~~products~~Index and doassumes ~~not~~dividends, ~~have~~if ~~full~~any, ~~control~~are ~~over the marketing and sale of our products into these markets~~reinvested. ~~Should~~

32COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN

~~TABLE~~Among OFAbaxis, ~~CONTENTS~~Inc., the Russell 2000 Index and the Nasdaq Medical Equipment Securities Index

these efforts be unsuccessful, or should we fail to maintain or effectively manage these relationships, our business, financial condition and results of operations are likely to be adversely affected. For example, during fiscal 2014, our strategy of increasing demand for our veterinary products through the expansion of our distribution partners, did not lead to the increased demand for our products in the veterinary clinics that we had anticipated resulting in excess channel inventory. The excess channel inventory was the result of our distributors not selling our products to end customers at the same rate as they were purchasing products from us. In response, we took additional steps to more closely monitor and manage channel inventory in an effort to normalize the veterinary product inventories at our distribution partners in the United States. We only began selling through our distributors Henry Schein Animal Health and Patterson Companies, Inc. in the third quarter of fiscal 2015 and our revenues in future quarters may be impacted by the timing of purchases of our products sold by them as these new distributors integrate our products into their sales process. We will continue to closely monitor and manage channel inventory at our distribution partners in the United States.

	3/31/2013		3/31/2014		3/31/2015		3/31/2016		3/31/2017		3/31/2018
Abaxis, Inc.	$	100.00	$	82.16	$	136.57	$	97.59	$	105.36	$	155.20
Russell 2000	$	100.00	$	124.90	$	135.15	$	121.96	$	153.94	$	172.09
NASDAQ Medical Equipment Securities	$	100.00	$	115.03	$	135.71	$	138.88	$	175.68	$	230.28

~~During~~(1) ~~fiscal~~This ~~2017,~~section inis ~~the~~not ~~North~~“soliciting ~~America veterinary market~~material,” weis ~~experienced~~not adeemed ~~decrease~~“filed” inwith the ~~unit~~Securities ~~sales of veterinary reagent discs sold, primarily attributable to a relatively flat installed base of customers of chemistry analyzers~~ and ~~fluctuation~~Exchange inCommission ~~distribution inventory, as compared to the same period in fiscal 2016. As a result, this reduced our revenue growth~~ and ~~contributed~~is tonot ~~lower gross profit margins in the veterinary market. Looking forward, as we believe competition in the veterinary market will remain intense, we have implemented and intend~~ to ~~continue~~be ~~implementing~~incorporated ~~new~~by ~~strategies~~reference to improve customer retention and monitor our installed base of customers and distribution inventory more closely. Additionally, we plan to continue to introduce new products that are designed to enhance our veterinary product portfolio. For example, in ~~September~~any ~~2016,~~filing ~~we completed the development~~ of ~~our~~Abaxis ~~connectivity~~under ~~product,~~ the ~~VetScan~~Securities ~~FUSE,~~Act ~~which is currently in beta-testing. The VetScan FUSE is a web-based integration system that provides connectivity between our point-~~of~~-care~~ ~~diagnostic instruments and the veterinary practice management systems. Additionally~~1933, inas ~~fiscal 2018~~amended, weor ~~expect to launch~~ the ~~VetScan~~Securities ~~Canine~~Exchange ~~Pancreatic~~Act ~~Lipase~~of ~~Rapid Test~~1934, as ~~well~~amended, aswhether amade ~~new~~before ~~point-of-care~~or ~~urine~~after ~~sediment analyzer into~~ the ~~veterinary~~date ~~market~~hereof ~~in our fourth quarter of fiscal 2018,~~ and airrespective ~~new point-~~of~~-care~~ ~~urine~~any ~~chemistry~~general ~~analyzer~~incorporation inlanguage ~~our~~contained ~~second quarter of fiscal 2018. See “Total Revenues – Continuing Operations within the Results of Operations” section below, for a further discussion regarding the change~~ in ~~total~~any ~~revenues~~such ~~in North America~~filing.

~~Critical Accounting Policies, Estimates and Judgments~~32

~~Our~~TABLE ~~consolidated~~OF financial statements are prepared in accordance with accounting principles generally accepted in the United States and pursuant to the rules and regulations of the Securities and Exchange Commission. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and the sensitivity of these estimates to deviations in the assumptions used in making them. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. However, there can be no assurance that our actual results will not differ from these estimates.CONTENTS

WeItem have identified the policies below as critical because they are not only important to understanding our financial condition and results of operations, but also because application and interpretation of these policies requires both judgment and estimates of matters that are inherently uncertain and unknown6. ~~Accordingly,~~Selected actual results may differ materially from our estimates. The impact and any associated risks related to these policies on our business operations are discussed below. For a more detailed discussion on the application of these and other accounting policies, see the Notes to the Consolidated Financial ~~Statements in Part II, Item 8 of this report.~~Data

~~Revenue~~The ~~Recognition.~~following ~~Our~~table ~~primary~~sets ~~customers~~forth ~~are~~selected ~~distributors~~consolidated ~~and~~financial ~~direct~~data ~~customers~~of inAbaxis ~~both the medical and veterinary markets. Service revenues were primarily generated from veterinary reference laboratory diagnostic and consulting services~~ for ~~veterinarians.~~each ~~Revenues~~year ~~from~~in ~~product~~the ~~sales,~~five ~~net~~year ofperiod ~~estimated~~ended ~~sales~~March ~~allowances~~31, ~~discounts~~2018. ~~and~~The ~~rebates,~~following ~~are~~selected ~~recognized~~consolidated ~~when~~financial ~~(i)~~data ~~evidence~~is ofqualified anby ~~arrangement~~reference ~~exists, (ii) upon shipment of the products or rendering of services~~ to ~~the~~and ~~customer,~~should ~~(iii)~~be ~~the~~read ~~sales~~in ~~price~~conjunction iswith ~~fixed~~“Management’s orDiscussion ~~determinable~~ and ~~(iv)~~Analysis ~~collection~~ of ~~the~~Financial ~~resulting~~Condition ~~receivable~~and isResults ~~reasonably assured. Rights~~ of ~~return~~Operations” ~~are~~and ~~not~~with ~~provided.~~the ~~Until~~consolidated ~~March~~financial ~~2015~~statements, werelated ~~offered~~notes ~~discounts~~thereto ~~on AVRL services for a specified period as incentives. Discounts were reductions to invoiced amounts within a specified period~~ and ~~were~~other ~~recorded~~financial atinformation ~~the~~included ~~time~~elsewhere ~~services~~in ~~are~~this ~~performed.~~Annual ~~Net~~Report ~~service~~on ~~revenues~~Form ~~were recognized at the time services were performed~~10-K.

33On March 31, 2015, we completed the sale of our AVRL business to Antech. We have reclassified the assets, liabilities, results of operations and the gain on sale of AVRL in our consolidated balance sheets and statements of income for all periods presented to reflect them as discontinued operations. Previously reported financial information have been revised to reflect the reclassification of AVRL within our veterinary market segment as a discontinued operation. See Note 2 to the Consolidated Financial Statements in Part II, Item 8 of this report for additional information.

TABLE OF CONTENTS

	Year Ended March 31,
	2018		2017			2016			2015			2014
	(In thousands, except per share data)
Statements of Income Data:
Continuing Operations:
Revenues	$	244,700	$	227,220		$	218,901		$	202,593		$	162,031
Cost of revenues		111,091		101,375			95,649			93,623			78,081
Gross profit		133,609		125,845			123,252			108,970			83,950
Operating expenses:
Research and development		23,332		19,795			18,388			16,327			13,647
Sales and marketing		53,291		45,249			42,526			42,147			34,742
General and administrative		18,331		16,314			15,984			16,192			11,333
Total operating expenses		94,954		81,358			76,898			74,666			59,722
Income from operations		38,655		44,487			46,354			34,304			24,228
Interest and other income (expense), net		4,745		6,625			793			(1,262	)		994
Income from continuing operations before income tax provision		43,400		51,112			47,147			33,042			25,222
Income tax provision		16,223		18,333			16,073			12,239			8,993
Income from continuing operations	$	27,177	$	32,779		$	31,074		$	20,803		$	16,229
Net income per share from continuing operations:
Basic	$	1.20	$	1.46		$	1.37		$	0.92		$	0.73
Diluted	$	1.17	$	1.44		$	1.36		$	0.91		$	0.72
Discontinued Operations:
Loss from discontinued operations, net of tax	$	—	$	(63	)	$	(3	)	$	(1,154	)	$	(2,044	)
Gain on sale of discontinued operations, net of tax	$	—	$	—		$	559		$	7,682		$	—
Net income (loss) per share from discontinued operations:
Basic	$	—	$	(0.01	)	$	0.03		$	0.29		$	(0.09	)
Diluted	$	—	$	—		$	0.02		$	0.29		$	(0.09	)
Consolidated Operations:
Net income	$	27,177	$	32,716		$	31,630		$	27,331		$	14,185
Net income per share:
Basic	$	1.20	$	1.45		$	1.40		$	1.21		$	0.64
Diluted	$	1.17	$	1.44		$	1.38		$	1.20		$	0.63
Shares used in the calculation of net income per share:
Weighted average common shares outstanding - basic		22,672		22,515			22,661			22,497			22,270
Weighted average common shares outstanding - diluted		23,135		22,797			22,883			22,787			22,575
Cash dividends declared per share	$	0.60	$	0.52		$	0.44		$	0.40		$	—

Amounts collected in advance of revenue recognition are recorded as a current or non-current deferred revenue liability based on the time from the balance sheet date to the future date of revenue recognition. We recognize revenue associated with extended maintenance agreements ratably over the life of the contract.33

~~Multiple~~TABLE ~~Element~~OF Revenue Arrangements. Our sales arrangements may contain multiple element revenue arrangements in which a customer may purchase a combination of instruments, consumables or extended maintenance agreements. Additionally, we provide incentives in the form of free goods or extended maintenance agreements to customers in connection with the sale of our instruments. We participate in selling arrangements in the veterinary market that include multiple deliverables, such as instruments and consumables. Prior to the sale of our AVRL business to Antech in March 2015, our selling arrangements in the veterinary market had also included service agreements associated with our veterinary reference laboratory. Judgments as to the allocation of consideration from an arrangement to the multiple elements of the arrangement, and the appropriate timing of revenue recognition are critical with respect to these arrangements.CONTENTS

A multiple element arrangement includes the sale of one or more tangible product offerings with one or more associated services offerings, each of which are individually considered separate units of accounting. We allocate revenues to each element in a multiple element arrangement based upon the relative selling price of each deliverable. When applying the relative selling price method, we determine the selling price for each deliverable using vendor-specific objective evidence (“VSOE”) of selling price, if it exists, or third-party evidence (“TPE”) of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, we use our best estimate of selling price for that deliverable. Revenue allocated to each element is then recognized when all revenue recognition criteria are met for each element.

	Year Ended March 31,
	2018		2017		2016		2015		2014
	(In thousands)
Consolidated Balance Sheets Data⁽¹⁾:
Cash and cash equivalents	$	46,277	$	91,332	$	88,323	$	107,015	$	73,589
Short-term investments		120,506		51,561		41,474		26,109		29,102
Working capital		220,368		199,735		183,026		168,576		148,553
Long-term investments		19,240		22,171		22,458		24,181		18,491
Total assets		341,103		305,646		271,380		269,064		217,380
Non-current liabilities		6,530		5,979		5,896		7,585		6,205
Total shareholders' equity	$	290,693	$	266,224	$	236,312	$	220,194	$	193,916

~~Revenues~~(1) ~~from~~Consolidated ~~our~~balance ~~multiple~~sheets ~~element~~data ~~arrangements~~reported are allocated separately to the instruments, consumables, extended maintenance agreements and incentives based on the relative selling price method. Amounts allocated to each element are based on its objectively determined fair value, such as the sales price for the product when it is sold separately. Revenues allocated to each element are then recognized when the basic revenue recognition criteria, as described above, are met for each element. Revenues associated with incentives in the ~~form~~table ofincludes ~~free~~continuing ~~goods are deferred until the goods are shipped to the customer. Revenues associated with incentives in the form of extended maintenance agreements are deferred~~ and ~~recognized~~discontinued ~~ratably over the life of the extended maintenance contract, generally one to three years~~operations. ~~Incentives in the form of extended maintenance agreements are our most significant multiple element arrangement.~~

~~For~~Item ~~our~~7. ~~selling~~Management’s ~~arrangements~~Discussion inand ~~the~~Analysis ~~veterinary market that include multiple deliverables, such as instruments, consumables or service agreements (prior to the sale~~ of ~~AVRL~~Financial inCondition ~~March~~and ~~2015)~~Results ~~associated with our veterinary reference laboratory, revenue is recognized upon delivery~~ of the product or performance of the service during the term of the service contract when the basic revenue recognition criteria, as described above, are met for each element. We allocate revenues to each element based on the relative selling price of each deliverable. Amounts allocated to each element are based on its objectively determined fair value, such as the sales price for the product or service when it is sold separately. Operations

~~Until~~The ~~March~~following ~~2015,~~discussion weand ~~offered~~analysis ~~customer~~should ~~incentives~~be ~~consisting~~read ofin ~~arrangements~~conjunction with ~~customers~~our toconsolidated ~~include~~financial ~~discounts~~statements onand ~~future~~related ~~sales~~notes ofthereto ~~services~~included ~~associated~~elsewhere ~~with our veterinary reference laboratory. We applied judgment~~ in ~~determining~~this ~~whether~~Annual ~~future~~Report ~~discounts~~on ~~are~~Form ~~significant and incremental~~10-K. ~~When~~This ~~the~~discussion ~~future~~may ~~discount~~contain ~~offered~~forward-looking ~~was~~statements ~~not~~based ~~considered~~upon ~~significant~~current ~~and~~expectations ~~incremental,~~that weinvolve ~~did~~risks ~~not~~and ~~account for the discount as an element of the original arrangement~~uncertainties. ToOur ~~determine~~actual ~~whether~~results ~~a discount was significant~~ and ~~incremental, we looked to~~ the ~~discount~~timing ~~provided in comparison to standalone sales~~ of ~~the~~selected ~~same~~events ~~product~~could todiffer ~~similar~~materially ~~customers,~~from ~~the~~those ~~level~~anticipated ~~of discount provided on other elements~~ in ~~the~~these ~~arrangement,~~forward-looking ~~and~~statements ~~the~~as ~~significance~~a result of ~~the~~several ~~discount to the overall arrangement. If the discount in the multiple element arrangement approximated the discount typically provided in standalone sales~~factors, ~~that~~including ~~discount~~those isset ~~not~~forth ~~considered~~under ~~incremental~~Item 1A. ~~During~~“Risk ~~fiscal~~Factors” ~~2015, our customer incentive programs with future discounts were not significant~~ and elsewhere in ~~fiscal~~this ~~2017~~Annual ~~and~~Report ~~2016~~on weForm ~~did not offer any such incentives~~10-K.

AtBusiness March 31, 2017 and 2016, the current portion of deferred revenue was $1.4 million and $1.6 million, respectively, and the non-current portion of deferred revenue was $1.5 million and $2.3 million, respectively. Net current and non-current deferred revenue decreased by $1.0 million from March 31, 2016 to March 31, 2017, primarily attributable to deferred revenue recognized ratably over the life of extended maintenance contracts Overview

34Abaxis, Inc. is a worldwide developer, manufacturer and marketer of portable blood analysis systems that are used in a broad range of medical specialties in human or veterinary patient care to provide clinicians with rapid blood constituent measurements. Until March 2015, Abaxis also provided veterinary reference laboratory diagnostic and consulting services for veterinarians through AVRL. See the section below entitled “Discontinued Operations” for further information.

~~TABLE~~Our OFcorporate ~~CONTENTS~~headquarters are located in Union City, California, from which we conduct our manufacturing, warehousing, research and development, regulatory, sales and marketing and administrative activities. We market and sell our products worldwide primarily through independent distributors, supplemented by our direct sales force. Our sales force is primarily located in the United States. Abaxis Europe GmbH, our wholly-owned subsidiary, markets and distributes diagnostic systems for medical and veterinary uses in the European and Asia Pacific markets.

~~offered~~We tomanage ~~customers~~our inbusiness ~~the form of free services~~ in ~~connection~~two ~~with~~operating ~~the sale of our instruments. In October 2013~~segments, ~~we changed~~ the ~~standard~~medical ~~warranty~~market ~~period~~and onveterinary ~~certain~~market, ~~instruments~~as ~~from~~described ~~three~~below. toSee ~~five~~“Segment ~~years,~~Results” ~~which resulted~~ in athis ~~decrease~~section infor ~~maintenance~~a ~~contracts~~detailed ~~offered~~discussion ~~to customers in the form~~ of ~~free~~financial ~~services~~results.

~~Customer~~Medical ~~Programs~~Market. ~~From~~We ~~time~~serve toa ~~time~~worldwide customer group in the medical market consisting of physicians’ office practices across multiple specialties, weurgent ~~offer~~care, ~~customer~~outpatient ~~marketing~~and walk-in clinics (free-standing or hospital-connected), health screening operations, home care providers (national, regional or local), nursing homes, ambulance companies, oncology treatment clinics, dialysis centers, pharmacies, hospital laboratories, military installations (ships, field hospitals and ~~incentive~~mobile ~~programs.~~care ~~Our~~units), ~~most~~pharmaceutical ~~significant~~clinical ~~customer~~trials ~~programs~~and ~~are~~cruise ~~described~~ship aslines. ~~follows:~~

~~Instrument~~For ~~Trade-In~~our ~~Programs.~~products Wein ~~periodically~~the ~~offer~~human ~~trade-~~medical market, we employ primarily independent distributors to market our products. Starting in ~~programs~~January 2013, we transitioned the majority of our medical product sales to ~~customers~~Abbott ~~for~~as ~~trading~~our exclusive distributor in anthe ~~existing~~medical ~~instrument~~market. Pursuant to ~~purchase~~our aAbbott ~~new~~Agreement, ~~instrument~~Abbott obtained the exclusive right to sell and wedistribute ~~will~~our ~~either~~Piccolo ~~provide~~Xpress ~~incentives~~chemistry analyzers and associated consumables in the ~~form~~professionally-attended ofhuman ~~free~~healthcare ~~goods~~market orin ~~reduce~~ the ~~sales~~United ~~price~~States ofand ~~the~~China ~~instrument~~(including Hong Kong). ~~These~~Effective ~~incentives~~September in2013, we amended the ~~form~~Abbott ofAgreement ~~free~~to ~~goods~~limit ~~are~~Abbott’s ~~recorded~~territory ~~based~~under onsuch agreement to the ~~relative~~United ~~selling~~States ~~price~~and ~~method~~effective ~~according~~April 2017, we amended the Abbott Agreement to include clinical research organization in Abbott’s customer segment. Effective July 2017, we further amended the ~~policies~~Abbott ~~described~~Agreement ~~above~~to outline certain pricing for qualifying customers of Abbott. Under the Abbott Agreement, we have certain responsibilities for providing technical support and warranty services to Abbott in support of its marketing and

Instrument Rental Programs. We periodically offer programs to customers whereby certain instruments are made available to customers for rent or on an evaluation basis. These programs typically require customers to purchase a minimum quantity of consumables during a specified period for which we recognize revenue on the related consumables according to the policies described above. Depending on the program offered, customers may purchase the instrument during the rental or evaluation period. Proceeds from such sale are recorded as revenue according to the policies described above. Rental income, if any, is also recorded as revenue according to the policies described above. 34

~~Lease~~TABLE ~~Programs.~~OF Starting in fiscal 2016, we entered into sales contracts as the lessor of instruments under sales-type lease agreements with our customers. In the veterinary market, we may offer arrangements to end users for monthly payments of instruments and consumables purchases over a term of six years. Revenues related to multiple-element arrangements are allocated to lease and non-lease elements based on their relative selling prices as prescribed by our revenue recognition policies described above. Lease elements generally include one or multiple veterinary instruments, while non-lease elements generally include the consumables related to the leased instrument. CONTENTS

Wesales ~~estimate~~efforts. ~~the~~The ~~fair~~initial ~~value~~term of ~~our leased products for~~ the ~~purposes~~Abbott ofAgreement ~~lease~~ended ~~classification.~~on InDecember ~~accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 840~~31, ~~Leases (“ASC 840”)~~2017, weand ~~define~~after the ~~fair~~initial ~~value of a leased product at lease inception as its normal selling price~~term, ~~reflecting~~the ~~any~~Abbott ~~volume~~Agreement orrenews ~~discounts~~automatically ~~that~~for ~~may~~successive ~~apply.~~one-year Weperiods ~~estimate~~unless ~~the~~terminated ~~fair~~by ~~value~~either ofparty ~~our leased products~~ based upon ~~transacted~~a ~~cash~~notice ~~sales prices. Estimating the fair value~~ of ~~our~~non-renewal ~~leased~~six ~~products~~months ~~can~~prior beto ~~subjective~~the ~~and~~then-current ~~thus~~expiration ~~subject to significant judgment~~date.

~~The~~We ~~present~~will ~~value~~continue ofto ~~lease~~sell ~~receivables,~~and ~~including~~distribute ~~accrued~~these ~~interest,~~medical ~~was~~products ~~$9.1~~outside ~~million~~of ~~and~~the ~~$2.1~~market ~~million,~~segments as ofto ~~March~~which ~~31,~~Abbott ~~2017~~has ~~and~~exclusive ~~2016, respectively~~rights. ~~Our~~Under ~~short-term~~our ~~and~~Abbott ~~long-term~~Agreement, ~~lease~~we ~~receivables~~will ~~are~~continue ~~recorded~~to ~~within~~sell ~~“Receivables”~~ and ~~“Other~~distribute ~~Assets,”~~to ~~respectively,~~Catapult onHealth ~~our~~LLC ~~consolidated~~and ~~balance~~specified ~~sheets.~~customer ~~Revenues~~segments ~~from~~in ~~sales-type lease arrangements is recognized upon shipment of~~ the ~~products~~United ~~to the customer~~States, ~~assuming~~including ~~all~~pharmacy ~~other~~and ~~revenue~~retail ~~recognition~~store ~~criteria~~clinics, ~~have~~shopping ~~been~~malls ~~met.~~and ~~Revenues~~cruise ~~from~~ship ~~sales-type leases are presented as product revenue~~lines. ~~Interest income is recognized monthly over the lease term using the effective-interest method.~~

~~Sales~~Veterinary ~~Incentive Programs~~Market. WeOur ~~periodically~~VetScan ~~offer~~products ~~customer~~serve ~~sales~~a ~~incentive~~worldwide ~~programs~~customer ~~and~~group ~~we record reductions to revenue related to these programs. Incentives may be provided~~ in the ~~form~~veterinary ofmarket ~~rebates~~consisting toof ~~distributors~~companion ~~for~~animal ~~volume-based purchases or upon meeting other specified requirements~~hospitals, ~~end-user~~animal ~~rebates~~clinics ~~and~~with ~~discounts.~~mixed Apractices ~~summary~~ of ~~our~~small ~~revenue~~animals, ~~reductions~~birds isand ~~described~~reptiles, ~~below.~~equine ~~Other~~and ~~rebate~~bovine ~~programs~~practitioners, ~~offered~~veterinary toemergency ~~distributors~~clinics, orveterinary ~~customers~~referral ~~vary~~hospitals, ~~from~~universities, ~~period~~governments, topharmaceutical ~~period~~companies, inbiotechnology ~~the~~companies ~~medical~~ and ~~veterinary~~private ~~markets~~research ~~and were not significant~~laboratories.

•We ~~Volume-based~~depend ~~Incentives.~~on ~~Volume-based~~a ~~incentives,~~number of distributors in North America that distribute our VetScan products. In the ~~form~~United ofStates ~~rebates~~veterinary market segment, ~~are~~we ~~offered~~also ~~from~~rely ~~time~~on tovarious ~~time~~independent toregional distributors. ~~and~~In ~~group~~September ~~purchasing~~2012, ~~organizations~~we ~~upon~~entered ~~meeting~~into ~~the~~a ~~sales~~distribution ~~volume~~agreement ~~requirements~~with ~~during~~MWI ato ~~qualifying~~purchase, ~~period~~market and ~~are~~sell ~~recorded~~the asfull aline ~~reduction~~of toAbaxis ~~gross~~veterinary ~~revenues~~products ~~during~~throughout athe ~~qualifying~~United ~~period~~States. ~~The~~In ~~pricing~~October ~~rebate~~2014, ~~program~~we isentered ~~primarily~~into ~~offered~~distribution toagreements ~~distributors~~with ~~and~~Henry ~~group~~Schein ~~purchasing~~Animal ~~organizations~~Health in(a ~~the~~division ~~North~~of ~~America~~Henry ~~veterinary~~Schein, ~~market~~Inc.) and Patterson Companies, ~~upon~~Inc. ~~meeting~~to sell the ~~sales~~full ~~volume~~line ~~requirements~~ of Abaxis veterinary products ~~during~~throughout the ~~qualifying~~United ~~period~~States. ~~Factors~~We ~~used~~depend on our distributors to assist us in ~~the~~promoting ~~rebate~~our ~~calculations~~VetScan ~~include~~products, ~~the~~and ~~identification~~accordingly, if one or more of ~~products~~our ~~sold~~distributors ~~subject~~were to astop ~~rebate~~selling ~~during~~our products in the ~~qualifying~~future, ~~period~~we ~~and~~may ~~which~~experience ~~rebate~~a ~~percentage~~temporary ~~applies~~sharp decline or delay in our revenues until our customers identify another distributor or purchase products directly from us. ~~Based~~In onaddition ~~these~~to ~~factors~~selling through distributors, we also directly supply our VetScan products to large group purchasing organizations, hospital networks and ~~using~~other ~~historical~~buying ~~trends~~groups in the United States, ~~adjusted~~such ~~for~~as ~~current~~Veterinary ~~changes~~Centers of America (“VCA”), a veterinary hospital chain in North America. In May 2014, we ~~estimate~~entered ~~the~~into ~~amount~~a ofproduct ~~the~~supply ~~rebate~~agreement with VCA to supply our VetScan chemistry analyzers and ~~record~~diagnostic ~~the~~reagent ~~rebate~~discs for placement at VCA’s animal hospitals located in North America that operates more than 800 animal hospitals. In May 2014, we entered into a non-exclusive co-marketing agreement with VCA’s Antech Diagnostic laboratory services to supply our VetScan chemistry analyzers in combination with Antech Diagnostic laboratory services as a ~~deduction~~diagnostic solution to ~~gross~~serve ~~revenues~~veterinary ~~when~~practices wethroughout ~~record~~North America. In the ~~sale~~third quarter of fiscal 2016, we also entered into a five-year supply agreement with Banfield Pet Hospital, an organization with more than 900 pet hospitals within the ~~product~~United States and Puerto Rico. ~~The~~Under ~~rebate~~our issupply ~~recorded~~agreement, aswe awill ~~reserve~~provide our VetScan hematology analyzers and associated consumables to ~~offset~~all ~~accounts~~of ~~receivable~~Banfield’s aspet ~~settlements~~hospital ~~are~~locations, ~~made~~for which installation and training began in April 2016 and was completed at the end of September 2016.

35Recent Developments

~~TABLE~~On OFMay ~~CONTENTS~~15, 2018, we entered into a definitive agreement with Zoetis Inc., a Delaware corporation (“Zoetis”), and Zeus Merger Sub, Inc., a California corporation and an indirect wholly-owned subsidiary of Zoetis (“Merger Sub”), pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub would merge with and into us and we would continue on as a surviving entity and indirect wholly-owned, subsidiary of Zoetis. The completion of the proposed acquisition is subject to the satisfaction of various closing conditions, including the approval of the merger by our shareholders. The merger is expected to be completed in the second half of calendar year 2018 at a price of $83.00 per share of common stock.

~~through~~Discontinued offsets to outstanding customer invoices. Settlement of the rebate accruals from the date of sale ranges from one to nine months after sale. Changes in the rebate accrual at the end of each period are based upon distributors and group purchasing organizations meeting the purchase requirements during the quarter. Operations

•In ~~Distributor~~March ~~Rebate~~2015, ~~Incentives.~~we ~~From~~entered ~~time~~into an asset purchase agreement with Antech pursuant to ~~time,~~which we ~~offer~~sold asubstantially ~~customer~~all ~~sales~~of ~~incentive~~the ~~program,~~assets ~~whereby~~of ~~distributors~~our ~~are~~AVRL ~~offered~~business ato ~~rebate~~Antech. ~~upon~~The ~~meeting~~transaction ~~certain~~closed ~~requirements~~on March 31, 2015. We ~~recognize~~determined ~~the~~that ~~rebate~~our ~~obligation~~AVRL asbusiness amet ~~reduction~~the ofcriteria ~~revenue~~to atbe ~~the~~classified ~~later~~as ofa ~~the~~discontinued ~~date~~operation, on which werequired ~~sell~~retrospective ~~the~~application ~~product~~to orfinancial ~~the~~information ~~date~~for ~~the~~all ~~program~~periods ~~is offered~~presented. ~~These~~Accordingly, ~~customer~~the ~~sales~~historical ~~incentive~~financial ~~programs~~statements ~~require~~appearing ~~management~~in tothis ~~estimate~~report ~~the~~have ~~rebate~~been ~~amounts~~revised to ~~distributors~~reflect ~~who~~this ~~will~~reclassification. ~~qualify~~Unless ~~for~~otherwise ~~the~~noted, ~~incentive~~references ~~during~~to ~~the~~revenues ~~promotional~~and ~~period.~~expenses Wein ~~record~~this ~~the~~report ~~estimated~~are ~~liability~~to inour ~~other~~revenues ~~current~~and ~~accrued~~expenses ~~liabilities~~excluding onthose ~~our~~from ~~consolidated~~AVRL ~~balance sheets~~operations. ~~Management’s~~See ~~estimates~~Note ~~are~~2 ~~based~~to onthe ~~historical~~Consolidated ~~experience~~Financial ~~and~~Statements ~~the~~in ~~specific~~Part ~~terms~~II, ~~and~~Item ~~conditions~~8 of ~~the~~this ~~incentive~~report ~~programs~~for more information.

•Overview End-User Rebates and Discounts. From time to time, cash rebates are offered to end-users who purchase certain products or instruments during a promotional period and are recorded as a reduction to gross revenues. Additionally, we periodically offer sales incentives to end-users, in the form of ~~sales~~Financial discounts, to purchase consumables for a specified promotional period, typically over five years from the sale of our instrument, and we reimburse resellers for the value of the sales discount provided to the end-user. We estimate the amount of the incentive earned by end-users during a quarter and record a liability to the reseller as a reduction to gross revenues. Factors used in the liability calculation of incentives earned by end-users include the identification of qualified end-users under the sales program during the period and using historical trends. Settlement of the liability to the reseller ranges from one to twelve months from the date an end-user earns the incentive.Results

~~The~~In ~~following~~fiscal ~~table~~2018, ~~summarizes~~total ~~the~~revenues ~~change~~were $244.7 million, an increase of 8% from fiscal 2017. The net increase in ~~total~~revenues ~~accrued~~was primarily attributable to revenues from consumable sales ~~incentive~~of ~~programs~~$191.3 ~~(in~~million, ~~thousands):~~an increase of 9% over

	Balance atBeginning of Year(1)		Provisions(2)		Payments			Balance atEnd of Year(1)
Year Ended March 31, 2017	$	5,844	$	8,520	$	(6,829	)	$	7,535
Year Ended March 31, 2016	$	5,865	$	9,627	$	(9,648	)	$	5,844
Year Ended March 31, 2015	$	700	$	10,230	$	(5,065	)	$	5,865

~~(1)~~TABLE ~~Balance~~OF represent reserves related to volume-based incentives, included as an offset to accounts receivables in the consolidated balance sheets, and accruals for distributor rebate incentives and end-user rebates and discounts, included within current accrued liabilities in the consolidated balance sheets.CONTENTS

fiscal 2017, due to (2a) ~~Provisions~~an ~~are~~increase ~~net~~in ~~revenue~~revenues ~~reductions~~from ~~recorded~~medical reagent discs sold in North America and ~~includes~~Europe, ~~differences~~(b) ~~between~~an ~~estimates~~increase in revenues from veterinary reagent discs sold in North America and ~~actual~~Europe ~~incentives~~and ~~earned~~(c) an increase in revenues from VetScan rapid tests sold in North America, due to sales of our VetScan Canine Pancreatic Lipase Rapid Test (launched in the first quarter of fiscal 2018), sales of our VetScan FLEX4 Rapid Test (launched in the fourth quarter of fiscal 2018) and an increase in the unit sales of our VetScan Canine Parvovirus Rapid Test, VetScan Feline FeLV/FIV Rapid Test and VetScan Heartworm Rapid Test.

~~Significant~~Gross ~~components~~profit ~~of our accrued sales incentive programs are as follows: Volume-based incentives charged to gross revenues~~ in fiscal ~~2017,~~2018 ~~2016~~was ~~and 2015, amounted to~~ $2133.06 million, ~~$1.9~~an ~~million~~increase ~~and~~of ~~$0.~~6% ~~million,~~from ~~respectively. Distributor rebate incentives charged (reversed) in gross revenues in~~ fiscal 2017, ~~2016~~primarily ~~and~~attributable ~~2015, amounted~~ to ~~$(0.3~~an ~~million),~~increase ~~$0.1~~in ~~million and $4.9 million, respectively. End-user rebates and discounts charged to gross~~ revenues infrom ~~fiscal~~medical ~~2017, 2016~~ and ~~2015,~~veterinary ~~amounted~~reagent ~~to $6~~discs.~~9 million, $7.6 million and $3.7 million, respectively.~~

~~Royalty~~Total ~~Revenues.~~operating ~~Royalties~~expenses ~~are~~in ~~typically~~fiscal ~~based~~2018 onwere ~~licensees’~~$95.0 ~~net~~million, ~~sales~~an increase of ~~products~~$13.6 ~~that~~million, ~~utilize~~or ~~our~~17%, ~~technology~~from ~~and~~$81.4 ~~are~~million ~~recognized~~in asfiscal ~~earned~~2017, inprimarily ~~accordance~~attributable ~~with~~to ~~the~~an ~~contract~~increase ~~terms~~in ~~when~~research ~~royalties~~and ~~from~~development ~~licensees~~spending, ~~can~~an beincrease ~~reliably~~in ~~measured~~promotional and ~~collectibility~~marketing isexpenses ~~reasonably~~to ~~assured,~~support ~~such~~our asgrowth ~~upon~~in ~~the~~both ~~receipt~~North ofAmerica aand ~~royalty~~in ~~statement~~the ~~from~~international ~~the~~markets ~~licensee.~~and ~~Our~~an ~~royalty~~increase ~~revenue~~in ~~depends~~personnel-related onexpenses ~~the~~related ~~licensees’~~to ~~use~~an ofin ~~our~~increase ~~technology,~~in headcount and ~~therefore,~~an ~~may~~increase ~~vary~~in ~~from~~bonus ~~period~~expense toand ~~period~~share-based ~~and~~compensation ~~impact~~in ~~our~~fiscal ~~revenues~~2018 ~~during~~since athe ~~quarter.~~company ~~Royalty~~achieved ~~revenues~~a ~~were~~lower ~~not~~performance ~~significant~~target in fiscal 2017~~, 2016 and 2015~~.

~~Allowance~~Net income for ~~Doubtful~~fiscal ~~Accounts~~2018 was $27.2 Wemillion, ~~recognize~~a ~~revenue~~decrease ~~when~~of ~~collection~~17% from ~~the~~$32.7 ~~customer~~million isin ~~reasonably~~fiscal ~~assured.~~2017, Weprimarily ~~maintain~~attributable to an ~~allowance~~increase ~~for~~in ~~doubtful~~operating ~~accounts~~expenses ~~based~~and onan ~~our~~additional ~~assessment~~estimated provision of ~~the~~$3.4 ~~collectibility~~million ofin ~~the~~fiscal ~~amounts~~2018 ~~owed~~due to usthe byTax ~~our~~Act, ~~customers.~~partially Weoffset ~~regularly~~by ~~review~~a ~~the~~net ~~allowance~~increase ~~and~~in ~~consider~~revenues, ~~the~~discussed ~~following~~above, ~~factors~~a ingain ~~determining~~from the ~~level~~release of ~~allowance~~a ~~required:~~holdback ~~the~~payment ~~customer’s~~of ~~payment~~$1.2 ~~history,~~million ~~the~~and ~~age~~a ofdecrease ~~the~~in ~~receivable~~income ~~balance,~~tax ~~the~~provision ~~credit~~due ~~quality~~to ofa ~~our~~decrease ~~customers,~~in the ~~general~~U.S. ~~financial~~federal ~~condition~~corporate oftax ~~our~~rate ~~customer~~from ~~base~~35% ~~and~~to ~~other~~21% ~~factors~~resulting ~~that~~in ~~may~~a ~~affect~~blended statutory tax rate of 31.5% for the ~~customers’~~fiscal ~~ability~~year toended ~~pay~~March 31, 2018. AnOur ~~additional~~diluted ~~allowance~~net isincome ~~recorded~~per ~~based~~share onfrom ~~certain~~continuing ~~percentages~~operations ofdecreased ~~our~~to $1.17 in fiscal 2018 from $1.44 in fiscal 2017.

36Cash, cash equivalents and investments increased by $21.0 million during fiscal 2018 to a total of $186.0 million as of March 31, 2018. During fiscal 2018, operating cash flows were $43.5 million, an increase of $10.4 million compared to $33.2 million during fiscal 2017, primarily attributable to an increase in accounts payable outstanding as of March 31, 2018, compared to the prior year, and a lower change in our capital lease receivable during fiscal 2018, compared to the prior year.

~~TABLE~~Key OFnon-operating ~~CONTENTS~~uses of cash during fiscal 2018 included payments of $1.3 million for an investment in a privately-held company, $6.0 million to purchase property and equipment, $2.6 million for tax withholdings related to net share settlements of restricted stock units and $13.6 million in cash dividends to shareholders.

~~aged~~Factors ~~receivables,~~that ~~using~~May ~~historical~~Impact ~~experience~~Future to estimate the potential uncollectible. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. If our actual collections experience changes, revisions to our allowances may be required, which could adversely affect our operating income. Performance

InOur ~~the~~industry ~~event~~is weimpacted ~~determine~~by ~~that~~numerous acompetitive, ~~lease~~regulatory ~~receivable~~and ~~may~~other ~~not~~significant befactors. ~~paid,~~On weDecember ~~include~~22, in2017, ~~our~~H.R. ~~allowance~~1, analso ~~amount~~known ~~for~~as the ~~outstanding~~“Tax ~~balance~~Cuts ~~related~~and toJobs Act” (the ~~lease~~“Tax ~~receivable.~~Act”), Wewas ~~regularly~~signed ~~review~~into ~~the~~law. ~~adequacy~~We ofestimate ~~the~~our ~~allowances~~effective ~~for~~income ~~outstanding~~tax ~~lease~~rate ~~receivables~~in ~~either~~fiscal on2019 anwill ~~individual~~be orin a ~~collective~~range ~~basis.~~of ~~When~~24% ~~evaluating~~to ~~the~~26%. ~~lease~~The ~~receivables,~~actual weimpact ~~consider~~of ~~historical~~the ~~experience,~~Tax ~~credit~~Act ~~quality~~on ~~and~~our ~~age~~effective ofincome ~~receivable~~tax ~~balances,~~rates ~~and~~may ~~economic~~differ ~~conditions~~from ~~that~~the ~~may~~estimates ~~affect~~due ato ~~customer’s~~changes ~~ability~~in tointerpretations ~~pay.~~and ~~Our~~assumptions ~~ongoing~~made ~~consideration~~by ofus. ~~all~~We ~~these~~anticipate ~~factors~~subsequent ~~could~~regulations ~~result~~associated inwith anthe ~~increase~~Tax inAct ~~our~~will ~~allowance~~be ~~for~~forthcoming ~~loss~~and onwill ~~lease~~continue ~~receivables~~to inanalyze the ~~future,~~tax ~~which~~legislation ~~could~~to ~~adversely~~determine ~~affect~~the ~~our~~full ~~operating~~effects ~~results.~~of ~~Lease receivables are charged off at~~ the ~~point~~new ~~when~~law ~~they~~on ~~are~~our ~~considered~~consolidated ~~uncollectible.~~financial statements.

~~Fair~~Our ~~Value~~sales ~~Measurements.~~for Weany ~~apply~~future ~~fair~~periods ~~value~~are ~~accounting~~not ~~for~~predictable ~~all~~with ~~financial~~a ~~assets~~significant ~~and~~degree ~~liabilities~~of certainty, and ~~non-financial~~may ~~assets~~depend ~~and~~on ~~liabilities~~a ~~that~~number ~~are~~of ~~recognized~~factors oroutside ~~disclosed~~of atour ~~fair~~control. ~~value~~In inparticular, ~~the~~we ~~financial~~are ~~statements~~highly ondependent aupon ~~recurring~~the ~~basis.~~efforts ~~Fair~~and ~~value~~priorities isof ~~defined~~our asdistributors ~~the~~in ~~price~~promoting ~~that~~and ~~would~~creating bea ~~received~~demand tofor ~~sell~~our anproducts ~~asset~~and oras ~~paid~~such, towe ~~transfer~~do anot ~~liability~~have infull ancontrol ~~orderly~~over ~~transaction~~the ~~between~~marketing ~~market~~and ~~participants~~sale atof ~~the~~our ~~measurement~~products ~~date~~into these markets. ~~When~~Should ~~determining~~these ~~fair~~efforts ~~value~~be unsuccessful, or should we ~~consider~~fail ~~the~~to ~~principal~~maintain or ~~most~~effectively ~~advantageous~~manage ~~market~~these inrelationships, ~~which~~our webusiness, ~~would~~financial ~~transact~~condition and ~~consider~~results ~~assumptions~~of ~~that~~operations ~~market~~are ~~participants~~likely ~~would~~to ~~use~~be ~~when~~adversely ~~pricing~~affected. ~~the~~We ~~asset~~generally oroperate ~~liability.~~with ~~The~~a ~~fair~~limited ~~value~~order ~~hierarchy~~backlog ~~distinguishes~~because ~~between~~our ~~(1)~~products ~~market~~are ~~participant~~typically ~~assumptions~~shipped ~~developed~~shortly ~~based~~after onorders ~~market~~are ~~data~~received. ~~obtained~~Product ~~from~~sales ~~independent~~in ~~sources~~any ~~(observable~~quarter ~~inputs)~~are generally dependent on orders booked and ~~(2)~~shipped anin ~~entity’s~~that ~~own~~quarter. ~~assumptions~~As ~~about~~a ~~market~~result, ~~participant~~any ~~assumptions~~shortfall ~~developed~~in ~~based~~product onsales ~~the~~during ~~best~~a ~~information~~quarter ~~available~~would innegatively ~~the~~affect ~~circumstances~~our ~~(unobservable~~results ~~inputs).~~of ~~The~~operations ~~fair~~and ~~value~~financial ~~hierarchy~~condition ~~consists~~during ofthat ~~three~~quarter. ~~broad~~In ~~levels~~addition, ~~which~~our ~~gives~~sales ~~the~~may ~~highest~~be ~~priority~~adversely impacted by pricing pressure from competitors. Our ability to ~~unadjusted~~increase ~~quoted~~our ~~prices~~revenues inand ~~active~~profitability ~~markets~~will ~~for~~depend, ~~identical~~in ~~assets~~part, oron ~~liabilities~~our ~~(Level~~ability 1)to ~~and~~increase the ~~lowest~~sales ~~priority~~volumes toof ~~unobservable~~our ~~inputs~~products, ~~(Level~~to ~~3).~~increase ~~The~~the ~~three~~sales ~~levels~~performance of ~~the~~our ~~fair~~independent ~~value~~distributors, ~~hierarchy~~and ~~are~~to ~~described~~successfully ~~below~~compete with our competitors.

~~Level~~Abbott 1:controls ~~Quoted~~the ~~prices~~marketing ~~(unadjusted)~~and insale ~~active~~of ~~markets~~our ~~for~~primary ~~identical~~medical ~~assets~~products orinto ~~liabilities.~~most As of ~~March~~the ~~31,~~U.S. ~~2017,~~medical ~~our~~market ~~investments~~and, ~~in cash equivalents~~accordingly, ~~which~~ we ~~classified as available-for-sale, totaled $0.6 million, using Level 1 inputs because these investments~~ are ~~traded~~dependent inupon ~~an active market. The valuations are based on quoted prices of~~ the ~~underlying~~efforts ~~security that are readily~~ and ~~regularly~~priorities ~~available~~of Abbott in anpromoting ~~active market,~~ and ~~accordingly,~~creating a ~~significant~~demand ~~degree of judgment is not required.~~

Level 2: Directly or indirectly observable inputs as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment because the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument. As of March 31, 2017, our available-for-sale investments in corporate bonds and municipal bonds, totaled $7.0 million, using Level 2 inputs, based on market pricing and other observable market inputs for similar securities obtained from various third party data providers.36

~~Level~~TABLE 3:OF Unobservable inputs that are supported by little or no market data and require the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. As of March 31, 2017 and 2016, we did not have any Level 3 financial assets or liabilities measured at fair value on a recurring basis.CONTENTS

~~Fair~~for ~~value~~such isproducts ain this market~~-based~~. ~~measure~~Should ~~considered~~these ~~from~~efforts ~~the~~be ~~perspective~~unsuccessful, ofour abusiness, ~~market~~financial ~~participant~~condition ~~who~~and ~~holds~~results ~~the~~of ~~asset~~operations ormay ~~owes~~be ~~the~~adversely ~~liability~~affected. ~~rather~~For ~~than~~example, anduring ~~entity-specific~~fiscal ~~measure. Therefore~~2014, ~~even~~we ~~when~~were ~~market~~adversely ~~assumptions~~impacted ~~are~~by ~~not~~the ~~readily~~timing ~~available,~~of ~~our~~purchases ~~own~~of ~~assumptions~~our ~~are~~medical ~~developed~~products sold to ~~reflect~~Abbott ~~those~~as ~~that~~it ~~market~~integrated ~~participants~~our ~~would~~products ~~use~~into inits ~~pricing~~sales ~~the~~process ~~asset~~and orsold ~~liability~~its atinventory, and in the ~~measurement~~third ~~date.~~and Atfourth ~~March~~quarters ~~31,~~of fiscal 2017, we ~~also~~were ~~had~~similarly ~~$66.7~~negatively ~~million~~impacted inby ~~investments~~a ~~classified~~reduction of orders from Abbott as ~~held-to-maturity~~a ~~and~~result ~~carried~~of atexcess ~~amortized~~instrument ~~cost~~inventory.

~~Investments~~In inthe ~~Unconsolidated~~United ~~Affiliates~~States veterinary market, we rely on our national and independent regional distributors. We ~~use~~are ~~the~~also ~~equity~~dependent ~~method~~upon tothe ~~account~~efforts ~~for~~and ~~our~~priorities ~~investments~~of these distributors in ~~entities~~promoting ~~that~~and wecreating a demand for our products and do not have full control over the marketing and sale of our products into these markets. Should these efforts be unsuccessful, ~~but~~or ~~have~~should we fail to maintain or effectively manage these relationships, our business, financial condition and results of operations are likely to be adversely affected. For example, during fiscal 2014, our strategy of increasing demand for our veterinary products through the ~~ability~~expansion of our distribution partners, did not lead to ~~exercise~~the ~~significant~~increased ~~influence~~demand ~~over~~for our products in the ~~investee~~veterinary clinics that we had anticipated resulting in excess channel inventory. ~~Equity~~The ~~method~~excess ~~investments~~channel ~~are~~inventory ~~recorded~~was the result of our distributors not selling our products to end customers at ~~original~~the ~~cost~~same ~~and~~rate ~~adjusted~~as ~~periodically~~they were purchasing products from us. In response, we took additional steps to ~~recognize~~more ~~(1)~~closely ~~our~~monitor ~~proportionate~~and ~~share~~manage ofchannel inventory in an effort to normalize the ~~investees’~~veterinary ~~net~~product ~~income~~inventories orat ~~losses~~our ~~after~~distribution partners in the ~~date~~United States. In the third quarter of ~~investment~~fiscal 2015, we began selling through our distributors Henry Schein Animal Health (2a division of Henry Schein, Inc.) ~~additional~~and ~~contributions~~Patterson ~~made~~Companies, Inc. and ~~dividends~~our orrevenues in future quarters may be impacted by the timing of purchases of our products sold by them as these distributors integrate our products into their sales process. We will continue to closely monitor and manage channel inventory at our distribution partners in the United States.

37During fiscal 2018, in the North America veterinary market, we experienced an increase of 4% in the unit sales of veterinary reagent discs sold, primarily attributable to increases in increased utilization within our customer base and fluctuation in distribution inventory, as compared to the same period in fiscal2017. Our installed base of active chemistry analyzers was relatively flat in fiscal 2018 as compared to fiscal 2017. Looking forward, as we believe competition in the veterinary market will remain intense, we have implemented and intend to continue implementing new strategies to improve customer retention and monitor our installed base of customers and distribution inventory more closely. Additionally, we plan to continue to introduce new products that are designed to enhance our veterinary product portfolio. For example, in September 2016, we completed the development of our connectivity product, the VetScan FUSE, a bi-directional connectivity system that provides integration between our point-of-care analyzers and the veterinary practice management systems worldwide. We launched the VetScan FUSE in the second quarter of fiscal 2018 and, we installed VetScan FUSE in approximately three hundred fifty veterinary practices worldwide during fiscal 2018. In June 2017, we launched our VetScan Canine Pancreatic Lipase Rapid Test into the veterinary market and, in September 2017, we launched our VetScan UA, a hand held point-of-care urine chemistry analyzer into the veterinary market. We also launched our new point-of-care urine sediment analyzer into the veterinary market in the fourth quarter of fiscal 2018. In addition, the USDA, Center for Veterinary Biologics, approved our VetScan FLEX4 Rapid Test, a combination test for heartworm, lyme, ehrlichia and anaplasma in January 2018, and we began selling the VetScan Flex4 late in the fourth quarter of fiscal 2018. See “Total Revenues – Continuing Operations within the Results of Operations” section below, for a further discussion regarding the change in total revenues in North America.

~~TABLE~~Critical OFAccounting ~~CONTENTS~~Policies, Estimates and Judgments

~~distributions~~Our ~~received,~~consolidated ~~and~~financial ~~(3)~~statements ~~impairment~~are ~~losses~~prepared ~~resulting~~in ~~from~~accordance ~~adjustments~~with accounting principles generally accepted in the United States and pursuant to ~~net~~the ~~realizable~~rules ~~value~~and regulations of the Securities and Exchange Commission. WeThe ~~eliminate~~preparation ~~all~~of ~~intercompany~~these ~~transactions~~consolidated infinancial ~~accounting~~statements ~~for~~requires ~~our~~management ~~equity~~to ~~method~~make ~~investments~~estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting period. WeOn ~~record~~an on-going basis, we evaluate our ~~proportionate~~estimates ~~share~~and the sensitivity of ~~the~~these ~~investees’~~estimates ~~net~~to ~~income~~deviations orin ~~losses~~the assumptions used in ~~“Interest~~making them. We base our estimates on historical experience and on various other ~~income~~assumptions ~~(expense)~~that are believed to be reasonable under the circumstances. However, ~~net”~~there oncan be no assurance that our ~~consolidated~~actual ~~statements~~results ofwill ~~income.~~not differ from these estimates.

We ~~assess~~have identified the ~~potential~~policies ~~impairment~~below ~~of our equity method investments when indicators such~~ as acritical ~~history~~because ofthey ~~operating~~are ~~losses,~~not aonly ~~negative~~important ~~earnings~~to ~~and~~understanding ~~cash~~our ~~flow outlook, and the~~ financial condition and ~~prospects~~results ~~for~~of ~~the~~operations, ~~investee’s~~but ~~business~~also ~~segment~~because ~~might~~application ~~indicate~~and ainterpretation ~~loss in value. The carrying value~~ of ~~our~~these ~~investments~~policies ~~are~~requires ~~reviewed~~both ~~quarterly~~judgment ~~for~~and ~~changes~~estimates ~~in circumstances or the occurrence~~ of ~~events~~matters that ~~suggest~~are ~~our~~inherently ~~investment~~uncertain ~~may not be recoverable. During fiscal 2017, 2016~~ and ~~2015, we have not recorded an impairment charge on our investments~~unknown. ~~At March 31~~Accordingly, ~~2017~~actual ~~and 2016, our investments in unconsolidated affiliates totaled $2.9 million and $2.7 million, respectively.~~

In January 2017, we early adopted ASU No. 2016-07, “Investments – Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting” (“ASU 2016-07”), which eliminates the requirement that an investor retrospectively apply equity method accounting when an investment that it had accounted for by another method initially qualifies for use of the equity method. See Note 7 to the Consolidated Financial Statements in Part II, Item 8 of this report for additional information.37

~~Warranty~~TABLE ~~Reserves.~~OF We provide for the estimated future costs to be incurred under our standard warranty obligation on our instruments. Our standard warranty obligation on instruments ranges from one to five years, depending on the specific product. The estimated contractual warranty obligation is recorded when the related revenue is recognized and any additional amount is recorded when such cost is probable and can be reasonably estimated. Cost of revenues reflects estimated warranty expense for instruments sold in the current period and any adjustments in estimated warranty expense for the installed base under our standard warranty obligation based on our quarterly evaluation of service experience. While we engage in product quality programs and processes, including monitoring and evaluating the quality of our suppliers, our estimated accrual for warranty exposure is based on our historical experience as to product failures, estimated product failure rates, estimated repair costs, material usage and freight incurred in repairing the instrument after failure and known design changes under the warranty plan. Effective October 2013, we prospectively changed our standard warranty obligations on certain instruments sold from three to five years. The increase in the standard warranty period did not result in a material impact on our cost of revenues or our accrued warranty costs during fiscal 2017, 2016 and 2015. CONTENTS

Weresults ~~also~~may ~~provide~~differ ~~for~~materially ~~the~~from ~~estimated~~our ~~future~~estimates. ~~costs~~The toimpact beand ~~incurred~~any ~~under~~associated ~~our~~risks ~~standard~~related ~~warranty~~to ~~obligation~~these policies on our ~~reagent~~business ~~discs.~~operations Aare ~~provision~~discussed ~~for~~below. ~~defective~~For ~~reagent discs is recorded and classified as~~ a ~~current~~more ~~liability~~detailed ~~when~~discussion on the ~~related~~application ~~sale~~of isthese ~~recognized~~ and ~~any~~other ~~additional~~accounting ~~amount~~policies, issee ~~recorded~~the ~~when~~Notes ~~such~~to ~~cost~~the isConsolidated ~~probable~~Financial ~~and~~Statements ~~can~~in bePart ~~reasonably estimated~~II, atItem ~~which~~8 ~~time they are included in cost~~ of ~~revenues.~~this ~~The warranty cost includes the replacement costs and freight of a defective reagent disc~~report.

AsRevenue ofRecognition. ~~March~~Our ~~31,~~primary ~~2017,~~customers ~~our~~are ~~current~~distributors ~~portion~~and ofdirect ~~warranty~~customers ~~reserves~~in ~~for~~both ~~instruments~~the medical and ~~reagent~~veterinary ~~discs~~markets. ~~totaled~~Service ~~$1.7~~revenues ~~million~~were ~~and~~primarily ~~our~~generated ~~non-current~~from ~~portion~~veterinary ofreference ~~warranty~~laboratory ~~reserves~~diagnostic ~~for~~and ~~instruments~~consulting ~~totaled~~services $2for veterinarians.7 ~~million,~~Revenues ~~which~~from ~~reflects~~product ~~our~~sales, ~~estimate~~net of ~~warranty~~estimated ~~obligations~~sales ~~based~~allowances, ondiscounts ~~the~~and ~~estimated~~rebates, ~~product~~are ~~failure~~recognized ~~rates,~~when ~~the~~(i) ~~number~~evidence of ~~instruments~~an inarrangement ~~standard warranty~~exists, ~~estimated~~(ii) ~~repair~~upon ~~and~~shipment ~~related~~of ~~costs~~the products or rendering of ~~instruments,~~services ~~and~~to anthe ~~estimate~~customer, of(iii) ~~defective~~the ~~reagent~~sales ~~discs~~price ~~and~~is ~~replacement~~fixed or determinable and ~~related~~(iv) ~~costs~~collection of athe ~~defective~~resulting ~~reagent~~receivable ~~disc~~is reasonably assured. ~~Total~~Rights ~~change~~of inreturn ~~accrued~~are ~~warranty~~not ~~reserve~~provided. ~~from~~Until March 312015, ~~2017~~we tooffered ~~March~~discounts ~~31,~~on ~~2016,~~AVRL ~~was~~services ~~primarily~~for ~~attributed~~a tospecified anperiod ~~increase~~as inincentives. ~~instruments~~Discounts inwere ~~standard~~reductions ~~warranty~~to invoiced amounts within a specified period and anwere ~~increase~~recorded inat ~~repair~~the ~~costs~~time services are performed. Net service revenues were recognized at the time services were performed.

~~For~~Amounts ~~fiscal~~collected ~~2017,~~in ~~2016~~advance ~~and~~of ~~2015,~~revenue ~~the~~recognition ~~provision~~are ~~for warranty expense related to instruments was $2.2 million, $1.2 million and $2.4 million, respectively. During fiscal 2016, we~~ recorded anas ~~adjustment~~a tocurrent ~~pre~~or non-~~existing~~current ~~warranties~~deferred ofrevenue ~~$0.2~~liability ~~million, which reduced our warranty reserves and our cost of revenues,~~ based on ~~our~~the ~~historical~~time ~~experience~~from ~~and our projected performance rate of instruments. The change in~~ the ~~provision~~balance ~~for~~sheet ~~warranty~~date ~~expense related~~ to ~~instruments during fiscal 2017, as compared to fiscal 2016, was primarily attributable to an increase in~~ the ~~number~~future date of ~~instruments~~revenue ~~under standard warranty~~recognition. ~~The~~We ~~change~~recognize inrevenue ~~the~~associated ~~provision~~with ~~for~~extended ~~warranty~~maintenance ~~expense~~agreements ~~related~~ratably toover ~~instruments during fiscal 2016, as compared to fiscal 2015, was primarily attributable to a decrease in~~ the ~~number~~life of ~~instruments under standard warranty. The increase in~~ the ~~provision for warranty expense related to instruments during fiscal 2015, as compared to fiscal 2014 was primarily attributable to an increase in the number of instruments under standard warranty~~contract.

38Multiple Element Revenue Arrangements. Our sales arrangements may contain multiple element revenue arrangements in which a customer may purchase a combination of instruments, consumables or extended maintenance agreements. Additionally, we provide incentives in the form of free goods or extended maintenance agreements to customers in connection with the sale of our instruments. We participate in selling arrangements in the veterinary market that include multiple deliverables, such as instruments and consumables. Prior to the sale of our AVRL business to Antech in March 2015, our selling arrangements in the veterinary market had also included service agreements associated with our veterinary reference laboratory. Judgments as to the allocation of consideration from an arrangement to the multiple elements of the arrangement, and the appropriate timing of revenue recognition are critical with respect to these arrangements.

~~TABLE~~A OFmultiple ~~CONTENTS~~element arrangement includes the sale of one or more tangible product offerings with one or more associated services offerings, each of which are individually considered separate units of accounting. We allocate revenues to each element in a multiple element arrangement based upon the relative selling price of each deliverable. When applying the relative selling price method, we determine the selling price for each deliverable using vendor-specific objective evidence (“VSOE”) of selling price, if it exists, or third-party evidence (“TPE”) of selling price. If neither VSOE nor TPE of selling price exist for a deliverable, we use our best estimate of selling price for that deliverable. Revenue allocated to each element is then recognized when all revenue recognition criteria are met for each element.

~~For~~Revenues ~~fiscal~~from ~~2017~~our multiple element arrangements are allocated separately to the instruments, ~~2016~~consumables, extended maintenance agreements and ~~2015,~~incentives based on the ~~provision~~relative ~~for~~selling ~~warranty~~price ~~expense~~method. ~~related~~Amounts allocated to ~~replacement~~each ofelement ~~defective~~are ~~reagent~~based ~~discs~~on ~~was~~its ~~$0.4~~objectively ~~million~~determined fair value, ~~$0.4~~such ~~million~~as ~~and~~the $0sales price for the product when it is sold separately.2 ~~million~~Revenues allocated to each element are then recognized when the basic revenue recognition criteria, ~~respectively~~as described above, are met for each element. ~~The~~Revenues ~~changes~~associated with incentives in the ~~provision~~form ~~for~~of ~~warranty~~free ~~expense~~goods ~~related~~are todeferred ~~reagent~~until ~~discs~~the ~~was~~goods ~~primarily~~are ~~due~~shipped to ~~our~~the ~~judgment~~customer. Revenues associated with incentives in the form of extended maintenance agreements are deferred and recognized ratably over the ~~estimated~~life ~~product~~of ~~failure~~the ~~rate~~extended maintenance contract, generally one to three years. Incentives in the form of ~~reagent~~extended ~~discs~~maintenance ~~under~~agreements ~~warranty~~are our most significant multiple element arrangement.

~~Management~~For ~~periodically~~our ~~evaluates~~selling ~~the~~arrangements ~~sufficiency~~in of the ~~warranty~~veterinary ~~provisions~~market ~~and~~that ~~makes~~include ~~adjustments~~multiple ~~when~~deliverables, ~~necessary.~~such Ifas aninstruments, ~~unusual~~consumables ~~performance~~or ~~rate~~service ~~related~~agreements (prior to ~~warranty~~the ~~claims~~sale isof ~~noted,~~AVRL anin ~~additional~~March ~~warranty~~2015) ~~accrual~~associated ~~may~~with beour ~~assessed~~veterinary ~~and~~reference ~~recorded~~laboratory, ~~when~~revenue ais ~~failure~~recognized ~~event~~upon isdelivery ~~probable~~of ~~and~~ the ~~cost~~product ~~can~~or beperformance ~~reasonably~~of ~~estimated. We review~~ the ~~historical~~service ~~warranty~~during ~~cost trends and analyze~~ the ~~adequacy~~term of the ~~ending~~service ~~accrual~~contract ~~balance~~when ~~of warranty reserves each quarter. The determination of warranty reserves requires us to make estimates of~~ the ~~estimated~~basic ~~product~~revenue ~~failure~~recognition ~~rate~~criteria, ~~expected~~as ~~costs~~described toabove, ~~repair~~are ormet ~~replace~~for ~~the~~each ~~instruments and to replace defective reagent discs under warranty~~element. IfWe ~~actual~~allocate ~~repair~~revenues orto ~~replacement~~each ~~costs~~element ofbased ~~instruments~~on orthe ~~replacement~~relative ~~costs~~selling ofprice ~~reagent discs differ significantly from our estimates, adjustments to cost~~ of ~~revenues~~each ~~may be required~~deliverable. ~~Additionally,~~Amounts ifallocated ~~factors~~to ~~change~~each ~~and~~element weare ~~revise~~based ~~our assumptions~~ on ~~the~~its ~~product~~objectively ~~failure~~determined ~~rate~~fair ~~of instruments or reagent discs~~value, ~~then~~such ~~our~~as ~~warranty~~the ~~reserves~~sales ~~and~~price ~~cost~~for ~~of revenues could be materially impacted in~~ the ~~quarter~~product ofor ~~such~~service ~~revision,~~when asit ~~well~~is assold ~~in following quarters~~separately.

~~Inventories.~~Until WeMarch ~~state~~2015, ~~inventories~~we atoffered ~~the~~customer ~~lower~~incentives consisting of ~~cost~~arrangements orwith ~~market,~~customers ~~cost~~to ~~being~~include ~~determined~~discounts ~~using~~on ~~standard~~future ~~costs~~sales ~~which~~of ~~approximate~~services ~~actual~~associated ~~costs~~with ~~using~~our ~~the~~veterinary ~~first-in,~~reference ~~first-out method~~laboratory. ~~Inventories include material, labor and manufacturing overhead.~~ We ~~establish~~applied ~~provisions~~judgment ~~for~~in ~~excess,~~determining ~~obsolete~~whether ~~and unusable inventories after evaluation of~~ future ~~demand~~discounts ofare ~~our~~significant ~~products~~ and ~~market conditions~~incremental. IfWhen the future ~~demand~~discount oroffered ~~actual~~was ~~market~~not ~~conditions~~considered ~~are~~significant ~~less~~and ~~favorable~~incremental, ~~than~~we ~~those~~did ~~estimated~~not byaccount ~~management~~for orthe ifdiscount aas ~~significant~~an ~~amount~~element of the ~~material~~original ~~were to become unusable, additional inventory write-downs may be required, which would have a negative effect on our operating income.~~

Intangible Assets. Intangible assets as of March 31, 2017 and 2016, which consists of customer relationships acquired in our in fiscal 2015 acquisition of QCR, are presented at cost, net of accumulated amortization. The intangible assets are amortized using the straight-line method over their estimated useful lives of 10 years, which approximates the economic benefit. If our underlying assumptions regarding the estimated useful life of an intangible asset change, then the amortization period, amortization expense and the carrying value for such asset would be adjusted accordingly. During fiscal 2017, 2016 and 2015, our changes in estimated useful life of intangible assets were not significant, except as noted below in “Valuation of Long-Lived Assets.”38

~~Valuation~~TABLE ofOF Long-Lived Assets. We evaluate the carrying value of our long-lived assets, such as property and equipment and amortized intangible assets, whenever events or changes in business circumstances or our planned use of long-lived assets indicate that the carrying amount of an asset may not be fully recoverable or their useful lives are no longer appropriate. We look to current and future profitability, as well as current and future undiscounted cash flows, excluding financing costs, as primary indicators of recoverability. An impairment loss would be recognized when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposal is less than the carrying amount. If impairment is determined to exist, any related impairment loss is calculated based on fair value and long-lived assets are written down to their respective fair values. During fiscal 2017, 2016 and 2015, we recognized impairment charges on long-lived assets of $0, $13,000 and $1.9 million, respectively. The impairment charges on our long-lived assets in fiscal 2015 were related to the property and equipment and intangible assets of our AVRL business, which has been offset against the gain from the sale of AVRL on the consolidated statement of income for fiscal 2015.CONTENTS

~~Income Taxes~~arrangement. WeTo ~~account~~determine ~~for~~whether ~~income~~a ~~taxes~~discount ~~using~~was ~~the~~significant ~~liability~~and ~~method~~incremental, ~~under~~we ~~which~~looked ~~deferred~~to ~~tax~~the ~~assets~~discount ~~and~~provided ~~liabilities~~in ~~are~~comparison ~~determined~~to ~~based~~standalone onsales of the ~~differences~~same ~~between~~product ~~the~~to ~~financial~~similar ~~statement~~customers, ~~carrying~~the ~~amounts~~level of ~~existing~~discount ~~assets~~provided ~~and~~on ~~liabilities~~other ~~and~~elements ~~their~~in ~~respective~~the ~~tax~~arrangement, ~~bases.~~and ~~Deferred~~the ~~tax~~significance ~~assets~~of ~~and~~the ~~liabilities~~discount ~~are~~to ~~measured~~the ~~using~~overall ~~enacted~~arrangement. ~~tax~~If ~~rates~~the ~~expected~~discount toin ~~apply~~the tomultiple ~~taxable~~element ~~income~~arrangement inapproximated the ~~years~~discount typically provided in ~~which~~standalone ~~those~~sales, ~~temporary~~that ~~differences~~discount ~~are~~is ~~expected~~not toconsidered beincremental. ~~recovered~~During orfiscal ~~settled.~~2015, ~~Valuation~~our ~~allowances~~customer ~~are~~incentive ~~established,~~programs ~~when~~with ~~necessary,~~future todiscounts ~~reduce~~were ~~deferred~~not ~~tax~~significant ~~assets~~and toin ~~the~~fiscal ~~amounts~~2017 ~~expected~~and to2016 bewe ~~recovered~~did not offer any such incentives.

WeAs ~~recognize~~of ~~and~~March ~~measure~~31, ~~benefits~~2018 ~~for~~and ~~uncertain~~2017, ~~tax~~the ~~positions~~current ~~using~~portion aof ~~two-step~~deferred ~~approach~~revenue was $0.8 ~~The~~million ~~first~~and ~~step~~$1.4 ismillion, torespectively, ~~evaluate~~and the ~~tax~~non-current ~~position~~portion ~~taken~~of ordeferred ~~expected~~revenue towas be$1.5 ~~taken~~million inand a$1.5 ~~tax~~million, ~~return~~respectively. byNet ~~determining~~current ifand ~~the~~non-current ~~weight~~deferred ofrevenue ~~evidence~~decreased ~~indicates~~by ~~that~~$0.5 itmillion isfrom ~~more~~March ~~likely~~31, ~~than~~2017 ~~not~~to ~~that~~March ~~the~~31, ~~tax position will be sustained upon audit~~2018, ~~including~~primarily ~~resolution~~attributable ofto ~~any~~deferred ~~related~~revenue ~~appeals~~recognized orratably ~~litigation~~over ~~processes.~~the ~~For~~life ~~tax~~of ~~positions~~extended ~~that~~maintenance ~~are~~contracts ~~more~~offered ~~likely than not~~ to becustomers ~~sustained~~in ~~upon audit,~~ the ~~second~~form ~~step~~of isfree toservices ~~measure~~in ~~the~~connection ~~tax~~with ~~benefit as~~ the ~~largest~~sale ~~amount~~of ~~that~~our isinstruments. ~~more than 50 percent likely to be~~

39Customer Programs. From time to time, we offer customer marketing and incentive programs. Our most significant customer programs are described as follows:

~~TABLE~~Instrument OFTrade-In ~~CONTENTS~~Programs. We periodically offer trade-in programs to customers for trading in an existing instrument to purchase a new instrument and we will either provide incentives in the form of free goods or reduce the sales price of the instrument. These incentives in the form of free goods are recorded based on the relative selling price method according to the policies described above.

~~realized~~Instrument ~~upon~~Rental ~~settlement~~Programs. ~~Significant~~We ~~judgment~~periodically isoffer ~~required~~programs to ~~evaluate~~customers ~~uncertain~~whereby ~~tax~~certain ~~positions.~~instruments Atare ~~March~~made ~~31,~~available ~~2017~~to ~~and~~customers ~~2016,~~for werent ~~had~~or noon ~~significant~~an ~~uncertain~~evaluation ~~tax positions~~basis. ~~Our~~These ~~policy~~programs istypically require customers to ~~include~~purchase ~~interest~~a ~~and~~minimum ~~penalties~~quantity ~~related~~of toconsumables ~~gross~~during ~~unrecognized~~a ~~tax~~specified ~~benefits~~period ~~within~~for ~~our~~which ~~provision~~we ~~for~~recognize ~~income~~revenue ~~taxes.~~on Inthe ~~fiscal~~related ~~2017,~~consumables ~~2016~~according ~~and~~to ~~2015~~the policies described above. Depending on the program offered, wecustomers ~~did~~may ~~not~~purchase ~~recognize~~the ~~any~~instrument ~~interest~~during the rental or ~~penalties~~evaluation ~~related~~period. toProceeds ~~uncertain~~from ~~tax~~such ~~positions~~sale inare recorded as revenue according to the ~~consolidated~~policies ~~statements~~described ofabove. Rental income, ~~and~~if ~~at March 31~~any, ~~2017~~is ~~and~~also ~~2016,~~recorded weas ~~had~~revenue noaccording ~~accrued~~to ~~interest~~the orpolicies ~~penalties~~described above.

~~Share-Based~~Lease ~~Compensation Expense~~Programs. WeStarting ~~account~~in ~~for~~fiscal ~~share-based~~2016, ~~compensation~~we ~~arrangements~~entered ~~using~~into ~~the~~sales ~~fair~~contracts ~~value~~as ~~method.~~the Welessor ~~recognize~~of ~~share-based~~instruments ~~compensation~~under ~~expense,~~sales-type ~~net~~lease ofagreements anwith ~~estimated~~our ~~forfeiture~~customers. ~~rate,~~In ~~over~~ the ~~requisite~~veterinary ~~service~~market, ~~period~~we ofmay ~~the~~offer ~~award~~arrangements to ~~employees~~end ~~and~~users ~~directors.~~for Asmonthly ~~required~~payments ~~by fair value provisions~~ of ~~share-based~~instruments ~~compensation,~~and ~~employee~~consumables ~~share-based~~purchases ~~compensation expense recognized is calculated~~ over ~~the~~a ~~requisite~~term ~~service period~~ of ~~the~~six ~~awards and reduced for estimated forfeitures~~years. ~~The~~Revenues ~~forfeiture~~related ~~rate~~to ~~is estimated based on historical data of our share~~multiple-~~based~~element ~~compensation~~arrangements ~~awards that~~ are ~~granted~~allocated ~~and cancelled prior~~ to ~~vesting~~lease and ~~upon~~non-lease ~~historical~~elements ~~experience~~based ofon ~~employee~~their ~~turnover.~~relative ~~Changes~~selling inprices ~~estimated~~as ~~forfeiture~~prescribed ~~rates~~by ~~and~~our ~~differences~~revenue ~~between~~recognition ~~estimated~~policies ~~forfeiture~~described ~~rates~~above. ~~and~~Lease ~~actual~~elements ~~experience~~generally ~~may~~include ~~result~~one ~~in significant, unanticipated increases~~ or ~~decreases~~multiple inveterinary ~~share-based compensation expense from period to period. To the extent we revise our estimate of the forfeiture rate in the future~~instruments, ~~our~~while ~~share~~non-~~based~~lease ~~compensation~~elements ~~expense~~generally ~~could~~include bethe ~~materially~~consumables ~~impacted~~related into the ~~quarter~~leased ~~of revision, as well as in following quarters~~instrument.

~~Prior~~We toestimate ~~fiscal~~the ~~2007,~~fair wevalue ~~granted~~of ~~stock~~our ~~option~~leased ~~awards~~products tofor ~~employees~~the ~~and~~purposes ~~directors~~of aslease ~~part~~classification. ofIn ~~our~~accordance ~~share-based~~with ~~compensation~~Financial ~~program.~~Accounting WeStandards ~~have~~Board ~~not~~(“FASB”) ~~granted~~Accounting ~~any~~Standards ~~stock~~Codification ~~options~~(“ASC”) ~~since~~Topic 840, Leases (“ASC 840”), we define the ~~beginning~~fair value of ~~fiscal~~a ~~2007.~~leased Weproduct ~~have~~at ~~recognized~~lease ~~compensation~~inception ~~expense~~as ~~for~~its ~~stock~~normal ~~options~~selling ~~granted~~price, ~~during~~reflecting ~~the~~any ~~requisite~~volume ~~service~~or ~~period~~discounts ofthat may apply. We estimate the ~~stock~~fair ~~option~~value of our leased products based upon transacted cash sales prices. AsEstimating ofthe ~~March~~fair ~~31,~~value ~~2017,~~of weour ~~had~~leased noproducts ~~unrecognized~~can ~~compensation~~be ~~expense~~subjective ~~related~~and tothus ~~stock~~subject ~~options~~to ~~granted~~significant judgment.

~~Since~~The ~~fiscal~~present ~~2007,~~value weof ~~have~~lease ~~granted~~receivables, ~~restricted~~including ~~stock~~accrued ~~unit~~interest, ~~awards~~was to$11.8 ~~employees~~million and ~~directors~~$9.1 million, as ~~part~~ of ~~our~~March ~~share-based~~31, ~~compensation~~2018 ~~program~~and 2017, respectively. ~~Restricted~~Our ~~stock~~short-term ~~unit~~and ~~awards~~long-term tolease ~~consultants~~receivables ~~have~~are ~~been~~recorded ~~insignificant~~within “Receivables” and “Other Assets,” respectively, on our consolidated balance sheets. ~~Awards~~Revenues offrom ~~restricted~~sales-type ~~stock~~lease ~~units~~arrangements ~~are~~is ~~issued~~recognized atupon noshipment ~~cost~~of the products to the ~~recipient~~customer, ~~and~~assuming ~~may~~all ~~have~~other ~~time-based~~revenue ~~vesting~~recognition criteria, orhave abeen ~~combination~~met. ofRevenues ~~time-based~~from ~~and performance~~sales-~~based~~type ~~vesting~~leases ~~criteria,~~are presented as ~~described~~product ~~below~~revenue. Interest income is recognized monthly over the lease term using the effective-interest method.

~~Restricted~~Sales ~~Stock~~Incentive ~~Unit~~Programs. ~~Awards~~We ~~(Time~~periodically ~~Vesting)~~offer customer sales incentive programs and we record reductions to revenue related to these programs. Incentives may be provided in the form of rebates to distributors for volume-based purchases or upon meeting other specified requirements, end-user rebates and discounts. A summary of our revenue reductions is described below. Other rebate programs offered to distributors or customers vary from period to period in the medical and veterinary markets and were not significant.

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