ABAX Abaxis, Inc. (delisted)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-K

 

(Mark One:)

 

☒	ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

 

OR

 

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

For the transition period from __________ to __________

 

Commission File Number: 000-19720

 

A.

Full title of the plan and the address of the plan, if different from that of the issuer named below:

 

ABAXIS 401(K) PLAN

 

B.

Name of issuer of the securities held pursuant to the plan and address of its principal executive office:

 

ABAXIS, INC.

3240 Whipple Road

Union City, California 94587

 

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We have audited the accompanying statements of net assets available for benefits of the Abaxis 401(k) Plan (the “Plan”) as of December 31, 2014 and 2013, and the related statement of changes in net assets available for benefits for the year ended December 31, 2014. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2014 and 2013, and the changes in net assets available for benefits for the year ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

The supplemental information in the accompanying schedule of Schedule H, Line 4i – Schedule of Assets (Held at End of Year) as of December 31, 2014 has been subjected to audit procedures performed in conjunction with the audit of Abaxis 401(k) Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but includes supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedure to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedules, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedule is fairly stated in all material respects in relation to the financial statements as a whole.

/s/ Burr Pilger Mayer, Inc.

San Jose, California

June 29, 2015

 

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ABAXIS 401(K) PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31, 2014 and 2013

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The accompanying notes are an integral part of these financial statements.

 

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ABAXIS 401(K) PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

For the Year Ended December 31, 2014

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The accompanying notes are an integral part of these financial statements.

 

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Abaxis 401(K) Plan

Notes to Financial Statements

December 31, 2014 and 2013

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1.	Description of the Plan

The following description of the Abaxis 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan.

General

The Plan is a defined contribution plan containing a cash deferred arrangement described in Section 401(k) of the Internal Revenue Code (the “IRC”). The Plan was established on December 1, 1990 and was most recently restated effective September 9, 2013, by Abaxis, Inc. (the “Company”) to provide benefits to eligible employees in the United States, as defined in the Plan document. The Plan is currently designed to be qualified under the applicable requirements of the IRC, as amended, and the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

Plan Administration

The Company has engaged a third-party-administrator as the recordkeeper to process and maintain the participant accounts. From September 9, 2013 to May 31, 2014, JP Morgan Retirement Plan Services LLC (“JPMRPS”) was the third-party-administrator. Effective June 1, 2014, JPMorgan Invest Holdings LLC (“JPMIH”) is the third-party-administrator. Since September 9, 2013, Reliance Trust Company (“RTC”) serves as trustee and custodian of the Plan. Some expenses incurred for administering the Plan are paid by the Plan.

 

Participant Accounts

Each participant’s account is credited with the participant’s contributions, Plan earnings and an allocation of the Company contributions, if any. Participant’s withdrawals, Plan losses and an allocation of administrative expenses are charged to the participant’s account. Allocation of the Company’s contribution is based on participant contributions and compensation as defined by the Plan.

Participant Contributions

Participants may elect to have the Company contribute a portion of their eligible pre-tax compensation, not to exceed the amount allowable under current income tax regulations. Participants who elect to have the Company contribute a portion of their compensation to the Plan agree to accept an equivalent reduction in taxable compensation. Contributions withheld are invested in accordance with the participant’s direction.

The Plan includes an Automatic Contribution Arrangement (“ACA”). Under the ACA provisions of the Plan, participants are automatically enrolled for a 3% payroll deferral per pay period. These contributions are defaulted into the Vanguard Target Retirement Funds based on the employee’s age, absent an investment fund election. Participants have the right to elect not to have the automatic deferrals withheld, and participants also have the right to elect to defer a different percentage.

 

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Abaxis 401(K) Plan

Notes to Financial Statements

December 31, 2014 and 2013

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1.	Description of the Plan, continued

Participants in the Plan may elect to make after-tax salary Roth 401(k) deferral contributions.

Participants are allowed to make rollover contributions of amounts received from other tax-qualified employer-sponsored retirement plans. Such contributions are deposited in the appropriate investment funds in accordance with the participant’s direction and the Plan’s provision.

Company Contributions

The Company may make discretionary matching contributions and discretionary profit sharing contributions as defined by the Plan and as approved by the Company’s Board of Directors. In 2014, the Company matched 50% of each eligible participant’s contributions up to a maximum of 2.5% of the participant’s eligible compensation for the second, third and fourth quarters. No discretionary profit sharing contribution was made in 2014.

Vesting

Participants are immediately vested with respect to their contributions, plus actual earnings thereon. Participants vest in the Company’s contributions at a rate of 25% per year, and become fully vested after four years of credited service.

Forfeitures

Forfeitures of nonvested Company contributions are used to reinstate any former participant account balance, reduce any Company matching contributions or profit sharing contributions and pay Plan expenses.

During 2014, forfeitures of nonvested account balances amounted to approximately $49,000. Forfeitures used to reduce Company contributions and pay Plan expenses in 2014 amounted to approximately $105,000 and $22,000, respectively, which included forfeitures from prior years. The balance of forfeited nonvested account at December 31, 2014 and 2013 was $12,000 and $90,000, respectively.

Investments

At December 31, 2014, investments of the Plan were held by RTC, and invested based solely upon instructions received from participants. The Plan’s investments are primarily in mutual funds, the Abaxis Common Stock Fund and a collective investment fund.

The JPMCB Stable Asset Income Fund (“SAIF”), the Plan’s investment contract since September 2013, is a bank-sponsored collective investment fund. SAIF is primarily comprised of benefit-responsive investment contracts that are issued by banks and insurance companies and are backed by fixed income portfolios that primarily consist of U.S. Treasury, agency, investment grade corporates, mortgage-backed and asset-backed securities. Withdrawals from SAIF are permitted on any business day for participant benefit payments and to enable the plan to implement investment elections made by individual participants, provided, however, that such investment elections are not for the purpose of transferring funds out of SAIF to a competing investment option, as determined by the SAIF trustee.

 

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Abaxis 401(K) Plan

Notes to Financial Statements

December 31, 2014 and 2013

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1.	Description of the Plan, continued

Notes Receivable from Participants

Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. No allowance for credit losses has been recorded as of December 31, 2014 and 2013. If a participant ceases to make loan repayments, a loan will be in default and may be considered a distribution from the Plan. In any event, the participant’s failure to repay a loan will reduce the benefit the participant would otherwise be entitled to from the Plan. The specific terms and conditions of participant loans are established by the Plan Administrative Committee.

The Plan allows eligible participants to borrow a minimum of $1,000 from their accounts and up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. The loans are secured by the participants’ vested balance. Such loans bear fixed interest at 2% above the prime rate as published on the first business day of the month before the loan is originated. The repayment period is limited to 60 months for a general purpose loan. The repayment term of a loan related to a principal residence is limited to 180 months. The notes receivable from participants at December 31, 2014 carry interest rates ranging from 3.25% to 5.25%. Principal and interest are paid ratably through payroll deductions.

Benefit Payments and Withdrawals

The Plan provides for the payment of benefits to the participant (or, if applicable, the beneficiary) upon normal retirement (age 60), termination of service, death, or disability. Participants are entitled to the vested portion of their account balance. Participants may elect to receive their distributions in the form of a single lump-sum payment in cash or installments. Terminated participants with an account balance that does not exceed $5,000 will receive a lump-sum distribution following termination of employment. In-service distributions are also available for participants who have attained age 59 1/2, or who qualify for financial hardship.

Administrative Expenses

Administrative fees in the amount of $22,467 for the year ended December 31, 2014, reflected in the Statement of Changes in Net Assets Available for Benefits, represent recordkeeping fees and are paid directly by the Plan using forfeitures as permitted by the Plan.

Plan Termination

Although the Company has not expressed any intent to do so, it has the right under the Plan to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in their account and Plan assets would be distributed to participants in accordance with Plan provisions.

Subsequent Events

In accordance with accounting standards affecting disclosures of subsequent events, the Plan Administrative Committee evaluated subsequent events for recognition and disclosure through the date which these financial statements were issued. The Plan Administrative Committee concluded that no material subsequent event has occurred since December 31, 2014 that requires recognition or disclosure in the financial statements.

 

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Abaxis 401(K) Plan

Notes to Financial Statements

December 31, 2014 and 2013

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2.	Significant Accounting Policies

Basis of Accounting

The financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and ERISA. Contributions from participants are recorded when withheld from the participant. Benefit payments are recorded when paid.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Investment Valuation and Income Recognition

The Plan’s investments are stated at fair value in accordance with Accounting Standards Codification Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”).  Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (“exit price”) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).  The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

 

Level 1:  Quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

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 since 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.

 

Level 3:  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.

 

Investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. The Statements of Net Assets Available for Benefits as of December 31, 2014 and 2013 present the fair value of the investment in a collective investment fund, which is primarily comprised of benefit-responsive investment contracts and the adjustment of the fully benefit-responsive investment contracts from fair value to contract value.

 

Purchases and sales of investments are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

 

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Abaxis 401(K) Plan

Notes to Financial Statements

December 31, 2014 and 2013

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2.	Significant Accounting Policies, continued

In the Statement of Changes in Net Assets Available for Benefits, the Plan presents the net appreciation in the fair value of its investments, which consists of realized gains or losses and unrealized appreciation or depreciation on investments. The cost of investments is determined using the average-cost basis for calculating realized gains or losses.

Recent Accounting Pronouncements

In May 2015, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) 2015-07 “Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)” (“ASU 2015-07”). ASU 2015-07 eliminates the requirement to categorize investments measured using the net asset value (NAV) practical expedient in the fair value hierarchy table. The new guidance will be applied retrospectively and is effective for fiscal years beginning after December 31, 2016, and interim periods within those fiscal years. Early adoption is permitted. Plan management is currently evaluating the impact that the new guidance will have on the Plan’s financial statements.

3.	Investments and Fair Value Measurements

The following presents the fair value of assets held for investment purposes and those individual investments representing five percent or more of the Plan’s net assets available for benefits at December 31, 2014 and 2013:

 

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Less than five percent of the Plan's net assets available for benefits at December 31, 2014.

The Plan’s investments, including gains and losses on investments bought, sold and held during the year ended December 31, 2014, appreciated in value as follows:

 

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Abaxis 401(K) Plan

Notes to Financial Statements

December 31, 2014 and 2013

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3.	Investments and Fair Value Measurements, continued

The following summarizes the Plan’s assets that are measured at fair value on a recurring basis, within the fair value hierarchy as defined by ASC 820, as of December 31, 2014 and 2013.

There were no Plan assets and liabilities measured and recorded at fair value on a non-recurring basis as of December 31, 2014 and 2013. There were no transfers between Level 1 and Level 2 fair value measurements during 2014 and 2013. Below is a description of the valuation methodologies used for the fair value measurements:

Mutual funds are publicly traded investments, which are valued at quoted NAV of shares held by the Plan at year end as these instruments have active markets.

The common stock fund consists primarily of Abaxis common stock. Fair value is based upon quoted market prices at year end as these instruments have active markets.

The collective investment fund is valued at estimated fair value, which has been determined based on the unit value as reported by JP Morgan. The unit value is determined by dividing the collective investment fund’s net assets at fair value by its units outstanding at measurement date.

 

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Abaxis 401(K) Plan

Notes to Financial Statements

December 31, 2014 and 2013

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4.	Related Party and Party-In-Interest Transactions

Certain Plan investments are managed by JP Morgan, an affiliate of JPMIH, the recordkeeper of the Plan. Any purchases and sales of these funds were performed equivalent to those that prevail in arm’s-length transactions. Such transactions, while considered party-in-interest transactions under ERISA regulations, are permitted under the provisions of the Plan and are specifically exempt from the prohibition of party-in-interest transactions under ERISA.

The Plan invests in common stock of the Company and transactions in this common stock are related-party transactions. The Plan held the following investments in the Abaxis Common Stock Fund (“the Stock Fund”) as of December 31, 2014 and 2013:

 

Participants may contribute to the Stock Fund, and may transfer funds from the Stock Fund to other Plan investment options available in the Plan. The participant investment election into the Stock Fund is limited to 20%. The value of a participant’s investment in the Stock Fund may exceed 20% of the participant’s total investment portfolio. However, once a participant’s investment in the Stock Fund exceeds 20% of the participant’s total portfolio, transfers to the Stock Fund via exchange from other investments will be prohibited.  During 2014, the Plan received cash dividends of $15,135 on shares of the Company’s common stock held.

The Company’s matching contribution is made either in the Company’s common stock or cash, as elected by the Company’s Board of Directors.

5.	Income Tax Status

In September 2013, the Plan adopted a Prototype Nonstandardized 401(k) Plan, which has received a favorable opinion letter from the Internal Revenue Service (“IRS”) dated March 31, 2008. The Prototype Nonstandardized 401(k) Plan has been amended subsequent to the receipt of the IRS opinion letter; however the Plan Administrative Committee believes that the adopted prototype, as amended, is currently designed and being operated in compliance with the applicable requirements of the IRC.

U.S. GAAP requires plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan has not recorded a liability for any uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Administrative Committee believes it is no longer subject to income tax examinations for years prior to 2011.

 

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Abaxis 401(K) Plan

Notes to Financial Statements

December 31, 2014 and 2013

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6.	Reconciliation of Financial Statements to Form 5500

The following schedule is a reconciliation of the net assets available for benefits per the financial statements to the Form 5500 as of December 31, 2014 and 2013:

The following schedule is a reconciliation of the changes in net assets available for benefits per the financial statements to the Form 5500 for the year ended December 31, 2014:

 

7.	Risk and Uncertainties

The Plan provides for various investment options in any combination of investment securities. In addition, the Company’s common stock is included as an investment option in the Plan. Investment securities are exposed to various risks, such as those associated with interest rates, market conditions, and credit-worthiness of the securities’ issuers. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in market values, interest rates, or other factors will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits.

 

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Abaxis 401(K) Plan

Schedule H, Line 4i – Schedule of Assets (Held at End of Year)

(Plan Number 001  EIN 77-0213001)

December 31, 2014

 

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Party-in-interest

All investments are participant directed; therefore, cost information has not been presented.

 

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Signature

 

THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 

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Exhibit Index

 

 

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Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-84356) of Abaxis, Inc. of our report dated June 29, 2015, relating to the financial statements and supplemental schedule appearing in this Annual Report on Form 11-K of the Abaxis 401(k) Plan for the year ended December 31, 2014.

/s/ Burr Pilger Mayer, Inc.

San Jose, California

June 29, 2015

 

 

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