ABATIX CORP. (ABIX)

[Drugdoctor]

To Our Fellow Stockholders:

With respect to 2009, we are especially grateful for the loyalty of our customers and the reliability of our suppliers. In addition, we are thankful for the confidence in our Company from our stockholders and the support we receive from the communities in which we operate.
Although we remained profitable in 2009 when compared to 2008, both sales and profitability were negatively impacted by the following items.
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There were no significant weather related events in 2009.
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The recession in the U.S. economy.
During 2008, there were floods in the Midwest as well as a hurricane that made landfall in South Texas and another hurricane that made landfall in Galveston, Texas. These events provided a major source of revenue for the Company, as we assisted in the clean up and restoration process. During 2009, there were no major events to provide an equal level of revenue.
The current recession in the U.S. caused many manufacturers to reduce their production levels and layoff staff. The economic slowdown also caused delays or cancellation of many commercial construction projects.
As a result of the lower revenue levels, we carefully evaluated our company expenses early in 2009. As a result of that evaluation, we made the difficult decision to reduce our level of staff, however; we also made great strides in reducing other expenses so that our current expense levels are better aligned with our current revenue levels. We do not anticipate any improvement in the commercial construction market during 2010.
Our conservative approach throughout the years has kept our debt levels manageable. This management philosophy, combined with our profitability in 2008, afforded us the opportunity to reduce our debt significantly in 2009, in spite of the economic downturn. The reduction of debt has provided us with the financial flexibility and the opportunity to expand our operations. In September 2009, we added a new facility in San Diego, California. In December 2009, we acquired a small business in Jacksonville, Florida. Both of these efforts provide us with the opportunity to better serve our customers.Because revenues have stabilized, our expenses have been reduced and our debt level remains low, the Board approved the repurchase of up to $500,000 of stock during 2010. These purchases can be made in open market or privately negotiated transactions. Although our overall outlook for 2010 remains neutral, we are having some success attacking new markets and will continue to actively pursue new customers in both historical and new markets.
We believe 2010 will provide some opportunities as well as some challenges. Rest assured, that we are prepared to face these challenges and are confident that with the help of our long term investors, customers, suppliers and employees, we will be a stronger company going forward.
Thank you for your continued support.
Terry W. Shaver Gary L. Cox
President, CEO Senior Executive VP
and Stockholder and Stockholder

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