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To: Bob Davis who wrote (4007)	5/7/1998 10:46:00 AM
From: Bob Davis	Respond to of 78596

The ABIX turnaround continues. After the close of the market on May 6th, the Company released its first quarter financial results, announcing that "The net earnings for the first quarter of 1998 increased 62% from 1997 first quarter net earnings." First Qtr. 1998 1997 1997 1996 1995 ------- ------- -------- -------- -------- Net Sales 8,675 8,470 34,955 33,066 19,085 % Increase 2.4% 6% 20% 6% 36% Net Income 187 116 841 756 813 % Increase 61% 11% -7% 275% 56% Earnings per Share $0.10 $0.06 $ 0.43 $ 0.35 $ 0.36 % Increase 67% 24% -4% 46% The Press Release went on to explain, "This increase primarily resulted from increased sales volume, improved pricing and lower interest expense." The press release gives an encouraging view of Abatix's future performance: Mr. Terry W. Shaver, President, stated "The earnings increase is a result of efforts from all Abatix personnel. The continued focus of our sales force on pricing, while increasing our customer base, and the efforts to better manage assets and control costs have been the major factors in our improved results. Continued efforts on these items should provide quarterly and annual results that exceed 1997 results. As previously stated, our primary focus for 1998 was to increase revenues. Several marketing programs were implemented late in the first quarter of 1998 and are expected to increase Abatix's visibility and name recognition in the industrial safety market. These new marketing programs will provide additional tools to improve our sales force's efficiency and success, while broadening the geographic area covered by Abatix. We are currently designing a new and improved internet site which will also increase Abatix's visibility. In addition to product information for current and potential customers, our internet site will also provide more effective means of communicating financial information with stockholders and the investment community." Since late July 1997, ABIX has moved from below $2.00 to close on Wednesday, May 6, 1998 at $4.25, up $0.25 for the day. Technically, both momentum-based and volume-based indicators appear to signal that this trend will continue. Frankly, I expect that today's announcement may generate additional buying interest in the near future. Although I would like to review the Company's 10-Q Report for the quarter before updating 1998 projections or theoretical valuations, it should be noted that my latest projection for the 1998 year calls for earnings per share of $0.50, and that, at $0.47 per share, current trailing 12 months earnings per share are just $0.03 below that target. For this reason, I feel relatively confident that ABIX can justify a theoretical market price well in excess of $8.00 per share. As soon as I am able to review the Company's quarterly 10-Q Report, which should be filed with the Securities & Exchange Commission within the next week or so, I will update the Summary and the in- depth Analysis which can be found on the Napeague web site. I encourage you to read the entire Analysis as well as the Company's investor relations information and its reports to the Securities & Exchange Commission prior to making any decision to invest in this or any other Company. Bob Davis The Napeague Letter napeague.com