-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Oe2hl2nqm1LEucjcuorU9sMa4eP34ql5oQygpmWA4bEFJQFftkwXvgbJu8Fm1oju RyZ8IFJzwmblY+lS1L87mQ== 0000827056-01-500003.txt : 20010514 0000827056-01-500003.hdr.sgml : 20010514 ACCESSION NUMBER: 0000827056-01-500003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZEVEX INTERNATIONAL INC CENTRAL INDEX KEY: 0000827056 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 870462807 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12965 FILM NUMBER: 1629842 BUSINESS ADDRESS: STREET 1: 4314 ZEVEX PARK LANE CITY: MURRAY STATE: UT ZIP: 84123 BUSINESS PHONE: 8012641001 MAIL ADDRESS: STREET 1: 4314 ZEVEX PARK LANE CITY: MURRAY STATE: UT ZIP: 84123 FORMER COMPANY: FORMER CONFORMED NAME: DOWNEY INDUSTRIES INC DATE OF NAME CHANGE: 19880811 10-Q 1 zvx10032001.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from .................to................. Commission file number 001-1296 ZEVEX INTERNATIONAL, INC. (Exact name of registrant as specified in charter) DELAWARE 87-0462807 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4314 ZEVEX Park Lane, Salt Lake City, Utah 84123 (Address of principal executive offices and zip code) (801) 264-1001 (Registrant's telephone number, including area code) NOT APPLICABLE (Former name, former address, and former fiscal year, if changed since last report) 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 [ X ] No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] Not Applicable [ X ] APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of April 25, 2001, the Company had outstanding 3,440,197 shares of common stock, par value $0.001 per share. PART I FINANCIAL INFORMATION - ------------------------------------------------------------------------------- ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q - ------------------------------------------------------------------------------- ZEVEX International, Inc. (the "Company") files herewith balance sheets of the Company as of March 31, 2001, and December 31, 2000, and the related statements of operations and cash flows for the respective three month periods ended March 31, 2001 and 2000. In the opinion of the Company's management, the financial statements reflect all adjustments, all of which are normal recurring adjustments, necessary to fairly present the financial condition of the Company for the interim periods presented. The financial statements included in this report on Form 10-Q should be read in conjunction with the audited financial statements of the Company and the notes thereto included in the annual report of the Company on Form 10-K for the year ended December 31, 2000. ZEVEX INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS
March 31 December 31 2001 2000 (unaudited) ---------------- --------------- ---------------- --------------- ASSETS Current assets: Cash and cash equivalents $ 923,601 $ 327,157 Restricted cash for sinking fund payment on IDB 116,283 90,070 Accounts receivable 6,636,395 7,501,089 Inventories 8,992,460 9,687,446 Marketable securities 952,369 1,065,275 Other current assets 9,868 9,867 Deferred income taxes 638,622 628,676 Income taxes receivable 238,876 319,990 Prepaid expenses 30,218 27,956 ------ ------ Total current assets 18,538,692 19,657526 Property and equipment, net 8,052,334 7,979,061 Patents, trademarks and acquisition costs, net 338,870 343,685 Goodwill, net 10,554,995 10,688,271 Other assets 25,691 19,419 ------ ------ $ 37,510,582 $ 38,687,962 ============ ============ LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,245,659 $ 2,212,726 Other accrued expenses 603,799 569,264 Bank line of credit 4,134,772 5,936,995 Current portion of industrial development bond 100,000 100,000 Payable related to business acquisition and convertible debt, short-term 5,350,000 1,000,000 Current portion of capital lease obligation 651,755 148,783 ---------- -------------- Total current liabilities 12,085,985 9,967,768 Deferred income taxes 173,585 151,667 Industrial development bond 1,600,000 1,600,000 Convertible debt, long-term 1,097,188 5,447,188 Capital lease obligation 1,424,910 463,834 Stockholders' equity: Common stock, $.001 par value: authorized 10,000,000 shares, issued 3,440,197 and 3,440,064 respectively at March 31, 2001 and December 31, 2000 3,440 3,440 Additional paid in capital 16,290,452 16,289,787 Unrealized loss on marketable securities, net (519,431) (502,713) Retained earnings 5,354,453 5,266,991 --------------- ------------ Total stockholders' equity 21,128,914 21,057,505 --------------- ---------- $ 37,510,582 $ 38,687,962 ============ ============ See accompanying notes.
ZEVEX INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31, 2001 2000 ----------------- ---------------- (unaudited) (unaudited) Revenue: Product sales $ 7,031,447 $ 5,415,772 Engineering services 360,972 242,275 ----------------- ---------------- 7,392,419 5,658,047 Cost of sales 4,502,722 3,128,614 ----------------- ---------------- Gross profit 2,889,697 2,529,433 Operating expenses: General and administrative 1,526,072 1,223,007 Selling and marketing 640,777 582,027 Goodwill amortization 143,194 126,785 Research and development 122,260 215,983 ----------------- ---------------- Total operating expenses 2,432,303 2,147,802 ----------------- ---------------- ----------------- ---------------- Operating income 457,394 381,631 Other income (expense) Interest income 1,326 37,969 Interest expense (309,206) (141,713) Gain on sale of marketable securities 40,978 298,048 ----------------- ---------------- Income before provision for income taxes 190,492 575,935 Provision for income taxes (103,030) (255,920) ----------------- ---------------- Net income $ 87,462 $ 320,015 ================= ================ Basic net income per share $ .03 $ .09 ================= ================ Weighted average shares Outstanding 3,440,065 3,422,767 ================= ================ Diluted net income per share $ .03 $ .09 ================= ================ Diluted weighted average shares Outstanding 3,466,271 3,766,946 ================= ================ See accompanying notes.
ZEVEX INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 2001 2000 --------------- ---------------- (unaudited) (unaudited) Cash flows from operating activities Net income $ 87,462 $ 320,015 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 515,255 318,656 Deferred income taxes 21,918 (39,946) Realized gain on marketable securities (40,978) (298,048) Changes in operating assets and liabilities: Restricted cash for sinking fund payment on industrial development bond (26,213) (26,179) Accounts receivable 864,694 (144,298) Trading securities -- 313,993 Inventories 694,986 (1,123,887) Prepaid expenses (2,262) 3,860 Other assets (6,273) 537 Accounts payable (967,067) 960,395 Accrued and other liabilities 34,535 (116,002) Income taxes receivable/payable 81,114 (512,122) --------------- ---------------- Net cash provided by (used in) operating activities 1,257,171 (343,026) Cash flows from investing activities Purchase of property and equipment (448,355) (157,646) Additions of patents and trademarks (2,082) (8,457) Redemption of available-for-sale marketable securities 127,221 508,223 --------------- ---------------- Net cash (used in) provided by investing activities (323,216) 342,120 Cash flows from financing activities Proceeds from capital leases 1,500,000 -- Payments on capital leases (35,952) -- Repayment of bank line of credit (1,802,223) (399,319) Proceeds from exercise of stock options 665 52,845 --------------- -- ---------------- Net cash used in financing activities (337,510) (346,474) --------------- ---------------- Net increase (decrease) in cash and cash equivalents 596,444 (347,380) Cash and cash equivalents at beginning of period 327,157 3,383,544 --------------- ---------------- Cash and cash equivalents at end of period $ 923,601 $ 3,036,164 =============== ================ Supplemental disclosure: Non-cash activities Unrealized (loss) gain on available-for-sale marketable securities $ (26,663) $ 138,855 See accompanying notes.
ZEVEX INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2001 1. Summary of Significant Accounting Policies Description of Organization and Business The Company was incorporated under the laws of the State of Nevada on December 30, 1987 under the name Downey Industries, Inc. In1988, the Company changed its name to ZEVEX International, Inc. and reincorporated into Delaware as a Delaware corporation during 1997. The Company holds three wholly owned subsidiaries, ZEVEX, Inc., a Delaware corporation, JTech Medical Technologies, a Utah corporation, and Aborn Electronics, Inc., a California corporation. The Company designs, manufactures and markets medical devices for enteral delivery and musculoskeletal evaluation through its wholly owned subsidiaries. The Company also designs and manufactures advanced medical devices, including surgical systems, device components, and sensors for medical technology companies. Principles of Consolidation The consolidated balance sheets at March 31, 2001 and December 31, 2000 include the accounts of ZEVEX International, Inc. and its three wholly-owned operating subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information along with the instructions to Form 10-Q of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in complete financial statements have been condensed or omitted. These financial statements should be read in conjunction with the financial statements and footnotes thereto included in the Company's 2000 Annual Report on SEC Form 10-K. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not indicative of the results of operations to be expected for a full year. New Accounting Pronouncements In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133, as amended by SFAS Nos. 137 and 138, is effective for the Company as of January 1, 2001. The new rule establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. Historically, the Company has not used derivative instruments, and the Company does not hold any derivative instruments at December 31, 2000. The Company adopted SFAS No. 133, as amended, in the first quarter of 2001. The adoption of SFAS No. 133 did not have an impact on earnings or the financial position of the Company, as expected. 2. Bank Line of Credit The Company renewed its line of credit arrangement with a financial institution with availability of $7 million. The line matures on May 31, 2001. The line of credit is collateralized by accounts receivable and inventory and bears interest at the prime rate, 8.0% at March 31, 2001 and 9.5% at December 31, 2000. The Company's balance on its line of credit was $4,134,772 at March 31, 2001 and $5,936,995 at December 31, 2000. Under the line of credit agreement, the Company is restricted from declaring cash dividends. In addition, the Company's line of credit contains certain financial covenants. As of March 31, 2001, the Company was in compliance with these financial covenants. 3. Related Party Transactions On December 31, 1998, the Company acquired JTech pursuant to a Stock Purchase Agreement between the Company and the four shareholders of JTech (the "JTech Stock Purchase"). Leonard C. Smith, one of the selling JTech shareholders, received $1,311,188 in cash and a convertible debenture in connection with the JTech Stock Purchase. The convertible debenture, in the principal amount of $1,290,000, is due January 6, 2002 and is convertible at Mr. Smith's option during the period from January 6, 2000 to January 6, 2002 at $11 per share. On April 3, 2000 Mr. Smith received $73,594 in cash and a convertible debenture in connection with the earn-out portion of the JTech Stock Purchase. The convertible debenture, in the principal amount of $73,594, is due March 31, 2002 and is convertible at Mr. Smith's option during the period from March 31, 2000 to March 31, 2002 at $11 per share. JTech also entered into an Employment Agreement with Leonard C. Smith, dated December 31, 1998, which provides that Mr. Smith serve as President of JTech for three years at a salary of at least $100,000 per year. Pursuant to the employment agreement, Mr. Smith also received an option to purchase 40,000 shares of the Company's common stock, vesting over four years, at $4.875 per share, the closing price of such stock on Nasdaq on the date of the JTech Stock Purchase. Mr. Smith was appointed to fill a vacancy on the Company's Board of Directors, effective April 26, 1999. Mr. Smith's term on the Board will expire at the 2001 annual meeting of shareholders. Mr. Smith was appointed President of the Company as well as President of ZEVEX, Inc. on September 1, 2000. 4. Comprehensive Income Effective January 1, 1998, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income". SFAS No. 130 requires that all items recognized under accounting standards as components of comprehensive income be reported in an annual financial statement that is displayed with the same prominence as other annual financial statements. This statement also requires that an entity classify items of other comprehensive income by their nature in an annual financial statement. Other comprehensive income may include foreign currency translation adjustments, and unrealized gains and losses on marketable securities classified as available-for-sale. For the three months ending March 31, 2001, the Company's comprehensive income was $16,718 (net of tax effect) lower than net income reported on the Company's financial statements. For the three months ending March 31, 2000, the Company's comprehensive income was $87,062 (net of tax effect) higher than net income reported on the Company's financial statements. 5. Inventories Inventories consist of the following:
March 31, 2001 December 31, 2000 ------------------------------------------ Materials $ 4,748,108 $ 4,832,947 Work in Progress 1,058,069 1,057,146 Finished goods, including completed subassemblies 3,186,283 3,797,353 ------------------------------------------ $ 8,992,460 $ 9,687,446 ==========================================
6. Net Income Per Common Share Basic net income per common share is calculated by dividing net income for the period by the weighted-average number of the Company's common shares outstanding. Diluted net income per common share includes the dilutive effect of options in the weighted-average number of the Company's common shares outstanding as calculated using the treasury stock method. - ------------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------------------------------------- General Through its three wholly owned subsidiaries, ZEVEX(R)International, Inc. (the "Company") is in the business of designing, manufacturing and distributing medical devices. The Company's subsidiary, ZEVEX Inc., provides products for enteral nutrition delivery. Through its OEM division, ZEVEX Inc. is also a contract manufacturer of medical devices, which include ultrasonic sensors, surgical handpieces, and electronic instruments. The Company's subsidiary, Aborn Electronics, Inc., specializes in the design and manufacturing of optoelectronic components. The Company's subsidiary, JTech Medical Industries, Inc., ("JTech") provides musculoskeletal evaluation products to chiropractors, occupational therapists, osteopaths, and physical therapists. Results of Operations The Company's revenues for the first quarter of 2001 increased to $7,392,419 from $5,658,047 for the first quarter of 2000, an increase of approximately 30%. Sales of the Company's proprietary enteral feeding products line accounted for approximately 50% of the total revenues for the first quarter of 2001, compared to 26% for the first quarter of 2000. The increase was in large part due to the purchase of Nestle's enteral nutrition delivery device business, which was completed on April 6, 2000. The prior year's first quarter revenues did not include any Nestle related sales. Sales of the Company's proprietary JTech product line, accounted for approximately 10% of the total revenues for the first quarter of 2001, compared to approximately 16% for the first quarter of 2000. Forty percent of the Company's revenues in the first quarter 2001 were from products manufactured for and sold to OEM customers, who market the final product, compared to approximately 58% during the first quarter 2000. During the first three months of 2000, 30% of total revenues resulted from sales to two OEM customers. The Company's gross profit as a percentage of revenues was approximately 39% for the first quarter of 2001 as compared to 44% for the first quarter of 2000. Management attributes the decrease in gross profit percentage year over year to several matters, including changes in product mix toward lower margin products, costs related to bringing in-house the manufacturing and servicing of the stationary enteral feeding pump lines, including the Nestle pumps acquired as mentioned above, and higher distribution costs related to the Company's proprietary products. Selling, general and administrative expenses increased during the first quarter of 2001 to $2,166,849, 29% of gross sales, as compared to $1,805,034, 32% of gross sales for the first quarter of 2000. The reduction in selling, general and administrative expenses, as expressed as a percentage of sales is attributable to sales revenue growth exceeding growth of selling, general and administrative expenses over the prior year. During the first quarter of 2001, increased expenses resulted from the Company's continuing growth, which occurred primarily from the acquisition of Nestle product line. Also, an expanded sales and marketing initiative increased staffing, travel, advertising, and administrative expenses related to the Company's proprietary product lines. The Company also experienced an increase in expenses related to employees, such as insurance, taxes, and pension benefits resulting from more employees in the first quarter of 2001 compared to first quarter of 2000. The Company believes that selling, general and administrative expenses in 2001 will be approximately 29% of sales, approximately the same rate as 2000. Research and development expenses vary from quarter to quarter depending on the number and nature of pending research and development projects and their various stages of completion. For the first quarter of 2001, research and development expenses were $122,260 compared to $215,983 in the first quarter of 2000. Expenses incurred during the first quarter were primarily for the continued development of the Company's enteral nutrition delivery and JTech proprietary products. Management believes investing in research and development will serve the Company's future well, and intends to continue this investment for the foreseeable future. Management currently anticipates that research and development expenses for 2001 will be approximately 3% of total revenues, approximately the same percentage of revenues as in the previous two years. For the first quarter of 2001 the Company had net income of $87,462, 1.2% of revenues compared to net income of $320,015, 5.7% of revenues for the first quarter of 2000. The decrease in net income during the first quarter of 2001, as compared to the first quarter of 2000, is due to a number of factors, (1) lower gross margins associated with the Company's product mix and the expanded sales effort and expenses related to the Company's proprietary products including sales personnel, support staff, and customer service and compliance personnel, (2) interest expense increased from $141,713 to $309,206 for additional interest paid for the earn-out portion of convertible debt related to the 1998 acquisitions and increased use of the Company's line of credit, (3) and the gain realized on the sale of securities sold in the first quarter of 2000 of $298,048 that was not matched in the first quarter of 2001 where the Company realized a gain of $40,978. As of March 31, 2001,the Company's backlog of customer orders was $5,312,000, as compared to $5,666,000 on March 31, 2000. Management estimates that approximately 90% of the backlog will be shipped before December 31, 2001. The Company's backlog is for contract manufacturing only and can be significantly affected by the timing of annual or semi-annual purchase orders placed by its customers. Liquidity and Capital Resources The Company's primary sources of liquidity are cash flow provided by operations and its revolving credit facility with Bank One Utah. During the first quarter of 2001, the Company's operations provided $1,257,171 in cash flow, compared to using $343,026 in cash for the first quarter of 2000. Cash increased by $596,445 for the first quarter of 2001, as the Company reduced its accounts receivable and inventories, this reduction was partially offset by a decrease in accounts payable. The Company's line of credit, which is secured by accounts receivable and inventory, permits borrowing up to $7 million. It bears interest at the prime rate, 8.0% at March 31, 2001 and 9.5% at December 31, 2000. The Company's balance on its line of credit was $4,134,772 at March 31, 2001 and $5,936,995 at December 31, 2000. The line matures on May 31, 2001 and the Company expects to renew the line in the ordinary course of business. Under the line of credit agreement, the Company is restricted from declaring cash dividends. In addition, the Company's line of credit contains certain financial covenants. As of March 31, 2001, the Company was in compliance with these financial covenants. With regard to capital expenditures, the Company's investment in property, patents from new research, production test equipment and tooling as well as equipment for lease and manufacturing tooling related to its proprietary products was $448,335 for the first quarter of 2001, compared to $166,103 for the first quarter of 2000. The Company expects to spend approximately $1,100,000 for the remainder of 2001 for additional manufacturing equipment and software, as well as for normal replacement of aging equipment and equipment for lease and manufacturing tooling related to its proprietary products. The Company also expects to invest approximately $450,000 in the research and development of new proprietary products for the rest of 2001. On March 29, 2000, the Company entered into an agreement to acquire certain assets from Nestle Clinical Nutrition, Inc. relating to Nestle's enteral nutrition delivery devices. The purchase was completed on April 6, 2000 for a purchase price of approximately $2.6 million, plus the actual cost of inventory acquired by the Company, which totaled approximately $1.2 million. Upon closing, cash of approximately $600,000 was paid. An additional $2.2 million was paid in October 2000, which included 1.2 million for inventory. The remainder of the purchase price, approximately $1,000,000, was calculated based upon the sales generated by the acquired assets and will be paid upon receipt of satisfactory documentation being provided by Nestle. These pumps were leased, rented or placed as part of arrangements in which pump users agree to periodically purchase related disposable products from the Company for use with the pumps. The Company's working capital at March 31, 2001 was $6,452,757, compared to $12,639,127 at March 31, 2000. The portion of working capital represented by cash at such dates was $923,601 and $3,036,164 respectively. The decrease in working capital is primarily due to a shift in the long-term portion of the convertible debt to short-term and the acquisition of the Nestle product line, which shifted current assets (cash) to property and equipment (pumps). The Company also uses substantial portions of its cash from time to time to fund its operations, including increases in inventories, accounts receivable and work in process in connection with various customer orders. The Company beleives its working capital is sufficient for operations for the next twelve months. On March 15, 2001, the Company entered into a Financing Lease with a bank for the amount of $1,500,000. The lease is secured by the Company's enteral feeding pumps purchased from Nestle and manufactured by the Company. The proceeds from the Financing Lease was used to reduce the Company's Line of Credit balance. The lease is a 36 month term is due on February 15, 2004 and is amortized over a fifteen year term at the interest rate of 8.24%. On April 18, 2001, the Company entered into a Term Loan Agreement with a bank for the amount of $1,000,000. The proceeds from the Promissory Note was used to reduce the Company's Line of Credit balance. The note is due on May 15, 2003 and is amortized over a fifteen year term at the interest rate of 8.5%. Cautionary Statement for Purposes of "Safe Harbor Provisions" of the Private Securities Litigation Reform Act of 1995 When used in this report, the words such as "estimate," "believe," "project," "anticipates" and similar expressions, together with other discussion of future trends or results, are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such statements, which include the Company's statements about the level of anticipated expenses during 2001 and its liquidity position are subject to certain risks and uncertainties, including those discussed below that could cause actual results to differ materially from those projected. These forward-looking statements speak only as of the date hereof and the Company disclaims any obligation to update them. All of these forward-looking statements are based on estimates and assumptions made by management of the Company, which although believed to be reasonable, are inherently uncertain and difficult to predict. Therefore, undue reliance should not be placed upon such estimates. There can be no assurance that the benefits anticipated in these forward-looking statements will be achieved. The following important factors, among others, could cause the Company not to achieve the benefits contemplated herein, or otherwise cause the Company's results of operations to be adversely affected in future periods: (i) continued or increased competitive pressures from existing competitors and new entrants; (ii) unanticipated costs related to the Company's growth and operating strategies; (iii) loss or retirement of key members of management; (iv) increase in interest rates of the Company's cost of borrowing, or a default under any material debt agreement; (v) adverse state or federal legislation or regulation that increases the cost of compliance, or adverse findings by a regulator with respect to existing operations; (vi) loss of customers;(vii) inability to achieve future sales; and (viii) the unavailability of sufficient funds for operations or capital expenditures. Many of such factors are beyond the control of the Company. Please refer to the Company's SEC Form 10-K for its fiscal year ended December 31, 2000 for additional cautionary statements. - ------------------------------------------------------------------------------- ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK - ------------------------------------------------------------------------------- No significant changes in market risk have occurred since December 31, 2000. Please refer to the Company's SEC Form 10-K for its fiscal year ended December 31, 2000 for additional discussions on market risks. PART II Item 2. Changes in Securities and Use of Proceeds. During the period ending March 31, 2001, there were 133 shares of Common Stock issued pursuant to exercise of stock options by employees of the Company. The exercise price on such shares ranges from $2.50 to $5.00 per share. The shares issued upon exercise of the options were issued pursuant to the exemption form registration under SEC Rule 505. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits The following exhibits are attached hereto or are incorporated herein by reference as indicated in the table below: Exhibit Location if other No. Title of Document than attached hereto ------ ----------------- -------------------- 3.01* Certificate of Incorporation Amendment No. 1 to Form S-1, filed October 24, 1997 3.02* Bylaws 1997 Form 10-K (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended March 31, 2001. * Denotes exhibits specifically incorporated in this Form 10-Q by reference to other filings of the Company pursuant to the provisions of Securities and Exchange Commission rule 12b-32 and Regulation S-K. These documents are located under File No. 001-10287 at, among other locations, the Securities and Exchange Commission, Public Reference Branch, 450 5th St., N.W., Washington, D.C. 20549. - ------------------------------------------------------------------------------- SIGNATURES - ------------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ZEVEX INTERNATIONAL, INC. Dated: May 12, 2001 By /s/ David J. McNally -------------------------- David J. McNally, CEO (Chief Executive Officer) By /s/ Phillip L. McStotts ------------------------------ Phillip L. McStotts, Secretary (Principal Financial Officer) -----END PRIVACY-ENHANCED MESSAGE-----