<PAGE>   1
    FORM 10-QSB - QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 1996

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                            Zaxis International Inc.
                  (Name of Issuer as specified in its charter)

       Delaware                    0-15476                   68-0080601
(State of Incorporation)   (Commission File Number)       (IRS Employer 
                                                           Identification No.)

                    1890 Georgetown Road, Hudson, Ohio 44236
                     (Address of principal executive office)

                                  (216)650-0444
                         (Registrant's telephone number)

Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months and (2) has
been subject to such filings for the past 90 days. Yes[X] No[ ]

As of November 5, 1996 there were 5,432,226 shares of Common Stock outstanding.

Page 1 of 37 Pages.  Exhibit Index on Page 9.
<PAGE>   2

                            ZAXIS INTERNATIONAL INC.
                                   FORM 10-QSB
<TABLE>
<CAPTION>
                                                                           Page No.
                                                                           --------
<S>     <C>                                                                <C>
Part I - Financial Information

Item 1. Financial Statements.

           Consolidated Balance Sheet                                         3

           Consolidated Statements of Operations:

             Quarters ended September 30, 1996 and 1995                       4

             Nine Months ended June 30, 1996 and 1995                         5

           Consolidated Statements of Cash Flows                              6

           Notes to Consolidated Financial Statements                         7

Item 2. Management's Discussion and Analysis.                               8-9

                           Part II - Other Information

Item 6. Exhibits and Reports on Form 8-K.                                    10

SIGNATURES                                                                   11
</TABLE>

                                        2
<PAGE>   3
                     ZAXIS INTERNATIONAL INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
    
                                     ASSETS
                                     ------
                                                                   September 30        December 31,
                                                                      1996                  1995
                                                                   -----------         -----------
                                                                   (Unaudited)
<S>                                                                <C>                 <C>        
CURRENT ASSETS:
    Cash                                                           $   118,708         $   135,574
    Accounts receivable, net                                            68,312              54,356
    Inventory                                                          136,056             135,845
    Prepaid expenses and other                                          17,616              39,700
                                                                   -----------         -----------
                 Total current assets                                  340,692             365,475
PROPERTY AND EQUIPMENT:
    Machinery and equipment                                            245,228             185,093
    Office equipment                                                   202,691             177,674
    Leasehold improvements                                              88,054              50,847
                                                                   -----------         -----------
                                                                       535,973             413,614
    Less accumulated depreciation                                      159,127              96,201
                                                                   -----------         -----------
                                                                       376,846             317,413
OTHER ASSETS:
    Deposits                                                            78,078              19,094
    Patent costs                                                        32,330              26,124
    Organization costs                                                   5,725               7,502
                                                                   -----------         -----------
                                                                       116,133              52,720
                                                                   -----------         -----------
                 TOTAL ASSETS                                      $   833,671         $   735,608
                                                                   ===========         ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES:
    Current portion of lease obligations                           $     2,348         $    10,334
    Bank loan payable                                                  100,000              25,015
    Notes payable to directors                                         141,340                   0
    Notes payable to others                                            189,000                   0
    Accounts payable                                                   452,631             200,262
    Accrued expenses                                                   221,641             198,512
                                                                   -----------         -----------
                 Total current liabilities                           1,106,960             434,123
STOCKHOLDERS' EQUITY:
    Common stock                                                        54,322              49,027
    Additional paid-in capital                                       5,378,139           4,152,631
    Deferred compensation                                              (33,676)            (59,375)
    Accumulated deficit                                             (5,672,074)         (3,840,798)
                                                                   -----------         -----------
                 Total stockholders' equity                           (273,289)            301,485
                                                                   -----------         -----------
                 Total liabilities and stockholders' equity        $   833,671         $   735,608
                                                                   ===========         ===========

</TABLE>

    See notes to consolidated financial statements.
    
    
                                        3
<PAGE>   4




                     ZAXIS INTERNATIONAL INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
    
                                   UNAUDITED
<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                              September 30,
                                                     -------------------------------
                                                        1996                1995
                                                     -----------         ----------- 
<S>                                                  <C>                 <C>        
Net sales                                            $   119,794         $    48,311

Cost of goods sold                                       191,560              69,798

Selling, general and administrative expenses             311,664             295,519
                                                     -----------         ----------- 
         Loss from operations                           (383,430)           (317,006)

Other income (expense):
  Interest income                                          1,319               1,357
  Miscellaneous income                                       263                  71
  Interest expense                                        (6,528)             (8,809)
                                                     -----------         ----------- 
         Total other income (expense)                     (4,946)             (7,381)
                                                     -----------         ----------- 
         Net loss                                    $  (388,376)        $  (324,387)
                                                     ===========         =========== 
Net loss per common share                            $     (0.07)        $     (0.09)
                                                     ===========         =========== 

Weighted average number of shares outstanding          5,413,218           3,785,405
                                                     ===========         =========== 

</TABLE>

See notes to consolidated financial statements.


                                       4
<PAGE>   5
                     ZAXIS INTERNATIONAL INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
    
                                    UNAUDITED
<TABLE>
<CAPTION>

                                                            Nine Months Ended
                                                              September 30,
                                                     -------------------------------
                                                        1996                 1995
                                                     -----------         ----------- 
<S>                                                  <C>                 <C>        
Net sales                                            $   339,390         $   132,346

Cost of goods sold                                       715,233             244,226

Selling, general and administrative expenses           1,453,512             970,287
                                                     -----------         ----------- 
           Loss from operations                       (1,829,355)         (1,082,167)

Other income (expense):
  Interest income                                          6,196               2,739
  Miscellaneous income                                     1,454                 654
  Interest expense                                        (9,572)            (12,109)
                                                     -----------         ----------- 
           Total other income (expense)                   (1,922)             (8,716)
                                                     -----------         ----------- 
           Net loss                                  $(1,831,277)        $(1,090,883)
                                                     ===========         =========== 
           
Net loss per common share                            $     (0.34)        $     (0.33)
                                                     ===========         =========== 
Weighted average number of shares outstanding          5,346,509           3,344,218
                                                     ===========         =========== 

</TABLE>


See notes to consolidated financial statements.
    


                                       5
<PAGE>   6

                     ZAXIS INTERNATIONAL INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
    
                                    UNAUDITED
<TABLE>
<CAPTION>
    
    
                                                                   Nine Months Ended
                                                                      September 30,
                                                            ------------------------------
                                                               1996                1995
                                                            -----------         -----------
<S>                                                         <C>                 <C>         
OPERATING ACTIVITIES:
Net loss                                                    ($1,831,277)        ($1,090,883)
Adjustments to reconcile net loss to cash
  used in operating activities:
    Depreciation and amortization                                66,881              36,624
    Compensation due to stock option grants                      (5,278)            194,672
    Changes in operating assets and liabilities:
      Accounts receivable                                       (13,956)            (30,009)
      Inventory and prepaid expenses                             21,873             (81,719)
      Accounts payable and accrued expenses                     275,499             187,071
                                                            -----------         -----------
              Cash used in operating activities              (1,486,258)           (784,244)

INVESTING ACTIVITIES:
  Purchase of property and equipment                           (122,359)            (96,013)
  Deposits                                                      (58,984)                  0
  Patent cost expenditures                                       (8,384)             (4,555)
                                                            -----------         -----------
               Cash used in investing activities               (189,727)           (100,568)

FINANCING ACTIVITIES:
  Proceeds from sales of common stock                         1,261,780           1,352,770
  Payments on notes payable                                     405,325                   0
  Payments on capital lease obligations                          (7,986)             (8,198)
                                                            -----------         -----------
               Cash provided by financing activities          1,659,119           1,344,572
                                                            -----------         -----------
Increase in cash                                                (16,866)            459,760
Cash at beginning of period                                     135,574               9,112
                                                            -----------         -----------
Cash at end of period                                       $   118,708         $   468,872
                                                            ===========         ===========


</TABLE>


See notes to consolidated financial statements.
    
    
                                       6
<PAGE>   7
                     ZAXIS INTERNATIONAL INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The financial statements present the consolidated financial position and results
of operations of Zaxis International Inc. (International) and Zaxis Inc. (Zaxis
or the Company), its wholly-owned subsidiary.

On August 25, 1995, Zaxis merged with a subsidiary of The InFerGene Company
(InFerGene). InFerGene was an inactive public company and neither InFerGene nor
its subsidiary had any assets or liabilities. The merger, for accounting
purposes, was a reverse acquisition in which Zaxis acquired InFerGene. The
acquisition was accounted for as a purchase with no value assigned to InFerGene.
InFerGene then changed its name to Zaxis International Inc. The financial
statements include the operations of Zaxis for all periods presented and the
operations of International since the date of acquisition. All intercompany
transactions and balances have been eliminated.

The financial statements and notes thereto do not include all of the disclosures
necessary for a full presentation of financial condition and operating results,
and should be read in conjunction with the financial statements for the year
ended December 31, 1995.

2. LIQUIDITY

Zaxis incurred losses of $1,831,277 during the nine months ended September 30,
1996, $1,729,000 in 1995 and $686,000 in 1994. The operations of the Company
have been financed mainly by private sales of common stock and by loans from
members of the Board of Directors and private investors.

Management recognizes that additional financial resources must be obtained in
order to execute its plans and to fund operations until they can generate cash,
and is in the process of pursuing several possibilities for interim and
long-term financing. The Company has engaged an investment banking firm to
assist in the private placement of debt securities for interim needs and will
then pursue long-term financing, possibly through the sale of common stock.
There can be no assurance that the Company will be successful in obtaining the
interim or long-term financing. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. No adjustments to the
amounts or classification of assets and liabilities which could result from the
outcome of this uncertainty are reflected in the financial statements.

3. NET LOSS PER COMMON SHARE

Net loss per share has been calculated giving retroactive effect to the exchange
ratio of Zaxis Inc. common stock for shares of Zaxis International Inc. in the
August 25, 1995 merger. The effects of outstanding options and warrants has not
been included in the calculation of net loss per share because their inclusion
would not be dilutive.

                                        7
<PAGE>   8

                            ZAXIS INTERNATIONAL INC.

Item 2. Management's Discussion and Analysis.

Results of Operations
Sales for the nine months ended September 30, 1996 and 1995, were $339,000 and
$132,000, respectively. The increase of $207,000 resulted from (1) new programs
launched with outside distributors in late 1995 and early 1996 which accounted
for most of the $135,000 increase in the first two quarters of the year over
1995; (2) sales of laboratory equipment of $57,000 in the third quarter; and (3)
growth in sales of laboratory media, compounds and reagents.

Cost of goods sold amounted to $715,000 for the nine months ended September 30,
1996, exceeding sales by $386,000. Cost of goods sold for the comparable 1995
period of $244,000 was $112,000 more than the related sales. Costs continued to
exceed sales because sales volume is still below capacity. In addition, 1996
sales include sales of distributor demonstration equipment and devices at
discounted prices, producing a higher cost to sales ratio.

Selling, general and administrative expenses amounted to $1,454,000 for the nine
months ended September 30, 1996, up $483,000 or 50% from the previous year.
Higher professional and consulting fees, more advertising expense and increased
travel costs are the principal reasons for the increase. Sales, executive and
administrative salaries were also higher in 1996 than in 1995 due to added
personnel, but that increase was offset by a decline in non-cash compensation
due to stock option plans. For the quarter, these costs totaled $312,000, up
$16,000 from the prior year, and were lower than the costs incurred in the first
two quarters of 1996 of $462,000 and $680,000, respectively. The lower level of
expense in the third quarter reflects strict cost controls, payroll reductions
and less professional fees and advertising.

Interest expense of $9,572 for the nine months was $2,500 less than 1995 which
included borrowing costs on interim financing, pending the completion of a
private placement of Common Stock in August 1995. Interest expense for the
quarter ended September 30, 1996, was $6,528, compared with $3,044 for the first
six months of 1996. The increase was due to interest accrued on notes payable to
directors and others issued during the period June through September of 1996.

Financial Condition and Liquidity
Operating activities used $1,486,000 during the first nine months of 1996.
Investing activities, primarily equipment purchases and deposits, used an
additional $190,000. The primary source of funds was Common Stock sales of $1.3
million, including $1.1 million from the exercise of Class A Warrants in January
1996. The Company borrowed $405,000 during the nine months ended September 30,
1996, including $189,000 from private investors, $141,000 from directors and
$75,000 from a bank.

The Company is seeking immediate financing to allow it to exploit several
opportunities from new products emerging from development stage, to afford it
the time required to build sales volumes of existing products to profitable
levels, and to satisfy the demands of current creditors. Accordingly, the
Company intends to secure interim financing from private sources and has
retained an investment banking firm to assist in that effort. The

                                        8
<PAGE>   9

                            ZAXIS INTERNATIONAL INC.

Company's immediate goal is to obtain sufficient funds to permit continuing
operations into the first half of 1997 and then complete long-term financing,
possibly through the sale of equity securities. Concurrently, the Company is
pursuing several opportunities to accelerate sales volume and provide additional
funds. These include joint ventures and supply arrangements with laboratory
instrument manufacturers utilizing various patent rights to which the Company
has access; alliances with molecular biology companies to market the Company's
long-lived precast DNA sequencing gel; and marketing programs with
pharmaceutical manufacturers and laboratory instrument marketers to obtain
market share for the Company's Lipoprotein assay kit which was granted FDA
clearance for clinical applications in September 1996.

There can be no assurance that any of the financing, marketing or joint venture
efforts will be concluded.

Part II-Other Information

Item 1. Legal Proceedings       None.

Item 2. Changes in Securities       None.

Item 3. Defaults Upon Senior Securities        None.

Item 4. Submission of Matters to a Vote of Security Holders     None.

Item 5. Other Information.        None.

Item 6. Exhibits and Reports on Form 8-K.

      (a) Exhibits.

                                                                         Page
                                                                         ----

           10  Material Contracts

               Promissory Notes to Directors and Other Investors         11-36

           27    Financial Data Schedule                                    37

      (b) Reports on Form 8-K.
                None.

                                        9
<PAGE>   10


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                          Zaxis International Inc.
                                          ------------------------
                                                (Registrant)

November 13, 1996                       /s/ C. E. Leffler.
                                        --------------------------------
                                        C. E. Leffler
                                        President

November 13, 1996                       /s/ John V. Danis.
                                        --------------------------------
                                        John V. Danis
                                        Vice President of Finance

                                       10
<PAGE>   11

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$100,000.00                                                      Hudson, Ohio
                                                                 June 26 , 1996

     FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Calvin D. Wible and Leonard
A. Duval ("Payee"), the principal sum of One Hundred Thousand Dollars
($100,000), together with interest thereon at the rate hereinafter specified.

     1. REPAYMENT. On December 26, 1996 (the "Maturity Date"), the outstanding
principal balance, and accrued and unpaid interest thereon, shall be due and
payable in full.

     2. INTEREST. The Company shall pay interest qurterly on the 26th of
September and December on the unpaid principal amount of this Note at an annual
rate equal to 9.25%.

     3. PAYMENT. Amounts due under this Note are payable in lawful money of the
United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

     4. PREPAYMENT. The Company shall have the right to prepay any amount of
interest or principal due under this Note at any time without penalty or
premium. Any such prepayment shall first be applied to the amount of interest
accrued to the date of such prepayment, then to the principal amount of this
Note.

     5. WARRANTS. As additional consideration for the loan of funds evidenced by
this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

     6. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

     7. EVENTS OF DEFAULT. In the event of any one of the following:

        (a) The Company shall default in the payment of any amount under this
        Note when the same becomes due;

                                       11


<PAGE>   12



          (b) The Company shall (I) apply for or consent to the appointment of,
          or the taking of possession by, a receiver, custodian, trustee or
          liquidator of itself or of all or a substantial part of its property,
          (ii) make a general assignment for the benefit of creditors, (iii)
          commence a voluntary case under any state or federal bankruptcy laws
          (as now or hereafter ineffect), (iv) acquiesce to or fail to have
          dismissed, within thirty (30) days, any petition filed against it in
          any involuntary case under such bankruptcy laws, or (vii) take any
          action for the purpose of effecting any of the foregoing; or

          (c) The Company shall admit in writing its inability, or be generally
          unable, to pay its debts as they become due or cease operations of its
          present business;

then, at the option of Payee, the entire amount of the principal of and interest
on this Note shall at once become due and payable, without presentment, demand,
protest or notice of protest of any kind, all of which are expressly waived by
the Company. In addition, upon any such event of default, Payee may exercise any
of the remedies provided by law.

     8.   Miscellaneous.

          (a) No waiver, consent or other binding agreement shall deemed to have
          been made by Payee or be binding upon Payee unless specifically
          granted in writing, which writing shall be strictly construed. This
          Note evidences the absolute and unconditional obligation of the
          Company to pay the principal of, and interest on, this Note. This Note
          is non-negotiable.

          (b) Payee shall not, solely by holding this Note, be entitled to vote
          or receive dividends or be considered a shareholder of the Company for
          any purpose, nor shall anything in this note be construed to confer on
          Payee, any rights of a shareholder of the Company or any right to
          vote, to give or withhold consent to any corporate action, to receive
          notices of meetings of shareholders, to receive dividends or
          subscription rights or otherwise.

          (c) This note is made in Hudson, Ohio, and shall be governed by the
          laws of the State of Ohio.

      IN WITNESS WHEREOF, the Company has executed this Note as of the date
first above written.

                                        ZAXIS INTERNATIONAL INC.

                                        By_____________________________________
                                                 C. E. Leffler, President

                                       12
<PAGE>   13


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$25,000.00                                                         Hudson, Ohio
                                                                   July 17, 1996

      FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Calvin D. Wible and Leonard
A. Duval ("Payee"), the principal sum of Twenty Five Thousand Dollars ($25,000),
together with interest thereon at the rate hereinafter specified.

     1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand.

     2. INTEREST. The Company shall pay interest quarterly on the 17th of
October, January, April and July on the unpaid principal amount of this Note at
an annual rate equal to 1% above the prime rate announced from time to time by
Key Bank.

     3. PAYMENT. Amounts due under this Note are payable in lawful money of the
United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

     4. WARRANTS. As additional consideration for the loan of funds evidenced by
this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

     5. MISCELLANEOUS.

        (a) No waiver, consent or other binding agreement shall deemed to have
        been made by Payee or be binding upon Payee unless specifically
        granted in writing, which writing shall be strictly construed. This
        Note evidences the absolute and unconditional obligation of the
        Company to pay the principal of, and interest on, this Note. This Note
        is non-negotiable.

                                       13


<PAGE>   14



          (b) Payee shall not, solely by holding this Note, be entitled to vote
          or receive dividends or be considered a shareholder of the Company for
          any purpose, nor shall anything in this note be construed to confer on
          Payee, any rights of a shareholder of the Company or any right to
          vote, to give or withhold consent to any corporate action, to receive
          notices of meetings of shareholders, to receive dividends or
          subscription rights or otherwise.

          (c) This note is made in Hudson, Ohio, and shall be governed by the
          laws of the State of Ohio.

     IN WITNESS WHEREOF, the Company has executed this Note as of the date first
above written.

                                        ZAXIS INTERNATIONAL INC.

                                        By_____________________________________
                                           C. E. Leffler, President

                                       14
<PAGE>   15


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$10,000.00                                                       Hudson, Ohio
                                                                 August 22, 1996


      FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Leonard A. Duval ("Payee"),
the principal sum of Ten Thousand Dollars ($10,000), together with interest
thereon at the rate hereinafter specified.

     1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand. The Company shall have the
right to repay any amount of interest or principal due under this Note at any
time without penalty or premium. Any such repayment shall first be applied to
the amount of interest accrued to the date of such repayment, then to the
principal amount of this Note.

     2. INTEREST. Interest shall accrue on the note at an annual rate of 9.25%

     3. PAYMENTS. Amounts due under this Note are payable in lawful money of the
United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

     4. WARRANTS. As additional consideration for the loan of funds evidenced by
this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

     5. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

     6. MISCELLANEOUS.

        (a) No waiver, consent or other binding agreement shall deemed to have
        been made by Payee or be binding upon Payee unless specifically
        granted in writing, which writing shall be strictly construed. This
        Note evidences the absolute and unconditional obligation of the
        Company to pay the principal of, and interest on, this Note. This Note
        is non-negotiable.

                                       15


<PAGE>   16



          (b) Payee shall not, solely by holding this Note, be entitled to vote
          or receive dividends or be considered a shareholder of the Company for
          any purpose, nor shall anything in this note be construed to confer on
          Payee, any rights of a shareholder of the Company or any right to
          vote, to give or withhold consent to any corporate action, to receive
          notices of meetings of shareholders, to receive dividends or
          subscription rights or otherwise.

          (c) This note is made in Hudson, Ohio, and shall be governed by the
          laws of the State of Ohio.

     IN WITNESS WHEREOF, the Company has executed this Note as of the date first
above written.

                                        ZAXIS INTERNATIONAL INC.

                                        By_____________________________________
                                               C. E. Leffler, President

                                       16


<PAGE>   17







THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$3,000.00                                                    Hudson, Ohio
                                                             September 16, 1996

     FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Leonard A. Duval ("Payee"),
the principal sum of Three Thousand Dollars ($3,000), together with interest
thereon at the rate hereinafter specified.

     1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand. The Company shall have the
right to repay any amount of interest or principal due under this Note at any
time without penalty or premium. Any such repayment shall first be applied to
the amount of interest accrued to the date of such repayment, then to the
principal amount of this Note.

     2. INTEREST. Interest shall accrue on the note at an annual rate of 9.25%

     3. PAYMENTS. Amounts due under this Note are payable in lawful money of the
United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

     4. WARRANTS. As additional consideration for the loan of funds evidenced by
this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

     5. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

     6. MISCELLANEOUS.

        (a) No waiver, consent or other binding agreement shall deemed to have
        been made by Payee or be binding upon Payee unless specifically
        granted in writing, which writing shall be strictly construed. This
        Note evidences the absolute and unconditional obligation of the
        Company to pay the principal of, and interest on, this Note. This Note
        is non-negotiable.

                                       17


<PAGE>   18



          (b) Payee shall not, solely by holding this Note, be entitled to vote
          or receive dividends or be considered a shareholder of the Company for
          any purpose, nor shall anything in this note be construed to confer on
          Payee, any rights of a shareholder of the Company or any right to
          vote, to give or withhold consent to any corporate action, to receive
          notices of meetings of shareholders, to receive dividends or
          subscription rights or otherwise.

          (c) This note is made in Hudson, Ohio, and shall be governed by the
          laws of the State of Ohio.

     IN WITNESS WHEREOF, the Company has executed this Note as of the date first
above written.

                                     ZAXIS INTERNATIONAL INC.

                                     By_____________________________________
                                     C. E. Leffler, President

                                       18
<PAGE>   19


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$11,000.00                                                       Hudson, Ohio
                                                                 August 22, 1996

     FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Joseph Sussen ("Payee"), the
principal sum of Eleven Thousand Dollars ($11,000), together with interest
thereon at the rate hereinafter specified.

     1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand. The Company shall have the
right to repay any amount of interest or principal due under this Note at any
time without penalty or premium. Any such repayment shall first be applied to
the amount of interest accrued to the date of such repayment, then to the
principal amount of this Note.

     2. INTEREST. Interest shall accrue on the note at an annual rate of 9.25%

     3. PAYMENTS. Amounts due under this Note are payable in lawful money of the
United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

     4. WARRANTS. As additional consideration for the loan of funds evidenced by
this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

     5. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

     6. MISCELLANEOUS.

        (a) No waiver, consent or other binding agreement shall deemed to have
        been made by Payee or be binding upon Payee unless specifically
        granted in writing, which writing shall be strictly construed. This
        Note evidences the absolute and unconditional obligation of the
        Company to pay the principal of, and interest on, this Note. This Note
        is non-negotiable.

                                       19


<PAGE>   20




          (b) Payee shall not, solely by holding this Note, be entitled to vote
          or receive dividends or be considered a shareholder of the Company for
          any purpose, nor shall anything in this note be construed to confer on
          Payee, any rights of a shareholder of the Company or any right to
          vote, to give or withhold consent to any corporate action, to receive
          notices of meetings of shareholders, to receive dividends or
          subscription rights or otherwise.

          (c) This note is made in Hudson, Ohio, and shall be governed by the
          laws of the State of Ohio.

     IN WITNESS WHEREOF, the Company has executed this Note as of the date first
above written.

                                                 ZAXIS INTERNATIONAL INC.

                                By_____________________________________
                                   C. E. Leffler, President

                                       20
<PAGE>   21


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$13,000.00                                                     Hudson, Ohio
                                                               September 9, 1996


     FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of James Stewart ("Payee"), the
principal sum of Thirteen Thousand Dollars ($13,000), together with interest
thereon at the rate hereinafter specified.

     1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand. The Company shall have the
right to repay any amount of interest or principal due under this Note at any
time without penalty or premium. Any such repayment shall first be applied to
the amount of interest accrued to the date of such repayment, then to the
principal amount of this Note.

     2. INTEREST. Interest shall accrue on the note at an annual rate of 9.25%

     3. PAYMENTS. Amounts due under this Note are payable in lawful money of the
United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

     4. WARRANTS. As additional consideration for the loan of funds evidenced by
this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

     5. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

     6. MISCELLANEOUS.

        (a) No waiver, consent or other binding agreement shall deemed to have 
been made by Payee or be binding upon Payee unless specifically granted in
writing, which writing shall be strictly construed. This Note evidences the
absolute and unconditional obligation of the Company to pay the principal of,
and interest on, this Note. This Note is non-negotiable.

                                       21


<PAGE>   22



         (b) Payee shall not, solely by holding this Note, be entitled to vote
or receive dividends or be considered a shareholder of the Company for any
purpose, nor shall anything in this note be construed to confer on Payee, any
rights of a shareholder of the Company or any right to vote, to give or withhold
consent to any corporate action, to receive notices of meetings of shareholders,
to receive dividends or subscription rights or otherwise.

         (c) This note is made in Hudson, Ohio, and shall be governed by the
laws of the State of Ohio.

      IN WITNESS WHEREOF, the Company has executed this Note as of the date
first above written.

                                      ZAXIS INTERNATIONAL INC.

                                      By_____________________________________
                                      C. E. Leffler, President

                                       22
<PAGE>   23


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$10,000.00                                                    Hudson, Ohio
                                                              September 12, 1996


      FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Richard McNary ("Payee"), the
principal sum of Ten Thousand Dollars ($10,000), together with interest thereon
at the rate hereinafter specified.

      1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand. The Company shall have the
right to repay any amount of interest or principal due under this Note at any
time without penalty or premium. Any such repayment shall first be applied to
the amount of interest accrued to the date of such repayment, then to the
principal amount of this Note.

      2. INTEREST. Interest shall accrue on the note at an annual rate of 9.25%

      3. PAYMENTS. Amounts due under this Note are payable in lawful money of
the United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

      4. WARRANTS. As additional consideration for the loan of funds evidenced
by this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

      5. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

      6. MISCELLANEOUS.

           (a) No waiver, consent or other binding agreement shall deemed to
      have been made by Payee or be binding upon Payee unless specifically
      granted in writing, which writing shall be strictly construed. This Note
      evidences the absolute and unconditional obligation of the Company to pay
      the principal of, and interest on, this Note. This Note is non-
      negotiable.

                                       23


<PAGE>   24




     (b) Payee shall not, solely by holding this Note, be entitled to vote or
     receive dividends or be onsidered a shareholder of the Company for any
     purpose, nor shall anything in this note be construed to confer on Payee,
     any rights of a shareholder of the Company or any right to vote, to give or
     withhold consent to any corporate action, to receive notices of meetings of
     shareholders, to receive dividends or subscription rights or otherwise.

     (c) This note is made in Hudson, Ohio, and shall be governed by the laws of
     the State of Ohio.

      IN WITNESS WHEREOF, the Company has executed this Note as of the date
first above written.

                                        ZAXIS INTERNATIONAL INC.

                                        By_____________________________________
                                        C. E. Leffler, President

                                       24
<PAGE>   25

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$ 40,000.00                                                   Hudson, Ohio
                                                              September 13, 1996


      FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Edward Gottschalk ("Payee"),
the principal sum of Forty Thousand Dollars ($40,000), together with interest
thereon at the rate hereinafter specified.

       1. REPAYMENT. The outstanding principal balance and accrued and unpaid
interest thereon, shall be due and payable on demand ("the Maturity Date").

       2. INTEREST. The Company shall pay interest at the Maturity Date on the
unpaid principal amount of this Note at an annual rate equal to 9.25%.

       3. PAYMENT. Amounts due under this Note are payable in lawful money of
the United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

       4. PREPAYMENT. The Company shall have the right to prepay any amount of
interest or principal due under this Note at any time without penalty or
premium. Any such prepayment shall first be applied to the amount of interest
accrued to the date of such prepayment, then to the principal amount of this
Note.

       5. WARRANTS. As additional consideration for the loan of funds evidenced
by this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

       6. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

       7. EVENTS OF DEFAULT. In the event of any one of the following:

          (a) The Company shall default in the payment of any amount under this
          Note when the same becomes due;

                                       25


<PAGE>   26



          (b) The Company shall (I) apply for or consent to the appointment of,
          or the taking of possession by, a receiver, custodian, trustee or
          liquidator of itself or of all or a substantial part of its property,
          (ii) make a general assignment for the benefit of creditors, (iii)
          commence a voluntary case under any state or federal bankruptcy laws
          (as now or hereafter ineffect), (iv) acquiesce to or fail to have
          dismissed, within thirty (30) days, any petition filed against it in
          any involuntary case under such bankruptcylaws, or (vii) take any
          action for the purpose of effecting any of the foregoing; or

          (c) The Company shall admit in writing its inability, or be generally
          unable, to pay its debts as they become due or cease operations of its
          present business;

then, at the option of Payee, the entire amount of the principal of and interest
on this Note shall at once become due and payable, without presentment, demand,
protest or notice of protest of any kind, all of which are expressly waived by
the Company. In addition, upon any such event of default, Payee may exercise any
of the remedies provided by law.

      8.  Miscellaneous.
          --------------

          (a) No waiver, consent or other binding agreement shall deemed to have
          been made by Payee or be binding upon Payee unless specifically
          granted in writing, which writing shall be strictly construed. This
          Note evidences the absolute and unconditional obligation of the
          Company to pay the principal of, and interest on, this Note. This Note
          is non-negotiable.

          (b) Payee shall not, solely by holding this Note, be entitled to vote
          or receive dividends or be considered a shareholder of the Company for
          any purpose, nor shall anything in this note be construed to confer on
          Payee, any rights of a shareholder of the Company or any right to
          vote, to give or withhold consent to any corporate action, to receive
          notices of meetings of shareholders, to receive dividends or
          subscription rights or otherwise.

          (c) This note is made in Hudson, Ohio, and shall be governed by the
          laws of the State of Ohio.

      IN WITNESS WHEREOF, the Company has executed this Note as of the date
first above written.

                                ZAXIS INTERNATIONAL INC.

                                By_____________________________________
                                C. E. Leffler, President

                                       26
<PAGE>   27


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$20,000.00                                                    Hudson, Ohio
                                                              September 17, 1996


       FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Howard Cassel ("Payee"), the
principal sum of Twenty Thousand Dollars ($20,000), together with interest
thereon at the rate hereinafter specified.

       1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand. The Company shall have the
right to repay any amount of interest or principal due under this Note at any
time without penalty or premium. Any such repayment shall first be applied to
the amount of interest accrued to the date of such repayment, then to the
principal amount of this Note.

       2. INTEREST. Interest shall accrue on the note at an annual rate of 9.25%

       3. PAYMENTS. Amounts due under this Note are payable in lawful money of
the United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

       4. WARRANTS. As additional consideration for the loan of funds evidenced
by this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

       5. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

       6. MISCELLANEOUS.

          (a) No waiver, consent or other binding agreement shall deemed to
          have been made by Payee or be binding upon Payee unless specifically
          granted in writing, which writing shall be strictly construed. This
          Note evidences the absolute and unconditional obligation of the
          Company to pay the principal of, and interest on, this Note. This
          Note is non-negotiable.

                                       27


<PAGE>   28



          (b) Payee shall not, solely by holding this Note, be entitled to vote
          or receive dividends or be considered a shareholder of the Company for
          any purpose, nor shall anything in this note be construed to confer on
          Payee, any rights of a shareholder of the Company or any right to
          vote, to give or withhold consent to any corporate action, to receive
          notices of meetings of shareholders, to receive dividends or
          subscription rights or otherwise.

          (c) This note is made in Hudson, Ohio, and shall be governed by the
          laws of the State of Ohio.

      IN WITNESS WHEREOF, the Company has executed this Note as of the date
first above written.

                                   ZAXIS INTERNATIONAL INC.

                                   By_____________________________________
                                   C. E. Leffler, President

                                       28
<PAGE>   29


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$20,000.00                                                    Hudson, Ohio
                                                              September 17, 1996


      FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Kenneth Sladky ("Payee"), the
principal sum of Twenty Thousand Dollars ($20,000), together with interest
thereon at the rate hereinafter specified.

       1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand. The Company shall have the
right to repay any amount of interest or principal due under this Note at any
time without penalty or premium. Any such repayment shall first be applied to
the amount of interest accrued to the date of such repayment, then to the
principal amount of this Note.

       2. INTEREST. Interest shall accrue on the note at an annual rate of 9.25%

       3. PAYMENTS. Amounts due under this Note are payable in lawful money of
the United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

       4. WARRANTS. As additional consideration for the loan of funds evidenced
by this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

       5. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

       6. MISCELLANEOUS.

          (a) No waiver, consent or other binding agreement shall deemed to
          have been made by Payee or be binding upon Payee unless specifically
          granted in writing, which writing shall be strictly construed. This
          Note evidences the absolute and unconditional obligation of the
          Company to pay the principal of, and interest on, this Note. This
          Note is non-negotiable.

                                       29


<PAGE>   30



          (b)  Payee shall not, solely by holding this Note, be entitled to vote
               or receive dividends or be considered a shareholder of the
               Company for any purpose, nor shall anything in this note be
               construed to confer on Payee, any rights of a shareholder of the
               Company or any right to vote, to give or withhold consent to any
               corporate action, to receive notices of meetings of shareholders,
               to receive dividends or subscription rights or otherwise.

          (c)  This note is made in Hudson, Ohio, and shall be governed by the
               laws of the State of Ohio.

      IN WITNESS WHEREOF, the Company has executed this Note as of the date
first above written.

                                 ZAXIS INTERNATIONAL INC.

                                 By_____________________________________
                                 C. E. Leffler, President

                                       30
<PAGE>   31


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$50,000.00                                                    Hudson, Ohio
                                                              September 18, 1996


       FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Brad Carter ("Payee"), the
principal sum of Fifty Thousand Dollars ($50,000), together with interest
thereon at the rate hereinafter specified.

       1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand. The Company shall have the
right to repay any amount of interest or principal due under this Note at any
time without penalty or premium. Any such repayment shall first be applied to
the amount of interest accrued to the date of such repayment, then to the
principal amount of this Note.

       2. INTEREST. Interest shall accrue on the note at an annual rate of 9.25%

       3. PAYMENTS. Amounts due under this Note are payable in lawful money of
the United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

       4. WARRANTS. As additional consideration for the loan of funds evidenced
by this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

       5. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

       6. MISCELLANEOUS.

          (a) No waiver, consent or other binding agreement shall deemed to
          have been made by Payee or be binding upon Payee unless specifically
          granted in writing, which writing shall be strictly construed. This
          Note evidences the absolute and unconditional obligation of the
          Company to pay the principal of, and interest on, this Note. This
          Note is non-negotiable.

                                       31


<PAGE>   32



          (b) Payee shall not, solely by holding this Note, be entitled to vote
          or receive dividends or be considered a shareholder of the Company for
          any purpose, nor shall anything in this note be construed to confer on
          Payee, any rights of a shareholder of the Company or any right to
          vote, to give or withhold consent to any corporate action, to receive
          notices of meetings of shareholders, to receive dividends or
          subscription rights or otherwise.

          (c) This note is made in Hudson, Ohio, and shall be governed by the
          laws of the State of Ohio.

      IN WITNESS WHEREOF, the Company has executed this Note as of the date
first above written.

                                   ZAXIS INTERNATIONAL INC.

                                   By_____________________________________
                                   C. E. Leffler, President

                                       32
<PAGE>   33


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$15,000.00                                                    Hudson, Ohio
                                                              September 18, 1996


       FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Robert Williams, Jr.
("Payee"), the principal sum of Fifteen Thousand Dollars ($15,000), together
with interest thereon at the rate hereinafter specified.

       1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand. The Company shall have the
right to repay any amount of interest or principal due under this Note at any
time without penalty or premium. Any such repayment shall first be applied to
the amount of interest accrued to the date of such repayment, then to the
principal amount of this Note.

       2. INTEREST. Interest shall accrue on the note at an annual rate of 9.25%

       3. PAYMENTS. Amounts due under this Note are payable in lawful money of
the United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

       4. WARRANTS. As additional consideration for the loan of funds evidenced
by this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

       5. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

       6. Miscellaneous.

          (a) No waiver, consent or other binding agreement shall deemed to
          have been made by Payee or be binding upon Payee unless specifically
          granted in writing, which writing shall be strictly construed. This
          Note evidences the absolute and unconditional obligation of the
          Company to pay the principal of, and interest on, this Note. This
          Note is non-negotiable.

                                       33


<PAGE>   34



          (b) Payee shall not, solely by holding this Note, be entitled to vote
          or receive dividends or be considered a shareholder of the Company for
          any purpose, nor shall anything in this note be construed to confer on
          Payee, any rights of a shareholder of the Company or any right to
          vote, to give or withhold consent to any corporate action, to receive
          notices of meetings of shareholders, to receive dividends or
          subscription rights or otherwise.

          (c) This note is made in Hudson, Ohio, and shall be governed by the
          laws of the State of Ohio.

      IN WITNESS WHEREOF, the Company has executed this Note as of the date
first above written.

                                  ZAXIS INTERNATIONAL INC.

                                  By_____________________________________
                                  C. E. Leffler, President

                                       34
<PAGE>   35


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS. THIS NOTE CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND WILL NOT BE TRANSFERRED OF RECORD EXCEPT IN COMPLIANCE WITH SUCH LAWS.

                                 PROMISSORY NOTE

$10,000.00                                                   Hudson, Ohio
                                                             September 18, 1996

       FOR VALUE RECEIVED, Zaxis International Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Robert Williams, Sr.
("Payee"), the principal sum of Ten Thousand Dollars ($10,000), together with
interest thereon at the rate hereinafter specified.

       1. REPAYMENT. The outstanding principal balance, and accrued and unpaid
interest thereon, shall be due and payable on demand. The Company shall have the
right to repay any amount of interest or principal due under this Note at any
time without penalty or premium. Any such repayment shall first be applied to
the amount of interest accrued to the date of such repayment, then to the
principal amount of this Note.

       2. INTEREST. Interest shall accrue on the note at an annual rate of 9.25%

       3. PAYMENTS. Amounts due under this Note are payable in lawful money of
the United States of America at Payee's address set forth above or at such other
location as may be designated by payee.

       4. WARRANTS. As additional consideration for the loan of funds evidenced
by this Note, the Company has granted to Payee certain warrants pursuant to a
Warrant Agreement of even date herewith.

       5. OPTIONAL REPAYMENT. Payee may elect to accept repayment in the form of
shares of Zaxis International Inc. Common Stock by exercising the Warrants
pursuant to the Warrant Agreement. If Payee so elects, the Company will grant
additional Warrants in an amount equivalent to 50% of the Warrants exercised.

       6. MISCELLANEOUS.

          (a) No waiver, consent or other binding agreement shall deemed to
          have been made by Payee or be binding upon Payee unless specifically
          granted in writing, which writing shall be strictly construed. This
          Note evidences the absolute and unconditional obligation of the
          Company to pay the principal of, and interest on, this Note. This
          Note is non-negotiable.

                                       35


<PAGE>   36



          (b) Payee shall not, solely by holding this Note, be entitled to vote
          or receive dividends or be considered a shareholder of the Company for
          any purpose, nor shall anything in this note be construed to confer on
          Payee, any rights of a shareholder of the Company or any right to
          vote, to give or withhold consent to any corporate action, to receive
          notices of meetings of shareholders, to receive dividends or
          subscription rights or otherwise.

          (c) This note is made in Hudson, Ohio, and shall be governed by the
          laws of the State of Ohio.

      IN WITNESS WHEREOF, the Company has executed this Note as of the date
first above written.

                            ZAXIS INTERNATIONAL INC.

                            By_____________________________________
                            C. E. Leffler, President

  

                                     36