UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES AND EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2004

                                       or

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES AND EXCHANGE ACT OF 1934

         For the transition period from ______________ to _____________

                        Commission file number 001-12965

                            ZEVEX INTERNATIONAL, INC.
             (Exact name of registrant as specified in its 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)

       Registrant's telephone number, including area code: (801) 264-1001

    Securities Registered Pursuant to Section 12(b) of the Exchange Act: None

      Securities Registered Pursuant to Section 12(g) of the Exchange Act:

                    Common Stock, par value $0.001 per share

         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:____

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K:_X_

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2) Yes ___No_X_

         The aggregate market value of the registrant's common stock held by
nonaffiliates computed with reference to the closing price as quoted on the
NASDAQ Stock Market, as of the last business day of the registrant's most
recently completed second quarter, June 30, 2004, was approximately $11,019,123.
For the purposes of the foregoing, the registrant assumed that affiliates
included only the registrant's directors, executive officers and principal
shareholders filing Schedules 13D or 13G with respect to the registrant's common
stock.

         The number of shares outstanding of the registrant's common stock as
of March 10, 2005 was 3,400,964

         Documents incorporated by reference: Portions of the registrant's
definitive Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days after registrant's fiscal year end December 31, 2004
are incorporated by reference into Part III of this report.


<PAGE>


TABLE OF CONTENTS


Part I
   Item 1  BUSINESS                                                    --  3
   Item 2  PROPERTIES                                                  -- 12
   Item 3  LEGAL PROCEEDINGS                                           -- 12
   Item 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS         -- 12

Part II
   Item 5  MARKET FOR REGISTRANT'S COMMON EQUITY AND
                 RELATED STOCKHOLDER MATTERS AND ISSUER
             PURCHASES OF EQUITY SECURITIES                            -- 13
   Item 6  SELECTED FINANCIAL DATA                                     -- 13
   Item 7  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS                   -- 14
   Item7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                 MARKET RISK                                           -- 35
   Item 8  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                 -- 35
   Item 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                 ON ACCOUNTING AND FINANCIAL DISCLOSURE                -- 36
   Item 9A CONTROLS AND PROCEDURES                                     -- 36
   Item 9B OTHER INFORMATION                                           -- 36

Part III
   Item 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT -- 36
   Item 11 EXECUTIVE COMPENSATION                                      -- 36
   Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                   AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS      -- 36
   Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS              -- 36
   Item 14 PRINCIPAL ACCOUNTANT AND SERVICES                           -- 36

Part IV

   Item 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
                   ON FORM 8-K                                         -- 37
   Item 15(c)  INDEX TO EXHIBITS                                       -- 39

SIGNATURES                                                             -- 38


<PAGE>


                                     PART I


ITEM 1.  BUSINESS

OVERVIEW

ZEVEX(R) International, Inc. ("ZEVEX") through our divisions and subsidiary,
engages in the business of designing, manufacturing, and distributing medical
devices. Our Therapeutics division markets enteral nutrition delivery devices.
Our Applied Technology division designs and manufactures advanced medical
components and systems for other medical technology companies. Until its sale on
December 31, 2003, our Physical Evaluation division marketed industry-leading
physical evaluation testing systems.

We develop and manufacture high quality, high value medical products. We
effectively integrate, implement, and support solutions throughout product life
cycles based upon our core competencies in fluid management and measurement, and
surgical ultrasound technologies.

We provide value in a continuum of product solutions, from components and
subsystems to complete medical systems of medical devise companies. We
manufacture complete systems if a significant portion of the value of the
product is derived from our technology.

We focus on product development and manufacturing, and distribute our products
through selected medical device marketing companies and distributors. We employ
product and territory managers to ensure that our services and sales support are
complimentary to the quality of our innovative products. This distribution
strategy allows us to leverage our expertise and technology across diverse
applications, while remaining focused on our core competencies.

In 2003, we began restructuring our operations to focus on our core market
offerings of our ambulatory enteral feeding products (our Therapeutics division)
and contract manufacturing services (our Applied Technology division). As part
of our efforts to refocus on our core business during 2004, we executed several
strategic agreements with Royal Numico N.V., a Netherlands corporation, which is
a world leader in the manufacturing and marketing of clinical nutrition
products, related equipment and accessories (see Item 7 Management's Disscussion
and Analysis of Financial Condition and Results of Operations). We also
completed our research and development project leading to the introduction of
our next-generation enteral feeding pump, the EnteraLite(R) Infinity(TM) at the
American Society of Parenteral and Enteral Nutrition Annual Conference in
January 2005. We were also the recipient of a 2004 Medical Design Excellence
Award as the primary designer of the LifePort(TM) Kidney Transporter that was
created for Organ Recovery Systems.

In 2004, we had consolidated revenue of $23,634,355 and a net loss of $178,977.
We had consolidated revenue of $25,869,876 and a net loss of $8,277,542 in 2003,
and consolidated revenue of $25,495,733 and net income of $214,303 in 2002.
Revenue from the Therapeutics division and from our Applied Technology division
constituted 53% and 47%, respectively, of our 2004 consolidated revenue, 48% and
40%, respectively, of our 2003 consolidated revenue and 48% and 38%,
respectively, of our 2002 consolidated revenues. We believe the Therapeutics
division and the Applied Technology division will continue to grow in the
future. The growth from these two divisions offset the decline in revenue from
our stationary enteral feeding business in 2004.

During the past three years, we increased our sales and marketing expenses, and
increased research and development investment in both our Therapeutics and
Applied Technology businesses in order to bring new products to market.

We continued to reduce our debt in 2004, which has decreased by 73%,
approximately $13 million since January 2001. During this period we also
redefined our operating segments, reduced employee head count by over 30%,
implemented lean manufacturing, and focused our Company on our core
competencies. Our operations are now based upon common or related technologies,
enhancing the development of innovative products, quality and service, and
providing efficient sharing of business resources.

<PAGE>


Our Therapeutics Division

Through the sale of enteral feeding pumps and related devices, we have
established a competitive position in the U.S. enteral nutrition delivery
market. The market in which we compete includes feeding pumps and disposable
sets that are used by patients who require direct gastrointestinal nutrition
therapy (also called enteral feeding). Enteral feeding is the means of providing
liquid nutrition to patients who may have experienced head or neck trauma, or
have gastrointestinal disorders, such as short bowel syndrome, Crohn's Disease,
bowel pseudo-obstruction and other disorders that prevent normal digestion.

Our Applied Technology Division

We also provide design and manufacturing services in a multi-billion dollar
market to worldwide medical device leaders who, in turn, sell our components and
systems under private labels or incorporate them into their products. We call
this our Applied Technology division. These OEM (Original Equipment
Manufacturer) products include ultrasonic sensors and surgical handpieces,
optoelectronic components, and electronic instruments. Our operation in Salt
Lake City has been certified to world-class medical device quality standards,
meeting ISO 9001 and ISO 13485 certification requirements and we employ a
quality system developed to meet the U. S. Food and Drug Administration's Good
Manufacturing Practices.

The Sale of Our Physical Evaluation Division

Until December 31, 2003, we competed in the Physical Evaluation market through
our sales of stand-alone and computerized products that measure isolated muscle
strength, joint ranges of motion and sensation. We called this our Physical
Evaluation division. On December 31, 2003, we completed the sale of our Physical
Evaluation business. The transaction was accomplished by the sale of all the
issued and outstanding capital stock of JTech Medical Industries, Inc.,
("JTech"), our wholly-owned subsidiary. The transaction was effected by a Stock
Purchase Agreement (the "Stock Purchase Agreement") dated December 31, 2003 by
and between ZEVEX and Mr. Leonard C. Smith, a former employee, officer and
director of ZEVEX. (See Item 7. Management Discussion and Analysis of Financial
Conditions and Results of Operations). We sold the Physical Evaluation division
in an effort to focus on our core competencies.

Financial Information

For information regarding our financial condition and results of operations
please see Item 8 of the report entitled "Financial Statements and Supplementary
Data" and Notes to Consolidated Financial Statements included in that item. See
also the discussion of the financial performance of our segments in Note 13 to
the Consolidated Financial Statements.

Our Contact and Additional Information

We maintain our executive offices and principal facility at 4314 ZEVEX Park
Lane, Salt Lake City, Utah 84123. Our telephone number is (801) 264-1001. We
maintain an Internet site at http://www.zevex.com. We make available free of
charge through this website our annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 as soon as reasonably practicable after we electronically file such
material to the Securities and Exchange Commission. Our website and the
information contained therein or connected thereto shall not be deemed to be
incorporated into this Form 10-K.

<PAGE>


OUR PROPRIETARY PRODUCTS

         Therapeutic Products

Through our Therapeutics division, we sell two major lines of enteral feeding
pumps and a variety of related disposable delivery sets and accessories. Enteral
feeding is a method of delivering nutrition to patients through the
gastrointestinal tract. Many enteral feeding patients require continuous
administration of nutritional solutions throughout the day, which requires the
patient to carry an enteral feeding pump.

We have successfully applied our engineering and regulatory expertise to the
development, commercialization, and marketing of our next generation enteral
feeding pump, the EnteraLite(R) Infinity(TM), for patients who require direct
gastrointestinal nutritional therapy. We believe that the EnteraLite(R)
Infinity(TM) pump is the lightest, most compact, most durable, and most mobile
enteral feeding pump in the U.S. market, possessing unprecedented safety and
accuracy in enteral nutrition delivery. Like its predecessor the EnteraLite(R),
the EnteraLite(R) Infinity(TM), has unique features which include the ability to
operate in any orientation, +/-5% accuracy and a 24-hour battery, the life of
which is one-third longer than the battery life of its closest competitor. The
EnteraLite(R) pump also carries a two-year warranty that is twice the industry
average.

The EnteraLite(R) Infinity(TM) builds upon the proven user interface and
superior accuracy of the original EnteraLite(R) pump, with an expanded feature
set that provides benefits of use in a wide variety of enteral feeding
applications. The unique features of the EnteraLite(R) Infinity(TM) are the
result of input from patients, clinicians, caregivers and durable medical
equipment providers. The accuracy, portability, size, and ruggedness of the
EnteraLite(R) Infinity(TM) allow patients to remove the traditional barriers of
utilizing an enteral feeding pump. In the U.S. today, the most commonly used
enteral feeding pumps are mounted on an I.V. pole and the patient is tethered to
the pole throughout the feeding, which can take a number of hours. For patients
who need to feed during the day, the I.V. pole limits their ability to be
physically active. We believe that the EnteraLite(R) Infinity(TM) may provide
access to new customers and applications that were previously beyond our reach.

First introduced in 1996, the EnteraLite(R) gained acceptance in the home health
care market due to its superior mobility and state-of-the-art features. We
believe that by improving the convenience of nutrition delivery, the
EnteraLite(R) and EnteraLite(R) Infinity(TM) can contribute to better clinical
outcomes and improved quality of life for enteral patients. The EnteraLite(R)
and EnteraLite(R) Infinity(TM) require the use of disposable feeding bags and
tubing sets, which are also sold by us. ZEVEX has been awarded thirteen U.S.
patents for technology related to the EnteraLite(R) Infinity and EnteraLite(R)
and associated disposable sets.

The 1998 acquisition of Nutrition Medical's line of stationary pumps, delivery
sets, and feeding tubes, followed by the 2000 acquisition of the installed base
of Nestle USA stationary pumps, has expanded our line of enteral delivery
products. We now manufacture and distribute these less expensive stationary
enteral feeding pumps, which are intended for applications where patients are
not mobile. Complementing these pump models are a line of disposable delivery
sets sold by us for use with the stationary pumps. These sets include feeding
solution bags of various sizes, as well as "spike" sets for use with pre-filled
feeding solution containers.

OUR APPLIED TECHNOLOGY CONTRACT DESIGN AND MANUFACTURING SERVICES

We provide  design and  manufacturing  services to medical  companies  who sell
our  components  and systems  under  private  labels or incorporate  them into
their products.  We call this our Applied  Technology  division.  We provide
these services for both established and emerging technology  companies,  such as
Cardinal Health, Inc. (formerly Alaris Medical Systems,  Inc.,),  Advanced
Medical Optics, Inc., various divisions of Baxter Healthcare  Corporation,
Medtronic Corporation,  Smith's Industries,  Inc., Edwards Lifesciences and
Terumo Corporation.  We offer our customers over 18 years of specialized
engineering and manufacturing expertise.

<PAGE>


Industry sources indicate a continued trend by medical device companies to
outsource their device manufacturing requirements. Many emerging companies do
not have the engineering, manufacturing, or regulatory expertise to quickly and
efficiently take a device from conception to commercial use. Even larger,
well-established companies, which may have the capital to develop such
expertise, may lack the required personnel and time to accumulate such expertise
or may want to focus their resources in areas other than manufacturing. In the
medical device industry in particular, there are substantial regulatory
compliance requirements, in both the United States and overseas, that must be
addressed in both designing and manufacturing such devices. By focusing our
resources and expertise in the design and manufacturing areas, we believe that
we offer customers the ability to outsource engineering and manufacturing needs
on a cost-effective basis, often allowing the customer to take a product to
market more quickly and efficiently, at a lower cost, and with higher quality
than a customer could achieve with its own resources.

We use extensive engineering and regulatory expertise to deliver integrated
design and manufacturing solutions to our customers. We are registered with the
United States Food and Drug Administration ("FDA") as a medical device
manufacturer and have developed internal systems intended to maintain compliance
with the FDA's Good Manufacturing Practices ("GMP"). We also are certified by
the International Organization for Standardization ("ISO") to 9001 and ISO 13485
standards, which means that we have met internationally recognized quality
standards for the design, manufacture, and testing of products. We devote
significant management time and financial resources to GMP compliance and ISO
certification.

PRINCIPAL OEM PRODUCTS

A majority of our contract manufacturing business in our Applied Technology
division involves the following four general product categories:

         Ophthalmic Surgical Devices

We design and manufacture ultrasonic phacoemulsification handpieces and
handpiece drive circuits for the surgical removal of cataracts.
Phacoemulsification is a method of cataract extraction that uses ultrasound
waves to break the cataract-obstructed lens of the eye into small fragments that
can be removed through a hollow needle. Phacoemulsification is currently used in
more than 90 percent of cataract procedures in the United States.

         Ultrasonic Sensors

We design and manufacture a variety of non-invasive ultrasonic sensors for the
detection of air bubbles and the monitoring of liquid levels in critical medical
systems. Our air bubble detectors monitor intravenous fluid lines in drug
infusion pumps, hemodialysis machines, blood collection systems, and
cardiopulmonary bypass systems. Our liquid level detectors utilize ZEVEX's
patented dry acoustic coupling technology and are used to monitor critical
liquid levels in reservoirs employed in cardiopulmonary bypass systems.

         Optoelectronic Sensors and Custom Integrated Circuits

We design and manufacture a variety of optical emitters and detectors, custom
integrated circuit products, and semiconductor components used in medical
applications. Our product capabilities include custom emitter and detector
arrays, sensor interface circuits, application-specific integrated circuit
(ASIC) devices, and custom device packaging solid-state relays. Medical
applications for our products include diagnostic and therapeutic equipment, such
as blood analyzers and dialysis machines.

         Medical Systems

The highest kind of integration for our contract services involves the design,
engineering, and manufacturing of medical systems. During 2004, we provided
design and engineering services to Organ Recovery Systems, Inc. and performed a
follow-on manufacturing contract to manufacture a hypothermic perfusion
transporter for kidneys. We also manufactured several other medical systems
including an active air removal system for Medtronic Cardiac Surgery that
prevents air bubbles from being reinfused into the patient during open heart
surgery, and the Power Medical Interventions, SurgASSIST(TM), which is a
computer-mediated technology platform that provides a unique level of
intraluminal access, surgical precision, and patient safety, with applications
in numerous surgical stapling procedures throughout the alimentary tract.

<PAGE>


REVENUE SOURCES

The following table sets forth the source of ZEVEX's total revenue during the
last three years, allocated between six product/service categories.

Revenue breakdown by product/service, by percentage
<TABLE>
<CAPTION>
<S>                                                                       <C>          <C>           <C>

Product                                                                   2004         2003         2002
-------                                                                   ----         ----         ----
Therapeutics                                                             52.8%         48.0%        47.6%
Ultrasonic and Optoelectronic Sensors, Custom IC's                       19.7%         19.8%        16.5%
Ophthalmic Surgical Devices                                              14.2%         11.0%        11.1%
Medical Systems                                                          11.7%         2.3%         3.4%
Design and Engineering                                                    1.6%         7.2%         7.1%
Physical Evaluation*                                                      0.0%         11.7%        14.3%
* On December 31, 2003 we sold our Physical Evaluation business.
</TABLE>


CAPABILITIES FOR DESIGN, ENGINEERING AND MANUFACTURING

         Design and Engineering

We have extensive design and engineering capabilities that we use for our own
product development, as well as for servicing our contract-manufacturing
customers. Our engineers have broad experience in designing, engineering, and
testing an array of medical devices and systems, with particular expertise in
fluid management and measurement and surgical ultrasound.

Our manufacturing service customers generally rely on us from the outset of
their projects for complete design, engineering, component analysis, testing,
and regulatory compliance for their devices or systems. In some instances,
customers have come to us with final drawings for products that they believe are
ready for manufacturing. Our engineers assist sales and marketing personnel in
evaluating requests for proposals and in developing proposed solutions, cost
estimates, and bids for each product. Our design and engineering services are
generally provided to customers on a time-and-materials fee basis, as part of a
plan to eventually manufacture the customer's product.

We have made significant investments in state-of-the-art equipment to support
our design and engineering staff, including product performance modeling
software, custom test stations, and three-dimensional computer aided design
("CAD") software. We have independently developed what we believe is the most
sophisticated modeling software for ultrasonic surgical device development. We
believe that our unique modeling and design capacities hasten product
development and improve the quality of the final device.

         Manufacturing

Our proprietary products are generally assembled and tested at our manufacturing
facility in Salt Lake City, Utah. Design, engineering, and manufacturing
services for other companies are also provided from our Salt Lake City facility.
Our disposable products are sub-contracted to specialty manufacturers.

Software inventory management systems are used to manage inventory and control
the ordering process for more than 5,000 parts used in ZEVEX's and our
customers' products. As the evolution of a device or system reaches production,
team members with direct responsibility for purchasing, manufacturing, and
quality assurance assume a greater role in the project. The project team
develops an assembly process, product testing protocol, and quality assurance
procedures to produce high-quality products that satisfy internal and external
specifications, as well as the FDA's GMP and ISO 9001/ISO 13485 quality
standards.

<PAGE>


We usually provide design and engineering services pursuant to negotiated
manufacturing agreements, which address quantity, pricing, warranty, indemnity,
and other terms of the relationship. Such contracts may or may not be exclusive
manufacturing arrangements, and may or may not include minimum volume
requirements. In some cases, no minimum purchase is required. In other cases, a
customer commits to purchase a minimum quantity identified in a rolling forecast
of production. We warrant our products to be free from defects in materials and
workmanship for periods ranging from 90 days to the life of the product.

SUPPLIERS

We purchase our component parts and raw materials from a variety of approved
suppliers. We are not dependent on a single supplier for any item, and we
believe that we can acquire materials from various sources in adequate
quantities and on a timely basis.

SALES AND MARKETING

         Therapeutics

We have a network of direct territory managers who sell enteral pumps and
disposable delivery sets in the United States. These territory managers have
been selected for their experience within the markets in which we sell our
products, and they sell directly to home health care service providers,
hospitals, nursing homes and medical product distributors. The direct territory
managers are regionally supported by specialists with clinical credentials
(registered dietitians or nurses), who we hire on an independent contractor
basis. We employ a North American sales manager to manage and deploy our sales
resources effectively in these major markets.

In the United States customers generally purchase EnteraLite(R) and
EnteraLite(R) Infinity(TM) ambulatory enteral feeding pumps directly from us. In
cases where a lease or rental is preferred, arrangements are most often made
through a third party that specializes in medical equipment financing. Customers
then purchase disposable sets as needed. Customers typically purchase 20 - 30
disposable sets per month for each pump that is placed in service.

Due to competition, lower-cost stationary pumps generally have been placed at no
up-front cost to the user, in return for set "usage" agreements, which typically
require minimum purchases of 15 disposable sets per pump per month, once the
pumps are placed in service. The cost of the pump is then amortized.

In North America, the distribution of the EnteraLite(R) and EnteraLite(R)
Infinity(TM) ambulatory pump, stationary pumps, and delivery sets are serviced
by our sales support manager, inside sales specialists, and customer service
department, in addition to the outside sales force described above.

Nestle is our distributor for the EnteraLite(R) in Germany where it also
distributes its clinical nutrition products. Medicina distributes the
EnteraLite(R) in the United Kingdom, and Baxter Healthcare distributes our
entire enteral feeding product line in Puerto Rico. During 2004, a version of
our stationary pump was manufactured under private label for distribution by
another company in Europe.

On July 22, 2004, we executed several strategic agreements with Numico Trading
B.V., a Netherlands corporation, ("NTBV"), and Nutricia International B.V., a
Netherlands corporation ("Nutricia", and, together with "NTBV", "Numico").
Nutricia and NTBV are wholly-owned subsidiaries of Royal Numico N.V., a
Netherlands corporation. Under the terms of these agreements, Numico will become
the exclusive distributor of certain enteral feeding pumps manufactured by ZEVEX
in over thirty countries, including parts of Africa, Asia, Australia, Europe,
The Pacific Rim, and South America.

<PAGE>


         Applied Technology Contract Design and Manufacturing Services

We generate new design and manufacturing projects using direct sales personnel
who are trained in our engineering expertise and manufacturing capabilities.
Project engineers also participate extensively in sales and marketing
activities. We promote our design and manufacturing capabilities at industry
trade shows, by advertising in leading industry publications, through our
website www.zevex.com, and by obtaining referrals from customers and other
persons who are familiar with ZEVEX's services.

COMPETITION

         Enteral Nutrition Delivery Products

We have three major competitors in the U.S. market for enteral feeding pumps.
Ross Laboratories, a division of Abbott Laboratories, markets the Patrol(R) and
Quantum(R) stationary enteral feeding pumps, and the Companion(R) and Embrace(R)
ambulatory enteral feeding pumps. Frost & Sullivan marketing research estimates
that Ross holds approximately 45% market share for enteral pumps and delivery
sets in both ambulatory and non-ambulatory enteral feeding applications. Kendall
Healthcare, a division of Tyco, offers the kangaroo(R) PET enteral feeding pump
for ambulatory applications, which has limited application because it can be
operated only in an upright position. Kendall also markets its new E-pump(R),
Control(R) and Entriflush(R) pumps for stationary applications. Frost & Sullivan
marketing research estimates that Kendall Healthcare presently holds
approximately 24% of the total market for enteral pumps and disposable sets in
both ambulatory and non-ambulatory applications. In addition to Ross
Laboratories and Kendall Healthcare, a third competitor, Novartis also competes
in the U.S. market for stationary enteral nutrition delivery pumps. Frost &
Sullivan marketing research estimates that Novartis presently holds
approximately 15% of the total U.S. market for enteral pumps and disposable sets
in both ambulatory and non-ambulatory applications.

Well-established competitors such as Ross Laboratories, Kendall Healthcare, and
Novartis typically bundle products for the greatest advantage in
group-purchasing situations. Each of these competitors offers a range of product
offerings that exceeds that of ZEVEX. We believe the keys to our ability to
compete effectively in the enteral feeding market are the unique features of our
product offerings and the benefits to customers who utilize them. We expect to
build upon our reputation for innovation that was earned by our EnteraLite(R)
ambulatory enteral feeding pump for mobile enteral patients with the
EnteraLite(R) Infinity(TM) and believe that it may provide access to new
customers and applications that were previously beyond our reach. We expect to
develop products that are complementary to our enteral nutrition delivery
product line, particularly those having features that can significantly improve
a patient's quality of life and can ensure safety and ease of enteral
administration.

         Contract Design and Manufacturing Services

The largest competitors for design and manufacturing services include Benchmark
Electronics, Nova Biomedical, Plexus, Inc., Sanmina-SCI Corp., and Sparton
Electronics Corporation. These contract manufacturers operate in the medical
technology industry, and some have substantially greater financial and marketing
resources than we do. Competitive factors in medical device design and
manufacturing include technology strengths, quality, regulatory compliance,
engineering competence, cost of non-recurring engineering, price of the
manufactured product, experience, customer service, and the ability to meet
design and production schedules. We believe that our unique expertise in fluid
management and measurement and surgical ultrasound, will allow us to compete
effectively for contracts involving these technologies.

<PAGE>


PATENTS AND TRADEMARKS

As of December 31, 2004, we held twenty-three U.S. patents and sixteen
international patents on devices developed by us, with thirteen additional U.S.
patents and eighteen international patents pending. The loss of certain patents
that are key to our proprietary products could have a materially adverse effect
on our overall business operations. We also rely on trade secrets and
confidentiality agreements to protect the proprietary nature of our
technologies.

In addition, we own and have applied for numerous trademarks in the United
States and abroad. We believe that our trademarks are well recognized in the
various markets for our products. With the exception of the Infinity(TM),
EnteraLite(R) and LifeGuard(R) trademarks, which are registered for our enteral
feeding products, we believe that the loss of any trademark would not have a
material adverse effect on our overall business operations.

RESEARCH AND DEVELOPMENT FOR OUR PROPRIETARY PRODUCTS

Our research and development projects are primarily focused on new proprietary
products. As of December 31, 2004, we have nineteen full-time engineers in
research and development, and had several other designers and engineers,
including independent contractors, contributing to research and development
projects. Our research and development staff performs engineering research and
development services for both ZEVEX as well as for customers of our Applied
Technology division on a fee for service basis. We invested $1,430,692 in 2004,
$1,817,581 in 2003, and $1,289,609 in 2002 for internal research and development
of new products. In 2004, research and development costs represented
approximately 6% of our annual revenue, compared to 7% in 2003 and 5% in 2002.
During 2003, approximately $763,000 was related to research and development
costs for JTech, which was sold in December 2003.

MAJOR CUSTOMERS

Historically, large portions of our revenue were not attributable to a single
customer. However, during 2004, McKesson HBOC, a distributor of products in our
Therapeutics division accounted for approximately 11% of revenue. During 2003
and 2002, no single customer accounted for over 10% of revenue. In 2005 and
beyond, because of our agreements signed in July 2004 with Numico as the
exclusive distributor of certain ZEVEX enteral feeding pumps in over thirty
countries, we expect that they will become a major customer. If any customer
with whom we do a substantial amount of business were to encounter financial
distress, the customer's lateness, unwillingness, or inability to pay its
obligations to us could result in a material adverse effect on our results of
operations and financial position.

BACKLOG

At December 31, 2004, we had a backlog of approximately $5,364,640 on orders for
medical devices to be manufactured for other medical technology companies, as
compared to a backlog at December 31, 2003 and 2002, of $4,860,597 and
$3,217,300, respectively. We estimate that approximately 90% of this backlog
will be shipped before December 31, 2005. As of March 10, 2005, we had a backlog
of $6,196,614. For purposes of the above figures, backlog includes product not
yet shipped pursuant to purchase orders that have been received by us. This does
not include any backlog for our proprietary products, because we generally hold
appropriate levels in inventory for sale to customers. Some of the orders
included in the backlog may be canceled or modified by customers without
significant penalty. In addition, because customers may place orders for
delivery at various times throughout the year, and because customers may change
delivery schedules or cancel orders, our backlog as of any particular date may
not necessarily be a reliable indicator of future revenue.


<PAGE>


GOVERNMENTAL REGULATION

Our manufacturing facility, customers' medical devices, and our proprietary
medical devices are subject to extensive regulation by the FDA under the Food
Drug and Cosmetics Act ("FDC Act"). Manufacturers of medical devices must comply
with applicable provisions of the FDC Act and associated regulations governing
the development, testing, manufacturing, labeling, marketing, and distribution
of medical devices, as well as record-keeping requirements, and the reporting of
certain information regarding device safety. In addition, our facility is
subject to periodic inspection by the FDA for compliance with the FDA's GMP
requirements. To ensure compliance with GMP requirements, we expend significant
time, resources, and effort in the areas of training, production, and quality
assurance.

For certain medical devices manufactured by us, the customer may need to obtain
FDA clearance in the form of a premarket approval ("PMA") application. Such
applications require substantial pre-clinical and clinical testing to obtain FDA
clearance. Other medical devices can be marketed without a PMA, but only by
establishing, in a 510(k) premarket notification, "substantial equivalence" to a
predicate device.

Besides the FDA regulations described above, we are also subject to various
state and federal regulations with respect to such matters as safe working
conditions, manufacturing practices, fire hazard control, environmental
protection, and the disposal of hazardous or potentially hazardous materials.
Our operations involve the use and disposal of relatively small amounts of
hazardous materials.

Beginning in 1998, all medical device manufacturers were required to obtain the
"CE Mark" to sell their products in the European Common Market. The CE Mark is a
quality designation given to products that meet certain policy directives of the
European Economic Area. We have received and maintain ISO 9001 and ISO 13845
certification, which allows us to CE Mark our own products and assist our
customers with obtaining the CE Mark for their products.

As part of a nationwide investigation into billing practices associated with
enteral nutrition delivery products, particularly in regard to billing practices
for pumps and disposable delivery sets, on July 2, 2001, the U.S. Office of
Inspector General (OIG), served a subpoena on the ZEVEX, Inc. subsidiary.
According to published reports, the investigation involved most manufacturers,
distributors and health care service providers in the United States enteral pump
industry and similar subpoenas were served on many of those parties. The
subpoena requested documents relating to our enteral pump customers' marketing
and billing practices. We responded to the subpoena. Since October of 2001 we
have not been contacted further by the OIG, although we understand the
investigation is proceeding and we intend to cooperate with the investigation if
contacted again. At this time we are uncertain as to any future impact this
investigation will have on our operations or financial position.

EMPLOYEES

As of March 10, 2005, we employed a total of 139 people in the following areas:
79 in Manufacturing, Testing, and Quality Assurance; 18 in Design and
Engineering; 19 in Administration; and 23 in Sales and Marketing. We have 131
employees located at our corporate headquarters and manufacturing facility in
Salt Lake City, Utah, and 8 employees at various locations throughout the United
States.

We consider our labor relations to be good, and none of our employees are
covered by a collective bargaining agreement. Currently, the local economy is
stable and the unemployment rate is moderate in the Salt Lake City metropolitan
area, which means that we face competition to attract and retain qualified
personnel. However, at the same time, the Salt Lake City metropolitan area has a
well-educated work force and is considered an attractive place to live.
Accordingly, we do not anticipate having difficulty in attracting and retaining
qualified personnel to meet our projected growth, although we believe that labor
costs will likely increase moderately.

<PAGE>


ENVIRONMENTAL COMPLIANCE COSTS

We believe that we are in compliance with all applicable environmental
regulations. We believe that our efforts to comply with federal, state, and
local provisions regarding the production and discharge of material into the
environment and the protection of the environment will not have a materially
adverse effect on our capital expenditures, earnings and our competitive
position.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND SALES

During the 2004 fiscal year, we generated total revenue of $23,634,355, of which
$3,168,587 (13%) was considered foreign source revenue. During the 2003 fiscal
year, we had total revenue of $25,869,876, of which $4,380,461 (17%) was
considered foreign source revenue. During the 2002 fiscal year, we had total
revenue of $25,495,733, of which $3,663,730 (14%) was considered foreign source
revenue.

During the last three fiscal years, we have had no long-lived assets, long-term
relationships with a financial institution, mortgage or other servicing rights,
deferred policy acquisition costs, or deferred assets, in any foreign country.

ORGANIZATIONAL STRUCTURE

ZEVEX is a Delaware corporation organized in 1987. It serves primarily as a
holding company, conducting business operations through our wholly-owned
subsidiary ZEVEX, Inc., a Delaware corporation. Until December 31, 2003 we also
conducted business through a wholly-owned subsidiary JTech Medical Industries,
Inc., a Utah corporation, which marketed our JTech Physical Evaluation product
line.

On December 31, 2003, we completed the sale of the Physical Evaluation business.
The transaction was accomplished by sale of all the issued and outstanding
capital stock of JTech. The transaction was effected by a Stock Purchase
Agreement (the "Stock Purchase Agreement") dated December 31, 2003 by and
between us and Mr. Leonard C. Smith, a former employee, officer and director of
the ZEVEX. (See Item 7 Management Discussion and Analysis of Financial
Conditions and Results of Operations)

ITEM 2.  PROPERTIES

Our executive offices, administrative offices, and manufacturing facility are
located in our 51,000 square foot, mixed-use building in Salt Lake City, Utah.
This building was constructed in 1997 to our specifications and is subject to an
Industrial Development Bond (see "Management's Discussion and Analysis of
Financial Condition and Results of Operations, Liquidity and Capital
Resources"). The building is situated on nearly four acres of land a few miles
from the downtown area. It allows quick access to two major interstate freeways
and to the Salt Lake International Airport. We currently utilize approximately
70% of the building's available space and believe that the building will be
adequate to serve our needs through the end of the year 2005. We own
approximately 3.47 vacant acres adjacent to our facility.

ITEM 3.  LEGAL PROCEEDINGS

We are not engaged in any material legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

ZEVEX's Common Stock is traded on the National Market system of The NASDAQ Stock
Market, under the symbol ZVXI. As of March 10, 2005, there were 160 holders of
record of ZEVEX's Common Stock (calculated without reference to individual
participants in securities position listings). Based on the number of proxy
materials requested by brokers and other record holders for distribution to
beneficial owners for ZEVEX's 2004 Annual Meeting, we estimate there are roughly
1,550 beneficial owners of ZEVEX Common Stock. ZEVEX has never declared or paid
any cash dividends on its Common Stock. ZEVEX currently intends to retain all
future earnings to finance future growth and does not anticipate paying any cash
dividends in the foreseeable future. We have a negative covenant in our bank
line of credit agreement that prevents the payment of any cash dividend without
prior approval of the bank.

The following table lists the high and low sales prices for ZEVEX Common Stock
for each full quarterly period since January 1, 2003.
<TABLE>
<CAPTION>
<S>                      <C>              <C>                                        <C>                  <C>

                                          2004                                       2003
                        ------------------------------------------ ------------------------------------------
                        --------------------- -------------------- --------------------- --------------------
                                High                  Low                  High                  Low
                        --------------------- -------------------- --------------------- --------------------
                        --------------------- -------------------- --------------------- --------------------
1st Quarter                     4.12                 2.85                  2.75                 1.82
2nd Quarter                     4.14                 2.55                  3.25                 2.13
3 rd Quarter                    6.38                 3.11                  4.75                 2.86
4th Quarter                     6.50                 3.14                  4.25                 3.42
</TABLE>

ITEM 6.  SELECTED FINANCIAL DATA

SELECTED FINANCIAL DATA - FIVE-YEAR REVIEW

The following selected statement of operations data for the years ended December
31, 2004, 2003, and 2002, and the balance sheet data as of December 31, 2004 and
2003, are derived from the audited consolidated financial statements included in
this report and should be read in conjunction with those consolidated financial
statements and notes thereto. The selected statement of operations data for the
years ended December 31, 2001 and 2000, and the balance sheet data as of
December 31, 2002, 2001, and 2000, are derived from the audited consolidated
financial statements of ZEVEX, which are not included herein, and are qualified
by reference to such financial statements and the notes thereto. The selected
consolidated financial data set forth below is also qualified in its entirety
by, and should be read in conjunction with the Consolidated Financial Statements
and Notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in Item 7 of this report.


<PAGE>

<TABLE>
<CAPTION>
<S>                                             <C>      <C>                         <C>                <C>

                                                         Fiscal Year Ended December 31

                                                  2004         2003         2002        2001         2000
Statement of Operations Data
Revenues                                       $23,634,355  $25,869,876  $25,495,733 $29,882,075  $30,778,627
Gross profit                                     8,456,978    8,323,795  11,119,989   12,052,298  10,848,772
Selling, general and administrative expenses     7,142,513    8,316,822   9,124,197   10,100,735   8,405,833
Research and development expenses                1,430,692    1,817,581   1,289,609      932,731     852,273
Asset and goodwill impairment                           --    1,566,967          --           --          --
Operating (loss) income                          (116,227)  (3,377,575)     706,183    1,018,832   1,590,666
Loss on sale of business                                --  (4,692,445)          --           --          --
Impairment loss on marketable securities                --           --          --    (917,628)          --
Other expenses                                      93,972      276,234     486,664      688,414     196,828
(Benefit) provision for  income taxes             (31,222)     (68,712)       5,216     (99,507)     669,698
Net (loss) income                                (178,977)  (8,277,542)     214,303    (487,703)     724,140
Net (loss) income per share basic                    (.05)       (2.43)         .06        (.14)         .21
Weighted average shares outstanding              3,400,964    3,400,964   3,414,846    3,431,639   3,425,254
Net (loss) income per share diluted                  (.05)       (2.43)         .06        (.14)         .19
Weighted average shares outstanding,
   assuming dilution                             3,400,964    3,400,964   3,418,278    3,431,639   3,748,032

                                                  2004         2003         2002        2001         2000
Balance Sheet Data
Total assets                                   $17,400,982  $19,732,085  $28,798,236 $33,639,146  $38,687,962
Total current liabilities                        2,711,603    4,688,891   5,679,446    5,918,660   9,967,768
Long-term debt (less current portion)            1,966,362    2,119,608   1,662,536    6,411,351   7,511,022
Stockholders' equity                            12,723,017   12,923,586  21,198,061   21,032,401  21,057,505

</TABLE>

Please refer to Item 7 of this report for a discussion of the main factors
causing the substantial changes in certain of the items set forth above,
particularly when comparing the year 2004 to earlier periods. Also refer to Item
7 of this report for a discussion of Factors that May Affect Future Results,
which describe material uncertainties that might cause the items set forth above
to not be indicative of our future financial condition or results of operations.

During 2003 the Company changed how certain expenses including research and
development, general and administrative, and selling and marketing costs were
classified. Certain prior year amounts for 2000 have not been reclassified to
conform to the current year presentation.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Overview

Through our divisions and subsidiaries, we engage in the business of designing,
manufacturing, and distributing medical devices. Our Therapeutics division
markets enteral nutrition delivery devices. Our Applied Technology division
designs and manufactures advanced medical components and systems for other
medical technology companies. Until its sale on December 31, 2003, our Physical
Evaluation division manufactured and marketed industry-leading physical
evaluation testing systems. Please refer to Note 13 of the Audited Consolidated
Financial Statements for discussion of our business segments.

Our Therapeutics division products include ambulatory enteral feeding pumps and
related disposable sets for mobile patients, as well as stationary enteral
feeding pumps and disposable sets. We entered the home health care segment of
the enteral nutrition delivery market in 1996 with the introduction of the
EnteraLite(R) ambulatory enteral feeding pump, which continues to gain
acceptance due to its superior mobility and state-of-the-art features. We
believe that by improving the convenience of nutrition delivery, first with the
EnteraLite(R) and now with the EnteraLite(R) Infinity(TM) we can contribute to
better clinical outcomes and improved quality of life for enteral patients.
Domestic sales of our EnteraLite(R) product line grew by approximately 8% in
2004 and 8% in 2003. Combining our international EnteraLite(R) and EnteraLite(R)
Infinity(TM) revenue with domestic revenue, the total ambulatory product line
growth was 8% in 2004 and 20% in 2003.

<PAGE>


At the time of the 1998 acquisition of the Nutrition Medical line of stationary
enteral feeding pumps and the 2000 acquisition of the Nestle USA, Inc. enteral
nutrition delivery business, we intended to aggressively expand into the
long-term care market for enteral feeding delivery products. As a result of
continued downward competitive pricing pressure in this market segment, our
revenue in the stationary enteral feeding pump business decreased by
approximately 18% in 2004.

Since 1987, we have been a specialized contract manufacturer providing design
and manufacturing services to medical companies who sell our components and
systems under private label, primarily incorporating our core technologies of
fluid management and measurement and surgical ultrasound. This business is
conducted through our Applied Technology division. Applied Technology division
revenue increased 7% during 2004, compared with growth of 8% in 2003.

During 2003, we evaluated our business opportunities and restructured our
operations to focus on our core market offerings of ambulatory enteral feeding
(our Therapeutics division) and contract manufacturing services (our Applied
Technology division). As part of this effort we established a lean manufacturing
philosophy including the transition from batch processing to continuous flow
production, realigned our operating segments to more accurately reflect our
current business, and sold the Physical Evaluation business in December 2003.

The sale of our Physical Evaluation business was accomplished by the sale of all
the issued and outstanding capital stock of JTech Medical Industries, Inc. our
wholly-owned operating subsidiary. The transaction was effected by a Stock
Purchase Agreement dated December 31, 2003 by and between us and Mr. Leonard C.
Smith, a former employee, officer and director of ZEVEX. Please refer to Note 2
in the Audited Consolidated Financial Statements for discussion of the sale.

On July 22, 2004, we executed several strategic agreements with Numico Trading
B.V., a Netherlands corporation ("NTBV"), and Nutricia International B.V., a
Netherlands corporation ("Nutricia", and, together with "NTBV", "Numico").
Nutricia and NTBV are wholly-owned subsidiaries of Royal Numico N.V., a
Netherlands corporation, which is a world leader in the manufacturing and
marketing of clinical nutrition products and related equipment and accessories.
Under the terms of these agreements, Numico will become the exclusive
distributor of certain ZEVEX enteral feeding pumps in over thirty countries,
including parts of Africa, Asia, Australia, Europe, The Pacific Rim, and South
America (the "Territory"). Also, we will become the exclusive manufacturer and
supplier to Numico of all clinical nutrition delivery pumps and accessories that
are or will be commercialized and placed or sold by Numico within the Territory.
We also entered into a maintenance and service agreement where we will become
the exclusive authorized service provider for repair and maintenance services
for certain enteral feeding pumps that are placed, sold, or distributed by
Numico in parts of the Territory. The term of these agreements are perpetual
but, may be terminated at any time on or after January 1, 2008, by either party
by giving notice to the other party of its intention to do so. After such notice
these agreements shall terminate two years from the date of such notice. We
anticipate that the combined impact of the distribution, manufacturing and
service components of these agreements will increase revenue by more than $7.0
million annually, beginning in the second half of 2005. Accordingly, we expect
to receive approximately $3.5 million in revenue from these agreements in 2005,
and more than $7.0 million in revenue from these agreements in the following
years.

Results of Operations

As an aid to understanding our operating results, the following table sets
forth, for the periods indicated, the relative percentages that certain items in
the statement of operations bear to revenue.

<PAGE>


Year Ended December 31 Statement of Operations Data -- Percentage of Revenue

<TABLE>
<CAPTION>
<S>                                    <C>                               <C>                             <C>

                                             2004          2003          2002          2001           2000
                                       ------------- ------------- ------------- ------------- -------------
Revenue                                        100%          100%          100%          100%           100%
Gross profit                                    36%           32%           44%           40%            35%
Selling, general and administrative
  expenses                                      30%           32%           36%           34%            27%
Research and development expenses                6%            7%            5%            3%             3%
Asset and goodwill impairment                   --%            6%           --%           --%            --%
Operating income (loss)                         --%         (13)%            3%            3%             5%
Loss on sale of business                        --%         (18)%           --%           --%            --%
Impairment loss on securities                   --%           --%           --%          (3)%            --%
Other income/(expense)                          --%          (1)%          (2)%          (2)%            --%
Income (loss) before income taxes              (1)%         (32)%            1%          (2)%             5%
(Benefit) Provision for income taxes            --%           --%           --%           --%             2%
Net (loss) income                              (1)%         (32)%            1%          (2)%             3%
</TABLE>


Fiscal Year 2004 Compared to Fiscal Year 2003

Revenue for the Applied Technology and Therapeutics divisions increased by
approximately 3% during 2004, compared to 2003. Revenue for these two divisions
was $23,634,355 during 2004, compared to $22,853,887 for 2003. This comparison
does not include revenue from the Physical Evaluation division, which was sold
on December 31, 2003. Revenue in 2003 from the Physical Evaluation division was
$3,015,989.

The increase in revenue over last year, excluding the Physical Evaluation
business, is largely due to a 7% increase in the Applied Technology division
revenue. Specifically, surgical handpiece and sensor revenue held steady during
the year, and medical systems revenue increased by approximately $2,200,000 for
2004. These increases more than offset lower engineering revenue, as certain
programs have now moved from engineering to manufacturing. Our Therapeutic
division revenue increased 1% during 2004, compared to 2003. Specifically, the
EnteraLite(R) portable feeding pump and disposable set revenue in this division
increased 8%. Also, our international Therapeutics revenue increased
approximately 5% during the year. This growth more than offset an 18% decrease
in stationary disposable set revenue for the year primarily related to the
continued downward competitive pricing.

Applied Technology contract manufactured products generated 47% of total revenue
during 2004, and sales of our proprietary Therapeutics products generated 53% of
revenue during the year. Excluding revenue from the Physical Evaluation business
which has been sold, Applied Technology revenue was 46% of total revenue for
2003 and our proprietary Therapeutics products generated 54% of revenue. If
sales from the Physical Evaluation division were included in this comparison,
proprietary product revenue would have been 60% of total revenue and Applied
Technology revenue would have been 40% of total revenue in 2003. During 2004,
one customer accounted for revenue in excess of 10% and in 2003, no single
customer accounted for over 10% of our revenue.

Our gross profit as a percentage of revenue was approximately 36% for 2004,
compared to 32% for 2003. We attribute the changes in gross profit percentage
from 2004 to 2003 to expenses that were recorded in 2003 that were non-recurring
in 2004, such as the write-off of discontinued products and non-recurring
manufacturing engineering costs associated with establishing new production
lines. Please refer to Note 12 of the Audited Consolidated Financial Statements
for discussion of our business segments including gross profit and the Company's
definition of contribution margin.

Depreciation and amortization expenses decreased to $857,731 in 2004 from
$1,582,120 in 2003 (excluding impairment). We recorded an impairment charge of
$1,566,967 in 2003. See Note 1 to the Audited Consolidated Financial Statements
under Goodwill, and Impairment of Long-Lived Assets for more information on the
effect of the impairment. The decrease is primarily due to the impairment loss
recorded on assets in 2003, resulting in a subsequent decline in depreciation
expense.

<PAGE>

Selling, general and administrative expenses decreased during 2004 to
$7,142,513, 30% of revenue, as compared to $8,316,822 for 2003, 32% of revenue.
The decrease is primarily related to the reduction in personnel from the sale of
the Physical Evaluation business, although the decrease was partially offset in
the second and third quarters of 2004 by non-recurring legal expenses incurred
in the amount of approximately $340,000, for the negotiations and drafting of
the strategic distribution, manufacturing, and services agreements with Royal
Numico N.V.

We combine the resources of our full-time engineers with several independent
contractors, to perform research and development projects. We invested
$1,430,692 in the research and development of new products during 2004, compared
to $1,817,581, which included approximately $763,000 from the Physical
Evaluation division in 2003. The decrease in research and development costs is
primarily due to the elimination of product developments costs related to the
Physical Evaluation division sold in 2003. We are continuing our efforts to
develop and introduce new proprietary products and recently introduced of our
next-generation enteral feeding pump, the EnteraLite(R) Infinity(TM) at the
American Society of Parenteral and Enteral Nutrition Annual Conference in
January 2005. Additionally, we are investing in proprietary component
technologies for our contract manufacturing business. We expect research and
development costs to be approximately 6% of revenue during 2005.

The Company had an operating loss of $116,227, 0.5% of revenue in 2004, compared
to an operating loss of $3,377,575, 13% of revenue in 2003. The change in
operating loss is due to the factors described above, including a higher gross
profit percentage, lower general and administrative costs, and the asset and
goodwill impairment in 2003. The Company had a net loss of $178,977, 1% of
revenue in 2004, compared to a net loss of $8,277,542, 32% of revenue in 2003.
The decrease in the net loss during 2004, as compared to 2003, is due to the
factors noted above, as well as a decrease in interest expense, as the Company
has reduced its debt during the past year, the reduction in research and
development costs, the recognition of certain deferred tax assets (see below),
and the loss on the sale of the Physical Evaluation business in the amount of
$4,692,445 in 2003.

We had an income tax benefit of $31,222 in 2004, compared to an income tax
benefit of $68,712 for 2003. The majority of the income tax benefit in 2004 is a
result of an income tax refund that was originally provided for as part of the
deferred tax asset valuation allowance. For 2004, our effective tax rate
differed from the statutory rate largely as a result of an increase in our
valuation allowance (see below), and research and development tax credits. For
2003, our effective tax rate differed from the statutory rate largely as a
result of an increase in our valuation allowance (see below), research and
development tax credits, and permanent asset basis differences.

At December 31, 2004 and December 31, 2003, we had net current deferred tax
assets of $0. Realization of our deferred tax assets is dependent on our ability
to generate taxable income in the year the assets are realized. Under FAS 109
Accounting for Income Taxes, guidance has been issued relating to cumulative
losses in recent years. Under this guidance, when there is a cumulative pretax
loss for financial reporting for the current and two preceding years and a
company does not have objective planning strategies designed to realize its
deferred tax assets, generally no deferred tax asset should be recognized. In
following this guidance management established a full valuation allowance for
all deferred tax assets in 2003.

At December 31, 2004, we had a backlog of approximately $5,364,640 on orders for
medical devices to be manufactured for other medical technology companies, as
compared to a backlog at December 31, 2003 of $4,860,597. We estimate that
approximately 90% of the backlog will be shipped before December 31, 2005. Our
backlog is for contract manufacturing only and can be significantly affected by
the timing of annual or semi-annual purchase orders placed by our customers.
During the past year, several of our Applied Technology customers have adopted
lean manufacturing philosophies, which results in the elimination of large,
advance-notice purchase orders and replacement with just-in-time, frequent
kanban deliveries. While more efficient for the supply chain, this can greatly
reduce our backlog figures.

<PAGE>


On December 31, 2003, the Company completed the sale of its Physical Evaluation
business. The transaction was accomplished through the sale of all the issued
and outstanding capital stock of JTech previously a wholly owned subsidiary of
the Company. The transaction was effected by a Stock Purchase Agreement dated
December 31, 2003 by and between the Company and Mr. Leonard C. Smith, a former
employee, officer and director of the Company, for a purchase price of $1.2
million which was recorded as an "other receivable" at December 31, 2003. Cash
of $1,164,500 was received in 2004 and $35,500 was received in February 2005
when the Company satisfied certain obligations to JTech as set forth in the
Stock Purchase Agreement. Such obligations include the requirement to deliver
inventory, upon completion of production, and certain other equipment. Deferred
revenue of $324,000 was recorded related to these obligations, all of which was
realized in 2004. The Company may also receive additional payments from the
purchaser based upon specifically identified JTech product sales in 2004 and
2005. A loss on the sale of this business in the amount of $4,692,445 was
recorded and is shown separately on the 2003 consolidated statement of
operations. Such loss consists of the write-off of goodwill and other
intangibles as discussed in Note 1 to the Audited Consolidated Financial
Statements as well as the write-off of certain other JTech related assets
totaling approximately $242,000 and the accrual of legal costs associated with
this transaction.

Our annual and quarterly operating results are affected by acceptance in the
markets for our proprietary and contract manufactured products, including the
volume and timing of customer orders, which vary due to (i) variation in demand
for the customers' products or services as a result of, among other things,
product life cycles, competitive conditions, and general economic conditions,
(ii) the customers' attempt to balance their inventory, (iii) the customers'
need to adapt to changing regulatory conditions and requirements, and (iv)
changes in the customers' preferences or strategies. Technical difficulties and
delays in the design and manufacturing processes may also affect such results.
The foregoing factors may cause fluctuations in revenue and variations in
product mix, which could in turn cause fluctuations in our gross margin.

Fiscal Year 2003 Compared to Fiscal Year 2002

During the fourth quarter of 2003, we evaluated our business opportunities and
modified our strategies to focus on our core market offerings of ambulatory
enteral feeding and contract manufacturing services. In conjunction with this
refocus of our business, on December 31, 2003, we completed the sale of JTech,
our Physical Evaluation business. At the time of the sale, goodwill associated
with JTech was stated at a net value of $5,199,419 on our balance sheet. Upon
completion of the sale, the goodwill and the related accumulated amortization
were removed from the balance sheet and the resulting loss is included in the
2003 consolidated statement of operations within the "Loss on sale of business."

Also in conjunction with this refocus, we re-evaluated our reporting units as
defined by SFAS No. 142 and determined that the Therapeutics reporting unit,
which had consisted of both our stationary and ambulatory enteral product lines,
should be disaggregated such that the two product lines became separate
reporting units because of the different market and sales practices of the
stationary and ambulatory enteral product line and the change in focus.
Therefore, in the fourth quarter of 2003, due to declining sales and cash flows
relating to the stationary enteral product line, we determined that indicators
of impairment existed related to this reporting unit. Upon completion of
impairment testing we determined that the fair value of the stationary enteral
reporting unit was less than the carrying value including goodwill. A goodwill
impairment loss was recognized in 2003 for this reporting unit in the amount of
$841,352. This loss is included in "Asset and goodwill impairment" on the 2003
consolidated statement of operations.

As noted above, we modified our future business strategies in the fourth quarter
of 2003. In conjunction with our business refocus, we also evaluated our
long-lived assets to determine if indicators of impairment existed. Based upon
our assessment of projected future cash flows related to our stationary enteral
product line, we determined that impairment of the fixed asset value for our
stationary enteral pumps existed. We recorded an impairment charge of $725,615,
as reflected in the 2003 consolidated statement of operations within "Asset and
goodwill impairment."
<PAGE>


Revenue was $25,869,876 for the year ended December 31, 2003, compared to
$25,495,733 for December 31, 2002, a 1% increase. The increase in revenue over
2002 was largely due to an 8% increase in domestic sales of EnteraLite(R)
ambulatory enteral nutrition delivery pump and disposable set products and an
increase of approximately $950,000 in international sales of our enteral pumps,
within our Therapeutics division. In addition, in our Applied Technology
division revenue from manufactured products and engineering services increased
over 7%. This revenue growth was partially offset by a 26% decline in orders for
stationary enteral nutrition delivery pump disposable sets and weaker demand for
Physical Evaluation products (discontinued in December 2003) that resulted in a
decline in sales of approximately 17%.

The percentage of revenue generated from our proprietary products decreased when
compared to revenue from contract manufacturing. In 2003, 60% of our revenue was
derived from proprietary products marketed by us, in comparison to 62% in 2002.
Sales of our Therapeutics products accounted for approximately 48% of total
revenue for the year ended December 31, 2003, which is consistent with 2002.
Sales from our Physical Evaluation product line accounted for approximately 12%
of total revenue for the year ended December 31, 2003, compared to 14% for the
year ended December 31, 2002. Forty percent of our revenue during 2003 was
derived from products manufactured for and sold to our contract manufacturing
customers, compared to 38% in 2002. The shift in revenue sources from our
proprietary products to contract manufacturing customers in 2003 was primarily
related to the decrease in stationary pump disposable revenue and the Physical
Evaluation products revenue. During 2003 and 2002, no single customer accounted
for over 10% of our revenue.

Our gross profit as a percentage of sales was 32% in 2003, compared to 44% in
2002. We attributed the decrease in gross profit percentage from 2002 to 2003 to
the write-off of discontinued products and miscellaneous obsolete inventory in
our Therapeutics division, downward pricing pressure related to some of our
Therapeutics products, non-recurring manufacturing engineering costs associated
with establishing new production lines in our Applied Technology division, and
the product mix delivered from our Applied Technology division during each year.

Selling, general, and administrative expenses decreased during 2003 to
$8,316,822, 32% of sales, as compared to $9,124,197, 36% of sales in 2002.
Although we reduced certain general and administrative costs, we continued to
invest in building our domestic sales forces for the Physical Evaluation and
Therapeutics divisions. Overall, sales and marketing expenses increased to
$4,547,178, for 2003, from $3,996,993 in 2002.

We combined the resources of our full-time engineers with several independent
contractors, to perform research and development projects. We invested
$1,817,581 in 2003 and $1,289,609 in 2002 for research and development of new
products. In 2003, research and development costs represented approximately 7%
of our annual revenue, compared to 5% in 2002.

Depreciation and amortization expenses decreased to $1,582,120 in 2003
(excluding impairment) from $1,618,682 in 2002. As discussed above, we recorded
an impairment charge of $1,566,967 in 2003. See Note 1 of the Audited
Consolidated Financial Statements under Goodwill, and Impairment of Long-Lived
Assets for more information on the effect of the impairment.

Goodwill held by us represented the excess of the purchase price over the fair
value of the tangible and other specifically identified intangible assets
obtained in acquisitions by ZEVEX. The current value of goodwill included in the
financial statements was $4,048,264 as of December 31, 2003.

We had an income tax benefit of $68,712 in 2003 compared to income tax expense
of $5,216 in 2002. The change from 2002 to 2003 was primarily due to the loss
before income taxes as described below. For 2003, our effective tax rate
differed from the statutory rate largely as a result of an increase in our
valuation allowance (see below), research and development tax credits, and
permanent asset basis differences. For 2002, our effective tax rate differed
from the statutory rate largely as a result of a reduction in our valuation
allowance (see below), research and development tax credits, and charitable
contribution deductions.
<PAGE>


At December 31, 2003, we had net current deferred tax assets of $0. Realization
of our gross deferred tax assets was dependent on our ability to generate
taxable income in the year the assets are realized. Under FAS 109 Accounting for
Income Taxes, guidance has been issued relating to cumulative losses in recent
years. Under this guidance, when there is a cumulative pretax loss for financial
reporting for the current and two preceding years and a company does not have
objective planning strategies designed to realize its deferred tax assets, no
deferred tax asset should be recognized. In following this guidance management
has established a full valuation allowance for all deferred tax assets. ZEVEX,
through the sale of the Physical Evaluation business in 2003, generated a
pre-tax capital loss carryover of approximately $5,090,000 for federal and
$4,693,000 for state purposes. In addition, in 2003, we had a pre-tax net
operating loss carryforward in the amount of $1,609,000. Other net deferred tax
assets at December 31, 2003 before the valuation allowance totaled $762,000.

During 2003 we had an operating loss of $3,377,575, compared to operating income
of $706,183, 3% of revenue in 2002. We had a net loss of $8,277,542, compared to
net income of $214,303, 1% of revenue in 2002. The net loss during 2003, as
compared to the net income in 2002, is due to a number of factors, including,
(i) loss on the sale of our Physical Evaluation business in the amount of
$4,692,445 (ii) the one-time impairment expense on fixed assets and goodwill
relating to the stationary enteral pumps and disposable business of $1,566,967,
(iii) lower gross profit achieved in 2003 as our gross margin decreased from 44%
in 2002 to 32% in 2003, (iv) increased selling and marketing expenses, and (v)
increased research and development costs.

Liquidity and Capital Resources

Our primary sources of liquidity have consisted of cash flow from operations,
borrowings under our revolving line of credit and other financial arrangements
described below. In prior years, we also have increased working capital through
the issuance of stock and we may do so in the future.

Cash flows provided from operating activities for 2004 were $1,009,418, compared
to $2,309,913 for 2003. In 2004, cash provided by operating activities was
primarily associated with our improved collection procedures, an increase in
accounts payable, and the collection of an income tax receivable, partially
offset by a decrease in deferred revenue and an increase in inventory. In 2003,
cash provided by operating activities was primarily associated with our
reduction in inventories as we continued to stream-line our purchasing and
manufacturing processes and our improved collection procedures, offset by
decreases in accounts payable.

Our working capital at December 31, 2004 was $5,959,929, compared to $5,865,388
at December 31, 2003. The portion of working capital represented by cash at such
dates was $212,859 and $668,089 respectively. The ratio of current assets to
current liabilities increased to 3.20 at December 31, 2004, from 2.25 at
December 31, 2003.

On December 31, 1999, we committed to pay $950,000 in cash and issue convertible
debentures in the aggregate amount of $950,000, due March 31, 2003, to Vijay
Lumba and Harry Parmar as payment of the earn-out portion of the purchase price
related to the acquisition of all issued and outstanding stock of Aborn. We
completed the cash payment and issued the debentures in 2000. On December 31,
2001, we paid $556,030 in cash to the debenture holders and negotiated an
extension of time, until January 6, 2003, to pay the remaining balance on the
original debenture of $793,970, with all other terms remaining unchanged. We
paid $788,970 in cash to the debenture holders on January 6, 2003, with the
remaining balance of $950,000 paid on March 30, 2003.

On December 31, 1998, we committed to pay up to of $3,100,000 in cash and issued
convertible debentures in the aggregate amount of $3,000,000 to Leonard Smith,
Tracy Livingston, and David Bernardi as partial consideration for the
acquisition of all issued and outstanding stock of JTech. We completed the cash
payment and issued the debentures in 1999. Amounts due under the convertible
debentures were to be paid by January 6, 2002. On December 31, 1999, we
committed to pay $147,188 in cash and convertible debentures in the aggregate
amount of $147,188 due March 31, 2002, to Leonard Smith, Tracy Livingston, and
David Bernardi as payment of the earn-out portion of the purchase price related
to the acquisition of all issued and outstanding stock of JTech. We completed
the cash payment and issued the debentures in 2000. On December 31, 2001 we paid
$968,000 in cash to the debenture holders and negotiated an extension of time,
through January 6, 2003, to pay the remaining balance on the original debenture
of $2,032,000, with all other terms remaining unchanged. We made a principal
payment during 2002 of $2,179,188 in full payment of the debentures.
<PAGE>


We have a $3,000,000 open line of credit arrangement with a financial
institution. The line of credit matures on May 29, 2005, is collateralized by
accounts receivable and inventories, and bears interest at the financial
institution's prime rate, 5.25% at December 31, 2004 and 4.0% at December 31,
2003. We owed $0 on the line of credit at December 31, 2004 and $1,810,970 at
December 31, 2003. We expect to renew the line of credit before its expiration.

On March 15, 2001, we entered into a Secured Financing Agreement with a bank for
the amount of $1,500,000. The agreement was secured by our existing base of
enteral feeding pumps, which were purchased from Nestle USA and are now
manufactured and maintained by us. The proceeds from this agreement were used to
reduce our line of credit balance. This agreement had a 36-month term, was due
on February 15, 2004, and bore interest at a rate of 8.24%. We paid off the
financing agreement in March 2003, primarily using proceeds from our line of
credit in the amount of $589,998.

On April 18, 2001, we entered into a Term Loan Agreement with a bank for the
amount of $1,000,000. This agreement is secured by our manufacturing facility.
The proceeds from the Term Loan Agreement were used to reduce the balance on our
line of credit. The agreement was originally due on May 15, 2003. The Term Loan
Agreement which was renegotiated effective May 15, 2003, is now due May 15, 2008
and is being amortized over a thirteen-year term at an interest rate of 5.4%. We
owed $819,608 on the Term Loan Agreement at December 31, 2004.

On October 30, 1996, the Company completed a transaction defined as "Murray
City, Utah, Adjustable Rate Industrial Development Revenue Bonds, Series 1997
(ZEVEX, Inc. Project)" in the amount of $2,000,000. The bonds are secured by an
irrevocable Letter of Credit issued by a bank, which is subject to expiration no
later than May 30, 2008. The bonds bear interest at an adjustable rate based on
the weekly tax-exempt floater rate, as determined by the remarketing agent.
During 2004, the interest paid monthly ranged from 1.06% to 2.00% (APR), with
and average rate for 2004 of 1.32%. The bonds mature on October 1, 2016.
Principal reductions occur in the amount of $100,000 per year. The outstanding
balance was $1,300,000 at December 31, 2004, of which $100,000 is classified as
current.

The following is a summary of the Company's debt and other long-term
obligations:
<TABLE>
<CAPTION>
<S>                                                   <C>                <C>                               <C>

                                                      Payment due by period
                                                 More than   More than   More than   More than
    Contractual                     Less than     1- year     2- year     3- year     4- year     More than
    Obligation          Total        1 -year                                                       5- year
-------------------- ------------- ------------- ----------- ----------- ----------- ----------- -------------
Industrial
 Development
  Bond                 $1,300,000      $100,000    $100,000    $100,000    $100,000    $100,000      $800,000
Other
  Long-term debt          819,608        53,246      56,219      59,358     650,785           -             -
                     ------------- ------------- ----------- ----------- ----------- ----------- -------------
                     ------------- ------------- ----------- ----------- ----------- ----------- -------------
Total                  $2,119,608      $153,246    $156,219    $159,358    $750,785    $100,000      $800,000
                     ============= ============= =========== =========== =========== =========== =============
</TABLE>
<PAGE>


Purchases of leasehold improvements to our facilities, tooling and new
engineering, production and testing equipment totaled $379,886 for 2004,
compared to $610,685 for 2003 and $399,565 in 2002. We expect to spend
approximately $1,000,000 during 2005 for additional manufacturing equipment and
software, for normal replacement of aging equipment, manufacturing tooling
related to our proprietary products, and improvements to our manufacturing area.

Our expected principal liquidity requirements are working capital, investments
in capital expenditures, and debt reduction. We believe our sources of liquidity
are sufficient for operations during the coming twelve months. These sources
include our projected cash from operations and, if necessary, draws from our
existing revolving line of credit.

Off-Balance Sheet Items

We have no off-balance sheet items.

Other

As part of a nationwide investigation into billing practices associated with
enteral nutrition delivery products, particularly in regard to billing practices
for pumps and disposable delivery sets, on July 2, 2001, the U.S. Office of
Inspector General (OIG), served a subpoena on the ZEVEX, Inc. subsidiary.
According to published reports, the investigation involved most manufacturers,
distributors and health care service providers in the United States enteral pump
industry and similar subpoenas were served on many of those parties. The
subpoena requested documents relating to our enteral pump customers' marketing
and billing practices. We responded to the subpoena. Since October of 2001 we
have not been contacted further by the OIG, although we understand the
investigation is proceeding and we intend to cooperate with the investigation
when contacted again. At this time we are uncertain as to any future impact this
investigation will have on our operations or financial position.

Inflation and Changing Prices

We have not been, and in the near term are not expected to be, materially
affected by inflation or changing prices.

Critical Accounting Policies and Estimates

In response to the SEC's Release numbers 33-8040 "Cautionary Advice Regarding
Disclosure About Critical Accounting Policies" and 33-8056, "Commission
Statement about Management's Discussion and Analysis of Financial Condition and
Results of Operations," we have identified the following critical accounting
policies that affect the more significant judgments and estimates used in the
preparation of the consolidated financial statements. The preparation of the
consolidated financial statements in conformity with U.S. generally accepted
accounting principles requires us to make estimates and judgments that affect
our reported amounts of assets and liabilities, revenues and expenses, and
related disclosures. Our significant accounting policies are included in Note 1
to the Audited Consolidated Financial Statements.

We evaluate our estimates and judgments on an on-going basis. We base our
estimates on historical experience and on assumptions that we believe to be
reasonable under the circumstances. Our experience and assumptions form the
basis for our judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may vary from what
we anticipate and different assumptions or estimates about the future could
change our reported results. We believe the following accounting policies are
the most critical to us, in that they are material to the portrayal of our
financial statements and they require our most difficult, subjective, or complex
judgments in the preparation of our consolidated financial statements:

<PAGE>


Allowance for Doubtful Accounts and Sales Returns

As a general policy, collateral is not required for accounts receivable;
however, we periodically monitor the need for an allowance for doubtful accounts
based upon expected collections of accounts receivable, historical bad debt
rates, and specific identification of uncollectible accounts. Based on these
factors, we record an allowance to provide for accounts that we believe may not
be ultimately collectable. Additionally, customers' financial condition and
credit worthiness are regularly evaluated. Historically losses on collections
have not been material. We also record a provision for estimated sales returns
and allowances on products we have sold. These estimates are based on historical
sales returns and other known factors. If the historical data we use to
calculate these estimates does not properly reflect future returns, revenue
could be overstated or understated. As of December 31, 2004 and 2003, we have
recorded allowances for doubtful accounts and sales returns of $192,000 and
$185,000, approximately 5.1% and 4.6% respectively of gross accounts receivable.

Product and Inventory Obsolescence

Rapid change and technological innovation characterize the marketplace for
medical products. As a result, we and our customers are subject to the risk of
product and inventory obsolescence, whether from prolonged development,
government approval cycles, or the development of improved products or processes
by competitors. In addition, the marketplace could conclude that the task for
which a customer's medical product was designed is no longer an element of a
generally accepted diagnostic or treatment regimen. Accordingly, we write down
inventory that we believe is excess or obsolete. Inventories are stated at the
lower of cost or market; cost is determined using the first-in, first-out
method. As of December 31, 2004 and 2003, we have recorded an excess and
obsolete reserve of $270,000 and $254,000, which is approximately 5.6% and 5.8%,
respectively of gross inventories.

Warranty

We record a provision for estimated warranty reserve on products we have sold.
These estimates are based on historical warranty expenses and other known
factors. If the historical data we use to calculate these estimates does not
properly reflect future warranty expenses, expenses could be understated or
overstated. We have recorded a warranty expense allowance in the amount of
$155,000 as of December 31, 2004.

Revenue Recognition

We recognize revenue from products sold directly to end customers when
persuasive evidence of an arrangement exists, the price is fixed and
determinable, shipment is made and title has passed, and collectibility is
reasonably assured. If such criteria are not met, revenue is deferred.

Contracts to perform engineering design and product development services are
generally performed on a time and materials basis. Revenue generally is
recognized as milestones are achieved.

We account for revenue from software transactions pursuant to SOP No. 97-2,
Software Revenue Recognition, as amended by SOP No. 98-4 and SOP No. 98-9. SOP
No. 97-2 requires that revenue recognized from software arrangements be
allocated to each element of the arrangement based on the relative fair values
of the elements, such as software products, upgrades, enhancements,
post-contract customer support, installation, or training. Under SOP No. 97-2,
the determination of fair value is based on objective evidence, which is
specific to the vendor. If such evidence of fair value for each element of the
arrangement does not exist, all revenue from the arrangement is deferred until
such time that evidence of fair value does exist or until all elements of the
arrangement are delivered. As of December 31, 2003 we sold our Physical
Evaluation business and no longer sell software or related services.


<PAGE>

Impairment

We have made acquisitions in the past that included a significant amount of
fixed assets, goodwill, and other intangible assets. The cost of the acquired
companies was allocated first to identifiable assets based on estimated fair
values. Intangible assets consist of goodwill, contracts, patents, and licenses.

Effective in 2002, goodwill is no longer amortized but is subject to an annual
(or, under certain circumstances, more frequent) impairment test, based on its
estimated fair value. Other intangible assets will generally continue to be
amortized over their useful lives and also will be subject to an impairment test
based on estimated fair value. Estimated fair value is typically less than
values based on undiscounted operating earnings because fair value estimates
include a discount factor in valuing future cash flows. There are many
assumptions and estimates underlying the determination of an impairment loss.
Another estimate using different, but still reasonable assumptions could produce
a significantly different result. Therefore, impairment losses could be recorded
in the future.

Currently, we assess the impairment of fixed assets and identifiable intangibles
whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. Factors we consider important that could trigger an
impairment review include the following:

o A significant underperformance relative to expected historical or projected
future operating results; o A significant change in the manner of how we use the
acquired asset or the strategy for our overall business; o A significant
negative industry or economic trend.

When we determine that one or more of the above indicators of impairment exist,
we evaluate the carrying amounts of the affected assets. The evaluation, which
involves significant management judgment, is based on various analyses including
cash flow and profitability projections. To the extent such projections indicate
that future undiscounted cash flows are not sufficient to recover the carrying
amounts of the related long-lived assets, the carrying amount of the underlying
assets will be reduced, with the reduction charged to expense, so that the
carrying amount is equal to fair value, primarily determined based on future
discounted cash flows, using a discount rate determined by management to be
commensurate with the risk inherent in our current business model.

In accordance with SFAS No. 142 goodwill and indefinite-lived intangible assets
must be reviewed annually (or more frequently under certain conditions) for
impairment in accordance with this Statement. This impairment test uses a fair
value approach, rather than the undiscounted cash flows approach previously
required. We are annually required to complete Step 1 (determining and comparing
the fair value of our reporting units to their carrying values, as of December
31, 2004, we had one reporting unit with goodwill) of the impairment test. Step
2 is required to be completed if Step 1 indicates that the carrying value of the
reporting unit exceeds the fair value, involves the calculation of the implied
fair value of goodwill. We completed Step 1 of the impairment assessment for the
reporting unit with goodwill at its annual impairment testing date in 2004.
Based upon our valuation procedures, we determined that the fair value of the
reporting unit exceeded its carrying value. As such, we were not required to
complete Step 2 of the impairment test and no impairment loss was recognized.

Prior to the fourth quarter of 2003, we had three reporting units with goodwill.
During the fourth quarter 2003, we evaluated our business opportunities and
modified our strategies to focus on our core market offerings of ambulatory
enteral feeding products and contract manufacturing services. In conjunction
with this refocus, we re-evaluated our reporting units and determined that the
Therapeutics reporting unit, which had consisted of both our stationary and
ambulatory enteral product lines, should be disaggregated such that the two
product lines became separate reporting units because of the different market
and sales practices of the stationary and ambulatory enteral product line. In
the fourth quarter of 2003, due to declining revenue and cash flows relating to
the stationary enteral product line, we determined that indicators of impairment
existed related to this reporting unit and again completed Step 1 of the
impairment test. Upon completion of Step 1, we determined that the fair value of
the stationary enteral reporting unit was less than the carrying value including
goodwill. We completed Step 2 of the impairment assessment and a goodwill
impairment loss has been recognized in 2003 for this reporting unit in the
amount of $841,352. This loss is included in "Asset and goodwill impairment" on
the consolidated statement of operations.

<PAGE>

Due to the significant changes to our overall business strategies, we also
performed an analysis in the fourth quarter of 2003 to determine if any
indicators of impairment existed related to the Applied Technology reporting
unit. We determined that our impairment test performed as part of our annual
impairment analysis continued to be appropriate and no impairment loss was
required.

In the fourth quarter of 2003 we also evaluated our long-lived assets to
determine if indicators of impairment existed. Based upon our assessment of cash
flows related to our stationary enteral product line, we determined that
impairment of the fixed asset value for our stationary enteral pumps existed. We
recorded an impairment charge of $725,615, as reflected in the 2003 consolidated
statement of operations within "Asset and goodwill impairment."

Net intangible assets and goodwill amounted to approximately $4.4 million as of
December 31, 2004. Net fixed assets amounted to approximately $4.3 million as of
December 31, 2004.

Income Taxes

Income taxes are recorded based on the liability method, which requires
recognition of deferred tax assets and liabilities based on differences between
financial reporting and tax bases of assets and liabilities measured using
enacted tax rates and laws that are expected to be in effect when the
differences are expected to reverse. A valuation allowance is recorded to reduce
our deferred tax asset to an amount that is more likely than not to be realized,
as determined based on our analyses of projected taxable income, including tax
strategies available to generate future taxable income. Our analyses of future
taxable income are subject to a wide range of variables, many of which involve
our estimates, and therefore our deferred tax asset may not be ultimately
realized. As of December 31, 2004 a full valuation has been recorded for all
deferred tax assets.

New Accounting Pronouncements

In December 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based
Payment, which is a revision of FASB Statement No. 123, Accounting for
Stock-Based Compensation. Statement 123(R) supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees, and amends FASB Statement No. 95,
Statement of Cash Flows. Generally, the approach in Statement 123(R) is similar
to the approach described in Statement 123. However, Statement 123(R) requires
all share-based payments to employees, including grants of employee stock
options, to be recognized in the income statement based on their fair values.
Pro forma disclosure will no longer be an alternative.

Statement 123(R) must be adopted no later than July 1, 2005 and we expect to
adopt Statement 123(R) on that date. Statement 123(R) permits public companies
to adopt its requirements using one of two methods, the "modified prospective'
or the "modified retrospective." Management has not yet determined which method
it will use. As permitted by Statement 123, the company currently accounts for
share-based payments to employees using Opinion 25's intrinsic value method and,
as such, generally recognizes no compensation cost for employee stock options.
Accordingly, the adoption of Statement 123(R)'s fair value method will have a
significant impact on our result of operations, although it will have no impact
on our overall financial position. The impact of adoption of Statement 123(R)
cannot be predicted at this time because it will depend on levels of share-based
payments granted in the future. However, had we adopted Statement 123(R) in
prior periods, the impact of that standard would have approximated the impact of
Statement 123 as described in the disclosure of pro forma net income and
earnings per share in Note 1 to our consolidated financial statements.
<PAGE>


Quarterly Financial Data

The following table sets forth a summary of our quarterly income statement data
for the fiscal years ended December 31, 2004 and 2003.
<TABLE>
<CAPTION>
<S>            <C>                                                                                       <C>
Summary of Quarterly Data
                 12/04       9/04        6/04        3/04       12/03        9/03        6/03        3/03
               ----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
               ----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
Revenue        $           $5,339,406 $6,223,997  $6,208,704  $           $6,125,757  $6,829,793  $6,648,184
               5,862,248                                      6,266,142
Gross profit    1,878,338  1,821,588   2,430,756   2,326,296     912,463   1,939,764   2,691,617   2,779,951
Impairment
loss                   --         --          --          --   1,566,967          --          --          --
Loss on sale
of business            --         --          --          --   4,692,445          --          --          --
Net (loss)
income          (285,929)  (294,721)     192,892     208,781  (8,019,543)  (407,328)    (28,107)     177,436
EPS basic           (.08)      (.09)         .06         .06      (2.36)       (.12)       (.01)         .05
EPS diluted         (.08)      (.09)         .06         .06      (2.36)       (.12)       (.01)         .05

</TABLE>

FACTORS THAT MAY AFFECT FUTURE RESULTS
(Cautionary Statements Under the Private Securities Litigation Reform Act of
1995)

The disclosure and analysis set forth in this 2004 Form 10-K contain certain
forward-looking statements, particularly statements relating to future actions,
performance or results of current and anticipated products, sales efforts,
expenditures, and future financial results. From time to time, we also provide
forward-looking statements in other publicly-released materials, both written
and oral. These statements are statements that do not relate strictly to
historical or current facts. When used in this report or our other
publicly-released materials, the words such as "plans," "expects," "will,"
"estimates," "believes," "projects," "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 and Section 21E of the Securities Exchange
Act of 1934, as amended. In all cases, a broad variety of risks and
uncertainties, known and unknown, as well as inaccurate assumptions can affect
the realization of the expectations or forecasts in those statements.
Consequently, while such statements represent our current views, no
forward-looking statement can be guaranteed. Actual future results may vary
materially.

We undertake no obligation to update any forward-looking statements, but
investors are advised to consult any further disclosures by us in our subsequent
filings pursuant to the Securities Exchange Act of 1934, as amended.
Furthermore, in accordance with the Private Securities Litigation Reform Act of
1995, we provide the following cautionary statements, identifying factors that
could cause our actual results to differ materially from expected and historical
results. It is not possible to foresee or identify all such factors.
Consequently, this list should not be considered an exhaustive statement of all
potential risks, uncertainties, and inaccurate assumptions.

Additionally, the following factors should be reviewed for a full understanding
of our business and considered in evaluating our prospects for future growth.
The occurrence of one or more of the following risks or uncertainties could have
a material adverse effect on our business, results of operations, and financial
condition.

Risk Factors in Marketing Our Proprietary Products

In producing and marketing our own proprietary devices, we face many of the same
risks that our contract manufacturing customers face. As discussed above with
respect to our customers, such risks include:

The medical products industry is highly competitive. A significant number of our
competitors have substantially greater capital resources, research and
development staffs, facilities, and substantially greater experience in
developing new products, obtaining regulatory approvals, and manufacturing and
marketing medical products. Competitors may succeed in marketing products
preferable to our products or rendering our products obsolete.

<PAGE>

The medical products industry is subject to significant technological change and
requires ongoing investment to keep pace with technological development,
quality, and regulatory requirements. In order to compete in this marketplace,
we will be required to make ongoing investment in research and development with
respect to our existing and future products.

We are subject to substantial risks involved in developing and marketing medical
products that are regulated by the FDA and comparable foreign agencies. There
can be no assurance that we will obtain the necessary FDA or foreign clearances
on a timely basis, if at all. As discussed above, commercialized medical
products are subject to further regulatory restrictions, which may adversely
affect us. Changes in existing laws and regulations or policies could adversely
affect our ability to comply with regulatory requirements.

There can be no assurance that our products will gain any significant market
acceptance in their intended target markets, even if required regulatory
approvals are obtained.

Revenues for many of the medical devices manufactured by us may be dependent in
part on availability of adequate reimbursement for those devices from
third-party health care payers, such as government and private insurance plans.
There is no assurance that the levels of reimbursements offered by third-party
payers will be sufficient to achieve market acceptance of our products.

         Regulatory Compliance for Manufacturing Facilities

We expend significant time, resources, and effort in the areas of training,
production, and quality assurance to maintain compliance with applicable
regulatory requirements. There can be no assurance, however, that ZEVEX's
manufacturing operations will be found to comply with GMP regulations, ISO
standards, or other applicable legal requirements or that we will not be
required to incur substantial costs to maintain our compliance with existing or
future manufacturing regulations, standards, or other requirements. Our failure
to comply with GMP regulations or other applicable legal requirements can lead
to warning letters, seizure of non-compliant products, injunctive actions
brought by the U.S. government, and potential civil or criminal liability on the
part of ZEVEX and officers and employees who are responsible for the activities
that lead to any violation. In addition, the continued sale of any instruments
manufactured by us may be halted or otherwise restricted.

         Product Development

Our success will depend to a significant extent upon our ability to enhance and
expand our current offering of proprietary products and to develop and introduce
additional innovative products that gain market acceptance. While we maintain
research and development programs and have established various Technical
Advisory Boards to assist us, there is no assurance that we will be successful
in selecting, developing, manufacturing, and marketing new products or enhancing
our existing products on a timely or cost-effective basis. Moreover, we may
encounter technical problems in connection with our efforts to develop or
introduce new products or product enhancements. Some of the devices currently
being developed by us (as well as devices of some of our customers) will require
significant additional development, pre-clinical testing and clinical trials,
and related investment prior to their commercialization. There can be no
assurance that such devices will be successfully developed, prove to be safe or
efficacious in clinical trials, meet applicable regulatory standards, be capable
of being produced in commercial quantities at reasonable costs, or be
successfully marketed.

         Design and Manufacturing Process Risks

While we have substantial experience in designing and manufacturing devices, we
may still experience technical difficulties and delays with the design and
manufacturing of our or our customers' products. Such difficulties could cause
significant delays in our production of products. In some instances, payment by
a manufacturing customer is dependent on our ability to meet certain design and
production milestones in a timely manner. Also, some major contracts can be
canceled if purchase orders thereunder are not completed when due. Potential
difficulties in the design and manufacturing process that could be experienced
by us include difficulty in meeting required specifications, difficulty in
achieving necessary manufacturing efficiencies, and difficulty in obtaining
materials on a timely basis.
<PAGE>


         Expansion of Marketing; Limited Distribution

We currently have a limited domestic direct sales force consisting of seventeen
full-time employees, complemented by a network of clinical support personnel. We
anticipate that we will need to increase our marketing and sales capability
significantly to more fully penetrate our target markets, particularly as
additional proprietary devices become commercially available. There can be no
assurance that we will be able to compete effectively in attracting and
retaining qualified sales personnel or independent manufacturer's
representatives as needed or that such persons will be successful in marketing
or selling our services and products.

         Product Recalls

If a device that is designed or manufactured by us is found to be defective,
whether due to design or manufacturing defects, improper use of the product, or
other reasons, the device may need to be recalled, possibly at our expense.
Furthermore, the adverse effect of a product recall on us might not be limited
to the cost of a recall. For example, a product recall could cause a general
investigation of ZEVEX by applicable regulatory authorities, as well as cause
other customers to review and potentially terminate their relationships with us.
Recalls, especially if accompanied by unfavorable publicity or termination of
customer contracts, could result in substantial costs, loss of revenues, and a
diminution of our reputation.

Risk Factors Relating to Our OEM Customers

Our success in contract manufacturing depends largely on the success of our
customers and their need for our manufacturing services and on the devices
designed and manufactured by us for those customers. Any unfavorable
developments or adverse effects on the sales of those devices or such customers'
businesses, results of operations, or financial position could have a
corresponding adverse effect on us. In addition, we sell certain types of
medical devices to multiple customers and, to the extent there is an unfavorable
development affecting the sales of any such type of device generally, the
adverse effect of such development on us would be more substantial than that
presented by the decline in sales to a single customer for such type of device.
Additionally, we believe that our design and manufacturing customers and their
devices (and ours indirectly) are generally subject to the following risks:

         Competitive Environment

The medical device industry is highly competitive and subject to significant
technological change. Participation in such industries requires ongoing
investment to keep pace with technological developments and quality and
regulatory requirements. These industries consist of numerous companies, ranging
from start-up to well-established companies. Many of our customers have a
limited number of products, and some market only a single product. As a result,
any adverse development with respect to these customers' products may have a
material adverse effect on the business and financial condition of such
customers, which may adversely affect those customers' ability to purchase and
pay for their products manufactured by us. The competitors and potential
competitors of our customers may succeed in developing or marketing technologies
and products that will be preferred in the marketplace over the devices
manufactured by us for our customers or that would render our customers'
technology and products obsolete or noncompetitive.

         Emerging Technology Companies

A number of our customers are emerging medical technology companies that have
competitors and potential competitors with substantially greater capital
resources, research and development staff and facilities, and substantially
greater experience in developing new products, obtaining regulatory approvals,
and manufacturing and marketing medical products. Approximately four customers,
representing 8% of our revenues in fiscal year 2004, were, in our opinion,
emerging medical technology companies. These customers may not be successful in
launching and marketing their products, or may not respond to pricing,
marketing, or other competitive pressures or the rapid technological innovation
demanded by the marketplace. As a result, these customers may experience a
significant drop in product revenues, which may hamper their ability to continue
as our customer or even pay for services and products that we have already
delivered.
<PAGE>


         Customer Regulatory Compliance

The FDA regulates many of the devices manufactured by us under the FDC Act,
which requires certain clearances from the FDA before new medical products can
be marketed. There can be no assurance that our customers will obtain such
clearances on a timely basis, if at all. The process of obtaining a PMA or a
510(k) clearance from the FDA could delay the introduction of a product to
market. A customer's failure to comply with the FDA's requirements can result in
the delay or denial of its PMA. Delays in obtaining a PMA are frequent and could
result our customers delaying or canceling orders to us. Many products never
receive a PMA. Similarly, 510(k) clearance may be delayed, and in some
instances, 510(k) clearance is never obtained.

Once a product is in commercial distribution, discovery of product problems or
failure to comply with regulatory standards may result in restrictions on the
product's future use or withdrawal of the product from the market despite prior
governmental clearance. There can be no assurance that product recalls, product
defects, or modification or loss of necessary regulatory clearance will not
occur in the future.

Sales of our medical products outside the United States are subject to
regulatory requirements that vary widely from country to country. The time
required to obtain clearance for sale in foreign countries may be longer or
shorter than that required for FDA clearance, and the requirements may differ.
The FDA also regulates the sale of exported medical devices, although to a
lesser extent than devices sold in the United States. In addition, our customers
must comply with other laws generally applicable to foreign trade, including
technology export restrictions, tariffs, and other regulatory barriers. There
can be no assurance that our customers will obtain all required clearances or
approvals for exported products on a timely basis, if at all.

Medical devices manufactured by us and marketed by our customers pursuant to FDA
or foreign clearances or approvals are subject to pervasive and continuing
regulation by the FDA and certain state and foreign regulatory agencies. FDA
enforcement policy prohibits the marketing of approved medical products for
unapproved uses. Our customers control the marketing of their products,
including representing to the market the approved uses of their products. If a
customer engages in prohibited marketing practices, the FDA or another
regulatory agency with applicable jurisdiction could intervene, possibly
resulting in marketing restrictions, including prohibitions on further product
sales, or civil or criminal penalties.

Changes in existing laws and regulations or policies could adversely affect the
ability of our customers to comply with regulatory requirements. There can be no
assurance that we or a customer of ours will not be required to incur
significant costs to comply with laws and regulations in the future, or that
such customer or we will be able to comply with such laws and regulations.

         Uncertain Market Acceptance of Products

There can be no assurance that the products that we design and manufacture for
our customers will gain any significant market acceptance, even if required
regulatory approvals are obtained. Some of our customers, especially emerging
technology companies, have limited or no experience in marketing their products
and have not made marketing or distribution arrangements for their products. Our
customers may be unable to establish effective sales, marketing, and
distribution channels to successfully commercialize their products.

<PAGE>

         Product and Inventory Obsolescence

Rapid change and technological innovation characterize the marketplace for
medical products. As a result, ZEVEX and our customers are subject to the risk
of product and inventory obsolescence, whether from prolonged development,
government approval cycles, or the development of improved products or processes
by competitors. In addition, the marketplace could conclude that the task for
which a customer's medical product was designed is no longer an element of a
generally accepted diagnostic or treatment regimen.

         Customers' Future Capital Requirements

Some of our customers, especially the emerging medical technology companies, are
not profitable and may have little or no revenues, but they have significant
working capital requirements. Such customers may be required to raise additional
funds through public or private financings, including equity financings.
Adequate funds for their operations may not be available when needed, if at all.
Insufficient funds may require a customer to delay development of a product,
clinical trials (if required), or the commercial introduction of the product or
may prevent such commercial introduction altogether.

         Uncertainty of Third-Party Reimbursement

Sales of many of the medical devices that are manufactured by us will be
dependent in part on availability of adequate reimbursement for those devices
from third-party health care payers, such as government and private insurance
plans, health maintenance organizations, and preferred provider organizations.
Third-party payers are increasingly challenging the pricing of medical products
and services. There can be no assurance that adequate levels of reimbursement
will be available to enable our customers to achieve market acceptance of their
products. Without adequate support from third-party payers, the market for the
products of our customers may be limited.

         Uncertainty of Market Acceptance of Out-Sourcing Manufacturing of
         Medical Devices

We believe that acceptance in the marketplace for out-sourcing of design and
manufacturing of advanced medical products for medical technology companies
varies from year to year and is still uncertain. Many of our potential customers
have internal design and manufacturing facilities. Our engineering and
manufacturing activities require that customers provide us with access to their
proprietary technology and relinquish the control associated with internal
engineering and manufacturing. As a result, potential customers may decide that
the risks of out-sourcing engineering or manufacturing are too great or exceed
the anticipated benefits of out-sourcing. In addition, medical technology
companies that have previously made substantial investments to establish design
and manufacturing capabilities may be reluctant to out-source those functions.
If the medical technology industry generally, or any significant existing or
potential customer, concludes that the disadvantages of out-sourcing
manufacturing outweigh the advantages, we could suffer a substantial reduction
in the size of one or more of our current target markets, which could have a
materially adverse effect on our business, results of operations, and financial
condition.

         Competition in Out-Sourcing Manufacturing

We face competition from design firms and other manufacturers that operate in
the medical device industry. Many competitors have substantially greater
financial and other resources than we do. Also, manufacturers focusing in other
industries may decide to enter into the industries served by us. Competition
from any of the foregoing sources could place pressure on us to accept lower
margins on our contracts or lose existing or potential business. To remain
competitive, we must continue to provide and develop technologically advanced
manufacturing services, maintain quality, offer flexible delivery schedules,
deliver finished products on a reliable basis, and compete favorably on the
basis of price and the value that we provide. There can be no assurance that we
will be able to compete favorably with respect to these factors.

<PAGE>

         Dependence on Major Customers

No assurances can be given that our customers will continue to do business with
us or that the volume of their orders for our contract manufactured devices and
proprietary products will increase or remain constant. The loss of several
customers, or a significant reduction in the volume of their orders to us, could
have a material adverse impact on our operations. In addition, if one or more of
these customers were to seek and obtain price discounts from us for our contract
manufactured devices or proprietary products, the resulting lower gross margins
on those devices and products could have a materially adverse effect on our
overall results of operations. If any customer with whom we do a substantial
amount of business were to encounter financial distress, the customer's
lateness, unwillingness, or inability to pay its obligations to us could result
in a materially adverse effect on our results of operations and financial
condition.

         Early Termination of Agreements

Our agreements with major manufacturing customers generally permit the
termination of the agreements before their expiration if certain events occur
that are materially adverse to the design, development, manufacture, or sale of
the product. Examples of such events include the failure to obtain or the
withdrawal of regulatory clearance or an alteration of regulatory clearance that
is materially adverse to the customer or which prohibits or interferes with the
manufacture or sale of the products. The performance of agreements with major
customers may be suspended or excused if certain conditions, generally beyond
the control of the customer or us (so-called force majeure events), cause the
failure or delay of performance.

Our pump usage agreements, under which enteral feeding pumps are placed with
users in exchange for a commitment by the user to buy disposable products from
us, generally require only monthly commitments, and users can terminate any
purchase obligation by returning the pump. Thus, there is no assurance of
continued revenue from pumps placed with such users.

         Risk of Product Liability

The manufacture and sale of products, especially medical products, entails an
inherent risk of product liability. We maintain product liability insurance with
limits of $1 million per occurrence and $2 million in the aggregate and an
umbrella policy with a $10 million limit. There can be no assurance that such
insurance is adequate to cover potential claims or that we will be able to
obtain product liability insurance on acceptable terms in the future or that any
product liability insurance subsequently obtained will provide adequate coverage
against all potential claims. Such claims may be significant in the medical
products area where product failure may result in loss of life or injury to
persons. Additionally, we generally provide a design defect warranty and in some
instances indemnification to customers for failure to conform to design
specifications and against defects in materials and workmanship, which could
subject us to a claim under such warranties or indemnification.

Dependence Upon Management

ZEVEX is substantially dependent upon our key managerial, technical and
engineering personnel, particularly our two executive officers, David McNally,
President and Chief Executive Officer, and Phillip McStotts, Chief Financial
Officer and Secretary/Treasurer. ZEVEX must also attract and retain highly
qualified engineering, technical, and managerial personnel. Competition for such
personnel is intense, the available pool of qualified candidates is limited, and
there can be no assurance that we will attract and retain such personnel. The
loss of our key personnel could have a material adverse effect on our business,
results of operations, and financial condition. None of our key personnel have
employment agreements with ZEVEX.

We carry key-man life insurance on the lives of our Chief Executive Officer and
Chief Financial Officer in the amount of $2,000,000 each. No assurances can be
given that such insurance would provide adequate compensation to ZEVEX in the
event of the death of either key employee.
<PAGE>


Patent Protection

As of December 31, 2004, we held twenty-three U.S. patents and sixteen
international patents on devices developed by us, with thirteen additional U.S.
patents and eighteen international patents pending. Such patents disclose
certain aspects of our technologies and there can be no assurance that others
will not design around the patent and develop similar technology. We believe
that our devices and other proprietary rights do not infringe on any proprietary
rights of third parties. There can be no assurance, however, that third parties
will not assert infringement claims in the future.

Control by Management and Certain Major Shareholders

As of March 15, 2005, the current executive officers and directors of ZEVEX,
together with those persons who are the beneficial owners of more than 5% of
ZEVEX's Common Stock, beneficially own or have voting control over approximately
25% of the outstanding Common Stock. Accordingly, these individuals have the
ability to influence the election of ZEVEX's directors and most corporate
actions. This concentration of ownership, together with other provisions in
ZEVEX's charter and applicable corporate law, may also have the effect of
delaying, deterring, or preventing a change in control of ZEVEX.

Suppliers and Shortages of Component Parts

We rely on third-party suppliers for many of the component parts used in
manufacturing our own products and those of our customers. Although component
parts are generally available from multiple suppliers, certain component parts
may require long lead times, and we may have to delay the manufacture of devices
from time to time due to the unavailability of certain component parts. In
addition, even if component parts are available from an alternative supplier, we
could experience additional delays in obtaining component parts if the supplier
has not met our vendor qualifications. Component shortages for a particular
device may adversely affect our ability either to meet the production plans for
our own devices or to satisfy customer orders for that device. Such shortages
and extensions of production schedules may delay the recognition of revenue by
us and may in some cases constitute a breach of a customer contract. If
shortages of component parts continue or if additional shortages should occur,
we may be forced to pay higher prices for affected components or delay
manufacturing and shipping particular devices, either of which could adversely
affect subsequent customer demand for such devices.

Customer Conflicts

The medical technology industry reflects vigorous competition among its
participants. As a result, our customers sometimes require us to enter into
non-competition agreements that prevent us from manufacturing instruments or
components for our customers' competitors in certain fields of use. Such
restrictions generally apply during the term of the customer's manufacturing
contract and, in some instances, for a period following termination of the
contract. If we enter into a non-competition agreement, we may be adversely
affected if our customer's product is not successful and we must forgo an
opportunity to manufacture a successful product for such customer's competitor.
Any conflicts among our customers could prevent or deter us from obtaining
contracts to manufacture successful products.

Future Capital Requirements

We believe that our existing capital resources and amounts available under our
existing bank line of credit will satisfy our anticipated capital needs for the
next year (depending primarily on our growth rate and our results of
operations). The commercialization of proprietary products, which is an element
of our growth strategy, would require increased investment in working capital
and could therefore shorten this period. Thereafter, we may be required to raise
additional capital or increase our borrowing capacity, or both. There can be no
assurance that alternative sources of equity or debt will be available in the
future or, if available, will be on terms acceptable to us. Also, any additional
equity financing would result in additional dilution to our shareholders.
<PAGE>


Reliance on Efficiency of Distribution and Third Parties

We believe our financial performance is dependent in part on our ability to
provide prompt, accurate, and complete services to our customers on a timely and
competitive basis. Accordingly, delays in distribution in our day-to-day
operations or material increases in the costs of procuring and delivering
products could have an adverse effect on our results of operations. Any failure
of either our computer operating system or our telephone system could adversely
affect our ability to receive and process customers' orders and ship products on
a timely basis. Strikes or other service interruptions affecting Federal Express
Corporation, United Parcel Service of America, Inc., or other common carriers
used by us to receive necessary components or other materials or to ship our
products also could impair our ability to deliver products on a timely and
cost-effective basis.

Volatility of Revenue and Product Mix

Our annual and quarterly operating results are affected by volume and timing of
customer orders, which vary due to (i) variation in demand for the customers'
products or services as a result of, among other things, product life cycles,
competitive conditions, and general economic conditions, (ii) the customers'
attempt to balance their inventory, (iii) the customers' need to adapt to
changing regulatory conditions and requirements, and (iv) changes in the
customers' preference or strategies. Technical difficulties and delays in the
design and manufacturing processes may also affect such results. The foregoing
factors may cause fluctuations in revenues and variations in product mix, which
could in turn cause fluctuations in our gross margin.

Under the terms of our contracts with many of our contract manufacturing
customers, the customers have broad discretion to control the volume and timing
of product deliveries. Further, the contracts with our customers typically have
no minimum purchase requirements. As a result, production may be reduced or
discontinued at any time. Therefore, it is difficult for us to forecast the
level of customer orders with certainty, making it difficult to schedule
production and maximize manufacturing capacity. Other factors that may adversely
affect our annual and quarterly results of operations include inexperience in
manufacturing a particular product, inventory shortages or obsolescence,
increasing labor costs or shortages, low gross margins on particular projects,
an increase in lower-margin product revenue as a percentage of total revenues,
price competition, and regulatory requirements. Because our business
organization and our related cost structure anticipate supporting a certain
minimum level of revenues, our limited ability to adjust the short-term cost
structure would compound the adverse effect of any significant revenue
reduction.

Uncertain Protection of Intellectual Property

To maintain the secrecy of some of our proprietary information, we rely on a
combination of trade secret laws and internal security procedures. We typically
require our employees, consultants, and advisors to execute confidentiality and
assignment of inventions agreements. There can be no assurance, however, that
the common law, statutory, and contractual rights on which we rely to protect
our intellectual property and confidential and proprietary information will
provide us with adequate or meaningful protection. Third parties may
independently develop products, techniques, or information that are
substantially equivalent to the products, techniques, or information that we
consider proprietary. In addition, proprietary information regarding us could be
disclosed in a manner against which we have no meaningful remedy. Disputes
regarding our intellectual property could force us into expensive and protracted
litigation or costly agreements with third parties. An adverse determination in
a judicial or administrative proceeding or failure to reach an agreement with a
third party regarding intellectual property rights could prevent us from
manufacturing and selling certain of our products.

Limited Market for Common Stock

Historically, the market for ZEVEX's Common Stock has been limited due to the
relatively low trading volume and the small number of brokerage firms acting as
market makers. ZEVEX's Common Stock is listed on the NASDAQ Stock Market. No
assurance can be given, however, that the market for the Common Stock will
continue or increase or that the prices in such market will be maintained at
their present levels.
<PAGE>


Possible Volatility of Stock Price

Announcements of technological innovations for new commercial devices by us or
our competitors, developments concerning our proprietary rights, or the public
concern as to the safety of our devices may have a material adverse impact on
our business and on the market price of our Common Stock, particularly as we
expand our efforts to become a medical technology company that manufactures and
markets its own proprietary devices. The market price of ZEVEX Common Stock may
be volatile and may fluctuate based on a number of factors, including
significant announcements by us and our competitors, quarterly fluctuations in
our operating results, and general economic conditions and conditions in the
medical device industry. In addition, in recent years the stock market has
experienced extreme price and volume fluctuations, which have had a substantial
effect on the market prices for many medical device companies and are often
unrelated to the operating performance of such companies.

Issuance of Additional Shares for Acquisition or Expansion

Any future major acquisition or expansion by us may include the issuance of
additional common shares or other stocks or instruments that may be authorized
without shareholder approval. The issuance of subsequent securities may also
result in substantial dilution in the percentage of the Common Stock held by
existing shareholders at the time of any such transaction. Moreover, the shares
or warrants issued in connection with any such transaction may be valued by our
management based on factors other than the trading price on the NASDAQ Stock
Market.

Impact of Anti-Takeover Measures; Possible Issuance of Preferred Stock;
Classified Board

Certain Provisions of our Certificate of Incorporation and Bylaws and the
Delaware General Corporation Law may have the effect of preventing,
discouraging, or delaying a change in the control of ZEVEX and may maintain the
incumbency of our Board of Directors and management. Such provisions could also
limit the price that certain investors might be willing to pay in the future for
shares of ZEVEX Common Stock. Pursuant to our Certificate of Incorporation, the
Board of Directors is authorized to fix the rights, preferences, privileges, and
restrictions, including voting rights, of unissued shares of ZEVEX Preferred
Stock and to issue such stock without any further vote or action by our
stockholders. The rights of the holders of ZEVEX Common Stock will be subject to
and may be adversely affected by the rights of the holders of any Preferred
Stock that may be created and issued in the future.

In addition, stockholders do not have the right to cumulative voting for the
election of directors. Furthermore, our Certificate and Bylaws provide for a
staggered board whereby only two to three of the total number of directors are
replaced or re-elected each year. The Certificate also provides that the
provisions of the Certificate relating to the number, vacancies, and
classification of the Board of Directors may only be amended by a vote of at
least 66 2/3% of the shareholders. Finally, the Bylaws provide that special
meetings of the stockholders may only be called by the President or any Director
of ZEVEX or pursuant to a resolution adopted by a majority of the Board of
Directors.

ZEVEX is subject to Section 203 of the Delaware General Corporation Law
("Section 203"), which restricts certain transactions and business combinations
between a corporation and an "Interested Stockholder" owning 15% or more of the
corporation's outstanding voting stock for a period of three years from the date
the stockholder becomes an Interested Stockholder. Subject to certain
exceptions, unless the transaction is approved in a prescribed manner, Section
203 prohibits significant business transactions such as a merger with,
disposition of assets to, or receipt of disproportionate financial benefits by
the Interested Stockholder, or any other transactions that would increase the
Interested Stockholder's proportionate ownership of any class or series of the
corporation's stock.

<PAGE>

Foreign Exchange, Currency, and Political Risk

Our international business is subject to risks customarily encountered in
foreign operations, including changes in a specific country's or region's
political or economic conditions, nationalization, trade protection measures,
import or export licensing requirements, the overlap of different tax
structures, unexpected changes in regulatory requirements, or other restrictive
government actions such as capital regulations. We are also exposed to foreign
currency exchange rate risk inherent in our foreign sales commitments and
anticipated foreign sales because the prices charged for our products are
denominated in U.S. dollars. Consequently, our foreign sales commitments and
anticipated sales could be adversely affected by an appreciation of the U.S.
dollar relative to other currencies.

ITEM 7A.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk in the form of fluctuations in interest rates and
their potential impact upon our line of credit, currently with a balance of $0
and our industrial development bond of $1,300,000. Principal payments of
$100,000 are made annually on the industrial development bond, with the balance
due October 1, 2016. The variable rate on the line of credit is the prime bank
lending rate, and the variable rate on the industrial development bond is based
on a weekly tax-exempt floater rate. The line of credit matures annually in May.
At December 31, 2004, the above debt represented 65.3% of our total short-term
funded debt and 61.3% of our total long-term funded debt compared with 91.7%
short-term funded debt and 61.3% long-term funded debt at December 31, 2003. For
illustrative purposes only, the impact of market risk is estimated using a
hypothetical increase in interest rates of one percentage point for both our
variable rate debt and cash. Based on hypothetical assumption, we would have
incurred an additional $22,000 in interest expense and received $6,000 in
additional interest income for the year ended December 31, 2004, and an
additional $35,000 in interest expense and received $4,000 in additional
interest income for the year ended December 31, 2003.

We are also exposed to market risk in the form of fluctuations in interest rates
and their potential impact on our fixed rate debt, which includes our term loan
agreement, with a balance of $819,608 as of December 31, 2004, which is due on
May 15, 2008 and is being amortized over a thirteen-year term at an interest
rate of 5.4%.

Additionally, we held marketable equity securities with a fair value of $29,250
at December 31, 2004, consisting of stock of a public company in the small-cap
market. Gross unrealized losses on marketable equity securities were $18,525 for
the year ended December 31, 2004. Gross unrealized gains on marketable equity
securities were $3,067 for the year ended December 31, 2003. We did not hold any
marketable securities at December 31, 2002.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following consolidated financial statements of ZEVEX are included beginning
at page 45, immediately following Item 15:

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2004 and 2003
Consolidated Statements of Operations for the years ended December 31, 2004,
2003, and 2002 Consolidated Statements of Cash Flows for the years ended
December 31, 2004, 2003, and 2002 Consolidated Statements of Stockholders'
Equity and Comprehensive Income for the years ended
  December 31, 2004, 2003, and 2002
Notes to the Consolidated Financial Statements
All schedules are omitted because they are not applicable or the required
   information is shown in the financial statements or notes thereto.

<PAGE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

We have no changes in or disagreements with our independent auditors with regard
to accounting or financial disclosures.

ITEM 9A.   CONTROLS AND PROCEDURES

As of December 31, 2004 our management, including our CEO and CFO, evaluated the
effectiveness of our "disclosure controls and procedures" (the controls and
other procedures for recording, processing, summarizing and reporting on a
timely basis the information required to be disclosed in the periodic reports
that we file with the U.S. Securities and Exchange Commission). Based on that
evaluation, and subject to the limitations noted below, our management concluded
that our disclosure controls and procedures are effective to ensure that
material information about us and our subsidiaries is made known to management
by others in our company on a timely basis for preparation of our periodic
reports. While we believe our disclosure controls and procedures are effective,
we note that controls and procedures, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the
controls and procedures are met. There are inherent limitations, including the
possibility that judgments in decision-making can be faulty, that breakdowns can
occur because of simple error or mistake, or that a person may circumvent the
controls. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.

There have been no significant changes in our internal control over financial
reporting during the fourth quarter of 2004 or in other factors that could
significantly affect those controls.

ITEM 9B.   OTHER INFORMATION

None

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Portions of the registrant's definitive Proxy Statement to be filed with the
Securities and Exchange Commission within 120 days after registrant's fiscal
year end December 31, 2004 are incorporated by reference into Part III of this
report.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will be set forth in the Proxy Statement
and is incorporated in this report by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item will be set forth in the Proxy Statement
and is incorporated in this report by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item will be set forth in the Proxy Statement
and is incorporated in this report by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

During 2004 and 2003,  Ernst & Young LLP examined the accounts of ZEVEX and its
subsidiaries and also provided other audit services to us in connection with
Securities and Exchange Commission filings.  A summary of these fees is set
forth in the following table. Fees Paid to Independent Auditors
<PAGE>


Service provided                                    2004                   2003
----------------                                    ----                   ----
Audit Fees                                      $137,502               $111,000
Audit-Related Fees                                     0                      0
Non-Audit Fee (Tax Fees)                           4,715                      0
All Other Fees                                         0                      0

In accordance with our Audit Committee Charter, the Audit Committee approves in
advance any and all audit services, including audit engagement fees and terms,
and non-audit services provided to us by our independent auditors (subject to
the de minimus exception for non-audit services contained in Section
10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended), all as
required by applicable law or listing standards. The independent auditors and
our management are required to periodically report to the Audit Committee the
extent of services provided by the independent auditors and the fees associated
with these services.

In the Charter of the Audit Committee, as amended April 1, 2004, the Audit
Committee has the sole authority to approve the audit and non-audit services of
the auditors. For 2003 and future periods, the Audit Committee has approved all
audit and non-audit services by the auditors.

                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Documents Filed as a Part of this Report.

         (1) - Financial Statements.

The following consolidated balance sheets of ZEVEX International, Inc. as of
December 31, 2004 and 2003, and the related consolidated statements of
operations, stockholders' equity and comprehensive income and cash flows for
each of the three years in the period ended December 31, 2004, are filed as part
of this report:

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Cash Flows

Consolidated Statements of Stockholders' Equity and Comprehensive Income

Notes to Consolidated Financial Statements

         (2) - Financial Statement Schedules

Not required in accordance with the applicable rules and regulations.

         (3) - Exhibits

A list of exhibits required to be filed as part of this report is set forth in
the Index to Exhibits, which immediately precedes such exhibits, and is
incorporated herein by reference.

 (b)     Reports on Form 8-K

         None


<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                      ZEVEX INTERNATIONAL, INC.

Dated:  March 30, 2005                                 By: /s/ DAVID J. MCNALLY
                                                         ----------------------
                                                       David J. McNally
                                                       Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

                                POWER OF ATTORNEY

Know all men by these presents, that each person whose signature appears below
constitutes and appoints each of David J. McNally and Phillip L. McStotts,
jointly and severally, his true and lawful attorney in fact and agent, with full
power of substitution for him and in his name, place and stead, in any and all
capacities to sign any or all amendments to this report on Form 10-K and to file
the same, with all exhibits thereto and other documents in connection therewith
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each said attorney in fact or his substitute or substitutes may do or cause
to be done by virtue hereof.
<TABLE>
<CAPTION>
<S>                                  <C>                                              <C>         <C>

  Signature                                 Title                                            Date

/s/ JOHN T. LEMLEY                  Chairman of the Board of Directors                 March 30, 2005
------------------
John T. Lemley


/s/ DAVID J. MCNALLY                Chief Executive Officer,                           March 30, 2005
---------------------------
David J. McNally                    President (Principal Executive
                                    Officer)


/s/ PHILLIP L. MCSTOTTS              Director, Chief Financial Officer,                March 30, 2005
-----------------------
Phillip L. McStotts                 Secretary, and Treasurer (Principal
                                    Financial and Accounting Officer)

/s/ BRADLY A. OLDROYD               Director                                           March 30, 2005
---------------------
Bradly A. Oldroyd

/s/ DAVID B. KAYSEN                 Director                                           March 30, 2005
-------------------
David B. Kaysen


/s/ DAN M. ROBERTSON                Director                                           March 30, 2005
--------------------
Dan M. Robertson

/s/ RICHARD L. SHANAMAN             Director                                           March 30, 2005
-----------------------
Richard L. Shanaman
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
<S>                                              <C>                                                                          <C>

                                                 INDEX TO EXHIBITS
                                                   (Item 15(c))

Number                                               Exhibits
3.1               Articles of Incorporation of ZEVEX International, Inc., a Delaware corporation (1).
3.2               Bylaws of ZEVEX International, Inc., a Delaware corporation (1).
10.1              Revolving Line of Credit Agreement between Bank One and ZEVEX International, Inc., dated September 29, 1997 (1).
10.3              Stock  Purchase  Agreement  between  Blosch & Holmes,  LLC and ZEVEX  International,  Inc.,  dated  December 1,
                  1996, including one amendment dated September 30, 1997 (1).
10.5#             ZEVEX International, Inc., Amended 1993 Stock Option Plan (3).
10.6              Industrial Development Bond Offering Memorandum dated October 30, 1996 (4).
10.7              Industrial Development Bond Reimbursement Agreement, dated October 30, 1996 (4).
10.19#            ZEVEX International, Inc., 1999 Stock Option Plan and Form of Stock Option Grant (6).
10.20#            Form of Stock Option Grant to Messrs. McNally and McStotts (7).
10.25             Amendment to Revolving Line of Credit Agreement between Bank One and ZEVEX International, Inc., dated June 29,
                  2001 (9).
10.27#            Executive Severance Package Agreement for Mr. McNally (10).
10.28#            Executive Severance Package Agreement for Mr. McStotts (10).
10.30             Stock Purchase Agreement dated December 31, 1998, between ZEVEX International, Inc., and Leonard C. Smith (11).
10.31             Flocare 800 Manufacturing Agreement between ZEVEX International, Inc. and Royal
                  ============
                  Numico, dated July 20, 2004 (12).
10.32             Supply Agreement between ZEVEX International, Inc. and Royal Numico, dated
                  July 20, 2004 (12).
10.33             Disposal Set Components Supply Agreement between  ZEVEX International, Inc. and
                  Royal Numico, dated July 20, 2004 (12).
10.34             License Agreement between ZEVEX International, Inc. and Royal Numico, dated
                  July 20, 2004 (12).
10.35             License Agreement between ZEVEX International, Inc. and Royal Numico, dated
                  July 20, 2004 (12).
10.36             Maintenance and Service Agreement between ZEVEX International, Inc. and Royal
                  Numico, dated July 20, 2004 (12).
21                List of Subsidiaries.
23.1              Ernst & Young LLP consent
31.01             Certification of the Registrant's Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of
                  2002.
31.02             Certification of Registrant's Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of
                  2002.
32.01             Certification of Registrant's Chief Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of
                  2002.
32.02             Certification of Registrant's Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of
                  2002.

(1)      Incorporated by reference to Amendment No. 1 on Registration Statement on Form S-1 filed October 24, 1997
         (File No. 333-37189).

(2)      Incorporated by reference to ZEVEX's Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 001-12965).

(3)      Incorporated by reference to Registration Statement on Form S-1 filed October 3, 1997 (File No. 001-12965).

<PAGE>

(4)      Incorporated by reference to ZEVEX's amended Quarterly Report on Form 10-Q for the quarter ended September 30, 1996
         (File No. 033-19583).

(5)      Incorporated by reference to ZEVEX's Current Report on Form 8-K filed January 14, 1999 (File No. 001-12965).

(6)      Incorporated by reference to ZEVEX's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 001-12965).

(7)      Incorporated by reference to ZEVEX's Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 001-12965).

(8)      Incorporated by reference to ZEVEX's Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 001-12965).

(9)      Incorporated by reference to ZEVEX's Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 001-12965).

(10)     Incorporated by reference to ZEVEX's Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-12965).

(11)     Incorporated by reference to ZEVEX's Current Report on Form 8-K filed January 15, 2004 (File No. 001-12965).

(12)     Incorporated by reference to ZEVEX's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004
         (File No. 001-12965).

# Identifies a "management contract or compensatory plan or arrangement".
</TABLE>


<PAGE>


                                                                  Exhibit 31.01

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER,
          AS REQUIRED BY SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.


I, David J. McNally, certify that:

1. I have reviewed this annual report on Form 10-K of ZEVEX International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I, are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

         a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

         b) Evaluated the effectiveness of the registrant's disclosure controls
         and procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

         c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):

         a) All significant deficiencies and material weaknesses in the design
         or operation of internal controls over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

         b) Any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal control over financial reporting.


Dated:  March 30, 2005
                                     By   /s/ David J. McNally
                                       --------------------------
                                       David J. McNally, CEO
                                      (Chief Executive Officer)
<PAGE>



                                                                  Exhibit 31.02

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER,
          AS REQUIRED BY SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.


I, Phillip L. McStotts, certify that:

1. I have reviewed this annual report on Form 10-K of ZEVEX International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I, are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

         a) Designed such disclosure controls and procedures, or caused such
         disclosure controls and procedures to be designed under our
         supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to
         us by others within those entities, particularly during the period in
         which this report is being prepared;

         b) Evaluated the effectiveness of the registrant's disclosure controls
         and procedures and presented in this report our conclusions about the
         effectiveness of the disclosure controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

         c) Disclosed in this report any change in the registrant's internal
         control over financial reporting that occurred during the registrant's
         most recent fiscal quarter (the registrant's fourth fiscal quarter in
         the case of an annual report) that has materially affected, or is
         reasonably likely to materially affect, the registrant's internal
         control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent functions):

         a) All significant deficiencies and material weaknesses in the design
         or operation of internal controls over financial reporting which are
         reasonably likely to adversely affect the registrant's ability to
         record, process, summarize and report financial information; and

         b) Any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal control over financial reporting.


Dated:  March 30, 2005
                                     By   /s/ Phillip L. McStotts
                                       -----------------------------
                                       Phillip L. McStotts, CFO
                                      (Chief Financial Officer)



<PAGE>


                                                                  EXHIBIT 32.01

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER,
          AS REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

I, David J. McNally, hereby certify pursuant to 18 U.S.C. Section 1350 adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:


         (i) The accompanying annual report on Form 10-K for the fiscal year
ended December 31, 2004, fully complies with the requirements of Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

         (ii) The information contained in such report fairly presents, in all
material respects, the financial condition and results of operations of ZEVEX
International, Inc.

Dated:  March 30, 2005

                                     By   /s/ David J. McNally
                                       David J. McNally, CEO
                                      (Chief Executive Officer)



<PAGE>


                                                                  EXHIBIT 32.02

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER,
          AS REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

I, Phillip L. McStotts, hereby certify pursuant to 18 U.S.C. Section 1350
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:


         (i) The accompanying annual report on Form 10-K for the fiscal year
ended December 31, 2004, fully complies with the requirements of Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

         (ii) The information contained in such report fairly presents, in all
material respects, the financial condition and results of operations of ZEVEX
International, Inc.

Dated:  March 30, 2005

                                     By   /s/ Phillip L. McStotts
                                       Phillip L. McStotts, CFO
                                      (Chief Financial Officer)


<PAGE>





CONSOLIDATED FINANCIAL STATEMENTS
ZEVEX International, Inc.
Years Ended December 31, 2004, 2003 and 2002
with Report of Independent Auditors


<PAGE>


                            ZEVEX International, Inc.

                        Consolidated Financial Statements

              For the years ended December 31, 2004, 2003 and 2002



<TABLE>
<CAPTION>
<S>                                 <C>                                                                <C>

                                    Contents

Report of Independent Registered Public Accounting Firm.................................................47

Audited Consolidated Financial Statements

Consolidated Balance Sheets ............................................................................48
Consolidated Statements of Operations ..................................................................49
Consolidated Statements of Stockholders' Equity and Comprehensive Income................................55
Consolidated Statements of Cash Flows ..................................................................51
Notes to Consolidated Financial Statements .............................................................52
</TABLE>


<PAGE>



             Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
ZEVEX International, Inc.

We have audited the accompanying consolidated balance sheets of ZEVEX
International, Inc. as of December 31, 2004 and 2003 and the related
consolidated statements of operations, stockholders' equity and comprehensive
income, and cash flows for each of the three years in the period ended December
31, 2004. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Company's internal control over financial reporting. Our audit
included consideration of internal controls over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit, also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ZEVEX
International, Inc. at December 31, 2004 and 2003, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 2004, in conformity with U.S. generally accepted accounting
principles.


Salt Lake City, Utah                                      /s/ Ernst & Young LLP
March 3, 2005
<PAGE>

                                              ZEVEX INTERNATIONAL, INC.
                                             CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S>                               <C>                                         <C>                         <C>       <C>


                                                                                      December 31,         December 31,
                                 ASSETS                                                   2004                 2003
                                                                               ----------------------------------------

Current assets
     Cash and cash equivalents                                                             $ 212,859         $ 668,089
     Designated cash for sinking fund payment on industrial
        development bond                                                                      96,042            95,277
     Accounts receivable, net of allowance for doubtful
        accounts of $192,000 in 2004 and $185,000 in 2003                                  3,563,436         3,830,341
     Other receivable                                                                         35,500         1,200,000
     Inventories                                                                           4,584,755         4,114,567
     Marketable securities                                                                    29,250            88,000
     Income taxes receivable                                                                       -           442,548
     Prepaid expenses and other current assets                                               149,690           115,457
     Total current assets                                                                  8,671,532        10,554,279

     Property and equipment, net                                                           4,345,942         4,799,120
     Patents, trademarks and other intangibles, net                                          335,244           330,277
     Goodwill, net                                                                         4,048,264         4,048,264
     Other assets                                                                                 -                145
     Total assets                                                                       $ 17,400,982      $ 19,732,085

             LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
     Accounts payable                                                                    $ 1,949,618       $ 1,540,700
     Other accrued liabilities                                                               606,734           525,071
     Deferred revenue                                                                              -           538,770
     Bank line of credit                                                                           -         1,810,970
     Current portion of industrial development bond                                          100,000           100,000
     Income taxes payable                                                                      2,005                 -
     Current portion of other long-term debt                                                  53,246            50,430
     Current portion of capital leases                                                            -            122,950
     Total current liabilities                                                             2,711,603         4,688,891

     Industrial development bond                                                           1,200,000         1,300,000
     Other long-term debt                                                                    766,362           819,608

Stockholders' equity
     Common stock; $.001 par value, 10,000,000
        authorized shares, 3,440,197 issued and 3,400,964
        outstanding at December 31, 2004 and 2003                                              3,440             3,440
     Additional paid in capital                                                           16,290,452        16,290,452
     Unrealized (loss) gain on marketable securities                                         (18,525)            3,067
     Treasury stock, 39,233 shares (at cost) at
        December 31, 2004 and 2003                                                           (89,422)          (89,422)
     Accumulated deficit                                                                  (3,462,928)       (3,283,951)
     Total stockholders' equity                                                           12,723,017        12,923,586
     Total liabilities and stockholders' equity                                         $ 17,400,982      $ 19,732,085
</TABLE>

<PAGE>

                                        ZEVEX INTERNATIONAL, INC.
                                  CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
<S>                                                   <C>           <C>                                <C>

                                                                    Year Ended December 31
                                                           2004              2003              2002
                                                     -----------------------------------------------------
                                                     -----------------------------------------------------
Revenue:
     Product sales                                       $ 22,968,163      $ 24,015,057      $ 23,683,3557
     Engineering services                                     666,192         1,854,819         1,812,378
     Total revenue                                         23,634,355        25,869,876        25,495,733

     Cost of sales                                         15,177,377        17,546,081        14,375,744
Gross profit                                                8,456,978         8,323,795        11,119,989

Operating expenses:
     General and administrative                             3,853,514         3,769,644         5,127,274
     Selling and marketing                                  3,288,999         4,547,178         3,996,923
     Research and development                               1,430,692         1,817,581         1,289,609
     Asset and goodwill impairment                                  -         1,566,967                 -
Total operating expenses                                    8,573,205        11,701,370        10,413,806

Operating (loss) income                                      (116,227)       (3,377,575)          706,183

Other income (expense):
     Interest and other income                                 22,209             8,406            56,676
     Interest expense                                        (142,042)         (284,640)         (543,340)
     Loss on sale of business                                       -        (4,692,445)                -
     Gain on sale of assets                                    25,861                 -                 -
(Loss) income before income taxes                            (210,199)       (8,346,254)          219,519

Benefit (provision) for income taxes                           31,222            68,712             (5,216)

Net (loss) income                                          $ (178,977)     $ (8,277,542)       $ 214,303


Basic net (loss) income per share                             $ (0.05)          $ (2.43)          $ 0.06

Weighted average shares outstanding                         3,400,964         3,400,964         3,414,846

Diluted net (loss) income per share                           $ (0.05)          $ (2.43)          $ 0.06

Diluted weighted average shares outstanding                 3,400,964         3,400,964         3,418,278
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
<S>                                                         <C>                   <C>                                            <C>


                                                           ZEVEX INTERNATIONAL, INC.

                                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME

                                                                                                      Unrealized
                                                                                                        (Loss)
                                                                                       Retained         Gain on
                                                                                       Earnings/       Available-
                                   Common Stock       Additional Paid-in Treasury    (Accumulated       for-sale
                                   Shares   Amount         Capital           Stock     Deficit)         Securities           Total
                                ------------------    ---------------    -----------------------    ---------------     ------------
                                ------------------    ---------------    -----------------------    ---------------     ------------
Balances at January 1, 2002     3,440,197 $ 3,440       $ 16,290,452     $ (60,956)  $4,779,288           $ 20,177      $ 21,032,401
Comprehensive income:
Net income                             --      --                 --            --      214,303                 --           214,303
Other comprehensive loss,
net of tax:
Change in unrealized gain
on available-for-sale
securities                             --      --                 --            --           --            (20,177)         (20,177)
                                                                                                                        ------------
                                                                                                                        ------------
Total comprehensive income                                                                                                   194,126
                                                                                                                        ------------
                                                                                                                        ------------

Purchase of 14,233 shares of
treasury stock, at cost                --      --                 --       (28,466)          --                 --          (28,466)
                                 ----------------    ---------------    -----------------------    ---------------      ------------
                                 ----------------    ---------------    -----------------------    ---------------      ------------
Balances at December 31, 2002   3,440,197   3,440         16,290,452       (89,422)   4,993,591                 --        21,198,061
Comprehensive loss:
Net loss                               --      --                 --            --   (8,277,542)                --       (8,277,542)
Other comprehensive income,
net of tax:
Change in unrealized gain on
available-for-sale securities          --      --                 --            --           --              3,067             3,067
                                                                                                                        ------------
                                                                                                                        ------------
Total comprehensive loss                                                                                                 (8,274,475)
                               ------------------    ---------------    -----------------------    ---------------      ------------
                               ------------------    ---------------    -----------------------    ---------------      ------------
Balances at December 31, 2003   3,440,197   3,440         16,290,452       (89,422)  (3,283,951)             3,067        12,923,586
Comprehensive loss:
Net loss                               --      --                 --            --     (178,977)                --         (178,977)
Other comprehensive loss,
net of tax:
Change in unrealized loss on
available-for-sale securities          --      --                 --            --           --            (21,592)         (21,592)
                                                                                                                        ------------
                                                                                                                        ------------
Total comprehensive loss                                                                                                   (200,569)
                               ------------------    ---------------    -----------------------    ---------------      ------------
                               ------------------    ---------------    -----------------------    ---------------      ------------
Balances at December 31, 2004   3,440,197 $ 3,440      $ 16,290,452      $ (89,422)$ (3,462,928)        $ (18,525)      $ 12,723,017
                               ==================    ===============    =======================    ===============      ============
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>                         <C>                               <C>             <C>                 <C>

                            ZEVEX INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                               Year Ended December 31
                                                                 2004          2003         2002
                                                              -----------  ------------- ------------
                                                              -----------  ------------- ------------
Cash flows from operating activities
Net (loss) income                                              $(178,977)  $ (8,277,542)   $ 214,303
Adjustments to reconcile net (loss) income to net cash
   provided by operating activities
     Depreciation and amortization                               857,731      1,582,120    1,618,682
     Asset and goodwill impairment                                     -      1,566,967            -
     Loss on sale of business                                          -      4,692,445            -
     Provision for bad debts                                       6,521        (24,963)     (64,620)
     Deferred income taxes                                             -         90,313      213,343
     Realized gain on marketable securities                       (3,361)             -      (38,078)
     Changes in operating assets and liabilities, net of
        acquisitions:
        Designated cash for sinking fund payment
           on industrial development bond                           (765)        (1,492)        (709)
        Accounts receivable                                      260,384        461,668    1,290,413
        Inventories                                             (470,188)     2,234,289      923,986
        Prepaid expenses and other assets                         29,006        100,628     (143,969)
        Bank overdraft                                                 -        (42,957)      42,957
        Accounts payable                                         408,918        (31,613)    (139,116)
        Accrued and other liabilities                             81,663        (95,694)      22,698
        Deferred revenue                                        (426,067)       214,770            -
        Income taxes receivable/payable                         444,553        (159,026)    134,984

Net cash provided by operating activities                      1,009,418      2,309,913    4,074,874

Cash flows from investing activities
Purchase of property and equipment                              (379,886)      (610,685)    (399,565)
Additions of patents and trademarks                              (29,634)       (94,150)     (51,880)
Proceeds from other receivable from sale of business             988,703
Redemption of available-for-sale marketable securities            40,519              -      225,797

Net cash provided by (used in) investing activities              619,702       (704,835)    (225,648)

Cash flows from financing activities
Principal payments on capital lease and long-term debt          (173,380)      (908,989)    (694,568)
Payments on business and product line acquisition debt                 -     (1,738,970)  (2,340,668)
Payment on industrial development bond                          (100,000)      (100,000)    (100,000)
Net (payments on) proceeds from bank line of credit           (1,810,970)     1,810,970   (1,713,610)
Purchase of treasury stock                                            -              -       (28,466)

Net cash used in financing activities                         (2,084,350)      (936,989)  (4,877,312)

Net increase (decrease) in cash and cash equivalents            (455,230)       668,089   (1,028,086)

Cash and cash equivalents at beginning of period                 668,089              -    1,028,086

Cash and cash equivalents at end of period                     $ 212,859      $ 668,089          $ -
</TABLE>

<PAGE>


                           ZEVEX INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Organization and Business and 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. The Company was originally incorporated as Downey Industries, Inc. and
changed its name to ZEVEX International, Inc. on August 15, 1988. In November
1997, the Company reincorporated in Delaware. In December 1998, the Company
acquired an additional product line and completed the acquisition of two
additional subsidiaries. Additionally, the Company acquired a product line from
Nestle USA, Inc. in April of 2000 (see Note 2).

The Company, through its divisions and subsidiary, engages in the business of
designing, manufacturing, and distributing medical devices. The Therapeutics
division markets enteral nutrition delivery devices. The Applied Technology
division designs and manufactures advanced medical components and systems for
other medical technology companies. Until its sale on December 31, 2003, the
Physical Evaluation division marketed industry-leading physical evaluation
testing systems.

On December 31, 2003, the Company completed the sale of its Physical Evaluation
business. The transaction was accomplished by sale of all the issued and
outstanding capital stock of JTech Medical Industries, Inc., ("JTech"), a wholly
owned subsidiary of the Company. The transaction was effected by a Stock
Purchase Agreement (the "Stock Purchase Agreement") dated December 31, 2003 by
and between the Company and Mr. Leonard Smith, a former employee, officer and
director of the Company (see Note 2).

Principles of Consolidation

The consolidated financial statements for 2004 include the accounts of ZEVEX
International, Inc. (the Company) and its wholly owned operating subsidiary
ZEVEX, Inc. In 2003 and 2002, the consolidated statements of operations also
included the accounts of the Company's wholly owned operating subsidiary, JTech.
As discussed above and in Note 2, JTech was sold effective December 31, 2003.
All significant intercompany balances and transactions have been eliminated in
consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally
accepted accounting policies requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and such
differences could be material.


Revenue Recognition

The Company recognizes revenue from products sold directly to end customers when
persuasive evidence of an arrangement exists, the price is fixed and
determinable, shipment is made and title has passed, and collectibility is
reasonably assured. If such criteria are not met, revenue is deferred. As of
December 31, 2004, 2003, and 2002, the Company had expensed as incurred shipping
and handling costs, and are included in selling and marketing of $490,000,
$437,000, and $424,000 respectively.

Contracts to perform engineering design and product development services are
generally performed on a time and materials basis. Revenue generally is
recognized as milestones are achieved; costs are expensed as incurred.

<PAGE>


1. Description of Organization and Business and Summary of Significant
Accounting Policies (continued)

Revenue Recognition (continued)

The Company accounts for revenue from software transactions pursuant to SOP No.
97-2, Software Revenue Recognition, as amended by SOP No. 98-4 and SOP No. 98-9.
SOP No. 97-2 requires that revenue recognized from software arrangements be
allocated to each element of the arrangement based on the relative fair values
of the elements, such as software products, upgrades, enhancements,
post-contract customer support, installation, or training. Under SOP No. 97-2,
the determination of fair value is based on objective evidence, which is
specific to the vendor. If such evidence of fair value for each element of the
arrangement does not exist, all revenue from the arrangement is deferred until
such time that evidence of fair value does exist or until all elements of the
arrangement are delivered. As of December 31, 2003 the Company sold its Physical
Evaluation business and no longer sell software and related services.

Cash and Cash Equivalents

The Company considers all certificates of deposit and highly liquid debt
instruments with an insignificant interest rate risk and an original maturity of
three months or less when purchased to be cash equivalents.

Concentrations of Credit Risk

The Company's financial instruments consist primarily of cash and cash
equivalents, marketable securities, trade accounts receivable and certain debt
issuances (see Note 8). Cash and cash equivalents are held in federally insured
financial institutions or invested in high-grade, short-term commercial paper
issued by major United States corporations. Marketable securities consist
principally of corporate stocks. The Company sells its products primarily to,
and has trade receivables with, independent durable medical equipment
manufacturers and dealers in the United States and abroad. During 2004, one
customer accounted for approximately 11% of revenue and 3% of accounts
receivable. During 2003 and 2002, no single customer accounted for over 10% of
revenue. Approximately 13% of product sales are to foreign customers in 2004,
17% in 2003, and 14% in 2002.

As a general policy, collateral is not required for accounts receivable;
however, the Company periodically monitors the need for and records an allowance
for doubtful accounts based upon expected collections of accounts receivable,
historical bad debt rates, and specific identification of uncollectible
accounts. Additionally, customers' financial condition and creditworthiness are
regularly evaluated. Historically losses on collection have not been material.

Inventories

Inventories are stated at the lower of cost or market; cost is determined using
the first-in, first-out method. The Company reviews inventory for indicators
that its inventory exceeds the market value of its inventory and writes down
inventory as deemed necessary. As of December 31, 2004 and 2003, the Company had
recorded an excess and obsolete reserve of approximately $270,000 and $254,000
respectively.

Sales Returns and Warranty

The Company records a provision for estimated sales returns and allowances and
warranty reserve on products it has sold. These estimates are based on
historical sales returns and warranty expenses and other known factors.


<PAGE>


1. Description of Organization and Business and Summary of Significant
Accounting Policies (continued)

Marketable Securities

As of December 31, 2004 and 2003, the Company's marketable securities consisted
of equity securities classified as available-for-sale. Such securities are
carried at their fair value based upon their quoted market prices at December
31, 2003.

Unrealized gains and losses on available-for-sale securities are reported, net
of tax, in a separate component of stockholders' equity.

Realized gains and losses and declines in value, judged to be
other-than-temporary on available-for-sale securities are included in other
income (expense). The cost of securities sold is based on the
specific-identification method. Interest and dividends on securities classified
as available-for-sale are included in other income.

As of December 31, 2004, the Company had unrealized holding losses of $18,525.
As of December 31, 2003, the Company had unrealized holding gains of $3,067 (see
Note 4).

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. If the
Company determines that an impairment of its property and equipment exists, such
property and equipment is written down to its fair value. Depreciation is
computed over expected useful lives of three to twenty-five years using the
straight-line method.

Major replacements and refurbishment costs, which extend the useful lives of
equipment, are capitalized and depreciated over the remaining useful life.
Normal maintenance and repairs are expensed as incurred.

Patents, Trademarks, and Other Intangibles

The costs of acquired and internally developed patents, trademarks, and other
intangibles are amortized over the estimated useful life of the intangible asset
on a straight-line basis. At December 31, 2004 and 2003, accumulated
amortization related to patents, trademarks, and other intangibles was $143,059
and $118,392, respectively. The Company periodically reviews the recoverability
of its intangible assets and where impairment in value has occurred, such
intangibles are written down to net realizable value. During December 2003, the
Company completed the sale of its Physical Evaluation business. Upon completion
of the sale, certain remaining JTech intangible assets and the related
accumulated amortization were written-off. The resulting loss of approximately
$92,500 is included in the 2003 consolidated statement of operations within the
loss on sale of business.

Goodwill

As of December 31, 2004 and 2003, the Company's gross goodwill balance was
$4,568,577 with accumulated amortization of $520,313.

In accordance with SFAS No. 142 goodwill and indefinite-lived intangible assets
must be reviewed annually (or more frequently under certain conditions) for
impairment in accordance with this Statement. This impairment test uses a fair
value approach, rather than the undiscounted cash flow approach previously
required. The Company is annually required to complete Step 1 (determining and
comparing the fair value of the Company's reporting units to their carrying
values, as of December 31, 2004, the Company had one reporting unit with
goodwill) of the impairment test. Step 2 is required to be completed if Step 1
indicates that the carrying value of the reporting unit exceeds the fair value
and involves the calculation of the
<PAGE>


1. Description of Organization and Business
and Summary of Significant Accounting Policies (continued)

Goodwill (continued)

implied fair value of goodwill. The Company completed Step 1 of the impairment
assessment for its reporting unit with goodwill at its annual impairment testing
date in 2004. Based upon the Company's valuation procedures, the Company
determined that the fair value of the reporting unit exceeded its carrying
value. As such, the Company was not required to complete Step 2 of the
impairment test and no impairment loss was recognized.

Prior to the fourth quarter of 2003, the Company had three reporting units with
goodwill. During the fourth quarter of 2003, the Company evaluated its business
opportunities and modified its strategies to focus on its core market offerings
of ambulatory enteral feeding and contract manufacturing services. In
conjunction with this refocus of the Company's business, on December 31, 2003,
the Company completed the sale of JTech, its Physical Evaluation business (see
Note 2). At the time of the sale, goodwill associated with JTech was stated at a
net book value of $5,199,419 on the Company's balance sheet. Upon completion of
the sale, the goodwill and the related accumulated amortization were removed
from the balance sheet and the resulting loss is included in the 2003
consolidated statement of operations within the "Loss on sale of business."

The Company also re-evaluated its reporting units and determined that the
Therapeutics reporting unit, which had consisted of both the Company's
stationary and ambulatory enteral product lines, should be disaggregated such
that the two product lines became separate reporting units for purposes of SFAS
No. 142. The Company made this determination because of the different market and
sales practices of the stationary enteral product line as well as the change in
the Company's focus as described above. Therefore, in the fourth quarter of
2003, due to declining sales and cash flows relating to this stationary enteral
product line, the Company determined that indicators of impairment existed
related to this reporting unit and again completed Step 1 of the impairment
test. Upon completion of Step 1, the Company determined that the fair value of
the stationary enteral reporting unit was less than the carrying value including
goodwill. As such the Company completed Step 2 of the impairment assessment and
a goodwill impairment loss of $841,352 was recorded in 2003 for this reporting
unit. This loss is included in "Asset and goodwill impairment" in the 2003
consolidated statement of operations.

Impairment of Long-Lived Assets

The Company assesses, on an ongoing basis, the recoverability of long-lived
assets, comparing estimates of future undiscounted cash flows to net book value.
If future undiscounted cash flow estimates are less than net book value, net
book value would be reduced to fair value based on estimates of discounted cash
flows. The Company also evaluates amortization periods of assets, including
intangible assets other than goodwill, to determine if events or circumstances
warrant revised estimates of useful lives.

As noted above, the Company modified its future business strategies in the
fourth quarter of 2003. In conjunction with its business refocus, the Company
evaluated its long-lived assets to determine if indicators of impairment
existed. Based upon an assessment of projected future cash flows related to its
stationary enteral product line, the Company determined that impairment of the
fixed asset value for its stationary enteral pumps existed. The Company recorded
an impairment charge of $725,615, as reflected in the 2003 consolidated
statement of operations within "Asset and goodwill impairment."

Income Taxes

The Company provides for income taxes based on the liability method, which
requires recognition of deferred tax assets and liabilities based on the
differences between financial reporting and tax bases of assets and liabilities
measured using enacted tax rates and laws that are expected to be in effect when
the differences are expected to reverse. A valuation allowance has been
established to reduce deferred tax assets to the amount that the Company
believes will be more likely than not to be realized (see Note 7).

<PAGE>

1. Description of Organization and Business and Summary of Significant
Accounting Policies (continued)

Stock Options

The Company has elected to follow the intrinsic value method under Accounting
Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees,
and related Interpretations (FIN No. 44) in accounting for its employee stock
options rather than adopting the alternative fair value accounting provided for
under SFAS No. 123, Accounting for Stock-Based Compensation. During 2004, 2003,
and 2002, no stock-based compensation expense was recognized by the Company.

Had compensation expense for options under the Company's two stock-based
compensation plans been determined based on the fair value of the option at the
grant dates for awards under those plans consistent with SFAS 123, the Company's
net income (loss) and earnings (loss) per share would have been adjusted to the
pro forma amounts for the years ended December 31, as indicated below:


<TABLE>
<CAPTION>
<S>                                                           <C>                   <C>          <C>       <C>

                                                                   2004             2003            2002
                                                              ---------------- ---------------- --------------
Net (loss) income as reported                                  $     (178,977)  $   (8,277,542)  $     214,303
   Less: Stock  compensation  expense  determined under fair
     value method, net of related tax effects                         599,040          334,800         249,613
                                                              ---------------- ---------------- --------------
                                                              ---------------- ---------------- --------------
Pro forma net loss                                             $     (778,017)  $   (8,612,342)  $    (35,310)
                                                              ================ ================ ==============
                                                              ================ ================ ==============
 Earnings per share:
   Basic - as reported                                         $      (0.05)    $        (2.43)  $        0.06
   Basic - pro forma                                           $      (0.23)    $        (2.53)  $       (0.01)
   Diluted - as reported                                       $      (0.05)    $        (2.43)  $        0.06
   Diluted - pro forma                                         $      (0.23)    $        (2.53)  $       (0.01)

</TABLE>


The fair value of the Company's options was estimated at the date of grant using
a Black-Scholes option pricing model with the following weighted-average
assumptions for 2004, 2003, and 2002, respectively, for options where the stock
price equals the exercise price: risk-free interest rate of 3.3%, 3.0%, and
3.4%; dividend yield of 0%; volatility factors of the expected market price of
the Company's common stock of .73, .77, and .53; and a weighted-average expected
life of the option of 3.5, 3.5, and 3.5 years. The estimated weighted-average
fair values of options granted in the years ended December 31, 2004, 2003, and
2002 were $2.30, $1.28, and $1.28, respectively. The following are 2002
weighted-average assumptions for options where the stock price is less than the
exercise price (no such options were granted in 2004 or 2003): risk-free
interest rate of 2.3%; dividend yield of 0%; volatility factors of the expected
market price of the Company's common stock of .53, and a weighted-average
expected life of the option of 3.5 years. The estimated weighted-average fair
values of options where the stock price is less than the exercise price was
$0.70.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's employee stock options have characteristics different from those
of traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized on a straight-line basis over the options' vesting period. Because
the effect of SFAS No. 123 is prospective, the initial impact on pro forma net
income (loss) may not be representative of compensation expense in future years.

<PAGE>

1. Description of Organization and Business and Summary of Significant
Accounting Policies (continued)

Capitalized Software Development Costs for Internal Use

In accordance with the provisions of Statement of Position (SOP) No. 98-1,
Accounting for the Costs of Software Developed or Obtained for Internal Use, the
Company capitalizes internal and external costs to develop or obtain internal
use software during the application development stage. Costs incurred during the
preliminary project stage are expensed as incurred, as are training and
maintenance costs. Amortization is computed using the straight-line method over
the estimated useful life of the assets, which has been determined to be three
to five years.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expenses were $40,450,
$158,168, and $128,616, respectively, for the years ended December 31, 2004,
2003, and 2002.

Research and Development Costs

Research and Development costs are expensed as incurred.

New Accounting Pronouncements

In December 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based
Payment, which is a revision of FASB Statement No. 123, Accounting for
Stock-Based Compensation. Statement 123(R) supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees, and amends FASB Statement No. 95,
Statement of Cash Flows. Generally, the approach in Statement 123(R) is similar
to the approach described in Statement 123. However, Statement 123(R) requires
all share-based payments to employees, including grants of employee stock
options, to be recognized in the income statement based on their fair values.
Pro forma disclosure will no longer be an alternative.

Statement 123(R) must be adopted no later than July 1, 2005 and we expect to
adopt Statement 123(R) on that date. Statement 123(R) permits public companies
to adopt its requirements using one of two methods, the "modified prospective'
or the "modified retrospective." Management has not yet determined which method
it will use. As permitted by Statement 123, the Company currently accounts for
share-based payments to employees using Opinion 25's intrinsic value method and,
as such, generally recognizes no compensation cost for employee stock options.
Accordingly, the adoption of Statement 123(R)'s fair value method will have a
significant impact on our result of operations, although it will have no impact
on our overall financial position. The impact of adoption of Statement 123(R)
cannot be predicted at this time because it will depend on levels of share-based
payments granted in the future. However, had we adopted Statement 123(R) in
prior periods, the impact of that standard would have approximated the impact of
Statement 123 as described in the disclosure of pro forma net income and
earnings per share in Note 1 to our consolidated financial statements.

Net Income (Loss) Per Common Share

Basic net income (loss) per common share is calculated by dividing net income
(loss) for the period by the weighted-average number of the Company's common
shares outstanding.

Diluted net income (loss) per common share includes the dilutive effect of
options, convertible debentures, and warrants in the weighted-average number of
the Company's common shares outstanding, as calculated using the treasury stock
method.

<PAGE>


1. Description of Organization and Business and Summary of Significant
Accounting Policies (continued)

Net Income (Loss) Per Common Share (continued)

Net income (loss), as presented on the consolidated statements of operations,
represents the numerator used in calculating basic and diluted net income (loss)
per common share. The following table sets forth the computation of the shares
used in determining basic and diluted net income (loss) per common share for the
years ended December 31:

<TABLE>
<CAPTION>
<S>                                                          <C>                  <C>                   <C>

(in thousands)                                                    2004            2003           2002
                                                             --------------- --------------- --------------
Denominator for basic net income (loss) per common
   share - weighted-average shares                                3,401           3,401           3,415
Dilutive securities: options, convertible debentures,
   and warrants                                                       -               -               3
                                                             --------------- --------------- --------------
Denominator for diluted net income (loss) per common
   share - adjusted weighted-average shares                       3,401           3,401           3,418
                                                             =============== =============== ==============
</TABLE>


Options, convertible debentures, and warrants to purchase approximately 869,500,
693,000, and 776,000 shares of common stock were outstanding at December 31,
2004, 2003, and 2002, respectively, but were not included in the computation of
diluted earnings per share because they were anti-dilutive.

Supplemental Cash Flow Information

<TABLE>
<CAPTION>
<S>                                                       <C>                 <C>                    <C>

Supplemental disclosures of cash flow information are as follows:

                                                                      Year Ended December 31
                                                               2004            2003           2002
                                                          -----------------------------------------------
 Cash paid during the year for:
    Interest                                               $     141,589  $     323,802   $      520,951

 Schedule of non-cash investing and financing activities:
    Unrealized gain (loss) on available-for-sale
      marketable securities                                      (18,525)         3,067         (32,180)
    Purchase price adjustments related to earn-out
      provisions for acquisitions                                      -              -         (65,722)
    Acquisition of available-for-sale marketable
      securities for accounts receivable                               -        (84,933)               -

</TABLE>


2. Acquisitions and Dispositions

On April 6, 2000, the Company acquired the enteral nutrition delivery device
business of Nestle USA, Inc. ("Nestle") in an asset purchase. The purchase price
included an earn-out of $1,000,000 based upon achievement of certain operating
goals. Such goals were met and, through December 31, 2001 approximately $778,000
had been paid. In 2002 after negotiation with Nestle, the Company paid
approximately $156,000 in final settlement of the earn-out. The difference of
$66,000 was recorded as an adjustment to goodwill in 2002.

On December 31, 2003, the Company completed the sale of its Physical Evaluation
business. The transaction was accomplished through the sale of all the issued
and outstanding capital stock of JTech previously a wholly owned subsidiary of
the Company. The transaction was effected by a Stock Purchase Agreement dated
December 31, 2003 by and between the Company and Mr. Leonard C. Smith, a former
employee, officer and director of the Company, for a purchase price of $1.2
million which was recorded as an "other receivable" at December 31, 2003. Cash
of $1,164,500 was received in 2004 and $35,500 was received in February 2005
when the Company satisfied certain obligations to JTech as set forth in the
Stock


<PAGE>

2. Acquisitions and Dispositions (continued)

Purchase Agreement. Such obligations include the requirement to deliver
inventory, upon completion of production, and certain other equipment. Deferred
revenue of $324,000 was recorded related to these obligations, all of which was
realized in 2004. The Company may also receive additional payments from the
purchaser based upon specifically identified JTech product sales in 2004 and
2005. A loss on the sale of this business in the amount of $4,692,445 was
recorded and is shown separately on the 2003 consolidated statement of
operations. Such loss consists of the write-off of goodwill and other
intangibles as discussed in Note 1 as well as the write-off of certain other
JTech related assets totaling approximately $242,000 and the accrual of legal
costs associated with this transaction.

3. Inventories
<TABLE>
<CAPTION>
<S>                                                             <C>                                <C>

Inventories consist of the following at December 31:
                                                                      2004               2003
                                                               ---------------------------------------

Materials                                                            $2,761,508         $2,144,926
Work-in-progress                                                        470,253            504,921
Finished goods, including completed subassemblies                     1,352,994          1,464,720
                                                               ---------------------------------------
                                                                     $4,584,755         $4,114,567
                                                               =======================================
</TABLE>



4. Marketable Securities

The following is a summary of marketable securities at December 31, 2004:

<TABLE>
<CAPTION>
<S>                                                  <C>                <C>                          <C>

                                                                          Gross
                                                                        Unrealized      Estimated Fair
Available-for-Sale                                       Cost             Losses            Value
                                                    ---------------- ----------------- -----------------
Equity securities                                      $     47,775       $   18,525      $     29,250

The following is a summary of marketable securities at December 31, 2003:

                                                                          Gross
                                                                        Unrealized      Estimated Fair
Available-for-Sale                                       Cost             Gains             Value
                                                    ---------------- ----------------- -----------------
Equity securities                                      $     84,933       $    3,067      $     88,000
</TABLE>


5. Property and Equipment

Property and equipment consist of the following at December 31:
<TABLE>
<CAPTION>
<S>                                                            <C>                       <C>      <C>

                                                                     2004                2003
                                                               ------------------ -------------------

Machinery and equipment                                         $    1,155,635     $    1,062,515
Stationary enteral feeding pumps                                     4,233,699          4,233,699
Furniture and fixtures                                               1,829,402          1,766,903
Software                                                               627,661            627,661
Tooling costs                                                        1,859,194          1,646,269
Building                                                             2,897,534          2,893,934
Land                                                                 1,084,415          1,084,415
                                                               ------------------ -------------------
                                                                    13,687,540         13,315,396
Less accumulated depreciation and amortization                      (9,341,598)        (8,516,276)
                                                               ------------------ -------------------
                                                                $    4,345,942     $    4,799,120
                                                               ================== ===================
</TABLE>
<PAGE>


5. Property and Equipment (continued)

Stationary enteral feeding pumps represent acquired and self-constructed pumps
that are placed with businesses and other users (at little or no cost to the
users) under arrangements in which the pump users have an obligation to buy
disposable products from the Company while they are using the pumps. To the
extent that the users discontinue purchase of the disposables, the pumps are
generally returned to the Company. As discussed in Note 1 an impairment charge
of $725,615 was recorded in 2003 related to stationary enteral feeding pumps.
This is included in the Therapeutics segment in Note 12.

Depreciation and amortization expense (including software amortization expense)
for property and equipment for the years ended December 31, 2004, 2003, and 2002
amounted to $833,064, $1,546,110, and $1,588,696, respectively.

6. Accrued Liabilities

Accrued liabilities consist of the following at December 31:

<TABLE>
<CAPTION>
<S>                                                                <C>                <C>
                                                                   2004               2003
                                                            ------------------- ------------------

Accrued payroll and related taxes and benefits                     $289,355            $244,441
Accrued vacation                                                    152,731             143,955
Warranty reserve                                                    155,000              85,000
Other accrued expense                                                 9,648              51,675
                                                            ------------------- ------------------
                                                                   $606,734            $525,071
                                                            =================== ==================
</TABLE>

7. Income Taxes

Deferred tax assets and liabilities are classified as current or non-current,
depending on the classification of the assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or non-current, depending on
the periods in which the temporary differences are expected to reverse.

Significant components of the Company's net deferred income taxes as of December
31 are as follows:
<TABLE>
<CAPTION>
<S>                                                                  <C>                      <C>        <C>

                                                                          2004                2003
                                                                     ------------------- -------------------
Deferred tax assets:
    Accruals and expenses not currently deductible                     $       333,735     $       303,978
    Fixed asset and other basis differences                                    183,659             289,329
    Net operating loss carryforward                                          1,027,537             881,804
    Federal and state tax credits carryforward                                 270,713             169,169
    Charitable contribution carryforward                                     1,869,742           1,869,742
    Capital loss carryforward                                                3,366,236           3,375,029
                                                                     ------------------- -------------------
Total deferred tax assets                                                    7,051,622           6,889,051

Valuation allowance                                                         (7,051,622)         (6,889,051)
                                                                     ------------------- -------------------
Net deferred taxes                                                     $             -     $             -
                                                                     =================== ===================
</TABLE>


The Company has recorded a full valuation allowance against its deferred tax
assets because the Company did not consider it more likely than not that these
assets would be realized based upon limitations on usage of certain of the
carryforwards as well its cumulative net losses in recent years.


<PAGE>

7. Income Taxes (continued)

The benefit (provision) for income taxes consists of the following:
<TABLE>
<CAPTION>
<S>                                                     <C>                      <C>                        <C>

                                                              2004               2003              2002
                                                        ------------------ ----------------- ------------------
Current taxes:
    Federal                                               $      33,857      $     133,710     $     144,194
    State                                                        (2,635)            25,315            49,700
    R&D credit                                                        -                  -            14,233
Deferred taxes:
    Federal                                                           -            (82,323)         (194,468)
    State                                                             -             (7,990)          (18,875)
                                                        ------------------ ----------------- ------------------
Benefit (provision) for income taxes                      $      31,222      $      68,712     $      (5,216)
                                                        ================== ================= ==================
</TABLE>

The actual tax benefit (expense) differs from the 34% federal statutory rate as
follows:
<TABLE>
<CAPTION>
<S>                                                     <C>                     <C>                       <C>

                                                               2004              2003              2002
                                                         ----------------- ------------------ ----------------

Federal tax benefit (expense) at statutory rate            $      71,468     $   2,837,726      $     (74,636)
State income tax, (including state R & D credit) net              51,321           261,631            (12,655)
Research and development credit                                   89,998           103,108             14,233
Permanent basis differences                                            -           155,703                  -
Benefit from charitable contribution                                   -                 -             11,944
Change in valuation allowance                                   (162,571)       (3,248,108)            83,692
Other non-deductible expenses                                    (18,994)          (41,348)           (27,794)
                                                         ----------------- ------------------ ----------------
Total benefit (provision) for income taxes                 $      31,222     $      68,712      $      (5,216)
                                                         ================= ================== ================
</TABLE>


The Company has federal net operating loss carryforwards totaling approximately
$2,002,000 that begin to expire in 2023. The Company has state net operating
loss carryforwards totaling approximately $10,507,000 that begin to expire in
2016. The Company has a federal and state charitable contribution carryforward
totaling approximately $5,013,000 that is only recognizable if the Company has
taxable income. This carryforward expires in 2007. Finally, the Company has
federal capital loss carryforwards of approximately $9,901,000 that begin to
expire in 2006.

8. Debt

Bank Line of Credit

The Company maintains a line of credit arrangement with a financial institution
with availability of $6 million. The line was subsequently reduced to $3 million
on March 10, 2004. The line matures on May 29, 2005. The Company expects that it
will be able to renew its line of credit in May 2005. The line of credit is
collateralized by accounts receivable and inventory and bears interest at the
prime rate, which was 5.25% at December 31, 2004 and 4.00% at December 31, 2003.
The Company's balance on this line of credit was $0 at December 31, 2004 and
$1,810,970 at December 31, 2003. Under the line of credit agreement, the Company
is restricted from declaring cash dividends and must maintain certain levels of
working capital and meet certain other financial covenants. In the fourth
quarter of 2003, we failed to meet certain financial covenants of our line of
credit. We received a waiver for such covenants, and these covenants were
modified for the first three quarters of 2004, beginning with the quarter ending
March 31, 2004. The Company was in compliance with such covenants as of December
31, 2004.

<PAGE>

8. Debt (continued)

Industrial Development Bond

On October 30, 1996, the Company completed a transaction defined as "Murray
City, Utah, Adjustable Rate Industrial Development Revenue Bonds, Series 1997
(ZEVEX, Inc. Project)" in the amount of $2,000,000. The bonds are secured by an
irrevocable Letter of Credit issued by a bank, which is subject to expiration no
later than May 30, 2008. The bonds bear interest at an adjustable rate based on
the weekly tax-exempt floater rate, as determined by the remarketing agent. The
average rate for 2004 was 1.3%. The bonds mature on October 1, 2016. Principal
reductions occur in the amount of $100,000 per year. The outstanding balance was
$1,300,000 at December 31, 2004, of which $100,000 is classified as current.

Other Long-term Debt

On April 18, 2001, the Company entered into a Term Loan Agreement with a bank
for the amount of $1,000,000. The agreement is secured by the Company's
manufacturing facility. The note was due on May 15, 2003. The Term Loan
Agreement was renegotiated effective May 15, 2003, is now due May 15, 2008 and
is being amortized over a thirteen-year term, at an interest rate of 5.4%. The
outstanding balance at December 31, 2004 was $819,608, of which $53,246 is
classified as current.

The following is a summary of the Company's debt and other long-term
obligations:
<TABLE>
<CAPTION>
<S>                     <C>                            <C>               <C>                             <C>


                                                      Payment due by period
                                                 More than   More than   More than   More than
    Contractual                     Less than     1- year     2- year     3- year     4- year     More than
    Obligation          Total        1 -year                                                       5- year
-------------------- ------------- ------------- ----------- ----------- ----------- ----------- -------------
Industrial
 Development
  Bond                 $1,300,000      $100,000    $100,000    $100,000    $100,000    $100,000      $800,000
Other
  Long-term debt          819,608        53,246      56,219      59,358     650,785           -             -
                     ------------- ------------- ----------- ----------- ----------- ----------- -------------
                     ------------- ------------- ----------- ----------- ----------- ----------- -------------
Total                  $2,119,608      $153,246    $156,219    $159,358    $750,785    $100,000      $800,000
                     ============= ============= =========== =========== =========== =========== =============
</TABLE>


9. Employee Benefit Plans

401(k) Profit Sharing Plan

The Company maintains a qualified 401(k) profit sharing plan covering
substantially all employees. Eligible employees may defer a portion of their
salary. At the discretion of the Board of Directors, the Company may make a
contribution of up to four percent (4%) of the eligible employees' salaries and
an additional discretionary amount to be determined each year by the Board of
Directors. Employees are fully vested in the employer contributions after six
years. Contributions to the plan for the years ended December 31, 2004, 2003,
and 2002 were $128,202, $146,590, and $130,823, respectively.

10. Stockholders' Equity

Preferred Stock

The Company is authorized to issue 2,000,000 shares of $.001 par value preferred
stock. None of the preferred stock was issued or outstanding at December 31,
2004 or 2003.

Common Stock Reserved for Future Issuance

At December 31, 2004, the Company had reserved 1,124,519 shares of common stock
for future issuance under the Company's stock option plans.

<PAGE>

10. Stockholders' Equity (continued)

Stock Option Plans

In September 1997, the Board of Directors consolidated its previous three stock
option plans into one plan and established the Amended 1993 Stock Option Plan
(the "1993 Plan"), which was ratified by shareholders in October 1993. Under the
1993 Plan, 600,000 shares of common stock were authorized for issuance, subject
to adjustment for such matters as stock splits and stock dividends.

The 1993 Plan provides for the grant of incentive stock options, stock
appreciation rights, and stock awards to eligible participants and may be
administered by the Board of Directors or by the Compensation Committee. All
options granted under the 1993 Plan expire after five to seven years from the
grant date and become exercisable no later than four years from the grant date.

During 1999, the Board of Directors established the 1999 Stock Option Plan (the
"1999 Plan"), which was ratified by shareholders in June 1999. The 1999 Plan
authorized 600,000 shares of common stock for issuance, subject to adjustment
for such matters as stock splits and stock dividends. The 1999 Plan provides for
the grant of incentive stock options, stock appreciation rights, and stock
awards to eligible participants and may be administered by the Board of
Directors or by the Compensation Committee. All options granted under the 1999
Plan expire after five to ten years from the grant date and become exercisable
either immediately or up to six years from the grant date.

A summary of stock option activity for both plans, and related information for
the years ended December 31, 2002, 2003, and 2004 follows:
<TABLE>
<CAPTION>
<S>                                   <C>            <C>                               <C>               <C>

                                          Shares          Outstanding Stock Options          Weighted-
                                                     ------------------------------------
                                        Available       Number of           Price             Average
                                        for Grant        Shares           Per Share        Exercise Price
                                     -------------------------------- --------------------------------------

Balance at January 1, 2002                 384,302        740,217            $2.47-7.00           $4.82
   Options granted                        (229,500)       229,500             1.90-3.40            3.09
   Options exercised                             -              -                     -               -
   Options canceled                        336,867       (336,867)            2.47-7.00            4.71
                                     -------------------------------- --------------------------------------
Balance at December 31, 2002               491,669        632,850             1.90-5.00            4.25
   Options granted                        (102,500)       102,500             1.90-2.86            1.99
   Options exercised                             -              -                     -                    -
   Options canceled                         42,400        (42,400)            4.00-5.00            4.85
                                     -------------------------------- --------------------------------------
                                     -------------------------------- --------------------------------------
Balance at December 31, 2003               431,569        692,950             1.90-5.00            3.86
   Options granted                        (444,000)       444,000             3.30-4.30            3.72
   Options exercised                             -              -                     -                    -
   Options canceled                        267,450       (267,450)            1.90-5.00            4.11
                                     -------------------------------- --------------------------------------
Balance at December 31, 2004               255,019        869,500            $1.90-5.00           $3.71
                                     ================================ ======================================
</TABLE>



Additionally, SFAS No. 123 requires that companies with wide ranges between the
high and low exercise prices of its stock options segregate the exercise prices
into ranges that are meaningful for assessing the timing and number of
additional shares that may be issued and the cash that may be received as a
result of the option exercises.


<PAGE>

10. Stockholders' Equity (continued)

Stock Option Plans (continued)

Below are the segregated ranges of exercise prices as of December 31, 2004:


<TABLE>
<CAPTION>
<S>                      <C>                                                  <C>                     <C>
                         Options Outstanding                                  Options Exercisable
----------------------------------------------------------------------  ---------------------------------
                                       Weighted-
                                        Average         Weighted-                           Weighted-
    Range of                           Remaining         Average                             Average
    Exercise           Number         Contractual        Exercise            Number          Exercise
     Prices          Outstanding         Life             Price           Exercisable         Price
----------------- ---------------------------------- -----------------  ----------------- ---------------

    $1.90-3.63         550,000          5.5 years        $3.21               115,250          $2.76
     3.94-5.00         319,500          4.3 years         4.57               161,250           4.76
----------------- ---------------------------------- -----------------  ----------------- ---------------
    $1.90-5.00         869,500          5.0 years        $3.71               276,500          $3.93
================= ================================== =================  ================= ===============
</TABLE>


11. Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating the
fair value of its financial instruments:

     Cash and cash equivalents, accounts receivable, and accounts payable: The
     carrying amounts reported in the balance sheet for cash and cash
     equivalents, accounts receivable, and accounts payable approximate their
     fair values.

     Marketable securities: The Company determines fair values based on quoted
market prices.

     Bank line of credit, convertible debt, industrial development bond, other
     long-term debt and capital leases: The fair values of the Company's bank
     line of credit and long-term debt and leases are estimated using discounted
     cash flow analyses, based on the Company's current estimated incremental
     borrowing rates for similar types of borrowing arrangements.

The carrying amounts and fair values of the Company's financial instruments are
as follows at December 31:
<TABLE>
<CAPTION>
<S>                                  <C>            <C>                                <C>              <C>

                                                    2004                               2003
                                     ----------------------------------- ----------------------------------
                                          Carrying             Fair           Carrying             Fair
                                           Amount              Value           Amount              Value
                                     ----------------- ----------------- ---------------- -----------------
 Cash and cash equivalents            $     212,859     $     212,859     $     668,089    $     668,089
 Accounts receivable                      3,563,436         3,563,436         3,830,341        3,830,341
 Marketable securities                       29,250            29,250            88,000           88,000
 Accounts payable                         1,949,618         1,949,618         1,540,700        1,540,700
 Bank line of credit                              -                 -         1,810,970        1,810,970
 Industrial development bond              1,300,000         1,300,000         1,400,000        1,400,000
 Other long-term debt                       819,608           822,997           870,038          901,745
 Capital leases                                   -                 -           122,950          134,570
</TABLE>

<PAGE>


12. Business Segments

The Company currently operates in two business segments: Therapeutics and
Applied Technology. The Therapeutics segment includes the manufacture and sale
of feeding pumps, disposable sets and feeding tubes used by patients who require
direct gastrointestinal nutrition therapy (also called enteral feeding). In the
Applied Technology segment, the Company provides design and manufacturing
services to medical device companies who, in turn, sell the Company's components
and systems under private labels or incorporate them into their products. The
Company evaluates the performance of the segments through gross profit, less
selling and marketing expenses, and research and development expenses (or
contribution margin). The Company does not allocate general and administrative
expenses by segment. General and administrative expenses are included in
Corporate and Unallocated amounts indicated below.

Segment information for the year ended December 31, 2004 (in thousands) is as
follows:

<TABLE>
<CAPTION>
<S>                                   <C>                  <C>              <C>                         <C>

                                                           Applied          Corporate and
                                      Therapeutics        Technology         Unallocated             Total
                                 ------------------ ------------------- ------------------ -----------------
                                 ------------------ ------------------- ------------------ -----------------
Revenue                                  $  12,489           $  11,145            $    --          $ 23,634
Cost of sales                                8,159               7,018                 --            15,177
                                 ------------------ ------------------- ------------------ -----------------
                                 ------------------ ------------------- ------------------ -----------------
Gross profit                                 4,330               4,127                 --             8,457
Selling and marketing                        2,937                 352                 --             3,289
Research and development                       989                 442                 --             1,431
                                 ------------------ ------------------- ------------------ -----------------
                                 ------------------ ------------------- ------------------ -----------------
Contribution margin                            404               3,333                 --             3,737
General and administrative                      --                  --              3,853             3,853
Other (income)/expense                          --                  --                 94                94
Benefit for income taxes                        --                  --               (31)              (31)
                                 ------------------ ------------------- ------------------ -----------------
                                 ------------------ ------------------- ------------------ -----------------
Net loss                                                                                            $ (179)
                                                                                           =================
                                                                                           =================

                                 ------------------ ------------------- ------------------ -----------------
                                 ------------------ ------------------- ------------------ -----------------
Total assets                      $             364            $  4,048          $  12,989          $ 17,401
                                 ================== =================== ================== =================
</TABLE>


Included in the segment assets disclosed above are specifically identified fixed
assets and goodwill. All assets other than those specifically identified fixed
assets and goodwill are included in Corporate and Unallocated. The only
specifically identified fixed assets include nutritional pumps and tooling,
which are included in the Therapeutics segment. All other fixed assets are used
jointly by the segments. Goodwill represents approximately $4,048,000 in Applied
Technology.

Through December 31, 2003 when such business was sold (See Note 2), the Company
also operated in a third segment, the Physical Evaluation segment. The Physical
Evaluation segment includes the manufacture and sale of stand-alone and
computerized products that measure isolated muscle strength, joint range of
motion and sensation.


<PAGE>


12. Business Segments (continued)

Segment information for the year ended December 31, 2003 (in thousands) is as
follows:

<TABLE>
<CAPTION>
<S>                               <C>              <C>             <C>            <C>                   <C>

                                                    Physical        Applied      Corporate and
                                  Therapeutics     Evaluation     Technology      Unallocated       Total
                                 --------------- --------------- -------------- --------------- ------------
                                 --------------- --------------- -------------- --------------- ------------
Revenue                             $    12,406    $      3,016      $  10,448         $    --     $ 25,870
Cost of sales                             9,124           1,369          7,053              --       17,546
                                 --------------- --------------- -------------- --------------- ------------
                                 --------------- --------------- -------------- --------------- ------------
Gross profit                              3,282           1,647          3,395              --        8,324
Selling and marketing                     2,596           1,557            394              --        4,547
Research and development                    760             763            295              --        1,818
                                 --------------- --------------- -------------- --------------- ------------
                                 --------------- --------------- -------------- --------------- ------------
Contribution margin                        (74)           (673)          2,706              --        1,959
General and administrative                   --              --             --           3,770        3,770
Asset and goodwill impairment             1,567              --             --              --        1,567
Loss on sale of business                     --           4,692             --              --        4,692
Other (income)/expense                       --              --             --             276          276
Benefit for income taxes                     --              --             --            (68)         (68)
                                 --------------- --------------- -------------- --------------- ------------
                                 --------------- --------------- -------------- --------------- ------------
Net loss                                                                                          $ (8,278)
                                                                                                ============
                                                                                                ============

                                 --------------- --------------- -------------- --------------- ------------
                                 --------------- --------------- -------------- --------------- ------------
Total assets                       $        752     $        --       $  4,048       $  14,932     $ 19,732
                                 =============== =============== ============== =============== ============

Included in the segment assets disclosed above are specifically identified fixed
assets and goodwill. Goodwill represents approximately $4,048,000 in Applied
Technology.

Segment information for the year ended December 31, 2002 (in thousands) is as follows:
                                                                               Corporate and
                                                  Physical        Applied       Unallocated
                                Therapeutics     Evaluation      Technology                       Total
                                -------------- --------------- --------------- --------------- -------------
                                -------------- --------------- --------------- --------------- -------------
Revenue                             $  12,125       $   3,650        $  9,721         $    --      $ 25,496
Cost of sales                           7,682           1,363           5,331              --        14,376
                                -------------- --------------- --------------- --------------- -------------
                                -------------- --------------- --------------- --------------- -------------
Gross profit                            4,443           2,287           4,390              --        11,120
Selling and marketing                   2,552           1,134             253              58         3,997
Research and  development                 672             199             418              --         1,289
                                -------------- --------------- --------------- --------------- -------------
                                -------------- --------------- --------------- --------------- -------------
Contribution margin                     1,219             954           3,719            (58)         5,834
General and administrative                 --              --              --           5,127         5,127
Other (income)/expense                     --              --              --             488           488
Provision for income taxes                 --              --              --               5             5
                                -------------- --------------- --------------- --------------- -------------
                                -------------- --------------- --------------- --------------- -------------
Net income                                                                                          $   214
                                                                                               =============
                                                                                               =============

                                -------------- --------------- --------------- --------------- -------------
                                -------------- --------------- --------------- --------------- -------------
Total assets                        $ 3,183       $     5,199        $  4,075       $  16,341      $ 28,798
                                ============== =============== =============== =============== =============
</TABLE>


Included in the segment assets disclosed above are specifically identified fixed
assets and goodwill. Goodwill represents approximately $842,000 in Therapeutics,
$5,199,000 in Physical Evaluation, and $4,048,000 in Applied Technology.

13. Related-Party Transactions

On December 31, 1998, the Company acquired JTech pursuant to a Stock Purchase
Agreement among 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 Company paid $290,000 of the convertible debenture in
December 2001, and the remaining principal amount of $1,073,594 (inclusive of
the 1999 earn-out provision of $52,406) was paid on December 31, 2002.


<PAGE>


13. Related-Party Transactions (continued)

JTech also entered into an employment agreement with Mr. Smith, dated December
31, 1998, which provided that Mr. Smith serve as President of JTech for three
years at a salary of $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 $5.00 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 and served until December 2002. Mr. Smith also served as Sr. Vice
President of ZEVEX International, Inc. and of ZEVEX, Inc., until December 31,
2003. On December 31, 2003, the Company completed the sale of its Physical
Evaluation business to Mr. Smith (see Note 2).

<PAGE>

                                                                  EXHIBIT 23.1






            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We  consent to the  incorporation  by  reference  in the  Registration
Statement  (Form S-8 No.  333-121591)  pertaining  to the ZEVEX International,
Inc. 1999 Stock Option Plan and the ZEVEX  International,  Inc. Amended 1993
Stock Option Plan of ZEVEX  International,Inc., of our report dated March 3,
2005, with respect to the consolidated  financial statements of ZEVEX
International,  Inc., included in this Annual Report (Form 10-K) for the year
ended December 31, 2004.





Salt Lake City, Utah                                      /s/ Ernst & Young LLP
March 28, 2005