<PAGE>   1
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

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

            For the fiscal year ended: DECEMBER 31, 2000

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

            For the transition period from                to
                                           --------------    -------------

            Commission file number:  0-28484

                              QUALMARK CORPORATION
                 (Name of small business issuer in its charter)


                  COLORADO                                  84-1232688
       (State or other jurisdiction                       (IRS Employer
     of incorporation or organization)                  Identification No.)

                 1329 WEST 121ST AVENUE, DENVER, COLORADO 80234
          (Address of principal executive offices, including zip code)

                                 (303) 254-8800
              (Registrant's Telephone Number, including area code)

             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 (NO PAR VALUE)
                                (Title of Class)


         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 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
   -----   ----

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [ ]

         Issuer's revenues for its most recent fiscal year.  $12,505,000

         The aggregate market value of the voting stock held by nonaffiliates
computed by reference to the average bid and asked prices of such stock as of
March 16, 2001 was $7,107,369.

         The number of shares outstanding of the issuer's Common Stock as of
March 16, 2001 was 3,610,092.

                      DOCUMENTS INCORPORATED BY REFERENCE

         Registrant's definitive Proxy Statement to be filed pursuant to
Regulation 14A under the Securities Exchange Act of 1934 is incorporated by
reference in Part III of this report.

         Transitional Small Business Disclosure Format (Check One): Yes    No X
                                                                       ---   ---


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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.


     QualMark Corporation ("QualMark" or "the Company") designs, manufactures,
and markets proprietary equipment that rapidly and efficiently expose product
design and manufacturing-related defects for the purpose of improving product
quality and reliability. The Company's high performance physical stress
equipment supports significant improvements in the process of Design
Verification Testing ("DVT") and Environmental Stress Screening ("ESS"). DVT is
the process by which electronic product manufacturers ensure their products
perform within the previously determined operating ranges (commonly known as
"specifications"). ESS is the testing process used by these same manufacturers
to expose production-related defects.

     The Company's equipment allow manufacturers to determine the true operating
limits of their products. This gives manufacturers the necessary information to
reduce design costs, improve product reliability, shorten time to market, reduce
warranty costs, and extend warranty periods. The Company's equipment is used by
manufacturers in a wide range of industries to perform highly accelerated stress
testing on products such as circuit boards, personal computers, monitors, flight
navigation systems, cellular telephones, LAN/WAN equipment and consumer
electronics.

     The Company evolved from a business manufacturing and marketing its
proprietary OVS (Omni-axial Vibration System) equipment to a full service
organization offering HALT (Highly Accelerated Life Test) and HASS (Highly
Accelerated Stress Screen) test services as well. The Company operates a network
of test centers, known as Accelerated Reliability Test Centers ("ARTC"), which
provide comprehensive HALT and HASS test and support services to industry. These
services include accelerated reliability improvement test services (HALT and
HASS) using QualMark's OVS physical stress equipment performed either in the
ARTC test centers or at the customer's site.

     QualMark currently has six test centers located in the metropolitan areas
of Denver, Colorado, Huntington Beach, California, Santa Clara, California,
Boston, Massachusetts, Detroit, Michigan, and Orlando, Florida. The Company also
has two strategic alliances with testing companies in the U.S. In addition, the
Company has established strategic alliances with TUV Product Service Ltd. and
Anecto Ltd., Maser Engineering, IMQ Instituto del marchia di Qualita, Institutet
For Verkstadsteknisk Forskning/The Swedish Institute of Production Engineering,
and Emitech, to operate testing centers in London, England, Galway, Ireland,
Mannheim, Germany, Enschede, the Netherlands, Milan, Italy, Molndal, Sweden and
Paris, France. As international demand for its products and services grows, the
Company may further expand its domestic and international presence by expanding
strategic alliance arrangements with other test lab organizations.

     The Company was organized in July 1991 as a Colorado limited liability
company and was later incorporated in Colorado in March 1992. The Company
completed its initial public offering in April 1996.


PRODUCTS AND SERVICES

     THE OVS COMBINED STRESS SYSTEM

     The Company's OVS Combined Stress Systems for HALT and HASS are comprised
of two main subassemblies: the LF Vibration Assembly, which applies vibrational
stresses, and the UltraRate Thermal Chamber Assembly, which applies thermal
stresses and houses the vibration assembly. During 2000, the Company released
the newest advancement in the OVS Combined Stress System, the Typhoon
("Typhoon"). The Typhoon technology optimizes the operating efficiencies of the
standard OVS test chambers. The lower costs are made possible by a unique design
that significantly reduces both the consumption of liquid nitrogen used to cool
the chambers and the amount of electricity used to heat the chambers.


     The LF Vibration Assembly

     The LF (low frequency) Vibration Assembly is a new generation vibration
system, which the Company introduced in 1999. This system has increased low
frequency compared to the Omniaxial vibration system previously produced and
sold by the Company. The LF system is a multi-axis vibration system comprised of
a table, actuators and unique attachment system and is the heart of the
Company's technology. The vibration table moves simultaneously in three linear
axes and three angular rotations. Each axis has broad-band random vibration,
with all frequencies present, all of the time. While the traditional frequency
range used for Design Verification Testing (DVT) and Environmental Stress
Screening (ESS) is from 2Hz to 2,000


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Hz, the Company's system creates vibrational forces between 2Hz and 10,000 Hz.
The new LF table has significantly increased low frequency energy available
resulting in more effective testing and screening for larger sub-systems. It
also provides extremely complex motion across a broad frequency range, which is
desirable for many current electronic technologies. Thus, the system creates
virtually any vibration that could occur naturally during product use. This is
important in testing and screening applications to expose most flaws, whether it
is design or process related, before the product is placed into service.

THE LF VIBRATION SYSTEM CONSISTS OF TWO MAJOR COMPONENTS:

VIBRATION TABLE

     The new patent pending table is constructed out of a top plate, thermal
insulation layer and supporting under structure. This new design is
significantly lighter and stiffer than the previous design, resulting in higher
low frequency energy and improved energy distribution over the active frequency
range. This table has proved particularly effective in the testing of assemblies
with larger components. The Company while continuing to supply a range of
standard table sizes has also produced custom sizes to meet customer
requirements. The Company uses an outside source to produce its vibration
tables, however the Company is not dependent on a single source of supply and
controls all design and documentation.

ASX AND LF2 ACTUATORS

     Attached to the bottom surface of the under structure are a set of
pneumatic piston driven actuators. The method of attachment is also the subject
of a patent application, as the unique method shapes the frequency distribution.
There are two types of actuator used, the patent pending ASX and the licensed
LF2. The ASX actuator is an evolution of the patented Autosmear actuator. The
Company is the sole licensee of the LF2 actuator from Storage Technology
Corporation. The combination of actuators provides excitation in both the low
and high frequency areas of the energy spectrum. Compressed air is used to drive
the pistons in the actuators to impact the top of the actuators, translating the
energy through the attachment system to vibration energy in the table.

     The unique design of these actuators when used in conjunction with the new
table generates an even distribution of vibratory energy in the frequency
spectrum. This provides for more effective fault detection and screening. The
Company has released this technology in all the OVS system sizes.

     The UltraRate Thermal Chamber Assembly

     The UltraRate Thermal Chamber, which houses the OmniAxial Vibration
Assembly, changes temperature at rates up to 600 Centigrade per minute as
measured on the product being tested. This high rate of change results in highly
effective design verification during HALT and extremely short production screens
during HASS, requiring less equipment and personnel to perform a given series of
thermal cycles. The Company believes that its UltraRate Thermal Chambers,
comprised of patented and patent pending features, have one of the highest rate
of thermal change available in the environmental stress screening industry. This
capability significantly reduces test time, with resulting cost reductions in
equipment and personnel.

     In spite of rapid temperature change and complex vibration spectra, the
system is extremely quiet, allowing it to be used in standard lab and
manufacturing environments without the necessity of building costly special
stress screening rooms.

TYPHOON TECHNOLOGY:

     The Typhoon technology represents the newest development in UltraRate
Thermal technology. The technology lowers operating costs by reducing thermal
mass of the chamber and optimizing the efficiency of the air flow system, which
consequently reduces operating costs.

The OVS Combined Stress System Product Line

     The Company's OVS Combined Stress Systems for HALT and HASS are presently
available in four sizes. The number after the "OVS" in the Company's product
models represents the linear footage of the vibration table as explained below.
Therefore, an OVS-1.5 contains a one and one half foot by one and one half foot
table, an OVS-2.5 contains a two and a half foot by two and a half foot table,
and so on. In addition to these standard systems, the Company has also designed
and manufactured custom systems to meet unique customer requirements. Through
this product spectrum, the Company provides systems capable of meeting virtually
every accelerated design ruggedization and production screening requirement. The
variety of chamber sizes allows customers to purchase equipment that meets their
requirements and to consume only the energy necessary to meet their
requirements. The OVS-4 and Typhoon systems have a unique patented feature which
allows the user


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to raise the shaker table, thus decreasing the internal volume of the chambers
to the minimum size required. By cooling and heating a smaller volume, the
customer can save considerably on power and liquid nitrogen requirements.

     OVS-1.5:

         The OVS-1.5 is the smallest version of the OVS product line. The
     OVS-1.5 is a truly portable, multi-axis vibration and high performance
     thermal chamber. Equipped with all the same operating features of the
     larger OVS systems, including PC controller, the OVS-1.5 is primarily used
     by manufacturers of small products (such as "palm size" circuit boards,
     modem cards for notebook computers, disk drives, etc.) and usually in the
     product development (HALT) area.


         The OVS-1.5 can generate random vibration forces in excess of 90 Grms
     (2Hz-10,000 Hz) on the 18"x18" vibration table and up to 60(degrees)
     Centigrade per minute change on the product under test within the
     18"x17"x13" internal dimension (ID) thermal chamber. The domestic price of
     the OVS-1.5 is approximately $77,900.

     OVS-2.5:

         The OVS-2.5 is the most popular system in the OVS product line. A
     mid-size system, the PC-controlled OVS-2.5 is equipped with four actuators
     mounted to the vibration table. The OVS-2.5 LF vibration system can
     generate 50 Grms from 2Hz to 10,000 Hz. The vibration table is 30"x30", and
     is enclosed within a thermal chamber that is 36"x36x37" (ID). The thermal
     chamber is capable of up to 60(degrees) Centigrade per minute change on the
     product under test. Typical uses of the OVS-2.5 include mid-size product
     HALT applications (disk drives, small computers, power supplies, monitors,
     etc.) and small volume HASS applications (multiple disk drives, multiple
     modem cards for notebook computers, etc.) The domestic price for a standard
     OVS-2.5 is approximately $128,500.

     OVS-4:

         The OVS-4 is the largest system in the OVS product line. By far, the
     most common application for the OVS-4 is for large volume production
     screening (HASS) on computers, monitors, communications systems, etc. The
     PC-controlled OVS-4 is equipped with a 48"x48" vibration table housed
     within a 55"x54"x54" (internal dimension) (table in lower position) thermal
     chamber capable of producing temperature changes of up to 60(degrees)
     Centigrade per minute on the product under test. The OVS-4 LF vibration
     system is equipped with eight actuators that produce up to 50 Grms random
     vibration force. The domestic price for a standard OVS-4.0 is approximately
     $182,500.

     Typhoon:

         The Typhoon chamber compares in size with the OVS-4. The most common
     application for the Typhoon is large volume production screening (HASS) on
     computers, monitors, communications systems, etc. The PC-controlled Typhoon
     is equipped with a 48"x48" vibration table housed within a 55"x54"x54"
     (internal dimension) (table in lower position) thermal chamber capable of
     producing temperature changes of up to 70(degrees) Centigrade per minute on
     the product under test. The Typhoon vibration system is equipped with
     twelve actuators that produce up to 35 Grms random vibration force. The
     domestic price for a standard Typhoon is approximately $185,000.

         A one year limited warranty is included with each OVS system sold in
     2000. Various options and accessories are available for each OVS model,
     including oxygen monitors, vacuum hold down apparatus (for product
     fixturing requirements), extended warranties, and on-site applications
     assistance.





QUALMARK ENGINEERING SERVICES ("QES")

         The Company offers a range of engineering services tailored to help
solve test process problems. The services that are offered under QES are:

                o  HALT and HASS testing procedure development


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                o  Precision production fixturing solutions
                o  Automated electronic functional test equipment design and
                   development
                o  Software validation testing and life cycle analysis
                o  Test and process data warehousing
                o  Remote viewing and analysis of test data through Internet
                   linking

The Company reviews each project with experts in the various fields and compiles
a proposal, which typically includes investigation, specification, and
execution. After the system or process is installed, the Company continues to
work with the client's staff to monitor and support the product and process.
This approach gives customers access to experts in varying fields at a time when
internal resources are often overburdened. The result is a better product
delivered to the marketplace, faster.

ACCELERATED RELIABILITY TEST CENTERS

     The Company has a network of ARTC test centers throughout the United
States, which provide test services and on-site applications support services.
The Company is uniquely positioned to offer comprehensive HALT/HASS test
services to manufacturers. The QualMark test service business includes
accelerated reliability test services performed in the Company's test centers
and on-site applications support services. These services allow a broad range of
customers convenient access to the Company's technology while also serving as
valuable sales tools for gaining system orders. Each test center is equipped
with the OVS-2.5, at least one applications engineer and ancillary testing
equipment. Offering these services as an ISO-registered accelerated test lab
significantly differentiates the Company from its equipment and lab competition.

     The Company opened its first ARTC facility in Denver in October 1993 and
subsequently opened additional facilities in Marlborough (Boston), Massachusetts
and Santa Clara, California in July 1994 and May 1995, respectively. Since
opening these facilities, many test service clients have placed orders to
purchase systems as a result of the data gathered and analyzed at the Company.
The test center is a valuable tool for the Company sales people to stimulate
system sales from those clients who are not willing to commit capital without
being able to experience a demonstration of the benefits using their own
product. Of strategic importance to the Company, the testing service business
should help insulate the Company from external economic factors that affect
capital spending and provide for more consistent revenues.

     In addition to its Boston, Denver and Santa Clara test centers, during
1996, the Company opened test centers in the metropolitan areas of
Minneapolis-Saint Paul, Minnesota, Detroit, Michigan, and Raleigh, North
Carolina. In 1997, the Company opened its seventh and eighth test centers in
Huntington Beach, California and Orlando, Florida. During 1999 and 2000, the
Company reevaluated its domestic test center market and closed the
Minneapolis-Saint Paul, Minnesota and Raleigh, North Carolina labs. The Company
established its first test center presence outside the U.S. via a strategic
alliance with TUV Product Service Ltd. In Fareham, England. This lab began
operations in February 1998. The second international alliance was established
in Galway, Ireland with Anecto, Ltd. This lab commenced operations in August
1998. The Company established a third international alliance in Mannheim,
Germany with TUV Product Service Ltd. as the partner. The Mannheim lab commenced
operations in November 1998. In 1999 the Company further expanded its
international network with its fourth additional alliance with Maser Engineering
in Enschede, The Netherlands. This lab commenced operations in May of 1999.
During 1999, agreements were put into place for the Company's fifth, sixth and
seventh international strategic alliances. These alliances are with IMQ
Institudo Italiano del Marchio di Qualita, located in Milan, Italy, Institutet
for Verkstadsteknisk Forskning/the Swedish Institute of Production Engineering
Research, located in Molndal, Sweden and with Emitech, located in Paris, France.
Under all of these alliances, except for Maser Engineering, the Company
contributed one OVS 2.5 system and the strategic partner provided the lab
facility, personnel and sales management. Under the agreement with Maser
Engineering, the Company contributed one OVS 1.5 system. In return for its
contribution of these systems to these alliances, the Company receives a
percentage of the revenues generated by the OVS systems.

     The Company may open additional test centers principally in metropolitan
areas with a heavy concentration of potential client companies and in which the
Company has a factory sales representative responsible for the target metro
area. Management believes demand for its test services will continue to grow,
allowing for controlled expansion into additional metro areas. Finally, the
Company may expand its international presence via strategic alliance
arrangements with other test lab organizations.

     Based on client demand, the Company offers on-site applications support
services, principally through its ARTC network, to its clients as well as
competitors' customers. Specifically, the Company advises customers how to apply
HALT and HASS techniques to their products.


<PAGE>   6


MARKETING

     During the last quarter of 2000, the Company reorganized it marketing group
hiring a new Director of Marketing and support staff. This change is an effort
to revitalize the Company's marketing philosophy and approach. Planning has been
started to assess the company's market and to target potential areas of growth.
The Company expanded it's offerings, entering the education field offering a
range of seminars developed by an industry expert. These seminars along with
open houses and technical presentations will continue to expand QualMark's
presence in the marketplace.

     The following is planned for the next twelve months:

1)       Continue to offer educational services and technical research and
         analysis through white papers. The Company will co-author to facility
         these white papers in an effort broadcast success with these
         techniques.

2)       The Company will overhaul it's advertising and target the typical
         journals in the industry as well as a few in adjacent disciplines.

3)       While the Company will attend a few focussed trade shows, the marketing
         plan is to expand it's presence on the web, positioning itself as a
         resource in accelerated testing.

4)       The Company has shifted it's focus reducing it's direct sales force and
         recruiting a number of independent representatives. The Company is also
         developing its market presence through its relationship with Chart
         Industries.

5)       The Company is focussing on expanding it's product offerings to
         existing chamber customers. The Company is developing a number of
         service plans to support the existing customer base. The Company is now
         offering a custom production fixturing business to help customers get
         the maximum benefit from their investment.

     Sales Strategy

     During the last quarter of 2000, the Company has revised its sales
strategy, by shifting focus from direct to independent representatives. These
representatives have been carefully chosen, each with many years selling similar
types of equipment. These representatives will be support by the regional Vice
Presidents as well as staff from head quarters. The Company will continue to do
the telemarketing from headquarters and will continue to use independent
sales/service agents in Europe, the Middle East and the Far East. The Company
plans to further support these agents as well as investigate potential markets
that have not yet been addressed.

     The regional vice presidents have been moved into more of a support role
with each sales employee responsible for selling all of the Company's products.
The Company believes that this will cause a relationship to be built as the
customer is led through the Company's products and services.


CUSTOMERS

     The Company's systems continue to be used by manufacturers in a wide
variety of industries. From inception of the Company, through December 31, 2000,
the Company has sold 377 systems to 135 different customers, in the following
industries: Telecommunications and Computer, Defense and Aerospace, Medical
Electronics, and others. The QualMark customer list includes major corporations
such as Allied Signal (Honeywell), AT&T, Cessna, Dupont, Cummins Engine,
Hewlett-Packard, Hughes (Raytheon), Intel, Lucent Technologies, Johnson &
Johnson, Medtronic, Motorola, National Semiconductor, Magnavox, Nortel (formerly
Northern Telecom), Sequent Computers (IBM), Tektronix, 3Com, United
Technologies, Cisco, and Dell. During 2000, there were no customers that
comprised 10% or more of the Company's revenue and the Company was not dependent
on any single industry segment for its revenues.


<PAGE>   7


     The Company's customers continues to be varied and are as follows:

<TABLE>
<CAPTION>
Aerospace and Defense                   Computer Related Products            Other
---------------------                   -------------------------            -----
<S>                                     <C>                                  <C>
Aviation electronics                    Circuit boards                       Automotive circuitry
Display switches                        Disk drives                          Electronic oil and gas flow meters
Flight navigation systems               Modems                               Global positioning systems
Marine navigation systems               Monitors
                                        Power supplies
                                        Printers
                                        Tape backup drives

Telecommunications                      Medical Electronics
------------------                      -------------------
Automated teller machines               Electronic thermometers
Air conditioning electronics            Glucose monitors
Cordless telephones                     Infusion pumps
Fax machines                            IV pumps
                                        Laboratory centrifuges
                                        Medical imaging systems
                                        Patient monitors
</TABLE>


RESEARCH AND PRODUCT DEVELOPMENT

     Research and development expenditures for the fiscal years ending December
31, 2000 and 1999 were $836,000 and $690,000, respectively. In 2000, the Company
released the Typhoon chamber the culmination of two and a half years of research
and development activity. It is the intent of the Company in 2001 to continue
its commitment and effort to the development of new technologies and product
offerings and expects its research and development expenditures to increase.
This research and development effort is expected to be funded by cash flows from
operations.

     Of great benefit to the Company is that its technology is extremely
flexible in regard to the physical size of its OVS systems; consequently,
product line extension opportunities normally do not require sizable
expenditures on product development.

     The Company intends to continue taking advantage of design refinement
opportunities specific to its OVS combined stress technology. As discussed in
the following "Intellectual Property" section, the Company currently holds
domestic and foreign patents on its products and continues to seek patent
protection of current and new products. The Company is optimistic that the
flexibility and scalability of its fundamental OVS combined stress technology
will allow the Company to add to its product line as new opportunities develop.

     Through its association with the University of Maryland's CALCE EPRC
(Computer Aided Life Cycle Enhancement, Electronic Packaging Research Center)
research program, the Company has aligned itself with one of the premier
electronic packaging research centers in the world. As a CALCE EPRC affiliate,
the Company has ongoing access to leading-edge technology development in the
areas of highly accelerated test methods and virtual verification. As the demand
and viability of these new test methods and technologies are verified, the
Company intends to add them to its ARTC service offering.

     The association with the University of Maryland allows the Company to
better manage its investment in research and development, while enjoying the
benefit of having an OVS system on site at CALCE EPRC for visiting prospective
client representatives to observe its operation.



INTELLECTUAL PROPERTY

     The Company has maintained the practice, where possible, to pursue patent
protection on its products. The Company has been issued eleven United States
patents (the "Patents") and one foreign patent issued in six countries. These
patents protect certain features of the OmniAxial and LF Vibration Assemblies of
the Company's OVS Combined Stress Systems or certain design features of the
pneumatic, piston-driven actuators (vibrators) that help create random motion of
the vibration table. The Company was issued U.S. Patent No. 5,365,788 on
November 22, 1994, for certain design features of pneumatic, piston driven
actuators that create motion for a vibration table. The Company was issued U.S.
Patent No. 5,412,991 on May 9, 1995, for certain design features of the
Company's vibration table. The Company was issued U.S. Patent No. 5,517,857 on
May 21, 1996, for certain design features related to positioning of a vibration
table within a stress screening chamber. The Company was issued U.S. Patent No.
5,540,109 on July 30, 1996, and U.S. Patent No. 5,675,098 on October 7, 1997,
for certain design features related to use of multiple stress screening
chambers. The Company was issued U.S. Patent No. 5,589,637 on December 31, 1996,
for certain design features of mountings of actuators to a vibration table. The
Company was issued U.S. Patent No. 5,744,724 on April 28, 1998 for certain
design features related to honeycomb vibration table structures. The


<PAGE>   8


Company was issued Patent No. 5,836,202 on November 17, 1998 for claims directed
at the angle of attachment of the actuators to the vibration table. The Company
was issued Patent No. 5,813,541 on September 29, 1998 for the configuration of
the control system attachment to the chamber. The Company was issued Patent No.
6,062,086 on May 16, 2000 relating to interposer devices for adjusting and
controlling the shock response of a shaker table assembly. The Company was
issued Patent No. 6,105,433 on August 22, 2000 for low frequency shaker table
technology. The remaining duration of each of the Patents is between ten and
twenty years.

     The Patents provide barriers to competition in the equipment sales portion
of its business. The loss of some or all of the protection of the Patents would
make it easier for other companies to enter the Company's market, compete, by
eroding the Company's ability to differentiate itself on the basis of technical
superiority.

     In addition to the Patents, the Company tries to protect its proprietary
technology and know-how through established security practices and
confidentiality agreements with each of its employees, consultants, suppliers
and technical advisors. There can be no assurance, however, that these
agreements or procedures will provide meaningful protection for the Company's
trade secrets in the event of unauthorized use or disclosure of such
information.

     While the Company believes the protection afforded by the Patents is
strong, there can be no assurance that other companies will not be able to
design and build competing vibration tables in a manner that does not infringe
the Patents.

     The Company has the following registered marks with the United States
Patent and Trademark Office: QUALMARK, ACCELERATE THE FUTURE, ACCELERATED
RELIABILITY TEST CENTER, ARTC, AUTOSMEAR and QHT. The Company has eleven U.S.
trademarks pending and five foreign mark applications pending. The Company plans
to make additional trademark, service mark, and certification mark applications
as appropriate.



COMPETITION


     Equipment

     The environment, which the Company competes, continues to get more
competitive. With the growing acceptance of the HALT & HASS techniques, this
market segment is being targeted as a growth area in an otherwise flat industry.
However, with the release of the new Typhoon system and the market acceptance of
the LF vibration system, the Company is confident that it will maintain it's
leadership position and maintain it's market share.

     Screening Systems, Inc. ("SSI") (Laguna Hills, California) has been in the
ESS and DVT business since the early 1980's. They operated for many of those
years with technology licensed from Hughes Electronic ("Hughes"). On March 22,
1996, Screening Systems, Inc. filed a patent infringement suit against the
Company in federal district court in Santa Ana, CA. This litigation was settled
on August 30, 1999. See Item 3 - Legal Proceedings.


     Thermotron Industries (Holland, MI) announced their offering of a
competitive product to the Company's OVS system in the first quarter of 1998.
Thermotron is a broad line environmental chamber manufacturer and has also begun
manufacturing and selling a chamber with an integrated vibration system that
directly competes with QualMark's OVS product offering.



     ARTC and Applications Support Services

     As the test methods, HALT and HASS continue to gain market acceptance, the
Company is starting to see competition for the ARTC's. Most of these competing
facilities are traditional test labs that have been furnished with equipment by
competing manufacturers. The Company is keeping a close eye on this development
but is confident that the superior offering of the ARTC's will maintain market
share.


<PAGE>   9
MANUFACTURING

     The Company's manufacturing facility is located in Denver, Colorado.
QualMark's assembly of the OVS systems follow a manufacturing line approach, in
which drawings of all subassemblies used by the Company are maintained using
computer aided design (CAD). The assembly of the Company's products is organized
around three major elements that include vibration systems, chamber systems and
control systems.

     To ensure that all subassemblies meet specifications when received, key
suppliers remain actively involved throughout product design. Key suppliers
perform source inspection at the point of manufacture. Most key suppliers are
local companies. The Company intends to further develop local suppliers, with
back-up suppliers as required. To date, the components and assemblies from these
suppliers have met or exceeded all specifications. The Company is not dependent
on any one or a few major suppliers for any of the key parts or components of
its systems. However, the Company has developed relationships with what it
considers critical vendors that manufacture three components of its OVS system.
While the Company is not dependent on these suppliers, it would take as much as
60 days to locate, qualify and begin taking delivery of these components from
new suppliers.

     While the Company maintains a small inventory of OVS systems in finished
goods, the Company primarily uses a rolling-quarter sales forecast in
determining the number of OVS-1.5, OVS 2.5, OVS-4, Typhoon systems to build
during the quarter. Because of increased sales volume, the Company is producing
certain common subassemblies that are integrated into the final systems when
orders are booked. This helps provide a more even manufacturing flow and
minimizes the "peaks and valleys" associated with small volume manufacturing.

     The Company has implemented Material Requirements Planning, a computer
software driven inventory management process, to maximize the effectiveness in
which an order can be filled while minimizing required inventory. Management
uses fully-costed Bills of Materials (BOM) which ensure that all parts of an OVS
system are identified and ordered in a timely manner.

PRODUCT WARRANTIES AND SERVICE

     In 1999 and 2000, the Company offered a limited, two and one-year parts and
labor warranty on all new OVS systems, respectively. OVS customers can purchase
extended warranties on their OVS systems, which may include two preventive
maintenance visits during the year by a qualified Company representative. In
addition, the Company offers for sale a comprehensive spare parts kit for each
OVS system, which further minimizes OVS system down time. Because of the
efficient design of OVS systems, the Company occasionally sends its technicians
into the field for warranty repairs. Most problems can be diagnosed over the
phone and, if necessary, replacement parts are sent to the customer via
overnight mail. During 2001, the Company will offer a standard, one-year parts
and labor warranty on all new OVS systems, and a limited, two-year parts and
labor warranty on specific negotiated contracts.

GOVERNMENT REGULATION

     To its knowledge, the Company complies with all international, federal,
state, and local regulations, including environmental regulations, governing the
conduct of its business and the costs of such compliance are minimal. The
Company has no significant environmental issues or impact in its manufacturing
or service delivery and there are no significant costs or compliance issues with
any government agencies or laws in this area.

EMPLOYEES

     As of December 31, 2000, the Company had forty-five employees, forty-two of
which are full-time. Thirty one of the Company's employees are employed at its
principal offices and headquarters in Denver, Colorado, seven are employed at
its facilities in Santa Clara, CA, two in Huntington Beach, CA , one in
Farmington Hills, MI, one in Marlborough, MA, two in Winter Park, FL, and one in
Huntsville, AL. No employees are represented by labor organizations and there
are no collective bargaining agreements. Employee relations are believed to be
good.

ITEM 2.  DESCRIPTION OF PROPERTY.

     The Company operates out of leased facilities located at 1329 West 121st
Avenue, Denver, Colorado. The three-year lease for the property expires on May
31, 2003. The leased property consists of approximately 18,093 square feet. The
lease calls for monthly payments over the term of the lease of $14,890. The
Company also leases 2,400 square feet in a space in the same building, 1313 West
121st Avenue. This space has a separate lease agreement that expires on November
30, 2001. The lease calls for monthly payments over the term of the lease of
$1,593. In addition to the two leases, the Company is responsible for certain
expenses, including property taxes, insurance and maintenance. The Company's
manufacturing, sales, administrative operations and regional ARTC services are
conducted at this facility.


<PAGE>   10


     The suburban Boston ARTC facility is located at 98 South Street, Hopkinton,
Massachusetts. The six-year lease expires April 30, 2005. The leased property
consists of approximately 5,000 square feet. The lease calls for average monthly
payments over the term of the lease of $3,252. In addition, The Company is
responsible for certain expenses, including property taxes, insurance and
maintenance. The Company's regional ARTC service business is conducted at this
facility.

     The Silicon Valley ARTC facility is located at 2225 Martin Avenue, Suite K,
Santa Clara, California. The three-year lease expires on February 28, 2001. The
leased property consists of approximately 4,660 square feet. The lease calls for
average monthly payments of $7,222. In addition, the Company is responsible for
certain expenses, including property taxes, insurance and maintenance. The
Company's regional ARTC service business is conducted at this facility.

     The suburban Minneapolis ARTC facility is located at Rush Lake Business
Park, 1775 Old Highway 8, Suite 110, New Brighton, Minnesota. The Company ceased
operations at this facility in April of 1999 but continues to lease the facility
until a suitable sub-lessor can be located. The present value of the remaining
lease cost was expensed during 1999. The five-year lease expires in February
2001. The leased property consists of 2,783 square feet. The lease calls for
average monthly payments of $2,748. In addition, the Company is responsible for
certain expenses, including property taxes, insurance and maintenance. The
Company's regional ARTC service business was conducted at this facility.

     The suburban Raleigh ARTC facility is located at 215 Southport Drive, Suite
300, Morrisville, North Carolina. The five-year lease expires in July 2001. The
Company ceased operations at this facility in November of 2000 but continues to
lease the facility until a suitable sub-lessor can be located. The present value
of the remaining lease cost was expensed during 2000. The leased property
consists of approximately 4,692 square feet. The lease calls for average monthly
payments of $3,175. In addition, The Company is responsible for certain
expenses, including property taxes, insurance and maintenance. The Company's
regional ARTC service business is conducted at this facility.

     The suburban Detroit ARTC facility is located at 39255 Country Club Drive,
Suite B-8, Farmington Hills, Michigan. The five-year lease expires in September
2001. The leased property consists of approximately 4,491 square feet. The lease
calls for average monthly payments of $5,427. In addition, the Company is
responsible for certain expenses, including property taxes, insurance and
maintenance. The Company's regional ARTC service business is conducted at this
facility.

     The southern California ARTC facility is located at 15661 Producer Lane,
Unit H, Huntington Beach, California. The five-year lease expires in December
2002. The leased property consists of 3,420 square feet. The lease calls for
average monthly payments of $2,154. In addition, the Company is responsible for
certain expenses, including property taxes, insurance and maintenance. The
Company's regional ARTC service business is conducted at this facility.

     The suburban Orlando facility is located at Crossroads Business Center,
Suite 212, 931 Semoran Boulevard, Winter Park, Florida. The five-year lease
expires April 30, 2002. The lease calls for average monthly payments of $2,969.
In addition, the Company is responsible for certain expenses, including property
taxes, insurance and maintenance. The Company's regional ARTC service business
is conducted at this facility.

       The Company believes that its facilities are adequate for its current
needs and that suitable additional space can be acquired if needed. All of the
premises are of recent construction, are in good condition, are neat in their
appearance and are located in business complexes with business of similar
quality.


ITEM 3.  LEGAL PROCEEDINGS

     On March 22, 1996, the Company was served with a summons and complaint in
the U.S. District Court in the Central District of California from Screening
Systems, Inc. ("SSI"), a competitor. The complaint, as amended, alleged that the
Company's vibration system infringed three patents owned by Hughes Electronics
("Hughes") and licensed to SSI, and sought injunctive relief, monetary damages
and costs of litigation.

     On August 30, 1999, the Company entered into a settlement agreement ("The
Agreement") with SSI. Both the Company and SSI denied any wrongdoing or
liability in any of the claims asserted. The Company agreed to pay SSI $925,000
to settle the litigation. Of that amount, the Company agreed to pay $300,000 at
the execution of the settlement agreement and to pay the remaining amounts by
April 1, 2001. The Company also agreed to issue SSI warrants to purchase 620,000
shares of common stock of QualMark Corporation. The exercise price of these
warrants is $4.85 per share and the warrants expire on August 30, 2004. Based on
the fully diluted shares used in the Company's earnings per share calculation
for the year ended


<PAGE>   11


December 31, 2000, if SSI exercised this warrant at a cost of $3,007,000, it
would own 14.8% of the Company's common stock. According to the terms of The
Agreement, as long as SSI family members own more than 5% of QualMark
Corporation common stock, their shares shall be non-voting. Both parties agreed
to a Mutual Release of Claims and to a Mutual Covenant not to sue each other
over any claim of patent infringement or alleged patent infringement with regard
to the making, having made, selling, offering for sale, importing or using any
products or services sold by either party in the ordinary course of business
prior to August 1, 1999.

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

     There were no matters submitted to a vote of shareholders during the last
quarter of the fiscal year ended December 31, 2000.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The common stock of the Company is traded on the NASDAQ (National
Association of Securities Dealers Automated Quotations) Small-Cap Market. The
following table sets forth the range of high and low closing bid prices of the
Company's common stock as reported by NASDAQ during fiscal years 2000 and 1999:



<TABLE>
<CAPTION>
                                              Fiscal Year Ended December 31, 2000

                                             High Close                                Low Close
<S>                                          <C>                                       <C>
First Fiscal Quarter                         $ 4.875                                    $3.125
Second Fiscal Quarter                          4.125                                     2.750
Third Fiscal Quarter                           3.375                                     2.313
Fourth Fiscal Quarter                          2.938                                     1.000
</TABLE>



<TABLE>
<CAPTION>
                                              Fiscal Year Ended December 31, 1999

                                             High Close                                Low Close
<S>                                          <C>                                       <C>
First Fiscal Quarter                         $ 5.438                                    $4.000
Second Fiscal Quarter                          4.875                                     2.250
Third Fiscal Quarter                           3.375                                     2.250
Fourth Fiscal Quarter                          3.000                                     2.000
</TABLE>

     The foregoing quotations represent quotations between dealers without
adjustment for retail markups, markdowns or commissions and may not represent
actual transactions.

     At December 31, 2000, the Company had approximately 1,081 beneficial
shareholders and 31 shareholders of record. The Company has never paid a cash
dividend and does not intend to do so in the future. The Company anticipates a
dividend payment on the outstanding preferred stock, in kind, of additional
preferred stock in future quarters (Refer to Note 8 of the Financial
Statements).

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

     The following table sets forth for the fiscal periods indicated the
percentage of total revenues, unless otherwise indicated, represented by certain
items reflected in the Company's consolidated statement of operations:


<PAGE>   12


<TABLE>
<CAPTION>
                                                   Fiscal Year Ended
                                       -------------------------------------------
                                       December 31, 2000         December 31, 1999
<S>                                    <C>                       <C>
Statement of Operations Data:
Revenues                                     100.0%                    100.0%
Cost of Revenues                              60.3                      60.3
                                             -----                     -----
Gross Profit                                  39.7                      39.7
Selling, general and administrative
   expenses                                   31.5                      54.2
Research and development
   expenses                                    6.7                       5.5
Severance Charges                              2.2                        --
                                             -----                     -----
Income (loss) from operations                 (0.7)                    (20.0)
Other income (expense)                        (2.4)                     (1.4)
                                             -----                     -----
Income (loss) before income taxes             (3.1)                    (21.4)
Income tax benefit                             0.1                       2.6
                                             -----                     -----
Net income (loss)                             (3.0)%                   (18.8)%
                                             =====                     =====
</TABLE>


RESULTS OF OPERATIONS

     The Company's annual and quarterly operating results could be subject to
fluctuations for a variety of reasons. The Company operates with a small backlog
relative to its revenue; thus most of its sales in each quarter result from
orders received in the current or prior quarter. In addition, because prices for
the Company's products are relatively substantial, a significant portion of net
sales for each quarter is attributable to a relatively small number of units.

Comparison of Years Ended December 31, 2000 and 1999

REVENUE

     Revenue decreased $54,000 or 0.4% to $12,505,000 in the year ended December
31, 2000 from 12,559,000 in the year ended December 31, 1999.

     OVS system revenue increased $409,000 or 4.6% from in $8,804,000 in the
year ended December 31, 1999 to $9,213,000 in the year ending December 31, 2000.
Sixty-three OVS units were sold in the year 2000 compared with the sixty OVS
units sold in the year 1999. The Company attributes the increase in demand for
OVS systems to the continuing development of strategic business relationships.
In the third quarter of 2000, QualMark entered into a marketing agreement with
Chart Industries. The agreement provides QualMark and Chart broad domestic
distribution rights to each other's products. Chart's contract with three
independent sales organizations and a staff of six sales personnel resell OVS
units in the mid-west and mid-atlantic states. During 2000, 8 OVS units were
sold to Chart, which were immediately sold by Chart to third parties,
representing 10.2% of equipment revenue, under the agreement. Additionally, the
Company continues to develop its already strong presence in the international
market place. QualMark has established business relationships with Hielkema Test
Equipment B.V. in the Netherland, Beatronic in Denmark, Emitech in France,
Amitra Oy in Finland, Thermotec Weilburg GmbH & Co. KG in Germany, AB-AD
Technology and Engineering Ltd. In Israel, Sumitomo in Japan, Namil Environ
Company in Korea, Logicom in Singapore, Kendro Laboratory Products AB in Sweden,
Chroma ATE Inc. in Taiwan, and Alphatech Limited in the UK. Of the units sold in
the year ended December 31, 2000, 19 represented international sales for 29.7%
of equipment revenue. The Company is continuing to expand its customer base in
2001 by initiating contact with potential distributors in China, India, South
Africa, and Jordan. QualMark is committed to focusing on domestic sales staff to
build relationships with potential key customers and establishing new sales
partnerships to expand the Company's customer base.

     Test center revenue decreased $463,000 or 12.3% from $3,755,000 the year
ended December 31, 1999 to $3,292,000 in the year ending December 31, 2000. As
of December 31, 2000, the Company operated six test centers containing ten
systems. This compares to December 31, 1999 when the Company operated seven test
centers containing eleven systems. The Company primarily attributes the decrease
in ARTC lab revenue to a reduction in ARTC labs. During the year ended December
31, 2000, two of the Company's larger test center labs suffered losses in key
sales and test engineer personnel. These factors directly affect the ARTC labs
ability to maximize volume. During the fourth quarter 2000, QualMark took steps
to optimize ARTC Labs by closing one lab in Morrisville, North Carolina. The
Company believes that these changes will result in increased margins and
utilization. During 1998 and continuing into 2000, the Company initiated its
international ARTC expansion


<PAGE>   13


program and is continuing to maintain its strategic alliances with operating
test labs in five different countries: TUV Product Service in the U.K. and
Germany, Anecto, ltd. in Ireland, IMQ in Italy, and Maser in the Netherlands.
Revenue for these alliances increased $71,000 or 31.7% from $224,000 in the year
ended December 31, 1999 to $295,000 for year ended December 31,2000. Under the
strategic alliance agreements, QualMark provides an OVS 2.5 to each lab
location, except Maser Engineering in the Netherlands which has an OVS 1.5, and
the strategic partner provides the facility, labor, and sales management.
QualMark receives a percentage of the revenue that the OVS system generates.


GROSS MARGIN

     The gross margin in 1999 and 2000 was 39.7%. The margin remained constant
as continuing price pressures exist in the accelerated test equipment market.
Management expects margins to increase during future quarters as emphasis is
placed on manufacturing utilization and overhead management. The Company further
believes that additional opportunities exist to improve margins through further
enhancements of relationships with its key vendors.

OPERATING EXPENSE

     Total operating expenses decreased $2,449,000 or 32.7% from $7,499,000 in
the year ended December 31, 1999 to $5,050,000 for the year ended December 31,
2000.

      Selling, general and administrative expenses declined $2,867,000 or 42.1%
from $6,809,000 for the year ended December 31, 1999 to $3,942,000 for the year
ended December 31, 2000. The decrease is attributed to substantial legal costs
of $2,114,000 incurred in 1999, which were associated with the defense of a
Company patent. All patent litigation was resolved in August 1999 (Refer to Item
3. Legal Proceedings). Also in 1999, the Company incurred additional costs for
consulting and travel expenses related to the continual development of the
international ARTC labs.

     Research and development costs increased $146,000 or 21.2% from $690,000
for the year ended December 31, 1999 to $836,000 for the year ended December 31,
2000. The increase is attributed to the Company's commitment to investing in
research and development, with a focus on current product line improvements. On
October 2, 2000, QualMark introduced a new product called Typhoon that the
Company believes will enable users of combined stress and thermal-only test
chambers to cut their consumable costs by up to 50% (Refer to Item 1,
Description of Business). It is the intent of the Company in 2001 to continue
its commitment and effort to the development of new technologies and product
offerings and expects its research and development expenditures to increase to
over $1,000,000.

      During June 2000, the Company initiated an organizational restructure plan
and charged $272,000 in severance to operations. This reorganization resulted in
the resignation of the Company's president and a reduction of six other
personnel from the Sales and Marketing, Accounting and Administrative, and
Manufacturing departments. Severance costs include salary payments, fringe
benefits and taxes related to these seven employees. Cash payments to settle the
salary payments, fringe benefits and taxes will continue through May of 2001.
Cash payments made during 2000 totaled $190,000 and as of December 31, 2000, the
severance liability balance remaining is $82,000.



INCOME TAX BENEFIT

         The Company experienced an unexpected business downturn during 2000 and
1999 that resulted in operating losses. Management concluded that it was more
likely than not that some portion of the deferred tax assets would not be
realizable and determined that a valuation allowance was required for a portion
of the deferred tax assets. Accordingly, a valuation allowance was established,
which, as of December 31, 2000 totaled $712,000 or 36% of total existing
deferred tax asset. The Company needs to generate approximately $4,700,000 in
taxable income to fully utilize its deferred tax assets in the future.

LIQUIDITY AND CAPITAL RESOURCES

     During 2000, the Company generated $188,000 of cash from operating
activities, invested $371,000 for equipment and sold equipment for $15,000,
invested $28,000 for patents, made $3,000 in capital lease payments, borrowed
$950,000 from banks and repaid $575,000 of those borrowings. Employees and
investors exercised options and warrants to purchase 104,223 shares of common
stock for proceeds of $235,000. Together, these activities resulted in a cash
increase of $411,000, for the year, for a balance of $936,000 at December 31,
2000. During 1999, the Company generated $839,000 of cash from operating
activities, invested $769,000 for equipment, invested $72,000 for patents, made
$2,000 in capital lease payments, borrowed


<PAGE>   14


$1,050,000 from banks and repaid $600,000 of those borrowings. Employees and
investors exercised options and warrants to purchase 54,000 shares of common
stock for proceeds of $115,000. In addition, the Company issued 465,116 Shares
of preferred stock for net proceeds of $974,000. Together, these activities
resulted in a cash decrease of $143,000, for a year-end balance of $525,000 at
December 31, 1999.

     During 1999, the Company renegotiated its Revolving Credit and Term Loan
Agreement ("Credit Agreement") with a commercial bank. Among other changes, this
amendment to the existing Credit Agreement reduced the amount the Company may
borrow on its revolving credit from $3,000,000 to $2,000,000. In addition, the
Company will make no further borrowings on the term loan portion of the Credit
Agreement. The revolving loan reflects five draws against it, with interest
rates ranging from 9.71% to 10.08%. As of December 31, 2000, the balance of the
revolving credit is $2,000,000. The term loan agreement, bears interest at the
reserve adjusted LIBOR rate plus the applicable margin (as defined), which was
9.71% and 9.26% at December 31, 2000 and 1999, respectively. As of December 31,
2000, the Company had an outstanding balance of $886,000 under the term loan
agreement. Both the line of credit arrangement and term loan agreement are
collateralized by substantially all the assets of the Company. The Credit
Agreement was due on December 22, 2001.

     The Company must maintain certain financial and other covenants in order to
draw amounts available under the line of credit. Provisions under this agreement
are not considered restricted to normal operations. Although the Company is not
now, nor has it ever been in arrears on any payment pursuant to the Credit
Agreement, as of December 31, 2000, the Company was in default of certain
financial covenants contained in the Credit Agreement. The Company has, however,
received waivers from its lender regarding such noncompliance.

     On February 1, 2001, the Company again renegotiated its Credit Agreement
with the commercial bank. Among other changes, this amendment to the Credit
Agreement reduces the revolving credit line to $1,000,000 (the outstanding
balance at February 1, 2001 was $811,000). In addition, the term loan available
was increased to $2,000,000 (the outstanding balance at February 1, 2001 was
$2,000,000). Both the revolving credit line and term loan under the Credit
Agreement become due on March 15, 2002.

     The Company expects to meet long term liquidity requirements through cash
flows generated by operations and the existing cash balance. The Company does
not anticipate any additional term loan borrowing, or draws against the
revolving credit line in 2001. Management has derived a short and long-term plan
to repay the existing Credit Agreement. As defined by the amended Credit
Agreement on February 1, 2001, the Company will make monthly principal payments,
beginning March 31, 2001, of $35,000 on the term loan. In addition, the Company
has also determined during 2001, quarterly payments on the revolving line of
credit will be made, based on cash flows generated from operations. At the close
of each quarter, the Company has made arrangements to meet and review results of
the Company with the commercial bank. During 2001, the Company expects to
renegotiate with the commercial bank for an extension to the Credit Agreement.




QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's exposure to interest rate changes are primarily related to
its variable rate debt issued under its $2,886,000 Credit Agreement (Refer to
Note 5 of the Financial Statements). Because the interest rates on these
facilities are variable, based upon the bank's prime rate or LIBOR, the
Company's interest expense and net income are affected by interest rate
fluctuations. If interest rates were to increase or decrease by 100 basis
points, the result, based upon the existing outstanding debt as of December 31,
2000 would be an annual increase or decrease of approximately $29,000 in
interest expense and a corresponding decrease or increase of approximately
$17,000 in the Company's net income after taxes.

     Revenue generated from foreign sales are payable in United States funds,
thus no foreign exchange rate risk exists.


FORWARD-LOOKING STATEMENTS

     The statements contained in this report which are not historical facts are
forward-looking statements that are subject to risks and uncertainties that
could cause actual results to differ materially from those set forth or implied
by forward-looking statements, including but not limited to variability in order
flow and operating results, the ability of the Company to find and retain
qualified personnel to staff its manufacturing and marketing operations and
existing and anticipated test centers, and the risk that the demand for the
Company's systems will not continue to grow.


<PAGE>   15


ITEM 7.  FINANCIAL STATEMENTS.

     Index to Financial Statements:

<TABLE>
<CAPTION>
                                                                  Page Number
                                                                  -----------
<S>                                                               <C>
Report of Independent Accountants                                 F-1
Statement of Operations                                           F-2
Balance Sheet                                                     F-3
Statement of Shareholders' Equity                                 F-4
Statement of Cash Flows                                           F-5
Notes to Financial Statements                                     F-6
</TABLE>

     All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

     None.



                                    PART III


ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

     The Company's definitive Proxy Statement to be filed pursuant to Schedule
14A under the Securities Exchange Act of 1934 is incorporated herein by
reference.

ITEM 10.  EXECUTIVE COMPENSATION.

     The Company's definitive Proxy Statement to be filed pursuant to Schedule
14A under the Securities Exchange Act of 1934 is incorporated herein by
reference.



ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The Company's definitive Proxy Statement to be filed pursuant to Schedule
14A under the Securities Exchange Act of 1934 is incorporated herein by
reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The Company's definitive Proxy Statement to be filed pursuant to Schedule
14A under the Securities Exchange Act of 1934 is incorporated herein by
reference.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits - See Index to Exhibits
(b)      Reports on Form 8-K during the last quarter of the Company's fiscal
         year ended December 31, 2000. - None


<PAGE>   16


                                   SIGNATURES



In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.


Dated:     April 11, 2001            QUALMARK CORPORATION


                                   By:  /s/ CHARLES D. JOHNSTON
                                       -----------------------------------------
                                       Charles D. Johnston, President and Chief
                                       Executive Officer

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.


<TABLE>
<CAPTION>
Signature                        Title                                               Date
---------                        -----                                               ----
<S>                              <C>                                                 <C>
/s/ Charles D. Johnston          President, Chief Executive Officer                  April 11, 2001
---------------------------      and Director
Charles D. Johnston

/s/ Anthony A. Scalese           Principal Accounting Officer                        April 11, 2001
---------------------------
Anthony A. Scalese

/s/ H. Robert Gill               Director                                            April 11, 2001
---------------------------
H. Robert Gill

/s/ Philip A. Gordon             Director                                            April 11, 2001
---------------------------
Philip A. Gordon

/s/ James L.D. Roser             Director                                            April 11, 2001
---------------------------
James L.D. Roser

/s/ William J. Sanko             Director                                            April 11, 2001
---------------------------
William J. Sanko

/s/ Richard Jennewine            Director                                            April 11, 2001
---------------------------
 Richard Jennewine
</TABLE>


<PAGE>   17




REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and
Shareholders of QualMark Corporation

In our opinion, the accompanying balance sheet and the related statements of
operations, of shareholders' equity and of cash flows present fairly, in all
material respects, the financial position of QualMark Corporation at December
31, 2000 and 1999, and the results of its operations and its cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America. 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 of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit 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.

As discussed in Note 1, the Company restated its 1999 net loss per share
calculations for the effect of a beneficial conversion feature associated with
redeemable preferred stock.


PricewaterhouseCoopers LLP

Denver, Colorado
April 2, 2001



                                      F - 1
<PAGE>   18

QUALMARK CORPORATION

STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                                       2000          1999
<S>                                                 <C>           <C>
Revenues                                            $   12,505    $   12,559
Cost of revenues                                         7,538         7,570
                                                    ----------    ----------

        Gross profit                                     4,967         4,989

Selling, general and administrative expenses             3,942         6,809
Research and development expenses                          836           690
Severance charges                                          272            --
                                                    ----------    ----------

        Total operating expenses                         5,050         7,499
                                                    ----------    ----------

        Loss from operations                               (83)       (2,510)

Other income (expense):
   Interest expense                                       (307)         (200)
   Interest income                                           1            33
   Other income (expense), net                               2            (9)
                                                    ----------    ----------

Loss before income taxes                                  (387)       (2,686)

Income tax benefit                                          12           322
                                                    ----------    ----------

Net loss                                            $     (375)   $   (2,364)
                                                    ==========    ==========


Net loss per basic and diluted common share         $    (0.13)   $    (0.80)
                                                    ==========    ==========

Weighted average shares outstanding                      3,571         3,532
                                                    ==========    ==========
</TABLE>


                     The accompanying notes are an integral
                       part of these financial statements.

                                      F - 2
<PAGE>   19



QUALMARK CORPORATION

BALANCE SHEET
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                                            2000          1999
<S>                                                                      <C>           <C>
ASSETS
Current assets:
   Cash and cash equivalents                                             $      936    $      525
   Trade accounts receivable, net of allowance for doubtful
    accounts of $187 and $192, respectively                                   3,968         4,089
   Inventories, net                                                           1,297         1,725
   Deferred tax asset                                                         1,194         1,089
   Other current assets                                                         122           125
                                                                         ----------    ----------
        Total current assets                                                  7,517         7,553
Property and equipment, net                                                   1,290         1,508
Note receivable from former officer                                              --           104
Deferred tax asset                                                               --            88
Other assets                                                                    132           155
                                                                         ----------    ----------
                                                                         $    8,939    $    9,408
                                                                         ==========    ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                      $    1,032    $    1,179
   Accrued expenses                                                             745         1,272
   Customer deposits and deferred revenue                                        82            58
   Current portion of long-term debt                                            700         1,700
   Current portion of capital lease obligations                                  --             3
                                                                         ----------    ----------
        Total current liabilities                                             2,559         4,212
Long-term debt                                                                2,461         1,086
Deferred tax liability                                                           17            --
                                                                         ----------    ----------
           Total liabilities                                                  5,037         5,298
Commitments and contingencies (Notes 6 and 13)


Redeemable preferred stock (Note 8);
   no par value; 2,000,000 shares authorized;
   502,326 designated as Series A, 465,116 shares issued
   and outstanding, liquidation preference $1,107;
   99,619 designated as Series B, none issued or outstanding                  1,016           919


Shareholders' equity:
   Common stock; no par value; 15,000,000
      shares authorized; 3,643,238 and 3,539,015 shares issued                7,403         7,210
   Treasury stock, at cost, 35,546 and zero shares held                        (123)           --
   Accumulated deficit                                                       (4,394)       (4,019)
                                                                         ----------    ----------
        Total shareholders' equity                                            2,886         3,191
                                                                         ----------    ----------
                                                                         $    8,939    $    9,408
                                                                         ==========    ==========
</TABLE>


                     The accompanying notes are an integral
                       part of these financial statements.

                                      F - 3

<PAGE>   20


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                         COMMON STOCK            TREASURY STOCK        ACCUMULATED
                                                    SHARES        AMOUNT        SHARES      AMOUNT       DEFICIT          TOTAL
<S>                                               <C>           <C>           <C>           <C>        <C>             <C>
Balance December 31, 1998                          3,485,015    $    6,396            --    $   --     $     (1,655)   $    4,741

Exercise of warrants for common stock                 54,000           115                                                    115

Amortization of deferred compensation
related to issuance of warrants and option                              23                                                     23

Warrants issued in connection with
redeemable preferred stock                                              87                                                     87

Warrants issued for common stock in
litigation settlement                                                  621                                                    621

Accretion of redeemable preferred stock,
dividends and beneficial conversion feature                            (32)                                                   (32)

Net loss                                                                                                     (2,364)       (2,364)
                                                  ----------    ----------    ----------   --------    ------------    ----------
Balance December 31, 1999                          3,539,015         7,210            --         --          (4,019)        3,191

Exercise of warrants for common stock                 19,079            38                                                     38

Exercise of options for common stock                  85,144           197                                                    197

Compensation related to issuance of
options for services                                                    55                                                     55

Common stock received in settlement of
note receivable and interest from former
officer                                                                           35,546       (123)                         (123)

Accretion of redeemable preferred stock
and dividends                                                          (97)                                                   (97)

Net loss                                                                                                       (375)         (375)
                                                  ----------    ----------    ----------   --------    ------------    ----------
Balance December 31, 2000                          3,643,238    $    7,403        35,546    $  (123)   $     (4,394)   $    2,886
                                                  ==========    ==========    ==========   ========    ============    ==========
</TABLE>


                     The accompanying notes are an integral
                       part of these financial statements.

                                      F - 4
<PAGE>   21


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                                        2000          1999
<S>                                                                  <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                             $     (375)   $   (2,364)
Adjustments to reconcile net loss to net cash from
 operating activities:
   Inventory write off                                                      111            50
   (Gain) loss on disposal of equipment                                      (2)           32
   Depreciation and amortization                                            597           550
   Warrant and stock option expense                                          55            23
   Deferred income tax benefit                                               --          (316)
   Issuance of warrants and note payable to settle litigation                --         1,546
Changes in assets and liabilities:
      Accounts receivable, net                                              121          (173)
      Inventories                                                           317          (412)
      Other assets                                                           14            59
      Accounts payable                                                     (147)          310
      Accrued expenses                                                     (527)         (139)
      Customer deposits and deferred revenue                                 24            (5)
                                                                     ----------    ----------

        Net cash provided by (used in) operating activities                 188          (839)
                                                                     ----------    ----------

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment                                      (371)         (769)
Proceeds from disposal of property and equipment                             15            --
Investment in patents                                                       (28)          (72)
                                                                     ----------    ----------

        Net cash used in investing activities                              (384)         (841)
                                                                     ----------    ----------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings                                                    950         1,050
Repayments of borrowings                                                   (575)         (600)
Proceeds from issuance of common stock, net                                 235           115
Proceeds from issuance of preferred stock and warrants, net                  --           974
Principal payments on capital lease obligations                              (3)           (2)
                                                                     ----------    ----------

        Net cash provided by financing activities                           607         1,537
                                                                     ----------    ----------

Net increase (decrease) in cash and cash equivalents                        411          (143)
Cash and cash equivalents at beginning of year                              525           668
                                                                     ----------    ----------

Cash and cash equivalents at end of year                             $      936    $      525
                                                                     ==========    ==========

SUPPLEMENTAL DISCLOSURE
Interest paid                                                        $      299    $      170



NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of note payable to settle litigation                        $       --    $      925
Issuance of warrants to settle litigation                            $       --    $      621
Common stock received in settlement of note receivable
and interest from former officer                                     $      123    $       --

Redeemable preferred stock dividends declared but not paid           $       80    $       27
</TABLE>


                                     F - 5
<PAGE>   22


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------

1.    ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      ORGANIZATION

        QualMark Corporation (the "Company") was incorporated on March 11, 1992
      in the State of Colorado. Its principal business activity is the
      manufacture and sale of vibration and thermal chambers for quality control
      testing of various electronic devices. The Company's sole manufacturing
      facility is located in Denver, Colorado. The Company also operates service
      centers, called Accelerated Reliability Test Centers ("ARTC"), where
      vibration and thermal chambers are available to customers for daily rental
      which are located in various cities across the United States. In addition,
      the Company has formed alliances for service centers in various cities in
      the United States and a number of foreign countries.

      CASH AND CASH EQUIVALENTS

        Cash on hand and in banks, together with marketable securities having
      original maturities of three months or less, are classified as cash and
      cash equivalents by the Company.

      CONCENTRATION OF CREDIT RISK

        Financial instruments that potentially subject the Company to
      concentrations of credit risk consist primarily of trade accounts
      receivable. Receivables arising from sales to customers are not
      collateralized and, as a result, management continually monitors the
      financial condition of its customers to reduce the risk of loss.

      INVENTORIES

        Inventories are stated at the lower of cost or market with cost
      determined by the first-in, first-out (FIFO) method.

      PROPERTY AND EQUIPMENT

        Property and equipment are recorded at cost. Depreciation is recorded
      using the straight-line method over estimated useful lives of three to ten
      years. Amortization of leasehold improvements and equipment under capital
      leases is provided over the shorter of the assets useful lives or the
      lives of the leases and is included in depreciation expense. Maintenance
      and repairs are expensed as incurred and improvements are capitalized.
      Upon sale or retirement of assets, the cost and related accumulated
      depreciation or amortization are eliminated from the respective accounts
      and any resulting gains or losses are reflected in operations.

      INTANGIBLES

        Costs related to patents are capitalized and amortized over their useful
      life.

      REVENUE RECOGNITION

        Revenues from product sales are recognized when persuasive evidence of
      an arrangement exists, delivery has occurred, sales price is fixed or
      determinable and collectibility is probable. Generally, the criteria is
      met upon shipment of products and transfer of title to customers.
      Provisions for discounts and allowance are recorded in the period of sale.
      Revenues from services are recognized when the services are performed and
      billable. Revenue from equipment service contracts is recognized ratably
      over the term of the contract.

      ADVERTISING EXPENSE

        The Company charges advertising, including production costs, to expense
      on the first date of the advertising period. Advertising and marketing
      expense for 2000 and 1999 was $68,000 and $65,000, respectively.

      PREOPENING COSTS

        The Company charges to selling, general and administrative expense the
      preopening costs of new service centers as incurred. These costs are
      primarily labor, supplies, preopening marketing and advertising and other
      expendable items.

      INCOME TAXES

        Deferred tax liabilities and assets are recognized for the expected
      future tax consequences of temporary differences between the carrying
      amounts for financial reporting purposes and the tax basis of individual
      assets and liabilities.


                                     F - 6
<PAGE>   23


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


      PRODUCT WARRANTIES

        A provision has been recorded for expected costs to be incurred as a
      result of product warranties at the time the sale is recognized. In 1999,
      the Company offered a, two-year parts and labor warranty on all new OVS
      systems. In 2000, the Company offered a, one-year parts and labor warranty
      on all new OVS systems, and sells an equipment service contract for an
      additional one-year parts and labor warranty.

      FINANCIAL INSTRUMENTS

        The carrying amounts of cash and cash equivalents, accounts receivable,
      accounts payable, accrued expenses, and customer deposits approximate fair
      value. The carrying amount of long term debt approximates its fair value
      due to variable rates.

      EARNINGS (LOSS) PER SHARE

        Earnings (loss) per basic share of common stock is based on the weighted
      average number of shares of common stock outstanding during each
      respective period. Earnings (loss) per diluted share of common stock adds
      to basic weighted shares the weighted average number of shares of
      potential common shares (diluted stock options and warrants) outstanding
      during each respective period. Proceeds from the exercise of the potential
      common shares are assumed to be used to repurchase outstanding shares of
      the Company's common stock at the average fair market value during the
      period. In a period in which a loss is incurred, only the weighted average
      number of common shares is used to compute the diluted loss per share as
      the inclusion of potential common shares would be antidilutive.

        Net loss applicable to common shareholders and net loss per basic and
      diluted common share for 1999 have been restated to reflect the beneficial
      conversion feature associated with the redeemable preferred stock
      discussed in Note 8. The only effect on the previously issued December 31,
      1999 financial statements is an increase in net loss applicable to common
      shareholders of $424,000 and an increase in net loss per basic and diluted
      common share of $0.13. There was no effect on previously reported
      revenues, expenses, net loss, assets, liabilities and cash flows as a
      result of the restatement.

      The calculation of basic and diluted earnings per share is as follows
      (in thousands, except per-share amounts):

<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                         2000          1999
<S>                                                   <C>           <C>
Basic and diluted loss per share computation:

   Net loss                                           $     (375)   $   (2,364)

   Accretion of redeemable preferred stock and
       dividends                                             (97)          (32)

   Beneficial conversion feature on redeemable
      preferred stock                                         --          (424)
                                                      ----------    ----------

   Net loss applicable to common shareholders         $     (472)   $   (2,820)
                                                      ==========    ==========

   Weighted average shares outstanding - basic             3,571         3,532
                                                      ==========    ==========

   Net loss per share - basic                         $    (0.13)   $    (0.80)
                                                      ==========    ==========

   Weighted average shares outstanding                     3,571         3,532
   Dilutive stock options and warrants                        --            --
                                                      ----------    ----------
                                                           3,571         3,532
                                                      ==========    ==========

   Net loss per share - diluted                       $    (0.13)   $    (0.80)
                                                      ==========    ==========
</TABLE>

           Options and warrants to purchase 993,658 shares of common stock were
      excluded from dilutive stock option calculations for 2000, because their
      exercise prices were greater than the average fair market value of the
      Company's stock for the period, and as such they would be antidilutive.


                                     F - 7
<PAGE>   24


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


           Options and warrants to purchase 1,729,991 shares of common stock
      were excluded from dilutive stock option calculations for 1999, because
      their exercise prices were greater than the average fair market value of
      the Company's stock for the period, and as such they would be
      antidilutive.

      USE OF ESTIMATES

        The preparation of the financial statements in conformity with generally
      accepted accounting principles 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.

      RECLASSIFICATION

        Certain amounts have been reclassified in prior years to be consistent
      with the classification as of December 31, 2000.

      NEW ACCOUNTING PRONOUNCEMENTS

        In June 1998, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards ("FAS") No. 133, "Accounting
      for Derivative Instruments and Hedging Activities." This statement
      establishes accounting and reporting standards for derivative instruments
      and for hedging activities. It requires the recognition of all derivatives
      as either assets or liabilities in the statement of financial position at
      fair value. In June 1999, the FASB issued FAS No. 137, which defers the
      effective date of FAS No. 133 to fiscal years beginning after June 15,
      2000. Currently, the Company does not engage in such activities and the
      adoption of this standard is not expected to have an effect on the
      Company's financial position or results of operations.

2.    INVENTORIES

        Inventories consist of the following at (in thousands):

<TABLE>
<CAPTION>
                                                  DECEMBER 31,
                                                2000          1999
<S>                                          <C>           <C>
Raw materials                                $      708    $      905
Work in process                                       1           213
Finished goods                                      638           657
Less: Allowance for obsolescence                    (50)          (50)
                                             ----------    ----------
                                             $    1,297    $    1,725
                                             ==========    ==========
</TABLE>

        The Company monitors inventory for technological obsolescence and
      provides an allowance when necessary. During the year ended December 31,
      2000 and 1999, $111,000 and $50,000, respectively is included in cost of
      sales as a write down of obsolescent raw materials.


                                     F - 8
<PAGE>   25


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


3.    PROPERTY AND EQUIPMENT

        Property and equipment consist of the following at (in thousands):

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                               2000          1999
<S>                                                         <C>           <C>
Machinery and equipment                                     $    2,686    $    2,426
Furniture and fixtures                                             190           189
Leasehold improvements                                             466           458
Capitalized internal use software                                  189           128
Construction in process                                            101            87
Less: Accumulated depreciation and amortization                 (2,342)       (1,780)
                                                            ----------    ----------
                                                            $    1,290    $    1,508
                                                            ==========    ==========
</TABLE>

        Depreciation expense was $575,000 and $544,000 for the years ended
December 31, 2000 and 1999, respectively.

4.    ACCRUED EXPENSES

        Accrued expenses consist of the following at (in thousands):

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                               2000          1999
<S>                                                         <C>           <C>
Accrued warranty                                            $      345    $      661
Accrued employee related                                           200           226
Accrued royalties payable                                           --            78
Severance payable (Note 12)                                         82            --
Other                                                              118           307
                                                            ----------    ----------
                                                            $      745    $    1,272
                                                            ==========    ==========
</TABLE>

5.    INDEBTEDNESS

        During 1999, the Company renegotiated its revolving credit and term loan
      agreement ("Credit Agreement") with a commercial bank. Among other
      changes, this amendment to the existing Credit Agreement reduced the
      amount the Company may borrow on its revolving credit from $3,000,000 to
      $2,000,000. In addition, the Company will make no further borrowings on
      the term loan portion of the Credit Agreement. The revolving credit
      reflects five draws against it, with interest rates ranging from 9.71% to
      10.08%. As of December 31, 2000, the balance of the revolving credit is
      $2,000,000. The term loan agreement, bears interest at the reserve
      adjusted LIBOR rate plus the applicable margin (as defined), which was
      9.71% and 9.26% at December 31, 2000 and 1999, respectively. As of
      December 31, 2000, the Company had an outstanding balance of $886,000
      under the term loan agreement. Both the line of credit arrangement and
      term loan agreement are collateralized by substantially all the assets of
      the Company. The Credit Agreement was due on December 22, 2001.

        The Company must maintain certain financial and other covenants in order
      to draw amounts available under the line of credit. Provisions under this
      agreement are not considered restricted to normal operations. Although the
      Company is not now, nor has it ever been in arrears on any payment
      pursuant to the Credit Agreement, as of December 31, 2000, the Company was
      in default of certain financial covenants contained in the Credit
      Agreement. The Company has, however, received waivers from its lender
      regarding such noncompliance.

        On February 1, 2001, the Company again renegotiated its Credit Agreement
      with the commercial bank. Among other changes, this amendment to the
      Credit Agreement reduces the revolving credit line to $1,000,000 (the
      outstanding balance at February 1, 2001 was $811,000). In addition, the
      term loan available was increased to $2,000,000 (the outstanding balance
      at February 1, 2001 was $2,000,000). Both the revolving credit line and
      term loan under the Credit Agreement become due on March 15, 2002


                                     F - 9
<PAGE>   26


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


        The Company expects to meet long term liquidity requirements through
      cash flows generated by operations and existing cash balances. The Company
      does not anticipate any additional term borrowing, or draws against the
      revolving credit line in 2001. Management has derived a short and long
      term plan to repay the existing Credit Agreement. As defined by the
      renegotiated Credit Agreement on February 1, 2001, the Company will make
      monthly principal payments, beginning March 31, 2001, of $35,000 to the
      term loan. The Company has also determined that, during 2001, quarterly
      payments to the revolving line of credit will be made, based on cash flows
      generated from operations. At the close of each quarter, the Company has
      made arrangements to meet and review results of the Company with the
      commercial bank. At the end of 2001, the Company expects to negotiate with
      the commercial bank for an extension to the Credit Agreement.

        The following represents future amounts payable at December 31, 2000 (in
      thousands).

<TABLE>
<S>                                                   <C>
        Year ended December 31,
           2001                                       $     425
           2002                                           2,461
                                                      ---------
                                                      $   2,886
                                                      =========
</TABLE>

        On August 31, 1999, the Company entered into a settlement agreement with
      Screening Systems, Inc. ("SSI") (See Note 13). Under the terms of the
      settlement, the Company issued a $925,000 note payable, which accrues
      interest at 9% per annum. As of December 31, 2000 the note had an
      outstanding balance of $275,000, which is payable in full on April 1,
      2001.

6.    LEASE COMMITMENTS

        The Company leases equipment, office space, and operating facilities
      under operating lease arrangements. Future minimum lease payments consist
      of the following at December 31, 2000 (in thousands):

<TABLE>
<CAPTION>
                                                        OPERATING
                                                         LEASES
<S>                                                     <C>
        Year ended December 31,
                    2001                                $     396
                    2002                                      258
                    2003                                      113
                    2004                                       39
                    2005                                       13
                                                        ---------
                                                        $     819
                                                        =========
</TABLE>


      Rent expense for the years ended December 31, 2000 and 1999 was $576,000
and $560,000, respectively.


                                     F - 10
<PAGE>   27


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


7.    INCOME TAXES

        Income tax expense (benefit) consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                YEARS ENDED DECEMBER 31,
                                                   2000          1999
<S>                                             <C>           <C>
Current tax expense (benefit)
   Federal                                      $       (6)   $       (9)
   State                                                (6)            3
                                                ----------    ----------
                                                       (12)           (6)
Deferred tax expense (benefit)
   Federal                                              --          (271)
   State                                                --           (45)
                                                ----------    ----------
                                                        --          (316)
                                                ----------    ----------
                                                $      (12)   $     (322)
                                                ==========    ==========
</TABLE>

        A reconciliation of the statutory Federal income tax rate to the income
tax benefit is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                               2000                  1999
                                                        AMOUNT       %         AMOUNT       %
<S>                                                    <C>         <C>        <C>        <C>
        Computed "expected" tax                        $   (132)   (34.0)%    $   (913)   (34.0)%
        State income taxes, net of Federal
         income tax effect                                    2      0.5%         (127)    (4.8)
        Change in valuation allowance                        96     24.8           616     23.0
        Other                                                22      5.6           102      3.8
                                                       --------    -----      --------   ------
                                                       $    (12)    (3.1)%    $   (322)   (12.0)%
                                                       ========    =====      ========   ======
</TABLE>

        Deferred tax assets and liabilities represent the future impact of
      temporary differences between the financial statement and tax bases of
      assets and liabilities and are as follows (in thousands):

<TABLE>
<CAPTION>
                                                        DECEMBER 31,
                                                    2000          1999
<S>                                             <C>           <C>
Deferred tax assets:
   NOL carryforwards                            $    1,619    $    1,331
   Accrued liabilities                                 192           278
   Allowance for doubtful accounts                      74            76
   Inventory                                            20            20
   Depreciation and amortization                        --            88
   Other                                                 5             5
   Valuation allowance                                (712)         (616)
                                                ----------    ----------
Total deferred tax assets                            1,198         1,182
                                                ----------    ----------

Deferred tax liabilities:
   Unicap                                                4             5
   Depreciation and amortization                        17            --
                                                ----------    ----------
Total deferred tax liabilities                          21             5
                                                ----------    ----------
Net deferred tax asset                          $    1,177    $    1,177
                                                ==========    ==========
</TABLE>



                                     F - 11
<PAGE>   28
QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------
<TABLE>
<S>                                                            <C>         <C>
      Financial Statements:
           Current deferred tax assets                         $   1,194   $   1,089
           Non-current deferred tax assets                            --          88
           Non-current deferred tax liabilities                      (17)         --
                                                               ---------   ---------
        Net deferred tax asset                                 $   1,177   $   1,177
                                                               =========   =========
</TABLE>

        As of December 31, 2000 and 1999, the Company had net operating loss
      ("NOL") carryforwards of approximately $4,114,000 and $3,372,000,
      respectively, which are available to offset future taxable income. The
      ultimate realizations of these assets are dependent upon the generation of
      future taxable income sufficient to offset the related deductions and loss
      carryforwards within the applicable carryforward period.

        The Company experienced an unexpected downturn it its business during
      1999 and 2000, which resulted in operating losses. Management concluded
      that it was more likely than not that a portion of the deferred tax assets
      would not be realizable and determined a valuation allowance was required
      for that portion of the deferred tax assets. During 2000, the Company's
      valuation allowance was increased by $96,000.

8.    REDEEMABLE PREFERRED STOCK

        In 1999, the Company authorized the issuance of 502,326 shares of Series
      A, redeemable, cumulative, participating, no par preferred stock ("Series
      A preferred stock"). Each share of the Series A preferred stock issued and
      outstanding shall have the right to vote on all matters presented to the
      holders of the common stock for vote, in the number of votes equal at any
      time to the number of shares of common stock into which each share of the
      Series A preferred stock would be convertible, and shall vote with the
      holders of the common stock as a single class. The Series A preferred
      shares accrue dividends at 8% per annum, and dividends may be paid in cash
      or additional preferred shares, in kind, at the option of the Company. In
      addition, in the event the Company declares, pays or sets apart a common
      stockholder dividend, each holder of shares of the Series A preferred
      stock shall be entitled to receive a per share dividend equal to the
      number of shares of common equity on which such common dividend is
      declared into which each share of Series A preferred stock is convertible
      on the record date, multiplied by the amount of cash or property paid, or
      by the number of shares of capital stock issued.

         During 1999, an existing common stock shareholder purchased 465,116
      shares of the Series A preferred stock and warrants to purchase 139,535
      shares of common stock at $2.50 per share, with a five-year expiration, in
      exchange for $1,000,000. The proceeds to the Company were $974,000, net of
      transaction costs. As of December 31, 2000 and 1999, the Series A
      preferred shares accumulated dividends in arrears of $107,000 and $27,000,
      respectively. Of the dividends in arrears at December 31, 2000, the
      Company anticipates a dividend payment of 37,210 in preferred shares at
      the conversion price of $2.15 per share, with the remaining $27,000 to be
      paid in cash. The Series A preferred stock rank senior to the common stock
      and have a liquidation preference of $2.15 per share plus all declared and
      unpaid dividends which total $1,107,000 at December 31, 2000. The Series A
      preferred stock is convertible to common shares at any time. On any date
      after September 1, 2004, at the option of the holders of the Series A
      preferred stock, the Company shall redeem the Series A preferred stock at
      $2.15 to the extent the Company has funds legally available for such
      payment. If the Company does not have funds available, at the option of
      the holders of the Series A preferred stock, be converted into a debt
      obligation of the Company in a form acceptable to the holders of the
      Series A preferred stock.

        As a result of the conversion price of the Series A preferred stock
      being less than the quoted market price on the date of issuance/commitment
      in 1999, a beneficial conversion feature existed in the amount of
      $424,000. This beneficial conversion feature would normally have resulted
      in a credit to common stock and a charge to retained earnings. As the
      Company has an accumulated deficit, both the credit and charge are
      reflected in common stock in the accompanying financial statements for
      1999.

        The Company maintains a one-time option to repurchase the Series A
      preferred stock or require the holder to convert their preferred stock,
      under the following terms. At any time following a 45-day consecutive
      trading period during which the average closing price per share of the
      Company's common stock is at least $5.00 per


                                     F - 12

<PAGE>   29


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


      share, the Company may give notice of its intention to repurchase all of
      the outstanding Series A preferred shares. The holder of the Series A
      preferred stock shall have 30 days from receipt of the Company's
      repurchase notice to elect to convert their Series A preferred shares to
      common stock. In the event that the holder of the Series A preferred stock
      does not elect to convert all of their Series A preferred stock, the
      Company may repurchase all, but not less than all, of the remaining Series
      A preferred stock at the price of $4.00 per share, or 90% of the fair
      market value of the common stock, whichever is greater, plus any
      accumulated dividends, by notice to the holder of the Series A preferred
      stock and tendering of funds within five business days of the expiration
      of the Series A preferred stock holder's conversion option. The fair
      market value of the commons stock shall be determined by the average
      closing price of the common stock for the five trading days prior to the
      date on which the Series A preferred stock holder's option to convert
      expires.

9.    STOCK WARRANTS AND OPTIONS

        In 1995, warrants to purchase 72,000 shares of common stock at an
      exercise price of $2.13 per share were issued to a principal shareholder,
      in connection with the Company's sale of Hobbs Engineering Corporation
      ("Hobbs") to the shareholder (Note 11). The warrants vest and are
      exercisable in 25% increments on December 31, 1996, 1997, 1998 and 1999.
      All warrants expire five years from the grant date. Compensation expense
      relative to these warrants of $92,000 will be charged to expense over the
      four-year vesting period which began January 1, 1996. During 1999, Hobbs
      exercised 54,000 warrants to purchase 54,000 shares of common stock.
      During 2000, Hobbs exercised the remaining 18,000 warrants to purchase
      18,000 shares of common stock.

        During 1996, the Company offered its stock for sale to the public. In
      connection therewith, the Company issued to the underwriter a five-year
      warrant to purchase up to 132,170 shares of common stock at $4.50 per
      share. During 2000, 5,001 warrants were converted into 1,079 shares of
      common stock. No warrants were exercised during 1999.

        During 1999, five-year warrants to purchase 139,535 shares of common
      stock at an exercise price of $2.50 per share were issued in connection
      with the Series A preferred stock, as described above. These warrants had
      a fair market value of $87,000 at the time of issuance.

        Also in 1999, the Company issued five-year warrants to purchase 620,000
      shares of common stock at an exercise price of $4.85 per share in
      connection with the settlement of patent litigation with SSI. These
      warrants had a fair market value of $621,000 at issuance. (See Note 13).

      STOCK OPTIONS

        In 1993, the Company adopted an incentive stock option plan (the "1993
      Plan") which provides employees and officers with an opportunity to
      purchase an aggregate of 159,746 shares of the Company's common stock. The
      1993 Plan requires that incentive stock options be issued at exercise
      prices which are at least 100% of the fair value of the stock at the date
      of the grant. Options issued under the 1993 Plan vest at a rate of 25% per
      year over four years and generally expire up to ten years from the date of
      grant.

        Stock option transactions of the 1993 Plan are summarized below:

<TABLE>
<CAPTION>
                                                                                                WEIGHTED AVERAGE
                                                                                  SHARES         EXERCISE PRICE
<S>                                                                              <C>            <C>
        Outstanding at December 31, 1998                                           100,497          $ 2.10
        Forfeited                                                                   (3,000)           2.13
                                                                                 ---------          ------
        Outstanding at December 31, 1999                                            97,497            2.09

        Exercised                                                                  (52,477)           2.08

        Forfeited                                                                   (1,500)           2.00
                                                                                 ---------          ------

        Outstanding at December 31, 2000                                            43,520          $ 2.12
                                                                                 =========          ======
</TABLE>


                                     F - 13
<PAGE>   30
QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


        At December 31, 2000 and 1999, options were exercisable with respect to
      43,520 and 97,497 shares, respectively, with exercise prices ranging from
      $2.00 to $2.13 and a weighted average exercise price of $2.12 and $2.09
      respectively. As of December 31, 2000 the weighted average contractual
      life was 4.00 years.
        During 2000, nonqualified options to purchase 116,000 common stock
      shares at a price of $2.64 per share were issued and 29,000 of these
      options were exercised, of which, 87,000 were forfeited. During 2000,
      nonqualified options to purchase 116,088 at a price of $2.00 per share
      expired.

      In 1995, the Company adopted the 1996 Stock Option Plan (the "1996 Plan").
      Under the 1996 Plan, grants of both incentive stock options and
      non-qualified options are permitted. Incentive stock options may only be
      granted to employees of the Company, including officers and directors who
      are also employees. Non-qualified options may be issued to officers,
      directors, employees or consultants of the Company. The exercise price of
      incentive stock options granted under the 1996 Plan must be at least 100%
      (or 110% in the case of a holder of 10% or more of the voting power of all
      classes of stock of the Company) of the fair market value of the Company's
      stock at the grant date, while the exercise price of non-qualified options
      is at the discretion of the Board of Directors. Aggregate common shares of
      722,000 are reserved for issuance under the 1996 Plan, as amended. Shares
      forfeited can be reissued under the 1996 Plan. Options issued under the
      1996 Plan vest at a rate of 25% per year over four years and generally
      expire up to ten years from the date of grant.

      Stock option transactions of the 1996 Plan are summarized below:

<TABLE>
<CAPTION>
                                                                                                WEIGHTED AVERAGE
                                                                                   SHARES        EXERCISE PRICE
<S>                                                                              <C>            <C>
        Outstanding at December 31, 1998                                           431,000           $ 4.63
        Granted                                                                    302,750             2.95
        Forfeited                                                                 (138,000)            3.95
                                                                                 ---------           ------
        Outstanding at December 31, 1999                                           595,750             3.94

        Granted                                                                    242,000             2.80
        Exercised                                                                   (3,667)            3.35
        Forfeited                                                                 (232,067)            3.83
                                                                                 ---------           ------

        Outstanding at December 31, 2000                                           602,016           $ 3.53
                                                                                 =========           ======
</TABLE>

        At December 31, 2000 and 1999, options were exercisable with respect to
      265,526 and 186,562 shares, respectively, with exercise prices ranging
      from $2.03 to $7.88 and a weighted average exercise price of $3.87 and
      $4.37, respectively. As of December 31, 2000 the weighted average
      contractual life was 6.54 years.

        In October 2000, 25,000 options were granted to a Director of the
      Company for services provided beyond normal director duties. These options
      were 100% vested and exercisable on the date of grant, compensation
      expense of $55,000 was recorded at the time of issue.


                                     F - 14
<PAGE>   31


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


      FAIR VALUE

        The Company applies Accounting Principles Board Opinion No. 25 and
      related Interpretations in accounting for its stock plans. Accordingly, no
      compensation expense has been recognized for options granted at fair
      market value. Had compensation cost for the Company's stock option plans
      been determined based on the fair values at the grant dates for awards
      under the plans consistent with the method of accounting prescribed by
      Financial Accounting Standard No. 123, the Company's results would have
      been changed to the pro forma amounts indicated below (in thousands):

<TABLE>
<CAPTION>
                                                                              YEARS ENDED DECEMBER 31,
                                                                                2000           1999
<S>                                                                           <C>           <C>
        Net loss applicable to common shareholders:
           As reported                                                        $   (472)     $  (2,820)
           Pro forma                                                          $   (504)     $  (3,059)

        Basic loss per share:
           As reported                                                        $  (0.13)     $   (0.80)
           Pro forma                                                          $  (0.14)     $   (0.87)

        Fully diluted loss per share:
           As reported                                                        $  (0.13)     $   (0.80)
           Pro forma                                                          $  (0.14)     $   (0.87)
</TABLE>

        The fair value of each option and warrant grant is estimated on the date
      of grant using the Black-Scholes option-pricing model with the following
      weighted-average assumptions used for grants in the years ended December
      31, 2000 and 1999: dividend yield of zero; expected volatility ranging
      from 79% to 97% ; risk-free interest rates ranging from 5.39% to 6.75%;
      and an expected term of seven years. The risk-free interest rate used in
      the calculation is the yield on the grant date of a U.S. Treasury Strip
      with a maturity equal to the expected term of the option.

10.   PROFIT SHARING PLAN

        The Company maintains an employee profit sharing plan under Section
      401(k) of the Internal Revenue Code (the "Plan") covering personnel who
      have been employed at least three months. Employees may contribute up to
      the federal limit of their compensation to the Plan each year. The Company
      may make discretionary contributions, as determined by the Board of
      Directors each year, to employee participants who have more than one year
      of service. Participants vest in employer contributions at a rate of 20%
      per year over five years. During 2000 and 1999, no employer contributions
      were made.

11.   SEGMENT INFORMATION

        The Company operates in two business segments, testing equipment and
      Accelerated Reliability Test Centers ("ARTC"). The equipment segment is
      engaged in the manufacture and sale of vibration and thermal chambers for
      quality control testing of various electronic devices. The ARTC segment
      operates service centers where vibration and thermal chambers are
      available to customers for daily rental.

        The accounting policies for these segments are the same as those
      described in Note 1 and there are no intersegment transactions. The
      Company evaluates the performances of its segments and allocates resources
      to them based primarily on gross profit. All operating revenues and
      expenses are allocated to business segments in determining their gross
      profit. All other expenses are not utilized in determining the allocation
      of resources on a segment basis.



                                     F - 15
<PAGE>   32


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------


        The table below summarizes information about reported segments (in
thousands):

<TABLE>
<CAPTION>
                                                              EQUIPMENT            ARTC               TOTAL
<S>                                                        <C>                <C>               <C>
                    YEAR ENDED DECEMBER 31, 2000

                    Sales                                  $         9,213    $         3,292   $         12,505
                    Gross profit                                     3,770              1,197              4,967
                    Property and equipment, net                        322                968              1,290

                    YEAR ENDED DECEMBER 31, 1999

                    Sales                                  $         8,804    $         3,755   $         12,559
                    Gross profit                                     3,330              1,659              4,989
                    Property and equipment, net                        385              1,123              1,508
</TABLE>

        The following is sales by geographic area (in thousands):

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                                 2000               1999
<S>                                                         <C>               <C>
                    United States                           $         9,471   $         10,592
                    International                                     3,034              1,967
                                                            ---------------   ----------------

                    Total                                   $        12,505    $        12,559
                                                            ===============    ===============
</TABLE>

        International sales are based on where the products were shipped and
where ARTC services were rendered.

12.   RELATED PARTY TRANSACTIONS

        In 1995, the Company sold the assets of Hobbs Engineering Corporation
      (HEC), excluding any patents or other intellectual property, to Dr. Hobbs,
      a principal shareholder of the Company. In connection with the sale, the
      Company agreed to make quarterly royalty payments to Dr. Hobbs equal to
      two percent of the Company's total revenues, increasing to a maximum of
      three percent if certain revenue levels are achieved, for the period
      January 1, 1996 through December 31, 1999, in exchange for Dr. Hobbs being
      available to actively promote the Company's products and services. During
      1999, royalties of $251,000 were expensed relating to this agreement. As
      of December 31, 1999, the Company had fulfilled the agreement with Dr.
      Hobbs and, therefore, no future royalties are payable on sales.

        During 1998, the Company lent $104,000 to the Company's former president
      pursuant to a note collateralized by his primary residence with interest
      accruing at a rate equal to 10% annually. The note was payable over five
      years, with 5% of the principal due at each anniversary date and the
      remaining balance due at the end of the term. On January 13, 2000, the
      former president remitted 4,016 shares of the Company's common stock at a
      fair market value of $4.06 per share on that date to satisfy $16,000 of
      principal, interest and penalties related to the note. On May 19, 2000,
      the Company's president resigned from his position. Subsequently, on June
      14, 2000, 31,530 common shares were remitted to the Company by the former
      president, at a fair market value of $3.39 per share on that date to
      satisfy the remaining principal and accrued interest balance of $106,000.

13.   SEVERANCE CHARGE

        During June 2000, the Company initiated an organizational restructure
      plan and charged $272,000 in severance to operations. This reorganization
      resulted in the resignation of the Company's president and a reduction of
      six other personnel from the Sales and Marketing, Accounting and
      Administrative, and Manufacturing departments. Severance costs include
      salary payments, fringe benefits and taxes related to these seven
      employees. Cash payments to settle the salary payments, fringe benefits
      and taxes will continue through


                                     F - 16
<PAGE>   33


QUALMARK CORPORATION

STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT FOR NUMBER OF SHARES)
--------------------------------------------------------------------------------

      May of 2001. Cash payments made during 2000 totaled $190,000 and as of
      December 31, 2000, the severance liability balance remaining is $82,000.

14.   LEGAL MATTERS

        On March 22, 1996, the Company was served with a summons and complaint
      from Screening Systems, Inc., a competitor. The complaint, as amended,
      alleges the Company's vibration system infringes three patents owned by
      Hughes Electronics ("Hughes") and licensed to SSI, and seeks injunctive
      relief, monetary damages and costs of litigation.

        Although the Company continues to maintain it engaged in no wrongful
      conduct, on August 31, 1999, it entered into a settlement agreement with
      SSI. Under the terms of the settlement, the Company will pay $925,000 to
      SSI in three unequal payments upon signing the agreement, July 2000, and
      April 2001. Interest will accrue at 9% per annum and is payable quarterly,
      on the settlement amount. In addition, the Company issued warrants to SSI
      for the purchase of 620,000 shares of its non-voting common stock. The
      warrants have a five-year term at an exercise price of $4.85 per share,
      and a fair market value of $621,000.


                                     F - 17
<PAGE>   34
                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER        DESCRIPTION
-------       -----------
<S>           <C>
3.1           Amended and Restated Articles of Incorporation of the Company.(1)
3.2           Amended and Restated Bylaws of the Company.(1)
3.3           Certificate of Designation for Series A Preferred Stock.(5)
4.1           Form of Certificate for Shares of Common Stock.(1)
4.6           Form of Warrant issued to holders of 10% secured promissory notes.(1)
10.1          QualMark Corporation 1993 Incentive Stock Option Plan.(1)
10.2          QualMark Corporation 1996 Stock Option Plan.(3)
10.3          Employment Agreement dated March 1, 1993 by and between the Company and W. Preston Wilson.(1)
10.4          Employment Agreement dated August 15, 1994 by and between the Company and J. Wayne Farlow.(1)
10.5          Agreement dated September 30, 1995 by and between the Company and Gregg K. Hobbs.(1)
10.8          Addendum to Agreement dated as of December 21, 1995 by and between the Company and Gregg K.
              Hobbs.(1)
10.11         Loan and Security Agreement dated April 30, 1996, by and between QualMark Corporation and
              Silicon Valley Bank, as amended by Amendment to Loan and Security Agreement dated August 18,
              1997.(2)
10.12         Loan and Security Agreement dated December 22, 1998, by and between QualMark Corporation and
              U.S. Bank National Association.(4)
10.13         Waiver and Amendment to Loan Agreement dated March 15, 1999 by and between QualMark and U.S.
              Bank National Association.(4)
10.14         Second Amendment to Loan Agreement dated August 23, 1999 by and between QualMark and U.S.
              Bank National Association.(5)
10.15         Settlement Agreement dated August 30, 1999 by and among QualMark Corporation and Screening
              Systems, Inc.(5)
10.16         Preferred Stock Purchase Agreement dated September 1, 1999, including Warrant to Purchase
              139,535 Shares of Common Stock.(5)
10.17         Third Amendment to Loan Agreement dated March 31, 2000 by and between QualMark and U.S. Bank
              National Association.(6)
10.18         Employment Agreement dated July 17, 2000 by and between the Company and Charles D. Johnston.(7)
10.19         Second Amendment to Promissory Notes and Fifth Amendment to Loan Agreement dated February 1,
              2001 by and between QualMark and U.S. Bank National Association.
</TABLE>



----------

(1)  Incorporated by reference from the Company's Registration Statement No.
     333-1454-D on Form SB-2.
(2)  Incorporated by reference from the Company's Quarterly Report on Form
     10-QSB for the quarter ended September 30, 1997.
(3)  Incorporated by reference from the Company's Proxy Statement for the 1996
     Annual Meeting of Shareholders.
(4)  Incorporated by reference from the Company's Annual Report of Form  10-KSB
     for the year ended December 31, 1998.
(5)  Incorporated by reference from the Company's Quarterly Report on Form
     10-QSB for the quarter ended September 30, 1999.
(6)  Incorporated by reference from the Company's Quarterly Report on Form
     10-QSB for the quarter ended June 30, 2000.
(7)  Incorporated by reference from the Company's Quarterly Report on Form
     10-QSB for the quarter ended September 30, 2000.