US SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

                   For the fiscal year ended December 31, 1998

                                       or

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

         For the transition period from ______________ to _____________

                         Commission file number 33-19583

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

              Delaware                                87-0462807
   (State or other jurisdiction of                (I.R.S. Employer
    incorporation or organization)               Identification No.)

                              4314 ZEVEX Park Lane
                           Salt Lake City, Utah 84123

              (Address of principal executive offices and zip code)

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

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

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

                    Common Stock, par value $0.001 per share

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes: X No:____

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

         The  aggregate  market value of the  registrant's  voting stock held by
nonaffiliates  computed  with  reference  to the closing  price as quoted on the
NASDAQ Stock Market on March 15, 1999, was  approximately  $14,198,709.  For the
purposes of the foregoing,  the registrant assumed that affiliates included only
the registrant's directors, executive officers and principal shareholders filing
Schedules 13D or 13G with respect to the registrant's common stock.

        The number of shares outstanding of the Company=s Common Stock as 
of March 15, 1999 was 3,418,876

         Documents incorporated by reference: none


<PAGE>



                                TABLE OF CONTENTS


Part I
   Item 1 - BUSINESS                                                     --   3
   Item 2 - PROPERTIES                                                    -- 24
   Item 3 - LEGAL PROCEEDINGS                                             -- 24
   Item 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS           -- 24

Part II
   Item 5 - MARKET FOR REGISTRANT=S COMMON EQUITY AND
                 RELATED STOCKHOLDER MATTERS                              -- 24
   Item 6 - SELECTED FINANCIAL DATA                                       -- 26
   Item 7 - MANAGEMENT=S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS                      -- 27
   Item 7A- QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
                 MARKET RISK                                              -- 34
   Item 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                   -- 35
   Item 9 - CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS
                 ON ACCOUNTING AND FINANCIAL DISCLOSURE                   -- 35

Part III
   Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY              -- 35
   Item 11 - EXECUTIVE COMPENSATION                                       -- 38
   Item 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                   AND MANAGEMENT                                         -- 43
   Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS               -- 45

Part IV
   Item 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
                   ON FORM 8-K                                            -- 46
   Item 14(c) - INDEX TO EXHIBITS                                         -- 48

SIGNATURES                                                                -- 47


<PAGE>


                                     PART I

ITEM 1.  BUSINESS

GENERAL

ZEVEX  International,  Inc.,  (`'ZEVEX  International"  is in  the  business  of
designing and manufacturing  advanced medical and electronic devices,  including
surgical systems, medical device components,  and sensors for medical technology
and other companies. ZEVEX International also designs, manufactures, and markets
its own  medical  devices  and  musculoskelatal  evaluation  products  using its
proprietary technologies.

ZEVEX International  conducts its business primarily through its original wholly
owned subsidiary,  ZEVEX, Inc., a Delaware  corporation  ("ZEVEX Inc."), and two
newly acquired, wholly owned subsidiaries,  JTech Medical Technologies,  Inc., a
Utah  corporation   ("JTech"),   and  Aborn  Electronics,   Inc.,  a  California
corporation  ("Aborn").  ZEVEX Inc. designs and manufactures medical devices for
medical  technology  companies,  as well as for itself.  JTech  manufactures and
markets its own proprietary  musculoskeletal evaluation products for health care
providers.  Aborn designs and  manufactures a variety of  sophisticated  optical
sensors and custom  computer chips for medical  technology and other  companies.
ZEVEX International  together with its subsidiaries may hereafter be referred to
collectively as the "Company".

The Company's current strategy is to augment continuing growth in its design and
manufacturing  service business with the acquisition or internal development and
commercialization   of  proprietary  products  that  either  use  the  Company's
technologies  and expertise or that  complement  the Company's  existing line of
proprietary  products.  The Company has successfully applied its engineering and
regulatory  expertise to the  development,  commercialization  and  marketing of
EnteraLite7,  ZEVEX  Inc.=s  proprietary  Ambulatory  Enteral  Feeding  Pump for
patients  who  require  direct   gastrointestinal   nutritional   therapy.   The
EnteraLite7  pump provides  patients  with maximum  mobility,  while  delivering
enteral solutions with unprecedented accuracy.

DEVELOPMENTS DURING 1998

The Company  substantially  expanded its business during 1998,  diversifying its
offering  of  proprietary  products  and  improving  its  ability  to design and
manufacture  sophisticated  devices  for  other  companies.  Company  management
believes that this  expansion  fulfills a major part of the Company's  plans for
growth through acquisition. The expansion took place in three major steps:

1. In July 1998,  ZEVEX Inc.  entered into an agreement with Nutrition  Medical,
Inc.,  a Minnesota  corporation  ("Nutrition  Medical  "), to acquire  Nutrition
Medical's  enteral feeding line of products.  Enteral feeding  involves  patient
feeding  through  feeding  pumps,  delivery  sets, and feeding tubes through the
intestines  or stomach.  Company  management  believes  that the addition of the
Nutrition Medical product line complements ZEVEX Inc.'s existing line of enteral
feeding  products,  enhancing the Company's ability to serve the enteral feeding
markets.  From July 1998 to December  1998,  ZEVEX Inc.  marketed the  Nutrition
Medical products under an exclusive marketing  arrangement,  allowing ZEVEX Inc.
to immediately benefit from sales of the Nutrition Medical products. The Company
completed the acquisition of the Nutrition  Medical product line on December 23,
1998.


2. On December 31, 1998,  the Company  acquired  JTech through a stock  purchase
transaction with the four shareholders of JTech.  JTech was organized in 1988 as
a sole proprietorship and later incorporated as JTech Medical  Industries,  Inc.
in 1995 to  manufacture  and  sell  range  of  motion  measurement  devices.  As
mentioned  above,  JTech currently  manufactures and markets its own proprietary
musculoskeletal  evaluation  products  for  health  care  providers,  a line  of
products not previously manufactured or sold by ZEVEX Inc.
With   approximately  22  employees,   JTech's  gross  revenues  for  1998  were
$2,796,344.

3. On December 31, 1998,  the Company  acquired  Aborn through a stock  purchase
transaction with the sole  shareholder of Aborn.  Aborn was organized in 1984 to
design,  manufacture and sell low cost  commercial  fiber optic  components.  As
mentioned  above,   Aborn  currently  designs  and  manufactures  a  variety  of
sophisticated   optical  sensors,   custom  computer  chips  and   semiconductor
components for medical  technology and other companies,  bringing new design and
manufacturing expertise to the Company. With approximately 8 employees,  Aborn's
gross revenues for calendar 1998 were $1,250,488.

Because  the   acquisition  of  Aborn  and  JTech  occurred  at  year  end,  the
contribution of these  acquisitions to the financial  performance of the Company
will not be realized until 1999.

DESIGN AND MANUFACTURING SERVICES

Through its ZEVEX Inc. and Aborn  subsidiaries,  the Company provides design and
manufacturing  services to medical and other technology companies,  who sell the
Company's  systems and devices under private labels or incorporate the Company's
devices  into their  products.  The Company  designs and  manufactures  over 120
different  surgical  systems,  device  components  and  sensors for more than 85
different established and emerging technology companies,  such as Alaris Medical
Systems,   Inc.,   Allergan,   Inc.,  various  divisions  of  Baxter  Healthcare
Corporation,  Mentor Corporation, SIMS Deltec, Inc., Staar Surgical Company, and
3M Company  Healthcare.  ZEVEX Inc. and Aborn each offer their customers over 12
years of specialized engineering and manufacturing expertise in their respective
areas.

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

The Company  uses  extensive  engineering  and  regulatory  expertise to deliver
integrated design and manufacturing solutions to its customers.  For its medical
technology customers,  ZEVEX Inc. has registered with the United States Food and
Drug  Administration  ("FDA") as a medical device manufacturer and has developed
internal   systems   intended  to  maintain   compliance  with  the  FDA's  Good
Manufacturing   Practices   ("GMP").   ZEVEX  Inc.  also  is  certified  by  the
International  Organization  for  Standardization  ("ISO") to 9001 and  EN46001,
which means that its has met  internationally  recognized  quality standards for
the design, manufacture, and testing of products. ZEVEX Inc. devotes significant
management time and financial  resources to GMP compliance and ISO certification
to attract customers requiring such services.

PRINCIPAL DEVICES MANUFACTURED FOR OTHERS AND THEIR MARKETS

         Surgical Devices -- Ophthalmic.

ZEVEX Inc. designs and manufactures  ultrasonic  phacoemulsification  handpieces
and systems for the  surgical  removal of  cataracts.  Phacoemulsification  is a
method  of  cataract  extraction,  which  uses  ultrasound  waves to  break  the
cataract-obstructed  lens of the eye into  small  fragments  that can be removed
through a hollow needle.  Phacoemulsification  is currently used in more than 80
percent of cataract  procedures in the United  States.  ZEVEX Inc.  manufactures
handpieces of several designs for Allergan,  Inc., who is a major customer and a
market leader in ophthalmology.  ZEVEX Inc. currently  manufactures two complete
phacoemulsification  systems for one customer, Paradigm Medical Industries, Inc.
These two systems include a basic  ultrasonic  system and a high-end system that
embodies both laser and ultrasonic energy sources.  Allergan, Inc., and Paradigm
Medical   Industries,   Inc.,  are  ZEVEX  Inc.'s  two  largest   customers  for
phacoemulsification  products.  However,  ZEVEX Inc. provides handpieces to many
other customers  worldwide.  ZEVEX Inc. also manufactures the KeraVision KV2000,
which is a high  precision,  vacuum  instrument  that  facilitates  the surgical
insertion  of  prescription  rings at a 2/3 depth in the  cornea.  These  rings,
depending upon their thickness,  will flatten the cornea, correcting an eye that
is 1 to 5 diopters out. The KV2000 creates a vacuum which is transmitted through
tubing to a fixture called the "vacuum centering guide (VCG)" which is placed on
top of the eye.  When a vacuum is applied,  the VCG attaches  itself to the eye,
giving the surgeon both a way to hold the eye still and a platform through which
to perform the surgery.

         Surgical Devices -- Liposuction.

ZEVEX Inc.  designs and  manufactures  ultrasonic  handpieces  for  liposuction.
Liposuction,  the  removal  of body  fat,  is one of the most  popular  cosmetic
procedures performed today. Current liposuction  procedures involve the use of a
metal cannula to sheer fat from a patient.  The current  procedure  requires the
physician  to  exert  a  large  amount  of  force.  In  ultrasonically  assisted
liposuction, a generator sends ultrasonic waves through a probe that is inserted
under  the  skin.  The  ultrasonic  energy  emulsifies  the  fat,  which is then
aspirated away. Ultrasonic  liposuction surgery can significantly reduce patient
trauma.

         Ultrasonic Medical Sensors.

ZEVEX Inc. designs and manufactures a variety of non-invasive ultrasonic sensors
for the detection of air bubbles and the  monitoring of liquid levels in medical
devices.  ZEVEX Inc.'s air bubble detectors monitor intravenous fluid lines in a
variety of devices and systems,  including  drug  infusion  pumps,  hemodialysis
machines,  blood collection systems, and cardiopulmonary  bypass systems.  ZEVEX
Inc.'s liquid level detectors are used to monitor  critical levels of liquids in
various  reservoirs used in surgery,  such as those employed in  cardiopulmonary
bypass systems.




         Optical Medical Sensors and Custom Chips.

Aborn  designs  and   manufactures  a  variety  of  optical  sensors  and  other
components,  custom integrated circuit chips, and semiconductor  components used
in both medical and industrial  devices.  Aborn's  products  include fiber optic
links, integrated  optoisolators,  high-speed sensor integrated circuits, custom
chips,  application  specific  integrated  circuit  (ASIC) chips and solid state
relays.  Medical  applications for these technology  products include diagnostic
and therapeutic equipment, such as blood analyzers and dialysis machines.

ZEVEX INTERNATIONAL'S PROPRIETARY PRODUCTS

         Enteral Feeding Products.

Through ZEVEX Inc.,  the Company sells two major lines of enteral  feeding pumps
and a variety of related  disposable  feeding  tubes and  delivery  sets.  These
products  are for  patients  who  require  direct  gastrointestinal  nutritional
therapy.  Enteral feeding is a means of providing nutrition to patients who have
experienced head or neck trauma,  or have  gastrointestinal  disorders,  such as
short bowel  syndrome,  Crohn's  Disease,  bowel  pseudo-obstruction,  and other
serious digestive disorders that prevent them from digesting food normally. Many
enteral  feeding  patients  require  continuous  administration  of  nutritional
solutions  throughout  the day,  which  requires the patient to carry an enteral
feeding pump.

ZEVEX Inc.  manufactures and markets the EnteraLite7  Ambulatory Enteral Feeding
Pump.  Management  believes  that the  EnteraLite7  pump is the  lightest,  most
compact  and  most  mobile  enteral  feeding  pump  on  the  market,  possessing
unprecedented safety and accuracy in liquid nutrition delivery.  The EnteraLite7
has a 24-hour  battery,  one-third  longer than the battery  life of its closest
competitor. The EnteraLite7 pump carries a two-year warranty, twice the industry
average and other unique features.

First introduced in 1996, the EnteraLite7 continues to gain market acceptance in
the home health  care market due to the  products  superior  mobility  and other
features.  Such features  contribute to a better clinical  outcomes and improved
quality  of life for  enteral  patients.  The  EnteraLite7  requires  the use of
disposable  feeding  bags and tube sets,  both of which are sold by the Company.
ZEVEX Inc. has been awarded five U.S. patents for EnteraLite7 technology.  ZEVEX
Inc. has also received  Notices of Allowance from the U.S.  Patent and Trademark
Office ("PTO") for one additional  patent that relates to various aspects of the
EnteraLite7 pump.

The acquisition of Nutrition  Medical=s  pumps,  delivery sets and feeding tubes
significantly  expands the ZEVEX line of enteral  delivery  products.  Nutrition
Medical=s  Model EP80 and EP85 enteral  feeding pumps are  cost-effective  pumps
intended  for  applications  where  patients  are not mobile.  Most of Nutrition
Medical=s  installed  base of feeding  pumps is in the  long-term  care  market.
Complementing the pumps is a broad line of disposable delivery sets used for the
administration  of enteral  nutrition.  These sets  include  bags and bottles of
various sizes, as well as spike sets for use with pre-filled containers.

Nutrition  Medical's  array of Panda7  feeding tubes include adult and pediatric
nasoenteric  tubes,   replacement   gastrostomy  tubes  and  a  needle  catheter
jejunostomy  kit. These feeding tubes are expendable  devices which allow access
to the  gastrointestinal  tract of the patient via commonly accepted procedures,
and are discarded after use by a single patient.


The  Nutrition  Medical  product  line builds  upon the  success  that ZEVEX has
achieved with its EnteraLite7 Ambulatory Feeding Pump.

         Musculoskeletal Evaluation Products.

Through JTech,  the Company is a manufacturer  and marketer of both  stand-alone
and  computerized  musculoskeletal  evaluation  products  that measure  isolated
muscle  strength,   joint  ranges  of  motion  and  sensation  to  document  the
effectiveness  of  treatment  or extent of injury.  JTech is an  internationally
recognized  leader in physical  medicine  measurement  products,  providing both
hardware  and  Windows95-compatible   software.  JTech  provides  equipment  for
musculoskeletal evaluation,  functional capacity evaluation, upper extremity and
hand testing and pain  evaluation.  These  products  are used by  chiropractors,
physical therapists,  and occupational  therapists for outcome assessment during
rehabilitation,  medical-legal  evaluations  for  personal  injury  and  workers
compensation, and clinical documentation.

The following table indicates the percentage of revenues  generated by the major
categories of product and services.  Notably,  these  percentages do not include
the products acquired in the connection with the recent acquisitions.

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


------------------------------- ---------------------------- ---------------------------- ----------------------------
       Product/Service                     1998                         1997                         1996
       ---------------                     ----                         ----                         ----
------------------------------- ---------------------------- ---------------------------- ----------------------------
------------------------------- ---------------------------- ---------------------------- ----------------------------
AIL/ADB Sensors                            24.5%                        35.6%                        54.1%
------------------------------- ---------------------------- ---------------------------- ----------------------------
------------------------------- ---------------------------- ---------------------------- ----------------------------
High Power Ultrasonics                     37.3%                        34.8%                        27.6%
------------------------------- ---------------------------- ---------------------------- ----------------------------
------------------------------- ---------------------------- ---------------------------- ----------------------------
Instrumentation Mfg                        2.8%                         8.9%                         3.2%
------------------------------- ---------------------------- ---------------------------- ----------------------------
------------------------------- ---------------------------- ---------------------------- ----------------------------
Enteral Feeding                            29.9%                        11.8%                        1.4%
------------------------------- ---------------------------- ---------------------------- ----------------------------
------------------------------- ---------------------------- ---------------------------- ----------------------------
Engineering/Tooling                        5.5%                         8.9%                         13.7%
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>

DESIGN AND ENGINEERING CAPABILITIES

The Company has extensive design and engineering  capabilities  that it uses for
its  own  product  development  as  well  as  for  servicing  its  manufacturing
customers.  The Company's  manufacturing service customers generally rely on the
Company  from the outset of their  project  for  complete  design,  engineering,
component  analysis,  testing,  and  regulatory  compliance for their devices or
system.  In other  instances,  customers  have come to the  Company  with  final
drawings  for devices  that they  believe are ready for  manufacturing.  In such
cases,  the Company  typically  revise and tests the customer's  existing design
prior to manufacturing.  Many times, the Company's  engineers identify and offer
design alternatives,  which have improved performance or produced  manufacturing
efficiencies.

The Company  assembles a project team of engineers and technicians  from various
disciplines to support each engineering  project.  The Company's  engineers work
closely  with the  customer  during all phases of the design,  engineering,  and
testing of the customer's device or system. The cooperative  approach is used to
assure that customers' expectations are met or exceeded in the final product.

The  Company's  engineers  assist sales and  marketing  personnel in  evaluating
requests for proposals and developing specific solutions,  bids, cost estimates,
and plans for each  product.  The  Company's  project  engineers act as customer
contacts throughout the design and engineering phase and have responsibility for
all  aspects  of  a  customer's  project.   The  Company  has  made  significant
investments in state-of-the-art  equipment to support its design and engineering
staff, including product performance modeling software, custom testing stations,
and three-dimensional computer aided design ("CAD") software.

ZEVEX Inc.  engineers  have broad  experience  in  designing,  engineering,  and
testing a broad array of medical technology devices and systems, with particular
expertise in ultrasonic devices.  Using its own software design,  ZEVEX Inc. has
created what management believes is the most sophisticated modeling software for
ultrasonic  device  development.  ZEVEX Inc.'s  modeling  and design  capacities
hasten product development for ultrasonic devices and improve the quality of the
final  device.  ZEVEX  Inc.'s  design and  engineering  services  generally  are
provided  to a  customer  as  part  of a  plan  to  eventually  manufacture  the
customer's product on a time and material or fixed price basis.

Aborn  also has an  engineering  team  experienced  in  designing,  engineering,
manufacturing,  and testing a broad array of  optical/electronic  devices,  with
particular expertise in optical/electronic sensors.

MANUFACTURING CAPABILITIES

The  Company's   own  products   generally  are  assembled  and  tested  at  its
manufacturing facility in Salt Lake City, Utah. ZEVEX Inc. design,  engineering,
and  manufacturing  services  for  other  companies  are  provided  in the  same
facility.   Some  of  ZEVEX  Inc.'s  enteral  feeding  disposable  products  are
manufactured by specialty manufacturers in the United States. Aborn provides its
design,  engineering,  and  manufacturing  services for other companies from its
facility in San Jose, California.

In most cases,  the  manufacturing  process begins with  technical  drawings and
specifications  derived through the  engineering  and design  process.  Once the
preliminary  design has been completed,  prototypes are manufactured and further
design  refinements  and  adjustments  are made based on the  performance of the
prototypes.  Following  completion of final design  specifications,  the Company
orders the required electronic components, piezoelectric ceramic, molded plastic
and stainless steel housings,  and other items from qualified  suppliers of such
items.  Inventory management,  work order, and MRP software programs are used to
manage  inventory  and control the  ordering  process for more than 10,000 parts
used in the Company's and its customer's products.  As the evolution of a device
or system  reaches  production,  team  members  with direct  responsibility  for
manufacturing,  quality  assurance,  test  engineering,  and materials  assume a
greater role in the  project.  The project  team  develops an assembly  process,
product testing and quality assurance procedures to produce high-quality devices
or systems that satisfy internal or customer specifications as well as the FDA's
GMP, and ISO 9001/EN 46001 quality standards where necessary.

ZEVEX  International  usually  provides  its  services  pursuant  to  negotiated
manufacturing agreements, which address quantity, pricing, warranty,  indemnity,
and other terms of the relationship.  Such contracts may or may not be exclusive
manufacturing   arrangements,   and  may  or  may  not  include  minimum  volume
requirements.  In some cases no minimum purchase is required.  In other cases, a
customer commits to purchase a minimum quantity identified in a rolling forecast
of  production.  ZEVEX and Aborn  generally  warrant the  products  they produce
against  defects in materials  and  workmanship  and may  indemnify the customer
against losses arising out of such breach of warranty.




MARKETING AND SALES

         Marketing and Sales of the Company's Design and Manufacturing Services.

The Company generates new design and manufacturing projects from customers using
direct sales  personnel who are trained in the Company's  engineering  expertise
and manufacturing  capabilities.  Project engineers also participate extensively
in sales and marketing activities.  In addition, the Company promotes its design
and  manufacturing  capabilities  at industry  trade shows,  by  advertising  in
leading industry publications, and by obtaining referrals from customers, former
employees of  customers,  and other  persons who are familiar with the Company's
services.

         Marketing and Sales of ZEVEX Inc.'s Enteral Feeding Products.

The Company has a network of over 50 independent manufacturer's  representatives
who sell the  Company's  line of Enteral pumps and related  disposable  delivery
sets.  These  representatives  have been selected for their  experience with the
home health care market served by the Company's pumps, and they sell directly to
home health care service  providers,  including  hospitals with  divisions.  The
manufacturer's  representatives  are regionally  supported by  specialists  with
clinical  credentials  (registered  dietitians  or  nurses),  who are  full-time
employees of the Company.

The installed  base of Nutrition  Medical=s  pumps,  delivery  sets, and feeding
tubes are being serviced by a national accounts manager.  Currently the EP80 and
EP85 models of the Nutrition Medical=s pumps are sold under private label to two
different companies.  The Company is in the process of reengineering the current
Model EP85  enteral  feeding  pump to provide  improved  convenience  and safety
features.  After this  reengineering,  this  product will be  remarketed  by the
Company=s  independent  manufacturer's   representatives  under  the  Enteral/EZ
trademark.

         Marketing and Sales of JTech Musculoskeletal Evaluation Products.

JTech  markets  its  products  using  various  methods  of  representation   and
distribution.   JTech  has  a  network  of  over  70  independent   dealers  and
manufacturer's  representatives  world  wide  who sell  JTech's  musculoskeletal
evaluation  products.  These dealers and representatives were selected for their
experience  with the physical and  occupational  therapy  markets as well as the
chiropractic market. The dealers and representatives are regionally supported by
regional sales managers,  who are full-time employees of JTech. JTech also sells
its products via seminars,  directed  mailings,  and catalogs using its customer
service personnel.

SUPPLIERS

The  Company  purchases  its  component  parts and raw  materials  from  various
approved suppliers.  The Company is not dependent on any single supplier for any
item,  and believes  that it can acquire  materials  from  various  sources on a
timely basis.

PATENTS AND TRADEMARKS

The Company either owns or has applied for various trade names and trademarks in
the United States and abroad for use with its products and services. The Company
believes  that its  trade  names and  trademarks  are well  recognized  with the
various markets for its products. The Company also believes that the loss of any
trade name  and/or  trademark  would not have a material  adverse  effect on its
overall business operations.

In  addition,  the Company owns eleven  patents with respect to its  proprietary
medical device products.  Except for the patents relating to Enteralite7 feeding
pump, the Company  believes that the loss of any of its patents would not have a
materially adverse effect on its overall business  operations.  The Company also
relies  on  trade  secrets  and   confidentiality   agreements  to  protect  the
proprietary  nature  of its  technologies  and has  taken  appropriate  steps to
protect its trade secrets.

MAJOR CUSTOMERS

The Company's  revenues  historically have been, and for a substantial period of
time in the future likely will be,  largely  derived from the sale of its design
and manufacturing services to a small number of major customers. During the 1996
fiscal  year,  ZEVEX Inc.  had three major  customers,  Allergan,  Inc.,  Alaris
Medical Systems,  Inc., (formerly IVAC Corporation),  and Paradigm Medical Inc.,
these customers accounted for approximately 66% of Company revenue.  These three
customers  each  accounted  for more than ten  percent  of the  Company's  total
revenues  in 1996.  During  the 1997  fiscal  year,  15% of  revenues  were from
Allergan,  15% were from  Paradigm,  18% were from  Alaris,  and 17% were from a
fourth  company,  Mentor H/S, Inc.  During the 1998 fiscal year, 15% of revenues
were  from  Allergan,  16% were  from  Mentor,  and 13%  were  from  Alaris.  No
assurances  can be given that such  customers  will continue to do business with
the Company or that the volume of their  orders for the  Company's  devices will
increase  or remain  constant.  The loss of any of such  major  customers,  or a
significant  reduction in the volume of their orders for the Company's  devices,
will have a material adverse impact on the Company's operations. In addition, if
one or more of these  customers were to seek and obtain price discounts from the
Company for the Company's  devices,  the resulting  lower gross margins on those
devices would have a materially  adverse effect on the Company's overall results
of operations.  If any customer with which the Company does a substantial amount
of business  were to encounter  financial  distress,  the  customer's  lateness,
unwillingness,  or inability to pay its  obligations to the Company could result
in a  materially  adverse  effect on the  Company's  results of  operations  and
financial  condition.   Company  management  expects,  however,  that  with  the
acquisition of the NMI enteral feeding product line, as well as JTech and Aborn,
the  percentage of total  revenues  represented  by a few major  customers  will
decline, so that the loss of such a customer would have less potential to have a
materially  adversely effect the financial condition or results of operations of
the Company in a material manner in the future.

BACKLOG

At December 31, 1998, the Company had a backlog of  approximately  $6,092,926 on
orders for medical  devices to be  manufactured  by ZEVEX Inc. for other medical
technology companies,  as compared to backlogs at December 31, 1997 and 1996, of
$6,265,007   and   $3,091,000,   respectively.   The  Company   estimates   that
approximately 90% of the backlog will be shipped before December 31, 1999. As of
March 23,  1999,  the Company had a backlog of  $6,291,768.  For purposes of the
above figures,  backlog  includes all orders received by the Company pursuant to
purchase  orders that have not been  completed and shipped by the Company.  This
does not include any backlog for the Company's proprietary products, because the
Company manufactures these devices and holds appropriate levels in inventory for
sale to  customers.  This also does not  include any backlog for JTech or Aborn.
Some of the orders  included  in the  backlog  may be  canceled  or  modified by
customers without significant  penalty.  In addition,  since customers may place
orders for delivery at various  times  throughout  the year,  and because of the
possibility of customer changes in delivery schedules or cancellation of orders,
the  Company's  backlog  as of any  particular  date  may not  necessarily  be a
reliable indicator of future revenue.

COMPETITION

         Competition for the Company's Design and Manufacturing Services.

The Company's primary competitors for design and manufacturing  services include
a large number of other contract manufacturers and customers that operate in the
medical technology and optical/electronic product industries,  some of which may
have substantially  greater financial and marketing  resources than the Company.
The primary competitive factors in medical and optical/electronic  device design
and   manufacturing   include  quality,   regulatory   compliance,   engineering
competence,  cost of non-recurring engineering design, price of the manufactured
product, experience, customer service, and ability to meet design and production
schedules.  Competition  for design  and  manufacturing  of  medical  devices is
primarily limited to those companies that meet the minimum applicable regulatory
requirements  of the FDA  and  international  standards  for  manufacturing  and
design.  In the future,  the Company is likely to compete  against new  entrants
into  the  industry  as  out-sourcing  expands  in the  medical  technology  and
optical/electronic product industries. For example, medical technology companies
with  design  and  manufacturing  capabilities  (especially  those  with  excess
capacity) and large electronic  contract  manufacturers  and defense  department
contractors with extensive engineering expertise may undertake the design and/or
manufacture of medical and/or optical/electronic devices for third parties.

         Competition for ZEVEX's Enteral Feeding Pumps

Two major  competitors  exist in the U.S. market for ambulatory  enteral feeding
pumps.  Ross  Laboratories,  a  division  of  Abbott  Laboratories,  offers  the
Companion7  pump,  which was  originally  introduced  to the  market in the late
1980's.  The  Company  estimates  that  Ross  holds a  market  share  of 45% for
ambulatory and non-ambulatory  enteral feeding  applications.  Sherwood Medical,
the second  competitor  offers the kangaroo7 PET enteral feeding pump,  which is
limited because it can only be operated in an upright position.  It is estimated
that Sherwood  presently  holds greater than 35% of the total market for enteral
pumps and disposable sets in both ambulatory and non-ambulatory applications.

Well-established  competitors  such as  Abbott  and  Sherwood  typically  bundle
products for the  greatest  advantage in  group-purchasing  situations.  Each of
these competitors  offers a breath of product offerings that far exceeds that of
the Company.  Key to the Company's ability to compete effectively are the unique
features of its product  offerings  and the  benefits to  customers  who utilize
them. The Company  expects to build upon its reputation for innovation  that was
earned by its  EnteraLite7  Ambulatory  Enteral  Feeding Pump for mobile enteral
patients.  In order to continue to increase revenues,  the Company will grow its
product  line so that it too can bundle a family of products to meet the enteral
nutrition delivery needs of its customers. The Company expects to develop and/or
acquire products which are complementary to the EnteraLite7,  particularly those
having features which can significantly  improve the quality of life of patients
and the safety and ease of enteral administration.




         Competition for Musculoskelatal Products

The Company's primary competitors in the  musculoskelatal  products market are a
limited number of small  privately held companies.  Most notable are ARCON,  The
Blankenship  System,  Key Methods,  Isernhagen,  Cedaron and Greenleaf  Medical.
Generally   these   companies   concentrate   on   particular   areas   such  as
musculoskeletal  testing,  functional capacity evaluation of hand testing. JTech
management  believes that few  competitors  can penetrate the broad  spectrum of
medical professions possible with JTech products because their products lack the
full range of capabilities  offered by JTech and none offer a completely modular
product  line like  JTech.  Competitive  factors in the  musculoskelatal  market
include  perceived  quality,  price, name  recognition,  training  capabilities,
support,  operating system,  defensibility,  and system  integration  potential.
Competition  in the market is primarily  limited to those  companies  capable of
developing  the  necessary  software and devices and meeting the FDA  regulatory
requirements.



RESEARCH AND DEVELOPMENT FOR THE COMPANY'S PROPRIETARY PRODUCTS

As of December 31, 1998,  ZEVEX Inc. had three  full-time  engineers in research
and development,  and had several other designers and engineers  contributing to
additional  research  and  development  projects.   ZEVEX  Inc.=s  research  and
development projects are primarily focused on new proprietary  products.  During
the last three  fiscal  years,  ZEVEX Inc.  continued  independent  research and
development  activities  with respect to the design and  development  of new and
improved devices,  spending $290,699 in 1998,  $702,563 in 1997, and $527,562 in
1996. In 1998 and 1997, research and development costs represented approximately
3% and 8% of the  Company's  revenues,  respectively.  Significant  fluctuations
experienced  in  research  and  development  are due to timing of the  Company's
research  projects.  The most notable  product from the  Company=s  research and
development  efforts  during  the past two years is the  EnteraLite7  Ambulatory
Enteral Feeding Pump.

GOVERNMENTAL REGULATION

ZEVEX Inc.'s manufacturing  facilities,  its customer's medical devices, and its
own medical  devices are subject to  extensive  regulation  by the FDA under the
Food Drug and Cosmetics Act ("FDC Act").  Manufacturers  of medical devices must
comply with  applicable  provisions  of the FDC Act and  associated  regulations
governing the development,  testing,  manufacturing,  labeling,  marketing,  and
distribution of medical devices,  record-keeping requirements, and the reporting
of certain  information  regarding  device  safety.  In  addition,  ZEVEX Inc.'s
facilities  are subject to periodic  inspection  by the FDA (and  certain  state
agencies) for compliance with the FDA's GMP  requirements.  To ensure compliance
with GMP  requirements,  the Company expends  significant time,  resources,  and
effort in the areas of training, production, and quality assurance.

For certain medical devices  manufactured by the Company,  the customer may need
to obtain FDA  clearance  of a  premarket  approval  ("PMA")  application.  Such
applications require substantial  preclinical and clinical testing to obtain FDA
clearance.  Currently,  at least two of the  Company's  customers are seeking or
plan to seek a PMA for devices to be manufactured by the Company.  Other medical
devices  can be marketed  without a PMA,  but only by  establishing  in a 510(k)
premarket notification "substantial equivalence" to a predicate device.

Besides the FDA  regulations  described  above,  the Company is also  subject to
various  state and  federal  regulations  with  respect to such  matters as safe
working conditions,  manufacturing practices, fire hazard control, environmental
protection,  and the disposal of hazardous or potentially  hazardous  materials.
The  Company's  operations  involve  the use and  disposal of  relatively  small
amounts of  hazardous  materials.  The Company  believes  that  compliance  with
federal,  state, and local regulations  regarding the disposal of such materials
does not have a  material  effect  on the  capital  expenditures,  earnings,  or
competitive position of the Company.

Beginning in 1998, all medical device  manufacturers were required to obtain the
"CE Mark" to sell their products in the European Common Market. The CE Mark is a
quality designation given to products that meet certain policy directives of the
European  Economic  Area.  The Company has received and  maintained ISO 9001 and
EN46001 certification,  which allows the Company to CE Mark its own products and
assist its customers with obtaining the CE Mark for their products.

EMPLOYEES

As of  March  15,  1999,  the  Company  employed  a total of 155  people  in the
following areas: in Design and Engineering,  41; in Manufacturing  and Test, 53;
in Quality Assurance,  12; and in Marketing and Administration,  49. The Company
has 147 people located at its corporate  headquarters and manufacturing facility
in Salt Lake  City,  Utah,  and 8 people  located  at its San Jose,  California,
facility.

The Company  also retains 4  consulting  and contract  personnel in the areas of
finance,  engineering, and regulatory. The Company considers its labor relations
to be good,  and none of its  employees  are covered by a collective  bargaining
agreement.  Currently, the local economy is growing and the unemployment rate is
low in the Salt Lake City metropolitan  area, which means that the Company faces
competition  to  attract  and  retain  qualified  personnel.  At the same  time,
however, the Salt Lake City metropolitan area has a well-educated work force and
is  considered an attractive  place to live.  Accordingly,  the Company does not
anticipate having difficulty in attracting and retaining  qualified personnel to
meet its projected growth.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND SALES

The Company's  revenues  historically have been largely derived from the sale of
its design  and  manufacturing  services  to a small  number of major  customers
located in the United States. During the 1998 fiscal year, the Company had total
revenues  of  $11,084,413,  of which  $623,572  was  considered  foreign  source
revenues.  During the 1997  fiscal  year,  the  Company  had total  revenues  of
$8,968,425, of which $457,390 was considered foreign source revenues. During the
1996  fiscal  year,  the  Company had total  revenues  of  $5,663,733,  of which
$396,461 was considered foreign source revenues.

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





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

The  disclosure  and analysis  set forth in this 1998 FORM 10-K contain  certain
forward-looking statements,  particularly statements relating to future actions,
performance  or results of current  and  anticipated  products,  sales  efforts,
expenditures,  and  financial  results.  From  time to time,  the  Company  also
provides forward-looking  statements in other publicly-released  materials, both
written  and oral.  These  statements  are any  statement  that does not  relate
strictly  to  historical  or  current  facts.  They use words  such as  "plans,"
"expects," "will" "believes" and other words and phrases of similar meaning.  In
all cases, a broad variety of risks and  uncertainties,  both known and unknown,
as well as inaccurate assumptions can affect the realization of the expectations
or forecasts in those statements. Consequently, while such statements represents
Company  management's  current  views,  no  forward-looking   statement  can  be
guaranteed. Actual future results may vary materially.

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

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

         Risk Factors Relating to the Company=s Customers

At the present  time,  and for a substantial  period of time in the future,  the
Company's  success will depend  largely on the success of the  customers for its
manufacturing  services  and  on  the  medical  and  optical/electronic  devices
designed and  manufactured by the Company for those  customers.  Any unfavorable
developments or adverse effects on the sales of those devices or such customers'
businesses,   results  of  operations,   or  financial  position  could  have  a
corresponding  adverse  effect on the Company.  In addition,  the Company  sells
certain types of medical  devices to multiple  customers and to the extent there
is an  unfavorable  development  affecting  the sales of any such type of device
generally,  the adverse effect of such  development on the Company would be more
substantial than that presented by the decline in sales to a single customer for
such type of device.  Additionally,  the  Company  believes  that its design and
manufacturing  customers  and their  devices  (and the Company  indirectly)  are
generally subject to the following risks:

Competitive Environment.  The medical and optical/electronic  product industries
are  highly  competitive  and  subject  to  significant   technological  change.
Participation in such industries  requires ongoing  investment to keep pace with
technological  developments  and  quality  and  regulatory  requirements.  These
industries   consist  of   numerous   companies,   ranging   from   start-up  to
well-established  companies.  Many of the  Company's  customers  have a  limited
number of  products,  and some market only a single  product.  As a result,  any
adverse  development  with  respect  to  these  customers'  products  may have a
material  adverse  effect  on the  business  and  financial  condition  of  such
customer, which may adversely affect that customer's ability to purchase and pay
for its products  manufactured  by the Company.  The  competitors  and potential
competitors  of the  Company's  customers may succeed in developing or marketing
technologies  and products  that will be preferred in the  marketplace  over the
devices  manufactured  by the Company for its customers or that would render its
customers' technology and products obsolete or noncompetitive.
 Emerging Technology Companies.  A significant number of the Company's customers
are emerging  medical  technology  companies that have competitors and potential
competitors  with  substantially   greater  capital   resources,   research  and
development  staffs,  and facilities,  and substantially  greater  experience in
developing new products,  obtaining regulatory approvals,  and manufacturing and
marketing medical products.  Approximately  eight customers,  representing 9% of
the  Company's  revenues in fiscal year 1998,  were,  in  management's  opinion,
emerging medical technology companies.  These customers may not be successful in
launching  and  marketing  their  products,  or  may  not  respond  to  pricing,
marketing, or other competitive pressures or the rapid technological  innovation
demanded by the marketplace and, as a result,  may experience a significant drop
in product revenues.

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

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

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

Medical  devices  manufactured  by the  Company and  marketed  by its  customers
pursuant to FDA or foreign  clearances or approvals are subject to pervasive and
continuing  regulation  by the FDA and  certain  state  and  foreign  regulatory
agencies.  FDA enforcement  policy  prohibits the marketing of approved  medical
products for unapproved uses. The Company's  customers  control the marketing of
their products,  including representing to the market the approved uses of their
products.  If a customer engages in prohibited marketing  practices,  the FDA or
another regulatory agency with applicable jurisdiction could intervene, possibly
resulting in marketing  restrictions,  including prohibitions on further product
sales, or civil or criminal penalties.  Changes in existing laws and regulations
or policies  could  adversely  affect the ability of the Company's  customers to
comply with regulatory  requirements.  There can be no assurance that a customer
of the Company, or the Company,  will not be required to incur significant costs
to comply with laws and regulations in the future,  or that such customer or the
Company will be able to comply with such laws and regulations.  Uncertain Market
Acceptance of Products.  There can be no assurance that the products created for
the Company's  customers will gain any  significant  market  acceptance  even if
required  regulatory  approvals are obtained.  Some of the Company's  customers,
especially  emerging  technology  companies,  have limited or no  experience  in
marketing   their  products  and  have  not  made   marketing  or   distribution
arrangements  for  their  products.  The  Company's  customers  may be unable to
establish effective sales, marketing,  and distribution channels to successfully
commercialize their products.

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

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

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

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

The Company believes that the market for out-sourcing the design and manufacture
of advanced  medical products for medical  technology  companies is in its early
stages.  Many of the Company's  potential  customers  have  internal  design and
manufacturing facilities. The Company's engineering and manufacturing activities
require  that  customers  provide the Company  with access to their  proprietary
technology and relinquish the control  associated with internal  engineering and
manufacturing.  As a result,  potential  customers  may decide that the risks of
out-sourcing   engineering  or  manufacturing   are  too  great  or  exceed  the
anticipated benefits of out-sourcing.  In addition, medical technology companies
that have  previously  made  substantial  investments  to  establish  design and
manufacturing  capabilities may be reluctant to out-source  those functions.  If
the  medical  technology  industry  generally,  or any  significant  existing or
potential   customer,   concludes  that  the   disadvantages   of   out-sourcing
manufacturing  outweigh the  advantages,  the Company could suffer a substantial
reduction in the size of one or more of its current target markets,  which could
have a material  adverse  effect on its  business,  results of  operations,  and
financial condition.

         Competition in Out-Sourcing Manufacturing

The Company faces  competition  from design firms and other  manufacturers  that
operate  in  the  medical  and  opto/electronic   technology  industries.   Many
competitors have  substantially  greater  financial and other resources than the
Company.  Also,  manufacturers  focusing in other industries may decide to enter
into the industries served by the Company. Competition from any of the foregoing
sources  could  place  pressure on the  Company to accept  lower  margins on its
contracts  or lose  existing or  potential  business,  which  could  result in a
material adverse effect on the Company's  business,  results of operations,  and
financial condition. To remain competitive, the Company must continue to provide
and develop technologically  advanced manufacturing services,  maintain quality,
offer  flexible  delivery  schedules,  deliver  finished  products on a reliable
basis,  and compete  favorably on the basis of price.  There can be no assurance
that  the  Company  will be able to  compete  favorably  with  respect  to these
factors.

         Early Termination of Agreements

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

         Risk Factors in Marketing the Company=s Proprietary Products

In producing and marketing its own proprietary  devices,  the Company faces many
of the same risks that its  design/manufacturing  customers  face.  As discussed
above with respect to its customers, such risks include:

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

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



The Company is subject to substantial risks involved in developing and marketing
medical products regulated by the FDA and comparable foreign agencies. There can
be no  assurance  that the  Company  will  obtain the  necessary  FDA or foreign
clearances  on a timely  basis,  if at all. As discussed  above,  commercialized
medical  products  are  subject to further  regulatory  restrictions,  which may
adversely  affect the  Company.  Changes in  existing  laws and  regulations  or
policies  could  adversely  affect  the  ability of the  Company to comply  with
regulatory  requirements.  There can be no assurance that the Company's products
will gain any  significant  market  acceptance in their intended target markets,
even if required regulatory approvals are obtained.

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

         Regulatory Compliance for Manufacturing Facilities

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

         Product Development

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

         Design and Manufacturing Process Risks

While the Company has  substantial  experience  in designing  and  manufacturing
devices, the Company may still experience technical difficulties and delays with
the  design  and  manufacturing  of  its  or  its  customer's   products.   Such
difficulties  could cause  significant  delays in the  Company's  production  of
products. In some instances, payment by a manufacturing

customer  is  dependent  on the  Company's  ability to meet  certain  design and
production  milestones in a timely  manner.  Also,  some major  contracts can be
canceled if purchase  orders  thereunder are not completed  when due.  Potential
difficulties in the design and  manufacturing  process that could be experienced
by the Company include difficulty in meeting required specifications, difficulty
in achieving necessary manufacturing efficiencies, and difficulties in obtaining
materials on a timely basis.

         Expansion of Marketing; Limited Distribution

The Company  currently has a limited  domestic direct sales force  consisting of
eight  individuals,  complemented  by a  network  of  independent  manufacturing
representatives.  The  Company  anticipates  that it will need to  increase  its
marketing  and sales  capability  significantly  to more fully  cover its target
markets,  particularly  as additional  proprietary  devices become  commercially
available.  There can be no  assurance  that the Company will be able to compete
effectively in attracting and retaining qualified sales personnel or independent
manufacturing  representatives  as needed or such persons will be  successful in
marketing or selling the Company's services and products.

         Product Recalls

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

         Risk of Product Liability

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

         Potential Inability to Sustain and Manage Growth

The Company's need to manage its growth  effectively will require it to continue
to implement and improve its operational,  financial, and management information
systems, to develop its managers' and project engineers'  management skills, and
to train, motivate,  and manage its employees.  The Company must also be able to
attract  and retain a  sufficient  number of suitable  employees  to sustain its
growth. If the Company cannot keep pace with the growth of its customers, it may
lose customers and its growth may be limited.

         Dependence Upon Management

The Company is substantially dependent upon its key managerial,  technical,  and
engineering  personnel,   particularly  ZEVEX  International's  three  executive
officers, Dean G. Constantine,  Chief Executive Officer and President,  David J.
McNally, Executive Vice President,  Phillip L. McStotts, Chief Financial Officer
and  Secretary/Treasurer,  and key managerial personnel Leonard Smith, President
of JTech, and Vijay Lumba, President of Aborn. The Company must also attract and
retain  highly  qualified  engineering,  technical,  and  managerial  personnel.
Competition  for such  personnel  is intense,  the  available  pool of qualified
candidates  is  limited,  and there can be no  assurance  that the  Company  can
attract and retain such  personnel.  The loss of its key personnel  could have a
material adverse effect on the Company's  business,  results of operations,  and
financial  condition.  Only Mr. Smith and Mr. Lumba have  employment  agreements
with their  respective  subsidiary  companies.  None of the other  Company's key
personnel have an employment agreement with the Company.

The Company  carries  key-man life insurance on the lives of its Chief Executive
Officer,  Chief Financial Officer, and Executive Vice President in the amount of
$500,000  each. No  assurances  can be given that such  insurance  would provide
adequate  compensation  to the  Company  in the  event of the  death of such key
employee.

         Patent Protection

As of  December  31,  1998,  the Company  held  eleven  U.S.  patents on devices
developed by the Company. Such patents disclose certain aspects of the Company's
technologies  and there can be no assurance  that others will not design  around
the patent and develop similar technology. The Company believes that its devices
and other  proprietary  rights do not infringe any  proprietary  rights of third
parties. There can be no assurance,  however, that third parties will not assert
infringement claims in the future.

         Control by Management and Certain Major Shareholders

As of March 15, 1999,  the current  executive  officers  and  directors of ZEVEX
International, together with those persons who are the beneficial owners of more
than 5% of ZEVEX  International's  Common Stock,  will  beneficially own or have
voting  control  over   approximately  33%  of  the  outstanding  Common  Stock.
Accordingly, these individuals have the ability to influence the election of the
ZEVEX  International's  directors and most corporate actions. This concentration
of  ownership,  together  with  other  provisions  in the ZEVEX  International's
charter and  applicable  corporate  law,  may also have the effect of  delaying,
deterring, or preventing a change in control of the ZEVEX International.

         Suppliers and Shortages of Component Parts

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

         Customer Conflicts

The  medical  technology  industry  reflects  vigorous   competition  among  its
participants.  As a result, its customers sometimes require the Company to enter
into  noncompetition  agreements  that  prevent the Company  from  manufacturing
instruments for its customers' competitors.  For example, the Company has agreed
with one customer not to manufacture  certain devices for laser cataract surgery
for any other customer or potential customer.  Such restrictions generally apply
during the term of the customer's manufacturing contract and, in some instances,
for a period following termination of the contract. If the Company enters into a
noncompetition   agreement,  the  Company  may  be  adversely  affected  if  its
customer's  product is not  successful and the Company must forgo an opportunity
to  manufacture a successful  instrument  for such  customer's  competitor.  Any
conflicts  among its customers could prevent or deter the Company from obtaining
contracts to manufacture successful instruments.

         Future Capital Requirements

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

         Reliance on Efficiency of Distribution and Third Parties

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

         Volatility of Revenues and Product Mix

The Company's annual and quarterly operating results are affected by a number of
factors,  including the volume and timing of customer orders,  which vary due to
(i) variation in demand for the customer's  products as a result of, among other
things,  product  life  cycles,  competitive  conditions,  and general  economic
conditions,  (ii) the  customer's  attempt to balance its  inventory,  (iii) the
customer's need to adapt to changing regulatory conditions and requirements, and
(iv) changes in the customer's  manufacturing  strategy.  Technical difficulties
and  delays in the design  and  manufacturing  processes  may also  affect  such
results. The foregoing factors may cause fluctuations in revenues and variations
in product mix, which could in turn cause  fluctuations  in the Company's  gross
margin.  Under the terms of the Company's  contracts with many of its customers,
the customers have broad  discretion to control the volume and timing of product
deliveries.  Further,  the Company's contracts with its customers typically have
no minimum  purchase  requirements.  As a result,  production  may be reduced or
discontinued at any time. Therefore, it is difficult for the Company to forecast
the level of customer  orders with  certainty,  making it  difficult to schedule
production and maximize manufacturing capacity. Other factors that may adversely
affect  the  Company's  annual  and  quarterly  results  of  operations  include
inexperience in manufacturing a particular  instrument,  inventory  shortages or
obsolescence, labor costs or shortages, low gross margins on design projects, an
increase  in  design  revenues  as  a  percentage  of  total   revenues,   price
competition,  and  regulatory  requirements.   Because  the  Company's  business
organization  and its related  cost  structure  anticipate  supporting a certain
minimum  level of revenues,  the Company's  limited  ability to adjust its short
term cost structure would compound the adverse effect of any significant revenue
reduction.

         Uncertain Protection of Intellectual Property

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

         Limited Market for Common Stock

Historically,  the market for the ZEVEX  International's  Common  Stock has been
limited  due to the  relatively  low  trading  volume  and the  small  number of
brokerage  firms acting as market  makers.  In May 1997,  ZEVEX  International's
Common Stock was listed for trading on the American Stock Exchange.  In November
1998, ZEVEX International's  Common Stock was changed to a listing on the NASDAQ
Stock Market,  which has increased the market for the Common Stock. No assurance
can be given,  however,  that the market for the Common  Stock will  continue or
increase or that the prices in such market will be  maintained  at their present
levels.



         Possible Volatility of Stock Price

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

         Issuance of Additional Shares for Acquisition or Expansion

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

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

Certain Provisions of the Company=s  Certificate of Incorporation and Bylaws and
the  Delaware  General  Corporation  Law may  have  the  effect  of  preventing,
discouraging,  or  delaying  a change  in the  control  of the  Company  and may
maintain  the  incumbency  of  the  Board  of  Directors  and  management.  Such
provisions could also limit the price that certain investors might be willing to
pay in the future for shares of the  Company=s  Common  Stock.  Pursuant  to the
Company=s Certificate of Incorporation,  the Board of Directors is authorized to
fix the rights,  preferences,  privileges,  and  restrictions,  including voting
rights,  of unissued  shares of the Company=s  Preferred Stock and to issue such
stock  without any further  vote or action by the  Company=s  stockholders.  The
rights of the  holders of Common  Stock will be subject to and may be  adversely
affected by the rights of the holders of any Preferred Stock that may be created
and issued in the future.  In  addition,  stockholders  do not have the right to
cumulative  voting for the election of  directors.  Furthermore,  the  Company=s
Certificate  and Bylaws provide for a staggered  board whereby only one-third of
the total  number of  directors  are  replaced  or  re-elected  each  year.  The
Certificate  also provides that the  provisions of the  Certificate  relating to
number,  vacancies,  and  classification  of the Board of Directors  may only be
amended by a vote of at least 66 2/3% of the shareholders.  Finally,  the Bylaws
provide  that  special  meetings of the  stockholders  may only be called by the
President  of the Company or pursuant to a  resolution  adopted by a majority of
the Board of Directors.

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

         Foreign Exchange, Currency, and Political Risk

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

ITEM 2.  PROPERTIES

ZEVEX  International's  executive offices,  and the  administrative  offices and
manufacturing  facilities  of  ZEVEX  Inc.  and  JTech,  are  located  in  ZEVEX
International's  51,000 square foot, mixed-use building in Salt Lake City, Utah.
This  building was  constructed  in 1997 to the  Company's  specifications.  The
building is situated on nearly four acres of land a few miles from the  downtown
area.  It allows quick access to two major  interstate  freeways and to the Salt
Lake International  Airport. The Company currently utilizes approximately 85% of
the building's  available  space and believes that the building will be adequate
to serve the  Company's  needs  through  the end of the year 2000.  To allow the
Company to build  additional  facilities as growth may require,  the Company has
acquired approximately 3.47 vacant acres adjacent to its facility.

Aborn's  administrative  and  manufacturing  operations  are located in a leased
3,300 square foot building in San Jose, California. The building was constructed
in 1979 and is adequate for Aborn's needs.

ITEM 3.  LEGAL PROCEEDINGS

The Company is not engaged in any legal proceedings.

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

No matters were submitted to the ZEVEX International's  shareholders for vote in
the fourth quarter of 1998.

                                     PART II

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

ZEVEX  International's  Common  Stock has been  trading on the  National  Market
system of The NASDAQ Stock Market since November 2, 1998, under the symbol ZVXI.
Prior to that date the stock traded on the American Stock Exchange beginning May
19, 1997,  under the symbol ZVX.  Prior to May 1997, the stock traded on the OTC
Bulletin  Boards under the symbols ZVXI and ZVXIU.  As of March 15, 1999,  there
were 180 holders of record of the ZEVEX International's Common Stock (calculated
without reference to individual  participants in securities  position listings).
Because  many of the ZEVEX  International's  shares of common  stock are held by
brokers and other institutions on behalf of stockholders,  ZEVEX International's
is unable to estimate  the total  number of  stockholders  represented  by these
record  holders.  ZEVEX  International  has  never  declared  or paid  any  cash
dividends on its Common Stock. Since ZEVEX International's intends to retain all
future earnings to finance future growth, it does not anticipate paying any cash
dividends  in the  foreseeable  future.  ZEVEX  International's  has a  negative
covenant in its bank line of credit  agreement  that prevents the payment of any
cash dividend without prior approval of the bank.

The   following   table   lists  the  high  and  low  sales   prices  for  ZEVEX
International's  Common Stock for each full quarterly period since June 1, 1997,
and the  high  and low bid  information  for the  common  stock  during  the two
quarterly periods preceding June 1, 1997:
<TABLE>
<CAPTION>
<S>                                        <C>                 <C>               <C>                 <C>     



                                      ------------------------------------- -------------------------------------
                                                      1998                                  1997
                                            High                Low                High                Low
                                      ------------------ ------------------ ------------------- ------------------
1st Quarter                                $12.63              $7.88              $8.00               $3.25
2nd Quarter                                $11.25              $6.75              $11.25              $7.13
3rd Quarter                                 $7.63              $4.50              $20.75             $13.50
4th Quarter                                 $7.88              $4.00              $16.25              $8.50
</TABLE>


The figures  given above for periods  prior to June 1, 1997 were obtained from a
market maker for ZEVEX  International's  common  stock and reflect  inter-dealer
prices, without retail mark-up, mark-down or commissions and may not necessarily
represent actual transactions.

During 1998, ZEVEX  International  sold the following  securities which were not
registered under the Securities Act of 1933 (the "Securities Act"):

         1. On December 23, 1998, ZEVEX  International  issued 115,000 shares of
common stock to Nutrition  Medical as partial  consideration for the acquisition
of Nutrition  Medical's  assets relating to its enteral feeding pump and related
disposable feeding product business. The shares were issued to Nutrition Medical
(an accredited  investor) pursuant to the exemption from registration  available
under Section 4(2) of the Securities Act and Rule 506 promulgated thereunder.

         2.  On  December  31,  1998,  ZEVEX  International  issued  convertible
debentures in the aggregate amount of $1,350,000 to Vijay Lumba and Harry Parmar
as partial consideration for the acquisition of all issued and outstanding stock
of Aborn. The debentures were issued to Messrs. Lumba and Parmar pursuant to the
exemption from  registration  available under Section 4(2) of the Securities Act
and/or  Rule  506  promulgated   thereunder.   Messrs.   Lumba  and  Parmar  are
sophisticated or accredited investors who had access to all material information
about ZEVEX  International  during the negotiation of the purchase  transaction.
All or part of the outstanding principal of each debenture is convertible by the
holder into ZEVEX  International  Common  Stock at a rate of $11.00 per share at
any time between one and three years from the date of issuance.



3. On December 31, 1998, ZEVEX  International  issued convertible  debentures in
the aggregate amount of $3,000,000 to Leonard Smith, Tracy Livingston, and David
Bernardi  as  partial  consideration  for  the  acquisition  of all  issued  and
outstanding  stock of  JTech.  The  debentures  were  issued to  Messrs.  Smith,
Livingston and Bernardi  pursuant to the exemption from  registration  available
under Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder.
Messrs. Smith, Livingston and Bernardi are sophisticated or accredited investors
who had access to all material  information about ZEVEX International during the
negotiation  of the  purchase  transaction.  All  or  part  of  the  outstanding
principal  of  each   debenture  is   convertible   by  the  holder  into  ZEVEX
International Common Stock at a rate of $11.00 per share at any time between one
and three years from the date of issuance.

         4. During the year ending December 31, 1998, there were 9,550 shares of
Common  Stock  issued  pursuant to exercise of stock  option by employees of the
Company. The exercise price on such shares ranged from $2.50 to $5.00 per share.
The shares  issued  upon  exercise of the  options  were issued  pursuant to the
exemption from registration available under SEC Rule 505.

         5. During the year ending  December 31, 1998,  there were 30,000 shares
of Common  Stock  issued  pursuant to the  exercise  of  warrants  issued by the
Company in  February  1997.  The  exercise  price on such  shares were $3.50 per
share.  The shares issued upon exercise of the warrants were issued  pursuant to
the exemption from  registration  available under Section 4(2) of the Securities
Act.

ITEM 6.  SELECTED FINANCIAL DATA

                   SELECTED FINANCIAL DATA C FIVE-YEAR REVIEW

The following selected statement of operations data for the years ended December
31, 1998,  1997 and 1996, and the balance sheet data as of December 31, 1998 and
1997 are derived from the audited consolidated  financial statements included in
this report and should be read in conjunction with those consolidated  financial
statements and notes thereto.  The selected statement of operations data for the
years ended December 31, 1995 and 1994 and the balance sheet data as of December
31,  1996,  1995 and 1994 are derived  from the audited  consolidated  financial
statements of the Company,  which are not included herein,  and are qualified by
reference to such financial statements and the notes thereto.










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


                                                         Fiscal Year Ended December 31

                                                       1998          1997         1996          1995         1994
                                                  ---------------------------------------------------------------------
Statement of Operations Data
Revenues                                           $11,084,413    $8,968,425   $5,663,733    $5,295,762   $3,332,437
Gross profit                                         4,237,970     4,211,368    2,727,678     2,230,209    1,315,767
Selling, general and administrative expenses         3,879,408     2,481,090    1,892,317     1,324,928    1,023,988
Research and development  expenses                     290,669       702,563      527,562       502,255      419,278
Other (income)/expenses                              (407,469)      (47,136)    (243,947)      (40,829)     (36,127)
Provisions (benefit) for taxes                         113,169       356,609      206,169       127,055     (66,709)
Net income (loss)                                      362,193       718,242      345,577       316,800     (24,662)
Net income (loss) per share basic                          .11           .34          .25           .24        (.02)
Weighted average shares outstanding                  3,298,150     2,097,831    1,388,511     1,305,812    1,130,609
Net Income (loss) per share diluted                        .10           .29          .24            24        (.02)
Weighted average shares outstanding B assuming
dilution
                                                     3,636,434     2,443,482    1,411,687     1,333,768    1,151.991

-----------------------------------------------------------------------------------------------------------------------
                                                     1998           1997          1996          1995         1994
-----------------------------------------------------------------------------------------------------------------------
Balance Sheet Data
Total assets                                       $33,760,979    $22,582,543    $6,368,670   $3,247,375    $2,824,029
Total current liabilities *                          7,395,946      1,290,466       588,009      346,504       273,708
Long-term debt (less current portion)                6,150,000      1,900,000     2,000,000           --            --
Stockholders' equity                                20,114,535     19,265,697     3,701,449    2,900,871     2,550,321
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
</TABLE>

* includes $4,204,500 that was paid on 1/6/99

The  Company's  management  anticipates  that the financial  performance  of the
Company during 1999 and future years will be affected materially by the addition
of the Nutrition  Medical line of enteral  feeding  products  beginning in July,
1998, and the addition of the operations of JTech and Aborn,  beginning December
31, 1998.

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

General

ZEVEX International,  Inc., (hereafter AZEVEX International@) is in the business
of  designing  and  manufacturing   advanced  medical  and  electronic  devices,
including  surgical  systems,   device  components,   and  sensors  for  medical
technology and other companies. ZEVEX International also designs,  manufactures,
and markets its own medical  devices  and  musculoskelatal  evaluation  products
using its proprietary technologies.

ZEVEX International conducts its business primarily through its oringinal wholly
owned subsidiary,  ZEVEX, Inc., a Delaware  corporation  ("ZEVEX Inc."), and two
newly acquired, wholly owned subsidiaries,  JTech Medical Technologies,  Inc., a
Utah  corporation   ("JTech"),   and  Aborn  Electronics,   Inc.,  a  California
corporation  ("Aborn").  ZEVEX Inc. designs and manufactures medical devices for
medical  technology  companies,  as well as for itself.  JTech  manufactures and
markets its own proprietary  musculoskeletal evaluation products for health care
providers.  Aborn designs and  manufactures a variety of  sophisticated  optical
sensors and custom computer chips for medical technology and other companies.

DEVELOPMENTS DURING 1998

ZEVEX   International   substantially   expanded  its   business   during  1998,
diversifying  ZEVEX  International's  offering of  proprietary  products and its
ability to design and  manufacture  sophisticated  devices for other  companies.
Company  management  believes that this  expansion  fulfills a major part of the
Company's  plans for growth  through  acquisition.  The expansion  took place in
three major steps:

1. In July 1998,  ZEVEX Inc.  entered into an agreement with Nutrition  Medical,
Inc.,  a Minnesota  corporation  ("Nutrition  Medical  "), to acquire  Nutrition
Medical's  enteral feeding line of products.  Enteral feeding  involves  patient
feeding  through  feeding  pumps,  delivery  sets, and feeding tubes through the
intestines  or stomach.  Company  management  believes  that the addition of the
Nutrition Medical product line greatly  complement ZEVEX Inc.'s existing line of
enteral feeding  products,  enhancing the Company's ability to serve the enteral
feeding  markets.  From July 1998 to  December  1998,  ZEVEX Inc.  marketed  the
Nutrition Medical products under an exclusive marketing arrangement,  under that
agreement,  the Company sold the Nutrition  Medical line,  but at a lower margin
than the Company normally receives for its proprietary products.

2. On December 31, 1998,  the Company  acquired  JTech through a stock  purchase
transaction with the four shareholders of JTech.  JTech was organized in 1988 as
a sole proprietorship and later incorporated as JTech Medical  Industries,  Inc.
in 1995 to initially  manufacture and sell range of motion measurement  devices.
As mentioned above, JTech currently manufactures and markets its own proprietary
musculoskeletal  evaluation  products  for  health  care  providers,  a line  of
products  not  previously  made or sold by  ZEVEX  Inc.  With  approximately  22
employees,  JTech's  gross  revenues  for  1998  were  $2,796,344.  The  Company
anticipates  a  significant  contribution  to revenues from JTech in 1999.

3. On December  31,  1998,  the  Company  acquired  Aborn  through  a  stock  
purchase transaction with the sole  shareholder of Aborn.  Aborn was organized 
in 1984 to initially  design,   manufacture  and  sell  low  cost  commercial  
fiber  optic components.  As mentioned  above,  Aborn  currently  designs and 
 manufactures a variety  of   sophisticated   optical   sensors,   custom   
computer  chips  and semiconductor  components for medical  technology and 
other companies,  bringing new design and  manufacturing  expertise to the 
Company.  With  approximately  8 employees, Aborn's gross revenues for calendar 
1998 were $1,250,488. The Company anticipates a significant contribution to
revenues from Aborn in 1999.

Because  the   acquisition  of  Aborn  and  JTech  occurred  at  year  end,  the
contribution of these  acquisitions to the financial  performance of the Company
will not be realized until 1999.

ZEVEX=s  sales  results for 1998 were the  strongest in the  Company=s  history.
Revenues were  $11,084,413,  a 23% increase over revenues of $8,968,425 in 1997,
and a 96%  increase  over  revenues of  $5,663,733  in 1995.  Revenues  for 1998
increased primarily due to demand for the Company=s  proprietary  products,  and
the award of significant engineering and manufacturing service contracts.

Results of Operations

In each of the three preceding years, a small number of customers  accounted for
a significant percentage of total revenues.  Fluctuations in the timing and size
of orders  from such  major  customers  resulted  in  changes  in the  Company=s
revenues and product mix, which in turn affected gross margins. As a result, the
Company experienced variations in operating results from quarter to quarter, and
the  results of  operations  for a  specific  quarter  should not be  considered
indicative of the results that may be achieved for longer periods.

Manufacturing revenue growth depends upon growth in demand for systems,  devices
and instruments manufactured by the Company, as well as on the Company's ability
to acquire  additional  manufacturing  service contracts from medical technology
companies.  The Company's contract manufacturing customers have complete control
over the  marketing  and sales of products  that the Company  manufacture's  for
them.  The  Company has no ability to increase  demand for  instruments  that it
manufactures for its contract-manufacturing customers.

The Company markets its manufacturing  capabilities and rarely undertakes design
work  without  securing  exclusive   manufacturing  rights  (See  AManufacturing
Capabilities@).  The volume and timing of future manufacturing  revenues related
to any specific  engineering  project are highly variable.  Certain  engineering
projects may not lead to future manufacturing  revenues. The manufacturing gross
margin  percentage  from year to year  depends  primarily on the product mix, as
gross margins vary by instrument and as a result of negotiated volume discounts.
Management  may  negotiate  volume  discounts  if the larger  volume  results in
smaller  per  unit  overhead,  improving  operating  margin.  The  gross  margin
percentage  for  manufacturing  revenues from  instruments  not yet approved for
commercial  use is generally  lower because a smaller  number of units  produced
limits  opportunities  to achieve  economies of scale and the instrument and its
manufacturing  process  are being  refined,  resulting  in larger per unit costs
during the initial manufacturing phase.

The Company's annual and quarterly operating results are affected by a number of
factors,  including the volume and timing of customer orders,  which vary due to
(i) variation in demand for the customer's  products as a result of, among other
things,  product  life  cycles,  competitive  conditions,  and general  economic
conditions,  (ii) the  customer's  attempt to balance its  inventory,  (iii) the
customer's need to adapt to changing regulatory conditions and requirements, and
(iv) changes in the customer's  manufacturing  strategy.  Technical difficulties
and  delays in the design  and  manufacturing  processes  may also  affect  such
results. The foregoing factors may cause fluctuations in revenues and variations
in product mix, which could in turn cause  fluctuations  in the Company's  gross
margin. During the first quarter of 1999, the Company is continuing to work on a
contract with a certain  customer on a fixed price  contract,  which may have an
adverse impact on the Company's  gross margin.  The Company also is completing a
reengineering  project with a major  customer on a cost sharing  basis which may
adversely  affect  gross  margin.  The Company is in the  process of  increasing
prices of the products  that it acquired in the  Nutrition  Medical  acquisition
which the Company  completed on December 23, 1998, in an effort to improve gross
margins on the Nutrition Medical line in 1999.

The  following  table  sets  forth,  for the  periods  indicated,  the  relative
percentages that certain items in the income statement bear to revenues.

Year Ended December 31, Income Statement Data -- Percentage of Gross Sales
<TABLE>
<CAPTION>
<S>                                 <C>                <C>            <C>          <C>           <C>    


                                          1998          1997          1996          1995          1994
                                    ------------- ------------- ------------- ------------- -------------
Revenues                                    100%          100%          100%          100%          100%
Gross profit                                 38%           47%           48%           42%           40%
Selling, general and                         34%           27%           33%           25%           31%
administrative expenses
Research and development  expenses            3%            8%           10%            9%           12%
Operating income/(loss)                       1%           12%            5%            8%          (3)%
Other income                                  3%           --%            4%            1%            1%
Income (loss) before taxes                    4%           12%            9%            9%          (2)%
Provisions (benefit) for taxes                1%            4%            3%            3%          (1)%
Net income (loss)                             3%            8%            6%            6%          (1)%
</TABLE>


During 1998, 44% of total revenues  resulted from sales to three customers,  all
of whom were major customers in 1997. During 1997 and 1996, 65% and 66% of total
revenues   resulted  from  sales  to  four   customers   and  three   customers,
respectively, three of which were major customers in both years.

The Company=s gross profit as a percentage of sales was 38% in 1998, as compared
to 47% in 1997 and 48% in 1996.  Management  attributes  the decrease in 1998 to
the following factors:  1) the rapid increase in sales of the Enteralite Feeding
Pump in the second quarter  exceeded the production  capacity of ZEVEX's outside
supplier  of  disposable  sets,  which  resulted in a surge in the cost of sales
related to this product due to increased shipping and related expenses necessary
to maintain the  Company's  obligations  to its  customers  and  reputation  for
service;  2) delays  experienced in the delivery  schedules dictated by three of
the Company's major customers,  where the Company normally  experiences a higher
gross margin; 3) increased costs of engineering staff to execute new engineering
and  production  jobs  obtained  by the  Company  during  the  second  and third
quarters;   4)  recorded  revenue  related  to  the  Nutrition  Medical  product
acquisition  on which the Company  did not  realize  any gross  profit and small
gross  margin  related to  products  sold  under the  marketing  agreement  with
Nutrition Medical; 5) costs associated with the reengineering project to enhance
the  marketability of a customer product on a cost sharing basis; and 6) a shift
in the revenue mix of the Company's products to lower margin items.

Selling,   general  and   administrative   expenses  increased  during  1998  to
$3,879,408, 35% of gross sales, as compared to $2,481,090, 28% of gross sales in
1997, and $1,892,317,  33% of gross sales in 1996.  Increased  expenses resulted
from the Company=s  continuing growth as it established  marketing  channels for
proprietary  products.  The Company  incurred  one-time  expense  related to its
application  and listing on the NASDAQ  National  Market,  as well as  increased
costs  associated  with legal,  accounting,  general  consulting  and public and
investor relations, depreciation and general administration.  Expanded sales and
marketing efforts increased  staffing,  travel,  advertising ,and administrative
expenses  related  to the  Company's  proprietary  clinical  nutrition  delivery
product line. The Company also had an increase in expenses related to employees,
such as  insurance,  taxes,  and pension  benefits.  The Company  believes  that
general and administrative expenses in 1999 as related to sales will continue at
approximately the same percentage rate as averaged over the last three years.

As of December 31, 1998,  ZEVEX Inc. had three  full-time  engineers in research
and development,  and had several other designers and engineers  contributing to
additional  research  and  development  projects.   ZEVEX  Inc.'s  research  and
development projects are primarily focused on new proprietary  products.  During
the last three  fiscal  years,  ZEVEX Inc.  continued  independent  research and
development  activities  with respect to the design and  development  of new and
improved devices,  spending $289,938 in 1998,  $702,563 in 1997, and $527,562 in
1996. In 1998 and 1997, research and development costs represented approximately
3% and 8% of the Company's revenues, respectively. The most notable product from
the Company's research and development  efforts during the past two years is the
EnteraLite7   Ambulatory   Enteral   Feeding  Pump.   Significant   fluctuations
experienced  in  research  and  development  are due to timing of the  Company's
research  projects.  The Company expects research and developments costs in 1999
to be approximately 3% of revenues.

Operating  income  decreased  to  $67,893,  1%  of  gross  sales  in  1998  from
$1,027,715, 11% of gross sales in 1997, and $307,799, 5% of gross sales in 1996.
Similarly,  the Company had a net income of $362,193, 3% of gross sales in 1998,
compared to $718,242, 8% of gross sales in 1997, and $345,577, 6% of gross sales
in 1996.  These changes during 1998 as compared to 1997 and 1996 are principally
due to the costs  addressed  above in  relation  to cost of sales  and  selling,
general and administrative costs as well as changes in the Company's product mix
of lower margin items delivered during the year.

Liquidity and Capital Resources

The Company's  increased working capital  requirements  during 1998 stemmed from
increasing  accounts  receivable and inventory levels  associated with growth in
revenues and the Company's  efforts to expand its operations by  acquisitions of
products  and  technologies.  Prior to 1997,  working  capital  had been  funded
primarily by a combination of increased  accounts payable,  borrowings under the
Company's revolving line of credit, and a $1.25 million private placement of the
ZEVEX International's Common Stock and warrants in February,  1997. In November,
1997 the ZEVEX International  completed a secondary public offering of the ZEVEX
International's  Common  Stock,  from  which  the ZEVEX  International  received
approximately $13 million in net proceeds.

During  1998,  the  Company  produced  $362,193  in net  income.  Cash  and cash
equivalents decreased by $1,837,748 for 1998 from operating  activities,  as the
Company funded an increase in accounts receivable and inventories which continue
to increase as the Company continues to expand its  manufacturing  base and meet
customer  requirements on lead times. During 1997, the Company had net income of
$718,242,  and cash and cash equivalents  decreased from operating activities by
$1,326,938,  as the  Company  funded an  increase  in  accounts  receivable  and
inventories. During 1996, the Company had a net income of $345,577, and cash and
cash  equivalents  decreased by $175,141 from  operating  activities,  while the
Company funded an increase in accounts receivable.

In 1997,  the  Company  completed  construction  of its new 51,000  square  foot
headquarters  and  manufacturing  facility.  The  cost of this  undertaking  was
approximately  $2,591,177.  In  1996,  the  company  negotiated  a $2.0  million
Industrial  Development Bond to finance this construction.  On October 29, 1996,
the Company paid $50,000 cash and 130,000 shares of unregistered Common Stock of
the Company for the  purchase  of  approximately  3.7 acres of land in Salt Lake
City,  Salt Lake County,  Utah,  as the site for this  facility.  The  Company's
purchases of land, leasehold  improvements to its facilities,  and new research,
production,  testing  equipment,  and tooling  totaled  $1,185,805  in 1998,  as
compared to  $3,004,926 in 1997,  and $619,188 in 1996.  The amount spent during
1998 is primarily  attributed to the  Company's  purchase of  approximately  3.5
acres of land  adjacent to the Company's  current  facility in Salt Lake City in
March  1998,  as well as to  continued  upgrading  of the  Company's  production
fixturing,  tooling and research and engineering  capabilities.  The increase in
equipment  purchases  between  1997 and 1996 is primarily  due to upgrading  the
Company's   production   fixturing,   tooling  and  research   and   engineering
capabilities.

The Company's working capital at December 31, 1998, was $11,669,033, compared to
$17,235,516  at December  31, 1997,  and  $4,520,781  at December 31, 1996.  The
portion of working  capital  represented by cash and  short-term  investments at
such dates was $9,558,543, $12,663,535 and $2,228,164 respectively. The decrease
in working capital during 1998 is primarily  attributed to (i) the  acquisitions
of the product line from Nutrition  Medical and the stock purchases of JTech and
Aborn, (ii) increases in accounts and accrued payables, and (iii) an increase of
the  Company's  line of credit.  In 1997,  the  increase in working  capital was
primarily  attributed to (i) completion of a secondary offering of the Company's
common stock in November,  1997, of  approximately  $13 million,  (ii) increased
income from operations  during the year, and (iii) a private  placement that was
completed in February, 1997. In 1996, the Company used net cash flow of $175,141
in  operating  activities,  as  the  Company  funded  an  increase  in  accounts
receivable and inventories.

On December 23, 1998, ZEVEX International  issued 115,000 shares of Common Stock
and  paid  $500,000  to  Nutrition  Medical,   Inc.  as  consideration  for  the
acquisition of Nutrition  Medical's  assets relating to its enteral feeding pump
and related disposable feeding product business.

On December 31, 1998,  ZEVEX  International  committed to pay cash of $1,572,500
and a  convertible  debentures  in the  aggregate  amount of $1,350,000 to Vijay
Lumba and Harry  Parmar as  partial  consideration  for the  acquisition  of all
issued  and  outstanding  stock of Aborn.  All or part of the  outstanding
principal  of  each   debenture  is   convertible   by  the  holder  into  ZEVEX
International Common Stock at a rate of $11.00 per share at any time between one
and  three  years  from  the date of  issuance.  On  December  31,  1998,  ZEVEX
International  committed to pay cash of $2,635,000 and a convertible  debentures
in the aggregate amount of $3,000,000 to Leonard Smith,  Tracy  Livingston,  and
David Bernardi as partial  consideration  for the  acquisition of all issued and
outstanding  stock of JTech.  All or part of the  outstanding  principal of each
debenture is convertible by the holder into ZEVEX International  Common Stock at
a rate of $11.00 per share at any time between one and three years from the date
of issuance.

On February 12, 1997, the Company completed a private placement of $1,250,000 of
its  securities,  which consisted of 500,000 units at a price of $2.50 per unit.
Each unit  consisted  of one share of Common Stock and a warrant to purchase one
share of Common  Stock at a price of $3.50 per share.  As of December  31, 1998,
30,000 of the warrants included in the above units have been exercised.

The Company has agreed to register on demand 350,000  shares of the  outstanding
warrants issued in connection  with the private  placement of February 12, 1997.
The demand  registration rights have been granted for a period of two years from
the registration  rights  agreement,  dated February 1, 1998. As of December 31,
1998, demand registration rights have not been exercised.

On December 11, 1996,  the Company  entered into a $500,000  open line of credit
arrangement  with a financial  institution.  The line of credit was increased to
$1,000,000 on September 10, 1997, and increased  again to $5,000,000 on December
31,  1997.  The  line is  matures  on May  31,  1999.  The  line  of  credit  is
collateralized  by accounts  receivable and  inventories,  and bears interest at
prime rate.  The  Company  owed  $541,993 on the line of credit at December  31,
1998, zero at December 31, 1997, and $60,108 at December 31, 1996.

Inflation and Changing Prices

The Company has not been, and in the near term is not expected to be, materially
affected by inflation or changing prices.

Year 2000 Compliance

Many  existing  computer  programs,  worldwide,  use only the last two digits to
refer to a year.  Such  computer  programs  may not  properly  recognize  a year
beginning with "20" instead of the current "19". If not corrected, many computer
applications  could fail or create  incorrect  results.  This phenomena is often
referred to as the "Year 2000" or "Y2K" problem.  There is  substantial  concern
that  if the  Year  2000  problem  is not  adequately  addressed,  there  may be
widespread

problems with computer  applications in all areas of use, potentially  affecting
the global economy.

If the Company's  internal systems and products do not correctly  recognize date
information  when the year changes to 2000,  there could be an adverse impact on
the Company's operations.  Additionally,  if the Company's supplier,  customers,
and other parties  experience Y2K  difficulties,  the Company could be adversely
affected.  The Company is  continuing  the process of assessing  and  correcting
potential Year 2000 problems with the Company's operations.

         State of Readiness

With regard to its information systems  (financial,  supply,  inventory,  order,
office support, etc.) the Company has developed and begun implementing a plan to
convert all necessary  systems to be ready for the year 2000.  Approximately 95%
of the  necessary  systems  have  been  determined  to be Y2K  compliant  by the
Company,  or have  been  upgraded  to new  systems  which are  certified  by the
manufacturer  as Year 2000  compliant.  Completion of correction or upgrading of
the remaining necessary systems is expected by July 1, 1999.

With  regard to its  non-information  system  operations,  the Company is in the
process of  reviewing  and  correcting  Y2K  problems  in the  following  areas:
products  currently  manufactured by the Company;  manufacturing and engineering
systems; and building systems. This review is approximately 95% complete and the
Company has been able to correct or plans to correct prior to 2000 each material
Y2K issue identified in the review.

With regard to potential Y2K issues for the Company's major material  suppliers,
the Company is in the process of communicating  with such parties.  Although not
all major suppliers have indicated their Y2K compliance, the Company has not yet
identified  any major supplier that believes it will be unable to operate due to
Y2K  problems  in 2000.  Generally,  the  Company  has  alternative  sources for
supplies in the event a supplier  experiences such  difficulties and the Company
does not presently  anticipate material  difficulties in obtaining materials due
to suppliers' Y2K problems.

With regard to major  customers,  the Company has had  communications  with such
parties and is reviewing  responses  regarding the Companies Y2K compliance.  To
date, the Company has  insufficient  information  from such parties to determine
the potential impact on the Company if such parties experience Y2K difficulties.

With regard to  third-party  utilities  and  services  (for  example,  telephone
electrical, bankcard processing and shipping services), the Company has no plans
to evaluate the Y2K readiness of such providers.

         Cost to Address Y2K Issues

As of March 1, 1999,  the Company has spent  approximately  $180,000 in hardware
and  software  expenses to upgrade or correct Y2K  problems  with the  Company's
internal  systems.  The  Company  currently  expects to incur  approximately  an
additional  $20,000 in costs for further upgrades and  corrections.  These costs
include,  however,  costs to upgrade and replace  systems that the Company would
otherwise would have done in the normal course of business.  The estimated costs
are based on  management's  best  projections but there can be no guarantee that
these forecasts will be achieved and actual results could differ materially from
those  anticipated.  Company  management  anticipates  that these  costs will be
funded  through  operating  cash  flows.  The  Company  has not yet been able to
estimate  the  costs it may  incur as a result of its  suppliers  and  customers
experiencing Y2K difficulties.

         Risk of the Company's Y2K Issues

The Company  anticipates  that the material risks related to its information and
non-information  systems will be timely  mitigated by current efforts being made
by the Company to identify and correct internal Y2K problems.  However, there is
no  guarantee  that the Company  will  successfully  identify or correct all Y2K
problems in a timely  manner.  For example,  due to the inherent  limitations of
real-time clock devices and system BIOS in the Company's manufacturing equipment
or building  systems,  continued  review and testing  could  uncover  additional
problems. In some cases, problems may be unforeseen, and occur regardless of the
testing  and review that is done.  Other  major Y2K risks for the Company  arise
from the potential for major  customers to experience  financial or  operational
difficulties  resulting from Y2K problems. If such customers reduce their orders
for the  Company's  products or  services,  the  Company's  operations  could be
adversely affected.

Additionally,  a major potential Y2K risk to the Company's operations is service
disruption from third-party providers that supply telephone, electrical, banking
and shipping  services.  Any disruption of these critical  services would hinder
the Company's ability to receive, process and ship orders.

         Contingency Plan.

The Company has not yet considered adoption of a formal contingency plan for Y2K
issues.

Other Matters

Summary of Quarterly Data
<TABLE>
<CAPTION>
<S>                       <C>          <C>          <C>           <C>         <C>          <C>           <C>          <C>

                            12/98         9/98         6/98         3/98         12/97        9/97          6/97         3/97
Revenue                   $3,451,206    $2,346,143   $3,099,353   $2,187,711   $2,656,935   $2,497,125    $1,603,260   $2,211,105
Gross profit               1,502,990       307,943    1,516,749      910,288    1,375,032      962,760       835,146    1,038,430
Net income                   319,748     (419,844)      347,281      115,008      307,479      128,238        56,987      225,538
EPS basic                        .09         (.13)          .11          .04          .13          .06           .03          .13
EPS diluted                      .09         (.13)          .10          .03          .11          .05           .02          .12
</TABLE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The  Company is exposed to market risk in the form of  fluctuations  in
interest rates and their potential  impact upon its industrial  development bond
of $1,900,000.  The variable rate on the industrial development bond is based on
a weekly tax-exempt floater rate until October 1, 2016.

         Additionally,  the Company  holds  marketable  securities of $1,209,235
with fixed interest  rates of 5.40% and 6.375% and maturities  ranging from 1999
to  2000.  The  Company's  marketable  equity  securities  of  $388,797  consist
primarily of public companies listed in small-cap market.



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Company=s financial  statements for the fiscal years ended December
31, 1998 and 1997, are included beginning at page 50,  immediately  follows Item
14.


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

         The Company  has no changes in or  disagreements  with its  independent
auditors with regard to financial disclosures.





                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF ZEVEX INTERNATIONAL

The following  table sets forth the name,  age, and  principal  position of each
ZEVEX International director and executive officer, as well as the expiration of
each director's term of office.
<TABLE>
<CAPTION>
<S>                            <C>      <C>                                                                <C>    

                                                                                                            Expiration
            Name               Age                                 Position                                  of Term
            ----               ---                                 --------                                  -------
Dean G. Constantine              46     President, Chief Executive Officer and Director                        2001
David J. McNally                 37     Executive Vice President and Director                                  2000
Phillip L. McStotts              41     Chief Financial Officer, Secretary/Treasurer and Director              1999
Bradly A. Oldroyd                41     Director                                                               2000
Darla R. Gill                    47     Director                                                               1999
Kirk Blosch                      43     Director                                                               1999
</TABLE>



ZEVEX  International  executive officers serve at the discretion of the Board of
Directors. None of the executive officers has an employment agreement with ZEVEX
International.  Certain  biographical  information  with  respect to each of the
officers and directors is set forth below.

Dean G. Constantine is a founder of ZEVEX  International and has served as ZEVEX
International=s CEO, President, and Chairman of the Board since its inception in
1986.  He also  serves as a director  of ZEVEX Inc.,  JTech,  and Aborn,  and as
President  and CEO of ZEVEX Inc.  Prior to joining ZEVEX  International,  he was
employed by EDO  Corporation,  Western  Division,  in Salt Lake City, Utah, from
October 1985 to September 1987, and from January 1971, to June 1983.  During his
nearly fifteen years of employment  with EDO  Corporation,  Mr.  Constantine had
various   responsibilities   including   project   supervision,   management  of
engineering  for  commercial  and  industrial  transducers,   and  research  and
development.  From July 1983, through October 1985, Mr. Constantine was employed
as  an  engineering   specialist  at  Northrop  Corporation   Electro-Mechanical
Division, Anaheim,  California,  where his responsibilities included engineering
project management and applications engineering.

David J.  McNally  is a founder of ZEVEX  International  and has served as ZEVEX
International=s  Executive Vice President, and as a director since its inception
in 1986. He also serves as a director of ZEVEX Inc.,  JTech, and Aborn, and as a
Vice  President  of ZEVEX Inc.  Prior to  joining  ZEVEX  International,  he was
employed by EDO  Corporation in Salt Lake City,  Utah as a marketing  manager of
transducers from October 1985 to September 1987. From June 1984 to October 1985,
Mr. McNally was employed by Physical  Acoustics  Corporation,  a Princeton,  New
Jersey based  manufacturer of acoustic  testing  systems,  as its regional sales
manager for the Southeastern United States. From June 1983, to June 1984, he was
employed by Hercules,  Inc., in Magna, Utah, as an advanced methods  development
engineer.  Mr.  McNally  received a Bachelor  of  Science  Degree in  Mechanical
Engineering  from  LaFayette  College  in May  1983  and a  Master  of  Business
Administration Degree from the University of Utah in June 1992.

Phillip L. McStotts is a founder of ZEVEX  International and has served as ZEVEX
International=s  CFO,  Secretary,  and  Treasurer,  and as a director  since its
inception. He also serves as a director of ZEVEX Inc., JTech, and Aborn, as CFO,
Secretary  and Treasurer of ZEVEX Inc.,  and as Vice  President and Secretary of
Aborn  and as CFO and  Secretary  of  JTech.  In  addition  to  running  his own
professional corporation , Phillip L. McStotts, CPA P.C. since October 1986, Mr.
McStotts was employed from May 1985 to September 1986, as an accountant with the
Salt Lake City firm of Chachas &  Associates,  where he was tax manager.  He has
also worked in the tax departments of the regional  accounting firms of Pearson,
Del Prete & Company,  and Petersen,  Sorensen & Brough.  Mr. McStotts received a
Bachelor of Science Degree in Accounting from  Westminster  College in May 1980,
and received a Master of Business  Administration Degree in Taxation from Golden
Gate University in May 1982.

Bradly A. Oldroyd has been a director of ZEVEX International since October 1991.
He is the founder,  principal  shareholder of Pinnacle  Management Group, a Salt
Lake City-based personnel services firm, serving as its president since 1986. He
is also a member of the faculty of the University of Phoenix campus in Salt Lake
City, where he teaches  management and marketing  courses in  undergraduate  and
graduate  programs.  Mr.  Oldroyd  received  a  Bachelor  of  Science  degree in
Marketing  from  Utah  State  University  in  1981  and  a  Master  of  Business
Administration Degree from the University of Utah in 1982.

Darla R. Gill is the owner of DRG Enterprises, a consulting company specializing
in marketing,  sales and new product development.  Ms.Gill was also the founder,
President  and  Chairman  of  Momentum  Medical  Corp.,  a Salt Lake  City-based
manufacturer and distributor of home health care products from 1993 to 1998. She
continues  to serve as a  Director.  Ms.  Gill was a  founder  of Merit  Medical
Systems,  Inc.,  in Salt Lake City,  and served  until  1992 as  Executive  Vice
President  and  Director.  She was  also  previously  employed  by Utah  Medical
Products,  Inc.,  where she served as Vice President of Marketing and Sales. Ms.
Gill also currently serves as a Director of the Board of NYB Corporation in Salt
Lake City.  Ms. Gill  graduated  from the University of Phoenix with a Bachelors
Degree in Business Administration in 1988.

Kirk Blosch has been a general partner in the partnership of Blosch and Holmes ,
a business  consulting and private  venture funding  general  partnership  since
1984.  For the past  fifteen  years Mr.  Blosch has been an advisor  for various
public and private  companies.  During 1995 and 1996 Mr. Blosch  provide  bridge
financing for private  companies  prior to their initial  offerings.  Mr. Blosch
graduated  from  the  University  of Utah  with a  Bachelors  Degree  in  Speech
Communications in 1977.

OTHER KEY EMPLOYEES

The other key employees of ZEVEX International are as follows:

Name                                Age    Position
Leonard C. Smith                    50     President and director of JTech
Vijay Lumba                         50     President, CEO and director of Aborn



Certain biographical  information with respect to each key employee is set forth
below.

Leonard C. Smith is a founder  of JTech and has  served as its  President  since
1995.  Prior to joining JTech,  in 1994 he established  Athe Charles  Group@,  a
medical  marketing  company   specializing  in  diagnostic  and   rehabilitation
products.  From 1993 to 1994, Mr. Smith was Vice President with Four Corners,  a
large chain of health  clubs,  based in the  Southwest.  From 1979 to 1993,  Mr.
Smith was a partner and Vice  President of Sales and  Marketing at Hoggan Health
Industries, a manufacturer of commercial fitness equipment. Mr. Smith received a
Bachelor of Science Degree in Business Management from the University of Utah in
June 1977.

Vijay Lumba is the founder of Aborn and has served as the President  since 1983.
He was  also  previously  employed  by  Fairchild  Semicondutor  Optoelectronics
Division,  where he served as a Product Manager with  responsibilities of design
and development of new products and the transfer of  manufacturing  technologies
to the Far East for high  volume  production.  Mr.  Lumba  graduated  from Delhi
University,  India with a Bachelors Degree in Physics, Chemistry and Mathematics
in 1969.  Mr.  Lumba also  graduated  from  Heald  Engineering  College,  in San
Francisco, California with a Bachelors Degree in Electrical Engineering in 1972.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has two committees, the Audit Committee and the 
Compensation Committee.  The Audit Committee is composed of Ms. Darla R. Gill 
and Mr. Bradly A. Oldroyd.  The Compensation Committee is also composed of
 Ms. Gill and Mr. Oldroyd.  The Audit Committee is authorized to review 
proposals of ZEVEX International=s independent auditors regarding annual audits
, recommend the engagement or discharge of ZEVEX International=s independent 
auditors, review recommendations of such auditors concerning accounting 
principles and the adequacy of internal controls and accounting procedures and
practices, to review the scope of the annual audit, approve or disprove each 
professional service or type of service other than standard auditing services 
to be provided by the auditors, and to review and discuss the audited 
financial statements with the auditors.  The Compensation Committee makes
recommendations to the Board of Directors regarding remuneration of the
executive officers and directors of ZEVEX International and oversee the 
administration of the Company's stock option plan.




MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors  held seven  meetings  during the last fiscal  year.  The
Audit  Committee held one meeting during the last fiscal year. The  Compensation
Committee held two meetings during the last fiscal year.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the compensation  paid by ZEVEX  International to
each of ZEVEX  International's  executive  officers during the three-year period
ended December 31, 1998.



         SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S>                            <C>        <C>        <C>         <C>       <C>           <C>         <C>          <C>    

                                                                                                                    Long Term 
Compensation  
                                           Annual Compensation                                            Awards          Payouts
             (a)                (b)        (c)         (d)        (e)          (f)          (g)         (h)          (i)
                                                                 Other     Restricted                                All
Name and                                                         Annual       Stock                     LTIP        Other
Principal Position              Year     Salary       Bonus      Comp.       Awards       Options     Payouts       Comp.
------------------              ----     ------       -----      -----       ------       -------     -------       -----
Dean G. Constantine             1998      $107,755     $50,000     0            0            0           0          $5,000(1)
CEO and President               1997      $105,000     $11,125     0            0            0           0          $4,207(1)
                                1996       $77,917     $12,189     0            0            0           0          $6,286(1)

David J. McNally                1998      $107,755     $50,000     0            0            0           0          $5,000(1)
Executive Vice President        1997      $105,000     $11,125     0            0            0           0          $4,207(1)
                                1996       $77,917     $12,189     0            0            0           0          $6,286(1)

Phillip L. McStotts             1998      $107,755     $50,000     0            0            0           0          $5,000(1)
Secretary/Treasurer             1997      $105,000     $11,125     0            0            0           0          $4,207(1)
                                1996       $77,917     $12,189     0            0            0           0          $6,286(1)
</TABLE>


(1) Represents the amount paid by ZEVEX International as a contribution to ZEVEX
International's 401(k) Pension and Profit Sharing Plan on the officer's behalf.

OPTIONS GRANTS IN LAST FISCAL YEAR
The Company made no grants of stock options to its executive officers during the
last fiscal year.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES

The  following  table sets  forth the  options  exercised  during the year ended
December 31, 1998,  by each  executive  officer of ZEVEX  International  and the
value of options held by such persons at such year-end.

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

                                                                                Value of
                                                        Number of               Unexercised
                                                        Unexercised             In-the-Money
                                                        Options at              Options at
                                                        FY-End                  FY-End
                           Shares
Name and                   Acquired     Value           Exercisable/            Exercisable/
Principal Position         on Exercise  Realized        Unexercisable           Unexercisable
--------- --------         -- --------  --------        -------------           -------------
Dean G. Constantine 
CEO, President                   0           0          29,900/52,500           $6,300/0
David J. McNally
Executive Vice President         0           0          29,900/52,500           $6,300/0
Phillip J. McStotts
Secretary/Treasurer              0           0          29,900/52,50            $6,300/0
</TABLE>


Of the  unexercised  options  listed  above  for  each of  Messrs.  Constantine,
McNally,  and McStotts,  5,400 were granted on December 17, 1992,  and expire on
December  16,  2001.  The  exercise  price  on such  options  is  $5.00.  Of the
unexercised options listed above for each of Messrs.  Constantine,  McNally, and
McStotts,  7,000 were granted on February  13, 1997,  and expire on February 12,
2002. The exercise price on such options is $3.85.  Of the  unexercised  options
listed above for each of Messrs. Constantine, McNally, and McStotts, 70,000 were
granted on  September  30, 1997 and expire on September  29, 2002.  The exercise
price on such  options  is  $5.00.  The  value of the  unexercised  options  was
determined  by  reference to the closing  sales price for ZEVEX  International's
Common Stock on the NASDAQ Stock Market as of the end of 1998.


REPORT ON OPTION REPRICING

The  following  table sets forth  information  with respect to the  repricing of
options  held  by  ZEVEX   International's   executive  officers.   For  further
information see Report of Compensation Committee.

Repriced Options Table 
<TABLE>
<CAPTION>
<S>                         <C>          <C>         <C>        <C>         <C>          <C>
 

           (a)                (b)          (c)          (d)         (e)         (f)             (g)
                                           Number                 Original      Repriced   Time Remaining
                                                      Market
Name and                    Date of        Of        Price at    Exercise     Exercise     Before option
Principal Position          Reprice      Options     Repricing     Price       Price          Expired
Dean G. Constantine         10/22/98        70,000       $4.875     $16.44     $5.00         3yrs 11mo.
CEO and President

David J. McNally            10/22/98        70,000       $4.875     $16.44     $5.00         3yrs 11mo.
Executive Vice Pres.

Phillip L. McStotts         10/22/98        70,000       $4.875     $16.44     $5.00         3yrs 11mo.
Secretary/Treasurer
</TABLE>


REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

         The Compensation Committee of the Board of Directors reviews and 
approves salaries, bonuses, and other benefits payable to the ZEVEX
International's officers.  The Compensation Committee is composed of 
Ms. Darla R. Gill and Mr. Bradly A. Oldroyd, both independent non-employee 
directors.

         The goals of the  Compensation  Committee in establishing  compensation
for  executive  officers  are to  align  executive  compensation  with  business
objectives and performance and to enable ZEVEX International to attract,  retain
and reward  executive  officers who  contribute to the long-term  success of the
ZEVEX  International.  The  compensation  policies and programs  utilized by the
Compensation  Committee and endorsed by the Board of Directors generally consist
of the following:

i.  Recommending  executive  officer  total  compensation  in  relation to ZEVEX
International's performance; ii. Providing a competitive compensation program in
order to attract,  motivate and retain  qualified  personnel;  iii.  Providing a
management   tool  for  focusing  and   directing  the  energies  of  the  ZEVEX
International's three executives toward
            achieving individual and corporate objectives; and
iv.         Providing  long-term  incentive  compensation  in the form of annual
            stock option  awards and  performance-based  stock option  awards to
            link individual success to that of the ZEVEX International.

         ZEVEX   International's   executive   compensation  consists  of  three
components:  base  salary,  annual  incentive  compensation  in the form of cash
bonuses, and stock options,  each of which is intended to complement the others,
and  together  are  designed to satisfy the ZEVEX  International's  compensation
objectives.  The Compensation  Committee's  policies with respect to each of the
three components are discussed below:

         Base Salary.  The Compensation  Committee  considers several factors in
determining base salaries for ZEVEX  International's  three executive  officers,
including industry averages for comparative  positions,  responsibilities of the
executive  officers,  length  of  service  with the ZEVEX  International's,  and
corporate and individual performance.

         Cash  Bonuses.   Cash  bonuses  paid  to  ZEVEX  International's  three
executive  officers are  discretionary  and are based on the relative success of
ZEVEX  International  in attaining  certain  financial  objectives and the three
officers' contribution to the achievement of those financial objectives.

         Stock Options.  Stock options  provide  additional  incentives to ZEVEX
International's  three  executive  officers  to maximize  long-term  shareholder
value.  The  options  that have  been  granted  vest  over a  defined  period to
encourage   these  officers  to  continue  their   employment   with  the  ZEVEX
International.  ZEVEX  International also grants stock options to all employees,
commensurate with their potential contributions to the ZEVEX International.

         Committee Meeting Report October 22, 1998. It was resolved at a meeting
of the compensation  Committee that it is in the best interest of the Company to
motivate several of its current option holders by reducing the exercise price of
their  outstanding  stock  option  grants.   Effective  October  22,  1998,  the
Compensation  Committee  approved  the  repricing  of the grants of Common Stock
purchase  options for 70,000 shares each to Messrs.  Constantine,  McNally,  and
McStotts issued on September 30, 1997. The options vest over a four-year  period
and are now exercisable at a price of $5.00 per share.  Also,  effective October
22, 1998, the Compensation  Committee approved the repricing of grants of Common
Stock purchase options to ZEVEX International=s three non-employee  directors as
follows:  (1) 15,000  shares to Mr.  Oldroyd and 13,000  shares to Ms. Gill,  of
which 14,000 and 12,000 respectively were issued on June 4, 1998 and vest over a
four-year  period  and 1,000 each were  issued on June 19,  1997 which are fully
vested  and are now  exercisable  at a price of $5.00  and  10,000  share to Mr.
Blosch  which were issued on June 4, 1998 and vest over a  four-year  period are
now exercisable at a price of $5.00.

Chief Executive Officer Compensation

         Dean G.  Constantine has been President and Chief Executive  Officer of
the ZEVEX  International  since its incorporation in 1986. For fiscal year 1998,
Mr. Constantine received compensation  consisting of a salary of $107,755, and a
cash bonus of $50,000.  The bonus was awarded  because ZEVEX  International  met
certain  financial and other corporate goals.  Also,  options to purchase 70,000
additional shares of ZEVEX International's  Common Stock held by Mr. Constantine
were  repriced  from  $16.44 per share to $5.00 per share.  In  determining  Mr.
Constantine's  compensation,  the  Compensation  Committee  evaluates  corporate
performance,  individual  performance,  compensation  paid to the  Company's two
other executive  officers,  and compensation paid to chief executive officers of
comparable  companies.  Through  his equity  ownership  in ZEVEX  International,
consisting  of 257,200  shares of Common  Stock and options to  purchase  82,400
shares of Common Stock, Mr.  Constantine  shares with other  shareholders of the
ZEVEX  International  have a  significant  stake  in the  success  of the  ZEVEX
International's business.

                COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
                                  Darla R. Gill
                                Bradly A. Oldroyd


<PAGE>


COMPANY STOCK PRICE PERFORMANCE

         The  following  graph  shows  a  comparison  of  the  cumulative  total
shareholder return on the ZEVEX International's  Common Stock over the past five
fiscal  years with the  cumulative  total return of the Russell 2000 Stock Index
and  the  Company's  Peer  Group,  consisting  of  Novametrix  Medical,  Applied
Biometrics,  Inc.,  Candela  Laser  Corporation,  Invivo  Corporation,  Zoll Med
Corporation,  Lectec Corporation and Medstone  International.  The graph assumes
$100 is invested in ZEVEX  International's  Common  Stock and in each of the two
indices at the closing market  quotation on December 31, 1993 and that dividends
are reinvested.

         The stock price  performance  graph  depicted below shall not be deemed
incorporated by reference by any general  statement  incorporating  by reference
this proxy  statement  into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934. The stock price performance on the graph is
not necessarily an indicator of future price performance.
[OBJECT OMITTED]
<TABLE>
<CAPTION>
<S>                     <C>        <C>     <C>     <C>      <C>      <C>
   

                           1993     1994    1995     1996     1997     1998
                         -------- ------- -------- -------- -------- --------

Russell 2000                100      98      122      143      164      164
Peer Group                  100      66       89       90       68       78
ZEVEX                       100      75       80       66      183       95
</TABLE>





COMPENSATION OF DIRECTORS

The  Company  pays  each  director  who is  not an  employee  of the  Company  a
director's  fee of $625 per Board of Directors  meeting  attended,  $250 for any
annual meeting  attended,  and $125 per hour for any special  meeting  attended.
Additionally, the Company has issued stock options to the non-employee directors
in the past and may do so in the  future.  Although  the  Company may also issue
stock  options to directors  who are  employees  for their service as directors,
these  employee  directors  currently  receive no  additional  compensation  for
serving as directors or attending meetings of directors or shareholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table  sets  forth  certain  information   regarding  beneficial
ownership of ZEVEX  International's  Common Stock (par value $0.001) as of March
15, 1999,  by (i) each person (or group of  affiliated  persons) who is known by
ZEVEX  International to beneficially own more than 5% of the outstanding  shares
of ZEVEX International's  Common Stock, (ii) each director and executive officer
of ZEVEX International,  and (iii) all executive officers and directors of ZEVEX
International  as a group. As of such date, ZEVEX  International  had a total of
3,418,876 shares of Common Stock outstanding.  Unless indicated  otherwise,  the
address  for  each   officer,   director  and  5%   shareholder   is  c/o  ZEVEX
International, 4314 ZEVEX Park Lane, Salt Lake City, Utah 84123.

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

                                                     Number of              Percent
 Name                                              Shares Owned           Of Class(1)

Kirk Blosch(2)                                        550,000                14.8%
Jeff Holmes(3)                                        550,000                14.8%
Blosch & Holmes, L.L.C.(4)                            250,000                 7.6%
Dean G. Constantine(5)                                287,130                 8.3%
David J. McNally(6)                                   270,098                 7.8%
Phillip L. McStotts(7)                                179,300                 5.2%
Bradly A. Oldroyd(8)                                  11,500                   *
Darla R. Gill(9)                                       9,480                   *
All Officers and Directors
as a Group (6 persons)                                757,508                21.5%

</TABLE>

*Less than 1%
(1) For each shareholder,  the calculation of percentage of beneficial ownership
is based on 3,418,876  shares of Common Stock  outstanding as of March 15, 1999,
and shares of Common Stock subject to options held by the  shareholder  that are
currently  exercisable  or  exercisable  within 60 days,  which are deemed to be
outstanding  and to be  beneficially  owned  by  the  shareholder  holding  such
options.  The percentage  ownership of any shareholder is determined by assuming
that the shareholder  has exercised all options and conversion  rights to obtain
additional  securities and that no other  shareholder has exercised such rights.
Except as indicated  otherwise  below, the persons and entity named in the table
have sole voting and investment power with respect to all shares of Common Stock
shown as beneficially  owned by them,  subject to applicable  community property
laws.

(2)  Director.  Includes  125,000  shares of Common  Stock held  directly by Mr.
Blosch,  175,000  shares of Common Stock issuable upon exercise of warrants that
are currently exercisable or will become exercisable within 60 days, and 250,000
shares of Common Stock held by Blosch & Holmes,  L.L.C. of which Mr. Blosch is a
principal (and which 250,000 shares are also reported as  beneficially  owned by
Mr. Holmes and Blosch & Holmes, L.L.C.).  Excludes 10,000 shares of Common Stock
issuable  upon  exercise of options  held by Mr.  Blosch that are not  currently
exercisable and will not become exercisable within 60 days. Mr. Blosch's address
is 2081 S. Lakeline Drive, Salt Lake City, UT 84109.

(3) Includes 125,000 shares of Common Stock held directly by Mr. Holmes, 175,000
shares of Common Stock  issuable  upon  exercise of warrants  that are currently
exercisable  or will become  exercisable  within 60 days,  and 250,000 shares of
Common Stock held by Blosch & Holmes,  L.L.C. of which Mr. Holmes is a principal
(and which 250,000 shares are also reported as beneficially  owned by Mr. Blosch
and Blosch & Holmes,  L.L.C.).  Mr.  Holmes'  address is 8555 E. Voltaire  Ave.,
Scottsdale, AZ 85260.

(4) Includes  250,000 shares of Common Stock held by Blosch & Holmes,  L.L.C. of
which Messrs.  Blosch and Holmes are  principals  (and which 250,000  shares are
also reported as beneficially  owned by Mr. Holmes and Mr. Blosch).  The address
for Blosch & Holmes, L.L.C.
is 2081 S. Lakeline Drive, Salt Lake City, UT 84109.

(5) Chief  Executive  Officer,  President  and Chairman of ZEVEX  International.
Includes  257,000 shares of Common Stock held directly,  29,900 shares of Common
Stock  issuable  upon  exercise  of  options  held by Mr.  Constantine  that are
currently  exercisable or will become exercisable within 60 days, and 230 shares
of Common Stock owned by his dependent  child.  Excludes 52,500 shares of Common
Stock  issuable  upon exercise of options held by Mr.  Constantine  that are not
currently exercisable and will not become exercisable within 60 days.

(6)  Executive  Vice  President  and director of ZEVEX  International.  Includes
240,198  shares of Common Stock held  directly and 29,900 shares of Common Stock
issuable  upon  exercise  of  options  held by Mr.  McNally  that are  currently
exercisable or will become exercisable within 60 days. Excludes 52,500 shares of
Common Stock  issuable upon exercise of options held by Mr. McNally that are not
currently exercisable and will not become exercisable within 60 days.

(7)  Chief  Financial  Officer,  Secretary,  Treasurer,  and  director  of ZEVEX
International.  Includes 149,400 shares of Common Stock held directly and 29,900
shares of Common Stock  issuable upon  exercise of options held by Mr.  McStotts
that are  currently  exercisable  or will  become  exercisable  within  60 days.
Excludes 52,500 shares of Common Stock issuable upon exercise of options held by
Mr. McStotts that are not currently  exercisable and will not become exercisable
within 60 days.

(8) Director.  Includes  11,500 shares of Common Stock issuable upon exercise of
options that are  currently  exercisable  or will become  exercisable  within 60
days.  Excludes  10,500 shares of Common Stock issuable upon exercise of options
held by Mr.  Oldroyd  that are not  currently  exercisable  and will not  become
exercisable  within 60 days.  (9) Director.  Includes 480 shares of Common Stock
held directly and 9,000 shares of Common Stock issuable upon exercise of options
that are  currently  exercisable  or will  become  exercisable  within  60 days.
Excludes  9,000 shares of Common Stock issuable upon exercise of options held by
Ms.  Gill that are not  currently  exercisable  and will not become  exercisable
within 60 days.


SECTION 16(a) BENEFICIAL REPORTING COMPLIANCE

Section 16(a) of the Securities  Exchange Act of 1934, as amended (the AExchange
Act@), requires ZEVEX  International=s  directors,  executive officers,  and 10%
shareholders to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of Common  Stock.  Based solely
on a review of the copies of such reports  furnished to ZEVEX  International and
written representations that no other reports were required, ZEVEX International
believes that all directors,  executive  officers,  and 10% shareholders  during
1998 complied on a timely basis with all applicable  filing  requirements  under
Section 16(a) of the Exchange Act, except as follows: Dean G. Constantine, David
J. McNally.  Phillip L.  McStotts,  Bradly A. Oldroyd,  Darla R. Gill,  and Kirk
Blosch each filed one late report on of Form 5, due in  February  1999,  for one
transaction  regarding  the October  repricing  of certain  options held by such
persons.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ZEVEX  International  has granted  demand  registration  rights,  for a two-year
period  commencing  February 1, 1998,  with respect to 350,000  shares of Common
Stock  issuable  upon the  exercise of warrants  held by Kirk Blosch and Jeff W.
Holmes, two of ZEVEX International=s principal shareholders. ZEVEX International
has  agreed to pay the  registration  expenses  arising in  connection  with the
registration  of these  shares.  The  selling  expenses  will be paid by Messrs.
Blosch and Holmes.

On April 15, 1997, ZEVEX  International  entered into a consulting contract with
DMG Advisors,  L.L.C., a Nevada limited liability  company (ADMG@).  Kirk Blosch
and Jeff W. Holmes, two of ZEVEX  International=s  principal  shareholders,  are
members and managers of DMG. Under the consulting contract,  ZEVEX International
paid an initial fee of $50,000 and is paying $10,000 per month through March 15,
1999 in exchange for the  consulting  services of DMG in the nature of strategic
planning, public relations,  advice regarding financings, and the identification
and  evaluation of potential  acquisitions  of new products or companies.  ZEVEX
International is also obligated to pay reasonable  business expenses incurred by
DMG.

Pursuant to a Stock  Purchase  Agreement,  dated December 31, 1996 between ZEVEX
International  and Blosch & Holmes,  L.L.C.,  a Utah limited  liability  company
(ABlosch & Holmes@),  as amended on September 30, 1997,  Blosch & Holmes has the
right to  appoint  one  member  of  ZEVEX  International=s  board of  directors,
provided  that such  nominee must be  acceptable  to ZEVEX  International.  Kirk
Blosch and Jeff W. Holmes,  principal  shareholders of ZEVEX International,  are
the two  member/managers  of Blosch & Holmes.  The right to  appoint a member of
ZEVEX International=s board of directors expires when Blosch & Holmes,  together
with Kirk Blosch and Jeff W. Holmes, no longer holds at least 6.5% of the voting
stock of ZEVEX International. Blosch & Holmes have exercised this right with the
appointment of Mr. Blosch to the board in June 1998.








                                     PART IV

ITEM 14        EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

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

         (1) - Financial Statements.

The following  Consolidated  Financial Statements of ZEVEX International and its
subsidiaries  for the years ended  December  31, 1998 and 1997,  and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1998, are filed as part
of this report:

Report of Ernst & Young LLP, Independent Auditors

Report of Daines and Rasmussen, P.C., Independent Auditors

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Cash Flows

Consolidated Statements of Stockholders= Equity

Notes to Consolidated Financial Statements

         (2) - Financial Statement Schedules.

Not required in accordance with the applicable rules and regulations.

         (3) - Exhibits

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

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended December 31, 1998.


<PAGE>


                                                          SIGNATURES

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

                            ZEVEX INTERNATIONAL, INC.

Dated:  March, __, 1999                         By: DEAN G. CONSTANTINE
                                                    ---- -- -----------
                                                  Dean G. Constantine
                                                  Chief Executive Officer

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

                                POWER OF ATTORNEY

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

  Signature                                 Title                            Date

DEAN G. CONSTANTINE        Chairman of the Board of Directors,                  March __, 1999
Dean G. Constantine                 Chief Executive Officer, and President
                                    (Principal Executive Officer)

DAVID J. MCNALLY           Director, Executive Vice President,                  March __, 1999
----- -- -------
David J. McNally

PHILLIP L. McSTOTTS        Director, Chief Financial Officer,                   March __, 1999
Phillip L. McStotts                 Secretary, and Treasurer (Principal
                                    Financial and Accounting Officer)

BRADLY A. OLDROYD          Director                                             March __, 1999
------ -- -------
Bradly A. Oldroyd          

DARLA R. GILL              Director                                             March __, 1999
Darla R. Gill

KIRK BLOSCH                Director                                             March __, 1999
Kirk Blosch
</TABLE>





                                INDEX TO EXHIBITS
                                  (Item 14(c))

Number                                               Exhibits

3.1     Articles of Incorporation of ZEVEX International, Inc., a Delaware
        corporation (1).
3.2     Bylaws of ZEVEX International, Inc., a Delaware corporation (1).
10.1    Revolving Line of Credit Agreement between Bank One and ZEVEX 
        International, dated September 29, 1997 (1).
10.2    Amendment to Revolving Line of Credit Agreement between Bank One and 
        ZEVEX International, dated December
        31, 1997 (2).
10.3    Stock Purchase Agreement between Blosch & Holmes, LLC and ZEVEX 
        International, dated December 1, 1996,
        including one amendment dated September 30, 1997 (1).
10.4    Registration Rights Agreement among Kirk Blosch, Jeff W. Holmes and 
        ZEVEX International, dated February 1,
        1998 (2).
10.5    ZEVEX International, Inc., Amended 1993 Stock Option Plan (3).
10.6    Industrial Development Bond Offering Memorandum, 
        dated October 30, 1996 (4).
10.7    Industrial Development Bond Reimbursement Agreement, dated October 
        30, 1996 (4).
10.8    Warrant to Purchase 50,000 shares of Common Stock issued to Wedbush 
        Morgan Securities, Inc., dated November
        20, 1997 (2).
10.9    Warrant to Purchase 50,000 shares of Common Stock issued to Everen 
        Securities, Inc., dated November 20,
        1997 (2).
10.10   Warrant to Purchase 500,000 shares of Common Stock originally issued to
        Blosch & Holmes, LLC, dated
        February 12, 1997 (2).
10.11   Description of Property Acquisition, dated March 4, 1998 (2).
10.12   Quit-Claim Deed for purchase of 3.47 acres of land, dated March 
        4, 1998 (2).
10.13   Stock Purchase Agreement, dated December 31, 1998, between ZEVEX 
        International and Vijay Lumba (5).
10.14   Stock Purchase Agreement, dated December 31, 1998, among ZEVEX 
        International, Leonard Smith, Tracy
        Livingston,  David  Bernardi,  and Corporation of the
        President of the Church of Jesus Christ of Latter Day
        Saints (5).
10.15   Convertible Debenture, dated January 6, 1999, issued to Vijay Lumba.
10.16   Convertible Debenture, dated January 6, 1999, issued to Leonard Smith.
10.17   Convertible Debenture, dated January 6, 1999, issued to Tracy
        Livingston.
10.18   Convertible Debenture, dated January 6, 1999, issued to David Bernardi.
10.19   1998 Stock Option Plan and Form of Stock Option Grant
21      List of Subsidiaries.
27      Financial Data Schedule.

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



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

(3)      Incorporated by reference to Registration Statement on Form S-1 filed 
October 3, 1997 (File No. 333-37189).

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

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

#        Identifies a "management contract or compensatory plan or arrangement".


<PAGE>









                        Consolidated Financial Statements

                            ZEVEX International, Inc.

                    For the years ended December 31, 1998 and
                                December 31, 1997
                       with Independent Auditors' Reports



<PAGE>


                            ZEVEX International, Inc.

                        Consolidated Financial Statements

                    For the years ended December 31, 1998 and
                                December 31, 1997




                                    Contents

Report of Daines & Rasmussen, P.C., Independent Auditors.......................
Report of Ernst & Young LLP, Independent Auditors..............................

Consolidated Financial Statements

Consolidated Balance Sheets ...................................................
Consolidated Statements of Operations .........................................
Consolidated Statements of Stockholders' Equity ...............................
Consolidated Statements of Cash Flows .........................................
Notes to Consolidated Financial Statements ....................................


<PAGE>







                          Independent Auditors' Report

Board of Directors and Stockholders
ZEVEX International, Inc.

We  have  audited  the  accompanying   consolidated   balance  sheets  of  ZEVEX
International, Inc. and its subsidiaries as of December 31, 1996 and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
the  years  then  ended.  These  consolidated   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of ZEVEX
International,  Inc.  and its  subsidiaries  as of December  31,  1996,  and the
results  of their  operations  and their  cash flows for the years then ended in
conformity with generally accepted accounting principles.



Salt Lake City, Utah                                  /Daines & Rasmussen, P.C.
February 13, 1997


<PAGE>



                                                                  


                          Independent Auditors' Report

Board of Directors and Stockholders
ZEVEX International, Inc.

We  have  audited  the  accompanying   consolidated   balance  sheets  of  ZEVEX
International,  Inc. and its  subsidiaries  as of December 31, 1998 and 1997 and
the related  consolidated  statements of operations,  stockholders'  equity, and
cash flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance about whether the  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of ZEVEX
International,  Inc. and its  subsidiaries as of December 31, 1998 and 1997, and
the results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.



Salt Lake City, Utah                                          /Ernst & Young LLP
February 24, 1999


<PAGE>


                                                                  
                            ZEVEX International, Inc.

                           Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S>                                                                   <C>    

                                                                                   December 31
                                                                             1998              1997
                                                                       ------------------------------------
Assets
Current assets:
   Cash and cash equivalents                                              $   7,960,511    $   2,260,426
   Cash restricted for sinking fund payment on industrial
     development bond                                                           182,049           76,164
   Accounts receivable, net of allowance for doubtful
     accounts of $138,000 in 1998 and $33,000 in 1997                         3,435,181        2,095,455
   Inventories                                                                5,574,394        3,540,591
   Marketable securities                                                      1,598,032       10,403,109
   Deferred income taxes                                                        249,251           82,930
   Prepaid expenses                                                              65,561           67,307
                                                                       ------------------------------------
                                                                       ------------------------------------
Total current assets                                                         19,064,979       18,525,982

Property and equipment, net                                                   5,505,643        3,933,804
Patents and trademarks, net of amortization of $17,439
   and $7,718                                                                   139,792          122,002
Goodwill                                                                      8,998,006                -
Other assets                                                                     52,559              755
                                                                       ====================================
                                                                          $  33,760,979    $  22,582,543
                                                                       ====================================

Liabilities and stockholders' equity Current liabilities:
   Accounts payable                                                       $   1,076,110    $     640,579
   Accrued liabilities                                                          469,079          244,484
   Income taxes payable                                                          50,891          285,403
   Bank lines of credit                                                         541,993                -
   Current portion of long-term debt                                          5,042,000          100,000
   Other                                                                        215,873           20,000
                                                                       ------------------------------------
Total current liabilities                                                     7,395,946        1,290,466

Deferred income taxes                                                            97,228          126,380
Industrial development bond                                                   1,800,000        1,900,000
Convertible debt, long-term portion                                           4,350,000                -
Other long-term liabilities                                                       3,270                -

Stockholders' equity:
   Common stock, $.001 par value: 10,000,000 shares
     authorized; 3,418,876 and 3,264,326 shares issued
     and outstanding in 1998 and 1997, respectively                               3,419            3,265
   Additional paid in capital                                                17,381,793       16,697,203
   Retained earnings                                                          2,927,422        2,565,229
   Treasury stock, 6,700 shares at cost                                         (50,790)               -
   Unrealized loss on available-for-sale securities, net
     of tax benefit of $87,633                                                 (147,309)               -
                                                                       ------------------------------------
Total stockholders' equity                                                   20,114,535       19,265,697
                                                                       ====================================
                                                                          $  33,760,979    $  22,582,543
                                                                       ====================================
</TABLE>


See accompanying notes.


<PAGE>


                                                                  
                            ZEVEX International, Inc.

                      Consolidated Statements of Operations
<TABLE>
<CAPTION>
<S>                                                       <C>    <C>             <C>              <C>    



                                                                         Year ended December 31
                                                          -----------------------------------------------------
                                                                 1998             1997             1996
                                                          -----------------------------------------------------
Revenues:
   Product sales                                              $10,475,256      $  8,176,155     $  4,891,272
   Engineering services                                           609,157           792,270          772,461
                                                          -----------------------------------------------------
                                                               11,084,413         8,968,425        5,663,733

   Cost of sales                                                6,846,443         4,757,057        2,936,055
                                                          -----------------------------------------------------
Gross profit                                                    4,237,970         4,211,368        2,727,678

Operating expenses:
   General and administrative                                   2,609,763         1,738,375        1,363,900
   Selling and marketing                                        1,269,645           742,715          528,417
   Research and development                                       290,669           702,563          527,562
                                                          -----------------------------------------------------
                                                                4,170,077         3,183,653        2,419,879
                                                          -----------------------------------------------------

Operating income                                                   67,893         1,027,715          307,799

Other income (expense):
   Interest income                                                567,991           125,315           53,819
   Interest expense                                               (92,152)          (78,179)         (12,981)
   Unrealized gain (loss) on marketable securities                (68,370)                -          203,109
                                                          -----------------------------------------------------
Income before provision for income taxes                          475,362         1,074,851          551,746

Provision for income taxes                                       (113,169)         (356,609)        (206,169)
                                                          -----------------------------------------------------

Net income                                                  $     362,193     $     718,242    $     345,577
                                                          =====================================================

Basic net income per common share                         $             .11   $         .34    $         .25
                                                          =====================================================

Diluted net income per common share                       $             .10   $         .29    $         .24
                                                          =====================================================
</TABLE>



  See accompanying notes.


<PAGE>


                                                                  
                            ZEVEX International, Inc.

                 Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
<S>                                <C>                    <C>            <C>          <C>         <C>            <C>




                                                                                                  Unrealized
                                                                                                    Loss on
                                                            Additional                           Available-for-Sale
                                        Common Stock          Paid-in     Retained     Treasury
                                   ------------------------
                                     Shares      Amount       Capital     Earnings      Stock     Securities      Total

                                   -----------------------------------------------------------------------------------------

Balances at December 31, 1995       1,365,716     $1,366   $  1,398,096   $1,501,410 $           $           -$  2,900,872
                                                                                             -
   Issuance of common stock for
     acquisition of land              130,000        130        454,870            -         -             -       455,000
   Net income                               -          -              -      345,577         -             -       345,577
                                   -----------------------------------------------------------------------------------------
Balances at December 31, 1996       1,495,716      1,496      1,852,966    1,846,987         -                   3,701,449
   Issuance of common stock for
     cash                           1,700,000      1,700     14,592,681            -         -             -    14,594,381
   Exercise of stock options for
     cash                              44,610         45         70,580            -         -             -        70,625
   Exercise of warrants for cash       24,000         24        179,976            -         -             -       180,000
   Issuance of warrants to
     purchase 100,000 shares of
     common stock for cash                  -          -          1,000            -         -             -         1,000
   Net income                               -          -              -      718,242         -             -       718,242
                                   -----------------------------------------------------------------------------------------
Balances at December 31, 1997       3,264,326     $3,265     16,697,203    2,565,229         -             -    19,265,697

   Comprehensive income:
     Net income                             -          -              -      362,193         -             -       362,193
     Other comprehensive income,
        net of tax:
          Unrealized loss on
            available-for-sale
            securities                      -          -              -            -         -      (147,309)     (147,309)
                                                                                                              --------------
   Total comprehensive income                                                                                      214,884
                                                                                                              --------------

   Exercise of stock options for
     cash                               9,550          9         33,485            -         -             -        33,494
   Exercise of warrants for cash       30,000         30        104,970            -         -             -       105,000
   Issuance of common stock for
     product line acquisition         115,000        115        546,135            -         -             -       546,250
   Purchase of 6,700 shares of
     treasury stock                         -          -              -            -   (50,790)            -       (50,790)
                                   =========================================================================================
Balances at December 31, 1998       3,418,876     $3,419    $17,381,793   $2,927,422  $(50,790)    $(147,309)  $20,114,535
                                   =========================================================================================
</TABLE>




See accompanying notes.



<PAGE>


                                                                 
                            ZEVEX International, Inc.

                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
<S>                                                       <C>             <C>              <C>    

                                                                     Year ended December 31,
                                                          -----------------------------------------------
                                                               1998            1997           1996
                                                          -----------------------------------------------
 Cash flows from operating activities
 Net income                                                 $   362,193    $   718,242     $   345,577
 Adjustments to reconcile net income to net cash provided
   by (used in) operating activities:
      Depreciation and amortization expense                     471,752        284,174         232,625
      Provision (benefit) for deferred income taxes            (136,473)       (35,762)         79,212
      Unrealized loss (gain) on marketable securities            68,370              -        (203,109)
      Changes in operating assets and liabilities, net of
        acquisitions:
        Increase in restricted cash for sinking fund
          payment on industrial development bond               (105,885)       (76,164)              -
        Increase in accounts receivable                        (989,046)      (665,934)       (219,727)
        Increase in inventories                              (1,612,638)    (2,196,294)       (552,337)
        (Increase) decrease prepaid expenses                     12,411        (20,499)        (43,973)
        (Increase) decrease in other assets                     (46,539)         2,734           5,193
        Increase in accounts payable                            260,235        301,556         147,461
        Increase in accrued liabilities and other               112,384         75,606          92,672
        Increase (decrease) in income taxes payable            (234,512)       285,403         (58,735)
                                                          -----------------------------------------------
 Net cash flows used in operating activities                 (1,837,748)    (1,326,938)       (175,141)

 Cash flows from investing activities
 Purchase of property and equipment                          (1,185,805)    (3,004,926)       (619,188)
 Purchase of businesses, net of cash acquired                (9,480,313)             -               -
 Purchases of available-for-sale marketable securities       (1,698,235)   (10,200,000)              -
 Redemptions of available-for-sale marketable securities     10,200,000              -               -
 Addition of patents and trademarks                             (27,511)       (78,663)        (51,057)
                                                          -----------------------------------------------
 Net cash flows used in investing activities                 (2,191,864)   (13,283,589)       (670,245)

 Cash flows from financing activities
 Proceeds from issuance of common stock                               -     14,594,381               -
 Proceeds from exercise of warrants                             105,000        180,000               -
 Proceeds from exercise of stock options                         33,494         70,625               -
 Proceeds from sale of 100,000 warrants                               -          1,000               -
 Issuance of debt related to business acquisitions            9,300,000              -               -
 Proceeds from bank line of credit                              441,993        639,892          60,108
 Repayments of bank line of credit                                    -       (700,000)              -
 Purchase of treasury stock                                     (50,790)             -               -
 Proceeds from industrial development bonds                           -              -       2,000,000
 Payments on industrial development bond                       (100,000)             -               -
                                                          -----------------------------------------------
 Net cash flows provided by financing activities              9,729,697     14,785,898       2,060,108
                                                          -----------------------------------------------
 Net  increase in cash and cash equivalents                   5,700,085        175,371       1,214,722
 Cash and cash equivalents at beginning of year               2,260,426      2,085,055         870,333
                                                          -----------------------------------------------
 Cash and cash equivalents at end of year                   $ 7,960,511    $ 2,260,426      $2,085,055
                                                          ===============================================
</TABLE>



 See accompanying notes.


<PAGE>



                                                          





1. Summary of Significant Accounting Policies

Description of Organization and Business

The Company was  incorporated  under the laws of the State of Nevada on December
30, 1987. The Company was originally incorporated as Downey Industries, Inc. and
changed its name to ZEVEX  International,  Inc. on August 15, 1988.  In November
1998 the Company  reincorporated  into  Delaware.  During  1998,  the  Company's
operations consisted of the business of its wholly-owned subsidiary, ZEVEX, Inc.
In December 1998, the Company acquired an additional  product line and completed
the acquisition of two additional subsidiaries (See Note 2). The Company and its
subsidiaries design and manufacture advanced medical devices, including surgical
systems,  device components,  and sensors for medical and industrial  technology
companies. The Company and its subsidiaries also design, manufacture, and market
their own medical  devices  using its  proprietary  technologies.  The Company's
design and  manufacturing  service  customers are primarily  medical  technology
companies,  which sell the Company's systems and devices under private labels or
incorporate the Company's devices into their products.

Principles of Consolidation

The  consolidated  balance  sheet at December 31, 1998  includes the accounts of
ZEVEX International,  Inc. (Company) and its wholly-owned operating subsidiaries
ZEVEX, Inc., Aborn  Electronics,  Inc., and JTech Medical  Industries,  Inc. The
consolidated statement of operations excludes the results of Aborn and JTech for
1998,  because these two acquisitions were consummated  effective as of December
31, 1998. At December 31, 1997, the consolidated  financial  statements  include
the  accounts  of  ZEVEX  International,  Inc.  (Company)  and its  wholly-owned
operating  subsidiary  ZEVEX,  Inc. All  significant  intercompany  balances and
transactions have been eliminated in consolidation.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year
presentation.



<PAGE>


1. Summary of Significant Accounting Policies (continued)

Use of Estimates

The preparation of 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.

Cash and Cash Equivalents

The  Company  considers  all  certificates  of deposit  and highly  liquid  debt
instruments  with a maturity of three  months or less when  purchased to be cash
equivalents.

Concentration of Credit Risk

The Company's financial instruments consist primarily of cash, cash equivalents,
marketable  securities and trade accounts receivable.  Cash and cash equivalents
are held in federally insured  financial  institutions or invested in high grade
short-term   commercial  paper  issued  by  major  United  States  corporations.
Marketable  securities consist principally of high grade corporate and municipal
bonds.  The Company sells its products  primarily to, and has trade  receivables
with,  independent  durable medical  equipment  manufacturers and dealers in the
United  States and abroad.  During the years ended  December  31, 1998 and 1996,
three of the Company's customers each accounted for more than 10% of net product
sales;  whereas,  for the year ended  December 31, 1997,  four of the  Company's
customers each  accounted for more than 10% of net product sales.  Less than 10%
of product sales are to foreign customers.

As a  general  policy,  collateral  is not  required  for  accounts  receivable;
however,  the  Company  periodically  monitors  the  need for an  allowance  for
doubtful  accounts based upon expected  collections  of accounts  receivable and
specific  identification  of uncollectible  accounts.  Additionally,  customers'
financial  condition and credit worthiness are regularly  evaluated.  Historical
losses have not been material.

Inventories

Inventories are stated at the lower of cost or market;  cost is determined using
the first-in, first-out method.


<PAGE>


1. Summary of Significant Accounting Policies (continued)

Marketable Securities

The  Company's   short-term   investments  are  comprised  of  debt  and  equity
securities,  all classified as either trading or available-for-sale  securities,
which are carried at their fair value based upon quoted  market  prices of those
investments  at  December  31,  1998 and 1997.  Unrealized  gains or losses  for
trading  securities  are  included  in  income.  Unrealized  gains and losses on
available-for-sale  securities are reported, net of tax, in a separate component
of stockholders'  equity. The amortized cost of debt securities in this category
is adjusted for amortization of premiums and accretion of discounts to maturity.
Such  amortization is included in investment  income.  Realized gains and losses
and declines in value judged to be  other-than-temporary  on  available-for-sale
securities  are included in investment  income.  The cost of securities  sold is
based  on  the  specific   identification  method.  Interest  and  dividends  on
securities classified as available-for-sale are included in investment income.

Net  unrealized  holding  losses on trading  securities  for the periods  ending
December  31, 1998 and 1997 of $68,370 and zero,  respectively,  are included in
net income; and, net unrealized holding losses on available-for-sale  securities
for the periods ending  December 31, 1998 and 1997 of $234,942  ($147,309 net of
taxes) and zero, respectively, are included in stockholders' equity.

Property and Equipment

Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation  is provided  over  expected  useful lives of three to  twenty-five
years using the straight-line method.  Leasehold improvements are amortized on a
straight-line  basis  over  the  lesser  of the  remaining  lease  term or their
estimated useful lives.

Major replacements,  which extend the useful lives of equipment, are capitalized
and depreciated  over the remaining useful life.  Normal  maintenance and repair
items are charged to costs and expenses as incurred.



<PAGE>


1. Summary of Significant Accounting Policies (continued)

Patents and Trademarks

The costs of  acquired  and  internally  developed  patents and  trademarks  are
amortized  over the lesser of fifteen years or the estimated  useful life of the
intangible asset on the straight-line  basis. The Company  periodically  reviews
the  recoverability  of patents and trademarks as well as other long-term assets
and, where  impairment in value has occurred,  such intangibles are written down
to net realizable value.

Goodwill

Goodwill  is recorded  at the lower of cost or its net  realizable  value and is
being  amortized on a  straight-line  basis over fifteen years.  At December 31,
1998, no  accumulated  amortization  for goodwill has been  recorded,  since the
acquisitions giving rise to the goodwill were consummated effective December 31,
1998 The Company  periodically  reviews the  recoverability  of these intangible
assets  in order to  determine  if they  should  be  written  down to their  net
realizable value.

Impairment of Long-Lived Assets

In accordance with Statement of Financial  Accounting  Standards (SFAS) No. 121,
"Accounting  for the  Impairment  of  Long-Lived  Assets to be Disposed Of," the
Company reviews long-lived and intangible assets for impairment  whenever events
or circumstances indicate the carrying value of an asset may not be recoverable.

Income Taxes

The Company  provides  for income  taxes based on the  liability  method,  which
requires recognition of deferred tax assets and liabilities based on differences
between  financial  reporting and tax bases of assets and  liabilities  measured
using  enacted  tax rates and laws that are  expected  to be in effect  when the
differences are expected to reverse.



<PAGE>


1. Summary of Significant Accounting Policies (continued)

Stock Options

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25) and related Interpretations in
accounting for its employee  stock options rather than adopting the  alternative
fair value  accounting  provided for under  Statement  of  Financial  Accounting
Standards (SFAS) No. 123, Accounting for Stock-based Compensation. Under APB 25,
because the exercise  price of the  Company's  stock  options  equals the market
price of the underlying  stock on the date of grant, no compensation  expense is
recognized.

New Accounting Pronouncement

In 1998, the Company  adopted SFAS No. 130,  "Reporting  Comprehensive  Income,"
which is effective for fiscal years  beginning after December 15, 1997. SFAS No.
130 requires that all items that are recognized  under  accounting  standards as
components of comprehensive  income be reported in a financial statement that is
displayed with the same prominence as other financial  statements.  The items of
other  comprehensive  income that are  typically  required to be  displayed  are
foreign currency items,  minimum pension liability  adjustments,  and unrealized
gains and  losses on certain  investments  in debt and  equity  securities.  The
effect of  adoption of SFAS No. 130 was a decrease  in  comprehensive  income to
$214,884, which reflects the change in the unrealized loss on available-for-sale
securities  of  $147,309,  net of tax  benefit  of  $87,633,  for the year ended
December 31, 1998.  There were no items of other  comprehensive  income prior to
1998.

Revenue Recognition

The  Company  records  revenue  from  the  sale of  manufactured  products  upon
shipment.  Revenue  from  contracts  to perform  engineering  design and product
development services are generally recognized as milestones are achieved;  costs
are expensed as incurred.

Advertising Costs

Advertising costs are expensed during the year in which they are incurred.
Advertising  expenses were $137,627,  $82,530 and $113,566, respectively for
the years ended December 31, 1998, 1997 and 1996.



<PAGE>


1. Summary of Significant Accounting Policies (continued)

Net Income Per Common Share

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

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

Net income as presented on the statement of operations  represents the numerator
used in calculating basic and diluted net income per common share. The following
table sets forth the  computation  of the shares used in  determining  basic and
diluted net income per common share:
<TABLE>
<CAPTION>
<S>                                                              <C>             <C>           <C>    

(in thousands)                                                       1998            1997           1996
                                                                  -----------     -----------    ------------

Denominator for basic net income per common share -
   weighted average shares                                           3,298           2,098          1,389
Dilutive securities: warrants and stock options                        338             345             23
                                                                  ===========     ===========    ============
Denominator for diluted net income per common share -
   adjusted weighted average shares                                  3,636           2,443          1,412
                                                                  ===========     ===========    ============
</TABLE>


Options and warrants to purchase 229,500,  312,000,  and 56,100 shares of common
stock were outstanding at December 31, 1998, 1997, and 1996,  respectively,  but
were not included in the computation of diluted  earnings per share because they
were anti-dilutive.

All shares  held in the  Company's  Employee  Stock  Ownership  Plan  (ESOP) are
considered   outstanding   for  both  basic  and  diluted   earnings  per  share
calculations.



<PAGE>


1. Summary of Significant Accounting Policies (continued)

Supplemental Cash Flow Information

 Supplemental disclosures of cash flow information were as follows:
<TABLE>
<CAPTION>
<S>                                                      <C>              <C>             <C>    


                                                               1998            1997           1996
                                                          -----------------------------------------------
 Cash paid during the year for:
    Interest                                                $    92,887    $    77,641      $    6,530
    Income taxes                                                481,589         71,206         170,839

 Schedule of non cash financing activities
    Issuance of common stock for acquisition
      of land, 130,000 shares                                         -              -         455,000
    Issuance of common stock for acquisition
      of Nutrition Medical product line                         546,250              -               -
</TABLE>


2. Acquisitions

On December 23,  1998,  the Company  acquired a product line of enteral  feeding
pumps from Nutrition Medical,  Inc. to complement its own existing product line.
The aggregate purchase price of $1,072,469, including legal expenses of $26,219,
is  payable  in cash of  $500,000  (see Note 15 -  Subsequent  Event),  which is
included  in  current  portion  of  long-term  debt and  115,000  shares  of the
Company's  common stock. In addition,  Nutrition  Medical,  Inc.  entered into a
noncompete agreement.  The acquisition has been accounted for as a purchase and,
accordingly,  the 1998 consolidated  statement of income includes the results of
operations of the product line from the date of acquisition.

On December 31,  1998,  the Company  acquired all of the issued and  outstanding
capital  stock of Aborn  Electronics,  Inc.  (Aborn),  a California  corporation
engaged in designing, developing and manufacturing optical sensor components for
medical and industrial applications.  These components are incorporated into the
end products of Aborn's design and manufacturing  service  customers,  which are
primarily  medical  products and electronic  products  companies.  The aggregate
purchase  price of $5,100,000  is payable in cash of  $1,350,000  (see Note 15 -
Subsequent Event), which is included in current portion of long-term debt, and a
7%  interest  bearing  convertible  debenture  of  $1,350,000.  Included  in the
purchase price is an earn-out provision that provides additional  consideration,
not to exceed cash of $950,000 and a convertible debenture of $950,000.


<PAGE>


2. Acquisitions (continued)

This earn-out provision is triggered if Aborn achieves certain levels of revenue
and  pretax  income.  Additional  consideration  may range from zero to the full
$1,900,000,  depending on achievement of levels of revenue and income within the
earn-out formula. Any additional consideration paid will result in an adjustment
to goodwill.  The convertible debentures are convertible into ZEVEX common stock
at $11 per  share  between  one to three  years  from the  issuance  dates.  The
acquisition has been accounted for as a purchase.

On December 31,  1998,  the Company  acquired all of the issued and  outstanding
capital stock of JTech Medical  Industries,  Inc.  (JTech),  a Utah  corporation
engaged in designing,  developing and manufacturing advanced medical devices for
use  in  several   medical   specialties,   including   occupational   medicine,
orthopedics,  physical  medicine  and  rehabilitation,   chiropractic,  physical
therapy,  neurology,   podiatry  and  athletic  training.  JTech  also  provides
educational  products and services,  such as in-office training,  seminars,  and
multimedia disks. The aggregate  purchase price of $7,250,000 is payable in cash
of  $3,100,000  (see Note 15  Subsequent  Event),  which is  included in current
portion of long-term debt, and a 8% interest  bearing  convertible  debenture of
$3,000,000.  Included in the aggregate  purchase  price are earn-out  provisions
over the following two years that provide additional consideration not to exceed
cash of $575,000 and a convertible debenture of $575,000. The earn-out provision
is triggered  if JTech  achieves  certain  levels of pretax  income.  Additional
consideration  may  range  from  zero  to  the  full  $1,150,000,  depending  on
achievement  of pretax  income  within  the  earn-out  formula.  Any  additional
consideration  paid will result in an  adjustment to goodwill.  The  convertible
debentures are convertible  into common stock at $11 per share between  December
31, 1999 and 2001. The acquisition has been accounted for as a purchase.

The unaudited pro forma results of  operations  assuming  consummation  of these
acquisitions as of January 1, 1997 are as follows:
<TABLE>
<CAPTION>
<S>                                                  <C>                 <C>    


                                                            1998                1997
                                                     ----------------------------------------

Revenues                                               $    15,131,000    $    13,049,000
Net income                                                     461,000            894,000

Basic net income per common share                      $           .14    $           .43
Diluted net income per common share                                .13                .35
                                                     ========================================
</TABLE>




<PAGE>


3. Inventories

Inventories consist of the following at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
<S>                                                  <C>                   <C>    


                                                             1998               1997
                                                      ---------------------------------------

Materials                                                $    3,156,276     $    2,306,818
Work in Progress                                              1,831,112          1,044,331
Finished goods, including completed subassemblies
                                                                587,006            189,442
                                                      =======================================
                                                         $    5,574,394     $    3,540,591
                                                      =======================================
</TABLE>


4. Marketable Securities

The  following  is a summary of  available-for-sale  securities  at December 31,
1998:
<TABLE>
<CAPTION>
<S>                           <C>             <C>               <C>             <C>     
  

                                              Gross Unrealized  Gross Unrealized  Estimated Fair
                                  Cost             Gains             Losses           Value
                             ---------------- ----------------- ----------------------------------

U.S. corporate securities        $1,209,235         $     -        $         -       $1,209,235
Equity securities                   489,000               -            234,942          254,058
                             ---------------- ----------------- ----------------------------------

                                 $1,698,235         $     -        $   234,942       $1,463,293
                             ================ ================= ==================================
</TABLE>




<PAGE>


4. Marketable Securities (continued)

The  amortized  cost and  estimated  fair  value of debt and  marketable  equity
securities  at December  31, 1998,  by  contractual  maturity,  are shown below.
Expected maturities will differ from contractual  maturities because the issuers
of the securities may have the right to prepay  obligations  without  prepayment
penalties.

                                 Estimated Fair
                                               Cost            Value
                                         ----------------------------------

U.S. corporate securities:
   Due within 1 year                        $   717,536      $   717,536
   Due after 1 to 5 years                       491,699          491,699
                                         ----------------------------------

                                              1,209,235        1,209,235

Equity securities                               489,000          254,058
                                         ----------------------------------

Total                                        $1,698,235       $1,463,293
                                         ==================================

5. Property and Equipment

At December 31, 1998 and 1997, property and equipment consists of the following:
<TABLE>
<CAPTION>
<S>                                                    <C>                <C>    


                                                             1998                1997
                                                       ------------------ -------------------

Machinery and equipment                                 $    1,351,078     $      497,540
Furniture and fixtures                                       1,017,847            592,889
Vehicles                                                        13,000              4,500
Tooling costs                                                  753,786            495,986
Building                                                     2,755,644          2,717,962
Land                                                         1,084,415            505,000
                                                       ------------------ -------------------
                                                             6,975,770          4,813,877
Less accumulated depreciation and amortization
                                                             1,470,127            880,073
                                                       ------------------ -------------------
                                                        $    5,505,643     $    3,933,804
                                                       ================== ===================
</TABLE>


Depreciation  expense  for the years  ended  December  31,  1998,  1997 and 1996
amounted to $462,031, $278,156 and $230,925, respectively.


<PAGE>


6. Accrued Liabilities

Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
<S>                                                    <C>                 <C>    

                                                             1998                1997
                                                       ------------------ -------------------

Accrued payroll and related taxes and benefits
                                                              $311,558           $167,164
Accrued vacation                                                86,267             45,331
Warranty reserve                                                65,000             25,000
Accrued interest                                                 6,254              6,989
                                                       ------------------ -------------------
                                                              $469,079           $244,484
                                                       ================== ===================
</TABLE>


7. Income Taxes

The provision for income taxes is made,  at Federal and State  statutory  rates,
based on pretax income reported in the financial statements.

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

Significant components of the Company's net deferred income taxes as of December
31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
<S>                                                                 <C>                  <C>    


                                                                          1998                1997
                                                                     ------------------- --------------------
Deferred tax assets:
    Non-deductible accruals and expenses                                  $ 161,618             $ 82,930
    Unrealized loss on available-for-sale securities                         87,633                    -
                                                                     ------------------- --------------------
Total deferred tax assets                                                   249,251               82,930

Deferred tax liabilities:
    Accelerated depreciation                                               (46,970)             (50,620)
    Net unrealized gains on trading securities                             (50,258)             (75,760)
                                                                     ------------------- --------------------
Total deferred tax liabilities                                             (97,228)            (126,380)
                                                                     =================== ====================
                                                                          $ 152,023            $(43,450)
                                                                     =================== ====================
</TABLE>



<PAGE>


7. Income Taxes (continued)

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


                                                                1998             1997             1996
                                                           ---------------- ---------------- ----------------
Current taxes:
Federal                                                        $(165,840)       $(333,620)        $(137,196)
State                                                            (24,244)         (56,793)          (17,936)
R&D credit                                                        28,075           69,565            28,175

Deferred taxes:
Federal                                                           44,519          (31,176)          (69,057)
State                                                              4,321           (4,585)          (10,155)
                                                           ---------------- ---------------- ----------------

Provision for income taxes                                   $  (113,169)       $(356,609)        $(206,169)
                                                           ================ ================ ================


The actual tax expense differs from the 34% Federal statutory rate as follows:

                                                                1998             1997             1996
                                                           ---------------- ---------------- ----------------

Expected tax (expense) at federal rate                         $(161,623)       $(365,449)       $(187,594)
State income tax expense, net of federal benefit
                                                                 (15,687)         (35,470)         (18,208)
Research and development credit                                   28,075           69,565           28,175
Non-deductible expenses                                          (11,985)          (8,782)          (6,164)
Tax-exempt interest                                               57,549            7,381                -
Other                                                             (9,498)         (23,854)         (22,378)
                                                           ---------------- ---------------- ----------------
Total provision for income taxes                               $(113,169)       $(356,609)       $(206,169)
                                                           ================ ================ ================
</TABLE>




<PAGE>


8. Debt

Bank Lines of Credit

The Company renewed its line of credit arrangement with a financial  institution
for $5  million.  The  line  matures  on May 31,  1999.  The line of  credit  is
collateralized  by accounts  receivable  and inventory and bears interest at the
prime rate,  which is 7.75% at December 31, 1998 and 8.25% at December 31, 1997.
The  Company's  balance on its line of credit was  $441,993 at December 31, 1998
and zero at December 31, 1997. Under the line of credit  agreement,  the Company
is restricted from declaring cash dividends.  In addition, the Company's line of
credit  contains  certain  financial  covenants.  As of December 31,  1998,  the
Company was in compliance with these financial covenants.

In addition,  JTech also has a line of credit with a financial  institution  for
$150,000.  The line bears  interest at the prime rate plus 1% (8.75% at December
31, 1998) and matures on March 15, 1999.  The balance  under this line of credit
was $100,000 at December 31, 1998. The line of credit is  collateralized  by all
of the assets of JTech and contains certain  covenants.  JTech was in compliance
with the debt covenants at December 31, 1998.


Industrial Development Bond

On October 30,  1996,  the Company  completed a  transaction  defined as "Murray
City, Utah,  Adjustable Rate Industrial  Development  Revenue Bonds, Series 1997
(ZEVEX, Inc. Project)" in the amount of $2,000,000.  The bonds are secured by an
irrevocable Letter of Credit issued by a bank, which is subject to expiration no
later than April 15, 2002.  The bonds bear interest at an adjustable  rate based
on the weekly  tax-exempt  floater rate as determined by the remarketing  agent.
The bonds mature on October 1, 2016. Principal reductions occur in the amount of
$100,000  per year at a rate of $8,333 per month  starting  April 1,  1997.  The
outstanding  balance was  $1,900,000 at December 31, 1998, of which  $100,000 is
classified as current.

Convertible Debt

In  connection  with the  acquisitions  of Aborn and JTech,  the Company  issued
$1,350,000 in 7% interest  bearing  convertible  debentures and $3,000,000 in 8%
interest  bearing  convertible  debentures (See Note 2). Accrued interest is due
and payable  quarterly  beginning  on April 1, 1999.  All accrued  interest  and
principal  is due and  payable  December  31,  2002.  The bonds are  convertible
between December 31, 1999 and December 31, 2002 at $11 per share.


<PAGE>


9. Employee Benefit Plans

401(k) Profit Sharing Plan

During 1991,  the Company  established a qualified  401(k)  profit  sharing plan
covering substantially all employees.  Eligible employees may defer a portion of
their salary. At the discretion of the Board of Directors,  the Company may make
a  contribution  of an  additional  amount  of up to  four  percent  (4%) of the
eligible employees' salary and a discretionary amount to be determined each year
by the  Board of  Directors.  Employees  are fully  vested  after  seven  years.
Contributions  to the plan for the year ended  December 31, 1998,  1997 and 1996
were  $98,865,  $60,274 and  $86,035,  respectively.  The Company has recorded a
payable  to the plan of  $18,844  and  $25,410 at  December  31,  1998 and 1997,
respectively, which is included in accrued liabilities.

Employees' Stock Ownership Plan

Effective October 14, 1993, the Company adopted an Employee Stock Ownership Plan
that covers all  employees who are over the age of 21, have been employed for at
least 90 days and who provide at least 1,000 hours of service.

Full vesting  will occur after seven years of service or upon normal  retirement
at 65 years of age. Contributions to the plan are at the discretion of the Board
of Directors with no minimum annual funding  requirements.  Contributions to the
plan will be primarily made with common stock of the Company.

No contribution was made for the years ended December 31, 1998 and 1997.

10. Stockholders' Equity

Change in Authorized Shares and Par Value

In connection with the 1997 reincorporation  into Delaware,  the Company adopted
an Amended and Restated  Certificate  of  Incorporation  which provides that the
Company is authorized  to issue  2,000,000  shares of $.001 par value  preferred
stock and 10,000,000 shares of $.001 par value common stock.



<PAGE>


10. Stockholders' Equity (continued)

Issuance of Common Stock

On November 29, 1996, the Company paid cash of $50,000 and issued 130,000 shares
of the  Company's  common stock for the purchase of 3.7 acres of land in Murray,
Utah for the purpose of constructing a manufacturing facility.

On February 12, 1997,  the Company  completed a private  placement  offering for
$1,250,000 of its securities, which consist of 500,000 units at a price of $2.50
per unit.  Each unit  consists  of one  share of common  stock and a warrant  to
purchase  one share of common  stock at a price of $3.50 per  share.  The issued
shares and shares  underlying the warrants are entitled to  registration  rights
for a period of five years from completion of the offering.

In November 1997 the Company  completed a secondary public offering of 1,200,000
shares  of  its  common  stock.  Total  net  proceeds  from  the  offering  were
$13,344,381.

Warrants

In February  1997,  the Company  issued  500,000  warrants in connection  with a
$1,250,000  private placement  offering,  as discussed above. As of December 31,
1998, 30,000 warrants have been exercised for a total consideration of $105,000.

In connection  with the secondary  public offering in November 1997, the Company
issued the  underwriters  warrants to purchase 100,000 shares of common stock at
$15 per share. The underwriters paid a price of $.01 per warrant. These warrants
expire 5 years from the date of the  offering.  The  underwriters'  warrants are
restricted from exercise,  sale,  transfer,  assignment or  hypothecation  for a
period  of one year  commencing  from the  offering  date.  These  warrants  are
entitled to certain registration rights.

Common Stock Reserved for Future Issuance

At December 31, 1998, the Company had reserved  1,135,840 shares of common stock
for future issuance,  including 590,000 shares reserved for exercise of warrants
and 545,840 shares reserved under the Company's stock option plan.



<PAGE>


10. Stockholders' Equity (continued)

Stock Option Plan

In September 1997, the Board of Directors  consolidated its previous three stock
option  plans into one plan and  established  the Amended 1993 Stock Option Plan
(the "Stock Option  Plan").  There are currently  600,000 shares of common stock
authorized for issuance  under the Stock Option Plan,  subject to adjustment for
such matters as stock splits and stock dividends.

The Stock Option Plan provides for the grant of incentive  stock options,  stock
appreciation  rights  and  stock  awards  to  eligible  participants  and may be
administered by the Board of Directors or by the Compensation Committee.

On September 30, 1997,  the Company  granted a total of 210,000  options with an
exercise price of $16.44 to three officers/directors.  In 1998, the options were
subsequently  repriced with an exercise price of $5.00. The options vest ratably
over a four year period from the grant date.

All options granted under the Stock Option Plan expire after five to seven years
from the grant date and  becomes  exercisable  no later than four years from the
grant date.

A summary of stock option activity,  and related information for the years ended
December 31, 1996, 1997 and 1998 follows:
<TABLE>
<CAPTION>
<S>                              <C>               <C>                 <C>                <C>    


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

Balance at December 31, 1995            222,840           77,160          $.79-5.00           $  2.70
   Additional authorization             100,000                -              -                     -
   Options granted                      (12,000)          12,000            $4.50             $  4.50
   Options canceled                       3,060           (3,060)         $2.50-5.00          $  3.24
                                  ------------------------------------ ----------------- ------------------

Balance at December 31, 1996            313,900           86,100          $.79-5.00           $  2.93
   Additional authorization             200,000                -              -                     -
   Options granted                     (275,050)         275,050         $3.50-17.50           $13.51
   Options exercised                          -          (44,610)         $.79-$5.00          $  1.58
   Options canceled                       2,850           (2,850)        $3.50-$5.00          $  3.97
                                  ------------------------------------ ----------------- ------------------

Balance at December 31, 1997            241,700          313,690         $2.50-17.50           $12.39
   Options granted                     (390,000)         390,000          $5.00-7.64          $  6.48
   Options exercised                          -           (9,550)         $2.50-5.00          $  3.51
   Options canceled                     299,500         (299,500)        $3.50-17.50           $15.77
                                  ------------------------------------ ----------------- ------------------

Balance at December 31, 1998            151,200          394,640          $2.50-5.00          $  4.76
                                  ==================================== ================= ==================
</TABLE>

<PAGE>


10. Stockholders' Equity (continued)

Stock Option Plan

The weighted  average fair value of options  granted in the years ended December
31, 1998,  1997, and 1996 were $3.29,  $9.98,  and $1.33,  respectively.  During
1998,  the  Company  canceled  options to  purchase  up to 298,000  shares  with
exercise  prices ranging from $7.63 to $17.50 and regranted  options to purchase
the same number shares at an exercise price of $5.00 per share. Of these 298,000
options,  212,000  were  outstanding  at the  beginning  of the  year,  with the
remaining 86,000 shares granted in early 1998.

Pro forma information regarding net income and earnings per share is required by
SFAS 123,  and has been  determined  as if the  Company  had  accounted  for its
employee  stock  options  under the fair value  method.  The fair value of these
options was estimated at the date of grant using a Black-Scholes  option pricing
model with the following weighted average  assumptions for 1998, 1997, and 1996,
respectively: risk-free interest rate of 5.3%, 5.9%, and 6.1%, dividend yield of
0%;  volatility  factors of the expected  market price of the  Company's  common
stock of .88, .90, and .40; and a  weighted-average  expected life of the option
of 4 years.

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

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized over the options'  vesting  period.  Because the effect of SFAS No.
123 is  prospective,  the  initial  impact on pro forma  net  income  may not be
representative  of  compensation  expense  in future  years.  The  effect on the
Company's  pro forma  results for fiscal year 1996 was not  material  (less than
$.01 per share).


<PAGE>


10. Stockholders' Equity (continued)

Stock Option Plan (continued)

For the years ended  December  31,  1998 and 1997,  pro forma net income and pro
forma net income per common share were as follows:
<TABLE>
<CAPTION>
<S>                                                     <C>                 <C>   

                                                               1998                1997
                                                         ------------------ -------------------

Pro forma:
   Net income                                                   $10,000          $554,000
   Basic net income per common share                                  -               .26
   Diluted net income per common share                                -               .23
</TABLE>


Additionally,  SFAS No. 123 requires that companies with wide ranges between the
high and low exercise prices of its stock options  segregate the exercise prices
into  ranges  that are  meaningful  for  assessing  the  timing  and  number  of
additional  shares  that may be issued  and the cash that may be  received  as a
result of the option  exercises.  Below are the  segregated  ranges of  exercise
prices as of December 31, 1998:
<TABLE>
<CAPTION>
<S>                 <C>            <C>              <C>                  <C>              <C>    


                         Options Outstanding                                   Options Exercisable
----------------------------------------------------------------------    -------------------------------
                                       Weighted
                                        Average          Weighted                            Weighted
    Range of                           Remaining         Average                             Average
    Exercise           Number         Contractual        Exercise             Number         Exercise
     Prices         Outstanding          Life             Price            Exercisable        Price
----------------- ----------------- ---------------- -----------------    --------------- ---------------

   $2.50-3.50           35,140        2.48 years           $3.20               35,140           $3.20
   $3.85-5.00          359,500        4.17 years           $4.92             124,750            $4.76
----------------- ----------------- ---------------- -----------------    --------------- ---------------
                                                     -----------------

   $2.50-5.00          394,640        4.02 years           $4.76             159,890            $4.42
================= ================= ================ =================    =============== ===============
</TABLE>




<PAGE>


11. Lease Commitments

In  1996  the  Company  and  its  subsidiary   occupied  an  administrative  and
manufacturing facility under the terms of an operating lease agreement.  In June
1997 the Company  moved into a new  facility  owned by and  constructed  for the
Company.

Lease  expense of $55,695 and $109,505 has been  charged to  operations  for the
years ended December 31, 1997 and 1996, respectively. The lease expired in April
1997.

12. Fair Value of Financial Instruments

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

     Cash and cash  equivalents:  The  carrying  amount  reported in the balance
     sheet for cash and cash equivalents approximates its fair value.

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

     Convertible  debt and Industrial  development  bond: The fair values of the
     Company's long-term debt are estimated using discounted cash flow analyses,
     based on the  Company's  current  incremental  borrowing  rates for similar
     types of borrowing arrangements.

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


                                                    1998                               1997
                                     ----------------------------------------------------------------------
                                     Carrying Amount         Fair       Carrying Amount         Fair
                                                            Value                              Value
                                     ----------------- ---------------------------------- -----------------

Cash and cash equivalents             $   7,960,511      $   7,960,511  $    2,260,426      $   2,260,426
Marketable securities:
   Trading securities                       134,739            134,739      10,403,109         10,403,109
   Available-for-sale securities          1,463,293          1,463,293               -                  -
Convertible debt                          4,350,000          4,350,000               -                  -
Industrial development bond               1,900,000          1,900,000       2,000,000          2,000,000
</TABLE>




<PAGE>


13. Major Customers

Sales to major  customers for the years ended December 31, 1998,  1997 and 1996,
are summarized as follows (percent of product sales):

                                              Year ended December 31,
                                -----------------------------------------------
                                      1998             1997              1996
                                ----------------- ---------------- ------------

Customer A                               16%               17%               *%
Customer B                               15%               15%              23%
Customer C                               13%               18%              33%
Customer D                                *%               15%              10%
                                ----------------- ---------------- ------------

                                         44%               65%              66%
                                ================= ================ ============
-----------------
* Less than 10% of sales.

14. Related Party Transactions

On April 15 1997, the Company  entered into a consulting  agreement with another
company owned by certain  stockholders to provide  services related to strategic
planning, public relations,  financing and potential acquisition of new products
or companies. Under the consulting agreement, the Company paid an initial fee of
$50,000 and must pay $10,000 per month for two years. In addition, these certain
stockholders  have the right to appoint one director to the  Company's  Board of
Directors.

In connection  with the secondary  public  offering  completed in November 1997,
certain  stockholders waived their registration  rights on 350,000 warrants.  In
exchange,  the  Company  and the  stockholders  executed a  registration  rights
agreement,  entitling the stockholders to certain demand registration rights for
a period of two years from the agreement's effective date.

15. Subsequent Event

In January 1999, the Company paid cash of $4,950,000 to Nutrition Medical,  Inc.
and to the  former  stockholders  of  Aborn  and  JTech in  connection  with the
acquisitions described in Note 2.




<PAGE>


                                  Exhibit 10.15
       Convertible Debenture, dated January 6, 1999, issued to Vijay Lumba


         THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED  UNDER THE
         SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE  STATE LAW AND MAY NOT
         BE OFFERED,  SOLD, OR OTHERWISE  TRANSFERRED,  PLEDGED, OR HYPOTHECATED
         UNLESS  AND  UNTIL  REGISTERED  UNDER  THE ACT OR STATE  LAW OR, IN THE
         OPINION OF COUNSEL IN FORM AND SUBSTANCE  SATISFACTORY TO THE ISSUER OF
         THE SECURITIES, SUCH OFFER, SALE, OR TRANSFER, PLEDGE, OR HYPOTHECATION
         IS IN COMPLIANCE THEREWITH.


                              CONVERTIBLE DEBENTURE

                              (Due January 5, 2002)

January 6, 1999                                                   $1,134,000.00
                                                                  -------------
(the "Issuance Date")

         The undersigned, ZEVEX INTERNATIONAL, INC., a Delaware corporation (the
"Company"),  for value  received,  hereby  promises to pay to the order of VIJAY
LUMBA (the "Holder") the principal amount of One Million One Hundred Thirty-Four
Thousand Dollars ($1,134,000.00) together with interest on such principal amount
and any other amounts due under this Debenture.

         This Debenture  (the  "Debenture")  is issued  pursuant to that certain
Stock  Purchase  Agreement,  dated  December 31, 1998,  entered into between the
Company and the Holder of this  Debenture (the  "Agreement").  This Debenture is
also subject to the following additional terms and conditions:


<PAGE>





1. Interest.  Commencing on the date of this Debenture and continuing  until all
principal  and  interest  due  under  this  Debenture  are  paid  in  full,  the
outstanding  principal balance of this Debenture shall bear interest at the rate
of seven  percent (7%) per annum,  compounded  annually.  Interest  shall accrue
daily and be calculated on the basis of a three hundred sixty (360) day year and
the actual number of days elapsed in any partial calendar month.

2. Payment.  Accrued  interest shall be due and payable  beginning April 1, 1999
and on each July 1,  October  1,  January 1, and April 1  thereafter  until this
Debenture  is paid in full.  The unpaid  principal  balance  of this  Debenture,
together with any and all accrued but unpaid interest,  shall be due and payable
in full three (3) years from the Issuance  Date.  All payments of principal  and
interest  shall be made in lawful  money of the United  States of America at the
address of the Holder set forth in Section  7.1 below.  Unless the Holder  shall
elect  otherwise,  each payment made under this Debenture shall be applied first
to interest due under this  Debenture and any balance shall be applied to reduce
the principal balance of this Debenture.

3.       Right of Conversion

         3.1 Conversion  Into Company  Securities.  At any time after a date one
(1) year from the Issuance  Date until a date three (3) years after the Issuance
Date, and from time to time during such period,  the Holder may elect to convert
all or a portion  of the unpaid  principal  amount  and all  accrued  but unpaid
interest of this Debenture into fully paid and  nonassessable  shares of Company
Common Stock, $0.001 par value (the "Conversion Shares") at the conversion price
of eleven dollars ($11.00) per share (the "Conversion Price"); provided that any
partial  conversion of less than the entire remaining  principal balance of this
Debenture  may not be less than  $25,000 in  principal  and  accrued  and unpaid
interest.

         3.2  Mechanics of  Conversion.  Upon the  Holder's  election to convert
pursuant  to Section  3.1 above,  the Holder  shall send  written  notice of its
election to the Company and shall surrender this Debenture to the Company at its
principal office. The written election shall specify the amount of principal and
accrued and unpaid interest that is to be converted.  Each  conversion  shall be
deemed to have been  effected  as of the  close of the  business  on the date on
which the notice is  delivered  to the  Company  and the  outstanding  principal
balance and accrued and unpaid interest shall be reduced by the amount converted
as set forth in the notice.  Within a reasonable  time  thereafter,  the Company
shall  cancel the  designated  portion of the  unpaid  principal  amount of this
Debenture  converted  by the  Holder  and  issue  and  deliver  to the  Holder a
certificate or certificates (the "Conversion  Certificates"),  registered in the
name of such  Holder,  for the number of full  shares of the  Conversion  Shares
issuable at the Conversion  Price,  bearing such  restrictive  legends as may be
required  by  federal  and  state  securities  laws.  In the  event of a partial
Conversion,  the Company  shall  return with the  Conversion  Certificates  this
Debenture,  bearing a proper  notation of the principal  amount that remains due
and payable after Holder's partial conversion, but otherwise unaltered.

         3.3 Effects of  Conversion.  Upon  conversion  of the entire  amount of
principal and unpaid interest of this Debenture, the rights of the Holder of the
Debenture as such shall cease.  The person or persons in whose name or names the
Conversion  Certificates are issued shall be deemed to have become the holder or
holders of record of the Conversion Shares represented thereby.

         3.4 No Fractional  Shares. No fractional share of the Conversion Shares
will be issued in  connection  with any  conversion  hereunder.  Instead  of any
fractional  share the  Company  shall pay a cash  adjustment  in respect of such
fractional interest as determined by reference to the Conversion Price.

         3.5 No Rights as  Stockholders.  Prior to the  conversion of all or any
portion of this  Debenture,  the Holder  shall not be entitled to any right as a
stockholder,  including  without  limitation  the  right  to vote or to  receive
dividends or other distribution, and shall not be entitled to receive any notice
of any proceeding of the Company, except as provided herein.

         3.6  Taxes on  Conversion.  Any taxes  required  upon the  issuance  of
Conversion  Certificates  on conversion of this  Debenture  shall be paid by the
Holder.

         3.7  Adjustments.  In the  event  of any  Company  stock  split,  stock
combination,  merger,  consolidation  or  recapitalization  affecting the Common
Stock of the Company prior to repayment or conversion under this Debenture,  the
Company shall make  appropriate,  proportionate  adjustments  to the  Conversion
Shares issued to Holder under Holder's conversion right.

         3.8  Notices  of Record  Date.  In the  event of (i) any  taking by the
Company of a record of the holders of securities  for the purpose of determining
the  holders  thereof  who  are  entitled  to  receive  any  dividend  or  other
distribution or (ii) any  reclassification  or  recapitalization  of the capital
stock of the  Company,  any  merger  or  consolidation  of the  Company,  or any
transfer of all or  substantially  all of the assets of the Company to any other
corporation,  entity,  or person,  or any voluntary or involuntary  dissolution,
liquidation,  or a winding-up of the Company, which occurs during the conversion
period, the Company shall mail to the Holder of the Debenture,  at least fifteen
(15) days prior to the record date specified  therein,  a notice  specifying (A)
the date on which  any  such  record  is to be  taken  for the  purpose  of such
dividend or distribution and a description of such dividend or distribution, (B)
the  date  on  which  any  such  reorganization,   reclassification,   transfer,
consolidation,  merger,  dissolution,  liquidation, or winding-up is expected to
become effective,  and (C) the time, if any is to be set, as to when the holders
of record of such  security  shall be  entitled  to  exchange  their  shares for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  transfer, consolidation, merger, dissolution, liquidation, or
winding-up.

4.       Events of Default; Acceleration

         4.1  Events,  Remedy.  If any of the  following  conditions  or  events
("Events of Default") shall occur:

                  (a)  if the  Company  shall  default  in  the  payment  of the
principal or interest on the Debenture when due and such default continues for a
period of 30 days after written notice thereof to the Company from Holder; or

                  (b) if the  Company  shall  default in the  performance  of or
compliance with any term or covenant contained in this Debenture, the Agreement,
or the Stock Pledge  Agreement  (defined  below) and such default shall not have
been remedied  within 30 days after written notice thereof shall have been given
to the Company by Holder (provided, however, if such default is not cured within
such 30-day period and the Company is diligently pursuing such cure, the Company
shall have an additional  period of time not to exceed ninety (90) days in which
to cure such default); or

                  (c) if the Company shall make an assignment for the benefit of
creditors,  or shall  admit in writing  its  inability  to pay its debts as they
become  due,  or shall file a  voluntary  petition  in  bankruptcy,  or shall be
adjudicated  a  bankrupt  or  insolvent,  or shall file any  petition  or answer
seeking for itself any reorganization,  arrangement, composition,  readjustment,
liquidation, dissolution, or similar relief under any present or future statute,
law or  regulation,  or shall file any answer  admitting or not  contesting  the
material  allegations  of a  petition  filed  against  the  Company  in any such
proceeding,  or shall seek or consent to or acquiesce in the  appointment of any
trustee, receiver or liquidator of the Company or of all or any substantial part
of the properties of the Company, or if the Company or its directors or majority
stockholders  shall take any action looking to the dissolution or liquidation of
the Company; or

                  (d) if, within 60 days after the service of process on Company
following   commencement   of  an  action   against  the  Company   seeking  any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute,  law or regulation,  such
action  shall  not have  been  dismissed  or if,  alternatively,  all  orders or
proceedings  thereunder  affecting the operations or the business of the Company
stayed,  or if the stay of any such order or proceeding  shall thereafter be set
aside,  or if,  within 60 days  after the  appointment  without  the  consent or
acquiescence  of the  Company of any  trustee,  receiver  or  liquidator  of the
Company or of all or any substantial part of the properties of the Company, such
appointment shall not have been vacated;

then and in any such event  Holder may at any time  (unless all  defaults  shall
theretofore have been remedied) at his option, by written notice to the Company,
declare the entire principal and interest of the Debenture then remaining unpaid
to be due and payable immediately. Notwithstanding the foregoing, this Debenture
shall not be in default to the extent that the Company has  exercised its rights
of recoupment under Section 8(f) of the Agreement.

         4.2 Other  Remedies on Default,  Etc. In case any one or more Events of
Default shall occur, be continuing, and not have been waived, Holder may proceed
to protect and  enforce  the rights of such Holder by an action at law,  suit in
equity, or other appropriate proceeding, whether for the specific performance of
any  agreement  contained  herein  or  under  terms of the  Agreement  or for an
injunction against a violation of any of the terms hereof or thereof,  or in aid
of the exercise of any power  granted  hereby or thereby or by law. In case of a
default in the payment of  principal or interest on the  Debenture,  the Company
will pay to the Holder  thereof such further  amount as shall be  sufficient  to
cover the costs and  expenses  of  collection,  including,  without  limitation,
reasonable attorneys' fees. No course of dealing and no delay on the part of any
Holder in exercising  any right shall  operate as a waiver  thereof or otherwise
prejudice such Holder's  rights.  No right conferred  hereby or by the Agreement
upon any Holder  shall be  exclusive  of any other  right  referred to herein or
therein  or now or  hereafter  available  at  law,  in  equity,  by  statute  or
otherwise.

5.       Prepayment

         This  Debenture  may  be  prepaid  (including  a  recoupment  deemed  a
prepayment  hereof under  Section 8(f) of the  Agreement)  without  penalty upon
thirty (30) days prior  written  notice by the Company to Holder.  Except in the
event of a deemed  prepayment in accordance  with Section 8(f) of the Agreement,
Holder shall have the right within such thirty day period to convert all or part
of this Debenture at Holder's election pursuant to Section 3 above.

6.       Security for Debenture

         This  Debenture  is secured by a Stock  Pledge  Agreement  (the  "Stock
Pledge Agreement") of even date herewith by and between the Company and Holder.

7.       Miscellaneous Provisions

         7.1 Notices.  Any notice herein required or payment required  hereunder
shall  be made or  given to the  address  of the  parties  as  specified  in the
Agreement.

         7.2  Amendments  or Waivers.  Any  provision of this  Debenture  may be
amended,  waived, or modified,  but only upon the written consent of the Company
and the Holder.

         7.3  Governing  Law.  This  Debenture has been executed in and shall be
governed by the laws of the State of Utah  excluding that body of law pertaining
to conflicts of law.

         7.4 Miscellaneous.  The unenforceability or invalidity of any provision
of this Debenture shall not affect the  enforceability  or validity of any other
provision  of this  Debenture.  The  terms  of this  Debenture  shall  bind  the
undersigned  and inure to the  benefit  of Holder  and their  respective  heirs,
successors,  assigns  and legal  representatives.  The  Holder  may,  with prior
written  notice to the Company in  accordance  with the terms of the  Agreement,
assign all or part of Holder's interest under this Debenture.

         IN WITNESS WHEREOF,  the Company has caused this Debenture to be issued
this 6th day of January, 1999.


                                                      ZEVEX INTERNATIONAL, INC.



                                                           Phillip L. McStotts,
                                                        Chief Financial Officer


<PAGE>


                                  Exhibit 10.16
      Convertible Debenture, dated January 6, 1999, issued to Leonard Smith

         THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED  UNDER THE
         SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE  STATE LAW AND MAY NOT
         BE OFFERED,  SOLD, OR OTHERWISE  TRANSFERRED,  PLEDGED, OR HYPOTHECATED
         UNLESS  AND  UNTIL  REGISTERED  UNDER  THE ACT OR STATE  LAW OR, IN THE
         OPINION OF COUNSEL IN FORM AND SUBSTANCE  SATISFACTORY TO THE ISSUER OF
         THE SECURITIES, SUCH OFFER, SALE, OR TRANSFER, PLEDGE, OR HYPOTHECATION
         IS IN COMPLIANCE THEREWITH.


                              CONVERTIBLE DEBENTURE

                              (Due January 6, 2002)

January 6, 1999                                                   $1,290,000.00
(the "Issuance Date")

         The undersigned, ZEVEX INTERNATIONAL, INC., a Delaware corporation (the
"Company"),  for value received,  hereby promises to pay to the order of Leonard
C. Smith (the  "Holder") the principal  amount of One Million Two Hundred Ninety
Thousand Dollars ($1,290,000.00) together with interest on such principal amount
and any other amounts due under this Debenture.

         This Debenture  (the  "Debenture")  is issued  pursuant to that certain
Stock  Purchase  Agreement,  dated  December 31, 1998,  entered into between the
Company and the Holder of this  Debenture (the  "Agreement").  This Debenture is
also subject to the following additional terms and conditions:


<PAGE>





1. Interest.  Commencing on the date of this Debenture and continuing  until all
principal  and  interest  due  under  this  Debenture  are  paid  in  full,  the
outstanding  principal balance of this Debenture shall bear interest at the rate
of eight  percent (8%) per annum,  compounded  annually.  Interest  shall accrue
daily and be calculated on the basis of a three hundred sixty (360) day year and
the actual number of days elapsed in any partial calendar month.

2. Payment.  Accrued interest shall be due and payable beginning April, 1, 1999,
and on each July 1,  October  1,  January 1, and April 1  thereafter  until this
Debenture  is paid in full.  The unpaid  principal  balance  of this  Debenture,
together with any and all accrued but unpaid interest,  shall be due and payable
in full three (3) years from the Issuance  Date.  All payments of principal  and
interest  shall be made in lawful  money of the United  States of America at the
address of the holder set forth in Section  8.1 below.  Unless the Holder  shall
elect  otherwise,  each payment made under this Debenture shall be applied first
to interest due under this  Debenture and any balance shall be applied to reduce
the principal balance of this Debenture.

3.       Right of Conversion

         3.1 Conversion  Into Company  Securities.  At any time after a date one
(1) year from the Issuance  Date until a date three (3) years after the Issuance
Date, and from time to time during such period,  the Holder may elect to convert
all or a portion  of the unpaid  principal  amount  and all  accrued  but unpaid
interest of this Debenture into fully paid and  nonassessable  shares of Company
Common Stock, $0.001 par value (the "Conversion Shares") at the conversion price
of eleven dollars ($11.00) per share (the "Conversion Price"); provided that any
partial  conversion of less than the entire remaining  principal balance of this
Debenture  may not be less than  $25,000 in  principal  and  accrued  and unpaid
interest.

         3.2  Mechanics of  Conversion.  Upon the  Holder's  election to convert
pursuant  to Section  3.1 above,  the Holder  shall send  written  notice of its
election to the Company and shall surrender this Debenture to the Company at its
principal office. The written election shall specify the amount of principal and
accrued and unpaid interest that is to be converted.  Each  conversion  shall be
deemed to have been  effected  as of the  close of the  business  on the date on
which the notice is  delivered  to the  Company  and the  outstanding  principal
balance and accrued and unpaid interest shall be reduced by the amount converted
as set forth in the notice.  Within a reasonable  time  thereafter,  the Company
shall  cancel the  designated  portion of the  unpaid  principal  amount of this
Debenture  converted by the Holder and issue a certificate or certificates  (the
"Conversion  Certificates"),  registered  in the  name of such  Holder,  for the
number of full shares of the Conversion Shares issuable at the Conversion Price,
bearing  such  restrictive  legends  as may be  required  by  federal  and state
securities laws. In the event of a Partial Conversion,  the Company shall return
with the Conversion  Certificates  this Debenture,  bearing a proper notation of
the  principal  amount  that  remains  due and payable  after  Holder's  partial
conversion,  but otherwise unaltered.  Conversion Certificates will be delivered
promptly to the Holder after  issuance by the Company;  provided,  however,  the
Company may, in its discretion,  hold in its possession Conversion  Certificates
for that  number  of  Conversion  Shares  which are  subject  to  forfeiture  as
described in Section 7 below. Each Conversion Certificate shall bear a legend to
the extent it is subject to forfeiture.

         3.3 Effects of  Conversion.  Upon  conversion  of the entire  amount of
principal and unpaid interest of this Debenture, the rights of the Holder of the
Debenture as such shall cease.  The person or persons in whose name or names the
Conversion  Certificates are issued shall be deemed to have become the holder or
holders of record of the Conversion Shares represented thereby.

         3.4 No Fractional  Shares. No fractional share of the Conversion Shares
will be issued in  connection  with any  conversion  hereunder.  Instead  of any
fractional  share the  Company  shall pay a cash  adjustment  in respect of such
fractional interest as determined by reference to the Conversion Price.

         3.5 No Rights as  Stockholders.  Prior to the  conversion of all or any
portion of this  Debenture,  the Holder  shall not be entitled to any right as a
stockholder,  including  without  limitation  the  right  to vote or to  receive
dividends or other distribution, and shall not be entitled to receive any notice
of any proceeding of the Company, except as provided herein.

         3.6  Taxes on  Conversion.  Any taxes  required  upon the  issuance  of
Conversion  Certificates  on conversion of this  Debenture  shall be paid by the
Holder.


         3.7  Adjustments.  In the  event  of any  Company  stock  split,  stock
combination,  merger,  consolidation  or  recapitalization  affecting the Common
Stock of the Company prior to repayment or conversion under this Debenture,  the
Company shall make  appropriate,  proportionate  adjustments  to the  Conversion
Shares issued to Holder under Holder's conversion right.

         3.8  Notices  of Record  Date.  In the  event of (i) any  taking by the
Company of a record of the holders of securities  for the purpose of determining
the  holders  thereof  who  are  entitled  to  receive  any  dividend  or  other
distribution or (ii) any  reclassification  or  recapitalization  of the capital
stock of the  Company,  any  merger  or  consolidation  of the  Company,  or any
transfer of all or  substantially  all of the assets of the Company to any other
corporation,  entity,  or person,  or any voluntary or involuntary  dissolution,
liquidation,  or a winding-up of the Company, which occurs during the conversion
period, the Company shall mail to the Holder of the Debenture,  at least fifteen
(15) days prior to the record date specified  therein,  a notice  specifying (A)
the date on which  any  such  record  is to be  taken  for the  purpose  of such
dividend or distribution and a description of such dividend or distribution, (B)
the  date  on  which  any  such  reorganization,   reclassification,   transfer,
consolidation,  merger,  dissolution,  liquidation, or winding-up is expected to
become effective,  and (C) the time, if any is to be set, as to when the holders
of record of such  security  shall be  entitled  to  exchange  their  shares for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  transfer, consolidation, merger, dissolution, liquidation, or
winding-up.

4.       Events of Default; Acceleration

         4.1  Events,  Remedy.  If any of the  following  conditions  or  events
("Events of Default") shall occur:

                  (a)  if the  Company  shall  default  in  the  payment  of the
principal or interest on the Debenture when due and such default continues for a
period of 30 days after written notice thereof to the Company from Holder; or

                  (b) if the  Company  shall  default in the  performance  of or
compliance with any term or covenant contained in this Debenture, the Agreement,
or the Pledge  Agreement and such default shall not have been remedied within 30
days after written notice thereof shall have been given to the Company by Holder
(provided,  however,  if such default is not cured within such 30-day period and
the  Company  is  diligently  pursuing  such  cure,  the  Company  shall have an
additional  period of time not to exceed  ninety (90) days in which to cure such
default); or

                  (c) if the Company shall make an assignment for the benefit of
creditors,  or shall  admit in writing  its  inability  to pay its debts as they
become  due,  or shall file a  voluntary  petition  in  bankruptcy,  or shall be
adjudicated  a  bankrupt  or  insolvent,  or shall file any  petition  or answer
seeking for itself any reorganization,  arrangement, composition,  readjustment,
liquidation, dissolution, or similar relief under any present or future statute,
law or  regulation,  or shall file any answer  admitting or not  contesting  the
material  allegations  of a  petition  filed  against  the  Company  in any such
proceeding,  or shall seek or consent to or acquiesce in the  appointment of any
trustee, receiver or liquidator of the Company or of all or any substantial part
of the properties of the Company, or if the Company or its directors or majority
stockholders  shall take any action looking to the dissolution or liquidation of
the Company; or

                  (d) if, within 60 days after the service of process on Company
following   commencement   of  an  action   against  the  Company   seeking  any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute,  law or regulation,  such
action  shall  not have  been  dismissed  or if,  alternatively,  all  orders or
proceedings  thereunder  affecting the operations or the business of the Company
stayed,  or if the stay of any such order or proceeding  shall thereafter be set
aside,  or if,  within 60 days  after the  appointment  without  the  consent or
acquiescence  of the  Company of any  trustee,  receiver  or  liquidator  of the
Company or of all or any substantial part of the properties of the Company, such
appointment shall not have been vacated;

then and in any such event  Holder may at any time  (unless all  defaults  shall
theretofore have been remedied) at his option, by written notice to the Company,
declare the entire principal and interest of the Debenture then remaining unpaid
to be due and payable immediately. Notwithstanding the foregoing, this Debenture
shall not be in default to the extent that the Company has  exercised its rights
of recoupment under Section 8(f) of the Agreement.

         4.2 Other  Remedies on Default,  Etc. In case any one or more Events of
Default shall occur, be continuing, and not have been waived, Holder may proceed
to protect and  enforce  the rights of such Holder by an action at law,  suit in
equity, or other appropriate proceeding, whether for the specific performance of
any  agreement  contained  herein  or  under  terms of the  Agreement  or for an
injunction against a violation of any of the terms hereof or thereof,  or in aid
of the exercise of any power  granted  hereby or thereby or by law. In case of a
default in the payment of  principal or interest on the  Debenture,  the Company
will pay to the Holder  thereof such further  amount as shall be  sufficient  to
cover the costs and  expenses  of  collection,  including,  without  limitation,
reasonable attorneys' fees. No course of dealing and no delay on the part of any
Holder in exercising  any right shall  operate as a waiver  thereof or otherwise
prejudice such Holder's  rights.  No right conferred  hereby or by the Agreement
upon any Holder  shall be  exclusive  of any other  right  referred to herein or
therein  or now or  hereafter  available  at  law,  in  equity,  by  statute  or
otherwise.

5.       Prepayment

         This  Debenture  may be prepaid  (including a deemed  prepayment  under
Section 8(f) of the Purchase  Agreement)  without  penalty upon thirty (30) days
prior written  notice by the Company to Holder.  Except in the event of a deemed
prepayment in  accordance  with Section 8(f) of the Purchase  Agreement,  Holder
shall have the right  within  such  thirty day period to convert  all or part of
this Debenture at Holder's election pursuant to Section 3 above.

6.       Security for Debenture

         This  Debenture  is secured by a Stock  Pledge  Agreement  of even date
herewith by and between the Company and Holder.

7.       Forfeiture of Debenture/Conversion Shares

         Holder  acknowledges  and agrees that this Debenture and any Conversion
Shares issued upon  conversion of this  Debenture are subject to the  forfeiture
provisions of Section  10.1(iii) of that certain  Employment  Agreement  between
Holder and JTech Medical  Industries,  Inc., dated as of the date hereof. In the
event of a forfeiture  of this  Debenture in  accordance  with the terms of such
Section 10.1(iii), Holder shall promptly surrender this Debenture to the Company
at its principal  office.  The Company  shall  promptly  thereafter  return this
Debenture  to Holder,  bearing a proper  notation of the  principal  amount that
remains due and payable after such forfeiture,  but otherwise unaltered.  In the
event of a  forfeiture  of  Conversion  Shares in  accordance  with the terms of
Section 10.1(iii) of the Employment Agreement, the Company shall promptly cancel
the Conversion  Certificates  applicable to the forfeited  Conversion Shares and
issue and deliver to Holder new certificates for any Conversion Shares that were
not forfeited by Holder.

8.       Miscellaneous Provisions

         8.1 Notices.  Any notice herein required or payment required  hereunder
shall  be made or  given to the  address  of the  parties  as  specified  in the
Agreement.

         8.2  Amendments  or Waivers.  Any  provision of this  Debenture  may be
amended,  waived, or modified,  but only upon the written consent of the Company
and the Holder.

         8.3  Governing  Law.  This  Debenture has been executed in and shall be
governed by the laws of the State of Utah  excluding that body of law pertaining
to conflicts of law.

         8.4 Miscellaneous.  The unenforceability or invalidity of any provision
of this Debenture shall not affect the  enforceability  or validity of any other
provision  of this  Debenture.  The  terms  of this  Debenture  shall  bind  the
undersigned  and inure to the  benefit  of Holder  and their  respective  heirs,
successors,  assigns and legal  representatives.  The Holder may, in  accordance
with the terms of the Agreement,  assign all or part of Holder's  interest under
this Debenture upon prior written notice to the Company.

         IN WITNESS WHEREOF,  the Company has caused this Debenture to be issued
this 6th day of January, 1999.


                                                      ZEVEX INTERNATIONAL, INC.



                                                           Phillip L. McStotts,
                                                        Chief Financial Officer


<PAGE>


                                  Exhibit 10.17
    Convertible Debenture, dated January 6, 1999, issued to Tracy Livingston

  UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE  STATE LAW AND MAY
        NOT  BE  OFFERED,   SOLD,  OR  OTHERWISE   TRANSFERRED,   PLEDGED,   OR
        HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR STATE LAW OR,
        IN THE  OPINION OF COUNSEL IN FORM AND  SUBSTANCE  SATISFACTORY  TO THE
        ISSUER OF THE SECURITIES,  SUCH OFFER,  SALE, OR TRANSFER,  PLEDGE,  OR
        HYPOTHECATION IS IN COMPLIANCE THEREWITH.


                              CONVERTIBLE DEBENTURE

                              (Due January 6, 2002)

January 6, 1999                                                   $1,290,000.00
(the "Issuance Date")

         The undersigned, ZEVEX INTERNATIONAL, INC., a Delaware corporation (the
"Company"),  for value received, hereby promises to pay to the order of J. Tracy
Livingston (the "Holder") the principal amount of One Million Two Hundred Ninety
Thousand Dollars ($1,290,000.00) together with interest on such principal amount
and any other amounts due under this Debenture.

         This Debenture  (the  "Debenture")  is issued  pursuant to that certain
Stock  Purchase  Agreement,  dated  December 31, 1998,  entered into between the
Company and the Holder of this  Debenture (the  "Agreement").  This Debenture is
also subject to the following additional terms and conditions:


<PAGE>


92


1. Interest.  Commencing on the date of this Debenture and continuing  until all
principal  and  interest  due  under  this  Debenture  are  paid  in  full,  the
outstanding  principal balance of this Debenture shall bear interest at the rate
of eight  percent (8%) per annum,  compounded  annually.  Interest  shall accrue
daily and be calculated on the basis of a three hundred sixty (360) day year and
the actual number of days elapsed in any partial calendar month.

2. Payment.  Accrued interest shall be due and payable beginning April, 1, 1999,
and on each July 1,  October  1,  January 1, and April 1  thereafter  until this
Debenture  is paid in full.  The unpaid  principal  balance  of this  Debenture,
together with any and all accrued but unpaid interest,  shall be due and payable
in full three (3) years from the Issuance  Date.  All payments of principal  and
interest  shall be made in lawful  money of the United  States of America at the
address of the holder set forth in Section  8.1 below.  Unless the Holder  shall
elect  otherwise,  each payment made under this Debenture shall be applied first
to interest due under this  Debenture and any balance shall be applied to reduce
the principal balance of this Debenture.

3.       Right of Conversion

         3.1 Conversion  Into Company  Securities.  At any time after a date one
(1) year from the Issuance  Date until a date three (3) years after the Issuance
Date, and from time to time during such period,  the Holder may elect to convert
all or a portion  of the unpaid  principal  amount  and all  accrued  but unpaid
interest of this Debenture into fully paid and  nonassessable  shares of Company
Common Stock, $0.001 par value (the "Conversion Shares") at the conversion price
of eleven dollars ($11.00) per share (the "Conversion Price"); provided that any
partial  conversion of less than the entire remaining  principal balance of this
Debenture  may not be less than  $25,000 in  principal  and  accrued  and unpaid
interest.

         3.2  Mechanics of  Conversion.  Upon the  Holder's  election to convert
pursuant  to Section  3.1 above,  the Holder  shall send  written  notice of its
election to the Company and shall surrender this Debenture to the Company at its
principal office. The written election shall specify the amount of principal and
accrued and unpaid interest that is to be converted.  Each  conversion  shall be
deemed to have been  effected  as of the  close of the  business  on the date on
which the notice is  delivered  to the  Company  and the  outstanding  principal
balance and accrued and unpaid interest shall be reduced by the amount converted
as set forth in the notice.  Within a reasonable  time  thereafter,  the Company
shall  cancel the  designated  portion of the  unpaid  principal  amount of this
Debenture  converted by the Holder and issue a certificate or certificates  (the
"Conversion  Certificates"),  registered  in the  name of such  Holder,  for the
number of full shares of the Conversion Shares issuable at the Conversion Price,
bearing  such  restrictive  legends  as may be  required  by  federal  and state
securities laws. In the event of a Partial Conversion,  the Company shall return
with the Conversion  Certificates  this Debenture,  bearing a proper notation of
the  principal  amount  that  remains  due and payable  after  Holder's  partial
conversion,  but otherwise unaltered.  Conversion Certificates will be delivered
promptly to the Holder after  issuance by the Company;  provided,  however,  the
Company may, in its discretion,  hold in its possession Conversion  Certificates
for that  number  of  Conversion  Shares  which are  subject  to  forfeiture  as
described in Section 7 below. Each Conversion Certificate shall bear a legend to
the extent it is subject to forfeiture.

         3.3 Effects of  Conversion.  Upon  conversion  of the entire  amount of
principal and unpaid interest of this Debenture, the rights of the Holder of the
Debenture as such shall cease.  The person or persons in whose name or names the
Conversion  Certificates are issued shall be deemed to have become the holder or
holders of record of the Conversion Shares represented thereby.

         3.4 No Fractional  Shares. No fractional share of the Conversion Shares
will be issued in  connection  with any  conversion  hereunder.  Instead  of any
fractional  share the  Company  shall pay a cash  adjustment  in respect of such
fractional interest as determined by reference to the Conversion Price.

         3.5 No Rights as  Stockholders.  Prior to the  conversion of all or any
portion of this  Debenture,  the Holder  shall not be entitled to any right as a
stockholder,  including  without  limitation  the  right  to vote or to  receive
dividends or other distribution, and shall not be entitled to receive any notice
of any proceeding of the Company, except as provided herein.

         3.6  Taxes on  Conversion.  Any taxes  required  upon the  issuance  of
Conversion  Certificates  on conversion of this  Debenture  shall be paid by the
Holder.


         3.7  Adjustments.  In the  event  of any  Company  stock  split,  stock
combination,  merger,  consolidation  or  recapitalization  affecting the Common
Stock of the Company prior to repayment or conversion under this Debenture,  the
Company shall make  appropriate,  proportionate  adjustments  to the  Conversion
Shares issued to Holder under Holder's conversion right.

         3.8  Notices  of Record  Date.  In the  event of (i) any  taking by the
Company of a record of the holders of securities  for the purpose of determining
the  holders  thereof  who  are  entitled  to  receive  any  dividend  or  other
distribution or (ii) any  reclassification  or  recapitalization  of the capital
stock of the  Company,  any  merger  or  consolidation  of the  Company,  or any
transfer of all or  substantially  all of the assets of the Company to any other
corporation,  entity,  or person,  or any voluntary or involuntary  dissolution,
liquidation,  or a winding-up of the Company, which occurs during the conversion
period, the Company shall mail to the Holder of the Debenture,  at least fifteen
(15) days prior to the record date specified  therein,  a notice  specifying (A)
the date on which  any  such  record  is to be  taken  for the  purpose  of such
dividend or distribution and a description of such dividend or distribution, (B)
the  date  on  which  any  such  reorganization,   reclassification,   transfer,
consolidation,  merger,  dissolution,  liquidation, or winding-up is expected to
become effective,  and (C) the time, if any is to be set, as to when the holders
of record of such  security  shall be  entitled  to  exchange  their  shares for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  transfer, consolidation, merger, dissolution, liquidation, or
winding-up.

4.       Events of Default; Acceleration

         4.1  Events,  Remedy.  If any of the  following  conditions  or  events
("Events of Default") shall occur:

                  (a)  if the  Company  shall  default  in  the  payment  of the
principal or interest on the Debenture when due and such default continues for a
period of 30 days after written notice thereof to the Company from Holder; or

                  (b) if the  Company  shall  default in the  performance  of or
compliance with any term or covenant contained in this Debenture, the Agreement,
or the Pledge  Agreement and such default shall not have been remedied within 30
days after written notice thereof shall have been given to the Company by Holder
(provided,  however,  if such default is not cured within such 30-day period and
the  Company  is  diligently  pursuing  such  cure,  the  Company  shall have an
additional  period of time not to exceed  ninety (90) days in which to cure such
default); or

                  (c) if the Company shall make an assignment for the benefit of
creditors,  or shall  admit in writing  its  inability  to pay its debts as they
become  due,  or shall file a  voluntary  petition  in  bankruptcy,  or shall be
adjudicated  a  bankrupt  or  insolvent,  or shall file any  petition  or answer
seeking for itself any reorganization,  arrangement, composition,  readjustment,
liquidation, dissolution, or similar relief under any present or future statute,
law or  regulation,  or shall file any answer  admitting or not  contesting  the
material  allegations  of a  petition  filed  against  the  Company  in any such
proceeding,  or shall seek or consent to or acquiesce in the  appointment of any
trustee, receiver or liquidator of the Company or of all or any substantial part
of the properties of the Company, or if the Company or its directors or majority
stockholders  shall take any action looking to the dissolution or liquidation of
the Company; or

                  (d) if, within 60 days after the service of process on Company
following   commencement   of  an  action   against  the  Company   seeking  any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute,  law or regulation,  such
action  shall  not have  been  dismissed  or if,  alternatively,  all  orders or
proceedings  thereunder  affecting the operations or the business of the Company
stayed,  or if the stay of any such order or proceeding  shall thereafter be set
aside,  or if,  within 60 days  after the  appointment  without  the  consent or
acquiescence  of the  Company of any  trustee,  receiver  or  liquidator  of the
Company or of all or any substantial part of the properties of the Company, such
appointment shall not have been vacated;

then and in any such event  Holder may at any time  (unless all  defaults  shall
theretofore have been remedied) at his option, by written notice to the Company,
declare the entire principal and interest of the Debenture then remaining unpaid
to be due and payable immediately. Notwithstanding the foregoing, this Debenture
shall not be in default to the extent that the Company has  exercised its rights
of recoupment under Section 8(f) of the Agreement.

         4.2 Other  Remedies on Default,  Etc. In case any one or more Events of
Default shall occur, be continuing, and not have been waived, Holder may proceed
to protect and  enforce  the rights of such Holder by an action at law,  suit in
equity, or other appropriate proceeding, whether for the specific performance of
any  agreement  contained  herein  or  under  terms of the  Agreement  or for an
injunction against a violation of any of the terms hereof or thereof,  or in aid
of the exercise of any power  granted  hereby or thereby or by law. In case of a
default in the payment of  principal or interest on the  Debenture,  the Company
will pay to the Holder  thereof such further  amount as shall be  sufficient  to
cover the costs and  expenses  of  collection,  including,  without  limitation,
reasonable attorneys' fees. No course of dealing and no delay on the part of any
Holder in exercising  any right shall  operate as a waiver  thereof or otherwise
prejudice such Holder's  rights.  No right conferred  hereby or by the Agreement
upon any Holder  shall be  exclusive  of any other  right  referred to herein or
therein  or now or  hereafter  available  at  law,  in  equity,  by  statute  or
otherwise.

5.       Prepayment

         This  Debenture  may be prepaid  (including a deemed  prepayment  under
Section 8(f) of the Purchase  Agreement)  without  penalty upon thirty (30) days
prior written  notice by the Company to Holder.  Except in the event of a deemed
prepayment in  accordance  with Section 8(f) of the Purchase  Agreement,  Holder
shall have the right  within  such  thirty day period to convert  all or part of
this Debenture at Holder's election pursuant to Section 3 above.

6.       Security for Debenture

         This  Debenture  is secured by a Stock  Pledge  Agreement  of even date
herewith by and between the Company and Holder.

7.       Forfeiture of Debenture/Conversion Shares

         Holder  acknowledges  and agrees that this Debenture and any Conversion
Shares issued upon  conversion of this  Debenture are subject to the  forfeiture
provisions of Section  10.1(iii) of that certain  Employment  Agreement  between
Holder and JTech Medical  Industries,  Inc., dated as of the date hereof. In the
event of a forfeiture  of this  Debenture in  accordance  with the terms of such
Section 10.1(iii), Holder shall promptly surrender this Debenture to the Company
at its principal  office.  The Company  shall  promptly  thereafter  return this
Debenture  to Holder,  bearing a proper  notation of the  principal  amount that
remains due and payable after such forfeiture,  but otherwise unaltered.  In the
event of a  forfeiture  of  Conversion  Shares in  accordance  with the terms of
Section 10.1(iii) of the Employment Agreement, the Company shall promptly cancel
the Conversion  Certificates  applicable to the forfeited  Conversion Shares and
issue and deliver to Holder new certificates for any Conversion Shares that were
not forfeited by Holder.

8.       Miscellaneous Provisions

         8.1 Notices.  Any notice herein required or payment required  hereunder
shall  be made or  given to the  address  of the  parties  as  specified  in the
Agreement.

         8.2  Amendments  or Waivers.  Any  provision of this  Debenture  may be
amended,  waived, or modified,  but only upon the written consent of the Company
and the Holder.

         8.3  Governing  Law.  This  Debenture has been executed in and shall be
governed by the laws of the State of Utah  excluding that body of law pertaining
to conflicts of law.

         8.4 Miscellaneous.  The unenforceability or invalidity of any provision
of this Debenture shall not affect the  enforceability  or validity of any other
provision  of this  Debenture.  The  terms  of this  Debenture  shall  bind  the
undersigned  and inure to the  benefit  of Holder  and their  respective  heirs,
successors,  assigns and legal  representatives.  The Holder may, in  accordance
with the terms of the Agreement,  assign all or part of Holder's  interest under
this Debenture upon prior written notice to the Company.

         IN WITNESS WHEREOF,  the Company has caused this Debenture to be issued
this 6th day of January, 1999.


                                                      ZEVEX INTERNATIONAL, INC.



                                                           Phillip L. McStotts,
                                                        Chief Financial Officer

<PAGE>


                                  Exhibit 10.18
     Convertible Debenture, dated January 6, 1999, issued to David Bernardi

    THE SECURITIES  REPRESENTED  HEREBY  HAVE NOT  BEEN  REGISTERED  UNDER  THE
         SECURITIES ACT OF 1933 (THE "ACT") OR APPLICABLE  STATE LAW AND MAY NOT
         BE OFFERED,  SOLD, OR OTHERWISE  TRANSFERRED,  PLEDGED, OR HYPOTHECATED
         UNLESS  AND  UNTIL  REGISTERED  UNDER  THE ACT OR STATE  LAW OR, IN THE
         OPINION OF COUNSEL IN FORM AND SUBSTANCE  SATISFACTORY TO THE ISSUER OF
         THE SECURITIES, SUCH OFFER, SALE, OR TRANSFER, PLEDGE, OR HYPOTHECATION
         IS IN COMPLIANCE THEREWITH.


                              CONVERTIBLE DEBENTURE

                              (Due January 6, 2002)

January 6, 1999                                                     $420,000.00
(the "Issuance Date")

         The undersigned, ZEVEX INTERNATIONAL, INC., a Delaware corporation (the
"Company"),  for value received, hereby promises to pay to the order of David W.
Bernardi (the  "Holder") the principal  amount of Four Hundred  Twenty  Thousand
Dollars  ($420,000.00)  together with interest on such principal  amount and any
other amounts due under this Debenture.

         This Debenture  (the  "Debenture")  is issued  pursuant to that certain
Stock  Purchase  Agreement,  dated  December 31, 1998,  entered into between the
Company and the Holder of this  Debenture (the  "Agreement").  This Debenture is
also subject to the following additional terms and conditions:


<PAGE>


109


1. Interest.  Commencing on the date of this Debenture and continuing  until all
principal  and  interest  due  under  this  Debenture  are  paid  in  full,  the
outstanding  principal balance of this Debenture shall bear interest at the rate
of eight  percent (8%) per annum,  compounded  annually.  Interest  shall accrue
daily and be calculated on the basis of a three hundred sixty (360) day year and
the actual number of days elapsed in any partial calendar month.

2. Payment.  Accrued interest shall be due and payable beginning April, 1, 1999,
and on each July 1,  October  1,  January 1, and April 1  thereafter  until this
Debenture  is paid in full.  The unpaid  principal  balance  of this  Debenture,
together with any and all accrued but unpaid interest,  shall be due and payable
in full three (3) years from the Issuance  Date.  All payments of principal  and
interest  shall be made in lawful  money of the United  States of America at the
address of the holder set forth in Section  8.1 below.  Unless the Holder  shall
elect  otherwise,  each payment made under this Debenture shall be applied first
to interest due under this  Debenture and any balance shall be applied to reduce
the principal balance of this Debenture.

3.       Right of Conversion

         3.1 Conversion  Into Company  Securities.  At any time after a date one
(1) year from the Issuance  Date until a date three (3) years after the Issuance
Date, and from time to time during such period,  the Holder may elect to convert
all or a portion  of the unpaid  principal  amount  and all  accrued  but unpaid
interest of this Debenture into fully paid and  nonassessable  shares of Company
Common Stock, $0.001 par value (the "Conversion Shares") at the conversion price
of eleven dollars ($11.00) per share (the "Conversion Price"); provided that any
partial  conversion of less than the entire remaining  principal balance of this
Debenture  may not be less than  $25,000 in  principal  and  accrued  and unpaid
interest.

         3.2  Mechanics of  Conversion.  Upon the  Holder's  election to convert
pursuant  to Section  3.1 above,  the Holder  shall send  written  notice of its
election to the Company and shall surrender this Debenture to the Company at its
principal office. The written election shall specify the amount of principal and
accrued and unpaid interest that is to be converted.  Each  conversion  shall be
deemed to have been  effected  as of the  close of the  business  on the date on
which the notice is  delivered  to the  Company  and the  outstanding  principal
balance and accrued and unpaid interest shall be reduced by the amount converted
as set forth in the notice.  Within a reasonable  time  thereafter,  the Company
shall  cancel the  designated  portion of the  unpaid  principal  amount of this
Debenture  converted by the Holder and issue a certificate or certificates  (the
"Conversion  Certificates"),  registered  in the  name of such  Holder,  for the
number of full shares of the Conversion Shares issuable at the Conversion Price,
bearing  such  restrictive  legends  as may be  required  by  federal  and state
securities laws. In the event of a Partial Conversion,  the Company shall return
with the Conversion  Certificates  this Debenture,  bearing a proper notation of
the  principal  amount  that  remains  due and payable  after  Holder's  partial
conversion,  but otherwise unaltered.  Conversion Certificates will be delivered
promptly to the Holder after  issuance by the Company;  provided,  however,  the
Company may, in its discretion,  hold in its possession Conversion  Certificates
for that  number  of  Conversion  Shares  which are  subject  to  forfeiture  as
described in Section 7 below. Each Conversion Certificate shall bear a legend to
the extent it is subject to forfeiture.

         3.3 Effects of  Conversion.  Upon  conversion  of the entire  amount of
principal and unpaid interest of this Debenture, the rights of the Holder of the
Debenture as such shall cease.  The person or persons in whose name or names the
Conversion  Certificates are issued shall be deemed to have become the holder or
holders of record of the Conversion Shares represented thereby.

         3.4 No Fractional  Shares. No fractional share of the Conversion Shares
will be issued in  connection  with any  conversion  hereunder.  Instead  of any
fractional  share the  Company  shall pay a cash  adjustment  in respect of such
fractional interest as determined by reference to the Conversion Price.

         3.5 No Rights as  Stockholders.  Prior to the  conversion of all or any
portion of this  Debenture,  the Holder  shall not be entitled to any right as a
stockholder,  including  without  limitation  the  right  to vote or to  receive
dividends or other distribution, and shall not be entitled to receive any notice
of any proceeding of the Company, except as provided herein.

         3.6  Taxes on  Conversion.  Any taxes  required  upon the  issuance  of
Conversion  Certificates  on conversion of this  Debenture  shall be paid by the
Holder.

         3.7  Adjustments.  In the  event  of any  Company  stock  split,  stock
combination,  merger,  consolidation  or  recapitalization  affecting the Common
Stock of the Company prior to repayment or conversion under this Debenture,  the
Company shall make  appropriate,  proportionate  adjustments  to the  Conversion
Shares issued to Holder under Holder's conversion right.

         3.8  Notices  of Record  Date.  In the  event of (i) any  taking by the
Company of a record of the holders of securities  for the purpose of determining
the  holders  thereof  who  are  entitled  to  receive  any  dividend  or  other
distribution or (ii) any  reclassification  or  recapitalization  of the capital
stock of the  Company,  any  merger  or  consolidation  of the  Company,  or any
transfer of all or  substantially  all of the assets of the Company to any other
corporation,  entity,  or person,  or any voluntary or involuntary  dissolution,
liquidation,  or a winding-up of the Company, which occurs during the conversion
period, the Company shall mail to the Holder of the Debenture,  at least fifteen
(15) days prior to the record date specified  therein,  a notice  specifying (A)
the date on which  any  such  record  is to be  taken  for the  purpose  of such
dividend or distribution and a description of such dividend or distribution, (B)
the  date  on  which  any  such  reorganization,   reclassification,   transfer,
consolidation,  merger,  dissolution,  liquidation, or winding-up is expected to
become effective,  and (C) the time, if any is to be set, as to when the holders
of record of such  security  shall be  entitled  to  exchange  their  shares for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  transfer, consolidation, merger, dissolution, liquidation, or
winding-up.

4.       Events of Default; Acceleration

         4.1  Events,  Remedy.  If any of the  following  conditions  or  events
("Events of Default") shall occur:

                  (a)  if the  Company  shall  default  in  the  payment  of the
principal or interest on the Debenture when due and such default continues for a
period of 30 days after written notice thereof to the Company from Holder; or

                  (b) if the  Company  shall  default in the  performance  of or
compliance with any term or covenant contained in this Debenture, the Agreement,
or the Pledge  Agreement and such default shall not have been remedied within 30
days after written notice thereof shall have been given to the Company by Holder
(provided,  however,  if such default is not cured within such 30-day period and
the  Company  is  diligently  pursuing  such  cure,  the  Company  shall have an
additional  period of time not to exceed  ninety (90) days in which to cure such
default); or

                  (c) if the Company shall make an assignment for the benefit of
creditors,  or shall  admit in writing  its  inability  to pay its debts as they
become  due,  or shall file a  voluntary  petition  in  bankruptcy,  or shall be
adjudicated  a  bankrupt  or  insolvent,  or shall file any  petition  or answer
seeking for itself any reorganization,  arrangement, composition,  readjustment,
liquidation, dissolution, or similar relief under any present or future statute,
law or  regulation,  or shall file any answer  admitting or not  contesting  the
material  allegations  of a  petition  filed  against  the  Company  in any such
proceeding,  or shall seek or consent to or acquiesce in the  appointment of any
trustee, receiver or liquidator of the Company or of all or any substantial part
of the properties of the Company, or if the Company or its directors or majority
stockholders  shall take any action looking to the dissolution or liquidation of
the Company; or

                  (d) if, within 60 days after the service of process on Company
following   commencement   of  an  action   against  the  Company   seeking  any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute,  law or regulation,  such
action  shall  not have  been  dismissed  or if,  alternatively,  all  orders or
proceedings  thereunder  affecting the operations or the business of the Company
stayed,  or if the stay of any such order or proceeding  shall thereafter be set
aside,  or if,  within 60 days  after the  appointment  without  the  consent or
acquiescence  of the  Company of any  trustee,  receiver  or  liquidator  of the
Company or of all or any substantial part of the properties of the Company, such
appointment shall not have been vacated;

then and in any such event  Holder may at any time  (unless all  defaults  shall
theretofore have been remedied) at his option, by written notice to the Company,
declare the entire principal and interest of the Debenture then remaining unpaid
to be due and payable immediately. Notwithstanding the foregoing, this Debenture
shall not be in default to the extent that the Company has  exercised its rights
of recoupment under Section 8(f) of the Agreement.

         4.2 Other  Remedies on Default,  Etc. In case any one or more Events of
Default shall occur, be continuing, and not have been waived, Holder may proceed
to protect and  enforce  the rights of such Holder by an action at law,  suit in
equity, or other appropriate proceeding, whether for the specific performance of
any  agreement  contained  herein  or  under  terms of the  Agreement  or for an
injunction against a violation of any of the terms hereof or thereof,  or in aid
of the exercise of any power  granted  hereby or thereby or by law. In case of a
default in the payment of  principal or interest on the  Debenture,  the Company
will pay to the Holder  thereof such further  amount as shall be  sufficient  to
cover the costs and  expenses  of  collection,  including,  without  limitation,
reasonable attorneys' fees. No course of dealing and no delay on the part of any
Holder in exercising  any right shall  operate as a waiver  thereof or otherwise
prejudice such Holder's  rights.  No right conferred  hereby or by the Agreement
upon any Holder  shall be  exclusive  of any other  right  referred to herein or
therein  or now or  hereafter  available  at  law,  in  equity,  by  statute  or
otherwise.

5.       Prepayment

         This  Debenture  may be prepaid  (including a deemed  prepayment  under
Section 8(f) of the Purchase  Agreement)  without  penalty upon thirty (30) days
prior written  notice by the Company to Holder.  Except in the event of a deemed
prepayment in  accordance  with Section 8(f) of the Purchase  Agreement,  Holder
shall have the right  within  such  thirty day period to convert  all or part of
this Debenture at Holder's election pursuant to Section 3 above.

6.       Security for Debenture

         This  Debenture  is secured by a Stock  Pledge  Agreement  of even date
herewith by and between the Company and Holder.

7.       Forfeiture of Debenture/Conversion Shares

         Holder  acknowledges  and agrees that this Debenture and any Conversion
Shares issued upon  conversion of this  Debenture are subject to the  forfeiture
provisions of Section  10.1(iii) of that certain  Employment  Agreement  between
Holder and JTech Medical  Industries,  Inc., dated as of the date hereof. In the
event of a forfeiture  of this  Debenture in  accordance  with the terms of such
Section 10.1(iii), Holder shall promptly surrender this Debenture to the Company
at its principal  office.  The Company  shall  promptly  thereafter  return this
Debenture  to Holder,  bearing a proper  notation of the  principal  amount that
remains due and payable after such forfeiture,  but otherwise unaltered.  In the
event of a  forfeiture  of  Conversion  Shares in  accordance  with the terms of
Section 10.1(iii) of the Employment Agreement, the Company shall promptly cancel
the Conversion  Certificates  applicable to the forfeited  Conversion Shares and
issue and deliver to Holder new certificates for any Conversion Shares that were
not forfeited by Holder.

8.       Miscellaneous Provisions

         8.1 Notices.  Any notice herein required or payment required  hereunder
shall  be made or  given to the  address  of the  parties  as  specified  in the
Agreement.

         8.2  Amendments  or Waivers.  Any  provision of this  Debenture  may be
amended,  waived, or modified,  but only upon the written consent of the Company
and the Holder.

         8.3  Governing  Law.  This  Debenture has been executed in and shall be
governed by the laws of the State of Utah  excluding that body of law pertaining
to conflicts of law.

         8.4 Miscellaneous.  The unenforceability or invalidity of any provision
of this Debenture shall not affect the  enforceability  or validity of any other
provision  of this  Debenture.  The  terms  of this  Debenture  shall  bind  the
undersigned  and inure to the  benefit  of Holder  and their  respective  heirs,
successors,  assigns and legal  representatives.  The Holder may, in  accordance
with the terms of the Agreement,  assign all or part of Holder's  interest under
this Debenture upon prior written notice to the Company.

         IN WITNESS WHEREOF,  the Company has caused this Debenture to be issued
this 6th day of January, 1999.


                                                      ZEVEX INTERNATIONAL, INC.



                                                           Phillip L. McStotts,
                                                        Chief Financial Officer


<PAGE>


                                  Exhibit 10.19
               1999 Stock Option Plan and Stock Option Grant Form


                            ZEVEX INTERNATIONAL, INC.

                             1998 STOCK OPTION PLAN

                           Effective January 1, 1999



<PAGE>



                                   ARTICLE 1.
                               GENERAL PROVISIONS


         1.1.     PURPOSE OF THE PLAN

                  This 1999  Stock  Option  Plan (the  "Plan")  is  intended  to
promote the interests of ZEVEX International  Inc., a Delaware  corporation (the
"Corporation"), by providing eligible persons with the opportunity to acquire or
increase their proprietary  interest in the Corporation as an incentive for them
to remain in the Service of the Corporation.

                  Capitalized  terms  shall have the  meanings  assigned to such
terms in the attached Appendix.

         1.2.     ADMINISTRATION OF THE PLAN

                  a. The Plan  shall be  administered  by the  Board  or, to the
extent required under  applicable  Stock Exchange  requirements or if desired by
the Board, a committee of the Board. If administered by a committee, the Primary
Committee  shall have sole and exclusive  authority to administer  the Plan with
respect  to Section 16  Insiders.  The  authority  to  administer  the Plan with
respect to persons  other than  Section 16 Insiders  may be vested in either the
Primary Committee or a Secondary Committee, as determined by the Board.

                  b. Members of the Primary Committee or any Secondary Committee
shall  serve  for such  period of time as the  Board  may  determine  and may be
removed by the Board at any time.  The Board may  terminate the functions of any
Secondary Committee at any time and delegate all powers and authority previously
delegated to such committee to the Primary  Committee.  To the extent  committee
administration  is no longer  required by applicable law,  regulation,  or Stock
Exchange  requirement,  the  Board  may  also  terminate  the  functions  of any
committee at any time and reassume all powers and authority previously delegated
to such committee.

                  c.  Each Plan  Administrator  shall,  within  the scope of its
administrative  functions  under the  Plan,  have full  power and  authority  to
establish  such  rules and  regulations  as it may deem  appropriate  for proper
administration of the Plan and to make such determinations under, and issue such
interpretations  of,  the  provisions  of the Plan and any  outstanding  options
thereunder  as it may  deem  necessary  or  advisable.  Decisions  of  the  Plan
Administrator  within the scope of its  administrative  functions under the Plan
shall be final and binding on all parties who have an interest in the Plan under
its jurisdiction or any option thereunder.

                  d. Service on the Primary Committee or the Secondary Committee
shall constitute  service as a Board member,  and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee.  No member of the Primary Committee
or the Secondary  Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants under the Plan.

                  e.  Each Plan  Administrator  shall,  within  the scope of its
administrative  jurisdiction under the Plan, have full authority (subject to the
provisions  of the Plan) to  determine  which  eligible  persons  are to receive
option  grants,  the time or times when such option  grants are to be made,  the
number of shares to be covered  by each such  grant,  the status of the  granted
option as either an  Incentive  Option or a  Non-Statutory  Option,  the time or
times at which each option is to become  exercisable,  the vesting  schedule (if
any) applicable to the option shares, the acceleration of such vesting schedule,
and all other terms and conditions of the option grants.

         1.3.     ELIGIBILITY

                  The following  persons shall be eligible to participate in the
Plan:

                  a.       Employees,

                  b.       non-employee members of the Board or the board of 
                  directors of any Parent or Subsidiary, and

                  c.       consultants and other independent advisors who 
                  provide Services to the Corporation or any Parent or
                  Subsidiary.

         1.4.     STOCK SUBJECT TO THE PLAN

                  a. The  stock  issuable  under  the Plan  shall be  shares  of
authorized  but unissued  Common  Stock,  including  shares  repurchased  by the
Corporation  on the open  market.  The maximum  number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed  600,000  shares,
which  number of shares  may be  changed  from time to time in  accordance  with
Article 3.4 below.

                  b. Shares of Common Stock subject to outstanding options shall
be  available  for  subsequent  issuance  under the Plan to the  extent  (i) the
options expire or terminate for any reason prior to exercise in full or (ii) the
options are cancelled in accordance with the cancellation-regrant  provisions of
Article 2.4.  However,  should the Exercise  Price be paid with shares of Common
Stock or should  shares of Common  Stock  otherwise  issuable  under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection  with the  exercise of an option  under the Plan,  then the number of
shares of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised, and not by the net
number of shares of Common Stock issued to the holder of such option.



                  c. Should any change be made to the Common  Stock by reason of
any stock  split,  stock  dividend,  recapitalization,  combination  of  shares,
exchange of shares or other change  affecting the outstanding  Common Stock as a
class  without  the   Corporation's   receipt  of   consideration,   appropriate
adjustments  shall be made to (i) the maximum  number and/or class of securities
issuable  under the Plan,  (ii) the number and/or class of securities  for which
any one person may be granted  options per calendar  year,  and (iii) the number
and/or  class  of  securities  and the  Exercise  Price  in  effect  under  each
outstanding  option in order to prevent the dilution or  enlargement of benefits
thereunder. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.

                                                     ARTICLE 2.
                                                OPTION GRANT PROGRAM

         2.1.     OPTION TERMS

                  Each option shall be evidenced by one or more documents in the
form  approved  by the Plan  Administrator;  provided,  however,  that each such
document shall comply with the terms specified below.  Each document  evidencing
an Incentive Option shall, in addition,  be subject to the provisions of Article
2.2 of the Plan, below.

                  a.       Exercise Price

                           (1)      The Exercise Price shall be fixed by the
Plan Administrator but shall not be less than one hundred percent (100%) of the 
Fair Market  Value per share of Common Stock on the Grant Date.

                           (2)      The Exercise Price shall become immediately 
due upon exercise of the option and shall, subject to the documents evidencing 
the option, be payable in one or more of the forms specified below:

                                    (a)     cash or check made payable to the 
Corporation,

                                    (b)     an adequately collateralized 
promissory note, payable to the Corporation, but only to the extent authorized 
by the Administrator pursuant to Section 3.1 of the Plan,

                                    (c)     shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's earnings
for financial reporting purposes and valued at Fair Market Value on the 
Exercise Date, or

                                    (d)     to the extent the option is 
         exercised for vested shares, through a special sale and
         remittance  procedure pursuant to which the Optionee shall concurrently
         provide     irrevocable     written     instructions     to    (a)    a
         Corporation-designated  brokerage  firm to effect the immediate sale of
         the  Purchased  Shares  and remit to the  Corporation,  out of the sale
         proceeds  available on the settlement  date,  sufficient funds to cover
         the aggregate  Exercise Price payable for the Purchased Shares plus all
         applicable  federal,  state  and  local  income  and  employment  taxes
         required to be withheld by the  Corporation  by reason of such exercise
         and (b) the

         Corporation  to  deliver  the  certificates  for the  Purchased  Shares
         directly to such brokerage firm in order to complete the sale.

                  Except to the extent  such sale and  remittance  procedure  is
utilized, payment of the Exercise Price for the Purchased Shares must be made on
the Exercise Date.

                  b.  Exercise  and  Term  of  Options.  Each  option  shall  be
exercisable  at such time or times,  during  such  period and for such number of
shares as shall be  determined  by the Plan  Administrator  and set forth in the
documents evidencing the option.  However, no option shall have a term in excess
of ten (10) years measured from the Grant Date.

                  c.       Effect of Termination of Service

                           (1)      The following provisions shall govern the 
exercise of any options held by the Optionee at the time of cessation 
of Service:

                                    (a)     Any option outstanding at the time 
         of the Optionee's cessation of Service for any reason
         except  death,   Permanent   Disability  or  Misconduct   shall  remain
         exercisable for a three (3) month period thereafter, provided no option
         shall be exercisable after the Expiration Date.

                                    (b)     Any option outstanding at the time 
         of the Optionee's cessation of Service due to death or
         Permanent  Disability shall remain  exercisable for a twelve (12) month
         period  thereafter,  provided no option shall be exercisable  after the
         Expiration Date.  Subject to the foregoing,  any option  exercisable in
         whole or in part by the  Optionee at the time of death may be exercised
         subsequently by the personal representative of the Optionee's estate or
         by the person or persons to whom the option is transferred  pursuant to
         the  Optionee's  will or in  accordance  with the laws of  descent  and
         distribution.

                                    (c)     Should the Optionee's Service be 
         terminated for Misconduct, then all outstanding options
         held by the Optionee shall terminate immediately and cease to be 
         outstanding.

                                    (d)     The option shall, immediately upon 
         the Optionee's cessation of Service, terminate and
         cease to be  outstanding  to the extent the option is not  otherwise at
         that time  exercisable.  During the  applicable  post-Service  exercise
         period,  the option may not be exercised in the aggregate for more than
         the number of shares for which the option is exercisable on the date of
         the  Optionee's  cessation  of  Service.  Upon  the  expiration  of the
         applicable  exercise  period or (if earlier) upon the Expiration  Date,
         the option shall  terminate and cease to be outstanding  for any shares
         for which the option has not been exercised.

                           (2)      The Plan Administrator shall have the 
discretion, exercisable either at the time an option is granted 
or at any time while the option remains outstanding, to:


                                    (a)     extend the period of time for which 
         the option is to remain exercisable following the
         Optionee's cessation of Service from the period otherwise in effect for
         that option to such  greater  period of time as the Plan  Administrator
         shall deem  appropriate,  but in no event beyond the  Expiration  Date,
         and/or

                                    (b)     permit the option to be exercised, 
         during the applicable post-Service exercise period,
         not only with respect to the number of shares of Common Stock for which
         such option is exercisable  at the time of the Optionee's  cessation of
         Service  but also with  respect to one or more  additional  shares that
         would  have  vested  under the  option had the  Optionee  continued  in
         Service.

                  d. Stockholder  Rights.  The holder of an option shall have no
stockholder  rights with respect to the shares  subject to the option until such
person shall have exercised the option,  paid the Exercise  Price,  and become a
holder of record of the Purchased Shares.

                  e. Limited  Transferability of Options. During the lifetime of
the Optionee, Incentive Options may be exercised only by the Optionee, and shall
not be  assignable  or  transferable  except by will or the laws of descent  and
distribution  following  the  Optionee's  death.  Non-Statutory  Options  may be
assigned  or  transferred  in whole or in part only (i)  during  the  Optionee's
lifetime if in connection with the Optionee's estate plan to one or more members
of  the  Optionee's  immediate  family  (spouse  and  children)  or  to a  trust
established  exclusively  for the benefit of one or more such  immediate  family
members,  or (ii) by will or the laws of descent and distribution  following the
Optionee's  death.  The assigned  portion may only be exercised by the person or
persons  who  acquire a  proprietary  interest  in the  option  pursuant  to the
assignment.  The terms  applicable to the assigned  portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.

         2.2.     INCENTIVE OPTIONS

                  The  terms  specified  below  shall  apply  to  all  Incentive
Options.  Except as modified by the  provisions  of this  Article  2.2,  all the
provisions of this Plan shall apply to Incentive Options.  Options  specifically
designated  as  Non-Statutory  Options  when issued  under the Plan shall not be
subject to the terms of this Article 2.2.

                  a.       Eligibility.  Incentive Options may only be granted
 to Employees.

                  b. Exercise  Price.  The Exercise Price shall not be less than
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the Grant Date.

                  c. Dollar  Limitation.  The aggregate Fair Market Value of the
shares of Common Stock  (determined as of the respective date or dates of grant)
for which one or more  options  granted to any  Employee  under the Plan (or any
other option plan of the  Corporation or any Parent or  Subsidiary)  may for the
first time become  exercisable as Incentive  Options during any one (1) calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become  exercisable
for the first time in the same calendar  year,  the foregoing  limitation on the
exercisability  of such  options as  Incentive  Options  shall be applied in the
order in which such options are granted.

                  d. 10% Stockholder. If an Employee to whom an Incentive Option
is granted is a 10% Stockholder,  then the Exercise Price shall not be less than
one  hundred ten  percent  (110%) of the Fair  Market  Value per share of Common
Stock on the Grant  Date,  and the option  term shall not exceed  five (5) years
measured from the Grant Date.

                  e.  Holding  Period.  Shares  purchased  pursuant to an option
shall cease to qualify for favorable tax treatment as Incentive Option Shares if
and to the extent  Optionee  disposes of such shares within two (2) years of the
Grant Date or within one (1) year of Optionee's purchase of said shares.

         2.3.     CORPORATE TRANSACTION/CHANGE IN CONTROL

                  a.  In  the  event  of any  Corporate  Transaction,  the  Plan
Administrator  shall  have the sole  discretion  to elect  that any  outstanding
option shall  automatically  accelerate so that such option  shall,  immediately
prior  to  the  effective  date  of the  Corporate  Transaction,  becomes  fully
exercisable  for all or a greater  portion of the shares of Common  Stock at the
time  subject to such option.  The Plan  Administrator's  discretion  under this
Article 2.3.a.  shall be exercisable either at the time the option is granted or
at any time while the option remains outstanding.

                  b. Each option which is assumed in connection with a Corporate
Transaction  shall be appropriately  adjusted,  immediately after such Corporate
Transaction, to apply to the number and class of securities that would have been
issuable to the Optionee in consummation  of such Corporate  Transaction had the
option  been  exercised   immediately  prior  to  such  Corporate   Transaction.
Appropriate  adjustments  shall  also be made to (i) the  number  and  class  of
securities  available for issuance under the Plan following the  consummation of
such Corporate Transaction, (ii) the exercise price payable per share under each
outstanding  option,  provided the  aggregate  exercise  price  payable for such
securities  shall  remain the same and (iii) the  maximum  number of  securities
and/or  class of  securities  for  which any one  person  may be  granted  stock
options.

                  c.  The  Plan   Administrator   shall  have  the   discretion,
exercisable  at the time the  option is  granted or at any time while the option
remains  outstanding,  to provide for the automatic  acceleration of any options
assumed or replaced in a Corporate  Transaction that do not otherwise accelerate
at that time in the event the Optionee's Service should  subsequently  terminate
by reason of an Involuntary  Termination  within eighteen (18) months  following
the effective  date of such  Corporate  Transaction.  Any options so accelerated
shall remain  exercisable  for shares until the earlier of (i) the expiration of
the option term or (ii) the expiration of the one (1)-year  period measured from
the effective date of the Involuntary Termination.

                  d.  The  Plan   Administrator   shall  have  the   discretion,
exercisable  either at the time the  option is  granted or at any time while the
option remains outstanding, to (i) provide for the automatic acceleration of one
or more  outstanding  options upon the occurrence of a Change in Control or (ii)
condition  any  such  option   acceleration  upon  the  subsequent   Involuntary
Termination of the Optionee's  Service within a specified  period (not to exceed
eighteen (18) months)  following  the effective  date of such Change in Control.
Any options  accelerated  in  connection  with a Change in Control  shall remain
fully exercisable until the expiration of the option term.

                  e.  The  portion  of  any  Incentive  Option   accelerated  in
connection  with a  Corporate  Transaction  or Change in  Control  shall  remain
exercisable as an Incentive Option only to the extent the applicable One Hundred
Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar
limitation  is  exceeded,  the  accelerated  portion  of such  option  shall  be
exercisable as a Non-Statutory Option under the federal tax laws.

                  f. The grant of options  under the Plan shall in no way affect
the right of the  Corporation  to adjust,  reclassify,  reorganize  or otherwise
change its capital or business  structure  or to merge,  consolidate,  dissolve,
liquidate or sell or transfer all or any part of its business or assets.


                                   ARTICLE 3.
                                  MISCELLANEOUS

         3.1.     FINANCING

                  The Plan  Administrator  may  permit any  Optionee  to pay the
option Exercise Price by delivering an adequately collateralized promissory note
payable  in one or more  installments.  The  terms of any such  promissory  note
(including the interest rate and the terms of repayment) shall be established by
the Plan Administrator in its sole discretion. In all events, the maximum credit
available  to the Optionee  may not exceed the sum of (i) the  aggregate  option
Exercise  Price  payable  for the  Purchased  Shares plus (ii) the amount of any
federal,  state and local income and  employment  tax liability  incurred by the
Optionee in connection with the option exercise.

         3.2.     TAX WITHHOLDING

                  a. The  Corporation's  obligation to deliver  shares of Common
Stock  upon the  exercise  of  options  under the Plan  shall be  subject to the
satisfaction  of all applicable  federal,  state and local income and employment
tax withholding requirements.

                  b. The Plan Administrator may, in its discretion,  provide any
or all  holders of  Non-Statutory  Options  under the Plan with the right to use
shares of Common Stock in  satisfaction  of all or part of the Taxes incurred by
such holders in connection with the exercise of their options. Such right may be
provided to any such holder in either or both of the following formats:

                           (1)  Stock  Withholding:  The  election  to have  the
         Corporation  withhold,  from  the  shares  of  Common  Stock  otherwise
         issuable upon the exercise of such  Non-Statutory  Option, a portion of
         those  shares  with  an  aggregate  Fair  Market  Value  equal  to  the
         percentage  of the Taxes (not to exceed  one  hundred  percent  (100%))
         designated by the holder.

                           (2) Stock  Delivery:  The  election to deliver to the
         Corporation,  at the time the Non-Statutory Option is exercised, one or
         more shares of Common Stock  previously  acquired by such holder (other
         than in connection with the option exercise  triggering the Taxes) with
         an  aggregate  Fair Market Value equal to the  percentage  of the Taxes
         (not to exceed one hundred percent (100%)) designated by the holder.

         3.3.     EFFECTIVE DATE AND TERM OF THE PLAN

                  a. The Plan shall become effective on the Plan Effective Date.
However,  no shares shall be issued under the Plan pursuant to Incentive Options
until  the  Plan  is  approved  by  the  Corporation's  stockholders.   If  such
stockholder  approval is not obtained  within  twelve (12) months after the Plan
Effective Date, then all Incentive  Options  previously  granted under this Plan
shall automatically convert into Non-Statutory Options.

                  b. The Plan shall  terminate upon the earliest of (i) December
31, 2008,  (ii) the date on which all shares  available  for issuance  under the
Plan shall have been issued, or (iii) the termination of all outstanding options
in connection  with a Corporate  Transaction.  Upon such Plan  termination,  all
outstanding  options shall continue to have force and effect in accordance  with
the provisions of the documents evidencing such options.

         3.4.     AMENDMENT OF THE PLAN

                  a. The Board  shall  have  complete  and  exclusive  power and
authority to amend or modify the Plan in any or all  respects,  or to cancel any
grants made thereunder; provided, however, that no such amendment, modification,
or cancellation  shall adversely  affect any rights and obligations with respect
to options at the time outstanding  under the Plan unless each affected Optionee
consents  to  such  amendment,   modification,  or  cancellation.  In  addition,
amendments  to the Plan  shall  be  subject  to  approval  of the  Corporation's
stockholders to the extent required by applicable  laws,  regulations,  or Stock
Exchange requirements.

                  b.  Options to purchase  shares of Common Stock may be granted
under the Plan that are in each  instance in excess of the number of shares then
available  for  issuance  under the Plan,  provided any excess  shares  actually
issued  are  held  in  escrow  until  there  is  obtained  Board  approval  (and
shareholder  approval if  required by  applicable  laws,  regulations,  or Stock
Exchange  requirements)  of an amendment  sufficiently  increasing the number of
shares of Common Stock available for issuance under the Plan.

         3.5.     USE OF PROCEEDS

                  Any cash proceeds received by the Corporation from the sale of
shares  of  Common  Stock  under the Plan  shall be used for  general  corporate
purposes.

         3.6.     REGULATORY APPROVALS

                  a. The  implementation of the Plan, the granting of any option
under the Plan, and the issuance of any shares of Common Stock upon the exercise
of any option shall be subject to the Corporation's  obtaining all approvals and
permits required by regulatory authorities having jurisdiction over the Plan and
the options and shares of Common Stock issued pursuant to the Plan.

                  b. No  shares  of Common  Stock  shall be issued or  delivered
under the Plan  unless  and until  there  shall  have been  compliance  with all
applicable  requirements of federal and state securities laws and all applicable
listing  requirements of any Stock Exchange on which Common Stock is then listed
for trading.

         3.7.     NO EMPLOYMENT/SERVICE RIGHTS

                  Nothing in the Plan shall  confer upon the  Optionee any right
to continue in Service for any period of specific  duration or interfere with or
otherwise  restrict in any way the rights of the  Corporation  (or any Parent or
Subsidiary  employing or retaining  such person) or of the Optionee to terminate
such person's Service at any time for any reason, with or without cause.


<PAGE>


                                                      APPENDIX

                  The  following  definitions  shall be in effect under the Plan
and the Plan Documents:

         0.1.     Board shall mean the Corporation's Board of Directors.


<PAGE>


117

110


         2. Change in Control shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:

                           (i) the acquisition,  directly or indirectly,  by any
         person or related  group of persons  (other than the  Corporation  or a
         person that directly or indirectly  controls,  is controlled  by, or is
         under common control with, the  Corporation),  of beneficial  ownership
         (within  the  meaning  of Rule  13d-3  of the 1934  Act) of  securities
         possessing  more than fifty percent (50%) of the total combined  voting
         power of the Corporation's  outstanding securities pursuant to a tender
         or  exchange  offer made  directly to the  Corporation's  stockholders,
         which the Board does not recommend such stockholders to accept, or

                           (ii) a change in the  composition of the Board over a
         period  of  thirty-six  (36)  consecutive  months  or less  such that a
         majority  of the  Board  members  ceases,  by  reason  of  one or  more
         contested   elections  for  Board   membership,   to  be  comprised  of
         individuals who either (A) have been Board members  continuously  since
         the  beginning of such period or (B) have been elected or nominated for
         election as Board members  during such period by at least a majority of
         the Board  members  described in clause (A) who were still in office at
         the time the Board approved such election or nomination.

         3. Code shall mean the Internal Revenue Code of 1986, as amended.

         4. Common Stock shall mean the Corporation's common stock.

         5.   Corporate   Transaction   shall  mean  either  of  the   following
stockholder-approved transactions to which the Corporation is a party:

                           (i) a merger  or  consolidation  in which  securities
         possessing  more than fifty percent (50%) of the total combined  voting
         power of the Corporation's  outstanding securities are transferred to a
         person or persons  different from the persons holding those  securities
         immediately prior to such transaction; or

                           (ii) the sale,  transfer or other  disposition of all
         or  substantially   all  of  the   Corporation's   assets  in  complete
         liquidation or dissolution of the Corporation.

         6.  Corporation  shall  mean  ZEVEX  International,  Inc.,  a  Delaware
corporation,  and any  corporate  successor to all or  substantially  all of the
assets or voting stock of ZEVEX International, Inc., which shall assume the Plan
by appropriate action.

         7. Eligible Director shall mean a non-employee Board member eligible to
participate in the Plan.

         8.  Employee  shall  mean an  individual  who is in the  employ  of the
Corporation (or any Parent or Subsidiary),  subject to the control and direction
of the employer  entity as to both the work to be  performed  and the manner and
method of performance.


         9.  Exercise  Date shall mean the date on which the  Corporation  shall
have received written notice of the option exercise pursuant to the Stock Option
Exercise Notice and Purchase Agreement.

         10. Exercise Price shall mean the exercise price per share as specified
in the Stock Option Grant.

         11.  Expiration Date shall mean the date on which the option expires as
specified in the Stock Option Grant.

         12. Fair Market Value per share of Common  Stock on any  relevant  date
shall be determined in accordance with the following provisions:

                           (i) If the Common  Stock is traded at the time on the
         Nasdaq National Market, then the Fair Market Value shall be the closing
         selling  price per share of Common  Stock on the date in  question,  as
         such  price is  reported  by the  National  Association  of  Securities
         Dealers on the Nasdaq National Market or any successor system. If there
         is no  closing  selling  price  for the  Common  Stock  on the  date in
         question, then the Fair Market Value shall be the closing selling price
         on the last preceding date for which such quotation exists.

                           (ii) If the Common Stock is at the time listed on any
         Stock Exchange, then the Fair Market Value shall be the closing selling
         price per share of Common  Stock on the date in  question  on the Stock
         Exchange  determined by the Plan Administrator to be the primary market
         for the  Common  Stock,  as such  price  is  officially  quoted  in the
         composite tape of transactions on such exchange. If there is no closing
         selling  price for the Common Stock on the date in  question,  then the
         Fair  Market  Value  shall  be the  closing  selling  price on the last
         preceding date for which such quotation exists.

                           (iii) If the Common  Stock is not listed on any Stock
         Exchange nor traded on the Nasdaq National Market, then the Fair Market
         Value shall be determined by the Plan  Administrator  after taking into
         account such factors as the Plan Administrator shall deem appropriate.

         13.  Grant  Date  shall mean the date on which the option is granted to
Optionee as specified in the Stock Option Grant.

         14.   Incentive  Option  shall  mean  an  option  which  satisfies  the
requirements of an "incentive stock option" under Code Section 422.

         15.  Involuntary  Termination shall mean the termination of the Service
of any individual which occurs by reason of:

                           (i)      such individual's involuntary dismissal or 
         discharge by the Corporation for reasons other than Misconduct, or

                           (ii)   such   individual's    voluntary   resignation
         following  (A) a change  in his or her  position  with the  Corporation
         which  materially  reduces  his or her level of  responsibility,  (B) a
         reduction in his or her level of  compensation  (including base salary,
         fringe benefits and participation in corporate-performance  based bonus
         or  incentive  programs) by more than  fifteen  percent  (15%) or (C) a
         relocation of such individual's  place of employment by more than fifty
         (50) miles,  provided and only if such change,  reduction or relocation
         is effected by the Corporation without the individual's consent.

         16.  Misconduct  shall  mean  the  commission  of  any  act  of  fraud,
embezzlement or dishonesty by the Optionee,  any  unauthorized use or disclosure
by such person of  confidential  information or trade secrets of the Corporation
(or any  Parent or  Subsidiary),  or any other  intentional  misconduct  by such
person  adversely  affecting the business or affairs of the  Corporation (or any
Parent or Subsidiary) in a material manner.  The foregoing  definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee or other person in the Service of the Corporation (or any Parent
or Subsidiary).

         17.      1933 Act shall mean the Securities Act of 1933, as amended.

         18.  1934  Act  shall  mean the  Securities  Exchange  Act of 1934,  as
amended.

         19.  Non-Statutory  Option shall mean an option not intended to satisfy
the requirements of an "incentive stock option" under Code Section 422.

         20.  Optionee  shall mean any person to whom an option is granted under
Plan.

         21.      Option Shares shall mean the number of shares of Common Stock
 subject to the option as specified in the Stock Option Grant.

         22. Parent shall mean any corporation  (other than the  Corporation) in
an unbroken chain of  corporations  ending with the  Corporation,  provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination,  stock possessing fifty percent (50%) or more of the total
combined  voting power of all classes of stock in one or the other  corporations
in such chain.

         23.  Permanent  Disability  or  Permanently  Disabled  shall  mean  the
inability  of the  Optionee  to engage in any  substantial  gainful  activity by
reason of any medically  determinable  physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.

         24.  Plan shall mean the  Corporation's  1999 Stock  Option Plan as set
forth herein.

         25. Plan Administrator  shall mean the particular  entity,  whether the
Board or a committee of the Board,  which is authorized  to administer  the Plan
with  respect to one or more  classes of  eligible  persons,  to the extent such
entity is carrying out its administrative  functions under the Plan with respect
to the persons under its jurisdiction.

         26. Plan  Documents  shall mean the Plan,  the Stock Option Grant,  and
Stock Option Exercise Notice and Purchase Agreement, collectively.


         27. Plan  Effective Date shall mean January 1, 1999, the date on which
the Plan was adopted by the Board.

         28.  Primary  Committee  shall  mean the  committee  of two (2) or more
non-employee  Board members (as defined in the  regulations to Section 16 of the
1934 Act)  appointed by the Board to administer the Plan with respect to Section
16 Insiders.

         29.  Purchased  Shares shall mean the shares purchased upon exercise of
the Option pursuant to the Stock Option Exercise Notice and Purchase Agreement.

         30. SEC shall mean the Securities and Exchange Commission.

         31. Secondary Committee shall mean a committee of two (2) or more Board
members  appointed by the Board to administer  the Plan with respect to eligible
persons other than Section 16 Insiders.

         32.  Section 16  Insider  shall  mean an  officer  or  director  of the
Corporation  subject to the short-swing  profit liabilities of Section 16 of the
1934 Act.

         33. Service shall mean the  performance of services to the  Corporation
(or any Parent or  Subsidiary)  by a person in the  capacity of an  Employee,  a
non-employee  member of the board of directors or a  consultant  or  independent
advisor.

         34. Stock Exchange shall mean either the American Stock  Exchange,  the
New York Stock Exchange,  another regional stock exchange,  or the Nasdaq market
as established by the National Association of Securities Dealers.

         35. Stock Option Exercise Notice and Purchase  Agreement shall mean the
agreement  of said  title in  substantially  the form of  Exhibit A to the Stock
Option Grant,  pursuant to which Optionee gives notice of his intent to exercise
the option.

         36. Stock  Option  Grant shall mean the Stock  Option  Grant  document,
pursuant to which  Optionee has been informed of the terms of the option granted
under the Plan.

         37. Subsidiary shall mean any corporation  (other than the Corporation)
in an unbroken chain of corporations  beginning with the  Corporation,  provided
each corporation  (other than the last  corporation) in the unbroken chain owns,
at the time of the  determination,  stock possessing fifty percent (50%) or more
of the total  combined  voting power of all classes of stock in one of the other
corporations in such chain.

         38. Taxes shall mean the Federal, state and local income and employment
tax liabilities  incurred by the holder of  Non-Statutory  Options in connection
with the exercise of those options.

         39. 10% Stockholder  shall mean the owner of stock (as determined under
Code  Section  424(d))  possessing  more  than ten  percent  (10%) of the  total
combined  voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).




                                                             Grant No. ________

                            ZEVEX INTERNATIONAL, INC.

                               STOCK OPTION GRANT


         Optionee:                                                           

         Address:                                                             

         Grant Date:                                                           

         Exercise Price:   $ ________________ per share

         Number of Option Shares: _________________ shares

         Expiration Date:                                                      

         Type of Option:         Incentive Option          Non-Statutory Option

         Exercise Schedule:  The option shall become  exercisable  annually with
         respect to _____  percent of the total number of Option  Shares on each
         of the first _____  anniversary  dates of the Grant  Date.  In no event
         shall the option become exercisable for any Option Shares not vested at
         the time of Optionee's cessation of Service.

                  1.  Grant of  Option.  ZEVEX  International,  Inc,  a Delaware
corporation (the  "Corporation"),  hereby grants to the Optionee named above, as
of the Grant Date, an option to purchase up to the total number of Option Shares
specified  above.  This grant  includes the terms of the Stock  Option  Exercise
Notice and Purchase  Agreement  attached  hereto as Exhibit A, and is subject to
all of the terms and conditions of this Grant and the  Corporation's  1999 Stock
Option  Plan, a copy of which is attached  hereto as Exhibit B. All  capitalized
terms not defined  herein  have the  meaning set for the in the  Appendix to the
Plan.

                  2. Option  Term.  The option  term shall be measured  from the
Grant  Date  and  shall  accordingly  expire  at the  close of  business  on the
Expiration  Date specified  above,  unless sooner  terminated in accordance with
paragraph 5 below.

                  3.  Limited  Transferability.  This  option  shall be  neither
transferable nor assignable, in whole or in part, by Optionee other than by will
or by the laws of descent and distribution following Optionee's death and may be
exercised, during Optionee's lifetime, only by Optionee. However, if this option
is  designated  a  Non-Statutory  Option  above,  then this option may also,  in
connection with  Optionee's  estate plan, be assigned in whole or in part during
Optionee's  lifetime  to one or more  members  of  Optionee's  immediate  family
(spouse or children) or to a trust  established  exclusively  for the benefit of
one or more such immediate family members.  Optionee must give written notice of
any such assignment during Optionee's  lifetime to the Corporation 10 days prior
to the  effective  date of the  assignment.  The  assigned  portion  may only be
exercised  by the person or persons  who acquire a  proprietary  interest in the
option pursuant to the assignment.  The terms applicable to the assigned portion
shall be the same as those in effect for this option  immediately  prior to such
assignment  and shall be set forth in such  documents  issued to the assignee as
the Plan Administrator may deem appropriate.

                  4.  Exercisability.  This option shall become  exercisable for
the  Option  Shares in one or more  installments  as  provided  in the  Exercise
Schedule   specified   above.  As  the  option  becomes   exercisable  for  such
installments,  those  installments  shall accumulate and the option shall remain
exercisable for the accumulated installments until the Expiration Date or sooner
termination of the option term under paragraph 5 below. This option shall not be
exercisable  for fewer than 100 shares  unless  otherwise  approved  by the Plan
Administrator.

                  5.  Cessation  of  Service.   The  option  term  specified  in
paragraph 2 above shall terminate, and this option shall cease to be outstanding
prior to the Expiration  Date, upon  Optionee's  ceasing to be in the Service of
the Corporation. In such event, the following provisions shall apply:

                           a. Should Optionee cease to remain in Service for any
                  reason (other than death,  Permanent Disability or Misconduct)
                  while this option is  outstanding,  then Optionee shall have a
                  period of three (3) months  (commencing  with the date of such
                  cessation of Service)  during which to exercise this option as
                  to vested Option Shares.

                           b.   Should   Optionee   die  while  this  option  is
                  outstanding,  then the personal  representative  of Optionee's
                  estate  (or the  person  or  persons  to whom  the  option  is
                  transferred  pursuant to Optionee's will or in accordance with
                  the laws of descent and  distribution)  shall have a period of
                  twelve (12) months (commencing with the date of such cessation
                  of Service)  during which to exercise this option as to vested
                  Option Shares.

                           c.  Should   Optionee  cease  Service  by  reason  of
                  Permanent  Disability  while this option is outstanding,  then
                  Optionee shall have a period of twelve (12) months (commencing
                  with the date of such  cessation  of Service)  during which to
                  exercise this option as to vested Option Shares.

                           d.  Should  Optionee's   Service  be  terminated  for
                  Misconduct,  then this option shall terminate  immediately and
                  cease to remain outstanding.

                           e. During the limited  post-Service  exercise period,
                  this option may not be  exercised  in the  aggregate  for more
                  than the number of vested  Option  Shares for which the option
                  is  exercisable  on the date of the  Optionee's  cessation  of
                  Service.  Upon the  expiration  of such  limited  post-Service
                  exercise period or upon the Expiration Date (if earlier), this
                  option shall  terminate  and cease to be  outstanding  for any
                  vested  Option  Shares  for  which  the  option  has not  been
                  exercised. In no event shall this option be exercisable at any
                  time after the  Expiration  Date. To the extent this option is
                  not otherwise exercisable for vested Option Shares at the time
                  of  Optionee's   cessation  of  Service,   this  option  shall
                  immediately terminate and cease to be outstanding with respect
                  to those shares.

                  6.  Adjustment in Option Shares.  If this option is assumed in
connection with a Corporate Transaction, then this option shall be appropriately
adjusted,  immediately after such Corporate Transaction,  to apply to the number
and class  securities which would have been issuable to Optionee in consummation
of such Corporate Transaction had the Option been exercised immediately prior to
such Corporate  Transaction,  and appropriate  adjustments shall also be made to
the Exercise Price;  provided that the aggregate Exercise Price shall remain the
same.  Should  any  change be made to the  Common  Stock by reason of any split,
stock dividend,  recapitalization,  combination of shares, exchange of shares or
other change  affecting  the  outstanding  Common  Stock as a class  without the
Corporation's receipt of consideration, appropriate adjustments shall be made to
(i) the total number and/or class of securities subject to this option, and (ii)
the  Exercise  Price,  in order to reflect  such change and  thereby  preclude a
dilution or enlargement of benefits hereunder.

                  7.  Stockholder  Rights.  The holder of this option  shall not
have any stockholder  rights with respect to the Option Shares until such person
shall have exercised the option, paid the Exercise Price, and become a holder of
record of the Purchased Shares.

                  8.       Manner of Exercising Options

                           a. In order to  exercise  this option  with  respect
to all or any part of the Option  Shares for which this option is at the time  
exercisable,  Optionee  (or any other  person or  persons exercising this 
option) must take the following actions:

                                    (1) Execute and deliver to the Corporation 
         a Stock Option  Exercise  Notice and Purchase  Agreement for the 
         Option Shares for which the option is exercised.

                                    (2) Pay the  aggregate  Exercise  Price for
         the  Purchased  Shares in one or more of the  following forms:

                                            (a)  Cash or check made payable to 
                  the Corporation; or

                                            (b) An adequately  collateralized  
                  promissory note payable to the Corporation,  but only to
                  the extent authorized by the Plan Administrator in accordance 
                  with paragraph 12 hereof.

                                            (c) In  shares  of  Common  Stock  
                  held  by  Optionee  (or  any  other  person  or  persons
                  exercising the option) for the requisite  period  necessary to
                  avoid a charge to the  Corporation's  earnings  for  financial
                  reporting  purposes  and  valued at Fair  Market  Value on the
                  Exercise Date; or

                                            (d) Through a special  sale and  
                  remittance  procedure  pursuant to which  Optionee (or any
                  other  person  or  persons   exercising   the  option)   shall
                  concurrently provide irrevocable written instructions (1) to a
                  Corporation-designated  brokerage firm to effect the immediate
                  sale of the Purchased Shares and remit to the Corporation, out
                  of  the  sale  proceeds  available  on  the  settlement  date,
                  sufficient funds to cover the aggregate Exercise Price payable
                  for the Purchased  Shares plus all applicable  federal,  state
                  and local income and employment  taxes required to be withheld
                  by the Corporation by reason of

                  such  exercise  and  (2) to the  Corporation  to  deliver  the
                  certificates   for  the  Purchased  Shares  directly  to  such
                  brokerage firm in order to complete the sale.

                                    Except to the extent the sale and remittance
                  procedure is utilized in connection with the option  exercise,
                  payment of the Exercise  Price must accompany the Stock Option
                  Exercise  Notice  and  Purchase  Agreement  delivered  to  the
                  Corporation in connection with the option exercise.

                                    (3) Furnish to the  Corporation  appropriate
         documentation  that the person or persons  exercising the option
         (if other than Optionee) have the right to exercise this option.

                                    (4) Execute and deliver to the  Corporation 
         such  written  representations  as may be requested by the Corporation 
         in  order  for  it  to  comply  with  the  applicable requirements of 
         federal and state securities laws.

                                    (5) Make  appropriate  arrangements  with
         the  Corporation  (or Parent or  Subsidiary  employing or
         retaining  Optionee)  for the satisfaction  of all federal,  state and
         local income and employment tax withholding requirements applicable to
         the option exercise.

                           b. As soon as practical after the Exercise Date, the 
 Corporation  shall issue to, or, on behalf of Optionee
(or any other person or persons exercising this option),a share certificate for
the Purchased Shares.

                           c. In no event may this option be  exercised  for any
fractional shares.

                  9.       Compliance with Laws and Regulations

                           a. The exercise of this option and the  issuance of 
the Option  Shares upon such  exercise  shall be subject
to compliance by the Corporation  and Optionee with all applicable  requirements
of law  relating  thereto  and  with all  applicable  regulations  of any  Stock
Exchange on which the Common Stock may be listed for trading at the time of such
exercise and issuance.

                           b. The inability of the Corporation to obtain 
approval from any regulatory body having  authority  deemed by
the  Corporation  to be necessary to the lawful  issuance and sale of any Common
Stock  pursuant to this option shall  relieve the  Corporation  of any liability
with  respect to the  non-issuance  or sale of the Common Stock as to which such
approval shall not have been obtained.  The Corporation,  however, shall use its
best efforts to obtain all such approvals.

                  10.  Successors  and Assigns.  Except to the extent  otherwise
provided in paragraph 3, the  provisions  of this  Agreement  shall inure to the
benefit of, and be binding upon, the  Corporation and its successors and assigns
and Optionee, Optionee's permitted assigns and the legal representatives,  heirs
and legatees of Optionee's estate.

                  11.  Notices.  Any notice required to be given or delivered to
the  Corporation  under  the terms of this  Agreement  shall be in  writing  and
addressed to the  Corporation  at its principal  corporate  offices.  Any notice
required to be given or delivered to Optionee  shall be in writing and addressed
to Optionee at the address  indicated  on the Stock  Option  Grant.  All notices
shall be deemed  effective  upon  personal  delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be notified.

                  12.  Financing.  The Plan  Administrator  may, in its absolute
discretion  and  without any  obligation  to do so,  permit  Optionee to pay the
Exercise  Price for the  purchase  Option  Shares by  delivering  an  adequately
collateralized promissory note payable to the Corporation. The terms of any such
promissory note (including the interest rate, the  requirements  for collateral,
and the terms of repayment)  shall be established by the Plan  Administrator  in
its sole discretion.

                  13.  Construction.  This  Agreement  and the option  evidenced
hereby are made and granted pursuant to the Plan and are in all respects limited
by and subject to the terms of the Plan and the Stock Option Exercise Notice and
Purchase Agreement.  All decisions of the Plan Administrator with respect to any
question or issue arising under the Plan or this  Agreement  shall be conclusive
and binding on all persons having an interest in this option.

                  14.      Governing Law. The  interpretation,  performance  
and enforcement of this Agreement shall be governed by the
laws of the State of Utah without resort to its conflict-of-laws rules.

                  15. Additional Terms Applicable to an Incentive Option. In the
event this option is designated an Incentive  Option above,  the following terms
and conditions shall also apply to the grant:

                           a. This option  shall cease to qualify for  favorable
         tax treatment as an Incentive Option if (and to the extent) this option
         is  exercised  for one or more Option  Shares:  (1) more than three (3)
         months  after  the date  Optionee  ceases to be an  Employee  or in the
         Service of the Corporation for any reason other than death or Permanent
         Disability  or (2) more than twelve (12) months after the date Optionee
         ceases to be an Employee by reason of death or Permanent Disability.

                           b. No installment under this option shall qualify for
         favorable tax  treatment as an Incentive  Option if (and to the extent)
         the aggregate  Fair Market Value  (determined at the Grant Date) of the
         Common  Stock for which  such  installment  first  becomes  exercisable
         hereunder  would,  when added to the aggregate value  (determined as of
         the respective  date or dates of grant) of any earlier  installments of
         the Common Stock and any other  securities for which this option or any
         other  Incentive  Options  granted to Optionee  prior to the Grant Date
         (whether under the Plan or any other option plan of the  Corporation or
         any Parent or  Subsidiary)  first  become  exercisable  during the same
         calendar year,  exceed One Hundred Thousand  Dollars  ($100,000) in the
         aggregate.   Should  such  One  Hundred   Thousand  Dollar   ($100,000)
         limitation  be  exceeded  in  any  calendar  year,  this  option  shall
         nevertheless  become exercisable for the excess shares in such calendar
         year, but shall be taxed as a Non-Statutory Option.

                           c.   Should  the  Board  elect  to   accelerate   the
         exercisability of this option upon a Corporate  Transaction,  then this
         option  shall  qualify as an  Incentive  Option  only to the extent the
         aggregate  Fair  Market  Value  (determined  at the Grant  Date) of the
         Common Stock for which this option  first  becomes  exercisable  in the
         calendar year in which the Corporate  Transaction occurs does not, when
         added to the aggregate  value  (determined as of the respective date or
         dates of grant) of the Common Stock or other  securities for which this
         option or one or more other Incentive Options granted to Optionee prior
         to the Grant Date  (whether  under the Plan or any other option plan of
         the Corporation or any Parent or Subsidiary)  first become  exercisable
         during the same  calendar  year,  exceed One Hundred  Thousand  Dollars
         ($100,000) in the aggregate. Should the applicable One Hundred Thousand
         Dollar  ($100,000)  limitation be exceeded in the calendar year of such
         Corporate Transaction, the option may nevertheless be exercised for the
         excess  shares  in  such  calendar  year,  but  shall  be  taxed  as  a
         Non-Statutory Option.

                           d. Should  Optionee hold, in addition to this option,
         one or more  other  options  to  purchase  Common  Stock  which  become
         exercisable  for the  first  time  in the  same  calendar  year as this
         option,  then the foregoing  limitations on the  exercisability of such
         options as Incentive Options shall be applied on the basis of the order
         in which such options are granted.

                           e. The grant of this option is subject to approval of
         the Plan by Corporation's  stockholders within twelve (12) months after
         the  adoption  of  the  Plan  by the  Board.  In the  event  that  such
         stockholder  approval  is not  obtained,  then  this  option  shall not
         qualify as an Incentive Option.

                           f. If the Option  Shares  covered  by this  Agreement
         exceed,  as of the Grant  Date,  the  number of shares of Common  Stock
         which may without  stockholder  approval be issued under the Plan, then
         this  option  shall  cease to qualify  as an  Incentive  Option  unless
         stockholder approval of an amendment sufficiently increasing the number
         of shares of  Common  Stock  issuable  under  the Plan is  obtained  in
         accordance with the provisions of the Plan.

                           g.  If  Optionee  is  a  10%  Stockholder,  then  the
         Exercise Price shall not be less than one hundred ten percent (110%) of
         the Fair Market Value per share of Common Stock on the Grant Date,  and
         the option term shall not exceed five (5) years measured from the Grant
         Date.

                           h. Shares  purchased  pursuant  to this option  shall
         cease to qualify for favorable tax treatment as Incentive Option shares
         if and to the extent  Optionee  disposes of such shares  within two (2)
         years from the Grant Date or within one (1) year of Optionee's purchase
         of said shares.

                           i.  Optionee  acknowledges  that the rules  regarding
         Incentive Options as contained in the Internal Revenue Code are subject
         to  amendment  in the future.  Optionee  should  consult his or her tax
         advisor  prior to taking any action with  respect to this option or the
         shares purchased hereunder.











         IN WITNESS  WHEREOF,  this  Agreement  is executed as of the Grant Date
first noted above.


                            ZEVEX INTERNATIONAL, INC.



                                                     By                       

                                                     Title                     





<PAGE>


                                 ACKNOWLEDGEMENT


         Optionee  understands  and agrees that the option is granted subject to
and in  accordance  with the terms of the  Corporation's  1998 Stock Option Plan
(the "Plan").  Optionee  further agrees to be bound by the terms of the Plan and
the terms of the  option as set forth in this  Agreement.  Optionee  understands
that any Option Shares  purchased under the option shall be subject to the terms
set forth in the Stock Option  Exercise Notice and Purchase  Agreement  attached
hereto as Exhibit A.

         Optionee hereby acknowledges  receipt of a copy of the Plan in the form
attached  hereto  as  Exhibit  B,  and  represents  that  Optionee  has read and
understands  the  Plan,  and  accepts  this  option  subject  to all  terms  and
provisions of the Plan and the Plan documents.  Optionee hereby agrees to accept
as binding,  conclusive and final, all decisions and interpretations of the Plan
Administrator upon any questions arising under the Plan.  Optionee  acknowledges
that there may be adverse tax  consequences  upon exercise of this option and/or
upon disposition of the Purchased Shares, and that Optionee should consult a tax
advisor prior to such exercise or disposition.

                                                     OPTIONEE



                                                     Optionee



                                                     Date


<PAGE>






                                    EXHIBIT A


                            ZEVEX INTERNATIONAL, INC.
                          STOCK OPTION EXERCISE NOTICE
                             AND PURCHASE AGREEMENT


         This Stock Option Exercise Notice and Purchase Agreement  ("Agreement")
is made  as of this  ____  day of  ___________,  ______,  by and  between  ZEVEX
International,   Inc.,  a  Delaware  corporation,   and  ______________________,
Optionee under the Corporation's 1999 Stock Option Plan (the "Plan").

         All  capitalized  terms used in this  Agreement and not defined  herein
shall have the meaning assigned to them in the Appendix to the Plan.


<PAGE>






         1.       Exercise of Option

                  a.  Exercise.  Optionee  hereby elects to exercise  Optionee's
option to purchase ___________________________________ (_____________) shares of
Common  Stock (the  "Purchased  Shares")  of the  Corporation,  pursuant to that
certain option (the "Option")  granted  Optionee on  __________________,  ______
(the "Grant  Date") to purchase  _____________  shares of Common Stock under the
Plan at the exercise price of $___________ per share (the "Exercise Price").

                  b. Payment.  Concurrent with the delivery of this Agreement to
the Corporation,  Optionee shall pay the Exercise Price for the Purchased Shares
in  accordance  with the  provisions of the Stock Option Grant and shall deliver
whatever  additional  documents  may be required by the Stock  Option Grant as a
condition for exercise with respect to the Purchased Shares.

         2.       Market Stand-off Agreement

                  a.   Restriction   on  Transfer.   In   connection   with  any
         underwritten   public   offering  by  the  Corporation  of  its  equity
         securities pursuant to an effective  registration statement filed under
         the 1933 Act,  including the  Corporation's  initial  public  offering,
         Owner  shall  not  sell,  make any short  sale of,  loan,  hypothecate,
         pledge,  grant any option for the purchase of, or otherwise  dispose or
         transfer for value or otherwise agree to engage in any of the foregoing
         transactions  with respect to, any Purchased  Shares  without the prior
         written   consent  of  the  Corporation  or  its   underwriters.   Such
         restrictions  (the  "Market  Stand-Off")  shall be in  effect  for such
         period  of  time  from  and  after  the  effective  date  of the  final
         prospectus  for the offering as may be requested by the  Corporation or
         such underwriters.  In no event, however,  shall such period exceed one
         hundred eighty (180) days.

                  b. Officers and  Directors.  Optionee  shall be subject to the
         Market Stand-Off provided and only if the officers and directors of the
         Corporation are also subject to similar restrictions.

                  c.  Additional  Shares.  Any new,  substituted  or  additional
         securities   which   are,   by  reason  of  any   recapitalization   or
         reorganization,  distributed with respect to the Purchased Shares shall
         be immediately subject to the Market Stand-Off,  to the same extent the
         Purchased Shares are at such time covered by such provisions.

                  d. Stop  Transfer.  In order to enforce the Market  Stand-Off,
         the Corporation may impose  stop-transfer  instructions with respect to
         the Purchased Shares until the end of the applicable stand-off period.

         3.       Miscellaneous Provisions

                  a.  No  Employment  or  Service  Contract.   Nothing  in  this
Agreement  or in the Plan shall  confer upon  Optionee  any right to continue in
Service  for any period of  specific  duration or  interfere  with or  otherwise
restrict in any way the rights of the  Corporation  (or any Parent or Subsidiary
employing  or  retaining  Optionee)  or of  Optionee,  which  rights  are hereby
expressly reserved by each, to terminate  Optionee's Service at any time for any
reason with or without cause.

                  b.  Notices.  Any  notice  required  to be  given  under  this
Agreement  shall be in  writing  and shall be  deemed  effective  upon  personal
delivery or upon deposit in the U.S.  mail,  registered  or  certified,  postage
prepaid  and  properly  addressed  to the party  entitled  to such notice at the
address indicated below such party's signature line on this Agreement or at such
other  address as such party may  designate  by ten (10) days'  advance  written
notice under this paragraph to all other parties to this Agreement.

                  c.  Amendments  and  Waivers.  No waiver or  amendment of this
Agreement shall be effective  unless agreed to in writing by the parties hereto.
No waiver of any breach or condition of this  Agreement  shall be deemed to be a
waiver  of any  other or  subsequent  breach or  condition,  whether  of like or
different nature.

                  d.  Optionee  Undertaking.  Optionee  hereby  agrees  to  take
whatever  additional  action  and  execute  whatever  additional  documents  the
Corporation  may deem necessary or advisable in order to carry out or effect one
or more of the  obligations or  restrictions  imposed on either  Optionee or the
Purchased Shares pursuant to the provisions of this Agreement.

                  e.       Governing  Law.  This  Agreement  shall be governed 
by, and construed in  accordance  with,  the laws of the State of Utah without\
resort to that State's conflict-of-laws rules.

                  f.  Successors  and Assigns.  The provisions of this Agreement
shall inure to the  benefit of, and be binding  upon,  the  Corporation  and its
successors and assigns and upon Optionee,  Optionee's  permitted assigns and the
legal  representatives,  heirs and legatees of Optionee's estate, whether or not
any such person shall have become a party to this  Agreement  and have agreed in
writing to join herein and be bound by the terms hereof.


<PAGE>


                  IN WITNESS  WHEREOF,  the parties have executed this Agreement
on the day and year first indicated above.

                                                      ZEVEX INTERNATIONAL, INC.



                                                      By:                     

                                                      Title:                  





                                                     OPTIONEE

                                                     Address:                  






<PAGE>



                                   Exhibit 21
                              List of Subsidiaries

1.       ZEVEX, Inc., a Delaware corporation
2.       JTech Medical Industries, Inc., a Utah corporation
3.       Aborn Electronics, Inc., a California corporation