FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from .................to.................
Commission file number 33-19583
ZEVEX INTERNATIONAL, INC.
(Exact name of registrant as specified in charter)
NEVADA 87-0462807
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5175 Greenpine Drive, Murray, Utah
(Address of principal executive offices)
84123
(Zip Code)
(801) 264-1001
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes [ ] No [ ] Not Applicable [ X ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. As of August 8, 1996,
the Company had outstanding 1,365,716 shares of common stock, par value
$0.04 per share.
Page 1 of 12 Consecutively Numbered Pages
PART I
FINANCIAL INFORMATION
______________________________________________________________________
ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-Q
______________________________________________________________________
ZEVEX International, Inc. (the "Company"), files herewith balance
sheets of the Company as of June 30, 1996, and December 31, 1995, and
the related statements of operations and cash flows for the respective
three month and six month periods ended June 30, 1996 and 1995. In
the opinion of the Companys management, the financial statements
reflect all adjustments, all of which are normal recurring
adjustments, necessary to fairly present the financial condition of
the Company for the interim periods presented. The financial
statements included in this report on Form 10-Q should be read in
conjunction with the audited financial statements of the Company and
the notes thereto included in the annual report of the Company on Form
10-KSB for the year ended December 31, 1995.
ZEVEX INTERNATIONAL, INC. & SUBSIDIARY
Balance Sheet
-Unaudited-
ASSETS
Jun 30 Dec 31
1996 1995
CURRENT
ASSETS
Cash in Banks 630,710 870,333
Accounts Receivable 872,830 1,209,794
Employee Advances 2,865 2,835
Prepaid Taxes 47,435 0
Work-In-Process 1,241,725 791,960
Total Current Assets 2,795,565 2,874,922
OTHER ASSETS
Net Property and Equipment 634,978 363,771
Deposits 3,490 8,682
Total Other Assets 638,468 372,453
TOTAL ASSETS 3,434,033 3,247,375
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES
Accounts Payable 341,265 191,562
Other Accrued Expenses 102,349 96,206
Income Taxes Payable 0 58,735
Total Current Liabilities 443,614 346,503
Long-Term Debt 0 0
Deferred Taxes 0 0
Total Long-Term Debt 0 0
STOCKHOLDERS'EQUITY
Common Stock 5,000,000 shares
authorized at $0.04 par value
issued and outstanding 1,130,716
shares in 1995 and 1,356,716
shares in 1996 54,629 54,629
Capital in Excess of Par
Value 1,344,833 1,344,833
Retained Earnings 1,590,957 1,501,410
Total Stockholders'
Equity 2,990,419 2,900,872
TOTAL LIABILITIES AND
STOCKHOLDERS'EQUITY 3,434,033 3,247,375
ZEVEX INTERNATIONAL, INC. & SUBSIDIARY
Statement of Operations
For Three For Three For Six For Six
Months Months Months Months
Ended Ended Ended Ended
6/30/96 6/30/95 6/30/96 6/30/95
REVENUES
Sales 1,277,618 1,204,968 2,545,225 2,389,914
Cost of Sales 676,349 674,183 1,389,655 1,357,592
Gross Profit 601,269 530,785 1,155,570 1,032,322
General Expenses
Marketing, G&A 474,435 324,124 831,653 614,933
Research and Devel. 131,586 149,058 245,814 280,491
Operating Income (4,752) 57,603 78,103 136,898
Other Income 14,642 9,234 27,726 18,645
Provision for Taxes (3,669) (13,515) (16,282) (21,696)
Net Income (Loss) 6,221 53,322 89,547 133,847
Income Per Share .0046 .0393 0656 .1076
Weighted Average Shares
Outstanding 1,365,716 1,356,716 1,365,716 1,243,662
ZEVEX INTERNATIONAL, INC. & SUBSIDIARY
Statement of Cash Flows
For the three months ended June 30, 1996
and June 30, 1995
Jun 30 Jun 30
1996 1995
Cash Flows from Operating Activities:
Net income (loss) 89,547 133,847
Noncash revenue and expense adjustments:
Depreciation 99,340 72,498
Change in assets and liability accounts:
(Increase) decrease in accounts receivable 336,934 (114,129)
(Increase) decrease in work-in-process (449,765) (63,970)
(Increase) decrease in deposits 5,192 (9,000)
(Increase) decrease prepaid expenses (47,435) 11,724
Increase (decrease) in accounts payable 149,703 19,086
Increase (decrease) in accrued expenses 6,143 (367)
Increase (decrease) in provision
for taxes (58,735) 21,696
Net Cash flows used for
operating activities 130,924 71,385
Cash flows from investing activities:
Purchase of equipment and tooling (370,547) (44,202)
Net increase (decrease) in cash (239,623) 27,183
Cash at beginning of period 870,333 864,332
Cash at end of period 630,710 891,515
ZEVEX INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
1. Summary of Significant Accounting Policies
A. Business Information
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.
B. Principles of Consolidation
The consolidated financial statements include the accounts of
ZEVEX, International, Inc. (Company) and its wholly-owned
subsidiary ZEVEX, Inc. All significant inter-company balances
and transactions have been eliminated in the consolidation.
C. Machinery and Equipment
Machinery and equipment are stated at cost less accumulated
depreciation. Depreciation is provided over expected useful
lives of five or seven years on accelerated methods, which
provide for more depreciation expense in the early years of the
estimated life of the asset.
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 incurred.
Upon retirement or disposal of property, plant or equipment, the
costs and related accumulated depreciation amounts are
eliminated, and any gain or loss is included in operation in the
year of disposition.
Notes to the financial statements - continued
D. Work In Process
Work in process is stated at the lower of cost (first-in, first-
out method) or market value.
E. Bad Debts
The Company accounts for bad debts using the direct write off
method. Accounts are written off when deemed uncollectible.
F. Net Income Per Share
The computation of net income per share of common stock is
computed by dividing net income for the period by the weighted
average number of shares outstanding during the period. Common
stock equivalents which dilute earnings per share are not taken
into consideration in the calculation because they have no
material impact.
2. Business Combination
On August 11, 1988, the Company acquired the outstanding stock of
ZEVEX, Inc., a manufacturer and producer of acoustic and electronic
equipment for special applications, in exchange for 600,000 shares of
its common stock. This business combination has been accounted for in
a manner similar to a pooling-of-interests.
Notes to the financial statements - continued
3. Income Taxes
Provision for income taxes is made, at Federal and State statutory
rates, based on earnings reported in the financial statements for the
amount of income taxes payable currently, less any prepayment
deposits. The provision for income taxes at June 30, 1996 and June
30, 1995 consists of the following:
1996 1995
Federal income taxes $ 11,033 $ 13,919
State income taxes 5,249 7,777
Provision for income tax $ 16,282 $ 21,696
========== ==========
4.Major Customers
The Company distributes its products directly and is not dependent
upon any single customer. However, sales to three customers for the
six months ending June 30, 1996, each represented 10% or more of total
sales.
______________________________________________________________________
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
______________________________________________________________________
Results of Operations
The Company's sales increased to $1,277,618 in the second quarter 1996
from $1,204,968 in the second quarter 1995, and $2,545,225 for the
first six months of 1996, from $2,389,914 for the first six months of
1995, an increase of approximately 6% for the three months ending June
1996, and an increase of 5% for the six months ending June 1996.
During the first six months of 1996, 65% of total revenues resulted
from sales to three customers, all of whom were major customers in
1995. Since the Company's products are sold to OEMs as components for
incorporation into products manufactured by them, demand for the
Company's products is affected by the demand for the final products
manufactured by the OEMs, which is beyond the control of the Company,
and no assurances can be given that orders from any customer will
increase or remain at current levels or that they will not decline.
The Company's gross profit as a percentage of sales was 47% in the
second quarter 1996, as compared to 44% in the second quarter 1995,
and 45% for the six months ending June 1996 compared to 43% for the
six months ending June 1995. Management attributes the increase to
the product mix that was delivered during the second quarter of 1996.
Selling, general and administrative expenses for the quarter ended
June 30, 1996 increased $150,311, from $324,124 in the second quarter
of 1995 to $474,435 in the second quarter of 1996. Management
attributes the increase in these expenses to increased sales effort,
including travel, and legal costs related to the introduction and
marketing trials of the new Enteralite(Trademark) ambulatory enteral
feeding pump, and increased expenses related to employee insurance and
tax costs. The Company believes that general and administrative
expenses will remain constant for the remainder of 1996.
Research and development expenses vary from quarter to quarter
depending on the number and nature of pending research and development
projects and their various stages of completion. During the second
quarter of 1996, research and development expenses were $131,586
compared to $149,058 during the second quarter of 1995, and $245,814
for the first six months of 1996, compared to 280,491 for the first
six months of 1995. Expenses incurred during the first six months
were for the continued development of several proprietary products and
new applications of the company's ultrasound technology. Management
believes investing in research and development will serve the
company's future well, and will continue these expenses at the current
rate for at least the next several quarters.
Net income decreased to $6,221, or 0.5% of net sales, in the
second quarter of 1996, from $53,322 in the second quarter of
1995. Net income of $89,547, or 3.5% of net sales, for the first
six months of 1996 decreased from a net income of $133,847 in the
first six months of 1995. The decreases in net income during
1996 as compared to 1995 are principally due to increased
selling, general and administrative expenses for the current
year.
As of June 30, 1996 the Company's backlog of customer orders was
$2,726,000, as compared to $3,243,000 on June 30, 1995. Management
estimates that approximately 90% of the backlog will ship before
December 31, 1996.
Liquidity and Capital Resources
During the quarter ending June 30, 1996, and the six months ending
June 30 1996, the Company produced $6,221 in net income and $89,547 in
net income respectively from operating activities. Cash decreased by
$239,623 for the six months ending June 30, 1996. During the quarter
ending June 30, 1995, and the six months ending June 30 1995, the
Company had net incomes of $53,322 and $133,847 respectively from
operating activities. Net cash increased by $27,183 for the six months
ending June 30, 1995, as the Company funded an increase in accounts
receivable and inventories of work in progress for future sale.
The Company's purchases of new research, production, test equipment
and tooling was $181,074 for the second quarter of 1996, and $370,547
for the first six months of 1996.
The Company's working capital at June 30, 1996, was $2,351,951 as
compared to $2,423,087 at June 30, 1995. The decrease is primarily
attributed to income from operations. The portion of working capital
represented by cash at such dates was $630,710 and $891,515
respectively. The Company utilizes substantial portions of its cash
from time to time to fund its operations.
PART II
OTHER INFORMATION NOT APPLICABLE AT THIS TIME
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
______________________________________________________________________
SIGNATURES
______________________________________________________________________
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ZEVEX INTERNATIONAL, INC.
Dated: May 10, 1996 By /s/ Dean G. Constantine
Dean G. Constantine, President
By /s/ Phillip L. Mcstotts
Phillip L. McStotts, Secretary
(Principal Financial Officer)
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