<DOCUMENT>
<TYPE>SB-2
<SEQUENCE>1
<FILENAME>v04380_formsb2.txt
<TEXT>

   As filed  with the  Securities  and  Exchange  Commission  on July 6, 2004
                                      An Exhibit List can be found on page II-3.
                                                           Registration No. 333-

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

                                    FORM SB-2
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933


                          ZYNEX MEDICAL HOLDINGS, INC.
                 (Name of small business issuer in its charter)


<TABLE>
<S>                                                  <C>                               <C>
            Nevada                                   3845                              87-0403828
------------------------------------ ------------------------------------- -------------------------------------
(State or other Jurisdiction of          (Primary Standard Industrial       (I.R.S. Employer Identification No.)
Incorporation or Organization)            Classification Code Number)
</TABLE>


                         8100 South Park Way, Suite A-9
                               Littleton, CO 80120
                                 (303) 703-4906
--------------------------------------------------------------------------------
        (Address and telephone number of principal executive offices and
                          principal place of business)

                    Thomas Sandgaard, Chief Executive Officer
                         8100 South Park Way, Suite A-9
                               Littleton, CO 80120
                                 (303) 703-4906
            (Name, address and telephone number of agent for service)


                                   Copies to:
                             Gregory Sichenzia, Esq.
                       Sichenzia Ross Friedman Ference LLP
                     1065 Avenue of the Americas, 21st Flr.
                            New York, New York 10018
                                 (212) 930-9700
                              (212) 930-9725 (fax)

                Approximate date of proposed sale to the public:
     From time to time after this Registration Statement becomes effective.

         If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the  Securities  Act,  check the following box and
list the Securities Act registration  statement number of the earlier  effective
registration statement for the same offering. [ ] ________

         If this  Form is a  post-effective  amendment  filed  pursuant  to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act  registration   statement  number  of  the  earlier  effective  registration
statement for the same offering. [ ] ________

         If this  Form is a  post-effective  amendment  filed  pursuant  to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act  registration   statement  number  of  the  earlier  effective  registration
statement for the same offering. [ ] ________

         If delivery of the  prospectus  is expected to be made pursuant to Rule
434, please check the following box. [ ]


<PAGE>



<TABLE>
<CAPTION>
                                              CALCULATION OF REGISTRATION FEE
======================================================= ================= ==================== ===================== ==============
                                                                           Proposed Maximum      Proposed Maximum      Amount of
          Title of Each Class of Securities               Amount to be    Offering Price Per    Aggregate Offering   Registration
                   to be Registered                        Registered         Security(1)             Price               Fee
------------------------------------------------------- ----------------- -------------------- --------------------- --------------
<S>                                                        <C>                   <C>              <C>                   <C>
Shares of  common  stock,  $.001  par  value  ("Common     685,715               $2.20            $1,508,573            $191.14
Stock")
Shares of Common Stock issuable upon exercise of
Class A warrants                                           342,859(2)            $2.20           $754,289.80            $ 95.57
Shares of Common Stock issuable upon exercise of
Class B warrants                                           685,715(3)            $2.20            $1,508,573            $191.14
Shares of Common Stock issuable upon exercise of
Class C warrants                                            22,858(4)            $2.20            $50,287.60            $  6.37
Shares of Common Stock issuable upon exercise of
Broker warrants                                             45,715(4)            $2.20              $100,573            $ 12.74

Total                                                     1,782,862              $2.20         $3,922,296.40            $496.96
======================================================= ================= ==================== ===================== ==============
</TABLE>


(1)  Estimated  solely for  purposes  of  calculating  the  registration  fee in
     accordance  with Rule 457(c) and Rule 457(g)  under the  Securities  Act of
     1933,  using  the  average  of the high and low  price as  reported  on the
     Over-The-Counter Bulletin Board on June 30, 2004.

(2)  Includes  a  good  faith  estimate  of  the  shares   underlying   warrants
     exercisable  at $1.75  per  share to  account  for  antidilution  and price
     protection adjustments.

(3)  Includes  a  good  faith  estimate  of  the  shares   underlying   warrants
     exercisable  at $2.00  per  share to  account  for  antidilution  and price
     protection adjustments.

(4)  Includes  a  good  faith  estimate  of  the  shares   underlying   warrants
     exercisable  at $0.01  per  share to  account  for  antidilution  and price
     protection adjustments.

     The registrant  hereby amends this  registration  statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further  amendment  which  specifically  states  that  this  registration
statement shall  thereafter  become effective in accordance with Section 8(a) of
the  Securities  Act of 1933 or until the  registration  statement  shall become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.


<PAGE>

================================================================================
The  information  in this  prospectus  is not complete and may be changed.  This
prospectus  is included in the  registration  statement  that was filed by Zynex
Medical Holdings, Inc., with the Securities and Exchange Commission. The Selling
Stockholders  may not sell these  securities  until the  registration  statement
becomes effective.  This prospectus is not an offer to sell these securities and
is not soliciting an offer to buy these  securities in any state where the offer
or sale is not permitted.
================================================================================

Preliminary Prospectus                 Subject To Completion, Dated July 6, 2004


     The information in this prospectus is not complete and may be changed.

                          Zynex Medical Holdings, Inc.

                               1,782,862 Shares of
                                  Common Stock

         This  prospectus  relates to the resale by the selling  stockholders of
685,715 shares of our common stock and 1,097,147 shares of common stock issuable
upon exercise of  outstanding  warrants,  based on current  market  prices.  The
selling  stockholders  may sell common stock from time to time in the  principal
market  on which  the  stock is  traded  at the  prevailing  market  price or in
negotiated  transactions.  Please see the "Selling Stockholders" section in this
prospectus for a complete description of all of the selling stockholders.

         We will not receive any proceeds from the sale of shares by the selling
stockholders.  However,  we will  receive  proceeds  upon  the  exercise  of any
warrants or options that may be exercised by the selling  stockholders,  if any.
We will pay the expenses of registering these shares.

         Our common stock is listed on the Over-The-Counter Bulletin Board under
the symbol  "ZYNX." The last reported  sales price per share of our common stock
as reported by the Over-The-Counter Bulletin Board on July 2, 2004, was $2.24.

                                   ----------

            Investing in these securities involves significant risks.
                     See "Risk Factors" beginning on page 3.

                                   ----------

         The Securities and Exchange Commission and state securities  regulators
have not approved or  disapproved  of these  securities  or  determined  if this
prospectus  is truthful or  complete.  Any  representation  to the contrary is a
criminal offense.

              The date of this prospectus is ______________, 2004.


<PAGE>

                               PROSPECTUS SUMMARY

Our Business

         We have  developed  a product  line to  compete  in the  electrotherapy
market as well as a unique product, the NeuroMove, for the stroke rehabilitation
market segment. All our products are cleared by the Food and Drug Administration
for sale in the United  States.  In the United  States,  our products  require a
physician's  prescription  before  they  can be  dispensed.  A  majority  of our
products have been developed by our founder, Thomas Sandgaard.

         The business  model is developed  around the  physician's  prescription
being  considered  an "order" -- to provide the product to the patient.  Then we
bill the  patient's  private  insurance or Medicare for payment.  We promote our
standard  electrotherapy  products to physicians through a direct sales force or
by using various marketing tools to both consumers and specialty  physicians for
our stroke rehabilitation product. Our stroke rehabilitation product is marketed
directly to the end-users and physicians who specialize in rehabilitation.

         For the three  months ended March 31,  2004,  we generated  revenues of
$262,941  and had a net  loss of  $180,617.  In  addition,  for the  year  ended
December 31, 2003, we generated  revenues of $1,083,912  and had a net income of
$40,697.

         Our  principal  offices are located at 8100 South Park Way,  Suite A-9,
Littleton, CO 80120, and our telephone number is (303) 703-4906. We are a Nevada
corporation.

                                  The Offering

Common stock offered by selling
stockholders......................  1,782,862   shares,  of  which  685,715  are
                                    currently   issued   and   outstanding   and
                                    1,097,147  are  issuable  upon  exercise  of
                                    outstanding warrants. This number represents
                                    approximately 7.3% of our common stock to be
                                    outstanding  after the offering.

Common stock to be outstanding
after the offering...............   24,520,238   shares,   which   assumes   the
                                    exercise    of   all    shares    underlying
                                    outstanding  warrants  being  registered  in
                                    this offering.

Use of proceeds..................   We will not  receive any  proceeds  from the
                                    sale of the common stock.  However,  we will
                                    receive  the sale price of any common  stock
                                    we sell  to the  selling  stockholders  upon
                                    exercise of the warrants.


Over-The-Counter Bulletin Board
Symbol...........................   ZYNX

         The above  information  is based on  23,423,091  shares of common stock
outstanding as of June 29, 2004.



                                       2
<PAGE>

                                  RISK FACTORS

         This investment has a high degree of risk. Before you invest you should
carefully  consider the risks and  uncertainties  described  below and the other
information in this  prospectus.  If any of the following  risks actually occur,
our business,  operating results and financial condition could be harmed and the
value of our stock  could go down.  This  means you could  lose all or a part of
your investment as a result of these risks.

Risks Related To Our Business

We may be unable to obtain the additional capital required to grow our business.
We may have to curtail our business if we cannot find adequate funding.

         Our ability to grow depends  significantly on our ability to expand our
operations  through  internal  growth and by acquiring other companies or assets
that  require  significant  capital  resources.  We may need to seek  additional
capital  from  public or private  equity or debt  sources to fund our growth and
operating plans and respond to other contingencies such as:

         o        shortfalls in anticipated revenues or increases in expenses;

         o        the development of new services; or

         o        the expansion of our operations,  including the recruitment of
                  additional personnel.

         We cannot be certain that we will be able to raise  additional  capital
in the future on terms  acceptable  to us or at all. If  alternative  sources of
financing  are  insufficient  or  unavailable,  we may be required to modify our
growth and operating plans in accordance with the extent of available financing.
Any additional  equity  financing may involve  substantial  dilution to our then
existing shareholders.

Many of our  potential  competitors  could be  larger  than us and have  greater
financial  and other  resources  than we do and those  advantages  could make it
difficult for us to compete with them.

         Substantial  competition  can be expected in the future in the areas of
stroke   rehabilitation  and  incontinence   treatment.   Competitors  may  have
substantial financial,  technical,  marketing, and other resources.  Competition
could result in price reductions,  fewer orders, reduced gross margins, and loss
of market share.  These  companies  may use standard or novel signal  processing
techniques.  Other  companies may develop  rehabilitation  products that perform
better  and/or are less  expensive  than our products.  Competitors  may develop
products that are substantially equivalent to our FDA approved products, thereby
using our products as predicate  devices to more quickly obtain FDA approval for
their own. If overall  demand for our products  should  decrease it could have a
materially adverse affect on our operating results.

Failure  to keep pace with the  latest  technological  changes  could  result in
decreased revenues.

          The market  for our  services  is  characterized  by rapid  change and
technological  improvements.  Failure to respond in a timely and  cost-effective
way to these  technological  developments  could  result in serious  harm to our
business and operating  results.  We have derived,  and we expect to continue to
derive,  a substantial  portion of our revenues  from  creating  products in the
medical device industry.  As a result,  our success will depend, in part, on our
ability to develop and market product  offerings that respond in a timely manner
to the technological advances of our customers,  evolving industry standards and
changing client preferences.

We  are  dependent  on  the  sale  of our  four  products,  each  of  which  has
competition,  to generate revenues, the loss of which could significantly reduce
revenue.

         NeuroMove  NM900,  IF8000,  TruWave,  and E-Wave are all relatively new
products. Even though there is now an established market for all these products,
we may not succeed in building  sufficient  market  share in each market  niche.
This is especially  true for the TruWave and the E-Wave.  We also distribute the
AM800 device and other  products  from several  other  manufacturers.  Too low a
market share could eventually prevent profitability,  because we depend on sales
of these products for a substantial part of Zynex's revenue.



                                       3
<PAGE>

We are dependent on reimbursement from insurance companies; changes in insurance
reimbursement policies could result in decreased or delayed revenues

         A  large  percentage  of our  revenues  come  from  reimbursement  from
insurance companies. Upon delivery of our products to our customers, we directly
bill the customers'  private insurance company for  reimbursement.  If insurance
companies  do not pay  their  bills on a timely  basis or if they  change  their
policies to exclude  coverage  for our  products,  we could  experience  delayed
revenue recognition or a decline in our revenue.

A   manufacturer's   inability   to  produce  our  goods  on  time  and  to  our
specifications could result in lost revenue and net losses.

         A third-party  manufacturer  assembles and manufactures a large portion
of  our  products.  Our  products  are  manufactured  to our  specifications  by
manufacturers. The inability of a manufacturer to ship orders of our products in
a timely  manner or to meet our  quality  standards  could  cause us to miss the
delivery date requirements of our customers for those items,  which could result
in  cancellation  of orders,  refusal to accept  deliveries  or a  reduction  in
purchase  prices,  any of which  could  have a  material  adverse  effect as our
revenues  would  decrease  and we would incur net losses as a result of sales of
the product,  if any sales could be made.  Because of the timing and seriousness
of our business,  and the medical device  industry in  particular,  the dates on
which  customers  need and require  shipments of products  from us are critical.
Further, because quality is a leading factor when customers and retailers accept
or reject goods, any decline in quality by our third-party  manufacturers  could
be  detrimental  not  only  to a  particular  order,  but  also  to  our  future
relationship with that particular customer.

If we need to replace  manufacturers,  our expenses could increase  resulting in
smaller profit margins.

         We compete  with other  companies  for the  production  capacity of our
manufacturers and import quota capacity.  Some of these competitors have greater
financial and other  resources  than we have,  and thus may have an advantage in
the  competition  for production and import quota  capacity.  If we experience a
significant   increase  in  demand,  or  if  we  need  to  replace  an  existing
manufacturer,  we may have to expand our third-party  manufacturing capacity. We
cannot assure you that this additional  capacity will be available when required
on terms that are  acceptable  to us or similar to existing  terms which we have
with our  manufacturers,  either  from a  production  standpoint  or a financial
standpoint.  We enter into a number of purchase order  commitments  specifying a
time for  delivery,  method of payment,  design and quality  specifications  and
other standard industry provisions, but do not have long-term contracts with any
manufacturer.   None  of  the   manufacturers   we  use  produces  our  products
exclusively.

         Should we be forced to replace one or more of our  manufacturers,  then
we may experience an adverse financial impact, or an adverse operational impact,
such as being forced to pay increased costs for such  replacement  manufacturing
or delays in distribution  and delivery of our products to our customers,  which
could cause us to lose customers or lose revenues because of late shipments.

Our business is exposed to domestic and foreign currency fluctuations;  negative
changes in exchange rates could result in greater costs.

         Most  of  Zynex's  revenue,  expenses,  and  capital  spending  will be
transacted  in US  dollars.  Zynex's  exposure  to market  risk for  changes  in
interest rates relate  primarily to Zynex's cash and cash  equivalent  balances,
marketable securities, investment in sales-type leases, and loan agreements. The
majority of Zynex's  investments may be in short-term  instruments and therefore
subject  to  fluctuations  in US  interest  rates.  Due to the  nature  of  such
short-term investments,  we cannot assure you that this will not have a material
adverse impact on our financial condition and results of operations.



                                       4
<PAGE>

If we are unable to retain the services of Mr.  Sandgaard or if we are unable to
successfully  recruit qualified managerial and sales personnel having experience
in business, we may not be able to continue our operations.

         Our success depends to a significant  extent upon the continued service
of Mr. Thomas Sandgaard,  our Chief Executive  Officer,  Chief Financial Officer
and currently sole director.  Loss of the services of Mr. Sandgaard could have a
material adverse effect on our growth, revenues, and prospective business. We do
not maintain key-man  insurance on the life of Mr.  Sandgaard.  In addition,  in
order to  successfully  implement  and  manage  our  business  plan,  we will be
dependent upon, among other things, successfully recruiting qualified managerial
and sales  personnel  having  experience in business.  Competition for qualified
individuals is intense.  There can be no assurance that we will be able to find,
attract and retain existing  employees or that we will be able to find,  attract
and retain qualified personnel on acceptable terms.

Hospitals  and  clinicians  may  not  buy,  prescribe  or use  our  products  in
sufficient numbers, which could result in decreased revenues.

         Hospitals and  clinicians may not accept the NeuroMove  NM900,  IF8000,
TruWave, or E-Wave products as effective, reliable, and cost-effective.  Factors
that could prevent such institutional customer acceptance include:

         - If customers  conclude  that the costs of these  products  exceed the
cost savings associated with the use of these products;

         - If customers are financially unable to purchase these products;

         - If  adverse  patient  events  occur  with the use of these  products,
generating adverse publicity;

         - If we lack  adequate  resources to provide  sufficient  education and
training to Zynex's customers; and

         - If frequent product malfunctions occur, leading clinicians to believe
that the products are unreliable.

         If any of these or other factors results in the non-use or non-purchase
of our products, we will have reduced revenues to work from.

As a  result  of being  in the  medical  device  industry,  we need to  maintain
substantial  insurance  coverage,  which  could  become very  expensive  or have
limited availability.

         Our marketing and sale of products and services  related to the medical
device field creates an inherent risk of claims for liability.  As a result,  we
carry product  liability  insurance  with an aggregate  limit of $2,000,000  and
$1,000,000 per occurrence and will continue to maintain  insurance in amounts we
consider adequate to protect us from claims. We cannot,  however,  be assured to
have resources sufficient to satisfy liability claims in excess of policy limits
if required to do so. Also,  there is no assurance  that our insurance  provider
will not drop our insurance or that our insurance  rates will not  substantially
rise in the future,  resulting in increased  costs to us or forcing us to either
pay higher  premiums  or reduce  our  coverage  amounts  which  would  result in
increased liability to claims.

Our future depends upon obtaining regulatory approval of any new products and/or
manufacturing operations we develop; Failure to obtain regulatory approval could
result in increased costs and lost revenue.

         Before marketing any new products, we will need to complete one or more
clinical  investigations  of each  product.  There can be no assurance  that the
results of such clinical investigations will be favorable to us. We may not know
the results of any study,  favorable or unfavorable to us, until after the study
has  been  completed.  Such  data  must be  submitted  to the FDA as part of any
regulatory  filing seeking  approval to market the product.  Even if the results
are favorable,  the FDA may dispute the claims of safety,  efficacy, or clinical
utility and not allow the product to be marketed.  The sale price of the product
may not be enough to recoup  the  amount of our  investment  in  conducting  the
investigative studies.



                                       5
<PAGE>

We may incur substantial expenses and can be expected to incur losses.

         The area of medical device research is subject to rapid and significant
technological  changes.  Developments  and  advances in the medical  industry by
either  competitors  or neutral  parties  can affect  our  business  in either a
positive or negative  manner.  Developments  and changes in technology  that are
favorable to us may  significantly  advance the potential of our research  while
developments  and  advances  in research  methods  outside of the methods we are
using may severely hinder, or halt completely our development.

         We are a small  company in terms of  employees,  technical and research
resources  and  capital.  We are  expected  to  have  significant  research  and
development,  sales and marketing,  and general and administrative  expenses for
several years. These amounts may be expended before any commensurate incremental
revenue  from these  efforts may be  obtained.  These  factors  could hinder our
ability to meet  changes in the medical  industry as rapidly or  effectively  as
competitors with substantially more resources.

We may be unable to protect our trademarks, trade secrets and other intellectual
property rights that are important to our business.

         We regard our trademarks, trade secrets and other intellectual property
as an integral component of our success.  We rely on trademark law, trade secret
protection  and  confidentiality   and/or  license  agreements  with  employees,
customers,  partners and others to protect our intellectual property.  Effective
trademark and trade secret  protection  may not be available in every country in
which our  products  are  available.  We cannot be  certain  that we have  taken
adequate  steps to protect our  intellectual  property,  especially in countries
where the laws may not protect our rights as fully as in the United  States.  In
addition, if our third-party  confidentiality  agreements are breached there may
not be an adequate remedy  available to us. If our trade secrets become publicly
known, we may lose our competitive position.

Substantial costs could be incurred defending against claims of infringement.

         Other  companies,  including  competitors,  may obtain patents or other
proprietary rights that would limit,  interfere with, or otherwise  circumscribe
Zynex's  ability to make,  use, or sell  products.  Should there be a successful
claim  of  infringement  against  us and if we could  not  license  the  alleged
infringed  technology,   business  and  operating  results  could  be  adversely
affected.  There has been  substantial  litigation  regarding  patent  and other
intellectual  property rights in the medical device  industry.  The validity and
breadth of claims covered in medical  technology  patents  involve complex legal
and factual  questions for which important legal principles  remain  unresolved.
Any litigation claims against us,  independent of their validity,  may result in
substantial  costs and the diversion of resources  with no assurance of success.
Intellectual property claims could cause us to:

         - cease selling,  incorporating, or using products that incorporate the
challenged intellectual property,

         - obtain  a  license  from the  holder  of the  infringed  intellectual
property right on reasonable terms, if at all, and

         - re-design Zynex's products  incorporating the infringed  intellectual
property.

Commercialization  of our products could fail if implementation of our sales and
marketing strategy is unsuccessful.

         A significant  sales and  marketing  effort may be necessary to achieve
the level of market  awareness  and sales  needed to achieve  profitability.  We
currently have only limited sales and marketing  experience,  both in the US and
abroad,  which may limit our ability to  successfully  develop and implement our
sales and marketing strategy. We need to:

         -        hire and train sales and clinical specialists;

         -        build a strong direct sales force;

         -        manage geographically dispersed operations;

         -        encourage customers to rent or purchase products;



                                       6
<PAGE>

         -        explore  potential  OEM  relationships  and  assure  that OEMs
                  provide appropriate educational and technical support; and

         -        promote frequent product use to increase sales of consumables.

         The failure to successfully  create and implement a sales and marketing
strategy could result in increased costs and net losses.

Our business could be adversely affected by reliance on sole suppliers.

         Certain essential product  components may be supplied by separate sole,
or a limited  group of,  suppliers.  Some  components  may be purchased  through
purchase  orders  rather  than  through  long term supply  agreements  and large
volumes of inventory may not be maintained. There may be shortages and delays in
obtaining certain product  components.  Disruption of the supply or inventory of
components  could  result  in a  significant  increase  in the  costs  of  these
components  or could result in an inability to meet the demand for our products.
In addition,  if a change in the  manufacturer  of a key  component is required,
qualification of a new supplier may result in delays and additional  expenses in
meeting customer demand for products.

We may not be able to obtain  clearance of a 510 (k) notification or approval of
a  pre-market  approval  application  with  respect to any  products on a timely
basis, if at all.

         If timely  clearance  or  approval of  products  is not  obtained,  our
business  could  be  materially  adversely  affected.  Clearance  of a  510  (k)
notification may also be required before marketing certain  previously  marketed
products,  which  have been  modified  after  they have  been  cleared.  Planned
enhancements  to our current  products are thought not to necessitate the filing
of a new 510(k)  notification.  Should the FDA so  require,  the filing of a new
510(k) notification for the modification of the product may be required prior to
marketing any modified devices.

The  FDA  also  requires  adherence  to  Good   Manufacturing   Practices  (GMP)
regulations, which include production design controls, testing, quality control,
storage, and documentation procedures.

         To determine whether adequate compliance has been achieved, the FDA may
inspect our facilities at any time.  Such compliance can be difficult and costly
to  achieve.  Our  compliance  status may change  due to future  changes  in, or
interpretations of, FDA regulations or other regulatory  agencies.  Such changes
may result in the FDA  withdrawing  marketing  clearance  or  requiring  product
recall.  In addition,  any changes or  modifications to a device or its intended
use may  require us to reassess  compliance  with Good  Manufacturing  Practices
guidelines, potentially interrupting the marketing and sale of products. Failure
to comply  with  regulations  could  result in  enforceable  actions,  including
product seizures,  product recalls,  withdrawal of clearances or approvals,  and
civil and criminal penalties.

Our  business  is subject to  extensive  government  regulation,  the failure to
comply with which could result in significant penalties.

         Numerous state and federal government agencies extensively regulate the
manufacture,  packaging, labeling, advertising, promotion, distribution and sale
of our  products.  Our failure or inability to comply with  applicable  laws and
governmental  regulations may result in civil and criminal  penalties,  which we
are unable to pay or may cause us to curtail or cease  operations.  We must also
expend resources from time to time to comply with newly adopted regulations,  as
well as  changes  in  existing  regulations.  If we fail to  comply  with  these
regulations,  we could be subject  to  disciplinary  actions  or  administrative
enforcement actions.

Our principal  officer and director  owns a  controlling  interest in our voting
stock and investors will not have any voice in our management.

         Our officer and current sole director,  Thomas Sandgaard,  beneficially
own  approximately  83%  of our  outstanding  common  stock.  As a  result,  Mr.
Sandgaard will have the ability to control  substantially  all matters submitted
to our stockholders for approval, including:

         -        election of our board of directors;



                                       7
<PAGE>

         -        removal of any of our directors;

         -        amendment of our certificate of incorporation or bylaws; and

         -        adoption of  measures  that could delay or prevent a change in
                  control  or  impede  a  merger,  takeover  or  other  business
                  combination involving us.

         As a result of his  ownership and  position,  Mr.  Sandgaard is able to
influence all matters requiring stockholder approval,  including the election of
directors and approval of significant corporate transactions. In addition, sales
of significant amounts of shares held by Mr. Sandgaard, or the prospect of these
sales,  could  adversely  affect  the  market  price of our  common  stock.  Mr.
Sandgaard's  stock  ownership may discourage a potential  acquirer from making a
tender  offer or  otherwise  attempting  to obtain  control of us, which in turn
could  reduce our stock  price or prevent  our  stockholders  from  realizing  a
premium over our stock price.

Risks Relating to our Common Stock

Our  Common  Stock is  Subject  to the  "Penny  Stock"  Rules of the SEC and the
Trading Market in our  Securities is Limited,  Which Makes  Transactions  in our
Stock Cumbersome and May Reduce the Value of an Investment in our Stock.

         Since our common  stock is not listed or quoted on any  exchange  or on
NASDAQ, and no other exemptions  currently apply, trading in our common stock on
the Over-The-Counter Bulletin Board is subject to the "penny stock" rules of the
SEC.  These rules  require,  among other things,  that any broker  engaging in a
transaction  in our  securities  provide its  customers  with a risk  disclosure
document,   disclosure  of  market  quotations,   if  any,   disclosure  of  the
compensation of the broker and its salespersons in the transaction,  and monthly
account  statements  showing  the market  values of our  securities  held in the
customer's  accounts.  The brokers  must  provide bid and offer  quotations  and
compensation information before making any purchase or sale of a penny stock and
also provide this information in the customer's confirmation. Generally, brokers
may be less willing to execute  transactions in securities subject to the "penny
stock"  rules.  This may make it more  difficult for investors to dispose of our
common stock and cause a decline in the market value of our stock.



                                       8
<PAGE>

                                 USE OF PROCEEDS

         This  prospectus  relates  to shares of our  common  stock  that may be
offered and sold from time to time by the selling  stockholders  of our company.
There will be no proceeds to us from the sale of shares of common  stock in this
offering.  However, in the event that our outstanding warrants are exercised, we
may receive proceeds of up to $1,971,656.33.  Any such proceeds will be used for
working capital  purposes.  There can be no assurance that any of these warrants
will be exercised.



                                       9
<PAGE>

            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock is  currently  traded on the OTC  Electronic  Bulletin
Board under the symbol "ZYNX."

         The  following  table sets forth the range of high and low  closing bid
quotations  for our common stock for each quarter of the last two fiscal  years,
as reported on the Bulletin Board. The quotations represent  inter-dealer prices
without retail markup, markdown or commission, and may not necessarily represent
actual transactions.

                PERIOD                                       HIGH         LOW
                ------                                       ----         ---


 Year Ended December 31, 2002:
         Fourth Quarter (1) ..........................       1.00         0.75

 Year Ended December 31, 2003:
         First Quarter ...............................       1.25         0.10
         Second Quarter ..............................       1.45         0.20
         Third Quarter ...............................       1.00         0.15
         Fourth Quarter (2) ..........................       2.50         0.03

Year Ended December 31, 2004:
         First Quarter ...............................       3.05         2.00
         Second Quarter ..............................       4.10         1.90

____________________
(1)      Our stock first started trading December 30, 2002.
(2)      Reflects a 40:1 reverse split on December 16, 2003.

         On  July 2, 2004,  the closing  sale  price for our common  shares,  as
reported by the Bulletin Board, was $2.24 per share.

         As of June 29,  2004,  there  were  23,423,091  shares of common  stock
outstanding and there were  approximately  221 registered  holders of our common
stock.



                                       10
<PAGE>

                                 DIVIDEND POLICY

         We have never paid any cash  dividends on our capital  stock and do not
anticipate  paying any cash  dividends on the Common  Shares in the  foreseeable
future.  We intend to retain  future  earnings to fund  ongoing  operations  and
future capital  requirements of our business.  Any future  determination  to pay
cash dividends will be at the discretion of the Board and will be dependent upon
our financial  condition,  results of operations,  capital requirements and such
other factors as the Board deems relevant.



                                       11
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                            AND RESULTS OF OPERATIONS

         Some of the  information in this  prospectus  contains  forward-looking
statements that involve  substantial risks and  uncertainties.  You can identify
these  statements  by  forward-looking  words such as "may,"  "will,"  "expect,"
"anticipate," "believe," "estimate" and "continue," or similar words. You should
read statements that contain these words carefully because they:

         o        discuss our future expectations;

         o        contain  projections of our future results of operations or of
                  our financial condition; and

         o        state other "forward-looking" information.

         We believe it is important to communicate  our  expectations.  However,
there may be events in the future that we are not able to accurately  predict or
over which we have no control.  The risk factors listed in this section, as well
as any  cautionary  language  in this  prospectus,  provide  examples  of risks,
uncertainties  and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking  statements. You should
be aware that the occurrence of the events described in these risk factors could
have an adverse  effect on our  business,  results of  operations  and financial
condition.

Overview

         Improved  collection of claims and  institution  of more rigorous sales
procedures  instituted  during the quarter ended March 31, 2004 are beginning to
show results in increasing  the speed and amounts of funds  received for product
sales  and  rentals.  The fact  that we were able to  obtain  small  amounts  of
external  equity  financing  during the  quarter  enabled us to hire  additional
personnel  in the sales  function.  This action is  beginning  to show  positive
results as these sales people  enhance their  competency as regards our products
and familiarize themselves with our operating procedures. A unique aspect of our
medical device business is the need to pay for inventory and sales  remuneration
as much as several months before we begin receiving insurance  reimbursement for
the device.  This creates the situation where, unless sales growth is managed to
fit cash flow, we need injections of equity or debt to handle cash  requirements
resulting from the aggregation and  accumulation of sales expenses.  In order to
accelerate market penetration and sales growth, we require additional capital.

         Dependent  on the amount of such  additional  capital  available to the
company,  present plans are to invest a  substantial  portion of it in sales and
marketing,  manufacturing the inventory to support sales, and  infrastructure to
smoothly process the resulting transactions. Amounts of up to $5.0 million could
be  reasonably  employed in this manner this year.  We  constantly  evaluate the
alternative methods to obtain this capital on the most favorable terms. However,
there can be no assurance  that we will be able to locate  sources of capital on
such terms.

         We currently  have 19 full time  employees  compared to 9 at the end of
January  2004.  This  increase  reflects  expansion  of  our  sales  and  claims
departments  made  available  through  funding that the company  received  since
completing  its  reverse  acquisition  transaction.  These  expansions  mark the
beginning of our program to ramp up  introduction  of our  NeuroMove(TM)  stroke
rehabilitation  product and  conventional  product  offerings.  Expansion of the
claims  department was undertaken to be able to more readily process in a timely
fashion  the  insurance  billings  from  an  increased  level  of  activity.  We
anticipate,  subject to adequate  financing  levels,  we will continue to expand
both  departments,  as well as production,  in order to  continually  accelerate
product volumes and revenues.

Critical Accounting Policies

         Our discussion  and analysis of our financial  condition and results of
operations are based upon our financial statements,  which have been prepared in
accordance with accounting principles generally accepted in the United States of
America.  The  preparation  of these  financial  statements  requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses,   and  related  disclosure  of  contingent  assets  and
liabilities.  We monitor our estimates on an on-going basis for changes in facts
and  circumstances,  and material  changes in these estimates could occur in the
future.  Changes in  estimates  are  recorded in the period in which they become
known. We base our estimates on historical experience and other assumptions that
we believe to be reasonable under the  circumstances.  Actual results may differ
from our estimates if past experience or other assumptions do not turn out to be
substantially accurate.

         We have  identified  the  policies  below as critical  to our  business
operations and the understanding of our results of operations.

         Revenue  Recognition.  Sales and  rental  income is  recognized  when a
product has been  medically  prescribed  and  dispensed to a patient  and,  when
applicable,  a claim  prepared by the Company has been filed with the  patient's
insurance provider.

         Provision  for Sales  Returns,  Allowances  and Bad Debts.  The Company
maintains a provision for sales allowances, returns and bad debts. Sales returns
and allowances result from reimbursements from insurance providers that are less
than amounts claimed, as provided by agreement,  where the amount claimed by the
Company  exceeds  the  insurance  provider's  usual,  customary  and  reasonable
reimbursement  rate and when units are returned  because of benefit denial.  The
provision is provided for by reducing  gross  revenue by a portion of the amount
invoiced  during the relevant  period.  The amount of the reduction is estimated
based on historical experience.

         Reserve for  Obsolete/Excess  Inventory.  Inventories are stated at the
lower of cost or market. We regularly review our inventories and, when required,
will record a provision for excess and obsolete  inventory based on factors that
may impact the realizable value of our inventory including,  but not limited to,
technological changes,  market demand,  regulatory  requirements and significant
changes in our cost  structure.  If ultimate  usage  varies  significantly  from
expected  usage,  or other factors arise that are  significantly  different than
those anticipated by management,  inventory write-downs or increases in reserves
may be required.

RESULTS OF OPERATIONS  FOR THE YEAR ENDED DECEMBER 31, 2003 COMPARED TO THE YEAR
ENDED DECEMBER 31, 2002

     Net sales  and  rental  revenues  for year  ended  December  31,  2003 were
$1,083,912 as compared with  $1,281,823  for year ended  December 31, 2002.  The
decrease of $197,911,  or 15.4%,  was due to a decision  made by Zynex to reduce
its sales staff in early 2003. During 2002, the company expanded its sales force
and  experienced a rapid  increase in sales.  However,  the company  didn't have
sufficient   resources  necessary  to  finance  the  increased  working  capital
requirements  nor create the  infrastructure,  i.e.,  customer  service,  claims
processing,  operations,  etc.,  required  to  support  this  increased  growth.
Therefore,  operations  were scaled  back to allow the company  time to seek new
sources of capital and begin  developing  the systems  and  processes  needed to
support a higher level of sales.



                                       12
<PAGE>

         Cost of sales and rentals  declined  $151,602  from $337,683 in 2002 to
$186,081  in 2003.  Cost of sales and rentals as a  percentage  of net sales and
rental  revenue  declined  from 26.3% in 2002 to 17.2% in 2003.  The decrease in
cost of sales and  rentals is due to lower  sales  volume and the product mix of
sales.  The decrease in cost of sales and rentals as a  percentage  of net sales
and rental  revenue  is due to an  increase  in  manufactured  products  sold in
relation to product  purchased for resale.  Manufactured  products  yield higher
gross margins than products purchased for resale.

         Selling,  general  and  administrative  expense  decreased  $98,767  to
$762,819 in 2003. The decline in selling, general and administrative is due to a
decrease of $156,523 in sales commission  expense offset by an increase in legal
expense of $40,569.

         The  provision  (benefit)  for income taxes was 37.9% of income  before
income taxes in 2003 versus (11.8%) in 2002.  The benefit of $2,200  recorded in
2002 results from utilization of net operating carryovers generated in 2001.

RESULTS OF OPERATIONS  FOR THE THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO THE
THREE MONTHS ENDED MARCH 31, 2003

Net Sales and Rental Income

         Net sales for the three months ended March 31, 2004 decreased  10.1% to
$262,941  compared with $292,335 for the three months ended March 31, 2003. This
decrease  is  primarily  due to higher than normal  credits  recorded  for sales
allowances and returns during the quarter ended March 31, 2004.

Gross Profit

         Gross  profit  for the three  months  ended  March 31,  2004  decreased
$34,273,  or 13.7%,  compared  to the three  months  ended March 31,  2003.  The
decrease  occurred  despite higher unit shipments during the quarter ended March
31, 2004.  The gross  profit  generated by these higher unit sales was offset by
the  reduction in revenue that  resulted  from the increase in the provision for
sales allowances and returns. The gross profit margin for the three months ended
March 31, 2004 was 82.5% as compared with 85.9% for the three months ended March
31, 2003.

Selling, General and Administrative

         Selling,  general and  administrative  expenses increased from $196,026
for the three-month  period ended March 31, 2003 to $387,767 for the three-month
period ended March 31, 2004. The increase is due to stock  compensation  expense
of $61,727  recognized  during the quarter  ended  March 31,  2004 for  warrants
issued to  consultants  for services  rendered  relating to our reverse  merger,
increased accounting expenses relating to our initial audit, legal fees incurred
in  connection  with the  reverse  merger  and  higher  payroll  costs due to an
increase in headcount.

Income Tax Provision

     The income tax benefit  recorded  for the  quarter  ended March 31, 2004 is
based on the estimated  annualized  effect of carrying  back current  period net
operating losses to prior years.

Liquidity and Capital Resources

          We have a deficit in working capital of $193,985 as of March 31, 2004.
New debt  financing  and proceeds  from the sale of common stock of $236,332 was
used to finance new  equipment and  operating  activities.  In order to maintain
current  operating  levels  during the balance of fiscal  2004,  we will need to
refinance  existing  notes  payable  due in 2004 and  obtain  new debt or equity
financing. We are currently evaluating potential sources of additional capital.

         Following  is a summary of cash flows for year ended  December 31, 2002
and 2003:



                                       13
<PAGE>

                                                            2002         2003
                                                         ---------    ---------
Net cash provided from operations                        $  50,492    $ 189,084
Net cash provided from (used in) investing activities        2,108      (10,004)
Net cash used in financing activities                      (54,276)    (179,080)
                                                         ---------    ---------
  Net increase (decrease) in cash                        $  (1,676)   $      --

         Net cash  provided  from  operations  of $189,084 in 2003 was  $138,592
higher  that 2002.  The  increase  was  primarily  due to a decrease in accounts
receivable attributed to lower sales in 2003.

         Net cash used in investing activities was $10,004 in 2003 and consisted
of additions to property and equipment  (principally  computers and peripherals)
as  compared  to $2,108  provided  by  investing  activities  in 2002  resulting
primarily from decreased deposits.

         Net cash used in  financing  activities  was  $179,080  in 2003  versus
$54,276 in 2002.  The increase in net cash used in financing  activities was due
to repayment of advances from stockholder and higher principal payments on notes
payable and capital lease obligations.

         We  believe  that  available  cash  will be  adequate  to fund our cash
requirements for the current year. However, if we are unsuccessful in increasing
revenues to plan levels, or if actual spending exceeds our estimates,  we may be
required to find other sources of financing or reduce our operating costs.

         Contractual obligations at March 31, 2004 consist of the following:
<TABLE>
<CAPTION>

                                                        Payments Due by Period
                                    ------------------------------------------------------------
                                                 Less than                         After
                                       Total     1 year    1-3 years  4-5 years    5 years
                                       -----     ------    ---------  ---------    -------

<S>                                  <C>        <C>        <C>         <C>         <C>
Notes payable                        $133,714   $133,714   $      -    $     -     $     -
Long-term obligations                 130,074     78,566     37,689     13,819           -
Capital lease obligations              23,628     10,905     12,723                      -
Operating leases                      460,564     63,664    306,544     90,356           -

Total contractual cash obligations   $747,980   $286,849   $356,956   $104,175     $     -
</TABLE>

                               PLAN OF OPERATIONS

         The plan of operations for the next twelve months involves creating the
internal infrastructure  required to support increased revenues,  increasing the
number of field sales representatives by a factor of 15, procuring and producing
sufficient  stocks of inventory  (both in-house and  inventories  consignable to
clinics  and the like) to support  increased  sales  activities,  ensuring  that
adequate  quality  systems  meeting  all  regulatory   requirements   exist  and
developing  marketing strategies to increase awareness of our products and their
unique   capabilities.   We  have  already  taken  steps  towards  building  our
infrastructure by filling the positions of Vice President of Sales,  Director of
Marketing  and Director of Finance.  We are  currently  recruiting a Director of
Operations.  In June,  2004, we also  launched a recruiting  campaign to attract
field sales  representatives.  In  addition,  we have  expanded  our billing and
collection  department.  A new  patient  database  system  designed  to  improve
billing,  collection  and inventory  tracking is nearing  completion  and should
begin operation during the third quarter 2004.

         On June 4, 2004, we received net proceeds of  approximately  $1,030,000
from the sale of 684,715  shares of common  stock  plus  warrants.  Although  we
believe we have  sufficient  cash to execute our operating plans during the next
twelve  months,  a change in  variables  such as the actual rate of growth could
create a need for additional capital.



                                       14
<PAGE>

BUSINESS

History

         Zynex  Medical,  Inc.,  our  wholly-owned  operating  subsidiary,   was
incorporated under the laws of the state of Colorado on March 3, 1998, under the
name of "Stroke  Recovery  Systems,  Inc." On October  1,  2003,  Zynex  Medical
acquired,  through a merger, the assets and the liabilities of Dan Med, Inc. and
changed its name to "Zynex Medical, Inc."

         Dan Med was established  with its main activities being the importation
of European  made  devices  for  electrotherapy  until 1999,  when Dan Med began
developing and  manufacturing its own line of  electrotherapy  devices.  Its own
products now constitute over 80% of Dan Med sales and are continuously growing.

         Stroke Recovery Systems was established with its main activity being to
provide electrotherapy devices for homecare to US patients suffering the effects
of a stroke.  Until the beginning of 2002, 95% of all Stroke  Recovery  Systems'
revenues were generated from an imported product,  the AutoMove.  In early 2002,
Stroke Recovery  Systems  introduced the entire Dan Med product line of standard
electrotherapy  products  by  adding a small  sales  force.  In  2002,  standard
electrotherapy products generated over 75% of Stroke Recovery Systems' revenues.

         In 2003,  Stroke  Recovery  Systems and Dan Med were merged in order to
simplify the operating and capital structure of both companies.

         We  have   developed   a  strong   product   line  to  compete  in  the
electrotherapy  market as well as a unique product,  the NeuroMove(TM),  for the
stroke  rehabilitation  market  segment.  We  are  not  currently  aware  of any
competition in this very attractive market segment. All our products are cleared
by the Food and Drug Administration for sale in the United States,  backed up by
a significant  volume of  scientific  evidence,  and  generally  accepted in the
medical  community.  In the United  States,  our products  require a physician's
prescription before they can be dispensed.  All our products have been developed
by our founder, Thomas Sandgaard.

         The business  model is developed  around the  physician's  prescription
being  considered  an "order" -- to provide the product to the patient.  Then we
bill the  patient's  private  insurance or Medicare for payment.  We promote our
standard  electrotherapy  products to physicians through a direct sales force or
by using various marketing tools to both consumers and specialty  physicians for
our stroke  rehabilitation  product.  Our  NeuroMove(TM)  stroke  rehabilitation
product is marketed  directly to the end-users and  physicians who specialize in
rehabilitation.

Description of Therapy Devices and Techniques

         Electrotherapy  is  gaining  acceptance  in the  United  States  as its
established use continues to grow worldwide. Electrical stimulation is not known
to have any side effects, which is a significant advantage over most medications
used for  relief of pain or other  therapies.  Applications  for this  treatment
technique are many and include:  pain relief,  increasing  blood flow,  reducing
edema,  preventing venous  thrombosis,  increasing a patient's  range-of-motion,
preventing muscle disuse atrophy,  reducing urinary  incontinence and stroke and
spinal cord injury rehabilitation.

         Technically,   electrotherapy   pain  relief  is  accomplished  by  the
introduction of an electrical current applied through surface electrodes,  which
"distorts" a pain signal on its way to the central nervous system and the brain.
Applying higher levels of electricity causes muscle  contractions and, depending
on the  placement of  electrodes,  may improve any of the  conditions  mentioned
above.

         All our units are  designed  to be used in a home  setting,  thus being
very cost effective compared to traditional  therapy,  easy to use and producing
outcomes  such as improved  mobility,  less pain,  and an ability to get back to
work significantly earlier than with traditional therapies.

Patient Needs and Clinical Outcomes

Pain.



                                       15
<PAGE>

         Electrical  stimulation  has been  shown to reduce  most types of local
pain, such as tennis elbow, neck or low back pain, arthritis,  and so forth. The
devices  used  to  accomplish  this  are  commonly  described  as  TENS  devices
(Transcuteanous  Electrical Nerve Stimulation).  Electrical stimulation is often
chosen as an alternative to or in combination with regular pain medication. Both
patients who suffer from acute pain (i.e.,  shortly after an injury) and chronic
pain can benefit  from  treatment  by TENS and similar  type  devices.  Numerous
clinical   studies  have  been  published  over  several   decades  showing  the
effectiveness  of TENS for pain relief.  TENS is sometimes  more  effective than
medication.  We have  developed two products in this  category,  the TruWave,  a
digital TENS device and the IF8000, an interferential  stimulator which offers a
deeper and  stimulation.  The TruWave is a "traditional"  TENS type unit whereas
the IF8000 is a very sophisticated unit with pain alleviating,  biofeedback, and
neuromuscular  training settings.  Both these products have been approved by the
FDA and are available to the market.

Muscle related problems.

         Electrical  muscle  stimulation  is  technically  achieved  in the same
fashion as TENS and by  increasing  the  electrical  intensity  to cause  muscle
contractions.  A built-in  timer  assures  that the  muscles do not  fatigue too
easily.  Many modalities  usually performed with regular physical therapy can be
replaced by  NeuroMuscular  Electrical  Stimulation  (NMES) devices for use in a
patient's home.  Common  applications are to prevent disuse atrophy,  increasing
strength,  increasing  range-of-motion,  and increasing local blood circulation.
NMES is commonly  considered a complement to physical therapy to improve overall
patient outcomes.  We have developed a specific digital device,  the E-Wave, for
this  application.  The IF8000 also has the capability to be programmed for NMES
applications.  Both  the  IF8000  and  the  E-Wave  are  cleared  by the FDA and
available to the market.

Post-op recovery:

         Electrical  stimulation  is found to be  effective in  preventing  deep
venous  thrombosis  immediately  after surgery,  as well as for pain relief,  to
improve  local  blood  circulation  and for  reducing  edema.  The  most  common
application is immediately post-orthopedic surgery. We believe the IF8000 is the
most effective of our products for these applications.

         A stroke usually  impacts a stroke  survivor's  mobility,  speech,  and
memory. A stroke most often only impacts one side of the body, opposite the part
of the brain where the stroke occurred.  It is documented that 70% of all stroke
survivors have significant  mobility  impairments  after the acute stage and, in
most cases, have to live with the disability for the rest of their lives.

         The need to regain movement  capability in their extremities exists for
nearly all of the 4 million  stroke  survivors  in the United  States who suffer
from mobility impairments in upper and/or lower extremities.

         Our NeuroMove(TM) NM900 serves the need for, first and foremost, a hope
that further patient  improvements  over their current physical ability plateaus
are possible.  After using the device,  the patient  increases  mobility and can
engage in more  activities,  becoming more  productive  for himself,  as well as
reducing the accident risk due to mobility  impairments.  Device payers (private
insurance,  Medicare and Medicaid)  may, in our opinion,  experience  less total
cost for caring for stroke  victims,  due to fewer  accidents and a reduction in
expensive  rehabilitation  when compared to  traditional  post-stroke  treatment
regimes.  Physicians can, with the  NeuroMoveTM,  offer a new treatment  option,
specifically for stroke patients, that will significantly improve their clinical
outcomes. The NeuroMove(TM) has been specifically approved by the FDA for stroke
rehabilitation. We have recently launched this new product into the market.

         There are approximately 4 million stroke survivors in the United States
who have an impeded ability to move their limbs. This number is expected to grow
more than 8% annually  for the near future as the  population  ages.  The annual
cost to  society of caring for stroke  victims  is  approximately  $45  billion,
including direct costs, lost productivity,  etc. The inability to move one's arm
and/or  hand  and/or  leg has a  substantial  psychological  impact  on a stroke
victim. In addition,  stroke victims commonly suffer additional  injuries due to
their inability to protect themselves if they are falling or stumbling.

Our Market

         The annual  domestic  market for  standard  electrotherapy  products is
currently  around $400 million and is experiencing a moderate growth rate, while
the market for stroke  rehabilitation  technology has only started to develop in
our opinion.  There are over 4 million  stroke  survivors  in the United  States
alone with a need for stroke recovery therapy equipment.



                                       16
<PAGE>

         We plan to focus on developing the stroke rehabilitation market segment
with our unique  technology.  This  market  segment is  believed to offer us the
greatest  potential  for  profitable,  massive  growth.  We plan to increase our
penetration of the market for standard  electrotherapy products by expanding our
sales  organization.  These  products  can not only add sales  growth  with high
profit margins, but are a significant addition to building manufacturing and R&D
efficiency, due to the common technology platform.

         Key characteristics of the target markets are:

         * A long time is generally  required to collect  payment from insurance
carriers (averages 100 to 200 days).

         *  Significant  insurance  "adjustments"  are  made  by  the  insurance
companies prior to payment.

         * Management  believes that a unique  opportunity  exists in the stroke
and spinal cord injury rehabilitation  markets, which show a type of demand of a
large  number of patients  willing to  privately  pay for a product  such as the
NeuroMove(TM).

         Our  strategy is to use our core  technology  to grow in two  different
market  segments:  the market  for  standard  electrotherapy  and the market for
stroke rehabilitation  equipment. The geographical focus will continue to be the
United States  market.  International  expansion may come only after  securing a
strong position in the United States.

         Marketing  of our  products  has been  accomplished  through the use of
commission  sales  people who call on doctors  and  therapists.  The doctors and
therapists then write a prescription  for our products,  which the patient sends
to us for  fulfillment.  This method of sales is  expected  to continue  for our
products other than the NeuroMove(TM).  In January 2003, we had to cut our sales
force for products other than the  NeuroMove(TM)  from ten people to three. This
was  necessitated  by the need to improve  receivables  collections so that they
would cover the cost of goods sold, sales commissions,  order processing, and so
forth. As collections from standard  products  improve,  it is our intent to add
sales  force in that  market  segment,  as we believe  we can grow the  standard
product revenues significantly with more sales people in the field.

Manufacturing and Processing

         Our strategy in manufacturing consists of the following elements:

         * At all  times,  comply  with  relevant  regulatory  requirements  and
regulations.

         * Use  contract  manufacturers  as much as possible,  thereby  avoiding
large capital investments and being able to respond to changes in volume as fast
as possible.  Domestically and internationally,  there is a large pool of highly
qualified contract  manufacturers for the type of devices we manufacture,  which
also ensures a very competitive bidding process.

         * Purchase the components themselves, to ensure a consistent quality to
the  manufacturing  base and to give us the  ability to  undertake  the  initial
quality  control of the  components.  It is faster to approve  second sources by
having the components  come to our facility and avoiding  shortcuts  potentially
made by the contract assembly company.

         * Test all units 100% in a real-life  environment to ensure the highest
possible  quality and the safety of patients.  This allows us to  establish  and
maintain a quality image as a company and reduce the cost of warranty repairs.

         All  assembly  of units as well as  testing is  accomplished  in-house.
There are no contracts with third party manufacturers.  There are many producers
of the types of subassemblies needed to manufacture our products;  thus, we have
not found it necessary to contract with any particular producer as a result.



                                       17
<PAGE>

Products Purchased for Resale

         We   distribute   a  number  of  products   from  other   domestic  and
international  manufacturers  in order to  complement  our  core  product  line,
including  electrical   stimulation  devices  and  patient  supplies,   such  as
electrodes.  Customarily,  there are not formal contracts between vendors in the
durable  medical  equipment  industry.  Replacement  products and components are
easily found, either from our own products or other manufacturers.

Patents

         We have  applied  for a patent on our  NeuroMove(TM)  technology.  With
regard to our other  products,  we believe  that the  products  contain  certain
proprietary software that protects them from being copied. In the future, we may
seek patents for advances to our existing  products and for new products as they
are developed.

Regulatory Approval and Process

         All our products are  classified  as Class II (Medium  Risk) devices by
the Food and Drug  Administration  (FDA) and clinical  studies with our products
are  considered  to be NSR  (Non-Significant  Risk  Studies).  Our  business  is
governed by the FDA and all products  typically  require 510(k) market clearance
before they can be put in commercial distribution.  We are also regulated by the
FDA's QSR  regulation  (Quality  Systems  Regulation),  which is  similar to the
ISO9000 and the European EN46000 quality control  regulations.  All our products
currently  in  production  or  manufactured  by other  vendors are  approved for
marketing in the United States under FDA's 510(k) regulations.

         To enter the  European  market,  our  products  as well as our  quality
assurance  systems  will have to be  approved  and  certified  by an  authorized
certifying body such as TUV, UL or BSI. In the future, we may plan to go through
this process as a part of its overall enhancement of the quality systems.

         Far East,  Middle East,  Eastern  European,  and Latin American markets
have  different  regulatory  requirements.  We intend to comply with  applicable
requirements if and when we decide to enter those markets.

Government Regulation

         The delivery of health care  services has become one of the most highly
regulated of professional and business endeavors in the United States.  Both the
federal   government  and  individual  state  governments  are  responsible  for
overseeing the activities of individuals and businesses  engaged in the delivery
of health care services.  Federal law and  regulations  are based primarily upon
the Medicare and Medicaid programs. Each of these programs is financed, at least
in part,  with  federal  funds.  State  jurisdiction  is based upon the  state's
interest in  regulating  the quality of health care in the state,  regardless of
the source of payment.  We believe we are materially  complying with  applicable
laws;  however, we have not received or applied for a legal opinion from counsel
or from any federal or state  judicial or  regulatory  authority.  Additionally,
many  aspects  of our  business  have not been the  subject  of state or federal
regulatory  interpretation.  The laws  applicable  to us are subject to evolving
interpretations.  If our operations are reviewed by a government  authority,  it
may receive a determination that could be adverse to us. Furthermore,  laws that
are applicable to us may be amended in a manner that could adversely affect us.

         Federal  health  care  laws  apply  to us when  we  submit  a claim  to
Medicare,  Medicaid  or any other  federally  funded  health care  program.  The
principle federal laws that we must abide by in these situations include:

         * Those  that  prohibit  the  filing of false or  improper  claims  for
federal payment.

         * Those that prohibit unlawful inducements for the referral of business
reimbursable under federally funded health care programs.

         * The federal government may impose criminal,  civil and administrative
penalties  on anyone who files a false claim for  reimbursement  from  Medicare,
Medicaid or other federally funded programs.

         A federal law commonly known as the  "anti-kickback  law" prohibits the
knowing or willful solicitation,  receipt,  offer or payment of any remuneration
made in return for:

         * The referral of patients  covered under Medicare,  Medicaid and other
federally-funded health care programs; or



                                       18
<PAGE>

         * The  purchasing,  leasing,  ordering,  or  arranging  for any  goods,
facility, items or service reimbursable under those programs.

Employees

          As of June 24, 2004, we employed 19 full time employees, of which five
are executives,  11 are administration and 3 are in sales and marketing. We also
employ  a  number  of  commission  sales  representatives  who  are  independent
contractors. We believe our relations with all of our employees are good.

Properties

         We presently occupy 10,000 square feet of office and warehouse space in
a modern  office  park  setting  in  Littleton,  Colorado.  The space is under a
five-year  contract  expiring in February 2009.  Current rent is $45,000 a year,
which will increase to $92,500 a year  starting  March 1, 2005 and will increase
$2,500  a  year  thereafter.   The  present  configuration  of  the  space  will
accommodate  40-50 people. We believe that our leased property is sufficient for
our current and immediately foreseeable operating needs.

Legal Proceedings

         From time to time, we may become involved in various lawsuits and legal
proceedings which arise in the ordinary course of business.  However, litigation
is subject to inherent  uncertainties,  and an adverse  result in these or other
matters may arise from time to time that may harm our business. We are currently
not aware of any such legal  proceedings  or claims  that we believe  will have,
individually  or in the  aggregate,  a material  adverse affect on our business,
financial condition or operating results.



                                       19
<PAGE>

                                   MANAGEMENT

Directors and Executive Officers

Our directors,  executive officers and key executives,  and their ages as of the
date hereof, are as follows.

 ---------------------- ------ -------------------------------------------------
 NAME                     AGE  POSITION
 ---------------------- ------ -------------------------------------------------
 Thomas Sandgaard         46   President, Chief Executive Officer and Director
 ---------------------- ------ -------------------------------------------------

Set  forth  below is a  biographical  description  of our  director  and  senior
executive officer based on information supplied by him.

         Thomas  Sandgaard  is  President,  Chief  Executive  Officer  and  sole
Director of Zynex.  Mr.  Sandgaard has a degree in electronics  engineering from
the  Odense  Teknikum  and an MBA from the  Copenhagen  Business  School and has
worked  in many  different  positions  in  industries  such  as  semiconductors,
telecommunications,  data communications,  and medical equipment.  Mr. Sandgaard
moved to the US from  Denmark in 1996,  where he founded DMI and Zynex  Medical,
Inc. in 1996 and 1998, respectively.

Board of Directors

         All of our  directors  hold  office  until the next  annual  meeting of
stockholders  and the  election  and  qualification  of  their  successors.  Our
executive officers are elected annually by the Board of Directors to hold office
until the first  meeting  of the Board  following  the next  annual  meeting  of
stockholders and until their successors are chosen and qualified.

Director and Executive Compensation

         Directors  serve  without  cash  compensation  and without  other fixed
remuneration.  We reimburse our  directors  for expenses  incurred in connection
with attending Board meetings.

Section 16(a) Beneficial Ownership Reporting Compliance

         Since we are governed  under  Section 15(d) of the Exchange Act, we are
not required to file reports of executive officers and directors and persons who
own more  than 10% of a  registered  class of the  Company's  equity  securities
pursuant to Section 16(a) of the Exchange Act.



                                       20
<PAGE>

                             EXECUTIVE COMPENSATION

         The following  tables set forth certain  information  regarding our CEO
and each of our most  highly-compensated  executive  officers whose total annual
salary and bonus for the fiscal year ending  December  31,  2003,  2002 and 2001
exceeded $100,000:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                  ANNUAL COMPENSATION

                                                             Other
                                                             Annual      Restricted     Options      LTIP
   Name & Principal                Salary        Bonus       Compen-       Stock         SARs       Payouts      All Other
       Position           Year       ($)          ($)        sation ($)   Awards($)       (#)         ($)      Compensation
------------------------ ------- ------------ ------------ ------------ ------------- ----------- ------------ --------------
<S>                       <C>      <C>             <C>            <C>
Thomas Sandgaard          2003     51,525          0         Note 1          -            -            -             -
  President and Chief     2002     99,000          0         Note 1          -            -            -             -
  Executive Officer       2001     91,000          0         Note 1          -            -            -             -
------------------------ ------- ------------ ------------ ------------ ------------- ----------- ------------ --------------
</TABLE>

(1) We also pay for 100% of Mr. Sandgaards's health insurance, dental and vision
plan. In addition, two company vehicles are provided at our expense. We also pay
for two home telephone lines.

Employment Agreements

Thomas Sandgaard

         On February 1, 2004, we entered into a three-year  employment agreement
with Thomas Sandgaard to serve as our President and Chief Executive Officer. The
agreement  expires  January  31,  2007;  if  written  notice is not  given,  the
agreement  will  automatically  be extended  for an  additional  2-year  period.
Initial annual compensation under the agreement is $174,000.  This amount may be
increased  annually at the board of directors'  discretion.  The agreement  also
provides  for a 50% annual  bonus in the event that annual net  revenue  exceeds
$2.25 million,  insurance and benefit plans provided by us, as well as a company
provided vehicle. The agreement includes a non-compete provision for the term of
the agreement extended to 24 months after termination of the agreement.

Employee Stock Incentive Plan

         None.

Option  Grants to the Named  Executive  Officers  and  Directors as of March 31,
2004:

         None.



                                       21
<PAGE>

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None.









                                       22
<PAGE>


         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding beneficial
ownership  of our  common  stock as of June 29,  2004 (i) by each  person who is
known by us to beneficially  own more than 5% of our common stock;  (ii) by each
of our officers and directors; and (iii) by all of our officers and directors as
a group.


<TABLE>
<CAPTION>
                                                                  Percent               Percent
Name  and  Address  of   Beneficial       Shares of          of Class Prior to       of Class After
Owner**                                  Common Stock             Offering            Offering ***
--------------------------------------------------------------------------------------------------------
<S>                                           <C>                           <C>                   <C>
Thomas Sandgaard                              19,465,000                    83.1%                 79.4%

All  officers,  directors  and  key
executives (1 Person)                         19,465,000                    83.1%                 79.4%
</TABLE>


** c/o 8100 South Park Way, Suite A-9, Littleton, CO 80120.
*** Percentage based upon 24,520,238 shares of common stock,  which assumes that
all shares underlying warrants being registered in this Offering will be sold.

Beneficial  Ownership  is  determined  in  accordance  with  the  rules  of  the
Securities and Exchange  Commission and generally  includes voting or investment
power with respect to  securities.  Shares of common stock subject to options or
warrants  currently  exercisable or  convertible,  or exercisable or convertible
within  60 days of June 29,  2004  are  deemed  outstanding  for  computing  the
percentage  of the person  holding  such  option or  warrant  but are not deemed
outstanding  for computing the percentage of any other person.  Percentages  are
based on a total of 23,423,091  shares of common stock  outstanding  on June 29,
2004,  and the  shares  issuable  upon the  exercise  of  options  and  warrants
exercisable on or within 60 days of June 29, 2004, as described below.



                                       23
<PAGE>

                            DESCRIPTION OF SECURITIES

         The  following  description  of our  capital  stock is a summary and is
qualified in its entirety by the  provisions  of our articles of  incorporation,
with  amendments,  all of which have been filed as exhibits to our  registration
statement of which this prospectus is a part.

Common Shares

         We are  authorized to issue up to  100,000,000  shares of Common Stock,
par value $.001.  As of June 29, 2004,  there were  23,423,091  shares of common
stock issued and  outstanding.  Holders of common stock are entitled to one vote
for each share held of record on all matters to be voted on by the shareholders.
The holders of common stock are entitled to receive dividends ratably,  when, as
and if declared by the board of directors,  out of funds legally  available.  In
the event of a  liquidation,  dissolution  or  winding-up  of us, the holders of
common stock are entitled to share  equally and ratably in all assets  remaining
available for  distribution  after payment of liabilities and after provision is
made for each class of stock, if any,  having  preference over the common stock.
The holders of shares of common stock, as such, have no conversion,  preemptive,
or other subscription rights and there are no redemption  provisions  applicable
to the common stock.  All of the outstanding  shares of common stock are validly
issued, fully-paid and nonassessable.

Preferred Shares

         We are authorized to issue up to 10,000,000  shares of preferred stock,
par value $.001.  As of June 29, 2004,  there were no shares of preferred  stock
issued and  outstanding.  The shares of preferred  stock may be issued in series
and shall have such voting powers,  full or limited,  or no voting  powers,  and
such  designations,  preferences and relative  participating,  optional or other
special rights,  and  qualifications,  limitations or restrictions  thereof,  as
shall be stated and expressed in the resolution or resolutions providing for the
issuance of such stock adopted from time to time by the board of directors.  The
board of directors is expressly  vested with the  authority to determine and fix
in the resolution or resolutions  providing for the issuances of preferred stock
the voting powers, designations, preferences and rights, and the qualifications,
limitations or restrictions  thereof, of each such series to the full extent now
or hereafter permitted by the laws of the State of Nevada.

Warrants and Options

         As of June 24, 2004, we had outstanding warrants and options to acquire
approximately  1,217,144  shares of common stock,  exercisable at prices ranging
between $0.01 and $2.00.

         On March 7, 2004,  we issued a total of 120,000  warrants  to  purchase
common  stock for five years to an employee  and two  consultants  for  services
provided;  110,000 of the  warrants are  exercisable  at $3 per share and 10,000
warrants are exercisable at $.55 per share.  The closing market quotation of the
stock was $2.75 per share on March 7, 2004.

         In connection  with the sale of 685,715 shares of our common stock in a
private  placement to five accredited  investors in June 2004, we issued 342,859
class A warrants,  685,715  class B warrants and 22,858  class C warrants,  with
each warrant representing the right to purchase one share of our common stock at
an exercise price of $1.75, $2.00 and $0.01,  respectively,  per share until one
hundred  fifty  (150)  days  after  the  effective  date  of  this  registration
statement. The exercise price and the number of shares issuable upon exercise of
the warrants will be adjusted upon the occurrence of certain  events,  including
the  issuance  of  common  stock  as a  dividend  on  shares  of  common  stock,
subdivisions,  reclassifications or combinations of the common shares or similar
events.  The  warrants  also  contain  provisions  protecting  against  dilution
requiring that the sale of additional  shares of common shares for less than the
exercise  price of the warrants or the current  market  price of our  securities
results in the  adjustment of the exercise  price to the lower issue price.  The
warrants  do not  entitle  warrant  holders to any  voting or other  rights as a
shareholder until such warrants are exercised and common shares are issued.

         Additionally,  in connection with the sale of the 685,715 shares of our
common  stock,  we agreed to issue the  placement  agent  five-year  warrants to
purchases  45,715  shares  of our  common  stock  plus a number of shares of our
common stock equal to 10% of the number of shares exercised by the class A and B
warrant holders, at an exercise price of $0.01 per share.



                                       24
<PAGE>

Transfer Agent

         Colonial Stock Transfer, 66 Exchange Place, Salt Lake City, Utah 84111,
is the transfer agent and registrar for our securities.
















                                       25
<PAGE>

                              PLAN OF DISTRIBUTION

         The selling stockholders and any of their respective non-sale pledgees,
non-sale donees,  non-sale  assignees and other non-sale  successors-in-interest
may,  from time to time,  sell any or all of their shares of common stock on any
stock exchange,  market or trading facility on which the shares are traded or in
private  transactions.  These sales may be at fixed or  negotiated  prices.  The
selling  stockholders  may use any one or  more of the  following  methods  when
selling shares:

         o        ordinary brokerage  transactions and transactions in which the
                  broker-dealer solicits the purchaser;

         o        block trades in which the  broker-dealer  will attempt to sell
                  the shares as agent but may  position  and resell a portion of
                  the block as principal to facilitate the transaction;

         o        purchases by a  broker-dealer  as principal  and resale by the
                  broker-dealer for its account;

         o        an exchange  distribution  in accordance with the rules of the
                  applicable exchange;

         o        privately-negotiated transactions;

         o        short sales;

         o        broker-dealers may agree with the selling stockholders to sell
                  a specified  number of such shares at a  stipulated  price per
                  share;

         o        through the writing of options on the shares

         o        a combination of any such methods of sale; and

         o        any other method permitted pursuant to applicable law.

         The selling  stockholders may also sell shares under Rule 144 under the
Securities  Act, if available,  rather than under this  prospectus.  The selling
stockholders  shall  have the sole and  absolute  discretion  not to accept  any
purchase  offer or make any sale of shares if they deem the purchase price to be
unsatisfactory at any particular time.

         The selling stockholders may pledge their shares to their brokers under
the margin provisions of customer agreements. If a selling stockholders defaults
on a margin loan, the broker may, from time to time,  offer and sell the pledged
shares.

         The selling  stockholders  may also  engage in short sales  against the
box, puts and calls and other  transactions  in our securities or derivatives of
our securities and may sell or deliver shares in connection with these trades.

         The  selling   stockholders  or  their  respective  non-sale  pledgees,
non-sale donees,  non-sale transferees or other non-sale successors in interest,
may also sell the shares  directly to market makers acting as principals  and/or
broker-dealers  acting  as  agents  for  themselves  or  their  customers.  Such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions  from the selling  stockholders  and/or the purchasers of shares for
whom such  broker-dealers may act as agents or to whom they sell as principal or
both, which compensation as to a particular  broker-dealer might be in excess of
customary commissions.  Market makers and block purchasers purchasing the shares
will do so for their own  account and at their own risk.  It is possible  that a
selling  stockholder  will  attempt  to sell  shares  of  common  stock in block
transactions to market makers or other purchasers at a price per share which may
be below the then market price. The selling  stockholders cannot assure that all
or any of the shares offered in this  prospectus  will be issued to, or sold by,
the selling stockholders.  The selling stockholders and any brokers,  dealers or
agents, upon effecting the sale of any of the shares offered in this prospectus,
may be deemed to be  "underwriters" as that term is defined under the Securities
Act of 1933, as amended,  or the Securities Exchange Act of 1934, as amended, or
the rules and  regulations  under  such acts.  In such  event,  any  commissions
received  by such  broker-dealers  or agents and any profit on the resale of the
shares  purchased  by them  may be  deemed  to be  underwriting  commissions  or
discounts under the Securities Act.

         We  are  required  to  pay  all  fees  and  expenses  incident  to  the
registration of the shares,  including fees and  disbursements of counsel to the
selling  stockholders,   but  excluding  brokerage  commissions  or  underwriter
discounts.

         The selling  stockholders,  alternatively,  may sell all or any part of
the  shares  offered  in this  prospectus  through  an  underwriter.  No selling
stockholder  has entered into any agreement with a prospective  underwriter  and
there is no assurance that any such agreement will be entered into.



                                       26
<PAGE>

         The selling  stockholders  and any other persons  participating  in the
sale or distribution  of the shares will be subject to applicable  provisions of
the Securities  Exchange Act of 1934, as amended,  and the rules and regulations
under such act, including,  without  limitation,  Regulation M. These provisions
may restrict certain  activities of, and limit the timing of purchases and sales
of any of the shares  by, the  selling  stockholders  or any other such  person.
Furthermore, under Regulation M, persons engaged in a distribution of securities
are prohibited from  simultaneously  engaging in market making and certain other
activities with respect to such securities for a specified  period of time prior
to the commencement of such  distributions,  subject to specified  exceptions or
exemptions.  In regards to short sells,  the selling  stockholder can only cover
its short position with the securities they receive from us upon conversion. All
of these limitations may affect the marketability of the shares.

         We  have  agreed  to  indemnify  the  selling  stockholders,  or  their
transferees or assignees,  against certain  liabilities,  including  liabilities
under the Securities  Act of 1933, as amended,  or to contribute to payments the
selling stockholders or their respective pledgees,  donees, transferees or other
successors in interest, may be required to make in respect of such liabilities.

         If the  selling  stockholders  notify  us  that  they  have a  material
arrangement  with a  broker-dealer  for the resale of the common stock,  then we
would be required to amend the  registration  statement of which this prospectus
is a part, and file a prospectus  supplement to describe the agreements  between
the selling stockholders and the broker-dealer.

PENNY STOCK

         The  Securities  and Exchange  Commission  has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes  relevant to us,
as any equity  security  that has a market price of less than $5.00 per share or
with an  exercise  price of less  than  $5.00  per  share,  subject  to  certain
exceptions.  For any  transaction  involving a penny stock,  unless exempt,  the
rules require:

         o        that a  broker  or  dealer  approve  a  person's  account  for
                  transactions in penny stocks; and

         o        the  broker  or dealer  receive  from the  investor  a written
                  agreement to the  transaction,  setting forth the identity and
                  quantity of the penny stock to be purchased.

         In order to  approve  a  person's  account  for  transactions  in penny
stocks, the broker or dealer must

         o        obtain   financial   information  and  investment   experience
                  objectives of the person; and

         o        make a reasonable determination that the transactions in penny
                  stocks  are  suitable  for  that  person  and the  person  has
                  sufficient knowledge and experience in financial matters to be
                  capable  of  evaluating  the  risks of  transactions  in penny
                  stocks.

         The broker or dealer must also deliver,  prior to any  transaction in a
penny stock, a disclosure  schedule prescribed by the Commission relating to the
penny stock market, which, in highlight form:

         o        sets  forth the basis on which the  broker or dealer  made the
                  suitability determination; and

         o        that the broker or dealer received a signed, written agreement
                  from the investor prior to the transaction.

         Disclosure  also has to be made about the risks of  investing  in penny
stocks  in  both  public  offerings  and in  secondary  trading  and  about  the
commissions payable to both the broker-dealer and the registered representative,
current  quotations for the securities and the rights and remedies  available to
an  investor  in cases of fraud in penny stock  transactions.  Finally,  monthly
statements  have to be sent  disclosing  recent price  information for the penny
stock held in the account and information on the limited market in penny stocks.



                                       27
<PAGE>

                              SELLING STOCKHOLDERS

         The table  below sets forth  information  concerning  the resale of the
shares of common  stock by the  selling  stockholders.  We will not  receive any
proceeds  from the resale of the common  stock by the selling  stockholders.  We
will receive proceeds from the exercise of the warrants. Assuming all the shares
registered  below  are sold by the  selling  stockholders,  none of the  selling
stockholder will continue to own any shares of our common stock.

         The  following  table  also sets  forth the name of each  person who is
offering the resale of shares of common stock by this prospectus,  the number of
shares of common stock  beneficially  owned by each person, the number of shares
of common  stock that may be sold in this  offering  and the number of shares of
common stock each person will own after the offering,  assuming they sell all of
the shares offered.

         For the table set forth below,  Konrad  Ackerman is the control  person
for Alpha Capital Aktiengesellschaft,  Michael Finkelstein and Elizabeth Leonard
are the control persons for Stonestreet Limited Partnership, Evan Schemenauer is
the control person for Whalehaven  Funds Limited,  [ ] is the control person for
Greenwich Growth Fund Limited, [ ] is the control person for Ellis International
Limited, Inc. and [ ] is the control person for J.P. Turner & Company, L.L.C.


<TABLE>
<CAPTION>
                                            Beneficial Ownership                                          Beneficial Ownership
                                           Prior to Offering (1)                                           After Offering (1)
Name of Selling Security Holder          Shares        Percentage (2)        Shares Offered (3)       Shares         Percentage (2)
------------------------------------ ----------------- ----------------- ------------------------ ----------------- ---------------
<S>                                    <C>                    <C>              <C>                <C>
Alpha Capital Aktiengesellschaft       723,809 (4)            3.03%            723,809 (4)                   0               *
Ellis International Limited, Inc.      289,525 (5)            1.23%            289,525 (5)                   0               *
Greenwich Growth Fund Limited          144,763 (6)              *              144,763 (6)                   0               *
Stonestreet Limited Partnership        434,287 (7)            1.83%            434,287 (7)                   0               *
Whalehaven Funds Limited               144,763 (8)              *              144,763 (8)                   0               *
J.P. Turner & Company, L.L.C.           45,715 (9)              *               45,715 (9)                   0               *
</TABLE>


* Less than 1%

(1)  Beneficial  Ownership is  determined  in  accordance  with the rules of the
Securities and Exchange  Commission and generally  includes voting or investment
power with respect to  securities.  Shares of common stock subject to options or
warrants  currently  exercisable or  convertible,  or exercisable or convertible
within  60 days of June 29,  2004  are  deemed  outstanding  for  computing  the
percentage  of the person  holding  such  option or  warrant  but are not deemed
outstanding for computing the percentage of any other person.

(2) Percentage  prior to offering is based on 23,423,091  shares of common stock
outstanding;  percentage after offering is based on 24,520,238  shares of common
stock outstanding .

(3) Includes 1,051,432 shares of common stock underlying warrants.

(4) Includes 438,095 shares of common stock underlying warrants.

(5) Includes 175,239 shares of common stock underlying warrants.

(6) Includes 87,620 shares of common stock underlying warrants.

(7) Includes 262,858 shares of common stock underlying warrants.

(8) Includes 87,620 shares of common stock underlying warrants.

(9) Includes 45,715 shares of common stock underlying warrants.


                                       28
<PAGE>

                                  LEGAL MATTERS

         The validity of the shares of common stock being offered hereby will be
passed upon for us by Sichenzia Ross Friedman Ference LLP, New York, New York.

                                     EXPERTS

         The combined financial statements of Zynex Medical, Inc. as of December
31,  2003 and for the years  ended  December  31, 2003 and  December  31,  2002,
included in this prospectus, have been included herein in reliance on the report
of Gordon,  Hughes & Banks, LLP,  independent public  accountants,  given on the
authority of that firm as experts in accounting and auditing.

                              AVAILABLE INFORMATION

         We  have  filed  a  registration  statement  on  Form  SB-2  under  the
Securities Act of 1933, as amended, relating to the shares of common stock being
offered  by  this  prospectus,  and  reference  is  made  to  such  registration
statement. This prospectus constitutes the prospectus of Zynex Medical Holdings,
Inc., filed as part of the registration  statement,  and it does not contain all
information in the registration statement, as certain portions have been omitted
in accordance  with the rules and  regulations  of the  Securities  and Exchange
Commission.

         We are  subject to the  informational  requirements  of the  Securities
Exchange Act of 1934,  which requires us to file reports,  proxy  statements and
other  information  with the Securities and Exchange  Commission.  Such reports,
proxy  statements  and other  information  may be inspected at public  reference
facilities of the SEC at Judiciary Plaza, 450 Fifth Street N.W., Washington D.C.
20549. Copies of such material can be obtained from the Public Reference Section
of the SEC at Judiciary Plaza, 450 Fifth Street N.W., Washington,  D.C. 20549 at
prescribed rates. Because we file documents electronically with the SEC, you may
also  obtain  this  information  by  visiting  the  SEC's  Internet  website  at
http://www.sec.gov.



                                       29
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                          INDEX TO FINANCIAL STATEMENTS

                              FINANCIAL STATEMENTS

The Financial  Statements  required by Item 304 of Regulation  S-B are stated in
U.S.  dollars  and are  prepared  in  accordance  with U.S.  Generally  Accepted
Accounting Principles.


<TABLE>
<CAPTION>
Fiscal Year Ended December 31, 2003
-----------------------------------
<S>                                                                                              <C>
Report of Independent Public Accountants                                                             F-1
Balance Sheet at December 31, 2003                                                                   F-2
Combined Statements of Operations for the years ended December 31, 2002 and December 31, 2003        F-3
Combined Statements of Cash Flows for the years ended December 31, 2002 and December 31, 2003        F-4
Combined Statement of Stockholder's Deficiency                                                       F-5
Notes to Combined Financial Statements                                                           F-6 to F-11

Three Months Ended March 31, 2004 - Unaudited
---------------------------------------------
Condensed Consolidated Balance Sheet - March 31, 2004                                                F-12
Condensed Consolidated Statements of Operations for the three months ended
March 31, 2004 and 2003                                                                              F-13
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 2004 and 2003                                                                              F-14
Condensed Consolidated Statement of Stockholders' Deficiency                                         F-15
Notes to Condensed Consolidated Financial Statements                                             F-16 to F-19
</TABLE>



                                       30
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors
Zynex Medical, Inc.
Littleton, Colorado

We have audited the  accompanying  balance  sheet of ZYNEX  MEDICAL,  INC.  (the
"Company") as of December 31, 2003 and the combined  statements  of  operations,
cash flows and  stockholder's  deficiency  for the years ended December 31, 2003
and 2002.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
the 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 financial  statements referred above present fairly, in all
material respects,  the financial position of ZYNEX MEDICAL, INC. as of December
31,  2003,  and the results of its  operations  and its cash flows for the years
ended  December 31, 2003 and 2002,  in  conformity  with  accounting  principles
generally accepted in the United States of America.

/s/ Gordon, Hughes & Banks, LLP

Greenwood Village, Colorado
May 21, 2004 (except as to the last  paragraph of Note 5, which is as of June 4,
2004)


                                      F-1
<PAGE>



                               Zynex Medical, Inc.
                                  Balance Sheet
                                December 31, 2003
                                     ASSETS

Current Assets:
 Receivables, less allowance for
  uncollectible accounts of $314,000                             $ 185,806
 Inventory                                                         166,245
 Prepaid expenses                                                    1,300
                                                                 ---------
     Total current assets                                          353,351

Property and equipment, less accumulated depreciation               67,860
Other assets                                                         9,765
                                                                 ---------
                                                                 $ 430,976
                                                                 =========

   LIABILITIES AND STOCKHOLDER'S DEFICIENCY

Current Liabilities:

 Notes payable                                                   $ 221,404
 Capital lease                                                       9,324
 Accounts payable, including bank overdrafts of $21,982            161,660
 Accrued payroll and payroll taxes                                  51,922
 Accrued income taxes                                               34,300
 Other accrued liabilities                                          70,625
 Advances from stockholder                                          12,816
                                                                 ---------
     Total current liabilities                                     562,051

Notes Payable, less current maturities                              11,634
Capital Lease, less current maturities                              14,671
                                                                 ---------
     Total liabilities                                             588,356
                                                                 ---------

Contingencies and Commitments                                         -

Stockholder's Deficiency:

 Common stock, $.000001 par value: 100,000,000 shares
  authorized; 1,000,000 shares issued and outstanding                  300
 Accumulated deficit                                              (157,680)
                                                                 ---------
     Total stockholder's deficiency                               (157,380)
                                                                 ---------
                                                                 $ 430,976
                                                                 =========

             See accompanying notes to combined financial statements

                                      F-2
<PAGE>



                               Zynex Medical, Inc.
                        Combined Statements of Operations

                            Years Ended December 31,

                                                       2002          2003
                                                   ----------     ----------
Net sales and rental revenue                       $1,281,823     $1,083,912
Cost of sales and rentals                             337,683        186,081
                                                   ----------     ----------
     Gross profit                                     944,140        897,831
                                                   ----------     ----------
Operating expenses:

 Selling, general and administrative                  861,586        762,819
 Depreciation                                          22,083         26,985
                                                   ----------     ----------
                                                      883,669        789,804

                                                   ----------     ----------
 Income from operations                                60,471        108,027

Other income (expense):

 Interest income                                        8,522          3,153
 Interest expense                                     (50,307)       (45,674)
                                                   ----------     ----------
 Income before income taxes                            18,686         65,506

Provision (benefit) for income taxes                   (2,200)        24,809
                                                   ----------     ----------
     Net Income                                    $   20,886     $   40,697
                                                   ==========     ==========

Earnings per common share                          $     0.00     $     0.00
                                                   ==========     ==========

Pro forma weighted average common shares
 outstanding*                                      22,151,662     22,151,662
                                                   ==========     ==========

* See Note 1 - Earnings Per Share

             See accompanying notes to combined financial statements

                                      F-3
<PAGE>



                               Zynex Medical, Inc.
                        Combined Statements of Cash Flow

                                                    Years Ended December 31,
                                                      2002           2003
                                                   ----------     ----------
Cash flows from operating activities:

 Net income                                        $   20,886     $   40,697
  Adjustments to reconcile net income to
   cash provided by operations -
    Depreciation expense                               22,083         26,985
  Changes in current assets and liabilities -
   (Increase)  decrease in receivables                (25,893)       130,433
   (Increase)  decrease in inventory and rented
    inventory                                         (27,111)          (291)
   (Increase) decrease in prepaid expenses               -            (1,300)
   Increase (decrease) in accounts payable             15,238        (22,152)
   Increase (decrease) in accrued liabilities          45,289         14,712
                                                   ----------     ----------
     Net cash from operating activities                50,492        189,084
                                                   ----------     ----------
Cash flows from (used in) investing activities:
 Purchase of equipment                                   -           (10,004)
 Decrease in deposits and other assets                  2,108           -
                                                   ----------     ----------
     Net cash from (used in) investing activities       2,108        (10,004)
                                                   ----------     ----------
Cash flow from (used in) financing activities:

 Payments on notes payable and capital lease          (69,344)       (96,618)
 Advances from (repayments to) stockholder             15,068        (82,462)
                                                   ----------     ----------
     Net cash used in financing activities            (54,276)      (179,080)
                                                   ----------     ----------
     Net increase (decrease) in cash                   (1,676)          -

     Beginning cash                                     1,676           -
                                                   ----------     ----------
     Ending cash                                   $     -        $     -
                                                   ==========     ==========
Supplemental cash flow information:

 Interest paid                                     $   49,410     $   31,336
 Income taxes paid                                      3,493          2,871
 Non-cash investing and financing activities -
  Equipment financed with capital lease                  -            29,000

             See accompanying notes to combined financial statements

                                      F-4
<PAGE>



                               Zynex Medical, Inc.
                 Combined Statement of Stockholder's Deficiency

                                  Common Stock        Accumulated
                               Shares      Amount       Deficit        Total
                              ---------    ------     -----------    ---------

Balance, December 31, 2001    1,000,000     $300      $(219,263)     $(218,963)

     Net income                    -          -          20,886         20,886
                              ---------     ----      ---------      ---------

Balance, December 31, 2002    1,000,000      300       (198,377)      (198,077)
     Net income                    -          -          40,697         40,697
                              ---------     ----      ---------      ---------
Balance, December 31, 2003    1,000,000     $300      $(157,680)     $(157,380)
                              =========     ====      =========      =========


             See accompanying notes to combined financial statements


                                      F-5
<PAGE>

                               ZYNEX MEDICAL, INC.
                     NOTES TO COMBINED FINANCIAL STATEMENTS

1. The Company and Summary of Significant Accounting Policies

The Company

Zynex Medical,  Inc. ("Zynex" or the "Company") was incorporated  under the laws
of the state of  Colorado on March 3, 1998,  under the name of "Stroke  Recovery
Systems,  Inc." (SRSI). On October 1, 2003, Zynex acquired,  through merger, the
assets and  liabilities  of Dan Med, Inc.  (DMI), a Colorado  corporation  under
common control. The companies were merged in order to simplify the operating and
capital structure of both companies. SRSI concurrently changed its name to Zynex
Medical, Inc.

DMI was incorporated in 1996 with its primary activity  importing  European-made
electrotherapy  devices until 1999 when DMI also began developing and assembling
its own line of electrotherapy  products. SRSI was incorporated in 1998 with its
main activity selling  electrotherapy devices to homecare patients suffering the
effects of a stroke.  In early 2002 SRSI began  marketing the entire DMI product
line of  standard  electrotherapy  products by adding a small  sales  force.  At
present,  Zynex  generates  substantially  all its revenue in North America from
sales  and  rentals  of its  products  to  patients,  dealers  and  health  care
providers.  Approximately  4.3% and  14.0%  of  sales in 2002 and 2003  involved
payment by Medicare and Medicaid programs.

On February 11, 2004,  Zynex was acquired by a Utah  corporation,  Zynex Medical
Holdings,  Inc. in a reverse merger wherein the sole  stockholder of the Company
received  19,500,000  shares of Zynex  Medical  Holdings,  Inc.'s  common  stock
(approximately  88% of  the  shares  of  the  combined  entity)  for  all of the
Company's common stock (see Note 5).

Principles of Consolidation

The accompanying combined financial statements include the accounts of Zynex and
DMI for all periods presented. All inter-company  transactions and accounts have
been eliminated.

Revenue Recognition

Sales  and  rental  income  is  recognized  when a  product  has been  medically
prescribed and dispensed to a patient and, when applicable,  a claim prepared by
the Company has been filed with the patient's  insurance  provider.  Product and
rental  revenue is recognized  net of an estimated  uncollectible  percentage of
sales and rentals and other discounts.

Uncollectible Accounts Receivable

A  significant  portion of the  accounts  receivable  balance is from  insurance
companies  or  other  third-party   reimbursing  agents.  The  nature  of  these
receivables  within this  industry  has  typically  resulted in long  collection
cycles. The Company establishes a reserve for uncollectible  accounts based upon
various   factors,   including   credit   risk,   historical   trends,   patient
responsibility  and other  information.  Such  reserves  are also  adjusted  for
amounts otherwise covered by third-party payers.

Use of Estimates

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 revenue  and  expenses  during the  reporting  period.
Ultimate  results  could  differ  from  those  estimates.  The most  significant
management  estimates used in the  preparation  of the financial  statements are
associated with the reserves established for uncollectible accounts receivable.

Inventories

Inventories are valued at the lower of cost (average) or market.  Finished goods
include  products held at different  locations by health care providers or other
third parties for rental or sale to patients.


                                      F-6
<PAGE>

Property and Equipment

Property and equipment are stated at cost.  Depreciation  is computed  using the
straight-line method. Estimated useful lives are as follows:

Office furniture and equipment        3-7 years
Rented inventory                      5 years
Vehicles                              5 years
Assembly equipment                    7 years

Research and Development

Research and development costs are expensed when incurred.

Fair Value of Financial Instruments and Credit Risk

The Company's financial instruments  primarily consist of cash,  receivables and
payables for which  current  carrying  amounts  approximate  fair market  value.
Additionally,  interest  rates  on  outstanding  borrowings  are at  rates  that
approximate   market  rates  for  borrowings  with  similar  terms  and  average
maturities.

Financial  instruments  that  potentially  subject  the  Company to  significant
concentrations of credit risk consist principally of cash and trade receivables.

The Company transacts its business with a single financial institution. However,
the amount on deposit did not exceed the $100,000  federally  insured limited at
December 31, 2003. Management believes that the institution is financially sound
and the risk of loss is minimal.

The Company has recorded trade receivables from business operations.  Management
regularly  evaluates the collectibility of accounts receivable and believes that
net receivables recorded as of December 31, 2003, to be collectible.

Shipping Costs

Shipping costs are included in cost of goods sold.

Compensation

The Company accounts for stock-based  compensation  using Accounting  Principles
Board's  Opinion  ("APB") No. 25,  "Accounting  for Stock Issued to  Employees."
Under APB No. 25,  compensation  expense is  recognized  for stock  options  and
warrants with an exercise  price that is less than the market price on the grant
date. For stock options  granted  employees or directors with exercise prices at
or above the  market  value of the  stock on the grant  date,  the  Company  has
adopted  the  Financial  Accounting  Standards  Board  ("FASB")  disclosure-only
provisions of Statement of Financial  Accounting  Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123").

As of December  31,  2003,  the Company  did not have any  employee  stock-based
compensation  programs.  However,  in March 2004 Zynex  Medical  Holdings,  Inc.
issued stock warrants to an employee and two consultants (see Note 5).

Comprehensive Income

There  are no  adjustments  necessary  to the net  income  as  presented  in the
accompanying   statement  of  operations  to  derive   comprehensive  income  in
accordance with Statement of Financial  Standards  ("SFAS") No. 130,  "Reporting
Comprehensive Income."

Segment Reporting

In June 1997, SFAS 131,  "Disclosure about Segments of an Enterprise and Related
Information," was issued.  Operating segments,  as defined in the pronouncement,
are components of an enterprise  about which separate  financial  information is
available  and that are  evaluated  regularly by  management  in deciding how to
allocate resources and assess  performance.  To date, the Company has only had a
single operating segment.

Cash and Cash Equivalents

Cash and cash  equivalents are stated at cost. Cash  equivalents  consist of all
highly liquid investments with maturities of three months or less when acquired.



                                      F-7
<PAGE>

Income Taxes

Deferred income taxes are based on temporary  differences  between the financial
statement and tax basis of assets and liabilities existing at each balance sheet
date using  enacted tax rates for years  during  which taxes are  expected to be
paid or recovered.

Earnings Per Share

Basic  earnings per share are  computed  using the  weighted  average  number of
shares outstanding during each period. Diluted earnings per share is computed on
the basis of the average  number of common shares  outstanding  and the dilutive
effect of  convertible  securities,  notes  payable,  stock options and warrants
using the "treasury stock" method.  Basic and diluted earnings per share are the
same  during  the  periods  presented  since  the  Company  had  no  convertible
securities, warrants or options.

All pro forma share and per share amounts  reflect the  retroactive  effect from
the beginning of the periods  presented,  of the reverse  acquisition  involving
Zynex Medical, Inc. and Zynex Medical Holdings, Inc. on February 11, 2004.

Recent Accounting Pronouncements

In April 2003, the FASB issued SFAS No. 149,  "Amendment of Statement No. 133 on
Derivative  Instruments  and Hedging  Activities".  SFAS No. 149 amends  certain
portions of SFAS No. 133 and is  effective  for all  contracts  entered  into or
modified  after  June 30,  2003 on a  prospective  basis.  SFAS  No.  149 is not
expected to have a material  effect on the results of  operations  or  financial
position of the Company  because the it currently has no  derivatives or hedging
contracts.

In June 2003, the FASB approved SFAS No. 150,  "Accounting for Certain Financial
Instruments with  Characteristics  of Both Liabilities and Equity.  SFAS No. 150
establishes  standards  for  how  an  issuer  classifies  and  measures  certain
financial  instruments with characteristics of both liabilities and equity. This
Statement is effective for financial  instruments entered into or modified after
May 31, 2003,  and  otherwise is effective at the beginning of the first interim
period  beginning  after  June 15,  2003.  The  adoption  of SFAS No. 150 is not
expected to have a material  effect on the  Company's  operations  or  financial
position.

In  December   2003,   the  FASB  issued  a  revised   Interpretation   No.  46,
"Consolidation of Variable Interest Entities".  The interpretation clarifies the
application  of Accounting  Research  Bulletin No. 51,  "Consolidated  Financial
Statements",  to certain  types of  entities.  The  Company  does not expect the
adoption of this interpretation to have any impact on its financial statements.

                        Selected Financial Statement Data

                                                December 31, 2003
                                                -----------------
     Property and equipment -
       Office furniture and equipment               $ 69,097
       Rented inventory                               50,544
       Vehicles                                       30,828
       Assembly equipment                                757
                                                    --------
                                                     151,226

     Less accumulated depreciation                   (83,366)
                                                    --------
        Net property, plant and equipment           $ 67,860



                                      F-8
<PAGE>



2. Notes Payable and Leases

Notes Payable at December 31, 2003 consisted of the following:

                                                   Current     Long-term
                                                  Maturities   Maturities
                                                  ----------   ----------

Note payable to a bank,  principal  and interest
payments  of  $4,331  due  on  a  monthly  basis
through  November  15,  2004.  At the end of the
term,  the  entire  outstanding  balance is due;
annual interest rate of 7.5%,  collateralized by
accounts receivable and the President's
personal residence.                                $136,615    $    -

Small Business Administration  revolving line of
credit,   principal  payments  and  interest  of
$3,000  due on a monthly  basis  through  May 4,
2004,  annual interest rate based on 2% over the
lowest prime rate, collateralized by inventory
accounts receivable and all contract rights.         46,692         -

Inventory  financing  obligations  to  financial
institutions,  monthly  principal  and  interest
payments total $3,479; annual interest rates
approximating 20%, collateralized by inventory.      28,168       11,634

Other                                                 9,929         -
                                                   --------      -------
Total                                              $221,404      $11,634
                                                   ========      =======

The  balloon  payment  of $38,424  due on May 4, 2004  under the Small  Business
Administration  revolving  line of  credit  was not paid.  Therefore,  we are in
default under this agreement.  We have requested an extension to continue paying
$3,000  per  month   including   principal  and  interest  until  this  debt  is
extinguished.

The Company has commitments  under various operating and capital leases that are
payable in monthly  installments.  As of December 31, 2003, future minimum lease
payments under non-cancelable operating and capital leases are as follows:

                                           Capital     Operating
                                            Lease        Leases
                                          ---------    ---------
     2004                                 $ 10,905      $ 46,056
     2005                                   10,905        85,468
     2006                                    4,668        93,231
     2007                                     -           95,695
     2008                                     -           98,160
     Thereafter                               -           16,428
                                          --------      --------
Total future minimum lease payments         26,478      $435,038
                                                        ========
Less amount representing interest           (2,483)
                                          --------
Present value of net minimum lease
 payments                                   23,995
Less current portion                        (9,324)
                                          --------
Long-term capital lease obligation        $ 14,671
                                          ========

Rent expense under  operating  leases for 2003 and 2002 was $51,051 and $41,553,
respectively.


                                       F-9
<PAGE>

3. Income Taxes

The following  summarizes the  components of the provision  (benefit) for income
taxes:

                                          2002        2003
                                        -------     -------
Current
  Federal                               $(2,000)    $17,109
  State                                    (200)      3,800
  Other                                    -          3,900
  Deferred                                 -           -
                                        -------     -------
                                        $(2,200)    $24,809
                                        =======     =======


A  reconciliation  of income  tax  computed  at the U.S.  statutory  rate to the
effective income tax rate is as follows:



                                          2002        2003
                                        -------     -------
Statutory rate                            35 %        35 %
State taxes                               (1)%         6 %
Surtax benefit                           (28)%       (18)%
Nondeductible                             14 %         9 %
Net operating loss carryover and other   (32)%         6 %
                                         -----       -----
Combined effective rate                  (12)%        38 %
                                         =====       =====
4. Commitments and Contingencies

Billing Practices

In connection  with its sale of medical  devices,  the Company sells  disposable
supplies used with some of its devices.  In some cases,  the billings to private
insurance  companies exceed supplies actually  shipped.  It is possible that the
affected private insurance  companies could assert claims for such overbillings.
The Company  discontinued  this billing  practice in March 2004 and has included
the claim in the reserve against accounts receivable,  approximately $137,000 as
of December 31, 2003.

Major Suppliers

During 2003 and 2002,  the Company  purchased  approximately  76% and 43% of its
entire inventory purchases from two suppliers. One of these suppliers is located
in Europe.

Concentrations

The Company maintains its cash deposits in one bank. The deposits are guaranteed
by the  Federal  Deposit  Insurance  Corporation  ("FDIC")  up to  $100,000.  At
December 31, 2003,  the Company's  cash balance at the bank was not in excess of
the FDIC insurance limit.


                                      F-10
<PAGE>

5. Events Subsequent to December 31, 2003

Reorganization

On February 11, 2004,  Zynex Medical  Holdings,  Inc.  (the  "Holding  Company")
acquired  all of the  outstanding  common  stock  of  Zynex  Medical,  Inc.  for
19,500,000 shares of the Holding  Company's common stock.  Coincidental with the
acquisition,  $358,800 of Holding  Company  loans were  converted  to  2,601,786
shares of common stock and 10,500,001 previously issued shares were canceled and
returned to  treasury.  This  reorganization  resulted in a total of  22,151,662
Holding Company common shares outstanding, of which the 19,500,000 shares issued
for  Zynex  Medical,  Inc.  represents  approximately  88%  of  the  shares  now
outstanding.

The  reorganization  is  recorded  as a  recapitalization  effected by a reverse
acquisition  wherein  the  Holding  Company  is  treated  as  the  acquiree  for
accounting purposes,  even though it is the legal acquirer.  The transaction has
been  accounted  for as a  purchase,  and  accordingly,  since  the  transaction
occurred in February  2004,  the  accompanying  financial  statements  represent
solely those of the accounting acquirer - Zynex Medical,  Inc. Since the Holding
Company is a  non-operating  entity  with  limited  business  activities  and no
assets, goodwill will not be recorded.

Employment Agreement

On February 1, 2004, Zynex Medical,  Inc.  entered into a three-year  employment
agreement  with  the  Company's  President,  Chief  Executive  Officer  and sole
shareholder.  The agreement  expires  January 31, 2007; if written notice is not
given,  the agreement will  automatically  be extended for an additional  2-year
period. Initial annual compensation under the agreement is $174,000. This amount
may be increased annually at the board of director's  discretion.  The agreement
also  provides  for a 50%  annual  bonus in the event that  annual  net  revenue
exceeds  $2.25  million,  Company  insurance  and benefit  plans,  as well as, a
Company provided vehicle. The agreement includes a non-compete provision for the
term of the agreement extended to 24 months after termination of the agreement.

Issuance of Stock Warrants

On March 7, 2004,  the  Holding  Company  issued a total of 120,000  warrants to
purchase common stock for five years to an employee and two consultants for past
services;  110,000 of the  warrants are  exercisable  at $3 per share and 10,000
warrants are exercisable at $.55 per share.  The closing market quotation of the
stock was $2.75 per share on March 7, 2004.

Common Stock

In February  2004,  100,000  shares of the Holding  Company's  common stock were
issued to an investor at $1 per share.

During January  through May, the Holding  Company  received  $130,000 for common
stock subscriptions at $1 per share.

On June 4, 2004, the Holding Company sold 685,715 shares of common stock to five
investors  at $1.75  per  share.  The  proceeds  realized  from  the  sale  were
$1,030,000,  net of transaction costs. In connection with the sales, the Holding
Company  granted  Class A Warrants to purchase an additional  342,857  shares of
common  stock at $1.75 per share,  Class B Warrants to  purchase  an  additional
685,714 shares of common stock at $2.00 per share,  Class C Warrants to purchase
22,858 shares of common stock at $.01 per share and Broker  Warrants to purchase
45,713 shares of common stock at $.01 per share.  The Class A Warrants expire on
the 150th day  after the  actual  effective  date  during  which a  registration
statement  has  been  available  for use by the  holder  for  resale  under  the
Securities Act of 1933 of the common stock issuable upon exercise of the Class A
Warrants. The Class B, Class C and Broker Warrants expire on June 4, 2009.

Upon  exercise of the warrants,  the Holding  Company is required to pay Warrant
Exercise  Compensation  equal to 10 percent of the cash proceeds  payable to the
Holding  Company.  The Holding Company is further required to issue one Broker's
Warrant for each 10 shares of Class A, Class B and Class C Warrants exercised by
the subscribers.

Acquisitions of Automobiles

During March 2004, the Company purchased an automobile  costing $60,800 pursuant
to a five-year 15% installment  loan agreement,  requiring  monthly  payments of
$1,351.  In  addition,  the Company  began  leasing  another  automobile  over a
39-month period with monthly lease payments of $935.

Loans

From  February  through May 2004,  the Company  borrowed a total of $87,000,  of
which  $15,000 has been  repaid.  Of the  $72,000  unpaid  loans,  $12,000 was a
ninety-day  non-interest  bearing  bridge loan received on February 4, 2004, and
$60,000 was  received  on April 1, 2004,  is due in six  months,  with  interest
payable  at 2%  monthly  plus  1,000  shares  of common  stock  per month  until
repayment.

                                      F-11
<PAGE>


                          ZYNEX MEDICAL HOLDINGS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                   (unaudited)


                                                                    March 31,
                                                                      2004
                                                                   ---------
                                                                   (Restated)
                    ASSETS

Current assets:
  Receivables, net of reserves of $334,274                         $ 200,675
  Inventories                                                        212,425
  Other current assets                                                 7,739
                                                                   ---------
     Total current assets                                            420,839

Property and equipment, net                                          139,618
Other assets                                                          17,602
                                                                   ---------
     Total assets                                                  $ 578,059
                                                                   =========

     LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
  Notes payable                                                    $ 133,714
  Current portion of long-term obligations                            92,301
  Accounts payable                                                   216,262
  Accrued liabilities                                                102,272
  Income taxes payable                                                25,534
  Loans payable                                                       27,000
  Advances from officer                                               17,741
                                                                   ---------
     Total current liabilities                                       614,824
Long-term obligations                                                 59,505
Stockholders' deficiency:
  Preferred stock, $.001 par value, 10,000,000 authorized,
   no shares issued and outstanding                                       --
  Common stock, $.001 par value, 100,000,000 shares
   authorized, issued and outstanding 22,251,662 shares               22,252
  Common stock subscribed (80,000 shares of common stock)             80,000
  Additional paid-in capital                                         161,627
  Accumulated deficit                                               (360,149)
                                                                   ---------
     Total stockholders' deficiency                                  (96,270)
                                                                   ---------
Total liabilities and stockholders' deficiency                     $ 578,059
                                                                   =========



                                      F-12
<PAGE>


                          ZYNEX MEDICAL HOLDINGS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)


                                                           Quarter Ended
                                                              March 31,
                                                   ----------------------------
                                                       2004             2003
                                                   ------------    ------------
                                                    (Restated)

Net sales and rental income                        $    262,941    $    292,335
Cost of sales and rentals                                46,098          41,219
                                                   ------------    ------------
     Gross profit                                       216,843         251,116

Selling, general and administrative                     387,767         196,026
                                                   ------------    ------------
     Income (loss) from operations                     (170,924)         55,090

Interest and other                                       16,068          14,596
                                                   ------------    ------------
     Income (loss) before income taxes                 (186,992)         40,494

Income tax provision (benefit)                           (6,375)         16,198
                                                   ------------    ------------
Net income (loss)                                  $   (180,617)   $     24,296
                                                   ============    ============
Basic and diluted net income (loss) per
  common share                                     $      (0.01)   $       0.00
                                                   ============    ============

Weighted average number of shares outstanding        22,198,915      22,151,662
                                                   ============    ============



                                      F-13
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)


                                                           Three Months Ended
                                                                March 31,
                                                         ----------------------
                                                            2004         2003
                                                         ----------   ---------
                                                         (Restated)
Cash flows from operating activities:
Net income (loss)                                        $(180,617)   $  24,296
Adjustments to reconcile net income (loss) to
  net cash used by operations:
   Depreciation                                              8,614        6,311
   Issuance of warrants for consulting services             61,727           --
   Changes in operating assets and liabilities:
    Accounts receivable                                    (14,869)    (105,362)
    Inventories                                            (46,180)      65,288
    Other current assets                                    (6,439)      (4,489)
    Accounts payable                                        54,602      (19,586)
    Accrued liabilities                                    (20,275)      59,410
    Income taxes payable                                    (8,766)       9,445
    Advances from officers                                   4,925      (13,615)
                                                         ---------    ---------
Net cash provided by (used in) operating activities       (147,278)      21,698

Cash flows from investing activities:
  Purchase of property and equipment                       (80,372)      (1,138)
  Other assets                                              (7,837)          --
                                                         ---------    ---------
Net cash provided by (used in) investing
  activities                                               (88,209)      (1,138)

Cash flows from financing activities:
  Proceeds from loans payable                               27,000           --
  Principal payments on notes payable and
   long-term obligations                                   (27,845)     (20,560)
   Proceeds from new debt financing                         56,332           --
   Proceeds from sale of common stock                      180,000           --
                                                         ---------    ---------
Net cash provided by (used in) financing
  activities                                               235,487      (20,560)
                                                         ---------    ---------
Increase (decrease) in cash                                     --           --
Cash at beginning of period                                     --           --
                                                         ---------    ---------
Cash at end of period                                    $      --    $      --
                                                         =========    =========
Supplemental disclosure of cash flow information:
  Cash paid for interest                                 $   5,719    $  17,491
                                                         =========    =========

  Cash paid for income taxes                             $   2,391    $      --
                                                         =========    =========


                                      F-14
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                        Three Months Ended March 31, 2004
                                   (unaudited)
<TABLE>
<CAPTION>
                                              Common    Addi-
                                              Stock     tional     Accumu-
                           Number             Sub-     Paid-in     lated
                          of Shares   Amount  scribed   Capital    Deficit      Total
                         ----------- -------- ------- ----------- ------------ ---------
<S>                      <C>         <C>      <C>     <C>         <C>          <C>
Balance, December 31,
2003                     10,549,877  $10,550  $  --   $3,031,989  $(3,404,649) $(362,110)

 Conversion of debt
 for stock in January     2,601,786    2,602     --      356,198         --      358,800

 Reverse merger
 activities
 February 11,
 2004:
  Consolidated net
   (deficit)                   --       --       --   (3,388,187)   3,225,117   (163,070)
  Shares issued
   to Zynex Medical,
   Inc. shareholder      19,500,000   19,500     --                               19,500
  Cancellation
   of certificates      (10,500,001) (10,500)    --                              (10,500)

 Sale of common stock       100,000      100     --       99,900                 100,000

 Proceeds from common
 stock subscriptions           --       --     80,000                             80,000

 Warrants issued
 to consultants                --       --       --       61,727                  61,727

Net (loss)                     --       --       --                  (180,617)  (180,617)
                         ----------- -------- ------- ----------- ------------ ----------
Balance, March 31,
2004                      22,251,662 $ 22,252 $80,000 $   161,627 $  (360,149) $ (96,270)
                         =========== ======== ======= =========== ============ ==========
</TABLE>


                                      F-15
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.   Nature of Business

     The  Company  designs,  manufactures  and  markets  a line of FDA  approved
products for the  electrotherapy  and stroke recovery markets.  The Company also
purchases   electrotherapy   devices  and  supplies  from  other   domestic  and
international suppliers for resale.

     On February 11, 2004,  Zynex  Medical  Holdings,  Inc.,  formerly Fox River
Holdings,  Inc.,  acquired  100% of the  common  stock  of Zynex  Medical,  Inc.
pursuant to an  acquisition  agreement  by issuing  19,500,000  shares of common
stock to the  sole  shareholder  of  Zynex  Medical,  Inc.  Coincident  with the
transaction,  Fox  River  Holdings,  Inc.  changed  its  name to  Zynex  Medical
Holdings,  Inc.  Immediately  after the transaction,  the former  shareholder of
Zynex Medical,  Inc. owned  approximately  88.5 percent of the Company's  common
stock.  The  reorganization  is  recorded  as a  recapitalization  effected by a
reverse merger wherein Zynex Medical  Holdings,  Inc. is treated as the acquiree
for accounting purposes,  even though it is the legal acquirer.  The transaction
has been accounted for as a purchase, and accordingly, the results of operations
for the periods  presented  represent  solely those of the accounting  acquirer,
Zynex  Medical,  Inc.  Since Zynex Medical  Holdings,  Inc. was a  non-operating
entity with limited business activity and no assets, goodwill was not recorded.

     The original  Form 10-QSB for quarter ended March 31, 2004 and filed on May
24, 2004 was prepared  before  completion of Zynex  Medical,  Inc.'s 2003 audit.
Certain  adjustments  arose after May 24, 2004 that were recorded as of December
31, 2003  thereby  affecting  the opening  balances in 2004.  This  amended Form
10-QSB reflects the impact of these adjustments on the balance sheet as of March
31, 2004 and the results of operations and cash flows for the three-month period
then  ended.  The  original  Form 10-QSB  reflected  a net loss of $186,992  for
quarter  ended  March 31,  2004.  The  amended  10-QSB/A  reflects a net loss of
$180,617 for the same period.

2.   Basis of Presentation

     The  accompanying  condensed  consolidated  financial  statements have been
prepared by the Company without audit,  pursuant to the rules and regulations of
the  Securities  and  Exchange  Commission  and in  accordance  with  accounting
principles  for interim  financial  information.  In the opinion of  management,
these  condensed  consolidated  financial  statements  contain  all  adjustments
(consisting only of normal recurring  adjustments) necessary to fairly state the
financial  position  of the  Company as of March 31, 2004 and the results of its
operations and cash flows for the three months ended March 31, 2004 and 2003.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted.  Furthermore,  these financial statements should
be read in conjunction with Zynex Medical,  Inc.'s audited financial  statements
at December 31, 2003, included in the Company's Form 8-K/A filed June 15, 2004.


                                      F-16
<PAGE>

3.   Summary of Significant Policies

     Use of Estimates

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

     Principles of Consolidation

     The accompanying  condensed  consolidated  financial statements include the
accounts  of Zynex  Medical,  Inc.  for all of the  periods  presented,  and the
accounts of Zynex  Medical  Holdings,  Inc.  subsequent to the February 11, 2004
reverse merger. All intercompany  balances and transactions have been eliminated
in consolidation.

           Revenue Recognition

     Sales and rental  income is  recognized  when a product has been  medically
prescribed and dispensed to a patient and, when applicable,  a claim prepared by
the Company has been filed with the patient's insurance provider.

     Provision for Sales Returns, Allowances and Bad Debts

     The Company  maintains a provision  for sales  allowances,  returns and bad
debts.  Sales returns and allowances result from  reimbursements  from insurance
providers that are less than amounts  claimed,  as provided by agreement,  where
the amount  claimed by the  Company  exceeds  the  insurance  provider's  usual,
customary and reasonable  reimbursement rate and when units are returned because
of benefit denial.  The provision is provided for by reducing gross revenue by a
portion of the amount  invoiced  during the relevant  period.  The amount of the
reduction is estimated based on historical experience.

     Stock-Based Compensation

     Transactions in equity instruments with non-employees for goods or services
are  accounted for using the fair value  method.  On March 7, 2004,  the Company
issued a total of 110,000  warrants to purchase  common  stock for five years to
two  consultants  for services  rendered in connection  with the reverse merger;
100,000  of the  warrants  are  exercisable  at $3.00 per share and  10,000  are
exercisable  at $.55 per share.  The closing  market  quotation of the stock was
$2.75 on March 7, 2004. As a result of these transactions,  the Company recorded
consulting expense of $61,727 during the quarter ended March 31, 2004.


                                      F-17
<PAGE>

     Statement  of  Financial  Accounting  Standards  No. 123,  "Accounting  for
Stock-Based Compensation," requires that companies either recognize compensation
expense for grants of stock options and other equity  instruments  based on fair
value,  or provide  pro forma  disclosure  of net  income  (loss) and net income
(loss) per share in the notes to the  financial  statements.  On March 16, 2004,
the Company issued a warrant to one employee to purchase 10,000 shares of common
stock at $3.00 per share.  The  warrant is valid  through  March 15,  2009.  The
Company  accounts for warrants  issued to employees  under the  recognition  and
measurement   principles  of  Accounting   Principles   Board  Opinion  No.  25,
"Accounting  for  Stock  Issued  to  Employees,"  and  related  interpretations.
Accordingly,  no compensation  cost has been  recognized  under SFAS 123 for the
employee's  warrant.  Had compensation cost for this award been determined based
on the grant date fair value,  consistent  with the method  required  under SFAS
123, the Company's net loss for the quarter ended March 31, 2004 would have been
increased by $6,190.

     The Company has determined that it will continue to account for stock-based
compensation  for  employees  under APB Opinion No. 25 as modified by FIN 44 and
elect  the  disclosure-only  alternative  under  SFAS  No.  123 for  stock-based
compensation  awarded  in 2004  using the  Black-Scholes  option  pricing  model
prescribed by SFAS No. 123.

4.   Net Earnings (Loss) Per Share

     The Company  computes net earnings (loss) per share in accordance with SFAS
No. 128,  "Earnings per Share",  which  establishes  standards for computing and
presenting net earnings  (loss) per share.  Basic  earnings  (loss) per share is
computed by dividing net income (loss) by the weighted  average number of common
shares outstanding during the period.  Diluted earnings per share is computed by
dividing  net income  (loss) by the  weighted  average  number of common  shares
outstanding and the number of dilutive potential common share equivalents during
the period.  The effects of  potential  common stock  equivalents  have not been
included in the  computation of diluted net loss per share for the quarter ended
March 31, 2004 as their effect is anti-dilutive.

     All  share  and  per  share  amounts  presented,   reflect  the  22,151,662
outstanding shares as a result of the February 11, 2004 reverse merger, adjusted
for subsequent activity.

5.   Notes Payable

     Notes  payable  includes a term loan  payable to  FirstBank  of  Littleton,
payable in monthly  installments of $4,331,  including  interest at 7.5%, with a
balloon payment of $105,533 due November 15, 2004. The loan is collateralized by
accounts receivable and the President's personal residence.

6.   Long-Term Obligations

     Long-term obligations at March 31, 2004 consist of the following:

Revolving line of credit, payable in monthly
installments of $3,000 including interest at prime
plus 2% with the unpaid balance due on May 4,
2004. The line of credit is secured by accounts
receivable and inventory and is guaranteed by the
Small Business Administration.                               $   41,424

Inventory financing obligations payable in monthly
installments of $3,479 with interest at 18.25% to
20.79%.  The obligations are collateralized by
inventory.                                                       32,318

Automobile loan payable in 60 monthly installments
of $1,351 with interest at 15.1%.                                56,332

Capital lease obligation                                         21,732
                                                             ----------
Total                                                           151,806

Less current portion                                             92,301
                                                             ----------
Long-term portion                                            $   59,505


                                      F-18
<PAGE>

The  balance of $38,424  due on May 4, 2004 under the  revolving  line of credit
guaranteed by the Small Business  Administration  was not paid.  Therefore,  the
Company is in  default  under this  agreement.  The  Company  has  requested  an
extension to continue paying $3,000 per month  including  principal and interest
until this debt is extinguished.

7.   Common Stock

      During the quarter  ended March 31, 2004,  the Company  received  $180,000
from the sale of common stock to certain  shareholders in a private placement at
$1.00  per  share,  80,000  of which  represents  subscribed  (and paid for) but
unissued  shares as of March 31, 2004.  The Company has used these  proceeds for
general working capital requirements.

8.   Contingency

     In  connection  with its  sales  of  medical  devices,  the  Company  sells
disposable  supplies used with some of its devices.  In some cases, the billings
to private insurance  companies exceed supplies actually shipped. It is possible
that the affected  private  insurance  companies or a governmental  agency could
assert  claims for such  overbillings.  The Company  discontinued  this  billing
practice  in March 2004 and has  reserved  the maximum  estimated  impact on the
collectibility of accounts  receivable,  approximately  $137,000 as of March 31,
2004.

9.   Events Subsequent to March 31, 2004

     On June 4, 2004, the Holding Company sold 685,714 shares of common stock to
five  investors  at $1.75 per share.  The proceeds  realized  from the sale were
$1,030,000,  net of transaction costs. In connection with the sales, the Holding
Company  granted  Class A Warrants to purchase an additional  342,857  shares of
common  stock at $1.75 per share,  Class B Warrants to  purchase  an  additional
685,714 shares of common stock at $2.00 per share,  Class C Warrants to purchase
22,858 shares of common stock at $.01 per share and Broker  Warrants to purchase
45,713 shares of common stock at $.01 per share.  The Class A Warrants expire on
the 150th day  after the  actual  effective  date  during  which a  registration
statement  has  been  available  for use by the  holder  for  resale  under  the
Securities Act of 1933 of the common stock issuable upon exercise of the Class A
Warrants. The Class B, Class C and Broker Warrants expire on June 4, 2009.

     Upon  exercise  of the  warrants,  the  Holding  Company is required to pay
Warrant Exercise  Compensation  equal to 10 percent of the cash proceeds payable
to the Holding  Company.  The Holding  Company is further  required to issue one
Broker's  Warrant  for each 10 shares of Class A,  Class B and Class C  Warrants
exercised by the subscribers.


                                      F-19
<PAGE>

================================================================================

You should rely only on the information  contained in this  prospectus.  We have
not  authorized  anyone  to  provide  you with  information  different  from the
information  contained in this prospectus.  This document may only be used where
it is legal to sell the securities. The information in this document may only be
accurate on the date of this document.



                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

Prospectus Summary                                                             2
Risk Factors                                                                   3
Use of Proceeds                                                                7
Market for Common Equity and Related
Stockholder Matters                                                            8
Dividend Policy                                                                9
Management's Discussion and Analysis                                          10
Business                                                                      19
Management                                                                    24
Executive Compensation                                                        27
Certain Relationships and Related Transactions                                32
Security Ownership of Certain Beneficial
Owners and Management                                                         33
Description of Securities                                                     35
Plan of Distribution                                                          37
Selling Stockholders                                                          39
Legal Matters                                                                 40
Experts                                                                       40
Available Information                                                         41
Index to Financial Statements                                                 42
                                                                              --

================================================================================

                                1,782,862 SHARES
                                     OF OUR
                                 OF COMMON STOCK



                          Zynex Medical Holdings, Inc.



                                ________________

                                   PROSPECTUS
                                ________________






                                 ________, 2004


================================================================================


<PAGE>

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24.  Indemnification of Directors and Officers.

         Our  Articles  of  Incorporation,  as  amended,  provide to the fullest
extent  permitted  by  Nevada  law,  our  directors  or  officers  shall  not be
personally  liable to us or our  shareholders  for  damages  for  breach of such
director's  or officer's  fiduciary  duty.  The effect of this  provision of our
Articles  of  Incorporation,  as  amended,  is to  eliminate  our rights and our
shareholders (through  shareholders'  derivative suits on behalf of our company)
to recover  damages  against a director or officer  for breach of the  fiduciary
duty of  care as a  director  or  officer  (including  breaches  resulting  from
negligent  or grossly  negligent  behavior),  except  under  certain  situations
defined  by  statute.  We believe  that the  indemnification  provisions  in our
Articles of  Incorporation,  as  amended,  are  necessary  to attract and retain
qualified persons as directors and officers.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
registrant  has been advised that in the opinion of the  Securities and Exchange
Commission  such  indemnification  is against  public policy as expressed in the
Securities Act and is, therefore,  unenforceable.  In the event that a claim for
indemnification  against  such  liabilities  (other  than  the  payment  by  the
registrant of expenses  incurred or paid by a director,  officer or  controlling
person of the  registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against  public policy as expressed in the  Securities
Act and will be governed by the final adjudication of such issue.

Item 25.  Other Expenses of Issuance and Distribution.

         The  following  table  sets  forth  an  itemization  of  all  estimated
expenses,  all of  which we will  pay,  in  connection  with  the  issuance  and
distribution of the securities being registered:

     Nature of Expense                                            Amount
                                                              ----------------
     SEC Registration fee                                       $    496.96
     Accounting fees and expenses                                *10,000.00
     Legal fees and expenses                                     *35,000.00
     Printing and related expenses                                 4,503.04
                                                              ----------------
                           TOTAL                                *$50,000.00

* Estimated.


                                      II-1
<PAGE>



Item 26.  Recent Sales of Unregistered Securities.

         Except  as set  forth  below,  there  were  no  sales  of  unregistered
securities by Zynex Medical Holdings during the past three (3) years:

         On  January  18,  2002,  we issued  20,000  shares  of common  stock in
satisfaction of approximately $85,000 in payables at December 31, 2001.

         On January 15, 2002, we did a 25 to 1 reverse stock split of our common
stock.

         On  September  27,  2002,  we issued  200,000  post split shares of our
common stock to our President for services provided.

         On  November  14,  2002,  we did a 10 to 1 reverse  stock  split of our
common stock.

         On November 14,  2002,  we issued 5,000 post split shares of our common
stock to our President for services provided.

         During the year ended  September 30, 2002, we issued 152,000 post split
shares of common stock in satisfaction of notes payable.

         Effective April 23, 2002, the Company  executed an agreement to acquire
all the equity of Fox River Graphics,  Inc.  ("FRG") a  privately-held  Illinois
corporation.   In  anticipation  of  the  acquisition,   the  Company  converted
approximately  $575,000  in debt  for  issuance  of  approximately  4.6  million
(pre-split) shares of common stock and issued, but held in escrow for completion
of  acquisition,  14 million shares of common stock.  During  November 2003, the
Company  abandoned the FRG  acquisition,  the former creditors agreed to rescind
their debt conversion.  This resulted in approximately  3.4 million  (pre-split)
shares  being  returned to treasury and a renewal of  approximately  $358,000 in
debt on the Company's books.  Also the 14 million in anticipation of closing was
canceled and returned to treasury.

         During fiscal year 2002,  we issued  2,000,000 pre reverse split shares
of common stock to Paul F. Beatty, our then President and sole director for past
services rendered.

         In January 2003, we issued 20,000,000 post split shares of common stock
to Paul Beatty, our then President and sole director for services rendered.

         On December 4, 2003,  we issued  10,000,000  shares of common  stock to
Paul Beatty, our then President and sole director for services rendered.

         On  December  16,  2003,  we did a 40 to 1 reverse  stock  split of our
common stock.  Any certificate less than 100 shares was not subject to the split
and no certificate greater than 100 shares was to be reversed below 100 shares.

         On December 18, 2003, we issued 2,000 shares to one of our shareholders
for conversion of approximately $85,000 in debt.

         Between  January and May 2004,  we received  $130,000  for common stock
subscriptions at $1 per share.

         In January 2004,  we issued  approximately  2,600,000  shares of common
stock were issued for approximately $360,000 in debt.

         Between  February and May 2004,  we sold  210,000  shares of our common
stock to six accredited investors in exchange for $210,000 in cash. These shares
were issued to three  "accredited  investors" within the meaning of Rule 501 and
pursuant to Rule 506 of Regulation D under the Securities Act of 1933.


                                      II-2
<PAGE>

         On February 11, 2004, we issued  19,500,000  shares of our common stock
in exchange for all of the issued and outstanding shares of Zynex Medical,  Inc.
The shares were issued to one accredited  investor in a transaction exempt under
Section 4(2) of the Securities Act of 1933, as amended.

         On March 7, 2004,  we issued a total of 120,000  warrants  to  purchase
common  stock  for  five  years  to an  employee  and two  consultants  for past
services;  110,000 of the  warrants are  exercisable  at $3 per share and 10,000
warrants are exercisable at $.55 per share.  The closing market quotation of the
stock was $2.75 per share on March 7, 2004.

         On June 4,  2004,  we sold  685,715  shares  of our  common  stock in a
private  placement for $1,030,000 to five  accredited  investors.  In connection
with the sale, we issued 342,858 class A warrants,  685,716 class B warrants and
22,858 class C warrants,  with each warrant  representing  the right to purchase
one share of our common  stock at an exercise  price of $1.75,  $2.00 and $0.01,
respectively,  per share until one hundred  fifty (150) days after the effective
date of this  registration  statement.  The Class A Warrants expire on the 150th
day after the actual  effective date during which a  registration  statement has
been available for use by the holder for resale under the Securities Act of 1933
of the common stock issuable upon exercise of the Class A Warrants. The Class B,
Class C and Broker Warrants expire on June 4, 2009.

         Additionally,  in connection with the sale of the 685,715 shares of our
common stock,  we issued the  placement  agent  five-year  warrants to purchases
45,715  shares of our common  stock plus a number of shares of our common  stock
equal to 10% of the  number  of  shares  exercised  by the class A and B warrant
holders, at an exercise price of $0.01 per share.

Item 27.  Exhibits.

              The  following  exhibits  are  included as part of this Form SB-2.
References  to "us" in this Exhibit List mean Zynex  Medical  Holdings,  Inc., a
Nevada corporation.

Exhibit No.   Description
-----------   -----------

3.1           Articles of  Incorporation  of Ibonzi.com,  Inc,  incorporated  by
              reference  to the  Company's  Current  Report on Form  8-K,  filed
              January 31, 2002.

3.2           Articles of Merger of Ibonzi.com,  Inc. with and into  Ibonzi,com,
              Inc to effect a migratory merger, incorporated by reference to the
              Company's Current Report on Form 8-K, filed January 31, 2002.

3.3           Amendment  to  Articles  of  Incorporation  of  Ibonzi.com,   Inc,
              changing the  company's  name to China Global  Development,  Inc.,
              incorporated by reference to the Company's  Current Report on Form
              8-K, filed January 31, 2002.

3.4           Certificate   of   Correction   to   Amendment   to   Articles  of
              Incorporation,  incorporated by reference to the Company's Current
              Report on Form 8-K, filed January 31, 2002.

3.5           Amendment to the Articles of Incorporation, changing the Company's
              name to Arizona Ventures, Inc. and effecting a  1:10 reverse split
              of common stock.

3.6           Amendment to the Articles of Incorporation, changing the Company's
              name to Fox River Holdings, Inc.

3.7           Amendment  to  the  Articles  of  Incorporation,  effecting a 1:40
              reverse split of common stock.

3.8           Amendment to the Articles of Incorporation, changing the Company's
              name to Zynex Medical Holdings, Inc.

3.9           Bylaws of the Company,  incorporated by reference to the Company's
              Current Report on Form 8-K, filed January 31, 2002.

                                      II-3

<PAGE>

4.1           Subscription Agreement, dated as of June 4, 2004, by and among the
              Company,  Alpha Capital  Aktiengesellschaft,  Stonestreet  Limited
              Partnership,  Whalehaven  Funds  Limited,  Greenwich  Growth  Fund
              Limited and Ellis International Limited, Inc.

4.2           Form of A Common Stock Purchase Warrant

4.3           Form of B Common Stock Purchase Warrant

4.4           Form of C Common Stock Purchase Warrant

4.5           Escrow  Agreement,  dated as of June 4, 2004,  by and among  Zynex
              Medical   Holdings,   Inc.,   Alpha  Capital   Aktiengesellschaft,
              Stonestreet   Limited   Partnership,   Whalehaven  Funds  Limited,
              Greenwich Growth Fund Limited,  Ellis  International  Limited Inc.
              and Grushko & Mittman, P.C.

5.1           Sichenzia  Ross  Friedman  Ference LLP Opinion and Consent  (filed
              herewith).

10.1          Acquisition Agreement,  dated as of January 27, 2004, by and among
              Zynex  Medical  Holdings,  Inc.,  Zynex  Medical,  Inc. and Thomas
              Sandgaard,  incorporated  by reference to Zynex Medical  Holdings,
              Inc.'s Current Report on Form 8-K, filed February 20, 2004.

10.2          Thomas Sandgaard Employment Agreement.

23.1          Consent of Gordon, Hughes & Banks, LLP (filed herewith).

23.2          Consent of legal counsel (see Exhibit 5).


                                      II-4
<PAGE>

Item 28.  Undertakings.

         The undersigned registrant hereby undertakes to:

         (1) File,  during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:

                  (i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");

                  (ii)  Reflect  in the  prospectus  any facts or events  which,
individually or together,  represent a fundamental  change in the information in
the  registration  statement.  Notwithstanding  the  foregoing,  any increase or
decrease  in volume of  securities  offered  (if the total  dollar  value of the
securities offered would not exceed that which was registered) and any deviation
from  the  low or  high  end of the  estimated  maximum  offering  range  may be
reflected in the form of prospectus  filed with the Commission  pursuant to Rule
424(b) under the Securities Act if, in the aggregate,  the changes in volume and
price  represent  no more than a 20% change in the  maximum  aggregate  offering
price set forth in the "Calculation of Registration  Fee" table in the effective
registration statement, and

                  (iii) Include any additional or changed  material  information
on the plan of distribution.

         (2) For  determining  liability  under the  Securities  Act, treat each
post-effective  amendment  as a new  registration  statement  of the  securities
offered,  and the offering of the securities at that time to be the initial bona
fide offering.

         (3) File a post-effective  amendment to remove from registration any of
the securities that remain unsold at the end of the offering.

         (4) For purposes of determining any liability under the Securities Act,
treat the information  omitted from the form of prospectus filed as part of this
registration  statement  in reliance  upon Rule 430A and  contained in a form of
prospectus  filed by the registrant  pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act as part of this  registration  statement as of the time
it was declared effective.

         (5) For  determining any liability under the Securities Act, treat each
post-effective   amendment   that  contains  a  form  of  prospectus  as  a  new
registration statement for the securities offered in the registration statement,
and that  offering  of the  securities  at that  time as the  initial  bona fide
offering of those securities.

         Insofar as indemnification for liabilities arising under the Securities
Act may be  permitted to  directors,  officers  and  controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

         In the event that a claim for indemnification  against such liabilities
(other than the  payment by the  registrant  of  expenses  incurred or paid by a
director,  officer or  controlling  person of the  registrant in the  successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling  person in connection with the securities being  registered,  the
registrant  will,  unless in the  opinion  of its  counsel  the  matter has been
settled by controlling precedent,  submit to a court of appropriate jurisdiction
the question  whether such  indemnification  by it is against  public  policy as
expressed in the Securities  Act and will be governed by the final  adjudication
of such issue.


                                      II-5
<PAGE>



                                   SIGNATURES

         In accordance with the  requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the  requirements  of filing on Form SB-2 and  authorizes  this  registration
statement  to be  signed  on its  behalf  by the  undersigned,  in the  City  of
Littleton, State of Colorado, on July 6, 2004.

                                  ZYNEX MEDICAL HOLDINGS, INC.

                                  By: /s/ Thomas Sandgaard
                                      ---------------------------------------
                                      Thomas Sandgaard, President,
                                      Chief Executive Officer, Principal
                                      Financial Officer and Director

         In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.

<TABLE>
Signature                                 Title                             Date
---------                                 -----                             ----
<S>                                                                     <C>
/s/Thomas Sandgaard            President, Chief Executive Officer       July 6, 2004
-------------------------      and Director
Thomas Sandgaard
</TABLE>






                                      II-6

</TEXT>
</DOCUMENT>
