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<SEC-DOCUMENT>0001144204-04-009580.txt : 20040706
<SEC-HEADER>0001144204-04-009580.hdr.sgml : 20040705
<ACCEPTANCE-DATETIME>20040706165004
ACCESSION NUMBER:		0001144204-04-009580
CONFORMED SUBMISSION TYPE:	SB-2
PUBLIC DOCUMENT COUNT:		13
FILED AS OF DATE:		20040706

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ZYNEX MEDICAL HOLDINGS   INC
		CENTRAL INDEX KEY:			0000846475
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]
		IRS NUMBER:				870403828
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		SB-2
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-117175
		FILM NUMBER:		04902800

	BUSINESS ADDRESS:	
		STREET 1:		8100 SOUTH PARK WAY
		STREET 2:		SUITE A-9
		CITY:			LITTLETON
		STATE:			CO
		ZIP:			80120
		BUSINESS PHONE:		(303) 703-4906

	MAIL ADDRESS:	
		STREET 1:		8100 SOUTH PARK WAY
		STREET 2:		SUITE A-9
		CITY:			LITTLETON
		STATE:			CO
		ZIP:			80120

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FOX RIVER HOLDINGS  INC
		DATE OF NAME CHANGE:	20031126

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ARIZONA VENTURES INC
		DATE OF NAME CHANGE:	20030115

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CHINA GLOBAL DEVELOPMENT INC
		DATE OF NAME CHANGE:	20020130
</SEC-HEADER>
<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>
<DOCUMENT>
<TYPE>EX-3.5
<SEQUENCE>2
<FILENAME>v04380_ex3-5.txt
<TEXT>

Exhibit 3.5


                              ARTICLES OF AMENDMENT

                        TO THE ARTICLES OF INCORPORATION

                                       OF

                         CHINA GLOBAL DEVELOPMENT, INC.

         Pursuant to the Provisions of the Nevada Business Corporations Act, the
Undersigned  Corporation  adopts the  following  amendment  to the  articles  of
Incorporation by way of shareholder consent.

1.       The following amendment of the Articles of Incorporation was adopted by
         a majority vote of the  shareholders of the corporation on November 14,
         2002. Said articles are hereby amended as follows:

                                    Article 1

                                      Name

         The Name of the corporation is Arizona Ventures, Inc.

2.       Additionally  the  shareholders  consented  to a  reverse  split of the
         company's  common stock on a 1 for 10 basis. 3. The number of shares of
         the  corporation  outstanding  at the time of adoption of the forEgoing
         was approximately  4.7 million;  and the number shares entitled to vote
         thereon were the same.

4.       The  number of  shares  voting in favor of the  actions  represented  a
         majority of the issued and  outstanding  shares and was  sufficient  to
         effect the corporate changes.

Effective the 14th day of November, 2002

                                                     /s/ Paul F. Beatty
                                                     -------------------------
                                                     Paul F. Beatty, President

/s/ Paul F. Beatty
- -------------------------
Paul F. Beatty, Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.6
<SEQUENCE>3
<FILENAME>v04380_ex3-6.txt
<TEXT>

Exhibit 3.6


                              ARTICLES OF AMENDMENT

                        TO THE ARTICLES OF INCORPORATION

                                       OF

                             ARIZONA VENTURES, INC.

Pursuant  to  the  provisions  of  the  Nevada  Business  Corporation  Act,  the
Undersigned  Corporation  adopts the  following  amendments  to the  Articles of
Incorporation by way of shareholder consent.

1.       The following amendment of the Articles of Incorporation was adopted by
         a majority vote of  shareholders  of the corporation on August 7, 2003.
         Said articles are herby amended as follows:

                                    Article 1

                                      Name

         The name of the corporation is Fox River Holdings, Inc.

2.       The  number  of shares of the  corporation  outstanding  at the time of
         adoption of the  foregoing  was  approximately  24.9  million;  and the
         number of shares entitled to vote thereon was the same.

3.       The number of shares voting in favor of the action was 20,200,000.  The
         shareholder voting in favor of the action represented a majority of the
         issued  and  outstanding  shares  and  was  sufficient  to  affect  the
         corporate changes.

Effective the 7th day of August 2003

                                                     /s/ Paul F. Beatty
                                                     -------------------------
                                                     Paul F. Beatty, President

/s/ Paul F. Beatty
- -------------------------
Paul F. Beatty, Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.7
<SEQUENCE>4
<FILENAME>v04380_ex3-7.txt
<TEXT>

Exhibit 3.7


                              ARTICLES OF AMENDMENT

                        TO THE ARTICLES OF INCORPORATION

                                       OF

                            FOX RIVER HOLDINGS, INC.

Pursuant  to  the  provisions  of  the  Nevada  Business  Corporation  Act,  the
Undersigned  Corporation  adopts the  following  amendments  to the  Articles of
Incorporation by way of shareholder consent.

1.       The following amendment of the Articles of Incorporation was adopted by
         a majority vote of the  shareholders  of the corporation on December 2,
         2003.

2.       The  shareholders  consented to a reverse split of the Company's common
         stock on a 1 for 40 basis.

3.       The  number  of shares of the  corporation  outstanding  at the time of
         adoption of the  foregoing  was  approximately  24.5  million;  and the
         number of shares entitled to vote thereon were the same.

4.       The number of shares voting in favor of the action was 20,200,000.  The
         shareholder  voting in favor of the actions  represented  a majority of
         the issued and  outstanding  shares  and was  sufficient  to effect the
         corporate changes.

Effective the 2nd of December 2003

                                                     /s/ Paul F. Beatty
                                                     -------------------------
                                                     Paul F. Beatty, President

/s/ Paul F. Beatty
- -------------------------
Paul F. Beatty, Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.8
<SEQUENCE>5
<FILENAME>v04380_ex3-8.txt
<TEXT>

Exhibit 3.8


                              ARTICLES OF AMENDMENT

                        TO THE ARTICLES OF INCORPORATION

                                       OF

                            FOX RIVER HOLDINGS, INC.

Pursuant  to  the  provisions  of  the  Nevada  Business  Corporation  Act,  the
Undersigned  Corporation  adopts the  following  amendments  to the  Articles of
Incorporation by way of shareholder consent.

1.       The following amendment of the Articles of Incorporation was adopted by
         a majority  vote of  shareholders  of the  corporation  on December 19,
         2003. Said articles are herby amended as follows:

                                    Article 1

                                      Name

         The name of the corporation is Zynex Medical Holdings, Inc.

2.       The  number  of shares of the  corporation  outstanding  at the time of
         adoption of the  foregoing  was  approximately  24.5  million;  and the
         number of shares entitled to vote thereon was the same.

3.       The number of shares voting in favor of the action was 20,200,000.  The
         shareholder voting in favor of the action represented a majority of the
         issued  and  outstanding  shares  and  was  sufficient  to  affect  the
         corporate changes.

Effective the 19th day of August 2003

                                                     /s/ Paul F. Beatty
                                                     -------------------------
                                                     Paul F. Beatty, President

/s/ Paul F. Beatty
- -------------------------
Paul F. Beatty, Secretary

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>6
<FILENAME>ex-4_1.txt
<TEXT>

EXHIBIT 4.1


                             SUBSCRIPTION AGREEMENT


         THIS SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of June 4,
2004, by and among Zynex Medical Holdings, Inc., a Nevada corporation (the
"Company"), and the subscribers identified on the signature page hereto (each a
"Subscriber" and collectively "Subscribers").

         WHEREAS, the Company and the Subscribers are executing and delivering
this Agreement in reliance upon an exemption from securities registration
afforded by the provisions of Section 4(2), Section 4(6) and/or Regulation D
("Regulation D") as promulgated by the United States Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"1933 Act").

         WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the
Subscribers, as provided herein, and the Subscribers shall purchase, in the
aggregate, $1,200,000 (the "Purchase Price") of the Company's common stock,
$.001 par value (the "Common Stock" or "Shares"), and share purchase warrants in
the forms attached hereto as EXHIBIT A, EXHIBIT B AND EXHIBIT C (collectively,
the "Warrants"), to purchase shares of Common Stock (the "Warrant Shares"). The
per Share Purchase Price shall be $1.75, subject to adjustment as described in
this Agreement. The Purchase Price shall be payable to the Company on the
Closing Date. The Common Stock, the Warrants and the Warrant Shares are
collectively referred to herein as the "Securities"; and

         WHEREAS, the aggregate proceeds of the sale of the Common Stock and the
Warrants contemplated hereby may be held in escrow pursuant to the terms of a
Funds Escrow Agreement which may be executed by the parties substantially in the
form attached hereto as EXHIBIT D (the "Escrow Agreement").

         NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement, the Company and the Subscribers hereby
agree as follows:

                  1. PURCHASE AND SALE OF SHARES AND WARRANTS. Subject to the
satisfaction (or waiver) of the conditions to Closing set forth in this
Agreement and the Escrow Agreement, each Subscriber shall purchase the Shares
and Warrants for the portion of the Purchase Price indicated on the signature
page hereto, and the Company shall sell such Shares and Warrants to the
Subscriber. The Purchase Price for the Shares and Warrants shall be paid in
cash. The entire Purchase Price shall be allocated to the Shares.

                  2. ESCROW ARRANGEMENTS; FORM OF PAYMENT. Upon execution hereof
by the parties and pursuant to the terms of the Escrow Agreement, each
Subscriber agrees to make the deliveries required of such Subscriber as set
forth in the Escrow Agreement and the Company agrees to make the deliveries
required of the Company as set forth in the Escrow Agreement.

                  3. WARRANTS.

                           (a) A WARRANTS. On the Closing Date the Company will
issue A Warrants to the Subscribers. One (1) A Warrant will be issued for each
two (2) Shares issued on the Closing Date. The per Warrant Share exercise price
to acquire a Warrant Share upon exercise of an A Warrant shall be $1.75. The A
Warrants shall be exercisable until the registration statement described in
Section 11.1(iv) of this Agreement has been effective for one hundred and fifty
(150) days.

                                       1
<PAGE>

                           (b) B WARRANTS. On the Closing Date the Company will
issue B Warrants to the Subscribers. One (1) B Warrant will be issued for each
one (1) Share issued on the Closing Date. The per Warrant Share exercise price
to acquire a Warrant Share upon exercise of a B Warrant shall be $2.00. The B
Warrants shall be exercisable until five (5) years after the Closing Date. The B
Warrants will be subject to Call as described in EXHIBIT B hereto.

                           (c) C WARRANTS. On the Closing Date the Company will
issue C Warrants to the Subscribers. One (1) C Warrant will be issued for each
thirty (30) Shares issued on the Closing Date. The per Warrant Share exercise
price to acquire a Warrant Share upon exercise of a C Warrant shall be $0.01.
The C Warrants shall be exercisable until five (5) years after the Closing Date.
The C Warrants will not be subject to Call.

                  4. SUBSCRIBER'S REPRESENTATIONS AND WARRANTIES. Each
Subscriber hereby represents and warrants to and agrees with the Company only as
to such Subscriber that:

                           (a) INFORMATION ON COMPANY. The Subscriber has been
furnished with or has had access at the EDGAR Website of the Commission to the
Company's Form 10-KSB for the year ended September 30, 2003 as filed with the
Commission, together with all subsequently filed Forms 10-QSB, 8-K, and filings
made with the Commission available at the EDGAR website (hereinafter referred to
collectively as the "Reports"). In addition, the Subscriber has received in
writing from the Company such other information concerning its operations,
financial condition and other matters as the Subscriber has requested in writing
(such other information is collectively, the "Other Written Information"), and
considered all factors the Subscriber deems material in deciding on the
advisability of investing in the Securities.

                           (b) INFORMATION ON SUBSCRIBER. The Subscriber is, and
will be at the time of the conversion of the Common Stock and exercise of any of
the Warrants, an "accredited investor", as such term is defined in Regulation D
promulgated by the Commission under the 1933 Act, is experienced in investments
and business matters, has made investments of a speculative nature and has
purchased securities of United States publicly-owned companies in private
placements in the past and, with its representatives, has such knowledge and
experience in financial, tax and other business matters as to enable the
Subscriber to utilize the information made available by the Company to evaluate
the merits and risks of and to make an informed investment decision with respect
to the proposed purchase, which represents a speculative investment. The
Subscriber has the authority and is duly and legally qualified to purchase and
own the Securities. The Subscriber is able to bear the risk of such investment
for an indefinite period and to afford a complete loss thereof. The information
set forth on the signature page hereto regarding the Subscriber is accurate.

                           (c) PURCHASE OF COMMON STOCK AND WARRANTS. On the
closing date, the Subscriber will purchase the Common Stock and Warrants as
principal for its own account and not with a view to any distribution thereof.

                           (d) COMPLIANCE WITH SECURITIES ACT. The Subscriber
understands and agrees that the Securities have not been registered under the
1933 Act or any applicable state securities laws, by reason of their issuance in
a transaction that does not require registration under the 1933 Act (based in
part on the accuracy of the representations and warranties of Subscriber
contained herein), and that such Securities must be held indefinitely unless a
subsequent disposition is registered under the 1933 Act or any applicable state

                                       2
<PAGE>

securities laws or is exempt from such registration. In any event, and subject
to compliance with applicable securities laws, the Subscriber may enter into
hedging transactions with third parties, which may in turn engage in short sales
of the Securities in the course of hedging the position they assume and the
Subscriber may also enter into short positions or other derivative transactions
relating to the Securities, or interests in the Securities, and deliver the
Securities, or interests in the Securities, to close out their short or other
positions or otherwise settle short sales or other transactions, or loan or
pledge the Securities, or interests in the Securities, to third parties that in
turn may dispose of these Securities.

                           (e) SHARES LEGEND. The Shares and the Warrant Shares
shall bear the following or similar legend:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
                  SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
                  HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE
                  SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
                  SATISFACTORY TO ZYNEX MEDICAL HOLDINGS, INC. THAT SUCH
                  REGISTRATION IS NOT REQUIRED."

                           (f) WARRANTS LEGEND. The Warrants shall bear the
following

or similar legend:

                  "THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
                  THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
                  OF 1933, AS AMENDED. THIS WARRANT AND THE COMMON SHARES
                  ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
                  OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
                  EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID
                  ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF
                  COUNSEL REASONABLY SATISFACTORY TO ZYNEX MEDICAL HOLDINGS,
                  INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

                           (g) COMMUNICATION OF OFFER. The offer to sell the
Securities was directly communicated to the Subscriber by the Company. At no
time was the Subscriber presented with or solicited by any leaflet, newspaper or
magazine article, radio or television advertisement, or any other form of
general advertising or solicited or invited to attend a promotional meeting
otherwise than in connection and concurrently with such communicated offer.

                           (h) AUTHORITY; ENFORCEABILITY. This Agreement and
other agreements delivered together with this Agreement or in connection
herewith have been duly authorized, executed and delivered by the Subscriber and
are valid and binding agreements enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity; and Subscriber
has full corporate power and authority necessary to enter into this Agreement
and such other agreements and to perform its obligations hereunder and under all
other agreements entered into by the Subscriber relating hereto.

                                       3
<PAGE>

                           (i) RESTRICTED SECURITIES. Subscriber understands
that the Securities have not been registered under the 1933 Act and such
Subscriber will not sell, offer to sell, assign, pledge, hypothecate or
otherwise transfer any of the Securities unless (i) pursuant to an effective
registration statement under the 1933 Act, (ii) such Subscriber provides the
Company with an opinion of counsel, in a form reasonably acceptable to the
Company, to the effect that a sale, assignment or transfer of the Securities may
be made without registration under the 1933 Act, or (iii) Subscriber provides
the Company with reasonable assurances (in the form of seller and broker
representation letters) that the Shares or the Warrant Shares, as the case may
be, can be sold pursuant to (A) Rule 144 promulgated under the 1933 Act, or (B)
Rule 144(k) promulgated under the 1933 Act, in each case following the
applicable holding period set forth therein. Notwithstanding anything to the
contrary contained in this Agreement, such Subscriber may transfer (without
restriction and without the need for an opinion of counsel) the Securities to
its Affiliates (as defined below) provided that each such Affiliate is an
"accredited investor" under Regulation D and such Affiliate agrees to be bound
by the terms and conditions of this Agreement.

                                    For the purposes of this Agreement, an
"Affiliate" of any specified Subscriber means any other person or entity
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Subscriber. For purposes of this definition,
"control" means the power to direct the management and policies of such person
or firm, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.

                           (j) NO GOVERNMENTAL REVIEW. Each Subscriber
understands that no United States federal or state agency or any other
governmental or state agency has passed on or made recommendations or
endorsement of the Securities or the suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the
offering of the Securities.

                           (k) CORRECTNESS OF REPRESENTATIONS. Each Subscriber
represents as to such Subscriber that the foregoing representations and
warranties are true and correct as of the date hereof and, unless a Subscriber
otherwise notifies the Company prior to the Closing Date (as hereinafter
defined), shall be true and correct as of the Closing Date.

                           (l) SURVIVAL. The foregoing representations and
warranties shall survive the Closing Date for a period of two years.

                  5. COMPANY REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to and agrees with each Subscriber that:

                           (a) DUE INCORPORATION. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the respective jurisdictions of their incorporation
and have the requisite corporate power to own their properties and to carry on
their business as now being conducted. The Company and each of its subsidiaries
is duly qualified as a foreign corporation to do business and is in good
standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a material
adverse effect on the business, operations or financial condition of the
Company.

                           (b) OUTSTANDING STOCK. All issued and outstanding
shares of capital  stock of the Company and each of its  subsidiaries  have been
duly authorized and validly issued and are fully paid and nonassessable.

                                       4
<PAGE>

                           (c) AUTHORITY; ENFORCEABILITY. This Agreement, the
Common  Stock,  the  Warrants,  the Escrow  Agreement  and any other  agreements
delivered together with this Agreement or in connection  herewith  (collectively
"Transaction  Documents") have been duly  authorized,  executed and delivered by
the Company and are valid and binding agreements  enforceable in accordance with
their  terms,   subject  to   bankruptcy,   insolvency,   fraudulent   transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting  creditors'  rights generally and to general  principles of equity.
The Company has full corporate  power and authority  necessary to enter into and
deliver the Transaction Documents and to perform its obligations thereunder.

                           (d) ADDITIONAL ISSUANCES. There are no outstanding
agreements or preemptive or similar rights  affecting the Company's common stock
or equity  and no  outstanding  rights,  warrants  or  options  to  acquire,  or
instruments   convertible   into  or   exchangeable   for,  or   agreements   or
understandings  with  respect  to the sale or  issuance  of any shares of common
stock  or  equity  of  the  Company  or  other  equity  interest  in  any of the
subsidiaries of the Company except as described on SCHEDULE 5(D).

                           (e) CONSENTS. No consent, approval, authorization or
order  of  any  court,   governmental   agency  or  body  or  arbitrator  having
jurisdiction  over the Company,  or any of its  affiliates,  the American  Stock
Exchange, the National Association of Securities Dealers, Inc., Nasdaq, SmallCap
Market, the OTC Bulletin Board ("Bulletin Board") nor the Company's shareholders
is required for the  execution by the Company of the  Transaction  Documents and
compliance  and  performance  by  the  Company  of  its  obligations  under  the
Transaction Documents,  including,  without limitation, the issuance and sale of
the Securities.

                           (f) NO VIOLATION OR CONFLICT. Assuming the
representations  and  warranties  of the  Subscribers  in Section 4 are true and
correct,  neither the issuance and sale of the Securities nor the performance of
the Company's  obligations under this Agreement and all other agreements entered
into by the Company relating thereto by the Company will:

                                    (i) violate, conflict with, result in a
breach of, or  constitute a default (or an event which with the giving of notice
or the lapse of time or both would be reasonably likely to constitute a default)
under (A) the articles or certificate of incorporation, charter or bylaws of the
Company,  (B) to the Company's  knowledge,  any decree,  judgment,  order,  law,
treaty,  rule,  regulation  or  determination  applicable  to the Company of any
court,  governmental  agency or body, or arbitrator having jurisdiction over the
Company  or any of its  subsidiaries  or over the  properties  or  assets of the
Company or any of its affiliates,  (C) the terms of any bond, debenture, note or
any other  evidence of  indebtedness,  or any  agreement,  stock option or other
similar plan, indenture,  lease, mortgage,  deed of trust or other instrument to
which the Company or any of its affiliates or  subsidiaries is a party, by which
the Company or any of its affiliates or  subsidiaries  is bound, or to which any
of the  properties of the Company or any of its  affiliates or  subsidiaries  is
subject,  or (D)  the  terms  of  any  "lock-up"  or  similar  provision  of any
underwriting or similar agreement to which the Company, or any of its affiliates
or subsidiaries is a party except the violation, conflict, breach, or default of
which would not have a material adverse effect on the Company; or

                                    (ii) result in the creation or imposition of
any lien,  charge or encumbrance upon the Securities or any of the assets of the
Company, its subsidiaries or any of its affiliates; or

                                       5
<PAGE>

                                    (iii) result in the activation of any
anti-dilution  rights or a reset or repricing of any debt or security instrument
of any  other  creditor  or  equity  holder of the  Company,  nor  result in the
acceleration of the due date of any obligation of the Company; or

                                    (iv) result in the activation of any
piggy-back registration rights of any person or entity holding securities of the
Company or having the right to receive securities of the Company.

                           (g) THE SECURITIES. The Securities upon issuance:

                                    (i) are, or will be, free and clear of any
security interests, liens, claims or other encumbrances, subject to restrictions
upon transfer under the 1933 Act and any applicable state securities laws;

                                    (ii) have been, or will be, duly and validly
authorized  and on the date of issuance  of the Shares and upon  exercise of the
Warrants,  the Shares and Warrant Shares will be duly and validly issued,  fully
paid and nonassessable  (and if registered  pursuant to the 1933 Act, and resold
pursuant  to an  effective  registration  statement  will  be free  trading  and
unrestricted,  provided  that  each  Subscriber  complies  with  the  prospectus
delivery requirements of the 1933 Act);

                                    (iii) will not have been issued or sold in
violation  of any  preemptive  or other  similar  rights of the  holders  of any
securities of the Company; and

                                    (iv) will not subject the holders thereof to
personal liability by reason of being such holders.

                            (h) LITIGATION. There is no pending or, to the best
knowledge of the Company, threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having jurisdiction
over the Company, or any of its affiliates that would affect the execution by
the Company or the performance by the Company of its obligations under the
Transaction Documents. Except as disclosed in the Reports, there is no pending
or, to the best knowledge of the Company, basis for or threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its affiliates which
litigation if adversely determined would have a material adverse effect on the
Company.

                           (i) REPORTING COMPANY. The Company is a publicly-held
company subject to reporting obligations pursuant to Section 15d of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). Pursuant to the
provisions of the 1934 Act, the Company has timely filed all reports and other
materials required to be filed thereunder with the Commission during the
preceding twelve months, for a company that would be subject to Section 12(g) of
the 1934 Act.

                           (j) NO MARKET MANIPULATION. The Company has not
taken, and will not take, directly or indirectly, any action designed to, or
that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of the common stock of the Company to facilitate the
sale or resale of the Securities or affect the price at which the Securities may
be issued or resold.

                           (k) INFORMATION CONCERNING COMPANY. The Reports
contain all material information relating to the Company and its operations and
financial condition as of their respective dates which information is required
to be disclosed therein. Since the date of the financial statements included in
the Reports, and except as modified in the Other Written Information or in the
Schedules hereto, there has been no material adverse change in the Company's
business, financial condition or affairs not disclosed in the Reports. The

                                       6
<PAGE>

Reports do not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances when made.

                           (l) STOP TRANSFER. The Securities, when issued, will
be restricted securities. The Company will not issue any stop transfer order or
other order impeding the sale, resale or delivery of any of the Securities,
except as may be required by any applicable federal or state securities laws and
unless contemporaneous notice of such instruction is given to the Subscriber.

                           (m) DEFAULTS. The Company is not in violation of its
articles of incorporation or bylaws. The Company is (i) not in default under or
in violation of any other material agreement or instrument to which it is a
party or by which it or any of its properties are bound or affected, which
default or violation would have a material adverse effect on the Company, (ii)
not in default with respect to any order of any court, arbitrator or
governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (iii) to its knowledge not in violation of
any statute, rule or regulation of any governmental authority which violation
would have a material adverse effect on the Company.

                           (n) NO INTEGRATED OFFERING. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under circumstances that would cause the offer of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
the Bulletin Board. Nor will the Company or any of its affiliates or
subsidiaries take any action or steps that would cause the offer of the
Securities to be integrated with other offerings. The Company will not conduct
any offering other than the transactions contemplated hereby that will be
integrated with the offer or issuance of the Securities.

                           (o) NO GENERAL SOLICITATION. Neither the Company, nor
any of its affiliates, nor to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the 1933 Act) in connection with the
offer or sale of the Securities.

                           (p) LISTING. The Company's common stock is quoted on
the Bulletin Board. The Company has not received any oral or written notice that
its common stock is not eligible nor will become ineligible for quotation on the
Bulletin Board nor that its common stock does not meet all requirements for the
continuation of such quotation and the Company satisfies and as of the Closing
Date, the Company will satisfy all the requirements for the continued quotation
of its common stock on the Bulletin Board.

                           (q) NO UNDISCLOSED LIABILITIES. The Company has no
liabilities or obligations which are material, individually or in the aggregate,
which are not disclosed in the Reports and Other Written Information, other than
those incurred in the ordinary course of the Company's businesses since
September 30, 2003 and which, individually or in the aggregate, would reasonably
be expected to have a material adverse effect on the Company's financial
condition, other than as set forth in SCHEDULE 5(Q).

                           (r) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. Since
September 30, 2003, no event or circumstance has occurred or exists with respect
to the Company or its businesses, properties, operations or financial condition,
that, under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the Reports. (s) CAPITALIZATION. The

                                       7
<PAGE>

authorized and outstanding capital stock of the Company as of the date of this
Agreement and the Closing Date are set forth on SCHEDULE 5(S). Except as set
forth in the Reports and Other Written Information and SCHEDULE 5(D), there are
no options, warrants, or rights to subscribe to, securities, rights or
obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock of the Company. All of the outstanding
shares of Common Stock of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable. (t) DILUTION. The Company's
executive officers and directors understand the nature of the Securities being
sold hereby and recognize that the issuance of the Securities will have a
potential dilutive effect on the equity holdings of other holders of the
Company's equity or rights to receive equity of the Company. The board of
directors of the Company has concluded, in its good faith business judgment,
that the issuance of the Securities is in the best interests of the Company. The
Company specifically acknowledges that its obligation to issue the Securities is
binding upon the Company and enforceable regardless of the dilution such
issuance may have on the ownership interests of other shareholders of the
Company or parties entitled to receive equity of the Company. (u) NO
DISAGREEMENTS WITH ACCOUNTANTS AND LAWYERS. There are no disagreements of any
kind presently existing, or reasonably anticipated by the Company to arise,
between the Company and the accountants and lawyers formerly or presently
employed by the Company, including but not limited to disputes or conflicts over
payment owed to such accountants and lawyers.

                           (v)      INVESTMENT COMPANY.  The Company is not,
and is not an Affiliate (as defined in Rule 405 under the 1933 Act) of, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

                           (w) CORRECTNESS OF REPRESENTATIONS. The Company
represents that the foregoing representations and warranties are true and
correct as of the date hereof in all material respects, and, unless the Company
otherwise notifies the Subscribers prior to the Closing Date, shall be true and
correct in all material respects as of the Closing Date.

                           (x) SURVIVAL. The foregoing representations and
warranties shall survive the Closing Date for a period of two years.

                  6. REGULATION D OFFERING. The offer and issuance of the
Securities to the Subscribers is being made pursuant to the exemption from the
registration provisions of the 1933 Act afforded by Section 4(2) or Section 4(6)
of the 1933 Act and/or Rule 506 of Regulation D promulgated thereunder. On the
Closing Date, the Company will provide an opinion reasonably acceptable to
Subscriber from the Company's legal counsel opining on the availability of an
exemption from registration under the 1933 Act as it relates to the offer and
issuance of the Securities and other matters reasonably requested by
Subscribers. A form of the legal opinion is annexed hereto as EXHIBIT E. The
Company will provide, at the Company's expense, such other legal opinions in the
future as are reasonably necessary for the resale of the Common Stock and
exercise of the Warrants and resale of the Warrant Shares.

                  7. LEGAL FEES. The Company shall pay to Grushko & Mittman,
P.C., a fee of $1,7500 ("Legal Fees") of which $7,500 has already been paid, as
reimbursement for services rendered to the Subscribers in connection with this
Agreement and the purchase and sale of the Shares and Warrants (the "Offering")

                                       8
<PAGE>

and acting as Escrow Agent for the Offering. The Legal Fees will be payable on
the Closing Date out of funds held pursuant to the Escrow Agreement.

                  8. BROKER.

                           (a) BROKER'S FEE. The Company on the one hand, and
each Subscriber (for himself only) on the other hand, agree to indemnify the
other against and hold the other harmless from any and all liabilities to any
persons claiming brokerage commissions or broker's fees other than J.P. Turner &
Company L.L.C. ("Broker") on account of services purported to have been rendered
on behalf of the indemnifying party in connection with this Agreement or the
transactions contemplated hereby and arising out of such party's actions. The
Company agrees that it will pay the Broker a cash broker's fee of ten percent
(10%) of the Purchase Price ("Broker's Fees") directly out of the funds held
pursuant to the Escrow Agreement. The Company represents that there are no other
parties entitled to receive fees, commissions, or similar payments in connection
with the Offering except the Broker. The Broker will also be paid by the Company
ten percent (10%) of the cash proceeds received by the Company from exercise of
the A Warrants and B Warrants ("Warrant Exercise Compensation"). The Warrant
Exercise Compensation must be paid by the Company to the Broker within five (5)
days after each receipt by the Company of Warrant Exercise cash proceeds.

                           (b) BROKER'S WARRANTS. On the Closing Date, the
Company will issue to the Broker Warrants identical to and carrying the same
rights as the C Warrants issuable to the Subscribers. A form of Broker's Warrant
is annexed hereto as EXHIBIT F. The Broker will receive two (2) Warrants for
each thirty (30) Shares issued to the Subscribers on the Closing Date and one
Broker's Warrant for each ten (10) A Warrants and ten (10) B Warrants exercised
by Subscribers . All the representations, covenants, warranties, undertakings,
remedies, liquidated damages, indemnification, and other rights including but
not limited to registration rights made or granted to or for the benefit of the
Subscribers are hereby also made by and granted to the Broker in respect of the
Broker's Warrants.

                  9. COVENANTS OF THE COMPANY. The Company covenants and agrees
with the Subscribers as follows:

                           (a) STOP ORDERS. The Company will advise the
Subscribers, promptly after it receives notice of issuance by the Commission,
any state securities commission or any other regulatory authority of any stop
order or of any order preventing or suspending any offering of any securities of
the Company, or of the suspension of the qualification of the Common Stock of
the Company for offering or sale in any jurisdiction, or the initiation of any
proceeding for any such purpose.

                           (b) LISTING. The Company shall promptly secure the
listing of the shares of Common Stock and the Warrant Shares upon each national
securities exchange, or automated quotation system upon which they are or become
eligible for listing (subject to official notice of issuance) and shall maintain
such listing so long as any Warrants are outstanding. The Company will maintain
the listing of its Common Stock on the American Stock Exchange, Nasdaq SmallCap
Market, Nasdaq National Market System, Bulletin Board, or New York Stock
Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock (the "Principal Market")), and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market, as applicable.
The Company will provide the Subscribers copies of all notices it receives
notifying the Company of the threatened and actual delisting of the Common Stock
from any Principal Market. As of the date of this Agreement and the Closing
Date, the Bulletin Board is and will be the Principal Market.

                                       9
<PAGE>

                           (c) MARKET REGULATIONS. The Company shall notify the
Commission, the Principal Market and applicable state authorities, in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscribers and promptly provide copies
thereof to Subscriber.

                           (d)      REPORTING REQUIREMENTS.  From the date of
this Agreement and until the sooner of (i) two (2) years after the Closing Date,
or (ii) until all the Shares and Warrant Shares have been resold or transferred
by all the Subscribers pursuant to the Registration Statement or pursuant to
Rule 144, without regard to volume limitation, the Company will (x) comply in
all respects with its reporting and filing obligations under the 1934 Act, (y)
comply with all reporting requirements that are applicable to an issuer with a
class of shares registered pursuant to Section 12(b) or 12(g) of the 1934 Act,
as applicable, and (z) comply with all requirements related to any registration
statement filed pursuant to this Agreement. The Company will use its best
efforts not to take any action or file any document (whether or not permitted by
the 1933 Act or the 1934 Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under said acts until two (2) years after the Closing Date. Until
the earlier of the resale of the Common Stock and the Warrant Shares by each
Subscriber or at least two (2) years after the Warrants have been exercised, the
Company will use its best efforts to continue the listing or quotation of the
Common Stock on the Principal Market or other market with the reasonable consent
of Subscribers holding a majority of the Shares and Warrant Shares, and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market. The Company
agrees to timely file a Form D with respect to the Securities if required under
Regulation D and to provide a copy thereof to each Subscriber promptly after
such filing.

                           (e) USE OF PROCEEDS. The Company undertakes to use
the proceeds of the Subscribers' funds for the purposes set forth on SCHEDULE
9(E) hereto. A deviation from the use of proceeds set forth on SCHEDULE 9(E) of
more than 10% per item or more than 20% in the aggregate shall be deemed a
material breach of the Company's obligations hereunder. Except as set forth on
SCHEDULE 9(E), the Purchase Price may not and will not be used for accrued and
unpaid officer and director salaries, payment of financing related debt,
redemption of outstanding redeemable notes or equity instruments of the Company
nor non-trade obligations outstanding on the Closing Date.

                           (f) RESERVATION. Prior to the Closing Date, the
Company undertakes to reserve, PRO RATA, on behalf of each Subscriber and holder
of a Warrant, from its authorized but unissued common stock, a number of common
shares equal to the amount of Warrant Shares issuable upon exercise of the
Warrants. Failure to have sufficient shares reserved pursuant to this Section
9(f) for three (3) consecutive business days or ten (10) days in the aggregate
shall be a material default of the Company's obligations under this Agreement.

                           (g)      TAXES.  From the date of this Agreement and
until the sooner of (i) two (2) years after the Closing Date, or (ii) until all
the Shares and Warrant Shares have been resold or transferred by all the
Subscribers pursuant to the Registration Statement or pursuant to Rule 144,
without regard to volume limitations, the Company will promptly pay and
discharge, or cause to be paid and discharged, when due and payable, all lawful
taxes, assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Company; provided, however, that any such
tax, assessment, charge or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if the
Company shall have set aside on its books adequate reserves with respect
thereto, and provided, further, that the Company will pay all such taxes,
assessments, charges or levies forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security therefore.


                                       10
<PAGE>

                           (h)      INSURANCE.  From the date of this Agreement
and until the sooner of (i) two (2) years after the Closing Date, or (ii) until
all the Shares and Warrant Shares have been resold or transferred by all the
Subscribers pursuant to the Registration Statement or pursuant to Rule 144,
without regard to volume limitations, the Company will keep its assets which are
of an insurable character insured by financially sound and reputable insurers
against loss or damage by fire, explosion and other risks customarily insured
against by companies in the Company's line of business, in amounts sufficient to
prevent the Company from becoming a co-insurer and not in any event less than
one hundred percent (100%) of the insurable value of the property insured; and
the Company will maintain, with financially sound and reputable insurers,
insurance against other hazards and risks and liability to persons and property
to the extent and in the manner customary for companies in similar businesses
similarly situated and to the extent available on commercially reasonable terms.

                           (i)      BOOKS AND RECORDS.  From the date of this
Agreement and until the sooner of (i) two (2) years after the Closing Date, or
(ii) until all the Shares and Warrant Shares have been resold or transferred by
all the Subscribers pursuant to the Registration Statement or pursuant to Rule
144, without regard to volume limitations, the Company will keep true records
and books of account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and affairs in accordance
with generally accepted accounting principles applied on a consistent basis.

                           (j)      GOVERNMENTAL AUTHORITIES.   From the date
of this Agreement and until the sooner of (i) two (2) years after the Closing
Date, or (ii) until all the Shares and Warrant Shares have been resold or
transferred by all the Subscribers pursuant to the Registration Statement or
pursuant to Rule 144, without regard to volume limitations, the Company shall
duly observe and conform in all material respects to all valid requirements of
governmental authorities relating to the conduct of its business or to its
properties or assets.

                           (k)      INTELLECTUAL PROPERTY.  From the date of
this Agreement and until the sooner of (i) two (2) years after the Closing Date,
or (ii) until all the Shares and Warrant Shares have been resold or transferred
by all the Subscribers pursuant to the Registration Statement or pursuant to
Rule 144, without regard to volume limitations, the Company shall maintain in
full force and effect its corporate existence, rights and franchises and all
licenses and other rights to use intellectual property owned or possessed by it
and reasonably deemed to be necessary to the conduct of its business.

                           (l)      PROPERTIES. From the date of this Agreement
and until the sooner of (i) two (2) years after the Closing Date, or (ii) until
all the Shares and Warrant Shares have been resold or transferred by all the
Subscribers pursuant to the Registration Statement or pursuant to Rule 144,
without regard to volume limitation, the Company will keep its properties in
good repair, working order and condition, reasonable wear and tear excepted, and
from time to time make all necessary and proper repairs, renewals, replacements,
additions and improvements thereto; and the Company will at all times comply
with each provision of all leases to which it is a party or under which it
occupies property if the breach of such provision could reasonably be expected
to have a material adverse effect.

                           (m) CONFIDENTIALITY/PUBLIC ANNOUNCEMENT. From the
date of this Agreement and until the sooner of (i) two (2) years after the
Closing Date, or (ii) until all the Shares and Warrant Shares have been resold
or transferred by all the Subscribers pursuant to the Registration Statement or
pursuant to Rule 144, without regard to volume limitations, the Company agrees
that except in connection with a Form 8-K or the Registration Statement, it will
not disclose publicly or privately the identity of the Subscribers unless
expressly agreed to in writing by a Subscriber or only to the extent required by
law and then only upon ten days prior notice to Subscriber. In any event and
subject to the foregoing, the Company undertakes to file a Form 8-K or make a
public announcement describing the Offering not later than the first trading day
following the Closing Date. In the Form 8-K or public announcement, the Company
will specifically disclose the amount of common stock outstanding immediately
after the Closing.

                                       11
<PAGE>

                           (n) FURTHER REGISTRATION STATEMENTS. Except for a
registration statement filed on behalf of the Subscribers pursuant to Section 11
of this Agreement which may include the securities identified on SCHEDULE 11.1
hereto, if any, the Company will not file any registration statements, including
but not limited to Form S-8, with the Commission or with state regulatory
authorities without the consent of the Subscriber until ninety (90) days after
the actual effective date of the registration statement described in Section
11.1(iv) of this Agreement ("Actual Effective Date") during which such
Registration Statement shall be current and available for use in connection with
the public resale of the Shares and Warrant Shares ("Exclusion Period").

                           (o) BLACKOUT. The Company undertakes and covenants
that until the first to occur of (i) the end of the Exclusion Period, or (ii)
until all the Shares and Warrant Shares have been resold pursuant to such
registration statement, the Company will not enter into any acquisition, merger,
exchange or sale or other transaction that could have the effect of delaying the
effectiveness of any pending registration statement or causing an already
effective registration statement to no longer be effective or current.

                           (p) NON-PUBLIC INFORMATION. The Company covenants and
agrees that neither it nor any other Person acting on its behalf will provide
any Subscriber or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto such
Subscriber shall have agreed in writing to receive such information. The Company
understands and confirms that each Subscriber shall be relying on the foregoing
representations in effecting transactions in securities of the Company.

                           (q) LOCKUP. The Company will deliver to the
Subscribers on or before the Closing Date and enforce the provisions of
irrevocable Lockup Agreements in the forms annexed hereto as EXHIBIT G, with the
parties identified on SCHEDULE 9(q) hereto.

                  10.      COVENANTS OF THE COMPANY AND SUBSCRIBER REGARDING
INDEMNIFICATION.

                           (a) The Company agrees to indemnify, hold harmless,
reimburse and defend the Subscribers, the Subscribers' officers, directors,
agents, affiliates, control persons, and principal shareholders, against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon the Subscriber
or any such person which results, arises out of or is based upon (i) any
material misrepresentation by Company or breach of any warranty by Company in
this Agreement or in any Exhibits or Schedules attached hereto, or other
agreement delivered pursuant hereto; or (ii) after any applicable notice and/or
cure periods, any breach or default in performance by the Company of any
covenant or undertaking to be performed by the Company hereunder, or any other
agreement entered into by the Company and Subscriber relating hereto.

                           (b) Each Subscriber agrees to indemnify, hold
harmless, reimburse and defend the Company and each of the Company's officers,
directors, agents, affiliates, control persons against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Company or any such person which
results, arises out of or is based upon (i) any material misrepresentation by
such Subscriber in this Agreement or in any Exhibits or Schedules attached
hereto, or other agreement delivered pursuant hereto; or (ii) after any
applicable notice and/or cure periods, any breach or default in performance by

                                       12
<PAGE>

such Subscriber of any covenant or undertaking to be performed by such
Subscriber hereunder, or any other agreement entered into by the Company and
Subscribers, relating hereto.

                           (c) In no event shall the liability of any Subscriber
or permitted successor hereunder or under any other agreement delivered in
connection herewith be greater in amount than the dollar amount of the net
proceeds actually received by such Subscriber upon the sale of Registrable
Securities (as defined herein).

                           (d)      The procedures set forth in Section 11.6
shall apply to the indemnifications set forth in Sections 10(a) and 10(b) above.

                  11.1. REGISTRATION RIGHTS. The Company hereby grants the
following registration rights to holders of the Securities.

                           (i)      On one occasion, for a period commencing
ninety-one (91) days after the Closing Date, but not later than two (2) years
after the Closing Date ("Request Date"), upon a written request therefor from
any record holder or holders of more than 50% of the Shares and Warrant Shares
actually issued upon exercise of the Warrants, the Company shall prepare and
file with the Commission a registration statement under the 1933 Act registering
the Shares and Warrant Shares including Warrant Shares issuable upon exercise of
the Broker's Warrants (collectively "Registrable Securities") which are the
subject of such request for unrestricted public resale by the holder thereof.
For purposes of Sections 11.1(i) and 11.1(ii), Registrable Securities shall not
include Securities which are registered for resale in an effective registration
statement or included for registration in a pending registration statement, or
which have been issued without further transfer restrictions after a sale or
transfer pursuant to Rule 144 under the 1933 Act. Upon the receipt of such
request, the Company shall promptly give written notice to all other record
holders of the Registrable Securities that such registration statement is to be
filed and shall include in such registration statement Registrable Securities
for which it has received written requests within ten (10) days after the
Company gives such written notice. Such other requesting record holders shall be
deemed to have exercised their demand registration right under this Section
11.1(i).

                           (ii)     If the Company at any time proposes to
register any of its securities under the 1933 Act for sale to the public,
whether for its own account or for the account of other security holders or
both, except with respect to registration statements on Forms S-4, S-8 or
another form not available for registering the Registrable Securities for sale
to the public, provided the Registrable Securities are not otherwise registered
for resale by the Subscribers or Holder pursuant to an effective registration
statement, each such time it will give at least fifteen (15) days' prior written
notice to the record holder of the Registrable Securities of its intention so to
do. Upon the written request of the holder, received by the Company within ten
(10) days after the giving of any such notice by the Company, to register any of
the Registrable Securities not previously registered, the Company will cause
such Registrable Securities as to which registration shall have been so
requested to be included with the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent required to
permit the sale or other disposition of the Registrable Securities so registered
by the holder of such Registrable Securities (the "Seller" or "Sellers"). In the
event that any registration pursuant to this Section 11.1(ii) shall be, in whole
or in part, an underwritten public offering of common stock of the Company, the
number of shares of Registrable Securities to be included in such an
underwriting may be reduced by the managing underwriter if and to the extent
that the Company and the underwriter shall reasonably be of the opinion that

                                       13
<PAGE>

such inclusion would adversely affect the marketing of the securities to be sold
by the Company therein; provided, however, that the Company shall notify the
Seller in writing of any such reduction. Notwithstanding the foregoing
provisions, or Section 11.4 hereof, the Company may withdraw or delay or suffer
a delay of any registration statement referred to in this Section 11.1(ii)
without thereby incurring any liability to the Seller.

                           (iii) If, at the time any written request for
registration is received by the Company pursuant to
Section 11.1(i), the Company has determined to proceed with the actual
preparation and filing of a registration statement under the 1933 Act in
connection with the proposed offer and sale for cash of any of its securities
for the Company's own account and the Company actually does file such other
registration statement, such written request shall be deemed to have been given
pursuant to Section 11.1(ii) rather than Section 11.1(i), and the rights of the
holders of Registrable Securities covered by such written request shall be
governed by Section 11.1(ii).

                           (iv)     The Company shall file with the Commission
not later than thirty (30) days after the Closing Date (the "Filing Date"), and
cause to be declared effective within ninety (90) days after the Filing Date
(the "Effective Date"), a Form SB-2 registration statement (the "Registration
Statement") (or such other form that it is eligible to use) in order to register
the Registrable Securities for resale and distribution under the 1933 Act. The
Company will register not less than a number of shares of common stock in the
aforedescribed registration statement that is equal to all of the Shares and
Warrant Shares issuable pursuant to this Agreement. The Registrable Securities
shall be reserved and set aside exclusively for the benefit of each Subscriber
and Warrant holder, PRO RATA, and not issued, employed or reserved for anyone
other than each such Subscriber and Warrant holder. The Registration Statement
will immediately be amended or additional registration statements will be
immediately filed by the Company as necessary to register additional shares of
Common Stock to allow the public resale of all Common Stock included in and
issuable by virtue of the Registrable Securities. Without the written consent of
the Subscriber, no securities of the Company other than the Registrable
Securities will be included in the Registration Statement except as disclosed on
SCHEDULE 11.1, if any.

                  11.2. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Section 11.1(i), 11.1(ii), or (iv) to effect the
registration of any Registrable Securities under the 1933 Act, the Company will,
as expeditiously as possible:

                           (a) subject to the timelines provided in this
Agreement, prepare and file with the Commission a registration statement
required by Section 11, with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for the
period of the distribution contemplated thereby (determined as herein provided),
and promptly provide to the holders of the Registrable Securities copies of all
filings and Commission letters of comment including a notification by confirmed
telecopier to Subscribers and Grushko & Mittman, P.C. within twenty-four (24)
hours of (i) notice that the Commission has no (further) comments on the
registration statement, and (ii) declaration of effectiveness of the
registration statement;

                           (b) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective until such registration statement has been effective for a
period of two (2) years, and comply with the provisions of the 1933 Act with
respect to the disposition of all of the Registrable Securities covered by such
registration statement in accordance with the Sellers' intended method of
disposition set forth in such registration statement for such period;

                           (c) furnish to the Sellers, at the Company's expense,
such number of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus) as such persons reasonably may
request in order to facilitate the public sale or their disposition of the
securities covered by such registration statement;

                                       14
<PAGE>

                           (d) use its best efforts to register or qualify the
Sellers' Registrable Securities covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the Sellers shall request
in writing, provided, however, that the Company shall not for any such purpose
be required to qualify generally to transact business as a foreign corporation
in any jurisdiction where it is not so qualified or to consent to general
service of process in any such jurisdiction;

                           (e) if applicable, list the Registrable Securities
covered by such registration statement with any securities exchange on which the
Common Stock of the Company is then listed;

                           (f) immediately notify the Sellers when a prospectus
relating thereto is required to be delivered under the 1933 Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing; and

                           (g)      provided same would not be in violation of
the provision of Regulation FD under the 1934 Act, make available for inspection
by the Sellers, and any attorney, accountant or other agent retained by the
Seller or underwriter, all publicly available, non-confidential financial and
other records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the seller,
attorney, accountant or agent in connection with such registration statement.

                  11.3. PROVISION OF DOCUMENTS. In connection with each
registration described in this Section 11, each Seller will furnish to the
Company in writing such information and representation letters with respect to
itself and the proposed distribution by it as reasonably shall be necessary in
order to assure compliance with federal and applicable state securities laws.

                  11.4. NON-REGISTRATION EVENTS. The Company and the Subscribers
agree that the Sellers will suffer damages if the Registration Statement is not
filed by the Filing Date and not declared effective by the Commission by the
Effective Date, and any registration statement required under Section 11.1(i) or
11.1(ii) is not filed within 60 days after written request and declared
effective by the Commission within 120 days after such request, and maintained
in the manner and within the time periods contemplated by Section 11 hereof, and
it would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (i) the Registration Statement is not filed on or before the
Filing Date or is not declared effective on or before the sooner of the
Effective Date, or within three (3) business days of receipt by the Company of a
written or oral communication from the Commission that the Registration
Statement will not be reviewed or that the Commission has no further comments,
(ii) if the registration statement described in Sections 11.1(i) or 11.1(ii) is
not filed within 60 days after such written request, or is not declared
effective within 120 days after such written request, or (iii) any registration
statement described in Sections 11.1(i), 11.1(ii) or 11.1(iv) is filed and
declared effective but shall thereafter cease to be effective (without being
succeeded within ten (10) business days by an effective replacement or amended
registration statement) for a period of time which shall exceed 30 days in the
aggregate per year (defined as a period of 365 days commencing on the date the
Registration Statement is declared effective) or more than 20 consecutive days
(each such event referred to in clauses (i), (ii) and (iii) of this Section 11.4
is referred to herein as a "Non-Registration Event"), then the Company shall
deliver to the holder of Registrable Securities, as Liquidated Damages, an
amount equal to one and one-half percent (1.5%) for each thirty (30) days or
part thereof for the first sixty (60) days and thereafter an amount equal to two
percent (2%) for each thirty (30) days or part thereof of the Purchase Price of

                                       15
<PAGE>

the Shares and Warrant Shares owned of record by such holder as of and during
the pendency of such Non-Registration Event which are subject to such
Non-Registration Event. The Company must pay the Liquidated Damages in cash
within ten (10) days after the end of each thirty (30) day period or shorter
part thereof for which Liquidated Damages are payable. In the event a
Registration Statement is filed by the Filing Date but is withdrawn prior to
being declared effective by the Commission, then such Registration Statement
will be deemed to have not been filed.

                  11.5. EXPENSES. All expenses incurred by the Company in
complying with Section 11, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
reasonable counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs of
insurance and fee of one counsel for all Sellers (in an amount not to exceed
$5,000) are called "Registration Expenses." All underwriting discounts and
selling commissions applicable to the sale of Registrable Securities, including
any fees and disbursements of any additional counsel to the Seller, are called
"Selling Expenses." The Company will pay all Registration Expenses in connection
with the registration statement under Section 11. Selling Expenses in connection
with each registration statement under Section 11 shall be borne by the Seller
and may be apportioned among the Sellers in proportion to the number of shares
sold by the Seller relative to the number of shares sold under such registration
statement or as all Sellers thereunder may agree.

                  11.6. INDEMNIFICATION AND CONTRIBUTION.

                           (a)      In the event of a registration of any
Registrable Securities under the 1933 Act pursuant to Section 11, the Company
will, to the extent permitted by law, indemnify and hold harmless the Seller,
each officer of the Seller, each director of the Seller, each underwriter of
such Registrable Securities thereunder and each other person, if any, who
controls such Seller or underwriter within the meaning of the 1933 Act, against
any losses, claims, damages or liabilities, joint or several, to which the
Seller, or such underwriter or controlling person may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such Registrable Securities was registered
under the 1933 Act pursuant to Section 11, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances when made, and will subject
to the provisions of Section 11.6(c) reimburse the Seller, each such underwriter
and each such controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company shall
not be liable to the Seller to the extent that any such damages arise out of or
are based upon an untrue statement or omission made in any preliminary
prospectus if (i) the Seller failed to send or deliver a copy of the final
prospectus delivered by the Company to the Seller with or prior to the delivery
of written confirmation of the sale by the Seller to the person asserting the
claim from which such damages arise, (ii) the final prospectus would have
corrected such untrue statement or alleged untrue statement or such omission or
alleged omission, or (iii) to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any such Seller, or any such controlling person in writing
specifically for use in such registration statement or prospectus.

                           (b)      In the event of a registration of any of
the Registrable Securities under the 1933 Act pursuant to Section 11, each
Seller severally but not jointly will, to the extent permitted by law, indemnify
and hold harmless the Company, and each person, if any, who controls the Company
within the meaning of the 1933 Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each

                                       16
<PAGE>

person who controls any underwriter within the meaning of the 1933 Act, against
all losses, claims, damages or liabilities, joint or several, to which the
Company or such officer, director, underwriter or controlling person may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the registration statement under which such Registrable Securities were
registered under the 1933 Act pursuant to Section 11, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company and each such
officer, director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that the Seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such Seller, as such, furnished in writing to the Company by such Seller
specifically for use in such registration statement or prospectus, and provided,
further, however, that the liability of the Seller hereunder shall be limited to
the net proceeds actually received by the Seller from the sale of Registrable
Securities covered by such registration statement.

                           (c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than under this
Section 11.6(c) and shall only relieve it from any liability which it may have
to such indemnified party under this Section 11.6(c), except and only if and to
the extent the indemnifying party is prejudiced by such omission. In case any
such action shall be brought against any indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section 11.6(c)
for any legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of investigation
and of liaison with counsel so selected, provided, however, that, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified parties, as a group, shall have the
right to select one separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.

                           (d) In order to provide for just and equitable
contribution in the event of joint liability under the 1933 Act in any case in
which either (i) a Seller, or any controlling person of a Seller, makes a claim
for indemnification pursuant to this Section 11.6 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 11.6 provides for indemnification in
such case, or (ii) contribution under the 1933 Act may be required on the part
of the Seller or controlling person of the Seller in circumstances for which

                                       17
<PAGE>

indemnification is not provided under this Section 11.6; then, and in each such
case, the Company and the Seller will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion so that the Seller is responsible only for the
portion represented by the percentage that the public offering price of its
securities offered by the registration statement bears to the public offering
price of all securities offered by such registration statement, provided,
however, that, in any such case, (y) the Seller will not be required to
contribute any amount in excess of the public offering price of all such
securities offered by it pursuant to such registration statement; and (z) no
person or entity guilty of fraudulent misrepresentation (within the meaning of
Section 10(f) of the 1933 Act) will be entitled to contribution from any person
or entity who was not guilty of such fraudulent misrepresentation.

                  11.7. DELIVERY OF UNLEGENDED SHARES.

                           (a) Within three (3) business days (such third (3rd)
business day, the "Unlegended Shares Delivery Date") after the business day on
which the Company has received (i) a notice that Registrable Securities have
been sold either pursuant to the Registration Statement or Rule 144 under the
1933 Act, (ii) a representation that the prospectus delivery requirements, or
the requirements of Rule 144, as applicable, have been satisfied, and (iii) the
original share certificates representing the shares of Common Stock that have
been sold, and (iv) in the case of sales under Rule 144, customary
representation letters of the Subscriber and/or Subscriber's broker regarding
compliance with the requirements of Rule 144, the Company at its expense, (y)
shall deliver, and shall cause legal counsel selected by the Company to deliver,
to its transfer agent (with copies to Subscriber) an appropriate instruction and
opinion of such counsel, directing the delivery of shares of Common Stock
without any legends including the legends set forth in Sections 4(e) and 4(f)
above, issuable pursuant to any effective and current Registration Statement
described in Section 11 of this Agreement or pursuant to Rule 144 under the 1933
Act (the "Unlegended Shares"); and (z) cause the transmission of the
certificates representing the Unlegended Shares together with a legended
certificate representing the balance of the unsold shares of Common Stock, if
any, to the Subscriber at the address specified in the notice of sale, via
express courier, by electronic transfer or otherwise on or before the Unlegended
Shares Delivery Date. Transfer fees shall be the responsibility of the Seller.

                           (b) In lieu of delivering physical certificates
representing the Unlegended Shares, if the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, upon request of a Subscriber, so long as the certificates
therefor do not bear a legend and the Subscriber is not obligated to return such
certificate for the placement of a legend thereon, the Company shall cause its
transfer agent to electronically transmit the Unlegended Shares by crediting the
account of Subscriber's prime Broker with DTC through its Deposit Withdrawal
Agent Commission system. Such delivery must be made on or before the Unlegended
Shares Delivery Date.

                           (c) The Company understands that a delay in the
delivery of the Unlegended Shares pursuant to Section 11 hereof beyond the
Unlegended Shares Delivery Date could result in economic loss to a Subscriber.
As compensation to a Subscriber for such loss, the Company agrees to pay late
payment fees (as liquidated damages and not as a penalty) to the Subscriber for
late delivery of Unlegended Shares in the amount of $100 per business day after
the Delivery Date for each $10,000 of purchase price of the Unlegended Shares
subject to the delivery default. If during any 360 day period, the Company fails
to deliver Unlegended Shares as required by this Section 11.7 for an aggregate
of thirty (30) days, then each Subscriber or assignee holding Securities subject
to such default may, at its option, require the Company to purchase all or any
portion of the Shares and Warrant Shares subject to such default at a price per
share equal to 130% of the Purchase Price of such Common Stock and Warrant
Shares. The Company shall pay any payments incurred under this Section in
immediately available funds upon demand.

                                       18
<PAGE>

                           (d) In addition to any other rights available to a
Subscriber, if the Company fails to deliver to a Subscriber Unlegended Shares as
required pursuant to this Agreement, within ten (10) calendar days after the
Unlegended Shares Delivery Date and the Subscriber purchases (in an open market
transaction or otherwise) shares of common stock to deliver in satisfaction of a
sale by such Subscriber of the shares of Common Stock which the Subscriber
anticipated receiving from the Company (a "Buy-In"), then the Company shall pay
in cash to the Subscriber (in addition to any remedies available to or elected
by the Subscriber) the amount by which (A) the Subscriber's total purchase price
(including brokerage commissions, if any) for the shares of common stock so
purchased exceeds (B) the aggregate purchase price of the shares of Common Stock
delivered to the Company for reissuance as Unlegended Shares, together with
interest thereon at a rate of 15% per annum, accruing until such amount and any
accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). For example, if a Subscriber purchases
shares of Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to $10,000 of purchase price of shares of Common Stock
delivered to the Company for reissuance as Unlegended Shares, the Company shall
be required to pay the Subscriber $1,000, plus interest. The Subscriber shall
provide the Company written notice indicating the amounts payable to the
Subscriber in respect of the Buy-In.

                           (e) In the event a Subscriber shall request delivery
of Unlegended Shares as described in Section 11.7(e) and the Company is required
to deliver such Unlegended Shares pursuant to Section 11.7(e), the Company may
not refuse to deliver Unlegended Shares based on any claim that such Subscriber
or any one associated or affiliated with such Subscriber has been engaged in any
violation of law, or for any other reason, unless, an injunction or temporary
restraining order from a court, on notice, restraining and or enjoining delivery
of such Unlegended Shares or exercise of all or part of said Warrant shall have
been sought and obtained and the Company has posted a surety bond for the
benefit of such Subscriber in the amount of 130% of the amount of the aggregate
purchase price of the Common Stock and Warrant Shares which are subject to the
injunction or temporary restraining order, which bond shall remain in effect
until the completion of arbitration/litigation of the dispute and the proceeds
of which shall be payable to such Subscriber to the extent Subscriber obtains
judgment in Subscriber's favor.

                  12. (a) RIGHT OF FIRST REFUSAL. Commencing on the Actual
Effective Date and until the Registration Statement has been effective for one
hundred and fifty (150) days, the Subscribers shall be given not less than five
(5) business days prior written notice of any proposed sale by the Company of
its common stock or other securities or debt obligations, except in connection
with (i) employee stock options or compensation plans in connection with no more
than 200,000 shares of Common Stock, (ii) as full or partial consideration in
connection with any merger, consolidation or purchase of substantially all of
the securities or assets of any corporation or other entity, (iii) as has been
described in the Reports or Other Written Information filed with the Commission
or delivered to the Subscribers prior to the Closing Date, or (iv) the
Securities contemplated to be issued to the Subscribers and Broker pursuant to
this Agreement (collectively "Excepted Issuances"). The Subscribers who exercise
their rights pursuant to this Section 12(a) shall have the right during the five
(5) business days following receipt of the notice to purchase all of such
offered common stock, debt or other securities in accordance with the terms and
conditions set forth in the notice of sale in the same proportion to each other
as their purchase of Shares in the Offering. In the event such terms and
conditions are modified during the notice period, the Subscribers shall be given
prompt notice of such modification and shall have the right during the original
notice period or for a period of five (5) business days following the notice of
modification, whichever is longer, to exercise such right.

                                       19
<PAGE>

                           (b) OFFERING RESTRICTIONS. During the Exclusion
Period except in connection with the Excepted Issuances or the Offering, the
Company will not enter into any agreement to, nor issue any equity, convertible
debt or other securities convertible into common stock without the prior written
consent of the Subscribers, which consent may be withheld for any reason.

                           (c) FAVORED NATIONS PROVISION. Other than the
Excepted Issuances, if at any time until the Registration Statement has been
effective for one hundred and eighty (180) days, if the Company shall offer,
issue or agree to issue any common stock or securities convertible into or
exercisable for shares of common stock (or modify any of the foregoing which may
be outstanding at any time prior to the Closing Date) to any person or entity at
a price per share or conversion or exercise price per share which shall be less
than the Per Share Purchase Price, without the consent of each Subscriber
holding Shares, then the Company shall issue, for each such occasion, additional
shares of Common Stock to each Subscriber so that the average Per Share Purchase
Price of the shares of Common Stock issued to the Subscriber (of only the Common
Stock or Warrant Shares still owned by the Subscriber) is equal to such other
lower price per share. The delivery to the Subscriber of the additional shares
of Common Stock shall be not later than the closing date of the transaction
giving rise to the requirement to issue additional shares of Common Stock. The
Subscriber is granted the registration rights described in Section 11 hereof in
relation to such additional shares of Common Stock except that the Filing Date
and Effective Date vis-a-vis such additional common shares shall be,
respectively, the sixtieth (60th) and one hundred and twentieth (120th) date
after the closing date giving rise to the requirement to issue the additional
shares of Common Stock. For purposes of the issuance and adjustment described in
this paragraph, the issuance of any security of the Company carrying the right
to convert such security into shares of Common Stock or of any warrant, right or
option to purchase Common Stock shall result in the issuance of the additional
shares of Common Stock upon the issuance of such convertible security, warrant,
right or option and again upon any subsequent issuances of shares of Common
Stock upon exercise of such conversion or purchase rights if such issuance is at
a price lower than the then Per Share Purchase Price. The rights of the
Subscriber set forth in this Section 12 are in addition to any other rights the
Subscriber has pursuant to this Agreement and any other agreement referred to or
entered into in connection herewith.

                           (d)      MAXIMUM EXERCISE OF RIGHTS.   In the event
the exercise of the rights described in Sections 12(a) and 12(c) would result in
the issuance of an amount of common stock of the Company that would exceed the
maximum amount that may be issued to a Subscriber calculated in the manner
described in Section 10 of the Warrant, then the issuance of such additional
shares of common stock of the Company to such Subscriber will be deferred in
whole or in part until such time as such Subscriber is able to beneficially own
such common stock without exceeding the maximum amount set forth calculated in
the manner described in Section 10 of the Warrant. The determination of when
such common stock may be issued shall be made by each Subscriber as to only such
Subscriber.

                  13.      MISCELLANEOUS.

                           (a) NOTICES. All notices, demands, requests,
consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i)
personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or
facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business

                                       20
<PAGE>

hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be: (i) if to the
Company, to: Zynex Medical Holdings, Inc., 8100 South Park Way, Suite A-9,
Littleton, CO 80120, Attn: Thomas Sandgaard, CEO, telecopier: (800) 495-6695,
with a copy by telecopier only to: Sichenzia, Ross, Friedman & Ference LLP, 1065
Avenue of the Americas, New York, NY 10018, Attn: Gregory Sichenzia, Esq.,
telecopier number: (212) 930-9725, (ii) if to the Subscribers, to: the one or
more addresses and telecopier numbers indicated on the signature pages hereto,
with an additional copy by telecopier only to: Grushko & Mittman, P.C., 551
Fifth Avenue, Suite 1601, New York, New York 10176, telecopier number: (212)
697-3575, and (iii) if to the Broker, to: J.P. Turner & Company, L.L.C., 17
Corporate Plaza, Suite 200, Newport Beach, CA 92660, Attn: Michael Rose,
telecopier: (949) 717-4839.

                           (b) CLOSING. The consummation of the transactions
contemplated herein shall take place at the offices of Grushko & Mittman, P.C.,
551 Fifth Avenue, Suite 1601, New York, New York 10176, upon the satisfaction of
all conditions to Closing set forth in this Agreement ("Closing Date").

                           (c) ENTIRE AGREEMENT; ASSIGNMENT. This Agreement and
other documents delivered in connection herewith represent the entire agreement
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by both parties. Neither the Company nor the
Subscribers have relied on any representations not contained or referred to in
this Agreement and the documents delivered herewith. No right or obligation of
either party shall be assigned by that party without prior notice to and the
written consent of the other party.

                           (d) COUNTERPARTS/EXECUTION. This Agreement may be
executed in any number of counterparts and by the different signatories hereto
on separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute but one and the same
instrument. This Agreement may be executed by facsimile signature and delivered
by facsimile transmission.

                           (e) LAW GOVERNING THIS AGREEMENT. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York without regard to principles of conflicts of laws. Any action brought
by either party against the other concerning the transactions contemplated by
this Agreement shall be brought only in the state courts of New York or in the
federal courts located in the state of New York. THE PARTIES AND THE INDIVIDUALS
EXECUTING THIS AGREEMENT AND OTHER AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN
CONNECTION HEREWITH ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE JURISDICTION
OF SUCH COURTS AND WAIVE TRIAL BY JURY. The prevailing party shall be entitled
to recover from the other party its reasonable attorney's fees and costs. In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.

                           (f) SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION.
The Company and Subscriber acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof, this being in addition
to any other remedy to which any of them may be entitled by law or equity.
Subject to Section 13(e) hereof, each of the Company, Subscriber and any
signator hereto in his personal capacity hereby waives, and agrees not to assert
in any such suit, action or proceeding, any claim that it is not personally

                                       21
<PAGE>

subject to the jurisdiction in New York of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Nothing in this Section shall affect or limit
any right to serve process in any other manner permitted by law.

                           (g) INDEPENDENT NATURE OF SUBSCRIBERS. The Company
acknowledges that the obligations of each Subscriber under the Transaction
Documents are several and not joint with the obligations of any other
Subscriber, and no Subscriber shall be responsible in any way for the
performance of the obligations of any other Subscriber under the Transaction
Documents. The Company acknowledges that the decision of each Subscriber to
purchase Securities has been made by such Subscriber independently of any other
Subscriber and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other
Subscriber or by any agent or employee of any other Subscriber, and no
Subscriber or any of its agents or employees shall have any liability to any
Subscriber (or any other person) relating to or arising from any such
information, materials, statements or opinions. The Company acknowledges that
nothing contained in any Transaction Document, and no action taken by any
Subscriber pursuant hereto or thereto (including, but not limited to, the (i)
inclusion of a Subscriber in the SB-2 Registration Statement and (ii) review by,
and consent to, such Registration Statement by a Subscriber) shall be deemed to
constitute the Subscribers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Subscribers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. The Company acknowledges
that each Subscriber shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of the Transaction
Documents, and it shall not be necessary for any other Subscriber to be joined
as an additional party in any proceeding for such purpose. The Company
acknowledges that it has elected to provide all Subscribers with the same terms
and Transaction Documents for the convenience of the Company and not because
Company was required or requested to do so by the Subscribers. The Company
acknowledges that such procedure with respect to the Transaction Documents in no
way creates a presumption that the Subscribers are in any way acting in concert
or as a group with respect to the Transaction Documents or the transactions
contemplated thereby.

                           (h) EQUITABLE ADJUSTMENT. The Securities and the
purchase prices of Securities shall be equitably adjusted to offset the effect
of stock splits, stock dividends, and distributions of property or equity
interests of the Company to its shareholders.


                      [THIS SPACE INTENTIONALLY LEFT BLANK]


                                       22

<PAGE>






                    SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT


         Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.

                                   ZYNEX MEDICAL HOLDINGS, INC.
                                   a Nevada corporation



                                   By:  /S/ THOMAS SANDGAARD
                                        --------------------
                                            Name:  Thomas Sandgaard
                                            Title:  Chief Executive Officer

                                   Dated: June 4, 2004

<TABLE>
<CAPTION>
- --------------------------------------- --------------------- ------------- -------------- --------------
SUBSCRIBER                              PURCHASE PRICE        SHARES        A WARRANTS     B WARRANTS
- --------------------------------------- --------------------- ------------- -------------- --------------
<S>                                     <C>                   <C>           <C>            <C>
                                        $500,000.00           285,714       142,857        285,714




- -------------------------------------
(Signature)
ALPHA CAPITAL AKTIENGESELLSCHAFT
Pradafant 7
9490 Furstentums
Vaduz, Lichtenstein
Fax: 011-42-32323196
- --------------------------------------- --------------------- ------------- -------------- --------------
</TABLE>



<PAGE>

                    SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT


         Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.

                                   ZYNEX MEDICAL HOLDINGS, INC.
                                   a Nevada corporation



                                   By:  /S/ THOMAS SANDGAARD
                                        --------------------
                                            Name:  Thomas Sandgaard
                                            Title:  Chief Executive Officer

                                   Dated: June 4, 2004


<TABLE>
<CAPTION>

- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
SUBSCRIBER                                        PURCHASE PRICE        SHARES               A WARRANTS          B WARRANTS
- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
<S>                                               <C>                   <C>                  <C>                 <C>
                                                  $300,000.00           171,429              85,715              171,429




_________________________________
(Signature) STONESTREET LIMITED
PARTNERSHIP C/o Canaccord Capital Corporation
320 Bay Street, Suite 1300 Toronto,
Ontario M5H 4A6, Canada
Fax: (416) 956-8989
- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
</TABLE>




<PAGE>
                    SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT


         Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.

                                   ZYNEX MEDICAL HOLDINGS, INC.
                                   a Nevada corporation



                                   By:  /S/ THOMAS SANDGAARD
                                        --------------------
                                            Name:  Thomas Sandgaard
                                            Title:  Chief Executive Officer

                                   Dated: June 4, 2004


<TABLE>
<CAPTION>

- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
SUBSCRIBER                                        PURCHASE PRICE        SHARES               A WARRANTS          B WARRANTS
- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
<S>                                               <C>                   <C>                  <C>                 <C>
                                                  $100,000.00           57,143               28,572              57,143


- --------------------------------------------
(Signature)
WHALEHAVEN FUNDS LIMITED
3rd Floor, 14 Par-Laville Road Hamilton,
Bermuda HM08 Fax: (441) 292-1373

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


<PAGE>

                    SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT


         Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.

                                   ZYNEX MEDICAL HOLDINGS, INC.
                                   a Nevada corporation



                                   By:  /S/ THOMAS SANDGAARD
                                        --------------------
                                            Name:  Thomas Sandgaard
                                            Title:  Chief Executive Officer

                                   Dated: June 4, 2004

<TABLE>
<CAPTION>

- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
SUBSCRIBER                                        PURCHASE PRICE        SHARES               A WARRANTS          B WARRANTS
- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
<S>                                               <C>                   <C>                  <C>                 <C>
                                                  $100,000.00           57,143               28,572              57,143


- --------------------------------------------
(Signature)
GREENWICH GROWTH FUND LIMITED
3rd Floor, 14 Par-Laville Road
Hamilton, Bermuda HM08
Fax: (441) 292-1373
- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
</TABLE>


<PAGE>

                    SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT


         Please acknowledge your acceptance of the foregoing Subscription
Agreement by signing and returning a copy to the undersigned whereupon it shall
become a binding agreement between us.

                                   ZYNEX MEDICAL HOLDINGS, INC.
                                   a Nevada corporation



                                   By:  /S/ THOMAS SANDGAARD
                                        --------------------
                                            Name:  Thomas Sandgaard
                                            Title:  Chief Executive Officer

                                   Dated: June 4, 2004

<TABLE>
<CAPTION>

- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
SUBSCRIBER                                        PURCHASE PRICE        SHARES               A WARRANTS          B WARRANTS
- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
<S>                                               <C>                   <C>                  <C>                 <C>
                                                  $200,000.00           114,286              57,143              114,286


- --------------------------------------------
(Signature)
ELLIS INTERNATIONAL LIMITED INC.
27 Old Gloncester Street
London, WEIN 3XX
United Kingdom
Fax: 011-020-7788-7803
- ------------------------------------------------- --------------------- -------------------- ------------------- --------------
</TABLE>




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.2
<SEQUENCE>7
<FILENAME>ex-4_2.txt
<TEXT>

EXHIBIT 4.2

THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ZYNEX MEDICAL HOLDINGS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

                  Right to Purchase _________ shares of Common Stock of Zynex
                  Medical Holdings, Inc. (subject to adjustment as provided
                  herein)

                         COMMON STOCK PURCHASE WARRANT A

No. 2004-A-001                                        Issue Date: June ___, 2004

         ZYNEX MEDICAL HOLDINGS, INC., a corporation organized under the laws of
the State of Nevada (the "Company"), hereby certifies that, for value received,
__________________, ____________________________________________, or its assigns
(the "Holder"), is entitled, subject to the terms set forth below, to purchase
from the Company at any time after the Issue Date until 5:00 p.m., E.S.T on the
one hundred and fiftieth (150th) day after the Actual Effective Date (as defined
in the Subscription Agreement) during which the Registration Statement as
defined in the Subscription Agreement has been available for use by the Holder
for the resale under the 1933 Act of the Common Stock issuable upon exercise of
this Warrant (the "Expiration Date"), up to ________ fully paid and
nonassessable shares of the common stock of the Company (the "Common Stock"),
$.001 par value per share at a per share purchase price of $1.75. The
aforedescribed purchase price per share, as adjusted from time to time as herein
provided, is referred to herein as the "Purchase Price." The number and
character of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided herein. The Company may reduce the Purchase Price without
the consent of the Holder. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Subscription Agreement
(the "SUBSCRIPTION AGREEMENT"), dated June ___, 2004, entered into by the
Company and the Holder.

         As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:

         (a) The term "Company" shall include Zynex Medical Holdings, Inc. and
any corporation which shall succeed or assume the obligations of Zynex Medical
Holdings, Inc. hereunder.

         (b) The term "Common Stock" includes (a) the Company's Common Stock,
$.001 par value per share, as authorized on the date of the Subscription
Agreement, and (b) any other securities into which or for which any of the
securities described in (a) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.

          (c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

         1. EXERCISE OF WARRANT.


<PAGE>

                  1.1. NUMBER OF SHARES ISSUABLE UPON EXERCISE. From and after
the Issue Date through and including the Expiration Date, the Holder hereof
shall be entitled to receive, upon exercise of this Warrant in whole in
accordance with the terms of subsection 1.2 or upon exercise of this Warrant in
part in accordance with subsection 1.3, shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.

                  1.2. FULL EXERCISE. This Warrant may be exercised in full by
the Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such Holder and surrender of the original Warrant within seven (7)
days of exercise, to the Company at its principal office or at the office of its
Warrant Agent (as provided hereinafter), accompanied by payment, in cash, wire
transfer or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase Price then in
effect.

                  1.3. PARTIAL EXERCISE. This Warrant may be exercised in part
(but not for a fractional share) by surrender of this Warrant in the manner and
at the place provided in subsection 1.2 except that the amount payable by the
Holder on such partial exercise shall be the amount obtained by multiplying (a)
the number of whole shares of Common Stock designated by the Holder in the
Subscription Form by (b) the Purchase Price then in effect. On any such partial
exercise, the Company, at its expense, will forthwith issue and deliver to or
upon the order of the Holder hereof a new Warrant of like tenor, in the name of
the Holder hereof or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may request, the whole number of shares of Common
Stock for which such Warrant may still be exercised.

                  1.4. FAIR MARKET VALUE. Fair Market Value of a share of Common
Stock as of a particular date (the "Determination Date") shall mean:

                           (a) If the Company's Common Stock is traded on an
exchange or is quoted on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ"), National Market System, the NASDAQ SmallCap
Market or the American Stock Exchange, LLC, then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date;

                           (b) If the Company's Common Stock is not traded on an
exchange or on the NASDAQ National Market System, the NASDAQ SmallCap Market or
the American Stock Exchange, Inc., but is traded in the over-the-counter market,
then the average of the closing bid and ask prices reported for the last
business day immediately preceding the Determination Date;

                           (c) Except as provided in clause (d) below, if the
Company's Common Stock is not publicly traded, then as the Holder and the
Company agree, or in the absence of such an agreement, by arbitration in
accordance with the rules then standing of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons qualified by
education and training to pass on the matter to be decided; or

                           (d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company's charter, then all amounts to
be payable per share to holders of the Common Stock pursuant to the charter in
the event of such liquidation, dissolution or winding up, plus all other amounts
to be payable per share in respect of the Common Stock in liquidation under the
charter, assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of all of the Warrants are outstanding
at the Determination Date.

                  1.5. COMPANY ACKNOWLEDGMENT. The Company will, at the time of
the exercise of the Warrant, upon the request of the Holder hereof acknowledge
in writing its continuing obligation to afford to such Holder any rights to
which such Holder shall continue to be entitled after such exercise in

                                       2
<PAGE>

accordance with the provisions of this Warrant. If the Holder shall fail to make
any such request, such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.

                  1.6. TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or
trust company shall have been appointed as trustee for the Holder of the
Warrants pursuant to Subsection 3.2, such bank or trust company shall have all
the powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.

         2. DELIVERY OF STOCK CERTIFICATES, ETC. ON EXERCISE. The Company agrees
that the shares of Common Stock purchased upon exercise of this Warrant shall be
deemed to be issued to the Holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within five (5) days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder hereof, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct in compliance with
applicable securities laws, a certificate or certificates for the number of duly
and validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such Holder shall be entitled on such exercise, plus,
in lieu of any fractional share to which such Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair Market Value
of one full share of Common Stock, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

         3.       ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.

                  3.1. REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at
any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1, at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.

                  3.2. DISSOLUTION. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolution, shall at its expense deliver or
cause to be delivered the stock and other securities and property (including
cash, where applicable) receivable by the Holder of the Warrants after the
effective date of such dissolution pursuant to this Section 3 to a bank or trust
company (a "Trustee") having its principal office in New York, NY, as trustee
for the Holder of the Warrants.

                  3.3. CONTINUATION OF TERMS. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the Other Securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any Other Securities, including, in the case of any
such transfer, the person acquiring all or substantially all of the properties
or assets of the Company, whether or not such person shall have expressly
assumed the terms of this Warrant as provided in Section 4. In the event this
Warrant does not continue in full force and effect after the consummation of the
transaction described in this Section 3, then only in such event will the
Company's securities and property (including cash, where applicable) receivable

                                       3
<PAGE>

by the Holder of the Warrants be delivered to the Trustee as contemplated by
Section 3.2.

                  3.4 SHARE ISSUANCE. Until the end of the Exclusion Period (as
defined in the Subscription Agreement), if the Company shall issue any Common
Stock except for the Excepted Issuances (as defined in the Subscription
Agreement), prior to the complete exercise of this Warrant for a consideration
less than the Purchase Price that would be in effect at the time of such issue,
then, and thereafter successively upon each such issue, the Purchase Price shall
be reduced to such other lower issue price. For purposes of this adjustment, the
issuance of any security or debt instrument of the Company carrying the right to
convert such security or debt instrument into Common Stock or of any warrant,
right or option to purchase Common Stock shall result in an adjustment to the
Purchase Price upon the issuance of the above-described security, debt
instrument, warrant, right, or option. The reduction of the Purchase Price
described in this Section 3.4 is in addition to the other rights of the Holder
described in the Subscription Agreement.

         4. EXTRAORDINARY EVENTS REGARDING COMMON STOCK. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.
The number of shares of Common Stock that the Holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which (a) the numerator
is the Purchase Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such exercise.

         5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the Holder of the Warrant and any
Warrant Agent of the Company (appointed pursuant to Section 11 hereof).

         6. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF WARRANT;
FINANCIAL STATEMENTS. The Company will at all times reserve and keep available,
solely for issuance and delivery on the exercise of the Warrants, all shares of
Common Stock (or Other Securities) from time to time issuable on the exercise of
the Warrant. This Warrant entitles the Holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.

                                       4
<PAGE>

         7. ASSIGNMENT; EXCHANGE OF WARRANT. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced hereby, may
be transferred by any registered holder hereof (a "Transferor"). On the
surrender for exchange of this Warrant, with the Transferor's endorsement in the
form of Exhibit B attached hereto (the "Transferor Endorsement Form") and
together with an opinion of counsel reasonably satisfactory to the Company that
the transfer of this Warrant will be in compliance with applicable securities
laws, the Company at its expense, twice, only, but with payment by the
Transferor of any applicable transfer taxes, will issue and deliver to or on the
order of the Transferor thereof a new Warrant or Warrants of like tenor, in the
name of the Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a "Transferee"), calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock called for on the face or
faces of the Warrant so surrendered by the Transferor. No such transfers shall
result in a public distribution of the Warrant.

         8. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense, twice only, will execute and deliver, in lieu thereof, a new Warrant of
like tenor.

         9. REGISTRATION RIGHTS. The Holder of this Warrant has been granted
certain registration rights by the Company. These registration rights are set
forth in the Subscription Agreement. The terms of the Subscription Agreement are
incorporated herein by this reference.

         10. MAXIMUM EXERCISE. The Holder shall not be entitled to exercise this
Warrant on an exercise date in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise date,
and (ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is being made
on an exercise date, which would result in beneficial ownership by the Holder
and its affiliates of more than 9.99% of the outstanding shares of Common Stock
on such date. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to
the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 9.99%. The restriction described in
this paragraph may be revoked upon sixty-one (61) days prior notice from the
Holder to the Company. The Holder may allocate which of the equity of the
Company deemed beneficially owned by the Subscriber shall be included in the
9.99% amount described above and which shall be allocated to the excess above
9.99%.

         11. WARRANT AGENT. The Company may, by written notice to the Holder of
the Warrant, appoint an agent (a "Warrant Agent") for the purpose of issuing
Common Stock (or Other Securities) on the exercise of this Warrant pursuant to
Section 1, exchanging this Warrant pursuant to Section 7, and replacing this
Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

         12. TRANSFER ON THE COMPANY'S BOOKS. Until this Warrant is transferred
on the books of the Company, the Company may treat the registered holder hereof
as the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

         13. WARRANT EXERCISE COMPENSATION. The Company has agreed to pay to
J.P. Turner & Company, L.L.C. ("Broker") Warrant Exercise Compensation as
described in the Subscription Agreement equal to ten percent (10%) of the cash
proceeds payable to the Company upon exercise of the Warrant. The Broker has
agreed to grant a concession to the Holder of this Warrant equal to one-half of
the cash Warrant Exercise Compensation. The Company agrees that the concession
amount may be deducted by the Holder from the aggregate Purchase Price payable

                                       5
<PAGE>

upon exercise of this Warrant. In such case, the Company shall only pay to the
Broker the Warrant Exercise Compensation minus the aforedescribed concession.
The Company is also obligated to issue Broker Warrants to the Broker as
described in the Subscription Agreement. The Broker will receive one Broker's
Warrant for each ten (10) A Warrants exercised by Subscribers. The Warrant
Exercise Compensation and Broker Warrants will be paid by the Company to the
Broker not later than the fifth (5th) business day after the Company receives
cash proceeds from the exercise of this Warrant. The Holder of the Warrant has
no obligation or responsibility to pay Warrant Exercise Compensation.

         14. NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company to: Zynex Medical Holdings,
Inc., 8100 South Park Way, Suite A-9, Littleton, CO 80120, Attn: Thomas
Sandgaard, CEO, telecopier: (800) 495-6695, with a copy by telecopier only to:
Sichenzia, Ross, Friedman & Ference LLP, 1065 Avenue of the Americas, New York,
NY 10018, Attn: Gregory Sichenzia, Esq., telecopier number: (212) 930-9725, (ii)
if to the Holder, to the address and telecopier number listed on the first
paragraph of this Warrant, with a copy by telecopier only to: Grushko & Mittman,
P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176, telecopier number:
(212) 697-3575, and (iii) if to the Broker, to: J.P. Turner & Company, L.L.C.,
17 Corporate Plaza, Suite 200, Newport Beach, CA 92660, Attn: Michael Rose,
telecopier: (949) 717-4839.

         15. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of New York. Any dispute relating to this Warrant shall be
adjudicated in New York County in the State of New York. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.

         IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.

                                              ZYNEX MEDICAL HOLDINGS, INC.



                                              By:
                                                 ---------------------------
                                                     Name:
                                                     Title:



Witness:






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3
<SEQUENCE>8
<FILENAME>ex-4_3.txt
<TEXT>
EXHIBIT 4.3

THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ZYNEX MEDICAL HOLDINGS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

                  Right to Purchase _________ shares of Common Stock of Zynex
                  Medical Holdings, Inc. (subject to adjustment as provided
                  herein)

                         COMMON STOCK PURCHASE WARRANT B

No. 2004-B-001                                 Issue Date: June ___, 2004

         ZYNEX MEDICAL HOLDINGS, INC., a corporation organized under the laws of
the State of Nevada (the "Company"), hereby certifies that, for value received,
__________________, ____________________________________________, or its assigns
(the "Holder"), is entitled, subject to the terms set forth below, to purchase
from the Company at any time after the Issue Date until 5:00 p.m., E.S.T on the
fifth anniversary after the Closing Date (as defined in the Subscription
Agreement) (the "Expiration Date"), up to ________ fully paid and nonassessable
shares of the common stock of the Company (the "Common Stock"), $.001 par value
per share at a per share purchase price of $2.00. The aforedescribed purchase
price per share, as adjusted from time to time as herein provided, is referred
to herein as the "Purchase Price." The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as provided
herein. The Company may reduce the Purchase Price without the consent of the
Holder. Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in that certain Subscription Agreement (the "SUBSCRIPTION
AGREEMENT"), dated June ___, 2004, entered into by the Company and the Holder.

         As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:

         (a) The term "Company" shall include Zynex Medical Holdings, Inc. and
any corporation which shall succeed or assume the obligations of Zynex Medical
Holdings, Inc. hereunder.

         (b) The term "Common Stock" includes (a) the Company's Common Stock,
$.001 par value per share, as authorized on the date of the Subscription
Agreement, and (b) any other securities into which or for which any of the
securities described in (a) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.

          (c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

<PAGE>



         1. EXERCISE OF WARRANT.

                  1.1. NUMBER OF SHARES ISSUABLE UPON EXERCISE. From and after
the Issue Date through and including the Expiration Date, the Holder hereof
shall be entitled to receive, upon exercise of this Warrant in whole in
accordance with the terms of subsection 1.2 or upon exercise of this Warrant in
part in accordance with subsection 1.3, shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.

                  1.2. FULL EXERCISE. This Warrant may be exercised in full by
the Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such Holder and surrender of the original Warrant within seven (7)
days of exercise, to the Company at its principal office or at the office of its
Warrant Agent (as provided hereinafter), accompanied by payment, in cash, wire
transfer or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase Price then in
effect.

                  1.3. PARTIAL EXERCISE. This Warrant may be exercised in part
(but not for a fractional share) by surrender of this Warrant in the manner and
at the place provided in subsection 1.2 except that the amount payable by the
Holder on such partial exercise shall be the amount obtained by multiplying (a)
the number of whole shares of Common Stock designated by the Holder in the
Subscription Form by (b) the Purchase Price then in effect. On any such partial
exercise, the Company, at its expense, will forthwith issue and deliver to or
upon the order of the Holder hereof a new Warrant of like tenor, in the name of
the Holder hereof or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may request, the whole number of shares of Common
Stock for which such Warrant may still be exercised.

                  1.4. FAIR MARKET VALUE. Fair Market Value of a share of Common
Stock as of a particular date (the "Determination Date") shall mean:

                           (a) If the Company's Common Stock is traded on an
exchange or is quoted on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ"), National Market System, the NASDAQ SmallCap
Market or the American Stock Exchange, LLC, then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date;

                           (b) If the Company's Common Stock is not traded on an
exchange or on the NASDAQ National Market System, the NASDAQ SmallCap Market or
the American Stock Exchange, Inc., but is traded in the over-the-counter market,
then the average of the closing bid and ask prices reported for the last
business day immediately preceding the Determination Date;

                           (c) Except as provided in clause (d) below, if the
Company's Common Stock is not publicly traded, then as the Holder and the
Company agree, or in the absence of such an agreement, by arbitration in
accordance with the rules then standing of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons qualified by
education and training to pass on the matter to be decided; or

                           (d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company's charter, then all amounts to
be payable per share to holders of the Common Stock pursuant to the charter in
the event of such liquidation, dissolution or winding up, plus all other amounts
to be payable per share in respect of the Common Stock in liquidation under the
charter, assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of all of the Warrants are outstanding
at the Determination Date.


<PAGE>

                  1.5. COMPANY ACKNOWLEDGMENT. The Company will, at the time of
the exercise of the Warrant, upon the request of the Holder hereof acknowledge
in writing its continuing obligation to afford to such Holder any rights to
which such Holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the Holder shall fail to make
any such request, such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.

                  1.6. TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or
trust company shall have been appointed as trustee for the Holder of the
Warrants pursuant to Subsection 3.2, such bank or trust company shall have all
the powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.

                  1.7. DELIVERY OF STOCK CERTIFICATES, ETC. ON EXERCISE. The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder hereof as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within five (5) days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder hereof, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct in compliance with
applicable securities laws, a certificate or certificates for the number of duly
and validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such Holder shall be entitled on such exercise, plus,
in lieu of any fractional share to which such Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair Market Value
of one full share of Common Stock, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

         2.       CASHLESS EXERCISE.

                  (a) If a Registration Statement as defined in the Subscription
Agreement ("Registration Statement") is effective and the Holder may sell its
shares of Common Stock upon exercise hereof, this Warrant may be exercisable in
whole or in part for cash only as set forth in Section 1 above. If no such
Registration Statement is available, then commencing one year after the Closing
Date, payment upon exercise may be made at the option of the Holder either in
(i) cash, wire transfer or by certified or official bank check payable to the
order of the Company equal to the applicable aggregate Purchase Price, (ii) by
delivery of Common Stock issuable upon exercise of the Warrants in accordance
with Section (b) below ("Cashless Exercise") or (iii) by a combination of any of
the foregoing methods, for the number of Common Stock specified in such form (as
such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the holder per the terms of this
Warrant) and the holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully paid and nonassessable shares of Common
Stock (or Other Securities) determined as provided herein.

                  (b) If the Fair Market Value of one share of Common Stock is
greater than the Purchase Price (at the date of calculation as set forth below)
and no Registration Statement relating to the shares of Common Stock underlying
this Warrant is effective, in lieu of exercising this Warrant for cash, the
holder may elect to receive shares equal to the value (as determined below) of
this Warrant (or the portion thereof being cancelled) by surrender of this
Warrant at the principal office of the Company together with the properly
endorsed Subscription Form in which event the Company shall issue to the holder
a number of shares of Common Stock computed using the following formula:

                           X=Y (A-B)
                             ---------
                                A


<PAGE>

                  Where    X=       the number of shares of Common Stock to be
                                    issued to the holder

                           Y=       the number of shares of Common Stock
                                    purchasable under the Warrant or, if only a
                                    portion of the Warrant is being exercised,
                                    the portion of the Warrant being exercised
                                    (at the date of such calculation)

                           A=       the Fair Market Value of one share of the
                                    Company's Common Stock (at the date of such
                                    calculation)

                           B=       Purchase Price (as adjusted to the date of
                                    such calculation)

                  (c) The Holder may employ the cashless exercise feature
described above only during the pendency of a Non-Registration Event as
described in Section 11 of the Subscription Agreement and only commencing one
year after the Closing Date.

         For purposes of Rule 144 promulgated under the 1933 Act, it is
intended, understood and acknowledged that the Commission currently has
interpreted Rule 144 to mean that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued pursuant to the Subscription
Agreement.

         3.       ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.

                  3.1. REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at
any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1, at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.

                  3.2. DISSOLUTION. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolution, shall at its expense deliver or
cause to be delivered the stock and other securities and property (including
cash, where applicable) receivable by the Holder of the Warrants after the
effective date of such dissolution pursuant to this Section 3 to a bank or trust
company (a "Trustee") having its principal office in New York, NY, as trustee
for the Holder of the Warrants.

                  3.3. CONTINUATION OF TERMS. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the Other Securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any Other Securities, including, in the case of any
such transfer, the person acquiring all or substantially all of the properties
or assets of the Company, whether or not such person shall have expressly
assumed the terms of this Warrant as provided in Section 4. In the event this
Warrant does not continue in full force and effect after the consummation of the
transaction described in this Section 3, then only in such event will the


<PAGE>

Company's securities and property (including cash, where applicable) receivable
by the Holder of the Warrants be delivered to the Trustee as contemplated by
Section 3.2.

                  3.4 SHARE ISSUANCE. Until the end of the Exclusion Period (as
defined in the Subscription Agreement), if the Company shall issue any Common
Stock except for the Excepted Issuances (as defined in the Subscription
Agreement), prior to the complete exercise of this Warrant for a consideration
less than the Purchase Price that would be in effect at the time of such issue,
then, and thereafter successively upon each such issue, the Purchase Price shall
be reduced to such other lower issue price. For purposes of this adjustment, the
issuance of any security or debt instrument of the Company carrying the right to
convert such security or debt instrument into Common Stock or of any warrant,
right or option to purchase Common Stock shall result in an adjustment to the
Purchase Price upon the issuance of the above-described security, debt
instrument, warrant, right, or option. The reduction of the Purchase Price
described in this Section 3.4 is in addition to the other rights of the Holder
described in the Subscription Agreement.

         4. EXTRAORDINARY EVENTS REGARDING COMMON STOCK. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.
The number of shares of Common Stock that the Holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which (a) the numerator
is the Purchase Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such exercise.

         5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the Holder of the Warrant and any
Warrant Agent of the Company (appointed pursuant to Section 11 hereof).

         6. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF WARRANT;
FINANCIAL STATEMENTS. The Company will at all times reserve and keep available,
solely for issuance and delivery on the exercise of the Warrants, all shares of
Common Stock (or Other Securities) from time to time issuable on the exercise of
the Warrant. This Warrant entitles the Holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.

         7. ASSIGNMENT; EXCHANGE OF WARRANT. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced hereby, may
be transferred by any registered holder hereof (a "Transferor"). On the
surrender for exchange of this Warrant, with the Transferor's endorsement in the
form of Exhibit B attached hereto (the "Transferor Endorsement Form") and


<PAGE>

together with an opinion of counsel reasonably satisfactory to the Company that
the transfer of this Warrant will be in compliance with applicable securities
laws, the Company at its expense, twice, only, but with payment by the
Transferor of any applicable transfer taxes, will issue and deliver to or on the
order of the Transferor thereof a new Warrant or Warrants of like tenor, in the
name of the Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a "Transferee"), calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock called for on the face or
faces of the Warrant so surrendered by the Transferor. No such transfers shall
result in a public distribution of the Warrant.

         8. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense, twice only, will execute and deliver, in lieu thereof, a new Warrant of
like tenor.

         9. REGISTRATION RIGHTS. The Holder of this Warrant has been granted
certain registration rights by the Company. These registration rights are set
forth in the Subscription Agreement. The terms of the Subscription Agreement are
incorporated herein by this reference.

         10. MAXIMUM EXERCISE. The Holder shall not be entitled to exercise this
Warrant on an exercise date nor may the Company exercise its right to give a
Call Notice (as defined in Section 11) in connection with that number of Common
Stock which would be in excess of the sum of (i) the number of Common Stock
beneficially owned by the Holder and its affiliates on an exercise date or Call
Date, and (ii) the number of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is being made
on an exercise date or Call Date, which would result in beneficial ownership by
the Holder and its affiliates of more than 9.99% of the outstanding Common Stock
on such date. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to
the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 9.99%. The restriction described in
this paragraph may be revoked upon sixty-one (61) days prior notice from the
Holder to the Company. The Holder may allocate which of the equity of the
Company deemed beneficially owned by the Subscriber shall be included in the
9.99% amount described above and which shall be allocated to the excess above
9.99%.

         11. CALL. The Company shall have the option to "call" the Warrants (the
"Warrant Call"), one or more times, in accordance with and governed by the
following:

                  (a) The Company shall exercise the Warrant Call by giving to
the Warrant Holder a written notice of call (the "Call Notice") during the
period in which the Warrant Call may be exercised. The effective date of each
Call Notice (the "Call Date") is the date on which notice is effective under the
notice provision of Section 15 of this Warrant.

                  (b) The Company's right to exercise the Warrant Call shall
commence thirty trading days after the Actual Effective Date as defined in the
Subscription Agreement.

                  (c) The number of shares of Common Stock to be issued upon
exercise of the Warrant which are subject to a Call Notice must be registered in
a registration statement effective from twenty-two trading days prior to the
Call Date and through the date such Common Stock is actually delivered to the
Warrant Holder ("Delivery Date").


<PAGE>

                  (d)      A Call Notice may be given not sooner than ten (10)
trading days after the prior Call Date.

                  (e) A Call Notice may be given by the Company only within ten
trading days after the Common Stock has had a closing price as reported for the
Principal Market (as defined in the Subscription Agreement) of not less than two
hundred percent (200%) of the Purchase Price for fifteen (15) consecutive
trading days ("Lookback Period").

                  (f) The Common Stock must be listed on the Principal Market
for the Lookback Period and through the Delivery Date.

                  (g) The Company shall not have received a notice from the
Principal Market during the sixty (60) calendar days prior to the Call Date that
the Company or the Common Stock does not meet the requirements for continued
quotation, listing or trading on the Principal Market.

                  (h) The Company and the Common Stock shall meet the
requirements for continued quotation, listing or trading on the Principal Market
for the Lookback Period and through the Delivery Date.

                  (i) Unless otherwise agreed to by the Holder of this Warrant,
a Call Notice must be given to all Warrant Holders who receive Warrants similar
to this Warrant (in terms of exercise price and other principal terms) issued on
or about the same Issue Date as this Warrant, in proportion to the amounts of
Common Stock which may be purchased by the respective Warrant Holders in
accordance with the respective Warrants held by each.

                  (j) The Warrant Holder shall exercise his Warrant rights and
purchase the Called Common Stock and pay for same within thirty (30) days after
the Call Date. If the Warrant Holder fails to timely pay the amount required by
the Warrant Call, the Company's sole remedy shall be to cancel a corresponding
amount of this Warrant.

         (k) The Company may not exercise the right to Call this Warrant after
the occurrence of a default by the Company of a material term of this Warrant or
the Subscription Agreement.

         12. WARRANT AGENT. The Company may, by written notice to the Holder of
the Warrant, appoint an agent (a "Warrant Agent") for the purpose of issuing
Common Stock (or Other Securities) on the exercise of this Warrant pursuant to
Section 1, exchanging this Warrant pursuant to Section 7, and replacing this
Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

         13. TRANSFER ON THE COMPANY'S BOOKS. Until this Warrant is transferred
on the books of the Company, the Company may treat the registered holder hereof
as the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

         14. WARRANT EXERCISE COMPENSATION. The Company has agreed to pay to
J.P. Turner & Company, L.L.C. ("Broker") Warrant Exercise Compensation as
described in the Subscription Agreement equal to ten percent (10%) of the cash
proceeds payable to the Company upon exercise of the Warrant. The Broker has
agreed to grant a concession to the Holder of this Warrant equal to one-half of
the cash Warrant Exercise Compensation. The Company agrees that the concession
amount may be deducted by the Holder from the aggregate Purchase Price payable
upon exercise of this Warrant. In such case, the Company shall only pay to the
Broker the Warrant Exercise Compensation minus the aforedescribed concession.
The Company is also obligated to issue Broker Warrants to the Broker as
described in the Subscription Agreement. The Broker will receive one Broker's
Warrant for each ten (10) B Warrants exercised by Subscribers. The Warrant
Exercise Compensation and Broker Warrants will be paid by the Company to the
Broker not later than the fifth (5th) business day after the Company receives
cash proceeds from the exercise of this Warrant. The Holder of the Warrant has
no obligation or responsibility to pay Warrant Exercise Compensation.


<PAGE>

         15. NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company to: Zynex Medical Holdings,
Inc., 8100 South Park Way, Suite A-9, Littleton, CO 80120, Attn: Thomas
Sandgaard, CEO, telecopier: (800) 495-6695, with a copy by telecopier only to:
Sichenzia, Ross, Friedman & Ference LLP, 1065 Avenue of the Americas, New York,
NY 10018, Attn: Gregory Sichenzia, Esq., telecopier number: (212) 930-9725, (ii)
if to the Holder, to the address and telecopier number listed on the first
paragraph of this Warrant, with a copy by telecopier only to: Grushko & Mittman,
P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176, telecopier number:
(212) 697-3575, and (iii) if to the Broker, to: J.P. Turner & Company, L.L.C.,
17 Corporate Plaza, Suite 200, Newport Beach, CA 92660, Attn: Michael Rose,
telecopier: (949) 717-4839.



<PAGE>




         16. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of New York. Any dispute relating to this Warrant shall be
adjudicated in New York County in the State of New York. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.

         IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.

                                              ZYNEX MEDICAL HOLDINGS, INC.



                                              By:
                                                  ----------------------------
                                                   Name:
                                                   Title:


- ----------------------------
Witness:






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4
<SEQUENCE>9
<FILENAME>ex-4_4.txt
<TEXT>
EXHIBIT 4.4

THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ZYNEX MEDICAL HOLDINGS, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.

                  Right to Purchase _________ shares of Common Stock of Zynex
                  Medical Holdings, Inc. (subject to adjustment as provided
                  herein)

                         COMMON STOCK PURCHASE WARRANT C

No. 2004-C-001                                       Issue Date: June ___, 2004

         ZYNEX MEDICAL HOLDINGS, INC., a corporation organized under the laws of
the State of Nevada (the "Company"), hereby certifies that, for value received,
_________________________,
________________________________________________________, or its assigns (the
"Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company at any time after the Issue Date until 5:00 p.m., E.S.T on the fifth
anniversary after the Closing Date (as defined in the Subscription Agreement)
(the "Expiration Date"), up to ________ fully paid and nonassessable shares of
the common stock of the Company (the "Common Stock"), $.001 par value per share
at a per share purchase price of $0.01. The aforedescribed purchase price per
share, as adjusted from time to time as herein provided, is referred to herein
as the "Purchase Price." The number and character of such shares of Common Stock
and the Purchase Price are subject to adjustment as provided herein. The Company
may reduce the Purchase Price without the consent of the Holder. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
that certain Subscription Agreement (the "SUBSCRIPTION AGREEMENT"), dated June
___, 2004, entered into by the Company and the Holder.

         As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:

         (a) The term "Company" shall include Zynex Medical Holdings, Inc. and
any corporation which shall succeed or assume the obligations of Zynex Medical
Holdings, Inc. hereunder.

         (b) The term "Common Stock" includes (a) the Company's Common Stock,
$.001 par value per share, as authorized on the date of the Subscription
Agreement, and (b) any other securities into which or for which any of the
securities described in (a) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.

          (c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

<PAGE>

         1. EXERCISE OF WARRANT.

                  1.1. NUMBER OF SHARES ISSUABLE UPON EXERCISE. From and after
the Issue Date through and including the Expiration Date, the Holder hereof
shall be entitled to receive, upon exercise of this Warrant in whole in
accordance with the terms of subsection 1.2 or upon exercise of this Warrant in
part in accordance with subsection 1.3, shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.

                  1.2. FULL EXERCISE. This Warrant may be exercised in full by
the Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such Holder and surrender of the original Warrant within seven (7)
days of exercise, to the Company at its principal office or at the office of its
Warrant Agent (as provided hereinafter), accompanied by payment, in cash, wire
transfer or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase Price then in
effect.

                  1.3. PARTIAL EXERCISE. This Warrant may be exercised in part
(but not for a fractional share) by surrender of this Warrant in the manner and
at the place provided in subsection 1.2 except that the amount payable by the
Holder on such partial exercise shall be the amount obtained by multiplying (a)
the number of whole shares of Common Stock designated by the Holder in the
Subscription Form by (b) the Purchase Price then in effect. On any such partial
exercise, the Company, at its expense, will forthwith issue and deliver to or
upon the order of the Holder hereof a new Warrant of like tenor, in the name of
the Holder hereof or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may request, the whole number of shares of Common
Stock for which such Warrant may still be exercised.

                  1.4. FAIR MARKET VALUE. Fair Market Value of a share of Common
Stock as of a particular date (the "Determination Date") shall mean:

                           (a) If the Company's Common Stock is traded on an
exchange or is quoted on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ"), National Market System, the NASDAQ SmallCap
Market or the American Stock Exchange, LLC, then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date;

                           (b) If the Company's Common Stock is not traded on an
exchange or on the NASDAQ National Market System, the NASDAQ SmallCap Market or
the American Stock Exchange, Inc., but is traded in the over-the-counter market,
then the average of the closing bid and ask prices reported for the last
business day immediately preceding the Determination Date;

                           (c) Except as provided in clause (d) below, if the
Company's Common Stock is not publicly traded, then as the Holder and the
Company agree, or in the absence of such an agreement, by arbitration in
accordance with the rules then standing of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons qualified by
education and training to pass on the matter to be decided; or

                           (d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company's charter, then all amounts to
be payable per share to holders of the Common Stock pursuant to the charter in
the event of such liquidation, dissolution or winding up, plus all other amounts
to be payable per share in respect of the Common Stock in liquidation under the
charter, assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of all of the Warrants are outstanding
at the Determination Date.


<PAGE>

                  1.5. COMPANY ACKNOWLEDGMENT. The Company will, at the time of
the exercise of the Warrant, upon the request of the Holder hereof acknowledge
in writing its continuing obligation to afford to such Holder any rights to
which such Holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the Holder shall fail to make
any such request, such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.

                  1.6. TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or
trust company shall have been appointed as trustee for the Holder of the
Warrants pursuant to Subsection 3.2, such bank or trust company shall have all
the powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.

                  1.7. DELIVERY OF STOCK CERTIFICATES, ETC. ON EXERCISE. The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder hereof as the record owner of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within five (5) days thereafter, the Company at its expense (including the
payment by it of any applicable issue taxes) will cause to be issued in the name
of and delivered to the Holder hereof, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct in compliance with
applicable securities laws, a certificate or certificates for the number of duly
and validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such Holder shall be entitled on such exercise, plus,
in lieu of any fractional share to which such Holder would otherwise be
entitled, cash equal to such fraction multiplied by the then Fair Market Value
of one full share of Common Stock, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

         2.       CASHLESS EXERCISE.

                  (a) Payment upon exercise may be made at the option of the
Holder either in (i) cash, wire transfer or by certified or official bank check
payable to the order of the Company equal to the applicable aggregate Purchase
Price, (ii) by delivery of Common Stock issuable upon exercise of the Warrants
in accordance with Section (b) below ("Cashless Exercise") or (iii) by a
combination of any of the foregoing methods, for the number of Common Stock
specified in such form (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the holder
per the terms of this Warrant) and the holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock (or Other Securities) determined as
provided herein.

                  (b) If the Fair Market Value of one share of Common Stock is
greater than the Purchase Price (at the date of calculation as set forth below)
and no Registration Statement relating to the shares of Common Stock underlying
this Warrant is effective, in lieu of exercising this Warrant for cash, the
holder may elect to receive shares equal to the value (as determined below) of
this Warrant (or the portion thereof being cancelled) by surrender of this
Warrant at the principal office of the Company together with the properly
endorsed Subscription Form in which event the Company shall issue to the holder
a number of shares of Common Stock computed using the following formula:

                           X=Y (A-B)
                             ---------
                                A


<PAGE>

                  Where    X=       the number of shares of Common Stock to
                                    be issued to the holder

                           Y=       the number of shares of Common Stock
                                    purchasable under the Warrant or, if only a
                                    portion of the Warrant is being exercised,
                                    the portion of the Warrant being exercised
                                    (at the date of such calculation)

                           A=       the Fair Market Value of one share of the
                                    Company's Common Stock (at the date of such
                                    calculation)

                           B=       Purchase Price (as adjusted to the date of
                                    such calculation)

                  (c) For purposes of Rule 144 promulgated under the 1933 Act,
it is intended, understood and acknowledged that the Commission currently has
interpreted Rule 144 to mean that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued pursuant to the Subscription
Agreement.

         3.       ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.

                  3.1. REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at
any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1, at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.

                  3.2. DISSOLUTION. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolution, shall at its expense deliver or
cause to be delivered the stock and other securities and property (including
cash, where applicable) receivable by the Holder of the Warrants after the
effective date of such dissolution pursuant to this Section 3 to a bank or trust
company (a "Trustee") having its principal office in New York, NY, as trustee
for the Holder of the Warrants.

                  3.3. CONTINUATION OF TERMS. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the Other Securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any Other Securities, including, in the case of any
such transfer, the person acquiring all or substantially all of the properties
or assets of the Company, whether or not such person shall have expressly
assumed the terms of this Warrant as provided in Section 4. In the event this
Warrant does not continue in full force and effect after the consummation of the
transaction described in this Section 3, then only in such event will the
Company's securities and property (including cash, where applicable) receivable
by the Holder of the Warrants be delivered to the Trustee as contemplated by
Section 3.2.

                  3.4 SHARE ISSUANCE. Until the end of the Exclusion Period (as
defined in the Subscription Agreement), if the Company shall issue any Common
Stock except for the Excepted Issuances (as defined in the Subscription
Agreement), prior to the complete exercise of this Warrant for a consideration
less than the Purchase Price that would be in effect at the time of such issue,
then, and thereafter successively upon each such issue, the Purchase Price shall
be reduced to such other lower issue price. For purposes of this adjustment, the
issuance of any security or debt instrument of the Company carrying the right to
convert such security or debt instrument into Common Stock or of any warrant,
right or option to purchase Common Stock shall result in an adjustment to the
Purchase Price upon the issuance of the above-described security, debt
instrument, warrant, right, or option. The reduction of the Purchase Price
described in this Section 3.4 is in addition to the other rights of the Holder
described in the Subscription Agreement.


<PAGE>

         4. EXTRAORDINARY EVENTS REGARDING COMMON STOCK. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.
The number of shares of Common Stock that the Holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be adjusted to a number determined by multiplying the number of
shares of Common Stock that would otherwise (but for the provisions of this
Section 4) be issuable on such exercise by a fraction of which (a) the numerator
is the Purchase Price that would otherwise (but for the provisions of this
Section 4) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such exercise.

         5. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the Holder of the Warrant and any
Warrant Agent of the Company (appointed pursuant to Section 11 hereof).

         6. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF WARRANT;
FINANCIAL STATEMENTS. The Company will at all times reserve and keep available,
solely for issuance and delivery on the exercise of the Warrants, all shares of
Common Stock (or Other Securities) from time to time issuable on the exercise of
the Warrant. This Warrant entitles the Holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.

         7. ASSIGNMENT; EXCHANGE OF WARRANT. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced hereby, may
be transferred by any registered holder hereof (a "Transferor"). On the
surrender for exchange of this Warrant, with the Transferor's endorsement in the
form of Exhibit B attached hereto (the "Transferor Endorsement Form") and
together with an opinion of counsel reasonably satisfactory to the Company that
the transfer of this Warrant will be in compliance with applicable securities
laws, the Company at its expense, twice, only, but with payment by the
Transferor of any applicable transfer taxes, will issue and deliver to or on the
order of the Transferor thereof a new Warrant or Warrants of like tenor, in the
name of the Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a "Transferee"), calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock called for on the face or

<PAGE>

faces of the Warrant so surrendered by the Transferor. No such transfers shall
result in a public distribution of the Warrant.

         8. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense, twice only, will execute and deliver, in lieu thereof, a new Warrant of
like tenor.

         9. REGISTRATION RIGHTS. The Holder of this Warrant has been granted
certain registration rights by the Company. These registration rights are set
forth in the Subscription Agreement. The terms of the Subscription Agreement are
incorporated herein by this reference.

         10. MAXIMUM EXERCISE. The Holder shall not be entitled to exercise this
Warrant on an exercise date in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise date,
and (ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is being made
on an exercise date, which would result in beneficial ownership by the Holder
and its affiliates of more than 9.99% of the outstanding shares of Common Stock
on such date. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to
the foregoing, the Holder shall not be limited to aggregate exercises which
would result in the issuance of more than 9.99%. The restriction described in
this paragraph may be revoked upon sixty-one (61) days prior notice from the
Holder to the Company. The Holder may allocate which of the equity of the
Company deemed beneficially owned by the Subscriber shall be included in the
9.99% amount described above and which shall be allocated to the excess above
9.99%.

         11. WARRANT AGENT. The Company may, by written notice to the Holder of
the Warrant, appoint an agent (a "Warrant Agent") for the purpose of issuing
Common Stock (or Other Securities) on the exercise of this Warrant pursuant to
Section 1, exchanging this Warrant pursuant to Section 7, and replacing this
Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

         12. TRANSFER ON THE COMPANY'S BOOKS. Until this Warrant is transferred
on the books of the Company, the Company may treat the registered holder hereof
as the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

         13. NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company to: Zynex Medical Holdings,
Inc., 8100 South Park Way, Suite A-9, Littleton, CO 80120, Attn: Thomas
Sandgaard, CEO, telecopier: (800) 495-6695, with a copy by telecopier only to:
Sichenzia, Ross, Friedman & Ference LLP, 1065 Avenue of the Americas, New York,

<PAGE>

NY 10018, Attn: Gregory Sichenzia, Esq., telecopier number: (212) 930-9725, and
(ii) if to the Holder, to the address and telecopier number listed on the first
paragraph of this Warrant, with a copy by telecopier only to: Grushko & Mittman,
P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176, telecopier number:
(212) 697-3575.

         14. MISCELLANEOUS. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of New York. Any dispute relating to this Warrant shall be
adjudicated in New York County in the State of New York. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.



<PAGE>



         IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.

                                              ZYNEX MEDICAL HOLDINGS, INC.


                                              By:
                                                ----------------------------
                                                   Name:
                                                   Title:

- ------------------------------
Witness:






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.5
<SEQUENCE>10
<FILENAME>ex-4_5.txt
<TEXT>
                             FUNDS ESCROW AGREEMENT


         This Agreement is dated as of the 4th day of June, 2004 among Zynex
Medical Holdings, Inc., a Nevada corporation (the "Company"), the Subscribers
identified on Schedule A hereto (each a "Subscriber" and collectively
"Subscribers"), and Grushko & Mittman, P.C. (the "Escrow Agent"):

                              W I T N E S S E T H:

         WHEREAS, the Company and Subscribers have entered into a Subscription
Agreement calling for the sale by the Company to the Subscriber of $.001 par
value Common Stock of the Company ("Common Stock") for an aggregate purchase
price of $1,200,000 and the issuance of Warrants in the amounts set forth on
Schedule A hereto; and

         WHEREAS, the parties hereto require the Company to deliver the Common
Stock and Warrants against payment therefor, with such Common Stock, Warrants
and the Escrowed Funds to be delivered to the Escrow Agent to be held in escrow
and released by the Escrow Agent in accordance with the terms and conditions of
this Agreement; and

         WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant
to the terms and conditions of this Agreement;

         NOW THEREFORE, the parties agree as follows:

                                    ARTICLE I

                                 INTERPRETATION

         1.1. DEFINITIONS. Capitalized terms used and not otherwise defined
herein that are defined in the Subscription Agreement shall have the meanings
given to such terms in the Subscription Agreement. Whenever used in this
Agreement, the following terms shall have the following respective meanings:

                  (a) "Agreement" means this Agreement and all amendments made
hereto and thereto by written agreement between the parties;

                  (b) "A Warrants" shall have the meaning set forth in Section
3(a) of the Subscription Agreement;

                  (c) "B Warrants" shall have the meaning set forth in Section
3(b) of the Subscription Agreement;

                  (d) "C Warrants" shall have the meaning set forth in Section
3(c) of the Subscription Agreement;

                  (e) "Broker" shall have the meaning set forth in Section 8 of
the Subscription Agreement;

                  (f) "Broker's Fee" shall have the meaning set forth in Section
8(a) of the Subscription Agreement;


<PAGE>

                  (g) "Broker's Warrants" shall have the meaning set forth in
Section 8(b) of the Subscription Agreement;

                  (h) "Closing Date" shall have the meaning set forth in Section
13(b) of the Subscription Agreement;

                  (i) "Escrowed Payment" means an aggregate cash payment of
$1,200,000 which is the Purchase Price as defined in the Subscription Agreement;

                  (j) "Legal Fees" shall have the meaning set forth in Section 7
of the Subscription Agreement;

                  (k) "Legal Opinion" means the original signed legal opinion
referred to in Section 6 of the Subscription Agreement;

                  (l) "Shares" shall have the meaning set forth in Section 1 of
the Subscription Agreement;

                   (m) "Subscription Agreement" means the Subscription Agreement
(and the exhibits thereto) entered into or to be entered into by the parties in
reference to the sale and purchase of the Shares and Warrants;

                  (n) "Warrants" shall mean collectively the A Warrants, B
Warrants and C Warrants.

                  (o) Collectively, the executed Subscription Agreement executed
by the Company, the Shares, Warrants, Legal Opinion, and Broker's Warrants are
referred to as "Company Documents"; and

                  (p) Collectively, the Escrowed Payment and the Subscription
Agreement executed by the Subscribers are referred to as "Subscriber Documents".

         1.2. ENTIRE AGREEMENT. This Agreement along with the Company Documents
and the Subscriber Documents constitute the entire agreement between the parties
hereto pertaining to the Company Documents and Subscriber Documents and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties. There are no warranties,
representations and other agreements made by the parties in connection with the
subject matter hereof except as specifically set forth in this Agreement, the
Company Documents and the Subscriber Documents.

         1.3. EXTENDED MEANINGS. In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders. The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.

         1.4. WAIVERS AND AMENDMENTS. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party waiving compliance. Except as expressly stated
herein, no delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder preclude any
other or future exercise of any other right, power or privilege hereunder.


<PAGE>

         1.5. HEADINGS. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.

         1.6. LAW GOVERNING THIS AGREEMENT. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of New York or in the federal courts
located in the state of New York. Both parties and the individuals executing
this Agreement and other agreements on behalf of the Company agree to submit to
the jurisdiction of such courts and waive trial by jury. The prevailing party
(which shall be the party which receives an award most closely resembling the
remedy or action sought) shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Agreement or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement.

         1.7. SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION. The Company and
Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injuction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law or
equity. Subject to Section 1.6 hereof, each of the Company and Subscriber hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.

                                   ARTICLE II

                         DELIVERIES TO THE ESCROW AGENT

         2.1. COMPANY DELIVERIES. On or about the date hereof, the Company shall
deliver to the Escrow Agent the executed Subscription Agreement, the Shares,
Warrants, Broker's Warrants, and Legal Opinion (collectively, the "Company
Documents").

         2.2. SUBSCRIBER DELIVERIES. On or before the Closing Date, each
Subscriber shall deliver to the Escrow Agent its portion of the Purchase Price,
and the executed Subscription Agreement. The Escrowed Payment will be delivered
pursuant to the following wire transfer instructions:

                                 Citibank, N.A.
                                 1155 6th Avenue
                           New York, NY 10036, USA ABA
                               Number: 0210-00089
              For Credit to: Grushko & Mittman, IOLA Trust Account
                            Account Number: 45208884


<PAGE>

         2.3. INTENTION TO CREATE ESCROW OVER COMPANY DOCUMENTS AND SUBSCRIBER
DOCUMENTS. The Subscriber and Company intend that the Company Documents and
Subscriber Documents shall be held in escrow by the Escrow Agent pursuant to
this Agreement for their benefit as set forth herein.

         2.4. ESCROW AGENT TO DELIVER COMPANY DOCUMENTS AND SUBSCRIBER
DOCUMENTS. The Escrow Agent shall hold and release the Company Documents and
Subscriber Documents only in accordance with the terms and conditions of this
Agreement.

                                   ARTICLE III

              RELEASE OF COMPANY DOCUMENTS AND SUBSCRIBER DOCUMENTS

         3.1. RELEASE OF ESCROW. Subject to the provisions of Section 4.2, the
Escrow Agent shall release the Company Documents and Subscriber Documents as
follows:

                  (a) On the Closing Date, the Escrow Agent will simultaneously
release the Company Documents to the Subscriber and release the Subscription
Agreement, and the Purchase Price to or for the benefit of the Company except
that the Legal Fees will be released to the Subscriber's attorneys, and the
Broker's Fee and Broker's Warrants will be released to or for the benefit of the
Broker.

                  (b) All funds to be delivered to the Company shall be
delivered pursuant to the wire instructions to be provided in writing by the
Company to the Escrow Agent.

                  (c) Notwithstanding the above, upon receipt by the Escrow
Agent of joint written instructions ("Joint Instructions") signed by the Company
and the Subscriber, it shall deliver the Company Documents and Subscriber
Documents in accordance with the terms of the Joint Instructions.

                  (d) Notwithstanding the above, upon receipt by the Escrow
Agent of a final and non-appealable judgment, order, decree or award of a court
of competent jurisdiction (a "Court Order"), the Escrow Agent shall deliver the
Company Documents and Subscriber Documents in accordance with the Court Order.
Any Court Order shall be accompanied by an opinion of counsel for the party
presenting the Court Order to the Escrow Agent (which opinion shall be
satisfactory to the Escrow Agent) to the effect that the court issuing the Court
Order has competent jurisdiction and that the Court Order is final and
non-appealable.

                  (e) In the event executed Subscription Agreements executed by
Subscribers for an aggregate Purchase Price of $1,200,000 and Escrowed Payments
for an aggregate of $1,200,000 have not been received by the Escrow Agent on or
before June 30, 2004, the Escrow Agent shall immediately release the Company
Documents to the Company and release the Subscriber Documents and Escrowed
Payments to the Subscribers.

         3.2. ACKNOWLEDGEMENT OF COMPANY AND SUBSCRIBER; DISPUTES. The Company
and the Subscriber acknowledge that the only terms and conditions upon which the
Company Documents and Subscriber Documents are to be released are set forth in
Sections 3 and 4 of this Agreement. The Company and the Subscriber reaffirm
their agreement to abide by the terms and conditions of this Agreement with
respect to the release of the Company Documents and Subscriber Documents. Any
dispute with respect to the release of the Company Documents and Subscriber
Documents shall be resolved pursuant to Section 4.2 or by agreement between the
Company and Subscriber.


<PAGE>

                                   ARTICLE IV

                           CONCERNING THE ESCROW AGENT

         4.1. DUTIES AND RESPONSIBILITIES OF THE ESCROW AGENT. The Escrow
Agent's duties and responsibilities shall be subject to the following terms and
conditions:

                  (a) The Subscriber and Company acknowledge and agree that the
Escrow Agent (i) shall not be responsible for or bound by, and shall not be
required to inquire into whether either the Subscriber or Company is entitled to
receipt of the Company Documents and Subscriber Documents pursuant to, any other
agreement or otherwise; (ii) shall be obligated only for the performance of such
duties as are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iii) may rely on and shall be protected in acting or refraining from
acting upon any written notice, instruction, instrument, statement, request or
document furnished to it hereunder and believed by the Escrow Agent in good
faith to be genuine and to have been signed or presented by the proper person or
party, without being required to determine the authenticity or correctness of
any fact stated therein or the propriety or validity or the service thereof;
(iv) may assume that any person believed by the Escrow Agent in good faith to be
authorized to give notice or make any statement or execute any document in
connection with the provisions hereof is so authorized; (v) shall not be under
any duty to give the property held by Escrow Agent hereunder any greater degree
of care than Escrow Agent gives its own similar property; and (vi) may consult
counsel satisfactory to Escrow Agent, the opinion of such counsel to be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by Escrow Agent hereunder in good faith and in accordance with the
opinion of such counsel.

                  (b) The Subscriber and Company acknowledge that the Escrow
Agent is acting solely as a stakeholder at their request and that the Escrow
Agent shall not be liable for any action taken by Escrow Agent in good faith and
believed by Escrow Agent to be authorized or within the rights or powers
conferred upon Escrow Agent by this Agreement. The Subscriber and Company,
jointly and severally, agree to indemnify and hold harmless the Escrow Agent and
any of Escrow Agent's partners, employees, agents and representatives for any
action taken or omitted to be taken by Escrow Agent or any of them hereunder,
including the fees of outside counsel and other costs and expenses of defending
itself against any claim or liability under this Agreement, except in the case
of gross negligence or willful misconduct on Escrow Agent's part committed in
its capacity as Escrow Agent under this Agreement. The Escrow Agent shall owe a
duty only to the Subscriber and Company under this Agreement and to no other
person.

                  (c) The Subscriber and Company jointly and severally agree to
reimburse the Escrow Agent for outside counsel fees, to the extent authorized
hereunder and incurred in connection with the performance of its duties and
responsibilities hereunder.

                  (d) The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving five (5) days prior written notice of resignation to the
Subscriber and the Company. Prior to the effective date of the resignation as
specified in such notice, the Subscriber and Company will issue to the Escrow
Agent a Joint Instruction authorizing delivery of the Company Documents and
Subscriber Documents to a substitute Escrow Agent selected by the Subscriber and
Company. If no successor Escrow Agent is named by the Subscriber and Company,
the Escrow Agent may apply to a court of competent jurisdiction in the State of
New York for appointment of a successor Escrow Agent, and to deposit the Company
Documents and Subscriber Documents with the clerk of any such court.


<PAGE>

                  (e) The Escrow Agent does not have and will not have any
interest in the Company Documents and Subscriber Documents, but is serving only
as escrow agent, having only possession thereof. The Escrow Agent shall not be
liable for any loss resulting from the making or retention of any investment in
accordance with this Escrow Agreement.

                  (f) This Agreement sets forth exclusively the duties of the
Escrow Agent with respect to any and all matters pertinent thereto and no
implied duties or obligations shall be read into this Agreement.

                  (g) The Escrow Agent shall be permitted to act as counsel for
the Subscriber in any dispute as to the disposition of the Company Documents and
Subscriber Documents, in any other dispute between the Subscriber and Company,
whether or not the Escrow Agent is then holding the Company Documents and
Subscriber Documents and continues to act as the Escrow Agent hereunder.

                  (h) The provisions of this Section 4.1 shall survive the
resignation of the Escrow Agent or the termination of this Agreement.

         4.2. DISPUTE RESOLUTION: JUDGMENTS. Resolution of disputes arising
under this Agreement shall be subject to the following terms and conditions:

                  (a) If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Company Documents and
Subscriber Documents, or if the Escrow Agent shall in good faith be uncertain as
to its duties or rights hereunder, the Escrow Agent shall be authorized, without
liability to anyone, to (i) refrain from taking any action other than to
continue to hold the Company Documents and Subscriber Documents pending receipt
of a Joint Instruction from the Subscriber and Company, or (ii) deposit the
Company Documents and Subscriber Documents with any court of competent
jurisdiction in the State of New York, in which event the Escrow Agent shall
give written notice thereof to the Subscriber and the Company and shall
thereupon be relieved and discharged from all further obligations pursuant to
this Agreement. The Escrow Agent may, but shall be under no duty to, institute
or defend any legal proceedings which relate to the Company Documents and
Subscriber Documents. The Escrow Agent shall have the right to retain counsel if
it becomes involved in any disagreement, dispute or litigation on account of
this Agreement or otherwise determines that it is necessary to consult counsel.

                  (b) The Escrow Agent is hereby expressly authorized to comply
with and obey any Court Order. In case the Escrow Agent obeys or complies with a
Court Order, the Escrow Agent shall not be liable to the Subscriber and Company
or to any other person, firm, corporation or entity by reason of such
compliance.

                                    ARTICLE V

                                 GENERAL MATTERS

         5.1. TERMINATION. This escrow shall terminate upon the release of all
of the Company Documents and Subscriber Documents or at any time upon the
agreement in writing of the Subscriber and Company.

         5.2. NOTICES. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed

<PAGE>

as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

(a) If to the Company, to:

                           Zynex Medical Holdings, Inc.
                           8100 South Park Way, Suite A-9
                           Littleton, CO 80120
                           Attn: Thomas Sandgaard, CEO
                           Fax: (800) 495-6695

         With a copy by telecopier only to:

                           Sichenzia, Ross, Friedman & Ference LLP
                           1065 Avenue of the Americas
                           New York, NY 10018
                           Attn: Gregory Sichenzia, Esq.
                           Fax: (212) 930-9725


(b) If to the Subscribers, to: the addresses and fax numbers listed on Schedule
A hereto


(c) If to the Broker, to:

                           J.P. Turner & Company, L.L.C.
                           17 Corporate Plaza,
                           Suite 200 Newport Beach, CA 92660
                           Attn: Michael Rose
                           Fax: (949) 717-4839

(d) If to the Escrow Agent, to:

                           Grushko & Mittman, P.C.
                           551 Fifth Avenue, Suite 1601
                           New York, New York 10176
                           Fax: 212-697-3575

or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.


<PAGE>

         5.3. INTEREST. The Escrowed Payment shall not be held in an interest
bearing account nor will interest be payable in connection therewith. In the
event the Escrowed Payment is deposited in an interest bearing account, each
Subscriber shall be entitled to receive its PRO RATA portion of any accrued
interest thereon, but only if the Escrow Agent receives from such Subscriber the
Subscriber's United States taxpayer identification number and other requested
information and forms.

         5.4. ASSIGNMENT; BINDING AGREEMENT. Neither this Agreement nor any
right or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto. This Agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.

         5.5. INVALIDITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.

         5.6. COUNTERPARTS/EXECUTION. This Agreement may be executed in any
number of counterparts and by different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile transmission and delivered by facsimile
transmission.



<PAGE>





5.7. AGREEMENT. Each of the undersigned states that he has read the foregoing
Funds Escrow Agreement and understands and agrees to it.


                                     ZYNEX MEDICAL HOLDINGS, INC.
                                     the "Company"


                                     By: /S/ THOMAS SANDGAARD


                                     ______________________________________
                                     (Print Name of Subscriber)


                                     _______________________________________
                                     (Signature of Subscriber)


                                     ESCROW AGENT:


                                     ______________________________________
                                     GRUSHKO & MITTMAN, P.C.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>11
<FILENAME>ex-5_1.txt
<TEXT>
EXHIBIT 5.1

                    SICHENZIA ROSS FRIEDMAN FERENCE LLP 1065
                        Avenue of the Americas, 21st Flr.
                               New York, NY 10018
                            Telephone: (212) 930-9700
                            Facsimile: (212) 930-9725

                                  July 6, 2004

VIA ELECTRONIC TRANSMISSION

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

RE:      ZYNEX MEDICAL HOLDINGS, INC.
         FORM SB-2 REGISTRATION STATEMENT (FILE NO. 333-)

Ladies and Gentlemen:

         We refer to the above-captioned registration statement on Form SB-2
(the "Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), filed by Zynex Medical Holdings, Inc., a Nevada corporation (the
"Company"), with the Securities and Exchange Commission.

         We have examined the originals, photocopies, certified copies or other
evidence of such records of the Company, certificates of officers of the Company
and public officials, and other documents as we have deemed relevant and
necessary as a basis for the opinion hereinafter expressed. In such examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as certified copies or photocopies and the
authenticity of the originals of such latter documents.

         Based on our examination mentioned above, we are of the opinion that
the securities being sold pursuant to the Registration Statement are duly
authorized and will be, when issued in the manner described in the Registration
Statement, legally and validly issued, fully paid and non-assessable.

         We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under "Legal Matters" in
the related Prospectus. In giving the foregoing consent, we do not hereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act, or the rules and regulations of the Securities and Exchange
Commission.

/s/ Sichenzia Ross Friedman Ference LLP

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>12
<FILENAME>ex-10_2.txt
<TEXT>
EXHIBIT 10.2

                             EMPLOYMENT AGREEMENT
                              --------------------

         EMPLOYMENT AGREEMENT (the "Agreement"), dated as of the 1st day of
February, 2004, between Zynex Medical, Inc., 8100 SouthPark Way A9, Littleton,
CO 80120 (the "Employer") and Thomas Sandgaard, with address at 10506 Kalahari
Ct., Littleton, CO 80124 (the "Employee").

                                R E C I T A L S:

A. The Employer desires to employ the Employee.

B. The Employee desires to be so employed upon the terms and conditions below
set forth.

NOW, THEREFORE, in consideration of the terms and the mutual undertakings
contained herein, it is agreed as follows:

1. Term. Subject to the terms of this Section 1 and Sections 7, 8 and
9, this Agreement shall commence on February 1, 2004 and expire on January 31,
2007 (the date on which this Agreement shall expire, as such date may be
extended in accordance with the terms of this Section 1 is hereinafter referred
to as the "Expiration Date"). Subject to the terms of Sections 7, 8 and 9,
unless either party gives written notice to the other of its desire to terminate
this Agreement at least thirty days prior to the then current Expiration Date or
Extended Period (the "Termination Notification Date"), this Agreement will be
automatically extended for further period(s) of two years from the then current
Expiration Date (the "Extended Period") on the same terms and conditions as
herein set forth. Except when the contrary is indicated, the phrase "the term of
this Agreement" shall henceforth be deemed to include the Extended Period.

2. Employment. The Employer agrees to employ the Employee as Zynex Medical,
Inc.'s Chief Executive Officer and President, and the Employee accepts such
employment.

3. Duties.

a) The Employee shall render all services of the nature of the services that a
Chief Executive Officer would render to a company in the medical device area.

b) During the term of this Agreement, Employee shall devote his full time,
energy, skill and best efforts to promote Employer's business and affairs and to
perform his duties hereunder.

c) The Employee shall report directly to the Board of Directors of the Employer.

4. Compensation. The Employer shall pay to the Employee for the loyal
and consistent services provided to it hereunder: a fee at the rate of $14,500
per month during the term of this Agreement. The Employee's compensation shall
be reviewed at least annually for appropriate increases at the end of each year
as determined by the Board of Directors of the Employer. Employee shall also
receive at the end of each year during the term of this Agreement, bonus
compensation as determined by the Board of Directors of the Employer or if at
the end of such year the Employer has received net revenue in the amount of
$2,250,000 or more, Employee based on his performance as evaluated by the
determined by the Compensation Committee of the Board of Directors of the
Employer, shall receive a bonus payment equal to six (6) times his monthly
salary at the end of the year the payment is made.


<PAGE>

5. Insurance and Benefits. During the term of this Agreement, the
Employee shall be entitled to participate in all employee benefit plans and
insurance programs, including company vehicle, which shall be provided from time
to time by the Employer to its employees (collectively, "Employee Benefit
Plans") in accordance with their terms and conditions. It is expressly
understood that Employee shall pay his withholding and other taxes applicable to
his income.

6. Termination. This Agreement may be terminated by the Employer for Cause
immediately upon written notice to the Employee. The term "Cause", as used
herein, shall mean the loss of any license necessary for the Employee to perform
his duties hereunder, or any willful misconduct, malfeasance, gross negligence
or other like conduct adversely affecting the best interests of the Employer,
including, without limitation, (i) the failure or neglect by the Employee to
perform his duties hereunder, (ii) the violation or attempted violation of any
provision hereof, (iii) the commission of any felony, including, without
limitation, any fraud against the Employer, any of its affiliates, clients or
customers of the Employer.

7. Return of Documents. On termination of this Agreement or at any time
upon the request of the Board of Directors of the Employer or its affiliates,
the Employee shall return to the Employer all documents, including all copies
thereof, and all other property relating to the business or affairs of the
Employer, including, without limitation, customer lists, agents or
representatives lists, commission schedules and information manuals, letters,
materials, reports, lists and records (all such documents and other property
being hereinafter referred to collectively as the "Materials"), in his
possession or control, no matter from whom or in what manner he may have
acquired such property. The Employee acknowledges and agrees that all of the
Materials are property of the Employer and releases all claims of right of
ownership thereto.

8. Confidentiality.

a) Employee acknowledges he will have access to operating, financial and other
information of Employer and customers of the Employer including, without
limitation, procedures, business strategies, and prospects and opportunities,
techniques, methods and information about, or received by it, from its customers
and that divulgence will irreparably harm the Employer ("Confidential
Information"). Employee also acknowledges that the foregoing provides Employer
with a competitive advantage (or that could be used to the disadvantage of the
Employer by a competitor). Employee also acknowledges the interest of the
Employer in maintaining the confidentiality of such information and Employee
shall not, nor any person acting on behalf of Employee, divulge, disclose or
make known in any way or use for the individual benefit of Employee or others
any of such Confidential Information. The foregoing is not applicable to such of
the Confidential Information that is established by Employee to be in the public
domain otherwise than as a result of its unauthorized disclosure by Employee or
any other person.

b) The customers of the Employer entrust the Employer with responsibility for
their business in the expectation that the Employer will hold all such matters,
including in some cases the fact that they are doing business with the Employer
and the specific transactions in which they are engaged, in the strictest
confidence ("Customer Confidences"). Employee covenants that after the
termination of his employment with the Employer, he will hold all Customer
Confidences in a fiduciary capacity and will not directly or indirectly disclose
or use such information.

c) Employee acknowledges that the Employer has a compelling business interest in
preventing unfair competition stemming from the use or disclosure of Customer
Confidences and Confidential Information in the event that, after any
termination on the post- employment activities of Employee, Employee goes to
work or becomes affiliated with a competitor of the Employer.


<PAGE>

d) Employee further acknowledges that all customers he services or dealt with
while employed with the Employer are customers of the Employer and not
Employee's personally. Employee also acknowledges that, by virtue of his
employment with the Employer, Employee has gained or will gain knowledge of the
identity, characteristics and preferences of the customers of the Employer, and
that Employee will not use such Customer Confidences and Confidential
Information at any time.

9. Covenants Not to Compete or Solicit.

a) The Employee undertakes that during the term of this Agreement and for 24
months thereafter, he will not, directly or indirectly (whether as sole
proprietor, partner, stockholder, director, officer, employee or in any other
capacity as principal or agent) compete with, or participate in any business
that competes with, the Employer; provided that the Employee may invest in (i)
the securities of any business or enterprise (but without otherwise
participating in the activities of such business or enterprise) which are listed
on a national or regional securities exchange or traded in the over-the-counter
market, and (ii) equity interests of the Employer, of any member thereof.

b) The Employee undertakes that during the term of this Agreement and for a
period of 24 months thereafter he will not, directly or indirectly (whether as a
sole proprietor, partner, stockholder, director, officer, employee or in any
other capacity as principal or agent), do any of the following:
(i) hire, or attempt to hire for employment, any person who is an employee of
the Employer on the date of such termination of employment, or attempt to
influence any such person to terminate his employment by the Employer; or (ii)
in any other manner interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the Employer and any of its
employees, or disparage the business or reputation of the Employer to any such
person.

c) The Employee undertakes that during the term of this Agreement and for 24
months thereafter he will not, directly or indirectly (whether as a sole
proprietor, partner, stockholder, director, officer, employee or in any other
capacity as principal or agent), do any of the following:
(i) solicit, service or accept any actual or prospective accounts, clients or
customers of the Employer during the period of the Employee's employment by the
Employer; (ii) influence or attempt to influence any of the accounts, customers
or clients referred to in Subsection 9(c)(i) to transfer their business or
patronage from the Employer to any other person or company engaged in a similar
business; (iii) directly assist any person or company soliciting, servicing or
accepting any of the accounts, customers or clients referred to in Subsection
9(c)(i); or (iv) in any other manner directly interfere with, disrupt or attempt
to disrupt the relationship, contractual or otherwise, between the Employer and
any of its accounts, customers or clients referred to in Subsection 9(d)(i), or
any other person, or disparage the business or reputation of the Employer to any
such person.


<PAGE>

(d) The Employer undertakes that during the term of this Agreement and for a
period of 60 months thereafter he will not, directly or indirectly, disparage
the business or reputation of the Employee to any accounts, customers or clients
referred to in Subsection 9(c)(i), or any other person.

10. Enforcement of Covenants.

The parties acknowledge and agree that the covenants contained in Sections 8 and
9 are essential elements of this Agreement and that, but for the agreements of
the Employee to comply with such covenants, the Employer would not have entered
into this Agreement. The parties further acknowledge and agree that a breach by
the Employee of the covenants contained in Sections 8 and 9 may result in
irreparable injury to the Employer for which there is no adequate remedy at law
and that the Employer shall be entitled to seek enforcement of the same by means
of a temporary restraining order and/or a preliminary or permanent injunction
issued by any court having jurisdiction thereof. In the event that the Employee
breaches any of the covenants contained in Sections 8 and 9, the Employer shall
be entitled to an accounting and repayment of all profits, Commissions and
benefits the Employee receives in connection with such breach.
The Employee agrees to indemnify and hold harmless the Employer against all of
its costs and expenses (including, without limitation, reasonable attorneys fees
and expenses) incurred in connection with the enforcement of the covenants
contained in Sections 8 and 9, except, with respect to the enforcement of any
such covenant by the Employer, to the extent that the Employer is the prevailing
party in any action or proceeding commenced by the Employer in connection
therewith. The covenants contained in Sections 8 and 9 shall survive the
termination of this Agreement. The remedies provided in this Section 10 shall be
in addition to, and not in lieu of, any other remedies and relief including
damages to which the Employer may be entitled.

11. Blue-Pencil. If any court of competent jurisdiction shall at any
time deem the term of any of the covenants and undertakings of the Employee
under Sections 8 and 9 herein too lengthy, the other provisions of those
Sections 8 and 9 shall nevertheless stand, the period of restriction shall be
deemed to be the longest period permissible by law under the circumstances. The
court in each case shall reduce the period of restriction to permissible
duration.


<PAGE>

12. Notices. Unless otherwise specifically provided herein, all
notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed, certified or registered mail, return receipt requested, with postage
prepaid at the following addresses, and/or to such other addresses and/or
persons which either party may designate by like notice:

                  (a) If to the Employee, to:
                           ----------------------
                           Thomas Sandgaard
                           10506 Kalahari Ct.
                           Littleton, CO 80124



                  (b) If to the Employer, to:
                           -----------------------
                           Attn:  Board of Directors
                           Zynex Medical, Inc.
                           8100 SouthPark Way, A9
                           Littleton, CO 80120

                           With a copy to:
                           ---------------
                           Ted Freedman, Esq.
                           Krys Boyle P.C.
                           600 Seventeenth Street
                           Suite 2700 South Tower
                           Denver, CO 80202
                           Fax No.: 303.893.2882

13. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Colorado without regard to
conflict of law provisions. Any disputes with respect to the interpretation of
this Agreement or the rights and obligations of the parties hereto shall be
exclusively brought in any federal or state court of competent jurisdiction
located in the State of Colorado. Each of the parties waives any right to object
to the jurisdiction or venue of such courts or to claim that such courts are an
inconvenient forum.

14. Additional Provisions.

(a) This Agreement shall inure to the benefit of, and be binding upon, the
Employer, its successors and assigns and shall inure to the benefit of, and be
binding upon, the Employee, his executors, administrators and heirs. The
Employee may not assign or delegate the performance of any of his rights and/or
obligations under this Agreement.

(b) This Agreement constitutes the entire Agreement, representation and
understanding of the parties hereto with respect to the subject matter hereof,
and no amendment or modification hereof shall be valid or binding unless made in
writing and signed by the parties hereto.

(c) No waiver of any provision of this Agreement shall be valid unless the same
is in writing and signed by the party against whom it is sought to be enforced.
No waiver of any default or breach of this Agreement shall be deemed a
continuing waiver or a waiver of any other breach or default.


<PAGE>

(d) Employee acknowledges that prior to the execution of this Agreement he had
full opportunity to consult with his independent attorneys and advisors as he
deemed appropriate and he fully understands the nature and scope of his rights
and obligations hereunder.

(e) If any provision of this Agreement is invalid or unenforceable in any
jurisdiction such provision shall, as to such jurisdiction, be ineffective to
the extent of such invalidity or unenforceability, but the foregoing shall not
render invalid or unenforceable in such jurisdiction the remainder of this
Agreement or the remainder of such provision or affect the validity or
unenforceability of any provision of this Agreement in any other jurisdiction.

IN WITNESS WHEREOF, the parties have executed this Agreement or caused this
Agreement to be executed on the date first above written.




                                     Zynex Medical, Inc., "Employer"



                                     /S/ THOMAS SANDGAARD
                                     --------------------

                                     Secretary Board of Directors
                                 By: Resolution of Board of Directors






                                     Thomas Sandgaard, "Employee"





                                     /s/ Thomas Sandgaard
                                     ------------------------------



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>13
<FILENAME>ex-23_1.txt
<TEXT>
                                                                  EXHIBIT 23.1


                                     CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

         We consent to the incorporation by reference in this Registration
Statement of ZYNEX MEDICAL HOLDINGS, INC. on Form SB-2, of our report dated May
21, 2004 (except as to the last paragraph of Note 5, which is as of June 4,
2004), included in Amendment No. 1 of Form 8-K/A, of ZYNEX MEDICAL HOLDINGS,
INC. filed June 15, 2004, on the financial statements of ZYNEX MEDICAL, INC. as
of December 31, 2003 and for each of the two years then ended.



                                                /s/ Gordon, Hughes & Banks, LLP

                                                GORDON, HUGHES & BANKS, LLP

Greenwood Village, Colorado
July 6, 2004


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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