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<SEC-DOCUMENT>0001263279-04-000204.txt : 20040707
<SEC-HEADER>0001263279-04-000204.hdr.sgml : 20040707
<ACCEPTANCE-DATETIME>20040707170521
ACCESSION NUMBER:		0001263279-04-000204
CONFORMED SUBMISSION TYPE:	10QSB/A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20040331
FILED AS OF DATE:		20040707

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:		10QSB/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	033-26787-D
		FILM NUMBER:		04904686

	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>10QSB/A
<SEQUENCE>1
<FILENAME>zynex.txt
<DESCRIPTION>ZYNEX MEDICAL FORM 10-QSB/A 3-31-04
<TEXT>
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                FORM 10-QSB/A
                               AMENDMENT NO. 1


           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934



                 For the quarterly period ended March 31, 2004


                       Commission File Number: 33-26787-D



                          Zynex Medical Holdings, Inc.
      -----------------------------------------------------------------
      (Exact name of small business issuer as specified in its charter)



          Nevada                     33-26787-D             87-0403828
- ---------------------------       ---------------     ----------------------
State or Other Jurisdiction       Commission File     IRS Employer Identifi-
      of Incorporation                 Number              cation Number



             8100 SouthPark Way, Suite A-9
             Littleton, Colorado                           80120
             ----------------------------------------------------
             Address of Principal Executive Offices      Zip Code



                                (303) 703-4906
                         ------------------------------
                         Registrant's Telephone Number,
                              Including Area Code




Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

                            Yes [X]           No [ ]

As of May 13, 2004, 22,331,662 shares of common stock were outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ]  No [X]




                       ZYNEX MEDICAL HOLDINGS, INC.
                               FORM 10-QSB
                                 INDEX

                                                              Page Number
PART I:  FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements:

         Condensed Consolidated Balance Sheets -
         March 31, 2004 .....................................      3

         Condensed Consolidated Statements of Operations -
         Quarter Ended March 31, 2004 and 2003 ..............      4

         Condensed Consolidated Statements of Cash Flows -
         Quarter Ended March 31, 2004 and 2003 ..............      5

         Condensed Consolidated Statement of Stockholders'
         Deficiency - Quarter Ended March 31, 2004 ..........      6

         Notes to Condensed Consolidated Financial
         Statements .........................................      7

Item 2.  Management's Discussion and Analysis of
         Operations .........................................     11

Item 3.  Controls and Procedures ............................     12

PART II: OTHER INFORMATION

Item 1.  Legal Proceedings ..................................     13

Item 2.  Changes in Securities ..............................     13

Item 3.  Defaults Upon Senior Securities ....................     13

Item 4.  Submission of Matters to a Vote of Security
         Holders ............................................     13

Item 5.  Other Information ..................................     13

Item 6.  Exhibits and Reports on Form 8-K ...................     13

SIGNATURES ..................................................     14













                                     2


                                    PART I
                             FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                          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
                                                                =========


                                     3





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
























                                     4



                          ZYNEX MEDICAL HOLDINGS, INC.
                CONDENSED CONSOLIDATED STATEMENT 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   $     -
                                                    ==========   ==========


                                     5


                       ZYNEX MEDICAL HOLDINGS, INC.
        CONDENSED CONSOLIDATED STATEMENT 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>












                                     6


                          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.  The
restated financial statements also reflect an income tax benefit of $6,375
which was not recognized in the original filing.  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 the
quarter ended March 31, 2004.  The amended Form 10-QSB 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.

                                     7



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 acquisition.  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.

     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

                                     8



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


                                     9


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,
$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.











                                     10



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

     The following information should be read in conjunction with the
Company's consolidated financial statements and related footnotes included in
this report.

     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 the Company 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 Company 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.  Management constantly evaluates 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.  This increase reflects expansion of our sales and claims departments
made available through funding that the company received since completing its
merger transaction.  These expansions mark the beginning of our program to
ramp up introduction of our NeuroMoveTM stroke rehabilitation product and
conventional product offerings.  Expansion of the claims department was done
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.
Present plans call for, subject to available financing as pointed out above, a
doubling in the number of sales employees and representatives by December 31,
2004.

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

                                     11


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 an 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 the Company's
reverse merger, increased accounting expenses relating to the Company's
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

     The Company has 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, the
Company will need to refinance existing notes payable due in 2004 and obtain
new debt or equity financing.  The Company is currently evaluating potential
sources of additional capital.


SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

     Certain information included in this quarterly report contains statements
that are forward-looking such as statements relating to plans for future
expansion and other business development activities, as well as other capital
spending and financing sources.  Such forward-looking information involves
important risks and uncertainties that could significantly affect anticipated
results in the future and, accordingly, such results may differ from those
expressed in any forward-looking statements made by or on behalf of the
Company.

ITEM 3.  CONTROLS AND PROCEDURES

     As of March 31, 2004, the Company's Chief Executive Officer and Principal
Financial Officer evaluated the effectiveness of the design and operations of
the Company's disclosure controls and procedures.  Based on that evaluation,
the Chief Executive Officer concluded that the Company required the additional
services of a full-time Director of Finance to formulate a system of
disclosure controls and procedures.  Accordingly, on May 10, 2004, Glenn
Turpen, Director of Finance, was engaged on a full-time basis.



                                     12



There have been no changes in internal control over financial reporting that
occurred during the fiscal quarter covered by this report that have materially
affected, or are reasonably likely to affect, the Company's internal control
over financial reporting.


                          PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

     None.

ITEM 2.  CHANGES IN SECURITIES.

     In February 2004, the Company sold 180,000 shares of its common stock to
three Accredited Investors in exchange for $180,000 in cash.

     In connection with this offering, the Company relied on the exemptions
provided by Section 4(2) of the Securities Act of 1933 and Rule 506 of
Regulation D promulgated under the Securities Act of 1933.  The Company
reasonably believes that the investors were "Accredited Investors" as such
term is defined in Rule 501 of Regulation D at the time the offering occurred.
The investors acquired the shares for investment purposes.  A restrictive
legend was placed on the certificates issued to the investors and stop
transfer orders were given to our transfer agent.  A Form D reporting the
offering was filed with the Securities and Exchange Commission.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

     None

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

     None.

ITEM 5.  OTHER INFORMATION.

     None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

     (a) Exhibits:

         31  Certification of Chief           Filed herewith electronically
             Executive Officer and Principal
             Financial Officer Pursuant
             to Section 302 of the
             Sarbanes-Oxley Act of 2002

         32  Certification of Chief           Filed herewith electronically
             Executive Officer and Principal
             Financial Officer Pursuant
             to Section 18 U.S.C. Section 1350


     (b) Reports on Form 8-K.  The Company filed reports on Form 8-K dated
January 27, 2004 reporting under Items 1, 5 and 7; February 11, 2004,
reporting under Items 1, 2 and 7; and February 10, 2004, reporting under Items
4 and 7.

                                     13


                                  SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment to be signed on its behalf by the
undersigned thereunto duly authorized.

                                  ZYNEX MEDICAL HOLDINGS, INC.



Date: July 7, 2004                By:/s/ Thomas Sandgaard
                                     Thomas Sandgaard, President,
                                     Chief Executive Officer and
                                     Treasurer (Principal Financial Officer)












































                                     14

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>ex31.txt
<DESCRIPTION>EXHIBIT 31
<TEXT>

EXHIBIT 31

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                         AND PRINCIPAL FINANCIAL OFFICER
           PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

     I, Thomas Sandgaard, certify that:

     1.  I have reviewed this quarterly report on Form 10-QSB of Zynex Medical
Holdings, Inc.;

     2.  Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;

     3.  Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the small
business issuer as of, and for, the periods presented in this report;

     4.  The small business issuer's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
small business issuer and have:

         (a)  Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;

         (b)  Evaluated the effectiveness of the small business issuer's
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation;
and

         (c)  Disclosed in this report any change in the small business
issuer's internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small business
issuer's fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the small
business issuer's internal control over financial reporting; and

     5.  The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer's board of directors (or persons
performing the equivalent functions):

         (a)  All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the small business issuer's ability to
record, process, summarize and report financial information; and

         (b)  Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business issuer's
internal control over financial reporting.

Date: July 7, 2004



/s/ Thomas Sandgaard
Thomas Sandgaard
Chief Executive Officer
and Principal Financial Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>3
<FILENAME>ex32.txt
<DESCRIPTION>EXHIBIT 32
<TEXT>
EXHIBIT 32


                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                         AND PRINCIPAL FINANCIAL OFFICER
                          ZYNEX MEDICAL HOLDINGS, INC.
                       PURSUANT TO 18 U.S.C. SECTION 1350


     I hereby certify that, to the best of my knowledge, the Annual Report on
Form 10-QSB of Zynex Medical Holdings, Inc. for the quarter ending March 31,
2004:

     (1) complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and

     (2) the information contained in the Report fairly presents, in all
material aspects, the financial condition and results of operations of Zynex
Medical Holdings, Inc.


Dated:  July 7, 2004




/s/ Thomas Sandgaard
Thomas Sandgaard
Chief Executive Officer and
Principal Financial Officer



A signed original of this written statement required by Section 906 of the
Sarbanes-Oxley Act of 2002 has been provided to Zynex Medical Holdings, Inc.
and will be retained by Zynex Medical Holdings, Inc. and furnished to the
Securities and Exchange Commission upon request.




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