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<SEC-DOCUMENT>0001263279-04-000332.txt : 20041112
<SEC-HEADER>0001263279-04-000332.hdr.sgml : 20041111
<ACCEPTANCE-DATETIME>20041112131756
ACCESSION NUMBER:		0001263279-04-000332
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20040930
FILED AS OF DATE:		20041112
DATE AS OF CHANGE:		20041112

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
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	033-26787-D
		FILM NUMBER:		041137737

	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
<SEQUENCE>1
<FILENAME>zynex.txt
<DESCRIPTION>ZYNEX MEDICAL HOLDINGS 9-30-04 10-QSB
<TEXT>
                  U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                FORM 10-QSB


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



                 For the quarterly period ended September 30, 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 November 10, 2004, 23,070,377 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 Sheet -
         September 30, 2004 .................................      3

         Condensed Consolidated Statements of Operations -
         Quarter Ended September 30, 2004 and 2003 and Nine
         Months Ended September 30, 2004 and 2003 ...........      4

         Condensed Consolidated Statements of Cash Flows -
         Nine Months Ended September 30, 2004 and 2003 ......      5

         Condensed Consolidated Statement of Stockholders'
         Equity - Nine Months Ended September 30, 2004             6

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

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

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

PART II: OTHER INFORMATION

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

Item 2.  Unregistered Sales of Equity Securities and Use of
         Proceeds ...........................................     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                                                 13

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














                                      2



                                    PART I
                             FINANCIAL INFORMATION

Item 1.  Financial Statements.

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

                                                             September 30,
                                                                  2004
                                                              -----------
                       ASSETS

Current assets:
  Cash and equivalents                                         $  283,232
  Receivables, less allowance for uncollectible
   accounts of $367,739                                           254,528
  Inventory                                                       332,394
  Other current assets                                             27,524
                                                              -----------
     Total current assets                                         897,678

Property and equipment, less accumulated depreciation             119,135
Other assets                                                       16,750
                                                              -----------
                                                              $ 1,033,563
                                                              ===========

        LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current maturities of long-term debt                        $   140,208
Accounts payable                                                136,026
  Accrued payroll and payroll taxes                               108,818
  Accrued income taxes                                              8,397
  Other accrued liabilities                                        63,890
                                                              -----------
     Total current liabilities                                    457,339

Long-term debt                                                     50,417
                                                              -----------
     Total liabilities                                            507,756

Stockholders' equity:
  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 23,070,377 shares            23,070
  Additional paid-in capital                                    1,335,233
  Accumulated deficit                                            (832,496)
                                                              -----------
     Total stockholders' equity                                   525,807
                                                            -----------
                                                              $ 1,033,563
                                                              ===========


                                      3





                         ZYNEX MEDICAL HOLDINGS, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)
<TABLE>
<CAPTION>

                                           Quarter Ended            Nine Months Ended
                                           September 30,               September 30,
                                      -----------------------   -----------------------
                                         2004         2003         2004         2003
                                      ----------   ----------   ----------   ----------
<S>                                   <C>          <C>          <C>          <C>
Net sales and rental income           $  366,784   $  320,686   $  966,430   $  897,784
Cost of sales and rentals                 61,194       64,118      161,820      154,144
                                      ----------   ----------   ----------   ----------
   Gross profit                          305,590      256,568      804,610      743,640

Selling, general and administrative      555,985      174,142    1,413,937      529,388
                                      ----------   ----------   ----------   ----------
   Income (loss) from operations        (250,395)      82,426     (609,327)     214,252

Interest and other                        33,823        4,358       56,387       32,089
                                      ----------   ----------   ----------   ----------
   Income (loss) before income taxes    (284,218)      78,068     (665,714)     182,163

Income tax (provision) benefit                 -      (29,564)      12,750      (69,848)
                                      ----------   ----------   ----------   ----------
Net income (loss)                     $ (284,218)  $   48,504   $ (652,964)  $  112,315
                                      ==========   ==========   ==========   ==========

Basic and diluted net income
 (loss) per common share              $    (0.01)  $     0.00   $    (0.03)  $     0.01
                                      ==========   ==========   ==========   ==========

Weighted average number of shares
 outstanding                          23,039,007   22,151,662   22,588,273   22,151,662
                                      ==========   ==========   ==========   ==========
</TABLE>






















                                      4


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

                                                      Nine Months Ended
                                                        September 30,
                                                  -------------------------
                                                      2004         2003
                                                   ---------    ---------
Cash flows from operating activities:
Net income (loss)                                  $(652,964)   $ 112,315
Adjustments to reconcile net income (loss) to
 net cash provided by (used in) operations:
  Depreciation                                        32,697       19,637
  Loss on disposal of equipment                       38,221         -
  Issuance of stock for loan financing                 2,730         -
  Issuance of warrants for consulting services        61,727         -
  Issuance of stock options for consulting
   services                                           11,707
  Changes in operating assets and liabilities:
     Accounts receivable                             (68,722)     (22,076)
     Inventory and rented inventory                 (188,118)      99,311
     Other current assets                            (25,162)        (274)
     Other assets                                     (6,985)        -
     Accounts payable                                (25,634)     (79,380)
     Accrued liabilities                              24,258       25,857
                                                   ---------    ---------
Net cash provided by (used in) operating
 activities                                         (796,245)     155,390

Cash flows from investing activities:
 Purchase of equipment                               (43,893)     (13,469)

Cash flows from financing activities:
 Payments on notes payable                          (122,739)     (67,326)
 Proceeds from sale of common stock                1,259,987         -
 Repayments of loans from stockholder                (13,878)     (69,945)
                                                   ---------    ---------
Net cash provided by (used in) financing
 activities                                        1,123,370     (137,271)
                                                   ---------    ---------
Increase in cash                                     283,232        4,650
Cash and equivalents at beginning of period             -            -
                                                   ---------    ---------
Cash and equivalents at end of period              $ 283,232    $   4,650
                                                   =========    =========

Supplemental cash flow information:
 Interest paid                                     $  22,184    $  36,108
 Income taxes paid                                    13,153         -
 Non-cash investing and financing activities -
  Equipment financed with note payable                56,332         -
  Equipment financed with capital lease                 -          29,000








                                      5



                         ZYNEX MEDICAL HOLDINGS, INC.
          CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      Nine Months Ended September 30, 2004
                                  (unaudited)
<TABLE>
<CAPTION>

                                                     Zynex Medical Holdings, Inc.
                         --------------------------------------------------------------------------
                                                  Common      Additional
                           Number of               Stock       Paid In     Accumulated
                            Shares     Amount    Subscribed    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 2004     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        915,715       915      -           1,126,874          -      1,127,789

 Broker warrants issued         -         -         -             132,198          -        132,198

 Common stock issued
  as additional interest       3,000         3      -               2,727          -          2,730

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

 Stock options issued
   to consultants               -         -         -              11,707          -         11,707

  Net loss                      -         -         -                -         (652,964)   (652,964)
                          ----------  --------   -------      -----------   -----------  ----------
Balance September 30,
2004                      23,070,377  $ 23,070      -         $ 1,335,233   $  (832,496) $  525,807
                          ==========  ========   =======      ===========   ===========  ==========


</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 acquisition 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.

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 September 30, 2004 and the results
of its operations for the quarter and nine months ended September 30, 2004 and
2003 and its cash flows for the nine months ended September 30, 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.

Certain reclassifications have been made to conform previously reported data
to the current presentation.  These reclassifications have no effect on net
income (loss) or financial position as previously reported.

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.

                                     7


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.  In March 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
acquisition; 100,000 of the warrants are exercisable at $3.00 per share and
10,000 are exercisable at $.55 per share.  As a result of these transactions,
the Company recorded consulting expense of $61,727 in March 2004.

On August 13, 2004, the Company issued 3,000 shares of common stock valued at
$2,730 to an individual who loaned the Company $60,000 from April 1, 2004
through June 11, 2004, the date of repayment.  The loan carried interest at 2%
per month plus 1,000 shares of common stock for each month, or part thereof,
that the loan was unpaid.

On September 27, 2004, the Company issued options valued at $11,707 to acquire
1,900,000 shares of common stock to a financial consulting firm in exchange
for consulting services provided in connection with the Company's reverse
acquisition, private placement and ongoing investor relations.  The fair value
of $11,707 is included in selling, general and administrative expense for
quarter ended September 30, 2004.  The options, which expire September 26,
2009, permit the purchase of common stock in quantities and at prices set
forth as follows:

                    Number of Shares         Price Per Share
                    ----------------         ---------------
                         100,000                 $0.40
                         400,000                 $1.75
                         200,000                 $2.00
                         200,000                 $2.25
                         200,000                 $2.50
                         200,000                 $2.75
                         200,000                 $3.00
                         200,000                 $3.50
                         200,000                 $4.00

                                     8

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
to employees 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 nine
months ended September 30, 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 and nine months ended September 30, 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 acquisition, adjusted for
subsequent activity.

5.   Cash and Equivalents

Cash and equivalents as of September 30, 2004 consists of $30,046 in
commercial bank deposits and $253,186 in a brokerage company working capital
cash management account.

6.   Notes Payable

Notes payable at September 30, 2004 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 October 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.                                $104,254    $    -

                                     9


Inventory financing obligations to financial
institutions, monthly principal and interest
payments total $2,709; annual interest rates
approximating 20%, collateralized by inventory       17,012         -

Motor vehicle contract payable in 60 monthly
installments of $1,351, annual interest at
15.1%, secured by automobile.                         9,045       43,242

Settlement agreement payable in 36 monthly
payments of $909 including interest at 8%.            9,897        7,175
                                                   --------      -------
Total                                              $140,208      $50,417
                                                   ========      =======

Subsequent to September 30, 2004, the Company entered into a debt modification
agreement whereby the note payable to bank due October 15, 2004 was extended
with identical terms through October 15, 2005.

7.   Common Stock

During the nine months ended September 30, 2004, the Company received $230,000
from the sale of 230,000 shares of common stock to certain shareholders in a
private placement.  The Company has used these proceeds for general working
capital requirements.

On June 4, 2004, the Company sold 685,715 shares of common stock to five
investors at $1.75 per share.  The proceeds realized from the sale were
$1,029,987, net of transaction costs.  In connection with the sales, the
Company granted Class A Warrants to purchase an additional 342,859 shares of
common stock at $1.75 per share, Class B Warrants to purchase an additional
685,715 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 45,715 shares of common stock at $.01 per share.  The fair value
of the Broker Warrants was $132,198 at June 4, 2004 using the Black-Scholes
option pricing model.

The Class B, Class C and Broker's Warrants expire on June 4, 2009.  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 Company's registration statement, filed
July 16, 2004 on Form SB-2/A, became effective July 20, 2004.

Upon exercise of the warrants, the Company is required to pay Warrant Exercise
Compensation equal to 10 percent of the cash proceeds payable to the Company.
The 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.

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 September
30, 2004.


                                    10


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

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

Results of Operations

Net Sales and Rental Income.  Net sales and rental income for the quarter
ended September 30, 2004 was $366,784 an increase of $46,098, or 14.4%
compared to $320,686 for the quarter ended September 30, 2003.  Net sales and
rental income for the nine months ended September 30, 2004 was $966,430, an
increase of $68,646, or 7.6%, compared to $897,784 for the nine months ended
September 30, 2003.  The increase in net sales and rental income for both the
quarter and nine-month period ended September 30, 2004 was due to higher
revenues generated from the Company's Neuromove[TM] product.

Gross Profit.  Gross profit for the quarter ended September 30, 2004 was
$305,590, or 83.3% of revenue, an increase of $49,022, or 19.1%, from the
gross profit of $256,568, or 80.0% of revenue, for the quarter ended September
30, 2003.  Gross profit for the nine months ended September 30, 2004 was
$804,610, or 83.3% of revenue, an increase of $60,970, or 8.2%, from the gross
profit of $743,640, or 82.8% of revenue, for the nine months ended September
30, 2003.  The increase in gross profit for the quarter and nine months ended
September 30, 2004, as compared with the same periods last year, is due to
higher net sales and rental income. Gross profit as a percent of revenue for
the quarter and nine months ended September 30, 2004 is considered comparable
to the like periods in 2003.  Gross profit as a percent of revenue can vary
depending on product mix.

Selling, General and Administrative.  Selling, general and administrative
expenses for the quarter ended September 30, 2004 were $555,985, an increase
of $381,843, or 219.3%, compared to $174,142 for the same period last year.
The increase is due to accounting and legal costs relating to the Company's
reverse acquisition, advertising and marketing of the Neuromove[TM] product,
substantially increased personnel costs to support higher anticipated sales
volumes and stock compensation expense relating to options granted in exchange
for consulting services.

Selling, general and administrative expenses for the nine months ended
September 30, 2004 were $1,413,937, an increase of $884,549, or 167.1%,
compared to $529,388 for the same period last year.  The increase is primarily
due to higher salaries and wages due to personnel additions discussed in the
preceding paragraph, professional fees incurred in connection with the
Company's reverse acquisition and initial financial audit, advertising and
stock compensation expense. The Company has added several new positions in
2004 to facilitate increased sales and support, including a Director of
Finance and a Manager of International Distribution.  The number of personnel
employed by the Company was 21 at September 30, 2004 versus 7 at September 30,
2003.

Interest and Other.  Interest and other expenses were $33,823 for the quarter
ended September 30, 2004, an increase of $29,465 compared to $4,358 for the
same period last year.  The increase is primarily due a loss of $25,500
recognized upon disposal of equipment that required upgrading. Interest and
other expenses were $56,387 for the nine months ended September 30, 2004, an
increase of $24,298 compared to $32,089 for the nine months ended September
30, 2003.  The increase is due to losses of $35,221 recognized for equipment
disposals offset by lower interest expense.

                                    11



Income Tax Provision (Benefit).  The income tax benefit recorded for the nine
month period ended September 30, 2004 represents the estimated annualized
effect of carrying back current period net operating losses to 2003.

Liquidity and Capital Resources

We require cash to fund our operating expenses and working capital
requirements.  We expect that our requirement for cash to fund these uses will
increase as our operations expand.

Cash used in operating activities was $796,245 for the nine months ended
September 30, 2004 compared with cash provided by operations of $155,390 for
the nine months ended September 30, 2003.  Cash used in operating activities
during the first nine months of 2004 resulted primarily from our net loss,
increases in accounts receivable due to higher revenues and purchases of
inventory to support forecasted sales and consignment to new sales
representatives.

Cash used in investing activities was $43,893 for the nine months ended
September 30, 2004 compared to $13,469 for the same period in 2003.  Cash used
in investing activities represents the purchase of equipment, primarily
computers and office furniture.

Cash provided from financing activities was $1,123,370 for the nine months
ended September 30, 2004 compared with cash used in financing activities of
$137,271 for the nine months ended September 30, 2003.  Sales of common stock
during the nine months ended September 30, 2004 provided net cash proceeds of
$1,259,987.

Cash and equivalents at September 30, 2004 was $283,232.  We believe, based on
the planned increase in revenues for the fourth quarter, that available cash
will be adequate to meet our requirements for the balance of 2004.  However,
in order to fully implement our business plan in 2005, we may need to raise
additional equity or debt financing.  We have initiated discussions with a
fund manager and a firm that may provide the capital necessary to execute our
business plan.  There can be no assurance that we will be able to raise such
additional financing or upon terms that are acceptable to us.  In the event
that we enter into any such financing, the terms thereto may be dilutive to or
contain other terms that may adversely impact our existing stockholders.

In order to conserve existing financial resources until such time as
additional financing is obtained, we will closely monitor both our costs and
revenue expectations in future periods and will take actions as market
conditions dictate.

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 the end of the period covered by this quarterly report, an evaluation
was performed under the supervision and with the participation of the
Company's management including the Company's Chief Executive and Principal

                                    12


Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures.  Based on that evaluation, the
Chief Executive and Principal Financial Officer concluded that the Company's
disclosure controls and procedures were effective as of September 30, 2004.

There have been no changes in internal control over financial reporting that
occurred during the quarter 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.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

     None

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.

         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

















                                    13





                                SIGNATURES

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

                                  ZYNEX MEDICAL HOLDINGS, INC.



Date: November 12, 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:  November 12, 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 September
30, 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:  November 12, 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>
-----END PRIVACY-ENHANCED MESSAGE-----
