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<SEC-DOCUMENT>0001079974-05-000131.txt : 20050415
<SEC-HEADER>0001079974-05-000131.hdr.sgml : 20050415
<ACCEPTANCE-DATETIME>20050415172219
ACCESSION NUMBER:		0001079974-05-000131
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20041231
FILED AS OF DATE:		20050415
DATE AS OF CHANGE:		20050415

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:			1231

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	033-26787-D
		FILM NUMBER:		05754646

	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>10KSB
<SEQUENCE>1
<FILENAME>zynex10ksb_3302005.txt
<DESCRIPTION>ANNUAL REPORT
<TEXT>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB
(Mark One)

[x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE


                      For the year ended December 31, 2004
                                         -----------------


[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934
                  For the transition period from _____ to _____


                        Commission file number 33-26787-D
                                               ----------

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


                 NEVADA                                    87-0403828
     -------------------------------                   -------------------
       (State or other jurisdiction                     I.R.S. employer
     of incorporation or organization                   Identification No.


     8100 Southpark Way, Suite A-9, Littleton, Colorado         80120
     --------------------------------------------------       ----------
        (Address of principal executive offices)              (Zip Code)


                    Issuer's telephone number: (303) 703-4906
                                               --------------

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.001 par value
                          -----------------------------
                                (Title of Class)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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[ ]

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         The issuer's revenues for its most recent year were $1,256,676.
                                                             -----------

     The aggregate market value of the 3,617,577 common shares held by
non-affiliates of the registrant was $1,103,361 computed by reference to the
average closing bid and ask price of such stock as listed on the non NASDAQ over
the counter market on February 11, 2005.

     This computation is based on the number of issued and outstanding shares
held by persons other that officers, Directors and shareholders of 5% or more of
the registrant's common shares.

     As of February 11, 2005, 23,070,377 shares of common stock are issued and
outstanding.

<PAGE>

Documents incorporated by reference:  See exhibits.

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


           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

     Certain statements in this annual report contain or may contain
forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements. These
factors include, but are not limited to, our ability to implement our strategic
initiatives, economic, political and market conditions and fluctuations,
government and industry regulation, interest rate risk, U.S. and global
competition, and other factors. Most of these factors are difficult to predict
accurately and are generally beyond our control. You should consider the areas
of risk described in connection with any forward-looking statements that may be
made herein. Readers are cautioned not to place undue reliance on these
forward-looking statements and readers should carefully review this annual
report in its entirety, including the risks described in "Risk Factors." Except
for our ongoing obligations to disclose material information under the Federal
securities laws, we undertake no obligation to release publicly any revisions to
any forward-looking statements, to report events or to report the occurrence of
unanticipated events. These forward-looking statements speak only as of the date
of this annual report, and you should not rely on these statements without also
considering the risks and uncertainties associated with these statements and our
business.

     When used in this annual report, the terms the "Company," "we," "us,"
"ours," and similar terms refers to Zynex Medical Holdings, Inc., a Nevada
corporation, and its wholly-owned subsidiary, Zynex Medical, Inc.

                                        2
<PAGE>


                                TABLE OF CONTENTS

                           FORM 10-KSB ANNUAL REPORT -
                  FISCAL YEAR 2004 ZYNEX MEDICAL HOLDINGS, INC.


                                                                            PAGE
                                                                            ----

PART I

Item 1.  Description of Business .........................................    4
Item 2.  Description of Property .........................................   11
Item 3.  Legal Proceedings ...............................................   11
Item 4.  Submission of Matters to a Vote of Security Holders .............   11

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters ........   11
Item 6.  Management's Discussion and Analysis or Plan of Operations ......   12
Item 7.  Financial Statements ............................................   F-1
Item 8.  Changes in and Disagreements with Accountants on Accounting
           And Financial Disclosure ......................................   20
Item 8A. Controls and Procedures .........................................   20
Item 8B. Other Information ...............................................   20

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act .............   21
Item 10. Executive Compensation ..........................................   22
Item 11. Security Ownership of Certain Beneficial Owners and
           Management And Related Stockholder Matters ....................   23
Item 12. Certain Relationships and Related Transactions ..................   24
Item 13. Exhibits ........................................................   24
Item 14. Principal Accountant Fees and Services ..........................   25


                                        3
<PAGE>


ITEM 1.  DESCRIPTION OF BUSINESS

History

     Zynex Medical Holdings, Inc., formerly Fox River Holdings, Inc., formerly
Arizona Ventures, Inc., formerly China Global Development, Inc., formerly
iBonzai.com, Inc., (the "Company" or "Zynex"), was initially organized on
December 26, 1991 as a Delaware corporation under the name of Life Medical
Technologies, Inc. The Company engaged in the business of bringing new medical
product technology to the health care market place. In 1995, the Company cut
back its operations and eliminated most staffing. From 1996 to 1999, the Company
maintained a skeleton crew to ship existing orders. By mid 1997, all employees
were laid off. By 1999, all remaining assets were distributed to its wholly
owned subsidiary (see below) and sold off to two of its former employees.
Subsequently, all subsidiaries were either sold off or allowed to lapse into
nonexistence. At December 31, 1999, only the parent corporation, Life Medical
Technologies, Inc. remained.

     In May 2000, the Company acquired all the of equity of Virtual Market
Solutions.com, Inc. (VMS), a privately-held Nevada corporation doing business as
iBonZai.com ("iBonzai"). As a result of the acquisition, iBonZai became a
wholly-owned subsidiary of the Company. Due to the change in the Internet
industry following the U.S. stock market downturn in the spring of 2000, VMS
experienced substantial obstacles in developing its business as a provider of
broadband backbone, billing services and technical support to Internet service
providers. As the Internet industry and economic conditions continued to
deteriorate during the first half of 2001, management suspended operations and
laid off all its employees. Following the events of September 11, 2001, the
Company rescinded the acquisition of VMS in an effort to complete a
restructuring of the Company's capital and shed itself of debt. As part of the
rescission, VMS retained all assets of the Company and the associated debt. As
such, the issuance of 9,250,000 shares of the Company's common stock was
rescinded, and the Company's additional paid-in capital and accumulated deficit
were adjusted for this event.

     On January 10, 2002, the Company was merged into Ibonzai.com, Inc. a Nevada
corporation, for the purposes of changing corporate domicile. On January 15,
2002, the Company changed its name to China Global Development, Inc., effected a
1 for 25 reverse stock split and authorized a change in capitalization to
100,000,000 shares of common stock having a par value of $.001 per share and
10,000,000 shares of preferred stock having a par value of $.001 per share.

     On February 7, 2002, the Company acquired all of the issued and outstanding
shares of Rainbow Light Global Corporation, a British Virgin Islands Corporation
("Rainbow") and changed its fiscal year end from December 31st to September
30th. Due to renewed deteriorations in the U.S. financial equity markets, the
Company was unable to raise any capital to fund its new acquisition.
Consequently, effective September 27, 2002 the Company rescinded the acquisition
of Rainbow and canceled all shares issued for that acquisition.

     On November 14, 2002, a majority of the shareholders consented to change
the Company's name to Arizona Ventures, Inc. and effected a 1 to 10 reverse
split of the common stock of the company. There was no change to the
capitalization of the Company.

     Effective April 23, 2003, the Company executed an agreement to acquire all
the equity of Fox River Graphics, Inc., ("FRG") a privately-held Illinois
corporation. Additionally, in anticipation of the acquisition, the Company was
able to convert approximately $575,000 in debt for the issuance of approximately
4.6 million shares of common stock. On August 7, 2003, the name of the Company
was changed to Fox River Holdings, Inc. and obtained the new trading symbol of
FXRH on the OTC Bulletin Board. For the period ending June 30, 2003, the Company
reported that no acquisitions or mergers had been completed and later abandoned
all efforts to close on the FRG acquisition.

                                        4
<PAGE>

     Due to the abandonment of the FRG acquisition, or any other acquisition or
merger, management agreed with the former creditors to rescind their debt
conversion. This resulted in the cancellation of approximately 3.2 million
shares of common stock and a renewal of debt approximating $358,000 debt on the
Company's books.

     On December 2, 2003, management obtained shareholder approval to effect a
reverse split of 1 to 40, effective immediately, of its common stock and to
change the name of the corporation to Zynex Medical Holdings, Inc.

     On February 11, 2004, Zynex Medical Holdings, Inc. acquired 100% of the
common stock of Zynex Medical, Inc., a privately-held Colorado corporation
("Zynex Medical"), pursuant to an acquisition agreement by issuing 19,500,000
shares of common stock to the sole shareholder of Zynex Medical, Thomas
Sandgaard. Immediately after the transaction, the former shareholder of Zynex
Medical owned approximately 88.5 percent of the Company's common stock. For
accounting purposes, Zynex Medical is treated as the acquiring corporation, and
financial statements for years prior to 2004 are those of Zynex Medical.

     Zynex is the parent company of Zynex Medical. Zynex Medical designs,
manufactures and markets a line of FDA approved medical devices for the
electrotherapy and stroke rehabilitation markets. The Company's headquarters are
located in Littleton, Colorado.

     Zynex Medical 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, SRSI acquired, through a merger, the assets and the liabilities
of Dan Med, Inc. ("DMI") and subsequently changed its name to "Zynex Medical,
Inc."

     DMI was incorporated on October 31, 1996 in Colorado by Mr. Sandgaard.
Initially, DMI's primary activities were importing European-made electrotherapy
devices until 1999 when DMI also began developing and assembling its own line of
electrotherapy products. Its own products constituted over 80% of DMI sales at
the time of its acquisition by Zynex Medical.

     Zynex Medical (formerly SRSI) was established with its main activity being
to provide electrotherapy devices for homecare to US patients suffering the
effects of a stroke. In early 2002, SRSI introduced the entire DMI product line
of standard electrotherapy products by adding a small sales force. In 2002,
electrotherapy products generated over 75% of SRSI's revenues.

     Zynex Medical has developed a strong product line to compete in the
electrotherapy market as well as our unique product, the NeuroMove(TM), for the
stroke rehabilitation market segment. We believe the Neuromove(TM) is unique
because of the ability of its built-in microprocessor to recognize low-level
attempts by muscles to contract and then "reward" such detection with electrical
stimulation. Although, there are other stroke rehabilitation techniques and
products, we do believe there is not any similar product in the stroke
rehabilitation market. All our products have been cleared by the Food and Drug
Administration for sale in the United States. In the United States, our products
require a physician's prescription or authorization before they can be
dispensed.

     The Company's business model is developed around the physician's
prescription being considered an "order" -- to provide the product to the
patient. Then, the patient's private insurance or Medicare is billed for
payment. Our electrotherapy products, the IF8000, TruWave and E-Wave, are
promoted to physicians through our direct sales force. Our NeuroMove(TM) stroke
rehabilitation product is marketed directly to the end-users and physicians who
specialize in rehabilitation. Our growth in terms of revenue requires additional
sales representatives, which is part of our business plan for 2005. In regard to
international sales, we intend to continue using independent distributors who
buy and resell our products.

OUR PRODUCTS

We currently have four products. We also have the resale products indicated
below.

                                        5
<PAGE>

         Product Name                   Description
         ------------                   ----------------
         Our Products
         IF8000                         Combination Interferential and Muscle
                                        Stimulation Device

         E-Wave                         Dual Channel NeuroMuscular Electrical
                                        Stimulation Device

         TruWave                        Dual Channel TENS Device

         NM900                          NeuroMove. EMG triggered Electrical
                                        Stimulation Device

         Resold Products
         ---------------
         Elpha3000                      Dual Channel NeuroMuscular Electrical
                                        Stimulation

         Device
         ------
         Conti4000                      Electrical Stimulation Device for
                                        Incontinence Treatment

         Arista2000                     Dual Channel TENS Device

         Elpha1000                      Dual Channel TENS Device

         DCHT                           Cervical Traction Device

         LHT                            Lumbar Traction Device

         Electrodes                     Supplies, re-usable for delivery of
                                        electrical current to the body

DESCRIPTION OF THERAPY DEVICES AND TECHNIQUES

     Electrotherapy is gaining acceptance in the United States as its
established use continues to grow worldwide. Electrotherapy is a form of
electrical stimulation. 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 assist in the treatments 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 the possibility of returning
to work significantly earlier than with traditional therapies.

PATIENT NEEDS AND CLINICAL OUTCOMES

     Pain.

     Electrical stimulation has been shown to reduce most types of local pain,
such as tennis elbow, neck or lower back pain, arthritis, and others. The
devices used to accomplish this are commonly described as TENS devices
(Transcutaneous 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. Zynex Medical has developed two products in the TENS category, the
TruWave, a digital TENS device, and the IF8000, an interferential stimulator
which offers a deeper stimulation. The TruWave is a "traditional" TENS type unit
that delivers pain alleviating electrotherapy, whereas the IF8000 is a more
sophisticated unit with deeper pain alleviating and neuromuscular training
settings. Both of these products have been cleared 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 in our E-Wave and IF8000 products assures that the muscles do

                                        6
<PAGE>

not fatigue too easily. Many pain relief and therapeutic treatments 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 preventing 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.

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 following orthopedic surgery. We believe the IF8000 is the most
effective of our products for these applications.

Stroke rehabilitation.

     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. According to information from a national
association, 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 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 NeuroMove(TM), offer a new treatment option,
specifically for stroke patients, that has the ability to 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 estimated at $400 million and is experiencing a moderate growth rate,
and we believe the market for stroke rehabilitation technology has only started
to develop. There are over 4 million stroke survivors in the United States alone
with a need for stroke recovery therapy equipment.

     Zynex is focused on developing the stroke rehabilitation market segment
with our NeuroMove's(TM) technology. This market segment is believed to offer us
the greatest potential for profitable growth. We also plan to increase our
penetration of the market for standard electrotherapy products by expanding our
sales organization. Increased sales of our products will result in potentially
high profit margins, in part because the higher volume allows for more efficient
use of our outsourced manufacturing and because the products use a common
technology platform but with different software configurations.

                                        7
<PAGE>

Key characteristics of our target markets are:

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

     - Significant payment "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
predominantly in the United States market with international expansion
continuing as qualified distributors are appointed.

     Marketing of our products has been accomplished through the use of our
commissioned sales representatives 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 of the product. This method of sales is
expected to continue for our products. We also market the NeuroMove(TM) through
promotions to end users such as advertisements in trade magazines and on the
Internet.

ASSEMBLY AND PROCESSING

     Our product assembly 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 in assembly equipment 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
assemble, which can result in a competitive bidding process.

     - Test all units 100% in a real-life, in-house environment to help ensure
the highest possible quality and the safety of patients as well as reduce the
cost of warranty repairs.

     Vendors located in the United States and Europe currently manufacture our
products. We do not have contracts with these vendors for our electrotherapy
products, rather we use purchase orders for our ongoing needs for the products.
We currently have a contract with a vendor which manufactures our NeuroMove(TM)
product. This contract provides for fixed quantities per month and may be
terminated upon notice by either party. We believe that there are numerous
suppliers that can manufacture our products and pricing, quality and service
will continue to determine which manufacturers we use for our products.

     Our employees develop the software for our products.

SALES

     Our products may be rented on a monthly basis or purchased. A health
insurance company or Medicare typically determines whether there is a rental or
purchase by a patient, depending on the anticipated time period for the use of
the product. If a rental of one of our products continues until an amount equal
to the purchase price is paid, we will then transfer ownership of the product to
the patient and cease rental charges for the product. When a rental unit is
returned, it is refurbished and is available for additional rentals.

                                        8
<PAGE>

     More than a majority of our revenue is derived from payments made by
private health insurance companies on behalf of their insureds. We also receive
revenues through Medicare payments, workers' compensation, attorneys patients,
wholesale and international customers. Typically those transactions for our
products are at least initially leases of our products with rental charges.

     Replacement parts such as electrodes are sent to patients every month.
These parts accounted for a material percentage of our revenues in 2004.

     We have employees dedicated to working with patients, wholesale and
international customers, doctors, private insurance companies and
Medicaid/Medicare to coordinate the rental payments or purchase payments of all
of our products.

PRODUCTS PURCHASED FOR RESALE

     In addition to our own products, 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.

INTELLECTUAL PROPERTY

     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.

     We have received registered trademarks for NeuroMove in the United States
and the European Union.

     We utilize proprietary information agreements with some of our employees
and trade secrets to protect our proprietary information as well as
confidentiality agreements with third parties.

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. Section 510(k) of the Federal Food, Drug
and Cosmetics Act, is available in certain instances for Class II (Medium Risk)
products. It requires that before introducing most Class II devices into
interstate commerce, the company introducing the product must first submit
information to the FDA demonstrating that the device is substantially equivalent
in terms of safety and effectiveness to a device legally marketed prior to March
1976. When the FDA determines that the device is substantially equivalent, the
agency issues a "clearance" letter that authorizes marketing of the product. We
are also regulated by the FDA's QSR division (Quality Systems Regulation), which
is similar to the ISO9000 and the European EN46000 quality control regulations.
All our products currently produced for us or resold by us are cleared 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, Underwriters Laboratories or British Standards Institute. In the
future, we may plan to go through this process as a part of our overall
enhancement of our quality systems.

                                        9
<PAGE>

     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.

HEALTHCARE 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 concerning our products; 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, we 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

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

EMPLOYEES

     As of December 31, 2004, we employed 19 full time employees, none of whom
are members of organized labor, of which 2 are executives, 7 are in
administration, design, and assembly and 10 are in sales and marketing. We also
employ a number of commissioned sales representatives who are independent
contractors. We believe our relations with all of our employees are good. We are
subject to the minimum wage and hour laws and provide routine employee benefits
such as life and health insurance.

EXECUTIVE OFFICER OF THE REGISTRANT

     The following table sets forth information as to the name, age and office
held by the sole executive officer of the Company as of December 31, 2004:

                                       10
<PAGE>

           Name               Age                      Position
     -----------------        ---     -----------------------------------------
      Thomas Sandgaard        46      President, Chief Executive Officer
                                      and Director Set forth below is a
                                      biographical description of our executive
                                      officer based on information supplied by
                                      him.

     Thomas Sandgaard is President, Chief Executive Officer and sole Director of
Zynex Medical Holdings, Inc. 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 and industries such as
semiconductors, telecommunications, data communications and medical equipment.
Mr. Sandgaard moved to the United States from Denmark in 1996, where he founded
DMI and Zynex Medical, Inc., in 1996 and 1998, respectively.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Company leases its headquarters, office, plant and warehouse in
Littleton, Colorado. The facility is under a five-year lease expiring in
February 2009. Current rent is $44,357 per year plus common area maintenance
expenses and increases to $91,177 commencing March 1, 2005 and increases by
$2,464 per year thereafter. The present configuration of the space will
accommodate 40-50 employees. The Company believes that the leased property is
sufficient to support customer requirements during 2005.

ITEM 3.  LEGAL PROCEEDINGS

     We are not a party to any pending or threatened legal proceedings.

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

     None.

                                     PART II

ITEM 5.  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 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, 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
         Third Quarter                                     $ 2.44      $ 0.29
         Fourth Quarter                                    $ 0.73      $ 0.25

                                       11
<PAGE>


(2) Reflects 40:1 reverse split on December 16, 2003

     As of February 8, 2005, there were 23,070,377 shares of common stock
outstanding and there were approximately 222 registered holders of our common
stock.

     The Company has never paid any cash dividends on our capital stock and does
not anticipate paying any cash dividends on the common shares in the foreseeable
future. The Company intends 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 of Directors (the "Board")
and will be dependent upon our financial condition, results of operations,
capital requirements and such other factors as the Board deems relevant.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The Company's primary focus during the first half of 2004 was effecting the
reverse acquisition, completed February 11, 2004, transitioning from being a
privately held company to a publicly held company, and raising new capital
through a private placement completed in June 2004. Beginning in July 2004, the
Company began concentrating on the expansion and development of the domestic
standard product sales organization. The Company's 2004 16% sales gain primarily
resulted from an increase in sales representatives whose compensation was a
combination of base salary and commission. The Company will endeavor to further
increase sales in 2005 and concurrently reduce fixed expenses by compensating
its sales representatives by commission only.

RESULTS OF OPERATIONS

     Net sales and rental income realized in 2004 were $1,256,676, an increase
of $172,764 or 15.9% over 2003. The increase was primarily due to growth in the
number of products sold or rented, primarily NeuroMove(TM) and our IF8000
products.

     Net sales and rental income by quarter were as follows:

                                                    2004          2003
                                                -----------   -----------
     First quarter                              $   262,941   $  292,335
     Second quarter                                 336,705      284,763
     Third quarter                                  366,784      320,686
     Fourth quarter                                 290,246      186,128
                                                -----------   -----------
       Total sales and net rental income        $ 1,256,676   $1,083,912
                                                ===========   ===========

     Although net sales and rental income for the first six months of 2004 were
relatively flat, increasing only 3.9% year over year, the expanded sales force
contributed to fourth quarter and second half year over year increases of 55.9%
and 29.6%, respectively. We expect rentals initiated in the second half of 2004
to increase our revenue stream during at least part of 2005.

     Gross profit increased $121,201 over 2003, an increase of 13.5%. The
increase was due to higher net sales and rental income. Gross profit as a
percent of net sales and rental income was 81.1% in 2004 compared to 82.8% in
2003. The decline in gross profit as a percent of net sales and rental income
was due to adjustments that resulted from the company's year end physical
inventory.

     Selling, general and administrative expenses increased from $762,819 in
2003 to $1,907,830 in 2004. Approximately 52%, or $597,978, resulted from
increases in salaries, inside sales incentives, payroll taxes and medical
insurance. These increases resulted from 2004 personnel additions, primarily in
the sales and sales support area. Other significant increases in selling,
general and administrative expenses were as follows:

                                       12
<PAGE>


     Advertising and marketing               $ 120,171
     Warrant and option expense              $  73,434
     Audit and reviews                       $  49,800
     Rent                                    $  58,548

     During 2004, the Company increased its advertising of the NeuroMove(TM),
both in print publications and on the Internet. Warrant and option expense
relates to warrants and options granted for services received in connection with
the Company's reverse acquisition, private placement and consulting services.
The increase in the cost of audit and reviews is due to public company audit and
review requirements. Zynex Medical was not audited prior to becoming part of a
public company in February 2004. Rent expense increased with the leasing of a
larger facility in March 2004 to accommodate a larger workforce and increased
volume.

     Depreciation increased $17,796, from $26,985 in 2003 to $44,781 in 2004.
The increase results from higher levels of rental inventory, depreciation of
copiers acquired under a capital lease, computer equipment and office furniture
added for new hires, and company vehicles.

     The loss on disposal of equipment results from the disposal of two company
owned vehicles at a loss of $9,464 and the disposal of office equipment that
required upgrading resulting in a loss of $25,783.

     The income tax benefit reported for year ended December 31, 2004 represents
refundable income taxes paid in prior years after carrying back net operating
losses incurred in 2004 and adjustment of prior year estimates to actual. The
company's federal tax loss carry forward as of December 31, 2004 is $1,145,653.

LIQUIDITY AND CAPITAL RESOURCES

     Cash used in operating activities was $1,060,987 for the year ended
December 31, 2004 compared with cash provided by operations of $189,084 for the
year ended December 31, 2003. Net cash used in operating activities resulted
primarily from the Company's net loss and increases in inventory and rental
equipment. The increase in rented equipment was largely caused by the increase
in the number of NeuroMove units leased to patients. The increase in inventory
was required to provide consigned inventory to an increasing number of field
sales representatives.

     Cash used in investing activities was $44,249 for the year ended December
31, 2004 compared to $10,004 for the year ended December 31, 2003. Cash used in
investing activities results from the purchase of equipment, principally
computer equipment and office furniture for new employees.

     Cash provided from financing activities was $1,108,314 for the year ended
December 31, 2004 compared with cash used in financing activities of $179,080
for the year ended December 31, 2003. Sales of common stock during the year
ended December 31, 2004 provided net cash proceeds of $1,259,987.

     The Company's principal funding need is for working capital to fund
continuing operations and expansion of the business, including expanding the
Company's sales force. The electrotherapy industry is capital intensive due to
high levels of consigned inventory required, higher than average accounts
receivables outstanding as a result of dealing with health insurers, and the
delayed cost recovery inherent in rental transactions. In order to fully
implement our business plan in 2005, we may need to raise additional debt or
equity financing. In the event we enter into any financing, the terms thereto
may be dilutive to or contain other terms that may adversely impact our existing
shareholders.

<TABLE>
                             Payments Due by Period
<CAPTION>

                                                        Less than                                      After
Significant Contractual Obligations      Total           1 Year           1-3 Years      4-5 Years    5 Years
- -----------------------------------    ------------      ------------     -----------    -----------  ----------
<S>                                    <C>               <C>               <C>            <C>         <C>
Notes payable                            $176,574        $131,235          $ 42,684       $  2,655    $   --
Capital lease obligations                  91,200          22,014            56,607         12,579        --
Operating leases                          414,032          94,606           302,998         16,428        --
                                         --------        --------          --------       --------    --------
Total contractual cash obligations       $681,806        $247,855          $402,289       $ 31,662    $   --
                                         ========        ========          ========       ========    ========
</TABLE>

                                       13
<PAGE>


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. Product and rental revenues are recognized net of a reserve for
collectibility.

     Provision for Sales Returns, Allowances and Collectibility. The Company
maintains a reserve for sales allowances, returns and collectibility. 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.


RISKS RELATED TO OUR BUSINESS

WE MAY BE UNABLE TO OBTAIN 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:

     -    shortfalls in anticipated revenues or increases in expenses;

     -    the development of new products; or

     -    the expansion of our operations, including the recruitment of
          additional sales personnel.

                                       14
<PAGE>

     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 may be expected in the future in the area of stroke
rehabilitation that may directly compete with our NeuroMove(TM) product.
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 to detect muscular movement and generate
stimulation to such muscles. 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 REIMBURSEMENT FROM INSURANCE COMPANIES; CHANGES IN INSURANCE
REIMBURSEMENT POLICIES COULD RESULT IN DECREASED OR DELAYED REVENUES

     A large percentage of our revenues come from insurance company
reimbursement. 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.

     Third-party manufacturers assemble and manufacture to our specifications
most of our products. 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 affect
on our revenues. 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, doctors, health insurance providers and
distributors 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.

                                       15
<PAGE>

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 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, we may
experience increased costs or an adverse operational impact due to delays in
distribution and delivery of our products to our customers, which could cause us
to lose customers or lose revenue 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.

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;

                                       16
<PAGE>

     - 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 needed to fund operations.

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 $1,000,000 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.

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, particularly our NeuroMove trademark which is
registered in the United States and the European Union, our trade secrets and
other intellectual property as an integral component of our success. We rely on
trademark law, patents, trade secret protection and confidentiality 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

                                       17
<PAGE>

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 and staff, both in
the US and abroad, which may limit our ability to successfully develop and
implement our sales and marketing strategy. To increase sales of our products we
may utilize some of the following strategies in the future:

     - hire and train sales and clinical specialists;

     - build a strong direct sales force;

     - manage geographically dispersed operations;

     - encourage customers to rent or purchase products;

     - explore potential reseller and original equipment manufacturer (OEM)
relationships and assure that reseller and 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 new 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. Company
personnel currently believe that certain planned enhancements to our current
products will not 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
manufacturing, 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

                                       18
<PAGE>

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 owns
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;

     - 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.

                                       19
<PAGE>

     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.

ITEM 7. FINANCIAL STATEMENTS.

     The consolidated financial statements, the notes thereto, and the report
thereon of Gordon, Hughes & Banks, LLP dated February 8, 2005 are filed as part
of this report starting on page F-1 below.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

     None.

ITEM 8A. CONTROLS AND PROCEDURES.

     The Company's Chief Executive Officer, Thomas Sandgaard, with the
participation of the Company's management, carried out an evaluation of the
effectiveness of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-15(e). Based upon that evaluation and as of the end of the
period covered by this report, the Company's disclosure controls and procedures
are effective to ensure that information required to be disclosed by the Company
in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in SEC
rules and forms.

     There was no change in the Company's internal control over financial
reporting that occurred during the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

ITEM 8B. OTHER INFORMATION.

     The employment agreement of Thomas Sandgaard our Chief Executive Officer
was amended on January 1, 2005. See Item 10 below.

                                       20
<PAGE>


     The Company's Board adopted a Stock Option Plan for its officers,
directors, independent contractors, consultants, employees and prospective
employees on January 3, 2005. The following is a summary of the material terms
of the Plan which is qualified in its entirety by a copy of the Plan, attached
hereto as Exhibit 10.4. The common stock of the Company authorized to be granted
under the Plan consists of 3,000,000 shares. Officers, directors, independent
contractors, consultants, employees and prospective employees are eligible for
option grants. Options are not transferable unless specified by the Plan
administrator. Either incentive stock options or nonqualified stock options may
be granted under the Plan. Incentive stock options require shareholder approval
within 12 months of the board approval. To the extent stockholder approval is
not obtained any grants of incentive stock options will be forfeited. Unless the
Plan administrator provides otherwise, each option granted under the Plan
expires within ten years from the date of grant. The purchase price under each
option granted pursuant to the Plan is the fair market value of the common stock
on the date of grant unless such option is granted in substitution of options
granted by a new employee's previous employer or the optionee pays or foregoes
compensation in the amount of any discount. Options may be suspended or
terminated if the Plan administrator or any person designated by the Plan
administrator reasonably believes that the optionee has committed an act of
misconduct against the Company. The President and Chief Executive Officer of the
Company administers the Plan and determines and designates from time to time (a)
those employees to whom options are granted, (b) the size, form, terms
(including vesting) and conditions of awards under the Plan, and (c) rules with
respect to the administration of the Plan.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT

     The following table provides information concerning each of the Company's
directors and executive officers.

                                          Director
     Name                         Age      Since           Position or Office
     ---------------------        ---     ---------      -----------------------

     Executive Officer
     -----------------
     Thomas Sandgaard             46                     Chief Executive Officer

     Director
     --------
     Thomas Sandgaard             46        2004         Chairman

     During the five years preceding the date of this report, the director and
executive officer named above has not been convicted in any criminal proceeding
nor is he subject to any pending criminal proceeding. Mr. Sandgaard became an
employee in 1996 when he founded DMI. In 1998, he formed SRSI and in 2003 merged
DMI with SRSI and changed the surviving company's name to Zynex Medical, Inc.
Mr. Sandgaard has worked in several industries including semiconductors,
telecommunications, data communications and medical equipment. Mr. Sandgaard has
a degree in electronics engineering from the Odense Teknikum (in Denmark) and an
MBA from the Copenhagen Business School.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission ("SEC") certain reports on prescribed forms regarding
ownership of and transactions in the Company's securities. Such officers,
directors and ten percent stockholders are also required by SEC rules to furnish
the Company with copies of all Section 16(a) forms that they file.

     Based solely on its review of the copies of such forms received by it and
written representations from reporting persons, the Company has determined that
all Section 16 reporting requirements applicable to its directors and other
executive officers were complied with for fiscal year 2004. The Commission has
established specific due dates for these reports and requires the Company to
report in this Proxy Statement any failure by these persons to file or failure
to file on a timely basis. To the knowledge of the Company, based solely on a
review of the copies of such reports received or written representations from

                                       21
<PAGE>

the reporting persons, the Company believes that during the 2004 fiscal year the
directors, executive officers and persons who own more than 10% of the Company's
common stock complied with all Section 16(a) filing requirements, except that
Mr. Sandgaard did not file a Form 3 reporting his beneficial ownership as a
result of the reverse acquisition in 2004 and he did not file a Form 4 reporting
acquisitions of Zynex common stock in December 2004 by a relative and for his
own account.

Code of Ethics

     The Company has not adopted a written code of ethics for its senior
executive and financial officers. The Board endeavors to hold these officers to
high ethical standards in their conduct of our business and may decide to
implement a code of ethics when the Company has additional resources.

ITEM 10.   EXECUTIVE COMPENSATION

Summary Compensation Table

     The following table shows, as to the Chief Executive Officer, the only
highly compensated executive officer whose salary plus bonus exceeded $100,000,
information concerning compensation paid for services to the Company in all
capacities during the year ended December31, 2004, as well as the total
compensation paid in each of the Company's previous two fiscal years.

<TABLE>
<CAPTION>
                                                                 Long term Compensation
                                                            ---------------------------------
                                 Annual Compensation                 Awards          Payouts
                           ------------------------------------------------------------------
                                                                          Securities
                                             Other Annual    Restricted   Underlying  LTIP    All Other
Name and             Year   Salary   Bonus   Compensation   Stock Awards   Options   Payouts Compensation
Principal Position           ($)      ($)       ($)(1)           ($)         (#)       ($)       ($)
- ------------------    ----  -------  -----   ------------   ------------   --------   ------- ----------
<S>                   <C>   <C>      <C>     <C>            <C>            <C>        <C>     <C>
Thomas Sandgaard      2004  173,000    0         37,159               0           0     0          0
   Chief Executive    2003   51,525    0          8,707               0           0     0          0
   Officer            2002   99,000    0         11,059               0           0     0          0
</TABLE>

________________________

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


                          OPTIONS GRANTS IN FISCAL 2004

     The Company did not grant stock options or stock appreciation rights to
Thomas Sandgaard during 2004, nor does it have any such rights outstanding from
prior years.

                              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 former sole
shareholder. The agreement expires January 31, 2007 and, if written notice is
not given, the agreement will automatically be extended for an additional
two-year period. The initial annual base salary under the agreement was $174,000
and may be increased annually at the board of director's discretion. The
agreement also provides for a 50% annual bonus if annual net revenue exceeds
$2.25 million, medical and life insurance, and a vehicle. The agreement contains
a non-compete provision for the term of the agreement and 24 months following
termination of the agreement.

On January 1, 2005, the agreement was amended to provide an annual base salary
of $144,000 and quarterly bonuses pursuant to the following schedule; provided
that if the Company does not have net income for that quarter then only half of
the bonus amount listed below shall be paid:

                                       22
<PAGE>

                 Quarterly Revenue           Quarterly Bonus
             --------------------------     -----------------

             $0 to $600,000                   $      0
             $600,001 - $800,000              $ 10,000
             $800,001 - $1,000,000            $ 25,000
             $1,000,001 and greater           $ 50,000

     The bonus amounts reflected in the above table shall be reduced by one-half
if the Company sustains a net loss during the quarter.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS.

     The following table contains certain information regarding beneficial
ownership of the Company's common stock as of February 11, 2005 by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's common stock, (ii) each of the Company's directors, (iii) the Chief
Executive Officer and (iv) all directors and executive officers as a group. The
information provided regarding beneficial ownership of the principal
stockholders is based on publicly available filings and, in the absence of such
filings, on the shares held of record by such persons.

                                                      Number of Shares   Percent
                                                       Beneficially         of
            Name                     Class of Stock       Owned           Class
- ---------------------------------   ----------------  ---------------     ------
Executive Officers:
- -------------------
    Thomas Sandgaard

                                         Common        19,452,800         84.3%
- --------------------------------------------------------------------------------

Other 5% Beneficial Owners
- --------------------------
    Financial Consulting Firm (1)
                                         Common         1,900,000          7.6%
- --------------------------------------------------------------------------------

 All Directors and
 Named Executive Officers
 As a Group                              Common        19,452,800         84.3%
- ------------------------
- --------------------------------------------------------------------------------

________________

(1) On September 27, 2004, the Company issued options valued at $11,707 to
acquire 1,900,000 shares of common stock to this financial consulting firm in
exchange for consulting services provided in connection with the Company's
reverse acquisition, and past investor relations. The options, which expire
September 26, 2009 permit the purchase of common stock in certain quantities at
various prices ranging from $.40 per share to $4.00 per share, as set forth more
clearly in the Note 2 of the Notes to Consolidated Financial Statements.


                      EQUITY COMPENSATION PLAN INFORMATION

     The following table provides information about shares of Common Stock
available for issuance under the Company's equity incentive plan.

<TABLE>
<CAPTION>
                                                                                          Number of Securities
                                                                                         Remaining available for
                                      Number of Securities to                             future issuance under
                                      be Issued Upon Exercise                             Equity Compensation
                                      of Outstanding Options,    Weighted Average      Plans (excluding securities
                                       Warrants and Rights        Exercise Price         reflected in column (a)
Plan Category                                  (a)                     (b)                         (c)
- ----------------------------------    -----------------------   -----------------      ----------------------------
<S>                                   <C>                       <C>                    <C>
Plans Approved by Shareholders                None
- -------------------------------------------------------------------------------------------------------------------

Plans Not Approved by Shareholders          2,093,000 (1)             $2.29              907,000

- -------------------------------------------------------------------------------------------------------------------
   Total                                    2,093,000                 $2.29              907,000
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
________________________

(1) All of the listed securities are available for issuance under the Zynex
Medical Holdings, Inc. 2005 Stock Option Plan, approved by the Board of
Directors on January 3, 2005. The Board of Directors may decide to submit the
Company's 2005 Stock Option Plan to the shareholders for approval during the
2005 calendar year.

                                       23
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None.


ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K.

Exhibit Number                            Description
- --------------   ---------------------------------------------------------------
      3.1        Articles of Incorporation of Ibonzi.com, Inc, incorporated by
                 reference to Exhibit 3.1 of 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, to effect a migratory merger, incorporated by
                 reference to Exhibit 2.1 of the 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.,
                 by reference to Exhibit 3.2 of 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 Exhibit 3.3 of 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, incorporated by reference to
                 Exhibit 3.5 of the Company's registration statement filed on
                 Form SB-2, filed July 6, 2004.
      3.6        Amendment to the Articles of Incorporation, changing the
                 Company's name to Fox River Holdings, Inc., incorporated by
                 reference to Exhibit 3.6 of the Company's registration
                 statement filed on Form SB-2, filed July 6, 2004.
      3.7        Amendment to the Articles of Incorporation, effecting a 1:40
                 reverse split of common stock, incorporated by reference to
                 Exhibit 3.7 of the Company's registration statement filed on
                 Form SB-2, filed July 6, 2004.
      3.8        Amendment to the Articles of Incorporation, changing the
                 Company's name to Zynex Medical Holdings, Inc., incorporated by
                 reference to Exhibit 3.8 of the Company's registration
                 statement filed on Form SB-2, filed July 6, 2004.
      3.9        Bylaws of the Company, incorporated by reference to Exhibit 3.4
                 of the Company's Current Report on Form 8-K, filed
                 January 31, 2002.
      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.,
                 incorporated by reference to Exhibit 4.1 of the Company's
                 registration statement filed on Form SB-2, filed July 6, 2004.
      4.2        Form of A Common Stock Purchase Warrant, incorporated by
                 reference to Exhibit 4.2 of the Company's registration
                 statement filed on Form SB-2, filed July 6, 2004.

                                       24
<PAGE>

      4.3        Form of B Common Stock Purchase Warrant, incorporated by
                 reference to Exhibit 4.3 of the Company's registration
                 statement filed on Form SB-2, filed July 6, 2004.
      4.4        Form of C Common Stock Purchase Warrant, incorporated by
                 reference to Exhibit 4.4 of the Company's registration
                 statement filed on Form SB-2, filed July 6, 2004.
      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., incorporated by reference to
                 Exhibit 4.5 of the Company's registration statement filed on
                 Form SB-2, filed July 6, 2004.
     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 Exhibit 10 of
                 Zynex Medical Holdings, Inc.'s Current Report on Form 8-K,
                 filed February 20, 2004.
     10.2        Thomas Sandgaard Employment Agreement, incorporated by
                 reference to Exhibit 10.2 of the Company's registration
                 statement filed on Form SB-2, filed July 6, 2004.
     10.3        Amendment to Thomas Sandgaard Employment Agreement dated
                 February 1, 2004
     10.4        Multi-Tenant Lease, dated January 20, 2004, by and between
                 First Industrial, L.P., a Delaware limited partnership and
                 Zynex Medical, Inc. a Colorado corporation.
     10.5        2005 Stock Option Plan.
     21.1        List of Subsidiaries.
     31.1        Certification of Chief Executive Officer and Chief Financial
                 Officer Pursuant to Rule 13a-14(a)/15d-14(a) as Adopted
                 Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
     32.1        Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
                 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Gordon, Hughes & Banks, LLP served as the Company's independent auditors
for the fiscal year ended December 31, 2004. The Company paid the following fees
to Gordon, Hughes & Banks LLP during fiscal 2004 and 2003:

                                                     2004         2003
                                                  --------     ---------
     Audit Fees                                   $ 44,000     $  6,000
     All other Fees:
        Audit-related Fees (reviews of
            Forms 10-QSB and SB-2)                  11,800           0
        Tax-related Fees                             5,500           0
        All other fees                                   0           0

     The Company's director, in reliance on statements by management and the
independent auditors, has determined that the provision of the non-audit
services described above is compatible with maintaining the independence of
Gordon, Hughes & Banks, LLP.



                                       25
<PAGE>

                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                             ZYNEX MEDICAL HOLDINGS, INC.


                             By: /s/ Thomas Sandgaard
                                 -----------------------------------------------
                                 Thomas Sandgaard
                                 President, Chairman and Chief Executive Officer
                                 Date: April 15, 2005

                                    26
<PAGE>

                          Zynex Medical Holdings, Inc.
                        Consolidated Financial Statements
                                December 31, 2004

<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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

We have audited the accompanying consolidated balance sheet of ZYNEX MEDICAL
HOLDINGS, INC. (the "Company") as of December 31, 2004 and the related
consolidated statements of operations, cash flows and stockholders' equity for
the years ended December 31, 2004 and 2003. 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. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. 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 to above present fairly, in
all material respects, the financial position of ZYNEX MEDICAL HOLDINGS, INC. as
of December 31, 2004, and the results of its operations and its cash flows for
the years ended December 31, 2004 and 2003, in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



/s/ Gordon, Hughes & Banks, LLP
- -------------------------------
Greenwood Village, Colorado
February 8, 2005

                                       F-2
<PAGE>



                          Zynex Medical Holdings, Inc.
                           Consolidated Balance Sheet
                                December 31, 2004


                                     ASSETS

Current Assets:
    Cash and cash equivalents                                $     3,078
    Receivables, less allowance for
      uncollectible accounts of $284,074                         190,090
    Inventory                                                    319,699
    Prepaid expenses                                              21,446
    Refundable income taxes                                       11,691
    Other current assets                                             630
                                                             -----------

         Total current assets                                    546,634

Property and equipment, less accumulated depreciation
    of $100,066                                                  228,495
Deposits                                                          14,472
                                                             -----------

                                                             $   789,601
                                                             ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
    Notes payable                                            $   131,235
    Capital lease                                                 15,311
    Accounts payable                                             180,158
    Accrued payroll and payroll taxes                             68,877
    Other accrued liabilities                                     86,523
                                                             -----------

         Total current liabilities                               482,104

Notes payable, less current maturities                            45,339
Capital lease, less current maturities                            59,265
                                                             -----------

         Total liabilities                                       586,708
                                                             -----------

Contingencies and Commitments                                       --

Stockholders' Equity:
    Preferred stock, $.001 par value, 10,000,000 shares
      authorized, no shares issued or outstanding                   --
    Common stock, $0.001, par value, 100,000,000 shares
      authorized, 23,070,377 shares issued and outstanding        23,070
    Additional paid-in capital                                 1,335,233
    Accumulated (deficit)                                     (1,155,410)
                                                             -----------

         Total stockholders' equity                              202,893
                                                             -----------

                                                             $   789,601
                                                             ===========



                 See accompanying notes to financial statements.

                                       F-3
<PAGE>


                          Zynex Medical Holdings, Inc.
                      Consolidated Statements of Operations
                            Years Ended December 31,

                                                    2004            2003
                                                ------------    ------------
Net sales and rental income                     $  1,256,676    $  1,083,912
Cost of sales and rentals                            237,644         186,081
                                                ------------    ------------

        Gross profit                               1,019,032         897,831

Operating expenses:
    Selling, general and administrative            1,907,830         762,819
    Depreciation                                      44,781          26,985
    Loss on disposal of equipment                     35,247            --
                                                ------------    ------------
                                                   1,987,858         789,804
                                                ------------    ------------

    Income (loss) from operations                   (968,826)        108,027

Other income (expense):
    Interest income                                    1,361           3,153
    Interest expense                                 (38,742)        (45,674)
    Other income (expense)                            (2,509)           --
                                                ------------    ------------

        Net income (loss) before income taxes     (1,008,716)         65,506

Provision (benefit) for income taxes                 (32,838)         24,809
                                                ------------    ------------

        Net income (loss)                       $   (975,878)   $     40,697
                                                ============    ============

Basic and diluted net income (loss)
    per common share                            $      (0.04)   $       --
                                                ============    ============

Weighted average number of shares
    outstanding                                   22,728,763      22,151,662
                                                ============    ============

                 See accompanying notes to financial statements.

                                       F-4
<PAGE>

<TABLE>
                          Zynex Medical Holdings, Inc.
                      Consolidated Statements of Cash Flows
                            Years Ended December 31,
<CAPTION>

                                                                       2004          2003
                                                                   -----------    -----------
<S>                                                                <C>            <C>
Cash flow from operating activities:
    Net income (loss)                                              $  (975,878)   $    40,697
    Adjustments to reconcile net income (loss) to
      net cash provided by (used in) operations:
        Depreciation                                                    44,782         26,985
        Issuance of warrants and options for consulting services        73,434           --
        Loss on disposal of equipment                                   35,247           --
        Issuance of stock for loan financing                             2,730           --
        Changes in operating assets and liabilities:
             Accounts receivable                                        (4,284)       130,433
             Inventory and rented equipment                           (216,895)          (291)
             Refundable income taxes                                   (11,691)          --
             Other current assets                                      (20,776)        (1,300)
             Other assets                                               (4,707)          --
             Accounts payable                                           18,498        (22,152)
             Accrued liabilities                                        (1,447)        14,712
                                                                   -----------    -----------

Net cash provided by (used in) operating activities                 (1,060,987)       189,084
                                                                   -----------    -----------

Cash flows from investing activities:
    Proceeds from sale of equipment                                      1,500           --
    Purchase of equipment                                              (45,749)       (10,004)
                                                                   -----------    -----------
Net cash used in investing activities                                  (44,249)       (10,004)

Cash flows from financing activities:
    Payments on notes payable and capital lease                       (198,857)       (96,618)
    Proceeds from sale of common stock                               1,259,987           --
    Proceeds from loans payable                                         60,000           --
    Repayment of loans from stockholder                                (12,816)       (82,462)
                                                                   -----------    -----------

Net cash provided by (used in) financing activities                  1,108,314       (179,080)

Increase in cash                                                         3,078           --

Cash and cash equivalents at beginning of period                          --             --
                                                                   -----------    -----------

Cash and cash equivalents at end of period                         $     3,078    $      --
                                                                   ===========    ===========


Supplemental cash flow information:
    Interest paid                                                  $    47,198    $    31,336
    Income taxes paid                                                   13,153          2,871
    Non-cash investing and financing activities -
      Equipment financed with note payable                              56,332           --
      Equipment financed with capital lease                             76,642         29,000
      Fair value of broker warrants issued                             132,198           --
</TABLE>

       See accompanying notes to financial statements.

                                       F-5
<PAGE>

<TABLE>
                          Zynex Medical Holdings, Inc.
                 Consolidated Statements of Stockholders' Equity
<CAPTION>


                                                                        Additional
                                          Number of                      Paid-In      Accumulated
                                            Shares        Amount         Capital        Deficit         Total
                                         -----------    -----------    -----------    -----------    -----------
<S>                                      <C>            <C>            <C>            <C>            <C>
December 31, 2002                         10,549,877    $    10,550    $ 3,031,989    $(3,445,346)   $  (402,807)

    Net income                                  --             --             --           40,697         40,697
                                         -----------    -----------    -----------    -----------    -----------

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

    Reorganization 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)

    Private placement of common stock        230,000            230        229,770           --          230,000

    Sale of common stock and warrants:
      Proceeds net of broker warrants        685,715            685        897,104           --          897,789
      Broker warrants                           --             --          132,198           --          132,198

    Warrants and options issued
      to consultants                            --             --           73,434           --           73,434

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

    Net loss                                    --             --             --         (975,878)      (975,878)
                                         -----------    -----------    -----------    -----------    -----------

December 31, 2004                         23,070,377    $    23,070    $ 1,335,233    $(1,155,410)   $   202,893
                                         ===========    ===========    ===========    ===========    ===========
</TABLE>

                 See accompanying notes to financial statements.

                                       F-6
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

ORGANIZATION OF BUSINESS

Zynex Medical, Inc. 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 Medical, Inc. 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 Medical, Inc. generates substantially all its revenue in North
America from sales and rentals of its products to patients, dealers and health
care providers. The amount of net revenue derived from Medicare and Medicaid
programs is less than 5 percent.

On February 11, 2004, Zynex Medical Holdings, Inc. (the "Company"), 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 prior to February 11, 2004 are solely those of the accounting
acquirer, Zynex Medical, Inc. (which consists of the consolidated accounts of
SRSI and DMI). Since Zynex Medical Holdings, Inc. was a non-operating entity
with limited business activity and no assets, goodwill was not recorded.

NATURE OF BUSINESS

The Company designs, assembles and commercializes a line of FDA approved medical
devices for the electrotherapy and stroke rehabilitation markets. The Company
also purchases electrotherapy devices and supplies from other domestic and
international suppliers for resale.

GOING CONCERN CONSIDERATIONS

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The
Company incurred a substantial operating loss in 2004.  This factor raises
substantial doubt about the Company's ability to continue as a going concern.

The Company is seeking to expand operations and increase revenue, however, there
can be no assurance that the Company will be able to expand and increase
revenues.


                                       F-7
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying 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. Product and
rental income is recognized net of the estimated uncollectible percentage of
sales as described below.

RESERVE FOR SALES RETURNS, ALLOWANCES AND COLLECTIBILITY

The Company maintains a reserve for sales allowances, returns and
collectibility. 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.

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 accompanying financial
statements are associated with collectibility of accounts receivable.

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.

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 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 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, 2004 to be collectible.

                                       F-8
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. The Company removes the cost and the
related accumulated depreciation from the accounts of assets sold or retired,
and the resulting gains or losses are included in the results of operations.
Depreciation is computed using the straight-line method. Cost and related
estimated useful lives of property and equipment as of December 31, 2004 are as
follows:

                                               Cost             Useful lives
                                            -----------         ------------

         Office furniture and equipment      $153,987           3-7 years
         Rented inventory                     113,985             5 years
         Vehicles                              59,832             5 years
         Assembly equipment                       757             7 years
                                           -----------
                                              328,561
         Less accumulated depreciation       (100,066)
                                           -----------
           Net book value                    $228,495
                                           ===========

SHIPPING COSTS

Shipping costs are included in cost of sales and rentals.

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 year
ended December 31, 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

                                      F-9
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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 year ended December 31, 2004 would have
increased by $6,190.

ADVERTISING

The Company expenses advertising costs as they are incurred. Advertising
expenses for the years ended December 31, 2004 and 2003 totaled $148,497 and
$28,026, respectively.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed when incurred. There were no
research and development expenses for years ended December 31, 2004 and 2003.

INCOME TAXES

Income taxes are computed using the liability method. The provision for income
taxes includes taxes payable or refundable for the current period and the
deferred income tax consequences of transactions that have been recognized in
the Company's financial statements or income tax returns. The carrying value of
deferred income taxes is determined based on an evaluation of whether the
Company is more likely than not to realize the assets. Temporary differences
result primarily from basis differences in property and equipment and net
operating loss carryforwards. The valuation allowance is reviewed periodically
to determine the amount of deferred tax asset considered realizable.

COMPREHENSIVE INCOME

There are no adjustments necessary to the net income (loss) 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 one
operating segment.

                                      F-10
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


EARNINGS 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 year ended
December 31, 2004 as their effect is anti-dilutive.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued SFAS 123R "Share-Based Payment," a revision to
FASB No. 123. SFAS 123R replaces existing requirements under SFAS No. 123 and
APB Opinion No. 25, and requires public companies to recognize the cost of
employee services received in exchange for equity instruments, based on the
grant-date fair value of those instruments, with limited exceptions. SFAS 123R
also affects the pattern in which compensation cost is recognized, the
accounting for employee share purchase plans, and the accounting for income tax
effects of share-based payment transactions. For small-business filers, SFAS
123R will be effective for interim periods beginning after December 15, 2005.
The Company is currently determining what impact the proposed statement would
have on its results of operations and financial position.

The FASB has proposed FASB Staff Position No. FAS 109-a, "Application of FASB
Statement No. 109, Accounting for Income Taxes, for the Tax Deduction Provided
to U.S. Based Manufacturers by the American Jobs Creation Act of 2004." On
October 22, 2004, the American Jobs Creation Act of 2004 (the "ACT") was signed
into law by the President. This Act includes tax relief for domestic
manufacturers by providing a tax deduction up to 9 percent (when fully
phased-in) of the lesser of (a) "qualified production activities income," as
defined in the Act, or (b) taxable income (after the deduction for the
utilization of any net operating loss carry forwards). As a result of this Act,
an issue has arisen as to whether this deduction should be accounted for as a
special deduction or a tax rate reduction under Statement 109. The FASB staff
believes that the domestic manufacturing deduction's characteristics are similar
to special deductions because the domestic manufacturing deduction is based on
the future performance of specific activities, including the level of wages.
Accordingly, the FASB staff believes that the deduction provided for under the
Act should be accounted for as a special deduction in accordance with Statement
109 and not as a tax rate reduction. This provision of the Act is not expected
to have an impact on the Company's financial statements.

In November 2004, the FASB issued FASB Statement No. 151, which revised ARB
No.43, relating to inventory costs. This revision is to clarify the accounting
for abnormal amounts of idle facility expense, freight, handling costs and
wasted material (spoilage). This Statement requires that these items be
recognized as a current period charge regardless of whether they meet the
criterion specified in ARB 43. In addition, this Statement requires the
allocation of fixed production overheads to the costs of conversion be based on
normal capacity of the production facilities. This Statement is effective for
financial statements for fiscal years beginning after June 15, 2005. Earlier
application is permitted for inventory costs incurred during fiscal years
beginning after the date of this Statement is issued. Management believes this
Statement will have no impact on the financial statements of the Company once
adopted.

In December 2004, the FASB issued FASB Statement No. 152, which amends FASB
Statement No. 66, Accounting for Sales of Real Estate, to reference the
financial accounting and reporting guidance for real estate time-sharing
transactions that is provided in AICPA Statement of Position (SOP) 04-2,
Accounting for Real Estate Time-Sharing Transactions. This Statement also amends
FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of
Real Estate Projects, to state that the guidance for (a) incidental operations

                                      F-11
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


and (b) costs incurred to sell real estate projects does not apply to
real-estate time-sharing transactions. The accounting for those operations and
costs is subject to the guidance in SOP 04-2. This Statement is effective for
financial statements for fiscal years beginning after June 15, 2005. Management
believes this Statement will have no impact on the financial statements of the
Company once adopted.

In December 2004, the FASB issued FASB Statement No. 153. This Statement
addresses the measurement of exchanges of nonmonetary assets. The guidance in
APB Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the
principle that exchanges of nonmonetary assets should be measured based on the
fair value of the assets exchanged. The guidance in that Opinion, however,
included certain exceptions to that principle. This Statement amends Opinion 29
to eliminate the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of nonmonetary
assets that do not have commercial substance. A nonmonetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. This Statement is effective
for financial statements for fiscal years beginning after June 15, 2005. Earlier
application is permitted for nonmonetary asset exchanges incurred during fiscal
years beginning after the date of this Statement is issued. Management believes
this Statement will have no impact on the financial statements of the Company
once adopted.

NOTE 3 - NOTES PAYABLE AND LEASES

Notes payable at December 31, 2004 consisted of the following:


Note payable to a bank, principal and interest
payments of $4,331 due on a monthly basis
through October 15, 2005, at which time
the entire balance is due; annual interest
rate of 7.5%, collateralized by accounts
receivable and the President's personal
residence.                                            $ 98,114



Inventory financing obligations to financial
institutions, monthly principal and interest
payments totaling $2,709, annual interest
rates approximating 20%, collateralized by
inventory.                                              12,918

Motor vehicle contract payable in 60 monthly
installments of $1,351, annual interest at
15.1%, secured by automobile.                           50,871

Settlement agreement payable in 36 monthly
beginning June 15, 2003, installments of $909
including interest at 8%.                               14,671
                                                     ---------

Total                                                 $176,574

Less current maturities                               (131,235)
                                                     ---------

Long-term maturities                                  $ 45,339
                                                     =========

Future maturities of the notes payable are as follows:

         Year ending December 31,
         ------------------------
         2005                                       $ 131,235
         2006                                          15,454
         2007                                          12,611
         2008                                          14,619
         2009                                           2,655
                                                    ----------
                                                    $ 176,574
                                                    ==========

                                      F-12
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company has commitments under various operating and capital leases that are
payable in monthly installments. As of December 31, 2004, future minimum lease
payments under non-cancelable operating and capital leases are as follows:


                                                       Capital       Operating
                                                        Lease         Leases
                                                     -----------    ----------
         2005                                        $  22,014      $   94,606
         2006                                           18,869         104,464
         2007                                           18,869         100,375
         2008                                           18,869          98,159
         2009                                           12,579          16,428
         Thereafter                                       --              --
                                                     ----------     ----------
Total future minimum lease payments                     91,200      $  414,032
                                                                    ==========
Less amount representing interest                       16,624
                                                     ----------
Present value of net minimum lease
  payments                                              74,576
Less current portion                                   (15,311)
                                                     ----------
Long-term capital lease obligation                   $  59,265
                                                     ==========

Rent expense under operating leases for 2004 and 2003 was $88,777 and $51,051,
respectively.

NOTE 4 - INCOME TAXES

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

                                                     2004        2003
                                                   --------    --------
   Federal income taxes
      Current ..................................   $(30,208)   $ 20,209
      Deferred .................................       --          --
   State income taxes
      Current ..................................     (2,630)      4,600
      Deferred .................................       --          --
                                                   --------    --------
   Total .......................................   $(32,838)   $ 24,809
                                                   ========    ========

A reconciliation of income tax computed at the U.S. statutory rate of 35% to the
effective income tax rate is as follows:

                                      F-13
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                                  2004            2003
                                                --------         --------
   Statutory rate                                 (35)%             35 %
   State taxes                                     (3)%              6 %
   Surtax benefit                                  --              (18)%
   Permanent differences                            3 %              9 %
   Basis difference in property and equipment      (5)%             --
   Net operating loss carryover and other          (3)%              6 %
   Change in valuation allowance                   40 %             --
                                                --------         --------
   Combined effective rate                         (3)%             38%
                                                ========         ========

The components of deferred income taxes at December 31, 2004 are as follows:

   Net operating loss carryovers                $ 424,579
   Basis difference in property and equipment      15,248
                                                ---------
   Total deferred tax asset                       439,827
   Valuation allowance                           (439,827)
                                                ---------
   Total net deferred tax                       $    --
                                                =========

SFAS 109 requires that all deferred tax balances be determined using the tax
rates and limitations expected to be in effect when the taxes will actually be
paid or recovered. Consequently, the income tax provision will increase or
decrease in the period in which a change in tax rate or limitation is enacted.
As of December 31, 2004, the Company had total deferred tax assets of $439,827.
The Company recorded a valuation allowance in the full amount of $439,827 at
December 31, 2004, against the amount by which deferred tax assets exceed
deferred tax liabilities. The valuation reserve at December 31, 2004 has been
provided due to the uncertainty of the amount of future taxable income. The
Company provides a valuation allowance in the full amount of its deferred tax
assets because under the criteria of SFAS No. 109, the Company does not have a
basis to conclude that it is more likely than not that it will realize the
deferred tax assets.

The Company has accumulated net operating loss carryforwards of $1,145,653 . To
the extent not used, the net operating loss carryforwards expire in varying
amounts beginning in 2023. As of December 31, 2004, all identified deferred tax
assets are reduced by a valuation allowance. Therefore, any additional operating
loss carryforwards not recognized would not result in a benefit in the provision
for income taxes due to the uncertainty of future realization of those
additional loss carryforwards.

NOTE 5 - COMMON STOCK

During the year ended December 31, 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.

                                      F-14
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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 897,789,
net of offering expenses and the fair value of Broker Warrants issued. 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.

During 2004, the Company also issued common stock warrants and options to
consultants and a debtor - see Note 2 - Stock-Based Compensation.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

BILLING PRACTICES

In connection with its sales of medical devices, the Company sells disposable
supplies used with some of its devices. Prior to March 2004, certain billings to
private insurance companies exceeded 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 December 31,
2004 and 2003.

MAJOR SUPPLIERS

During 2004 and 2003, the Company purchased approximately 36% and 56%,
respectively, of its entire inventory purchases from one European supplier.

CONCENTRATIONS

The Company maintains its cash deposits in one bank and one brokerage company
cash management account. At December 31, 2004, the Company's cash balance at the
bank was not in excess of the FDIC insurance limit.

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 former sole
shareholder. The agreement expires January 31, 2007 and, if written notice is
not given, the agreement will automatically be extended for an additional
two-year period. The initial annual base salary under the agreement was $174,000
and may be increased annually at the board of director's discretion. The
agreement also provides for a 50% annual bonus if annual net revenue exceeds
$2.25 million, medical and life insurance, and a vehicle. The agreement contains
a non-compete provision for the term of the agreement that extends for 24 months
following termination of the agreement.

                                      F-15
<PAGE>

                          ZYNEX MEDICAL HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


On January 1, 2005, the agreement was amended to provide an annual base salary
of $144,000 and quarterly bonuses as follows:

         Quarterly Revenue                    Quarterly Bonus
       --------------------------          --------------------
       $0 to $600,000                           $      0
       $600,001 - $800,000                      $ 10,000
       $800,001 - $1,000,000                    $ 25,000
       $1,000,001 and greater                   $ 50,000

The bonus amounts reflected in the above table shall be reduced by one-half if
the Company sustains a net loss during the quarter.

NOTE 7 - RELATED PARTY TRANSACTIONS

The Company provides the President with two automobiles for personal use costing
$2,287 per month.

NOTE 8 - SUBSEQUENT EVENT

On January 3, 2005, the Board of Directors adopted the Zynex Medical Holdings,
Inc. 2005 Stock Option Plan. The Plan authorized the issuance of a total of
3,000,000 shares of common stock to both employees and non-employees. Concurrent
with the adoption of the Plan, the Company granted 190,000 options to 16
employees at $0.30 per share (the quoted market value per share on January 3,
2005).  The options vest at the rate of 25 percent per year and expire ten years
from the date of grant.

                                      F-16
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>2
<FILENAME>zynex10ksbex103_3282005.txt
<TEXT>
                                                                    Exhibit 10.3

            AMENDMENT TO EMPLOYMENT AGREEMENT DATED FEBRUARY 1, 2004
                BETWEEN ZYNEX MEDICAL, INC. AND THOMAS SANDGAARD


Section (4) of the agreement is hereby amended as follows:

4.   Compensation. Commencing January 1, 2005 and continuing through the
     duration of this agreement, the Employer shall pay to the Employee for the
     loyal and consistent services provided to it hereunder: a fee at the rate
     of $12,000 per month. 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 quarter during the term of this Agreement, bonus
     compensation based on exceeding net revenue goals as follows:

                  Quarterly
                  Revenue                      Bonus
                  ---------------------     ------------
                  Less than $600,000        $     0
                  ---------------------     ------------
                           >$600,000        $10,000
                  ---------------------     ------------
                           >$800,000        $25,000
                  ---------------------     ------------
                         >$1,000,000        $50,000
                  ---------------------     ------------

The bonus amounts reflected in the above table shall be reduced by one-half if
the Company sustains a net loss during the quarter.

                                                 Zynex Medical, Inc., "Employer"

                                                  /s/
                                                  ------------------------------
                                                  Secretary Board of Directors

                                                  /s/ Thomas Sandgaard
                                                  ------------------------------
                                                  Thomas Sandgaard, "Employee"
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>3
<FILENAME>zynex10ksbex104_3282005.txt
<TEXT>
                                                                    Exhibit 10.4

                               MULTI-TENANT LEASE

     This lease is made as of the 28th day of January 2004, by and between First
Industrial, L.P., a Delaware limited partnership ("Landlord) and Zynex Medical,
Inc., a Colorado corporation, ("Tenant").

1.   Basic Provisions: In addition to other terms which are defined elsewhere in
     this Lease or any Exhibits, the terms defined in the following subsections
     of this Section 1 shall have the meaning set forth in such subsection
     whenever used in this Lease.

     1.1  Building: 52,581 square foot multi-tenant building part of the
          Building Complex commonly known as Southwest Business Center.

     1.2  Premises: Approximately 9,857 square feet of space located in the
          Building, including all improvements therein or to be provided by
          Landlord under the terms of this Lease, commonly known by the street
          address of 8100 Southpark Way, Unit A-9, Littleton, Colorado 80120, as
          outlined on Exhibit A attached hereto. In addition to Tenant's rights
          to use and occupy the Premises as hereinafter specified, Tenant shall
          have non-exclusive rights to the Common Areas (as defined in Section
          2.4 below) as hereinafter specified, but shall not have any rights to
          the roof, exterior walls or utility raceways of the Building or to any
          other buildings in the Building Complex.

     1.3  Building Complex: The Premises and the Building, the Common Areas (as
          defined below), the land upon which they are located, along with all
          other buildings and improvements thereon depicted on Exhibit B
          attached hereto and made a part hereof.

     1.4 Parking: Tenant's pro-rata share of unreserved vehicle parking spaces.

     1.5  Term: Five (5) years ("Primary Lease Term") commencing March 1, 2004
          ("Commencement Date") and ending February 28, 2009 ("Expiration
          Date").

     1.6  Estimated Delivery Date: March 1, 2004. [This is a nonbinding estimate
          of the date on which Landlord currently estimates it will be able to
          deliver the Premises to Tenant for the purposes of Tenant commencing
          its tenant finish work.]

     1.7  Base Rent:

             Lease Year            Rate/SF NNN        Monthly Rent
          ---------------          -----------        ------------

          3/1/04 -2/28/05            $4.50            $3,696.38
          3/1/05 -2/28/06            $9.25            $7,598.10
          3/1/06 -2/28/07            $9.50            $7,803.46
          3/1/07 -2/29/08            $9.75            $8,008.81
          3/1/08 -2/28/09            $10.00           $8,214.17

     Upon execution Tenant shall pay $6,423.48 as Base Rent and estimated Common
     Area Maintenance expenses for the period of March 1-31, 2004. For the
     Primary Lease Term Base Rent shall be payable on the first day of each
     month.

     1.8  Rentable Area: Approximately 52,581 square feet which is all rentable
          space available for lease in the Building Complex. Unless otherwise
          provided herein, any square footage set forth in this Lease or that
          may have been used in calculating this Rent and/or Common Area
          Operating Expenses is an approximation which Landlord and Tenant agree
          is reasonable and the Base Rent and Tenant's Share based thereon are
          not subject to revision whether or not the actual square footage is
          more or less. Notwithstanding the foregoing, if there is: (i)
          alteration to the Premises or the Building or Building Complex after
          the Commencement Date; or (ii) any change in the designated Rentable
          Area of the Building Complex, then Landlord shall have the exclusive
          discretion to recalculate Tenant's Share by substituting the revised
          approximate Rentable Area of the Premises and/or the Building Complex
          in the calculation described above. Any change in the approximate
          Rentable Area of the Premises or recalculated by Landlord shall be
          effective, for purposes of calculating Tenant's Share as of the first
          day of the next calendar month after such change.

     1.9  Tenant's Share of Common Area Operating Expenses: 18.75% (calculated
          by dividing 9.857 by 52.581).

     1.10 Security Deposit: $10,940.00.

     1.11 Permitted Use: General office for sales of stroke recovery systems.

     1.12 Guarantor. The obligations of the Tenant under this Lease are to be
          guaranteed by Thomas Sandgaard.


2.   Premises, Parking and Common Areas.

     2.1  Grant. Landlord hereby leases to Tenant, and Tenant hereby leases from
          Landlord, the Premises for the term, at the rent and upon all of the
          terms, covenants and conditions set forth in this Lease.

     2.2  Landlord Delivery. Landlord shall deliver the Premises to Tenant clean
          and free of debris on the Commencement Date and warrants to Tenant
          that the existing plumbing, electrical systems, fire sprinkler system,
          lighting, air conditioning and heating systems and loading doors, if
          any, in the Premises, other than those constructed by Tenant, shall be
          in good operating condition on the Commencement Date. If Tenant does
          not give Landlord written notice of a non-compliance with this
          warranty within thirty (30) days after the Commencement Date,
          correction of that non-compliance shall be the obligation of Tenant at
          Tenant's sole cost and expense.

     2.3  Acceptance of Premises. Tenant hereby acknowledges: (a) that it has
          been advised to satisfy itself with respect to the condition of the
          Premises including, but not limited to, the electrical and fire
          sprinkler systems, security, environmental aspects, and compliance
          with the Americans with Disabilities Act and applicable zoning,
          municipal, county, state and federal laws, ordinances and regulations
          and any covenants or restrictions of record (collectively, "Applicable
          Laws") and the present and future suitability of the Premises for
          Tenant's intended use; (b) that Tenant has made such investigation as
          it deems necessary with reference to such matters, is satisfied with
          reference thereto, and assumes all responsibility therefore as the
          same relate to Tenant's occupancy of the Premises and/or the terms of
          this Lease; and (c) that neither Landlord, nor any of Landlord's
          agents, has made any oral or written representations or warranties
          with respect to said matters other than as set forth in this Lease. If
          Landlord has agreed to complete finish work in the Premises, such work
          shall be completed in accordance with Exhibit C attached hereto and
          made a part hereof (the "Work Agreement"), and such work may be
          referred to herein as "Landlord's Work. Except as set forth expressly
          in the Work Agreement, Landlord shall have no obligation for
          completion of remodeling of the Premises and Tenant shall accept the
          Premises in its "AS IS" condition.

                                                                            COPY
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     2.4  Common Areas. The term "Common Areas" is defined as all areas and
          facilities outside the Premises and within the exterior boundary line
          of the Building Complex and interior utility raceways within the
          Premises that are provided and designated by the Landlord from time to
          time for the general non-exclusive use of Landlord, Tenant and other
          tenants of the Building Complex and their respective employees,
          suppliers, shippers, customers, contractors and invitees, including
          parking areas, utility rooms, loading and unloading areas, trash
          areas, roadways, sidewalks, walkways, parkways, driveways and
          landscaped areas. Landlord hereby grants to Tenant, for the benefit of
          Tenant and its employees, suppliers, shippers, contractors, customers
          and invitees, during the Term of this Lease the non-exclusive right to
          use, in common with others entitled to such use, the Common Areas as
          they exist from time to time, subject to any rights, powers, and
          privileges reserved by Landlord under the terms hereof or under the
          terms of any rules and regulations or restrictions governing the use
          of the Building Complex. Under no circumstances shall the right
          therein granted to use the Common Areas be deemed to include the right
          to store any property, temporarily or permanently, in the Common
          Areas. Any such storage shall be permitted only by the prior written
          consent of Landlord or Landlord's designated agent, which consent may
          be revoked at any time. In the event that any unauthorized storage
          shall occur, then Landlord shall have the right, without notice, in
          addition to such other rights and remedies that it may have, to remove
          the property and charge the cost to Tenant, which cost shall be
          immediately payable upon demand by Landlord. Landlord or such other
          person(s) as Landlord may appoint shall have the exclusive control and
          management of the Common Areas and shall have the right, from time to
          time, to establish, modify, amend and enforce reasonable rules and
          regulations with respect thereto. Landlord shall have the right, in
          Landlord's sole discretion, from time to time: (i) to make changes to
          the Common Areas, including, without limitation, changes in the
          location, size, shape and number of driveways, entrances, parking
          spaces, parking areas, loading and unloading areas, ingress, egress,
          direction of traffic, landscaped areas, walkways and utility raceways;
          (ii) to close temporarily any of the Common Areas for maintenance
          purposes so long as reasonable access to the Premises remains
          available; (iii) to designate other land outside the boundaries of the
          Building Complex to be a part of the Common Areas; (iv) to add
          additional building and improvements to the Common Areas; (v) to use
          the Common Areas while engaged in making additional improvements,
          repairs or alterations to the Building Complex, or any portion
          thereof; and (vi) to do and perform such other acts and make such
          other changes in, to or with respect to the Common Areas and Building
          Complex as Landlord may, in the exercise of sound business judgment
          deem to be appropriate.


     2.5  Parking. Tenant shall be entitled to use the number of unreserved
          parking spaces specified in Section 1.4 on those portions of the
          Common Areas designated from time to time by Landlord for parking.
          Tenant shall not use more parking spaces than said number. Said
          parking spaces shall be used for parking by vehicles no larger than
          full-size passenger automobiles or pick-up trucks, herein called
          "Permitted Size Vehicles." Vehicles other than Permitted Size Vehicles
          shall be parked and loaded or unloaded as directed by Landlord in the
          Rules and Regulations issued by Landlord. Tenant shall not permit or
          allow any vehicles that belong to or are controlled by Tenant or
          Tenant's employees, suppliers, shippers, customers, contractors or
          invitees to be loaded, unloaded, or parked in areas other than those
          designated by Landlord for such activities. If Tenant permits or
          allows use of the prohibited areas, then Landlord shall have the
          right, without notice, in addition to such other rights and remedies
          that it may have, to remove or tow away the vehicle involved and
          charge the cost to Tenant, which cost shall be immediately payable
          upon demand by Landlord.


3.   Term.

     3.1  Term. The Commencement Date, Expiration Date and Primary Lease Term of
          this Lease are as specified in Section l.5.

     3.2  Delivery Date. If a Delivery Date is specified in Section 1.6 and if
          Tenant totally or partially occupies the Premises after the Delivery
          Date but prior to the Commencement Date, the obligation to pay Base
          Rent shall be abated for the period of such early occupancy. All other
          terms of this Lease, however (including but not limited to the
          obligations to pay Tenant's Share of Common Area Operating Expenses
          and to carry the insurance required in the Lease) shall be in effect
          during such period.

     3.3  Delay In Possession. If for any reason Landlord cannot deliver
          possession of the Premises to Tenant by the Estimated Delivery Date,
          if one is specified in Section 1.6, or if no Delivery Date is
          specified, by the Commencement Date, Landlord shall not be subject to
          any liability therefor, nor shall such failure affect the validity of
          this Lease, or the obligations of Tenant hereunder, or extend the term
          hereof; but in such case, Tenant shall not, except as otherwise
          provided herein, be obligated to pay Base Rent or perform any other
          obligation of Tenant under the terms of this Lease until Landlord
          delivers possession of the Premises to Tenant. The delay of said date
          shall be in full satisfaction of any claims Tenant might otherwise
          have as a result of such delay. If in accordance with the foregoing
          provision, the Commencement Date would occur on other than the first
          day of a calendar month, the Commencement Date shall be delayed until
          the first day of the next calendar month and the Primary Lease Term
          shall be measured from such date; provided, however, during any period
          of delayed commencement, all terms and provisions set forth in this
          Lease including, but not limited to Tenant's obligation to pay Base
          Rent and all other charges under the Lease shall commence at such
          earlier date. In order to place in writing the exact Commencement Date
          and Expiration Date of the Lease, the parties agree to execute a
          supplemental agreement to become a part hereof setting forth such
          dates as determined under the provisions of this Section 3.3.

     3.4  Lease Year. "Lease Year" as used in this Lease shall be defined as
          each twelve month period beginning with the Commencement Date or any
          anniversary thereof and ending on the immediately preceding day one
          year later.


4.   Rent.

     4.1  Base Rent. Tenant shall pay Base Rent and other rent or charges, as
          the same may be adjusted from time to time, to Landlord in lawful
          money of the United States, without offset or deduction on or before
          the day on which it is due under the terms of this Lease. Base Rent
          and all other rent and charges for the period during the term hereof
          which is for less than one full month shall be prorated based upon the
          actual number of days of the month involved. Payment of Base Rent and
          other charges shall be made to Landlord at its address stated herein
          or to such other persons or at such other addresses as Landlord may
          from time to time designate in writing to Tenant.

     4.2  Common Area Operating Expenses. Tenant shall pay to Landlord during
          the term hereof, in addition to the Base Rent, Tenant's Share (as
          specified in Section 1.9) of all Common Area Operating Expenses, as
          hereinafter defined, during each calendar year of the term of this
          Lease, in accordance with the following provisions:

          (a)  "Common Area Operating Expenses" are defined, for purposes of
               this Lease, as all costs incurred by Landlord relating to the
               ownership and operation of the Building Complex including, but
               not limited to, the following:

               (i)  The operation, repair and maintenance, in neat, clean, good
                    order and condition of the Common Areas, including parking
                    areas, utility rooms, loading and unloading areas, trash
                    areas, roadways, sidewalks, walkways, parkways, driveways,
                    landscaped areas, striping, bumpers, irrigation systems,
                    Common Area lighting facilities, fences and gates,
                    elevators, roofs, and exterior walls, including paint;
                    exterior signs, awnings, any tenant directories, and fire
                    detection, sprinkler systems, and all professional fees
                    incurred in connection with the operation, management and
                    maintenance of the Building Complex.

               (ii) The cost of water, gas, electricity and telephone to service
                    either the Building Complex and/or the Premises, to the
                    extent not separately metered.

               (iii) Snow, ice and debris removal service, and security services
                    and the costs of any environmental inspections.

               (iv) Cost of capital improvements, structural repairs and
                    replacements in or to the Building Complex, which shall be
                    amortized at a market rate of return over the useful life of
                    such item as determined by Landlord's accountants.

                                        2
<PAGE>


               (v)   Real Property Taxes to be paid by Landlord for the Building
                     and the Common Areas under Section 11 hereof.

               (vi)  The cost of the premiums for the insurance policies
                     maintained by Landlord under Section 9 hereof.

               (vii) Any deductible portion of an insured loss concerning the
                     Building or the Common Areas.

               (viii) Any other services to be provided by Landlord that are
                     stated elsewhere in this Lease to be a Common Area
                     Operating Expense.

     (b)  Any Common Area Operating Expenses and Real Property Taxes that are
          specifically attributable to the Building or to such other building in
          the Building Complex or to the operation, repair and maintenance
          thereof shall be allocated entirely to the Building or such other
          building. However, any Common Area Operating Expenses and Real
          Property Taxes that are not specifically attributable to the Building
          or to any other building or to the operation, repair and maintenance
          thereof, shall be equitably allocated by Landlord to all buildings in
          the Building Complex.

     (c)  The inclusion of the improvements, facilities and services set forth
          in Section 4.2(a) shall not be deemed to impose an obligation upon
          Landlord to either have said improvements or facilities or to provide
          those services unless Landlord has agreed elsewhere in this Lease to
          provide the same or some of them.

     (d)  Tenant's Share of Common Area Operating Expenses shall be payable by
          Tenant within ten (10) days after a reasonably detailed statement of
          actual expenses is presented to Tenant by Landlord. At Landlord's
          option, however, an amount may be estimated by Landlord from time to
          time of Tenant's Share of annual Common Area Operating Expenses and
          the same shall be payable monthly, as Landlord shall designate, during
          each calendar year on the same day as the Base Rent is due hereunder.
          If during any particular calendar year, there is a change in the
          information on which Landlord based the estimate upon which Tenant is
          then making its estimated Operating Expense payments so that such
          estimate furnished to Tenant is no longer accurate, Landlord shall be
          permitted to revise such estimate from time to time by notifying
          Tenant and there shall be such adjustments made in the monthly amount
          of Tenant's Share on the first day of the month following the serving
          of such statement to Tenant. Landlord shall deliver to Tenant after
          the expiration of each calendar year a reasonably detailed statement
          showing Tenant's Share of the actual Common Area Operating Expenses
          incurred during the preceding year. If Tenant's payments under this
          Section 4.2(d) during said preceding calendar year exceed Tenant's
          Share as indicated on said statement, Tenant shall be credited the
          amount of such overpayment against Tenant's Share of Common Area
          Operating Expenses next becoming due. If Tenant's payments under this
          Section 4.2(d) during said preceding year were less than Tenant's
          Share as indicated on said statement, Tenant shall pay to Landlord the
          amount of the deficiency within ten (10) days after delivery by
          Landlord to Tenant of said statement. Landlord's failure to deliver
          statement of Tenant's share within one hundred and twenty (120) days
          shall not relieve Tenant of the obligation to pay sums otherwise due.
          Tenant's obligation to pay Tenant's Share of Common Area Operating
          Expenses shall survive the expiration or termination of the Lease.


5.   Security Deposit. Tenant shall deposit with Landlord upon Tenant's
     execution hereof the Security Deposit set forth in Section 1.10 as security
     for Tenant's faithful performance of Tenant's obligations under this Lease.
     If Tenant fails to pay Base Rent or other rent or charges due hereunder, or
     otherwise is in default under this Lease, Landlord may use, apply or retain
     all or any portion of said Security Deposit for the payment of any amount
     due Landlord or to reimburse or compensate Landlord for any liability,
     cost, expense, loss or damage (including attorneys' fees) which Landlord
     may suffer or incur by reason thereof. If Landlord uses or applies all or
     any portion of said Security Deposit, Tenant shall within ten (10) days
     after written request therefore deposit monies with Landlord sufficient to
     restore said Security Deposit to the full amount required by this Lease.
     Any time the Base Rent increases during the term of this Lease, Tenant
     shall, upon written request from Landlord, deposit additional monies with
     Landlord as an addition to the Security Deposit so that the total amount of
     the Security Deposit shall at all times bear the same proportion to the
     then current Base Rent as the initial Security Deposit bears to the initial
     Base Rent set forth in Section 1.7. Landlord shall not be required to keep
     all or any part of the Security Deposit separate from its general accounts.
     Landlord shall, within sixty (60) days after the expiration of the term
     hereof and after Tenant has vacated the Premises, return to Tenant (or, at
     Landlord's option, to the last assignee, if any, of Tenant's interest
     herein), that portion of the Security Deposit, or applied by Landlord. No
     part of the Security Deposit shall be considered to be held in trust, to
     bear interest or other increment for its use, or to be prepayment for any
     monies to be paid by Tenant under this Lease. At Landlord's election,
     Landlord may elect to have the Security Deposit held by Landlord's manager
     in a separate security deposit, trust, trustee or escrow account
     established and maintained by such manager with respect to certain security
     deposits of tenants within the Building Complex. Unless Tenant is so
     notified, (i) Landlord will hold the Security Deposit and be responsible
     for its return; and (ii) Tenant may request return of the Security Deposit
     by giving Landlord written notice in accordance with the provisions of the
     Lease, and Landlord's manager, if any, agrees that in the event of a
     dispute over the ownership of the Security Deposit, the manager will not
     wrongfully withhold Landlord's true name and current mailing address from
     Tenant. Landlord may deliver the funds deposited herein by Tenant to the
     purchaser of Landlord's interest in the Premises in the event such interest
     be sold, and thereupon, Landlord shall be discharged from further liability
     with respect to such deposit. If the claims of Landlord exceed said
     deposit, Tenant shall remain liable for the balance of such claims.

6.   Use.

     6.1  Permitted Use.

          (a)  Tenant shall use and occupy the Premises only for the Permitted
               Use set forth in Section 1.11 and for no other purpose. Tenant
               shall not use or permit the use of the Premises in a manner that
               is unlawful, creates waste or a nuisance, or that disturbs owners
               and/or occupants of, or causes damage to the Premises or
               neighboring premises or properties.

          (b)  Landlord hereby agrees to not unreasonably withhold or delay its
               consent to any written request by Tenant, Tenant's assignees or
               subtenants, and by prospective assignees and subtenants of
               Tenant, its assignees and subtenants, for a modification of said
               Permitted Use so long as the same will not impair the structural
               integrity of the improvements on the Premises or in the Building
               or the mechanical or electrical systems therein does not conflict
               with uses by other Tenants, is not significantly more burdensome
               to the Premises or the Building and the improvements thereon, and
               is otherwise permissible pursuant to this Section 6. If Landlord
               elects to withhold such consent, Landlord shall within five (5)
               business days after such request give a written notification of
               same, which notice shall include an explanation of Landlord's
               reasonable objections to the change in use.


7.   Hazardous Substances.

     7.1  Consent. The term "Hazardous Substance" as used in this Lease shall
          mean any product, substance, chemical, material or waste whose
          presence, nature, quantity and/or intensity of existence, use,
          manufacture, disposal, transportation, spill, release or effect,
          either by itself or in combination with other materials expected to be
          on the Premises, is either: (i) potentially injurious to the public
          health, safety or welfare, the environment, or the Premises; (ii)
          regulated or monitored by any governmental authority; or (iii) a basis
          for potential liability of Landlord to any governmental agency or
          third party under any applicable statute or common law theory.
          Hazardous Substance shall include, but not be limited to hydrocarbons,
          petroleum gasoline, crude oil or any products or by-products thereof.
          Tenant shall not engage in any activity in or about the Premises which
          constitutes a Reportable Use (as hereinafter defined) of Hazardous
          Substances without the express prior written consent of Landlord and
          compliance in a timely manner (at Tenant's sole cost and expense) with
          all Applicable Requirements (as defined in Section 7.4). "Reportable
          Use" shall mean (i) the installation or use of any above or below
          ground storage tank; (ii) the generation, possession, storage, use,
          transportation, or disposal of a Hazardous Substance that requires a
          permit from, or with respect to which a report, notice, registration
          or business plan is required to be filed with, any governmental
          authority; and (iii) the presence in, on or about the Premises of a
          Hazardous Substance with respect to which any Applicable Laws require
          that a notice be given to persons entering or occupying the Premises
          or neighboring properties. Notwithstanding the foregoing. Tenant may,
          without Landlord's prior consent but upon notice to Landlord and in

                                        3
<PAGE>

          compliance with all Applicable Requirements, use any ordinary and
          customary materials reasonably required to be used by Tenant in the
          normal course of the Permitted Use, so long as such use is not a
          Reportable Use and does not expose the Premises or neighboring
          properties to any meaningful risk of contamination or damage or expose
          Landlord to any liability therefor. In addition, landlord may (but
          without any obligation to do so) condition its consent to any
          Reportable Use of any Hazardous Substance by Tenant upon Tenant's
          giving Landlord such additional assurances as Landlord, in its
          reasonable discretion, deems necessary to protect itself, the public,
          the Premises and the environment against damage, contamination or
          injury and/or liability therefor including but not limited to the
          installation (and, at Landlord's option, removal on or before Lease
          expiration or earlier termination) of reasonably necessary protective
          modifications to the Premises (such as concrete encasements) and/or
          the deposit of an additional Security Deposit under Section 5.


     7.2  Duty to Inform Landlord. If Tenant knows, or has reasonable cause to
          believe, that a Hazardous Substance has come to be located in, on,
          under or about the Premises or the Building, other than as previously
          consented to by Landlord, Tenant shall immediately give Landlord
          written notice thereof, together with a copy of any statement, report,
          notice, registration, application, permit, business plan, license,
          claim, action, or proceeding given to, or received from, any
          governmental authority or private party concerning the presence,
          spill, release, discharge of, or exposure to, such Hazardous Substance
          including but not limited to all such documents as may be involved in
          any Reportable Use involving the Premises. Tenant shall not cause or
          permit any Hazardous Substance to be spilled or released in, on, under
          or about the Premises (including, without limitation, through the
          plumbing or sanitary sewer system).

     7.3  Indemnification. Tenant shall indemnify, protect, defend and hold
          Landlord, its managers, members, officers, directors, agents,
          employees, lenders and ground Landlord, if any, and the Premises,
          harmless from and against any and all damages, liabilities, judgments,
          costs, claims, liens, expenses, penalties, loss of permits and
          attorneys' and consultants' fees arising out of or involving any
          Hazardous Substance brought onto the Premises by or for Tenant or by
          anyone under Tenant's control. Tenant's obligations under this Section
          7.3 shall include, but not be limited to, the effects of any
          contamination or injury to any person, property or the environment
          created or suffered by Tenant, and the cost of investigation
          (including consultants' and attorneys' fees and testing), removal,
          remediation, restoration and/or abatement thereof, or of any
          contamination therein involved, and shall survive the expiration or
          earlier termination of this Lease. No termination, cancellation or
          release agreement entered into by Landlord and Tenant shall release
          Tenant from its obligations under this Lease with respect to Hazardous
          Substances, unless specifically so agreed by Landlord in writing at
          the time of such agreement. The indemnification set forth above shall
          survive the expiration or termination of this Lease.

     7.4  Tenant's Compliance with Requirements. Tenant shall at Tenant's sole
          cost and expense, fully, diligently and in a timely manner, comply
          with all "Applicable Requirements," which term is used in this Lease
          to mean all laws, rules, regulations, ordinances, directives,
          covenants, easements and restrictions of record, permits, the
          requirements of any applicable fire insurance underwriter or rating
          bureau, and the recommendations of Landlord's engineers and/or
          consultants, relating in any manner to the Premises (including but not
          limited to matters pertaining to (i) industrial hygiene, (ii)
          environmental conditions on, in, under or about the Premises,
          including soil and groundwater conditions; and (iii) the use,
          generation, manufacture, production, installation, maintenance,
          removal, transportation, storage, spill, or release of any Hazardous
          Substance), now in effect or which may hereafter come into effect.
          Tenant shall, within five (5) days after receipt of Landlord's written
          request, provide Landlord with copies of all documents and
          information, including but not limited to permits, registrations,
          manifests, applications, reports and certificates, evidencing Tenant's
          compliance with any Applicable Requirements specified by Landlord, and
          shall immediately upon receipt, notify Landlord in writing (with
          copies of any documents involved) of any threatened or actual claim,
          notice, citation, warning, complaint or report pertaining to or
          involving failure by Tenant or the Premises to comply with any
          Applicable Requirements.

     7.5  Inspection. Landlord, Landlord's agents, employees, contractors and
          designated representatives, and the holders of any mortgages, deeds of
          trust or ground leases on the Premises ("Lenders") shall have the
          right to enter the Premises at any time in the case of an emergency,
          and otherwise at reasonable times, for the purpose of inspecting the
          condition of the Premises and for verifying compliance by Tenant with
          this Lease and all Applicable Requirements, and Landlord shall be
          entitled to employ experts and/or consultants in connection therewith
          to advise Landlord with respect to Tenant's activities, including but
          not limited to Tenant's installation, operation, use, monitoring,
          maintenance, or removal of any Hazardous Substance on or from the
          Premises. The costs and expenses of any such inspections shall be paid
          by the party requesting same, unless a Default of this Lease by Tenant
          or a violation of Applicable Requirements or a contamination, caused
          or materially contributed to by Tenant, is found to exist or to be
          imminent, or unless the inspection is requested or ordered by a
          governmental authority as the result of any such existing or imminent
          violation or contamination. In such case, Tenant shall upon request
          reimburse Landlord or Landlord's Lender, as the case may be, for the
          costs and expenses of such inspections.


8.   Maintenance, Repairs, Utility Installations, Trade Fixtures and
     Alterations.

     8.1  By Tenant.

          (a)  Subject to the provisions of Sections 8.2, 10, and 15, Tenant
               shall, at Tenant's sole cost and expense and at all times, keep
               the Premises and every part thereof in good order, condition and
               repair (whether or not such portion of the Premises requiring
               repair, or the means of repairing the same, are reasonably or
               readily accessible to Tenant, and whether or not the need for
               such repairs occurs as a result of Tenant's use, any prior use,
               the elements or the age of such portion of the Premises),
               including, without limiting the generality of the foregoing, all
               equipment or facilities specifically serving the Premises;
               whether or not the equipment or facilities are located within the
               Premises, such as plumbing, heating, air conditioning and
               ventilating system, electrical lighting facilities, boilers,
               fired or unfired pressure vessels, fire hose connections if
               within the Premises, fixtures, interior walls, interior surfaces
               of exterior walls, ceilings, floors, windows, doors serving the
               Premises, including overhead doors, dock bumpers, dock pads, dock
               levelers, etc., plate glass, and skylights, but excluding any
               items which are the responsibility of Landlord pursuant to
               Section 8.2 below. Tenant, in keeping the Premises in good order,
               condition and repair, shall exercise and perform good maintenance
               practices. Tenant's obligations shall include restorations,
               replacements or renewals when necessary to keep the Premises and
               all improvements thereon or a part thereof in good order,
               condition and state of repair. Tenant shall be responsible for
               trash removal.

          (b)  Tenant shall, at Tenant's sole cost and expense, procure and
               maintain a contract, with copies to Landlord, customary form and
               substance for and with a contractor specializing and experienced
               in the inspection, maintenance and service of the heating, air
               conditioning and ventilation system for the Premises. However,
               Landlord reserves the right, upon notice to Tenant, to procure
               and maintain the preventative maintenance contract for the
               heating, air conditioning and ventilating systems, and if
               Landlord so elects, Tenant shall reimburse Landlord, upon demand,
               for the cost thereof.

          (c)  If Tenant fails to perform Tenant's obligations under this
               Section 8.1, Landlord may enter upon the Premises after ten (10)
               days' prior written notice to Tenant (except in the case of an
               emergency, in which case no notice shall be required), perform
               such obligations on Tenant's behalf, and put the Premises in good
               order, condition and repair.

     8.2  By Landlord. Subject to the provisions of Sections 2.2, 4.2, 6, 8.1,
          10 and 15, and except for damage caused by any negligent or
          intentional act or omission of Tenant, its agents, employees,
          suppliers or invitees, in which event Tenant shall repair the damage,
          Landlord, subject to reimbursement pursuant to Section 4.2, shall keep
          in good order, condition and repair the foundations, exterior walls,
          structural condition of interior bearing walls, exterior roof, fire
          sprinkler and/or standpipe and hose (if located in the Common Areas)
          or other automatic fire extinguishing systems including fire alarm
          and/or smoke detention systems and equipment, fire hydrants, parking
          lots, walkways, parkways, driveways, landscaping, fences, signs, main
          sanitary sewer lines and utility systems serving the Common Areas and
          all parts thereof as well as providing the services for which there is
          a Common Area Operating Expense pursuant to Section 4.2. Landlord
          shall not be obligated to paint the exterior or interior surfaces of
          exterior walls nor shall Landlord be obligated to maintain, repair or
          replace windows, doors or plate glass of the Premises. Tenant shall
          have no right to make repairs to the Building or Building Complex at
          Landlord's expense.

                                        4
<PAGE>

     8.3  Utility Installations, Trade Fixtures, Alterations.

     (a)  Definitions, Consent Required. The term "Utility Installations" is
          used in this Lease to refer to all air lines, power panels, electrical
          distribution, security, fire protection systems, communications
          systems, lighting fixtures, heating, ventilating and air conditioning
          equipment, plumbing, and fencing in, on, or about the Premises. The
          term "Trade Fixtures" shall mean Tenant's machinery and equipment
          which can be removed without doing material damage to the Premises.
          The term "Alterations" shall mean any modification of the improvements
          on the Premises after the Delivery Date, other than Utility
          Installations or Trade Fixtures. "Tenant-Owned Alterations and/or
          Utility Installations" are defined as Alterations and/or Utility
          Installations made by Tenant that are not yet owned by Landlord
          pursuant to Section 8.4(a). Tenant shall not make nor cause to be made
          any Alterations or Utility Installations in, on, under or about the
          Premises without Landlord's prior written consent. Tenant may,
          however, make non-structural Utility Installations to the interior of
          the Premises (excluding the roof) without Landlord's consent but upon
          notice to Landlord, so long as they are not visible from the outside
          of the Premises, do not involve puncturing, relocating or removing the
          roof or any existing walls or changing or interfering with the fire
          sprinkler or fire detection systems and the cumulative cost thereof
          during the term of this Lease as extended does not exceed two thousand
          five hundred dollars ($2,500.00.)

     (b)  Consent, Any Alterations or Utility Installations that Tenant shall
          desire to make and which require the consent of the Landlord shall be
          presented to Landlord in written form with detailed plans. All
          consents given by Landlord, whether by virtue of Section 8.3(a) or by
          subsequent specific consent, shall be deemed conditioned upon: (i)
          Tenant acquiring all applicable permits required by governmental
          authorities; (ii) the furnishing of copies of such permits together
          with a copy of the plans and specifications for the Alteration or
          Utility Installation to Landlord prior to commencement of the work
          thereon; and (iii) the compliance by Tenant with all conditions of
          said permits in a prompt and expeditious manner. Any Alterations or
          Utility Installations by Tenant during the term of this Lease shall be
          done in a good and workmanlike manner, with good and sufficient
          materials, and be in compliance with all Applicable Requirements.
          Tenant shall promptly upon completion thereof furnish Landlord with
          as-built plans and specifications therefor. Landlord may, (but without
          obligation to do so) condition its consent to any requested Alteration
          or Utility Installation that costs two thousand five hundred dollars
          ($2,500.00) or more upon Tenant providing Landlord with a lien and
          completion bond in an amount equal to one and one-half times the
          estimated cost of such Alteration or Utility Installation.

     (c)  Lien Protection. Tenant shall pay when due all claims for labor or
          materials furnished or alleged to have been furnished to or for Tenant
          at or for use on the Premises, which claims are or may be secured by
          any mechanic's or materialmen's lien against the Premises or any
          interest therein. Tenant shall give Landlord not less than ten (10)
          days' notice prior to the commencement of any work in, on, or about
          the Premises, and Landlord shall have the right to post notices of
          non-responsibility in or on the Premises as provided by law. If Tenant
          shall, in good faith, contest the validity of any such lien, claim or
          demand, then Tenant shall, at its sole expense, defend and protect
          itself, Landlord and the Premises against the same and shall pay and
          satisfy any such adverse judgment that may be rendered thereon before
          the enforcement thereof against the Landlord or the Premises. If
          Landlord shall require, Tenant shall furnish to Landlord a surety bond
          satisfactory to Landlord in an amount equal to one and one-half times
          the amount of such contested lien, claim or demand, indemnifying
          Landlord against liability for the same, as required by law for the
          holding of the Premises free from the effect of such lien or claim. In
          addition, Landlord may require Tenant to pay Landlord's attorneys'
          fees and costs in participating in such action if Landlord shall
          decide it is to its best interest to do so.

8.4  Ownership, Removal, Surrender, and Restoration.

     (a)  Ownership. Subject to Landlord's right to require their removal and to
          cause Tenant to become the owner thereof as hereinafter provided in
          this Section 8.4, all Alterations and Utility Installations made to
          the Premises by Tenant shall be the property of and owned by Tenant,
          but considered a part of the Premises. Landlord may, at any time and
          at its option, elect in writing to Tenant to be the owner of all or
          any specified part of the Tenant-Owned Alterations and Utility
          Installations. Unless otherwise instructed per Section 8.4(b) hereof,
          a11 Tenant-Owned Alterations and Utility Installations shall, at the
          expiration or earlier termination of this Lease, become the property
          of Landlord and remain upon the Premises and be surrendered with the
          Premises by Tenant.

     (b)  Removal. Unless otherwise agreed in writing, Landlord may require that
          any or all Tenant-Owned Alterations or Utility Installations be
          removed by the expiration or earlier termination of this Lease,
          notwithstanding that their installation may have been consented to by
          Landlord. Landlord may require the removal at any time of all or any
          part of any Alterations or Utility Installations made without the
          required consent of Landlord.

     (c)  Surrender/Restoration. Tenant shall surrender the Premises by the end
          of the last day of the Lease term or any earlier termination date,
          clean and free of debris and in good operating order, condition and
          state of repair, ordinary wear and tear excepted. Ordinary wear and
          tear shall not include any damage or deterioration that would have
          been prevented by good maintenance practice or by Tenant performing
          all of its obligations under this Lease. Except as otherwise agreed or
          specified herein, the Premises, as surrendered, shall include the
          Alterations and Utility Installations. The obligation of Tenant shall
          include the repair of any damage occasioned by the installation,
          maintenance or removal of Tenant's Trade Fixtures, furnishings,
          equipment, and Tenant-Owned Alterations and Utility Installations, as
          well as the removal of any storage tank installed by or for Tenant,
          and the removal, replacement, or remediation of any soil, material or
          ground water contaminated by Tenant, all as may then be required by
          Applicable Requirements and/or good practice. Tenant's Trade Fixtures
          shall remain the property of Tenant and shall be removed by Tenant
          subject to its obligation to repair and restore the Premises per this
          Lease. Any Trade Fixtures, Alterations and/or Utility Installations
          not removed upon the expiration of this Lease shall be deemed
          abandoned and may be disposed of by Landlord, as Landlord may
          determine appropriate, without further notice to Tenant. Tenant shall
          pay Landlord all expenses incurred in connection with such items
          including, but not limited to, the costs of repairing any damage to
          the Premises caused by removal of such items. Tenant's obligation
          hereunder shall survive the expiration or other termination of the
          Lease.


9.   Insurance; Indemnity

     9.1  Payment of Premiums. The cost of the premiums for the insurance
          policies maintained by Landlord under this Section 9 shall be a Common
          Area Operating Expense pursuant to Section 4.2 hereof. Premiums for
          policy periods commencing prior to, or extending beyond, the term of
          this Lease shall be prorated to coincide with the corresponding
          Commencement Date or Expiration Date.

     9.2  Liability Insurance.

          (a)  Carried by Tenant. Tenant shall obtain and keep in force during
               the term of this Lease a commercial general liability policy of
               insurance protecting Tenant, Landlord and any Lender(s) whose
               names have been provided to Tenant in writing (as additional
               insured) against claims for bodily injury, personal injury and
               property damage based upon, involving or arising out of the
               ownership, use, occupancy or maintenance of the Premises and all
               areas appurtenant thereto. Such insurance shall be on an
               occurrence basis providing single limit coverage in an amount not
               less than two million dollars ($2,000,000) per occurrence with an
               "Additional Insured-Managers or Landlords of Premises"
               endorsement and contain the "Amendment at the Pollution
               Exclusion" endorsement for damage caused by heat, smoke or fumes
               from a hostile fire. The policy shall not contain any
               intra-insured exclusions as between insured persons or
               organizations, but shall include coverage for liability assumed
               under this Lease as an "insured contract" for the performance of
               Tenant's indemnity obligations under this Lease. The limits of
               said insurance required by this Lease or as carried by Tenant
               shall not, however, limit the liability of Tenant nor relieve
               Tenant of any obligation hereunder. All insurance to be carried
               by Tenant shall be primary to and not contributory with any
               similar insurance carried by Landlord, whose insurance shall be
               considered excess insurance only. In addition, Tenant shall
               maintain workers' compensation insurance as is required by state
               law.

          (b)  Carried By Landlord. Subject to reimbursement of premiums as
               described in Section 9.1, Landlord shall also maintain liability
               insurance described in Section 9.2(a) above, in addition to and
               not in lieu of, the insurance required to be maintained by
               Tenant. Tenant shall not be named as an additional insured
               therein.

                                        5
<PAGE>


     9.3  Property Insurance. Subject to reimbursement of premiums as described
          in Section 9.1, Landlord shall maintain property damage insurance on
          such portions of the Building Complex from time to time which Landlord
          has the obligation to maintain and repair under this Lease, above
          foundation walls, insuring against loss or damage by fire or other
          casualty covered by a so-called "special form" policy, in such
          amounts, and from companies and on such terms and conditions as
          Landlord deems appropriate from time to time. Tenant-Owned Alterations
          and Utility Installations, Trade Fixtures and Tenant's' personal
          property shall be insured by Tenant pursuant to Section 9.4. Landlord
          may also obtain and keep in force during the term of this Lease a
          policy or policies in the name of Landlord, with loss payable to
          Landlord and any Lender(s), insuring the loss of the full rental and
          other charges payable by all Tenants of the Building to Landlord for
          one year (including all Real Property Taxes, insurance costs, all
          Common Area Operating Expenses and any scheduled rental increases).
          Tenant shall pay for any increase in the premiums for the property
          insurance of the Building and for the Common Areas or other buildings
          in the Building Complex if said increase is caused by Tenant's acts,
          omissions, use or occupancy of the Premises.

     9.4  Tenant's Property Insurance. Subject to the requirements of Section
          9.5, Tenant at its cost shall either by separate policy or, at
          Landlord's option, by endorsement to a policy already carried,
          maintain insurance coverage on all of Tenant's personal property,
          Trade Fixtures and Tenant-Owned Alterations and Utility Installations
          in, on, or about the Premises similar in coverage to that carried by
          Landlord as the Insuring Party under Section 9.3. Such insurance shall
          be full replacement cost coverage with a deductible not to exceed
          $1,000 per occurrence. The proceeds from any such insurance shall be
          used by Tenant for the replacement of personal property and the
          restoration of Trade Fixtures and Tenant-Owned Alterations and Utility
          Installations. Upon request from Landlord, Tenant shall provide
          Landlord with written evidence that such insurance is in force.
          Insurance required of Tenant hereunder shall be in companies duly
          licensed to transact business in the state where the Premises are
          located, and maintaining during the policy term a "General
          Policyholders Rating" of at least B+, V, or such other rating as may
          be required by a Lender, as set forth in the most current issue of
          "Best's Insurance Guide." Tenant shall not do or permit to be done
          anything which shall invalidate the insurance policies referred to in
          this Section 9. Tenant shall cause to be delivered to Landlord, within
          seven (7) days after the earlier of the Delivery Date or the
          Commencement Date evidence of the existence and amounts of, the
          insurance required under Section 9.2(a) and 9.4. No such policy shall
          be cancelable or subject to modification except after thirty (30)
          days' prior written notice to Landlord. Tenant shall at least thirty
          (30) days prior to the expiration of such policies, furnish Landlord
          with evidence of renewals or "insurance binders" evidencing renewal
          thereof, or Landlord may order such insurance and charge the cost
          thereof to Tenant, which amount shall be payable by Tenant to Landlord
          upon demand.

     9.5  Waiver. Tenant and Landlord each hereby release and relieve the other,
          and waive their entire right to recover damages (whether in contract
          or in tort) against the other, for loss or damage to their property or
          for any business interruption arising out of or incident to the perils
          to the extent such loss or damage or business interruption is
          coverable by a standard or special form policy regardless of whether
          such insurance is carried or not, or if so carried, payable to or
          protects Landlord or Tenant or both. The effect of such releases and
          waivers of the right to recover damages shall not be limited by the
          amount of insurance carried or required, or by any deductibles
          applicable thereto. Landlord and Tenant agree to have their respective
          insurance companies issuing property damage insurance waive any right
          to subrogation that such companies may have against Landlord or
          Tenant, as the case may be, so long as the insurance is not
          invalidated thereby.

     9.6  Indemnity. Except for Landlord's willful misconduct, Tenant shall
          indemnify, protect, defend and hold harmless the Premises, Landlord
          and its agents, employees, Landlord's master or ground Landlord,
          members, partners and Lenders, from and against any and all claims,
          loss of rents and/or damages, costs, liens, judgments, penalties, loss
          of permits, attorneys' and consultants' fees, expenses and/or
          liabilities arising out of, involving, or in connection with, the
          occupancy of the Premises by Tenant, the conduct of Tenant's business,
          any act, omission or neglect of Tenant, its agents, contractors,
          employees or invitees, and out of any Default or Breach by Tenant in
          the performance in a timely manner of any obligation on Tenant's part
          to be performed under this Lease. The foregoing shall include, but not
          be limited to, the defense or pursuit of any claim or any action or
          proceeding involved therein, and whether or not (in the case of claims
          made against Landlord) litigated and/or reduced to judgment. In case
          any action or proceeding be brought against Landlord by reason of any
          of the foregoing matters, Tenant upon notice from Landlord shall
          defend the same at Tenant's expense by counsel reasonably satisfactory
          to Landlord and Landlord shall cooperate with Tenant in such defense.
          Landlord need not have first paid any such claim in order to be so
          indemnified. The provisions of this Section shall survive the
          expiration or termination of this Lease.

     9.7  Exemption of Landlord from Liability. Landlord shall not be liable for
          injury or damage to the person or goods, wares, merchandise or other
          property of Tenant, Tenant's employees, contractors, invitees,
          customers, or any other person in or about the Premises, whether such
          damage or injury is caused by or results from fire, steam,
          electricity, gas, water or rain or from the breakage, leakage,
          obstruction or other defects of pipes, fire sprinklers, wires,
          appliances, plumbing, air conditioning or lighting fixtures, or from
          any other cause, whether said injury or damage results from conditions
          arising upon the Premises or upon other portions of the Building of
          which the Premises are a part, from other sources or places, and
          regardless of whether the cause of such damage or injury or the means
          of repairing the same is accessible or not. Landlord shall not be
          liable for any damages arising from any act or neglect of any other
          Tenant of Landlord nor from the failure by Landlord to enforce the
          provisions of any other lease in the Building Complex. Notwithstanding
          Landlord's negligence or breach of this Lease, Landlord shall under no
          circumstances be liable for injury to Tenant's business or for any
          loss of income or profit therefrom, or for any consequential damages
          of Tenant. Notwithstanding anything to the contrary contained herein,
          Landlord's liability under this Lease shall be limited to its interest
          in the Building Complex.


10.  Damage or Destruction.

     10.1 Total Damage. If the Premises or the Building shall be so damaged by
          fire or other casualty as to render the Premises wholly untenantable
          and if such damage shall be so great that a competent architect, in
          good standing, selected by Landlord shall certify in writing to
          Landlord and Tenant within ninety (90) days of said casualty that the
          Premises, with the exercise of reasonable diligence, cannot be made
          fit for occupancy within one hundred eighty (180) working days from
          the happening thereof, then this Lease shall cease and terminate from
          the date of the occurrence of such damage and Tenant shall thereupon
          surrender to Landlord the Premises and all interest therein hereunder
          and Landlord may reenter and take possession of the Premises and
          remove Tenant therefrom. Tenant shall pay rent, duly apportioned, up
          to the time of such termination of this Lease. If, however, the damage
          shall be such that said architect shall certify within said ninety
          (90) day period that the Premises can be made tenantable within said
          one hundred eighty (180) day period, then, except as hereinafter
          provided, Landlord shall repair the damage so done (to the extent of
          the Building Standard tenant finish allowance then provided by
          Landlord to tenants in the Building) with all reasonable speed.

     10.2 Partial Damage. If the Premises shall be slightly damaged by fire or
          other casualty, but not so as to render the same wholly untenantable
          or to require a repair period in excess of one hundred eighty (180)
          days, then, Landlord, after receiving notice in writing of the
          occurrence of the casualty, except as hereafter provided, shall cause
          the same to be repaired to the extent of the base tenant finish per
          the then-current standard allowance provided by Landlord to tenants in
          the Building with reasonable promptness. If the estimated repair
          period as established in accordance with the provisions of
          subparagraph 10.1 above exceeds one hundred eighty (180) days, then
          the provisions of subparagraph 10.1 shall control notwithstanding the
          fact that the Premises are not wholly untenantable.

     10.3 Building Damage. In case the Building throughout shall be so injured
          or damaged, whether by fire or otherwise (though said Premises may not
          be affected, or if affected, can be repaired within said one hundred
          eighty (180) days), that, within ninety (90) days after the happening
          of such injury, Landlord shall decide not to reconstruct or rebuild
          said Building, then, notwithstanding anything contained herein to the
          contrary, upon notice in writing to that effect given by Landlord to
          Tenant within said ninety (90) days, Tenant shall pay the rent,
          properly apportioned up to such date, this Lease shall terminate from
          the date of delivery of said written notice, and both parties hereto
          shall be freed and discharged of all further obligations hereunder.

     10.4 Rent Abatement. Provided that the casualty is not the fault of Tenant,
          Tenant's agents, servants, or employees. Tenant's

                                        6
<PAGE>


          rent shall abate during any such period of Landlord's repair and
          restoration, but only to the extent of any recovery by Landlord under
          its rental insurance related to the Premises in the same proportion
          that the part of the Premises rendered untenantable bears to the
          whole.

     10.5 Tenant's Obligation. In the event the Lease is not terminated, Tenant
          shall, at its expense, replace or fully repair Tenant's personal
          property and Alterations and/or Utility Installations installed by
          Tenant in the Premises existing on the date of the occurrence of the
          casualty and Tenant shall fully cooperate with Landlord in removing
          Tenant's personal property and any debris from the Premises to
          facilitate making of repairs.


11.  Real Property Taxes.

     11.1 Payment of Taxes. Landlord shall pay the Real Property Taxes, as
          defined in Section 11.2, applicable to the Building Complex, and
          except as otherwise provided in Section 11.3, any such amounts shall
          be included in the calculation of Common Area Operating Expenses in
          accordance with the provisions of Section 4.2.

     11.2 Real Property Tax Definition. As used herein, the term "Real Property
          Taxes" shall include any form of real estate tax or assessment,
          general, special, ordinary or extraordinary, and any license fee,
          commercial rental tax, improvement bond or bonds, levy or tax (other
          than inheritance, personal income or estate taxes) imposed upon the
          Building Complex by any authority having the direct or indirect power
          to tax, including any city, state or federal government, or any
          school, agricultural, sanitary, fire, street, drainage, or other
          improvement district thereof, levied against any legal or equitable
          interest of Landlord in the Building Complex or any portion thereof,
          Landlord's right to rent or other income therefrom, and/or Landlord's
          business of leasing the Premises. The term "Real Property Taxes" shall
          also include any tax, fee, levy, assessment or charge, or any increase
          therein, imposed by reason of events occurring, or changes in
          Applicable Law taking effect, during the term of this Lease, including
          but not limited to a change in the ownership of the Building Complex
          or in the improvements thereon, the execution of this Lease, or any
          modification, amendment or transfer thereof, and whether or not
          contemplated by the Parties, and any reasonable expenses incurred by
          Landlord in contesting such taxes or assessment of the Building
          Complex. In calculating Real Property Taxes for any calendar year, the
          Real Property Taxes for any real estate tax year shall be included in
          the calculation of Real Property Taxes for such calendar year based
          upon the number of days which such calendar year and tax year have in
          common.

     11.3 Additional Improvements. Common Area Operating Expenses shall not
          include Real Property Taxes specified in the tax assessor's records
          and work sheets as being caused by additional improvements placed upon
          the Building Complex by other tenants or by Landlord for the exclusive
          enjoyment of such other tenants. Notwithstanding Section 11.1 hereof,
          Tenant shall, however, pay to Landlord at the time Common Area
          Operating Expenses are payable under Section 4.2, the entirety of any
          increase in Real Property Taxes if assessed solely by reason of
          Alterations, Trade Fixtures or Utility Installations placed upon the
          Premises by Tenant or at Tenant's request.

     11.4 Joint Assessment. If the Building is not separately assessed, Real
          Property Taxes allocated to the Building shall be an equitable
          proportion of the Real Property Taxes for all of the land and
          improvements included within the tax parcel assessed, such proportion
          to be determined by Landlord from the respective valuations assigned
          in the assessor's work sheets or such other information as may be
          reasonably available. Landlord's reasonable determination thereof, in
          good faith, shall be conclusive.

     11.5 Tenant's Taxes. Tenant shall pay prior to delinquency all taxes
          assessed against and levied upon Tenant-Owned Alterations and Utility
          Installations, Trade Fixtures, furnishings, equipment and all personal
          property of Tenant contained in the Premises or stored within the
          Building Complex. When possible, Tenant shall cause its Tenant-Owned
          Alterations and Utility Installations, Trade Fixtures, furnishings,
          equipment and all other personal property to be assessed and billed
          separately from the real property of Landlord. If any of Tenant's said
          property shall be assessed with Landlord's real property, Tenant shall
          pay Landlord the taxes attributable to Tenant's property within ten
          (10) days after receipt of a written statement setting forth the taxes
          applicable to Tenant's property. In addition, Tenant shall pay all
          taxes, including, without limitation, workers' compensation, general
          license or franchise taxes and rent taxes, if any, which may be
          required for the conduct of Tenant's business.

12.  Utilities. Tenant shall pay directly for all utilities and services
     supplied to the Premises, including but not limited to electricity,
     telephone, security, gas and cleaning of the Premises, together with any
     taxes thereon. If any such utilities or services are not separately metered
     to the Premises or separately billed to the Premises, Tenant shall pay to
     Landlord a reasonable proportion to be determined by Landlord of all such
     charges jointly metered or billed with other premises in the Building, in
     the manner and within the time periods set forth in Section 4.2(d). In
     addition, Tenant shall reimburse Landlord for the reasonable costs incurred
     by Landlord in providing services which are shared by more than one tenant
     after ordinary business hours, including, without limitation, the costs for
     materials, additional wear and tear on equipment, utility charges and labor
     (including fringe benefits and overhead costs). Computation for Landlord's
     costs for providing such services will be made by Landlord's engineer,
     based on such engineer's survey of Tenant's excess usage.


13.  Assignment and Subletting.

     13.1 Landlord's Consent Required.

          (a)  Tenant shall not voluntarily or by operation of law assign,
               transfer, mortgage or otherwise transfer or encumber
               (collectively, "assign") or sublet a11 or any part of Tenant's
               interest in this Lease or in the Premises without Landlord's
               prior written consent, which consent will not unreasonably be
               withheld provided that (i) Tenant has complied with the
               provisions of this subparagraph and Landlord has declined to
               exercise its rights thereunder; (ii) the proposed subtenant or
               assignee is engaged in a business in the Premises which will be
               used in a manner which is in keeping with the then standards of
               the Building Complex and does not conflict with any exclusive use
               rights granted to any other tenant; (iii) the proposed subtenant
               or assignee has reasonable financial worth in light of the
               responsibilities involved and Tenant shall have provided Landlord
               with reasonable evidence thereof; (iv) Tenant is not in default
               hereunder at the time it makes its request for such consent; (v)
               the proposed subtenant or assignee is not a governmental or
               quasi-governmental agency; (vi) the proposed subtenant or
               assignee is not a tenant under or is not currently negotiating a
               lease with Landlord in any building owned by Landlord in the
               Denver metropolitan area (including in the Building Complex); or
               (vii) the rent under such sublease or assignment is not less than
               the rent to be paid by Tenant for such space under the Lease and
               is not less than eighty-five percent (85%) of the rental rate
               then being offered by Landlord for similar space in the Building
               Complex. Notwithstanding anything contained in Section 13 to the
               contrary, in the event Tenant requests Landlord's consent to
               sublet all or a portion of the Premises or to assign its interest
               in this Lease, Landlord shall have the right to (x) consent to
               such sublease or assignment in its reasonable discretion as
               described in the preceding sentences; (y) refuse to grant such
               consent in Landlord's reasonable discretion based upon the
               criteria described above; or (z) refuse to grant such consent and
               terminate this Lease as to the portion of the Premises with
               respect to which such consent was requested; provided, however,
               if Landlord refuses to grant such consent and elects to terminate
               the Lease as to such portion of the Premises, Tenant shall have
               the right within fifteen (15) days after Landlord's exercise of
               its right to terminate to withdraw Tenant's request for such
               consent and remain in possession of the Premises under the terms
               and conditions hereof. In the event the Lease is terminated as
               set forth herein, such termination shall be effective as of the
               date set forth in a written notice from Landlord to Tenant, which
               date shall in no event be more than thirty (30) days following
               such notice. Tenant hereby agrees that in the event it desires to
               sublease all or any portion of the Premises or assign this Lease
               to any party, in whole or in part, Tenant shall notify Landlord
               not less than sixty (60) days prior to the date Tenant desires to
               sublease such portion of the Premises or assign this Lease
               ("Tenant's Notice"). Tenant's Notice shall set forth a
               description of the Premises to be so sublet or assigned and the
               terms and conditions on which Tenant desires to sublet the
               Premises or assign this Lease. Landlord shall have forty-five
               (45) days following receipt of Tenant's Notice to exercise
               Landlord's rights pursuant to (x), (y) and (z) above. If Landlord
               consents to such sublease or assignment, and if for any reason
               Tenant is unable to sublet said portion of the Premises or assign
               the applicable portion of its interest in this Lease on the terms
               and conditions contained in Tenant's Notice within one hundred
               and twenty (120) days following its original notice to Landlord,
               Tenant agrees to re-offer the Premises to Landlord in accordance
               with the provisions hereof prior to subleasing or assigning the
               same to any third party.

          (b)  A change in the control of Tenant shall constitute an assignment
               requiring Landlord's consent. The transfer, on a cumulative
               basis, of twenty-five percent (25%) or more of the voting control
               of Tenant, shall constitute a change in control for this purpose.

                                        7
<PAGE>

          (c)  The involvement of Tenant or its assets in any transaction or
               series of transactions (by way of merger, sale, acquisition,
               financing, refinancing, transfer, leveraged buy-out or
               otherwise), whether or not a formal assignment or hypothecation
               of this Lease or Tenant's assets occurs, which results or will
               result in a reduction of the Net Worth of Tenant, as hereinafter
               defined, by an amount equal to or greater than twenty-five
               percent (25%) of such Net Worth of Tenant as it was represented
               to Landlord at the time of full execution and delivery of this
               Lease, or at the time of the most recent assignment to which
               Landlord has consented, or as it exists immediately prior to said
               transaction or transactions constituting such reduction, at
               whichever time said Net Worth of Tenant was or is greater, shall
               be considered an assignment of this Lease by Tenant to which
               Landlord may reasonably withhold its consent. "Net Worth of
               Tenant" for purposes of this Lease shall be the net worth of
               Tenant (excluding any Guarantors) established under generally
               accepted accounting principles consistently applied.

          (d)  An assignment or subletting of Tenant's interest in this Lease
               without Landlord's specific prior written consent shall, at
               Landlord's option, be a Default curable after notice per Section
               13.1, or a non-curable Default without the necessity of any
               notice and grace period. If Landlord elects to treat such
               unconsented assignment or subletting as a non-curable Default,
               Landlord shall have the right to either: (i)terminate this Lease,
               or (ii) upon thirty (30) days written notice ("Landlord's
               Notice"), increase the monthly Base Rent for the Premises to the
               greater of the then fair market rental value of the Premises, as
               reasonably determined by Landlord, or one hundred ten percent
               (110%) of the Base Rent then in effect. Pending determination of
               the new fair market rental value, if disputed by Tenant, Tenant
               shall pay the amount set forth in Landlord's Notice, with any
               overpayment credited against the next installment(s) of Base Rent
               coming due, and any underpayment for the period retroactively to
               the effective date of the adjustment being due and payable
               immediately upon the determination thereof. Further, in the event
               of such Default and rental adjustment, (i) the purchase price of
               any option to purchase the Premises held by Tenant shall be
               subject to similar adjustment to the then fair market value as
               reasonably determined by Landlord (without the Lease being
               considered an encumbrance or any deduction for depreciation or
               obsolescence, and considering the Premises at its highest and
               best use and in good condition) or one hundred ten percent (110%)
               of the price previously in effect; (ii) any index-oriented rental
               or price adjustment formulas contained in this Lease shall be
               adjusted to require that the base index be determined with
               reference to the index applicable to the time of such adjustment;
               and (iii) any fixed rental adjustments scheduled during the
               remainder of the Lease term shall be increased in the same ratio
               as the new rental bears to the Base Rent in effect immediately
               prior to the adjustment specified in Landlord's Notice.

          (e)  Tenant's remedy for any breach of this Section 13.1 by Landlord
               shall be limited to compensatory damages and/or injunctive
               relief.

     13.2 Terms and Conditions Applicable to Assignment and Subletting.

          (a)  Regardless of Landlord's consent any assignment or subletting
               shall not (i) be effective without the express written assumption
               by such assignee or subtenant of the obligations of Tenant under
               this Lease; (ii) release Tenant of any obligations hereunder; nor
               (iii) alter the primary liability of Tenant for the payment of
               Base Rent and other sums due Landlord hereunder or for the
               performance of any other obligations to be performed by Tenant
               under this Lease.

          (b)  Landlord may accept any rent or performance of Tenant's
               obligations from any person other than Tenant pending approval or
               disapproval of an assignment. Neither a delay in the approval or
               disapproval of such assignment nor the acceptance of any rent for
               performance shall constitute a waiver or estoppel of Landlord's
               right to exercise its remedies for the Default or breach by
               Tenant of any of the terms, covenants or conditions of this
               Lease.

          (c)  The consent of Landlord to any assignment or subletting shall not
               constitute a consent to any subsequent assignment or subletting
               by Tenant or to any subsequent or successive assignment or
               subletting by the assignee or subtenant. However Landlord may
               consent to subsequent sublettings and assignments of the sublease
               or any amendments or modifications thereto without notifying
               Tenant or anyone else liable under this Lease or the sublease and
               without obtaining their consent, and such action shall not
               relieve such persons from liability under this Lease or the
               sublease.

          (d)  In the event of any Default of Tenant's obligations under this
               Lease, Landlord may proceed directly against Tenant, any
               Guarantors or anyone else responsible for the performance of the
               Tenant's obligations under this Lease, including any subtenant,
               without first exhausting Landlord's remedies against any other
               person or entity responsible therefor to Landlord, or any
               security held by Landlord.

          (e)  Each request for consent to an assignment or subletting shall be
               in writing, accompanied by information relevant to Landlord's
               determination as to the financial and operational responsibility
               and appropriateness of the proposed assignee or subtenant,
               including but not limited to the intended use and/or required
               modification of the Premises, if any, together with a
               non-refundable deposit of one thousand dollars ($1,000.00) or ten
               percent (10%) of the monthly Base Rent applicable to the portion
               of the Premises which is the subject of the proposed assignment
               or sublease, whichever is greater, as reasonable consideration
               for Landlord's considering and processing the request for
               consent. Tenant agrees to provide Landlord with such other or
               additional information and/or documentation as may be reasonably
               requested by Landlord.

          (f)  Any assignee of, or subtenant under this Lease shall, by reason
               of accepting such assignment or entering into such sublease, be
               deemed for the benefit of Landlord, to have assumed and agreed to
               conform and comply with each and every term, covenant, condition
               and obligation herein to be observed or performed by Tenant
               during the term of said assignment or sublease, other than such
               obligations as are contrary to or inconsistent with provisions of
               an assignment or sublease to which Landlord has specifically
               consented in writing.

          (g)  The occurrence of a transaction described in Section 13.2(c)
               shall give Landlord the right (but not the obligation) to require
               that the Security Deposit be increased by an amount equal to six
               (6) times the then monthly Base Rent, and Landlord may make the
               actual receipt by Landlord of the Security Deposit increase a
               condition to Landlord's consent to such transaction.

          (h)  Landlord, as a condition to giving its consent to any assignment
               or subletting, may require that the amount and adjustment
               schedule of the rent payable under this Lease be adjusted to what
               is then the market value and/or adjustment schedule for property
               similar to the Premises as then constituted, as determined by
               Landlord.

          (i)  If Tenant collects any rental or other amounts from a subtenant
               or assignee in excess of the Base Rent and Tenant's Share of
               Common Area Operating Expenses, Tenant shall pay the Landlord, as
               and when Tenant receives the same, all such excess amounts
               received by Tenant less any improvements, brokers' fees,
               advertising expenses or other concessions to the extent all of
               the above are actually paid for by Tenant in the procurement of a
               subtenant or assignee.

     13.3 Additional Terms and Conditions Applicable to Subletting. The
          following terms and conditions shall apply to any subletting by Tenant
          of all or any part of the Premises and shall be deemed included in all
          subleases under this Lease whether or not expressly incorporated
          therein:

          (a)  Tenant hereby assigns and transfers to Landlord all of Tenant's
               interest in all rentals and income arising from any sublease of
               all or a portion of the Premises heretofore or hereafter made by
               Tenant, and Landlord may collect such rent and income and apply
               same toward Tenant's obligations under the Lease; provided,
               however, that until a Default (as defined in Section 14.1) shall
               occur in the performance of Tenant's obligations under this
               Lease, Tenant may, except as otherwise may be provided in this
               Lease, receive, collect and enjoy the rents accruing under such
               sublease. Landlord shall not, by reason of the foregoing
               provision except as otherwise provided in this Lease,

                                        8
<PAGE>

               receive, collect and enjoy the rents accruing under such
               sublease. Landlord shall not, by reason of the foregoing
               provision or any other assignment of such sublease to Landlord,
               nor by reason of the collection of the rents from a subtenant, be
               deemed liable to the subtenant for any failure of Tenant to
               perform and comply with any of Tenant's obligations to such
               sublease under such Sublease. Tenant hereby irrevocably
               authorizes and directs any such sublease, upon receipt of a
               written notice from Landlord stating that a Default exists in the
               performance of Tenant's obligations under this Lease to pay to
               Landlord the rents and other charges due and to become due under
               the sublease. Subtenant shall rely upon any such statement and
               request from Landlord and shall pay such rents and other charges
               to Landlord without any obligation or right to inquire as to
               whether such Default exists and notwithstanding any notice from
               or claim from Tenant to the contrary, Tenant shall have no right
               or claim against such subtenant, or, until the Default has been
               cured, against Landlord, for any such rents and other charges so
               paid by said subtenant to Landlord.

          (b)  In the event of a Default by Tenant in the performances of its
               obligations under this Lease, Landlord, at its option and without
               any obligation to do so, may require any subtenant to attorn to
               Landlord, in which event Landlord shall undertake the obligations
               of the sublandlord under such sublease from the time of the
               exercise of said option to the expiration of such subleases;
               provided, however, Landlord shall not be liable for any prepaid
               rents or security deposit paid by such subtenant to such
               sublandlord or for any other prior defaults or breaches of such
               sublandlord under such sublease.

          (c)  Any matter or thing requiring the consent of the sublandlord
               under a sublease shall also require the consent of Landlord
               herein.

          (d)  No subtenant under a sublease approved by Landlord shall further
               assign or sublet all or any part of the Premises without
               Landlord's prior written consent, which may be granted or denied
               in Landlord's sole discretion.


14. Default; Remedies.

     14.1 Default. A "Default" or "Event of Default" by Tenant is defined as a
          failure by Tenant to observe, comply with or perform any of the terms,
          covenants, conditions or rules applicable to Tenant under this Lease.
          Each one of the following shall be an event of default:

          (a)  The vacating of the Premises without the intention to reoccupy
               same, or the abandonment of the Premises.

          (b)  Except as expressly otherwise provided in this Lease, the failure
               by Tenant to make any payment of Base Rent, Tenant's Share of
               Common Area Operating Expenses, or any other monetary payment
               required to be made by Tenant hereunder as and when due, the
               failure by Tenant to provide Landlord with reasonable evidence of
               insurance or surety bond required under this Lease, or the
               failure of Tenant to fulfill any obligation under this Lease
               which endangers or threatens life or property, where such failure
               continues for a period of three (3)days following written notice
               thereof by or on behalf of Landlord to Tenant.

          (c)  Except as expressly otherwise provided in this Lease, the failure
               by Tenant to provide Landlord with reasonable written evidence
               (in duly executed original form, if applicable) of (i) compliance
               with Applicable Requirements per Section 7.4; (ii) the
               inspection, maintenance and service contracts required by Section
               8.l(b); (iii) the rescission of an unauthorized assignment or
               subletting per Section 13; (v) a Tenancy Statement per Sections
               17 or 37; (vi) the subordination or non-subordination of this
               Lease per Section 31; (vi) the guaranty of the performance of
               Tenant's obligations under this Lease if required under Sections
               1.12 and 37; (vii) the execution of any document requested under
               Section 41 (easements); or (viii) any other documentation or
               information which Landlord may reasonably require of Tenant under
               the terms of this Lease, where any such failure continues for a
               period of ten (10) days following written notice by or on behalf
               of Landlord to Tenant.

          (d)  A Default by Tenant as to the terms, covenants, conditions or
               provisions of this Lease, or of the rules adopted under Section
               39 hereof that are to be observed, complied with or performed by
               Tenant, other than those described in Subparagraphs 14.l(a), (b)
               or (c) above, where such Default continues for a period of thirty
               (30) days after written notice thereof by or on behalf of
               Landlord to Tenant; provided, however, that if the nature of
               Tenant's Default is such that more than thirty (30) days are
               reasonably required for its cure, then it shall not be deemed to
               be a Breach of this Lease by Tenant if Tenant commences such cure
               within said thirty (30) day period and thereafter diligently
               prosecutes such cure to completion.

          (e)  The occurrence of any of the following events: (i) the making by
               Tenant of any general arrangement or assignment for the benefit
               of creditors; (ii) Tenant's becoming a "debtor" as defined in 11
               U.S. Code Section 101 or any successor statute thereto (unless,
               in the case of a petition filed against Tenant, the same is
               dismissed within sixty (60) days); (iii) the appointment of a
               trustee or receiver to take possession of substantially all of
               Tenant's assets located at the Premises or of Tenant's interest
               in this Lease, where possession is not restored to Tenant within
               thirty (30) days; or (iv) the attachment, execution or other
               judicial seizure of substantially all of Tenant's assets located
               at the Premises or of Tenant's interest in this Lease, where such
               seizure is not discharged within thirty (30) days; provided,
               however, in the event that any provision of this subparagraph
               14.1(e) is contrary to any applicable law, such provision shall
               be of no force or effect, and shall not affect the validity of
               the remaining provisions.

          (f)  The discovery by Landlord that any financial statement of Tenant
               or of any Guarantor, given to Landlord by Tenant or any
               Guarantor, was materially false.

          (g)  If the performance of Tenant's obligations under this Lease is
               guaranteed: (i) the death of a Guarantor; (ii) the termination of
               a Guarantor's liability with respect to the Lease other than in
               accordance with the terms of such guaranty; (iii) a Guarantor's
               becoming insolvent or the subject of a bankruptcy filing; (iv) a
               Guarantor's refusal to honor the guaranty; or (v) a Guarantor's
               breach of its guaranty obligation on an anticipatory breach
               basis, and Tenant's failure within sixty (60) days following
               written notice by or on behalf of Landlord to Tenant of any such
               event, to provide Landlord with written alternative assurances of
               security, which, when coupled with the then existing resources of
               Tenant, equals or exceeds the combined financial resources of
               Tenant and the Guarantors that existed at the time of execution
               of this Lease.

     14.2 Remedies

          (a)  If any one or more Event of Default shall happen, then Landlord
               shall have the right at Landlord's election, then or at any time
               thereafter either:

               (l)(a) Without demand or notice, to reenter and take possession
                    of the Premises or any part thereof and repossess the same
                    as of Landlord's former estate and expel Tenant and those
                    claiming possession through or under Tenant and remove the
                    effects of both or either, without being deemed guilty of
                    any manner of trespass and without prejudice to any remedies
                    for arrears of rent or preceding breach of covenants or
                    conditions. Should Landlord elect to reenter; as provided in
                    this subparagraph (1), or should Landlord take possession
                    pursuant to legal proceedings or pursuant to any notice
                    provided for by law, Landlord may, from time to time,
                    without terminating this Lease, relet the Premises or any
                    part thereof, either alone or in conjunction with other
                    portions of the Building of which the Premises are a part,
                    in Landlord's or Tenant's name but for the account of
                    Tenant, for such term or terms (which may be greater or less
                    than the period which would otherwise have constituted the
                    balance of the term of this Lease) and on such conditions
                    and upon such other terms (which may include concessions of
                    free rent and alteration and repair of the Premises) as
                    Landlord, in its absolute discretion, may determine and
                    Landlord may collect and receive the rents therefor.
                    Landlord shall in no way be responsible or liable for any
                    failure to relet the Premises, or any part thereof, or for
                    any failure to collect any rent due upon such reletting;
                    provided, however, Landlord shall use reasonable efforts to
                    relet the Premises. No such reentry or taking possession of
                    the Premises by Landlord shall be construed as an election
                    on Landlord's part to terminate this Lease unless a written
                    notice of such intention be given to Tenant. No notice from
                    Landlord hereunder or under a forcible entry and detainer
                    statute or similar

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<PAGE>



                    law shall constitute an election by Landlord to terminate
                    this Lease unless such notice specifically so states.
                    Landlord reserves the right following any such reentry
                    and/or reletting to exercise its right to terminate this
                    Lease by giving Tenant such written notice, in which event
                    the Lease will terminate as specified in said notice.

               (1)(b) If Landlord elects to take possession of the Premises as
                    provided in this subparagraph (1) without terminating the
                    Lease, Tenant shall pay to Landlord (i) the rent and other
                    sums as herein provided, which would be payable hereunder if
                    such repossession had not occurred, less (ii) the net
                    proceeds, if any, of any reletting of the Premises after
                    deducting all of Landlord's expenses incurred in connection
                    with such reletting, including, but without limitation, all
                    repossession costs, brokerage commissions, legal expenses,
                    attorneys' fees, expenses of employees, alteration,
                    remodeling, and repair costs and expenses of preparation for
                    such reletting. If, in connection with any reletting, the
                    new lease term extends beyond the existing term or the
                    premises covered thereby include other premises not part of
                    the Premises, a fair apportionment of the rent received from
                    such reletting and the expenses incurred in connection
                    therewith, as provided aforesaid, will be made in
                    determining the net proceeds received from such reletting.
                    In addition, in determining the net proceeds from such
                    reletting, any rent concessions will be apportioned over the
                    term of the new lease. Tenant shall pay such amounts to
                    Landlord monthly on the days on which the rent and all other
                    amounts owing hereunder would have been payable if
                    possession had not been retaken and Landlord shall be
                    entitled to receive the same from Tenant on each such day;
                    or

               (2)(a) To give Tenant written notice of intention to terminate
                    this Lease on the date of such given notice or on any later
                    date specified therein and, on the date specified in such
                    notice, Tenant's right to possession of the Premises shall
                    cease and the Lease shall thereupon be terminated, except as
                    to Tenant's liability hereunder as hereinafter provided, as
                    if the expiration of the term fixed in such notice were the
                    end of the term herein originally demised. In the event this
                    Lease is terminated pursuant to the provisions of this
                    subparagraph (2), Lessee shall remain liable to Landlord for
                    damages in an amount equal to the rent and other sums which
                    would have been owing by Tenant hereunder for the balance of
                    the term had this Lease not been terminated less the net
                    proceeds, if any, of any reletting of the Premises by
                    Landlord subsequent to such termination, after deducting all
                    Landlord's expenses in connection with such reletting,
                    including, but without limitation, the expenses enumerated
                    above. Landlord shall be entitled to collect such damages
                    from Tenant monthly on the days on which the rent and other
                    amounts would have been payable hereunder if this Lease had
                    not been terminated and Landlord shall be entitled to
                    receive the same from Tenant on each such day.
                    Alternatively, at the option of Landlord, in the event this
                    Lease is terminated, Landlord shall be entitled to recover
                    forthwith against Tenant as damages for loss of the bargain
                    and not as a penalty an amount equal to the worth at the
                    time of termination of the excess, if any, of the amount of
                    rent reserved in this Lease for the balance of the term
                    hereof over the then Reasonable Rental Value of the Premises
                    for the same period plus all amounts incurred by Landlord in
                    order to obtain possession of the Premises and relet the
                    same, including attorneys' fees, reletting expenses,
                    alterations and repair costs, brokerage commissions and all
                    other like amounts. It is agreed that the "Reasonable Rental
                    Value" shall be the amount of rental which Landlord can
                    obtain as rent for the remaining balance of the term.

          (b)  Suit or suits for the recovery of the rents and other amounts and
               damages set forth hereinabove may be brought by Landlord, from
               time to time, at Landlord's election, and nothing herein shall be
               deemed to require Landlord to await the date whereon this Lease
               or the term hereof would have expired had there been no such
               default by Tenant or no such termination, as the case may be.
               Each right and remedy provided for in this Lease shall be
               cumulative and shall be in addition to every other right or
               remedy provided for in this Lease or now or hereafter existing at
               law or in equity or by statute or otherwise, including, but not
               limited to, suits for injunctive relief and specific performance.
               The exercise or beginning of the exercise by Landlord of any one
               or more of the rights or remedies provided for in this Lease or
               now or hereafter existing at law or in equity or by statute or
               otherwise shall not preclude the simultaneous or later exercise
               by Landlord of any or all other rights or remedies provided for
               in this Lease or now or hereafter existing at law or in equity or
               by statute or otherwise. All such rights and remedies shall be
               considered cumulative and non-exclusive. All costs incurred by
               Landlord in connection with collecting any rent or other amount
               and damages owing by Tenant pursuant to the provisions of this
               Lease, or to enforce any provision of this Lease, shall also be
               recoverable by Landlord from Tenant. Further, if an action is
               brought pursuant to the terms and provisions of the Lease, the
               prevailing party in such action shall be entitled to recover from
               the other party any and all reasonable attorneys' fees incurred
               by such prevailing party in connection with such action.

          (c)  No failure by Landlord to insist upon the strict performance of
               any agreement, term, covenant or condition hereof or to exercise
               any right or remedy consequent upon a Default thereof and no
               acceptance of full or partial rent during the continuance of any
               such Default shall constitute a waiver of any such Default or of
               such agreement, term, covenant, or condition. No agreement, term,
               covenant, or condition hereof to be performed or complied with by
               Tenant and no Default thereof shall be waived, altered, or
               modified, except by written instrument executed by Landlord. No
               waiver of any Default shall affect or alter this Lease but each
               and every agreement, term, covenant, and condition hereof shall
               continue in full force and effect with respect to any other then
               existing or subsequent Default thereof. Notwithstanding any
               termination of this Lease, the same shall continue in force and
               effect as to any provisions which require observance or
               performance by Landlord or Tenant subsequent to such termination.

          (d)  Nothing contained in this Section 14 shall limit or prejudice the
               right of Landlord to prove and obtain as liquidated damages in
               any bankruptcy, insolvency, receivership, reorganization, or
               dissolution proceeding an amount equal to the maximum allowed by
               any statute or rule of law governing such a proceeding and in
               effect at the time when such damages are to be proved, whether or
               not such amount be greater, equal to, or less than the amounts
               recoverable, either as damages or rent, referred to in any of the
               preceding provisions of this Section. Notwithstanding anything
               contained in this Section to the contrary, any such proceeding or
               action involving bankruptcy, insolvency, reorganization,
               arrangement, assignment for the benefit of creditors, or
               appointment of a receiver or trustee, as set forth above, shall
               be considered to be an Event of Default only when such
               proceeding, action, or remedy shall be taken or brought by or
               against the then holder of the leasehold estate under this
               Lease."

          (e)  Pursue any other remedy now or hereafter available to Landlord
               under the laws or judicial decisions of the state wherein the
               Premises are located.

          (f)  The expiration or termination of this Lease and/or the
               termination of Tenant's right to possession shall not relieve
               Tenant from liability under any indemnity provisions of this
               Lease as to matters occurring or accruing during the term hereof
               or by reason of Tenant's occupancy of the Premises.

     14.3 Inducement Recapture in Event of Default. Any agreement by Landlord
          for free or abated rent or other charges applicable to the Premises,
          or for the giving or paying by Landlord to or for Tenant of any cash
          or other bonus, inducement or consideration for Tenant's entering into
          this Lease, all of which concessions are hereinafter referred to as
          "Inducement Provisions" shall be deemed conditioned upon Tenant's full
          and faithful performance of all of the terms, covenants and conditions
          of this Lease to be performed or observed by Tenant during the term
          hereof as the same may be extended upon the occurrence of a Default
          (as defined in Section 14.1) of this Lease by Tenant, any such
          Inducement Provision shall automatically be deemed deleted from this
          Lease and of no further force or effect, and any rent, other charge,
          bonus, inducement or consideration theretofore abated, given or paid
          by Landlord under such an Inducement Provision shall be immediately
          due and payable by Tenant to Landlord, and recoverable by Landlord, as
          additional rent due under this Lease, notwithstanding any subsequent
          cure of said Default by Tenant. The acceptance by Landlord of rent or
          the cure of the Default which initiated the operation of this Section
          14.3 shall not be deemed a waiver by Landlord of the provisions of
          this Section 14.3 unless specifically so stated in writing by Landlord
          at the time of such acceptance.

     14.4 Late Charges. Tenant hereby acknowledges that late payment by Tenant
          to Landlord of rent and other sums due hereunder will cause Landlord
          to incur costs not contemplated by this Lease, the exact amount of
          which will be extremely difficult to ascertain. Such costs include,
          but are not limited to, processing and accounting charges, and late
          charges which may be imposed upon Landlord by the terms of any ground
          lease, mortgage or deed of trust covering the Premises. Accordingly,
          if any installment of rent or other sum due from Tenant

                                       10
<PAGE>


          shall not be received by Landlord or Landlord's designee within five
          (5) days after such amount shall be due, then, without any requirement
          for notice to Tenant. Tenant shall pay to Landlord a late charge equal
          to five percent (5%) of such overdue amount. The parties hereby agree
          that such late charge represents a fair and reasonable estimate of the
          costs Landlord will incur by reason of late payment by Tenant.
          Acceptance of such late charge by Landlord shall in no event
          constitute a waiver of Tenant's Default with respect to such overdue
          amount, nor prevent Landlord from exercising any of the other rights
          and remedies granted hereunder. In the event that a late charge is
          payable hereunder, whether or not collected for three (3) consecutive
          installments of Base Rent, then notwithstanding Section 4.1 or any
          other provision of this Lease to the contrary, Base Rent shall, at
          Landlord's option, become due and payable quarterly in advance.

     14.5 Default by Landlord. Landlord shall not be deemed in default of this
          Lease unless Landlord fails within a reasonable time to perform an
          obligation required to be performed by Landlord. For purposes of this
          Section 14.5, a reasonable time shall in no event be less than thirty
          (30) days after receipt by Landlord, and by any Lender(s) whose name
          and address shall have been furnished to Tenant in writing for such
          purpose, of written notice specifying wherein such obligation of
          Landlord has not been performed: provided, however, that if the nature
          of Landlord's obligation is such that more than thirty (30) days after
          such notice are reasonably required for its performance, then Landlord
          shall not be in breach of this Lease if performance is commenced
          within such thirty (30)day period and thereafter diligently pursued to
          completion.


15.  Condemnation. If the Premises or any portion thereof are taken under the
     power of eminent domain or sold under the threat of the exercise of said
     power (all of which are herein called "condemnation"), this Lease shall
     terminate as to the part so taken as of the date the condemning authority
     takes title or possession whichever first occurs. If more than ten percent
     (10%) of the floor area of the Premises or more than twenty-five percent
     (25%) of the portion of the Common Areas designated for Tenant's parking is
     taken by condemnation, Tenant may, at Tenant's option, to be exercised in
     writing within ten (10) days after Landlord shall have given Tenant written
     notice of such taking (or in the absence of such notice, within ten (10)
     days after the condemning authority shall have taken possession) terminate
     this Lease as of the date the condemning authority takes such possession.
     If Tenant does not terminate this Lease in accordance with the foregoing,
     this Lease shall remain in full force and effect as to the portion of the
     Premises remaining, except that the Base Rent shall be reduced in the same
     proportion as the rentable floor area of the Premises taken bears to the
     total rentable floor area of the Premises. No reduction of Base Rent shall
     occur if the condemnation does not apply to any portion of the Premises.
     Any award for the taking of all or any part of the Premises under the power
     of eminent domain or any payment made under threat of the exercise of such
     power shall be the property of Landlord, whether such award shall be made
     as compensation for diminution of value of the leasehold or for the taking
     of the fee, or as severance damages; provided, however, that Tenant shall
     be entitled to any compensation, separately awarded to Tenant for Tenant's
     relocation expenses and/or loss of Tenant's Trade Fixtures.


16.  Brokers. Tenant and Landlord each represent and warrant to the other that
     (i) it has had no dealings with any person, firm, broker or finder other
     than David Fried of First Industrial Realty, Inc. (First Industrial) who
     acted as Landlord's agent in connection with the negotiation of this Lease
     and/or the consummation of the transaction contemplated hereby; and (ii) no
     broker or other person, firm or entity other than said named Broker(s) is
     entitled to any commission or finder's fee in connection with said
     transaction. Tenant and Landlord do each hereby agree to indemnify,
     protect, defend and hold the other harmless from and against liability for
     compensation or charges which may be claimed by any such unnamed broker,
     finder or other similar party by reason of any dealings or actions of the
     indemnifying Party, including any costs, expenses, and/or attorneys' fees
     reasonably incurred with respect thereto.


17.  Statements.

     17.1 Estoppel. Each party shall within ten (10) days after written notice
          from the other party execute, acknowledge, and deliver to the
          requesting party a statement in writing certifying that this Lease is
          unmodified and in full force and effect (or, if there have been
          modifications, that the same is in full force and effect as modified
          and stating the modifications), that there have been no defaults
          thereunder by Landlord or Tenant (or, if there have been defaults,
          setting forth the nature thereof), the date to which the rent and
          other charges have been paid in advance, if any, and such other
          information as the requesting party may request. It is intended that
          any such statement delivered pursuant to this Section may be relied
          upon by any prospective purchaser of all or any portion of Landlord's
          interest herein or any holder of any mortgage or deed of trust
          encumbering the Building Complex. Tenant's failure to deliver such
          statement within such time shall be conclusive upon Tenant that:
          (i)the Lease is in full force and effect, without modification except
          as may be represented by Landlord; (ii) there are no uncured defaults
          in Landlords performance and (iii) not more than one month's rent has
          been paid in advance. Further, upon request, Tenant will supply
          Landlord a corporate or partnership resolution, as the case may be,
          certifying that the party signing said statement of Tenant is properly
          authorized to do so.

     17.2 Financial Statement. If Landlord desires to finance, refinance, or
          sell the Premises or the Building, or any part thereof, Tenant and all
          Guarantors shall deliver to any potential lender or purchaser
          designated by Landlord such financial statements of Tenant and such
          Guarantors as may be reasonably required by such lender or purchaser,
          including but not limited to Tenant's financial statements for the
          past three (3) years. All such financial statements shall be received
          by Landlord and such lender or purchaser in confidence and shall be
          used only for the purposes herein set forth.


18.  Landlord's Liability. The term "Landlord" as used herein shall mean the
     owner or owners at the time in question of the fee title to the Premises.
     In the event of a transfer of Landlord's title or interest in the Premises
     or in this Lease, Landlord shall deliver to the transferee or assignee (in
     cash or by credit) any unused Security Deposit held by Landlord at the time
     of such transfer or assignment. Upon such transfer or assignment and
     delivery of the Security Deposit, as aforesaid, the prior Landlord shall be
     relieved of all liability with respect to the obligations and/or covenants
     under this Lease thereafter to be performed by the Landlord. Subject to the
     foregoing, the obligations and/or covenants in this Lease to be performed
     by the Landlord shall be binding only upon the Landlord as hereinabove
     defined.


19.  Severability. The invalidity of any provision of this Lease, as determined
     by a court of competent jurisdiction, shall in no way affect the validity
     of any other provision hereof.


20.  Interest on Past Due Obligations. Any monetary payment due Landlord
     hereunder, other than late charges, not received by Landlord within ten
     (10) days following the date on which it was due, shall bear interest from
     the date due at the prime rate charged by the largest state chartered bank
     in the state in which the Premises are located plus four percent(4%) per
     annum, but not exceeding the maximum rate allowed by law, in addition to
     the potential late charge provided for in Section 14.4.


21.  Time of Essence. Time is of the essence with respect to the performance of
     all obligations to be performed or observed by the Parties under this
     Lease.


22.  Rent. All monetary obligations of Tenant to Landlord under the terms of
     this Lease are deemed to be rent.


23.  No Prior or other Agreements. This Lease contains all agreements between
     the Parties with respect to any maker mentioned herein, and no other prior
     or contemporaneous agreement or understanding shall be effective.


24.  Notices.

     24.1 Notice Requirements. All notices required or permitted by this Lease
          shall be in writing and may be delivered in person (by hand or by
          messenger or courier service) or may be sent by certified or
          registered mail or U.S. Postal Service Express Mail, with postage
          prepaid, or by facsimile transmission during normal business hours,
          and shall be deemed sufficiently given if served in a manner specified
          in this Section 24. The addresses noted below shall be that Party's
          address for delivery or mailing of notice purposes. Either Party may
          by written notice to the other specify a different address for notice
          purposes, except that upon Tenant's taking possession of the Premises,
          the Premises shall constitute Tenant's address for the purpose of
          mailing or delivering notices to Tenant. A copy of all notices
          required or permitted to be given to Landlord hereunder shall be
          concurrently transmitted to such party or parties at such addresses as
          Landlord may from time to time hereafter designate by written notice
          to Tenant.


                                       11
<PAGE>


          If to Local Landlord:         First Industrial Realty. Inc.
                                        5350 South Roslyn Street, Suite 240
                                        Greenwood Village, Colorado 80111
                                        Attn: Jane Montgomery

          If to Landlord:               First Industrial. L.P.
                                        311 South Wacker Drive. Suite 4000
                                        Chicago, Illinois 60606
                                        Attn: Chief Operating Officer

          with a copy to:               Barack Ferrazzano Kirschbaum
                                        Perlman & Nagelberg
                                        333 West Wacker Drive, Suite 2700
                                        Chicago. Illinois 60606
                                        Attn: Howard Nagelberg and
                                           Suzanne Besette-Smith

          If to Tenant:                 Zynex Medical, Inc.
                                        8100 Southpark Way
                                        Unit A-9
                                        Littleton, CO 80120
                                        Attn: Thomas Sandgaard

     24.2 Date of Notice. Any notice sent by registered or certified mail,
          return receipt requested, shall be deemed given forty-eight (48) hours
          after the same is addressed as required herein and mailed with postage
          prepaid. Notices delivered by United States Express Mail or overnight
          courier that guarantees next day delivery shall be deemed given
          twenty-four (24) hours after delivery of the same to the United States
          Postal Service or courier. If any notice is transmitted by facsimile
          transmission or similar means, the same shall be deemed served or
          delivered upon telephone or facsimile confirmation of receipt of the
          transmission thereof, provided a copy is also delivered via delivery
          of mail. If notice is received on a Saturday or a Sunday or a legal
          holiday, it shall be deemed received on the next business day.


25.  Waivers. No waiver by Landlord of the Default of any term, covenant or
     condition hereof by Tenant shall be deemed a waiver of any other form
     covenant or condition hereof or of any subsequent Default by Tenant of the
     same of any other term, covenant or condition hereof. Landlord's consent to
     or approval of any such act shall not be deemed to render unnecessary the
     obtaining of Landlord's consent to or approval or any subsequent or similar
     act by Tenant or be construed as the basis of an estoppel to enforce the
     provision or provisions of this Lease requiring such consent. Regardless of
     Landlord's knowledge of a Default at the time of accepting rent, the
     acceptance of rent by Landlord shall not be a waiver of any Default by
     Landlord of any provision hereof. Any payment given Landlord by Tenant may
     be accepted by Landlord on account of moneys or damages due Landlord,
     notwithstanding any qualifying statements or conditions made by Tenant in
     connection therewith, which such statements and/or conditions shall be of
     no force or effect whatsoever unless specifically agreed to in writing by
     Landlord at or before the time of deposit of such payment.


26.  Recording. Tenant shall not record this Lease or a memorandum hereof. In
     the event that Tenant violates this provision, this Lease shall be null,
     void and of no further force and effect, at Landlord's option, except that
     Tenant shall be liable to Landlord as liquidated damages, in the amount of
     the remaining Rent to be paid hereunder.


27.  Holdover. Tenant has no right to retain possession of the Premises or any
     part thereof beyond the expiration or earlier termination, of this Lease.
     In the event that Tenant holds over in violation of this Section 27 with
     the consent of Landlord, then the Base Rent payable from and after the time
     of the expiration or earlier termination of this Lease shall be increased
     to two hundred percent (200%) of the Base Rent applicable during the month
     immediately preceding such expiration or earlier termination. Nothing
     contained herein shall be construed as a consent by Landlord to any holding
     over by Tenant.


28.  Cumulative Remedies. No remedy or election hereunder shall be deemed
     exclusive but shall, wherever possible, be cumulative with all other
     remedies at law or in equity.


29.  Covenants and Conditions. All provisions of this Lease to be observed or
     performed by Tenant are both covenants and conditions.


30.  Binding Effect: Choice of Law. This Lease shall be binding upon the
     Parties, their personal representatives, successors and assigns and be
     governed by the laws of the State of Colorado. Any litigation between the
     Parties hereto concerning this Lease shall be initiated in the county in
     which the Premises are located.


31.  Subordination; Attornment; Non-Disturbance

     31.1 Subordination. This Lease and any other Option granted hereby shall be
          subject and subordinate to any ground lease, mortgage, deed of trust,
          or other hypothecation or security device (collectively, "Security
          Device") now or hereafter placed by Landlord upon the real property of
          which the Premises are a part, to any and all advances made on the
          security thereof, and to all renewals, modifications, consolidations,
          replacements and extensions thereof. Tenant agrees that the Lender's
          holding any such Security Device shall have no duty, liability or
          obligation to perform any of the obligations of Landlord under this,
          Lease, but that in the event of Landlord's default with respect to any
          such obligation. Tenant will give any Lender whose name and address
          have been furnished Tenant in writing for such purpose notice of
          Landlord's default pursuant to Section 14.5. If any Lender shall elect
          to have this Lease and/or any Option granted hereby superior to the
          lien of its Security Device and shall give written notice thereof to
          Tenant, this Lease and such Options shall be deemed prior to such
          Security Device, notwithstanding the relative dales of the
          documentation or recordation thereof.

     31.2 Attornment. Subject to the non-disturbance provisions of Section 3
          1.3, Tenant agrees to attorn to a Lender or any other party who
          acquires ownership of the Premises by reason of a foreclosure of a
          Security Device, and that in the event of such foreclosure, such new
          owner shall not (i) be liable for any act or omission of any prior
          Landlord or with respect to events occurring prior to acquisition of
          ownership; (ii) be subject to any offsets or defenses which Tenant
          might have against any prior Landlord; or (iii) be bound by prepayment
          of more than one month's rent.

     31.3 Non-Disturbance. With respect to Security Devices entered into by
          Landlord after the execution of this Lease, Tenant's subordination of
          this Lease shall be subject to receiving assurance ("non-disturbance
          agreement") from the Lender that Tenant's possession and this Lease,
          including any options to extend the term hereof, will not be disturbed
          so long as Tenant is not in Default hereof and attorns to the record
          owner of the Premises.

     31.4 Self-Executing. The agreements contained in this Section 31 shall be
          effective without the execution of any further documents: provided,
          however, that upon written request from Landlord or a Lender in
          connection with a sale, financing or refinancing of the Premises,
          Tenant and Landlord shall execute such further writings as may be
          reasonably required to separately document any such subordination or
          non-subordination, attornment and/or non-disturbance agreement as is
          provided for herein.

                                       12
<PAGE>


32   Attorneys' Fees. If any Party brings an action or proceeding to enforce the
     terms hereof or declare rights hereunder, the Prevailing Party (as
     hereafter defined) in any such proceeding, action, or appear thereon. shall
     be entitled to reasonable attorneys' fees. Such fees may be awarded in the
     same suit or recovered in a separate suit, whether or not such action or
     proceeding is pursued or decision or judgment. The term "Prevailing Party"
     shall include, without limitation, a Party who substantially obtains or
     defeats the relief sought, as the case may be, whether by compromise,
     settlement, judgment or the abandonment by the other Party of its claim or
     defense. The attorneys' fee award shall not be computed in accordance with
     any court fee schedule, but shall be such as to fully reimburse all
     attorneys' fees reasonably incurred. Landlord shall be entitled to
     attorneys' fees, costs and expenses incurred in preparation and service of
     notices of Default and consultations in connection therewith, whether or
     not a legal action is subsequently commenced in connection with such
     Default.


33.  Right of Entry. Landlord and Landlord's agents shall have the right to
     enter the Premises at any time, in the case of an emergency, and otherwise
     at reasonable times for the purpose of showing the same to prospective
     purchasers, lenders, or tenants, and making such alterations, repairs,
     improvements or additions to the Premises or to the Building. as Landlord
     may reasonably deem necessary. Landlord may at any time place on or about
     the Premises or Building any ordinary "For Sale" signs and Landlord may at
     any time during the last one hundred eighty (180) days of the term hereof
     place on or about the Premises any ordinary "For Lease" signs. All such
     activities of Landlord shall be without abatement of rent or liability to
     Tenant.


34.  Auctions. Tenant shall not conduct, nor permit to be conducted, either
     voluntarily or involuntarily, any auction upon the Premises without first
     having obtained Landlord's prior written consent. Notwithstanding anything
     to the contrary in this Lease. Landlord shall not be obligated to exercise
     any standard of reasonableness in determining whether to grant such
     consent.


35.  Signage. Tenant shall not place any sign upon the exterior of the Premises
     or the Building, except that Tenant may, with Landlord's prior written
     consent, install (but not on the roof) such signs as are reasonably
     required to advertise Tenant's own business so long as such signs are in a
     location designated by Landlord and comply with Applicable Requirements and
     the signage criteria established for the Building Complex by Landlord. The
     installation of any sign on the Premises by or for Tenant shall be subject
     to the provisions of Section R (Maintenance, Repairs, Utility
     Installations, Trade Fixtures and Alterations). Unless otherwise expressly
     agreed herein, Landlord reserves all rights to the use of the roof of the
     Building, and the right to install advertising signs on the Building,
     including the roof, which do not unreasonably interfere with the conduct of
     Tenant's business; Landlord shall be entitled to all revenues from such
     advertising signs. Landlord's sign criteria is attached hereto as part of
     Exhibit D.


36.  Termination; Merger. Unless specifically stated otherwise in writing by
     Landlord, the voluntary or other surrender of this Lease by Tenant, the
     mutual termination or cancellation hereof, or a termination hereof by
     Landlord for Default by Tenant, shall automatically terminate any sublease
     or lesser estate in the Premises: provided, however, Landlord shall, in the
     event of any such surrender, termination or cancellation, have the option
     to continue any one or all of any existing subtenancies. Landlord's failure
     within ten (10) days following any such event to make a written election to
     the contrary by written notice to the holder of any such lesser interest,
     shall constitute Landlord's election to have such event constitute the
     termination of such interest.


37.  Guarantor.

     37.1 Form of Guaranty. If there are to be any Guarantors of the Lease per
          Section 1.12, the form of the guaranty to be executed by each such
          Guarantor shall be in the form provided by Landlord attached hereto as
          Exhibit E and each such Guarantor shall have the same obligations as
          Tenant under this Lease, including, but not limited to, the obligation
          to provide the Tenancy Statement and information required in Section
          17.

     37.2 Additional Obligations of Guarantor. It shall constitute a Default of
          the Tenant under this Lease if any such Guarantor fails or refuses,
          upon reasonable request by Landlord to give: (a) evidence of the due
          execution of the guaranty called for by this Lease, including the
          authority of the Guarantor (and of the party signing on Guarantor's
          behalf) to obligate such Guarantor on said guaranty, and resolution of
          its board of directors authorizing the making of such guaranty,
          together with a certificate of incumbency showing the signatures of
          the persons authorized to sign on its behalf; (b) current financial
          statements of Guarantor as may from time to time be requested by
          Landlord; (c) a Tenancy Statement; or (d) written confirmation that
          the guaranty is still in effect.


38.  Quiet Possession. Upon payment by Tenant of the rent for the Premises and
     the performance of all of the covenants, conditions and provisions on
     Tenant's part to he observed and performed under this Lease and subject to
     the provisions of this Lease, Tenant shall not be disturbed in its
     possession of the Premises for the entire term hereof by Landlord or any
     other person lawfully claiming through or under Landlord.


39.  Rules and Regulations. Tenant agrees that it will abide by, and keep and
     observe all reasonable rules and regulations ("Rules and Regulations) which
     Landlord may make from time to time for the management, safety, care, and
     cleanliness of the grounds, the parking and unloading of vehicles and the
     preservation of good order, as well as for the convenience of other
     occupants or tenants of the Building and the Building Complex and their
     invitees.


40.  Security. Tenant hereby acknowledges that the rent payable to Landlord
     hereunder does not include the cost of guard service or other security
     measures, and that Landlord shall have no obligation whatsoever to provide
     same. Tenant assumes all responsibility for the protection of the Premises,
     Tenant, its agents and invitees and their property from the acts of third
     parties. Notwithstanding the foregoing, Landlord may elect to provide a
     concierge or security guard for more efficient operation of the Building
     Complex, and the cost thereof shall be included as a Common Area Operating
     Expense. Landlord is not obligated to provide such services at any time or
     for any length of time. Tenant expressly acknowledges that Landlord has not
     represented to Tenant that the Building Complex is secure and Landlord
     shall not be responsible for the quality of any services which may be
     provided hereunder or for damage or injury to Tenant, its agents,
     employees, invitees or others or its betterments contained in the Building
     Complex or the Premises due to the failure, action or inaction of such
     persons.


41.  Reservations. Landlord reserves the right, from time to time, to grant,
     without the consent or joinder of Tenant, such easements, rights of way,
     utility raceways, and dedications that Landlord deems necessary, and to
     cause the recordation of parcel maps and restrictions, so long as such
     easements, rights of way, utility raceways, dedications, maps and
     restrictions do not unreasonably interfere with the use of the Premises by
     Tenant. Tenant agrees to sign any documents reasonably requested by
     Landlord to effectuate any such easement rights, dedication, map or
     restrictions.


42.  Authority. If either Party hereto is a corporation, trust, or general or
     limited partnership, each individual executing this Lease on behalf of such
     entity represents and warrants that he or she is duly authorized to execute
     and deliver this Lease on its behalf. If Tenant is a corporation, trust or
     partnership. Tenant shall within thirty (30) days after request by
     Landlord. deliver to Landlord evidence satisfactory to Landlord of such
     authority.


43.  Conflict. Any conflict between the printed provisions of this Lease and the
     typewritten or handwritten provisions shall be controlled by the
     typewritten or handwritten provisions.


44.  Offer. Preparation of this Lease by either Landlord or Tenant or Landlord's
     agent or Tenant's agent and submission of same to

                                       13
<PAGE>

     hereto.

45.  Amendments. This Lease may be modified only in writing, signed by the
     parties in interest at the time of the modification. The Parties shall
     amend this Lease from time to time to reflect any adjustments that are made
     to the Base Rent or other rent payable under this Lease. As long as they do
     not materially change Tenant's obligations hereunder, Tenant agrees to make
     such reasonable non-monetary modifications to this Lease as may be
     reasonably required by an institutional insurance company or pension plan
     lender in connection with the obtaining of normal financing or refinancing
     of the property of which the Premises are a part.


46.  Multiple Parties. Except as otherwise expressly provided herein, if more
     than one person or entity is named herein as either Landlord or Tenant, the
     obligations of such multiple parties shall be the joint and several
     responsibility of all persons or entities named herein as such Landlord or
     Tenant.


47.  Relocation of Premises. Landlord shall have the right, at its sole option,
     to relocate Tenant and substitute for the Premises other space with the
     Building Complex. Landlord shall notify Tenant with sixty (60) days prior
     written notice of the date Tenant will need to be relocate into the new
     Premises. Substitute space shall contain at least as much square footage as
     the Tenant's original Premises, which space thereafter shall be governed by
     the terms and conditions of the Lease Agreement. Such substitute Premises
     shall have similar building features and shall be improved with decorations
     and improvements at least equal in quantity and quality with Tenant
     original Premises. Said costs for decoration and improvements shall be at
     the sole expense of the Landlord. Decorations and improvement in such
     substitution Premises shall include, but not be limited to, moving
     expenses, sign relocation, door lettering and telephone relocation
     expenses. Tenant, at Tenant's option, may terminate this Lease within
     fifteen (15) days of receipt of notice to relocate from Landlord. Lease
     termination shall be effective on the date Tenant would have been relocated
     to the new Premises.


48.  Temperature. Tenant shall maintain the air temperature in its leased space
     warm enough to prevent the freezing of plumbing and sprinkler systems, if
     any.


49.  Confidentiality. All information contained in this Lease Agreement is
     hereby deemed confidential and shall not be divulged to anyone without the
     express written consent of Landlord except as otherwise specified in
     Section 17, and Section 26 of this Lease Agreement or as otherwise required
     by law.

The parties hereto have executed this Lease to be effective on the date and year
first above written.



LANDLORD:                                   TENANT:

First Industrial. L.P., a Delaware          Zynex Medical, Inc.
limited partnership by First Industrial     a Colorado corporation
Realty Trust, a Maryland corporation its
General partner


By: /s/ Graham Riley                        By:  /s/ Thomas Sandgaard
    ------------------------------------        --------------------------------
    Graham Riley                                Thomas Sandgaard

Its:       Regional Director                Its:      President

Address:   5350 South Roslyn Street         Address:  8100 Southpark Way,
           Suite 240                                  Unit A-9
           Greenwood Village, Colorado                Littleton, Colorado 80120
           80111


Phone:     303.220-5565                               Phone:   800-845-1771
Fax:       307.220-5585                               Fax:     800-495-6695


                                    EXHIBITS

                        Exhibit A - Depiction of Premises

                        Exhibit B - The Building Complex

                           Exhibit C - Work Agreement

                            Exhibit D - Sign Criteria

                              Exhibit E - Guaranty

                          Exhibit F - Option to Extend


                                       14
<PAGE>


                                    EXHIBIT A

                              DEPICTION OF PREMISIS
                              ---------------------

                  [Detailed architect drawing of office space]

                          8100 Southpark Way, Suite A9

                                       15
<PAGE>

                                    EXHIBIT B

                              THE BUILDING COMPLEX
                              --------------------

                            Southwest Business Center

                                [Map of Location]


                                       16
<PAGE>


                                    EXHIBIT C

                                 WORK AGREEMENT

                             (Landlord's Work Form)
                             ----------------------

a. To that certain lease made as of the 28th day of January, 2004, between First
Industrial, L.P., a Delaware limited partnership as Landlord, and Zynex Medical,
Inc., a Colorado corporation as Tenant, covering approximately 9,857 square feet
of space located at 8100 Southpark Way, Unit A-9, Littleton, Colorado 80120.

Concurrently herewith, you as Tenant, and the undersigned, as Landlord, have
executed a Lease covering the above captioned Premises (the provisions of said
Lease are herein incorporated by reference as if fully set forth herein). In
consideration of the execution of said Lease. Tenant and Landlord mutually agree
as follows:


1. Tenant Improvement Allowance. Landlord agrees to provide Tenant with an
allowance of $O.5O/SF ($4,928.50) towards any work Tenant does within the
Premises. Tenant shall provide Landlord with paid receipts and lien waivers for
all leasehold improvements made to the Premises. Tenant shall use a licensed
general contractor who shall be required to pull a building permit for any
leasehold improvements that are not cosmetic in nature (i.e. carpet/paint).
Landlord will, within thirty (30) days from the receipt of the above
documentation. reimburse Tenant for the total of the paid receipts or $4,928.50,
whichever is less. Tenant shall use the allowance within three (3) months of
lease commencement or Tenant shall forfeit said allowance.

Except as listed above. Tenant shall take delivery of the Demised Premises in
substantially "as is" condition. Any other costs necessary for Tenant to open
for business shall be the sole responsibility of Tenant.





LANDLORD:                                   TENANT:

First Industrial. L.P., a Delaware          Zynex Medical, Inc.
limited partnership by First Industrial     a Colorado corporation
Realty Trust, a Maryland corporation its
General partner


By: /s/ Graham Riley                        By:  /s/ Thomas Sandgaard
    ------------------------------------        --------------------------------
    Graham Riley                                Thomas Sandgaard

Its:       Regional Director                Its:      President

Address:   5350 South Roslyn Street         Address:  8100 Southpark Way,
           Suite 240                                  Unit A-9
           Greenwood Village, Colorado                Littleton, Colorado 80120
           80111


Phone:     303.220-5565                               Phone:   800-845-1771
Fax:       307.220-5585                               Fax:     800-495-6695

                                       17
<PAGE>

                          SCHEDULE 1 TO WORK AGREEMENT

                     PROCEDURE AND SCHEDULES FOR COMPLETION
                     --------------------------------------
                            OF TENANT WORK BY TENANT
                            ------------------------


Tenant and Tenant's Contractor and the contracts between Tenant and Tenant's
Contractors, to be entered into in connection with the performance of Tenant's
Work, shall conform to the following rules, regulations, and requirements, which
shall be incorporated into such contracts. Tenant shall ensure that all of
Tenant's Contractors act in conformity with the provisions set forth herein. In
the event of any conflict between any other terms or provisions of Tenant's
contracts and the terms and provisions set forth below, the terms and provisions
set forth below shall control.

     A. Tenant shall start construction of Tenant's Work in the Premises not
later than ten (10) days from issuance of a building permit, and shall carry
such construction to completion with all due diligence.

     B. Tenant shall submit to Landlord, in writing, at least ten (10) days
prior to the commencement of construction, the following information:

          1. The names and addresses of the general, mechanical and electrical
     contractors, if any, Tenant intends to engage in the construction of
     Tenant's Work and copies of proposed contracts executed by Tenant. (The
     term "Contractor" as used hereinafter shall mean Tenant's general
     Contractor or, if Tenant does not use a general Contractor, then all
     Contractors with whom Tenant contracts directly for Tenant's Work. The term
     "Subcontractors" shall mean and refer to all entities contracting with the
     Contractor to complete Tenant's Work.)

          2. A proposed schedule setting forth the commencement date of
     construction of Tenant's Work and the date of completion of construction of
     Tenant's Work, fixturing work, dates for proposed interruption of services
     (if any required) and the date of projected opening.

          3. Copies of performance and/or labor and material bonds, as required
     by Landlord, from the Contractor and Subcontractors.

          4. Final itemized statement of estimated construction costs, including
     architectural, engineering and contracting fees.

          5. Evidence of insurance as called for herein. Tenant shall secure,
     pay for and maintain, or cause its Contractor(s) to secure, pay for and
     maintain, during the continuance of and for one (1) year after completion
     of construction and fixturing work within Tenant's Premises, all of the
     insurance policies required and in the amounts as set forth herein. Tenant
     shall not permit, and Tenant's contract shall prohibit its Contractor to
     commence any work until all required insurance has been obtained and
     certified copies of policies have been delivered to Landlord.

     C. Insurance: The following insurance requirements shall be complied with:

          1. Minimum Coverage -Prior to any Tenant's Work being commenced by
     Tenant's Contractor or Subcontractors, Tenant or Tenant's Contractor (as
     set forth below), shall obtain and maintain insurance with minimum coverage
     and limits to protect Landlord and Landlord's managing agent from the
     claims hereinafter set forth which may arise or result from performance of
     any Tenant's Work. whether such work be done by Tenant's Contractor or by
     any of Subcontractors or by anyone directly or indirectly employed by
     Tenant's Contractor or Subcontractors or by anyone for whose acts Tenant's
     Contractor or Subcontractors may be liable as set forth as follows (such
     limits may be provided by an appropriate "umbrella" policy):

          a. Workmen's Compensation insurance at the statutory limits provided
     for by the State of Colorado:

          b. Employer's liability insurance at a limit of not less than $100,000
     for all damages arising from each accident;

          c. Comprehensive general liability insurance covering: (i) Operations
     Premises liability; (ii) Owner's and Contractor's protective liability;
     (iii) Completed operations: (iv) Product liability; (v) Contractual
     liability; (vi) Broad form property damage endorsement and property damage
     caused by cogitations otherwise subject to exclusion for explosion,
     collapse or underground damage; (vii) Fire legal liability, with the
     following insurance limits: Bodily Injury: $1,000,000 each occurrence;
     $1,000,000 aggregate completed operations products; Property Damage
     $500,000 each occurrence; $500.000 aggregate operations; $500,000 aggregate
     protective; $500,000 aggregate completed operations/products;

          d. Comprehensive automobile liability insurance covering all owned,
     hired or non-owned vehicles including the loading and unloading thereof
     with limits of no less than: Automobile Bodily Injury: $500,000 each
     person; $1,000,000 each occurrence: Automobile Property Damage: $500,000
     each person;

          e. Physical damage insurance covering the completed value of the
     Tenant's Work which shall afford coverage against "all risks" for physical
     loss or damage.


          2. Cancellation - All such insurance shall be carried with a company
     or companies reasonably satisfactory to Landlord and Landlord's managing
     agent and the insurance described in (3). (4) and (5) above, and shall name
     Landlord and Landlord's managing agent and their employees and agents as
     additional insured parties. In addition, each policy shall provide that it
     will not be canceled or altered except after ten (10) days advance written
     notice to Landlord, and the certificate of insurance shall so state.


          3. Policy Termination -Tenant's Contractor and Subcontractors shall
     maintain all insurance required hereunder during the completion of Tenant's
     Work and for a period ending one (1) year after the date of completion of
     all Tenant's Work.


          4. Either Tenant or Tenant's Contractor may provide the insurance
     required hereunder except that Tenant's Contractor shall at a minimum
     provide the insurance described in (1), (2) and (3) of subparagraph 3(a)
     above. Prior to commencement of work by Tenant's Contractor. ~t shall
     deliver two (2) copies of the aforementioned policies or certificates
     evidencing such insurance to Landlord. All policies shall be deemed primary
     over any other valid or collectible insurance carried by Landlord or
     Landlord's managing agent. Such policies must be approved by Landlord prior
     to commencement of said work. Without the express written consent of the
     Landlord, Tenant agrees that it shell not allow any Contractor. or
     subcontractor to commence work within the Shopping Center until such entity
     has obtained the Insurance required above.


          5. Waiver of Subrogation - Tenant and Tenant's Contractor and
     Subcontractors shall waive all rights against each other and the
     subcontractors, sub-subcontractors, agents and employees, each of the other
     for damages caused by fire or other perils available under the normal "All
     Risk" I.S.0, insurance policy on the work itself and the Building.

                                       18
<PAGE>


     D. As provided above, Tenant shall notify Landlord of the names of the
proposed Tenant's Work general, mechanical and electrical contractors. All
Contractors and Subcontractors engaged by Tenant shall be bondable, licensed
contractors, capable of performing quality workmanship and working in harmony
with Landlord's general contractor and other contractors on the job. All work
shall be coordinated with the general project work. Landlord shall have the
right to require Tenant's Contractors and Subcontractors to provide payment and
performance bonds for any or all Tenant's Work. such bonds to be paid for out of
Tenant's Work Allowance if such funds are available. Any bond shall be requested
and provided prior to the commencement of Tenant's Work.

     E. Tenant's Contractor and construction shall comply in all respects with
applicable federal, state, county and/or local statutes, ordinances,
regulations, laws and codes. All required building and other permits in
connection with the construction and completion of Tenant's Work shall be
obtained and paid for by Tenant out of Tenant's Work Allowance if such funds are
available. If either party observes that any Tenant's Work is at variance in any
respect with any applicable codes, ordinances, laws, rules and regulations, it
shall promptly notify the. other party and Landlord in writing, and any
necessary changes shall be made by Tenant. If Tenant's Contractor performs any
Tenant's Work that it knows is contrary to such codes, laws, ordinances, rules
and regulations, and fails to deliver such notice to the Tenant and Landlord,
Tenant's Contractor shall assume full responsibility therefore and shall bear
all costs attributable to repair, replacement or correction. Tenant and Tenant's
Contractor and its subcontractors shall comply with Federal, State and local tax
laws, social security acts. unemployment compensation acts and such other acts
and laws as are applicable to the performance of Tenant's Work.

     F. All contracts shall be in writing, and no work shall be done except
pursuant to such contracts. Tenant's contract with Tenant's Contractor shall be
subject to Landlord prior written consent, which consent shall not be
unreasonably withheld or delayed. Any approved contracts shall not be amended or
modified without approval by Landlord, which consents shall not be unreasonably
withheld or delayed. The Tenant's contract shall conform with the provisions of
the Lease, including all provisions herein, and shall obligate the Tenant's
Contractor to complete Landlord's Tenant's Work in accordance with the schedule
referred to in Paragraph 2(b) above.

     G. Work which Landlord shall have the right to have performed on behalf of
and for the benefit of Tenant shall be limited to work which Landlord deems
necessary to be done on an emergency basis and which pertains to structural
components, the general utility systems for the project, and the erection of
temporary barricades and temporary signs, per standard project details and
criteria, during construction or Tenant's Work which in Landlord's reasonable
opinion is not being performed in compliance with this Schedule 1.

     H. Tenant's Work shall be subject to the inspection and reasonable approval
of Landlord. Landlord's architect and general Contractor. Such inspection shall
be for Landlord's sole benefit and shall in no event be construed as any benefit
to, nor may Tenant rely thereon. All of Tenant's Work shall be first quality.

     I. Tenant shall apply and pay for all utility meters except where metered
service is provided by Landlord or public service agency.

     J. The Tenant's contract shall include a statement requiring the Contractor
and all Subcontractors, laborers. and material men to execute a lien waiver for
any interim and final payments. A copy of the executed waiver or notice of
refusal is to be immediately forwarded to the Landlord.

     K. Tenant and Tenant's Contractor shall indemnify and hold harmless
Landlord and representatives, agents and employees from and against all claims,
damages, losses, and expenses, including, but not limited to, reasonable
attorney's fees arising out of or resulting from the performance of Tenant's
Work or Tenant's Contractor's performance of the Tenant's contract which are:
(a) caused in whole or in part by any negligence or omission of Tenant's
Contractor, any subcontractor or anyone directly or indirectly employed by any
of them or anyone for whose acts any of them may be liable; and (b) attributable
to bodily injury, sickness, disease or death, or the destruction of tangible
personal property, including loss of use resulting from any of the foregoing
acts and all Tenant's Work contracts shall reflect this indemnity. In any and
all claims against the Landlord or its representatives or any of their agents or
employees or by an employee of Tenant's Contractor, any subcontractor, anyone
directly or indirectly employed by any of them. or anyone for whose acts any of
them may be liable. The indemnification obligation under the Paragraph 14 shall
not be limited in any way by any limitation on the amount or type of damages.
compensation or benefits payable by or for the Tenant's Contractor or any
Subcontractor under the Workers Compensation Act, disability benefit acts, or
other employee benefit acts.

     L. In the event a Subcontractor or materialman files a mechanics' lien as a
result of performing work pursuant to Tenant's contract then Tenant's Contractor
shall indemnify the Tenant and Landlord from said lien and shall, when requested
by the Tenant and/or Landlord, pay the amount requested to release the lien or
furnish Tenant and Landlord (as Landlord or Tenant may specify) either a bond
sufficient to discharge the lien or deposit in an escrow approved by Landlord
and Tenant a sum equal to 150% of the amount of such lien. Subject to any
restrictions thereon posed by any mortgagee' of Landlord. Tenant's Contractor
shall have the right and opportunity, in cooperation with Landlord and Tenant,
to contest the validity of any such mechanics' lien by such legal means as are
available, including the right to prosecute any appeals which may be permitted
by law so long as during the pendency of any contest or appeal, the Tenant's
Contractor shall effectively stay or prevent any official or judicial sale of
any of the real property or improvements comprising the building, upon execution
or otherwise, and so long as the Tenant's Contractor pays any final judgment
entered with respect to any such mechanics' lien and thereafter procures and
records, within a reasonable time, record satisfaction thereof. In the event the
Tenant and Landlord shall be a party to any such coiltest or appeal, or any
other action resulting from or arising out of the performance of the work by
Tenant's Contractor (or any of its subcontractors, agents, or employees),
Tenant's Contractor shall be responsible for all legal fees and other costs and
expenses incurred by Landlord and Tenant in any such action. Landlord and Tenant
shall have the right to obtain separate counsel of their choice at Tenant's
Contractor's expense. In the event that Tenant's Contractor fails to pay the
lien or provide a bond or cash escrow, or otherwise fails to fully satisfy and
obtain the release of any lien or claim in accordance with the provisions
hereof. Tenant's Contractor shall be obligated to pay to Tenant or Landlord, as
the case may be, all monies that the latter may pay in discharging any such lien
including all costs and reasonable attorneys' fees incurred by Landlord or
Tenant in settling, defending against, appealing or in any other manner dealing
with any such lien.

     M. All risk of loss to all property of the Tenant and Tenant's Contractor
and its subcontractors. Including, but not limited to, tools and materials
located on the Premises. shall be the sole and exclusive responsibility of the
Tenant and Tenant's Contractor and its subcontractors, and the Landlord shall
have no responsibility therefore.

     N. If Tenant or Tenant's Contractor is adjudicated a bankrupt, or if Tenant
or Tenant's Contractor makes a general assignment for the benefit of its
creditors, or if a receiver is appointed on account of Tenant's Contractor's
insolvency, or if Tenant's Contractor persistently or repeatedly refuses or
falls, except in cases where delay is justified, to supply enough properly
skilled workmen or proper materials or if Tenant's Contractor persistently
disregards laws, ordinances, rules, regulations or orders of any public
authority having jurisdiction, or otherwise is guilty of a substantial violation
of a provision of Tenant's contact, then the Tenant (or Landlord in the event of
Tenant's bankruptcy. default. or assignment to creditors) may, without prejudice
to any right or remedy and after giving the Tenant's Contractor and its surety,
if any, seven (7) business days' written notice, terminate Tenant's contract
with the Contractor and in the event of Contractor's default take possession of
all materials, equipment, tools, construction equipment and machinery thereon
owned by Tenant's Contractor and shall thereafter finish all Tenant's Work being
constructed and previously contracted for by Tenant's Contractor by whatever
method it may deem expedient. In such case. Tenant's Contractor shall not be
entitled to receive any further payments from Tenant until completion of all
Tenant's Work; provided, however, that the Tenant's actions shall not release
Tenant's Contactor from any obligations to Tenant arising from its performance
or nonperformance under any contracts prior to the date of such termination.
Following the completion of such uncompleted Tenant's Work, Tenant shall pay the
Tenant's Contractor an amount equal to the aggregate of the amounts actually due
under Tenant's contract at the time of the termination of the contract. less the
cost to Tenant of completing all the Tenant's Work. Upon termination of Tenant's
contract, Tenant's Contractor shall execute and deliver all documents and take
all steps, including the legal assignment of Tenant's Contractor contractual
rights as the Tenant may require for the purpose of fully vesting in Tenant the
rights and benefits of the Tenant's Contractor under Tenant's contract, and
arising out of it. Tenant shall also pay to the Tenant's Contractor fair rental
for any equipment retained.

                                       19
<PAGE>


     0. Tenant's Contractor shall warrant and agree, at its expense, and at no
expense whatsoever to Landlord or Tenant to correct or cause to be corrected any
defects in the Tenant's Work (including, but not limited to, latent defects or
defects due to defective workmanship or materials whether supplied, installed or
performed by Tenant's Contractor or any Subcontractor or supplier) which occur
within one (1) year after Tenant's Contractor has substantially completed the
Tenant's Work, including completion of all punchlist items, (as evidenced by the
Tenant's acceptance of such Work) or for such longer period as may be set forth
in the Tenant's contract. Tenant's Contractor shall require a similar warranty
in all Subcontracts, and shall deliver to Landlord and Tenant, together with
appropriate assignments, if required, all warranties of subcontractors and
suppliers of materials, components and equipment furnished and installed in
connection with such Tenant's Work. Tenant's Contractor further agrees that all
guaranties and warranties relating to any Tenant's Work or any materials
incorporated into the Tenant's Work shall be extended to and given to both the
Landlord and the Tenant, as their respective interests in such Tenant's Work
exist, as more particularly set forth in the Lease between the Landlord and
Tenant.

     P. Landlord shall have no obligation with respect to Tenant's Contractor
except for the provision to Tenant's Contractor of those services which Landlord
provides to other tenant finish contractors in the Building Complex without
preference or privileges.

     Q. Landlord and Landlord's contractor shall have the right, from time to
time as may be required, to inspect or perform work within the Premises. Such
inspections or work shall not conflict with Tenant's Contractor's work in the
Premises unless it is necessary in an emergency situation Further, Landlord
shall have the right to suspend Tenant's Contractor's work in the Premises if
such work, in the reasonable opinion of Landlord or of Landlord's contractor, is
presenting or may present a danger to life, safety, or property, or in an
emergency situation.

     R. Tenant shall give Landlord reasonable prior notice to all inspections,
punchouts and other reviews during the course of construction so that Landlord
may observe such events. Further. Landlord shall be likewise informed of all
building Department inspections and requirements for issuance of the Certificate
of Occupancy for the Premises. Landlord's observation of any such events shall,
in no event be construed or interpreted as a review or approval by Landlord of
any such work nor shall it prevent Landlord, if it thereafter discovers any
deficiency in such Work, from requiring correction thereof as otherwise provided
herein. Tenant's Contractor shall be solely responsible for obtaining such
Certificate of Occupancy and shall submit to Landlord the original thereof prior
to Tenant's occupancy of the Premises for the purpose of conducting business.

     S. Provided the same is performed in a reasonable manner. Landlord's
engineer or other agent shall have the option of reviewing all equipment and
materials to be used in the construction of the Tenant's Work and all such work
prior to Tenant move-in. Such review shall in no event constitute approval by
Landlord.

     T. Tenant's Contractor will not store materials or supplies in, about, or
outside the Building Complex (other than within the Premises) without the prior
approval of the Landlord and Landlord's contractor.

     U. Tenant's Contractor will provide, at all times, direct supervision of
any and all work being performed for the Tenant including the delivery and
hoisting of materials, if necessary.

     V. Tenant's Contractor will cooperate with Landlord to dispose of refuse
resulting from Tenant's Work. This may include the use of Landlord's dumpster
and a proration of charges associated with such use or at Landlord's option and
Tenant's sole cost and expense the placement of Tenant Contractor's dumpster at
a location specified by Landlord.

     W. If my legal action or arbitration proceeding is commenced in order to
enforce the provisions of Tenant's contract or to recover damages as a result of
the alleged breach of the provisions thereof, the prevailing party in any such
action or proceeding shall be entitled to recover all reasonable costs incurred
in connection therewith, including reasonable attorneys' fees.

                                       20
<PAGE>


                                    EXHIBIT D

                                  SIGN CRITERIA


     These criteria have been established for the purpose of assuring a quality
business park and for the mutual benefit of all Tenants. Conformance will be
strictly enforced, and any installed nonconforming or unapproved signs must be
brought in conformance at the expense of the Tenant. ANY SIGN THAT DOES NOT
CONFORM TO THESE REGULATIONS WILL BE REMOVED AND REPLACED WITH A CONFORMING SIGN
AT TENANTS EXPENSE.

     It will be the sole responsibility of the Tenant to conform to the terms of
this Sign Criteria as follows:

     A. General Requirements:

          1. Within thirty (30) days after execution of this Lease. Tenant will
     provide, at its sole cost and expense, the Tenant's portion of the sign in
     conformance with the criteria below.

          2. The sign base complete with the unit number has been provided on
     the building. The sign base is the property of the Landlord.

          3. Tenant identification shall be restricted to the Tenant portion of
     the sign except for item "A" below.

          4. The lettering/logo and installation of the Tenant portion of the
     sign on the sign base shall be paid for by Tenant and remain the property
     of Landlord. All letters and other scripting shall be consistent in color
     and style with the lettering on the base and in good taste, in the opinion
     of Landlord.

          5. Tenant shall submit to Landlord for its approval all copy and/or
     logo prior to installation of the Tenant portion of the sign.

          6. Upon Lease termination, Tenant shall remove its sign and return the
     premises to their original condition.

          7. No electrical or audible signs will be allowed.

          8. Except as provided herein, no banners, pennants, placards,
     freestanding signs, or signs affixed to automobiles or trailers are allowed
     on the building. in the landscaped areas, or on streets or, parking area.
     The restriction pertaining to automobiles or trailers does not apply to
     magnetic or painted identification signs placed on company or private
     vehicles for use in the normal course of business.

          9. All signs will be reviewed for conformance with this criteria and
     overall aesthetics and design quality Approval or disapproval of sign
     submittals based on aesthetics shall remain the sole right of the Landlord.

          10. Each Tenant shall submit or cause to be submitted to Landlord for
     approval before fabrication at least four (4) copies of detailed drawings
     indicating location, size, layout, design and color of the proposed signs,
     including all lettering and/or graphics.

          11. All permits for signs and their installation shall be obtained by
     the Tenant or their representative at Tenant's cost and expense and will
     comply with all appropriate government requirements. Nothing in this
     criteria shall imply a waiver of requirements by the local authorities.

          12. Tenant shall be responsible for the fulfillment of all
     requirements and specifications.

          13. All signs shall be constructed and installed at Tenant's expense


     B. Specific Requirements:

     1. None

     2.

     3.

     4.





LANDLORD:                                   TENANT:

First Industrial. L.P., a Delaware          Zynex Medical, Inc.
limited partnership by First Industrial     a Colorado corporation
Realty Trust, a Maryland corporation its
General partner


By: /s/ Graham Riley                        By:  /s/ Thomas Sandgaard
    ------------------------------------        --------------------------------
    Graham Riley                                Thomas Sandgaard

Its:       Regional Director                Its:      President

Address:   5350 South Roslyn Street         Address:  8100 Southpark Way,
           Suite 240                                  Unit A-9
           Greenwood Village, Colorado                Littleton, Colorado 80120
           80111


Phone:     303.220-5565                               Phone:   800-845-1771
Fax:       307.220-5585                               Fax:     800-495-6695

                                       21
<PAGE>

                                    EXHIBIT E

                                    GUARANTY

     THIS GUARANTY is given as of this 28th day of January, 2004, by Thomas
Sandgaard (hereinafter referred to as "Guarantor"), whose home address is 10506
S. Kalahari Ct., Littleton, Colorado 80124.


                              W I T N E S S E T H:

     WHEREAS, First Industrial, L.P., a Delaware limited partnership
("Landlord") is willing to execute that certain Lease Agreement (the "Lease")
dated the __ day of _________,2004, between Landlord and Zynex Medical, Inc., a
Colorado corporation ("Tenant") pertaining to approximately 9,857 square feet of
space in the Building located at 8100 Southpark Way, in the City of Littleton,
State of Colorado, known as Suite A-9 (the "Premises") on condition of receiving
the Guaranty from the Guarantor as herein contained;

     NOW, THEREFORE, for and in consideration of leasing the Premises by the
Landlord to Tenant in accordance with the terms and provisions of the Lease,
which Lease is executed concurrently herewith, to induce Landlord to execute and
deliver the Lease and for other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged by the Guarantor, Guarantor
hereby agrees as follows.

     1. Guarantor hereby represents and warrants to Landlord that:

          a. Guarantor acknowledges that Guarantor is financially interested in
     Tenant.

          b. Guarantor further warrants and represents that the financial
     information provided to Landlord by Tenant and Guarantor, upon which
     Landlord may have relied in entering into the Lease, is currently accurate.

          c. This Guaranty has been duly executed and delivered by the
     authorized of guarantor and constitutes lawful, binding and legally
     enforceable obligations.

     2. Guarantor hereby, jointly and severally, unconditionally and irrevocably
guarantees the prompt and faithful performance of all of the terms and
provisions of the Lease by Tenant and any assignee of Tenant, including, but not
limited to, the payment of all installments of rent and other sums due to
Landlord thereunder. Guarantor does hereby waive each and every notice to which
Guarantor may be entitled under said Lease, or otherwise. and expressly consents
to any extension of time, leniency, modification, waiver, forbearance, or any
change which may be made in any term and condition of the Lease, and no such
change, modification, extension, waiver, or forbearance shall release Guarantor
from any liability or obligation hereby incurred or assumed. Guarantor further
expressly waives any notice of default in or under any of the terms of the
Lease, notice of acceptance of this Guaranty, and all setoffs and counterclaims;
provided, however, Guarantor shall be given the same right to cure Tenant's
default as that afforded Tenant under the Lease.

     3. It is specifically understood and agreed that, in the event of a default
by Tenant of the terms and provisions of the Lease and after the expiration of
any applicable grace period, Landlord shall be entitled to commence any action
or proceeding against the Guarantor or otherwise exercise any available remedy
at law or in equity to enforce the provisions of this Guaranty without first
commencing any action or otherwise proceeding against Tenant or otherwise
exhausting any or all of its available remedies against Tenant, it being
expressly agreed by the undersigned that its liability under this Guaranty shall
be primary. Landlord may maintain successive actions for other defaults. Its
rights hereunder shall not be exhausted by its exercise of any of its rights or
remedies or by any such action or by any number of successive actions, until and
unless all obligations hereby guaranteed have been paid and fully performed.

     4. In the event that any action be commenced by Landlord to enforce the
provisions of this Guaranty, Landlord shall be entitled, if it shall prevail in
any such action or proceeding, to recover from Guarantor all reasonable costs
incurred in connection therewith, including reasonable attorneys' fees.

     5. No payment by Guarantor shall entitle Guarantor under any obligations
owed by Tenant to Guarantor, by subrogation or otherwise. to any payment by
Tenant under or out of the property of the Tenant, including specifically, but
not limited to, the revenues derived from the Premises

     6. This Guaranty shall inure to the benefit of Landlord, its heirs,
personal representatives, successors, and assigns and shall be binding upon the
heirs, personal representatives, successors, and assigns of the Guarantor.

     7. The liability of the Guarantor hereunder shall in no way be affected by,
and Guarantor expressly waives any defenses that may arise by reason of, (a) the
release or discharge of the Tenant in any creditors', receivership, bankruptcy
or other proceedings; (b) the impairment, limitation or modification of the
liability of the Tenant or the estate of the Tenant in bankruptcy, or of any
remedy for the enforcement of the Tenant's said liability under the Lease,
resulting from the operation of any present or future provision of the National
Bankruptcy Act or other statute or from the decision In any court; (c) the
rejection or disaffirmance of the Lease in any such proceedings; (d) the
modification, assignment or transfer of the Lease by the Tenant; (e) any
disability or other defense of the Tenant; or (f) the cessation from any cause
whatsoever of the liability of the Tenant.

     8. Guarantor agrees that in the event Tenant shall become insolvent or
shall he adjudicated a bankrupt, or shall file a petition for reorganization,
arrangement or similar relief under any present or future provisions of the
Federal Bankruptcy Code, or any similar law or statute of the United States or
any State thereof, or if such a petition filed by creditors of Tenant shall be
approved by a Court, or if Tenant shall seek a judicial readjustment of the
rights of its creditors under any present or future Federal or State law or if a
receiver of all or part of its property and assets is appointed by any State or
Federal court:

          a. If the Lease shall be terminated or rejected, or the obligations of
     Tenant thereunder shall be modified. Landlord shall have the option either
     (i) to require the undersigned, and the undersigned, hereby so agree, to
     execute and deliver to Landlord a new lease as tenant for the balance of
     the term then remaining as provided in the Lease and upon the same terms
     and conditions as set forth therein, or (ii) to recover from the
     undersigned that which Landlord would be entitled to recover from Tenant
     under the Lease in the event of a termination of the License by Landlord
     because of a default by Tenant, and such shall be recoverable from the
     undersigned without regard to whether Landlord is entitled to recover the
     same from Tenant in any such proceeding.

          b. If any obligation under the Lease is performed by Tenant and all or
     any part of such performance is avoided or recovered from Landlord as a
     preference, fraudulent transfer or otherwise, in any bankruptcy,
     insolvency, liquidation, reorganization or other proceeding involving
     Tenant, the liability of Guarantor under this Guaranty shall remain in full
     force and effect.

                                       22
<PAGE>


          c. As further security for the payment of amounts under this Guaranty.
     Guarantor will file all claims against Tenant upon any indebtedness of
     Tenant to the undersigned in any bankruptcy or other proceeding in which
     the filing of claims is required by law and will assign to Landlord all
     rights of the undersigned thereunder, to the extent of Guarantor's
     obligations under this Guaranty. If Guarantor does not file any such claim,
     Landlord, as attorney-in-fact for Guarantor is hereby authorized to do so
     in the name of Guarantor or, in Landlord's discretion, to assign the claim
     and to cause proof of claim to be filed in the name of Landlord's nominee.
     In all such cases, whether in administration, bankruptcy or otherwise, the
     person or persons authorized to pay such claim shall pay to Landlord the
     full amount thereof, and, to the full extent necessary for that purpose,
     Guarantor hereby assigns to Landlord all of Guarantor's rights to any such
     payments or distributions to which Guarantor would otherwise be entitled.

          This Guaranty shall be enforced with the laws of the State of Colorado
     and shall be deemed executed in the County of Arapahoe, State of Colorado.
     Guarantor hereby consents to and submits to the jurisdiction of the federal
     and state courts located in the State of Colorado and any action or suit
     under this Guaranty by Guarantor shall only be brought in the federal or
     state court with appropriate under the Guaranty, and hereby waives any
     defenses based on the venue, inconvenience of the forum, lack of personal
     jurisdiction, the sufficiency of service and processor the like in ay such
     action or suit brought in the State of Colorado.


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

Social Security Number: XXX-XX-XXXX
                        -----------

or (Tax ID Number):


STATE OF   Colorado
           ------------------------------------

COUNTY OF  Arapahoe
          -------------------------------------


     The foregoing instrument was acknowledged before me this 28th day of
January, 2004 by Thomas Sandgaard .



     Witness my hand and official seal.

     My commission expires: 10-24-2005           )       Rhonda S. Tuley
                            ----------           ) ss    Notary Public
                                                 )       State of Colorado
                                                         /s/ Rhonda S. Tuley
                                                         -------------------
                                                         Notary Public

                                       23
<PAGE>

                                    EXHIBIT E

                                OPTION TO EXTEND


                                    (Market)


     As additional consideration for the covenants of Tenant hereunder, Landlord
hereby grants unto Tenant an option (the "Option") to extend the term of this
Lease for one (1) additional term of five (5) years (the "Option Term"). The
Option shall apply to all space then under the Lease at the time the Option Term
would commence and shall be on the following terms and conditions:

          A. Written notice of Tenant's interest in exercising the Option shall
     be given to Landlord not earlier than twelve (12) months and not later than
     six (6)months prior to the expiration of the Primary Lease Term ("Tenant's
     Notice"). Not later than thirty (30) days after receiving Tenant's Notice,
     Landlord shall give to Tenant notice of the terms, conditions and rental
     rate applicable during the Option Term, in accordance with subparagraph E
     below ("Landlord's Notice")

          B. Tenant shall have ten (10) days following Tenant's receipt of
     Landlord's Notice within which to exercise the Option by delivering written
     notice of such exercise to Landlord under the terms, conditions and rental
     rate set forth in Landlord's Notice. If Tenant gives such Notice and
     provided the other conditions to the extension have been satisfied, the
     term of the Lease shall be automatically extended for the Option Term
     without requiring further action by the parties; provided, however, the
     parties shall execute an amendment to the Lease to confirm the terms of the
     extension.

          C. Unless Landlord is timely notified by Tenant in accordance with
     subparagraphs A and B above, the Option shall terminate and the Lease shall
     expire in accordance with its terms, at the end of the Primary Lease Term.

          D. Tenant's Option to extend shall continue only if as of the date of
     Tenant's Notice or as of the date of commencement of the Option Term.
     Tenant (i) shall not be in default under the Lease at the time of exercise
     of the option or at the time of the commencement of the Option Terms; (ii)
     Tenant shall not have sublet more than twenty-five percent (25%) of the
     Premises nor assigned its interest in the Lease nor vacated the Premises;
     or (iii) Tenant shall not have been sent more than two (2) letters
     notifying Tenant of noncompliance with the terms and conditions of the
     Lease during Tenant's tenancy.

          E. The Option granted hereunder shall be upon the same terms and
     conditions of this Lease, except for the rental to be paid by Tenant, and
     except there shall be no further option to extend the Lease. The Base Rent
     applicable during each Option Term shall be comparable to that for
     comparable space in a comparable building complex as of the date of
     Landlord's Notice but in no event shall the rate be less than the Base Rent
     which Tenant is paying immediately prior to commencement of the Option
     Term.

          F. After exercise of the Option to extend for one terms above
     described, there shall be no further rights on the part of Tenant to extend
     the term of the Lease.







LANDLORD:                                   TENANT:

First Industrial. L.P., a Delaware          Zynex Medical, Inc.
limited partnership by First Industrial     a Colorado corporation
Realty Trust, a Maryland corporation its
General partner


By: /s/ Graham Riley                        By:  /s/ Thomas Sandgaard
    ------------------------------------        --------------------------------
    Graham Riley                                Thomas Sandgaard

Its:       Regional Director                Its:      President

Address:   5350 South Roslyn Street         Address:  8100 Southpark Way,
           Suite 240                                  Unit A-9
           Greenwood Village, Colorado                Littleton, Colorado 80120
           80111


Phone:     303.220-5565                               Phone:   800-845-1771
Fax:       307.220-5585                               Fax:     800-495-6695

                                       24

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>4
<FILENAME>zynex10ksbex105_3282005.txt
<TEXT>
                                                                    Exhibit 10.5

                          ZYNEX MEDICAL HOLDINGS, INC.

                             2005 STOCK OPTION PLAN

1.   PURPOSE

     The purpose of the Zynex Medical Holdings, Inc. 2005 Stock Option Plan (the
     "Plan") is to provide participants with an increased economic and
     proprietary interest in the Company and its subsidiaries in order to
     encourage those Participants to contribute to the success and progress of
     the Company and its subsidiaries.

2.   DEFINITIONS

     (a)  "Administrator" means the Administrator of the Plan in accordance with
          Section 11.

     (b)  "Board of Directors" means the Board of Directors of the Company.

     (c)  "Common Stock" means the Company's common stock, par value $.001,
          subject to adjustment as provided in Section 8.

     (d)  "Company" means Zynex Medical Holdings, Inc., a Nevada corporation,
          and subsidiaries.

     (e)  "Options" shall mean the stock options granted pursuant to the plan.

     (f)  "Participants" shall mean those officers, directors, independent
          contractors, consultants, employees and prospective employees of the
          Company and its subsidiaries to whom Options have been granted from
          time to time by the Administrator and any authorized transferee of
          such officer's, directors, independent contractors, consultants and
          employees.

     (g)  "Plan" means the Zynex Medical Holdings, Inc. 2005 Stock Option Plan.

     (h)  "Retirement" shall have the meaning specified by the Administrator in
          the terms of an option grant or, in the absence of any such term,
          shall mean retirement from active employment with the Company (i) at
          or after age 55 with the approval of the Administrator or (ii) at or
          after age 65. The determination of the Administrator as to an
          individual's Retirement shall be conclusive on all parties.

     (i)  "Total and Permanent Disablement" shall have the meaning specified by
          the Administrator in the terms of an option grant or, in the absence
          of any such term, shall mean a physical condition arising from an
          injury or illness which renders an individual incapable of performing
          work. The determination of the Administrator as to an individual's
          Disablement shall be conclusive on all of the parties.

<PAGE>

     (j)  "ISO" means an option to purchase common stock which at the time the
          Option is granted under the Plan qualifies as an incentive stock
          option within the meaning of Internal Revenue code Section 422.

     (k)  "NSO" means a nonstatutory stock option to purchase common stock which
          at the time the Option is granted under the Plan does not qualify as
          an ISO.

3.   PARTICIPANTS

     Options may only be granted to officers, directors, independent
     contractors, consultants, employees and prospective employees of the
     Company and its subsidiaries as selected by the Board of Directors.

4.   EFFECTIVE DATE AND TERMINATION OF PLAN

     The Plan was adopted by the Board of Directors of the Company on January 3,
     2005 and shall become effective upon approval by the Company's
     shareholders. The Plan shall remain available for the grant of Options
     until December 31, 2014. Notwithstanding the foregoing, the Plan may be
     terminated at such earlier time as the Board of Directors may determine.
     Termination of the Plan will not affect the rights and obligations of the
     Participants and the Company arising under Options theretofore granted and
     then in affect.

5.   SHARES SUBJECT TO THE PLAN AND TO OPTIONS

     The stock subject to Options authorized to be granted under the Plan shall
     consist of three million (3,000,000) shares of the company's common stock,
     or the number and kind of shares of stock or other securities which shall
     be substituted or adjusted for such shares as provided in Section 8. The
     shares to be delivered upon exercise of Options granted under the Plan
     shall be made available, at the discretion of the Board of Directors, from
     the authorized unissued shares or treasury shares of common stock.

6.   GRANT, TERMS AND CONDITIONS OF OPTIONS

     Options may be granted at any time and from time to time prior to the
     termination of the Plan. No Participant shall have any rights as a
     stockholder with respect to any shares of stock subject to Options
     hereunder until said shares have been issued. Each Option shall be
     evidenced by a written stock option agreement and/or such other written
     arrangements as may be approved from time to time by the Administrator.
     Options granted pursuant to the Plan need not be identical but each Option
     must contain and be subject to the following terms and conditions:

                                        2
<PAGE>

     (a)  Price: The purchase price under each Option shall be established by
          the Administrator. In no event will the option price be less than the
          fair market value of the stock on the date of grant unless such
          Options are granted in substitution of options granted by a new
          employee's previous employer or the optionee pays or foregoes
          compensation in the amount of any discount. The price may be paid in
          cash or any alternative means acceptable to the Administrator,
          including an irrevocable commitment by a broker to pay over such
          amount from a sale of the shares issuable under an Option and the
          acceptance of a promissory note secured by the number of shares of
          Common Stock then issuable upon exercise of the Options.

     (b)  $100,000 ISO Limitation: The aggregate fair value (determined as of
          the date the Option is granted) of the common stock for which ISOs
          shall first become exercisable by an Optionee in any calendar year
          under all ISO plans of the Company shall not exceed $100,000. Options
          is excess of this limitation shall constitute NSOs.

     (c)  Duration and Exercise or Termination of Option: Unless the
          Administrator provides otherwise, each Option granted must expire
          within a period not more that ten (10) years from the date of grant.

     (d)  Suspension or Termination of Option: Except as otherwise provided by
          the Administrator, if at any time (including after a notice of
          exercise has been delivered) the Chief Executive Officer or any other
          person designated by the Administrator (each such person, an
          "Authorized Officer") reasonably believes that a participant has
          committed as act of misconduct as described in this Section, the
          Authorized Officer may suspend the Participant's rights to exercise
          any Option pending a determination of whether an act of misconduct has
          been committed.

          Except as otherwise provided by the Administrator, if the
          Administrator or an Authorized Officer determines a Participant has
          committed an act of embezzlement, fraud, dishonesty, nonpayment of any
          obligation owed to the Company, breach of fiduciary duty or deliberate
          violation of the Company rules resulting in loss, damage or injury to
          the Company, or if a Participant makes an unauthorized disclosure of
          any Company trade secret or confidential information, engages in any
          conduct constituting unfair competition, induces any Company customer
          to breach a contract with the Company or induces any principal for
          whom the Company acts as agent to terminate any such agency
          relationship, neither the Participant nor his or her estate nor
          transferee shall be entitled to exercise any Option whatsoever. In
          making such determination, the Administrator or an Authorized Officer
          shall act fairly and shall give the Participant an opportunity to
          appeal and present evidence on his or her behalf at a hearing before
          the Administrator or the Board of Directors. For any Participant who

                                        3
<PAGE>

          is an "executive officer" for purposes of Section 16 of the Securities
          and Exchange Act of 1934, the determination of the Authorized Officer
          shall be subject to the approval of the Administrator.

     (e)  Termination of Employment: Subject to Section 6 (b), unless the
          Administrator specifies otherwise, upon termination of the
          Participant's employment, his or her rights to exercise an Option then
          held shall be only as follows:

          (1)  Death. Upon the death of a participant while in the employ of the
               Company, all of the Participant's Options then held shall be
               exercisable by his or her estate, heir or beneficiary at any time
               during the twelve (12) months next succeeding the date of death.
               Any and all Options that are unexercised during the twelve (12)
               months next succeeding the date of death shall terminate as of
               the end of such twelve (12) month period.

          (2)  Total and Permanent Disability. Upon termination as a result of
               the Total and Permanent Disability of any Participant, all of the
               Participant's Options then held shall be exercisable for a period
               of twelve (12) months after termination. Any and all Options that
               are unexercised during the twelve (12) months succeeding the date
               of termination shall terminate as of the end of such twelve (12)
               month period.

          (3)  Retirement. Upon Retirement of a Participant, the Participant's
               Options then held shall be exercisable for a period of twelve
               (12) months after Retirement. The number of shares with respect
               to which the Options shall be exercisable shall equal the total
               number of shares which were exercisable under the Participant's
               Option on the date of his or her retirement. Any and all Options
               that are unexercised during the twelve (12) months succeeding the
               date of termination shall terminate as of the end of such twelve
               (12) month period.

          (4)  Other Reasons. Upon the date of termination of a Participant's
               employment for any reason other that those stated in Sections 6
               (d) (1), (d) (2), and (d) (3) or as described in Section 6 (c)
               above, (A) any Option that is unexercisable as of such
               termination date shall remain unexercisable and shall terminate
               as of such date. And (B) any Option that is exercisable as of
               such termination date shall expire the earlier of (i) thirty (30)
               days following such date or (ii) the expiration date of the
               option.

                                        4
<PAGE>

     (f)  Transferability of Option: Unless the Administrator specifies
          otherwise, each Option shall be nontransferable by the Participant
          other that by will or the laws of descent and distribution.

     (g)  Cancellation: The Administrator may, at any time prior to exercise and
          subject to consent of the Participant, cancel any option previously
          granted and may or may not substitute in their place Options at a
          different price and different type under different terms or in
          different amounts.

     (h)  Conditions and Restrictions Upon Securities Subject to Options:

          The Administrator may provide that the shares of Common Stock issued
          upon exercise of an Option shall be subject to further conditions or
          agreements as the Administrator in his or her discretion may specify
          prior to the exercise of such Option, including without limitation,
          conditions on vesting and transferability, forfeiture or repurchase
          provisions and method of payment for the shares issued upon exercise
          (including the actual or constructive surrender of Common Stock
          already owned by the Participant).


     (i)  Other Terms and Conditions: Options may also contain such other
          provisions, which shall not be inconsistent with any of the foregoing
          terms, as the Administrator shall deem appropriate. No Option,
          however, nor anything contained in the Plan shall confer upon any
          Participant any right to continue in the Company's employ or service
          nor limit in any way the Company's right to terminate his or her
          employment at any time.

7.   LOANS

     The Company may make loans, at the request of the Participant and in the
     sole discretion of the Administrator, for the purpose of enabling the
     Participant to exercise Options granted under the Plan and to pay the tax
     liability resulting from an Option exercised under the Plan. The
     Administrator shall have full authority to determine the terms and
     conditions of such loans. Such loans may be secured by the shares received
     upon exercise of such Option.

8.   ADJUSTMENT OF AND CHANGES IN THE STOCK

     In the event that the number of shares of Common Stock of the Company shall
     be increased or decreased through recapitalization, reclassification,
     combination of shares, stock splits, reverse stock splits, spin-offs, or
     the payment of a stock dividend, (other than regular, quarterly cash
     dividends) or otherwise, then each share of Common Stock of the Company
     which has been authorized for issuance under the Plan, whether such share
     is then currently subject to or may become subject to an Option under the

                                        5
<PAGE>

     Plan, may be proportionately adjusted to reflect such increase or decrease,
     unless the terms of the transaction provide otherwise. Outstanding Options
     may also be amended as to price and other terms if necessary to reflect the
     foregoing events.

     In the event there shall be any other change in the number or kind of
     outstanding shares of Common Stock of the Company, or any stock or other
     securities into which such Common Stock shall have been changed, or for
     which it shall have been exchanged, whether by reason of merger,
     consolidation or otherwise, the Administrator shall, in his sole
     discretion, determine the appropriate adjustment, if any, to be effected.
     In addition, in the event of such change described in this paragraph, the
     Administrator may accelerate the time or times at which any Option may be
     exercised within a time prescribed by the Administrator in his sole
     discretion.

     No right to purchase fractional shares shall result from any adjustment in
     Options pursuant to this Section 8. In case of any adjustment, the shares
     subject to the Option shall be rounded down to the nearest whole share.
     Notice of any adjustment shall be given by the Company to each Participant
     which shall have been so adjusted and such adjustment (whether or not
     notice is given) shall be effective and binding for all purposes of the
     Plan.

9.   REGISTRATION OF STOCK

     In the event the Board of Directors or the Administrator determines in his
     sole discretion that the registration of the plan shares under any
     applicable law or governmental regulation is necessary as a condition to
     the issuance of such shares under the Option, the Option may not be
     exercised in whole or in part unless such consent or approval has been
     unconditionally obtained.

10.  WITHHOLDING

     To the extent required by applicable federal, state and local or foreign
     law, a Participant shall make arrangements satisfactory to the Company for
     the satisfaction of any withholding tax obligations that arise by reason of
     an exercise. The Company shall not be required to issue shares or to
     recognize the disposition of such shares until such obligations are
     satisfied. The Administrator may permit these obligations to be satisfied
     by having the Company withhold a potion of the shares of stock that
     otherwise would be issued to him or her upon exercise of the Option, or to
     the extent permitted, by tendering shares previously acquired, provided
     that such will not result in an accounting charge to the Company.

                                        6
<PAGE>

11.  ADMINISTRATION AND AMENDMENT OF THE PLAN

     The Plan shall be administered by the Administrator who shall be the
     Company's President and Chief Executive Officer. Subject to the express
     provisions of this Plan, the Administrator shall be authorized and
     empowered to do all things necessary or desirable in connection with the
     administration of the Plan, including, without limitation: (a) to
     prescribe, amend and rescind rules and regulations relating to the Plan and
     to define terms not otherwise defined herein; (b) to determine which
     persons are Participants (as defined in Section 3 hereof) and to which of
     such Participants, if any, an Option shall be granted hereunder and the
     timing of any such Option grants; (c) to determine the number of shares of
     Common Stock subject to an Option and the exercise or purchase price of
     such shares; (d) to establish and verify the extent of satisfaction of any
     conditions to exercisability applicable to an Option; (e) to waive
     conditions to and/or accelerate exercisability of an Option, either
     automatically upon the occurrence of specified events (including in
     connection with a change of control of the Company) or otherwise in his
     discretion; (f) to prescribe and amend the terms of Option grants made
     under the Plan (which need not be identical); (g) to determine whether, and
     the extent to which, adjustments are required pursuant to Section 8 hereof;
     and (h) to interpret and construe this Plan, any rules and regulations
     under the Plan and the terms and conditions of any Option granted
     hereunder, and to make exceptions to any such provisions in good faith and
     for the benefit of the Company.

     All decisions, determinations and interpretations by the Administrator
     regarding the Plan, any rules and regulations under the Plan and the terms
     and conditions of any Option granted hereunder, shall be final and binding
     on all Participants and optionholders. The Administrator shall consider
     such factors as he deems relevant, in his sole and absolute discretion, to
     making such decisions, determinations and interpretations including,
     without limitation, the recommendations or advice of any officer or other
     employee of the Company and such attorneys, consultants and accountants as
     the Administrator may select.

     The Administrator may, from time to time, delegate some of the
     responsibilities with respect to the administration of the Plan to such
     persons as he may designate in his sole discretion but may not delegate
     authority to grant options to a person who is not a member of the Board of
     Directors.

     The interpretation and construction of any provision of the Plan by the
     Board of Directors shall be final and conclusive. The Board of Directors
     may periodically adopt rules and regulations for carrying out the Plan, and
     amend the Plan as desired, without further action by the Company's
     stockholders except to the extent required by applicable law. Any amendment
     to the Plan will not affect the rights and obligations of the Participants
     and the Company arising under Options theretofore granted and then in
     effect. Notwithstanding the foregoing, and subject to adjustment pursuant
     to Section 8, the Plan may not be amended to increase the number of shares
     of Common Stock authorized for issuance, unless approved by the Company's
     stockholders.

                                        7
<PAGE>


12.  TIME OF GRANTING OPTIONS

     The effective date of such Option shall be the date on which the grant was
     made. Within a reasonable time thereafter, the Company will deliver the
     Option to the Participant.

12.  GOVERNING LAW; SEVERABILITY

     The Plan shall be governed by the laws of the State of Nevada. The
     invalidity or unenforceability of any provision of the Plan or any Option
     granted pursuant to the Plan shall not affect the validity and
     enforceability of the remaining provisions of the Plan and the Options
     granted hereunder, and such invalid or unenforceable provision shall be
     stricken to the extent necessary to preserve the validity and
     enforceability of the Plan and the options granted hereunder.

     Dated this 3rd day of January 2005.

                                                     By:  /s/ Thomas Sandgaard
                                                          ----------------------
                                                          Thomas Sandgaard
                                                          President and Chief
                                                          Executive Officer

                                        8
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>5
<FILENAME>zynex10ksbex21_3282005.txt
<DESCRIPTION>SUBSIDIARIES
<TEXT>
                                                                      Exhibit 21

                           SUBSIDIARIES OF REGISTRANT



             NAME                              JURISDICTION OF FORMATION
             ----                              -------------------------


       Zynex Medical, Inc.                           Colorado


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>6
<FILENAME>zynex10ksbex31_3282005.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
                                                                      Exhibit 31


                                  CERTIFICATION

I, Thomas Sandgaard, certify that:

     1.  I have reviewed this Form 10-KSB 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
<PAGE>

     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.

Dated:  April 15, 2005

                                           /s/  Thomas Sandgaard
                                           -------------------------------------
                                           Thomas Sandgaard
                                           President and Chief Executive Officer
                                           (Principal Executive Officer and
                                           Principal Financial Officer)

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>7
<FILENAME>zynex10ksbex32_3282005.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
                                                                      Exhibit 32

                         CERTIFICATION OF 10-KSB REPORT
                                       OF
                          ZYNEX MEDICAL HOLDINGS, INC.
                      FOR THE YEAR ENDED DECEMBER 31, 2004

     1.  The undersigned is the Principal Executive Officer and the Principal
         Financial Officer of Zynex Medical Holdings, Inc. ("Zynex"). This
         Certification is made pursuant to Section 906 of the Sarbanes-Oxley Act
         of 2002. This Certification accompanies the 10-KSB Report of Zynex for
         the year ended December 31, 2004.

     2.  We certify that such 10-KSB Report fully complies with the requirements
         of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and
         that the information contained in such 10-KSB Report fairly presents,
         in all material respects, the financial condition and results of
         operations of Zynex.

This Certification is executed as of April 15, 2005.


                                           /s/  Thomas Sandgaard
                                           -------------------------------------
                                           Thomas Sandgaard
                                           President and Chief Executive Officer
                                           (Principal Executive Officer and
                                           Principal Financial Officer)
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
