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<SEC-DOCUMENT>0001079974-05-000301.txt : 20050812
<SEC-HEADER>0001079974-05-000301.hdr.sgml : 20050812
<ACCEPTANCE-DATETIME>20050811175815
ACCESSION NUMBER:		0001079974-05-000301
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20050630
FILED AS OF DATE:		20050812
DATE AS OF CHANGE:		20050811

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:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	033-26787-D
		FILM NUMBER:		051018436

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

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

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

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

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CHINA GLOBAL DEVELOPMENT INC
		DATE OF NAME CHANGE:	20020130
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>zynex10qsb_8102005.txt
<DESCRIPTION>QUARTERLY REPORT FOR PERIOD ENDED 6-30-2005
<TEXT>
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB


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



                  For the quarterly period ended June 30, 2005
                                                 --------------


                       Commission File Number: 33-26787-D
                                               ----------


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


             Nevada                    33-26787-D            90-0214497
   ---------------------------      ---------------    ----------------------
   State or Other Jurisdiction       Commission File         IRS Employer
of Incorporation or Organization)        Number          Identification Number



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


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

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

                            Yes [X]           No [ ]

As of JuLY 31, 2005 23,117,784 shares of common stock were outstanding.

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

<PAGE>


                       ZYNEX MEDICAL HOLDINGS, INC.
                               FORM 10-QSB
                                 INDEX
                                                                     Page Number
                                                                     -----------
PART I:  FINANCIAL INFORMATION

Item 1.  Financial Statements:

         Condensed Consolidated Balance Sheet -
         June 30, 2005 ............................................      3

         Condensed Consolidated Statements of Operations -
            Quarters Ended June 30, 2005 and 2004 and Six
            Months Ended June 30, 2005 and 2004....................      5

         Condensed Consolidated Statements of Cash Flows -
         Six Months Ended June 30, 2005 and 2004...................      6

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

Item 2.  Management's Discussion and Analysis or Plan of
         Operations ...............................................      8

Item 3.  Controls and Procedures ..................................      9

PART II: OTHER INFORMATION

Item 1.  Legal Proceedings ........................................     10

Item 2.  Unregistered Sales of Equity Securities and Use of
         Proceeds .................................................     10

Item 3.  Defaults Upon Senior Securities ..........................     10

Item 4.  Submission of Matters to a Vote of Security
         Holders ..................................................     10

Item 5.  Other Information ........................................     10

Item 6.  Exhibits..................................................     10

SIGNATURES ........................................................     12


<PAGE>


                                     PART I
                              FINANCIAL INFORMATION

Item 1. Financial Statements.




                          Zynex Medical Holdings, Inc.
                      Condensed Consolidated Balance Sheet
                                  June 30, 2005
                                   (unaudited)

                                     ASSETS

Current Assets:
  Cash and equivalents                                               $     --
  Receivables, less allowance for
    uncollectible accounts of $487,461                                  475,910
  Inventory                                                             396,560
  Prepaid expenses                                                       14,344
  Refundable income taxes                                                 7,586
  Other current assets                                                      661
                                                                     ----------

         Total current assets                                           895,061

Property and equipment, less accumulated depreciation
  of $132,894                                                           223,102
Other assets                                                             10,940
                                                                     ----------

                                                                     $1,129,103
                                                                     ==========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Bank overdraft                                                     $   19,116
  Notes payable                                                          99,951
  Capital lease                                                          13,787
  Accounts payable                                                      373,824
  Loan from stockholder                                                  25,300
  Accrued payroll and payroll taxes                                      87,577
  Other accrued liabilities                                              75,804
                                                                     ----------

         Total current liabilities                                      695,359

Notes payable, less current maturities                                   34,629
Capital lease, less current maturities                                   52,226
                                                                     ----------

         Total liabilities                                              782,214
                                                                     ----------

Contingencies and Commitments                                              --

                                        3
<PAGE>
                          Zynex Medical Holdings, Inc.
                      Condensed Consolidated Balance Sheet
                                  June 30, 2005
                                   (unaudited)
                                    Continued
                                    ---------


Stockholders' Equity:
  Preferred stock, $.001 par value, 10,000,000 shares
    authorized, no shares issued or outstanding                            --
  Common stock, $.001, par value, 100,000,000 shares
    authorized, 23,117,784 shares issued and outstanding                 23,117
  Additional paid-in capital                                          1,347,686
  Accumulated (deficit)                                              (1,023,914)
                                                                    -----------

         Total stockholders' equity                                     346,889
                                                                     -----------

                                                                     $ 1,129,103
                                                                     ===========



                                        4
<PAGE>

<TABLE>
                          Zynex Medical Holdings, Inc.
                 Condensed Consolidated Statements of Operations
                                   (unaudited)

<CAPTION>

                                             Quarter Ended                 Six Months Ended
                                                June 30,                        June 30,
                                      ---------------------------    ---------------------------
                                          2005           2004            2005           2004
                                      ------------   ------------    ------------   ------------
<S>                                   <C>            <C>             <C>            <C>
Net sales and rental income           $    589,483   $    336,705    $  1,134,426   $    599,596
Cost of sales, rentals and freight          73,250         54,528         160,362        100,628
                                      ------------   ------------    ------------   ------------
  Gross profit                             516,233        282,177         974,064        498,968

Selling, general and administrative        417,784        456,425         799,824        835,395
Depreciation                                16,801         13,759          32,828         22,373
                                      ------------   ------------    ------------   ------------
                                           434,585        470,184         832,652        857,768

  Income (loss) from operations             81,648       (188,007)        141,412       (358,800)

Interest and other expense                   6,232          6,497           9,916         22,696
                                      ------------   ------------    ------------   ------------

  Income (loss) before income taxes         75,416       (194,504)        131,496       (381,496)

Income tax provision (benefit)                --           (6,375)           --          (12,750)
                                      ------------   ------------    ------------   ------------
Net income (loss)                     $     75,416   $   (188,129)   $    131,496   $   (368,746)
                                      ============   ============    ============   ============

Basic and diluted net income (loss)
  per common share                    $       0.00   $      (0.01)   $       0.01   $      (0.02)
                                      ============   ============    ============   ============

Weighted average number of shares
  outstanding
  Basic                                 23,074,024     22,521,945      23,072,210     22,360,430
                                      ============   ============    ============   ============
  Diluted                               23,237,948     22,521,945      23,230,567     22,360,430
                                      ============   ============    ============   ============
</TABLE>

                                        5
<PAGE>


                          Zynex Medical Holdings, Inc.
                 Condensed Consolidated Statements of Cash Flows
                                   (unaudited)

                                                      Six Months Ended June 30,
                                                     --------------------------
                                                         2005           2004
                                                     -----------    -----------

Cash flows from operating activities:
  Net income (loss)                                  $   131,496    $  (368,746)
  Adjustments to reconcile net income (loss) to
    net cash provided by (used in) operations:
    Depreciation                                          16,801         22,858
    Issuance of warrants for consulting services            --           61,727
    Issuance of common stock for consulting services      12,500           --
    Loss on disposal of equipment                           --            9,721
    Changes in operating assets and liabilities:
         Accounts receivable                            (285,820)       (47,583)
         Inventory                                       (76,861)      (107,733)
         Refundable income taxes                           4,105           --
         Other current assets                              7,071           (288)
         Other assets                                      3,532         (6,985)
         Bank overdraft                                   19,116           --
         Accounts payable                                193,666         39,683
         Accrued liabilities                               7,981         13,850
                                                     -----------    -----------

Net cash provided by (used in) operating activities       33,587       (383,496)

Cash flows from investing activities:
  Purchase of equipment                                  (11,408)       (38,760)

                                                     -----------    -----------
Net cash used in investing activities                    (11,408)       (38,760)


Cash flows from financing activities:
  Payments on notes payable and capital lease            (50,557)       (62,908)
  Proceeds from sale of common stock                        --        1,259,988
  Proceeds from (payments on) loan from stockholder       25,300        (12,816)
                                                     -----------    -----------
Net cash provided by (used in) financing activities      (25,257)     1,184,264
                                                     -----------    -----------

(Decrease) Increase in cash                               (3,078)       762,008

Cash and equivalents at beginning of period                3,078           --
                                                     -----------    -----------


Cash and equivalents at end of period                $      --      $   762,008
                                                     ===========    ===========


Supplemental cash flow information:
  Interest paid                                      $    13,212    $    14,467
  Income taxes paid                                         --            2,391
  Non-cash investing and financing activities
    Equipment financed with note payable                    --           56,332



<TABLE>
                          Zynex Medical Holdings, Inc.
            Condensed Consolidated Statement of Stockholders' Equity
                         Six Months Ended June 30, 2005
                                   (unaudited)

<CAPTION>


                                                      Additional
                          Number of                   Paid-In      Accumulated
                          Shares        Amount        Capital        Deficit         Total
                         -----------   -----------   -----------   -----------    -----------
<S>                      <C>           <C>           <C>           <C>            <C>
December 31,2004          23,070,377   $    23,070   $ 1,335,233   $(1,155,410)   $   202,893

 Issuance of common
  stock for consulting
    services                  47,407            47        12,453          --           12,500

Net income                      --            --            --         131,496        131,496
                         -----------   -----------   -----------   -----------    -----------
June 30, 2005             23,117,784   $    23,117   $ 1,347,686   $(1,023,914)   $   346,889
                         ===========   ===========   ===========   ===========    ===========
</TABLE>

                                        6
<PAGE>


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

1.   Nature of Business

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


2.   Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared
by the Company without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission and in accordance with accounting principles
for interim financial information. In the opinion of management, these condensed
consolidated financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to fairly state the financial position
of the Company as of June 30, 2005 and the results of its operations for the
quarter and six months ended June 30, 2005 and 2004, and its cash flows for the
six months ended June 30, 2005 and 2004.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. Furthermore, these financial statements should
be read in conjunction with Zynex Medical Holdings, Inc.'s audited financial
statements at December 31, 2004 included in the Company's Form 10-KSB filed
April 15, 2005.

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

As reported in the December 31, 2004 financial statements, the Company incurred
a substantial loss in 2004 and as of June 30, 2005 reported no cash or cash
equivalents. The foregoing raises substantial doubt about the Company's ability
to continue as a going concern. The accompanying interim financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

The Company is in discussions with commercial banks and asset based lenders that
may provide a secured working capital line of credit and with private equity
investors to further assist in executing its business plan. There can be no
assurance that it will be able to raise such additional financing or do so on
terms that are acceptable to the Company.


3.   Stockholders' Equity

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.

All share and per share amounts presented reflect the 23,117,784 outstanding
shares as a result of the February 11, 2004 reverse acquisition, adjusted for
subsequent activity.

Pursuant to the Company's 2005 Stock Option Plan, adopted on January 3, 2005,
the Company granted 190,000 common stock options to employees on January 3, 2005
at $0.30 per share and 22,000 common stock options to employees on April 1, 2005
at $0.23 per share. As of June 30, 2005, 102,500 options of the January 3, 2005
grant and 22,000 shares of the April 1, 2005 grant remain outstanding.

Pursuant to the April 18, 2005 Compensation Agreement between the Company and
Peter J. Leveton, Chief Financial Officer, on April 18, 2005 the Company granted
350,000 stock options to Mr. Leveton at $0.22 per share of common stock. As of
June 30, 2005, 350,000 shares remain outstanding.

As of June 24, 2005 the Company issued 47,407 shares of common stock to The Wall
Street Group for $12,500 of consulting services rendered during the period April
1 through June 30, 2005, The shares were issued at prices of  $0.23 to $0.31
per share.


                                        7
<PAGE>


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

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


Results of Operations

Net Sales and Rental Income. Net sales and rental income for the quarter and six
months ended June 30, 2005 were $589,483 and $1,134,426, an increase of $252,778
and $534,830, or 75.1% and 89.2% compared to $336,705 and $599,596 for the
quarter and six months ended June 30, 2004. The increase in net sales and rental
income for the quarter ended June 30, 2005 compared to the quarter ended June
30, 2004 was due to greater end user and physician awareness of the Company's
products resulting from its increased 2004 marketing investments and an increase
in sales representatives.

Gross Profit. Gross profit for the quarter and six months ended June 30, 2005
were $516,233 and $974,074, or 87.6% and 85.9% of revenue, an increase of
$234,056 and $475,096, or 82.9% and 95.2%, from the gross profit of $282,177 and
$498,968, or 83.8% and 83.2% of revenue, for the quarter and six months ended
June 30, 2004. The increase in gross profit for the quarter and six months ended
June 30, 2005, as compared with the same period last year, is due to higher net
sales and rental income.

Gross profit as a percent of revenue for the quarter and six months ended June
30, 2005 is higher than the like period in 2004 because of improved terms with
certain suppliers and improved collections.

Selling, General and Administrative. Selling, general and administrative
expenses for the quarter and six months ended June 30, 2005 were $417,784 and
$799,824, a decrease of $38,641 and $35,571 or 8.5% and 4.3%, compared to
$456,425 and $835,395 for the same periods last year. The decreases compared to
the same periods last year were due to reductions in highly compensated
personnel, office expense, and advertising, marketing and promotion, offset by
increases in public company expense, consulting, legal fees, and liability
insurance.

Interest and Other. Interest and other expenses were $6,232 and $9,916 for the
quarter and six months ended June 30, 2005, a decrease of $265 and $12,780
compared to $6,497 and $22,696 for the same periods last year. The decreases
result primarily from a reduction in interest and finance charges due to a
reduction in debt.

Liquidity and Capital Resources. We expect that our cash requirements will
increase as our operations expand. Based on the Company's first half results and
planned sales revenue for the next two quarters we believe that available cash
will be adequate to meet our requirements for the balance of 2005. However, in
order to fully implement our 2005 business plan, we need to raise additional
equity or debt financing.

We are in discussions with commercial banks and asset based lenders that may
provide a secured working capital line of credit and with private equity
investors to further assist in executing our business plan. There can be no
assurance that we will be able to raise such additional financing or do so on
terms that are acceptable to us.

Cash provided by operating activities was $33,587 for the six months ended June
30, 2005 compared with cash used by operations of $383,496 for the six months
ended June 30, 2004. The primary reasons for improvement in cash flow werethe
increase in net sales and rental income concurrent with reductions in operating
expenses and the resultant improvement in net income.

Cash used in investing activities was $11,408 for the six months ended June 30,
2005 compared to $38,760 for the same period in 2004. Cash used in investing
activities represent the purchase of equipment and inventory rented to
customers.

Cash used in financing activities was $25,257 for the six months ended June 30,
2005 compared with cash provided by financing activities of $1,184,264 for the
six months ended June 30, 2004. Sales of common stock during the six months
ended June 30, 2004 provided net cash proceeds of $1,259,988. During the six
months ended June 30, 2005 the Company received $25,300 in working capital loans
from principal shareholder Thomas Sandgaard.


                                        8
<PAGE>




To conserve and most efficiently and effectively use financial resources now and
in the future we will continue to closely monitor both our costs and revenue
expectations and will take appropriate action as circumstances require.

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included in this quarterly report contains statements that
are forward-looking, such as statements relating to plans for future expansion
and other business development activities, as well as other capital spending and
financing sources. Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results in the future
and, accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company. These risks
include the need to obtain additional capital in order to grow our business,
larger competitors with greater financial resources, the need to keep pace with
technological changes, our dependence on the reimbursement from insurance
companies for products sold or rented to our customers, our dependence on third
party manufacturers to produce our goods on time and to our specifications, the
acceptance of our products by hospitals and clinicians, implementation of our
sales strategy including a strong direct sales force and other risks described
in our 10-KSB Report for the year ended December 31, 2004.


ITEM 3.  CONTROLS AND PROCEDURES

As of the end of the period covered by this quarterly report, an evaluation was
performed under the supervision and with the participation of the Company's
management including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures were effective as of June 30, 2005.

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

                                        9
<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

     None.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

See Note 3 to the Notes to the Condensed Consolidated Financial Statements for
information regarding the issuance of common stock to The Wall Street Group on
June 24, 2005. These shares were issued pursuant to an exemption from
registration under the Securities Act of 1933 for a limited or non-public
offering.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     None

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

     None.

ITEM 5. OTHER INFORMATION.

     None.

ITEM 6. EXHIBITS.

     (a)  Exhibits

          10.1  Compensation Agreement dated       Filed herewith electronically
                as of April 18, 2005
                between the Company
                and Peter J. Leveton.


          31.1  Certification of Chief             Filed herewith electronically
                Executive Officer
                Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002

          31.2  Certification of Chief Financial   Filed herewith electronically
                Officer Pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002

                                       10
<PAGE>


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


          (b) Reports on Form 8-K

              On June 2, 2005 the Company filed a Form 8-K to report a
         definitive compensation agreement with Peter J. Leveton, Chief
         Financial Officer of the Company.

         On June 28, 2005 the Company filed a Form 8-K to announce the June 27,
         2005 press release and publication of a Wall Street Transcript
         interview with Thomas Sandgaard, Chairman, President and Chief
         Executive Officer of the Company.

                                       11
<PAGE>


                                   SIGNATURES

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

                                  ZYNEX MEDICAL HOLDINGS, INC.



Date: August 11, 2005             By:  /s/ Thomas Sandgaard
                                       -----------------------------------------
                                       Thomas Sandgaard, President,
                                       Chief Executive Officer,
                                       Treasurer

                                  By:  /s/ Peter J. Leveton
                                       -----------------------------------------
                                       Chief Financial Officer
                                       Principal Financial Officer



                              INDEX TO EXHIBITS


Exhibit No.             Description
- -----------             -----------
   10.1                 Compensation Agreement dated as of
                        April 18, 2005 between
                        the Company and Peter J. Leveton.

   31.1                 Certification Of the Chief Executive Officer Pursuant to
                        Section 302 of the Sarbanes-Oxley Act of 2002

   31.2                 Certification of the Chief Financial Officer Pursuant to
                        Section 302 of the Sarbanes-Oxley Act of 2002

   32                   Certification of the Chief Executive Officer and Chief
                        Chief Financial Officer Pursuant to Section 18 U.S.C.
                        Section 1350

                                       12

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>zynex10qsbex101_8102005.txt
<DESCRIPTION>EMPLOYMENT CONTRACT
<TEXT>
                                                                    EXHIBIT 10.1

[[ZYNEX LETTERHEAD]]



April 18, 2005

Mr. Peter J. Leveton

Dear Pete:

When signed by you and me this letter will become a binding agreement between
you and Zynex Medical Holdings, Inc. (the "Company") and formalize the pre
employment verbal agreement with regard to your Zynex responsibilities and
compensation.

Effective Date: April 18, 2005

Position: Chief Financial Officer.

Responsibilities: All financial aspects of the Company, including: SEC
reporting; identifying possible additional sources and negotiating to obtain
additional funding; financial, business and strategic planning and projections;
participation in or advice to the CEO regarding current and future
merger/acquisition discussions and negotiations; working with the CEO on
commercial banking relationships; internal controls; managing H/R and
Accounting; and other responsibilities as assigned by the CE0.

Committed Time: No less than 20 hours per week, 80 hours per month.


Base Salary Compensation: Base salary compensation shall become payable in three
parts:

(1)  $2,250 per month to be accrued and payable for each month of employment by
     the Company beginning as of the Effective Date of this agreement.

(2)  An additional $4,000 per month for each month of employment by the Company
     ("First Raise") shall be conditioned upon, and become payable as of the
     first day of the month next following the first to occur of the following
     (the "First Event"):

     (a)  the Company obtains a line of credit of at least $250,000, or

     (b)  the Company receives third party equity or debt investment of at least
          $1,000,000, or

     (c)  the Company has annual audited "positive net cash provided by
          operating activities" of at least $500,000, or

     (d)  the Company undergoes a sale of substantially all the assets, a stock
          sale, a merger or other liquidity event of the Company with a
          valuation of at least $10,000,000 (a "Liquidity Event").

<PAGE>


     Upon the occurrence of a First Event, you shall become vested in an amount
     equal to the First Raise for each month of employment beginning as of the
     Effective Date of this agreement through the month in which the First Event
     occurs (but no later than the month in which your employment terminates or
     the First Raise begins). and such amount shall be paid promptly thereafter
     but in no event later than 2 1/2 months following the year in which occurs
     the First Event, such that there is no deferral of compensation.

(3)  An additional $5,000 per month for each month of employment by the Company
     ("Second Raise") shall be conditioned upon, and become payable as of the
     first day of the month next following the first to occur of the following
     (the "Second Event"):

     (a)  the Company obtains a third party equity or debt investment of at
          least $1,000,000,

     (b)  the Company has annual audited "net cash provided by operating
          activities" of at least $500,000 , or

     (c)  the Company undergoes a Liquidity Event.

     Upon the occurrence of a Second Event, you shall become vested in an amount
     equal to the Second Raise for each month of employment  beginning as of the
     Effective  Date of this  agreement  through  the month in which the  Second
     Event  occurs  (but no later  than  the  month  in  which  your  employment
     terminates  or the Second  Raise  begins),  and such  amount  shall be paid
     promptly  thereafter but in no event later than 2 1/2 months  following the
     year in which  occurs the Second  Event,  such that there is no deferral of
     compensation.

If you are not employed by the Company as of the date of a First Event or Second
Event, but

(1)  you played an active, integral and key role in accomplishing such event;
     and

(2)  your employment terminated

     (a)  voluntarily within 30 days of the First Event or Second Event, or

     (b)  involuntarily within 120 days of the First Event or Second Event, then
          the Company shall pay an amount equal to the First Raise and/or Second
          Raise, as applicable, for each month of employment beginning as of the
          effective date of this agreement through the date on which your
          employment terminates, and such amount shall be paid promptly
          thereafter but in no event later than 2 1/2 months following the year
          in which occurs the First Raise or Second Raise, as applicable, such
          that there is no deferral of compensation.

<PAGE>


Common Stock Compensation: 350,000 Zynex non-statutory Common Stock options,
ten-year term, with an exercise price of $0.22 per share, equal to the closing
market value on April 18, 2005, the date of grant. Such options to vest: (1)
100,000 shares on the grant date, (2) 25,000 shares if employed as of June 30,
2005, (3) 25,000 shares as of the last day of each full calendar quarter of
employment thereafter through the quarter ended March 31, 2007, and (4) 50,000
shares if employed or if you played an active, integral and key role in
accomplishing such event, within 30 days of voluntary termination and within 90
days of involuntary termination upon the earlier of (a) third party equity or
debt investment of at least $1,000,000, (b) annual audited "positive net cash
provided by operating activities" of at least $500,000 or (c) sale, merger or
other Liquidity Event of the Company with a valuation of no less than
$10,000,000.

All such options will contain a cashless exercise provision.

All unvested quarterly options will vest automatically in the event of a
Liquidity Event with a valuation of no less than $10,000,000 if such Liquidity
Event occurs during your employment or, if you played an active, integral and
key role in accomplishing such Liquidity Event, within 90 days of involuntary
termination.

In the event of your death or other permanent incapacity, all amounts earned but
unpaid and all vested options will be promptly paid and/or assigned to your
wife, Mary Ann Leveton. In the event that Mary Ann predeceases you or becomes
deceased at the same time such amount and all vested options will be paid and/or
assigned to your Estate.

Other than as provided for a Liquidity Event, all unvested options will expire
upon the voluntary or involuntary termination of employment.


Medical and Dental Insurance: You have advised that you will not participate in
either the Company's medical or dental plans and the equivalent cost will be
paid as an addition to the base compensation set forth above.


Other Employee Benefits: Other benefits (401-k, if any, vacation and sick leave,
paid holidays, etc.) consistent with other executive employees.


Expense Reimbursement: Usual and customary.


Taxation: You shall be responsible for all tax consequences, whether intended or
unintended, resulting from compensation paid to you, in whatever form, by the
Company.


Accepted and agreed effective as of April 18, 2005.



<PAGE>


Zynex Medical Holdings, Inc.


/s/ Thomas Sandgaard                                      /s/ Peter J Leveton
- ------------------------------------                      ---------------------
Thomas Sandgaard                                          Peter J. Leveton
President and Chief Executive Officer



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>zynex10qsbex311_8102005.txt
<TEXT>
                                                                    Exhibit 31.1


                                  CERTIFICATION

I, Thomas Sandgaard, certify that:

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

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

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

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

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

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

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

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

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

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

Dated:  August 11, 2005

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


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>zynex10qsbex312_8102005.txt
<TEXT>
                                                                    Exhibit 31.2




                                  CERTIFICATION

I, Peter J. Leveton, certify that:

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

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

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

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

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

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

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

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

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

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

Dated:  August 11, 2005

                                           /s/ Peter J. Leveton
                                           -------------------------------------
                                           Peter J. Leveton
                                           Chief Financial Officer
                                           Principal Financial Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>5
<FILENAME>zynex10qsbex32_8102005.txt
<TEXT>
                                                                      Exhibit 32

                         CERTIFICATION OF 10-QSB REPORT
                                       OF
                          ZYNEX MEDICAL HOLDINGS, INC.
                       FOR THE QUARTER ENDED JUNE 30, 2005

     1.   The  undersigned  are the  Principal  Executive  Officer and 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-QSB Report of Zynex
          for the quarter ended June 30, 2005.

     2.   We  certify  that  such  10-QSB   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-QSB  Report
          fairly presents, in all material respects, the financial condition and
          results of operations of Zynex.

This Certification is executed as of August 11, 2005.

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



                                            /s/ Peter J. Leveton
                                           -------------------------------------
                                            Peter J. Leveton
                                            Chief Financial Officer
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
