CONVERTIBLE SECURED PROMISSORY NOTE

THIS PROMISSORY NOTE (THE “NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS NOTE IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO THE MAKER, THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.

THIS PROMISSORY NOTE IS SUBJECT TO THE SUBORDINATION AGREEMENT BETWEEN THE HOLDER HEREOF AND SILICON VALLEY BANK.

FOR VALUE RECEIVED , ZYNEX MEDICAL HOLDINGS, INC., a Nevada corporation (“Maker”), promises to pay to the order of Ascendiant Capital Group, LLC   (“Holder”) at 18881 Von Karman, 16 ^th Floor, Irvine, CA 92612, the principal sum of Two Hundred Seventy Five Thousand Dollars ($275,000), together with all accrued interest thereon and fees, upon the terms and conditions specified below.

1.   Use of Loan Proceeds . The proceeds of this Note shall be used for general working capital for the Maker.

2.   Due Date . Unless earlier accelerated or converted pursuant to the terms hereof, this Note shall mature and the outstanding principal balance of this Note together with all accrued and unpaid interest hereunder shall become due and payable in one lump sum on April 18, 2007 (the “Maturity Date”); provided, however, if Maker delivers written notice to Holder at any time not less than 15 days prior to the Maturity Date stating that Maker has elected to extend the term of this Note, this Note shall instead mature and the outstanding principal balance of this Note together with all accrued and unpaid interest hereunder shall become due and payable in six equal monthly installments beginning on the Maturity Date and ending on October 18, 2007 (the “Extended Maturity Date”).

3.     Original Issue Discount . This Note shall have an original issue discount equal to five percent (5%) of the aggregate principal amount of this Note, and Maker acknowledges that the proceeds of this Note shall be net of this five percent (5%) original issue discount. The amount by which the issue price of this Note is less than the amount to be paid at the Maturity Date (excluding amounts stated to be interest), constitutes “original issue discount,” the accrual of which is treated as interest on the Note for purposes of federal and state taxation.

4.   Interest . Interest shall accrue on the unpaid balance outstanding from time to time under this Note at the rate of (a) fifteen percent (15%) per annum from the date hereof to and including January 17, 2007 and (b) eighteen percent (18%) per annum from January 18, 2007 to and including the Maturity Date (with (a) and (b) referred to herein as the “Initial Term”); provided, however, (i) if the term of this Note is extended by Maker pursuant to Section 2 hereof, then from and after the original Maturity Date to and including the Extended Maturity Date, interest shall accrue on the unpaid balance outstanding from time to time under this Note at the rate of twenty-one percent (21%) per annum, and (ii) any principal amount not paid when due and, to the extent permitted by applicable law, any interest not paid when due, in each case whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (both before as well as after judgment), shall bear interest payable upon demand at a rate that is five percent (5%) per annum in excess of the rate of interest otherwise then payable under this Note. All computations of interest shall be made on the basis of a year of 360 days for the actual number of days (including the first day and excluding the last day) occurring in the period for which such interest is payable. In no event shall the interest rate payable on this Note exceed the maximum rate of interest permitted to be charged under applicable law. If the rate of interest payable under this Note is ever reduced as a result of the preceding sentence and at any time thereafter the maximum rate permitted by applicable law shall exceed such reduced rate of interest then provided for hereunder, then the rate provided for hereunder shall be increased to a rate not to exceed the maximum rate permitted by applicable law at such time, such that the total amount of interest received by the Holder is equal to or as nearly equal to the amount provided for in the first sentence of this paragraph as applicable law permits. All Interest payable under this Note during the Initial Term shall be prepaid on the date hereof from the proceeds of this Note irrespective of any prepayment of amounts under this Note. In the case of any Extended Maturity Date, all interest shall be according to the amortization schedule set forth in Section 2 hereof.

5.   Conversion .

(a)   At any time or from time to time prior to the Maturity Date or the Extended Maturity Date, as the case may be, Holder may elect to convert all or any portion of the outstanding principal balance of this Note and accrued but unpaid interest thereon into the common stock of Maker at an initial conversion price of $0.32 per share of common stock (the “Conversion Price”).

(b)   No fractional shares of Maker’s capital stock will be issued upon conversion of this Note. In lieu of any fractional share to which Holder would otherwise be entitled, Maker will pay to Holder in cash the amount of the unconverted principal and interest balance of this Note that would otherwise be converted into such fractional share. Upon conversion of this Note pursuant to Section 5, Holder shall surrender this Note, duly endorsed, at

the principal offices of Maker. At its expense, Maker will, as soon as practicable thereafter, issue and deliver to Holder, at such address as requested by Holder, a certificate or certificates for the number of shares to which Holder is entitled upon such conversion, together with any other securities and property to which Holder is entitled upon such conversion under the terms of this Note, including a check payable to Holder for any cash amounts payable as a result of any fractional shares as described herein.

6.   Adjustments to Conversion Price for Certain Diluting Issuances .

(a)   Special Definitions . For purposes of this Section 6, the following definitions apply:

(i)   “ Options ” shall mean rights, options, or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities (defined below).

(ii)   “ Original Issue Date ” shall mean the date hereof.

(iii)   “ Convertible Securities ” shall mean any evidences of indebtedness, shares or other securities convertible into or exchangeable for common stock of Maker.

(iv)   “ Additional Shares of Common Stock ” shall mean all shares of common stock issued (or, pursuant to Section 6(c) below deemed to be issued) by Maker after the Original Issue Date, other than shares of common stock issuable or issued:

A.   upon the exercise or conversion of exercisable securities or Convertible Securities outstanding as of the Original Issue Date;

B.   upon exercise of stock options to officers, directors, employees or consultants of Maker pursuant to stock option or stock purchase plans or agreements on terms approved by the Board of Directors of Maker;

C.   as stock splits or subdivisions or stock dividends in respect of which the Conversion Price is adjusted pursuant to Section 6(e);

D.   in connection with any joint venture approved by the Board of Directors of Maker;

E.   to vendors in payment of normal and customary fees or in settlement of outstanding accounts payable in an aggregate amounts not to exceed 1% of the Maker’s outstanding Common Stock (measured as of the Original Issue Date and each anniversary date thereof) in each 12 month period following the Original Issue Date, provided that any such Additional Shares of Common Stock must be valued, as of the day such Additional Shares of Common Stock are issued or deemed to be issued, at or above the market price of the Maker’s Common Stock on the day of issuance, or

F.   in connection with an acquisition by Maker of the securities, assets or business of another company.

(b)   No Adjustment of Conversion Price . Any provision herein to the contrary notwithstanding, no adjustment in the Conversion Price shall be made in respect of the issuance of Additional Shares of Common Stock unless the consideration per share is less than the applicable Conversion Price in effect on the date of, and immediately prior to such issue.

(c)   Deemed Issue of Additional Shares of Common Stock . In the event that Maker at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities then entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein designed to protect against dilution) of common stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, upon the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued:

(i)   no further adjustments in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;

(ii)   if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Maker, or increase or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

(iii)   upon the expiration of any such Options or rights, the termination of any such rights to convert or exchange or the expiration of any Options or rights related to such Convertible Securities or exchangeable securities, the Conversion Price, to the extent in any way affected by or computed using such Options, rights or Convertible Securities or Options or rights related to such Convertible Securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and convertible or exchangeable securities that remain in effect) actually issued upon the exercise of such Options or rights, upon the conversion or exchange of such Convertible Securities or upon the exercise of the Options or rights related to such Convertible Securities;

(d)   Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock . In the event that Maker, at any time after the Original Issue Date, shall issue Additional Shares of Common Stock without consideration or for a consideration per share less than the Conversion Price in effect on the date of and immediately prior to such issue (a “ Dilutive Transaction ”), then and in such event, the Conversion Price shall, automatically and without