****


**UNITED
STATES**


**SECURITIES
AND EXCHANGE COMMISSION**


**Washington,
D.C. 20549**





****


**FORM
10-QSB**


****


**(Mark
One)**


****


x
    **QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE****ACT
      OF 1934**


For the
quarterly period ended March 31, 2005





Or





o
    **TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT****OF
      1934**


For the
Transition Period from _______________ to _______________


****


**Commission
File No. 001-16781**





****


**MICROHELIX,
INC.**


(Name of
small business issuer in its charter)




**Oregon**
      (State
      or other jurisdiction of
      incorporation
      or organization)
    **91-1758621**
      (I.R.S.
      Employer
      Identification
      No.)**19500
      SW 90****th****Court**
      **Tualatin,
      Oregon**
      (Address
      of principal executive offices)
    **97062**
      (Zip
      Code)





**(503)
692-5333**


(Issuer's
telephone number)


_________________________________





**16125
      SW 72****nd****Ave.; Portland, OR 97224**
      (Former
      address of principal executive offices)





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 report(s), and (2) has been
subject to such filing requirements for the past 90 days. Yes x No o





As of May
6, 2005, there were 2,082,746 shares of the issuer's common stock outstanding.





Transitional
Small Business Disclosure Format: Yes o No
x

















**MICROHELIX,
INC.**





**Quarterly
Report on Form 10-QSB**


**Three
Months Ended March 31, 2005**


**Table
of Contents**




**PART
      I****-****FINANCIAL
      INFORMATION******
    **Page****ITEM
      1****.
      CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED**Consolidated
      Balance Sheet as of December 31, 2004 and March 31, 2005
    3Consolidated
      Statements of Operations for the three months ended March 31, 2004 and
      2005
    4Consolidated
      Statements of Cash Flows for the three months ended March 31, 2004 and
      2005
    5Notes
      to Consolidated Financial Statements
    6**ITEM
      2****.
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**
    10**ITEM
      3.****CONTROLS AND PROCEDURES**
    12**PART
      II -****OTHER INFORMATION****ITEM
      6. EXHIBITS**
    13**SIGNATURES**
    14**EXHIBIT
      INDEX**
    15**CERTIFICATIONS**EXHIBIT
      31.1
    16EXHIBIT
      31.2
    17EXHIBIT
      32
    18






-2-





**PART
I — FINANCIAL INFORMATION**





**ITEM
1. CONSOLIDATED FINANCIAL STATEMENTS — UNAUDITED**







**MICROHELIX,
INC.**





**CONSOLIDATED
BALANCE SHEET**





**March
      31, 2005****(UNAUDITED)****Assets**Current
      Assets:Cash
    
    $
    17,768Accounts
      receivable, net of allowance of $16,513
    
    
    311,754Inventories,
      net
    
    
    223,060Prepaid
      expenses
    
    
    18,397Total
      current assets
    
    
    570,979Property
      and equipment — net
    
    
    95,839Other
      assets — net
    
    
    71,884Total
      assets
    
    $
    738,702**Liabilities
      and Shareholders’ Deficiency**Current
      Liabilities:Accounts
      payable
    
    $
    379,183Accrued
      liabilities
    
    
    217,352Line
      of credit
    
    
    191,544Note
      payable
    
    
    1,684Total
      current liabilities
    
    
    789,763Note
      payable, less current maturities
    
    
    8,363Total
      liabilities
    
    
    798,126Shareholders’
      Deficiency:Preferred
      Stock, no par value, 3,500,000 shares authorized, none issued and
      outstandingat March 31, 2005,Common
      stock, no par value, 25,000,000 shares authorized, 1,959,713 issued and
      outstanding atMarch 31, 2005
    
    
    14,473,409Additional
      paid-in capital
    
    
    6,487,417Accumulated
      deficit
    
    
    (21,020,250
    )Total
      shareholders’ deficiency
    
    
    (59,424
    )Total
      liability and shareholders’ deficiency
    
    $
    738,702





*The
accompanying notes are an integral part of these consolidated financial
statements.*





-3-


****


**MICROHELIX,
INC.**





**CONSOLIDATED
STATEMENTS OF OPERATIONS**


**(UNAUDITED)**





****
      ****
    
    **Three
      Months Ended**
      **March
      31,******
    
    **2004**
    
    **2005**Sales
    
    $
    279,797
    
    $
    418,684Cost
      of Sales
    
    
    459,519
    
    
    340,108Gross
      profit (loss)
    
    
    (179,722
    )
    
    78,576Operating
      Expenses:Research
      and development
    
    
    54,585
    
    
    -----Sales
      and marketing
    
    
    3,145
    
    
    4,946General
      and administrative
    
    
    321,279
    
    
    196,299Total
      operating expenses
    
    
    379,009
    
    
    201,245Loss
      from operations
    
    
    (558,731
    )
    
    (122,669
    )Other
      Income (Expense):Interest
      income
    
    
    369
    
    
    -----Interest
      expense
    
    
    (3,981
    )
    
    (7,966
    )Gain
      on sale of asset
    
    
    -----
    
    
    500Other
      expense — net
    
    
    (3,612
    )
    
    (7,466
    )Net
      loss from continuing operations
    
    
    (562,343
    )
    
    (130,135
    )Discontinued
      operations:Loss
      from operations of wire and cable division
    
    
    (129,214
    )
    
    ------Net
      loss
    
    $
    (691,557
    )
    $
    (130,135
    )Loss
      per common share - basic and diluted:Net
      loss from continuing operations
    
    $
    (.33
    )
    $
    (.07
    )Net
      loss from discontinued operations
    
    
    (.08
    )
    
    ----Net
      loss
    
    $
    (.41
    )
    $
    (.07
    )Weighted
      average shares used in per share calculation — basic and
      diluted
    
    
    1,681,806
    
    
    1,959,713





*The
accompanying notes are an integral part of these consolidated financial
statements.*





-4-





**MICROHELIX,
INC.**





**CONSOLIDATED
STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**





****
      ****
    
    **Three
      Months Ended**
      **March
      31,******
    
    **2004**
    
    **2005****Cash
      Flows from Operating Activities:**Net
      loss from continuing operations
    
    $
    (562,343
    )
    $
    (130,135
    )Adjustments
      to reconcile net loss to cash provided by (used in) operating
      activities:Depreciation
      and amortization
    
    
    122,757
    
    
    10,092Inventory
      reserves
    
    
    73,518
    
    
    10,000Stock
      compensation expense
    
    
    5,387
    
    
    ----Loss
      from operations of wire and cable division
    
    
    (129,214
    )
    
    ----Change
      in:Accounts
      receivable, net
    
    
    38,432
    
    
    (98,477
    )Inventories
    
    
    20,106
    
    
    (53,383
    )Prepaid
      expenses
    
    
    14,888
    
    
    5,937Intangible
      and other assets
    
    
    9,986
    
    
    (71,884
    )Accounts
      payable
    
    
    266,074
    
    
    200,768Accrued
      liabilities
    
    
    213,019
    
    
    61,439Net
      cash provided by (used in) operating activities
    
    
    72,610
    
    
    (65,643
    )**Cash
      Flows from Investing Activities -**Capital
      expenditures
    
    
    (4,789
    )
    
    (10,728
    )**Cash
      Flows from Financing Activities:**Proceeds
      from borrowings against notes payableand lines of
      credit
    
    
    874,285
    
    
    462,554Principal
      payments on notes payable and lines of credit
    
    
    (825,571
    )
    
    (408,934
    )Principal
      payments on capital lease obligations
    
    
    (57,469
    )
    
    -----Proceeds
      from borrowing — long term note
    
    
    -----
    
    
    10,047Net
      cash used in financing activities
    
    
    (8,755
    )
    
    63,667Change
      in cash
    
    
    59,066
    
    
    (12,704
    )Cash,
      beginning of period
    
    
    48,767
    
    
    30,472Cash,
      end of period
    
    $
    107,833
    
    $
    17,768Supplemental
      disclosure of cash flow information —Cash paid for
      interest
    
    $
    16,854
    
    $
    3,755




*The
accompanying notes are an integral part of these consolidated financial
statements.*





-5-





**MICROHELIX,
INC.**





**NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**


**Three
Months Ended March 31, 2005 and March 31, 2004**





**1.**
    **Summary
      of Significant Policies**





*Nature
of Operations* —
microHelix, Inc. (the "Company"), is primarily engaged in the design,
manufacture, and sale of cable assemblies for use in medical and commercial
devices and systems.





*Basis
of Presentation* — The
unaudited consolidated financial statements have been prepared by the Company,
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC"). The information furnished herein reflects all adjustments (consisting
of normal recurring accruals and adjustments), which are, in the opinion of
management, necessary to fairly represent the operating results for the
respective periods.





*Principles
of Consolidation* — These
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, BioElectric Corporation ("BioElectric"). In 2004,
BioElectric was dissolved. All
material inter-company accounts have been eliminated in
consolidation.




*Reclassifications* — Certain
reclassifications have been made to the three months ended March 31, 2004
consolidated financial statements to conform to the presentation of the three
months ended March 31, 2005 consolidated financial statements.





*Going
Concern* — These
consolidated financial statements have been prepared on a going concern basis
that contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company has incurred recurring losses and
had negative cash flows from operations during each of the past two years and,
at March 31, 2005, had an accumulated deficit of $21,020,250. This indicates
that the Company may be unable to continue as a going concern for a reasonable
period of time. These consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that may be necessary
should the Company be unable to continue as a going concern. Subsequent to March
31, 2005, microHelix announced a material development that may favorably impact
its ability to continue as a going concern as described below.




On April
13, 2005, the Company announced that it had completed the acquisition of 100% of
the stock of privately-held Moore Electronics, Inc. ("MEI") for consideration of
$3,000,000. The Company also refinanced $400,000 of MEI bank debt. MEI will be
operated as a wholly-owned subsidiary of the Company and had 2004 unaudited
revenues of approximately $11,100,000 and unaudited net income of approximately
$70,000. (See Note 7)





MEI
manufactures cable assemblies for a broad mix of customers, serving major
medical device manufacturers with components for defibrillators and patient
monitoring devices and serving commercial equipment manufacturers in diverse
markets including instrumentation, semi-conductors and robotics.




*Stock-Based
Compensation* — SFAS No.
123, "Accounting for Stock-Based Compensation," establishes and encourages the
use of the fair value based method of accounting for stock-based compensation
arrangements under which compensation cost is determined using the fair value of
stock-based compensation determined as of the date of grant and is recognized
over the periods in which the related services are rendered. The statement also
permits companies to elect to continue using the current intrinsic value
accounting method specified in Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees," to account for stock-based
compensation. The Company has elected to use the intrinsic value based method
and has disclosed the pro forma effect of using the fair value based method to
account for its stock-based compensation. The Company uses the fair value method
for options granted to non-employees. If the Company had elected to recognize
compensation expense based upon the fair value at the grant date for awards
under the Stock Option Plan consistent with the methodology prescribed by SFAS
No. 123, the Company's net loss and loss per share would be reduced to the pro
forma amounts indicated below for the three months ended March 31, 2004 and
March 31, 2005:





-6-







****
    
    **Three
      Months Ended**
      **March
      31,******
    
    **2004**
    
    **2005**Net
      loss, as reported
    
    $
    (691,557
    )
    $
    (130,135
    )Deduct: Total stock
      based employee compensation expense determined under APB 25
    method
    
    
    —
    
    
    —Deduct:
      Total stock-based employee compensation expense determined under SFAS123
      method.
    
    
    (60,782
    )
    
    (27,188
    )Pro
      forma net loss
    
    $
    (752,339
    )
    $
    (157,323
    )Basic
      and diluted net loss per common share:As
      reported
    
    $
    (0.41
    )
    $
    (0.07
    )Pro
      forma
    
    $
    (0.45
    )
    $
    (0.08
    )





The pro
forma amounts may not be indicative of the effects on reported net income for
future years due to the effect of options vesting over a period of years and the
granting of stock compensation awards in future years.





The fair
value of each option grant was estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for the grants:





****
    
    **Three
      Months Ended**
      **March
      31,******
    
    **2004**
    
    **2005**Risk-free
      interest rate
    
    
    4.000
    %
    
    4.000
    %Dividend
      yield
    
    
    0.0
    %
    
    0.0
    %Expected
      volatility
    
    
    99
    %
    
    99
    %Expected
      option lives
    
    
    4
      years
    
    
    4
      years





There
were no options exercised or granted during the three months ended March 31,
2004 and 2005.




*Net
Loss per Share* — The
Company uses SFAS No. 128, "Earnings Per Share" for calculating the basic and
diluted loss per share. Basic loss per share is computed by dividing net loss
attributable to common stockholders by the weighted average number of common
shares outstanding. Diluted loss per share is computed similar to basic loss per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
At March 31, 2005, the outstanding number of potentially dilutive common shares
totaled 1,255,095 shares of common stock, consisting of options to purchase
117,867 shares of common stock, Class B warrants to purchase 926,833 shares of
common stock, and other warrants to purchase 210,395 shares of common stock. At
March 31, 2004, the outstanding number of potentially dilutive common shares
totaled 1,333,313 shares, consisting of options to purchase 196,085 shares of
common stock, Class B warrants to purchase 926,833 shares of common stock, and
other warrants to purchase 210,395 shares of common stock. However, as the
Company has net losses, their effect is anti-dilutive and has not been included
in the diluted weighted average earnings per share as shown on the Consolidated
Statements of Operations.







-7-


******
**2.**
    **Customer
      Concentration****





Approximately $157,000 of sales for the three months
ended March 31, 2005 were made to one customer. Included in receivables at March
31, 2005 is approximately $157,000 due from this customer.





**3.**
    **Inventories**





Inventories
are as follows:





Finished
      goods
    
    $
    50,900Raw
      materials
    
    
    393,208Total
      inventory
    
    
    444,108Less:
      Reserves
    
    
    (221,048
    )Net
      Inventory
    
    $
    223,060





**4.**
    **Other
      Assets**





Certain
costs associated with both the financing and acquisition of MEI were incurred
during the three month period ended March 31, 2005. These expenditures have been
identified and represented on the consolidated balance sheet as a long-term
deferred cost pending the completion and final accounting for the transaction
that will occur during the second quarter, ending June 30, 2005. All costs
associated with the financing effort will be offset against the proceeds and
those costs associated with the acquisition will be added to the purchase price
of MEI.




Deferred
      Costs - Financing
    
    $
    51,618Deferred
      Costs - Acquisition
    
    
    20,266$
    71,884




**5.**
    **Loss
      Per Share**





Basic net
loss per share has been computed by dividing net loss by the weighted average
number of shares outstanding during each period. Diluted loss per share would be
computed by dividing net loss by the weighted average common stock and common
stock equivalent shares outstanding during each period using the treasury stock
method for employee stock option plans and warrants, if the common equivalent
shares were not anti-dilutive. Common stock equivalents were anti-dilutive for
all periods presented, so diluted and basic earnings per share are the same.









-8-




**6.**
    **Sub
      Lease Rental Agreement**





On March
8, 2005, the Company signed a sub-lease agreement with Advanced Neuromodulation
Systems, Inc. ("ANS"), which in April 2004 purchased the Company's wire and
cable division, whereby ANS has agreed to assume the lease obligation for the
Company's facilities in Portland, Oregon beginning April 21, 2005 through the
termination of the lease on November 30, 2005.





**7.**
    **Subsequent
      Events**





*Acquisition
of Subsidiary*





On April
8, 2005, the Company entered into a merger agreement and acquired 100% of the
outstanding stock of Moore Electronics, Inc., an Oregon corporation ("MEI"),
from two shareholders. On April 4, 2005, the Company incorporated microHelix
Acquisition Corp., an Oregon corporation, as a 100% owned subsidiary of the
Company. microHelix Acquisition Corp. was merged with MEI with MEI being the
surviving corporation and becoming a wholly-owned subsidiary of the Company.





MEI,
headquartered in Tualatin, Oregon, was founded in 1978 and is an independent
manufacturer of customized cable assemblies, sub-assemblies, wire harnesses and
electro-mechanical assemblies. MEI serves major medical equipment manufacturers
and commercial equipment manufacturers. MEI will be operated as a wholly-owned
subsidiary of microHelix. MEI occupies a leased 33,000 square foot facility and
employees 130 people. For the year ended December 31, 2004, MEI had unaudited
sales of approximately $11,100,000 and net income of approximately $70,000.





The
Company acquired all the outstanding stock of MEI for consideration totaling
$3,000,000, which consisted of $1,500,000 in cash, $1,250,000 in the form of a
promissory note and 250,000 shares of Series B Preferred Stock valued at
$250,000. In addition, the Company refinanced $400,000 of bank debt owed by MEI.
The promissory note bears interest at 10% per annum, with interest only payable
for the first three months and then principal and interest amortized in monthly
payments until April 2008. The promissory note may be prepaid at any time
without penalty . The
Company intends to engage an independent party to provide a "fair value"
appraisal so the purchase cost of the MEI acquisition can be appropriately
allocated to the various assets and liabilities acquired. Since the acquisition
was completed on April 8, 2005, it is not practicable to include such
information in this report.





In order
to finance the acquisition of MEI, the Company sold 2 million shares of Series B
Preferred Stock at $1.00 per share in a private placement. Each share of Series
B Preferred Stock is convertible into four shares of Common Stock. Each share of
Series B Preferred Stock is eligible for a cumulative dividend of $0.15 per
share per annum, payable quarterly if declared by the Board of Directors of the
Company. The Company can redeem the shares of Series B Preferred Stock at any
time after April 8, 2006 for $1.50 per share. Series B Preferred Stock have the
same voting rights as the holders of Common Stock and each Series B Preferred
Stock shareholder is entitled to the number of votes as the shares of Common
Stock into which such shares of Series B Preferred Stock could, at the time of
such vote, be converted.





The
Company and MEI also entered into an amended and restated loan and security
agreement with BFI Business Finance (“BFI”) dated as of April 5, 2005 that
became effective on April 8, 2005, under which, the Company and MEI can borrow
up to $1,500,000, subject to advance rates on accounts receivable and
inventories. The loan agreement amends and restates in its entirety the existing
loan and security agreement dated October 7, 2004 between the Company and BFI.
The loan agreement is scheduled to expire on April 8, 2006. The Company and MEI
have granted security interests in the loan agreement to BFI covering
substantially all of their respective assets.





Borrowings
under the loan agreement will be used to refinance existing bank debt owed by
the Company and MEI, to pay a portion of the purchase price of the MEI stock
acquired by the Company in the merger and for working capital purposes.
Borrowings under the loan agreement will bear interest at the "deemed prime
rate" plus 5%. The "deemed prime rate" equals the greater of the prime rate as
published in the Wall Street Journal or 5.25%. The loan agreement contains
customary affirmative and negative covenants and events of default for a secured
financing arrangement, including, among other things, limitations on
consolidations, mergers and sales of assets.





*Issuance
of Common Stock*





The
Company issued warrants on April 8, 2005 to its financial advisor and its
affiliates to purchase a total of 478,000 shares of Common Stock. Such warrants
can be exercised through April 7, 2015 for a price of $0.25 per share. The
Company also issued on April 8, 2005 a total of 123,000 shares of common stock
to six of its employees and directors. These grants were unrestricted and were
made for services related to the successful completion of the merger.




***
* * * * ***




-9-





**ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION**





The
following discussion provides information that management believes is relevant
to an assessment and understanding of the Company’s operations and financial
condition. This discussion should be read in conjunction with the unaudited
consolidated financial statements and accompanying notes.





**Forward-Looking
Statements**





Statements
in this filing, which are not historical facts, are “forward-looking” statements
under the provisions of the Private Securities Litigation Reform Act of 1995, as
amended. Such statements reflect management’s current views and estimates of
future economic and market circumstances, industry conditions, company
performance and financial results. Words such as “may,” “should,” “expects,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,”
“potential,” “continue,” and variations of such words and similar expressions
are intended to identify such forward looking statements. These statements are
subject to risks and uncertainties that could cause the Company’s actual future
results to differ materially from the results discussed herein. Factors that
could adversely affect future events, transactions or results include, but are
not limited to, our ability to compete successfully in the medical ultrasound
business; our ability to execute our business plan; the delay in the sale of
commercial quantities of our products caused by regulatory review of our
customer’s products into which they are incorporated; the concentrated nature of
our customer base which causes fluctuations in our revenue and earnings and adds
unpredictability of our quarterly sales and earnings; the uncertain market
acceptance of our new ultrasound products; and competition from larger
competitors with more financial resources; and other risks and factors as are
described from time to time in the Company’s Securities and Exchange Commission
filings, including but not limited to, the risks detailed in the “Risk Factors”
section of the Company’s Annual Report on Form 10-KSB for the year ended
December 31, 2004. The forward-looking statements contained in this Form 10-QSB
speak only as of the date on which they are made, and the Company undertakes no
obligation and does not intend to update or revise these forward-looking
statements to reflect events or circumstances that occur after the date of this
filing. If the Company does update or correct one or more forward-looking
statements, investors and others should not conclude that the Company will make
additional updates or corrections with respect thereto or with respect to other
forward-looking statements.








**Critical
Accounting Policies and Estimates**





The
discussion and analysis of our financial condition and results of operations is
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these consolidated 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 evaluate our estimates on an on-going basis, including those
related to product returns, bad debts, inventories, prepaid expenses, income
taxes, warranty obligations, and other contingencies. We base our estimates on
historical experience and on various other assumptions we believe are reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We believe the following
critical accounting policy and related judgments and estimates affect the
preparation of our consolidated financial statements:





*Revenue
Recognition* —We
recognize revenue from commercial sales of cable assemblies and related products
when title passes, which is upon shipment. Commercial sales are made F.O.B.
point of shipment. The products must be physically shipped from the factory. In
some cases, tooling that has been paid for by a customer may remain at our
facilities or at a vendor's facilities. Returns are limited to nonconforming
products and the volume of returns has been insignificant so we do not establish
reserves for returns.





-10-





**RESULTS
OF OPERATIONS**





**THREE
MONTHS ENDED MARCH 31, 2004 AND MARCH 31, 2005**





The
discussion that follows relates primarily to the activities of the Company’s
ultrasound division as all activity for the wire and cable division was
classified for reporting purposes as discontinued operations. The reporting for
discontinued operations is included only for the three months ended March 31,
2004 as the sale of the wire and cable division was completed on April 21, 2004.
Sales for the first quarter of 2005 were $418,684 compared to sales of $279,797
recorded in the first quarter a year ago, or an increase of $138,887 or 50% that
largely can be attributed to a single customer. As a result of this significant
increase in shipments, the gross profit for the first quarter of 2005 was
$78,576 compared to a negative gross margin of $179,722 in the first quarter of
2004. This improvement in margin can be attributed to increased factory
efficiency due to higher volume and a reduction in the provisions for inventory
reserves.





Total
operating expenses for the first quarter of 2005 were $201,245 compared to a
total of $379,009 incurred during the first quarter of 2004. Research and
development expense for the first quarter of 2004 was $54,585 compared with no
expenditures in this area during the first quarter of 2005 as the Company’s
internal development replacement probe program was concluded in
2004.





General
and administrative expenses were $196,299 for the first quarter of 2005 compared
to $321,279 incurred during the first quarter of 2004. This reduction of
$124,980 can primarily be attributed to a reduction in building lease expense as
ANS has sub-let the vast majority of the building, and reductions in audit and
tax fees, in insurance premiums and in outside service expenses. All of these
reductions can be attributed to the reduced size of the Company’s operations
associated with the sale to ANS.





The loss
from continuing operations was $130,135 for the first quarter of 2005, compared
to a loss from continuing operations of $562,343 for the first quarter of 2004.
This improvement resulted from an improvement in gross margin of $258,298 plus a
reduction in expenses of $177,764 in engineering and general and administrative
expenses and an increase in other income of $3,854. The wire and cable division
financial results have been reported as discontinued operations and for the
first quarter of 2004 the net loss for this division was $129,214. The division
was sold in April 2004; accordingly, there are no operations to report in the
first quarter of 2005.





The net
loss for the Company was $130,135 for the first quarter of 2005 compared with a
net loss of $691,557 for the same quarter a year ago. This reduction in losses
for the Company can be attributed to an improvement of $432,208 in the
continuing operations of the ultrasound division and a reduction in corporate
expenses and the elimination of the losses from the wire and cable
operations.





**LIQUIDITY
AND CAPITAL RESOURCES**





As of
March 31, 2005, the Company had $17,768 in cash compared to a balance as of
December 31, 2004 of $30,472. During the first quarter of 2005, the Company used
$65,643 of cash in operating activities and another $10,728 for capital
expenditures. These expenditures were primarily financed through the Company’s
existing line of credit.





On April
8, 2005 the Company entered into a merger agreement and acquired 100% of the
outstanding stock of Moore Electronics, Inc., an Oregon corporation (“MEI”),
from two shareholders. In order to finance the acquisition of MEI, the Company
sold 2 million shares of Series B preferred stock at $1.00 per share in a
private placement. In addition, the Company and MEI also entered into an amended
and restated loan and security agreement with BFI Business Finance (“BFI”) dated
as of April 5, 2005 that became effective on April 8, 2005, under which, the
Company and MEI can borrow up to $1,500,000, subject to advance rates on
accounts receivable and inventories. Although the Company expects these new
financing arrangements will provide a portion of the capital resources to
operate and expand the business, the Company may need additional capital that we
have not yet secured. If these proceeds are not sufficient, the Company may be
required to seek additional financing and such financing could be dilutive to
existing shareholders or may not be available on reasonable terms or at all.
(See Note 7 to Consolidated Financial Statements)




-11-




**ITEM
3.** **CONTROLS
AND PROCEDURES**





The
Company's Chief Executive Officer/Principal Financial Officer evaluated the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as of March 31, 2005. Based on that evaluation, the Company's
Chief Executive Officer/Principal Financial Officer concluded that,
notwithstanding the material weakness discussed in the following paragraph, as
of the evaluation date the Company's disclosure controls and procedures are
designed to and are effective to give reasonable assurance that the information
the Company must disclose in reports filed with the Securities and Exchange
Commission is properly recorded, processed, summarized, and reported as
required.





There
were no changes in the Company's internal control over financial reporting
during the quarter ended March 31, 2005 that materially affected, or were
reasonably likely to materially affect the Company's internal control over
financial reporting. However, as noted in the Company’s 10-KSB filing for the
period ended December 31, 2004, in January 2005 our management and our newly
appointed independent registered public accountants reviewed our 10-QSB filings
for the periods ended March 31, 2004, June 30, 2004, and September 30, 2004. As
a result of these reviews, the newly appointed independent registered
accountants reported to our Audit Committee two adjustments with regard to the
interim financial statements prepared for the periods ending March 31, 2004 and
June 30, 2004 that needed to be made. Management acknowledged that these
recommended adjustments to the interim financial statements reflect a material
weakness under standards established by the Public Company Accounting Oversight
Board ("PCAOB"). The Company restated its 10-QSB reports for each quarter in
2004 due to a correction of an error for inventory reserves during the three
months ended March 31, 2004, and a reclassification of a one-time entry that
recorded a sale of assets that occurred during the three months ended June 30,
2004. Additional inventory reserves were provided for the three months ended
December 31, 2004. These
material weakness issues have been discussed in detail among management,
our Audit Committee, and our independent registered public accountants. The
Company plans to hire additional finance personnel and make the necessary
changes to strengthen inventory controls. The Company will continue to evaluate
its internal controls and procedures to identify any required improvements.








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**PART
II. OTHER INFORMATION**





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





The
following exhibits are filed as part of this report:





Exhibit
      3.1(2)
    
    Amended
      and Restated Articles of Incorporation of microHelix, Inc., as amended
      November 16, 2001, December 5, 2003, and April 8, 2005Exhibit
      3.2(1)
    
    Bylaws
      of microHelix, Inc.Exhibit
      4.1(1)
    
    Form
      of Warrant Agreement among microHelix, inc. and UMB Bank, n.a., as Warrant
      Agent, including the form of Class B WarrantExhibit
      4.2(1)
    
    Form
      of Unit CertificateExhibit
      4.3(1)
    
    Form
      of Warrant to Paulson Investment Company, Inc.Exhibit
      31.1(3)
    
    Certification
      of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002Exhibit
      31.2(3)
    
    Certification
      of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002Exhibit
      32(3)
    
    Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002







(1)
    Incorporated
      by reference to the Company's Registration Statement on Form SB-2 (Reg.
      No. 333-65872), declared effective on November 16,
2001.


(2)
    Incorporated
      by reference to the Company's Annual Report on Form 10-KSB for the year
      ended December 31, 2004.


(3)
    Filed
      herewith.








-13-





**SIGNATURES**





In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.





**MICROHELIX,
INC.**





Signature
    
    Title
    
    Date/s/
      Tyram H. Pettit
    
    President,
      Chief Executive Officer, and
    
    May
      16, 2005Tyram
      H. Pettit
    
    Vice
      President - Finance of microHelix, Inc.(Principal
      Executive Officer andPrincipal
      Financial Officer)








-14-





EXHIBIT
INDEX





ExhibitNumber
    
    Description3.1(2)
    
    Amended
      and Restated Articles of Incorporation of microHelix, Inc., as amended
      November 16, 2001, December 5, 2003, and April 8, 20053.2(1)
    
    Bylaws
      of microHelix, Inc.4.1(1)
    
    Form
      of Warrant Agreement between microHelix, Inc. and UMB Bank, n.a., as
      Warrant Agent, including the form of Class B Warrant4.2(1)
    
    Form
      of Unit Certificate4.3(1)
    
    Form
      of Warrant to Paulson Investment Company, Inc.31.1(3)
    
    Certification
      of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      200231.2(3)
    
    Certification
      of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      200232(3)
    
    Certification
      of Principal Executive Officer and Principal Financial Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002







(1)
    Incorporated
      by reference to the Company's Registration Statement on Form SB-2 (Reg.
      No. 333-65872), declared effective on November 16,
2001.


(2)
    Incorporated
      by reference to the Company's Annual Report on Form 10-KSB for the year
      ended December 31, 2004.


(3)
    Filed
      herewith.











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