zynex8kx105_10608.htm


     

    
      

      

    

     

     

    Exhibit
10.5

    


     

    Zynex,
Inc.

     

    Audit
Committee Charter

     

    (October
2008)

     

    Organization

     

    This
charter governs the operation of the Audit Committee (the “Committee’“) of the
Board of Directors of Zynex, Inc. (the “Company”).  The Committee
shall review and reassess the adequacy of the charter at least annually and
obtain the approval of the Board of Directors for any proposed changes to the
charter.  The Committee shall be appointed by the Board and shall make
regular reports to the Board.  The Committee shall be comprised of at
least two directors, each of whom shall meet the applicable independence and
experience requirements of the American Stock Exchange and the Securities and
Exchange Commission.

     

    Responsibilities
and Processes

     

    The
primary responsibility of the Committee is to oversee the Company’s financial
reporting processes on behalf of the Board and report the results of its
activities to the Board.  Management is responsible for preparing the
Company’s financial statements, and the independent auditors are responsible for
auditing those financial statements.  The Committee, in carrying out
its oversight responsibilities, will assess the Company’s systems of internal
accounting and financial controls, any internal audit process, the independence,
qualifications and performance of the Company’s independent auditor, and the
overall integrity of the Company’s financial statements and information
systems.  The Committee is empowered to investigate any matter brought
to its attention with full access to all books, records, facilities, and
personnel of the Company.  In addition, the Committee will have the
power to review and approve “related party transactions”, in accordance with the
requirements of the American Stock Exchange and any regulatory
agencies.  The Committee may also have such other duties as may, from
time to time, be assigned to it by the Board.

     

    The
Committee shall have the authority, to the extent it deems necessary or
appropriate to carry out its duties, to retain special legal, accounting or
other consultants to advise the Committee.  The Company must provide
appropriate funding, as determined by the Committee, for payment for the
services of such advisors, as well as for the ordinary administrative expenses
of the Committee that are necessary or appropriate in carrying out its
duties.  The Committee may also form and delegate authority to
subcommittees to undertake its responsibilities, under its
supervision.

     

    The
Committee shall meet as often as it determines, but not less frequently than
quarterly.  The Committee shall meet with the independent auditor in
separate executive sessions at least quarterly.

     

    The
following shall be the principal recurring processes of the Committee in
carrying out its oversight responsibilities.  The processes are set
forth as a guide with the understanding that the Committee may modify them, as
it deems appropriate.

     

    


    
      
        
           


        

        
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    Financial
Statement and Disclosure Matters

     

    
      	
              ·  

            	
              Review
      with management and the independent auditor the annual audited financial
      statements to be included in the Company’s Annual Report on Form 10-K.
      Based on these reviews, the Committee shall report to the Board whether
      the Committee recommends inclusion of the annual audited financial
      statements in the Company’s Form
10-K.

            


    

     

    
      	
              ·  

            	
              Review
      with management and the independent auditor the interim financial
      statements to be included in the Company’s Quarterly Report on Form
      10-Q.  The Committee shall discuss with the independent auditor
      the results of its review of each interim financial statement for a
      quarter.

            


    

     

    
      	
              ·  

            	
              Discuss
      with management and the independent auditor significant financial
      reporting issues and judgments made in connection with the preparation of
      the Company’s financial statements, including the effect of alternative
      acceptable accounting policies on the Company’s financial
      statements.

            


    

     

    
      	
              ·  

            	
              Prepare
      the report required by the rules of the Securities and Exchange Commission
      to be included in the Company’s proxy statement for any annual
      meeting.

            


    

     

    
      	
              ·  

            	
              Discuss
      with management and the independent auditor the effect of regulatory and
      accounting initiatives as well as off-balance sheet structures on the
      Company’s financial statements.

            


    

     

    
      	
              ·  

            	
              Discuss
      with management the Company’s major financial risk exposures and the steps
      management has taken to monitor and control such exposures, including the
      Company’s risk assessment and risk management
  policies.

            


    

     

    Oversight
of the Company’s Relationship with the Independent Auditor

     

    
      	
              ·  

            	
              Be
      directly responsible for the appointment, compensation, retention,
      termination and oversight of the work of the independent auditor engaged
      for the purpose of preparing or issuing an audit report or performing
      other audit, review or attest services for the Company (including the
      resolution of disagreements between management and the independent auditor
      regarding financial reporting).  The independent auditor must
      report directly to the Committee.

            


    

     

    


    
      
        
           


        

        
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              ·  

            	
              Obtain
      and review a report from the independent auditor at least annually
      regarding (a) the auditor’s internal quality-control procedures, (b) any
      material issues raised by the most recent quality-control review of the
      firm, or by any inquiry or investigation by governmental or professional
      authorities within the preceding five years respecting one or more
      independent audits carried out by the firm, (c) any steps taken to deal
      with any such issues, and (d) all relationships between the independent
      auditor and the Company, including those consistent with Independence
      Standards Board Standard 1.  The Committee shall evaluate the
      experience, qualifications, performance and independence of the
      independent auditor, including considering whether the provision of
      non-audit services is compatible with maintaining the auditor’s
      independence, and taking into account the opinions of
      management.  The Committee shall present its conclusions to the
      Board and, if so determined by the Committee, recommend that the Board
      take additional action to satisfy itself of the qualifications,
      performance and independence of the auditor.  As part of these
      matters, the Committee shall be responsible for actively engaging in a
      dialogue with the auditor with respect to any disclosed relationships or
      services that may impact the objectivity and independence of the auditor
      and for taking, or recommending that the full Board take, appropriate
      action to oversee the independence of the independent
    auditor.

            


    

     

    
      	
              ·  

            	
              Discuss
      with the independent auditors the overall scope and plans for its
      audit.  Also, discuss with management and the independent
      auditors the adequacy and effectiveness of the Company’s accounting and
      financial controls.  Meet separately with the independent
      auditors, with and without management present, to discuss the results of
      the audit and any other
examinations.

            


    

     

    
      	
              ·  

            	
              Discuss
      the matters required to be communicated to the Committee by the
      independent auditors under generally accepted auditing
      standards.

            


    

     

    
      	
              ·  

            	
              Review
      and pre-approve all audit engagement fees and terms and all non-audit
      services with the independent auditor.  The Committee shall
      consult with management but shall not delegate these responsibilities to
      management.

            


    

     

    
      	
              ·  

            	
              Review
      any proposed employment offer by the Company to an employee or former
      employee of the independent auditor and discuss with the management the
      actions intended to be taken by management and the independent auditor to
      ensure that the auditor maintains
independence.

            


    

     

    Compliance
Oversight Responsibilities

     

    
      	
              ·  

            	
              Obtain
      from the independent auditor assurance that Section 10A of the Securities
      Exchange Act of 1934, in regard to the occurrence of illegal acts, has not
      been implicated.

            


    

     

    


    
      
        
           


        

        
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              ·  

            	
              Discuss
      with management and the independent auditor any correspondence with
      regulators or governmental agencies and any employee complaints or
      published reports which raise material issues regarding the Company’s
      financial statements or accounting
policies.

            


    

     

    
      	
              ·  

            	
              Discuss
      with the Company’s general counsel legal matters that may have a material
      impact on the financial statements or the Company’s compliance
      policies.

            


    

     

    
      	
              ·  

            	
              Approve
      or reject all “related party” transactions. Review reports and disclosures
      of related party transactions prepared by
  management.

            


    

     

    Oversight
of the Company’s Internal Audit Function

     

    
      	
              ·  

            	
              Discuss
      with management and the independent auditors the quality and adequacy of
      the Company’s internal controls and any internal audit functions’
      organization, responsibilities, plans, results, budget and staffing, as
      well as providing oversight to internal audit activities, including review
      of significant reports prepared by the employees performing internal audit
      functions and management’s
responses.

            


    

     

    Whistleblower
Policy

     

    
      	
              ·  

            	
              Establish
      and oversee the Company’s anonymous complaint policy contained within the
      Company’s Code of Business Conduct and Ethics regarding the confidential,
      anonymous submission by employees of reports regarding questionable
      accounting practices, internal accounting controls or auditing matters and
      the investigation, disposition and retention of such
    reports.

            


    

     

    Limitation
of Audit Committee’s Role

     

    
      	
              ·  

            	
              While
      the Committee has the responsibilities and powers set forth in this
      Charter, it is not the duty of the Committee to plan or conduct audits or
      to determine that the Company’s financial statements and disclosures are
      complete and accurate and are in accordance with generally accepted
      accounting principles and applicable rules and
      regulations.  These are the responsibilities of management and
      the independent auditor.  It is not the duty of the Committee to
      conduct investigations or to assure Company’s compliance with laws and
      regulations.

            


    

     

     

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