UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
                                   -----------
                                   (MARK ONE)

                 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1999

               [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

          For the transition period from         to
                                         --------  ------------

                         Commission file number 0-28606

                            NUWAVE TECHNOLOGIES, INC.
                 (name of small business issuer in its charter)

               DELAWARE                                     22-3387630
     (State or other jurisdiction                         (IRS Employer
    of incorporation or organization)                  Identification No.)

                               ONE PASSAIC AVENUE
                           FAIRFIELD, NEW JERSEY 07004
               (Address of principal executive offices)(Zip Code)

                                 (973) 882-8810
                (Issuer's telephone number, including area code)
                                 --------------
         Securities registered under Section 12(b) of the Exchange Act:

                                      NONE

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

                          COMMON STOCK, $.01 PAR VALUE,
                                 PUBLIC WARRANTS

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days. Yes
[XX] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained herein, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference to Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [XX]

State issuer's revenues for its most recent fiscal year: $16,553

Aggregate market value of the voting stock held by non-affiliates based on the
last sale price for such stock at December 31, 1999: $19,588,540

The number of shares of Common Stock outstanding as of March 6, 2000: 8,468,889

Transitional Small Business Disclosure Format: Yes [ ] No [XX]

                       DOCUMENTS INCORPORATED BY REFERENCE


<PAGE>


Portions of the registrant's Proxy Statement for the 2000 Annual Meeting of
Stockholders are incorporated by reference in Part III hereof.


<PAGE>


                           NUWAVE TECHNOLOGIES, INC.
                                   FORM 10-KSB
                                      INDEX


PART I........................................................................1

     ITEM 1.      BUSINESS....................................................1
     ITEM 3.      LEGAL PROCEEDINGS..........................................11
     ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........11

PART II......................................................................11

     ITEM 5.      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS........................................11
     ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATION..................................................12
     ITEM 7.      FINANCIAL STATEMENTS.......................................20
     ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING AND FINANCIAL DISCLOSURE........................20

PART III.....................................................................21

     ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS....................................................21
     ITEM 10.     EXECUTIVE COMPENSATION.....................................21
     ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT.................................................21
     ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............21
     ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K...........................21

SIGNATURES...................................................................25


This Form 10-K contains forward-looking statements with the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The actual results could differ materially from those set forth in the
forward-looking statements. Certain factors that might cause such a difference
are discussed in Item 6, "Management's Discussion and Analysis or Plan of
Operation -- Certain Factors That May Affect Future Results" within this report.


<PAGE>


                                     PART I

ITEM 1.  BUSINESS.

GENERAL

               The Company is a development stage enterprise organized in July
1995. Our mission is to identify and commercialize high margin, proprietary
technologies suited for high-volume, high-growth markets and, in turn achieve
attractive long-term growth for the Company. The first technologies being
commercialized are in the field of photo and video-enhancement. In this regard
we have developed proprietary video-enhancement technology designed to
significantly enhance video output devices with clearer, sharper details and
more vibrant colors when viewed on the display screen. This is known as the
NUWAVE Video Processor ("NVP") technology. We intend to license this technology
and/or have it manufactured in the form of Application Specific Integrated
Circuit ("ASICs") chips through third parties and to directly market these
products to OEMs which would incorporate this enabling technology to improve
picture quality in set-top boxes, televisions, VCR's, DVD's, camcorders and
other video output devices.

               In addition to the NVP technology, during 1999, the Company
completed the initial development of its first proprietary digital photo and
video software technology. The technology was introduced as PictureWizard in
September 1999 and sold directly to consumers through our exclusive e-commerce
Web site store at picturewizard.com for the primary purpose of limited test
marketing, system and product evaluation in a live setting, and to garnish
customer feedback on both the product and the Web site. Based on this initial
test marketing, customer feedback and the results of an independent survey
sponsored by the Company, in April we will launch the PicturePrepSuite2000
product line offering additional features, benefits and options. These products
are the first downloadable software products with the ability to enhance both
pictures and streaming video from virtually any PC program or while surfing the
internet using a PC. In addition to direct on-line consumer sales (B to C
sales), we intend to market this technology directly to businesses (B to B)
expanding our OEM customer base by either embedding or bundling our technology
into products such as PC's, printers, scanners, camcorders and DVD's among other
imaging devices and by providing our software products to retailers for sale in
their camera, film and film processing departments. This digital technology not
only complements our analog ASIC chip technology but can also work in
conjunction to further improve the resulting image quality.

               The Company, in conjunction with Terk Technologies Corp., is
currently developing a commercial video retail product utilizing the NVP
technology (the "Retail Version"). In this regard, the Company has entered into
a five-year manufacturing and marketing agreement with Terk Technologies Corp.
to manufacture and market under the Terk brand name, a line-up of set-top boxes
incorporating NUWAVE's technology for existing televisions and video output
products.

               In early March 2000 we received the OEM version of our ASIC chip
from the semiconductor-manufacturing foundry. This ASIC chip is currently
undergoing full quality assurance testing. The initial test results have been
positive. We plan to use this chip for sales demonstration purposes and expect
to be ready for production during the third quarter. Our sales program is aimed
at obtaining orders initially from those customers who have signed non
disclosure agreements and already had evaluated the Company's technology in PCB
(printed circuit format) and wish to test the ASIC chips in their products. In
anticipation of production of the NVP ASIC chip, the Company has been conducting
sales presentations of the NVP and Softset technologies to prospective OEM
customers world wide (i.e., manufacturers of set-top boxes, televisions, VCR's,
DVD's and other video output devices). We have marketing and sales organizations
in place in the U.S., Japan and China, close to key prospective customers, to
implement this program. Although we are unable to predict whether our marketing
efforts will be successful, we believe that our products have been well
received.


<PAGE>


               We are concentrating the Company's activities primarily on the
final phase of the development of our ASIC line of chips and the continued
development of our digital software technology and Internet presence and the
marketing and sales of its line of analog and digital picture and video
enhancement products to the OEM, professional video and retail markets. We are
also conducting investigation and research and development activities with
respect to additional new technologies/products to address the digital, PC and
Internet markets. These activities may give rise to additional products that may
be commercialized by the Company.

               In this regard, the Company has formed a strategic alliance with
MemoryLink Corp. for the commercialization of MemoryLink's propriety Wireless
Digital Video Technology, which was recently introduced by NUWAVE and MemoryLink
at the January 2000 International Consumer Electronics Show, where prototypes of
the initial products using the technology were demonstrated to selected major
OEM companies based in Asia, Europe and the U.S. The products using the Wireless
Digital Video Technology are expected to be available within the next twelve to
eighteen months.

               The Company believes this focused product strategy will provide
NUWAVE with an expanded technology base and diversify the product line and
services it can offer potential customers and allow it to take full advantage of
the significant video growth opportunity presented by the converging PC,
Internet, television, HDTV and telecommunication markets. It believes that the
capacity of its existing data processing and management information systems is
sufficient to allow it to expand its business without significant additional
capital expenditures.

               On March 13, 2000, the Company completed a private placement with
Janssen-Meyers whereby the Company issued to certain accredited investors, as
defined under Regulation D as promulgated under the Securities Act, 2,088,608
shares of the Company's Common Stock and 1,044,304 Class A Redeemable Warrants
for an aggregate purchase price of $6,600,000.



HISTORY

               The Company was conceived of by Mr. Ernest Chu in June 1994 when
he met with Mr. Ted Wong, the President of Prime Technology, Inc. ("Prime") as a
result of an introduction by employees of a high-technology company for which
Mr. Chu was then rendering consulting services in his individual capacity. At
that time, Prime was the exclusive licensee of Rave Engineering Corp.'s ("Rave")
technology. Mr. Chu believed that the technology had the potential to be
commercialized on a mass basis for use in the video broadcast industry. In the
Fall of 1994, Mr. Chu and Mr. Wong determined that the Rave technology could be
most effectively exploited if a new company were organized to license the
technology and related products and directly commercialize and manufacture them,
rather than relying on sublicensing. They agreed that Prime and Mr. Chu would
directly participate in the equity of the new entity, and Rave would participate
through its approximately 20% equity ownership in Prime and through royalty and
development payments from the new company. Prime would continue to be
responsible for sublicensing through an agency agreement with the new company.
The parties recognized the need for an experienced president to operate the new
company and to commercialize the products, and began negotiations with Mr.
Gerald Zarin, whom Mr. Wong had recently met, to accept that position and
participate in the Company's equity.

               Negotiations commenced in December 1994 and continued among Mr.
Zarin, Mr. Chu, Mr. Wong on behalf of Prime and Mr. Randy Burnworth on behalf of
Rave through early July 1995. As a result of these negotiations, the Company was
organized in July 1995, at which time Prime terminated its exclusive license
arrangement with Rave and the Company entered into the License Agreement. In


                                       2
<PAGE>


addition, Rave agreed to continue the development of the technology and the
Initial Products pursuant to the Development Agreement and Prime became the
Company's exclusive agent to sublicense the products covered by the License
Agreement to third parties (subject in all cases to the Company's approval)
under the terms of the Agency Agreement. Mr. Zarin became the Company's
President and Mr. Chu became the Chairman of its Board of Directors and acting
Chief Financial Officer. Mr. Wong became a director of the Company.

               The Company believed that Rave had not performed the services
required under the Development Agreement. In November 1998, the Company
commenced an arbitration proceeding (the "Arbitration") against Rave and Randy
Burnworth. On May 28, 1999, pursuant to a Settlement Agreement, the Arbitration
was resolved and the License Agreement was terminated. As a result of the
Settlement Agreement, the Company continues to maintain exclusive worldwide
license rights to make, market and license its video enhancement technology free
of any claims of ownership or inventorship by Rave; in return, Rave and certain
individuals associated with Rave received $175,000 in cash as well as 100,000
shares of the Company's Common Stock and options to purchase 50,000 shares of
the Company's Common Stock at an exercise price of $1.46, exercisable until May
28, 2002.



BACKGROUND--VIDEO IMAGES

               The human eye perceives all images as a result of its ability to
recognize light. Light travels as continuous electromagnetic waves ("Analog
Light Waves") that are either emitted by the object being observed or reflected
from it. Analog Light Waves vary in frequency and amplitude, and can be directly
captured as images. For example, in photography, light waves strike film treated
with certain chemicals and the energy from the light wave causes chemical
reactions that change the translucency of the film. As a result, the image can
be recreated by again passing light through the film. In computers, visual
images can be stored and manipulated after Analog Light Waves have been broken
down into smaller constituent parts expressed as digital signals. These digital
signals are transmitted as bits and then reconstituted into Analog Light Waves
visible to the human eye.

               Broadcast television technology is based on Analog Light Wave
transmissions. Analog Light Waves are captured by an electronic television
camera and turned into usable electrical energy in the form of lower frequency
waves in the form of electrical currents in an electric circuit ("Analog Video
Waves"). That wave is transmitted to a receiver, where it is projected at the
standard broadcast rate of 30 frames per second ("fps") against a phosphorescent
screen. The screen then emits Analog Light Waves, making the image visible to
the human eye.

               Modern video telecommunications, such as satellite broadcasting
and cable television, generally combine both analog and digital processes in
order to capture and transmit images. For example, in digital satellite video
telecommunication the image is digitized by a computer processor and then
broadcast to a satellite. The digital information is received and rebroadcast by
the satellite directly to a receiver, and then reconstituted into energy in the
form of an analog wave and displayed at 30 fps to create a visible image.

               Band widths available for satellite video transmission are
limited by the Federal Communications Commission ("FCC"). These limitations
significantly restrict the amount of information that can be transmitted in any
time interval and require most information to be transmitted in a compressed
digitized format.


                                       3
<PAGE>


               Internet telecommunication is subject to greater limitations. All
sites on the Internet are computers that process data on a digital basis linked
by telephone lines. Information is typically transmitted over these lines from
computers through modems. Currently, the fastest modems available for general
use can transmit only a fraction of the digital information necessary to create
real time images at 30 fps. Even if the speed of a modem was increased, the
limitations of currently available personal computers for general use make it
unlikely that a user would be able to retrieve and display data at a rate
greater than 15 fps. One result is that real time teleconferences are generally
accomplished by using special high speed modems and dedicated telephone lines
rather than using the Internet. These telephone lines are usually provided by a
national carrier having the equivalent band width of approximately 24 standard
telephone lines, which is then able to transmit the video images at 30 fps.
Charges for these dedicated lines are substantially the same as for 24 standard
lines, making real time teleconferences expensive. The ability to use the
Internet or otherwise use standard telephone lines for teleconferencing would
substantially reduce costs of teleconferencing.

               Given the physical limitations of satellite, cable and telephone
systems, and their increasing interactivity, ever more emphasis is being placed
on compression technology as a means to allow more data to be transmitted in any
time interval. Using a variety of techniques, portions of a digital description
of an image are omitted in the transmission of information, and, by mathematical
formula or inference, most of the omitted data is then replaced after reception.
The result of this compression technology has been to increase the number of
channels available for digital satellite broadcasting from 50 to 150, and to
significantly improve the quality of images transmitted over the Internet. The
Company believes that improvements in the amount of compression possible will
continue. However, as the amount of compression increases, more data will likely
be lost, and the quality of the image will deteriorate.

               Image information may be lost in the process of compression or
distorted during recording, transmission or playback because of various factors,
including signal interference or deterioration of original film quality and
camera focus. Some of the problems from this loss or distortion of image
information include lack of clarity, a "washed out" look and excessive or
inadequate black level.

               One of the methods used to compress digitized video information
for storage and transmission (other than television transmission) is to
eliminate frames. A phenomenon causing analogous results occurs when the hard
drive of a computer, or some other component, cannot retrieve or present data at
sufficiently high fps. In either case, image movement is erratic and
unrealistic. Regardless of whether the signal is compressed, the image may be
subject to random salt and pepper patterns.

THE COMPANY'S VIDEO ENHANCEMENT PRODUCTS

The NVP and Softsets

               The NVP controls, corrects and improves analog video signals' use
of digital control (software). The NVP first detects and replaces all important
picture synchronization and stability attributes. It then separates and corrects
the color and black and white information. The NVP enhances fine details of an
image and reduces distortions incurred in the course of transmitting the image,
corrects the pure black content of images and adjusts perceived light on
projected images. Fine detail enhancement is achieved by a proprietary circuit
that analyzes the form of the analog waves at the point of origin or display,
and processes the wave to significantly increase the clarity of the image.

               The NVP achieves "blackness" correction by establishing a
"reference to true black" and adjusting the rest of the color spectrum to that
reference, making a "washed out" image appear more vivid. Similar referencing
currently is available only in expensive video display units, TV monitors and


                                       4
<PAGE>


projection systems; the NVP's proprietary circuits enable the process to be
performed inexpensively on a printed circuit board, ASIC or a small portion of a
integrated circuit chip.

               The NVP also contains circuits that provide for the adjustment of
light in images and brightness of the colors presented, similar to circuits
traditionally included in televisions.

               The NVP can be used prior to further processing of the Analog
Video Wave at the source of the video signal and/or at the other end of the
process prior to the display of the video image. In the form of a chip, it can
be included in a television set, video projector or in a video conference
display or in the decoder or routing box that connects a typical television to a
cable broadcasting company or a multichannel satellite provider. The NVP also
can be included in any personal computer that has a capture board, a device
enabling the computer to convert standard broadcast video signals into a
digitized form. This enables the image to be enhanced prior to digitization.

               Through its Advanced Engineering Group, the Company has developed
the Softsets to control the functions of the NVP. The Softsets give both
end-users and manufacturers who use the NVP in their products the ability to
manipulate the attributes of video images to their own taste or standards. For
example, the manufacturer of a set-top box who includes the NVP and Softsets in
its product could offer viewers the ability to select predetermined optimum
video parameters for "Sports," "Movies," "Drama" or other predesignated
programming from their remote control ("Active Softsets"). Additionally, program
providers or other transmitters can encode their signal so that a receiving
device containing the Softsets and enhanced NVP will automatically adjust its
video parameters to a predetermined value when the signal is received ("Passive
Softsets"). The encoded signal can also be included in the actual programming.

Digital Video and Photo Software Video Enhancement Technology

               During 1998, NUWAVE, using internal resources, developed a
proprietary technology to remove noise, graininess in pictures, to complement
the company's Clarity technology used in the NVP-103 ASIC. The result of this
development is a set of algorithms, patent pending, that remove 70% of the
picture noise while retaining correct focus (the image does not blur). In
addition the NUWAVE algorithm process is three times faster than any other known
algorithm or filter thus allowing use in and during real time streaming video.

               In 1999, NUWAVE was desirous to offer digital technology
solutions and to create and enter into an E-Commerce environment. Based upon the
power of its propriety noise reduction algorithms a software program,
PictureWizard, was developed for users to correct, improve and enhance digital
streaming video and digital photography. PictureWizard, the product, and
www.PictureWizard.com were introduced in late 1999. This became the first
downloadable software product with the ability enhance both pictures and
streaming video from virtually any PC program or while surfing the internet
using a PC. Based on initial test marketing, customer feedback and the results
of an independent survey, in April the Company will launch the
PicturePrepSuite2000 product line offering additional features, benefits and
options. The PictureWizard movie and picture enhancement product is sold at the
www.PictureWizard.com web store. The PicturePrep Suite 2000 website store at
www.PicturePrep.com will launch in April.

               The evolution of the noise reduction algorithms results in six
products for NUWAVE to sell or license to the OEM, the retailer and the
consumer:

1.   PicturePrep software product sold via the Internet to consumers.
2.   PicturePrep custom software sold bundled with an OEM product such as a
     scanner, digital camera or computer printer.


                                       5
<PAGE>


3.   PicturePrep software in "blister packs" sold via retail stores such as drug
     stores that sell photo processing.
4.   NUWAVE algorithms licensed in software form to OEM of consumer electronics
     products.
5.   NUWAVE algorithms licensed in hardware chip form to OEM of consumer
     electronics products.
6.   NUWAVE algorithms bundled with our ASIC video enhancement chip sales to
     OEM of consumer electronic products.

               Management believes the Company now has proprietary solutions for
sale in both analog and digital form to meet the evolution and convergence of
the PC to Television markets and the worldwide trend away from analog devices
toward digital devices.

Wireless Digital Technology

               The Company has formed a strategic alliance with MemoryLink
Corp., for the commercialization of MemoryLink's propriety Wireless Digital
Video Technology. MemoryLink, a privately owned Wisconsin company was founded in
1998 with the vision of empowering individuals with wireless, personal broadband
technologies that will create a host of new life enhancing applications and
leverage the power of the internet Capitalizing on the FCC's establishment of
nonrestrictive spectrum in the 5GHz band, MemoryLink has developed
state-of-the-art digital wireless multimedia RF technologies encompassing video,
audio and data applications and its intellectual property portfolio positions
the company to establish itself as a leader in this field. Products that may
evolve from MemoryLink's efforts include portable wireless, flat panel TV's and
computers, home and commercial surveillance products, personal hand held
products and wide area digital PC video networking products. This technology was
recently introduced by NUWAVE and MemoryLink at the January 2000 International
Consumer Electronics Show, where prototypes of the initial products using the
technology were demonstrated to selected major OEM companies based in Asia,
Europe and the U.S. Initial products emerging from this technology expected to
be available within the next twelve to eighteen months.

Other Potential Products

               The Company intends to continue to use outside consultants to
assure exposure to new ideas and technology. The Company, through its Advanced
Engineering Group and agreements with third parties, is conducting investigation
and research and development activities with respect to other new
technologies/products to address the digital, PC and internet markets, which are
new markets for the Company to participate in. These activities may give rise to
additional products that may be commercialized by the Company. However, there
can be no assurance that its efforts will result in marketable products or
products that can be produced at commercially acceptable costs.



RESEARCH AND DEVELOPMENT

               Research and development activity with respect to the Company's
Initial Products was carried out by Rave prior to July 21, 1995, when the
Company and Rave entered into the License Agreement and the Development
Agreement. The Company's Initial Products were based on technology originated by
Rave prior to the Company's organization and licensed to the Company by Rave
pursuant to the License Agreement. Although it was the Company's intention to
utilize Rave as its primary source for research and development activities, the
Company became dissatisfied with Rave's performance under the Development
Agreement and has found it necessary to utilize its Advanced Engineering Group
as its primary means for product development. The Company's Advanced Engineering
Group currently operates to support the continuing development of the Company's
products and related technology, and the identification of additional sources of


                                       6
<PAGE>


new technology. The Company utilizes its Advanced Engineering Group to create
products and technology independent of the "Licensed Product" and "Licensed
Process" as outlined in the License Agreement. These independently developed
products and technology include the NVP, a significant amount of the software
included in each of its products and new circuitry to allow certain of the
products to be produced as ASICs. The Advanced Engineering Group is also
currently developing a commercial video retail product which utilizes the NVP
technology and during 1999 developed proprietary digital software photo and
video enhancement technology utilized in the Company's first Internet product
Picture Wizard.

               As of December 31, 1999, the Advanced Engineering Group consisted
of 5 of the Company's employees and outside consultant organizations who have on
their respective staffs engineers, technicians and support personnel (totaling
more than 30 personnel) who devote time to the Company on an as-needed
project-by-project basis. The Company anticipates that the make-up of its
Advanced Engineering Group will change from time to time depending on its
current and anticipated development and commercialization plans. The Company's
strategy with respect to new products and technologies is to continue to utilize
the Advanced Engineering Group as well as other independent third party sources
and to increase its internal technical and engineering staff as appropriate.

               From July 17, 1995 to December 31, 1999, the Company incurred
expenses of $6,319,909 on research and development, of which approximately 55%
was paid to Rave pursuant to the Development Agreement. During fiscal 1999 and
1998, $938,745 and $1,572,364, respectively, was spent on research and
development activities. During the next 12 months, the Company estimates that it
will spend approximately $800,000 in support of the commercialization of its
products and on research and development. In the event the Company is able to
generate sufficient revenues from sales of its NVP products during such 12-month
period, it anticipates it will increase its expenditures on research and
development and the identification of new sources of technology.



MARKETING AND SALES

               During 1999, the Company completed the initial development of its
first proprietary digital photo and video software technology. The technology
was introduced as Picture Wizard in September 1999 and sold directly to
consumers through our exclusive e-commerce Web site store at picturewizard.com
for the primary purpose of limited test marketing, system and product evaluation
in a live setting, and to garnish customer feedback on both the product and the
Web site. Based on this initial test marketing, customer feedback and the
results of an independent survey sponsored by the Company, we will launch in
April, the PicturePrepSuite2000 product line offering additional features,
benefits and options. These products are the first downloadable software
products with the ability enhance both pictures and streaming video from
virtually any PC program or while surfing the Internet using a PC. In addition
to direct on-line consumer sales (B to C sales), we intend to market this
technology directly to businesses (B to B) expanding our OEM customer base by
either embedding or bundling our technology into products such as PC's,
printers, scanners, camcorders and DVD's among other imaging devices and by
providing our software products to retailers for sale in their camera, film and
film processing departments. This digital technology not only complements our
analog ASIC chip technology but can also work in conjunction to further improve
the resulting image quality.

               The Company is currently developing retail products for consumers
who do not have NUWAVE enabled products for their TV's but want to improve the
picture quality of their home viewing. We believe that the most effective way to
introduce this product into the retail marketplace is to work through
distributors who will manufacture and sell to retailers, including those with


                                       7
<PAGE>


whom they are currently doing business. In this regard, the Company has entered
into a five-year manufacturing and marketing agreement with Terk Technologies
Corp. to manufacture and market under the Terk brand name, a line-up of set-top
boxes incorporating NUWAVE's technology for existing televisions and video
output products. Terk products are currently marketed to all major consumer
electronics retailers in the U.S. At present, there are three hundred million
non-enhanced televisions in the United States alone.

               The Company has also commenced marketing of its NVP and Softsets
to manufacturers of video products including TV's, VCR's, DVD's, set-top boxes,
satellite distribution systems, digital cameras and camcorders. The Company has
also introduced its technology to companies that manufacture component parts and
semiconductors used in the manufacture of such video products. The Company
believes that the inclusion of its NVP and Softsets in such video products will
allow them to produce significantly better images and allow for product
differentiation, and the low cost to the user will make it an attractive
product. The Company's goal is to position itself to take advantage of the
converging television, telecommunication and computer markets by developing
multiple products from its unique video enhancement technology. Earlier this
month we received the OEM version of our ASIC chip from the
semiconductor-manufacturing foundry. This ASIC chip is currently undergoing full
quality assurance testing. The initial test results have been positive. We plan
to use this chip for sales demonstration purposes and expect to be ready for
production during the third quarter. Our sales program is aimed at obtaining
orders initially from those customers who have already evaluated the Company's
technology and wish to test the ASIC chips in their products. In anticipation of
production of the NVP ASIC chip, the Company has been conducting sales
presentations of the NVP and Softset technologies to prospective OEM customers
world wide (i.e., manufacturers of set-top boxes, televisions, VCR's, DVD's and
other video output devices). We have marketing and sales organizations in place
in the U.S., Japan and China, close to key prospective customers, to implement
this program. Although we are unable to predict whether our marketing efforts
will be successful, we believe that our products have been well received.

               The Company has formed a strategic alliance with MemoryLink Corp.
for the commercialization of certain of MemoryLink's propriety Wireless Digital
Video Technologies, which was introduced in January, 2000 by NUWAVE and
MemoryLink at the 2000 International Consumer Electronics Show, where prototypes
of the initial products using the technology were demonstrated to selected major
OEM companies based in Asia, Europe and the U.S. The products using the Wireless
Digital Video Technology are expected to be available within the next twelve to
eighteen months.

               The Company intends to support the above sales efforts through
various sales and marketing programs/activities including trade advertising,
attendance at industry trade shows, attendance at participating dealer shows,
attendance at end-user events, literature mailers and co-op dealer advertising.

MANUFACTURING

               The Company does not contemplate that it will directly
manufacture any of its products. It intends to contract with third parties to
manufacture its proposed NVP and Softsets. It also may license to third parties
the rights to manufacture the products, through direct licensing, OEM
arrangements or otherwise.

               The Company intends to produce the NVP ASIC chip in accordance
with a customer's specific application requirements supported by firm
commitments rather than producing and storing in inventory ASIC chips in
anticipation of applications required by customers in the future. In this
regard, the Company contracted with Adaptive to provide necessary technical
support and manage this process under the Company's direction, contracted with
TEC to complete the design work necessary to convert the Company's current NVP


                                       8
<PAGE>


PC board design to ASIC specifications and contracted with ZMD for production of
the ASIC.

PATENTS; PROPRIETARY INFORMATION

               To the extent practicable, the Company has filed and intends to
file U.S. patents and/or copyright applications for certain of its proposed
products and technology. The Company has also filed and intends to file
corresponding applications in key industrial countries worldwide.

               In April 1996, the Company filed two patent applications on
behalf of Rave for its Randall connector system. One patent was received in
November 1997 and the second one in January 1998. Under the terms of the
settlement agreement with Rave, the Company retains the exclusive license rights
to these patents.

               In April 1998, the Company filed three patent applications for
certain of its independently developed products: one for the NUWAVE Video
Processor and two for the Softsets. Although management believes that each of
these applications contains patentable claims, there is no assurance that the
Company will receive any patents. Also, even if granted, there is no assurance
that any patent will afford the Company with commercially significant protection
of its technology or that it will have adequate resources to enforce these
patents.

               The Company also intends to license and/or sell its technology
and products in foreign markets. As such, it intends to seek foreign patent
protection. The patent laws of other countries may differ significantly from
those of the United States as to the patentability of the Company's products and
technology. Moreover, the degree of protection afforded by foreign patents may
be different from that in the United States. Patent applications in the United
States are maintained in secrecy until the patents are issued, and publication
of discoveries in scientific or patent literature tends to lag behind actual
discoveries by several months. As a result, the Company cannot be certain that
it will be the first creator of inventions covered by any patent applications it
makes or the first to file patent applications on such inventions.

               Management believes that the products the Company intends to
market and sell do not infringe the patents or other proprietary rights of third
parties. Further, it is not aware of any patents held by competitors that will
prevent, limit or otherwise interfere with the Company's ability to make and
sell its products. However, it is possible that competitors may have applied
for, or may in the future apply for and obtain, patents which have an adverse
impact on the Company's ability to make and sell its products. In addition,
because the Company is a relatively new company in the development stage, claims
that its products infringe on the proprietary rights of others are more likely
to be asserted after commencement of commercial sales of its products. There is
no assurance that competitors will not infringe the Company's patents. Defense
and prosecution of patent suits, even if successful, are both costly and time
consuming. An adverse outcome in the defense of a patent suit could subject the
Company to significant liabilities to third parties, require disputed rights to
be licensed from third parties or require it to cease selling its products.

               The Company also relies on unpatented proprietary technology.
There is no assurance that others may not independently develop the same or
similar technology or otherwise obtain access to the Company's unpatented
technology. To protect its trade secrets and other proprietary information, the
Company requires employees, advisors and collaborators to enter into
confidentiality agreements. The Company could be adversely affected in the event
that these agreements fail to provide meaningful protection for its trade
secrets, know-how or other proprietary information.


                                       9
<PAGE>


COMPETITION

               For a discussion relating to the competition that the Company
faces and risks related thereto, see "Management's Discussion and Analysis or
Plan of Operation--Certain Factors That May Effect Future Results--Competition"
and "--Rapid Changes to Industry Standards; Product Obsolescence."

EMPLOYEES

               The Company currently has thirteen full-time employees, of which
eight are executives or administrative and five are in the Advanced Engineering
Group, and depending on its level of business activity, expects to hire
additional employees in the next 12 months, as needed, to support marketing and
sales, manufacturing and research and development.

FACILITIES

               The Company has established its headquarters in Fairfield, New
Jersey. Pursuant to the sublease relating to such facility, the Company is
obligated to make monthly rental payments of $6,600. The lease is on a
month-to-month basis. The Company's subleased portion of the facility is
approximately 2,500 square feet and the sublease entitles the Company to share
certain common areas.

EXECUTIVE OFFICERS

               Set forth below are the names, ages as of March 17, 2000 and
business experience of the executive officers of the Company:

      Name                Age                      Position
------------------        ---        -----------------------------------------
Gerald Zarin              59         Chairman of the Board of Directors,
                                        Chief Executive Officer and President

Don Legato                56         Vice President-Sales

Jeremiah F. O'Brien       53         Vice President, Secretary and Chief
                                        Financial Officer

Robert Webb               64         Vice President - Marketing/Technical
                                        Development

               GERALD ZARIN has been a Director and President and Chief
Executive Officer of the Company since July 1995. He has been Chairman of the
Board of Directors since January 28, 1996. From June 1991 until January 1993,
Mr. Zarin was the Chairman, President and Chief Executive Officer of Emerson
Radio Corporation, which designs and sells consumer electronics products. From
June 1993 to July 1995, he was President and Chief Executive Officer at AMD
Consulting, Inc., a business consulting firm. From November 1990 to June 1991,
he was President and Chief Executive Officer of JEM, Inc., an importer of fine
furnishings. From August 1987 to October 1990, he was Senior Vice President and
Chief Financial Officer of Horn & Hardart, Inc. Horn & Hardart, Inc. is the
parent company for Hanover House and various other hotels and fast food chains.
From 1976 to 1986, he was President and Chief Executive Officer of Morse
Electro, Inc., which designed and sold consumer electronics products.

               DON LEGATO has been the Vice President-Sales of the Company since
February 1997. From April 1994 to February 1997, he was the President of Gale
Group Ltd., Inc., a management consulting firm. >From May 1993 to April 1994, he
served as Vice President Sales and Marketing and also as a Director for Applied
Safety Inc., (makers of the "World's First" Retrofit Driver's Side Airbag System


                                       10
<PAGE>


in the US). From June 1992 to May 1993 he was President of Technology Solutions
Distributing Inc., a computer products distribution company. From November 1972
to June 1992, he was President and CEO of T.L.D. Limited, Inc., a manufacturer's
representative company representing major electronics and computer consumer
products firm such as Sanyo, Sharp, Sony and Apple Computer. He also served on
Manufacturer's Advisory Councils for several of these companies.

               JEREMIAH O'BRIEN has been Vice President and Secretary of the
Company since July 1995 and Chief Financial Officer since January 1996. From
1983 to 1989, he served as CFO and Executive Vice President for Cardiac
Resuscitator Corporation, a medical electronics manufacturer. From September
1989 through June 1991, he served as Senior Vice President of Finance for
Emerson Computer Corporation and Emerson Technologies, Inc. (both of which
manufacture and sell electronic components and products). From June 1993 through
March 1994, Mr. O'Brien was Corporate Controller for Andin International, a
jewelry manufacturing company. During the period of July 1991 through July 1995,
he also functioned as an independent consultant in financial matters to various
private corporations.

               ROBERT WEBB has been the Vice President-Marketing/Technical
Development of the Company since September 1995. From June 1995 to September
1995, Mr. Webb acted as an independent consultant to various private
corporations. From July 1994 until March 1995, he was Vice President of New
Product Development for Studio Magic, Inc., a company involved in the design and
manufacture of computer video equipment, and served as a consultant for such
company from October 1993 to July 1994 and in April 1995. From October 1973
until October 1993 he was employed by Grass Valley Tektronix, which produces
broadcast television equipment. He served as a special advisor to the President
of Grass Valley Tektronix from February 1993 to September 1993; he was Division
General Manager-Graphics Systems from November 1990 to February 1993 and held
various executive positions prior to that time

ITEM 3.   LEGAL PROCEEDINGS

               None.

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

               During the fourth quarter of 1999, the Company did not have any
meetings of its Stockholders.



                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS

MARKET FOR COMMON EQUITY

               The Company's Common Stock, par value $.01 per share ("Common
Stock"), has been traded since July 1996 on the NASDAQ SmallCap Stock Market
under the symbol "WAVE" for Common Stock and "WAVEW" for Common Stock Warrants.
Prior to that time, there was no public market for the Common Stock or Warrants.
The following table sets forth the range of high and low closing sale prices for
the Common Stock as reported on the NASDAQ SmallCap Stock Market during each of
the quarters presented. The quotations set forth below are inter-dealer
quotations, without retail mark-ups, mark-downs or commissions and do not
necessarily represent actual transactions.


                                       11
<PAGE>


                                  COMMON STOCK

QUARTERLY PERIOD ENDED                            HIGH              LOW

March 31, 1998                                    6.63              3.88

June 30, 1998                                     4.50              2.94

September 30, 1998                                3.50              1.38

December 31, 1998                                 4.19              0.66

March 31, 1999                                    3.50              1.50

June 30, 1999                                     2.41              1.31

September 30, 1999                                3.63              1.94

December 31, 1999                                 3.50              2.00


               As of March 12, 2000, there were approximately 153 holders of
record of the Company's Common Stock. This number does not include beneficial
owners of the Common Stock whose shares are held in the names of various
dealers, clearing agencies, banks, brokers and other fiduciaries.

               The Company has never declared or paid any cash dividends. The
Company currently intends to retain any future earnings to finance the growth
and development of its business and future operations, and therefore does not
anticipate paying any cash dividends in the foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

               During the three months ended December 31, 1999 there were no
sales of unregistered securities.



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

                          SUMMARY FINANCIAL INFORMATION

               The summary financial data set forth below are derived from and
should be read in conjunction with the financial statements, including the notes
thereto, filed as part of this Form 10-KSB.


                                       12
<PAGE>


<TABLE>
<CAPTION>

                                                                         JULY 17, 1995 (INCEPTION)
                                       YEAR ENDED        YEAR ENDED        TO DECEMBER 31, 1999
STATEMENT OF OPERATIONS DATA:      DECEMBER 31, 1998    DECEMBER 31,
                                                            1999
<S>                                <C>                  <C>              <C>
Revenues                           $      12,545        $      16,553    $      39,373
Net Loss                           $   3,998,271        $   2,690,372    $  15,878,199
Net loss per common share          $       (0.55)       $       (0.32)
Weighted average number of shares      7,259,896            8,419,644

</TABLE>

                                     DECEMBER 31,          DECEMBER 31,
     BALANCE SHEET DATA:                 1998                  1999

Working capital                    $   4,904,765        $   1,832,611
Total assets                       $   5,515,352        $   3,180,313
Total liabilities                  $     261,201        $     274,555
Deficit accumulated during         $  13,187,827        $  15,878,199
   the development stage
Stockholders' equity               $   5,254,151        $   2,905,758

FORWARD-LOOKING STATEMENTS

               This Report on Form 10-KSB contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements
other than statements of historical facts included in this Report, including
without limitation, the statements under "General," "Marketing and Sales,"
"Research and Development," "Manufacturing," "Liquidity and Capital Resources"
and "Plan of Operation" are forward-looking statements. The Company cautions
that forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those indicated in the
forward-looking statements, due to several important factors herein identified.
Important factors that could cause actual results to differ materially from
those indicated in the forward-looking statements ("Cautionary Statements")
include delays in product development, competitive products and pricing, general
economic conditions, risks of intellectual property litigation, product demand
and industry capacity, new product development, commercialization of new
technologies, the Company's ability to raise additional capital when required,
and the risk factors detailed from time to time in the Company's annual report
on Form 10-KSB and other materials filed with the Securities and Exchange
Commission ("SEC").

               All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the Cautionary Statements.

GENERAL

               The Company is a development stage enterprise organized in July
1995. Our mission is to identify and commercialize high margin, proprietary
technologies suited for high-volume, high-growth markets and, in turn achieve
attractive long-term growth for the Company. The first technologies being
commercialized are in the field of photo and video-enhancement. In this regard
we have developed proprietary video-enhancement technology designed to
significantly enhance video output devices with clearer, sharper details and
more vibrant colors when viewed on the display screen. This is known as the
NUWAVE Video Processor ("NVP") technology. We intend to license this technology
and/or have it manufactured in the form of Application Specific Integrated
Circuit ("ASICs") chips through third parties and to directly market these
products to OEMs who incorporate this enabling technology to improve picture
quality in set-top boxes, televisions, VCR's, DVD's, camcorders and other video
output devices. In addition to the NVP technology, the Company has recently
completed development of proprietary software technology with the ability to


                                       13
<PAGE>


digitally enhance both pictures and video on PC's while the user is surfing the
Internet or working offline (see "Marketing and Sales").

               In July 1996, we completed an initial public offering ("IPO") of
the Company's Common Stock and Public Warrants from which we received net
proceeds of $9,538,428 and repaid $2,000,000 principal amount of promissory
notes issued in a previous financing. On February 11, 1998, the Company received
net proceeds of $859,347 for issuance of 253,485 shares of our Common Stock to
Profutures Special Equities Fund, L.P. ("Profutures"), together with warrants to
purchase up to 100,000 shares of the Company's Common Stock. Pursuant to a
Placement Agency Agreement, dated May 11, 1998, with Janssen-Meyers Associates,
L.P. ("Janssen-Meyers"), the Company effected a private equity placement for an
aggregate of 2,742,904 shares of the Company's Common Stock and 2,057,207 Class
A Redeemable Warrants between May 19, 1998 and June 9, 1998 for net proceeds of
$5,990,924. On March 14, 2000, the Company completed a private placement with
Janssen-Meyers whereby the Company issued to certain accredited investors, as
defined under Regulation D as promulgated under the Securities Act, 2,088,608
shares of the Company's Common Stock and 1,044,304 Redeemable Common Stock
Purchase Warrants for an aggregate purchase price of $6,600,000. See
"Management's Discussion and Analysis or Plan of Operation--Liquidity and
Capital Resources."

               As of December 31, 1999 the Company had accumulated a deficit
during the development stage of $15,878,199, which includes a net loss for the
year ended December 31, 1999 of $2,690,372 compared to a net loss for the year
ended December 31, 1998 of $3,998,271, a decrease in losses of $1,307,899. The
loss for the year ended December 31, 1999 included included a reduction in
research and development costs of $633,619 when compared to the year ended
December 31, 1998. Such reduction was almost exclusively due to the termination
of the Rave Development Agreement in October, 1998. General and administrative
costs for the year ended 1999 were $2,503,812 compared to $2,646,409 for 1998, a
reduction of $142,597. Such reduction included a change in legal costs from 1998
($389,366) to 1999 ($269,448) of $119,918. In addition marketing costs were
reduced in 1999 by $26,234 ($229,644 in 1998 vs. $203,410 in 1999).

               Although the Company anticipates deriving some revenue from the
sale of its proprietary software (Softsets) and the NVP products during 2000, no
assurance can be given that these products will be successfully marketed during
such period. Even if revenues are produced from the sale of such products, the
Company expects to continue to incur losses for at least the next 12 months. See
"Liquidity and Capital Resources."



LIQUIDITY AND CAPITAL RESOURCES

               From its inception until the IPO, the Company relied for all of
its funding ($2,900,000 in cash plus the cancellation of the notes in the
principal amount of $350,000) on private sales of its debt and equity securities
("Private Financings"). In July 1996, the Company completed its IPO and received
net proceeds of $9,538,428. The Company used $2,073,652 of the net proceeds of
the IPO to repay the principal and interest on the outstanding notes issued to
investors in connection with the Private Financings. On February 6, 1998, the
Company issued 253,485 shares of its Common Stock for an aggregate purchase
price of $1,000,000 to a Private Limited Partnership. On May 11, 1998, the
Company entered into a placement agency agreement with Janssen-Meyers to act as
the Company's placement agent in a private equity placement whereby the Company
issued to certain accredited investors, as defined under Regulation D as
promulgated under the Securities Act, 2,742,904 shares of the Company's Common
Stock and 2,057,207 Class A Redeemable Warrants between May 19, 1998 and June 9,
1998 for an aggregate purchase price of $7,280,546.

               On March 13, 2000, the Company completed a private placement with
Janssen-Meyers whereby the Company issued to certain accredited investors, as
defined under Regulation D as promulgated under the Securities Act, 2,088,608


                                       14
<PAGE>


shares of the Company's Common Stock and 1,044,304 Redeemable Common Stock
PurchaseWarrants for an aggregate purchase price of $6,600,000.

               The Company anticipates that its available cash will be
sufficient to satisfy its contemplated cash requirements for at least through
the next twelve months.

PLAN OF OPERATION

               The Company's plan of operation over the next 12 months focuses
primarily on the final phase of the development of its ASIC line of chips and
continued development of its digital software technology and Internet presence
and the marketing and sales of its line of analog and digital picture and video
enhancement products to the OEM, professional video and retail markets and the
continued effort necessary to support the sales and marketing of these products.
In addition, the Company plans to market to the same markets wireless video
technology through its strategic alliance with Memory link Corp. Also, the
Company, through its Advanced Engineering Group and agreement with third
parties, is currently conducting investigation and research and development
activities with respect to other new technologies/products to address the
digital, PC and internet markets. These activities may give rise to additional
products that may be commercialized by the Company. However, there can be no
assurance that its efforts will result in marketable products or products that
can be produced at commercially acceptable costs.

               The Company anticipates, based on its current proposed plans and
assumptions relating to its operations, that it has sufficient cash to satisfy
the estimated cash requirements of the Company for the next 12 months. In the
event of unanticipated expenses, delays or other problems beyond this period,
the Company might be required to seek additional funding. In addition, in the
event that the Company receives a larger than anticipated number of initial
purchase orders upon introduction of its NVP products, it may require resources
greater than its available cash or than are otherwise available to the Company.
In such event, the Company may be required to raise additional capital. There
can be no assurance that such additional capital will be available to the
Company if needed, on commercially reasonable terms or at all.

               The Company's future performance will be subject to a number of
business factors, including those beyond the Company's control, such as economic
downturns and evolving industry needs and preferences, as well as the level of
competition and the ability of the Company to successfully market its products
and technology. There can be no assurance that the Company will be able to
successfully implement a marketing strategy, generate significant revenues or
achieve profitable operations. In addition, because the Company has had only
limited operations to date, there can be no assurance that its estimates will
prove to be accurate or that unforeseen events will not occur.



CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

               The following factors, among others, could cause actual results
to differ materially from those contained in forward-looking statements made in
this Annual Report on Form 10-KSB and presented elsewhere by management from
time to time.

1.   Development Stage Enterprise; Absence of Operating History
     ----------------------------------------------------------

               The Company is a development stage enterprise. It has had only a
limited operating history and has sold only a limited quantity of its products
to date (primarily for demonstration purposes). Since its inception in July
1995, the Company has been engaged primarily in: raising funds; directing
supervising, and coordinating the activities of its Advanced Engineering Group,
made up of the Company's own employees and third party consultants who work with
the Company on a project-by-project basis, in the continuing development of the
NUWAVE Video Processor and Picture Wizard 2000, pre-marketing and, more


                                       15
<PAGE>


recently, it produced its first NUWAVE Video Processor in an application
specific integrated chip (ASIC) format for the OEM market.

               The Company's prospects must be considered in light of the risks
associated with the establishment of a new business in the evolving electronic
video industry. In the Company's case this is particularly so, as further risks
will be encountered in its shift from the development to the commercialization
of new products based on innovative technology. There can be no assurance that
the Company will be able to generate revenues or achieve profitable operations.

2.   Limited Revenues; Accumulated Deficit; Anticipated Future Losses
     ----------------------------------------------------------------

               To date, the Company has received only limited revenue from the
sale of its products (primarily from sales made for demonstration purposes). It
does not anticipate significant operating revenue until its relevant technology
and one or more of its products is completely developed, manufactured in
commercial quantities and made available for commercial delivery. There can be
no assurance that its technology and products, if developed and manufactured,
will be able to compete successfully in the marketplace and/or generate
significant revenue. The Company has incurred significant costs in connection
with the development of its technologies and proposed products and there is no
assurance that it will achieve sufficient revenues to offset anticipated
operating costs. As of December 31, 1999, the Company had an accumulated deficit
of $15,878,199. Although the Company anticipates deriving some revenue from the
sale of its NUWAVE Video Processor and related products and Softsets within the
next 12 months, no assurance can be given that these products will be
successfully marketed or even completely developed and tested for commercial use
during such period. Management anticipates that the Company will continue to
incur substantial losses for at least the next 12 months. Included in such
former and future losses are research and development expenses, marketing costs,
manufacture and assembly, and general and administrative expenses. The Company
anticipates that it will continue to have high levels of operating expenses and
will be required to make significant expenditures in connection with its
continued research and development activities. The Company anticipates that its
losses will continue until it is able to generate sufficient revenues to support
its operations.

3.   Significant Capital Requirements; Dependence on Available Cash; Need for
     ------------------------------------------------------------------------
     Additional Financing
     --------------------

               The Company's capital requirements in connection with its
development activities have been and will continue to be significant. The
Company has been dependent upon the proceeds of sales of its securities to
private investors to fund its initial development activities. Since its initial
public offering in July 1996, the Company has obtained needed capital through
private placements of its securities. See "Management's Discussion and Analysis
or Plan of Operation--General."

               The Company anticipates, based on its current proposed plans and
assumptions relating to its operations, that it has sufficient cash to satisfy
all of its estimated cash requirements for the next 12 months. In the event of
unanticipated expenses, delays or other problems, the Company might be required
to either utilize the equity financing available under the Investment Agreement
or seek additional funding elsewhere. Also, if it were to receive a larger than
anticipated number of initial purchase orders upon introduction of the Softsets
or the NUWAVE Video Processor products, the Company might require additional
capital. No assurance can be given that the Company will be able to obtain such
additional capital on commercially reasonable terms or at all. An inability to
obtain additional financing, when needed, would have a material adverse effect
on the Company, and possibly require it to curtail or cease operations. To the
extent that any future financing involves the sale the Company's equity
securities, its existing stockholders could be substantially diluted.


                                       16
<PAGE>


4.   New Concept; Uncertainty of Market Acceptance; Lack of Marketing Experience
     ---------------------------------------------------------------------------

               The Company develops technology and products utilizing new
concepts and designs in video imagery and processing. The Company's prospects
for success will depend on its ability to successfully sell its products to key
manufacturers and distributors who may be inhibited from doing business with the
Company because of their commitment to their own technologies and products. As a
result, demand and market acceptance for the Company's technology and products
are subject to a high level of uncertainty. The Company currently has limited
financial, personnel and other resources to undertake the extensive marketing
activities that will be necessary to market its technology and products once
their development is completed. No assurance can be given that any of its
potential customers will enter into any arrangements with the Company. Further,
there is no assurance that the Company's marketing efforts will be successful.

5.   Dependence on Third-Party Design Changes
     ----------------------------------------

               Commercialization of the NUWAVE Video Processor and sale to
manufacturers of the relevant video equipment will require such manufacturers to
adopt new circuit configurations to accommodate the relevant chip in their
products. The Company anticipates that manufacturers wishing to use the NUWAVE
Video Processor will make such modifications because of the benefits derived
from the improved performance of their products and the relative simplicity of
such modifications. However, there is no assurance that such modifications will
be made. Also, the cost of such modifications may inhibit or prevent their
adoption. The Company's ability to sell and/or license its products would be
adversely affected if designers and manufacturers fail to make such
modifications.

6.   Uncertainty of Product and Technology Development; Need for Product
     -------------------------------------------------------------------
     Testing; Technological Factors
     ------------------------------

               Development of the Company's products are subject to all of the
risks inherent in the development of new technology and products including the
following risks: unanticipated delays; expenses; technical problems or
difficulties; and possible insufficiency of funding to complete development.
There is no assurance as to when, or whether, the Company can successfully
complete such developments. Further, there is no assurance that the Company can
develop products in commercially salable form within its projected development
schedule. If the Company is unable to complete its development activities for
its proposed products, it would have to complete development through third
parties. Management believes that the Company has sufficient resources to
complete development of its products. However, there is no assurance that it
will be able to complete such development in a timely manner, or at all. There
is also no assurance that it can enter into economically reasonable arrangements
for the completion of such products by third parties.

               In connection with the development of commercially salable
prototypes, the Company must successfully complete a testing program for its
products before marketing them. Unforeseen technical problems arising out of
such testing could significantly and adversely affect its ability to manufacture
a commercially acceptable version. In addition, the Company's success will
depend upon its technology and proposed products meeting acceptable cost and
performance criteria and upon their timely introduction into the marketplace.
There can be no assurance that the Company's technology and proposed products
will satisfactorily perform the functions for which they are designed, that they
will meet applicable price or performance objectives or that unanticipated
technical or other problems will not occur. Should any such problems arise, the
result would be increased costs and/or material delays in the development of the
proposed products.


                                       17
<PAGE>


7.   Dependence on Third-Party Development and Manufacturing
     -------------------------------------------------------

               The Company does not plan to directly manufacture any of its
products. It intends to contract with third parties to manufacture its proposed
NUWAVE Video Processor and Softsets, and related retail products. The Company
may also license to third parties the rights to manufacture proposed products,
through direct licensing, OEM arrangements or otherwise.

               The Company will be dependent on third parties to manufacture the
NVP ASIC (the application specific integrated circuit-based NUWAVE Video
Processor) and related products as well as future products the Company may
choose to commercialize. Although the Company has entered into an agreement with
a potential manufacturer of the NVP ASIC chip, there can be no assurance that
such manufacturer will dedicate sufficient production capacity to satisfy the
Company's requirements within scheduled delivery times, or at all. Failure or
delay by the Company's suppliers in fulfilling its anticipated needs would have
an adverse effect on the Company's ability to develop and market its products.
In addition, the Company will be dependent on third party vendors for many of
the components necessary for the final assembly of its products. The Company may
have difficulty in obtaining contractual agreements with suppliers of such
materials due to, among other things, possible material shortages or possible
lack of adequate purchasing power. While management believes that these
components are available from multiple sources, it is anticipated that the
Company will obtain certain of them from a single source, or limited number of
sources, of supply. In the event that certain of such suppliers are unable or
unwilling to provide the Company with such components on commercially reasonable
terms, or at all, delays in securing alternative sources of supply would result
and could have a material adverse effect on the Company's operations.

8.   Competition
     -----------

               The markets that the Company intends to enter are characterized
by intense competition, and, particularly with respect to the market for video
editing, video production and video processing products, significant price
erosion over the life of a product. The Company's products will directly compete
with those of numerous well-established companies, such as Sony Electronics,
Inc., Panasonic Division of Matsushita Electric Industrial Co., Motorola, Inc.,
Mitsubishi International Corp. and Royal Philips Electronics, NV, which design,
manufacture and/or market video technology and other products. All of these
companies have substantially greater financial, technical, personnel and other
resources than the Company and have established reputations for success in the
development, licensing, sale and service of their products and technology.
Certain of these competitors dominate their industries and have the necessary
financial resources to enable them to withstand substantial price competition or
downturns in the market for video products.

9.   Rapid Changes to Industry Standards; Product Obsolescence
     ---------------------------------------------------------

               The markets for the technology and products being developed by
the Company are characterized by rapid changes and evolving industry standards
often resulting in product obsolescence or short product life cycles. As a
result, certain companies may be developing technologies or products of which
the Company is unaware which may be functionally similar, or superior, to some
or all of those being developed by the Company. As a result of all of the above,
the ability of the Company to compete will depend on its ability to complete
development and introduce to the marketplace in a timely and cost-competitive
manner its proposed products and technology, to continually enhance and improve
such products and technology, to adapt its proposed products to be compatible
with specific products manufactured by others, and to successfully develop and
market new products and technology. There is no assurance that the Company will
be able to compete successfully, that its competitors or future competitors will
not develop technologies or products that render the Company's products and


                                       18
<PAGE>


technology obsolete or less marketable or that the Company will be able to
successfully enhance its proposed products or technology or adapt them
satisfactorily.

10.  Enforceability of Patents and Similar Rights; Possible Issuance of Patents
     --------------------------------------------------------------------------
     to Competitors; Trade Secrets
     -----------------------------

               To the extent practicable, the Company has filed or intends to
file U.S. patents and/or copyright applications relating to certain of its
proposed products and technologies and to file corresponding applications in key
industrial countries worldwide. If granted, there is no assurance that any
patent will afford the Company commercially significant protection of its
technology or that the Company will have adequate resources to enforce its
patents. Because the Company also intends to license and/or sell its technology
and products in foreign markets, it intends to seek foreign patent protection.
With respect to foreign patents, the patent laws of other countries may differ
significantly from those of the United States as to the patentability of the
Company's products or technology. Moreover, the degree of protection afforded by
foreign patents may be different from that in the United States. Patent
applications in the United States are maintained in secrecy until patents issue,
and since publication of discoveries in the scientific or patent literature
tends to lag behind actual discoveries by several months, the Company cannot be
certain that it will be the first creator of inventions covered by any patent
applications it makes or the first to file patent applications on such
inventions.

               The Company believes that the products it intends to market and
sell do not infringe the patents or other proprietary rights of third parties
and is not aware of any patents held by its competitors that will prevent, limit
or otherwise interfere with the Company's ability to make and sell the products
it intends to market. However, it is possible that competitors in both the
United States and foreign countries, many of which have substantially greater
resources and have made substantial investments in competing technologies, may
have applied for, or may in the future apply for and obtain, patents which have
an adverse impact on the Company's ability to make and sell its products. In
addition, because of the developmental stage of the Company, claims that the
Company's products infringe on the proprietary rights of others are more likely
to be asserted after commencement of commercial sales incorporating the
Company's technology. There can also be no assurance that competitors will not
infringe the Company's patents. Defense and prosecution of patent suits, even if
successful, are both costly and time consuming. An adverse outcome in the
defense of a patent suit could subject the Company to significant liabilities to
third parties, require disputed rights to be licensed from third parties or
require the Company to cease selling its products.

               The Company also relies on unpatented proprietary technology, and
there can be no assurance that others may not independently develop the same or
similar technology or otherwise obtain access to the Company's unpatented
technology. To protect its trade secrets and other proprietary information, the
Company requires employees, consultants, advisors and collaborators to enter
into confidentiality agreements. There can be no assurance that these agreements
will provide meaningful protection for the Company's trade secrets, know-how or
other proprietary information in the event of any unauthorized use,
misappropriation or disclosure of such trade secrets, know-how or other
proprietary information. If the Company is unable to maintain the proprietary
nature of its technologies, the Company could be adversely affected.

11.  No Dividends
     ------------

               The Company has not paid any cash dividends to date. Payment of
dividends on the Company's Common Stock is within the discretion of the Board of
Directors and will depend upon the Company's earnings, capital requirements and
financial condition, and other relevant factors. The Company does not intend to
declare any dividends on its Common Stock in the foreseeable future. Instead, it
plans to retain any earnings it receives for development of its business
operations.


                                       19
<PAGE>


12.  Limitation on Tax Loss Carryforwards
     ------------------------------------

               As of December 31, 1999, the Company had available unused net
operating loss carryforwards ("NOLs") aggregating approximately $12,460,000 to
offset future federal taxable income. The unused NOLs expire in various years
from 2010 to 2019. Under Section 382 of the Internal Revenue Code of 1986, as
amended (the "Code"), utilization of prior NOLs is limited after an ownership
change. The Company may be subject to limitations on the use of its NOLs as
provided under Section 382. Accordingly, there can be no assurance that a
significant amount of the existing NOLs will be available to use. In the event
that the Company achieves profitability, as to which there can be no assurance,
such limitation would have the effect of increasing its tax liability and
reducing its net income and available cash resources in the future.

13.  Limitation on Liability of Directors and Officers
     -------------------------------------------------

               The Company's Certificate of Incorporation provides that: it
indemnify any of its directors, officers, employees or agents against actions,
suits or proceedings relating to the Company; and subject to certain
limitations, a director shall not be personally liable for monetary damages for
breach of his fiduciary duty. In addition, the Company has entered into an
indemnification agreement with each of its directors. Such indemnification
agreement provides that a director is entitled to indemnification to the fullest
extent permitted by law.

14.  Reliance Upon Key Personnel
     ---------------------------

               The Company's operations depend largely on the continued
employment of Mr. Gerald Zarin, Chairman of the Board, President and Chief
Executive Officer. If Mr. Zarin or other members of management or key personnel
resign or otherwise leave the Company, its business and financial condition
could be materially adversely affected.

15.  Market Price Fluctuations
     -------------------------

               The trading price of the Company's Common Stock may be subject to
wide fluctuations in response to quarter-to-quarter variations in operating
results, general conditions in the computer, video and telecommunications
industries, changes in earnings estimates, recommendations by analysts and other
events.

ITEM 7.     FINANCIAL STATEMENTS

               The information required by this item is incorporated by
reference to pages F-1 through F-19 of this Annual Report on Form 10-KSB.


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

DISMISSAL OF INDEPENDENT ACCOUNTING FIRM

               Coopers & Lybrand L.L.P. ("Coopers"), the independent accounting
firm which audited the Company's financial statements during fiscal year 1996,
was dismissed by the Company on February 11, 1998. Coopers' reports on the
Company's financial statements for the two years ended December 31, 1996 did not
contain any adverse opinions or disclaimers of opinion, and neither report was
qualified or modified as to uncertainty, audit scope, or accounting principles.
The decision to change accountants was approved by the Board of Directors of the
Company at the Meeting of the Board of Directors of the Company on February 4,
1998. During the Company's two fiscal years ended December 31, 1996, there were


                                       20
<PAGE>


no disagreements with Coopers on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Coopers, would have caused
it to make reference to the subject matter of the disagreements in connection
with its report.

ENGAGEMENT OF NEW INDEPENDENT ACCOUNTANTS

               The Company has engaged Richard A. Eisner & Company, LLP as its
new independent accountants effective February 11, 1998. During the Company's
two fiscal years ended December 31, 1996 and any subsequent interim period prior
to engaging such accountants, the Company had not consulted with Richard A.
Eisner & Company, LLP regarding any of the matters specified in Item 304(a)(2)
of Regulation S-B.

               The disclosure called for by this Item 8 has been previously
disclosed by the Company under Item 4 of the Company's Current Report on Form
8-K filed with the SEC on February 18, 1998.


                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

               The information required by this item regarding directors,
promoters and control persons of the Company is incorporated by reference to the
Registrant's definitive Proxy Statement for its 2000 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission not later
than April 30, 2000.



ITEM 10.  EXECUTIVE COMPENSATION

               The information required by this item is incorporated by
reference to the Registrant's definitive Proxy Statement for its 2000 Annual
Meeting of Shareholders to be filed with the Securities and Exchange Commission
not later than April 30, 2000.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

               The information required by this item is incorporated by
reference to the Registrant's definitive Proxy Statement for its 2000 Annual
Meeting of Shareholders to be filed with the Securities and Exchange Commission
not later than April 30, 2000.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

               The information required by this item is incorporated by
reference to the Registrant's definitive Proxy Statement for its 2000 Annual
Meeting of Shareholders to be filed with the Securities and Exchange Commission
not later than April 30, 2000.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS


                                       21
<PAGE>


EXHIBIT   DESCRIPTION
-------   -----------

3.1*      Articles of Incorporation of the Company (Delaware) (See Exhibit
          3.1(a) to Registration Statement on Form SB-2 filed with the
          Commission on April 2, 1996).

3.2*      Certificate of Amendment to Articles of Incorporation of the Company
          (Delaware) (See Exhibit 3.1(b) to Registration Statement on Form SB-2
          filed with the Commission on April 2, 1996).

3.3*      Certificate of Authority (New Jersey) (See Exhibit 3.1(c) to
          Registration Statement on Form SB-2 filed with the Commission on April
          2, 1996).

3.4*      Amended Certificate of Authority (New Jersey) (See Exhibit 3.1(d) to
          Registration Statement on Form SB-2 filed with the Commission on April
          2, 1996).

3.5*      Certificate of Amendment to Articles of Incorporation of the Company
          (Delaware) (See Exhibit 3.1(e) to Registration Statement on Form SB-2
          filed with the Commission on April 2, 1996).

3.6*      By-Laws of the Company (See Exhibit 3.2 to Registration Statement on
          Form SB-2 filed with the Commission on April 2, 1996).

4.1*      Form of Common Stock Certificate (See Exhibit 4.1 to Amendment No. 2
          to Registration Statement on Form SB-2 filed with the Commission on
          July 3, 1996).

4.2*      Form of Public Warrant Agreement between the Company, American Stock
          Transfer & Trust Company and Rickel & Associates, Inc. (See Exhibit
          4.2 to Amendment No. 1 to Registration Statement on Form SB-2 filed
          with the Commission on May 22, 1996).

4.3*      Form of Public Warrant Certificate (See Exhibit 4.3 to Amendment No. 2
          to Registration Statement on Form SB-2 filed with the Commission on
          July 3, 1996).

4.4*      Form of Underwriter's Warrant Agreement (including Warrant
          Certificate) between the Company and Rickel & Associates (See Exhibit
          4.4 to Amendment No. 1 to Registration Statement on Form SB-2 filed
          with the Commission on May 22, 1996).

4.5*      Selected Dealer Agreement among Rickel & Associates, Inc. and certain
          underwriters (See Exhibit 4.5 to Amendment No. 2 to Registration
          Statement on Form SB-2 filed with the Commission on July 3, 1996).

10.1*     Restated Employment Agreement dated as of July 20, 1995 between NUWAVE
          Engineering, Inc. and Gerald Zarin (See Exhibit 10.1 to Registration
          Statement on Form SB-2 filed with the Commission on April 2, 1996).

10.13*    Option Agreement for the Purchase of Common Stock dated as of July 17,
          1995 between NUWAVE Engineering, Inc. and Jeremiah F. O'Brien (See
          Exhibit 10.14 to Registration Statement on Form SB-2 filed with the
          Commission on April 2, 1996).

10.14*    Option Agreement for the Purchase of Common Stock dated as of
          September 11, 1995 between NUWAVE Engineering, Inc. and Robert I. Webb
          (See Exhibit 10.15 to Registration Statement on Form SB-2 filed with
          the Commission on April 2, 1996).

10.15*    Option Agreement for the Purchase of Common Stock dated as of November
          9, 1995 between NUWAVE Engineering, Inc. and Lyle E. Gramley (See
          Exhibit 10.16 to Registration Statement on Form SB-2 filed with the
          Commission on April 2, 1996).


                                       22
<PAGE>


10.16*    Option Agreement for Purchase of Common Stock dated as of March 1,
          1996 between NUWAVE Technologies, Inc. and Jeremiah F. O'Brien (See
          Exhibit 10.17 to Registration Statement on Form SB-2 filed with the
          Commission on April 2, 1996).

10.17*    Option Agreement for Purchase of Common Stock dated as of July 20,
          1995 between NUWAVE Technologies, Inc. and Gerald Zarin (See Exhibit
          10.18 to Registration Statement on Form SB-2 filed with the Commission
          on April 2, 1996).

10.18*    Option Agreement for Purchase of Common Stock dated as of March 1,
          1996 between NUWAVE Technologies, Inc. and Joseph A. Sarubbi (See
          Exhibit 10.19 to Registration Statement on Form SB-2 filed with the
          Commission on April 2, 1996).

10.19*    Option Agreement for Purchase of Common Stock dated as of March 1,
          1996 between NUWAVE Technologies, Inc. and Ed Bohn (See Exhibit 10.20
          to Registration Statement on Form SB-2 filed with the Commission on
          April 2, 1996).

10.23*    Form of Indemnification Agreement between the Company and its
          directors, dated as of January 31, 1996 (See Exhibit 10.24 to
          Registration Statement on Form SB-2 filed with the Commission on April
          2, 1996).

10.34*    Non-Employee Director Stock Option Plan (See Exhibit 10.1 to Current
          Report on Form 8-K filed with the Commission on June 6, 1997).

10.35*    Form of Incentive Stock Option Agreement (See Exhibit 4.3 to
          Registration Statement on Form S-8 filed with the Commission on
          November 12, 1997).

10.36*    Form of Non-Employee Director Stock Option Agreement (See Exhibit 4.4
          to Registration Statement on Form S-8 filed with the Commission on
          November 12, 1997).

10.37*    Form of Non-Qualified Stock Option Agreement covering options not
          granted under either the 1996 Performance Incentive Plan or the
          Non-Employee Director Stock Option Plan (See Exhibit 4.5 to
          Registration Statement on Form S-8 filed with the Commission on
          November 12, 1997).

10.42*    Letter Agreement, dated March 3, 1998, between NuWave Technologies,
          Inc. and Janssen/Meyers Associates, L.P. (See Exhibit 10.41 to Annual
          Report on Form 10-KSB filed with the Commission on March 25, 1998).

10.43*    Warrant, dated March 3, 1998, executed by NuWave Technologies, Inc. in
          favor of Janssen/Meyers Associates, L.P., to purchase up to 400,000
          shares of Common Stock, par value $.01 per share, of NuWave
          Technologies, Inc. (See Exhibit 10.41 to Annual Report on Form 10-KSB
          filed with the Commission on March 25, 1998).

10.44*    Letter Agreement, dated December 3, 1997, between NuWave Technologies,
          Inc. and Lippert/Heilshorn & Associates, Inc. (See Exhibit 10.41 to
          Annual Report on Form 10-KSB filed with the Commission on March 25,
          1998).

10.45*    Option Agreement, dated December 9, 1997, between NuWave Technologies,
          Inc. and Lippert/Heilshorn & Associates, Inc. (See Exhibit 10.41 to
          Annual Report on Form 10-KSB filed with the Commission on March 25,
          1998).

10.46*    First Amendment to Restated Employment Agreement, dated December 9,
          1997, between NuWave Technologies, Inc. and Gerald Zarin (See Exhibit
          10.41 to Annual Report on Form 10-KSB filed with the Commission on
          March 25, 1998).


                                       23
<PAGE>


10.47*    Placement Agency Agreement, dated as of May 11, 1998, between
          Janssen-Meyers Associates, L.P. and NuWave Technologies, Inc. (See
          Exhibit 10.1 to Current Report on Form 8-K filed with the Commission
          on June 11, 1998).

10.49*    Warrant Agreement, dated May 15, 1998, between NuWave Technologies,
          Inc. and American Stock Transfer & Trust Company (See Exhibit 10.3 to
          Current Report on Form 8-K filed with the Commission on June 11,
          1998).

10.50*    Form of Warrant Certificate (See Exhibit 10.4 to Current Report on
          Form 8-K filed with the Commission on June 11, 1998).

10.52*    Form of Placement Agent Warrant Certificate (See Exhibit 10.6 to
          Current Report on Form 8-K filed with the Commission on June 11,
          1998).

10.53*    Form of Subscription Agreement (See Exhibit 10.7 to Current Report on
          Form 8-K filed with the Commission on June 11, 1998).

10.54*    Agreement, dated February 1, 1999, between NuWave Technologies, Inc.
          and Terk Technologies Corp.

10.55**   Option Agreement for Purchase of Common Stock dated as of September
          28, 1999 between NUWAVE Technologies, Inc. and Richard E. Ekstract.

10.56**   Placement Agency Agreement, dated as of February 14, 2000, between
          Janssen-Meyers Associates, L.P. and NUWAVE Technologies, Inc.

10.57**   Warrant Agreement, dated March 13, 2000, between NUWAVE Technologies,
          Inc. and American Stock Transfer & Trust Company.

10.58**   Form of Warrant Certificate.

10.59**   Form of Subscription Agreement.

10.60**   Placement Agent Warrant Agreement, dated March 13, 2000, between
          NUWAVE Technologies, Inc. Janssen-Meyers Associates, L.P.

23.1**    Consent of Richard A. Eisner & Co., L.L.P.

24.1**    Power of Attorney (included on signature page of this Annual Report
          on Form 10-KSB).

27.1**    Financial Data Schedule


*    The exhibits thus designated are incorporated herein by reference as
     exhibits hereto. Following the description of such exhibits is a
     reference to the copy of the exhibit heretofore filed with the
     Commission, to which there have been no amendments or changes.

**   Filed herewith.

(b)       REPORTS ON FORM 8-K:

          During the fourth quarter of 1999, the Company filed a Form 8-K dated
          December 30,1999 to report on the Company's termination of the
          Profutures Special Equities Fund, L.P. financing agreement and to
          announce the proposed financing arrangement with Janssen-Meyers
          Associates, L.P.


                                       24
<PAGE>


                                   SIGNATURES

               Pursuant to the requirements of Section 13 or 15(d) 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.

                                        NUWAVE TECHNOLOGIES, INC.
                                        (Registrant)



Date: March 25, 2000                    By:  /s/ Gerald Zarin
                                           ------------------------------------
                                             Gerald Zarin
                                        Chairman of the Board, President
                                        and Chief Executive Officer

                                POWER OF ATTORNEY

               Each director and/or officer of the Company whose signature
appears below hereby appoints Gerald Zarin as his attorney-in-fact to sign in
his name and behalf, in any and all capacities stated below and to file with the
Commission any and all amendments, including post-effective amendments, to this
Registration Statement.

               Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

SIGNATURE                     TITLE                              DATE

/s/ Gerald Zarin              President, Chief Executive         March 30, 2000
------------------------      Officer and Chairman of
Gerald Zarin                  the Board (Principal
                              Executive Officer)

/s/ Jeremiah F. O'Brien       Chief Financial Officer and        March 30, 2000
------------------------      Secretary (Principal
Jeremiah F. O'Brien           Financial Officer and
                              Accounting Officer)

/s/ Ed Bohn                   Director                           March 30, 2000
------------------------
Ed Bohn

/s/ Richard Ekstract          Director                           March 30, 2000
------------------------
Richard Ekstract

/s/ Lyle Gramley              Director                           March 30, 2000
------------------------
Lyle Gramley

/s/ Joseph A. Sarubbi         Director                           March 30, 2000
------------------------
Joseph A. Sarubbi


                                       25
<PAGE>


                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

EXHIBIT                                                                         PAGE
NUMBER    DESCRIPTION                                                           NUMBER
-------   -----------                                                           ------
<S>       <C>                                                                   <C>
3.1*      Articles of Incorporation of the Company (Delaware) (See Exhibit
          3.1(a) to Registration Statement on Form SB-2 filed with the
          Commission on April 2, 1996).

3.2*      Certificate of Amendment to Articles of Incorporation of the Company
          (Delaware) (See Exhibit 3.1(b) to Registration Statement on Form SB-2
          filed with the Commission on April 2, 1996).

3.3*      Certificate of Authority (New Jersey) (See Exhibit 3.1(c) to
          Registration Statement on Form SB-2 filed with the Commission on April
          2, 1996).

3.4*      Amended Certificate of Authority (New Jersey) (See Exhibit 3.1(d) to
          Registration Statement on Form SB-2 filed with the Commission on April
          2, 1996).

3.5*      Certificate of Amendment to Articles of Incorporation of the Company
          (Delaware) (See Exhibit 3.1(e) to Registration Statement on Form SB-2
          filed with the Commission on April 2, 1996).

3.6*      By-Laws of the Company (See Exhibit 3.2 to Registration Statement on
          Form SB-2 filed with the Commission on April 2, 1996).

4.1*      Form of Common Stock Certificate (See Exhibit 4.1 to Amendment No. 2
          to Registration Statement on Form SB-2 filed with the Commission on
          July 3, 1996).

4.2*      Form of Public Warrant Agreement between the Company, American Stock
          Transfer & Trust Company and Rickel & Associates, Inc. (See Exhibit
          4.2 to Amendment No. 1 to Registration Statement on Form SB-2 filed
          with the Commission on May 22, 1996).

4.3*      Form of Public Warrant Certificate (See Exhibit 4.3 to Amendment No. 2
          to Registration Statement on Form SB-2 filed with the Commission on
          July 3, 1996).

4.4*      Form of Underwriter's Warrant Agreement (including Warrant
          Certificate) between the Company and Rickel & Associates (See Exhibit
          4.4 to Amendment No. 1 to Registration Statement on Form SB-2 filed
          with the Commission on May 22, 1996).

4.5*      Selected Dealer Agreement among Rickel & Associates, Inc. and certain
          underwriters (See Exhibit 4.5 to Amendment No. 2 to Registration
          Statement on Form SB-2 filed with the Commission on July 3, 1996).

10.1*     Restated Employment Agreement dated as of July 20, 1995 between NUWAVE
          Engineering, Inc. and Gerald Zarin (See Exhibit 10.1 to Registration
          Statement on Form SB-2 filed with the Commission on April 2, 1996).
</TABLE>

                                       26
<PAGE>

<TABLE>
<CAPTION>

EXHIBIT                                                                         PAGE
NUMBER    DESCRIPTION                                                           NUMBER
-------   -----------                                                           ------
<S>       <C>                                                                   <C>
10.13*    Option Agreement for the Purchase of Common Stock dated as of July 17,
          1995 between NUWAVE Engineering, Inc. and Jeremiah F. O'Brien (See
          Exhibit 10.14 to Registration Statement on Form SB-2 filed with the
          Commission on April 2, 1996).

10.14*    Option Agreement for the Purchase of Common Stock dated as of
          September 11, 1995 between NUWAVE Engineering, Inc. and Robert I. Webb
          (See Exhibit 10.15 to Registration Statement on Form SB-2 filed with
          the Commission on April 2, 1996).

10.15*    Option Agreement for the Purchase of Common Stock dated as of November
          9, 1995 between NUWAVE Engineering, Inc. and Lyle E. Gramley (See
          Exhibit 10.16 to Registration Statement on Form SB-2 filed with the
          Commission on April 2, 1996).

10.16*    Option Agreement for Purchase of Common Stock dated as of March 1,
          1996 between NUWAVE Technologies, Inc. and Jeremiah F. O'Brien (See
          Exhibit 10.17 to Registration Statement on Form SB-2 filed with the
          Commission on April 2, 1996).

10.17*    Option Agreement for Purchase of Common Stock dated as of July 20,
          1995 between NUWAVE Technologies, Inc. and Gerald Zarin (See Exhibit
          10.18 to Registration Statement on Form SB-2 filed with the Commission
          on April 2, 1996).

10.18*    Option Agreement for Purchase of Common Stock dated as of March 1,
          1996 between NUWAVE Technologies, Inc. and Joseph A. Sarubbi (See
          Exhibit 10.19 to Registration Statement on Form SB-2 filed with the
          Commission on April 2, 1996).

10.19*    Option Agreement for Purchase of Common Stock dated as of March 1,
          1996 between NUWAVE Technologies, Inc. and Ed Bohn (See Exhibit 10.20
          to Registration Statement on Form SB-2 filed with the Commission on
          April 2, 1996).

10.22*    Loan and Stock Purchase Agreement dated as of December 15, 1995
          between NUWAVE Engineering, Inc. and Helen Burgess (See Exhibit 10.23
          to Registration Statement on Form SB-2 filed with the Commission on
          April 2, 1996).

10.23*    Form of Indemnification Agreement between the Company and its
          directors, dated as of January 31, 1996 (See Exhibit 10.24 to
          Registration Statement on Form SB-2 filed with the Commission on April
          2, 1996).

10.34*    Non-Employee Director Stock Option Plan (See Exhibit 10.1 to Current
          Report on Form 8-K filed with the Commission on June 6, 1997).

10.35*    Form of Incentive Stock Option Agreement (See Exhibit 4.3 to
          Registration Statement on Form S-8 filed with the Commission on
          November 12, 1997).

10.36*    Form of Non-Employee Director Stock Option Agreement (See Exhibit 4.4
          to Registration Statement on Form S-8 filed with the Commission on
          November 12, 1997).

</TABLE>

                                       27
<PAGE>

<TABLE>
<CAPTION>

EXHIBIT                                                                         PAGE
NUMBER    DESCRIPTION                                                           NUMBER
-------   -----------                                                           ------
<S>       <C>                                                                   <C>
10.37*    Form of Non-Qualified Stock Option Agreement covering options not
          granted under either the 1996 Performance Incentive Plan or the
          Non-Employee Director Stock Option Plan (See Exhibit 4.5 to
          Registration Statement on Form S-8 filed with the Commission on
          November 12, 1997).

10.42*    Letter Agreement, dated March 3, 1998, between NuWave Technologies,
          Inc. and Janssen/Meyers Associates, L.P. (See Exhibit 10.42 to Annual
          Report on Form 10-KSB filed with the Commission on March 25, 1998).

10.43*    Warrant, dated March 3, 1998, executed by NuWave Technologies, Inc. in
          favor of Janssen/Meyers Associates, L.P., to purchase up to 400,000
          shares of Common Stock, par value $.01 per share, of NuWave
          Technologies, Inc. (See Exhibit 10.43 to Annual Report on Form 10-KSB
          filed with the Commission on March 25, 1998).

10.44*    Letter Agreement, dated December 3, 1997, between NuWave Technologies,
          Inc. and Lippert/Heilshorn & Associates, Inc. (See Exhibit 10.44 to
          Annual Report on Form 10-KSB filed with the Commission on March 25,
          1998).

10.45*    Option Agreement, dated December 9, 1997, between NuWave Technologies,
          Inc. and Lippert/Heilshorn & Associates, Inc. (See Exhibit 10.45 to
          Annual Report on Form 10-KSB filed with the Commission on March 25,
          1998).

10.46*    First Amendment to Restated Employment Agreement, dated December 9,
          1997, between NuWave Technologies, Inc. and Gerald Zarin (See Exhibit
          10.46 to Annual Report on Form 10-KSB filed with the Commission on
          March 25, 1998).

10.47*    Placement Agency Agreement, dated as of May 11, 1998, between
          Janssen-Meyers Associates, L.P. and NuWave Technologies, Inc. (See
          Exhibit 10.1 to Current Report on Form 8-K filed with the Commission
          on June 11, 1998).

10.49*    Warrant Agreement, dated May 15, 1998, between NuWave Technologies,
          Inc. and American Stock Transfer & Trust Company (See Exhibit 10.3 to
          Current Report on Form 8-K filed with the Commission on June 11,
          1998).

10.50*    Form of Warrant Certificate (See Exhibit 10.4 to Current Report on
          Form 8-K filed with the Commission on June 11, 1998).

10.52*    Form of Placement Agent Warrant Certificate (See Exhibit 10.6 to
          Current Report on Form 8-K filed with the Commission on June 11,
          1998).

10.53*    Form of Subscription Agreement (See Exhibit 10.7 to Current Report on
          Form 8-K filed with the Commission on June 11, 1998).

10.54*    Agreement, dated February 1, 1999, between NuWave Technologies, Inc.
          and Terk Technologies Corp.

</TABLE>

                                       28
<PAGE>

<TABLE>
<CAPTION>

EXHIBIT                                                                         PAGE
NUMBER    DESCRIPTION                                                           NUMBER
-------   -----------                                                           ------
<S>       <C>                                                                   <C>

10.55*    Option Agreement for Purchase of Common Stock dated as of September   A-1
          28, 1999 between NUWAVE Technologies, Inc. and Richard E. Ekstract.

10.56**   Placement Agency Agreement, dated as of February 14, 2000, between    A-2
          Janssen-Meyers Associates, L.P. and NUWAVE Technologies, Inc.

10.57**   Warrant Agreement, dated March 13, 2000, between NUWAVE Technologies, A-3
          Inc. and American Stock Transfer & Trust Company.

10.58**   Form of Warrant Certificate.                                          A-4

10.59**   Form of Subscription Agreement.                                       A-5

10.60**   Form of Placement Agent Warrant Certificate.                          A-6

23.1**    Consent of Richard A. Eisner & Co.

24.1**    Power of Attorney (included on signature page of this Annual Report   A-7
          on Form 10-KSB).

27.1**    Financial Data Schedule                                               A-8


</TABLE>

*    The exhibits thus designated are incorporated herein by reference as
     exhibits hereto. Following the description of such exhibits is a reference
     to the copy of the exhibit heretofore filed with the Commission, to which
     there have been no amendments or changes.

**   Filed herewith.


                                       29


<PAGE>


                           NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                         INDEX TO FINANCIAL STATEMENTS

                                                                         PAGE(S)
                                                                         -------


Reports of Independent Accountants .................................. F-2 - F-3

Balance Sheet as of December 31, 1999 ...............................      F-4

Statements of Operations for the years ended December 31, 1998 and
     December 31, 1999 and for the cumulative period from July 17, 1995
     (inception) to December 31, 1999 ...............................      F-5

Statement of Stockholders' Equity for cumulative period from
     July 17, 1995 (inception) to December 31, 1999 .................      F-6

Statements of Cash Flows for the years ended December 31, 1998 and
     and December 31, 1999 and for the cumulative period from
     July 17, 1995 (inception) to December 31, 1999 .................      F-7

Notes to Financial Statements ....................................... F-8 - F-20


                                      F-1
<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholders
NUWAVE Technologies, Inc.
Fairfield, New Jersey


We have audited the accompanying balance sheet of NUWAVE Technologies, Inc. (a
development stage enterprise) as of December 31, 1999, and the related
statements of operations, stockholders' equity and cash flows for each of the
years in the two-year period ended December 31, 1999 and the amounts for the
period from January 1, 1997 through December 31, 1999 included in the period
from July 17, 1995 (inception) to December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred above present fairly, in all
material respects, the financial position of NUWAVE Technologies, Inc. as of
December 31, 1999, and the results of its operations and its cash flows for each
of the years in the two-year period ended December 31, 1999 and the amounts for
the period from January 1, 1997 through December 31, 1999 included in the
cumulative amounts for the period from July 17, 1995 (inception) to December 31,
1999, in conformity with generally accepted accounting principles.



Richard A. Eisner & Company, LLP

Florham Park, New Jersey
March 1, 2000
With respect to Note 10
March 17, 2000


                                      F-2
<PAGE>


PRICEWATERHOUSECOOPERS
--------------------------------------------------------------------------------
                                                     PRICEWATERHOUSECOOPERS LLP
                 REPORT OF INDEPENDENT ACCOUNTANTS   1301 Avenue of the Americas
                                                     New York NY 10019-6013
                                                     Telephone (212)259 1000
                                                     Facsimile (212)259 1301

To the Board of Directors and Stockholders of
NUWAVE Technologies, Inc.


     We have audited the statement of operations, cash flows of NUWAVE
Technologies, Inc. (a development stage enterprise) for the period from July 17,
1995 (inception) to December 31, 1996 included in the cumulative amounts for the
period from July 17, 1995 (inception) to December 31, 1999 (not presented
separately herein), and the related statement of stockholders' equity for the
period from July 17, 1995 (inception) to December 31, 1995 and the year ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts or disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of NUWAVE
Technologies, Inc. for the period from July 17, 1995 (inception) to December 31,
1996 included in the cumulative amounts for the period from July 17, 1995
(inception) to December 31, 1999, in conformity with generally accepted
accounting principles.



                                        PricewaterhouseCoopers LLP

New York, New York
March 26, 1997


                                      F-3
<PAGE>


                            NUWAVE TECHNOLOGIES, INC
                        (A Development Stage Enterprise)

                                  BALANCE SHEET

                    ASSETS
                                                                    December 31,
                                                                        1999
                                                                    ------------
Current assets:

       Cash and cash equivalents                                    $ 1,969,292

       Inventory                                                         40,889

       Prepaid expenses and other current assets                         96,985

                       Total current assets                           2,107,166

Property and equipment                                                  100,666

Other assets                                                             64,131

Deferred tax benefits                                                   908,350
                                                                    ------------
                       Total assets                                 $ 3,180,313
                                                                    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

       Accounts payable and accrued liabilities                       $ 274,555

                       Total liabilities                                274,555

Commitments and contingencies

Stockholders' equity:

       Series A Convertible Preferred Stock, noncumulative,
       $.01 par value; authorized 400,000 shares; issued and
       outstanding - none

       Preferred stock, $.01 par value; authorized 1,000,000
       shares; issued and oustanding - (such preferences and
       rights to be designated by the Board of Directors)

       Common stock, $.01 par value; authorized 20,000,000
       shares; as of  December 31, 1999; issued and
       outstanding 8,468,889 shares.                                     84,689

       Additional paid in capital                                    18,699,268

       Deficit accumulated during the development stage             (15,878,199)
                                                                    ------------
                       Total stockholders' equity                     2,905,758

                       Total liabilties and stockholders' equity    $ 3,180,313
                                                                    ============


   The accompanying notes are an integral part of these financial statements


                                      F-4
<PAGE>


<TABLE>
<CAPTION>

                            NUWAVE TECHNOLOGIES, INC
                        (A DEVELOPMENT STAGE ENTERPRISE)

                            STATEMENTS OF OPERATIONS

                                                                                    Cumulative from
                                                                                     July 17, 1995
                                                  Year               Year             (inception)
                                                  ended              ended                 to
                                              December 31,       December 31,         December 31,
                                                  1998               1999                 1999
                                              --------------    --------------     ------------------
<S>                                           <C>                <C>                <C>
Net Sales                                     $     12,545       $     16,553       $     39,373
Cost of Sales                                       (4,906)            (2,200)           (11,320)
                                              --------------    --------------      --------------
                                                     7,639             14,353             28,053
                                              --------------    --------------      --------------
Operating expenses:

Research and development expenses             $ (1,572,364)      $   (938,745)      $ (6,319,909)

General and administrative expenses             (2,646,409)        (2,503,812)        (9,712,452)
                                              --------------    --------------      --------------
                                                (4,218,773)        (3,442,557)       (16,032,361)
                                              --------------    --------------      --------------
             Loss from operations               (4,211,134)        (3,428,204)       (16,004,308)
                                              --------------    --------------      --------------
Other income (expense):

             Interest income                       212,863            174,086            742,065

             Interest expense                                          (5,709)          (337,251)

             Rave settlement costs                                   (338,895)          (338,895)
                                              --------------    --------------      --------------
                                                   212,863           (170,518)            65,919
                                              --------------    --------------      --------------
Net loss before benefit for imcome taxes
             and extraordinary item             (3,998,271)        (3,598,722)       (15,938,389)

             Benefit  for income taxes                                908,350            908,350
                                              --------------    --------------      --------------
Net loss before extraordinary item              (3,998,271)        (2,690,372)       (15,030,039)

             Extraordinary item                                                         (848,160)
                                              --------------    --------------      --------------
             Net loss                         $ (3,998,271)      $ (2,690,372)      $(15,878,199)
                                              ==============    ==============      ==============
Basic and diluted loss per share:

             Weighted average number of
             common shares outstanding           7,259,896         8,419,644
                                              ==============    ==============

             Basic and diluted loss per share      $ (0.55)          $ (0.32)
                                              ==============    ==============
</TABLE>


   The accompanying notes are an integral part of these financial statements


                                      F-5
<PAGE>


                            NUWAVE TECHNOLOGIES, INC
                        (A DEVELOPMENT STAGE ENTERPRISE)
                       STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                             SERIES A                                                       DEFICIT
                                            CONVERTIBLE                                                   ACCUMULATED
                                          PREFERRED STOCK         COMMON STOCK      ADDITIONAL  DEFERRED   DURING THE
                                      ---------------------- ----------------------  PAID-IN    EQUITY    DEVELOPMENT
                                        SHARES      AMOUNT    SHARES      AMOUNT     CAPITAL     COSTS       STAGE        TOTAL
                                      ---------- ----------- ----------- ---------- ----------- -------- -------------- -----------
<S>                                    <C>       <C>         <C>         <C>        <C>         <C>      <C>            <C>
Common shares issued in connec-
   tion with the formation of the
   company............................                         2,060,000   $ 20,600                                       $ 20,600

Common shares returned and retired
   without consideration..............                          (125,000)    (1,250)    $ 1,250

Sale of Series A convertible pre-
   ferred stock for cash of $1.50 per
   share..............................   600,000     $ 6,000                            894,000                            900,000

Common shares issued with initial
   bridge notes payable for cash of
   $1.50 per share....................                            70,000        700     104,300                            105,000

Costs incurred in connection with
   equity financing...................                                                          $(38,400)                  (38,400)

Net loss for the period from July
   17, 1995 (inception) to December
   31, 1995...........................                                                                       $ (910,591)  (910,591)
                                      ---------- ----------- ----------- ---------- ----------- -------- -------------- -----------

Balance at December 31, 1995..........   600,000       6,000   2,005,000     20,050     999,550  (38,400)      (910,591)    76,609

Common shares issued in connec- tion
   with the exchange of the initial
   bridge notes for 14 bridge
   units..............................                            70,000        700     139,300                           140,000

Common shares issued with bridge
   notes payable for cash of $2.00
   per share..........................                           330,000      3,300     656,700                           660,000

Costs incurred in connection with
   the private placement offering
   relating to the equity financing...                                                 (134,000)$ 13,400                 (120,600)

Common shares issued  in connec-
   tion with the initial public offering
   for cash of $5.00 per share.......                          2,300,000     23,000  11,477,000                        11,500,000

2,530,000 common stock purchase
   warrants issued in connection with
   the initial public offering for cash
   of $0.10 per warrant................                                                 253,000                           253,000

220,000 common stock purchase warrants
   and 220,000 redeemable warrants
   issued to the underwriter in
   connection with the initial public
   offering for cash of $10.00........                                                       10                                10

Conversion of 600,000 preferred
   shares into 600,000 common
   shares in connection with the
   initial public offering............  (600,000)     (6,000)    600,000      6,000                                            -
</TABLE>


   The accompanying notes are an integral part of these financial statements


                                      F-6
<PAGE>


                            NUWAVE TECHNOLOGIES, INC
                        (A DEVELOPMENT STAGE ENTERPRISE)
                       STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                             SERIES A                                                       DEFICIT
                                            CONVERTIBLE                                                   ACCUMULATED
                                          PREFERRED STOCK         COMMON STOCK      ADDITIONAL  DEFERRED   DURING THE
                                      ---------------------- ----------------------  PAID-IN    EQUITY    DEVELOPMENT
                                        SHARES      AMOUNT    SHARES      AMOUNT     CAPITAL     COSTS       STAGE        TOTAL
                                      ---------- ----------- ----------- ---------- ----------- -------- -------------- -----------
<S>                                    <C>       <C>         <C>         <C>        <C>         <C>      <C>            <C>
Costs incurred in connection with
   the initial public offering........                                               (2,214,582)  25,000                (2,189,582)

Common shares issued in connection
   with the exercise of 20,000 stock
   options for cash of  $1.50 per
   share............................                              20,000        200      29,800                             30,000

Net loss for the year ended
   December 31, 1996..................                                                                       (4,430,649)(4,430,649)
                                      ---------- ----------- ----------- ---------- ----------- -------- -------------- -----------

Balance at December 31, 1996.......               $   -        5,325,000   $ 53,250 $11,206,778 $  -        $(5,341,240)$5,918,788

Common shares issued in connection
   with the exercise of 23,334 stock
   options for cash of  $2.00 per
   share............................                              23,334        233      46,435                             46,668

Net loss for the year ended
   December 31, 1997..................                                                                       (3,848,316)(3,848,316)
                                      ---------- ----------- ----------- ---------- ----------- -------- -------------- -----------

Balance at December 31, 1997.......       -       $   -        5,348,334   $ 53,483 $11,253,213 $  -        $(9,189,556)$2,117,140

Common shares issued in connection
   with a private placement for cash
   of $3.95 per share with 50,000
   warrants and 50,000 supplemental
   warrants.............                                         253,485      2,535     997,465                          1,000,000

Costs incurred in connection with
   private placement...................                                                (140,652)                          (140,652)

Common shares issued in connection
   with the exercise of 11,666 stock
   options for cash of  $2.00 per
   share..............................                            11,666        117      23,215                             23,332

Warrants to purchase common stock
   issued in connection with a
   consulting agreement...............                                                  217,040                            217,040

2,742,904 Common shares issued with
   2,057,207 class A warrants to
   purchase common shares in
   connection with a private placement
   for a cash price
   ranging from $2.50 to
   $3.06 per share....................                         2,742,904     27,429   7,253,117                          7,280,546

18.2 Unit Warrants issued in
   connection with private placement                                                          6                                  6

Costs incurred in connection with
   private placement...................                                              (1,244,990)                        (1,244,990)

Net loss for the year ended
   December 31, 1998..................                                                                       (3,998,271)(3,998,271)
                                      ---------- ----------- ----------- ---------- ----------- -------- -------------- -----------
Balance at December 31, 1998.......       -           -        8,356,389     83,564  18,358,414     -       (13,187,827) 5,254,151
</TABLE>


   The accompanying notes are an integral part of these financial statements


                                      F-6
<PAGE>


                            NUWAVE TECHNOLOGIES, INC
                        (A DEVELOPMENT STAGE ENTERPRISE)
                       STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                             SERIES A                                                       DEFICIT
                                            CONVERTIBLE                                                   ACCUMULATED
                                          PREFERRED STOCK         COMMON STOCK      ADDITIONAL  DEFERRED   DURING THE
                                      ---------------------- ----------------------  PAID-IN    EQUITY    DEVELOPMENT
                                        SHARES      AMOUNT    SHARES      AMOUNT     CAPITAL     COSTS       STAGE        TOTAL
                                      ---------- ----------- ----------- ---------- ----------- -------- -------------- -----------
<S>                                    <C>       <C>         <C>         <C>        <C>         <C>      <C>            <C>
Issuance of common stock in connection
   with an arbitration settlement                                100,000       1,000    145,200                            146,200

Issuance of options in connection with
   an arbitration settlement                                                             17,695                             17,695

Common shares issued in connection
   with the exercise of 12,500 stock
   options for cash of  $1.462 per
   share..............................                            12,500        125      18,150                             18,275

Costs incurred in connection with
   private placement..................                                                  (44,638)                           (44,638)

Warrants to purchase common stock
   issued in connection with a
   consulting agreements..............                                                  204,447                            204,447

Net loss for the year ended
   December 31, 1999..................                                                                       (2,690,372)(2,690,372)
                                      ---------- ----------- ----------- ---------- ----------- -------- -------------- -----------

   Balance at December 31, 1999            -       $   -       8,468,889   $ 84,689 $18,699,268  $  -      $(15,878,199)$2,905,758
                                      ========== =========== =========== ========== =========== ======== ============== ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements


                                      F-6
<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        ( A Development Stage Enterprise)

                            STATEMENTS OF CASH FLOWS
                Increase (decrease) in cash and cash equivalents
<TABLE>
<CAPTION>
                                                                                       Cumulative
                                                                                          from
                                                                                      July 17, 1995
                                                         Year           Year          (inception)
                                                        ended          ended              to
                                                       December 31,  December 31,     December 31,
                                                         1998           1999              1999
                                                    --------------  -------------    --------------
<S>                                                  <C>            <C>               <C>
Cash flows from operating activities:
      Net loss                                       $ (3,998,271)  $ (2,690,372)     $ (15,878,199)

      Adjustments to reconcile net loss to
      net cash used in operating activities:

      Extraordinary item                                                                    848,160

      Depreciation expense                                 52,690         52,026            166,785

      Amortization of unamortized debt discount                                             168,778

      Amortization of deferred financing costs                                               89,062

      (Increase) Decrease in inventory                     10,745          8,184            (40,889)

      (Increase) Decrease in prepaid expenses
      and other current assets                            (15,730)        29,749            (96,985)

      (Increase) Decrease in other assets                 (80,079)        98,148            (64,131)

      (Increase) in Deferred tax benefits                               (908,350)          (908,350)

      Increase in accounts payable and
      accrued liabilities                                 107,578         13,354            274,555

      Issuance of warrants in connection with
      consultant agreements                               217,040        204,447            421,487

      Issuance of common stock in connection with
      an arbitration settlement                                          146,200            146,200

      Issuance of options in connection with
      an arbitration settlement                                           17,695             17,695

      Issuance of common stock for services rendered                                         20,600
                                                    --------------  -------------    --------------
                  Net cash used in operating
                  activities                           (3,706,027)    (3,028,919)       (14,835,232)
                                                    --------------  -------------    --------------
Cash flows from investing activities:

      Purchase of property and equipment                  (60,247)       (41,663)          (267,451)
                                                    --------------  -------------    --------------
                  Net cash used in investing
                  activities                              (60,247)       (41,663)          (267,451)
                                                    --------------  -------------    --------------
Cash flows from financing activities:

      Proceeds from sales of Series A Convertible

      Preferred Stock                                                                       900,000

      Proceeds from issuance of initial bridge units                                        350,000

      Proceeds from issuance of bridge units, net of

      exchange of initial bridge notes                                                    1,650,000
</TABLE>


   The accompanying notes are an integral part of these financial statements


                                      F-7
<PAGE>


<TABLE>
<CAPTION>
                                                                                       Cumulative
                                                                                          from
                                                                                      July 17, 1995
                                                         Year           Year          (inception)
                                                        ended          ended              to
                                                       December 31,  December 31,     December 31,
                                                         1998           1999              1999
                                                    --------------  -------------    --------------
<S>                                                  <C>            <C>               <C>
      Proceeds from IPO                                                                  11,753,010

      Proceeds from equity offering -
      February 6, 1998                                  1,000,000                         1,000,000

      Proceeds from equity offering May 19 to
      June 6, 1998                                      7,280,546                         7,280,546

      Repayment of notes issued in connection with
      initial bridge notes                                                              (2,000,000)

      Costs incurred for equity offerings and
      warrants                                         (1,385,636)       (44,638)        (3,778,856)

      Issuance of common stock in connection with
      exercise of stock options                            23,332         18,275            118,275

      Release of restricted cash                          145,403         76,078               -

      Deferred financing costs                                                             (201,000)
                                                    --------------  -------------    --------------
      Net cash provided (used in) by financing
      activities                                        7,063,645         49,715         17,071,975
                                                    --------------  -------------    --------------
      Net increase (decrease) in cash and cash
      equivalents                                       3,297,371     (3,020,867)         1,969,292

Cash and cash equivalents at the beginning of
the period                                              1,692,788      4,990,159              -
                                                    --------------  -------------    --------------
      Cash and cash equivalents at the end of
      the period                                       $4,990,159    $ 1,969,292       $  1,969,292
                                                    ==============  =============    ==============
Supplemental disclosure of cash flow information:

      Interest paid during the period                                $     5,709       $     73,702
                                                                    =============    ==============
Supplemental disclosure of non cash investing and
      financing activities:

Deferred financing costs incurred in connection with the
exchange of the initial bridge notes for 14 bridge units                               $    140,000
                                                                                     ==============
Deferred equity costs charged to additional paid in
      capital in connection with the PPO                                               $     13,400
                                                                                     ==============
Deferred financing costs charged to additional
      paid-in capital in connection with the IPO                                       $     25,000
                                                                                     ==============
600,000 Series A Convertible Preferred Stock converted
      into Common Stock                                                                $     6,000
                                                                                     ==============
</TABLE>


   The accompanying notes are an integral part of these financial statements


                                      F-7
<PAGE>


1.        ORGANIZATION AND BUSINESS

          NUWAVE Technologies, Inc. (the "Company"), a development stage
enterprise, was incorporated in Delaware on July 17, 1995. It has had only a
limited operating history and has had only limited sales of its products to
date. Since its inception in July 1995, the Company has been engaged primarily
in the research and development of proprietary video enhancement technology
designed to significantly enhance video output devices with clearer sharper
details and more vibrant colors when viewed on the display screen. This
technology is known as the NUWAVE Video Processor ("NVP") technology. The
Company intends to license this technology or have it manufactured in the form
of Application Specific Integrated Circuits ("ASIC") through third parties and
to directly market products which use this technology to improve picture quality
in set-top boxes, televisions, VCR's, DVD's, camcorders and other video devices.
In addition to the NVP technology the Company has recently completed development
of proprietary software technology with the ability to digitally enhance both
pictures and videos on PC's while the user is surfing the Internet or working
offline. The Company conducts its operations primarily in the United States.

          There is no assurance that the Company's research and development and
marketing efforts will be successful, that the Company will ever have
commercially accepted products, or that the Company will achieve significant
sales of any such products. The Company has incurred net losses and negative
cash flows from operations since its inception. In addition, the Company
operates in an environment of rapid change in technology and is dependent upon
the services of its employees and its consultants. If the Company is unable to
successfully market its NUWAVE Video Processor and related products it is
unlikely that the Company could continue its business.

2.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

          The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amount of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenue and expenses during the reporting period. The
most significant estimates relate to the valuation allowance in connection with
deferred tax assets. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

          Cash and cash equivalents include all cash balances, money market
instruments, and other highly liquid investments with insignificant interest
rate risk and original maturities of three months or less. At December 31, 1999,
$1,969,292 of money market accounts and commercial checking accounts, the fair
value of which approximate cost, are included in cash and cash equivalents.

INVENTORY

          Inventory is stated at the lower of cost (first-in, first-out method)
or market.


                                      F-8
<PAGE>


PROPERTY AND EQUIPMENT

          Property and equipment are recorded at cost less accumulated
depreciation. The cost of maintenance and repairs is charged against results of
operations as incurred.

          Depreciation is charged against results of operations by an
accelerated method over the estimated useful lives of the related assets.

          Sales and retirements of depreciable property are recorded by removing
the related cost and accumulated depreciation from the accounts. Gains or losses
on sales and retirements of property and equipment are reflected in the results
of operations.

RESEARCH AND DEVELOPMENT EXPENSES

          Expenditures for research and development are expensed as incurred.

ADVERTISING EXPENSES

          The Company expenses advertising costs which consist primarily of
promotional items and print media. Advertising and promotional expenses charged
to operations for the cumulative period from July 17, 1995 (inception) to
December 31, 1999 amounted to $570,983 and for the years ended December 31, 1999
and December 31, 1998 amounted to $33,083 and $116,776, respectively.

CONCENTRATION OF CREDIT RISK

          The Company's financial instruments that are exposed to concentrations
of credit risk consist of cash and cash equivalents. The Company places its cash
and cash equivalents in high quality institutions with three types of accounts,
1) an operating account where the cash balance is in excess of the FDIC
insurance limit, 2) a money market fund which invests only in U.S. Government
securities and 3) certificates of deposit.

PER SHARE DATA

          The basic per share data has been computed on the basis of the loss
for the period divided by the historic weighted average number of shares of
common stock outstanding. All potentially dilutive securities have been excluded
from the computations since they would be antidilutive (see note 5).

INCOME TAXES

          The Company recognizes deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined on the basis of the differences between the tax basis
of assets and liabilities and their respective financial reporting amounts
("temporary differences") at enacted tax rates in effect for the years in which
the differences are expected to reverse.


                                      F-9
<PAGE>


3.        PROPERTY AND EQUIPMENT

          Property and equipment consist of the following:

                                                USEFUL LIVES IN   DECEMBER 31,
                                                     YEARS            1999
                                                ---------------- --------------
Furniture and Fixtures........................        10          $    5,523
Computers.....................................         5             170,918
Equipment.....................................         5              91,010
                                                                  ----------
                                                                  $  267,451
   Less, accumulated depreciation.............                       166,785
                                                                  ----------
                                                                  $  100,666
                                                                  ==========

4.        ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

          Accounts payable and accrued liabilities consist of the following:

                                                                  DECEMBER 31,
                                                                      1999
                                                                  ------------
Accounts payable.....................................              $ 202,281
Legal and accounting fees............................                 72,274
                                                                   ---------
                                                                   $ 274,555
                                                                   =========

5.        CAPITAL TRANSACTIONS

COMMON STOCK

          On July 17, 1995, the Company issued 2,060,000 shares of common stock
for a fair market value of $.01 per share as consideration for services rendered
in connection with the formation of the Company, as follows:

o    1,090,000 shares to Prime Technologies, Inc. ("Prime"). Rave Engineering
     Corp. ("Rave") and two members of the Company's Board of Directors have
     ownership interests in Prime of 22%, 22% and 16%, respectively;

o    450,000 shares to the Company's President;

o    450,000 shares to three entities affiliated with an individual who was a
     member of the Company's Board of Directors (125,000 of such shares were
     subsequently returned and retired without consideration); and

o    70,000 shares to individuals who were either employees of, or consultants
     to, the Company.

          On April 30, 1996, the board of directors and the Company's
stockholders authorized the increase in the shares of common stock to 20,000,000
common shares, par value $.01 per share.

          In July 1996 the Company completed an IPO in which it sold 2,300,000
common shares and 2,530,000 Redeemable Common Stock Purchase Warrants (the
"Warrants") to purchase an additional 2,530,000 common shares. The Warrants
became exercisable at $5.50 per share on July 3, 1997, and have an expiration
date of July 3, 2001. The Warrants are redeemable by the Company at any time on
not less than 30 days prior written notice to the holders of the Warrants,
provided the average closing bid quotation of the Common Stock as reported on
the NASDAQ Stock Market, if traded thereon, or if not traded thereon, the


                                      F-10
<PAGE>


average closing sale price of the Common Stock if listed on a national
securities exchange (or other reporting system that provides last sale prices),
has been at least 150% of the then current exercise price of the Warrants
(currently $6.225) for a period of 20 consecutive trading days ending on the
third day prior to the date on which the Company gives notice of redemption. The
Warrants will be exercisable until the close of business on the day immediately
preceding the date fixed for redemption. The Underwriter will receive from the
Company a Warrant Solicitation fee of five percent (5%) of the aggregate
exercise price of the Warrants if the market price of the Common Stock is
greater than the exercise price of the Warrants on the date of exercise.

          Also in connection with the IPO, the Company issued to the
Underwriter, for an aggregate purchase price of $10.00, warrants to purchase
220,000 Common Stock and Redeemable Warrants to purchase 220,000 Redeemable
Warrants (the "Underwriter's Warrants"). The Underwriter's Warrants are at
$8.25. The warrants expire July, 2001.

          On February 6, 1998, the Company entered into a two-year agreement
with an investor whereby the Company issued 253,485 shares of the Company's
common stock, par value $0.01 per share ("Common Stock"), for an aggregate
purchase price of $1,000,000. In addition, subject to certain conditions, the
agreement provided that, from time to time over the life of the agreement the
Company could put shares of the Company's Common Stock for a minimum of $250,000
and a maximum of $750,000. The agreement required that a total aggregate value
of Puts over the life of the agreement must be a minimum of $1,000,000. In
connection with the agreement the Company issued to the investor warrants to
purchase an aggregate of 50,000 shares of Common Stock at a purchase price of
$6.41 per share and additional warrants (the "supplemental warrants") to
purchase an aggregate of 50,000 shares of Common Stock at a purchase price of
$3.95 per share. On December 20, 1999, the agreement, along with any remaining
obligations of either party was terminated by mutual consent. In connection with
the termination the investor returned the 100,000 warrants and the warrants were
cancelled.

          On March 3, 1998, the Company entered into a consulting agreement with
an organization (the "Consultant") whereby the Consultant will perform
consulting services relating to corporate finance and other financial services
matters. As compensation for such services, the Company paid the consultant
$5,000 per month during an initial term ending September 3, 1999 subject to
automatic one-year renewal terms unless either the Company or the Consultant
gave written notice of termination at least 30 days prior to the end of the
initial or subsequent terms. On November 2, 1999 the consulting agreement was
extended to May 31, 2001.

          In connection with such consultant agreement, the Company issued to
the Consultant warrants to purchase 400,000 shares of common stock. The warrants
have an exercise price of $4 per share, became exercisable September 3, 1999,
and expire on March 3, 2003. The fair value of these warrants was estimated at
$386,805 and has been charged to operations over the life of the initial term of
the consulting agreement, $169,765 and $217,040 was charged against operations
for the years ended December 31, 1999 and 1998, respectively.

          On May 11, 1998 the Company entered into a placement agency agreement
with the Consultant to act as the Company's placement agent in a private equity
placement whereby the Company issued to certain accredited investors, as defined
under Regulation D as promulgated under the Securities Act of 1933, as amended
(the "Securities Act"), 2,742,904 shares of the Company's Common Stock and
2,057,207 Class A Redeemable Warrants ("Class A Warrants") between May 19, 1998
and June 6, 1998 for an aggregate purchase price of $7,280,546. Each Class A
Warrant entitles the holder thereof to purchase one share of Common Stock at an


                                      F-11
<PAGE>


exercise price per share of $3.24, subject to adjustment upon the occurrence of
certain events to prevent dilution, at any time during the period commencing
from June 6, 1998 and expiring on May 11, 2003. The Class A Warrants are subject
to redemption by the Company at $.01 per Warrant 12 months after the effective
date of a registration statement covering the Warrants on not less than 30 days
prior written notice to the holders of the Warrants, provided the average
closing bid price of the Common Stock has been at least 250% of the then current
exercise price of the Warrants for a period of thirty consecutive trading days
ending on the day prior to the day on which the Company gives notice of
redemption. The Class A Warrants will be exercisable until the close of business
on the day immediately preceding the date fixed for redemption.

          The Consultant, for acting as placement agent, received a commission
of 10% ($728,055) of the gross proceeds from the sale of the Units, as well as a
3% non-accountable expense allowance ($218,416) and reimbursement of other
costs, including legal expenses relating to the offering ($77,171). In addition,
the Consultant, as part of its compensation, received warrants exercisable until
May 11, 2003 to purchase up to (i) 688,084 shares of the Company's Common Stock
at a price per share ranging from $2.50 to $3.06 and (ii) warrants to purchase
up to 516,068 shares of the Company's common stock at a price per share of
$3.24.

          As a result of the above capital transactions and in accordance with
the provisions of the Warrant Agreement dated as of July 3, 1996, between the
Company, Rickel & Associates, Inc. and American Stock Transfer & Trust Company,
adjustments have been made to the exercise price (the "Warrant Price") for the
warrants issued pursuant to such Agreement (the Public Warrants") and to the
number of shares of Common Stock issuable on exercise of the Public Warrants.
The Warrant Price has been reduced from $5.50 to $4.15. In addition, for every
share of Common Stock the warrant holders were entitled to prior to the dilutive
transactions (2,530,000 shares), the warrant holders are now entitled to 1.325
shares (3,352,250 shares). Also, pursuant to the Warrant Agreement, the Company
can redeem the Public Warrants in the event that the average closing price of
the Company's Common Stock is at least 150% of the then current Warrant Price of
the Public Warrants for a period of 20 consecutive trading days: consequently,
the average closing price now required is $6.225.

          On May 28, 1999, in accordance with the terms of Rave Settlement
Agreement, the Company issued 100,000 shares of its Common Stock and options to
purchase 50,000 shares of the Company's Common Stock at an exercise price of
$1.46. Operations has been charged $163,895, the estimated fair value of the
Common Stock and options on May, 28 1999.



PREFERRED STOCK

          During July and August 1995, the Company sold 600,000 shares of Series
A Convertible Preferred Stock for $900,000 to several investors, one of whom was
the purchaser of the initial bridge notes. The preferred shares converted into
common shares on a one-for-one basis, at the IPO date.

          On April 30, 1996, the board of directors and the Company's
stockholders authorized an additional 1,000,000 shares of preferred stock, $.01
par value, which may have such preferences and rights as the board of directors
may designate.


                                      F-12
<PAGE>


BRIDGE UNITS

          On December 15, 1995, the Company issued to a Series A Convertible
Preferred stockholder 14 initial bridge units, each unit consisting of the
Company's unsecured initial bridge notes in the principal amount of $25,000 with
a stated interest rate of 10% per annum and 5,000 shares of the Company's common
stock with a fair market value of $1.50 per share for proceeds of $350,000.
After giving effect to the amortization of the initial bridge notes debt
discount, the effective interest rate of the initial bridge notes was 33% per
annum.

          On March 1, 1996, based upon an offer from the Company, the initial
bridge noteholder elected to exchange the 14 initial bridge units for 14 bridge
units.

          On March 1 and March 27, 1996, the Company sold and exchanged to
accredited investors an accumulative total of 80 units (the "bridge units")
respectively, in its PPO. Each bridge unit consisted of (i) a senior
subordinated non-negotiable promissory note ("Bridge Notes") in the principal
amount of $25,000, with a stated interest rate of 10% per annum, and (ii) 5,000
shares of common stock with a fair market value of $2.00 per share. After giving
effect to the amortization of the Bridge Notes debt discount, the effective
interest rate of the Bridge Notes was 49%.

          On July 9, 1996, the aggregate principal amount of the Bridge Notes of
$2,000,000 and accrued interest of $73,652 was repaid upon the consummation, and
out of the proceeds, of the IPO.

STOCK OPTIONS

          The Company accounts for stock options in accordance with Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB
No. 25"). Under APB No. 25, generally, no compensation expense is recognized in
the financial statements in connection with the awarding of stock option grants
to employees provided that, as of the grant date, all terms associated with the
award are fixed and the quoted market price of the Company's stock, as of the
grant date, is not more than the amount an employee must pay to acquire the
stock as defined; however, to the extent that stock options are granted to non
employees, for goods or services, the fair value of these options is included in
operating results as an expense.


                                      F-13
<PAGE>


          A summary of the Company's stock option activity under its plans, and
related information, is as follows:

<TABLE>
<CAPTION>


                                                                                  WEIGHTED
                                          NUMBER OF                               AVERAGE       NUMBER OF
                                           COMMON          EXERCISE PRICE         EXERCISE       SHARES
                                           SHARES         RANGE PER SHARE          PRICE       EXERCISABLE
                                           ------         ----------------         -----       -----------
<S>                                        <C>            <C>                      <C>          <C>
Outstanding at December 31, 1996.......    362,000        $ 1.50 - $ 5.75          $ 1.72       311,524
                                                                                                =======
Granted................................    192,500        $ 5.78 - $ 6.88          $ 6.54
Exercised..............................    (23,334)           $ 2.00               $ 2.00
Canceled...............................    (25,000)       $ 6.38 - $ 6.81          $ 6.64
                                         ---------
Outstanding at December 31, 1997.......    506,166        $ 1.50 - $ 6.75          $ 2.92       401,000
                                                                                                =======
Granted................................    733,000        $ 1.50 - $ 3.25          $ 3.13
Exercised..............................    (11,666)           $ 2.00               $ 2.00
Canceled...............................    (13,000)       $ 3.00 - $ 6.75          $ 5.23
                                         ---------
Outstanding at December 31, 1998.......  1,214,500        $ 1.50 - $ 6.88          $ 3.18       633,503
                                                                                                =======
Granted                                    205,000         $1.97 - $2.50           $ 2.03
Cancelled                                  (25,000)        $3.00 - $3.25           $ 3.20
                                         ---------
Outstanding at December 31, 1999.......  1,394,500         $1.50 - $6.88           $ 3.02     1,199,338
                                         =========                                            =========
</TABLE>


          Disclosures required by Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123"), including pro
forma operating results had the Company prepared its financial statements in
accordance with the fair value based method of accounting for stock-based
compensation are shown below.

          Exercise prices and weighted-average contractual lives for stock
options outstanding as of December 31, 1999 are as follows:

<TABLE>
<CAPTION>

                              OPTIONS OUTSTANDING           OPTIONS EXERCISABLE
                    ------------------------------------  ---------------------------
                                   WEIGHTED
                                   AVERAGE      WEIGHTED                   WEIGHTED
                                  REMAINING     AVERAGE                    AVERAGE
    RANGE OF         NUMBER      CONTRACTUAL    EXERCISE       NUMBER      EXERCISE
EXERCISE PRICES   OUTSTANDING       LIFE         PRICE      EXERCISABLE     PRICE
---------------   -----------    -----------  ------------- -----------   ---------
<S>                  <C>            <C>          <C>          <C>            <C>
$ 1.50 - $ 2.50      570,000        4.48         $1.71        390,004        $1.61
$ 3.00 - $3.25       653,000        3.40         $3.25        653,000        $3.25
$ 5.87 - $ 6.88      171,500        3.08         $6.50        156,334        $6.49

</TABLE>

          The following table summarizes the pro forma operating results of the
Company had compensation costs for the stock options granted been determined in
accordance with the fair- value-based method of accounting for stock based
compensation as prescribed by SFAS No. 123. Since certain option grants awarded
during 1999 and 1998 vest over several years and additional awards are expected
to be issued in the future, the pro forma results noted below are not likely to
be representative of the effects on future years of the application of the
fair-value-based method.

<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                   ------------------- ------------------
                                                    DECEMBER 31, 1998  DECEMBER 31, 1999
<S>                                                  <C>                 <C>
Pro forma net loss................................   $  (4,285,280)      $ (2,986,914)
Pro forma basic and diluted loss per share........   $        (.59)      $       (.35)

</TABLE>

For the purpose of the above pro forma information, the fair value of these
options was estimated at the date of grant using the Black-Scholes option
pricing model. The weighted-average fair value of the options granted during


                                      F-14
<PAGE>


1999 and 1998 was $1.52 and $.85, respectively. The following weighted-average
assumptions were used in computing the fair value of option grants for 1999 and
1998: weighted-average risk-free interest rates ranged from 5.50% to 6.39% for
1999 and 4.26% to 5.60% for 1998; zero dividend yields for both years;
volatility of the Company's Common Stock of 60% for 1999 and 30% for 1998; and
an expected life of the options of ten years for 1999 and three years for 1998,
respectively.

Performance Incentive Stock Option Plan

          On January 31, 1996, the Company adopted its 1996 Performance
Incentive Stock Option Plan (the "Plan"). Under the Plan, incentive and
nonqualified stock options, stock appreciation rights and restricted stock may
be granted to key employees and consultants (the "Participants") by certain
disinterested directors of the Board of Directors. Any incentive option granted
under the Plan will have an exercise price of not less than 100% of the fair
market value of the shares on the date on which such option is granted. With
respect to an incentive option granted to a Participant who owns more than 10%
of the total combined voting stock of the Company or of any parent or subsidiary
of the Company, the exercise price for such option must be at least 110% of the
fair market value of the shares subject to the option on the date on which the
option is granted. A nonqualified option granted under the Plan (i.e., an option
to purchase the common stock that does not meet the Internal Revenue Code's
requirements for incentive options) must have an exercise price of at least the
par value of the stock. Stock appreciation rights may be granted in conjunction
with the grant of an incentive or nonqualified option under the Plan or
independently of any such stock option. The directors determine the vesting of
the options under the Plan at the date of grant. A maximum of 1,205,000 options
can be awarded under the Plan (as amended May 26, 1998). As of December 31, 1996
no options had been issued. During 1997, 172,500 options were granted and 25,000
options were canceled under the plan. During 1998, 605,000 options were granted
under the plan. During 1999, 145,000 options were granted under the plan.

Non-Employee Director Stock Option Plan

          On November 25, 1996, the Company established a Non-Employee Director
Stock Option Plan (the "Director's Plan"). The Director's Plan provides that
each member of the Board of Directors (an "Eligible Director") who otherwise (1)
is not currently an employee of the Company, or (2) is not a former employee
still receiving compensation for prior services (other than benefits under a
tax-qualified pension plan) shall be eligible for the grant of stock options
under the Director's Plan. Each Eligible Director at the time of his election to
the Board of Directors, shall be granted an option to purchase 3,000 shares of
the Company's common stock at an exercise price equal to closing price of such
common stock at close of business at the date of such grant, such option to vest
immediately and to expire five years from the date of such grant.

          Beginning with the annual meeting of the stockholders of the Company
held on May 29, 1997 and provided that a sufficient number of shares remain
available under the Director's Plan, each year immediately following the date of
the annual meeting of the Company there automatically will be granted to each
Eligible Director who is then serving on the Board an option to purchase 5,000
shares of the Company's Common Stock. The first 1,000 options vest immediately,
the remainder vest equally over the next four years from the date of grant and
are exercisable at the closing price of such shares of common stock at the date
of grant. Such options expire five years from the date of vesting.


                                      F-15
<PAGE>


          On November 25, 1996, four Eligible Directors were each granted 3,000
stock options at an exercise price of $5.75 per share. On May 29, 1997, four
Eligible Directors were each granted 5,000 stock options at an exercise price of
$6.75 per share. On May 26, 1998, one eligible director was granted 53,000
options at an excise price of $3.25 per share and the three remaining Eligible
Directors were each granted 25,000 stock options at $3.25 per share. The maximum
number of shares of Common Stock with respect to which options may be granted
under the Director's Plan (as amended May 26, 1998) is 235,000 shares. During
1998, 13,000 options previously granted under the plan were cancelled. During
1999, 60,000 options were granted, 45,000 options at $2.56 per share and 15,000
options at 2.06 per share, under the plan. As of December 31, 1999, there are
48,000 stock options reserved for issuance in the Director's Plan.

6.        RAVE SETTLEMENT

          On November 13, 1998, pursuant to the provisions of an Exclusive
Worldwide Licensing Agreement the "License Agreement" and a Development
Agreement, both dated July 21,1995 the Company commenced an arbitration
proceeding against Rave and its principal Randy Burnworth seeking (a) damages
for the injuries to the Company caused by Rave's and Burnworth's breaches of
their contractual and common law obligations to the Company, including but not
limited to those referred to above, and (b) a declaration that, among other
things, Rave is not entitled to any royalties or other payments with respect to
the Company's technology and that the Company continues to have exclusive
license rights to the "Licensed Product" and "Licensed Process" under the
License Agreement.

          On May 28, 1999, a Settlement Agreement was reached, the Arbitration
was resolved and the License Agreement was terminated. As a result of the
Settlement Agreement, the Company continues to maintain exclusive worldwide
license rights to make, market and license its video enhancement technology free
of any claims of ownership or inventorship by Rave; in return, Rave and certain
individuals associated with Rave received $175,000 in cash as well as 100,000
shares of the Company's Common Stock and options to purchase 50,000 shares of
the Company's Common Stock at an exercise price of $1.46.

7.        INCOME TAXES

          There is no benefit for federal income taxes for the year ended
December 31, 1998, since the Company has incurred operating losses. In addition,
the Company has fully reserved the net potential future tax benefits resulting
from its temporary differences and net operating loss carryforwards.

          The tax effect of temporary differences consists of the following:

                                                                    DECEMBER 31,
                                                                        1999
                                                                    ------------
                 Deferred tax assets:
                      Start up costs..........................       $1,260,061
                      Property and equipment..................           19,954
                      Net operating loss carryforward.........        4,975,964
                                                                    ------------
                                                                      6,255,979
                      Valuation allowance.....................       (5,347,629)
                                                                    ------------
                                                                    $   908,350
                                                                    ============


                                      F-16
<PAGE>


          In accordance with New Jersey statues, the Company has entered into an
agreement to sell certain New Jersey net operating losses and research and
development credits accordingly, a state income tax benefit and deferred tax
asset has been recognized in 1999. There was no provision for income taxes for
the year ended December 31, 1998.

          During the years ended December 31,1999 and 1998, the benefit for
deferred taxes before change in valuation allowances aggregated $1,053,041 and
$1,437,000, respectively. The change in valuation allowances for the years ended
December 31, 1999 and 1998 were $144,691 and $1,437,000, respectively.

          The difference between the statutory federal income tax rate and the
effective rate for the Company's income tax benefit for each of the years ended
December 31, 1999 and 1998, respectively, is summarized as follows:



                                                          1999         1998
                                                          ----         ----

Statutory federal income tax rate                         34.0%        34.0%

State income tax benefit, net of federal tax effect       16.7%

Increase in valuation allowance                         (25.0)%      (29.0)%

Miscellaneous                                            (0.4)%       (5.0)%
                                                     ----------    ---------
Effective income tax rate                                 25.3%         0.0%
                                                     ----------    ---------


          As of December 31, 1999, the Company has unused net operating loss
carryforwards of $12,460,000 available for federal income tax purposes. The
unused net operating loss carryforwards expire in various years from 2010 to
2019. The Company, in the future, may be subject to limitations on the use of
its NOL's as provided under Section 382 of the Internal Revenue Code.

8.        COMMITMENTS AND CONTINGENCIES

CONSULTING AND REPRESENTATIVE AGREEMENTS

          On June 1, 1998, the Company contracted with Innovation Partners
International, Inc. ("IPI") to provide sales management and engineering services
for the Company in Japan and other designated countries, for the purpose of
securing the Company's product sales to the Asian Original Equipment
Manufacturers market. In return for such services the Company agreed to pay IPI
a fee of $6,000 per month plus normal business expenses. At December 31, 1999, a
total of $133,085 had been paid under the terms of the contract, representing
consulting fees and out of the pocket expenses, which have been charged to
operations.

          On July 22, 1998, the Company contracted with David Kwong
("consultant") to sell and license products in China and to maintain a sales
office for the Company in China. The contract may be terminated, by either
party, any time subsequent to September 30, 1999 by giving the other party at


                                      F-17
<PAGE>


least 90 days' notice of termination. In return for such services the Company
agreed to pay the consultant a monetary commission and grant certain stock
options upon attaining determined sales levels. In addition the consultant will
receive a monthly consulting. The Company further agreed to pay the costs to
establish and maintain an office in China within the limits of an approved
budget. As of December 31, 1999 a total of $222,316 had been paid under the
terms of the contract, representing consulting fees of $106,500, office expenses
of $90,492 and travel costs of $31,448. No commissions had been earned and no
stock options had been granted through December 31, 1999 pursuant to this
agreement.

          On November 11, 1999 the Company contracted with Wolfe Axelrod
Associates (WAA) to provide various Investor Relations and Public Relations
services for the Company. The contract is for an initial period of twelve months
and provides for automatic renewal for an additional one-year period unless
terminated by NUWAVE's written notification at least 30 days prior to the end of
the 12 month term provided however that NUWAVE may terminate this agreement upon
30 days written notice within the initial seven months of the contract. In
return for such services the Company granted to WAA 300,000 options for the
purchase of the Company's common stock at $2.00 per share (market price on date
of grant). The 300,000 options vest as follows: 125,000 on July 14, 2000;
100,000 on November 15, 2000 provided that the contract remained in force beyond
July 14, 2000 and 75,000 on November 15, 2000 provided that the contract remains
in force on that date. The estimated fair value of the options at date of issue
was $342,286 and is being amortized over twelve months. For the year ended
December 31, 1999 the Company recognized an expense of $34,682 relating to this
agreement. In addition the Company agreed to pay WAA a fee of $10,000 per month
plus normal business expenses. As of December 31, 1999 $30,162 had been paid
under the terms of the contract.

LEASES

          The Company leases shared office space on a month-to-month basis for a
monthly rental of $6,600. Rent expense incurred for the cumulative period from
July 17, 1995 (inception) to December 31, 1999 amounted to $273,918; and for the
years ended December 31, 1999 and December 31, 1998 amounted to $77,471 and
$74,098, respectively.

9.        EMPLOYMENT AGREEMENTS

          Mr. Zarin entered into an employment agreement with the Company, dated
as of July 20, 1995, pursuant to which he agreed to serve as the Company's
President and Chief Executive Officer through December 31, 2000. In December
1997, the term of the agreement was extended for two additional years to
December 31, 2002. The agreement provided for an initial salary of $90,000 per
year and increased to $120,000 on March 15, 1996. Mr. Zarin is also entitled to
an annual bonus equal to (i) 30% of his base compensation if the Company's net
profits before taxes are equal to projections to be approved by the Company's
Board of Directors, (ii) 60% of his base compensation if the Company's net
profits before taxes are equal to 110% of such projections, and (iii) 100% of
his base compensation if the Company's net profits before taxes are equal to
120% of such projections. Mr. Zarin can terminate the agreement upon 180 days
notice. The Company can terminate the agreement for good cause at any time. If
the Company terminates the agreement other than for good cause, or otherwise
materially breaches the agreement, Mr. Zarin will receive a single payment equal
to the remaining payments he would have been entitled to receive during the
unexpired portion of the agreement. Pursuant to the employment agreement
provides Mr. Zarin was granted an option to purchase 200,000 shares of Common
Stock at $1.50 per share. The option expires December 31, 2000 and terminates if
Mr. Zarin voluntarily leaves the Company or the employment agreement is
terminated by the Company for good cause. In connection with services rendered


                                      F-18
<PAGE>


in establishing the Company and creating its business plan and projections, Mr.
Zarin received 450,000 shares of the Company's Common Stock valued at $.01 per
share.

          Mr. Webb entered into an employment agreement with the Company, dated
as of September 11, 1995, pursuant to which Mr. Webb was appointed Vice
President-Marketing of the Company. In March 1997, his title was changed to Vice
President-Marketing/Technical Development in order to more accurately reflect
his duties. The employment agreement continued until March 31, 1996 and
thereafter has been continuing for successive 3-month periods. Mr. Webb's
initial salary was $5,000 per month and was increased to $108,000 per year as of
August 14, 1996. In connection with his employment agreement, Mr. Webb received
options to purchase 70,000 shares of the Company's Common Stock at $1.50 per
share.

          Mr. Legato entered into an employment agreement with the Company,
dated as of February 11, 1997, pursuant to which Mr. Legato was appointed Vice
President-Sales of the Company. The employment agreement continued until August
1997 and thereafter has been continuing for successive 3-month periods. Mr.
Legato's initial salary was $150,000 per year and has not been increased. In
connection with his employment agreement, Mr. Legato received options to
purchase 60,000 shares of the Company's Common Stock at $6.875 per share.

          In connection with services performed by Mr. O'Brien, on July 17,
1995, he received 5,000 shares of the Company's Common Stock valued at $.01 per
share and has been granted options to purchase 25,000 shares of the Company's
Common Stock at $1.50 per share and 5,000 shares of the Company's Common Stock
at $2.00 per share.

          On September 4, 1998 the Company entered into an employment agreement
with its Vice President - Engineering. As part of the agreement, the Company
granted to this individual, under the Company's Plan, options to purchase 50,000
shares of common stock at $1.50 per share, the underlying value of the Company's
common stock at October 1, 1998, the date of grant: 10,000 options vested on
March 16, 1999; 13,334 options vest on March 16, 2000; 13,333 options vest on
March 16, 2001; 13,333 options vest on March 16, 2002.


10.       EXTRAORDINARY ITEM

          The terms of the Bridge Notes of the Company contained early repayment
provisions in the event the Company completed an IPO. As a result of the
Company's completing an IPO in July 1996, the Bridge Notes were repaid and the
unamortized financing costs of $251,938 and the unamortized debt discount of
$596,222 as of that date, totaling $848,160, were written off and recorded as an
extraordinary item for the year ended December 31, 1996.


11.       SUBSEQUENT EVENTS

          On February 9, 2000 the Company held a Special Meeting of Stockholders
to (i) approve the issuance of shares of the Company's common stock and related
warrants aggregating a minimum of $3,000,000 and a maximum of $6,000,000 in a
private offering, to fulfill NASDAQ Stock Market Rule 4310 (C) (25) (H), and
(ii) approve a proposed amendment to the Company's Certificate of Incorporation
to increase the authorized shares of common stock by 20,000,000 shares to
40,000,000 shares. Both matters were approved by a majority of the stockholders.


                                      F-19
<PAGE>


          On February 14, 2000 the Company entered into a placement agency
agreement with Janssen-Meyers Associates, L.P. ("JMA") to act as the Company's
placement agent in a private equity placement whereby the Company issued to
certain accredited investors, as defined under Regulation D as promulgated under
the Securities Act of 1933, as amended (the " Securities Act"), 2,088,608 shares
of the Company's Common Stock and 1,044,304 Redeemable Common Stock Purchase
Warrants ("Common Stock Purchase Warrants") on March 14, 2000 for an aggregate
purchase price of $6,600,000. Each Common Stock Purchase Warrant entitles the
holder thereof to purchase one share of Common Stock at an exercise price per
share of $3.95, subject to adjustment upon the occurrence of certain events to
prevent dilution, at any time during the period commencing from March 14, 2000
and expiring on March 14, 2003. The Common Stock Purchase Warrants are subject
to redemption by the Company at $.01 per Warrant 12 months after the effective
date of a registration statement covering the Warrants on not less than 30 days
prior written notice to the holders of the Warrants, provided the average
closing bid price of the Common Stock has been at least 250% of the then current
exercise price of the Warrants for a period of thirty consecutive trading days
ending within five days prior to the date on which the Company gives notice of
redemption. The Common Stock Purchase Warrants will be exercisable until 5:00
P.M. on March 14, 2003 New York time.


          Janssen-Meyers Associates for acting as placement agent received a
commission of 10% ($660,000) of the gross proceeds from the sale of the Units,
as well as a 3% non-accountable expense allowance ($198,000) and reimbursement
of other costs, including legal expenses relating to the offering ($54,399). In
addition, JMA received as part of its compensation, warrants exercisable until
March 14, 2003 to purchase up to 522,152 shares of the Company's Common Stock at
a price per share of $3.95.


                                      F-20