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

                                   FORM 10-KSB/A

                               ------------------
                                   (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, 1997

               [ ] 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

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 preceding 12
months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days. Yes [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]



<PAGE>

State issuer's revenues for its most recent fiscal year: $10,275

Aggregate market value of the voting stock held by non-affiliates based on the
last sale price for such stock at March 12, 1998: $23,507,750

The number of shares of Common Stock outstanding as of March 12, 1998: 5,601,819


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




















                                       ii

<PAGE>



ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)      EXHIBITS

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

1.1*     Form of Underwriting Agreement (See Exhibit 1.1 to Registration
         Statement on Form SB-2 filed with the Commission on April 2, 1996).
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).
5.1*     Opinion of counsel to the Company concerning the legality of the
         securities offered in the Company's Initial Public Offering (See
         Exhibit 5.1 to 

                                       

<PAGE>

         Amendment No. 2 to Registration Statement on Form SB-2 filed with the
         Commission on July 3, 1996).
5.2*     Opinion of Greenberg Taurig Hoffman Lipoff Rosen & Quentel, P.A. (See
         Exhibit 5.1 to Registration Statement on Form S-8 filed with the
         Commission on November 12, 1997).
5.3*     Opinion of counsel to the Company concerning the legality of the
         securities being offered (See Exhibit 5 to Registration Statement on
         Form S-3 filed with the Commission on March 8, 1998).
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).
10.2*    Employment Agreement dated as of September 11, 1995 between NUWAVE
         Engineering, Inc. and Robert I. Webb (See Exhibit 10.2 to Registration
         Statement on Form SB-2 filed with the Commission on April 2, 1996).
10.3*    Consulting Agreement dated as of July 18, 1995 between NUWAVE
         Engineering, Inc. and Corporate Builders, L.P. (See Exhibit 10.3 to
         Registration Statement on Form SB-2 filed with the Commission on April
         2, 1996).
10.4*    Letter Agreement dated as of November 22, 1995 between NUWAVE
         Technologies, Inc. and Rickel & Associates, Inc. (See Exhibit 10.5 to
         Registration Statement on Form SB-2 filed with the Commission on April
         2, 1996).
10.5*    1996 Performance Incentive Plan (See Exhibit 10.6 to Registration
         Statement on Form SB-2 filed with the Commission on April 2, 1996).
10.6*    Exclusive Worldwide License Agreement dated as of July 21, 1995 between
         NUWAVE Engineering, Inc. and Rave Engineering Corporation (See Exhibit
         10.7 to Registration Statement on Form SB-2 filed with the Commission
         on April 2, 1996).
10.7*    Development Agreement dated as of July 21, 1995 between NUWAVE
         Engineering, Inc. and Rave Engineering Corporation (See Exhibit 10.8 to
         Registration Statement on Form SB-2 filed with the Commission on April
         2, 1996).
10.8*    Exclusive Agency Agreement dated as of July 21, 1995 between NUWAVE
         Engineering, Inc. and Prime Technology, Inc. (See Exhibit 10.9 to
         Registration Statement on Form SB-2 filed with the Commission on April
         2, 1996).
10.9*    Assignment dated as of July 21, 1995 between NUWAVE Engineering, Inc.,
         Prime Technology, Inc. and Rave Engineering Corporation (See Exhibit
         10.10 to Registration Statement on Form SB-2 filed with the Commission
         on April 2, 1996). 
10.10*   Shareholders' Agreement dated as of July 21, 1995 (See Exhibit 10.11 to
         Registration Statement on Form SB-2 filed with the Commission on April
         2, 1996). 

                                        2

<PAGE>

10.11*   Finder's Agreement dated as of September 1, 1995 among NUWAVE
         Technologies, Inc., Prime Technology, Inc. and Harvest Technologies,
         Inc. (See Exhibit 10.12 to Registration Statement on Form SB-2 filed
         with the Commission on April 2, 1996).
10.12*   Finder's Agreement dated as of January 16, 1996 among NUWAVE
         Engineering, Inc., Prime Technology, Inc. and Jay Vahl (See Exhibit
         10.13 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).
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).
10.20*   Shareholder's Agreement dated as of July 17, 1995 between NUWAVE
         Engineering, Inc. and its Common Stockholders (See Exhibit 10.21 to
         Registration Statement on Form SB-2 filed with the Commission on April
         2, 1996).
10.21*   Form of Subscription Agreement between NUWAVE Engineering, Inc. and its
         Series A Preferred Stockholders through August 1995 (See Exhibit 10.22
         to Registration Statement on Form SB-2 filed with the Commission on
         April 2, 1996).

                                        3

<PAGE>

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).
10.24*   Form of Note entered into between the Company and the Initial Bridge
         Investor relating to the Initial Bridge Financing (See Exhibit 10.25 to
         Registration Statement on Form SB-2 filed with the Commission on April
         2, 1996).
10.25*   Form of 10% Promissory Note delivered by the Company in connection with
         the private placement of 80 Units (the "Private Placement Bridge"),
         each unit consisting of an unsecured 10% non-negotiable promissory
         note in the amount of $25,000 and 5,000 shares of Common Stock of the
         Company, during February and March of 1996 (See Exhibit 10.26 to
         Registration Statement on Form SB-2 filed with the Commission on April
         2, 1996).
10.26*   Form of Securities Registration Rights Agreement entered into between
         the Company and the purchasers of Common Stock in the Private Placement
         (See Exhibit 10.27 to Registration Statement on Form SB-2 filed with
         the Commission on April 2, 1996).
10.27*   Form of Registration Rights Agreement entered into between Company and
         the purchasers of its Series A Preferred Stock (See Exhibit 10.28 to
         Registration Statement on Form SB-2 filed with the Commission on April
         2, 1996).
10.28*   Form of Lock-up letter between the Company and certain holders of its
         Common Stock (See Exhibit 10.29 to Registration Statement on Form SB-2
         filed with the Commission on April 2, 1996).
10.29*   Lease Letter Agreement between the Company and Simon, Sarver &
         Rosenberg dated July 28, 1995 (See Exhibit 10.30 to Registration
         Statement on Form SB-2 filed with the Commission on April 2, 1996).
10.30*   Guaranty executed by the Company as of October 13, 1995 in
         connection with Standard Industrial Net Lease between Collins Tech RB
         and Rave Engineering, Inc. (See Exhibit 10.31 to Registration Statement
         on Form SB-2 filed with the Commission on April 2, 1996). 
10.31*   Amendment to Employment Agreement dated as of September 11, 1995
         between NUWAVE Engineering, Inc. and Robert I. Webb dated June 3, 1996
         (See Exhibit 10.32 to Amendment No. 2 to Registration Statement on Form
         SB-2 filed with the Commission on July 3, 1996). 
10.32*   Financial Consulting Agreement between Prime Technology, Inc. and
         Ernest Chu dated January 15, 1995 (See Exhibit 10.33 to Amendment No. 2
         to Registration Statement on Form SB-2 filed with the Commission on
         July 3, 1996).

                                        4

<PAGE>

10.33*   Letter Agreement concerning the Gaming Technology among the Company,
         Rave Engineering Corp. and Prime Technology, Inc. dated March 24, 1997
         (See Exhibit 10.34 to Annual Report filed with the Commission on April
         30, 1997).
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).
10.38*   Registration Rights Agreement, dated February 6, 1998, between NuWave
         Technologies, Inc. and ProFutures Special Equities Fund, L.P. (See
         Exhibit 4.1 to Current Report on Form 8-K filed with the Commission on
         February 18, 1998).
10.39*   Private Securities Subscription Agreement, dated as of February 6,
         1998, between NuWave Technologies, Inc. and ProFutures Special Equities
         Fund, L.P. (See Exhibit 10.1 to Current Report on Form 8-K filed with
         the Commission on February 18, 1998).
10.40*   Warrant, dated February 6, 1998, executed by NuWave Technologies, Inc.
         in favor of ProFutures Special Equities Fund, L.P., to purchase up to
         50,000 shares of Common Stock, par value $.01 per share, of NuWave
         Technologies, Inc. (See Exhibit 10.2 to Current Report on Form 8-K
         filed with the Commission on February 18, 1998).

   
10.41*   Component Purchase Agreement, dated December 31, 1997, between Thomson
         Consumer Electronics, Inc. and NuWave Technologies, Inc. (See 
         Exhibit 10.41 to Annual Report on Form 10-KSB filed with the Commission
         on March 25, 1998).
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.
10.45**  Option Agreement, dated December 9, 1997, between NuWave Technologies,
         Inc. and Lippert/Heilshorn & Associates, Inc.
10.46**  First Amendment to Restated Employment Agreement, dated December 9,
         1997, between NuWave Technologies, Inc. and Gerald Zarin.
    

16.1*    Letter from Coopers & Lybrand L.L.P. to the Commission dated February
         16, 1998 (See Exhibit 16.1 to Current Report on Form 8-K filed with the
         Commission on February 18, 1998).

   
23.1*    Consent of Coopers & Lybrand L.L.P. (See Exhibit 23.1 to Annual
         Report on Form 10-KSB filed with the Commission on March 25, 1998).
23.2**   Consent of Coopers & Lybrand L.L.P.
27.1*    Financial Date Schedule (See Exhibit 27.1 to Annual Report on 
         Form 10-KSB filed with the Commission on March 25, 1998).
    

                                        5

<PAGE>

*   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:

              None.












                                       6

<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 amended report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                      NUWAVE TECHNOLOGIES, INC.
                                       (Registrant)



Date: April 2, 1998                   By: /s/ Gerald Zarin
                                          ------------------------------------
                                          Gerald Zarin
                                          Chairman of the Board, President and
                                          Chief Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this amended 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    April 2, 1998
----------------------------
Gerald Zarin                     Officer and Chairman of
                                 the Board (Principal
                                 Executive Officer)


/s/ Jeremiah F. O'Brien          Chief Financial Officer and   April 2, 1998
----------------------------
Jeremiah F. O'Brien              Secretary (Principal
                                 Financial Officer and
                                 Accounting Officer)


/s/ Ed Bohn                      Director                      April 2, 1998
----------------------------
Ed Bohn


/s/ Lyle Gramley                 Director                      April 2, 1998
----------------------------
Lyle Gramley


/s/ David Kwong                  Director                      April 2, 1998
----------------------------
David Kwong


/s/ Joseph A. Sarubbi            Director                      April 2, 1998
-----------------------------
Joseph A. Sarubbi

                                        7

<PAGE>

                                  EXHIBIT INDEX

Exhibit                                                                  Page
Number   Description                                                     Number
------   -----------                                                     ------

1.1*     Form of Underwriting Agreement (See Exhibit 1.1 to
         Registration Statement on Form SB-2 filed with the Commission
         on April 2, 1996).

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

                                       8

<PAGE>

         Registration Statement on Form SB-2 filed with the Commission
         on July 3, 1996).

5.1*     Opinion of counsel to the Company concerning the legality of
         the securities offered in the Company's Initial Public
         Offering (See Exhibit 5.1 to Amendment No. 2 to Registration
         Statement on Form SB-2 filed with the Commission on July 3,
         1996).

5.2*     Opinion of Greenberg Taurig Hoffman Lipoff Rosen & Quentel,
         P.A. (See Exhibit 5.1 to Registration Statement on Form S-8
         filed with the Commission on November 12, 1997).

5.3*     Opinion of counsel to the Company concerning the legality of
         the securities being offered (See Exhibit 5 to Registration
         Statement on Form S-3 filed with the Commission on March 8,
         1998).

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).

10.2*    Employment Agreement dated as of September 11, 1995 between
         NUWAVE Engineering, Inc. and Robert I. Webb (See Exhibit 10.2
         to Registration Statement on Form SB-2 filed with the
         Commission on April 2, 1996).

10.3*    Consulting Agreement dated as of July 18, 1995 between NUWAVE
         Engineering, Inc. and Corporate Builders, L.P. (See Exhibit
         10.3 to Registration Statement on Form SB-2 filed with the
         Commission on April 2, 1996).

10.4*    Letter Agreement dated as of November 22, 1995 between NUWAVE
         Technologies, Inc. and Rickel & Associates, Inc. (See Exhibit
         10.5 to Registration Statement on Form SB-2 filed with the
         Commission on April 2, 1996).

10.5*    1996 Performance Incentive Plan (See Exhibit 10.6 to
         Registration Statement on Form SB-2 filed with the Commission
         on April 2, 1996).

10.6*    Exclusive Worldwide License Agreement dated as of July 21,
         1995 between NUWAVE Engineering, Inc. and Rave Engineering
         Corporation (See Exhibit 10.7 to Registration Statement on
         Form SB-2 filed with the Commission on April 2, 1996).

10.7*    Development Agreement dated as of July 21, 1995 between
         NUWAVE Engineering, Inc. and Rave Engineering Corporation
         (See Exhibit 10.8 to Registration Statement on Form SB-2
         filed with the Commission on April 2, 1996).

10.8*    Exclusive Agency Agreement dated as of July 21, 1995 between
         NUWAVE Engineering, Inc. and Prime Technology, Inc. (See
         Exhibit 10.9 to Registration Statement on Form SB-2 filed
         with the Commission on April 2, 1996).


                                        9

<PAGE>

10.9*    Assignment dated as of July 21, 1995 between NUWAVE
         Engineering, Inc., Prime Technology, Inc. and Rave
         Engineering Corporation (See Exhibit 10.10 to Registration
         Statement on Form SB-2 filed with the Commission on April 2,
         1996).

10.10*   Shareholders' Agreement dated as of July 21, 1995 (See
         Exhibit 10.11 to Registration Statement on Form SB-2 filed
         with the Commission on April 2, 1996).

10.11*   Finder's Agreement dated as of September 1, 1995 among NUWAVE
         Technologies, Inc., Prime Technology, Inc. and Harvest
         Technologies, Inc. (See Exhibit 10.12 to Registration
         Statement on Form SB-2 filed with the Commission on April 2,
         1996).

10.12*   Finder's Agreement dated as of January 16, 1996 among NUWAVE
         Engineering, Inc., Prime Technology, Inc. and Jay Vahl (See
         Exhibit 10.13 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).

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

<PAGE>

10.20*   Shareholder's Agreement dated as of July 17, 1995 between
         NUWAVE Engineering, Inc. and its Common Stockholders (See
         Exhibit 10.21 to Registration Statement on Form SB-2 filed
         with the Commission on April 2, 1996).

10.21*   Form of Subscription Agreement between NUWAVE Engineering,
         Inc. and its Series A Preferred Stockholders through August
         1995 (See Exhibit 10.22 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).

10.24*   Form of Note entered into between the Company and the Initial
         Bridge Investor relating to the Initial Bridge Financing (See
         Exhibit 10.25 to Registration Statement on Form SB-2 filed
         with the Commission on April 2, 1996).

10.25*   Form of 10% Promissory Note delivered by the Company in
         connection with the private placement of 80 Units (the
         "Private Placement Bridge"), each unit consisting of an
         unsecured 10% non- negotiable promissory note in the amount
         of $25,000 and 5,000 shares of Common Stock of the Company,
         during February and March of 1996 (See Exhibit 10.26 to
         Registration Statement on Form SB-2 filed with the Commission
         on April 2, 1996).

10.26*   Form of Securities Registration Rights Agreement entered into
         between the Company and the purchasers of Common Stock in the
         Private Placement (See Exhibit 10.27 to Registration
         Statement on Form SB-2 filed with the Commission on April 2,
         1996).

10.27*   Form of Registration Rights Agreement entered into between
         Company and the purchasers of its Series A Preferred Stock
         (See Exhibit 10.28 to Registration Statement on Form SB-2
         filed with the Commission on April 2, 1996).

10.28*   Form of Lock-up letter between the Company and certain
         holders of its Common Stock (See Exhibit 10.29 to
         Registration Statement on Form SB-2 filed with the Commission
         on April 2, 1996).
         
10.29*   Lease Letter Agreement between the Company and Simon, Sarver
         & Rosenberg dated July 28, 1995 (See Exhibit 10.30 to
         Registration Statement on Form SB-2 filed with the Commission
         on April 2, 1996).

                                       11

<PAGE>

10.30*   Guaranty executed by the Company as of October 13, 1995 in
         connection with Standard Industrial Net Lease between Collins
         Tech RB and Rave Engineering, Inc. (See Exhibit 10.31 to
         Registration Statement on Form SB-2 filed with the Commission
         on April 2, 1996).

10.31*   Amendment to Employment Agreement dated as of September 11,
         1995 between NUWAVE Engineering, Inc. and Robert I. Webb
         dated June 3, 1996 (See Exhibit 10.32 to Amendment No. 2 to
         Registration Statement on Form SB-2 filed with the Commission
         on July 3, 1996).

10.32*   Financial Consulting Agreement between Prime Technology, Inc.
         and Ernest Chu dated January 15, 1995 (See Exhibit 10.33 to
         Amendment No. 2 to Registration Statement on Form SB-2 filed
         with the Commission on July 3, 1996).

10.33*   Letter Agreement concerning the Gaming Technology among the
         Company, Rave Engineering Corp. and Prime Technology, Inc.
         dated March 24, 1997 (See Exhibit 10.34 to Annual Report
         filed with the Commission on April 30, 1997).

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).

10.38*   Registration Rights Agreement, dated February 6, 1998,
         between NuWave Technologies, Inc. and ProFutures Special
         Equities Fund, L.P. (See Exhibit 4.1 to Current Report on
         Form 8-K filed with the Commission on February 18, 1998).

10.39*   Private Securities Subscription Agreement, dated as of
         February 6, 1998, between NuWave Technologies, Inc. and
         ProFutures Special Equities Fund, L.P. (See Exhibit 10.1 to
         Current Report on Form 8-K filed with the Commission on
         February 18, 1998).

10.40*   Warrant, dated February 6, 1998, executed by NuWave
         Technologies, Inc. in favor of ProFutures Special Equities
         Fund, L.P., to purchase up to 50,000 shares of Common Stock,
         par value $.01 per share, of NuWave Technologies, Inc. (See
         Exhibit 
                                       12

<PAGE>

         10.2 to Current Report on Form 8-K filed with the Commission
         on February 18, 1998).

   
10.41*   Component Purchase Agreement, dated December 31, 1997,
         between Thomson Consumer Electronics, Inc. and NuWave
         Technologies, Inc. (See Exhibit 10.41 to Annual
         Report on Form 10-KSB filed with the Commission on March 25, 1998).

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.

10.45**  Option Agreement, dated December 9, 1997, between NuWave Technologies,
         Inc. and Lippert/Heilshorn & Associates, Inc.

10.46**  First Amendment to Restated Employment Agreement, dated December 9,
         1997, between NuWave Technologies, Inc. and Gerald Zarin.
    

16.1*    Letter from Coopers & Lybrand L.L.P. to the Commission dated
         February 16, 1998 (See Exhibit 16.1 to Current Report on Form
         8-K filed with the Commission on February 18, 1998).

   
23.1*    Consent of Coopers & Lybrand L.L.P. (See Exhibit 23.1 to Annual
         Report on Form 10-KSB filed with the Commission on March 25, 1998).

23.2**   Consent of Coopers & Lybrand L.L.P.

27.1*    Financial Date Schedule (See Exhibit 27.1 to Annual
         Report on Form 10-KSB filed with the Commission on March 25, 1998).
    


*    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.

                                       13

<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                        (A Development Stage Enterprise)

                         Index to Financial Statements


                                                                        Page(s)
                                                                        -------


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

Balance Sheet as of December 31, 1997...............................   F-4

Statements of Operations for the years ended December 31, 1996
     and December 31, 1997 and for the cumulative period
     from July 17, 1995 (inception) to December 31, 1997............   F-5

   
Statements of Stockholders' Equity for cumulative period from
     July 17, 1995 (inception) to December 31, 1997..................  F-6-F-7
    

Statements of Cash Flows for the years ended December 31, 1996
     and December 31, 1997 and for the cumulative period from
     July 17, 1995 (inception) to December 31, 1997.................   F-8-F-9

Notes to Financial Statements.......................................   F-10-F-23

                                      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 at December 31, 1997, and the related
statements of operations, changes in stockholders' equity and cash flows for the
year ended December 31, 1997 and the amounts for such year included in the
period from July 17, 1995 (inception) to December 31, 1997. 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 audit.
    

         We conducted our audit 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 audit provides a reasonable basis for our opinion.

   
         In our opinion, the financial statements enumerated above present
fairly, in all material respects, the financial position of NUWAVE Technolgies,
Inc. at December 31, 1997, and the results of its operations and its cash
flows for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
    


/s/ Richard A. Eisner & Company, LLP

                                                Richard A. Eisner & Company, LLP


Florham Park, New Jersey
March 3, 1998







                                       F-2
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


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

We have audited the accompanying  statement of operations,  stockholder's equity
and cash flows of NUWAVE Technologies, Inc. (a development Stage enterprise) for
the period from July 17, 1995 (inception) to December 31, 1997, and for 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,
1997 and for the year ended December 31, 1996 included in the cumulative amounts
for the period from July 17, 1995  (inception) to December 31, 1997, and for the
year ended December 31, 1996, in conformity with generally  accepted  accounting
principles.


                                                       /s/ Coopers & Lybrand LLP


New York, New York                                   
March 26, 1997

                                       F-3
<PAGE>


                           NUWAVE TECHNOLOGIES, INC.
                        (A Development Stage Enterprise)

                                  Balance Sheet

                                     ASSETS
                                                                  December 31,
                                                                       1997
                                                                 --------------

Current assets:

         Cash and cash equivalents                                  $ 1,692,788

         Inventory                                                       59,818

         Prepaid expenses and other current assets                      111,005
                                                                 --------------

                          Total current assets                        1,863,611

Property and equipment                                                  103,471

Restricted Cash                                                         221,481

Other assets                                                             82,200
                                                                 --------------

                      Total assets                                  $ 2,270,763
                                                                 ==============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

         Accounts payable and accrued liabilities                     $ 153,623
                                                                 --------------


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 - none (such
         preferences and rights to be designated by the 
         Board of Directors)

         Common stock, $.01 par value; authorized 20,000,000
         shares:  issued and outstanding 5,348,334 shares                53,483
    

         Additional paid in capital                                  11,253,213

         Deficit accumulated during the development stage            (9,189,556)
                                                                 --------------

                    Total stockholders' equity                        2,117,140
                                                                 --------------

                    Total liabilties and stockholders' equity       $ 2,270,763
                                                                 ==============

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

                                      F-4
<PAGE>


                            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
                                    1996           1997             1997
                                -------------  -------------   ----------------

Net sales                                      $     10,275    $       10,275

Cost of Sales                                        (4,214)           (4,214)
                                               -------------   ----------------

                                                       6,061             6,061
                                               -------------   ----------------

Operating expenses:

Research and development
  expenses                        $ (1,620,594)   (1,697,084)       (3,808,800)

General and administrative
 expenses                           (1,808,567)   (2,336,000)       (4,562,231)
                                   ------------ -------------  ----------------

                                    (3,429,161)   (4,033,084)       (8,371,031)
                                   ------------ -------------  ----------------

           Loss from operations     (3,429,161)   (4,027,023)       (8,364,970)
                                   ------------ -------------  ----------------

Other income (expense):

           Interest income             172,539       178,707           355,116

           Interest expense           (325,867)                       (331,542)
                                   ------------ -------------  ----------------

Total other income (expense)          (153,328)      178,707            23,574
                                   ------------ ------------- ----------------
   
Loss before extraordinary item      (3,582,489)   (3,848,316)       (8,341,396)
    

           Extraordinary item         (848,160)                       (848,160)
                                   ------------ -------------  ----------------
           Net loss                $(4,430,649)  $(3,848,316)      $(9,189,556)
                                  ============= =============  ================

Basic and diluted loss per share:

           Weighted average
           number of common 
           shares outstanding        3,767,403     5,343,348
                                  ============= ============

           Basic and diluted
           loss per share before
           extraordinary item       $    (0.95)   $    (0.72)

           Basic and diluted
           loss per share on
           extraordinary item       $    (0.23)   $        -
                                  ------------- ------------

           Basic and diluted
           loss per share           $    (1.18)   $    (0.72)
                                  ============= ============

     The accompanying notes are an integral part of these fnancal statments

                                      F-5
<PAGE>
<TABLE>
                                                     NUWAVE TECHNOLOGIES, INC.
                                                 (A Development Stage Enterprise)

                                                 Statement of Stockholders' Equity
<CAPTION>
                                                                                                                Deficit
                                              Series A                                                        Accumulated
                                            Convertible                               Additional  Deferred    During the
                                          Preferred Stock         Common Stock         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
   connection 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 
   preferred 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 connection 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 connection 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                                                -

                             The accompanying notes are an integral part of these financial statements

                                                                F-6
</TABLE>
<PAGE>
<TABLE>
                                                     NUWAVE TECHNOLOGIES, INC.
                                                 (A Development Stage Enterprise)

                                                 Statement of Stockholders' Equity

<CAPTION>
                                                                                                                Deficit
                                          Series A                                                        Accumulated
                                        Convertible                               Additional  Deferred    During the
                                      Preferred Stock         Common Stock         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
                                   ========== ========= =========== ==========  ===========   =========   ============= ===========

                             The accompanying notes are an integral part of these financial statements

                                                                F-7
</TABLE>
<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,
                                                                    1996           1997           1997
                                                                -------------- -------------- --------------
<S>   <C>                                                        <C>            <C>            <C>
Cash flows from operating activities:

      Net loss                                                   $ (4,430,649)  $ (3,848,316)  $ (9,189,556)

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

      Extraordinary item                                              848,160                       848,160

      Depreciation expense                                             18,856         42,354         62,070

      Amortization of unamortized debt discount                       163,103                       168,778

      Amortization of deferred financing costs                         89,062                        89,062

      Issuance of common stock for services rendered                                                 20,600

      Increase in inventory                                                          (59,818)       (59,818)

      Increase in prepaid expenses and other
      current assets                                                  (70,218)       (19,096)      (111,005)

      Increase (decrease)  in accounts payable and
      accrued liabilities                                             274,066       (219,487)       153,623

      Increase in other assets                                        (68,275)        (9,925)       (82,200)
                                                                -------------- -------------- --------------

                    Net cash used in operating activities          (3,175,895)    (4,114,288)    (8,100,286)
                                                                -------------- -------------- --------------

Cash flows from investing activities:

      Purchase of property and equipment                              (80,892)       (76,052)      (165,541)
                                                                -------------- -------------- --------------

                    Net cash used in investing activities             (80,892)       (76,052)      (165,541)
                                                                -------------- -------------- --------------

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                     1,650,000

    The accmpanying notes are an integral part of these financial statements

                                       F-8

</TABLE>
<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,
                                                                    1996           1997            1997
                                                                -------------- -------------- --------------
<S>   <C>                                                          <C>           <C>         <C>

      Proceeds from IPO                                            11,753,010                    11,753,010

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

      Costs incurred for equity offerings                          (2,310,182)                   (2,348,582)

      Issuance of common stock in connection with
      exercise of stock options                                        30,000         46,668         76,668

      Increase in restricted cash                                                   (221,481)      (221,481)

      Deferred financing costs                                       (180,900)                     (201,000)
                                                                -------------- -------------- --------------

      Net cash provided (used in) by financing activities           8,941,928       (174,813)     9,958,615
                                                                -------------- -------------- --------------

      Net increase (decrease) in cash and cash equivalents          5,685,141     (4,365,153)     1,692,788

Cash and cash equivalents at the beginning of the period              372,800      6,057,941              -

                                                                -------------- -------------- --------------

      Cash and cash equivalents at the end of the period          $ 6,057,941    $ 1,692,788    $ 1,692,788
                                                                ============== ============== ==============

Supplemental disclosure of cash flow information:

      Interest paid during the period                                $ 73,702                      $ 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                     $ 140,000
                                                                ==============                ==============

Deferred equity costs charged to additional paid in
      capital in connection with the PPO                             $ 13,400                      $ 13,400
                                                                ==============                ==============

Deferred financing costs charged to additional paid-in capital in
      connection with the IPO                                        $ 25,000                      $ 25,000
                                                                ==============                ==============

600,000 Series A Convertible Preferred Stock converted
      into Common Stock                                               $ 6,000                       $ 6,000
                                                                ==============                ==============

</TABLE>

      The accompanying notes are an integral part of these financial statements

                                         F-9

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

1. ORGANIZATION AND BUSINESS:

     NUWAVE Technologies,  Inc. (the "Company"), a development stage enterprise,
was  incorporated  in  Delaware  on July 17,  1995.  It was  formed to  develop,
manufacture  and market products which improve picture quality in set-top boxes,
televisions,  VCR's,  camcorders  and  other  video  devices  by  enhancing  and
manipulating  video signals,  and  facilitate  the  production of  sophisticated
consumer and professional  videos.  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 raising funds,  directing,
supervising and coordinating Rave Engineering  Corporation  ("Rave") and its own
Advanced  Engineering  Group  in the  continuing  development  of its  products,
pre-marketing  activities,  the commencement of  comprehensive  marketing of the
NUWAVE  Video   processor  and  the  recruitment  of  management  and  technical
personnel,  including  members of the Advanced  Engineering  Group.  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. The Company has the
ability to substantially reduce costs.
    


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.


Inventory

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

                                      F-10

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

Property and Equipment

     Property and equipment are recorded at cost.  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, 1997 amounted to $421,124 and for the years ended December 31, 1997
and December 31, 1996 amounted to $289,892 and $131,232, 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 a commercial  bank 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,
3) Certificates of Deposit.

Per Share Data

   
     The Company has adopted the standards set by the Financial Accounting
Standards Board and computes earnings per share data in accordance with SFAS No.
128 "Earnings per Share". 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
6).
    


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-11

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

3. INVENTORY

         Inventory consists of the following:

                                            December 31,
                                               1997
                                            ------------

      Finished goods . . . . . . .             $ 46,316
         Work in process . . . . .                13,502
                                            ------------
                                               $ 59,818
                                            ============

4. PROPERTY AND EQUIPMENT:

   Property and equipment consist of the following:

                                Useful Lives      December 31,
                                  in Years           1997
                               --------------    ------------
   Furniture and Fixtures . .        10            $  4,323
   Computers  . . . . . . . .         5             100,954
   Equipment  . . . . . . . .         5              60,264
                                               ------------
                                                   $165,541

       Less, accumulated
        depreciation . . . .                         62,070
                                               ------------
                                                   $103,471
                                               ============


   
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:

   Accounts payable and accrued liabilities consist of the following:
    

                                               December 31,
                                                   1997
                                               ------------

     Accounts payable . . . .                     $ 36,964
     Legal and accounting
        fees  . . . . . . . .                       90,908
     Accrued payroll. . . . .                       18,399
     Payroll taxes payable. .                        7,352
                                              ------------
                                                  $153,623
                                              ============

6. 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:

                                      F-12

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

o     1,090,000  shares  to Prime  Technologies,  Inc.  ("Prime").  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 are exercisable
at $5.50 per share  commencing on July 3, 1997,  and have an expiration  date of
July 3, 2001. The Warrants are redeemable by the Company at any time  commencing
twelve  months  after  date of the IPO 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 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 (initially,  $8.25 per share), 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, 220,000 warrants to purchase Common Stock
and 220,000  Redeemable  Warrants to purchase 220,000  Redeemable  Warrants (the
"Underwriter's  Warrants").   Thereafter,  for  a  period  of  four  years,  the
Underwriter's  Warrants  will be  exercisable  at an  amount  of 165%  above the
offering price of the Common Stock and Warrants.  The warrants expire five years
after the date of issue.


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

                                      F-13

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

shares were convertible into common shares on a one-for-one basis, either at the
option of each holder or automatically upon the effective date of an IPO.

     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.

     On July 3, 1996,  the  effective  date of the IPO, the Series A Convertible
Preferred Stock consisting of 600,000 shares was converted to common shares on a
one for one basis.

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 accompanying financial position and results of operations of the
Company have been prepared 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 accompanying
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 are included
in operating results as an expense.
    

                                      F-14

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

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

                      Number       Exercise        Weighted -
                        of           Price         Average          Number of
                      Common       Range per      Exercise           Shares
                      Shares         Share          Price          Exercisable
                    ------------------------------------------------------------

Outstanding at
December 31, 1995    315,000        $ 1.50         $ 1.50           260,714
                                                                    =======
Granted               67,000   $ 2.00 - $ 5.75     $ 2.67

Exercised            (20,000)       $ 1.50         $ 1.50
                     --------

   
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
    

Cancelled            (25,000)  $ 6.38 - $6.81      $ 6.64
                   ---------
   
Outstanding at
December 31, 1997    506,166   $ 1.50 - $6.88      $ 2.92          401,000
                   =========                                       =======
    

     During 1995,  the Company  granted  options to purchase  315,000  shares of
Common Stock ,  exercisable  at $1.50 per share.  The options vested as follows:
260,714 at date of grant,  27,143 in 1996 and 27,143 in 1997. The options expire
as follows: 240,714 in 2000, 27,143 in 2001 and 27,143 in 2002.

     During  1996,  the Company  granted  options to purchase  55,000  shares of
Common Stock ,  exercisable  at $2.00 per share.  The options vested as follows:
31,667 at date of grant, 11,667 in 1997 at 11,666 in 1998. The options expire as
follows: 8,333 in 2001, 11,667 in 2002 and 11,666 in 2003.


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  

                                      F-15

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

   
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 260,000 options
can be awarded  under the Plan.  As of  December  31,  1996 no options  had been
issued.  During  1997,  172,500  options  were  granted and 25,000  options were
cancelled 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  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.

   
     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.  The maximum  number of shares of Common  Stock with respect to which
options  may be  granted  under  the  Director's  Plan is 80,000  shares.  As of
December 31, 1997,  there are 48,000 stock options  reserved for issuance in the
Director's Plan.
    

     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, 1997 are as follows:

                                      F-16
<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

                       Options Outstanding                Options Exercisable
             ---------------------------------------   -------------------------

   
                              Weighted
                               Average      Weighted                   Weighted
Range of                      Remaining      Average                   Average
Exercise        Number       Contractual    Exercise      Number       Exercise
 Prices      Outstanding        Life          Price    Exercisable      Price
--------     -----------     -----------    --------   -----------   -----------
    

$ 1.50 -
$ 2.00         326,666            3.4        $ 1.55      315,000       $ 1.53

$ 5.75 -
$ 6.88         179,500            5.6        $ 6.47       86,000       $ 6.16


     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 1996 and 1997 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.



                                                1996              1997
                                            -------------     --------------

   
Pro forma net loss                          $ (4,496,349)      $ (4,029,183)
    

Pro forma basic and
Diluted loss per share                      $      (1.19)      $       (.75)


     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
1996 and 1997 was $.84 and $1.75,  respectively.  The following weighted-average
assumptions  were used in computing the fair value of option grants for 1996 and
1997:  weighted-average risk-free interest rates of 5.32% for 1996 and 5.64% for
1997;  zero dividend yields for both years;  volatility of the Company's  Common
Stock of 50% for both years;  and an  expected  life of the options of two years
for 1996 and 1997, respectively.

7. INCOME TAXES

     There is no  provision  for  federal,  state or local  income taxes for the
years ended  December  31, 1997 and  December  31,  1996,  since the Company has
incurred  operating losses. In addition,  the Company has fully reserved the net
potential future tax benefits  resulting from its  organization  costs and a net
operating loss carryforwards.

                                      F-17

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

The tax effect of temporary differences consists of the following:

                                                   December 31,
                                                      1997
                                                   -----------
Deferred tax assets:
   
   Startup costs . . . . . . . . . . .             $ 2,130,610
    
   Property and equipment . . . . . . .                 24,828
   Net operating loss carryforward. . .              1,504,585
                                                   -----------
                                                     3,660,023
   Valuation allowance. . . . . . . . .              3,660,023
                                                   -----------
                                                   $        --
                                                   -----------


     Certain costs in the statement of operations  have been  capitalized  under
Internal  Revenue Code and will be amortized over five years commencing with the
date the Company  begins its trade or business,  as defined by Internal  Revenue
Service  regulations.  The valuation  allowance  offsets all of the deferred tax
assets as of December 31, 1997.

   
     As of December 31, 1997, the Company has unused net operating loss
carryforwards of $3,761,463 available for income tax purposes. The unused net
operating loss carryforwards expire in various years from 2010 to 2012. 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:

License and Development agreements


     Pursuant to the terms of the License  Agreement  dated July 21,  1995,  the
Company is obligated to pay to Rave  royalties  ("Royalties")  of (i) 2 1/2 % of
net sales  ("Sales  Royalties"),  as defined,  of  products  sold by the Company
utilizing Rave's  technology and (ii) 25% of any  sublicensing  fees received by
the Company  from  sublicenses  of the products  and  technology  covered by the
License Agreement. Payments of Sales Royalties will commence upon the earlier of
(i)  accumulated  net sales of  licensed  products  and  technology  sold by the
Company or its future sublicensees reaching an aggregate of $50,000,000, or (ii)
the  Company's  aggregate  net  profits  from  sales of  licensed  products  and
technology equaling $5,000,000, whichever comes first.

     In March 1997 the  Company  agreed  with Rave to exclude  from the  License
Agreement  certain  video  transmission  technology  which Rave may  develop for
application in the video game industry ("the Video Game  Technology") In return,
Rave  agreed to pay the Company  2.5% of net sales of  products  using the Video
Game Technology and 25% of any fees it receives from licensing such  technology.
The Video Game Technology is not used in any of the Company's  current products,
and the Company has no current plans to develop it.

     The License  Agreement  became  effective on July 21, 1995 and continues in
force until either (1) the  expiration of the last patent rights or (2) July 21,
2012, whichever is later.

                                      F-18

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

   
     The Company has entered into a development agreement (the "Development
Agreement") with Rave, pursuant to which the Company has formulated a
development plan (the "Development Plan") extending through October 1998, with
annual renewals, subject to one year's written notice. The Development Plan
focuses principally on the development of the products, as defined, and will be
revised from time to time to provide for the development of additional related
products. The Development Agreement provides for the payment to Rave of a
monthly fee which, when aggregated with the Royalties provided for in the
License Agreement, must equal at least $65,000 per month. The Development Plan
is to be revised by October 2, 1998 and on each anniversary thereafter for each
year the Development Agreement remains in effect. The Development Agreement
terminates on October 2, 1998. The Development Agreement also provides for Rave
to receive additional payments under certain conditions aggregating $850,000 to
purchase or lease equipment for use in developing the Licensed Products and
Technology. The payments were originally to be made in monthly installments not
to exceed $23,611 with a lump sum payment of $283,336 due in March 1998, if
certain conditions were met. In this regard, on April 22, 1997, the Company
deposited $300,000 into a certificate of deposit. The certificate of deposit has
been pledged as collateral for an irrevocable standby letter of credit opened by
the Company to guarantee monthly equipment lease payments (not to exceed $23,611
per month) to be made by the Company on behalf of Rave pursuant to the
Development Agreement. The balance of the standby letter of credit will be
reduced by any payments made and any cash restriction on the certificate of
deposit is limited to the balance of the standby letter of credit. Through
December 31, 1997, the Company had made payments of $386,657 under this
agreement and at that date had $221,481 pledged as collateral to guarantee the
monthly payments.
    


     The Rave  research and  development  expenses  charged to the  statement of
operations for the cumulative  period from July 17, 1995 (inception) to December
31, 1997 amounted to  $2,657,355;  and for the years ended December 31, 1997 and
December 31, 1996 amounted to $1,096,903 and $1,143,825, respectively.

Agency Agreement

     In order to assist it in obtaining  sublicensing  revenue,  the Company has
entered into an Agency Agreement (the "Agency Agreement") with Prime. The Agency
Agreement provides that Prime will be the Company's exclusive agent for entering
into sublicenses with respect to the licensed  products and technology.  Because
its products are not fully developed,  the Company has not developed a licensing
program,  established  proposed royalties,  or otherwise determined the terms or
conditions of the  arrangements  it may want to make with proposed  licensees or
others.  These programs will be developed in conjunction  with product  research
and  development,  and with  Prime  pursuant  to the Agency  Agreement.  For its
services,  with respect to the first  $50,000,000  of aggregate net sales of the
Company's licensees and sublicensees, after subtracting the payments to Rave and
licensing  expenses,  Prime will receive 35% of net sublicense  fees received by
the Company,  and thereafter 45%.  Because the Company has retained the right 

                                      F-19

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

to enter into licenses and sublicenses  independently,  payments to Prime are to
be made regardless of whether the relevant  sublicenses are entered into through
Prime's  efforts or by the  Company  itself.  Prime will  receive an  additional
agency  fee of up to  $1,500,000,  of which  (i)  $400,000  has been  paid  (ii)
$400,000 is payable out of the Company's first sublicensing  royalties and (iii)
$700,000 is payable out of the Company's portion of sublicensing  royalties when
net sublicensing sales exceed  $200,000,000.  The Agency Agreement provides that
Prime will  contribute  its  royalty  participation  to pay Rave in any month in
which the Company,  after making reasonable commercial effort, is unable to make
the $65,000 Rave Minimum Payment  necessary to maintain the License Agreement on
an exclusive basis with such amounts to be repaid by the Company to Prime out of
the Company's next available  royalty payment or 12 months from the date of such
advance.


     The  Agency  Agreement  terminates  upon  the  termination  of the  License
Agreement or upon a default, as defined in the Agency Agreement.


     The agency fee charged to operations  for the  cumulative  period from July
17, 1995 (inception) to December 31, 1997 amounted to $400,000 and for the years
ended  December 31, 1997 and December 31, 1996 amounted to $70,000 and $330,000,
respectively.

     The minimum  annual  commitments  under the Rave  License  and  Development
Agreements, and the Agency Agreement, as of December 31, 1997 are as follows:

   
For the Year   Royalty and
   Ending      Development    Consulting      Equipment
December 31,      Fees          Fees          Financing       Total
------------  ------------   ------------    -----------   ------------
    

   1998         $650,000        $35,000       $463,342      $1,148,342
             =============   ============    ===========   ============


Employment Agreements

     The  Company  entered  into an  employment  agreement  with  its  President
originally  expiring  December 31, 2000.  In December  1997,  the  agreement was
extended for two years to December 31, 2002. The employment  agreement  provides
for a minimum  annual  salary,  and bonus  incentives,  based  upon the  Company
meeting  profit levels to be set by the Board of Directors.  The agreement  also
provides for termination payments to the President under certain  circumstances.
The minimum  annual  salary  commitment as of December 31, 1996 and December 31,
1997, excluding bonus arrangements, amounted to $120,000 per annum.

     On February 10, 1997, the Company entered into an employment agreement with
its Vice  President - Sales.  As part of the agreement,  the Company  granted to
this individual,  under the Company's Plan, options to purchase 60,000 shares of
common stock at $6.875 per share,  the underlying  value of the Company's common
stock at the date of grant. 5,000 options vested immediately; 5,000 options vest
on June 10, 1997;  20,000 options vest on February 10, 1998; 30,000 options vest
on February 10, 1999.


                                      F-20

<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

Consulting and Representative Agreements

     The Company has a  consulting  agreement  with a Limited  Partnership  (the
"Consultant")  rendering  business  advice.  One of the general  partners of the
Consultant is a former member of the Company's Board of Directors.  In addition,
this general partner was a partner in two other  affiliated  entities.  Together
the  Consultant  and the two other  affiliated  entities  (which  also  provided
services to the Company)  received  450,000 shares of the Company's common stock
for an aggregate consideration of $4,500 (see Note 6). The term of the agreement
was initially for two years and has been orally extended for one additional year
to June  30,1998.  The  Consultant  received  fees of $7,500 per month until the
completion of the IPO. Once the IPO was completed, the fee was reduced to $5,000
per month  until the  agreement  terminates.  The total  consulting  fee per the
consulting  agreement  charged to the statement of operations for the cumulative
period from July 17, 1995  (inception) to December 31, 1997 amounted to $175,000
plus  out-of-pocket  expenses;  and for the years  ended  December  31, 1997 and
December 31, 1996  amounted to $60,000 and $77,500 plus out of pocket  expenses,
respectively.  The  total  aggregate  consideration  charged  to  operations  in
connection with the services rendered by the principal of the Consultant and his
affiliated  entities for the cumulative period from July 17, 1995 (inception) to
December  31, 1997  amounted to $264,998;  and for the years ended  December 31,
1997 and December 31, 1996 amounted to $66,329 and $110,367, respectively.

     Effective  August  1,1995,  the Company  entered into an  agreement  with a
consultant  whereby the  consultant  provided to the Company on a  non-exclusive
basis, certain services, among others:  evaluation of the Company's technologies
and  products,  assistance  in  product  development  and the  development  of a
marketing  strategy and plan, and the recommendation of candidates for marketing
and sales positions. On April 7, 1997, the Company entered into a Representative
Agreement with this same  consultant  whereby the consultant was appointed as an
exclusive  sales  representative  for  selected  accounts,   identified  in  the
agreement,  to obtain Strategic  Alliance  Contracts for the Company and to sell
Products  during the term of the  Agreement.  The term of the Agreement was from
April 7,  1997 to  November  30,1997.  Under  the  terms of the  Agreement,  the
consultant or his designees  will receive  options to purchase  shares of common
stock of the Company for each  Strategic  Alliance  Contract the Company  enters
into through the efforts of the Representative and/or his designees. For options
granted,  the options  price is equal to the fair market value as of the date of
the grant and will expire five years after the date of grant.  In addition,  the
Company shall pay the  Representative  a commission on net sales of all products
sold by the Company solely through the efforts of the Representative  and/or his
designees if the Representative and/or his designees made substantial efforts to
sell the  Products  to the  purchaser  during  the term of this  Agreement.  The
commission  rate is based on the type of sale and  timing of the  sale.  For all
purchase  orders  accepted  by the  company  during the period  April  7,1997 to
November 15, 2001, the Company will also pay to the  Representative a commission
of three  percent  of net sales of active  and/or  passive  presets  and  device
drivers whether or not the  representative  made any effort to sell these items.
As of December 31, 1997, no  commissions  had been earned and 45,000 options had
been granted  pursuant to this  Agreement.  Since inception to December 31, 1997
the Company has incurred $376,122;  and for the years ended December 31,1997 and
December 31, 1996, $143,657 and $195,968,  respectively,  of 


                                      F-21
<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

consulting fees and out of pocket  expenses for this consultant  which have been
charged to operations.

     On November 12,1997, the Company contracted with Adaptive Miro-Ware, Inc to
work with TEC (see below) in the design and  development of a custom  integrated
circuit ("ASIC") in accordance with the Company's specifications. The total cost
of the project was  estimated to be $179,550 to be paid in intervals  based upon
milestones.  The contract is expected to be  completed  during the first half of
1998. At December 31,1997 $17,500 had been paid under the terms of the contract.

     On November 14,1997, the Company contracted with The Engineering Consortium
("TEC") to design and develop a custom integrated circuit ("ASIC") in accordance
with the Company's  specifications.  The total cost of the project was estimated
to be $130,000 to be paid in intervals  based upon  milestones.  The contract is
expected to be completed  during the first half of 1998. At December  31,1997 no
payments had been made under the terms the contract.

     On  December 3, 1997,  the  company  contracted  with  Lippert/Heilshorn  &
Associates,  Inc.  ("LHA")  to provide  various  Investor  Relations  and Public
Relations  services  for the  Company.  In return for such  services the Company
granted to the LHA 30,000 options for the purchase of the Company's common stock
at $5.78 per share  (market  price on date of grant.  In  addition  the  Company
agreed to pay LHA a fee of $7,500 per month plus normal business  expenses.  The
contract  terminates on March 31,1998,  at which time the contract will continue
on a month-to-month  basis.  However, the Company may terminate the agreement at
any time after March 31,1998 upon 60 days notice to LHA.

     The Company has entered into numerous sales representation  agreements with
various  organizations  whereby  the  Company  will  pay to  the  representative
organization  commissions  based  on the type of sale and  timing  of sale.  The
commission  rates vary from 2% to 16%. No  commissions  had been earned  through
December 31,1997 pursuant to these agreements.


Leases

     The Company  leases  shared  office space on a  month-to-month  basis for a
monthly rental of $5,400.  Rent expense incurred for the cumulative  period from
July 17, 1995 (inception) to December 31, 1997 amounted to $122,348; and for the
years ended  December  31, 1997 and  December  31, 1996  amounted to $78,496 and
$37,452,respectively.  In addition, the Company is a guarantor on lease payments
of $4284 per month regarding Rave's facility. The lease expires on June 14,1998.


9.     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.


                                      F-22
<PAGE>

                            NUWAVE TECHNOLOGIES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                          NOTES TO FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

10.     SUBSEQUENT EVENT

   
     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
for an aggregate purchase price of $1,000,000. In addition, subject to certain
conditions, the agreement provides that, from time to time over the life of the
agreement the Company shall issue "Puts" to the investor whereby the Company
shall issue for each Put and the investor shall purchase, at the Company's
option, shares of the Company's Common Stock for a minimum of $250,000 and a
maximum of $750,000. The total aggregate value of the Puts over the life of the
agreement must be a minimum of $1,000,000 and cannot exceed $5,000,000. The
purchase price of the stock will be at 88% of the fair market value of the stock
at the time of the Put. The following restrictions apply beginning with the
second Put: 1) there must be 20 business days between Puts; 2) the average daily
trading volume in the Company's Common Stock for the 30 trading days prior to
the Put date must be at least 20,000 shares; 3) The minimum bid price for the
Company's Common Stock on the trading day immediately preceding the put date
must be at least $2.50; 4) unless the investor agrees otherwise, no put can be
made which cause the investor to own more than 9.9% of the Company's then
outstanding stock.
    

     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.  The warrants  may be exercised at any time  beginning
August  6,1998 and ending three years  thereafter.  Also,  in the event that the
market price as of the effective date of the  registration  statement filed with
the Securities and Exchange  Commission on March 3,1998  regarding the resale of
the underlying securities is less than $3.95, then the Company will issue to the
investor a supplemental  warrant to purchase  50,000 shares of Common stock at a
stick price of $3.95.  The  supplemental  warrant may be  exercised  at any time
beginning 5 days after the effective date and ending 5 years thereafter.

   
     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 shall pay the consultant $5,000 per
month during an initial term ending September 3,1999 subject to automatic
one-year terms unless either the Company or the Consultant shall have given
written notice at least 30 days prior to the end of the initial or subsequent
terms.
    

     In connection  with this  agreement,  the Company  issued to the Consultant
400,000  common stock  purchase  warrants.  The  warrants  The warrants  have an
exercise price of $4 and are exercisable  after September  3,1999.  The warrants
expire on March 3, 2003.


                                      F-23