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

                                  FORM 10-KSB
                                   (MARK ONE)

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

                For the fiscal year ended December 31, 2003
               [ ] 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.)


                         1416 Morris Avenue, Suite 207
                            Union, New Jersey 07083
               Address of principal executive offices)(Zip Code)

                                (908)- 851-2470
                (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, $.001 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 past 12 months (or
for such shorter  period that the  registrant was required to file such reports)
and (2) has been subject to such filing  requirements  for the past 90 days.
Yes [X] 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. [X]

State issuer's revenues for its most recent fiscal year:  $19,656

Aggregate market value of the voting stock held by  non-affiliates  based on the
last sale price for such stock at March 31, 2004: $243,867

The number of shares of Common Stock outstanding as of March 31, 2004: 1,875,902

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

<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                  FORM 10-KSB
                                     INDEX


      PART I

      ITEM 1.  description of BUSINESS.......................................1
      Item 2.  description of properties.....................................4
      ITEM 3.  LEGAL PROCEEDINGS.............................................5
      ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........5

      PART II

      ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS...........................................6
      ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
               OF OPERATION ................................................10
      ITEM 7.  FINANCIAL STATEMENTS.........................................18
      ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
               ACCOUNTING AND FINANCIAL DISCLOSURE..........................18
      ITEM 8a. CONTROLS AND PROCEDURES......................................18


      PART III

      ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
               PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
               ACT..........................................................18
      ITEM 10. EXECUTIVE COMPENSATION.......................................19
      ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT...................................................20
      ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
               TRANSACTIONS.................................................21
      ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.............................21
      ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.......................24

      siGNATURES............................................................27

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

<PAGE>

                                     PART I

ITEM 1.  BUSINESS

GENERAL

      NuWave Technologies Inc. was incorporated in Delaware on July 17, 1995.

      Since its formation in 1995, NuWave has been a technology company, focused
upon the development and marketing of technology and technology products related
to enhancing image and video output. NuWave continues in its efforts to identify
customers and markets where it will be able to market its proprietary technology

      Over the last three years, the Company's sales have declined from $505,000
in 2001, to $286,000 in 2002 and to $20,000 in 2003, as it has had difficulty in
securing  buyers  for  its  technology  products  in a very  competitive  market
environment.  The Company has incurred net losses of $4,273,000,  $2,674,000 and
$790,000 for each of the years 2001, 2002 and 2003, respectively.

      During 2003, in conjunction with a restructuring  with the primary lender,
the Company terminated all of its officers and employees. On September 10, 2003,
the Company entered into an agreement with a lender,  Cornell Capital  Partners,
LP  ("Cornell"),  to  settle a  default  on its  indebtedness  owed to  Cornell.
Pursuant to the agreement, Cornell and the Company agreed to the following:

            1. Cornell agreed not to foreclose on its  outstanding  indebtedness
      owed by the  Company.  Cornell  agreed to enter into a new loan  agreement
      with the Company  for  $200,000  to be  deposited  in escrow to be used to
      satisfy certain  outstanding  obligations of the Company,  including trade
      payables, unpaid wages, and settlement of employment agreements.

            2. In this  agreement,  Cornell will consider  providing  additional
      capital to the  Company  and  assisting  in  identifying  new  businesses.
      Cornell has agreed to maintain the  Company's  public  filings and status.
      The Company's Chief Executive Officer ("CEO") and Chairman of the Board of
      Directors,  and Chief Financial  Officer  ("CFO"),  agreed to resign their
      positions  with  the  Company.  The  CEO  and CFO  received  a  settlement
      consisting of cash and warrants to purchase shares of the Company's common
      stock at an  exercise  price of $1.00 per share.  The  Company's  Board of
      Directors  appointed  a nominee  to its Board of  Directors,  selected  by
      Cornell. Upon such appointment,  the Company's Board members resigned. The
      Agreement  was  consummated  on  September  29, 2003,  effective  with the
      closing and the resignations of the Board members. As a result of reaching
      settlements  to satisfy  certain  outstanding  obligations of the Company,
      including  trade  payables,  unpaid  wages,  and  settlement of employment
      agreements,  the  Company  realized  a gain  on  forgiveness  of  debt  of
      approximately $347,000, during the year ended December 31, 2003.

      During 2003,  the Company  made changes to its product  lines and business
strategy.  The Company has had difficulty in selling its  technology  related to
image and video  enhancement.  This technology is designed to enrich picture and
video output with clearer,  more defined detail in texture,  color, contrast and
tone. The Company  competes in a very  competitive and quickly  evolving market.
The Company's  products have not been price competitive in the market,  and this
had made it difficult to obtain placements  within end use electronics  markets.
The  Company  previously  marketed  three  product  lines;  however,  based on a
reevaluation  of  these  lines  it  is  no  longer   marketing  the  retail  and

                                      A-1
<PAGE>

security/surveillance  products  and have  significantly  reduced our  marketing
efforts of the  digital  filtering  technology  and will  continue to market the
NuWave Video Processor (NVP).

      The NVP technology is proprietary video-enhancement technology designed to
significantly  enhance video output  devices with clearer,  sharper  details and
more vibrant colors when viewed on the display screen. The Company has engaged a
non-exclusive independent sales agent to provide marketing, product development,
promotion,  sales and distribution of the NuWave Technology.  This non-exclusive
independent  agent  is  marketing  the  Company's  products  and  technology  to
electronics and other companies on a world wide basis.

      The Company  intends to broaden its base of products  and  investments  in
order to diversify the product portfolio into a broad spectrum of industries and
to improve profitability.  In 2003 and 2004, the Company formed new subsidiaries
for the purpose of  acquiring  and holding real estate and other  assets.  As of
March 31, 2004,  the Company  holds only one real estate  property,  a parcel of
undeveloped acreage, as discussed below.

      On October 20, 2003, NuWave formed Lehigh Acquisition Corp. ("Lehigh"). On
December 22, 2003, Lehigh acquired land that the Company intends to develop into
an over 55 community  with  individual  units to be sold. A description  of this
property is  contained  in Item 2. In January and  February,  2004,  the Company
formed NuWave Acquisition Corp., Harwood Acquisition Corp., WH Acquisition Corp.
and JK Acquisition Corp.

      As of March 31,  2004,  the  Company has not as yet  identified  any other
properties, markets, or investments, and has made no commitments to purchase any
such assets.

OTHER POTENTIAL PRODUCTS

      The Company continues to search for companies and investments,  as well as
products that use the Company's  technology.  Each opportunity will be evaluated
for both its fit for the  Company  and the time frame upon which it will bring a
satisfactory  return on the  Company's  investment.  As of March 31,  2004,  the
Company  has not  identified  nor  purchased  any  new  investment  products  or
companies.

RESEARCH AND DEVELOPMENT

      Currently,  research  and  development  efforts  are  limited to  refining
technology  for specific  markets and customers from whom there may be near term
sales.  During  2003 the  Company  made its  research  and  development  testing
facilities and testing equipment available to its independent commissioned agent
who  will  work  with   potential   customers   and  markets  to  develop  sales
opportunities  for the Company.  The agent may use the research and  development
facility as needed to support near term needs of potential market opportunities.

       During  fiscal 2003 and 2002,  $134,000 and $681,000,  respectively,  was
spent on research and development activities.

MARKETING AND SALES

      In its technology  business,  the Company has contracted  with a sales and
marketing  agent who will  non-exclusively  represent  the  Company  in order to
generate sales of the Company's  NUWAVE Video Processor  Technology.  This agent
previously served as the Company's chief technology officer.  Under an agreement
dated  October 31, 2003,  this agent has the  non-exclusive  right to market the
Company  products  worldwide.  The  agent  is  responsible  for  all of its  own
expenses,  in promoting,  marketing,  selling and travel. The agreement provides
for a

                                      A-2
<PAGE>

commission  to the agent of 90% of the net profit on business  generated  by the
agent. This agreement expires on October 31, 2004.

MANUFACTURING

      The Company does not contemplate that it will directly  manufacture any of
its  products.  It has  contracted  with third  parties to  manufacture  its NVP
Application Specific Integrating Chips ("ASIC") and its product line up. It also
may license to third parties the rights to  manufacture  the  products,  through
direct  licensing,  Original  Equipment  Manufacturer  ("OEM")  arrangements  or
otherwise.

      The Company  intends to produce  the NVP ASIC chips only as ordered  under
firm commitments by customers.

PATENTS; PROPRIETARY INFORMATION

      The Company is presently  re-evaluating is technology  line-up and product
strategy.  In the past,  the Company  has filed U.S.  patents  and/or  copyright
applications  for certain of its proposed  products and technology.  The Company
has also filed applications in key industrial countries  worldwide.  The Company
intends to protect patents and technologies in key strategic  technology product
areas.  These areas are currently  being studied,  and have not yet been clearly
identified.

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

      In April  1998,  the  Company  filed three U.S.  patent  applications  for
certain  of its  independently  developed  products:  one for the  NUWAVE  Video
Processor and two for the Softsets, these patents were granted in November 2000,
February 2001 and May 2001,  respectively.  In August 1999,  the Company filed a
patent  application for its digital  software  technology as used in PicturePrep
product  line,  this patent was granted in October  2001.  There is no assurance
that any patent will afford us with commercially  significant  protection of our
technology or that we will have adequate resources to enforce our patents.

      The  Company  historically  sold its  technology  and  products in foreign
markets.  As such, it has filed for foreign  patent  protection in the countries
forming the European  Common  Union,  Japan and Korea.  The patent laws of other
countries  may differ  significantly  from those of the United  States as to the
patentability of the Company's products and technology.  Moreover, the degree of
protection  afforded by foreign patents may be different from that in the United
States. Patent applications in the United States are maintained in secrecy until
the  patents  are issued,  if a  non-publication  request is timely made and the
applications are not foreign filed, and are otherwise  published 18 months after
filing.  Publication of discoveries in scientific or patent  literature tends to
lag behind actual discoveries by several months. As a result, the Company cannot
be certain that it will be the first creator of inventions covered by any patent
applications  it  makes  or the  first  to  file  patent  applications  on  such
inventions.

      Management  believes  that the products the Company  intends to market and
sell do not infringe the patents or other  proprietary  rights of third parties.
Further,  it is not aware of any patents held by competitors  that will prevent,
limit or otherwise  interfere  with the  Company's  ability to make and sell its
products.  However, it is possible that competitors may have applied for, or may
in the future apply for and obtain,  patents which have an adverse impact on the
Company's  ability to make and sell its  products.  There is no  assurance  that
competitors will not infringe the Company's patents.  Defense and prosecution of
patent suits, even if successful, are both costly and time consuming. An adverse

                                      A-3
<PAGE>

outcome in the defense of a patent suit could subject the Company to significant
liabilities to third parties,  require disputed rights to be licensed from third
parties or require it to cease selling its products.

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

COMPETITION

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

EMPLOYEES

      The  Company  currently  has two  full-time  employees,  of whom one is an
executive  and  depending  on its level of  business  activity,  expects to hire
additional  employees in the next 12 months, as needed, to support marketing and
sales,  development  and  construction.  The  Company  also  retains a number of
consultants on an as-needed basis.

ITEM 2. PROPERTIES

      The Company maintains it headquarters in Union, New Jersey, a shared space
for which  the  Company  pays  $500 per  month,  on a month to month  basis.  In
addition,  the  Company  maintains  approximately  1,000  square feet of lab and
storage space in Fairfield,  New Jersey. The Company pays $1,200 per month, on a
month to month basis.

      Effective in 2003,  the Company began seeking  investments  in real estate
properties.  Currently,  there are no  limitations  on the  types of assets  the
Company  may  invest.  This  policy  may  be  changed  without  the  consent  of
shareholders.  It is the Company's policy to invest in properties  primarily for
possible capital gain.

      The Company may invest in most any  properties,  including,  for  example:
undeveloped  acreage;  shopping  centers;  single family  residential and office
buildings.  The Company intends to finance the  acquisition of these  properties
through a combination of debt and equity financing.  The Company's  objective is
to invest and then sell,  in order to recognize the benefit of the capital gain.
The Company  intends to hold and manage  properties  for only the duration which
will facilitate the sale for the possible capital gain.

                                      A-4
<PAGE>

      The Company has no current  intention to invest in real estate  mortgages.
The Company  may invest in the common  stock of  companies  that are in the real
estate business.  Primary real estate activities in which the Company may invest
in the future include investing in: undeveloped and developed properties.

      On December 22, 2003, the Company acquired a parcel of undeveloped acreage
in Cranford,  New Jersey.  This land was  purchased  for  $4,950,000  from Stone
Street Asset Management,  LLC, a company under common control with Cornell.  The
Company  obtained an appraisal by an independent  Certified  General Real Estate
Appraiser, who valued the acreage at $4,950,000. In exchange for the undeveloped
acreage, the Company issued $3,550,000 in convertible  debentures and $1,400,000
in a note payable.  $3,300,000 of the convertible  debentures are collateralized
with a first  mortgage lien on the land,  which  debentures  are held by Cornell
Capital  Partners,  LP. The  $1,400,000  note  payable is secured  with a second
mortgage on the land and is held by Stone Street Asset  Management,  LLC.  Stone
Street  and  Cornell  Capital  are  related  parties  in that they  have  common
ownership.  The  $4,950,000  purchase price of the  undeveloped  acreage is at a
price that is approximately  $2,035,000 greater than the cost basis in the hands
of Stone  Street  immediately  prior to the sale.  Stone  Street  purchased  the
property  from an  independent  3rd party in August,  2003. As a result of Stone
Street's relationship with Cornell, and Cornell's relationship with the Company,
the Company has  recorded the land at its cost basis in the hands of the seller.
The Company has a deeded interest in the property.  Of the obligations due under
the convertible  debentures $250,000 are due in December 2005 and $3,300,000 are
due in December  2008. The holders of the  convertible  debentures may convert a
portion into the  Company's  common stock at any time.  The  $1,400,000  note is
payable  over 60 months,  starting  January 1,  2005.  All of these  obligations
accrue interest at a 5% annual interest rate.

      The  Company  intends  to  develop  the  property  into  a  55  and  over,
residential community. The Company intends to develop residential dwelling units
and limited  retail space on the site.  The  residential  dwelling units will be
sold to individual buyers.  Currently the acreage is not developed.  The Company
believes that there is a demand for these 55 and over units. Reasons include: an
aging population with disposable income, the continued positive economic outlook
for the Northeast economy and the positive local economics in the Cranford,  New
Jersey area. The Company expects that planning for the project will be completed
in 2004 and that construction and development will begin in 2005. The Company is
currently developing cost estimates for the development of the property.

      The Company  maintains  adequate  liability  insurance on the  undeveloped
acreage.

ITEM 3.  LEGAL PROCEEDINGS

            None.

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

            None.


                                      A-5
<PAGE>

                                    PART II

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

MARKET FOR COMMON EQUITY

      The Company's  Common Stock, par value $.001 per share ("Common Stock") is
traded on the OTC bulletin board (OTCBB) Market under the symbol NUWV. The OTCBB
is a regulated  quotation  service that  displays  real-time  quotes,  last-sale
prices and volume information in over-the-counter (OTC) equity securities. Prior
to August 13, 2002, the stock had been traded on the NASDAQ SmallCap Market. The
following table sets forth the range of high and low closing sale prices for the
Common Stock as reported on the NASDAQ  SmallCap Stock Market during each of the
quarters  presented until August 12, 2002 and the OTCBB subsequent to August 12,
2002. The quotations set forth below are inter-dealer quotations, without retail
mark-ups,  mark-downs or commissions  and do not  necessarily  represent  actual
transactions. On July 21, 2003, the Company effected a 1:50 reverse stock split,
as previously approved by shareholders. All closing sales prices below have been
restated retroactively for the effect of the reverse stock split.



                                                        Common
                                                        Stock
                                                   HIGH        LOW
               QUARTERLY PERIOD ENDED
               March 31, 2002                      52.50      29.50
               June 30, 2002                       36.50      15.00
               September 30, 2002                  20.50       3.50
               December 31, 2002                    7.00       0.50
               March 31, 2003                       8.00       0.18
               June 30, 2003                        0.45       0.10
               September 30, 2003                   0.60       0.10
               December 31, 2003                    0.31       0.10

      As of March 29, 2004,  there were  approximately  189 holders of record of
the Company's Common Stock.  This number does not include  beneficial  owners of
the Common Stock whose shares are held in the names of various dealers, clearing
agencies, banks, brokers and other fiduciaries.

      During  October,  2003,  the Company  redeemed its  convertible  preferred
stock.  In accordance  with the  redemption,  the Company paid a one time deemed
dividend - redemption premium in total of $19,400.  These convertible  preferred
shares have now all been redeemed are there remain no shares outstanding.

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

                                      A-6
<PAGE>

RECENT SALES OF UNREGISTERED SECURITIES

CONVERTIBLE DEBENTURES

      During October 2003, the Company raised $200,000 through the issuance of a
convertible debenture to Cornell. In addition, during December 2003, the Company
raised  $195,000  through the  issuance  of  convertible  debentures  to various
unrelated  parties.  On December  22,  2003,  the Company  issued a  convertible
debenture for $3,300,000 to Cornell in connection  with the  acquisition of land
held for  development and sale which is secured through a first mortgage lien on
the land. All of these debentures bear interest at a rate of 5% per annum,  with
interest due at maturity or upon conversion.  These debentures mature at various
dates ranging from October 2005 through December 2008.

      At the option of the Company,  upon the maturity date,  these  convertible
debentures  may be converted into the Company's  Common Stock.  At the option of
the holder,  at any time prior to  maturity,  any  portion of these  convertible
debentures  may be  converted  into Common  Stock.  The value of  principal  and
accrued  interest is  convertible  at the per share price equal to the lesser of
(a)  120% of the  closing  bid  price,  or (b) 80% of the  lowest  daily  volume
weighted  average price for the five days  immediately  preceding the conversion
date.  In  addition,  the Company may redeem,  with 30 days  advance  notice,  a
portion or all of these  outstanding  debentures  at 120% of the dollar value of
the amount redeemed plus accrued interest.  Under the conversion  limitation for
the debentures  held by Cornell,  the Company may issue shares under  conversion
only so long as, at conversion, Cornell holds no more than 9.9% of the Company's
outstanding shares.

      The Company has recorded  debt  discounts  of $986,000  ($875,000 of which
related to  convertible  debentures  issued to  Cornell)  at  issuance  of these
convertible debentures to reflect the value of the beneficial conversion feature
related to the convertible debentures. Accordingly, the Company has recorded the
value of the  beneficial  conversion  features  as a reduction  to the  carrying
amount of the convertible debt and as an addition to additional paid-in capital.

      The Company is  amortizing  the debt discount over the term of the related
debentures which range from 24 months to 60 months.

SECURED NOTE PAYABLE - RELATED PARTY

      On December 22, 2003, Lehigh issued a secured note for $1,400,000 to Stone
Street in conjunction with its purchase of land in New Jersey. The note provides
for the payment of sixty equal monthly installments of principal and interest of
$27,741 beginning on January 1, 2005, matures on January 10, 2010 and is secured
through a second  mortgage on the land.  The note bears interest at a rate of 5%
per annum.

WARRANTS

      On September 24, 2003, the Company issued 200,000 warrants to purchase the
Company's  common stock at $1.00 per share.  These  warrants  were issued to two
former  officers for prior  services  provided to the Company.  The warrants are
exercisable over a five-year period which expires in September 2008.

EQUITY LINE OF CREDIT AND ADVANCES

      On April 15, 2002,  the Company  entered into a $3,000,000  Equity Line of
Credit Agreement (the "Agreement") with Cornell (the "Purchaser").  Provided the
Company was in compliance with the terms of the Agreement, the Company could, at

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<PAGE>

its option, periodically require the Purchaser to purchase up to $100,000 in any
seven day  period of the  Company's  common  stock  (the  "put"  shares) up to a
maximum of $3,000,000  over the next two years,  commencing on May 31, 2002 (the
effective date of a Securities Act of 1933  registration  statement on Form SB-2
for the  registration  of  100,000  shares of common  stock to be sold under the
Agreement,  plus  4,762  shares of common  stock  mentioned  below).  Additional
registration  statements  added 280,000 shares on November 1, 2002 and 1,200,000
shares on January 10, 2003,  bringing the total  registered  shares to 1,580,000
under the Agreement.  The Company issued to the Purchaser 4,362 shares of common
stock as a commitment  fee for entering  into the  Agreement.  In addition,  the
Company issued to the placement agent 400 shares of the Company's  common stock.
For each share of common stock  purchased  under the Equity Line of Credit,  the
Purchaser paid 97% of the then Market Price (as defined in the  Agreement),  and
was paid a fee of 4% of each advance.  This Agreement expires on April 15, 2004.
The Company has issued  1,343,168 and 235,650  common shares under the Agreement
for the years ended December 31, 2003 and 2002, respectively.

      The Agreement was  non-exclusive;  thereby permitting the Company to offer
and sell its  securities to third parties while the Equity Line of Credit was in
effect.  The  Company  had the option to  terminate  the  Equity  Line of Credit
Agreement at any time, provided there is no pending advance  thereunder.  During
July 2003,  the Company  reached the limit of 1,580,000  registered  shares that
were issuable under the Agreement.

      The Company  received loans  aggregating  $357,000 and $525,000 during the
years ended December 31, 2003 and 2002, respectively. The Company repaid certain
of these  loans in the amounts of $273,000  and  $325,000,  in each of the years
December 31, 2003 and 2002,  respectively  through the issuance of 1,151,490 and
187,374 shares of the Company's  common stock. The common shares issued to repay
these notes were issued at a 3% discount.  These loans were non-interest bearing
during their terms, which ranged from 90 days to 180 days.

      The balance of these loans as of September 2003,  totaling $284,000,  were
not repaid within their term and were in default.  During  September  2003,  the
Company  entered into an  agreement  with Cornell to settle the default on these
loans.  In  connection  therewith,  Cornell  agreed  not  to  foreclose  on  its
outstanding  indebtedness  of $284,000  owed by the  Company.  In  addition,  on
September 29, 2003,  Cornell  entered into a new loan agreement with the Company
for $200,000 to be deposited in escrow to be used to satisfy certain outstanding
obligations  of  the  Company,  including  trade  payables,  unpaid  wages,  and
settlement of employment  agreements.  The loan was non-interest bearing for its
original term of 180 days.

      On March 27, 2004, the $200,000 loan matured and was not repaid  according
to its terms.  On April 5, 2004,  Cornell  agreed to extend the due dates of the
$284,000 of loans and the $200,000 loan to April 15, 2005.  While in default and
through the extended  maturity date, the $284,000 of loans and the $200,000 loan
accrue interest from the default dates at a rate of 24% per annum.

CONVERTIBLE PREFERRED STOCK

      During May 2003, the Company entered into a Securities  Purchase Agreement
with  several  independent  buyers  whereby the  Company  issued and sold to the
buyers  67,000  shares of Series A Preferred  Stock at $1 per share.  The buyers
were  entitled,  at their option,  to convert the Series A Preferred  Stock into
shares of the Company's Common Stock at any time commencing after May 1, 2004 at
an adjusted  conversion price of $0.05 per share.  Any unconverted  shares as of
May 1, 2005 would  automatically  convert  into shares of the  Company's  Common
Stock at an adjusted  conversion  price of $0.05 per share.  The Company had the
right to redeem the outstanding Preferred Stock upon 30 days written notice at a
redemption  price  of 150%  of the  subscription  amount  plus  interest  on the
purchase  price of 24%. If the Company  chooses to redeem some,  but not all, of

                                      A-8
<PAGE>

the Series A Preferred  Stock,  the Company  could redeem a pro rata amount from
each holder of the Series A Preferred Stock. The preferred stock was redeemed by
the Company in October 2003 for a total redemption price of $86,400. The $19,400
excess of the amount of the redemption over the amount of the original issue has
been  recorded  as a deemed  dividend -  redemption  premium on the  convertible
preferred stock.

SHARES ISSUED FOR SERVICES

      On June 30, 2003,  the Company issued 25,000 shares of common stock valued
at approximately $5,000 in exchange for services provided to the Company.

INCREASE IN AUTHORIZED SHARES, REDUCTION IN PAR VALUE AND REVERSE STOCK SPLIT

      On December 20, 2002, the stockholders  approved an increase in the number
of authorized  shares from  40,000,000 to 140,000,000 and a reduction of the par
value per share from $0.01 to $0.001. The change in par value has been reflected
in the  consolidated  financial  statements  during 2002. On July 21, 2003,  the
Company's Board of Directors declared effective a reverse split of the Company's
common  shares  in  the  ratio  of 1 to 50 as  voted  on  and  approved  by  the
stockholders at the Company's Annual Stockholders'  meeting held on December 20,
2002,  and effective on July 21, 2003. All share and per share amounts have been
retroactively restated for the stock split.

ISSUANCE OF COMMON STOCK

      Between June 7, 2002 and June 30, 2002 the Company entered into agreements
with  various  investors  whereby a total of 22,203  shares of Common  Stock and
warrants  exercisable  at $50 per share for 1,000  shares of common  stock  were
issued for an aggregate  purchase  price of  $330,350.  In  connection  with the
issuance of these  shares,  the Company  incurred  costs of $35,664 in placement
agent fees and expenses.

      On February  27,  2002,  the Company  entered  into an  agreement  with an
investor  whereby  the  Company  issued  4,285  shares  of  common  stock for an
aggregate purchase price of $150,000 and warrants to purchase up to 1,000 shares
of Common Stock at an exercise price of $50.00 per share with an exercise period
of five years  expiring  February 27, 2007.  Under the terms of the  agreement a
consultant  was paid a finder's  fee of $1,500  representing  one percent of the
purchase price.

      On  February  5,  2002,  the  Company  entered  into a  private  placement
agreement  with  investors  whereby  the  Company  issued  12,000  shares of the
Company's  common  stock  for  an  aggregate  purchase  price  of  $330,000.  In
connection  with this  agreement,  the Company  issued to the Placement  Agent a
Placement  Agent  Warrant,  exercisable  to  purchase up to 600 shares of common
stock,  representing  five  percent  of the  total of the  stock  issued  in the
Offering. The warrants shall be exercisable for a period of five years, expiring
on February 8, 2007,  at an exercise  price of $27.50 per share.  The  Placement
Agent also received a cash  placement fee of eight percent of the purchase price
and a  non-accountable  allowance  equal to two percent of the  purchase  price,
totaling $33,000.

                                      A-9
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONDITION AND RESULTS OF
         OPERATIONS

                         SUMMARY FINANCIAL INFORMATION

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


                                      YEAR ENDED         YEAR ENDED
 CONSOLIDATED STATEMENT OF           DECEMBER 31,       DECEMBER 31,
      OPERATIONS:                        2003               2002
(in thousands, except for per
share and per share data)
Revenues                             $        20         $     286
Net loss - common shareholders       $      (809)        $  (2,674)
Net loss per common - basic and      $      (.56)        $   (9.37)
   diluted
Weighted average number of
shares - basic and diluted             1,455,365           285,315

                                     DECEMBER 31,
CONSOLIDATED BALANCE SHEET DATA:        2003
Working capital deficiency           $    (50)
Total assets                         $  3,319
Total liabilities                    $  5,024
Stockholders' deficiency             $ (1,705)

FORWARD-LOOKING STATEMENTS

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

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

GENERAL

             Our  mission  is to  profitably  exploit  our  proprietary  imaging
technology  and to identify and develop other business  opportunities  that will
diversify the Company's operations. We have diversified the Company's operations

                                      A-10
<PAGE>

by  acquiring  land for  development  and sale.  We also have been  focusing  on
technology related to image and video enhancement designed to enrich picture and
video output with clearer,  more defined detail in texture,  color, contrast and
tone,  at low cost. We have  developed  and are  currently  marketing the NUWAVE
Video Processor (NVP) Technology (see "Marketing and Sales").

NOTE - THE  COMPANY  WILL  DISCUSS  ITS  TECHNOLOGY  BUSINESS  UNDER  RESULTS OF
OPERATIONS AND WILL DISCUSS ITS NEW REAL ESTATE DEVELOPMENT  BUSINESS UNDER PLAN
OF OPERATION. SEE BELOW.

RESULTS OF OPERATIONS - TECHNOLOGY BUSINESS OPERATIONS

      Revenues for the year ended  December 31, 2003 were $20,000 as compared to
$286,000  for the prior  year.  Revenues  for 2003 were  negatively  impacted by
increased  competition  and price  compression in the image and video sectors of
the  electronics  markets.  Revenues  for  2002  were  a  direct  result  of the
introduction  of our first retail  product,  the VGE 101 and an  agreement  with
Gemini Industries,  Inc. to become the exclusive licensee of NUWAVE's VGE retail
products.  The Gemini program was not  successful,  and the Company is no longer
marketing the VGE retail products.

      In  December  2001,  we entered  into a  strategic  alliance  with  Gemini
Industries  ("Gemini"),  a manufacturer and distributor of consumer  electronics
accessories.  Gemini was  granted a  five-year  exclusive  license to market and
distribute NUWAVE's VGE in North America.  Initial shipments of the VGE and ASIC
chips to Gemini took place  during the first  quarter of 2002.  Minimum  ongoing
purchase  requirements  under the  contract  were to begin in July  2002.  After
having received a three-month  extension  Gemini still had not met their minimum
contractual  purchase  requirements  and  management  determined  it  was in the
Company's best interest to terminate the agreement.

      The sales for the year ended December 31, 2002 were primarily sales of the
Company's  remaining  domestic VGE inventory to Gemini, as the Company's efforts
were concentrated on sales of NVP 1104. Cost of Sales for 2003 was $5,000 versus
$390,000  for 2002.  The decrease in cost of sales was a result of a decrease in
sales.  Cost of sales in 2002 was  primarily  the result of a  write-off  of the
Company's  December  31,  2002  remaining  physical  inventory  in the amount of
$230,000  consisting of the  discontinued  domestic and European VGE product and
the related NVP 1104 ASIC chips.  Research  and  development  costs for the year
ended  December 31, 2003 were  $134,000;  a reduction of $547,000 from the prior
year.  This  reduction  primarily  resulted from a reduction in all research and
development due to liquidity  constraints and the head count reductions in order
to trim costs.  The decreases in research and  development  were in  engineering
salaries and outside  consulting fees which decreased $504,000 from 2002; and, a
$54,000  reduction  in lab  supplies  and lab  operating  expenses.  General and
administrative  expenses  related to the technology  business for the year ended
December 31, 2003 were  $943,000 a decrease of  $1,128,000  from the prior year.
This  decrease  was the result of a  significant  reduction in most all expenses
resulting  from the  resignation of all management and employees with only a new
CEO in September,  2003 and one other administrative  employee hired on November
1, 2003.  The decrease also resulted  from  continued  Company wide cost cutting
efforts. There were major decreases in marketing and sales expenses of $117,000,
salaries of $278,000, professional fees $171,000, investor relations of $77,000,
financial  consulting of $128,000,  closing of overseas  operations of $110,000,
insurance of $133,000,  and domestic rent of $46,000.  Interest  expense for non
real estate operations  increased $44,000 on account of additional notes payable
to finance  liquidity  and paying  interest  rates on these notes at the default
penalty rate of 24% per anum. Gain on forgiveness of debt increased $347,000 due
to settlement of various liabilities for approximately 10% of the amounts owed.

      The Company  recorded a  consolidated  net loss of  $790,000  for the year
ended December 31, 2003.  After  subtracting  the loss  associated with the real
estate  operations  (which are  discussed in the plan of  operation,  below) the
Company  incurred  a net  loss  of  $764,000.  This  compares  favorably  to the

                                      A-11
<PAGE>

$2,674,000  loss incurred in the year ended December 31, 2002.  This decrease in
loss of $1,910,000 is primarily  attributable to the Company-wide  cost cutting,
which occurred  during 2003, as discussed  above.  These  decreases in operating
expenses were offset by the decrease in the Company's benefit from income tax of
$187,000.

PLAN OF OPERATION - REAL ESTATE ACTIVITIES

      During 2003, the Company has diversified its business by investing in real
estate and real estate development  activities.  The Company's first real estate
investment was not made until December 22, 2003. There are no revenues from real
estate  activities.  Revenues  in real estate are not  projected  to be realized
until mid to late 2005.  The  Company's  real  estate  related  operating  costs
include  primarily  real estate taxes.  The Company  recorded a net loss on real
estate operations of approximately $26,000.

      The Company has acquired a parcel of undeveloped  acreage for  $4,950,000.
The Company  obtained an  appraisal  by an  independent  Certified  General Real
Estate Appraiser, who valued the acreage at $4,950,000.  The Company's tentative
plans call for the development of approximately 100 residential  dwelling units.
The  Company  intends to engage an  architect  during  mid 2004 for the  purpose
drawing up  specifications  and establishing  budgets for costs for the project.
Once the  architectural  plans are in place,  the  Company  will  interview  and
contract with a developer to build out the property.

      Land  development  and  construction  costs are  roughly  estimated  to be
$8,000,000 to $10,000,000.  The Company will have to raise  additional  funds to
finance construction,  either from issuing additional shares of stock or through
bank or other debt financing.

      The Company may purchase other real estate  properties,  once financing is
in place.  In  conjunction  with the  increase  in  Company  activities  and the
management of  additional  properties,  the Company  intends to hire four to six
additional employees during the year.

LIQUIDITY AND CAPITAL RESOURCES

      Common stock share prices and numbers of shares have been adjusted for the
effect of the 1:50 reverse stock split, which was effective July 21, 2003.

      The primary  source of financing for the Company since  inception has been
through  the  issuance  of common  and  preferred  stock and debt.  The  Company
utilized the Equity Line of Credit to generate cash of $396,000 and  $1,490,000,
for each of the years 2003 and 2002, respectively.  In addition, the Company has
issued  convertible  debentures  $3,945,000 to both Cornell and to others,  with
$3,550,000  being used for the acquisition of the undeveloped  land. The Company
had cash  balances on hand of $119,000  and $174,000 for each of the years ended
December  31,  2003 and  2002.  The  Company's  cash  position  continues  to be
uncertain.  The Company's primary cash needs are to fund ongoing operations,  to
satisfy accrued  liabilities and to develop its real property  project.  Cornell
Capital  agreed to extend the  maturity of the notes until April 15,  2005.  The
Company will defer any land  development  and  construction  expenditures  until
after it has arranged  adequate  funding.  For funding  during the period ending
March 31, 2005, the Company  intends to seek financing  through a combination of
sources,  the plans for which are not yet resolved.  These sources might include
funding through the issuance of securities or loans.

      In conjunction  with the  acquisition  for  $4,950,000 of the  undeveloped
acreage,  the Company  issued a  $1,400,000  note  payable to Stone Street Asset
Management, LLC and convertible debentures of $3,300,000 to Cornell and $250,000
to others.

                                      A-12
<PAGE>

      Under the conversion  limitation for the debentures  held by Cornell,  the
Company  may issue  shares  under  conversion  only so long as,  at  conversion,
Cornell holds no more than 9.9% of the Company's outstanding shares.

      The Company will  continue to rely on the sale of  securities or loans for
near term working  capital  needs.  In  addition,  the Company will seek outside
mortgage  financing for certain of the  properties  that it might acquire in the
future, as well as to finance development and construction of the dwelling units
on  the  undeveloped   acreage.   The  severe  cost  cutting  has  reduced  cash
requirements  of the  Company  substantially.  The  Company  projects  that  its
anticipated funding, in conjunction with some mortgage financing through outside
unrelated  parties,  will  provide the Company  with  adequate  working  capital
through mid 2005. In their report on the audit of NUWAVE's financial  statements
for the  years  ended  December  31,  2003,  and 2002 our  independent  auditors
included an  explanatory  paragraph in their report because there is substantial
doubt about our ability to continue in business as a going concern.

      During the year ended December 31, 2003, the Company had a net decrease in
cash of $55,000. The Company's sources and uses of funds were as follows:

      CASH USED IN OPERATING  ACTIVITIES.  The Company used net cash of $858,000
in its operating  activities.  This was primarily  driven by a consolidated  net
loss of $790,000,  offset by a non-cash gain on forgiveness of debt of $347,000.
Net cash  increased  through  decreases in inventory,  prepaids and other assets
totaling $203,000.

      CASH USED IN  INVESTING  ACTIVITIES.  The Company used net cash of $55,000
for development costs on the land acquired.

      CASH  PROVIDED BY FINANCING  ACTIVITIES.  The Company  raised  $557,000 in
advances under the Equity Line of Credit and another  $39,000 in sales of common
stock under the Equity Line of Credit. In addition,  the Company raised $395,000
in funds through issuance of convertible debentures. $200,000 of the convertible
debentures  were issued to a related party.  During 2003, the Company issued and
then redeemed  $67,000 in convertible  preferred  stock.  Upon  redemption,  the
Company paid a deemed  dividend of $19,000.  During 2003 the Company also repaid
$115,000 of a note payable to a former officer/shareholder.

      At December  31, 2003,  the Company has  negative  net working  capital of
$50,000.  The Company intends to monitor spending carefully until such time that
new funding is arranged.

CRITICAL ACCOUNTING POLICIES

      The  Company's   consolidated  financial  statements  and  related  public
financial  information  are based on the  application  of accounting  principles
generally  accepted in the United  States  ("GAAP").  GAAP  requires  the use of
estimates,  assumptions,  judgments and subjective interpretations of accounting
principles that have an impact on the assets,  liabilities,  revenue and expense
amounts  reported.  These  estimates  can also affect  supplemental  information
contained  in  our  external   disclosures   including   information   regarding
contingencies, risk and financial condition. We believe our use of estimates and
underlying  accounting  assumptions  adhere  to GAAP  and are  consistently  and
conservatively  applied.  We base our estimates on historical  experience and on
various  other   assumptions   that  we  believe  to  be  reasonable  under  the
circumstances.  Actual results may differ  materially from these estimates under
different  assumptions  or  conditions.   We  continue  to  monitor  significant
estimates made during the preparation of our consolidated financial statements.

                                      A-13
<PAGE>

      Our  significant  accounting  policies  are  summarized  in  Note 3 of our
consolidated  financial  statements.  While  all  these  significant  accounting
policies impact its financial  condition and results of operations,  the Company
views certain of these policies as critical.  Policies determined to be critical
are those  policies  that  have the most  significant  impact  on the  Company's
consolidated financial statements and require management to use a greater degree
of judgment and estimates.  Actual results may differ from those estimates.  Our
management  believes that given current facts and circumstances,  it is unlikely
that applying any other  reasonable  judgments or estimate  methodologies  would
cause a material  effect on our  consolidated  results of operations,  financial
position or liquidity for the periods presented in this report.

      There are no critical accounting policies.

EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS

      In May 2003, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 150,  "Accounting for Certain Financial  Instruments with Characteristics of
Both   Liabilities  and  Equity".   SFAS  No.  150  establishes   standards  for
classification and measurement in the statement of financial position of certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires  classification of a financial instrument that is within its scope as a
liability  (or an asset in some  circumstances).  SFAS No. 150 is effective  for
financial  instruments  entered  into  or  modified  after  May  31,  2003  and,
otherwise,  is effective at the beginning of the first interim period  beginning
after June 15, 2003.  The Company  adopted SFAS No. 150 in the third  quarter of
2003.  The  adoption  did  not  have an  impact  on the  consolidated  financial
statements.

      In  January   2003,  as  revised  in  December   2003,   the  FASB  issued
Interpretation No. 46 ("FIN 46"),  "Consolidation of Variable Interest Entities,
an  Interpretation  of ARB No. 51." FIN 46 requires  certain  variable  interest
entities  to be  consolidated  by the primary  beneficiary  of the entity if the
equity investors in the entity do not have the  characteristics of a controlling
financial  interest or do not have  sufficient  equity at risk for the entity to
finance its activities  without additional  subordinated  financial support from
other  parties.  FIN 46 is  effective  for all new  variable  interest  entities
created or acquired  after  January 31,  2003.  For variable  interest  entities
created or acquired  prior to February 1, 2003, the provisions of FIN 46 must be
applied for the first interim or annual  period ending after  December 15, 2004.
The  adoption  of FIN 46 for  provisions  effective  during  2003 did not have a
material impact on the consolidated financial statements.


CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

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

      1.    WE HAVE ONLY A LIMITED OPERATING HISTORY.

      As to the  technology  business,  until  June of 2001  the  Company  was a
development   stage   enterprise.   At  that  time  the   Company   shifted   to
commercialization  and thus have had only a  limited  operating  history.  Since
inception in July 1995, the Company has been engaged  primarily in raising funds
and continuing the development of the NUWAVE Video  Processor (NVP)  Technology.
During the second half of 2001 the Company  began  producing and selling the NVP
Video  Processor  in an ASIC format for the OEM market and our first set top box
product utilizing the NVP technology the

                                      A-14
<PAGE>

VGE for the retail market. During late 2002 and throughout 2003, the Company has
terminated  all  engineering  employees  and most all  engineering  and  product
development  consultants in an effort to reduce costs. As of March 31, 2004, the
Company is  utilizing  the  services of a sales  agent to  identify  and develop
markets and opportunities for our proprietary video and imaging technology There
remain  many risks as the  Company  now seeks to  profitably  commercialize  its
technology.  There can be no assurance that the Company will be able to generate
significant revenues or achieve profitable operations.

      The Company  entered the real estate market in December  2003. The Company
is not likely to see revenue from its real estate investments until some time in
2005 and 2006. There remain many risks, such as market risks, interest rates and
competition  in this market.  There can be no assurance  that we will be able to
generate significant revenues or achieve profitable operations

      2.    WE HAVE A HISTORY OF INCURRING LOSSES AND WE ANTICIPATE THAT WE WILL
            CONTINUE TO INCUR LOSSES.

      To  date,  we have  received  only  limited  revenue  from the sale of our
technology products, and no revenue yet from the real estate business. There can
be no assurance  that our  technology  or real estate  products  will be able to
compete  successfully in the marketplace and/or generate significant revenue. We
have  incurred  significant  costs in  connection  with the  development  of our
technologies  and  proposed  products  and  there is no  assurance  that it will
achieve  sufficient  revenues  to  offset  anticipated  operating  costs.  As of
December 31, 2003, we had an accumulated  deficit of approximately  $27,923,000.
We  anticipate  receiving  only limited  revenues from the  technology  business
during 2004.  Revenues from real estate are not forecast until 2005.  Management
anticipates  that we may  continue to incur  losses for at least the next twelve
months.  Included in such former and future losses are research and  development
expenses,  marketing costs, real estate carrying cost such as taxes and interest
and general and  administrative  expenses.  We  anticipate  that our losses will
continue  until we are able to  generate  sufficient  revenues  to  support  our
operations.

      3.    OUR CONTINUED  DEVELOPMENT EFFORTS AND FUTURE GROWTH DEPEND UPON OUR
            ABILITY TO RAISE ADDITIONAL CAPITAL WHICH MAY NOT BE AVAILABLE TO US
            WHEN NEEDED OR ON ACCEPTABLE TERMS.

      Our capital  requirements in connection  with our  development  activities
have been significant.  We have been dependent upon the proceeds of sales of our
securities  to private  investors  to fund our initial  development  activities.
Since our initial public  offering in July 1996, we have obtained needed capital
through  private  placements  of our  securities.  We  anticipate,  based on our
current proposed plans and assumptions relating to our operations,  that we will
require  additional  capital  in order  to  implement  our  business  plan  (see
Liquidity  and  Capital   Resources  and  Plan  of  Operation  and  Management's
Discussion  and  Analysis).  On April 15,  2002,  the Company  entered into a $3
million  Equity Line of Credit with  Cornell  Capital  Partners,  LP a qualified
investor  (the  "Purchaser").  That Equity  Line of Credit  expires on April 15,
2004.  We intend to seek a two year  renewal  of the Equity  Line of Credit.  In
their report on the audit of NUWAVE's  financial  statements  for the year ended
December 31, 2003, our independent auditors included an explanatory paragraph in
each of their report  because  there is  substantial  doubt about our ability to
continue as a going concern.  To the extent that any future  financing  involves
the  sale  of  our  equity  securities,   our  existing  stockholders  could  be
substantially diluted.

      4.    COMPETITION

      Intense  competition  exists  in the  technology  markets  that we are in.
Customers  that  purchase our products  are subject to  significant  pressure to
reduce costs, given the significant price compression in all consumer electronic
markets.  Accordingly,  these  factors place  intense  downward  pressure on the
prices of our key  products,  which may  prevent the  Company  from  realizing a
profit on sale of products.

                                      A-15
<PAGE>

      The Company has entered  into a  non-exclusive  contract  with a sales and
marketing agent.  This agent is the Company's  former chief technology  officer.
This  agent will  represent  the  Company  and  support  the  evolution  and any
necessary  further  development of the Company's  technology,  in exchange for a
commission of 90% of net profits derived from such efforts.

      5.    MARKET PRICE FLUCTUATIONS

      The trading price of our common stock may be subject to wide  fluctuations
in response to  quarter-to-quarter  variations  in  operating  results,  general
conditions  in the  electronics  and real  estate  markets,  changes in earnings
estimates, recommendations by analysts and other events.

      Our common stock has been  relatively  thinly traded and we cannot predict
the extent to which a trading market will develop.

      Our common  stock has been traded on the Over the Counter  Bulletin  Board
("OTC:BB")  since  August 13,  2002.  Prior to that date,  our common  stock was
traded on the Nasdaq SmallCap Market, from which it was delisted for not meeting
the minimum  requirements  for  continued  listing.  Our common  stock is thinly
traded  compared to larger more widely known  companies in our industry.  Thinly
traded  common stock can be more volatile than common stock trading in an active
public market. We cannot predict the extent to which an active public market for
the common stock will develop or be sustained after this offering.

      6.    OUR COMMON STOCK HAS BECOME  SUBJECT TO "PENNY  STOCK"  RESTRICTIONS
            UNDER FEDERAL  SECURITIES  LAWS, WHICH COULD REDUCE THE LIQUIDITY OF
            OUR COMMON STOCK, SO STOCKHOLDERS  FACE SIGNIFICANT  RESTRICTIONS ON
            THE RESALE OF OUR STOCK.

      The Securities  and Exchange  Commission  has adopted  regulations,  which
generally  define penny stocks to be an equity  security that has a market price
less than  $5.00 per share or an  exercise  price of less than  $5.00 per share,
subject to certain  exemptions.  On December 31 2003,  the closing price for our
common stock, as quoted on the Over the Counter  Bulletin  Board,  was $0.14 per
share and therefore,  our common stock is designated a "Penny Stock." As a penny
stock,  our common stock may become subject to Rule 15g-9 under the Exchange Act
or the Penny Stock  Rules.  These rules  include,  but are not limited to, Rules
3a5l-l,  15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities
Exchange Act of 1934, as amended.  These rules impose  additional sales practice
requirements on  broker-dealers  that sell such securities to persons other than
established customers and "accredited investors" (generally,  individuals with a
net worth in excess of  $1,000,000  or annual  incomes  exceeding  $200,000,  or
$300,000 together with their spouses). For transactions covered by Rule 15g-9, a
broker-dealer  must make a special  suitability  determination for the purchaser
and have received the purchaser's  written  consent to the transaction  prior to
sale. As a result,  this rule may affect the ability of  broker-dealers  to sell
our  securities  and may affect the  ability  of  purchasers  to sell any of our
securities in the secondary market.

      The rules may  further  affect the ability of owners of our shares to sell
their securities in any market that may develop for them. There may be a limited
market for penny stocks, due to the regulatory  burdens on  broker-dealers.  The
market  among  dealers  may not be active.  Investors  in penny  stock often are
unable to sell stock back to the dealer that sold them the stock.  The  mark-ups
or commissions  charged by the  broker-dealers  may be greater than any profit a
seller may make.  Because of large dealer  spreads,  investors  may be unable to
sell the stock  immediately back to the dealer at the same price the dealer sold
the stock to the investor.  In some cases,  the stock may fall quickly in value.
Investors  may be unable to reap any profit from any sale of the stock,  if they
can sell it at all.

                                      A-16
<PAGE>

      For any  transaction  involving a penny stock,  unless  exempt,  the rules
require  delivery,  prior to any  transaction in a penny stock,  of a disclosure
schedule  prepared by the  Securities  and Exchange  Commission  relating to the
penny  stock  market.  Disclosure  is  also  required  to be  made  about  sales
commissions payable to both the broker-dealer and the registered  representative
and current  quotations  for the  securities.  Finally,  monthly  statements are
required to be sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stock.

      The penny stock  restrictions  will no longer apply to our common stock if
we become listed on a national  exchange;  we would again qualify for listing on
the Nasdaq SmallCap Market if we attain  $2,000,000  minimum net tangible assets
and a $1.00 per share market price. In any event,  even if our common stock were
exempt from the penny stock  restrictions,  we would  remain  subject to Section
15(b)(6) of the Exchange Act, which gives the Securities and Exchange Commission
the authority to restrict any person from  participating  in a  distribution  of
penny  stock,  if the  Securities  and  Exchange  Commission  finds  that such a
restriction would be in the public interest.

      Stockholders  should  be  aware  that,  according  to the  Securities  and
Exchange  Commission  Release  No.  34- 29093,  the market for penny  stocks has
suffered  in recent  years  from  patterns  of fraud and abuse.  These  patterns
include:

o     control of the market for the security by one or a few broker-dealers that
      are often related to the promoter or issuer;

o     manipulation of prices through prearranged matching of purchases and sales
      and false and misleading press releases;

o     "boiler  room"  practices   involving  high  pressure  sales  tactics  and
      unrealistic price projections by inexperienced sales persons;

o     excessive and  undisclosed  bid-ask  differentials  and markups by selling
      broker-dealers; and

o     the wholesale dumping of the same securities by promoters; and

o     broker-dealers  after  prices have been  manipulated  to a desired  level,
      along  with the  inevitable  collapse  of  those  prices  with  consequent
      investor losses.


      7.    FUTURE SALES BY OUR  STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK AND
            OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.

      Sales of our common stock in the public  market  following  this  offering
could lower the market  price of our common  stock.  Sales may also make it more
difficult for us to sell equity securities or  equity-related  securities in the
future at a time and price that our  management  deems  acceptable or at all. Of
the 1,875,902  shares of common stock shown as outstanding as of March 31, 2004,
637,000 shares are, or will be, freely tradable without restriction, unless held
by our "affiliates."  The remaining  1,238,902 shares of common stock which will
be held by existing  stockholders,  including  the officers and  directors,  are
"restricted  securities"  and  may  be  resold  in the  public  market  only  if
registered or pursuant to an exemption from registration.

      In  addition,  there are  outstanding  warrants  to purchase up to 218,230
shares of common stock and $3,945,000 of debentures  convertible into 35,223,214
shares of common stock at a price equal to the lesser of (a) 120% of the closing
bid price or (b) 80% of the lowest daily volume  weighted  average price for the
five days immediately preceding the conversion date.

                                      A-17
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

      The  information  required by this item is  incorporated  by  reference to
pages F-1 through F-25 of this Annual Report on Form 10-KSB.

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

      On October 30, 2003, NuWave Technologies, Inc. dismissed Eisner LLP as its
independent certified public accountant.

      Eisner's  report on  NuWave's  financial  statements  for the years  ended
December 31, 2001 and 2002, respectively,  did not contain an adverse opinion or
a  disclaimer  of  opinion.  However,  the  report did  reflect a going  concern
uncertainty.

      Eisner's  dismissal was recommended and approved by the Company's Board of
Directors.

      Since January 1, 2001, as well as any  subsequent  interim period prior to
dismissal, there were no disagreements on any matter of accounting principles or
practices,  financial  statement  disclosure,  or auditing  scope or procedures,
which disagreements if not resolved to their satisfaction would have caused them
to make reference in connection  with their opinion to the subject matter of the
disagreement.

      Since January 1, 2001, as well as any  subsequent  interim period prior to
dismissal, Eisner did not advise NuWave Technologies, Inc. of any of the matters
identified in paragraph (a)(1)(iv)(B) of Item 304 of Regulation S-B.

      On October 30, 2003, NuWave  Technologies,  Inc. engaged Marcum & Kleigman
LLP as  its  principal  accountant  to  audit  NuWave  Technologies's  financial
statements.  NuWave  did  not  consult  Marcum  &  Kleigman  LLP on any  matters
described in paragraph  (a)(2)(i)  or (ii) of Item 304 of  Regulation  S-B since
January 1, 2003 or any  subsequent  interim  period  prior to engaging  Marcum &
Kliegman LLP.

ITEM 8A.  CONTROLS AND PROCEDURES

      Based on his evaluation of the  effectiveness  of our disclosure  controls
and  procedures  within 90 days of the  filing  date of this  report,  our Chief
Executive Officer has concluded that our disclosure  controls and procedures are
effective  for  gathering,  analyzing  and  disclosing  the  information  we are
required to disclose in our reports filed under the  Securities and Exchange Act
of 1934.  There have not been  significant  changes in our  controls or in other
factors  that  could  significantly  affect  these  controls  subsequent  to the
evaluation date.

                                    PART III

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

      Set  forth  below  are the  names as of April  10,  2004 and the  business
experience of the directors and executive officers of the Company:

       NAME               AGE                   POSITION

George D. Kanakis          31    President, Chief Executive and Financial
                                 Officer and Director
Robert B. Legnosky         30    Director

                                      A-18
<PAGE>

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

      GEORGE D. KANAKIS has been a Director and  President  and Chief  Executive
Officer of the Company since  September 10, 2003. From March 2002 through August
2003,  he had been a Vice  President  Of Corporate  Finance for Cornell  Capital
Partners,  LP,  where  he  structured  equity  and debt  financings,  as well as
provided  consulting to clients on mergers and  acquisitions.  From 1993 to 2001
Mr. Kanakis managed the Futures and Options Group at Barclays Capital,  where he
serviced primarily institutional clients, around the world. Mr. Kanakis holds an
MBA in Finance and  Investments  from the  Zicklin  School of Business at Baruch
College  where he  graduated  in December  2001 and a degree in  Economics  from
Rutgers University where he graduated in May 1995.

      ROBERT B. LEGNOSKY has been a Director  since  September  10, 2003.  Since
October 30,  2002,  Mr.  Legnosky has been  serving as the  President  and Chief
Executive  Officer of  Celerity  Systems,  Inc.  Celerity  is related to Cornell
Capital Partners,  LP. From 1998 through October,  2002, Mr. Legnosky has served
as a Senior  Technical  Consultant  with AXA  Financial/Equitable  Life where he
provided  technical  support  and  direction  on  cash  analysis  and  monitored
unprocessed cash reports to ensure service standards.  Between 1997 to 1998, Mr.
Legnosky  served as a Sales  Associate  with  Cybermax  Computer  Inc.  where he
advised consumers on personal computers,  provided technical support to clients,
and drafted proposals. Between 1997 to 1998, Mr. Legnosky also served as a Group
Life Claims Manager with  Prudential  Insurance  Company where he evaluated life
insurance claims. Mr. Legnosky graduated from Rutgers University with a Bachelor
of Science and Bachelor of Arts degree in 1996.

CODE OF ETHICS

      On March 30, 2004, the Board of Directors of the Company adopted a written
Code of Ethics  designed  to deter  wrongdoing  and  promote  honest and ethical
conduct,  full,  fair and  accurate  disclosure,  compliance  with laws,  prompt
internal reporting and  accountability to adherence to the Code of Ethics.  This
Code of Ethics has been filed with the Securities and Exchange  Commission as an
Exhibit to this Form 10-KSB.

Committees

      NuWave's Board of Directors  serves as the audit  committee.  The Board of
Directors  does not have a "financial  expert" due to the lack of capital needed
to attract a qualified expert.

ITEM 10.  EXECUTIVE COMPENSATION

                       COMPENSATION OF EXECUTIVE OFFICERS

      The following table sets forth the annual and long-term  compensation  for
services in all capacities  for the fiscal years ended  December 31, 2003,  2002
and 2001 paid to George D. Kanakis and Gerald Zarin ("Named Executive Officer").
No other executive officer received  compensation  exceeding $100,000 during the
fiscal years ended  December 31, 2003,  2002 and 2001.  Mr.  Kanakis  became our
Chief  Executive  Officer on September  10, 2003.  The  employment  of Mr. Zaris
terminated  on September  29, 2003.  The  following  table sets forth the annual
compensation paid by the Company for services  performed on the Company's behalf
for the fiscal years ended  December 31,  2001,  2002 and 2003,  with respect to

                                      A-19
<PAGE>

those persons who were, as of December 31, 2003, the Company's  Chief  Executive
Officer and the Company's executive officers (the "Named Executive Officers").

<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE

                                                                                LONG TERM
                                      ANNUAL COMPENSATION                  COMPENSATION AWARDS
                                      -------------------                  -------------------
                                                                       SECURITIES
                                                                       UNDERLYING
                                                            OTHER       OPTIONS
        NAME AND                                           ANNUAL       (NUMBER         ALL OTHER
   PRINCIPAL POSITION          YEAR    SALARY    BONUS   COMPENSATION  OF SHARES)(1)  COMPENSATION
   ------------------          ----    ------    -----   ------------  -------------  ------------
<S>                            <C>    <C>           <C>        <C>          <C>             <C>
George D. Kanakis, President
and Chief Executive Officer    2003   $ 12,500

Gerald Zarin                   2003   $ 117,000     $0         $0           0               $0
Former President and           2002   $ 155,000   $30,000      $0           0               $0
Chief Executive Officer        2001   $ 144,000     $0         $0        200,000            $0
</TABLE>

      Note:  George  D.  Kanakis,  President  and CEO has an  annual  salary  of
      $75,000.

      Note:  Gerald  Zarin's  employment  terminated  on September  29, 2003. In
      conjunction  therewith,  he received  100,000  warrants  to  purchase  the
      Company's stock at $1.00 per share. Mr. Zarin surrendered all options upon
      his resignation during 2003.

NO STOCK OPTIONS

      For the Year Ended December 31, 2003, there were no options granted.

      On January 12, 2003, the former executive  Officers of the Company and all
employees  voluntarily and  irrevocably  surrendered all options granted to them
though that date. As such,  no options  remain  outstanding  as of this date. On
December 31, 2003, all stock option plans were terminated.

DIRECTORS' COMPENSATION

      Directors  who are not  employees  of the Company are entitled to a fee of
$2,500 per year and $500 per meeting  attended (other than telephonic  meetings)
for serving on the Board of  Directors.  Each  director is also  reimbursed  for
expenses  incurred in  connection  with  attendance  at meetings of the Board of
Directors.

EMPLOYMENT AGREEMENTS

      The Company does not currently have any employment contracts with its sole
officer,  Mr.  Kanakis.  Until  September 29, 2003,  the Company had  employment
agreements  with its former  President  and CEO, Mr.  Gerald Zarin and its Chief
Financial Officer, Mr. Jeremiah F. O'Brien. These agreements terminated upon the
September 29, 2003 resignations of these two former officers.


ITEM 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT
          PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT

BENEFICIAL OWNERS

                                      A-20
<PAGE>

      The table below is based on  information  obtained  from the persons named
therein with respect to the shares of Common Stock beneficially owned, as of the
March 31, 2004 (except as noted below),  by (i) each person known by the Company
to be the owner of more than 5% of the outstanding  shares of Common Stock, (ii)
each director of the Company,  (iii) each executive officer of the Company,  and
(iv) all executive officers and directors of the Company as a group

      Company has been advised  that no shares are held by any current  Director
or Officer of the Company.

<TABLE>
<CAPTION>
                                            AMOUNT AND NATURE OF    PERCENTAGE OF OUTSTANDING SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER        BENEFICIAL OWNERSHIP                OWNED
------------------------------------        --------------------                -----
<S>                                               <C>                            <C>
Cornell Capital Partners, LP                      481,140                        9.9%
101 Hudson Street
Jersey City, NJ 07302
</TABLE>


Note:  Cornell holds  $3,500,000 of convertible  debentures in the Company.  The
Company may exercise  conversion of the debenture into common stock,  so long as
after the  conversion,  the  Company  holds not more than 9.9% of the  Company's
outstanding common stock.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Lehigh  acquired  a parcel of land in New Jersey  for  $4,950,000  that it
intends  to  develop  and then  sell.  Lehigh  based  its  purchase  price on an
independent commercial appraisal. This land was acquired from Stone Street Asset
Management LLC ("Stone Street"), a company under common control with Cornell. In
connection  with this purchase of land,  the Company  incurred debt  obligations
consisting  of a  $3,300,000  convertible  debenture  to  Cornell,  $250,000  of
convertible  debentures  to  unrelated  parties and a  $1,400,000  secured  note
payable  to Stone  Street.  As a  result  of Stone  Street's  relationship  with
Cornell, and Cornell's  relationship with Company, the Company has recorded land
at the cost  basis  recorded  by Stone  Street of  approximately  $2,915,000  in
accordance with accounting rules regarding transfer of non-monetary assets.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(A)   DOCUMENTS FILED AS PART OF THIS REPORT.

      See index to Consolidated  Financial Statements attached,  which are filed
      as part of this report.

(B)   REPORTS ON FORM 8-K.

      A summary of the  Company's  8-K  filings  for the period  October 1, 2003
      through December 31, 2003 follows:

      On Form 8-K filed on October 30, 2003, the Company reported that effective
October 30, 2003,  that it  dismissed  Eisner LLP as its  independent  certified
public accountants. This change was approved by the Company's Board of Directors
on October 30, 2003. The Company,  on same date engaged Marcum & Kliegman LLP as
its new principal accountant.

      On Form 8-K filed on October 2, 2003,  the  Company  reported  that it had
reached an agreement with Cornell  Capital  Partners,  LP to settle a default on
its indebtedness  owed to Cornell.  In addition,  Cornell agreed to enter into a
new loan with the  Company  for net  proceeds  of $195,000 to be used to satisfy
outstanding  obligations.  In  addition,  Cornell  will  assist  the  Company by
considering  to provide  capital,  intending  to maintain the  Company's  public
filings and assisting in identifying  new business.  In addition,  the Company's
CEO and CFO resigned,  each receiving 100,000 warrants to purchase the Company's
common stock for $1.00 per share.  The Company's board of directors  appointed a
nominee to its board of directors  selected by Cornell.  Except for the nominee,
the Company's other board members resigned.

                                      A-21
<PAGE>



(C)   THE FOLLOWING EXHIBITS ARE FILED AS PART OF THIS REGISTRATION STATEMENT:

                        EXHIBITS SECTION NEEDS MORE WORK

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


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

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

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

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

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

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

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

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

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

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

10.1*       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).

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

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

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

                                      A-22
<PAGE>

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

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

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

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

10.9*       Placement Agency Agreement,  dated as of February 14, 2000,  between
            Janssen-Meyers Associates,  L.P. and NUWAVE Technologies,  Inc. (See
            Exhibit  10.56  to  Annual  Report  on Form  10-KSB  filed  with the
            Commission on March 30, 2000).

10.10*      Warrant   Agreement,   dated   March  13,   2000,   between   NUWAVE
            Technologies, Inc. and American Stock Transfer & Trust Company. (See
            Exhibit  10.57  to  Annual  Report  on Form  10-KSB  filed  with the
            Commission on March 30, 2000).

10.11*      Form of Warrant Certificate.  (See Exhibit 10.58 to Annual Report on
            Form 10-KSB filed with the Commission on March 30, 2000).

10.12*      Form of Subscription Agreement.  (See Exhibit 10.59 to Annual Report
            on Form 10-KSB filed with the Commission on March 30, 2000).

10.13*      Placement  Agent Warrant  Agreement,  dated March 13, 2000,  between
            NUWAVE  Technologies,  Inc.  Janssen-Meyers  Associates,  L.P.  (See
            Exhibit  10.60  to  Annual  Report  on Form  10-KSB  filed  with the
            Commission on March 30, 2000).

10.14*      Option Agreement for Purchase of Common Stock dated as of August 14,
            2001 between  NUWAVE  Technologies,  Inc.,  and SHEENWAY (Hong Kong)
            LTD.

10.15*      Option  Agreement for Purchase of Common Stock dated as of April 30,
            2001 between NUWAVE Technologies, Inc., and Richard Ekstract.

10.16*      Form of Warrant Agreements, dated February 5, 2002.

10.17*      Form of Warrant Agreements, dated February 27, 2002.

10.18*      Partners In Europe Agreement

10.19*      Stock Purchase Agreement, dated as of February 5, 2002

10.20*      Stock Purchase Agreement, dated as of February 27, 2002

10.21*      Amended and Restated  Equity Line of Credit  Agreement,  dated as of
            May 17, 2002, between NUWAVE Technologies,  Inc. and Cornell Capital
            Partners,  L.P. (See Exhibit 10.45 to Registration Statement on Form
            SB-2 ((File No.  333-89012))  filed with the  Commission  on May 24,
            2002).

10.22*      Placement  Agent  Agreement,  dated as of April  15,  2002,  between
            NUWAVE Technologies,  Inc. and Westrock Advisors,  Inc. (See Exhibit
            10.42 to Registration Statement on Form SB-2, with the Commission on
            April 29, 2002.)

10.23*      Registration  Rights Agreement,  dated as of April 15, 2002, between
            NUWAVE  Technologies,  Inc. and Cornell Capital Partners,  L.P. (See
            Exhibit 10.43 to Registration Statement on Form SB-2, filed with the
            Commission on April 29, 2002.)

10.24*      Escrow Line of Credit Agreement, dated as of April 15, 2002, between
            NUWAVE  Technologies,  Inc. and Cornell Capital Partners,  L.P. (See
            Exhibit 10.44 to Registration Statement on Form SB-2, filed with the
            Commission on April 29, 2002.)

                                      A-23
<PAGE>

10.25*      Form of Stock  Purchase  Agreement,  dated as of June 2002,  between
            NUWAVE Technologies,  Inc. and certain investors. (See Exhibit 10.45
            to Registration Statement on Form SB-2, filed with the Commission on
            July 11, 2002.)

10.26*      Form of Selling Stockholders Agreement, dated as of July 2002, among
            NUWAVE  and the  Purchasers.  (See  Exhibit  10.46  to  Registration
            Statement on Form SB-2, filed with the Commission on July 11, 2002.)

10.27*      Revolving  Line of Credit  Secured  Demand  Promissory  Note,  dated
            December 10, 2002, to Gerald Zarin by NUWAVE Technologies, Inc. (See
            Exhibit  10.47 to  Registration  Statement  on SB-2,  filed with the
            Commission on December 27, 2002).

10.28*      Agreement with Cornell Capital Partners LP, dated September 10, 2003
            (See  Exhibit  10.1  to Form  8-K,  filed  with  the  Commission  on
            September 10, 2003).

10.29**     Convertible  Debenture  Agreement  dated December 22, 2003,  between
            Cornell  Capital  Partners,  LP and NUWAVE  (incorporated  with Form
            10-KSB filed with the Commission on April 13, 2004)

10.30**     Secured  Note Payable  Agreement  dated  December 22, 2003,  between
            Stone Street Asset  Management,  LLC and NUWAVE  (incorporated  with
            Form 10-KSB filed with the Commission on April 13, 2004)

10.31**     Form of convertible  debenture,  dated as of December 2003,  between
            NUWAVE and certain  investors  (incorporated  with Form 10-KSB filed
            with the Commission on April 13, 2004)

10.32**     Independent Sales Agent Agreement between Nextgen Associates,
            Inc. and NUWAVE dated October 31,2003 (incorporated with Form
            10-KSB filed with the Commission on April 13, 2004)

14.1**      Code of Ethics

31.1**      Certification re: Section 302

32.1**      Certification re: Section 906


*     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.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

      AUDIT FEES. The aggregate fees billed for professional  services  rendered
was  $53,500  and  $62,000  for the  audits of the  Company's  annual  financial
statements for the fiscal years ended December 31, 2003 and 2002,  respectively,
and the reviews of the  financial  statements  included in the  Company's  Forms
10-QSB for those fiscal years.

      AUDIT-RELATED  FEES.  The  aggregate  fees  billed in each of the last two
fiscal years for assurance and related services by the principal accountant that
are  reasonably  related  to the  performance  of the  audit  or  review  of the

                                      A-24
<PAGE>

Company's  financial  statements  and not reported under the caption "Audit Fee"
include a $1,000 fee in the year ended December 31, 2002 for attending a company
board meeting.

      TAX FEES. For the year ended  December 31, 2002, the principal  accountant
billed $7,500 for tax compliance.

      ALL OTHER FEES.  Other than the services  described  above,  the aggregate
fees billed for services rendered by the principal accountant was $0 and $5,000,
respectively,  for the fiscal years ended December 31, 2003 and 2002. These fees
related to the review of the Company's Registration Statement.

      AUDIT COMMITTEE  POLICIES AND PROCEDURES.  The Board of Directors performs
the duties of an audit  committee.  The Board of Directors must  pre-approve all
auditing services and permitted non-audit services (including the fees and terms
thereof) to be performed for the Company by its independent auditors, subject to
the  de  minimus   exceptions  for  non-audit   services  described  in  Section
10A(i)(1)(B) of the Securities Exchange Act of 1934, which should be nonetheless
be approved by the Board of Directors prior to the completion of the audit. Each
year the  independent  auditor's  retention to audit our  financial  statements,
including the associated fee, is approved by the committee  before the filing of
the previous year's annual report on Form 10-KSB. At the beginning of the fiscal
year, the Board of Directors will evaluate other known potential  engagements of
the  independent  auditor,  including the scope of work proposed to be performed
and the proposed fees,  and approve or reject each service,  taking into account
whether the  services  are  permissible  under  applicable  law and the possible
impact of each non-audit service on the independent auditor's  independence from
management.  At each such  subsequent  meeting,  the auditor and  management may
present  subsequent  services for approval.  Typically,  these would be services
such as due diligence for an acquisition,  that would not have been known at the
beginning of the year.

      Since May 6, 2003,  the  effective  date of the  Securities  and  Exchange
Commission  rules stating that an auditor is not  independent of an audit client
if the services it provides to the client are not appropriately  approved,  each
new  engagement  of Marcum & Kleigman  LLP, has been  approved in advance by the
Board of  Directors,  and none of those  engagements  made use of the de minimus
exception  to  the  pre-approval   contained  in  Section  10A(i)(1)(B)  of  the
Securities Exchange Act of 1934.

                                      A-25
<PAGE>

                                   SIGNATURES


            Pursuant  to  the  requirements  of  Section  13  or  15(d)  of  the
Securities  Exchange Act of 1934,  the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                  NUWAVE TECHNOLOGIES, INC.
                                  (Registrant)



Date: April 13, 2004              By: /s/George Kanakis
                                     -----------------------------------
                                      George Kanakis,
                                      Chairman of the Board, President
                                      and Chief Executive Officer (Principal
                                      Executive Officer and Principal Financial
                                      Officer)

<TABLE>
<CAPTION>
SIGNATURE                         TITLE                               DATE

<S>                     <C>                                           <C>
/s/George Kanakis
--------------------    and Chief Executive Officer (Principal        April 14, 2004
George Kanakis          Executive Officer and Principal Financial
                        Officer)
/s/Robert Legnosky
--------------------    Director                                      April 14, 2004
Robert Legnosky
</TABLE>



                                      A-26

<PAGE>


                    NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                      PAGE(S)
                                                                      -------


Independent Auditors' Report - Marcum & Kleigman LLP                    F-2

Independent Auditors' Report - Eisner LLP                               F-3

Balance Sheet as of December 31, 2003                                   F-4

Statements of Operations for the Years ended
  December 31, 2003 and 2002                                            F-5

Statement of Stockholders' Equity (Deficiency) for
  the Years ended December 31, 2003 and 2002                            F-6

Statements of Cash Flows for the Years ended
  December 31, 2003 and 2002                                         F-7 - F-8

Notes to Financial Statements                                        F-9 - F-25

                                      F-1
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


To the Stockholders and Board of Directors
NuWave Technologies, Inc.
Union, New Jersey

We have audited the accompanying consolidated balance sheet of NuWave
Technologies Inc. and Subsidiary as of December 31, 2003, and the related
consolidated statements of operations, stockholders' equity (deficiency) and
cash flows for the year then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 referred to above present fairly, in
all material respects, the consolidated financial position of NuWave
Technologies, Inc. and Subsidiary as of December 31, 2003, and the consolidated
results of their operations and their cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company incurred a loss during the year
of approximately $790,000 and had stockholders' and working capital deficiencies
of approximately $1,705,000 and $50,000, respectively, which raises substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.



/s/ Marcum & Kliegman LLP
------------------------------
Marcum & Kliegman LLP

April 9, 2004
New York, New York

                                      F-2
<PAGE>

INDEPENDENT AUDITORS' REPORT

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


We have audited the  statements of  operations,  stockholders'  equity  (capital
deficit),  and cash  flows  of  NUWAVE  Technologies,  Inc.  for the year  ended
December 31, 2002.  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 auditing standards  generally accepted
in the  United  States of  America.  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  referred to above present fairly, in
all  material  respects,  the  results  of  operations  and cash flows of NUWAVE
Technologies,  Inc. for the year ended  December 31, 2002,  in  conformity  with
accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a going  concern.  As  discussed  in Note (2) to the
financial  statements,  the Company has  experienced  recurring net losses,  its
operating activities have resulted in cash outflows, and at December 31, 2002 it
has both a  negative  working  capital  position  and a capital  deficit.  These
matters raise  substantial  doubt about the  Company's  ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note (2). The financial  statements do not include any adjustments that might
result from the outcome of this uncertainty.

/s/Eisner LLP
----------------------
Eisner LLP

Florham Park, New Jersey
March 28, 2003

                                      F-3
<PAGE>

                    NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

                           Consolidated Balance Sheet
                 (In thousands, except share and per share data)

                                     ASSETS

                                                                December 31,
                                                                   2003
                                                                -----------
Current assets:

  Cash and cash equivalents                                       $    119

  Inventory                                                              1
                                                                  --------
                  Total current assets                                 120

Property and equipment, net                                              4

Land held for development and sale                                   2,970

Deferred tax asset                                                     225
                                                                  --------
                  Total assets                                    $  3,319
                                                                  ========

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:

  Accounts payable and accrued liabilities                        $    170
                                                                  --------
                  Total current liabilities                            170
Long-term liabilities:

  Notes payable - related party                                        484

  Secured note payable - related party                               1,400

  Convertible debentures - related party,                            2,634
    net of unamortized discount of $866

  Convertible debentures, net of unamortized discount of $109          336
                                                                  --------
                  Total long-term liabilities                        4,854
                                                                  --------
                  Total liabilities                                  5,024
                                                                  --------
Stockholders' deficiency:

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

  Preferred stock, $.01 par value; authorized 1,600,000
    shares; none issued - (preferences and
    rights to be designated by the Board of Directors)                  --

  Common stock, $.001 par value; authorized 140,000,000 shares;
    1,875,902 shares issued and outstanding                              2

  Additional paid-in capital                                        26,216

  Accumulated deficit                                              (27,923)
                                                                  --------
                  Total stockholders' deficiency                    (1,705)
                                                                  --------
                  Total liabilties and stockholders' deficiency   $  3,319
                                                                  ========

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

                                      F-4
<PAGE>

                    NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                             For the Years ended December 31,
                                                              ---------------------------
                                                                  2003           2002
                                                              -----------    ------------


<S>                                                           <C>            <C>
Net sales                                                     $        20    $       286

Cost of sales                                                           5            390
                                                              -----------    -----------
                Gross profit (loss)                                    15           (104)
                                                              -----------    -----------

Operating expenses:

     General and administrative                                       958          2,071

     Research and development                                         134            681
                                                              -----------    -----------

         Total operating expenses                                   1,092          2,752
                                                              -----------    -----------

                Loss from operations                               (1,077)        (2,856)
                                                              -----------    -----------

Other income (expense):

    Gain on forgiveness of debt                                       347             --

    Interest income                                                    --              5

    Interest expense                                                  (55)            (5)
                                                              -----------    -----------

                Other income, net                                     292             --
                                                              -----------    -----------

Loss before (provision for) benefit from income taxes                (785)        (2,856)

                (Provision for) benefit from income taxes              (5)           182
                                                              -----------    -----------

                Net loss                                             (790)        (2,674)

                Deemed dividend - Redemption premium on
                convertible preferred stock                           (19)            --
                                                              -----------    -----------

                Net loss applicable to common stockholders    $      (809)   $    (2,674)
                                                              ===========    ===========

Basic and diluted net loss per common share:

                Weighted average number of
                    common shares outstanding                   1,455,365        285,315
                                                              ===========    ===========


                Basic and diluted net loss per common share   $     (0.56)   $     (9.37)
                                                              ===========    ===========
</TABLE>

       The accompanying notes are an integral part of these consolidated
                              financial statments

                                      F-5
<PAGE>

                    NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                        (In thousands, except share data)

<TABLE>
<CAPTION>

                                                                    CONVERTIBLE                                      TOTAL
                                           COMMON STOCK           PREFERRED STOCK      ADDITIONAL                STOCKHOLDERS'
                                      -----------------------  ----------------------    PAID-IN    ACCUMULATED      EQUITY
                                        SHARES       AMOUNT      SHARES      AMOUNT      CAPITAL      DEFICIT     (DEFICIENCY)
                                      -----------  ----------  ----------  ----------  -----------  ------------  -------------

<S>              <C>                    <C>       <C>                <C>    <C>          <C>          <C>          <C>
Balance, January 1, 2002                228,053   $       2           --    $      --    $  25,725    $ (24,440)   $   1,287

Common shares and 2,600
  warrants to purchase common
  shares issued in a private
  placement                              38,309          --           --           --          731           --          731

Options and warrants to purchase
  common stock issued
  for services                               --          --           --           --          200           --          200

Common shares issued under the
  equity line of credit                 240,412           3           --           --          267           --          270

Common shares issued for
  services                                  960          --           --           --           --           --           --

Change in common stock par value             --          (4)          --           --            4           --           --

Net loss                                     --          --           --           --           --       (2,674)      (2,674)

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

Balance, December 31, 2002              507,734           1           --           --       26,927      (27,114)        (186)

Common shares issued under the
  equity line of credit for
  repayment of notes payable,
  net of costs                        1,151,490           1           --           --          272           --          273

Proceeds from issuance of
  common stock under Equity
  Line of Credit                        191,678          --           --           --           39           --           39

Common shares issued for
  services                               25,000          --           --           --            5           --            5

Proceeds from issuance of
  convertible preferred stock                --          --       67,000            1           66           --           67

Warrants issued for services                 --          --           --           --           22           --           22

Redemption of convertible
  preferred stock                            --          --      (67,000)          (1)         (66)         (19)         (86)

Recording of convertible debt
  discount                                   --          --           --           --          986           --          986

Adjustment to record acquired land
  at the seller's historical cost            --          --           --           --       (2,035)          --       (2,035)
  basis (Note 5)
Net loss                                     --          --           --           --           --         (790)        (790)

                                      ---------   ---------    ---------    ---------    ---------    ---------    ---------
Balance, December 31, 2003            1,875,902   $       2           --    $      --    $  26,216    $ (27,923)   $  (1,705)
                                      =========   =========    =========    =========    =========    =========    =========
</TABLE>

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

                                      F-6
<PAGE>

                    NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)


                                                            For the Years ended
                                                                December 31,
                                                            ------------------
                                                             2003        2002
                                                            -------    -------

Cash flows from operating activities:

      Net loss                                              $  (790)   $(2,674)
                                                            -------    -------

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

              Bad debt expense                                   11         --

              Deferred income taxes                               5         --

              Depreciation                                       42         32

              Loss on disposal of equipment                      --          7

              Amortization of debt discount                      11         --

              Issuance of stock and warrants for services        27        200

              Gain on forgiveness of debt                      (347)        --

          Decrease in operating assets:

              Decrease in accounts receivable                    --        127

              Decrease in inventory                              24        388

              Decrease in prepaid expenses and other
                  current assets                                159         20

              Decrease in other assets                           20         10

              Decrease in deferred tax asset                     --         50

          Decrease in operating liabilities:

              Decrease in accounts payable and accrued
                liabilities                                     (20)      (309)
                                                            -------    -------

                    Total adjustments                           (68)       525
                                                            -------    -------

                    Net cash used in operating activities      (858)    (2,149)
                                                            -------    -------

Cash flows from investing activities:

      Purchase of property and equipment                         --         (7)

      Land development costs                                    (55)        --

      Proceeds from sale of equipment                             1          3
                                                            -------    -------

                    Net cash used in investing activities   $   (54)   $    (4)
                                                            -------    -------


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

                                      F-7
<PAGE>

                    NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
                        (In thousands except share data)


<TABLE>
<CAPTION>
                                                                 For the Years ended
                                                                     December 31,
                                                                 ------------------
                                                                   2003       2002
                                                                 -------    -------

Cash flows from financing activities:
<S>                                                                 <C>         <C>
      Proceeds from issuance of notes payable - related party        557

      Proceeds from issuance of notes payable                                   640

      Proceeds from issuance of convertible debentures               395         --

      Repayment of note payable to officer/stockholder              (115)        --

      Proceeds from issuance of common stock
        under Equity Line of Credit                                   39        850

      Proceeds from issuance of convertible preferred stock           67

      Costs incurred for equity offerings and warrants                --       (174)

      Redemption of convertible preferred stock (inclusive of
          redemption premium of $19)                                 (86)        --
                                                                 -------    -------

          Net cash provided by financing activities                  857      1,316
                                                                 -------    -------

Net decrease in cash and cash equivalents                            (55)      (837)

Cash and cash equivalents - beginning of the year                    174      1,011
                                                                 -------    -------

Cash and cash equivalents - end of the year                      $   119    $   174
                                                                 =======    =======

Supplemental disclosure of cash flow information:

      Cash paid during the year for interest                     $    25    $     5
                                                                 =======    =======

Supplemental disclosures of non-cash investing and
      financing activities:

      Recording of debt discount                                 $   986    $    --
                                                                 =======    =======

      Issuance of 1,151,490 and 187,374 shares of
      common stock in settlement of notes payable                $   273    $   325
                                                                 =======    =======

      On December  22, 2003,  the Company
      acquired a parcel of land through the
      assumption of debt as follows:
          Land held for development and sale                     $ 2,915
          Note payable - Related party - Stone Street
              Asset Management , LLC                              (1,400)
          Convertible debenture - Related party - Cornell
              Capital Partners, LP                                (3,300)
          Convertible debentures                                    (250)
                                                                 -------
          Additional paid-in capital - adjustment
            to record acquired land at the seller's historical
            cost basis                                           $(2,035)
                                                                 =======
</TABLE>

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

                                      F-8
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    ORGANIZATION AND NATURE OF OPERATIONS

      NUWAVE Technologies,  Inc. ("NUWAVE") was incorporated in Delaware on July
17, 1995. On October 20, 2003, NuWave formed Lehigh Acquisition Corp ("Lehigh").
Since its inception,  NUWAVE has operated as a technology  company,  focusing on
technology  related to enhancing  image and video  output.  NUWAVE  continues to
market its proprietary  video-enhancement  technology.  During  November,  2003,
through Lehigh,  NUWAVE entered the land development  business.  On December 22,
2003,  Lehigh  purchased  a parcel of land from a related  entity and intends to
develop and sell residential units.

2.    GOING CONCERN AND MANAGEMENT'S PLAN

      The Company incurred a net loss of approximately  $790,000 during the year
ended December 31, 2003, and at December 31, 2003 has  stockholders' and working
capital deficiencies of approximately $1,705,000 and $50,000,  respectively that
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.

      Management has taken a number of actions to lower costs and to improve the
Company's  liquidity.  The  Company  has  substantially  reduced  its cash  flow
requirements  through  significant  reductions  in  payroll  and  various  other
operating expenses. In addition, the Company intends to remain in the technology
business,  and has engaged the services of an outside consultant to represent it
in its sales and  marketing  efforts in order to attempt to  generate  increased
sales of its technology products.

      The Company has obtained an extension of the due dates until April,  2005,
for the payment of certain note payable obligations to Cornell Capital Partners,
LP  ("Cornell")  that  matured  during  2003 and  March of 2004 (see Note 7). In
addition, management's plans include the raising of cash through the issuance of
debt or  equity  although  there  are no  assurances  that the  Company  will be
successful.  The  Company  continues  to require  funding  by and the  financial
support of Cornell.  Management  does not intend to expend any additional  funds
toward the  development of the land held for  development  and sale (see Note 5)
until such time as new funding is secured.

      The accompanying consolidated financial statements have been prepared on a
going  concern  basis,   which   contemplates  the  realization  of  assets  and
satisfaction of liabilities in the normal course of business. These consolidated
financial  statements do not include any adjustments relating to the recovery of
the  recorded  assets or the  classification  of the  liabilities  that might be
necessary  should  the  Company  be  unable  to  continue  as a  going  concern.
Accordingly,  there is substantial doubt about the Company's ability to continue
as a  going  concern.  There  can be no  assurance  that  the  Company  will  be
successful  in  these  endeavors  and  therefore  may  have  to  consider  other
alternatives.

                                      F-9
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      PRINCIPLES OF CONSOLIDATION

      The consolidated  financial  statements include the accounts of NuWave and
Lehigh,  NUWAVE'S wholly-owned  subsidiary  (collectively,  the "Company").  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.

      USE OF ESTIMATES

      The  preparation of consolidated  financial  statements in conformity with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities  at the  date  of the  consolidated  financial  statements  and  the
reported  amounts of revenues and expenses during the reporting  period.  Actual
results could differ from those estimates.

      CASH AND CASH EQUIVALENTS

      The Company  considers  all highly liquid  investments  with a maturity of
three months or less when purchased to be cash equivalents.

      INVENTORY

      Inventory consists of purchased components and supplies,  and is stated at
the lower of cost determined on the first-in, first-out method or market.

      PROPERTY AND EQUIPMENT

      Property and equipment is stated at cost, less  accumulated  depreciation.
Depreciation  of property and  equipment is determined  using the  straight-line
method over their estimated  useful lives,  generally five to seven years.  Upon
retirement  or  other  disposition  of  these  assets,   the  cost  and  related
accumulated  depreciation  of these assets are removed from the accounts and the
resulting  gains  or  losses  are  reflected  in  the  consolidated  results  of
operations. Expenditures for maintenance and repairs are charged to operations.

      LAND HELD FOR DEVELOPMENT AND SALE

      Land held for  development  and sale is stated at the seller's  historical
cost basis (see Note 5), plus the costs of improvements.

      IMPAIRMENT OF LONG-LIVED ASSETS

      The Company periodically assesses the recoverability of long-lived assets,
including  property and equipment and land held for  development  and sale, when
there  are   indications  of  potential   impairment,   based  on  estimates  of
undiscounted  future cash  flows.  The amount of  impairment  is  calculated  by
comparing  anticipated  discounted  future cash flows with the carrying value of
the related  asset.  In performing  this  analysis,  management  considers  such
factors as current results,  trends, and future prospects,  in addition to other
economic factors.

                                      F-10
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

      REVENUE RECOGNITION

      Revenue from sales is recognized when products are shipped to customers.

      RESEARCH AND DEVELOPMENT COSTS

      Research and development costs are charged to expense as incurred.  During
the years ended December 31, 2003 and 2002, the Company  incurred  approximately
$134,000 and $681,000, respectively, in research and development costs.

      ADVERTISING COSTS

      Advertising  costs are expensed as incurred,  which  consist  primarily of
promotional items,  print and digital media. There were no material  advertising
costs incurred  during the year ended  December 31, 2003.  During the year ended
December 31, 2002,  the Company  incurred  approximately  $5,000 in  advertising
costs.

      INCOME TAXES

      The Company  recognizes  deferred tax assets and liabilities  based on the
difference  between the financial  statement  carrying  amounts and tax bases of
assets and liabilities,  using the effective tax rates in effect in the years in
which the  differences  are  expected  to  reverse.  A  valuation  allowance  is
established  when necessary to reduce deferred tax assets to the amount expected
to be realized.

      STOCK-BASED COMPENSATION

       On December 31, 2003, the Company terminated its two stock-based employee
compensation  plans (see Note 8). As  permitted  under  Statement  of  Financial
Accounting Standards ("SFAS") No. 148, "Accounting for Stock-Based  Compensation
-  Transition  and  Disclosure",  which  amended  SFAS No. 123  "Accounting  for
Stock-Based  Compensation,"  the  Company  has elected to continue to follow the
intrinsic value method in accounting for its stock-based  employee  compensation
arrangements as defined by Accounting  Principles  Board Opinion ("APB") No. 25,
"Accounting  for  Stock  Issued  to  Employees",   and  related  interpretations
including Financial Accounting  Standards Board ("FASB")  Interpretation No. 44,
"Accounting  for  Certain  Transactions   Involving  Stock   Compensation",   an
interpretation  of APB No.  25. No  stock-based  employee  compensation  cost is
reflected in net loss, as all options  granted under those plans had an exercise
price equal to the market  value of the  underlying  common stock on the date of
grant.

      The following  table  summarizes  the effect on net loss as if the Company
has applied the fair value recognition provisions of SFAS No. 123 to stock-based
employee compensation. Since certain option grants awarded during 2001 vest over
several  years,  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.

                                      F-11
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

      STOCK-BASED COMPENSATION, CONTINUED

                                               FOR THE YEARS ENDED
                                      -------------------------------------
                                      DECEMBER 31, 2003   DECEMBER 31, 2002
                                      -----------------   -----------------
Net loss applicable to common
stockholders,
   as reported                           $(809,000)        $  (2,674,000)

Less:  Total stock based employee
compensation
  expense determined under the fair
value based
  method for all awards                         --               (28,000)
                                         ---------         -------------
Pro forma net loss                       $(809,000)        $  (2,702,000)
                                         =========         =============
Basic and diluted net loss per
share, as reported                       $    (.56)        $       (9.37)
                                         =========         =============
Pro forma basic and diluted net
loss per share                           $    (.56)        $       (9.47)
                                         =========         =============

      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.   Options  were  last  issued  by  the  Company  is  2001.  The
weighted-average  fair value of the options granted during 2001 was $39.00.  The
following weighted-average  assumptions were used in computing the fair value of
option grants for 2001:  weighted-average  risk-free  interest rates ranged from
5.09% to 5.39%; zero dividend yield; volatility of the Company's Common Stock of
110%; and an expected life of the options of ten years.

      LOSS PER SHARE

      The Company follows SFAS No. 128, "Earnings Per Share", which provides for
the calculation of "basic" and "diluted"  earnings (loss) per share.  Basic loss
per share  includes no dilution  and is computed by dividing  loss  available to
common stockholders by the weighted-average  number of common shares outstanding
for the period.  Diluted loss per share  reflects the  potential  dilution  that
could occur  through the effect of common  shares  issuable upon the exercise of
stock  options and  warrants  and  convertible  securities.  For the years ended
December 31, 2003 and 2002,  potential  common shares  amount to 35,441,444  and
140,467 shares,  respectively,  and have not been included in the computation of
diluted loss per share since the effect would be antidilutive. Conversion of all
convertible  debentures was based upon a conversion price of $0.112 per share at
December 31, 2003.

      CONCENTRATION OF CREDIT RISK - CASH

      The Company maintains its cash and cash equivalents with various financial
institutions,  which exceed  federally  insured  limits  throughout the year. At
December 31, 2003, the Company had cash on deposit of  approximately  $35,000 in
excess of federally insured limits.

                                      F-12
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

      FAIR VALUE OF FINANCIAL INSTRUMENTS

      The consolidated financial statements include various estimated fair value
information  at  December  31,  2003 and  2002,  as  required  by SFAS No.  107,
"Disclosures about Fair Value of Financial Instruments". Such information, which
pertains to the Company's  financial  instruments,  is based on the requirements
set forth in that  Statement and does not purport to represent the aggregate net
fair value to the Company.

      The following methods and assumptions were used to estimate the fair value
of each class of financial  instruments  for which it is practicable to estimate
that value:

            Cash:  The carrying  amount  approximates  fair value because of the
short-term maturity of those instruments.

            Accounts  payable  and accrued  liabilities:  The  carrying  amounts
approximate fair value because of the short maturity of those instruments.

            Notes payable and convertible  debentures:  The carrying  amounts of
notes  payable  and  convertible  debentures  approximate  fair value due to the
length  of  the  maturities,   and/or  due  to  the  interest  rates  not  being
significantly different from the current market rates available to the Company.

      EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

      In May  2003,  the FASB  issued  SFAS No.  150,  "Accounting  for  Certain
Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS
No.  150  establishes  standards  for  classification  and  measurement  in  the
statement  of  financial   position  of  certain   financial   instruments  with
characteristics of both liabilities and equity. It requires  classification of a
financial  instrument  that is within its scope as a  liability  (or an asset in
some circumstances). SFAS No. 150 is effective for financial instruments entered
into or  modified  after  May 31,  2003  and,  otherwise,  is  effective  at the
beginning of the first interim period beginning after June 15, 2003. The Company
adopted SFAS No. 150 in the third quarter of 2003.  The adoption did not have an
impact on the consolidated financial statements.

      In  January   2003,  as  revised  in  December   2003,   the  FASB  issued
Interpretation No. 46 ("FIN 46"),  "Consolidation of Variable Interest Entities,
an  Interpretation  of ARB No. 51." FIN 46 requires  certain  variable  interest
entities  to be  consolidated  by the primary  beneficiary  of the entity if the
equity investors in the entity do not have the  characteristics of a controlling
financial  interest or do not have  sufficient  equity at risk for the entity to
finance its activities  without additional  subordinated  financial support from
other  parties.  FIN 46 is  effective  for all new  variable  interest  entities
created or acquired  after  January 31,  2003.  For variable  interest  entities
created or acquired  prior to February 1, 2003, the provisions of FIN 46 must be
applied for the first interim or annual  period ending after  December 15, 2004.
The  adoption  of FIN 46 for  provisions  effective  during  2003 did not have a
material impact on the consolidated financial statements.

                                      F-13
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.    PROPERTY AND EQUIPMENT

      Property and equipment consist of the following:

                                     USEFUL LIVES  DECEMBER 31,
                                       IN YEARS        2003
                                     ------------  ------------
Furniture and fixtures                     7        $  5,000
Computer equipment                         5         221,000
Equipment                                  5         100,000
                                                    --------
                                                    $326,000
  Less: accumulated depreciation                     322,000
                                                    --------
                                                      $4,000
                                                    ========

      Depreciation  expense  on  property  and  equipment  for the  years  ended
December  31, 2003 and 2002  amounted  to  approximately  $42,000  and  $32,000,
respectively.


5.    LAND HELD FOR DEVELOPMENT AND SALE

      On December 22, 2003,  Lehigh  acquired a parcel of land in New Jersey for
$4,950,000 that it intends to develop and then sell. This land was acquired from
Stone Street  Asset  Management  LLC ("Stone  Street"),  a company  under common
control with  Cornell.  In connection  with this  purchase of land,  the Company
incurred debt obligations consisting of a $3,300,000 of convertible debenture to
Cornell,   $250,000  of  convertible  debentures  to  unrelated  parties  and  a
$1,400,000  secured  note  payable to Stone  Street (see Note 7). As a result of
Stone Street's  relationship with Cornell,  and Cornell's  relationship with the
Company (see Note 7), the Company has recorded the land at the  historical  cost
basis as recorded by Stone Street of approximately $2,915,000 in accordance with
accounting rules regarding  transfer of non-monetary  assets.  The difference of
$2,035,000  between the fair value of the land as determined  by an  independent
appraiser  and the  carryover  cost  basis of land from  Stone  Street  has been
recorded as an adjustment to additional paid-in capital.


6.    ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

      Accounts payable and accrued liabilities consist of the following:

                                                   DECEMBER 31,
                                                       2003
                                                   ------------

Accounting and legal fees                           $ 51,000
Interest - related parties                            31,000
Interest                                               1,000
Consulting fees                                       37,000
Automobile lease termination fee                      22,000
Miscellaneous                                         28,000
                                                    --------
                                                    $170,000
                                                    ========

                                      F-14
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


7.    NOTES PAYABLE AND CONVERTIBLE DEBENTURES

      NOTE PAYABLE OFFICER/STOCKHOLDER

      On December 10, 2002, the Company  entered into a 60 day Revolving Line of
Credit  and  Secured   Promissory  Note  with  the  Company's   former  CEO  and
stockholder. Under the terms of the agreement, the former CEO agreed to lend the
Company, as needed for working capital requirements, up to $230,000. At December
31,  2002  there was an  outstanding  balance of  $115,000,  which was repaid on
January 2, 2003.  Interest  expense  and a  commitment  fee related to this note
included in the consolidated statement of operations for the year ended December
31, 2002 amounted to $1,000 and $8,000, respectively.

      NOTES PAYABLE

      Effective  upon  September 29, 2003,  Cornell  became a related party (see
below).

      In  connection  with the Equity Line of Credit with  Cornell (see Note 8),
the Company  received  loans  ("Equity  Line  Loans")  aggregating  $357,000 and
$525,000 during the years ended December 31, 2003 and 2002, respectively.  Under
the Equity Line of Credit, through the issuance of its common stock, the Company
repaid  certain of these  Equity  Line  Loans in the  amounts  of  $273,000  and
$325,000, in each of the years December 31, 2003 and 2002,  respectively through
the issuance of 1,151,490 and 187,374 shares of the Company's  common stock. The
common  shares  issued to repay these notes were issued at a 3% discount.  These
Equity Line Loans were  non-interest  bearing  during their terms,  which ranged
from 90 days to 180 days.

      The balance of these  Equity  Line Loans as of  September  2003,  totaling
$284,000,  were  not  repaid  within  their  term and  were in  default.  During
September 2003, the Company entered into an Agreement with Cornell to settle the
default  on  these  loans.  The  following  items  took  place  pursuant  to the
Agreement:

      o     Cornell agreed not to foreclose on its  outstanding  indebtedness of
            $284,000  owed by the Company.  In addition,  on September 29, 2003,
            Cornell  entered  into a new loan  agreement  with the  Company  for
            $200,000  to be  deposited  in escrow to be used to satisfy  certain
            outstanding  obligations of the Company,  including  trade payables,
            unpaid wages, and settlement of employment agreements.  The loan was
            non-interest bearing for its original term of 180 days.

      o     Cornell would provide  additional  capital to the Company and assist
            in  identifying  new  businesses.  Cornell  agreed to  maintain  the
            Company's  public filings and status.  The Company's Chief Executive
            Officer  ("CEO") and Chairman of the Board of  Directors,  and Chief
            Financial Officer ("CFO"), agreed to resign their positions with the
            Company, and as such, their employment  agreements terminated at the
            same time. The CEO and CFO received a settlement  consisting of cash
            and warrants to purchase shares of the Company's  common stock at an
            exercise price of $1.00 per share (see Note 8). The Company's  Board
            of Directors appointed a nominee to its Board of Directors, selected
            by Cornell.  Upon such  appointment,  the Company's  existing  Board
            members resigned.

                                      F-15
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


7.    NOTES PAYABLE AND CONVERTIBLE DEBENTURES, CONTINUED

      NOTES PAYABLE - RELATED PARTY, CONTINUED

      o     The  Agreement was  consummated  on September 29, 2003 and effective
            with the closing and the  resignations  of the Board  members.  As a
            result  of  reaching  settlements  to  satisfy  certain  outstanding
            obligations of the

            Company,  including trade payables,  unpaid wages, and settlement of
            employment agreements, the Company realized a gain on forgiveness of
            debt of  approximately  $347,000  during the year ended December 31,
            2003.

      On March 27, 2004, the $200,000 loan matured and was not repaid  according
to its terms.  On April 5, 2004,  Cornell  agreed to extend the due dates of the
$284,000 of Equity Line Loans and the $200,000 loan to April 15, 2005.

      While in default and through the extended  maturity  date, the $284,000 of
Equity Line Loans and the $200,000  loan accrue  interest from the default dates
at a rate of 24% per annum. Interest expense on these loans from Cornell for the
years ended  December  31, 2003 and 2002 was  approximately  $46,000 and $5,000,
respectively.

      At  December  31,  2003,  accrued  interest  on these loans due to Cornell
included  in  accounts  payable  and  accrued  liabilities  on the  accompanying
consolidated balance sheet was approximately $23,000.

      CONVERTIBLE DEBENTURES

      During October 2003, the Company raised $200,000 through the issuance of a
convertible debenture to Cornell. In addition, during December 2003, the Company
raised  $195,000  through the  issuance  of  convertible  debentures  to various
unrelated  parties.  On December  22,  2003,  the Company  issued a  convertible
debenture  for  $3,300,000  to Cornell  and  $250,000  to  unrelated  parties in
connection  with the acquisition of land held for development and sale (see Note
5) which is  secured  through a first  mortgage  lien on the land.  All of these
debentures  bear  interest  at a rate  of 5% per  annum,  with  interest  due at
maturity or upon conversion.  These  debentures  mature at various dates ranging
from October 2005 through December 2008.

      At the option of the Company,  upon the maturity date,  these  convertible
debentures  may be converted into the Company's  Common Stock.  At the option of
the holder,  at any time prior to  maturity,  any  portion of these  convertible
debentures  may be  converted  into Common  Stock.  The value of  principal  and
accrued  interest is  convertible  at the per share price equal to the lesser of
(a)  120% of the  closing  bid  price,  or (b) 80% of the  lowest  daily  volume
weighted  average price for the five days  immediately  preceding the conversion
date.  In  addition,  the Company may redeem,  with 30 days  advance  notice,  a
portion or all of these  outstanding  debentures  at 120% of the dollar value of
the amount redeemed plus accrued interest.  Under the conversion  limitation for
the debentures  held by Cornell,  the Company may issue shares under  conversion
only so long as,  at  conversion,  the  Cornell  holds no more  than 9.9% of the
Company's outstanding shares.

                                      F-16
<PAGE>

7.    NOTES PAYABLE AND CONVERTIBLE DEBENTURES, CONTINUED

      CONVERTIBLE DEBENTURES, CONTINUED

      The Company has recorded  debt  discounts  of $986,000  ($875,000 of which
related to  convertible  debentures  issued to  Cornell)  at  issuance  of these
convertible debentures to reflect the value of the beneficial conversion feature
related to the convertible debentures. Accordingly, the Company has recorded the
value of the  beneficial  conversion  features  as a reduction  to the  carrying
amount of the convertible debt and as an addition to additional paid-in capital.



      The Company is  amortizing  the debt discount over the term of the related
debentures  which  range  from 24  months  to 60  months.  Amortization  of debt
discounts for the year ended December 31, 2003 amounted to approximately $11,000
(approximately  $9,000 of which  relates  to  convertible  debentures  issued to
Cornell) and was recorded as interest expense on the  accompanying  consolidated
statement of operations.

      SECURED NOTE PAYABLE - RELATED PARTY

      On December 22, 2003, Lehigh issued a secured note for $1,400,000 to Stone
Street in conjunction  with its purchase of land in New Jersey (see Note 5). The
note provides for the payment of sixty equal monthly  installments  of principal
and  interest of $27,741  beginning  on January 1, 2005,  matures on January 10,
2010 and is  secured  through  a second  mortgage  on the land.  The note  bears
interest at a rate of 5% per annum.

      Aggregate annual maturities of Notes Payable and Convertible Debentures at
December 31, 2003 are as follows:

      Year Ending December 31,                  Amount
      ------------------------                  ------

              2004                          $       --
              2005                           1,122,000
              2006                             273,000
              2007                             287,000
              2008                           3,802,000
              Thereafter                       345,000
                                          ------------

      Total  notes  payable and
      convertible debentures                 5,829,000

      Less: unamortized debt
      discount                                 975,000
                                          ------------

      Total  notes  payable and
      convertible   debentures, net         $4,854,000
                                          ============

                                      F-17
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.    STOCKHOLDERS' DEFICIENCY

      CONVERTIBLE PREFERRED STOCK

      During May 2003, the Company entered into a Securities  Purchase Agreement
with  several  independent  buyers  whereby the  Company  issued and sold to the
buyers  67,000  shares of Series A Preferred  Stock at $1 per share.  The buyers
were  entitled,  at their option,  to convert the Series A Preferred  Stock into
shares of the Company's Common Stock at any time commencing after May 1, 2004 at
an adjusted  conversion price of $0.05 per share.  Any unconverted  shares as of
May 1, 2005 would  automatically  convert  into shares of the  Company's  Common
Stock at an adjusted  conversion  price of $0.05 per share.  The Company had the
right to redeem the outstanding Preferred Stock upon 30 days written notice at a
redemption  price  of 150%  of the  subscription  amount  plus  interest  on the
purchase  price of 24%. If the Company chose to redeem some, but not all, of the
Series A Preferred  Stock,  the Company could redeem a pro rata amount from each
holder of the Series A Preferred  Stock. The preferred stock was redeemed by the
Company in October  2003 for a total  redemption  price of $86,400.  The $19,400
excess of the amount of the redemption over the amount of the original issue has
been recorded as a deemed dividend - redemption premium on convertible preferred
stock.

      COMMON STOCK AND WARRANTS

      On December 20, 2002, the stockholders  approved an increase in the number
of authorized  shares from  40,000,000 to 140,000,000 and a reduction of the par
value per share from $0.01 to $0.001. The change in par value has been reflected
in the  consolidated  financial  statements  during 2002. On July 21, 2003,  the
Company's Board of Directors declared effective a reverse split of the Company's
common  shares  in  the  ratio  of 1 to 50 as  voted  on  and  approved  by  the
stockholders at the Company's Annual Stockholders'  meeting held on December 20,
2002,  and effective on July 21, 2003. All share and per share amounts have been
retroactively restated for the stock split.

      On  February  5,  2002,  the  Company  entered  into a  private  placement
agreement  with  investors  whereby  the  Company  issued  12,000  shares of the
Company's  common  stock  for  an  aggregate  purchase  price  of  $330,000.  In
connection  with this  agreement,  the Company  issued to the Placement  Agent a
Placement  Agent  Warrant,  exercisable  to  purchase up to 600 shares of common
stock,  representing  five  percent  of the  total of the  stock  issued  in the
Offering. The warrants shall be exercisable for a period of five years, expiring
on February 8, 2007,  at an exercise  price of $27.50 per share.  The  Placement
Agent also received a cash  placement fee of eight percent of the purchase price
and a  non-accountable  allowance  equal to two percent of the  purchase  price,
totaling $33,000.

      On February  27,  2002,  the Company  entered  into an  agreement  with an
investor  whereby  the  Company  issued  4,285  shares  of  common  stock for an
aggregate purchase price of $150,000 and warrants to purchase up to 1,000 shares
of Common Stock at an exercise price of $50.00 per share with an exercise period
of five years  expiring  February 27, 2007.  Under the terms of the  agreement a
consultant  was paid a finder's  fee of $1,500  representing  one percent of the
purchase price.

                                      F-18
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.    STOCKHOLDERS' DEFICIENCY, CONTINUED

      COMMON STOCK AND WARRANTS, CONTINUED

      On April 15, 2002,  the Company  entered into a $3,000,000  Equity Line of
Credit Agreement (the "Agreement") with Cornell (the "Purchaser").  Provided the
Company was in compliance with the terms of the Agreement, the Company could, at
its option, periodically require the Purchaser to purchase up to $100,000 in any
seven day  period of the  Company's  common  stock  (the  "put"  shares) up to a
maximum of $3,000,000  over the next two years,  commencing on May 31, 2002 (the
effective date of a Securities Act of 1933  registration  statement on Form SB-2
for the  registration  of  100,000  shares of common  stock to be sold under the
Agreement,  plus  4,762  shares of common  stock  mentioned  below).  Additional
registration  statements  added 280,000 shares on November 1, 2002 and 1,200,000
on January 10, 2003, bringing the total registered shares to 1,580,000 under the
Agreement. The Company issued to the Purchaser 4,362 shares of common stock as a
commitment fee for entering into the Agreement.  In addition, the Company issued
to the placement agent 400 shares of the Company's  common stock. For each share
of common stock  purchased  under the Equity Line of Credit,  the Purchaser paid
97% of the then Market Price (as defined in the  Agreement),  and was paid a fee
of 4% of each  advance.  The Company  has issued  1,343,168  and 235,650  common
shares (of which  1,151,490  and 187,374  represented  shares  utilized  for the
repayment of notes  payable to Cornell - see Note 7) under the Agreement for the
years ended December 31, 2003 and 2002, respectively.

      The Agreement was  non-exclusive;  thereby permitting the Company to offer
and sell its  securities to third parties while the Equity Line of Credit was in
effect.  The  Company  had the option to  terminate  the  Equity  Line of Credit
Agreement at any time, provided there is no pending advance  thereunder.  During
July 2003,  the Company  reached the limit of 1,580,000  registered  shares that
were issuable under the Agreement.

      Between June 7, 2002 and June 30, 2002 the Company entered into agreements
with  various  investors  whereby a total of 22,203  shares of Common  Stock and
warrants  exercisable  at $50 per share for 1,000  shares of common  stock  were
issued for an aggregate  purchase  price of  $330,350.  In  connection  with the
issuance of these  shares,  the Company  incurred  costs of $35,664 in placement
agent fees and expenses.

      On June 30, 2003,  the Company issued 25,000 shares of common stock valued
at approximately $5,000 in exchange for services provided to the Company.

      On September 24, 2003, the Company issued 200,000 warrants to purchase the
Company's  common stock at $1.00 per share.  These  warrants  were issued to two
former  officers for prior  services  provided to the Company.  The warrants are
exercisable  over a five-year  period which expires in September  2008. The fair
value of the warrants was estimated at $0.09 per warrant on the date of issuance
using the  Black-Scholes  pricing  model.  Compensation  costs  related to these
warrants  for the year ended  December  31, 2003  included  in the  consolidated
statement of operations amounted to $18,000.

                                      F-19
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.    STOCKHOLDERS' DEFICIENCY, CONTINUED

      COMMON STOCK AND WARRANTS, CONTINUED

      During the years ended  December  31, 2003 and 2002, a total of 94,879 and
50,600 warrants expired, respectively.

      At December 31, 2003 there were 218,230 warrants outstanding as follows:


             NUMBER OF                       WEIGHTED
          COMMON SHARES                      AVERAGE
            UNDERLYING     EXERCISE PRICE    EXERCISE    EXPIRATION
             WARRANTS     RANGE PER SHARE     PRICE         DATES
             --------     ---------------     -----         -----

               3,130     $53.50 - $70.00     $66.78    November 2004 to
                                                        December 2004
              12,000     $37.50 - $100.00    $68.79    February 2005 to
                                                        November 2005
               3,100      $5.00 - $50.00     $38.39    January 2007 to
                                                        October 2007
             200,000          $1.00           $1.00    September 2008
             -------
             218,230
             =======


      STOCK OPTIONS

      On January 12, 2003 the Company's  employees and directors rescinded their
interest  in 23,780 of the  Company's  options  that had been  granted  to them.
During 2003, all other outstanding options expired.

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

                                      F-20
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.    STOCKHOLDERS' DEFICIENCY, CONTINUED

      STOCK OPTIONS, CONTINUED

      A summary of the  Company's  stock option  activity  under its plans,  and
related  information,  is as follows.  All amounts have been restated to reflect
the impact of the reverse stock split:

<TABLE>
<CAPTION>
                                                                WEIGHTED
                                   NUMBER OF                     AVERAGE    NUMBER OF
                                    COMMON     EXERCISE PRICE   EXERCISE     SHARES
                                    SHARES     RANGE PER SHARE   PRICE    EXERCISABLE
                                    ------     ---------------   -----    -----------

<S>                                 <C>       <C>      <C>      <C>          <C>
Outstanding at January 1, 2002      32,560    $30.50 - $344.00  $126.00      29,843
                                                                            =======

Cancelled                            5,203    $36.50 - $344.00  $190.00
                                   -------

Outstanding at December 31, 2002    27,357    $30.50 - $337.50  $114.50      26,991
                                                                            =======

Forfeited                           27,357    $30.50 - $337.50  $114.50
                                   -------

Outstanding at December 31, 2003         -                                        -
                                   =======                                  =======
</TABLE>


      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 could 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
would have an exercise  price of not less than 100% of the fair market  value of
the  shares on the date on which  such  option is  granted.  With  respect to an
incentive  option  granted to a Participant  who owns more than 10% of the total
combined  voting  stock of the  Company  or of any parent or  subsidiary  of the
Company,  the exercise  price for such option would 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) would have an exercise price of at least the
par value of the common  stock.  Stock  appreciation  rights could 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  determined the vesting
of the options under the Plan at the date of grant.  A maximum of 24,100 options
could be awarded  under the Plan (as  amended  May 26,  1998).  No options  were
issued during the years ended  December 31, 2003 and 2002 under the  Performance
Incentive Stock Option Plan. This plan was terminated by the Company on December
31, 2003.

                                      F-21
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.    STOCKHOLDERS' DEFICIENCY, CONTINUED

      STOCK OPTIONS, CONTINUED

      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 provided that
each member of the Board of Directors (an "Eligible Director") who otherwise (1)
was not currently an employee of the Company,  or (2) was not a former  employee
still  receiving  compensation  for prior services  (other than benefits under a
tax-qualified  pension  plan) would 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,  would be granted an option to purchase 60 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  remained
available under the Director's Plan, each year immediately following the date of
the annual meeting of the Company there  automatically  would be granted to each
Eligible  Director  who was then  serving on the Board an option to purchase 100
shares of the Company's common stock.  The first 20 options vested  immediately,
the remainder vested equally over the next four years from the date of grant and
were exercisable at the closing price of such shares of common stock at the date
of grant.  Such options expired five years from the date of vesting.  No options
were  issued  during  the  years  ended  December  31,  2003 and 2002  under the
Director's Plan. This plan was terminated by the Company on December 31, 2003.

      The maximum number of shares of Common Stock with respect to which options
could be granted under the  Director's  Plan (as amended May 26, 1998) was 4,700
shares.

      This plan was terminated by the Company on December 31, 2003.


9.    EMPLOYEE BENEFIT PLAN

      The Company maintained a noncontributory  Employee Savings Plan,  operated
in accordance with the provisions of Section 401(k) of the Internal Revenue Code
that was  terminated  during the year ended  December 31, 2003.  Pursuant to the
terms of the plan,  participants  could defer a portion of their income  through
contributions  to the plan.  During the years ended  December 31, 2003 and 2002,
the Company did not make any discretionary additional contributions to the plan.
The  termination  of the  Plan  had no  effect  on  the  consolidated  financial
statements.

                                      F-22
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10.   INCOME TAXES

      The (provision for) benefit from income taxes for the years ended December
31,  2003 and 2002  consists  entirely of state  taxes and is  comprised  of the
following:

                                               2003         2002
                                               ----         ----
            State:
                  Current                   $       0   $  232,000
                  Deferred                  $  (5,000)     (50,000)
                                            ----------  -----------
                                            $  (5,000)  $  182,000
                                            ==========  ===========

      The  difference  between  the  statutory  federal  income tax rate and the
effective rate for the Company's  income tax benefit for each of the years ended
December 31, 2003 and 2002, respectively, is summarized as follows:

                                                     2003       2002
                                                     ----       ----

      Tax at federal statutory rate                 34.0%       34.0%
      State income tax benefit (expense) net of
        federal tax effect                          (0.2)%       4.2%
      Increase in valuation allowance              (37.0)%     (33.9)%
      Miscellaneous                                  2.6%        2.1%
                                                   ------      ------
      Effective income tax rate                      0.6%        6.4%
                                                   ======      ======


      The tax effect of temporary differences consists of the following:


                                                         DECEMBER,
                                                         31, 2003
                                                         --------
            Deferred tax assets:
               Net operating loss carryforward         $10,231,000
               Land held for development and sale          813,000
               Research and development credits            198,000

               Property and equipment                       21,000
                                                       -----------
                                                        11,263,000
               Valuation allowance                     (11,038,000)
                                                       -----------
                                                       $   225,000
                                                       ===========

                                      F-23
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10    INCOME TAXES, CONTINUED

      In  accordance  with New Jersey  statutes,  the  Company  entered  into an
agreement to sell certain New Jersey net operating  losses  ("NOL") and research
and development  credits.  Accordingly,  a state income tax benefit and deferred
tax asset was  recorded  at December  31, 2002 and for the year then ended.  The
deferred  tax asset at December  31,  2003 of $225,000  related to the sale of a
portion of the New Jersey NOL  recorded in 2002 that was received by the Company
in January 2004.  The Company has not recorded an additional  state deferred tax
asset at December 31, 2003 related to the sale of the  remaining  New Jersey NOL
(see below).

      An  increase  in  valuation  allowance  of  approximately  $1,477,000  and
$968,000,  respectively,  for the years  ended  December  31,  2003 and 2002 was
recorded  because it was more likely than not that the deferred tax assets would
not be realized.

      As of  December  31,  2003,  the  Company  has unused net  operating  loss
carryforwards  of  $27,640,000  and  $10,305,000,  respectively,  available  for
federal  and  state  income  tax  purposes.   The  unused  net  operating   loss
carryforwards  expire in various  years from 2010 to 2023.  The  Company  may be
subject to  limitations on the use of its NOL's as provided under Section 382 of
the Internal Revenue Code. In addition, the Company has research and development
tax  credit  carryforwards  for  federal  and state  purposes  of  approximately
$144,000 and  $54,000,  respectively  that expire in various  years from 2010 to
2023.

11.   SEGMENT DATA

      The Company presents segment information in accordance with the provisions
of SFAS  No.  131,"Disclosures  About  Segments  of an  Enterprise  and  Related
Information"  ("SFAS No. 131").  SFAS No.131  establishes  standards for the way
public  enterprises  report  information  about  operating  segments  in  annual
financial   statements  and  requires  those   enterprises  to  report  selected
information  about  operating  segments in interim  financial  reports issued to
stockholders.

      Commencing with the acquisition of land (see Note 5) in December 2003, the
Company operates in two industry  segments - video and image technology and real
estate development and sale. The Company evaluates segment  performance based on
loss from operations.

                                      F-24
<PAGE>

                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


11.   SEGMENT DATA, CONTINUED

      Summarized  financial  information  concerning  the  Company's  reportable
segments is shown in the following table for the year ended December 31, 2003:


                                                (IN THOUSANDS)

                                                  REAL ESTATE
                               VIDEO & IMAGE     DEVELOPMENT
                                 TECHNOLOGY        AND SALE           TOTAL
                                 ----------        --------           -----

Net revenues from customers       $    20           $   --           $    20
                                  =======           ======           =======

Loss from operations              $(1,062)          $  (15)          $(1,077)
                                  =======           ======           =======
Total identifiable assets         $   349           $2,970           $ 3,319
                                  =======           ======           =======
Gain on forgiveness of debt       $   347           $   --           $   347
                                  =======           ======           =======
Interest expense                  $    53           $    2           $    55
                                  =======           ======           =======
Depreciation                      $    42           $   --           $    42
                                  =======           ======           =======
Capital expenditures              $    --           $2,970           $ 2,970
                                  =======           ======           =======



12.   MAJOR CUSTOMERS

      For the year ended December 31, 2003, two customers accounted for sales of
$12,720 (65%) and $4,375 (22%),  respectively.  For the year ended  December 31,
2002, one customer accounted for sales of approximately $268,000 (94%).

13.   SALES AND MARKETING AGREEMENT

      In October 2003, the Company entered into a non-exclusive  contract with a
sales and marketing agent, who is the Company's former chief technology officer.
The agent will market, promote, sell and distribute the Company's technology, in
exchange  for a  commission  equal to 90% of the net profits  derived  from such
efforts.


14.   SUBSEQUENT EVENTS

      During January and February  2004,  the Company formed NuWave  Acquisition
Corp,  Harwood  Acquisition  Corp, WH Acquisition Corp. and JK Acquisition Corp.
Each of these  subsidiaries  was  formed  with the  intent to  acquire  and hold
investments in real estate and other types of assets.

                                      F-25