<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               REPORT ON FORM 10-K

     /x/  Annual Report pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934

     For the fiscal year ended November 30, 1998.

     /_/  Transition Report pursuant to Section 13 or 15(d) of The Securities
          Exchange Act of 1934

     For the transition period from ___________________ to ___________________.

Commission File No. 0-24530

                               FUTUREBIOTICS, INC.
             (Exact name of registrant as specified in its charter)


            Delaware                                      11-3205937
(State of or other jurisdiction                (IRS Employer Identification No.)
of incorporation or organization)


145 Ricefield Lane
Hauppauge, New York                                                     11788
(Address of Principal                                                 (Zip Code)
  Executive Offices)


Registrant's telephone number, including area code: (516) 273-2630

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act:


                    Common Stock, par value $.0001 per share
                                (Title of Class)

 Units consisting of two (2) shares of common stock, par value $.0001 per share
          and two (2) Class A Redeemable Common Stock Purchase Warrants
                                (Title of Class)

                Class A Redeemable Common Stock Purchase Warrants
                                (Title of Class)


<PAGE>

           Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No /_/

           Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of the Regulation S-K is not contained herein and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. /x/

           Issuer's revenues for its most recent fiscal year were $10,304,000.

           The aggregate market value of the voting stock held by non-
affiliates of the Registrant, computed by reference to the closing price of such
stock as of March 5, 1999, was approximately $4,050,000.

           Number of shares outstanding of the issuer's common stock, as of
March 5, 1999, was 1,350,000.

                   DOCUMENTS INCORPORATED BY REFERENCE: None.


<PAGE>

                                     PART I

Item 1. BUSINESS.

General

           Futurebiotics, Inc., a Delaware corporation (the "Company"), was
formed on March 16, 1994. The Company is engaged in the distribution, marketing
and sale of vitamins, minerals, herbal formulations and specialty nutritional
supplements, which it markets principally to health food stores through regional
distributors.

           The Company's primary product line consists of more than 150 items,
including multi-vitamin/mineral formulas, green superfood powders,
herbal/mineral tonics and herbal complexes, and specific specialty supplements.
All of the Company's products are supplied by its parent company, PDK Labs Inc.

           This Form 10-K contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Statements made
that are not historical facts are forward-looking and, accordingly, involve
risks and uncertainties that could cause actual results or outcomes to differ
materially from those expressed in the forward-looking statements. Although such
forward-looking statements have been based on reasonable assumptions, there is
no assurance that the expected results will be achieved. Some of the factors
that could cause actual results to differ materially include, but are not
limited to: the effects of regulatory decisions; changes in law and other
governmental actions and initiatives; uncertainties relating to global economic
conditions; market acceptance of competing products; the availability and cost
of raw materials, the Company's ability to successfully maintain or increase
market share in its core business while expanding its product base into other
markets; the strength of its distribution channels; and the Company's ability to
manage fixed and variable expense growth relative to revenue growth.

Recent Developments

           On March 3, 1999, an Asset Purchase Agreement (the "Purchase
Agreement") was executed by and among FB Acquisition Corp., a Delaware
corporation ("FB Acquisition"), Nutraceutical Corporation, a Delaware
corporation ("Nutraceutical"), the Company and PDK Labs, Inc., a New York
corporation ("PDK"), pursuant to which FB Acquisition agreed to acquire, and the
Company agreed to sell, (the "Transaction") substantially all of the Company's
assets (the "Assets").

           As consideration for the Assets, FB Acquisition has agreed to pay in
cash (i) $3,700,000, (ii) the value of purchased inventory up to $1,500,000, and
(iii) the net book value of accounts receivables up to a maximum of $725,000.
The purchase price is subject to adjustment in the event that the proceeds
actually received from collecting the purchased accounts receivable differs from
the amount of purchased accounts receivable.

           In connection with the Transaction, the Company anticipates entering
into a Transition Service Agreement at closing which will require the Company to
provide certain services to FB


                                        2

<PAGE>

Acquisition on a temporary basis to facilitate a smooth transition of the
transfer of the Assets to FB Acquisition.

           The closing ("Closing") of the Transaction is subject to the approval
of the Company's stockholders and the satisfaction of other customary
conditions. PDK, the majority stockholder of the Company has agreed to vote the
shares of the Company's capital stock held by it in favor of the Transaction.
The Company anticipates Closing the Transaction during the second calendar
quarter of 1999.

           Following the Closing, the Company shall be restricted from engaging
in merchandising, distribution or sale of (i) a broad line of branded
nutritional supplements, other than to mass merchandisers, or (ii) any of the
Company's proprietary products and/or formulations. As a result, the Company
intends to commence a new business.

           The following is a summary of the Company's business (the "Business")
as of the date hereof and in the event that the Transaction is consummated, the
Company will no longer be engaged in the Business.

Products and Product Development

           The Company develops products for its own Futurebiotics line. Its
products include vitamins, minerals, herbs and specialty combinations. Each
product category contains numerous different dosage sizes and various and unique
combinations of ingredients. These product groups include nutrition products for
men, advanced women's formulas, super green foods, weight loss/management
products and vegetarian multiple vitamins.

           The Company introduces new products in response to anticipated
consumer trends. Product concepts are generally developed by the Company's
management, key employees and consultants.

Government Regulation

           The processing, formulation, packaging, labeling and advertising of
the Company's products are subject to regulation by one or more federal
agencies, including the United States Food and Drug Administration ("FDA"), the
Federal Trade Commission ("FTC"), the Consumer Product Safety Commission, the
United States Department of Agriculture and the Environmental Protection Agency
("EPA"). These activities may also be regulated by various agencies of the
states and localities in which the Company's products are sold.

           In October 1994, the Dietary Supplement Health and Education Law was
signed into law. This new law, which amends the Federal Food, Drug and Cosmetic
Act, defines dietary supplements as a separate and distinct entity, and not as
food additives. Vitamins, minerals, amino acids, herbs and other nutritional
substances are included in the definition. It expressly provides for the use of
third party scientific literature which shall not be regulated as labeling by
the FDA, provided it is not false or misleading. The new law also delayed the
FDA's requirements for extensive product label changes which were to be applied
to products


                                        3
<PAGE>

manufactured after July 1, 1995. It provides a set of different label
requirements for ingredient content information, and directs the FDA to publish
new label regulations for supplements with a mandatory effective date of
December 31, 1996. It makes no modifications on the requirements and
proscriptions regarding health claims for dietary supplements. The new law also
introduced the concept of good manufacturing practices to the manufacture of
dietary supplements. At this time, it would be premature to predict its overall
impact on the dietary supplement industry.

Competition

           The market for vitamins, dietary supplements, herbal-based products
and nutritional supplements is highly competitive in each of the Company's
existing and anticipated product lines and methods of distribution. Numerous
manufacturers and distributors compete with the Company for customers throughout
the United States and internationally in the packaged vitamin, mineral and
nutritional supplement industry selling products to retailers, such as mass
merchandisers, drug store chains, independent drug stores and health food
stores. Many of the Company's competitors are substantially larger and more
experienced than the Company, have longer operating histories and have
materially greater financial and other resources than the Company. Many of these
competitors are private companies, and therefore, the Company cannot compare its
revenues with respect to the sales volume of each competitor. The Company's
significant competitors include Nature's Bounty, Twin Labs, and Solgar. There
can be no assurance that the Company will be able to compete successfully with
its more established and better capitalized competitors.

           Although certain of the Company's competitors are substantially
larger than the Company and have greater financial resources, the Company
believes that it competes favorably with other vitamin and nutritional
supplement companies because of its access to products, competitive pricing,
quality of products, sales support and diverse product line.

Marketing and Advertising

           The Company markets its products through in-store demonstrations,
point of purchase displays, and promotional literature. Advertising is through
consumer and trade magazines, newspapers, in-store flyers, radio and
distributors catalogs. The Company also mails a five color catalog directly to
retail stores.

Trademarks and Patents

           The Company owns various trademarks which have been registered with
the United States Patent and Trademark Office ("PTO"). To the Company's
knowledge, the Company has the common law right to use such servicemarks on its
products and in the marketing of its services. The Company has retained
trademark counsel and presently intends to make all appropriate filings and
registrations and take all other actions necessary, to protect all of its
intellectual property rights.

Conflicts of Interests


                                        4
<PAGE>

           As of November 30, 1998, PDK owned fifty one and nine tenths (51.9%)
percent of the Company's outstanding shares of Common Stock and one hundred
(100%) percent of its Preferred Stock. At present, PDK supplies all of the
Company's products, as well as certain management and administrative facilities
and personnel. It is anticipated that PDK will continue to supply a significant
percentage of the Company's products, at or near present levels, as well as
administrative and support services, and that the Company will continue to
operate its executive offices, distribution and packaging at facilities leased
and managed by PDK. In addition, four (4) members of PDK's Board of Directors,
Reginald Spinello, Karine Hollander, Thomas Keith and Lawrence Simon, are also
members of the Company's Board of Directors. Reginald Spinello, a Director and
the President and Chief Executive Officer of the Company, is PDK's President and
Chief Executive Officer. Because of PDK's ownership interest in the Company, the
identity of certain management and PDK's role as a significant supplier to the
Company, certain conflicts of interest may occur between the Company and PDK.

Product Liability Insurance

           The Company, like other distributors of products that are ingested,
faces inherent risk of exposure to product liability claims if, among other
things, the use of its products results in an injury. With respect to product
liability coverage, the Company currently has a product liability insurance
policy. There is no assurance that any judgment against the Company will not
exceed liability coverage. A judgment significantly in excess of the amount of
insurance coverage would have a material adverse effect on the Company.

Employees

           As of March 1, 1999, the Company employs a total of 13 employees on a
full time basis. The Company utilizes PDK for a majority of its administrative
functions.

Item 2. PROPERTIES.

           The Company's corporate, sales, and advertising offices are located
at the offices of PDK Labs Inc., 145 Ricefield Lane, Hauppauge, New York 11788,
(telephone number (516) 273-6300).

           The lease is for 5,000 square feet for an initial one (1) year term
with yearly options to renew with escalations of five (5%) percent annually. The
initial annual rental is $50,000. The lease terminates in October, 2000 as does
the PDK Labs Inc. master lease.

Item 3. LEGAL PROCEEDINGS.

           Except as set forth below, management is not aware of any material
legal proceedings pending against the Company.

           Donald Zinman ("Zinman") served and filed a complaint (the "Zinman
Complaint") against PDK and its majority-owned subsidiary, Futurebiotics, Inc.
("Futurebiotics") dated May 16, 1997 in a litigation entitled Zinman v. PDK Labs
Inc. and Futurebiotics, Inc. in the Eastern


                                        5
<PAGE>

District of New York. The Zinman Complaint alleges breach of contract in that
PDK failed to pay amounts under an Amended Consulting Agreement between Zinman
and PDK. On November 24, 1998, the Company settled the lawsuit in its entirety
for $450,000.

           Although the Company is not a party to the following legal
proceedings, PDK has been named in the following litigations:

           On February 4, 1994 PDK was named as a defendant in a litigation
entitled Hillary L. Dufficy v. PDK Labs Inc. in the Superior Court of the State
of Connecticut, alleging a product liability claim pursuant to Section 52-572m
of the Connecticut General Statutes. The action seeks unspecified monetary
damages. The Court granted PDK's motion for summary judgment dismissing the
action and plaintiff has appealed the decision. PDK intends to vigorously defend
the lawsuit and has referred the action to its product liability insurer.

           On July 29, 1996, PDK served a complaint (the "Complaint") against a
former executive in a litigation entitled PDK Labs Inc. v. Perry Krape in the
Supreme Court of the State of New York, County of Suffolk. The Complaint
alleges, in pertinent part, that the former executive breached his employment
agreement with PDK by competing with PDK and soliciting PDK's customers in
violation of the terms of the agreement. The Complaint further alleges that the
executive has defaulted on payments due to PDK pursuant to a promissory note and
that while serving as an officer of PDK made inappropriate investments for PDK's
Profit Sharing Plan and Trusts. By virtue of the foregoing, PDK alleges that the
executive has breached his Employment Agreement and the Amendment, engaged in
unfair competition, breached the terms of the personal guarantee, defaulted upon
the promissory note, converted funds belonging to PDK and breached his fiduciary
duty to PDK.

           In his Answer and Counterclaim (the "Counterclaim"), the executive
offers general denials of these allegations and interposes both personal
counterclaims and derivative claims. The executive's personal Counterclaim,
asserts in pertinent part, that the Company and certain officers and directors
have breached their fiduciary duty to him and that the Restrictive Covenant and
agreement is unenforceable and should be deemed a nullity. The derivative claims
were dismissed by the court and the executive has appealed the dismissal. PDK
and the directors deny that they engaged in any improper conduct which would
support the executive's personal Counterclaim. Each intends to vigorously defend
against such claims and PDK intends to proceed with its action against the
executive. In addition, on February 22, 1999, Mr. Krape served a demand on the
PDK's board of directors, pursuant to Section 626 of the New York Business
Corporation Law, to commence a shareholder's derivative action (the "Demand").
The Demand requests that the board of directors commence an action for fraud,
breach of fiduciary duty and corporate waste against various individuals and
entities including former and present officers and directors of PDK. The board
of directors is reviewing the Demand.

           Futurebiotics has not been named as a party in the former executive's
Counterclaim.

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

           (a) On September 18, 1998, the Company held its annual meeting of
Shareholders.


                                       6
<PAGE>

           (b) At said meeting, the following five individuals were elected by
the following vote to serve as directors until the next annual meeting of
stockholders and until their successors are elected and qualified:

                                   FOR                       AGAINST
                                   ---                       -------

Reginald Spinello               1,809,254                     6,480
Karine Hollander                1,809,254                     6,480
Thomas Keith                    1,809,254                     6,480
Theresa Giove                   1,809,254                     6,480
Lawrence D. Simon               1,809,254                     6,480

           (c) At said meeting 1,810,635 votes in favor of and 3,470 votes
against a proposal to ratify the appointment of Holtz Rubenstein & Co., LLP to
serve as the independent certified public accountants for the 1999 fiscal year.


                                        7
<PAGE>

                                     PART II

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

           The pre-reverse split Common Stock was regularly quoted and traded on
the Nasdaq system under the symbol VITK until December 30, 1996. The
post-reverse split Common Stock is regularly quoted and traded on the NASDAQ
system under the symbol VITK. The Class A Warrants were regularly quoted and
traded on the NASDAQ system under the symbol VITKW until December 31, 1997 when
they were de-listed.

           The following table indicates the high and low bid prices for the
Company's Common Stock and Class A Warrants for the period up to November 30,
1998 based upon information supplied by the NASDAQ system. Prices represent
quotations between dealers without adjustments for retail markups, markdowns or
commissions, and may not represent actual transactions.

Common Stock
------------

1996 Calendar Year                                        Quoted Bid Price
------------------                                        ----------------

                                                       High               Low
                                                       ----               ---

First Quarter                                         5 5/8               3 7/16

Second Quarter                                        3 3/4               2 3/16

Third Quarter                                         2 13/16             1 1/4

Fourth Quarter                                        2 13/16             1 1/4


1997 Calendar Year                                        Quoted Bid Price
------------------                                        ----------------

                                                       High               Low
                                                       ----               ---

First Quarter                                         3                     3/4
                                                                  
Second Quarter                                        2 3/8               1 5/8
                                                                  
Third Quarter                                         3 3/4               2 1/8
                                                                  
Fourth Quarter                                        4 1/4               3 3/8
                                                               

                                       8

<PAGE>

1998 Calendar Year                                        Quoted Bid Price
------------------                                        ----------------

                                                       High               Low
                                                       ----               ---

First Quarter                                           4 1/2            3 1/2
                                                                       
Second Quarter                                          7 7/8            1 1/4
                                                                       
Third Quarter                                           3 1/2            1 1/4
                                                                       
Fourth Quarter                                         16                  3/4
                                                                      
Class A Warrants


1996 Calendar Year                                        Quoted Bid Price
------------------                                        ----------------


                                                       High               Low
                                                       ----               ---

First Quarter                                             1/8              1/16

Second Quarter                                            3/32             1/16

Third Quarter                                             1/16             1/32

Fourth Quarter                                            1/32             1/32


1997 Calendar Year                                        Quoted Bid Price
------------------                                        ----------------


                                                       High               Low
                                                       ----               ---

First Quarter                                             1/32             1/32

Second Quarter                                            1/32             1/32

Third Quarter                                             1/32             1/32

Fourth Quarter                                            1/32             1/32


1998 Calendar Year                                        Quoted Bid Price
------------------                                        ----------------


                                                       High               Low
                                                       ----               ---

First Quarter                                             1/64             1/64

Second Quarter                                            1/64             1/64

Third Quarter                                             1/64             1/64


                                       9

<PAGE>

Fourth Quarter                                            1/64             1/64

           The Company effected a one-for-ten reverse stock split with respect
to its shares of Common Stock outstanding on December 30, 1996.

           On March 5, 1999, the closing price of the Common Stock as reported
on NASDAQ National was $3.00. On March 5, 1999, there were 156 holders of record
of Common Stock.


Item 6. SELECTED FINANCIAL DATA.

SUMMARY BALANCE SHEET DATA
    (in thousands)

                                          November 30,

                          1998      1997      1996      1995      1994
                          ----      ----      ----      ----      ----

Total Assets            $ 7,340   $10,975   $11,764   $10,142   $ 9,865
Long-Term Obligations         0     3,000     3,000     1,250         0
Stockholders' Equity      7,126     7,798     8,545     8,547     7,890



SUMMARY INCOME STATEMENT DATA

(in thousand, except share and per data)

<TABLE>
<CAPTION>
                                                        Year ended November 30,

                                    1998           1997           1996           1995          1994
                                    ----           ----           ----           ----          ----

<S>                            <C>            <C>            <C>            <C>           <C>        
Revenues                       $    10,304    $    11,682    $    12,713    $    10,647   $     7,415
Operating (Loss) Income               (914)        (1,206)          (372)           516           895
Net (Loss) Income                     (980)        (1,034)          (290)           442           533
Net (Loss) Income Per Common
   Stock                       ($     0.73)   ($     0.77)   ($     0.21)   $      0.33   $      1.15
Average Number of Common
   Shares Outstanding            1,350,000      1,350,000      1,350,000      1,327,643       463,472
</TABLE>


                                       10

<PAGE>

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
        FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Results of Operations

Fiscal Year 1998 compared to Fiscal Year 1997

           Net sales for the fiscal year 1998 were approximately $10,304,000 as
compared to net sales in 1997 of $11,682,000. Gross profit amounted to
approximately $3,775,000 (37% of sales) in 1998 as compared with $5,883,000 (50%
of sales) in 1997. The decrease in gross profit percentage is attributable to
changes in the Company's price structure and a change in the mix of sales. In
addition, the Company has designed new bold color coded labels and has changed
from plastic to glass bottles for its products. These changes are intended to
enhance and create a more uniform presence for the product line as compared to
the original labels which were diversified in style throughout the product line.
As a result of these changes, certain product was sold at close out prices which
had an impact on the overall gross profit percentage.

           Selling, general and administrative expenses were $4,689,000 (46% of
sales) in 1998, and $7,089,000 (61% of sales) in 1997. The decrease is primarily
attributable to a charge for promotional costs of approximately $1,507,000 in
1997 related to marketing program, and a reduction in sales force salaries and
expenses in 1998 due to the Company consolidating sales territories and reaching
more customers through telemarketing efforts.

           On March 3, 1999, the Company and PDK entered into an Asset Purchase
Agreement with Nutraceutical Corporation ("Nutraceutical") and FB Acquisition
Corp., a wholly-owned subsidiary of Nutraceutical pursuant to which FB
Acquisition Corp. agreed to acquire and the Company agreed to sell, (the
"Transaction") substantially all of the Company's assets (the "Assets").

           As consideration for the Assets, FB Acquisitions Corp. has agreed to
pay in cash (i) $3,700,000, (ii) the value of purchased inventory up to
$1,500,000, and (iii) the net book value of accounts receivable up to a maximum
of $725,000. The purchase price is subject to adjustment in the event that the
proceeds actually received from collecting the purchased accounts receivables
differ from the amount of purchased accounts receivable.

           The closing ("Closing") of the Transaction is subject to the approval
of the Company's stockholders and the satisfaction of other customary
conditions. PDK, the majority stockholder of the Company has agreed to vote the
shares of the Company's capital stock held thereby in favor of the Transaction.
The Company anticipates Closing the Transaction during the second calendar
quarter of 1999.

           Following the Closing, the Company shall be restricted from engaging
in merchandising distribution or sale of (i) a broad line of branded nutritional
supplements, other than to mass merchandisers, or (ii) any of the Company's
proprietary products and/or formulations. As a result, the Company intends to
commence a new business.


                                       11

<PAGE>

           The Company recognizes the need to ensure its operations will not be
adversely impacted by the Year 2000 software failures. Software failures due to
processing errors potentially arising from calculations using the Year 2000 date
are a known risk. The Company is addressing this risk to the availability and
integrity of financial statements and the reliability of operational systems.
The Company is developing a plan to ensure that its systems are compliant with
the requirements to process transactions in the Year 2000. That plan consists of
four phases: assessment, remediation, testing and implementation, and
encompasses internal information technology (IT) systems and non-IT systems, as
well as third party exposures. The Company has completed the assessment of its
IT systems and non-IT systems and is in the process of making remedial changes
to its existing software. In addition, the Company has requested from a majority
of its principal suppliers and vendors written statements regarding their plan
for meeting Year 2000 requirements. To date, the Company has not received
adequate response to such requests.

           Management of the Company believes that it is working on an effective
program to resolve the Year 2000 issue in a timely manner and that the costs of
implementing this program will not materially affect the financial position of
the Company. The Company has not yet completed all necessary phases of the Year
2000 program. In the event that the Company does not complete any additional
phases, the Company could experience business interruptions. In addition,
disruptions in the economy generally resulting from the Year 2000 issues could
also materially adversely affect the Company. The amount of potential liability
and lost revenue cannot be reasonably estimated at this time. Management
believes that inflation did not have a material effect on operations or
financial condition in 1998, 1997, or 1996. Management also believes that its
business is not seasonal; however, significant promotional activities can have a
direct impact on sales volume in any given quarter.

Fiscal Year 1997 compared to Fiscal Year 1996

           Net sales for the fiscal year 1997 were approximately $11,682,000 as
compared to net sales in 1996 of $12,713,000. The decrease in sales is
attributable to the Company discontinuing an aggressive marketing program which
was in place in 1996. Gross profit amounted to approximately $5,883,000 (50% of
sales) in 1997 as compared with $7,194,000 (57% of sales) in 1996. The decrease
in gross profit percentage is attributable to changes being implemented to the
Company's price structure upon the phase out of a marketing program targeting
select retail stores and distributors, as well as a change in the mix of sales.

           Selling, general and administrative expenses were $7,089,000 (61% of
sales) in 1997 and $7,566,000 (60% of sales) in 1996. Included in selling,
general and administrative expenses is approximately $1,507,000 in 1997 and
$1,238,000 in 1996 of promotional costs associated with a marketing program with
select retail stores and distributors in order to obtain premium shelf space.
Costs associated with these distribution rights were charged to operations
ratably over the lives of the agreements. The Company ceased signing any new
customers under this program as of May 31, 1996. As of fiscal year end 1997 all
promotional costs were fully amortized.

           The (benefit) provision for income taxes reflects an effective tax
rate of 26% in 1997 and 27% in 1996.


                                       12

<PAGE>

Liquidity and Capital Resources

           The Company had working capital of approximately $6,954,000 and
$9,327,000 at November 30, 1998 and 1997, respectively.

           The Company's statement of cash flows reflects cash provided by
operations of approximately $1,313,000 which reflects a net loss of
approximately ($980,000), offset by decreases in accounts receivable ($227,000),
inventories ($1,109,000), prepaid expenses and other current assets ($305,000),
other assets ($190,000) and an adjustment for depreciation and amortization
($524,000).

           The cash flow statement also reflects cash provided by investing
activities of approximately ($1,254,000) principally attributable to the sale
and maturity of securities ($1,288,000), net of purchases of property and
equipment ($39,000).

           Net cash used in financing activities of $3,000,000 represents
repayments of long-term debt.

           The Company and its parent are party to credit facilities with a bank
which provide for borrowings under a revolving credit agreement (the "Revolving
Agreement") and a term loan (the "Term Agreement").

           The Revolving Agreement, as amended, which expires in September 2000
provides for aggregate borrowings of up to $10,000,000 with a sublimit of
$4,000,000 for the Company. Borrowings under the Revolving Agreement bear
interest at the bank's prime rate or Eurodollar rate plus 1.75%, at the
Company's option.

           The Term Agreement provides for aggregate borrowings of up to
$8,500,000 for the Company and its parent on a combined basis.

           The Company and its parent are jointly and severally liable for the
unpaid balance of the credit facilities. Borrowings are secured by the assets of
the Company and its parent.

           The credit facilities contain various covenants pertaining to the
maintenance of certain financial ratio restrictions, limitations on dividends,
and restrictions on borrowings.

           The Company expects to meet its cash requirements from operations,
current cash reserves, and existing financial agreements.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

           See financial statements following Item 14 of this Annual Report on
Form 10-K.

Item 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
        ON ACCOUNTING AND FINANCIAL DISCLOSURE.

           None.


                                       13

<PAGE>

                                    PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT OF THE REGISTRANT.

           The following persons are the current executive officers and
directors.

      Name                    Age         Position Held
-----------------             ---         -------------

Reginald Spinello              46         President, Chief Executive Officer and
                                             Director

Karine Hollander               32         Chief Financial Officer, Director

Thomas Keith                   39         Director

Theresa Giove                  40         Director

Lawrence D. Simon              32         Director

---------

Background of Executive Officers and Directors

           Reginald Spinello has been the President and a Director of the
Company since its formation and Chief Executive Officer since December 2, 1997.
In addition, he has been a Director of Superior Supplements, Inc. since May 1,
1996. Superior Supplements, Inc. ("SSI") is a developer, manufacturer and
marketer of dietary supplements in bulk tablet, capsule and powder form. In
addition, he is the Chief Executive Officer, President and Chairman of the Board
of Directors of PDK Labs Inc., a position he has held since August 1998 and a
Director of PDK Labs Inc. since August 5, 1997. Mr. Spinello joined PDK Labs
Inc. in September 1991 as Vice President of Operations. Prior to joining PDK
Labs Inc., Mr. Spinello was President and Founder of Internal Reinforcements
from 1985 to 1991, a specialty distributor and marketer of natural vitamins and
supplements. Mr. Spinello graduated from Bryant College with a B.S. Degree in
Business Administration. Additionally, he has studied in the field of nutrition
and is a non-practicing nutrition consultant.

           Karine Hollander has been a Director of the Company since September
1998 and has been the Chief Financial Officer of the Company and PDK Labs Inc.
since March 3, 1997. In addition, she has been a Director of PDK Labs Inc. since
March 11, 1998. She had been the Comptroller of PDK Labs Inc. since September
1994. Form 1989 until join the Company, Ms. Hollander was employed by the
accounting firm of Holtz Rubenstein & Co., LLP. Ms. Hollander received a B.A.
degree in Accounting from Dowling College.


                                       14

<PAGE>

           Thomas A. Keith has been a Director of the Company since December 2,
1997, and he has been a Director of PDK Labs Inc. since March 11, 1998. In
addition, he has been a Director of Compare Generiks, Inc. since May 21, 1997
and the President of Compare Generiks, Inc. since October 31, 1995. Prior to
joining Compare Generiks, Inc., from December 1990 to October 1995, Mr. Keith
was Vice President of Sales & Marketing of PDK Labs Inc. Compare Generiks, Inc.
("CGI") is a distributor, marketer and vendor of dietary supplements and
over-the-counter non-prescription pharmaceuticals.

           Theresa Giove has been a Director of the Company since September
1998. In addition, she has been a Director of CGI since December 1, 1997 and has
been engaged in the practice of psychotherapy since 1990. From 1989 to 1991, she
was a Director of the Adolescent Wellness Center at North Shore University
Hospital. She was on the faculty at Adelphi University where she was a professor
in the Graduate Social Work Department until May 1998. Ms. Giove has a B.S.
degree from New York Institute of Technology and a M.B.A. degree in Professional
Studies, Clinical Counseling from New York Institute of Technology. She also
received a M.B.A. degree in Social Work from Adelphi University. She was awarded
her Ph.D. in Social Psychology from Union Institute in 1998.

           Lawrence D. Simon has been a Director of the Company since September
1998. He has been a Director of PDK Labs Inc. since March 11, 1998. In addition,
he has been the President, Chairman, Chief Financial Officer and a Director of
SSI since May 1, 1996. He was the National Sales Director for the Company from
October 1, 1995, until his resignation on April 30, 1996. Prior to joining the
Company, Mr. Simon was Regional Sales Manager for PDK Labs Inc. (from April 10,
1992 to September 30, 1995). Prior to PDK Labs Inc., Mr. Simon was President of
LDS Products Inc. (from March 1990 to March of 1991). LDS Products Inc., is a
brokerage corporation specializing in sales to wholesale companies in Eastern
Europe. Prior to LDS Products Inc., Mr. Simon was an Auditor with Coopers &
Lybrand LLP (from December 1988 to March 1990). He is a graduate of Cleveland
State University with a Bachelors Degree in Business Administration.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

           Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.

           To the Company's knowledge, based solely upon its review of the
copies of such reports furnished to the Company during the year ended November
30, 1998, all Section 16(a) filing requirements applicable to its officers and
directors and greater than ten percent beneficial owners were satisfied.

Item 11. EXECUTIVE COMPENSATION


                                       15

<PAGE>

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                                     Long Term Compensation
                                                  ------------------------------------------------------
                                               Annual Compensation                 Awards             Payouts
                                        ---------------------------------         --------      -----------------
          (a)                   (b)        (c)      (d)            (e)              (f)            (g)        (h)           (i)
                                                                                 Restricted                                 All
                                                                     Other         Stock          LTIP                     Other
                                                                     Annual        Awards       Options/    Payouts    Compensation
Name and Principal Position     Year    Salary($)   Bonus($)    Compensation($)     ($)          SARs(#)      ($)           ($)
---------------------------     ----    ---------------------   ---------------    ------       --------    -------    ------------
<S>                             <C>      <C>        <C>            <C>              <C>            <C>        <C>           <C> 
Reginald Spinello, CEO          1998     $ 50,000   $-0-           $-0-             $-0-           $-0-       $-0-          $-0-
                                1997     $ -0-(1)   $-0-           $-0-             $-0-           $-0-       $-0-          $-0-
                                1996     $ 50,000   $-0-           $-0-             $-0-           $-0-       $-0-          $-0-
                                                                                                                        
Alan Novich, Chairman           1997     $ 56,000   $-0-           $-0-             $-0-           $-0-       $-0-          $-0-
                                1997     $225,000   $100,000       $-0-             $-0-           $-0-       $-0-          $-0-
                                1996     $225,000   $125,000       $-0-             $-0-           $-0-       $-0-          $-0-
</TABLE>

----------

(1)  During the year ended November 30, 1997, Mr. Spinello's compensation
     was covered under the Sales and Management Agreement with PDK Labs
     Inc.


                        Aggregated Option/SAR Exercises -
                          and FY-End Option/SAR Values

<TABLE>
-------------------------------------------------------------------------------------------------------------

<CAPTION>
  (a)                     (b)                        (c)                     (d)                  (e)

                                                                        Number of
                                                                        Securities               Value of
                                                                        Underlying               Unexercised
                                                                        Unexercised              In-the-Money
                                                                        Options/SARs at          Options/SARs at
                                                                        FY-End (#)               FY-End (#)
                     Shares Acquired                                    Exercisable/             Exercisable/
Name                 on Exercise (#)           Value Realized($)        Unexercisable            Unexercisable
----                 ---------------           -----------------        -------------            -------------
<S>                        <C>                       <C>                  <C>                     <C>
Alan Novich,                                                           
 Chairman                  -0-                       -0-                  41,668/-0-              -0-
</TABLE>


           In April 1996, the Company amended its five year employment agreement
with its former chairman of the board providing for annual compensation of
$225,000 plus benefits, commencing on the effective date of the initial public
offering. Additionally, this individual was granted options to purchase 41,668
shares of the Company's common stock. The options have an exercise price of
$15.00 and are exercisable at any time through March 1999. On February 26, 1998,
the Company ceased making payments under Mr. Novich's employment agreement.


                                       16

<PAGE>

Employment Agreements

           The Company had an employment agreement with its former Chairman of
the Board, Alan Novich, pursuant to which Mr. Novich receives an annual salary
of $225,000, a monthly automobile allowance, and was granted options to purchase
41,668 shares of the Company's common stock at a price of $15.00 per share. On
February 26, 1998, the Company ceased making payments under Mr. Novich's
employment agreement.

Stock Option Plans

           Incentive Option and Stock Appreciation Rights Plan -- The Directors
of the Company have adopted and the stockholders of the Company have approved
the adoption of the Company's 1994 Incentive Stock Option and Stock Appreciation
Rights Plan ("Incentive Option Plan"). The purpose of the Incentive Option Plan
is to enable the Company to encourage key employees and Directors to contribute
to the success of the Company by granting such employees and Directors incentive
stock options ("ISOs"), as well as non-qualified options and stock appreciation
rights ("SARs").

           The Incentive Option Plan will be administered by the Board of
Directors or a committee appointed by the Board of Directors (the "Committee")
which will determine, in its discretion, among other things, the recipients of
grants, whether a grant will consist of ISOs, non-qualified options or SARs (in
tandem with an option or freestanding) or a combination thereof, and the number
of shares to be subject to such options and SARs.

           The Incentive Option Plan provides for the granting of ISOs to
purchase Common Stock at an exercise price to be determined by the Board of
Directors or the Committee not less than the fair market value of the Common
Stock on the date the option is granted. Non-qualified options and freestanding
SARs may be granted with any exercise price. SARs granted in tandem with an
option have the same exercise price as the related option.

           The total number of shares with respect to which options and SARs may
be granted under the Incentive Option Plan is 41,668. ISO's may not be granted
to an individual to the extent that in the calendar year in which such ISO's
first become exercisable the shares subject to such ISOs have a fair market
value on the date of grant in excess of $100,000. No option or SAR may be
granted under the Incentive Option Plan after March 14, 2004 and no option or
SAR may be outstanding for more than ten years after its grant. Additionally, no
option or SAR can be granted for more than five (5) years to a shareholder
owning 10% or more of the Company's outstanding Common Stock.

           Upon the exercise of an option, the holder must make payment of the
full exercise price. Such payment may be made in cash or in shares of Common
Stock, or in a combination of both. The Company may lend to the holder of an
option funds sufficient to pay the exercise price, subject to certain
limitations. SARs may be settled, in the Board of Directors' discretion, in
cash, Common Stock, or in a combination of cash and Common Stock. The exercise
of SARs cancels the corresponding number of shares subject to the related
option, if any, and the exercise of an


                                       17

<PAGE>

option cancels any associated SARs. Subject to certain exceptions, options and
SARs may be exercised any time up to three months after termination of the
holder's employment.

           The Incentive Option Plan may be terminated or amended at any time by
the Board of Directors, except that, without stockholder approval, the Incentive
Option Plan may not be amended to increase the number of shares subject to the
Incentive Option Plan, change the class of persons eligible to receive options
or SARs under the Incentive Option Plan or materially increase the benefits of
participants.

           To date no options or SARs have been granted under the Incentive
Option Plan. No determinations have been made regarding the persons to whom
options or SARs will be granted in the future, the number of shares which will
be subject to such options or SARs or the exercise prices to be fixed with
respect to any option or SAR.

           Non-Qualified Option Plan -- The Directors and stockholders of the
Company adopted the 1994 Non-Qualified Stock Option Plan (the "Non-Qualified
Option Plan"). The purpose of the Non-Qualified Option Plan is to enable the
Company to encourage key employees, Directors, consultants, distributors,
professionals and independent contractors to contribute to the success of the
Company by granting such employees, Directors, consultants, distributors,
professionals and independent contractors non-qualified options. The
Non-Qualified Option Plan will be administered by the Board of Directors or the
Committee in the same manner as the Incentive Option Plan.

           The Non-Qualified Option Plan provides for the granting of
non-qualified options at such exercise price as may be determined by the Board
of Directors, in its discretion. The total number of shares with respect to
which options may be granted under the Non-Qualified Option Plan is 333,333.

           Upon the exercise of an option, the holder must make payment of the
full exercise price. Such payment may be made in cash or in shares of Common
Stock (based on the fair market value of the Common Stock on the date prior to
exercise), or in a combination of both. The Company may lend to the holder of an
option funds sufficient to pay the exercise price, subject to certain
limitations. Subject to certain exceptions, options may be exercised any time up
to three months after termination of the holder's employment.

           The Non-Qualified Option Plan may be terminated or amended at any
time by the Board of Directors, except that, without stockholder approval, the
Non-Qualified Option Plan may not be amended to increase the number of shares
subject to the Non-Qualified Option Plan, change the class of persons eligible
to receive options under the Non-Qualified Option Plan or materially increase
the benefits of participants.


                                       18

<PAGE>

Item 12. SECURITY OWNERSHIP OF CERTAIN
         BENEFICIAL OWNERS AND MANAGEMENT.

           The following table sets forth certain information, as of March 5,
1999 with respect to the beneficial ownership of the outstanding Common
Stock by (i) any holder of more than five (5%) percent; (ii) each of the
Company's officers and directors; and (iii) the directors and officers of the
Company as a group:

                                               Amount
                                             and Nature           Approximate
Name and Address                             Beneficial           Percent of
of Beneficial Owner                          Ownership               Class
-------------------                          ----------           -----------

PDK Labs, Inc.(2)                               700,000              51.9%


Reginald Spinello (3)                               0                 0


Thomas Keith (3)                                    0                 0


Lawrence Simon (3)                                  0                 0


Karine Hollander (3)                                0                 0


Theresa Giove (3)                                   0                 0


Directors and Officers                     
as a Group (5 persons)                              0                 0

(1)  Beneficial ownership as reported in the table above has been determined in
     accordance with Instruction (4) to Item 403 of Regulation S-B of the
     Securities Exchange Act.

(2)  Does not include 8,335,000 shares of Preferred Stock held by PDK Labs Inc.
     Each share of Preferred Stock has one-tenth of a vote.

(3)  The address for all listed beneficial owners is 145 Ricefield Lane,
     Hauppauge, New York 11788.


                                       19

<PAGE>

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

           PDK provides the Company with certain management services, including
bookkeeping, order processing, computer services and shipping and further
provides all of the products marketed by the Company pursuant to a Sales and
Management Agreement between the Company and PDK, as amended. The Company pays
PDK its costs for the Products, which is defined as actual material costs, plus
an amount representing PDK's actual direct labor costs plus factory overhead, as
determined in accordance with generally accepted accounting principles.

           In August 1997, as amended on August 13, 1998, the Company and its
parent entered into credit facilities with a bank which provide for borrowings
under a revolving credit agreement (the "Revolving Agreement") and a term loan
(the "Term Agreement"). The Revolving Agreement, as amended, which expires in
September 2000, provides for aggregate borrowings of up to $10,000,000 with a
sublimit of $4,000,000 for the Company. Borrowings under the Revolving Agreement
bear interest at the bank's prime rate or Eurodollar rate plus 1.75%, at the
Company's option. The Term Agreement provides for aggregate borrowings of up to
$8,500,000 for the Company and its parent on a combined basis.

           The Company and its parent are jointly and severally liable for the
unpaid balance of the credit facilities. Borrowings are secured by the assets of
the Company and its parent. The credit facilities contain various covenants
pertaining to the maintenance of certain financial ratio restrictions,
limitations on dividends, and restrictions on borrowings.

General

           The Company believes that material affiliated transactions between
the Company and its directors, officers, principal shareholders or any
affiliates thereof have been and will be in the future on terms no less
favorable than could be obtained from unaffiliated third parties.


                                       20

<PAGE>

                                     PART IV

Item 14. EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)  Financial Statements.

           The following financial statements are included in Part II, Item 8:

Report of Independent Certified Public Accountants                    F-1

Balance sheets as of November 30, 1998 and 1997                       F-2

Statements of operations for the three years ended
           November 30, 1998                                          F-3

Statement of stockholders' equity for the three years ended
           November 30, 1998                                          F-4

Statements of cash flows for the three years ended
           November 30, 1998                                          F-5

Notes to financial statements                                         F-6 - F-13

(a)(2)  Financial Statement Schedules.

Schedules not listed above are omitted because of the absence of the conditions
under which they are required or because the required information is included in
the financial statements or notes thereto.


                                       21
<PAGE>

                               FUTUREBIOTICS, INC.
                    REPORT ON AUDITS OF FINANCIAL STATEMENTS
                       THREE YEARS ENDED NOVEMBER 30, 1998


                                    CONTENTS

                                                                        Page
                                                                        ----

Report of Independent Certified Public Accountants                       F-1

Balance sheets as of November 30, 1998 and 1997                          F-2

Statements of operations for the three years ended 
  November 30, 1998                                                      F-3

Statement of stockholders' equity for the three years ended 
  November 30, 1998                                                      F-4

Statements of cash flows for the three years ended
  November 30, 1998                                                      F-5

Notes to financial statements                                         F-6 - F-13


<PAGE>

                          Independent Auditors' Report

Board of Directors and Stockholders
Futurebiotics, Inc.
Hauppauge, New York

We have audited the balance sheets of Futurebiotics, Inc. as of November 30,
1998 and 1997 and the related statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended November 30, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Futurebiotics, Inc. as of
November 30, 1998 and 1997 and the results of its operations and its cash flows
for each of the three years in the period ended November 30, 1998, in conformity
with generally accepted accounting principles.

As disclosed in Note 13, on March 3, 1999, the Company entered into an agreement
to sell substantially all of its operating assets.

                                                     HOLTZ RUBENSTEIN & CO., LLP

Melville, New York

February 12, 1999 (except for Note 13, as
   to which the date is March 3, 1999)


                                       F-1

<PAGE>


                               FUTUREBIOTICS, INC.

                                 BALANCE SHEETS
                 (in thousands, except share and per share data)

                                                              November 30,
                                                         ----------------------
             ASSETS  (Notes 5 and 13)                      1998          1997
             ------                                      --------      --------

CURRENT ASSETS:
   Cash and cash equivalents                             $    181      $    614
   Investment in marketable securities,
      at fair value                                           -           1,088
   Accounts receivable, less allowance for
      doubtful accounts of $12                              1,030         1,257
   Inventories                                              2,179         3,288
   Due from parent                                          2,533         2,388
   Property, plant and equipment held for
      disposal (Notes 3 and 13)                               194           -
   Intangible assets held for disposal
      (Notes 4 and 13)                                        438           -
   Prepaid income taxes                                       -             154
   Prepaid expenses and other current assets                  145           450
   Deferred income tax asset (Note 10)                        326           215
                                                         --------      --------
        Total current assets                                7,026         9,454

INVESTMENT IN MARKETABLE SECURITIES                           -             199

PROPERTY, PLANT AND EQUIPMENT, net (Note 3)                   -             256

INTANGIBLE ASSETS, net (Note 4)                               -             562

OTHER ASSETS                                                  314           504
                                                         --------      --------
                                                         $  7,340      $ 10,975
                                                         ========      ========
   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                      $     61      $    115
   Accrued expenses                                            11            12
                                                         --------      --------
        Total current liabilities                              72           127
                                                         --------      --------

LONG-TERM DEBT (Note 5)                                       -           3,000
                                                         --------      --------

DEFERRED INCOME TAX LIABILITY (Note 10)                       142            50
                                                         --------      --------

COMMITMENTS AND CONTINGENCIES
   (Notes 7 and 9)

STOCKHOLDERS' EQUITY: (Note 6)
   Common stock, $.0001 par value;
      authorized 40,000,000 shares;
      1,350,000 issued and outstanding                        -             -
   Preferred stock, $.0001 par value;
      authorized, issued and
      outstanding 8,335,000 shares                              1             1
   Additional paid-in capital                               9,395         9,395
   Unearned compensation                                   (1,228)       (1,535)
   Unrealized (loss) on marketable
      securities                                              -              (1)
   (Deficit)                                               (1,042)          (62)
                                                         --------      --------
                                                            7,126         7,798
                                                         --------      --------

                                                         $  7,340      $ 10,975
                                                         ========      ========

                        See notes to financial statements


                                       F-2

<PAGE>


                              FUTUREBIOTICS, INC.

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

                                                  Years Ended November 30,
                                          -------------------------------------
                                             1998          1997          1996
                                          ----------   -----------   ----------

NET SALES (Note 8)                        $   10,304   $    11,682   $   12,713
                                          ----------   -----------   ----------
COSTS AND EXPENSES:
  (Notes 2, 3, 4, 7 and 9)
     Cost of sales                             6,529         5,799        5,519
     Selling, general and administrative       4,689         7,089        7,566
                                          ----------   -----------   ----------

                                              11,218        12,888       13,085
                                          ----------   -----------   ----------

OPERATING LOSS                                  (914)       (1,206)        (372)
                                          ----------   -----------   ----------

OTHER EXPENSES (INCOME):
  Interest income                                (51)         (115)        (117)
  Interest expense                               123           264          143
  Other                                           (9)           49          -
                                          ----------   -----------   ---------- 

                                                  63           198           26
                                          ----------   -----------   ----------

LOSS BEFORE (BENEFIT) PROVISION
  FOR INCOME TAXES                              (977)       (1,404)        (398)

PROVISION (BENEFIT) FOR
  INCOME TAXES (Note 10)                           3          (370)        (108)
                                          ----------   -----------   ----------

NET LOSS                                  $     (980)  $    (1,034)  $     (290)
                                          ==========   ===========   ==========

BASIC LOSS PER SHARE (Note 6)                  $(.73)        $(.77)       $(.21)
                                               =====         =====        =====

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING
  (Note 6)                                 1,350,000     1,350,000    1,350,000
                                           =========     =========    =========

                       See notes to financial statements

                                      F-3

<PAGE>

                              FUTUREBIOTICS, INC.

                       STATEMENT OF STOCKHOLDERS' EQUITY
                (in thousands, except share and per share data)
                                  (See Note 6)

<TABLE>
<CAPTION>
                                                  Common Stock          Preferred Stock                                        
                                               -------------------   --------------------   Additional                      
                                                            Par                    Par       Paid-in         Unearned      
                                                Shares     Value        Shares    Value      Capital       Compensation    
                                               ---------  --------   ----------- -------    ----------    --------------   
<S>                                            <C>         <C>        <C>          <C>       <C>            <C>
Balance at November 30, 1995                   1,350,000   $    -     8,335,000    $ 1       $ 9,395        $   (2,111)      

Amortization of unearned compensation                 -         -            -       -             -                288      

Net loss for the year ended
   November 30, 1996                                  -         -            -       -             -                 -       
                                               ---------   -------    ---------    ---       -------        ----------       

Balance at November 30, 1996                   1,350,000        -     8,335,000      1         9,395            (1,823)      

Amortization of unearned compensation                 -         -            -       -             -                288      

Unrealized loss on marketable securities              -         -            -       -             -                 -       

Net loss for the year ended
   November 30, 1997                                  -         -            -       -             -                 -       
                                               ---------   -------    ---------    ---       -------        ----------       

Balance at November 30, 1997                   1,350,000        -     8,335,000      1         9,395            (1,535)      

Amortization of unearned compensation                 -         -            -       -             -                307      

Unrealized loss on marketable securities              -         -            -       -             -                 -       

Net loss for the year ended
   November 30, 1998                                  -         -            -       -             -                 -       
                                               ---------   -------    ---------    ---       -------        ----------       

Balance at November 30, 1998                   1,350,000   $    -     8,335,000    $ 1       $ 9,395        $   (1,228)      
                                               =========   =======    =========    ===       =======        ==========       
<CAPTION>

                                            Unrealized
                                             Loss on     (Deficit)/
                                            Marketable    Retained
                                            Securities    Earnings       Total
                                            -----------  ----------   ----------
<S>                                         <C>          <C>          <C>
Balance at November 30, 1995                 $   -       $  1,262      $  8,547

Amortization of unearned compensation            -            -             288

Net loss for the year ended
   November 30, 1996                             -           (290)         (290)
                                             -----       --------      --------

Balance at November 30, 1996                     -            972         8,545

Amortization of unearned compensation            -            -             288

Unrealized loss on marketable securities        (1)           -              (1)

Net loss for the year ended
   November 30, 1997                             -         (1,034)       (1,034)
                                             -----       --------      --------

Balance at November 30, 1997                    (1)           (62)        7,798

Amortization of unearned compensation            -            -             307

Unrealized loss on marketable securities         1            -               1

Net loss for the year ended
   November 30, 1998                             -           (980)         (980)
                                             -----       --------       -------

Balance at November 30, 1998                 $   -       $ (1,042)      $ 7,126
                                             =====       ========       =======
</TABLE>
                        See notes to financial statements

                                       F-4
<PAGE>

                              FUTUREBIOTICS, INC.

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>

                                                                            Years Ended November 30,
                                                                   --------------------------------------------
                                                                      1998            1997              1996
                                                                   ----------      ----------       -----------
<S>                                                                <C>             <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                        $     (980)     $   (1,034)      $      (290)
                                                                   ----------      ----------       -----------
   Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
        Depreciation and amortization                                     524           1,873             1,828
        Deferred tax (benefit) provision                                   (4)           (223)              161
        Increase in allowance for doubtful accounts                        -               12                -
        Loss on sale of property and equipment                              4              -                 -
        Changes in operating assets and liabilities:
           (Increase) decrease in assets:
             Accounts receivable                                          227             181               (16)
             Inventories                                                1,109             (27)           (1,354)
             Due from parent                                             (145)         (1,917)              291
             Prepaid income taxes                                         139             263              (674)
             Prepaid expenses and other current assets                    305               2               136
             Other assets                                                 190             134                29
           Increase (decrease) in liabilities:
             Accounts payable and accrued expenses                        (56)             42                (4)
                                                                   ----------      ----------       -----------
        Total adjustments                                               2,293             340               397
                                                                   ----------      ----------       -----------
        Net cash provided by (used in)
           operating activities                                         1,313            (694)              107
                                                                   ----------      ----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                     (39)            (15)             (197)
   Proceeds from sale of property and equipment                            15              -                 -
   Acquisition of intangible assets                                       (10)             -             (1,920)
   Proceeds from sale/maturity of marketable securities                 1,288             839               365
                                                                   ----------      ----------       -----------
        Net cash provided by (used in)
           investing activities                                         1,254             824            (1,752)
                                                                   ----------      ----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:

   Proceeds from long-term debt                                            -            3,000             1,750
   Repayments of long-term debt                                        (3,000)         (3,000)               -
                                                                   ----------      ----------       ----------
        Net cash (used in) provided by financing activities            (3,000)             -              1,750
                                                                   ----------      ----------       -----------

Net (decrease) increase in cash and cash equivalents                     (433)            130               105

Cash and cash equivalents, beginning of year                              614             484               379
                                                                   ----------      ----------       -----------

Cash and cash equivalents, end of year                             $      181      $      614       $       484
                                                                   ==========      ==========       ===========
</TABLE>

                       See notes to financial statements

                                      F-5

<PAGE>


                              FUTUREBIOTICS, INC.

                         NOTES TO FINANCIAL STATEMENTS

                      THREE YEARS ENDED NOVEMBER 30, 1998
                (in thousands, except share and per share data)

1.      Summary of Significant Accounting Policies:

        a.  Description of business

            Futurebiotics, Inc. (the "Company") is engaged in the distribution,
marketing and sales of vitamins, minerals, herbal formulations and specialty
nutritional supplements. The Company's parent, PDK Labs Inc. ("PDK"), owns 52%
of the Company's stock.

        b.  Investment in marketable securities

            Investments in debt and equity securities are designated as trading,
held-to-maturity or available-for-sale. Management considers the Company's
marketable securities, consisting principally of government and
government-backed debt securities, to be available-for-sale. Available-for-sale
securities are reported at amounts which approximate fair value. Temporary
declines in the market value of any available-for-sale security below cost are
charged against stockholders' equity, meanwhile declines deemed other than
temporary are charged to earnings resulting in the establishment of a new cost
basis for the security.

            At November 30, 1997, debt securities classified as non-current have
contractual maturities within 1-5 years.

        c.  Inventories

            Inventories, consisting principally of finished goods, are valued at
the lower of cost (first-in, first-out method) or market.

        d.  Depreciation and amortization

            Depreciation is computed using the straight-line method over the
estimated useful lives of the related assets. Amortization of leasehold
improvements is computed using the straight-line method over the estimated
useful lives of the related assets or the remaining term of the lease, whichever
is shorter.

            Maintenance and repairs of property and equipment are charged to
operations and major improvements are capitalized. Upon retirement, sale or
other disposition of property and equipment, the cost and accumulated
depreciation are eliminated from the accounts and gain or loss is included in
operations.

            Intangible assets are amortized using the straight-line method over
the following periods:

                    Deferred loan costs                    Term of related debt
                    Customer lists                         5 years
                    Covenants not to compete               9 years
                    Goodwill                               10 years

        e.  Income taxes

            Deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities,
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

                                       F-6

<PAGE>


1.      Summary of Significant Accounting Policies:  (Cont'd)

        f.  Statement of cash flows

            For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.

        g.  Concentration of credit risk

            Financial instruments which potentially expose the Company to
concentrations of credit risk, as defined by Statement of Accounting Standards
No. 105, consist primarily of trade accounts receivable and marketable
securities. Wholesale distributors of nutritional supplements account for a
substantial portion of trade receivables. The risk associated with this
concentration is limited due to the large number of distributors and their
geographic dispersion.

        h.  Estimates

            The preparation of financial statements in conformity with generally
accepted accounting principles 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 financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

        i.  Advertising

            The Company charges advertising costs to expense as incurred. 
Advertising costs amounted to $1,086, $1,088 and $1,449 for the years ended
November 30, 1998, 1997 and 1996, respectively.

        j.  Reclassifications

            Certain reclassifications have been made to the prior years'
financial statements to conform with the classifications used in 1998.

        k.  Concentration of credit risk

            The Company invests its excess cash in deposits and money market
accounts with major financial institutions and in commercial paper of companies
with strong credit ratings. Generally, the investments mature within ninety days
and therefore, are subject to little risk. The Company has not experienced
losses related to these investments.

            The concentration of credit risk in the Company's accounts
receivable is substantially mitigated by the Company's credit evaluation
process, reasonably short collection terms and the geographical dispersion of
revenue. Although the Company generally does not require collateral, reserves
for potential credit losses are maintained and such losses have been within
management's expectations.

        l.  New accounting standards

            In June 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 130, "Reporting Comprehensive Income," which established
standards for reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes in
equity except those resulting from investments by owners and distribution to
owners. Among other disclosures, SFAS No. 130 requires that all items that are
required to be recognized under current accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements.

                                       F-7

<PAGE>

1.      Summary of Significant Accounting Policies:  (Cont'd)

        l.  New accounting standards  (Cont'd)

            In addition, in June 1997, the FASB issued SFAS No. 131,
"Disclosures About Segments of an Enterprise and Related Information," which
establishes standards for reporting information about operating segments. It
also establishes standards for disclosures regarding products and services,
geographic areas and major customers.

            Both of these new standards are effective for periods beginning
after December 15, 1997 and require comparative information for earlier years to
be restated. The implementation of these new standards will not affect the
Company's results of operations and financial position, but may have an impact
on future financial statement disclosures.

        2.  Sales and Management Agreement:

        Under a 10 year agreement entered into in 1994, PDK, in exchange for
600,000 shares of unregistered common stock, is providing the Company with its
entire line of products at PDK's cost. The agreement provides PDK with
registration rights for up to 60,000 shares of the stock per year in order to
effect transfers of such shares. The Company purchased approximately $7,395,
$5,750 and $6,870 for the years ended November 30, 1998, 1997 and 1996,
respectively.

        The Agreement, as amended, further provides that in the event that PDK
is unable to supply products having a cost of at least $2,000,000 during any
fiscal year (such shortage being defined as the "PDK Deficiency") then PDK shall
forfeit to the Company either (i) fifteen percent (15%) of the PDK Deficiency in
cash, or (ii) a portion of the 60,000 shares of stock, determined by multiplying
the 60,000 shares of stock by a percentage which is arrived at by dividing the
PDK Deficiency by $2,000.

        3.  Property, Plant and Equipment:

        Property, plant and equipment, at cost, consist of the following:

                                                                 November 30,
                                                            --------------------
                                                             1998         1997
                                                            -------     --------

        Equipment                                           $    34     $     34
        Office equipment and fixtures                           368          374
        Leasehold improvements                                    8           35
                                                           --------     --------
                                                                410          443
        Less accumulated depreciation and amortization          216          187
                                                           --------     --------
                                                                194          256
        Less assets held for disposal                           194           -
                                                           --------     --------

                                                           $     -      $    256
                                                           ========     ========

        Depreciation and amortization of property, plant and equipment for the
years ended 1998, 1997 and 1996 approximated $83, $71 and $55, respectively.

                                       F-8

<PAGE>


        4.  Intangible Assets:  (Cont'd)

        Intangible assets consist of the following:

                                                            November 30,
                                                    --------------------------
                                                       1998             1997
                                                    ---------        ---------

        Covenants not to compete                    $     845        $     845
        Goodwill                                          300              300
        Customer lists                                     -               384
        Other                                              34               25
                                                    ---------        ----------
                                                        1,179            1,554
        Less accumulated amortization                     741              992
                                                    ---------        ---------
                                                          438              562
        Less assets held for disposal                     438                -
                                                    ---------        ---------
                                                    $      -         $     562
                                                    =========        =========

        The Company implemented a marketing program with select retail stores
and distributors in order to obtain premium shelf space. Costs associated with
these distribution rights were being charged to operations ratably over the
lives of the respective agreements. Effective May 31, 1996 the Company ceased
signing any new customers under this program. Costs associated with the program
were fully amortized as of November 30, 1997. Selling expenses recognized under
this program approximated $1,507 and $1,238 for the years ending November 30,
1997 and 1996, respectively.

        Amortization expense for the years ended 1998, 1997 and 1996
approximated $124, $1,512 and $1,485, respectively.

        5.  Long-Term Debt:

        The Company and its parent are party to a revolving credit agreement
with a bank which expires in September 2000. The facility, as amended, provides
for aggregate borrowings of up to $10,000, with a sublimit for the Company.
Interest is charged monthly on the outstanding balance at either the bank's
prime rate or the Eurodollar rate plus 1.75%, at the Company's option. At
November 30, 1998, the Company and its parent had outstanding borrowings under
this agreement of $-0- and $400, respectively.

        The credit facilities contain various covenants pertaining to the
maintenance of certain financial ratio restrictions, limitations on dividends,
and restrictions on borrowings. Borrowings are secured by the assets of the
Company and its parent and are jointly and severally liable for the unpaid
balance under these credit facilities.

        The prime rate and the Eurodollar rate at November 30, 1998 were 7.75%
and 5.625%, respectively.

        6.  Stockholders' Equity:

        a.  Capitalization

            The Company's authorized capital consists of 40,000,000 shares of
common stock and 8,335,000 shares of preferred stock. All stock has a $.0001 par
value. Each share of common and preferred has one vote per share in all matters.
The preferred shares have priority over the Company's common stock in respect to
dividend rights and liquidation preferences.

                                      F-9

<PAGE>


        6.  Stockholders' Equity:  (Cont'd)

        b.  Warrants

            In August 1994, the Company completed a public offering of 115,000
units, each unit consisting of two shares of common stock and two Class A
Warrants. Each Class A Warrant entitles the holder to purchase one share of
common stock at $36.00 per share. The warrants are exercisable at any time
during the four year period commencing one year from the date of the offering.
The Class A Warrants are redeemable by the Company, for $.50 per warrant, if the
average price of the common stock equals or exceeds $60.00 per share for any
twenty trading days within a period of thirty consecutive trading days ending
five days prior to the date of the notice of redemption.

        c.  Loss per share

            In the first quarter of fiscal 1998, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 128, "Earnings Per
Share" ("SFAS 128"). SFAS 128 simplifies the standards for computing earnings
per share and replaces the presentation of primary earnings per share with basic
earnings per share. It also requires dual presentation of basic and diluted
earnings per share on the face of the consolidated statement of operations for
all entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic earnings per share computation to the
numerator and denominator of the diluted EPS computation.

            The Company's adoption of SFAS 128 did not result in a change to
prior years' EPS. Basic and diluted loss per share amounts were equivalent for
the years ended November 30, 1998, 1997 and 1996 as the effect of any
outstanding options or warrants was antidilutive.

        d.  Reserved shares

            At November 30, 1998, the Company has approximately 610,000 shares
of common stock reserved for future issuance.

        e.  Stock option plan

            The Company has adopted a Non-qualified Option Plan (the "Plan")
covering 333,333 shares of common stock of the Company. Options under the Plan
are granted at terms set by the Board of Directors at the time of issuance.
Options may be exercised at any time up to three months after termination.

            The Company has also adopted an Incentive Option and Stock
Appreciation Rights Plan (the "1994 Plan") covering 41,668 shares of the
Company's common stock. Incentive stock options under the 1994 Plan are granted
at an exercise price (not less than the fair market value) at the date of grant.
Non-qualified options and freestanding stock appreciation rights may also be
granted with any exercise price.

            To date, no options or stock appreciation rights have been granted
under either plan.

                                      F-10

<PAGE>

        7.  Commitments and Contingencies:

        a.  Consulting agreements

            In 1995 the Company entered into two separate seven year consulting
agreements. As consideration for these services, the Company issued 60,000
shares of common stock to each of the companies and a consulting fee of $210 to
one company. Consideration paid, including the value of the common stock granted
($843), is being charged to operations ratably over the lives of the consulting
agreements. Amounts charged to operations under these agreements approximated
$150 for each of the years ended November 30, 1998, 1997 and 1996, respectively.

        b.  Lease commitment

            The Company leases warehouse and office space from PDK under an 
agreement which provides for monthly lease payments approximating $4. Rent
expense approximated $50, $50 and $86 for the years ended November 30, 1998,
1997 and 1996, respectively.

        c.  Litigation

            On July 29, 1996, PDK served a complaint against a former executive 
citing that, among other things, he breached his agreement with PDK by
competing with PDK and soliciting PDK's customers in violation of his
separation agreement.

            The former executive has denied PDK's allegations and, through a
counterclaim, asserts that PDK and certain current and former officers and
directors have breached their fiduciary duty to PDK and its stockholders. PDK
and the officers and directors deny that they engaged in any improper conduct
which would support the former executive's counterclaim. Each intends to
vigorously defend against such claims and PDK intends to proceed with its action
against the former executive. In addition, the complaint also demands that PDK's
board commence a shareholders derivative action for fraud, breach of fiduciary
duty, and corporate waste against various individuals and entities.

            Futurebiotics has not been named as a party in the former
executive's counterclaim.

            The Company is involved in various other lawsuits and claims
incidental to its business. In the opinion of management, the ultimate
liabilities, if any, resulting from such lawsuits and claims, will not
materially affect the financial position of the Company.

        8.  Major Customer Information:

        Sales to no single customer exceeded 10% of total sales for the years 
ended 1998 and 1997. Sales to one customer approximated 13% of total sales for
the year ended 1996.

        9.  Retirement Plan:

        Qualified employees are eligible to participate in a salary reduction
plan under Section 401(k) of the Internal Revenue Code. Participation in the
plan is voluntary, and any participant may elect to contribute up to 17% of
earnings. The Company may, at its discretion, contribute up to 3% of an
employee's earnings. Contributions on the part of the Company approximated $18,
$25 and $22 for the years ended November 30, 1998, 1997 and 1996, respectively.

                                      F-11

<PAGE>


       10.  Income Taxes:

        The provision (benefit) for income taxes consists of the following:

                                               Years Ended November 30,
                                    -----------------------------------------
                                     1998            1997             1996
                                    -----         ---------         -------
        Current:

            Federal                 $   -         $    (147)        $    (273)
            State                       7                -                  4
                                    -----         ---------         ---------
                                        7              (147)             (269)
                                    -----         ---------         ---------
        Deferred:

            Federal                   (4)              (195)              184
            State                      -                (28)              (23)
                                    -----         ---------         ---------
                                       (4)             (223)              161
                                    -----         ---------         ---------

                                    $   3         $    (370)        $    (108)
                                    =====         =========         =========

        Net deferred income tax asset (liability) are comprised of the
following:

                                                           November 30,
                                                  ----------------------------
                                                     1998              1997
                                                  ----------        ----------

        Inventories                               $     144         $      40
        Property, plant and equipment                   (35)              (33)
        Tax carryforwards                               528               350
        Unearned compensation                          (142)             (205)
        Intangibles                                     199               189
        Valuation allowance                            (510)             (175)
                                                  ---------         ---------

                                                  $     184         $     166
                                                  =========         =========

     A reconciliation of the federal statutory rate to the Company's effective
tax rate is as follows: 
                                                                 % of
                                                        Pre-Tax Earnings (Loss)
                                                        Years Ended November 30,
                                                       -------------------------
                                                         1998     1997    1996
                                                       -------  -------  -------

        U.S. Federal statutory income tax rate           34.0%    34.0%   34.0%
        State income tax, net of federal tax benefit      3.6      4.5     3.2
        Valuation allowance                             (34.3)   (12.5)     -
        Permanent differences                            (4.9)     -      (9.4)
        Other                                             1.3       .3     (.7)
                                                       ------   ------   -----

                                                          (.3)%   26.3%   27.1%
                                                       ======   ======   =====

       11.  Supplemental Information - Statement of Cash Flows:

        Cash paid during the years for:

                                                        Years Ended November 30,
                                                        ------------------------
                                                         1998     1997     1996
                                                        ------   ------   ------

        Interest                                        $ 123    $ 265     $ 142
                                                        =====    =====     =====

        Income taxes                                    $   7    $  -      $ 514
                                                        =====    =====     =====


                                      F-12

<PAGE>

   12.  Fair Value of Financial Instruments:

        The fair value of a financial instrument represents the amount at 
which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced sale or liquidation.

        The following methods and assumptions were used by the Company in
estimating fair value disclosures for financial instruments:

        Current Assets, Investments in Marketable Securities and Current
        Liabilities: The fair value of short-term financial instruments,
        including cash and cash equivalents, trade accounts receivable and
        payable, certain accrued liabilities, and certain other short-term
        financial instruments, approximates their carrying amount in the
        financial statements due to the short maturity of such instruments.

        Notes Payable and Long-Term Debt: The fair value of the variable rate
        term note payable and line of credit approximates their carrying
        amount since the currently effective rates reflect market rates.

   13.  Subsequent Event:

        On March 3, 1999, the Company entered into an agreement to sell
substantially all of its operating assets to an unrelated company for proceeds
approximating $6 million. This transaction is subject to the satisfaction of a
number of conditions, including the approval of the stockholders of
Futurebiotics.

        Net assets to be disposed of in connection with this transaction have
been classified as current assets in the accompanying balance sheet as of
November 30, 1998.

                                      F-13

<PAGE>

(a)(3)  Exhibits.

3.01*      Certificate of Incorporation of the Company.

3.02*      By-Laws of the Company.

3.03*      Amendment to Certificate of Incorporation.

4.01*      Specimen Certificate for shares of Common Stock.

4.02*      Specimen Certificate for Class A Redeemable Common Stock Purchase 
           Warrant.

4.03*      Form of Warrant Agreement by and among the Company, the Underwriter 
           and Continental Stock Transfer & Trust Company.

4.04*      Form of Underwriter's Unit Purchase Option.

10.01*     Employment Agreement between the Company and Alan Novich.

10.02*     Form of Sales and Management Agreement between PDK Labs Inc. and the
           Company

10.03*     1994 Incentive Stock Option and Stock Appreciation Rights Plan.

10.04*     1994 Non-Qualified Stock Option Plan.

10.05*     Sales and Management Agreement by and between PDK Labs Inc. and the
           Company.

10.06*     Form of Consulting Agreement with Underwriter.

10.07*     Revolving Credit Agreement between PDK Labs Inc. and Manufacturers 
           Hanover Trust Company, dated February 25, 1992

10.08*     Security Agreement between PDK Labs Inc. and Manufacturers Hanover
           Trust Company, dated February 25, 1992

                                     II-1

<PAGE>

10.09*     Short Form Term Loan Agreement among PDK Labs Inc. and Chemical Bank,
           dated November 30, 1992

10.10**    Amendment of Sales and Management between PDK Labs Inc. and the 
           Company dated December 8, 1994

10.11**    Consulting Agreement by and between the Company and Lidco, Ltd. dated
           January 3, 1995

10.12**    Consulting Agreement by and between the Company and K.A.M. Group 
           dated January 3, 1995

10.13***   Amendment No. 1 to Employment Agreement between Alan Novich and the 
           Company dated as of December 1, 1995.

10.14***   Revolving Credit Agreement between PDK Labs Inc., Futurebiotics, 
           Inc., PDI Labs Inc., and The Chase Manhattan Bank dated September 25,
           1996.

10.15***   First Amendment and Waiver to Revolving Credit Agreement between PDK
           Labs Inc., Futurebiotics, Inc., PDI Labs Inc., and The Chase
           Manhattan Bank dated February 26, 1997.

10.16++++  Credit Agreement by and among PDK Labs Inc., Futurebiotics, Inc. and 
           European American Bank dated as of August 20, 1997 and certain
           material exhibits thereto.

10.17++++  Assignment and Assumption Agreement by and among PDK Labs Inc.,
           Futurebiotics, Inc. and Bank Leumi USA dated January 16, 1998.

10.18++++  Assignment and Assumption Agreement by and among PDK Labs Inc.,
           Futurebiotics, Inc. and National Bank of Canada dated January 16,
           1998.

10.19++++  First Amendment and Waiver to Credit Agreement by and among PDK Labs
           Inc., Futurebiotics, Inc., European American Bank, Bank Leumi USA and
           National Bank of Canada dated as of February 18, 1998.

10.20****  Asset Purchase Agreement dated as of March 3, 1999 by and among FB
           Acquisition Corp., Nutraceutical International Corporation,
           Futurebiotics, Inc and PDK Labs Inc.

10.21      Second Amendment to Credit Agreement by and among PDK Labs Inc.,
           Futurebiotics, Inc. and European American Bank dated as of August 13,
           1998.

10.22      Asset Purchase Agreement by and among Futurebiotics, Inc. and
           Superior Supplements, Inc. dated November 19, 1998.

27.1       Financial Data Schedule

                                     II-2

<PAGE>

*          Incorporated by Reference to the Company's Registration Statement on
           Form SB-2, No. 33-78022

**         Incorporated by Reference to the Company's Form 10-KSB for the year
           ended November 30, 1994.

***        Incorporated by Reference to the Company's Form 10-KSB for the year
           ended November 30, 1996.

++++       Incorporated by Reference to the Company's Form 10-K for the year
           ended November 30, 1998.

****       Incorporated by Reference to the Company's Form 8-K dated March 10,
           1999.

(B)        Reports on Form 8-K.

           None.

                                     II-3

<PAGE>

                                   SIGNATURE

           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.

Dated: New York, New York
       March 10, 1999
                                       FUTUREBIOTICS, INC.

                                       By: /s/ Reginald Spinello
                                          --------------------------------------
                                           President and Chief Executive Officer

                                       By: /s/ Karine Hollander
                                          --------------------------------------
                                           Chief Financial Officer and Principal
                                           Accounting Officer

           Pursuant to the requirements of the Securities Exchange Act of 1934,
this Registration Statement or Amendments thereto has been signed below by the
following persons in the capacities and on the dates indicated.

Signature                         Title                             Date
---------                         -----                             ----

/s/ Reginald Spinello             President, Chief              March 10, 1999
-------------------------         Executive Officer
Reginald Spinello                 and Director
                                  
/s/ Theresa Giove                 Director                      March 10, 1999
-------------------------
Theresa Giove

/s/ Thomas Keith                  Director                      March 10, 1999
-------------------------
Thomas Keith

/s/ Lawrence D. Simon             Director                      March 10, 1999
-------------------------
Lawrence D. Simon

/s/ Karine Hollander              Director                      March 10, 1999
-------------------------
Karine Hollander

                                     II-4