UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549
                                    FORM 10-K
     (Mark  One)
     [X]     ANNUAL  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
                         SECURITIES EXCHANGE ACT OF 1934
     For  the  fiscal  year  ended  December  31,  2000
OR
     [  ]     TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
                         SECURITIES EXCHANGE ACT OF 1934
     For  the  transition  period  from  ______________  to  _____________
                         Commission file number: 0-11635
                            OMNI NUTRACEUTICALS, INC.
                            -------------------------
             (Exact name of registrant as specified in its charter)

             Utah                      87-0468225
---------------------------------  -------------------
(State or other jurisdiction        (I.R.S.  Employer
of incorporation or organization)  Identification No.)


              5310 Beethoven Street, Los Angeles, California 90066
              ----------------------------------------------------
          (Address of principal executive offices, including zip code)
                                 (310) 306-3636
                                 --------------
                (Issuer's telephone number, including area code)
         Securities registered under Section 12(b) of the Exchange Act:

                                  Name of each exchange
            Title of each class   on which registered
            -------------------  ---------------------
                    None                 None


         Securities registered under Section 12(g) of the Exchange Act:
                     common stock, $0.01 par value per share
                     ---------------------------------------
                                (Title of Class)
Indicated  by  check  mark  whether  the  registrant:  (i) 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 (ii) 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 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.  [___]

The  number  of shares outstanding of our common stock as of April 11, 2001, was
34,106,032  shares.  The  aggregate market value of the common stock (12,666,550
shares) held by non-affiliates, based on the closing market price ($0.20) of the
common  stock  as  of  April  11,  2001  was  $2,533,310.



     CERTAIN  STATEMENTS  IN THIS ANNUAL REPORT ON FORM 10-K, OR THE REPORT, ARE
"FORWARD-LOOKING STATEMENTS."  THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE
NOT  LIMITED  TO,  STATEMENTS  ABOUT  THE  PLANS,  OBJECTIVES,  EXPECTATIONS AND
INTENTIONS OF OMNI NUTRACEUTICALS, INC., A UTAH CORPORATION (REFERRED TO IN THIS
REPORT  AS  "WE,"  "US" OR "OUR,") AND OTHER STATEMENTS CONTAINED IN THIS REPORT
THAT  ARE  NOT  HISTORICAL  FACTS.  FORWARD-LOOKING STATEMENTS IN THIS REPORT OR
HEREAFTER  INCLUDED  IN  OTHER  PUBLICLY  AVAILABLE  DOCUMENTS  FILED  WITH  THE
SECURITIES  AND  EXCHANGE  COMMISSION,  OR  THE  COMMISSION,  REPORTS  TO  OUR
STOCKHOLDERS  AND  OTHER  PUBLICLY AVAILABLE STATEMENTS ISSUED OR RELEASED BY US
INVOLVE  KNOWN  AND  UNKNOWN  RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD
CAUSE  OUR  ACTUAL RESULTS, PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS
TO  DIFFER  FROM  THE  FUTURE  RESULTS,  PERFORMANCE (FINANCIAL OR OPERATING) OR
ACHIEVEMENTS  EXPRESSED  OR  IMPLIED  BY  SUCH FORWARD-LOOKING STATEMENTS.  SUCH
FUTURE  RESULTS  ARE  BASED  UPON MANAGEMENT'S BEST ESTIMATES BASED UPON CURRENT
CONDITIONS AND THE MOST RECENT RESULTS OF OPERATIONS.  WHEN USED IN THIS REPORT,
THE  WORDS  "EXPECT,"  "ANTICIPATE,"  "INTEND,"  "PLAN,"  "BELIEVE,"  "SEEK,"
"ESTIMATE"  AND  SIMILAR  EXPRESSIONS  ARE  GENERALLY  INTENDED  TO  IDENTIFY
FORWARD-LOOKING  STATEMENTS.  BECAUSE  THESE  FORWARD-LOOKING STATEMENTS INVOLVE
RISKS  AND  UNCERTAINTIES,  THERE  ARE IMPORTANT FACTORS THAT COULD CAUSE ACTUAL
RESULTS  TO  DIFFER  MATERIALLY  FROM  THOSE  EXPRESSED  OR  IMPLIED  BY  THESE
FORWARD-LOOKING  STATEMENTS,  INCLUDING  OUR PLANS, OBJECTIVES, EXPECTATIONS AND
INTENTIONS  AND  OTHER  FACTORS  DISCUSSED  UNDER  "RISK  FACTORS."



                                     PART I
Business
GENERAL

     We  are  a  supplier  and  formulator of branded natural health, herbal and
nutritional  supplements designed and formulated to address the dietary needs of
the general public. Our products are produced primarily from natural ingredients
and are formulated for the purposes of achieving specific dietary or nutritional
goals.  We  develop  and  market  natural remedies for weight loss, pain relief,
cholesterol  control  and other specific health and nutrition needs.  All of our
products are natural nutritional supplements are subject to regulation under the
Dietary  Health  Supplement & Education Act of 1994, or DHSEA.  Our products are
widely  distributed  through  mass  market  retailers  such  as  GNC,  Wal-Mart,
Rite-Aid,  Costco, Eckerd and Walgreens, in over 7,500 health food stores either
directly  or  through  distributors, and internationally through distributors in
over  20  countries.

     Our portfolio of branded products includes, but is not limited to, Nature's
Secret,  Diet  System  6, PhenSafe, Harmony Formulas, Dr. Linus Pauling Vitamins
and  Inholtra  Natural Pain Relief among others.  We own numerous trademarks and
have  pending trademarks applications domestically and worldwide relating to our
branded  products,  including  without  limitation,  Bar  Bites(R), BurnMore(R),
Candistroy(R),  Cellulite  Burner(R), Crave Less(R), Diet System 6(R), Enduarnce
Energy(R),  Evening Multi(R), Fulfill(R), Ginko Smart(R), Ginza-Plus(R), Harmony
Formulas  and  Design(R),  Home  Nutrition(R),  Inholtra(R),  Liver  Support(R),
Marital  Arts  Nutrition(R),  Memory Sharp(R), Mind Energy(R), Morning Multi(R),
Nature's  Secret(R),  Parastroy(R),  PhenSafe(R),  Redo(R),  Rezyme  (R),  Super
Cleanse(R), System-Six(R), The New Grapefruit Diet(R), Thinsolution(R), Ultimate
Breakfast(R),  Ultimate  Cleanse(R),  Veroxin-7(R)  and  Yohimbe-Plus(R).


INDUSTRY  OVERVIEW

It  is  generally accepted that the nutrition industry is primarily comprised of
companies  that  manufacture,  distribute  and/or  sell:

-     vitamins,  minerals  and  meal  supplements,  or  VMS;

-     herbals  and  botanicals;

-     sports  nutrition;

-     natural  personal  care  products;  and

-     natural  foods  including  organics.

     In  the  last  several  years,  public awareness of the positive effects of
vitamins  and  nutritional  supplements  on  good  health has been heightened by
widely  publicized  reports  of  scientific findings supporting such claims. The
rise and acceptance of alternative medicine has greatly contributed to increased
sales  of  nutritional  supplements.  Because  the  market  for  these  products
represents  a  rapidly  evolving  industry,  one  that  is  growing  at a nearly
double-digit  rate,  it  is  anticipated  that  sales  will  increase  for  the
foreseeable  future.

     INDUSTRY  TRENDS.  The  VMS,  herbals  and sports nutrition segments in the
U.S., has grown at an estimated compounded annual growth rate or CAGR, according
to  the  Nutrition  Business  Journal,  or NBJ, of over 12% from 1994 to 1998 to
$13.9  billion.  The  NBJ  estimated  sales  for  1999 at $14.7 billion.  Market
competition  has  driven down pricing for commodity supplements such as vitamins
A,  C  and E, as well as standard multiple vitamin-mineral formulations. Pricing
for  clinically  viable  specialty  formulations,  however,  generally  commands
between  10%  and  20%  higher  prices  than  comparable  non-science  based
formulations.  Our sales of bulk/commodity herbal products comprise only a small
percentage  of  our  gross  sales; we focus our efforts on those other segments,
which  continue  to demonstrate growth such as specific solutions for joint care
and  weight  loss.  These industry segments are expected to grow at an even more
favorable double-digit rate than the high single digit per annum growth expected
for  the  industry  as  a  whole.

     Clinical  verification  for  previously  unknown formulations has increased
consumer  usage  among  all  nutritional  supplement categories.  New scientific
research  from  widely  publicized  institutions,  such  as  the Cambridge Heart
Antioxidant  Study,  has  supported the positive health effects of using certain
vitamins  and  dietary  supplements.  The  increase  in VMS and sports nutrition
products  can  be attributed to increased education and exposure to the benefits
of  these  products.  Consumers  have  exhibited  a  trend  to  be more actively
involved  in their own health and well being.  There has been increased consumer
interest in healthier lifestyles and a heightened awareness and understanding of
the  connection  between  diet  and  health.

     The  aging of the "baby boom" generation, combined with consumers' tendency
to  purchase  more dietary supplements as they age, has been an important source
of  growth  for  the  VMS  segment of the nutritional industry.  There will be a
significant expansion of the population segment of 40 years and over in the next
decade,  and  this  segment  displays  the  highest  usage of vitamins and other
supplements.

     The  nationwide  trend  toward  preventive  medicine  in response to rising
healthcare  costs  has  been  an underlying driver for this industry.  There has
been  a  heightened  awareness  and understanding of preventive medicine and the
connection  between  vitamins and health amongst the general public, health care
professionals,  employers,  government agencies, and managed care organizations.
Issues  regarding  preventive  care  and  the  benefits  of vitamins and dietary
supplements  have  received  widespread  media  coverage.

OUR  PRODUCTS

     AS  A  SUPPLIER  AND  FORMULATOR  OF  NUTRITIONAL  SUPPLEMENTS  PRIMARILY
MANUFACTURED FROM NATURAL HERBS, BOTANICALS AND NUTRIENTS, WE HAVE DIVERSE, HIGH
QUALITY  FAMILY  OF BRANDED PRODUCTS. WE SELL THREE BROAD CATEGORIES OF PRODUCTS
INCLUDING:

-    CLEANSING  PRODUCTS  TO  ERADICATE  THE  TOXINS  FROM  THE  BODY;

-    BUILDING  PRODUCTS  THAT  INCREASE  THE  BODY'S  ENERGY AND STAMINA THROUGH
     RESTORING  VITAL  NUTRIENTS  TO  THEIR  APPROPRIATE  LEVELS;  AND

-    SPECIFIC SOLUTIONS FOR SELECTED ORGAN AND BODY SYSTEMS TO CONCENTRATE ON AN
     INDIVIDUAL'S  PROBLEM  AREAS.

     ALL OF THESE PRODUCTS ARE NUTRACEUTICAL, USED BY CONSUMERS IN MANY CASES AS
ALTERNATIVES  TO  PHARMACEUTICALS.  OUR TOP BRAND FAMILIES ARE: NATURE'S SECRET,
WHICH  REPRESENTS 20.3% OF 2000 NET REVENUE, INHOLTRA, WHICH REPRESENTS 11.5% OF
2000  NET  REVENUE  AND  WEIGHT LOSS PRODUCTS, WHICH REPRESENT 13.1% OF 2000 NET
REVENUE.

     We are continually developing products that may not fall squarely under one
of  our  normal  brand lines. Because of our rapid time to market capability, we
are  able  to  take  advantage  of trends and marketing opportunities that other
companies  are  unable  to  take advantage of. A cornerstone of our business has
been  our  ability to understand industry trends and bring new and/or repackaged
products  to  market  quickly.  The  majority  of  these  products have involved
re-formulations  and/or  repackaging of existing products or finding new markets
or  applications  for existing products. As such, we do not anticipate requiring
significant capital to develop our products. In instances where we have followed
other  "first  movers,"  emphasis  has  been  on  careful  market and scientific
research,  leading  to  higher  quality  consumer driven products. In nearly all
branded  product  families  we  have  done extensive work to improve our already
strong  brands  with  the  introduction  of  many  new  and innovative products.

     To  maximize  our  overall  exposure, we often reformulate and/or repackage
many of our existing products and distribute them overseas. One example includes
Yodel,  a  foreign  version of our popular Nature's Secret Ultimate Cleanse sold
expressly  in  Japan.  Another  product found only overseas is Yohimbe-Plus, our
natural  herbal  alternative  to  Viagra  sold  primarily  in  Russia.

     NATURE'S  SECRET.  Nature's  Secret  is  a premium brand in the health food
store  distribution  channel.  The product family consists of internal cleansing
products,  which  are  those  used  for  detoxifying  and  cleansing  the body's
digestive  and  intestinal  systems, vitamins and minerals and specific solution
products  such  as  targeted  weight  loss and energy products.  Nature's Secret
Ultimate  Cleanse  is the number one selling cleansing line on the market today.

     INHOLTRA.  This  line  of  joint  care  products is based upon our patented
formula designed to repair, replenish and revitalize worn and damaged cartilage.
The  Inholtra  line  makes  use  of  nine natural nutritional ingredients, which
differentiates  it from most other glucosamine/chondroitin-based products on the
market.  Presently,  the  product  line  consists  of  three  distinct products:
Inholtra  Natural  Pain  Formula,  InholtraNow  Natural  Pain  Relief  Cream and
Inholtra  SulfaMAX  Natural  MSM  Formula.  Product  users  range from arthritis
sufferers to casual athletes. In just one year sales for the Inholtra brand have
grown  nearly  50%,  making  Inholtra our number two selling brand. The Inholtra
line  is  sold  in  both  the  health  food  and  mass-market  channels.

     We  believe  that  many  of  our  products, if supported by the appropriate
resources,  have outstanding growth potential.  For example, we are preparing to
launch  a  hybrid  pharmaceutical/nutraceutical  extension of the Inholtra joint
care  line  that  will  be  the  first  of its kind in the marketplace. This new
product  combines  various  pharmaceutical pain relievers such as aspirin with a
nutraceutical  complex  of  glucosamine and chondroitin. We anticipate that when
this  new  product  is  introduced,  it  will  have  a substantial effect on our
earnings  potential  as  a  result  of  the  following:

-    over-the-counter,  or  OTC,  analgesics is a multi-billion dollar category;

-    the  glucosamine/chondroitin  category  of  products is at $400 million per
     annum  and  growing  rapidly;

-    80%  of  joint  pain  sufferers  use  OTC  products  regularly;  and

-    a  growing number of consumers are using glucosamine/chondroitin due to its
     ability  to  restore  joints.

     This  type  of hybrid product allows the typical user of analgesics to take
one  convenient product in capsule form not only to relieve pain associated with
arthritis and other joint conditions, but to replenish and repair worn cartilage
at  the  same time. The new Inholtra "Joint Pain" line is being designed in four
different  forms  to  cover  the  spectrum  of  choice  of pain relief products:
aspirin,  ibuprofen,  acetaminophen  and  nap  oxen  sodium.

     WEIGHT LOSS PRODUCTS.  Weight loss is a large and enduring product category
across  all  levels  of distribution. There are numerous products competing with
our Diet System 6 line of products.  Other products in our weight loss portfolio
include PhenSafe, a safe all-natural alternative to prescriptions drugs, such as
Phen  Fen  and  Cellulite  Burner.

     Presently,  the  Diet System 6-product line is comprised of three programs,
the  Fat  Binding,  the  Super Energy and the Cellulite Reduction products along
with  a  Diet  System  6  for  Men  program  and diet shakes, bars and teas. The
Cellulite  Burner  Program  is  a  diet  and  exercise regimen designed around a
special  nutritional  formula  to  combat  cellulite.  Phen  Safe  is  a  safe,
all-natural  alternative to prescription drugs such as the appetite suppressant,
phen-fen.

     Diet  System 6 competes with brands like Slim fast and Dexatrim and is sold
in  both  health  food  store  and  mass  merchandiser  channels.  Diet System 6
distinguishes  itself from the competition, because of its unique formulation of
the  six  most  effective  ingredients  for  dieting,  which  are typically sold
separately.

     LINUS  PAULING  VITAMINS.  We  have  the  exclusive marketing rights to the
Linus  Pauling  name  for  the next 47 years. Dr. Pauling was the only person to
have  won  two  Nobel  Prizes  and  is highly regarded for his popularization of
vitamin  usage  in  the  U.S.  This  largely  under-utilized  asset represents a
significant  opportunity  for  expansion. We have developed a unique value added
line  of  formulas  around  the  Linus  Pauling  Vitamins  brand.

     HARMONY  FORMULAS.  Harmony  Formulas  represents  our  only  line  sold
exclusively  through  the  professional  health  distribution  channel.  Harmony
Formulas  is  a  line  of  clinically  developed,  precisely blended nutritional
supplements,  and designed specifically for health care practitioners who employ
natural,  alternative  treatments.  We  use  different  packaging  with  a  more
clinical  look  for  many of these formulations to differentiate them from other
similar  product  offerings.  Harmony  products  address  alternative  medicine
practitioners,  giving  credence  to  the  use  of  naturopathic  medicines.

SALES,  MARKETING  AND  DISTRIBUTION

     Historically,  we  have distributed our products though three main channels
of  distribution:  mass  market  retailers,  such  as GNC, specialty health food
stores  and  distributors  and  international  distributors.

     As  of  March  31,  2001,  our sales and marketing organization includes 33
full-time employees of whom 10 are direct marketing representatives.  We pay our
direct  marketing  force  employees a salary plus commission, with a majority of
their  compensation  resulting  from their salary.  Our sales force for the mass
market  and  health  food  stores  is  a  combination  of in-house personnel and
independent  brokers.  Our  staff  for  the  mass  market includes four regional
managers  and  one  national  account  vice  president  who  also  manages  our
independent  brokers.

     Our  point  of  sale advertising is designed to convey the effectiveness of
our products.  We have established our reputation with retailers through quality
products,  timely  delivery  and  superior  packaging.  Through  our  ability to
position  products  in  the  marketplace and our strong reputation, we have been
able  to  secure favorable shelf spacing from many of our retail customers.  Our
sales,  marketing  and  distribution infrastructure is designed to integrate new
brands  with  minor  incremental  costs  and  synergistic  potential.  Recent
limitations in capital, however, have limited the amount of advertising to point
of  sale  displays.

     Historically,  we have distributed our products though three main segments:
mass-market  retailers,  which  accounted for 48.1% of 2000 shipments, specialty
health food stores and distributors, which accounted for 27.6% of 2000 shipments
and  international  distribution,  which  accounted for 23.3% of 2000 shipments.
With  increased  advertising  in  the  future,  we  should be able to convey the
effectiveness  of  our  products.  In  certain  instances,  we  enter into co-op
advertising  arrangements  with  our  customers.

     MASS  MARKET  RETAILERS.  We  market  several  of  our  product  lines  to
mass-market  retailers, which we define as large food and drug stores, warehouse
or  club  stores and other large convenience stores.  Customers in this category
include  Wal-Mart,  Walgreens,  Costco,  GNC  and  K-Mart.  This  category  also
includes  traditional  national and regional supermarket chains, such as Safeway
and  Kroger.  These categories offer attractive pricing on vitamins, nutritional
supplements  and  minerals  but  have limited selection and offer little product
information. In addition, this category typically offers a moderate selection of
vitamins,  nutritional  supplements  and  minerals,  focusing  instead  on
prescriptions  and over-the-counter drug products.  VMS offerings by mass-market
retailers are often not all-natural products.  This category generally offers an
extremely  limited  selection  of vitamins, nutritional supplements and minerals
and  infrequent  discounts.

     Our marketing focus for the mass market is targeted at impulse buying where
products  are purchased based on the appeal of the display scheme.  Displays for
the  mass  market  are  intended  to provide informative product descriptions in
plain  view so that they provide consumers with a quick summary of the product's
attributes.  Clear  "point  of  purchase"  information  is  necessary due to the
environment  typical  of  mass-market  retailers  where  sales personnel are not
available  to answer consumer questions.  We display our products in multi-panel
boxes  and  product displays to provide stronger shelf presence.  We are relying
primarily  on this cost effective form of "point of purchase" promotion to drive
sales.

     Advertising  to  the  mass  market  is  often  targeted  at price sensitive
consumers  who  normally  perform  price  comparisons  on similar products.  The
mass-market consumer tends to be more impulse driven and generally less educated
than the health food store consumer.  For this segment, we use print advertising
in  popular  health  and  fitness magazines, such as Shape, for promotion of our
products.

     SPECIALTY  HEALTH  FOOD  STORES.  A  substantial  portion  of  our sales is
achieved  through  specialty health food stores.  We service approximately 7,500
stores,  directly  and  through  distributors.  Many of the accounts are smaller
independent  health  food  shops  that  have  steady orders ranging from $500 to
$1,000.  This  category  is  highly fragmented and includes some local, regional
and  national chains such as Whole Foods and Wild Oats. The largest participants
in  this  sector  include  Vitamin  Shoppe and Vitamin World.  Despite continued
expansion  of  the national chains, this category still remains dominated by the
thousands  of  local  and  regional  "mom  and  pop"  stores  and  chains.

     Our  sales  effort  to  health  food  stores  is  handled  by  health  food
distributors,  telephone sales, through in-house staff, and independent brokers.
Independent  brokers handle the larger, major accounts while the telephone sales
staff  services  lower  volume  customers.  Due to the size of the orders in the
health food segment, products earn higher margins than mass-market products.  We
are  able  to  offer  volume discounts and other special offers to larger health
food  stores

     Advertising  for  the  health  food product lines is concentrated in health
magazines  such  as  Let's Live and in fitness magazines such as Shape and Self.
We target the self-motivated consumer who will consistently refer to specialized
magazines  to  obtain  information  on  health  products.  There  is  a  strong
correlation  between the individual who reads these magazines and the patrons of
specialty  health  stores.  In  our advertising, we emphasize the quality of its
ingredients  and the innovative formulations that the products offer, as opposed
to  focusing  on  price.

     INTERNATIONAL SALES.  Our products are sold in over 20 countries, including
the  United  Kingdom,  Japan,  Russia,  China  and  Singapore,  through  various
in-country  distributors, that target both mass-market retailers and health food
stores.

     Our marketing staff applies the same methodology to its international brand
management  as  it  does  for  domestic  markets.  There  is a constant focus on
packaging and display configurations to obtain the most effective penetration in
each  market.  Our  staff  will  often  alter packaging or displays to appeal to
consumers  in  a  particular  foreign  market.  Advertising  schemes  are  also
customized  to adapt to foreign publications, cultures and different demographic
groups.

     Presently,  Asia  and  Europe  represent our largest international markets.
Sales  in  Russia  and  the  UK  are expected to increase while sales within the
European  Union,  or  EU,  will  expand upon registration of products within its
respective  countries.  Activity in Japan is expected to rapidly expand, both in
product  placement  and  revenue  growth.  Other  key  Asian  markets,  such  as
Singapore,  Malaysia  and  Hong  Kong,  continue  to exhibit steady growth, with
accelerated  growth  in  the future as more products are registered within those
markets.

SUPPLIER  RELATIONS,  MANUFACTURING  AND  PURCHASING

     All  of  our  products  are  manufactured by third party domestic suppliers
pursuant  to  our  specifications  and  proprietary  recipes. The suppliers that
manufacture for us are required to meet strict manufacturing standards set forth
by  the  Food and Drug Administration, or FDA. Prior to selecting a manufacturer
to  produce  our  products,  we  review the manufacturer's raw material sources,
quality  assurance  procedures  and  reliability  to  assure  that  the proposed
manufacturer  meets  our  criteria.  Currently,  we  utilize  eight  different
manufacturers  and believe that there are numerous other qualified manufacturers
that  would  meet  quality  assurance  requirements if alternative manufacturing
sources  were required.  All ingredients contained in our products are generally
available  from  a  number  of  alternative  sources.

COMPETITION

     The  industry  in which we operate is highly competitive and fragmented. It
is  estimated  that  nearly  900  companies are involved in the manufacturing or
wholesale  distribution  of  supplements to the mass markets. Of those 900, less
than  20  companies  comprise 25% of the market with the remaining 75% comprised
mostly of companies generating less than $20 million in total annual sales.  The
ten  largest  competitors  are  large  well-capitalized  companies that have the
ability to change and shape the industry.  In the health and natural food sector
these  include  product  lines such as:  Nature's Way, Rainbow Light Nutritional
Systems,  Solgar,  Nature's  Herbs  and  Twinlabs.

     In  the  mass  market  sector  the  competitors  include:  Whitehall Robins
Healthcare,  Bayer  AG,  Mead  Johnson Nutritionals, Johnson & Johnson, Inc. and
Leiner  Health  Products  Group,  Inc.

     While  the  nutrition  industry  has  a few large manufacturers, there is a
large  and  diverse  group  of  smaller manufacturers who sell primarily through
wholesale  distributors.  Generally,  larger companies sell multiple brands into
each  channel  of  distribution  and smaller companies generally target only one
channel  of  distribution.  The  proliferation  of  small  manufacturers  can be
attributed  to  the  low  barriers  to  entry  for  many  product  categories.
Historically,  less  stringent  regulations  from  the  FDA, as well as a steady
supply  of  innovative  formulations  have  allowed small companies to enter the
market  with  just  a  few  products.

     We  continue  to  be  a leader in internal cleansing products and intend to
leverage  this success to launch other products.  Our Nature's Secret-Registered
Trademark-  and  Harmony  Formula-Registered  Trademark-  brand lines have built
strong  brand  loyalty with retailers, practitioners and customers by delivering
quality  products,  excellent customer service and an emphasis on health through
education.

     In the food, drug and mass market, we face increased competition where many
of  our  competitors  are  significantly  larger  and  have  greater  financial
resources.  We  believe  we  will  be  able to compete successfully in this mass
market  in  the future because of our unique formulations and packaging, product
quality  and  good  relationships  with  distributors  and  store  buyers.

PATENTS  AND  INTELLECTUAL  PROPERTY

     We protect our proprietary rights from unauthorized use by third parties to
the  extent  that  our  proprietary  rights are covered by valid and enforceable
patents  or  are  effectively  maintained  as  trade secrets.  Patents and other
proprietary  rights  are an essential element of our business.  Our policy is to
file  patent applications and to protect technology, inventions and improvements
to  inventions  that  are  commercially  important  to  the  development  of our
business.  As of December 31, 2000, we were maintaining 2 U.S. patents and other
corresponding  foreign patents based on our discoveries that have been issued or
allowed.  Of our patents, 2 are issued in the United States, 1 is issued in each
of  Australia,  Canada  and  the European Community.  Each patent will expire in
year  2015.  The patent for this new Inholtra product is pending and the Company
expects  this  to  create  a  barrier  to  competition.

     A  significant  part  of  our intellectual property consists principally of
registered trademarks.  We are engaged on a continuing basis in developing brand
names  for  our  new products, securing trademark protection for brand names and
copyright  protection for associated materials, policing our existing marks, and
enforcing  our legal rights in cases of potential infringement by third parties.
Prior  to  commencing  advertising and sales of products under a newly developed
brand  name,  we seek to minimize the risks of potentially infringing the rights
of  others  by conducting trade and service mark searches and other inquiries in
addition  to  filing  publicly  for  trademark  protection of the brand name and
copyright  protection  for  associated  advertising  materials  and  labeling.


     We  also  rely  on  trade  secret,  employee  and third-party nondisclosure
agreements  and  other  protective measures to protect our intellectual property
rights  pertaining  to  our  products  and  technology.

GOVERNMENT  REGULATION

     Our  products  and  research  and  development  activities are regulated by
numerous  governmental  authorities,  principally  the  FDA,  the  Federal Trade
Commission,  or  FTC,  the  Department  of  Agriculture  and  the  Environmental
Protection  Agency,  or  EPA  and  corresponding  state  and  foreign regulatory
agencies.

     The  FDA,  in  particular, regulates the formulation, manufacture, labeling
and  distribution  of  foods,  including  dietary  supplements,  cosmetics  and
over-the-counter  or  homeopathic  drugs.  FDA  regulations require that certain
informational  labeling be presented in a prescribed manner on all foods, drugs,
dietary  supplements  and  cosmetics. Specifically, the Food, Drug, and Cosmetic
Act,  or  the  FDC Act, requires that food, including dietary supplements, drugs
and  cosmetics,  not be "misbranded." A product may be deemed an unapproved drug
and  "misbranded"  if  it  bears  improper  claims  or  improper  labeling.  A
manufacturer  or  distributor of dietary supplements must notify the FDA when it
markets  a  product  with  labeling claims that the product has an effect on the
structure  or function of the body. Noncompliance with the FDC Act, and recently
enacted  amendments  to  the  FDC Act, could result in enforcement action by the
FDA.

     The  FDC  Act  has  been  amended  several  times  with  respect to dietary
supplements,  most  recently  by  DSHEA. DSHEA created a new statutory framework
governing  the  definition, regulation and labeling of dietary supplements. With
respect  to  definition,  DSHEA  created  a  new  class  of dietary supplements,
consisting  of  vitamins,  minerals,  herbs,  amino  acids  and  other  dietary
substances  for  human  use  to  supplement  the  diet, as well as concentrates,
metabolites,  extracts  or  combinations of such dietary ingredients. Generally,
under  DSHEA,  dietary  ingredients  that  were on the market before October 15,
1994,  may  be  sold without FDA pre-approval and without notifying the FDA.  In
contrast, a new dietary ingredient, such as one not on the market before October
15,  1994  requires  proof  that  it has been used as an article of food without
being  chemically  altered  or evidence of a history of use or other evidence of
safety  establishing  that  it  is reasonably expected to be safe. Retailers, in
addition  to dietary supplement manufacturers, are responsible for ensuring that
the  products  they  market  for  sale  comply  with  these  regulations.

     DSHEA  established  an  office  of  Dietary  Supplements  at  the  National
Institutes of Health in order to coordinate and conduct scientific research into
the health benefits of dietary supplements, as well as a Presidential commission
to  study  and  make  recommendations  on  the  regulation  of  label claims and
statements  for  dietary  supplements.  DSHEA  empowers  consumers  to make more
informed  choices about preventive health care programs based on scientific data
about  the  health  of  dietary  supplements.

     Although  DSHEA is generally viewed as a positive development for companies
that  sell  dietary  supplements  such as vitamins, minerals, herbs, and similar
substances,  the  legislation  imposed  new  labeling  requirements that must be
adhered  to in order for a product to qualify for the "safe harbors" established
by  DSHEA.

     With  respect  to  labeling,  DSHEA  amends,  for  dietary supplements, the
Nutrition  Labeling  and  Education  Act  by  providing  that  "statements  of
nutritional  support,"  also  referred to as "structure/function claims," may be
used  in  dietary supplement labeling without FDA pre-approval, provided certain
requirements  are  met.  These  statements  may  describe how particular dietary
ingredients  affect  the  structure or function of the body, or the mechanism of
action  by which a dietary ingredient may affect body structure or function, but
may  not  state  a  drug  claim,  such as a claim that a dietary supplement will
diagnose,  mitigate,  treat,  cure  or  prevent  a  disease.  A company making a
"statement  of nutritional support" must possess substantiating evidence for the
statement, disclose on the label that the FDA has not reviewed the statement and
that the product is not intended for use for a disease and notify the FDA of the
statement  within  30  days  after  its  initial  use.

     In  addition, DSHEA allows the dissemination of "third party literature" in
connection  with  the  sale of dietary supplements to consumers at retail if the
publication  meets statutory requirements. Under DSHEA, "third party literature"
may  be  distributed  if,  among other things, it is not false or misleading, no
particular  manufacturer  or brand of dietary supplement is promoted, a balanced
view  of available scientific information on the subject matter is presented and
there  is  physical  separation  from  dietary  supplements  in  stores.

     Given  the  fact  that  DSHEA  was  enacted  only  six years ago, the FDA's
regulatory  policy  and  enforcement positions on certain aspects of the new law
are  still  evolving.  Moreover,  ongoing  and future litigation between dietary
supplement  companies  and  the  FDA  will  likely  further  refine  the  legal
interpretations of DSHEA. As a result, the regulatory status of certain types of
dietary  supplement  products,  as  well as the nature and extent of permissible
claims,  will  remain  unclear  for  the  foreseeable  future.

     In addition to the regulatory scheme under the FDC Act, the advertising and
promotion  of  dietary supplements, foods, OTC drugs and cosmetics is subject to
scrutiny  by  the  FTC,  which  prohibits  "unfair  or deceptive" advertising or
marketing  practices.  The  FTC has pursued numerous food and dietary supplement
manufacturers and retailers for deceptive advertising or failure to substantiate
promotional  claims, including, in many instances, claims made via the Internet.
The  FTC  has  the power to seek administrative or judicial relief prohibiting a
wide  variety  of  claims,  to  enjoin  future  advertising,  to seek redress or
restitution payments and to seek a consent order and seek monetary penalties for
the  violation  of  a  consent  order.

     Although  the  regulation  of  dietary supplements is less restrictive than
that  of  drugs  and  food  additives,  we  cannot  be  assured that the current
statutory  scheme  and regulations applicable to dietary supplements will remain
less  restrictive.  Any laws, regulations, enforcement policies, interpretations
or  applications  applicable  to our business could require the reformulation of
certain  products to meet new standards, the recall or discontinuance of certain
products  not  capable  of  reformulation,  additional  record keeping, expanded
documentation  of  the  properties  of  certain  products, expanded or different
labeling  or  scientific  substantiation.

EMPLOYEES

     Currently,  we  have approximately 71 employees, including approximately 33
in  sales  and  marketing positions, 18 in distribution and 20 in administrative
positions.  None  of  our  employees  is  covered  by  a  collective  bargaining
agreement,  nor to our knowledge is there any current attempt to organize into a
collective  bargaining  unit.   We  have  not experienced any slow downs or work
stoppages.


                                  RISK FACTORS

     OUR  SECURITIES  ARE  HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
ONLY INVESTORS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT SHOULD MAKE AN
INVESTMENT  IN THESE SECURITIES.  IN ADDITION TO THE FACTORS SET FORTH ELSEWHERE
IN  THIS  REPORT, PROSPECTIVE INVESTORS SHOULD GIVE CAREFUL CONSIDERATION TO THE
FOLLOWING  RISK  FACTORS IN EVALUATING US AND OUR BUSINESS BEFORE PURCHASING OUR
SECURITIES.

     THERE IS A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK.  PERSONS WHO MAY OWN
OR  INTEND  TO  PURCHASE  SHARES  OF COMMON STOCK IN ANY MARKET WHERE THE COMMON
STOCK  MAY TRADE SHOULD CONSIDER THE FOLLOWING RISK FACTORS, TOGETHER WITH OTHER
INFORMATION  CONTAINED  ELSEWHERE  IN  OUR  REPORTS,  PROXY STATEMENTS AND OTHER
AVAILABLE  PUBLIC INFORMATION, AS FILED WITH THE COMMISSION, PRIOR TO PURCHASING
SHARES  OF  OUR  COMMON  STOCK.

     OUR  ABILITY  TO  PREDICT  RESULTS  OR  THE EFFECT OF CERTAIN EVENTS ON OUR
OPERATING  RESULTS  IS  INHERENTLY  UNCERTAIN. THEREFORE, WE ARE CAUTIONING EACH
READER  OF  THIS  REPORT TO CAREFULLY CONSIDER THE FOLLOWING FACTORS AND CERTAIN
OTHER FACTORS DISCUSSED HEREIN AND IN OTHER PAST FILINGS WITH THE SECURITIES AND
EXCHANGE  COMMISSION.

     FACTORS  THAT COULD CAUSE OR CONTRIBUTE TO THE OUR ACTUAL RESULTS DIFFERING
MATERIALLY  FROM  THOSE DISCUSSED HEREIN AND IN ANY FORWARD LOOKING STATEMENT OR
FOR  THE  PRICE OF OUR COMMON STOCK TO BE AFFECTED ADVERSELY INCLUDE BUT ARE NOT
LIMITED  TO:

WE HAVE A HISTORY OF OPERATING LOSSES WHICH ARE LIKELY TO CONTINUE IN THE FUTURE

     Our  auditors  have  included  an  explanatory paragraph in their report of
Independent  Public  Accountants  included  in  our audited financial statements
included elsewhere in this report for the years ended December 31, 2000, 1999 as
previously  restated  and 1998, respectively, to the effect that our losses from
operations for the year ended December 31, 2000, and the working capital deficit
and  the retained deficit at December 31, 2000 raise substantial doubt about our
ability  to continue as a going concern.  We have incurred significant losses in
two  of  the  last  three  years.   We have historically financed our activities
through  working  capital  provided  from  operations,  loans  and  the  private
placement  of  our  debt  and  equity  securities.  As of December 31, 2000, our
retained  deficit  was $41.4 million.  In the first quarter of the year 2000, we
implemented  an operating plan to improve the financial results of the business,
concentrating  initially  on  major  cost  reductions.  In doing so, we are also
focusing  on product margins, which have gradually eroded as the mix of products
sold  changes  and  the  competition  for  retail  shelf  space  erodes pricing.

     We  expect  to  incur  continuing losses because we plan to spend available
resources  on marketing new and existing products.  We cannot assure you that we
will market any products successfully, operate profitably in the future, or that
we  will not require significant additional financing in order to accomplish our
business  plan.

WE WILL NEED RELIEF FROM OUR OBLIGATIONS TO PAY OUR SECURED CREDITOR IN THE NEAR
TERM  AND  WE MAY NEED ADDITIONAL FINANCING TO MAINTAIN AND EXPAND OUR BUSINESS,
AND  SUCH  FINANCING  MAY  NOT  BE  AVAILABLE  ON  FAVORABLE  TERMS,  IF AT ALL.

     We  have  historically  financed  our  operations  through  working capital
provided  from  operations,  loans  and the private placement of equity and debt
securities.  In  fiscal  year  2000, we raised the gross amount of approximately
$8.1 million through a private placement of our securities.  The net proceeds of
that  financing, together with our existing financial resources and any revenues
from  our sales, distribution, licensing and manufacturing relationships, should
be  sufficient  to  meet our operating and capital requirements through June 15,
2001.  The  balance  due  under  our Secured Credit Agreement approximates $15.9
million  as of March 31, 2001 and requires a payment of approximately $1,750,000
on  June  15,  2001  and monthly payments of principal of approximately $195,000
commencing  in July, 2001.  We do not have the resources to make these payments.
We  will  be  seeking,  from  our  secured lender, an extension of these payment
obligations.  Our  failure  to  receive  such  extension  could  have a material
adverse  effect  upon  our  financial  condition  and our ability to continue to
operate.

If  we need additional financing, we cannot assure you that it will be available
on  favorable  terms,  if  at  all.  If  we  need funds and cannot raise them on
acceptable  terms,  we  may  not  be  able  to:

-    sustain  our  business  operations;
-    execute  our  growth  plan;
-    take  advantage  of  future  opportunities,  including  acquisitions,  as
     feasible;
-    respond  to  customers  and  competition.

THE  ISSUANCE  OF ADDITIONAL SHARES OF COMMON STOCK UPON CONVERSION OF PREFERRED
STOCK  MAY  CAUSE  SIGNIFICANT  DILUTION  OF  EXISTING  SHAREHOLDERS' INTERESTS.

     Significant  dilution  of  existing shareholders' interests may occur if we
issue  additional  shares  of  common stock underlying outstanding shares of our
preferred  stock  or  preferred  stock.  The  number  of  shares of common stock
issuable  upon  conversion of the preferred stock may constitute a significantly
greater  percentage  of  the  total  outstanding shares of common stock, as such
conversion  is  based on a formula tied to the market price of the common stock.

     The exact number of shares of common stock into which currently outstanding
preferred  stock may ultimately be convertible will vary over time as the result
of  ongoing  changes in the trading price of the common stock.  Decreases in the
trading  price  of  the  common  stock will result in increases in the number of
shares  of  common  stock  issuable upon conversion of the preferred stock.  The
following  consequences  could  result.  The  conversion  of the preferred stock
would  dilute  the  book  value  and  earnings per share of common stock held by
existing  shareholders.

     The  Securities  Purchase  Agreement,  dated October 27, 2000, provides, in
part,  that  to  the  extent  that the number of shares required to be issued in
connection  with  conversions  of preferred stock exceeds 19.9% or approximately
6,520,700  shares of common stock outstanding at the closing, we are required to
redeem the preferred stock representing such excess common shares at 140% of its
face  amount,  plus  accrued  dividends.  If this were to occur, we may not have
adequate  cash to redeem such excess and would then be in breach of the terms of
the  securities  purchase  stock  agreements.

OUR  PRODUCTS  RETURN  POLICIES  MAY  HAVE  A  MATERIAL  ADVERSE EFFECT UPON OUR
OPERATIONS.

     Product  returns  are  a  recurring  part  of our business. Products may be
returned  for  various  reasons including expiration dates or lack of sufficient
sales  velocity. We accrue a reserve for returns based on historical experience.
During  1999  and 2000, returns were far higher than in past years and, as such,
our  gross profit was negatively impacted in 1999 and 2000 for returns. Although
we  have  increased  our  reserves  and have generally been able to estimate the
level  of returns accurately, there is no guarantee that future returns will not
exceed the high levels experienced in the year 2000 or will be in line with past
return  percentages.  The  risk  of returns is amplified by the current industry
trend,  which  shows  negative  growth.  If  this trend continues, retailers may
decide  to reduce inventory levels from their suppliers, by returning goods from
their  warehouse  distribution  centers.

WE  ARE  RELIANT  ON  A  LIMITED  NUMBER  OF  PRODUCTS  TO  GENERATE  REVENUES.

     We  currently  offer approximately 313 products and derived more than 31.8%
of  our  total shipments during 2000 from the sale of products, Ultimate Cleanse
and  Inholtra  . As a result of the limited number of health products from which
we  derive  our revenue, the risks associated with our business increase since a
decline  in market demand for one or more products, for any reason, could have a
significant  adverse  impact  on  the  results  of  our  operations.

WE  MAY  FACE  COSTLY  PRODUCT  LIABILITY  AND  OTHER LEGAL CLAIMS BY CONSUMERS.

     The  products  we  carry  are particularly susceptible to product liability
claims.  Any  claim of product liability by a consumer against us, regardless of
merit,  could  be  costly  financially  and  could  divert  the attention of our
management.  It  could  also  create  negative  publicity,  which would harm our
business.  Although  we maintain product liability insurance in the amount of $1
million,  it  may  not  be  sufficient  to  cover  a  claim  if  one  is  made.

     Like  other  retailers, distributors and manufacturers of products that are
ingested,  we  face  an inherent risk of exposure to product liability claims in
the  event  that  the  use  of the products we sell results in injury. We may be
subjected  to  various  product  liability  claims,  including  claims  that the
products  we  sell  contain  contaminants,  are  improperly  labeled  or include
inadequate instructions as to use or inadequate warnings concerning side effects
and  interactions  with  other  substances.  We  cannot  predict whether product
liability  claims  will be brought against us in the future or the effect of any
resulting adverse publicity on our business.  Moreover, we may not have adequate
resources  in  the event of a successful claim against us. We do not have formal
indemnification  arrangements  with the third-party vendors from which we source
our  products.  If  our  insurance  protection is inadequate and our third-party
vendors  do  not  indemnify  us,  the  successful assertion of product liability
claims  against  us  could  result  in potentially significant monetary damages.

     Although  many  of  the ingredients in our products are vitamins, minerals,
herbs  and  other  substances  for  which  there  is  a  long  history  of human
consumption, some of our products contain innovative ingredients or combinations
of  ingredients.  There is little long-term experience with human consumption of
some  of  these  innovative  product ingredients or combinations in concentrated
form.  In  addition, interactions of these products with other similar products,
prescription  medicines and over-the-counter drugs have not been fully explored.

     Because  we will be dealing with large numbers of end users, we will have a
significant  level  of  legal  exposure  due  to  this  volume  of  customer
relationships.  The most serious area of exposure will be in relation to product
advertising  claims  and the product quality.  People may purchase products from
us  expecting certain physical results, unique to nutritional products.  If they
do  not  perceive  the  results  to be in accordance with the claims made on the
packaging  or  on our Web site, certain individuals or groups of individuals may
seek  monetary  retribution.  However,  we  have no assurance that our insurance
company will comply with coverage in all instances or that such coverage will be
adequate  to  cover  all  potential  losses

OUR  SUCCESS  IS DEPENDENT UPON THE SUCCESSFUL INTRODUCTION OF OUR NEW PRODUCTS.

     We  believe the growth of our net sales is substantially dependent upon our
ability  to introduce new products, particularly our new hybrid product known as
Inholtra Joint Pain. We plan to introduce Inholtra Joint Pain to the mass-market
in  May  2001. Because we have limited resources to spend on advertising we will
rely on point of sales displays to introduce this product to the consumer. If we
do  not achieve velocity rates that our target mass-market customers demand, the
product  may  be  removed from our customers shelves. Our ability to meet future
debt  obligations  is dependent in large measure on the success of this product.
We  seek to introduce additional products each year. The success of new products
is dependent upon a number of factors, including our ability to develop products
that  will  appeal to consumers and respond to market trends in a timely manner.
There  can  be  no  assurance  that  our efforts to develop new products will be
successful or that consumers will accept our new products. In addition, products
currently experiencing strong popularity and rapid growth may not maintain their
sales  volumes  over  time.

OUR FAILURE TO HAVE LONG-TERM CONTRACTS WITH MANUFACTURERS OR DISTRIBUTORS COULD
HAVE  AN  ADVERSE  EFFECT  ON  OUR  OPERATIONS.

     We  purchase all of our products from third-party manufacturers pursuant to
purchase  orders,  but  without  any  long term manufacturing agreements. In the
event  that  a  current  manufacturer  is  unable  to meet our manufacturing and
delivery requirements at some time in the future, we may suffer interruptions of
delivery  of certain products while we establish an alternative source. To limit
our  exposure  to  this type of interruption, for all large volume products, two
third-party  manufacturers  have  been  established. We also rely on third-party
carriers for product shipments, including shipments to and from our distribution
facilities.  We  are  therefore subject to the risks, including employee strikes
and inclement weather, associated with our carrier's ability to provide delivery
services to meet our fulfillment and shipping needs. Failure to deliver products
to  our  customers in a timely and accurate manner would harm our reputation and
our  business  and  results  of  operations.

WE  ARE  DEPENDENT  ON  OUR  BUSINESS  RELATIONSHIPS WITH OUR LARGEST CUSTOMERS.

     During  2000,  we  had two customers who accounted for more than 10% of our
business.  Our  top  10 customers account for approximately 60% of our business.
The  loss  of any one of or a significant number of these customers would have a
material  adverse  effect on our growth. We do not have long-term contracts with
any  of  its  customers.  There  is  no  assurance that our major customers will
continue  as  major  customers.  The loss of a significant number of other major
customers,  or  a  significant  reduction  in  purchase  volume  by or financial
difficulty  of  such  customers,  for  any reason, could have a material adverse
effect  on  our  business,  financial  condition  and  results  of  operations.

INDUSTRY  TRENDS  INDICATE  THAT  OUR  SALES  IN  OUR  INDUSTRY  ARE IN DECLINE.

     The  total  United  States  retail  market for nutritional supplements, the
vitamin,  mineral  and  supplement market, or VMS is highly fragmented. Industry
sources  report that the VMS sector grew substantially during most of the 1990s,
in  many  years  at a double digit pace. However, there is evidence, that during
the  year  2000,  the  industry  rate  of  growth  became  negative.

     Information  Resources,  Inc.,  or  IRI, tracks sales data within the food,
drug,  and  mass-market  channels  of  distribution.  In  the twelve weeks ended
February 4, 2001, vitamin and supplement sales in these channels of distribution
fell  9.3%  when compared to the same period a year earlier. Sales for the prior
52  weeks  fell  4.0%  when  compared to the same 52-week period a year earlier.
During  the  12-week  period,  sales  of  herbal  products fell 20.8% and in the
52-week  period  such  sales  fell  13.2%.

     In  addition  to  the  trends  in  our specific industry, the United States
economy  has  experienced  a  significant  downturn  in recent months, which may
contribute  significantly  to  downward  trends  in  our  industry.

     There  also  can  be  no  assurance that the industry growth rates of prior
years  can be regained. In addition, there can be no assurance that the industry
growth rate will not continue to decline in future operating periods or that the
growth  rate  of the U.S. economy may not be negative. Such a failure to achieve
and  sustain growth in the industry or in the U.S. economy as a whole may have a
material  adverse  effect  on  our ability to return its results to its historic
rates  of  growth  and  its  results  of  operations.

THE  VMS  INDUSTRY  IS  HIGHLY  COMPETITIVE.

     Numerous  companies,  many  of  which  have  greater  size  and  financial,
personnel,  distribution  and  other  resources  than us, compete with us in the
development,  manufacture  and  marketing  of  VMS  supplements.  Our  principal
competition  in  the health food store distribution channel comes from a limited
number of large nationally known manufacturers and many smaller manufacturers of
dietary  supplements.  In  the  mass-market  distribution channel, our principal
competition  comes  from  broad  line  manufacturers,  major  private  label
manufacturers  and  other  companies.

     In  addition,  large  pharmaceutical  companies  have begun to compete with
others  and  us  in  the dietary supplement industry. Packaged food and beverage
companies  compete  with us on a limited basis in the dietary supplement market.
Increased  competition  from such companies could have a material adverse effect
on  us  because  such  companies  have  greater  financial  and  other resources
available  to  them  and  possess  manufacturing,  distribution  and  marketing
capabilities  far  greater  than  ours.

     We  also  face  competition  in  both the health food store and mass market
distribution  channels  from private label dietary supplements and multivitamins
offered  by  health  and  natural  food  store  chains,  drugstore  chains, mass
merchandisers  and  supermarket  chains.

OUR  BUSINESS  MAY  BE  ADVERSELY  AFFECTED  BY  UNFAVORABLE  PUBLICITY.

     We  believe that the VMS market is significantly affected by national media
attention  regarding  the  consumption  of  VMS  supplements.  Future scientific
research  or  publicity  may  not  be  favorable  to  the VMS industry or to any
particular product, and may not be consistent with earlier favorable research or
publicity.  Because  of  our  dependence  on  consumers'  perceptions,  adverse
publicity  associated  with  illness or other adverse effects resulting from the
consumption  of  our  products  or  any  similar  products  distributed by other
companies and future reports of research that are perceived as less favorable or
that  question  earlier  research  could  have  a material adverse effect on our
business, financial condition and results of operations. We are highly dependent
upon consumers' perceptions of the safety and quality of our products as well as
dietary  supplements  distributed by other companies. Thus, the mere publication
of  reports  asserting  that  such  products may be harmful or questioning their
efficacy  could  have  a  material  adverse  effect  on  our business, financial
condition  and  results  of  operations,  regardless of whether such reports are
scientifically supported or whether the claimed harmful effects would be present
at  the  dosages  recommended  for  such  products.

THERE  IS  A  SIGNIFICANT  COST  TO  OUR  RETAIL  RELATIONSHIPS.

     Many large retailers demand various forms of incentive payments in order to
conduct  business  with  them.  These  payments  include  slotting  fees,  co-op
advertising payments, rebate incentives, price off promotions and other forms of
monetary and non-monetary support. We must continually evaluate specific demands
to  ascertain  the  profitability of potential business from the retailer making
the  demand.  Because  of such demands, we may, depending upon the demands being
made,  ascertain  that  we cannot profitably do business with certain retailers.
This may cause us to stop doing business with existing customers or not allow us
to  enter  into  a  business relationship with a potential new customer, each of
which  in  turn  could  dampen  future  revenue  growth.

AN ABSENCE OF CONCLUSIVE CLINICAL STUDIES TO SHOW THAT THERE ARE NO HARMFUL SIDE
EFFECTS  TO  OUR  PRODUCTS  COULD  HAVE  AN  ADVERSE  EFFECT  ON  OUR  BUSINESS.

     Although  many  of  the ingredients in our products are vitamins, minerals,
herbs  and  other  substances  for  which  there  is  a  long  history  of human
consumption,  some of our products contain ingredients for which no such history
exists. In addition, although we believe all of our products are safe when taken
as  directed  by us, there is little long-term experience with human consumption
of  a  number  of  these  product ingredients in concentrated form. Accordingly,
there  can  be  no assurance that our products, even when used as directed, will
have  the  effects  intended  or  will  not  have harmful side effects. Any such
unintended  effects may result in adverse publicity or product liability claims,
which  could have a material adverse effect on our business, financial condition
and  results  of  operations.

WE  RELY  ON  OUR  INTELLECTUAL  PROPERTY  PROTECTION AS AN IMPORTANT ELEMENT OF
COMPETITION.

     Our  policy is to pursue registrations for all of the trademarks associated
with  its  key  products.  We rely on common law trademark rights to protect its
unregistered  trademarks as well as its trade dress rights. Common law trademark
rights  generally  are  limited to the geographic area in which the trademark is
actually used, while a United States federal registration of a trademark enables
the  registrant to stop the unauthorized use of the trademark by any third party
anywhere  in  the United States. We intend to register our trademarks in certain
foreign  jurisdictions  where  our  products  are  sold. However, the protection
available,  if  any,  in  such  jurisdictions  may  not  be  as extensive as the
protection  available  to  us  in  the  United  States.

     Currently,  we have few patents on its products and no material business is
derived from those items that are patented. To the extent we do not have patents
on  its  products,  another  company  may replicate one or more of our products.

     Although  we  seek  to  ensure  that  we  do  not infringe the intellectual
property rights of others, there can be no assurance that third parties will not
assert  intellectual  property  infringement  claims  against  us.

WE  DEPEND ON OUR EXECUTIVE OFFICERS AND KEY PERSONNEL TO IMPLEMENT OUR BUSINESS
STRATEGY  AND  COULD  BE  HARMED  BY  THE  LOSS  OF  THEIR  SERVICES.

     We  believe  that  our  growth and future success will depend in large part
upon  the  skills  of  our  management  and  technical team. The competition for
qualified  personnel  in  the laser industry is intense, and the loss of our key
personnel  or  an  inability  to  continue  to  attract, retain and motivate key
personnel could adversely affect our business. We cannot assure you that we will
be  able to retain our existing key personnel or to attract additional qualified
personnel.  We  do  not  have key-person life insurance on any of our employees.
Our  success  depends in part upon the continued service and performance of Klee
Irwin,  President  and  Chief  Executive  Officer.

DIFFICULTY  OF  STRICT  COMPLIANCE  WITH  GOVERNMENT  REGULATIONS

     The  processing,  formulation,  packaging,  labeling and advertising of our
products  are  subject  to  governmental regulation. Congress has recognized the
potential  impact  of dietary supplements in promoting the health of US citizens
by  enacting  the  DSHEA.  Because  of the broad language of certain sections of
DSHEA  and  the  regulations  that implement it, it is difficult for any company
manufacturing  or  making  dietary  supplements  to remain in strict compliance.

OUR CHIEF EXECUTIVE OFFICER AND OUR CHAIRMAN OF THE BOARD VOTE A MAJORITY OF OUR
SHARES, WHICH COULD DISCOURAGE AN ACQUISITION OF US OR MAKE REMOVAL OF INCUMBENT
MANAGEMENT  MORE  DIFFICULT.

     Klee  Irwin,  our  Chief Executive Officer, beneficially owns approximately
41.5%  of  our outstanding shares common stock as of March 31, 2001 and holds an
irrevocable  proxy to vote an aggregate of approximately 4.1% of the outstanding
common  stock  on  behalf  of  American  Equities,  LLC  and Corporate Financial
Enterprises,  Inc.  Andrew  Vollero,  Jr.,  Chairman  of  the Board of Directors
currently holds an irrevocable proxy to vote an aggregate of approximately 20.2%
of  the  outstanding common stock as of March 31, 2001.  Together, they are able
to  control  all  matters  requiring approval by our stockholders, including the
election  of directors and the approval of mergers or other business combination
transactions.

OUR  ARTICLES  OF INCORPORATION AND UTAH LAW CONTAIN PROVISIONS THAT COULD DELAY
OR  PREVENT  AN  ACQUISITION  OF  THE  COMPANY.

     Our  articles  of  incorporation  and  by-laws  contain provisions that may
discourage  third  parties from seeking to acquire us. These provisions include:

-    a  classified  board  of  directors;

-    a  requirement  that special meetings of shareholders be called only by our
     board  of  directors,  chairman  of  the  board,  president  or  10% of the
     stockholders  of  record  of  all  shares  entitled  to  vote;

-    limitations  on  the  ability of shareholders to amend, alter or repeal our
     by-laws;  and

-    the  authority  of  the  board  of  directors to issue, without shareholder
     approval,  preferred  stock  with  such terms as the board of directors may
     determine.

     We  are  also  afforded  the  protections  of  the  Utah  Revised  Business
Corporation  Act.  This  statute contains provisions that impose restrictions on
shareholder  action  to  acquire  control  of  our  company.  The  effect of the
provisions  of  our  articles  of  incorporation  and  by-laws  and Utah law may
discourage  third  parties  from  acquiring  control  of  our  company.

THERE  IS  A  RISK  OF  OWNING  LOW  PRICED  STOCKS  AND  POSSIBLE DIFFICULTY IN
LIQUIDATING  SHARES  OF  SUCH  STOCK.

     Our  common stock is currently quoted in the "Pink Sheets" published by the
National  Quotation Bureau, which is generally considered to be a less efficient
market  than  markets  such as NASDAQ or other national exchanges, and which may
cause  difficulty  in  conducting  trades  and  difficulty  in  obtaining future
financing.  Further,  our  securities  are  subject  to  the "penny stock rules"
adopted  pursuant  to  Section 15 (g) of the Securities Exchange Act of 1934, as
amended,  or  the  Exchange  Act.  The  penny  stock  rules  apply to non-NASDAQ
companies  whose  common stock trades at less than $5.00 per share or which have
tangible  net  worth  less  than  $5,000,000 ($2,000,000 if the company had been
operating  for  three  or  more years).  Such rules require, among other things,
that  brokers  who  trade  "penny  stock"  to  persons  other  than "established
customers"  complete  certain  documentation,  make  suitability  inquiries  of
investors  and  furnish  quote  information  under  certain circumstances.  Many
brokers  have  decided not to trade "penny stock" because of the requirements of
the  penny stock rules and, as a result, the number of broker-dealers willing to
act as market makers in such securities is limited.  In the event that we remain
subject to the "penny stock rules" for any significant period, there may develop
an  adverse  impact  on  the  market,  if  any, for our securities.  Because our
securities  are  subject to the "penny stock rules," investors will find it more
difficult  to  dispose  of  these  securities.  Further  for  companies  whose
securities  are  quoted  in  the  "Pink  Sheets,"  it  is  more  difficult:

-    to  obtain  accurate  quotations,

-    to obtain coverage for significant news events because major wire services,
     such as the Dow Jones News Service, generally do not publish press releases
     about  such  companies,  and

-    to  obtain  capital.

POTENTIAL  FLUCTUATIONS  IN  OUR OPERATING RESULTS COULD LEAD TO FLUCTUATIONS IN
THE  MARKET  PRICE  FOR  OUR  COMMON  STOCK.

     Our  results  of  operations  are  expected to fluctuate significantly from
quarter  to  quarter,  depending  upon  numerous  factors,  including:

-    demand  for  our  products;
-    changes  in  our  pricing  policies  or  those  of  our  competitors;
-    increases  in  our  manufacturing  costs;
-    the number, timing and significance of product enhancements and new product
     announcements  by  ourselves  and  our  competitors;
-    our  ability  to develop, introduce and market new and enhanced versions of
     our  products on a timely basis considering, among other things, regulatory
     approval  processes  and  the timing and results of future clinical trials;
     and
-    product  quality  problems,  personnel changes, and changes in our business
     strategy.

     The  market  price  for  our  common  stock  could fluctuate due to various
factors.  These  factors  include:

-    acquisition-related  announcements;
-    announcements  by  us  or  our  competitors  of  new  products;
-    changes  in  government  regulations;
-    fluctuations  in  our  quarterly  and  annual  operating  results;  and
-    general  market  conditions.

     In  addition,  the  stock  markets  have,  in  recent  years,  experienced
significant  price fluctuations. These fluctuations often have been unrelated to
the  operating  performance  of  the  specific  companies whose stock is traded.
Market  fluctuations,  as  well as economic conditions, have adversely affected,
and  may continue to adversely affect, the market price of our common stock. Our
ability  to  pay  dividends  on  our  common  stock  may  be  limited.

     We  do  not  expect to pay any cash dividends in the foreseeable future. We
intend  to  retain  earnings,  if any, to provide funds for the expansion of our
business.

LIMITATIONS ON DIRECTOR LIABILITY MAY DISCOURAGE STOCKHOLDERS FROM BRINGING SUIT
AGAINST  A  DIRECTOR.

     Our  articles of incorporation provide, as permitted by governing Utah law,
that  a  director  shall  not be personally liable to us or our stockholders for
monetary  damages  for  breach  of  fiduciary  duty  as a director, with certain
exceptions.  These  provisions  may  discourage  stockholders from bringing suit
against a director for breach of fiduciary duty and may reduce the likelihood of
derivative  litigation brought by stockholders on our behalf against a director.
In  addition,  our  articles  of  incorporation and bylaws provide for mandatory
indemnification  of  directors  and  officers to the fullest extent permitted by
Utah  law.

Properties
     Our  principal  offices  are located at 5310 Beethoven Street, Los Angeles,
California,  90066  in  a  building  and  warehouse we lease at a monthly rental
charge  of  $42,000.  This  is  a  five-year  lease  subject  to  escalation.

     In  November  1999,  we  entered  into  a 5-year lease of office facilities
located at 350 Interlocken, Broomfield, Colorado.  The lease agreement calls for
escalating  lease payments over the term of the lease.  On February 15, 2001, we
assigned  this  lease  to  a  third  party.

Legal  Proceedings
     On  January 18, 2001, a lawsuit was filed against us in Los Angeles County,
California,  Superior  Court  entitled  Unified  Western  Grocers,  Inc. v. Omni
Nutraceuticals,  Inc.,  Case  No.  01  000066.  The  complaint seeks recovery of
approximately $20,000, interest and costs.  A responsive pleading has been filed
denying  liability.  We  do not believe the outcome of this litigation is likely
to  materially  impact  us.

     On  January  23,  2001,  the  Labor Commissioner of the State of California
entered a judgment against us in the amount of approximately $42,000 in a matter
entitled  Richard  F.  Lynch  v.  Omni Nutraceuticals, Inc., Labor Commissioner,
State  of  California,  State Case No. 05-19487 1 CC.  We filed an appeal, which
required  posting  a  bond  in  the  amount  of the judgment, in the Los Angeles
County, California, Superior Court on February 14, 2001.  The appeal is entitled
In  the Matter of the Appeal of Omni Nutraceuticals, Inc, of the Order, Decision
or  Award  of  the Labor Commissioner, Richard F. Lynch, Real Party in Interest,
Case  No. BS067765.  The appeal involves a retrial of the matter in the Superior
Court.  We  deny that any sums are due Lynch.  The final outcome of this case is
uncertain,  but  appears  unlikely  that  it  will have a material impact on us.

     On  December  8, 2000, we were sued in a case entitled Media Networks, Inc.
v. Omni Nutraceuticals, Inc., in Los Angeles County, California, Superior Court,
Case  No.  BC  241503,  for  amounts  due on an open account, account stated and
services  rendered  pursuant  to  agreement.  The  complaint  seeks  a  total of
approximately  $437,000,  interest,  attorneys  fees,  and  collection and other
costs.  We  have  filed  a  responsive pleading denying liability.  Based on the
information  currently available, we are unable to evaluate the likelihood of an
unfavorable  outcome.

     We  received  a  demand  letter  dated  February  20,  2001,  from  counsel
representing  the  majority  of  the  former  owners  of  Smart Basics, Inc., an
Internet  retailer  we  acquired  on May 25, 2000, claiming, among other things,
misrepresentations in connection with the transaction in which the Smart Basics'
shareholders  exchanged  their ownership interest in Smart Basics for our common
stock.  The  demand  letter  seeks  unspecified  relief  or, in the alternative,
rescission  of  the  transaction.  The  letter threatens legal action unless the
matter  is  otherwise resolved.  We are investigating our rights and obligations
with  respect  thereto.  Based  on  the  information currently available, we are
unable  to  determine  the  likelihood of an unfavorable outcome to this matter.
Smart  Basics,  together  with  our  other  Internet  operations,  was  sold  to
Vitacost.com  on  February  2,  2001.

     We have received an inquiry from the Los Angeles County and Alameda County,
California,  District  Attorney's  Offices  with respect to labeling of our "151
Bars"  and "Diet System 6 Bars."  Discussions and an exchange of information are
taking  place  with  respect  thereto.  We  are hopeful that a resolution can be
reached  without  litigation, although no assurance can be given.  If settlement
is  not  reached, an action for false advertising, unfair business practices and
other claims may be filed against us.  We are no longer selling the "Diet System
6  Bars"  that are a subject of the inquiry.  Based on the information currently
available,  we  are unable to evaluate the likelihood of an unfavorable outcome.

     A  complaint  for  money was filed against us on May 25, 2000, in an action
entitled  Copelco  Capital,  Inc.  v.  Omni Nutraceuticals, Inc., in Los Angeles
County,  California,  Superior  Court,  Case No. BC230578.  It seeks recovery of
principal of $67,360.31, interest, taxes, fees, liens and late charges according
to  proof,  attorney's  fees  and  costs in connection with our alleged lease of
copier  equipment.  We  have  filed  a responsive pleading denying liability and
raising  affirmative defenses.  Based on the information currently available, we
are  unable  to  evaluate  the  likelihood  of  an  unfavorable  outcome.

     A  complaint  for breach of contract and common counts was filed against us
on  November  30,  2000,  in  a  case  entitled  Puretek  Corporation  vs.  Omni
Nutraceuticals,  Inc.,  filed in Los Angeles County, California, Superior Court,
Case No. 241059.  It seeks recovery of $76,724.22, interest, attorney's fees and
costs.  We  have  filed  a  responsive  pleading  denying  liability and raising
affirmative  defenses.  On  December  28,  2000,  the  court  granted  Puretek's
Application  for  Right  to Attach Order and Writ of Attachment in the amount of
$68,403.86.  Based  on  the  information  currently  available, we are unable to
evaluate  the  likelihood  of  an  unfavorable  outcome.

     We have been sued in the Circuit Court for Baltimore County, Maryland.  The
title  of  the  case  filed  on  October 6, 2000, is Gain, Inc., d/b/a/ American
Medtech  v.  Maryland  Urology  Group,  Inc.,  Veromax  International, LLC, Omni
Nutraceuticals,  Inc.,  Blackstone  International, LLC, Melvin J. Duckett, M.D.,
Larry  L.  Parks and Kyle P. Moore, Civil No. 03-C-00-010409.  The First Amended
Complaint  filed  November  6,  2000, alleges that other defendants granted Gain
exclusive  rights  to  market  and  sell Veromax  to all U.S. pharmacy and chain
stores  with  greater  than twenty stores and that these defendants subsequently
assigned  rights  to  us  to  market and sell Veromax  that were contrary to the
rights  previously  granted  Gain.  It claims that we tortiously interfered with
Gain's prospective economic advantage, and published false information to Gain's
customers  that  disparaged its rights to distribute Veromax , in our efforts to
market  and  sell  Veromax  and  seeks  $250,000,000  in  compensatory  damages,
$25,000,000  in  punitive damages, interest and costs.  It also seeks injunctive
relief  prohibiting us from interfering with Gain's marketing efforts by selling
or  offering  to  sell  Veromax  to  certain  identified  pharmacy chains and to
account  for  sales  made  to  said identified pharmacy chains.  We have filed a
responsive  pleading  denying  liability  and  raising  affirmative defenses and
intend  to  vigorously  defend  this action.  Based on the information currently
available,  we  are unable to evaluate the likelihood of an unfavorable outcome.

     From  time  to  time  we  are a party to legal proceedings that we consider
routine  litigation  incidental  to  our  business.  We  believe that the likely
outcome  of  such  litigation  will  not  have  a material adverse effect on our
business  or  results  of  operations.

Submission  of  Matters  to  a  Vote  of  Security  holders

     During the year ended December 31, 2000, our stockholders did not adopt any
resolutions.

                                     PART II
Market  for  Registrant's  Common  Equity  and  Related  Stockholder  Matters

     Our  common  stock  is  listed  on  the  National Association of Securities
Dealers,  Inc. electronic bulletin board under the symbol "ZONE."  The following
table  sets  forth,  for  the  periods  indicated, the high and low closing sale
prices  of our common stock, as reported by the NASDAQ, for periods on and after
January  1,  1998,  by  the  National  Association  of  Securities Dealers, Inc.
electronic  bulletin  board  for  the period from May 10, 2000 through March 31,
2001.

<TABLE>
<CAPTION>
                              HIGH    LOW
                              -----  -----
<S>                           <C>    <C>
YEAR ENDED DECEMBER 31, 1998
 First Quarter                $5.88  $4.50
 Second Quarter                9.50   4.88
 Third Quarter                 7.50   2.75
 Fourth Quarter                6.94   3.00
YEAR ENDED DECEMBER 31, 1999
 First Quarter                $8.00  $3.43
 Second Quarter                2.50   1.50
 Third Quarter                 2.50   1.50
 Fourth Quarter                2.31   1.13
YEAR ENDED DECEMBER 31, 2000
 First Quarter                $8.63  $1.38
 Second Quarter                7.38   3.75
 Third Quarter                 4.19   1.38
 Fourth Quarter                1.66   0.13
</TABLE>

     The  last  reported  sale  price of our common stock as quoted in the "Pink
Sheets"  published by the National Quotation Bureau on April 11, 2001 was $0.20.
At  April 11, 2001, there were 34,106,032 shares of our common stock outstanding
held  by  approximately  240  holders  of  record  of  our  common  stock.
On  November  7,  2000,  the  NASDAQ/NMS  halted  trading  in our stock.  NASDAQ
delisted  the  common stock from trading on November 17, 2000.  Our common stock
is  currently  quoted  in the "Pink Sheets," which are published by the National
Quotation  Bureau.  We believe that the delisting by NASDAQ is likely to have an
adverse  effect  on  the market for our common stock and on our ability to raise
additional  capital.

DIVIDEND  POLICY

     We  have  not  declared  or paid any dividend since inception on our common
stock.  We  do not anticipate that any dividends will be declared or paid in the
future  on  our  common  stock.

PROVISIONS  OF  OUR  ARTICLES  OF  INCORPORATION  AND  BY-LAWS  THAT  MAY  HAVE
ANTI-TAKEOVER  EFFECTS

     Certain  provisions  of our articles of incorporation and by-laws described
below,  as  well  as  the  ability  of our board of directors to issue shares of
preferred  stock  and  to  set  the  voting  rights, preferences and other terms
thereof,  may  be  deemed  to  have  an  anti-takeover effect and may discourage
takeover  attempts  not  first  approved  by  our  board of directors, including
takeovers  which particular stockholders may deem to be in their best interests.
These  provisions  also  could  have  the  effect  of  discouraging  open market
purchases  of our common stock because they may be considered disadvantageous by
a  stockholder  who  desires  subsequent  to  such purchases to participate in a
business  combination  transaction  with  us  or  to elect a new director to our
board.

Classified  Board
     Our  Articles of Incorporation and Bylaws provide that until after June 30,
2003, our board of directors shall be not less than 3 nor more than 5 directors,
unless  otherwise  determined  by  the  affirmative  vote  of  a majority of the
outstanding  shares  of  voting capital stock then entitled to vote generally in
the  election  of  directors,  voting  together as a single class.  The Board of
Directors  shall be divided into three classes, Class I, Class II and Class III.
There  are  currently  four  (4) members of the Board of Directors.  The initial
Class  I  directors will serve until the annual meeting of stockholders in 2001,
the Class II directors until the annual meeting of stockholders in 2000, and the
Class  III  directors  until  the  annual  meeting  of  stockholders  in  1999.
Thereafter,  all  directors  shall serve for three year terms.  Until after June
30,  2000,  directors  may  be  removed  with  or  without  cause  only upon the
affirmative  vote  of  at  least  80% of the outstanding shares entitled to vote
generally  in  the election of directors, voting as a single class.  Thereafter,
only the affirmative vote of a majority of such shareholders is required.  Until
after  June  30, 2003, these provisions may be amended or repealed only upon the
affirmative  vote  of  at  least  80% of the outstanding shares entitled to vote
generally  in  the election of directors, voting as a single class.  Thereafter,
only  the  affirmative vote of a majority of such shareholders is required.  The
effect  of  these  provisions  is  that not more than one-third of the Company's
directors  will  be  elected at any single annual meeting and a supermajority of
votes  will  be  required  to remove incumbent directors.  As a result, a person
seeking  control  of  the  Company  might  not  necessarily be able to acquire a
controlling block of stock and effect an entire change in management at a single
annual  meeting.

     Special  Meetings  of  Stockholders
     Our  Bylaws provide that a special meeting of stockholders may be called by
the Chairman of the Board of Directors, the President, the Board of Directors or
10%  of  the  stockholders  of  record  of  all  shares  entitled  to  vote.

     Corporate  Action  Without  a  Stockholder  Meeting
     Our Articles of Incorporation provide that any action required or permitted
to be taken by our stockholders must be effected at a duly called Annual Meeting
or  at  a  Special  Meeting  of  stockholders of the Company, unless such action
requiring  or  permitting  stockholder approval is approved by three quarters of
the incumbent directors, in which case such action may be authorized or taken by
the  written consent of the holders of outstanding shares of voting stock having
not  less  than the minimum voting power that would be necessary to authorize or
take  such  action  at a meeting of stockholders at which all shares entitled to
vote  thereon  were present and voting.  Except as specifically set forth above,
no  action may be taken by stockholders by written consent.  Prior to or on June
30,  2003,  any  amendment  or  repeal  of  this  provision  shall  require  the
affirmative  vote  of  the  holders of at least 80% of the outstanding shares of
voting  capital  stock  then  entitled  to  vote  generally  in  the election of
directors, voting as a single class.  Thereafter, only the affirmative vote of a
majority  of  such  outstanding  shares  is  required.

     Limitation  of  Liability  of  Directors;  Indemnification
     Utah  law  limits  a  director's liability for monetary damages, except for
breach  of  a  director's  duties  under certain circumstances.  Our Articles of
Incorporation  contain  provisions  limiting a director's liability for monetary
damages  to  the  fullest  extent  permitted  by  Utah  law.  Our  Articles  of
Incorporation  also  require  us  to  indemnify  our directors, and permit us to
indemnify  our officers, employees' fiduciaries and other agents, to the fullest
extent  permitted  under  Utah  law.

SHARES  ELIGIBLE  FOR  FUTURE  SALE

     As  of  December  31,  2000, we had outstanding 34,019,379 shares of common
stock,  in  each case excluding shares underlying outstanding options.  Of these
shares,  approximately  12,580,000  shares  sold  are  freely  tradable  without
restriction  or  further  registration  under  the Securities Act. The remaining
outstanding  shares  include approximately 6,800,000 shares of common stock that
are  "restricted securities" as defined in Rule 144 and may not be resold in the
absence  of  registration  under  the Securities Act or pursuant to an exemption
from  such  registration,  including  exemptions  provided  by  Rule  144.

     In  addition,  certain  executive  officers,  directors,  shareholders  and
affiliates,  who  own  approximately  22,653,600  shares  of  our  common stock,
including  options  and warrants on 1,778,029 shares, outstanding as of the date
of  this report, have signed lock-up agreements in which they have agreed not to
offer,  sell,  contract  to sell or otherwise dispose of any common stock or any
securities convertible into or exchangeable for common stock until September 26,
2001,  without  the  prior  written  consent  of  Astor  Capital, Inc. While the
investors  have indicated no present intention to waive these restrictions, were
they to do so, up to approximately an additional 20,857,600 shares of our common
stock  could be available for registration and subsequent sale, which could harm
our  stock price or make it more difficult to sell our shares. To continue their
effectiveness, each of these lock-up agreements required that the parties either
deposit  their  respective  shares  with  an escrow agent or enter a restrictive
legend  on the share certificates evidencing their inability to sell or transfer
the  shares pursuant to the restrictions contained in the lock-up agreements. On
January  15,  2001,  we were advised by one of the parties that this requirement
had  not been met and that they considered the agreements void. After review, we
concluded  on  January  17,  2001  that  such  requirements  had  not  been met.

RULE  144

     In  general,  under  Rule  144,  beginning  90  days after the date of this
report,  a  person who has beneficially owned restricted shares for at least one
year, including persons who are affiliates, would be entitled to sell within any
three-month  period  a  number  of  shares  that does not exceed the greater of:

-    1%  of  the  then  outstanding  shares  of  our common stock, approximately
     353,840  shares;  or

-    the  reported  average weekly trading volume of our common stock during the
     four  calendar  weeks  preceding  a  sale  by  such  person.

-    Sales  under Rule 144 are also subject to manner-of-sale provisions, notice
     requirements  and  the  availability  of  current  public  information.

     RULE  144(K)

     Under  Rule  144(k), a person who has not been one of our affiliates during
the 90 days preceding a sale, and who has beneficially owned the shares proposed
to be sold for at least two years, is free to sell such shares without regard to
the  volume,  manner-of-sale or certain other limitations contained in Rule 144.
Selected  Financial  Data

     You  should  read  the  following  selected  consolidated financial data in
conjunction  with  "Management's  Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and related
notes  included  elsewhere in this report.  The statement of operations data for
the  years ended December 31, 1998, 1999 as previously restated and 2000 and the
balance  sheet  data  at  December  31, 1999 as previously restated and 2000 are
derived  from  our audited consolidated financial statements appearing elsewhere
in  this  report.  The balance sheet data at December 31, 1997 and 1996, and the
statement of operations data for the year ended December 31, 1997 and the period
from  March  15,  1996  to  December  31,  1996  are  derived  from  our audited
consolidated  financial statements not included in this report. The statement of
operations data for the period from January 1, 1996 to March 14, 1996 represents
data  of  a predecessor company and is derived from their unaudited consolidated
financial  statements  not  included  in  this  report.

<TABLE>
<CAPTION>
                          STATEMENT OF OPERATIONS DATA
                      (In Thousands, Except per Share Data)

                                  1999 AS
                                  PREVIOUSLY
                       2000       RESTATED      1998      1997      1996
                       ---------  ------------  --------  --------  --------
<S>                    <C>        <C>           <C>       <C>       <C>

Net sales                29,609   $    30,922   $30,547   $29,353   $28,592
---------------------  ---------  ------------  --------  --------  --------
Gross profit             10,223        14,934    18,007    16,050    16,266
---------------------  ---------  ------------  --------  --------  --------
Operating (loss)
income                  (13,472)       (9,866)    1,827    (4,638)   (1,298)
---------------------  ---------  ------------  --------  --------  --------
Other income
(expense)                (1,864)         (829)     (209)      (79)      101
---------------------  ---------  ------------  --------  --------  --------
Income (loss) before
provision for income
taxes                   (15,337)      (10,696)    1,618    (4,717)   (1,197)
---------------------  ---------  ------------  --------  --------  --------
Provision for income
taxes                                    (274)      600        --       594
---------------------             ------------  --------  --------  --------
Income (loss) before
discontinued
operations              (15,337)      (10,422)    1,018    (4,717)   (1,791)
---------------------  ---------  ------------  --------  --------  --------
Discontinued
operations               (1,155)         (633)
---------------------  ---------  ------------
Net income (loss)       (16,492)      (11,055)    1,018    (4,717)   (1,791)
---------------------  ---------  ------------  --------  --------  --------
Pro forma provision
for income taxes
(unaudited)            N/A        N/A             1,345       765   N/A
---------------------  ---------  ------------  --------  --------  --------
Pro forma net
income (loss)
(unaudited)            N/A        N/A               273    (5,482)  N/A
---------------------  ---------  ------------  --------  --------  --------
PER SHARE
DATA:
---------------------
Historical Earnings
(loss) per common
share
-- Basic and diluted   $  (0.71)  $     (0.39)  $  0.04   $ (0.17)  $ (0.07)
---------------------  ---------  ------------  --------  --------  --------
ProForma Earnings
(loss) per common
share
-- Basic and diluted
(unaudited)            N/A        N/A           $  0.01   $ (0.20)  N/A
---------------------  ---------  ------------  --------  --------  --------
Historical
Weighted average
number of shares of
common stock
outstanding-Basic        30,640        28,177    27,747    27,365    25,647
---------------------  ---------  ------------  --------  --------  --------
Weighted average
number of shares of
common stock
outstanding-
Diluted                  30,640        28,177    28,221    27,365    25,647
---------------------  ---------  ------------  --------  --------  --------
Pro forma
---------------------
Weighted average
number of shares of
common stock
outstanding -- Basic
(unaudited)            N/A        N/A            27,747    27,365   N/A
---------------------  ---------  ------------  --------  --------  --------
Weighted average
number of shares of
common stock
outstanding --
Diluted (unaudited)    N/A        N/A            28,221    27,365   N/A
---------------------  ---------  ------------  --------  --------  --------
</TABLE>


<TABLE>
<CAPTION>
                               BALANCE SHEET DATA

                                 1999 AS
                                PREVIOUSLY
                       2000      RESTATED     1998     1997     1996
--------------------  --------  ------------  -------  -------  -------
<S>                   <C>       <C>           <C>      <C>      <C>

Working Capital
(Deficit)             (11,141)  $    (8,558)  $ 4,395  $ 3,588  $ 4,843
--------------------  --------  ------------  -------  -------  -------
Total Assets           27,305        29,533    13,087   11,337   15,832
--------------------  --------  ------------  -------  -------  -------
Long Term Debt, Net
of Current Portion      7,440        10,380     1,423    1,298    1,276
--------------------  --------  ------------  -------  -------  -------
Shareholders'
Investment              2,569          (316)    5,869    5,387   10,256
--------------------  --------  ------------  -------  -------  -------
</TABLE>


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

THE  FOLLOWING  DISCUSSION  AND  ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE
CONSOLIDATED  FINANCIAL  STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS
REPORT.

OVERVIEW

     We  are  the survivor of a corporate reorganization, or the reorganization,
of  4Health, Inc, and Irwin Naturals, Inc., which was consummated June 30, 1998.

     We  are  a  supplier  and  formulator of branded natural health, herbal and
nutritional  supplements designed and formulated to address the dietary needs of
the  general  public.  Our  products  are  produced  primarily  from  natural
ingredients and are formulated for the purposes of achieving specific dietary or
nutritional  goals.  We  have  historically  sold  and  continue  to  sell these
products  to  health  food  stores, both directly and through distributors, mass
merchandisers  and  distributors  who  sell  into  foreign  countries.

INTERNAL  DISPUTES  AND  CHANGES  IN  MANAGEMENT

     Upon  the consummation of the reorganization, Messrs. R. Lindsey Duncan and
Klee  Irwin,  our  controlling  shareholders, entered into substantially similar
three-year  employment  agreements with us.  In 1999, Mr. Duncan was employed as
Chairman of the Board and as a member of our Executive Committee with all duties
and  responsibilities  normally  associated  with  this position.  Mr. Irwin was
employed  as  the  Chief  Executive  Officer  and  as  a member of the Executive
Committee  with  all  duties  and responsibilities normally associated with this
position  until  April  20,  1999.

     On  April  20, 1999, Mr. Irwin resigned, as Chief Executive Officer and his
employment  agreement  was  terminated.  In connection with his resignation, the
Board  of  Directors appointed him as Chief Executive Officer of HealthZone.com,
our  then  wholly  owned  e-commence  subsidiary,  or  HealthZone.

     In  October  1998,  we  entered  into an agreement to hire Louis Mancini as
President  and  Chief  Operating  Officer  and,  subsequently,  Chief  Executive
Officer.

     During  the  period from June, 1998, until Mr. Irwin's resignation as Chief
Executive Officer, disputes arose between Mr. Irwin and us.  On October 8, 1999,
we  entered  into  a  settlement  agreement  with  Mr. Irwin in order to resolve
certain  mutual  claims  that  had  arisen.  Among  the  principal  terms of the
settlement,  Mr.  Irwin  made  a  capital contribution of $410,000, and returned
941,436  shares  of our common stock to us.  363,363 of these shares were issued
to the former owners of Health & Vitamin Express, Inc., or HVE and the remainder
will  be  reflected  as  treasury stock.  Further, Messrs. Irwin and Duncan, who
together owned approximately 74% of the outstanding shares of our voting capital
stock,  each  entered  into  a  five-year voting agreement pursuant to which Mr.
Irwin  has  agreed  to certain stand-still provisions.  They have agreed to vote
their  respective  shares  of our common stock for their respective nominees for
Class  I  and II directors and the candidate for Class III director nominated by
the  two  Class  II  directors.  Upon  execution  of  the  settlement agreement,
day-to-day  control  of  us  was  vested  in  Messrs.  Duncan  and  Mancini.

     Effective  on  March  12,  2000, Mr. Duncan and his spouse, Cheryl Wheeler,
entered  into  an  agreement,  or  the  Withdrawal  Agreement,  in  which:

-    Mr.  Duncan  agreed  to  resign  from  the  Board  of  Directors,

-    terminated  his  employment  agreement  with  us,  and

-    ceased  all  further  involvement  with  us.

     Mr.  Duncan  and Ms. Wheeler both agreed to vote their respective shares of
our  common  stock,  or  give  their  written consent on all matters on the same
proportionate  basis  as  our  remaining shareholders vote their shares, or give
their  written  consent on such matters for a period of five years from the date
of  the  Withdrawal  Agreement,  and  appoint  Andrew  Vollero,  Jr.,  as
attorney-in-fact  for each of them to vote their shares of common stock, or give
their  written  consent.

     Mr.  Duncan's  agreement  to  resign  from  the  Board  and  terminate  his
employment  agreement  was  conditioned  on:

-    the  extension  of the exercise and expiration dates of all of his existing
     stock  options  to  purchase  1,003,029  shares  of the common stock to the
     seventh  anniversary  of  the  Withdrawal  Agreement.

-    the receipt of $1,500,000 in net proceeds from the sale of shares of common
     stock  owned  by  Mr.  Duncan  at a price of $3.00 per share in one or more
     transactions.

-    the execution and delivery by American Equities LLC and Corporate Financial
     Enterprises,  Inc.,  or  the  investors,  of a term sheet providing for the
     purchase  by them from us of our securities for an aggregate purchase price
     of  $2,000,000.

-    the  execution  and  delivery by Mr. Irwin and each of the investors to Mr.
     Duncan  of  a  general  release.

-    the  execution  and  delivery  by  us  of  a registration rights agreement.

-    the  termination  of  the  voting  agreement  dated  October 8, 1999 by and
     between  Mr.  Duncan  and  Mr.  and  Mrs.  Klee  Irwin.

     On  March  12,  2000,  the  Board:

-    terminated  Louis  Mancini's  employment  as  President and Chief Executive
     Officer,

-    appointed  Mr.  Irwin  to  fill  the  vacancy  created  thereby,  and

-    authorized  the  termination  of  that  certain settlement agreement, dated
     October 8, 1999, by and among us and Mr. and Mrs. Klee Irwin, and ancillary
     agreements.

ADJUSTMENT  TO OUR FINANCIAL STATEMENTS FOR 1999 AND 2000 AND CUSTOMER RIGHTS OF
RETURN

     During  the  period  of  time  while  Messrs.  Duncan  and  Mancini were in
day-to-day  control  of  our sales and marketing efforts, they developed several
product  offerings  that  were  not  successful.  In  order  to  protect  our
relationship  with  certain  of  our  customers,  as  well as to ensure a strong
reputation  to  secure future sales, we exercised liberal flexibility with those
customers  in  authorizing  returns for certain products which did not sell.  At
the  end  of  the  first  quarter  of  2000, management again changed. It became
necessary  at this time to continue for a limited period, the flexible stance on
returns  initiated  in  1999  in  order  to  further  support  and  protect  our
relationship  with  those  customers.

     In  an  effort  to  build  customer confidence and satisfaction, we warrant
satisfaction and grant to our customers, at the retail consumer level, the right
of  return  for full credit if the end user is not satisfied with the quality of
our  product.  Historically,  this  policy  has  generated  insignificant  total
returns.  During  the period from 1999 through the third quarter of 2000, due to
product  introductions  in 1999 that proved unsuccessful, the percentage of such
returns  increased.  A  significant  amount  of such allowances were granted for
returns  during  1999  and  the  first quarter of 2000. These returns became the
subject  of financial statement restatements that were made to certain quarterly
reports  on  Form 10-Q for two years ended December 31, 1999 and 2000 and on our
annual  report  Form  10-K  for  the  year  ended  December  31,  1999.

     Starting  in  July  2000,  one  of  our  large  customers started deducting
significant  amounts  from  cash  remittances. In addition, certain of our other
customers  began  taking deductions against cash remittances that were in excess
of historical amounts we had experienced. Beginning in August 2000, we conducted
an  investigation of our 1999 and 2000 sales practices and determined that sales
to  certain  customers  were  made  with  rights  of  return and "guarantees" of
sell-through  to  consumers.  As  part  of  our  investigation,  we  reviewed
substantially  all  of the customer deductions taken in 2000 and determined that
certain  amounts  related  not  only  to  "guaranteed"  sales, but also to other
customer  allowances and concessions granted by management in the fourth quarter
of  1999  and  the  first quarter of 2000. Substantially all of the arrangements
were  previously  unknown  to  the  current  management  team.

     We  determined  the  effect of these deductions and previously restated our
financial  statements  for  the  year ended December 31, 1999. Revenues from any
products  with  "guaranteed"  sales  were deferred until the sell through of the
product  at  the  customer  level  and  the  related product has been treated as
consigned  inventory.  In  situations  in  which  we  granted  allowances  and
concessions  in the fourth quarter of 1999 and early in 2000 related to sales in
1999,  we  have increased our reserves for such allowances and concessions as of
December  31,  1999,  at  which time such allowances were known. In addition, in
situations in which we subsequently granted additional allowances or concessions
relating  to  sales made in prior periods, but which were unknown in the earlier
periods,  we  have increased our reserves in the period such decisions were made
and  the  amounts  became  known.

     The  effect  of  the adjustments required as a result of this investigation
was to restate our financial statements for the third and fourth quarters of and
the  year  1999  and  the first and second quarters of 2000.  The cumulative net
impact  on  our  statements of operations from July 1, 1999 through December 31,
1999  included  the  deferral of approximately $1.9 million of gross profit from
previously  recorded sales, now treated as "guaranteed sales," and an additional
$0.3  million of reserves for allowances granted to customers for sales in prior
periods.  During  the  twelve  months  ended  December  31,  2000,  all  of such
guaranteed  sales  were  reversed  and  approximately $4.4 million of additional
charges  for  reserves  were  recorded.

RECENT  DEVELOPMENTS  IN  OUR  BUSINESS

     SALE TO VITACOST.COM, INC.  On February 2, 2001, we entered into a Purchase
Agreement  with Vitacost.com, Inc., as Vitacost, an on-line marketer of vitamins
and  nutritional  products,  whereby  Vitacost acquired substantially all of the
operating  assets  of our combined internet operations in exchange for 6,800,000
shares  of Vitacost common stock.  The agreement contains an optional repurchase
right  giving  us,  at  any time after four years from the closing, the right to
demand that Vitacost repurchase the stock we acquired for $3,400,000 in cash or,
at  their  option,  a 60 month note requiring equal monthly payments of $56,667.
The  agreement  also  contains an optional redemption right, giving Vitacost the
right  to  redeem  the  stock we acquired, at any time up to four years from the
closing.  If  this  option  is  exercised  between  the  closing  and  the first
anniversary thereof, the price is $7,000,000, which compounds at the rate of 10%
for  each  year  up to $9,317,000 on the fourth anniversary of the closing.  The
stock  we  received  represents approximately 19.9% of the total Vitacost common
stock  outstanding.  As  long as we continue to hold at least a 10% interest, we
will  have  one  of the five available seats on the Vitacost Board of Directors.
Additionally,  we have certain anti-dilution rights in the event Vitacost raises
additional  equity.

     ACQUISITION  AND DISPOSITION OF VITAMIN DISCOUNT CONNECTION. On October 27,
2000,  we  acquired Vitamin Discount Connection, an Internet "e-tailer" and mail
order  retailer  of  nutritional  and health-related products. We issued 190,000
restricted shares of our common stock in exchange for certain assets and assumed
the  seller's  liabilities of $115,000. If our common stock is not registered by
March  1,  2001, we agreed to replace the restricted shares with freely tradable
shares  or  to  repurchase such restricted shares at the market closing price on
March  1,  2001,  or  a  combination of both. Substantially all of the operating
assets  of  Vitamin  Discount  Connection  were  sold  to  Vitacost.com, Inc. in
February  2001.

     ACQUISITION AND DISPOSITION OF HEALTHSHOP.COM. On May 22, 2000, we executed
an  asset  purchase  agreement to purchase selected assets of HealthShop.com, or
Healthshop,  an Internet business retailer of nutritional supplements and health
related  products  for a purchase price of $3,500,000, payable in 838,951 shares
of  our  common  stock.  We  are  obligated to issue up to an additional 250,000
shares  contingent  upon the sellers meeting certain performance measures during
the  one  year  period  from  the  closing date. We also entered into consulting
agreements  with  the  former  shareholders and executives of Healthshop.com and
issued options to purchase an aggregate of 250,000 shares of our common stock in
connection  therewith.  Healthshop and the former shareholders and executives of
Healthshop were granted piggyback registration rights with respect to the shares
and  the  shares  underlying  the  options granted by us in connection with this
transaction.  If the registration statement required to be filed pursuant to the
January  24,  2000  private  placement is not filed within 60 days after May 18,
2000,  we agree to file a registration statement covering the securities granted
in connection with this transaction within 30 days thereafter. Substantially all
of  the  operating  assets  of  Healthshop  were  sold  to Vitacost.com, Inc. in
February  2001.

     ACQUISITION  AND  DISPOSITION  OF  SMARTBASICS.COM.  On  May  25,  2000, we
executed  an  agreement  and plan of reorganization with Smart Basics, Inc., dba
SmartBasics.com,  an Internet and mail order retailer of nutritional supplements
and health related products. Under the terms of the agreement, we issued 170,000
shares  of  our  common  stock  in  consideration  for  all  of  the  equity  of
SmartBasics.com.  Substantially  all  of the operating assets of SmartBasics.com
were  sold  to  Vitacost.com,  Inc.  in  February  2001.

     ACQUISITION  OF  INHOLTRA.  On March 10, 1999, we purchased for $13,250,000
certain  net assets of Inholtra Investment Holdings and Trading, N.V., Inholtra,
Inc.,  and  Inholtra  Natural, Ltd. including the Inholtra-registered trademark-
brand  of  anti-joint  pain  product  and  associated  trademarks,  patent  and
inventory,  for  $13.3  million.  The purchase price consisted of the payment of
$3,250,000  in  cash  at  closing,  and the issuance of a $10,000,000 promissory
note.  The  promissory  note  was repaid on June 10, 1999 in connection with our
new  banking  facility.  In  connection with this acquisition, we entered into a
consulting  agreement  with  a  former  employee  of  the sellers.  The two-year
agreement  requires  annual  consulting  fees  of  $60,000.

     ACQUISITION  AND  DISPOSITION OF HEALTH & VITAMIN EXPRESS.  On February 15,
1999,  we  purchased for $2,880,000 the issued and outstanding shares of HVE, an
e-commerce  distribution  company.  The  purchase consideration consisted of the
issuance of 363,636 shares of our common stock valued at $2,273,000 or $6.25 per
share  and  the  assumption  of  $571,000  of  debt.  Substantially  all  of the
operating  assets  of  HVE  were  sold  to  Vitacost.com, Inc. in February 2001.

     Pursuant  to  a  Settlement, Termination and Mutual Release Agreement dated
April  13,  2000,  363,636  additional  shares  to the former owners of HVE were
issued  in  settlement  of  a  lawsuit  filed on December 23, 1999 by the former
owners  of  HVE.  In  connection  with  the  settlement,  all  other  rights and
obligations  that existed under the February 15, 1999 agreement were terminated.

RESULTS  OF  OPERATIONS

     2000  COMPARED  TO  1999

     Net  sales  for  the  year ended December 31, 2000 were $29,609,000 with an
operating loss of $13,472,000 and a net loss available to common shareholders of
$21,610,000,  or  $0.71  per basic and diluted share. Consolidated net sales for
the  year  ended  December  31,  1999 were $30,922,000 with an operating loss of
$9,867,000  and  net  loss of $11,055,000, or $0.39 per basic and diluted share.
The  net  loss  available to common shareholders for the year ended December 31,
2000 was impacted by; (i) an increase in estimates for returns and allowances of
$4,429,000,  (ii)  a  $5,118,000  preferred  stock  dividend, (iii) a $1,720,000
one-time  non-cash  charge,  (iv)  $1,827,000  increase  in  stock  compensation
expense,  and  (v) a $548,000 increase in interest expense. Other income for the
year  ended  December  31, 1999 included a $481,000 one-time gain on the sale of
the former 4Health corporate headquarters building located in Boulder, Colorado.

     SALES

     Net sales for the year ended December 31, 2000, decreased by $1,313,000, or
4.2%,  to  $29,609,000  from  $30,922,000 for the comparable period in 1999. The
decrease  in  net  sales relates primarily to increases in estimates for returns
and  allowances which increased $4,429,000 or 130% to $7,836,000 from $3,407,000
for the comparable period in 1999. Sales discounts declined $283,000 or 24.7% to
$862,000  from  $1,146,000  for  the  comparable  period  in  1999.

     GROSS  PROFIT

     Gross  profit for the year ended December 31, 2000 decreased $4,711,000, or
31.5%,  to $10,223,000 from $14,934,000 for the comparable period in 1999. Gross
profits  as a percentage of sales for the year ended December 31, 2000 decreased
to  34.5% from 48.3% in the comparable period in 1999. The decrease in the gross
margin  percentage  resulted  primarily  the  increase  in estimated returns and
allowances  as a result of higher rates of returns on products sold in the first
half  of  the  year.  Also  impacting  margins was a shift in the product-mix to
certain  items  that have lower margin, increased allowances given and discounts
offered  to  customers.

     SALES  AND  MARKETING

     Sales and marketing expenses for year ended December 31, 2000, decreased by
$1,188,000, or 12.5% to $$8,292,000 from $9,480,000 for the comparable period in
1999.  This  decrease  was  principally  due  to  sharp  reductions in marketing
salaries, marketing services purchased, travel and other related expenses in the
second,  third  and principally in the fourth quarter. These decreased more than
offset  media  and  co-op  advertising  campaigns  of approximately $1.9 million
initiated  by  the  former  management during the first quarter of 2000 to boost
sales  of  Inholtra,  Veromax  and  Cholestaid  for  fiscal  2000.

     GENERAL  AND  ADMINISTRATIVE

     General  and  administrative expenses for the year ended December 31, 2000,
increased  by  $2,206,000,  or  20.0%  to  $13,252,000  from $11,045,000 for the
comparable period in 1999. The increase primarily came from increased accounting
and  legal  expenses  of $905,000 related to the restatement of 1999 results and
the results of the first, second and third quarters of 2000, charges of $187,000
related  to  waivers and restructuring a line of credit and a term loan with the
our  principal  bank  and increased stock compensation expense of $1,857,000. In
addition,  2000  included  a  $1,720,000  non-cash  compensation  charge.  This
$1,720,000  represents the fair market value of one million shares of personally
owned  common  stock  transferred  by the current Chief Executive Officer to the
former Chairman of the Board in connection with the Withdrawal Agreement between
the Company and the former Chairman of the Board. These increases were partially
offset  by  $489,000  in  reductions in wages and taxes, $257,000 reduced travel
expenses,  $1,032,000  reduction in bad-debt expense and other overall decreases
in  the third and fourth quarters in various other operating and overhead costs.
1999  included  a  one-time  charge  of  $287,000  for  a  corporate  move.

     DEPRECIATION  AND  AMORTIZATION

     Depreciation  and  amortization  for  the  year  ended  December  31, 2000,
increased by $1,257,000 to  $3,149,000 from $1,892,000 for the comparable period
in  1999.  The  increase  relates  to  the amortization of e-commerce, goodwill,
Inholtra  trademark  and  deferred  financing costs resulting from the shortened
life  to  the  term  loan partially offset by the elimination of amortization on
intangibles  written  off  in  1999.

     OTHER  INCOME  (EXPENSE)

     Interest expense for the year ended December 31, 2000 increased $548,000 to
$1,887,000  from  $1,339,000 for the comparable period in 1999. This increase is
consistent  with  the  increase in the utilization of our line of credit and the
term  loan  in  2000  that  was  incurred  originally  in  connection  with  the
acquisition of the Inholtra brand. Other income for year ended December 31, 1999
included  a  $481,000  gain  on  the  sale  of  the  former  4Health  corporate
headquarters  building  located  in  Boulder,  Colorado.

     LOSS  FROM  DISCONTINUED  OPERATIONS

     In  the  fourth  quarter  of  2000  we  decided to divest of our e-commerce
operations  and  accordingly, the results of operations of this business segment
since  inception  have been classified on the Statement of Operations under Loss
From  Discontinued  Operations from inception. On February 2, 2001 substantially
all  of  the  operating assets were sold for shares of common stock in a private
company.

     1999  COMPARED  TO  1998

     Consolidated  net  sales  for  the  year  ended  December  31,  1999  were
$30,922,000  with an operating loss of $9,867,000 and a net loss of $11,055,000,
or  $(0.39)  per  basic  and  diluted share. Consolidated net sales for the same
period  in  the prior year were  $30,547,000 with operating income of $1,827,000
and net income of  $1,018,000 or $.04 per basic and $0.01 per diluted share. The
net  loss  for  1999 was impacted by: a reduction in gross profit of $3,807,000,
primarily  resulting from the restatement described in Note 1, an increased SG&A
expenses  of  approximately  $7,747,000, including a $634,000 loss in operations
from  our  Internet  subsidiary  HealthZone.com,  or HealthZone, a $640,000 loss
incurred  with  the  write  off  of  intangibles,  non-cash  warrant  and option
compensation  costs  of  $832,000 and  $288,000 related to the relocation of our
corporate  and  warehouse  facilities.

     NET  SALES

     Net  sales  for  the year ended December 31, 1999 increased by $375,000, or
1.2%  to  $30,922,000  from  $30,547,000 for the comparable period in 1998.  The
increase in sales related to the introduction of our new Inholtra pain relieving
product,  partially  offset  by  an increase of over $2 million in allowances to
customers  for returns and allowances and deferral of over $2.8 million of sales
with  explicit  right  of  return.

     GROSS  PROFIT

     Gross  profit for the year ended December 31, 1999 decreased $2,823,000, or
15.7%,  to  $15,184,000  from  $18,007,000  for  the  comparable period in 1998.
Gross  profits  as  a  percentage  of sales for the year ended December 31, 1999
decreased to 49.1% from 59.0% in the comparable period in 1998.  The decrease in
the  margin  relates  to:  (i)  pricing  concessions  related  to  1999 sales in
conjunction  with the launch and early stage sales of several new products, (ii)
sales  adjustments  given  to  certain  customers, and (iii) an overall shift in
product  mix  to  certain  items  which  have  a  lower  margin.

     SELLING  AND  MARKETING

     Sales  and  marketing  expenses  for  the  year  ended  December  31, 1999,
increased  by  $2,838,000  or  41.8%,  to  $9,631,000  from  $6,793,000  for the
comparable period in 1998.  The increase primarily relates to wages, advertising
and  other  costs  incurred  on  marketing and media campaigns to (i) launch the
introduction of Inholtra,  (ii) launch our new products, Cholestaid and Veromax,
for  the  fourth  quarter  1999  and  fiscal  2000,  (iii) media and advertising
campaigns  to  support  certain  of  our  other  products,  and  (iv)  continual
repackaging  and  redesign  of  our  core  product  lines.

     GENERAL  AND  ADMINISTRATIVE

     General  and  administrative expenses for the year ended December 31, 1999,
increased  by  $2,328,000,  or  31.5%  to  $9,720,000  from  $7,392,000  for the
comparable  period in 1998. Included in 1999 general and administrative expenses
were:  (i)  legal  and  professional  fees  of  $806,000, (ii) $717,000 in costs
incurred  on  our  HealthZone  operations,  (iii)  $415,000 for consulting costs
incurred  to  implement  our  acquisition  of Inholtra and other products,  (iv)
approximately  $1,136,000  in  uncollectible  receivables  (v)  $903,000  of
non-cash  warrant and compensation costs, and (vi) a  $288,000 charge related to
the  relocation  of  our  corporate  and  warehouse  facilities.  The prior year
included  $1,021,000  of  costs  associated  with  the  merger  described above.
Distribution  costs for the year ended December 31, 1999 increased $1,594,000 or
146%,  to  $2,686,000  from  $1,092,000 from the comparable period in 1998.  The
increase  primarily  relates  to  higher expenditures for freight, compensation,
fulfillment  and other distribution costs associated with efforts to promote new
and  existing  products  to  new  customers.

     DEPRECIATION  AND  AMORTIZATION

     Depreciation  and  amortization  for  the  year  ended  December  31, 1999,
increased by $987,000 to  $1,890,000 from  $903,000 for the comparable period in
1998.  The  increase  specifically relates to amortization costs relating to the
Inholtra  and  HVE  acquisitions.

     OTHER  INCOME  (EXPENSE)

     Interest expense for the year ending December 31, 1999 increased $1,176,000
to $1,339,000 from  $163,000 for the comparable period in 1998. This increase is
consistent  with  the  increase  in  the  utilization of our line of credit, the
incurrence  of  the  Inholtra  acquisition  debt  and  the term loan incurred to
refinance  the  Inholtra  acquisition  debt  in  1999.  Other  income included a
$481,000  gain on the sale of the former 4Health corporate headquarters building
located  in  Boulder,  Colorado.

     LIQUIDITY  AND  CAPITAL  RESOURCES

     As  of December 31, 2000, we had cash and cash equivalents of approximately
$199,000,  and  approximately  $1,489.000  of  availability  under our revolving
credit line.  The increase in cash and cash equivalents primarily relates to the
receipt  of  approximately  $2,720,000 of net proceeds from the October 27, 2000
private  placement. As of December 31, 2000, we had total current liabilities of
$17,296,000,  $6,003,000  of  which  consisted  of  accounts payable to vendors.
Further,  as  of  December  31,  2000,  we  had  a  working  capital  deficit of
$11,141,000,  and an accumulated deficit of $41,358,000. We estimate that, based
on  the  current  rate  of negative cash flow from operations, the cash and that
available  under  the  revolving  credit line as of April 9, 2001 (approximately
$545,000)  will  be  sufficient  to  provide a source of working capital through
approximately  June  15,  2001,  the  date  on  which $1,750,000 becomes due and
payable  to  our  bank.  However,  this  estimate  only  gives effect to certain
payments  to  vendors  to  reduce  outstanding accounts payable. There can be no
assurances  that  the vendors will continue to supply us with goods and services
on  an  ongoing  basis,  which  may  have  an  adverse  effect  on our continued
operations.

     Product  returns  are  a  recurring  part  of our business. Products may be
returned  for  various  reasons including expiration dates or lack of sufficient
sales velocity.  We accrue a reserve for returns based on historical experience.
During  1999  and 2000, returns were far higher than in past years and, as such,
our  gross profit was negatively impacted in 1999 and 2000 for returns. Although
we  have  increased  our  reserves  and have generally been able to estimate the
level  of returns accurately, there is no guarantee that future returns will not
exceed the high levels experienced in the year 2000 or will be in line with past
return  percentages.  The  risk  of returns is amplified by the current industry
trend,  which  shows  negative  growth.  If  this trend continues, retailers may
decide  to reduce inventory levels from their suppliers, by returning goods from
their  warehouse  distribution  centers.  If this occurs, Management will decide
whether  they  will  accept  such  returns.

     During  the year ended December 31, 2000, we experienced negative cash flow
from operations of  $4,129,000.  The sale of equity securities and issuance of a
minority  interest  in  our subsidiary, HealthZone.com in January, 2000, and the
sale  of  common  stock  provided  an  aggregate  of approximately $8,440,000 in
proceeds  to  us.  Approximately  $3,620,000 of these proceeds were used for the
repayment  of an existing line of credit and other long term borrowings, as well
as  for  costs  incurred  with  the  financings.

     Credit  Facility.

     On  June  10,  1999,  we secured a new loan from a lending institution that
provides  up  to  $20  million  dollars of financing.  The loan was subsequently
amended on January 21, 2000.  The credit facility consists of a $13 million term
loan,  or  Term Loan,  and up to a $7 million revolving loan, or Revolving Loan,
subject to borrowing base availability and compliance with certain financial and
other  covenants  and agreements, including the maintenance of certain financial
ratios,  limitations  on  capital  expenditures,  restrictions  on acquisitions,
limitations  on  incurrence of indebtedness, and restrictions on dividends paid.
$4,527,000  of  loan  proceeds  were  disbursed  to repay and close our previous
existing  credit facility, and $10,000,000 was disbursed to repay the promissory
note  issued  in  connection  with  the  acquisition  of  the assets of Inholtra
Naturals,  Ltd.

     The loans under the credit facility are secured by substantially all of our
assets. Borrowings under the Term Loan bear interest at an annual rate of either
prime  plus  2.25  percent  or  LIBOR  plus  3.75  percent and are paid monthly.
Borrowings under the Revolving Loan currently bear interest at an annual rate of
either  prime  plus  1.75  percent  or  LIBOR  plus  3.0  percent,  and are paid
quarterly.  The  rates are subject to decrease based upon our satisfying certain
operating  performance  levels.  The  credit facility agreement contains certain
financial  and  other  covenants  or  restrictions, including the maintenance of
certain  financial  ratios, limitations on capital expenditures, restrictions on
acquisitions,  limitations on the incurrence of indebtedness and restrictions on
dividends  paid  by  us.  The  $13,000,000  Term  Loan  was payable in quarterly
installments of $583,333 that began October 15, 1999, and which were to increase
to  $750,000  on  October 15, 2002, until the Loan was paid in full on April 15,
2004.  In  addition,  we were to make a payment of principal on the Term Loan in
addition  to  the  quarterly  payments in an amount equal to 50% of "Excess Cash
Flow" (as defined) for each fiscal year. Each Excess Cash Flow Payment was to be
applied  to  reduce  the remaining regularly scheduled principal installments of
the  Term Loan in inverse order of their maturity. Additionally, upon receipt by
us  of any unapplied insurance or condemnation proceeds, the proceeds of key-man
life  insurance which has been assigned to an Agent, asset sale proceeds or debt
sale  proceeds,  we are required to make a mandatory prepayment of the Term Loan
in  the  amount  thereof.  Furthermore,  upon  receipt  by us of any equity sale
proceeds,  we  were was to make a mandatory prepayment of (i) the Revolving Loan
to  the limited extent necessary to fully prepay the Revolving Loan or, if less,
in such amount so that borrowing availability after giving effect thereto equals
$3,000,000  and  (ii)  to  the extent of any balance of any equity sale proceeds
after  the  application  to  the  Revolving  Loan  to the extent provided in the
preceding clause, the Term Loan; provided, however, if at the time of receipt of
such  equity  sale  proceeds, no event of default has occurred and is continuing
and  the  debt  to EBITDA ratio meets certain defined levels, then the amount of
such  mandatory  prepayment  on the Term Loan shall be 50% of the amount of such
equity  sale proceeds remaining after application to the Revolving Loan pursuant
to  the preceding clause, and, further, provided, however, if such ratio is less
than a defined amount, then no such prepayment on the Term Loan from equity sale
proceeds  need  be  made.

     As  a  condition  of  a  waiver  obtained  in  May  2000, the Term Loan and
Revolving  Loan  agreements  were amended to change the expiration dates of both
facilities  to  April  30,  2001.  Further, under the amendment, the lender will
require  us  to  meet certain revised financial ratios. On October 23, 2000, the
Term  Loan  was  amended  to  include  a  waiver of all existing defaults and an
extension  of  the  term  to  July  30,  2002.

     On  October  23, 2000, the credit facility was also amended with respect to
both  its term debt and revolving credit agreements. The major amendments of the
Waiver  and  Amendment No. 4 to Secured Credit Agreement included an increase in
the  availability  of  the  Revolving  Loan up to the maximum credit limit of $7
million, an extension of the term of both the revolving and term debt agreements
from  April  30,  2001 to July 30, 2002 and an agreement to permit us to use the
proceeds  obtained  from  the October, 2000 equity financing for working capital
purposes.  Additionally, the lender agreed to waive any and all defaults then in
existence  and  defer  until June 15, 2001, all principal payments due under the
loan  from  the period commencing October, 2000 and ending May, 2001. The sum of
such deferred payments will be approximately $1,750,000. The lender also allowed
us to use the proceeds from a private placement of securities, closed on October
27,  2000,  resulting  in  net proceeds of approximately $2,720,000, for working
capital  purposes.  The  lender  charged  us  a fee for the restructuring of the
indebtedness  of  approximately  $131,000,  payable  in  six  equal installments
commencing  April  15,  2001.

     On February 2, 2001, the credit facility was amended in connection with the
sale  of  our Internet operations to Vitacost.com.  Pursuant to the terms of the
Consent  and  Amendment  No.  5  to  Secured  Credit  Agreement,  (i) the lender
consented  to  the  terms  of  the Vitacost.com transaction, (ii) we pledged our
6,800,000  shares  of  Vitacost's  common  stock as security for our obligations
under our credit facility, (iii) we agreed to make certain mandatory prepayments
upon  receipt  of  any  proceeds  resulting  from the exercise of our redemption
rights or those of Vitacost, and (iv) we transferred to lender all of our rights
and  remedies  with  respect  to,  and  title and interest in, arising from this
transaction,  including  our  right  of redemption and right to receive payments
upon the exercise by Vitacost of its redemption rights; provided that lender may
not  exercise  these  rights only upon the occurrence of an event of default and
during  the  continuance  thereof.  This  assignment  terminates  upon  the full
performance  of  our obligations under the loan facility or other termination of
the  loan  agreement other than a termination by reason of our breach, whichever
occurs  later.

     Sale  of  Series  A  Convertible  Preferred  Stock  Private

     On  January 24, 2000, we sold 2,000,000 shares of our newly created 5% $.01
par  Convertible  preferred stock for $2,900,000 and sold seven year warrants to
purchase  500,000  shares  of  common  stock at $2.25 per share for $100,000. In
connection  with  the  issuance  of  the preferred stock, we issued common stock
representing  an  approximate  10%  interest  in  our  wholly  owned subsidiary,
HealthZone.com,  to  the  same  investors. The securities of Healthzone.com were
subsequently returned to HealthZone.com. We incurred issuance costs of $100,000,
which  consisted  of  legal  and  placement  agent  fees.  On March 24, 2000, we
converted  all  of these preferred shares, plus accrued dividends, for 2,016,438
shares  of  its  common stock. Since the conversion rate was significantly below
the  trading  price  of  our  common  stock  when  the  Preferred was issued, we
recognized a preferred dividend of $1,950,000, which is reflected as a reduction
in  net  income  available  to  common  stockholders.

March  27,  2000  Private  Placement

     On  March  27,  2000,  we sold 700,000 shares of common stock to individual
investors  in  a  private  placement  for  aggregate  proceeds  of  $2,100,000.
Investors  were  granted  piggyback  registration rights in connection with this
transaction.

October  27,  2000  Private  Placement

     On  October  27, 2000, we entered into a Securities Purchase Agreement with
several  "accredited  investors,"  or holders whereby the holders purchased 3000
shares  of  our  newly  issued Series A Convertible preferred stock resulting in
gross  proceeds  to us of $3,000,000.  In addition, the buyers received warrants
to  purchase  up  to  600,000  shares  of  common  stock at an exercise price of
approximately  $0.96  per share.  We received net proceeds from this transaction
of $2,720,000, after fees, costs and expenses of issuance.  An additional 50,000
warrants were issued to an intermediary on the same terms as were granted to the
buyers.

     The  preferred  stock  is  convertible  into  common stock on the following
basis.  The number of shares of common stock to be issued is equal to the stated
value  of the number of shares of preferred stock being converted, together with
any  accrued  dividends,  or  the  Additional  Amount  thereon,  divided  by the
"conversion  price."  The  conversion  price  is  equal  to  the  lesser  of:

-    115%  of  the  average  of the two lowest bid prices quoted on the exchange
     where  our common stock is traded during the ten days preceding the closing
     or,
-    80%  of the average of the two lowest bid prices of the common stock during
     the  five  days  preceding  conversion.

     Pursuant to the Securities Purchase Agreement and related documents, we are
required  to file a registration statement, registering for resale the number of
common shares issuable assuming a market price of $.50 per share upon conversion
of  all  of  the  preferred stock, plus the exercise, at the contractual rate of
approximately  $0.96,  of  all  of  the warrants issued in connection therewith.

     We  may redeem the preferred stock at any time after closing at a price per
share  equal  to  the  greater  of:

-    $1,400,  plus  an  Additional  Amount  per Share, defined as 6% of the face
     amount  of  the preferred stock being redeemed, multiplied by the number of
     days  since  the  closing, divided by 365, or the optional redemption price
     or,

-    the  market  price of the common stock into which the preferred stock being
     redeemed  could  be  converted  as  of  the  date of the notice of optional
     redemption.

     On  the  fourth  anniversary  of  the  Issue  Date,  any existing shares of
preferred  stock,  together with the additional amount, must either be converted
into common stock pursuant to the conversion formula or redeemed for cash at the
optional  redemption  price.

     In the event any conversion of preferred stock would result in the issuance
of  more  than  19.9% of the number of shares of common stock outstanding on the
date  of  the  closing,  the  preferred  stock  representing such excess must be
redeemed,  in  cash  for  $1,400.00  per  share,  plus  the  additional  amount.
Notwithstanding  anything  to  the contrary, except on the fourth anniversary of
the Issue Date, neither we nor holders of the preferred stock may convert all or
any portion of the preferred stock if and to the extent that the issuance to the
holder of shares of common stock upon such conversion would result in the holder
being  deemed  the  "beneficial  owner"  of more than 5% of the then outstanding
shares  of  common  stock  within the meaning of Section 13(d) of the Securities
Exchange  Act  of  1934, as amended, and the rules promulgated thereunder.  If a
court  of  competent jurisdiction determines that this limitation is ineffective
to  prevent  a  holder from being deemed the beneficial owner of more than 5% of
the  then  outstanding shares of common stock, we will be obligated to redeem so
may  of  such  holder's  shares of the preferred stock as are necessary to cause
such  holder  to  be deemed the beneficial owner of not more than 5% of the then
outstanding  shares  of  common  stock.

     A  registration  statement  is  required  to be filed within 30 days of the
closing  to  cover  the  common stock underlying the conversion of the preferred
stock,  or  the  conversion  shares  and  the exercise of the warrants, and such
indeterminate  number  of  shares  of  common  stock  issuable  pursuant  to the
anti-dilution  adjustment  provisions  of the preferred stock and warrants.  For
registration  purposes only, the number of conversion shares to be registered is
calculated based upon an assumed conversion price per share of $0.50.  As of the
date  of  the filing of this registration statement, which covers the shares and
warrants  issued  in connection with this transaction, we are in default of this
provision  of  the  preferred  stock  Agreements.

     The  Securities  Purchase  Agreement  includes  certain  provisions  for
liquidated  damages  against  us  if  a  registration  statement for the related
securities  is  not  filed  within  30 days or declared effective within 90 days
after October 27, 2000. These liquidated damages provisions require us to pay an
additional amount to the holders equal to: (a) in the event of a late filing, 1%
of  the  gross  purchase  price  for  such securities from the period commencing
October  27,  2000  through  the  30th day following such date and each 30th day
thereafter,  each  of  which  is  referred  to  as  a  Computation  Date, if the
registration  statement  is  not  filed by such Computation date, and (b) in the
event  of  a  late  effective  date,  1%  of  the  gross purchase price for such
securities  from  the period commencing on the previous Computation Date through
the  30th  day  following  such  date  and  each  30th  day  thereafter,  if the
registration  statement  is  not  declared effective by the relevant computation
date.  We may also be liable for certain liquidated damages in the event we fail
to issue timely shares of common stock upon conversion of the preferred stock or
exercise  of  the warrants. These liquidated damages may be paid by us either in
cash  or  in  common  stock,  at  our option. As of November 26, 2000 we were in
default  of  this  provision.  There  can be no assurances as to whether we will
continue  to  incur  such  liquidated  damages or as to the total amount of such
liquidated  damages.

Subsequent  Financing

     On October 30, 2000, we entered into an agreement with Institutional Equity
Corporation,  or  IEC,  to  serve as our financial consultant for the purpose of
determining  investor interest in a private offering of our securities for gross
proceeds  of  up  to  $20,000,000.  IEC is entitled to a minimum fee of $25,000,
which  is  payable  in  16,667  shares  of  our  common  stock.

     During  the  year  ended December 31, 2000, we issued 599,905 shares of our
Common  Stock  to  various  vendors  and  other trade creditors for an aggregate
agreed upon debt conversion price of $1,431,000 or a weighted average conversion
price  of  $2.38  per  share.

     We  have  primarily  funded  our  operations  to  date  through  internally
generated  capital,  bank loans or private equity financing.  Our future capital
requirements  will  depend  on  many factors, including the nature and timing of
orders from customers, collection of trade accounts receivable, the expansion of
sales and marketing efforts, costs associated with entering into new channels of
distribution,  and  the  status of competing products.  Management believes that
additional investment capital will be required to permit us to meet our business
objectives  in  the  near  term. Such funds may be raised either through debt or
equity offerings, or some combination of the two. However, there is no assurance
that  we  will be able to secure such funds on commercially reasonable terms, if
at  all.  If  not  successful  in securing additional funds, we may be forced to
dispose  of our assets outside of its normal course of business and/or resort to
bankruptcy  protection.

     Our  auditors  have  included  an  explanatory paragraph in their report of
Independent  Public  Accountants included in this Annual Report on Form 10-K/A ,
to  the  effect  that our losses from operations for the year ended December 31,
2000,  and  the working capital deficit and the retained deficit at December 31,
2000  raise  substantial doubt about our ability to continue as a going concern.

NEW  AUTHORITATIVE  PRONOUNCEMENTS

     In June 1998 and June 1999, the Financial Accounting Standards Board (FASB)
issued  Statement  of Financial Accounting Standards (SFAS) No. 133, "Accounting
for  Derivative  Investments  and  Hedging  Activities," and SFAS No. 137, which
delayed  the  effective  date  of  SFAS  No. 133.  We will adopt the standard in
January  2001.  Management does not expect the adoption of this standard to have
a  material  impact  on  our  financial  position  or  results  of  operations.

     In  December  1999,  the SEC staff released Staff Accounting Bulletin (SAB)
No.  101,  Revenue  Recognition,  to  provide  guidance  on  the  recognition,
presentation  and  disclosure  of  revenue  in financial statements.  Changes in
accounting to apply the guidance in SAB No. 101 may be accounted for as a change
in  accounting  principle effective January 1, 2000. SAB No.  101, has not had a
material effect on the Company's revenue recognition and results of operations.

ITEM  7A.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURE  ABOUT  MARKET  RISK

     Our  primary market risk exposure is interest rate risk. As of December 31,
2000,  all  of  our  debt  obligations  were subject to variable interest rates.
Financial  Statements  and  Supplementary  Data.

     Our  audited  Consolidated  Financial  Statements  and  related  Notes  and
Schedules,  including  our  consolidated balance sheets at December 31, 2000 and
1999  as  previously  restated,  and  the  related  consolidated  statements  of
operations,  stockholders'  investment,  and cash flows for each of the years in
the  3-year  period  ended December 31, 2000, included elsewhere in this Report,
have  been  so  included in reliance on the report of Singer, Lewak, Greenbaum &
Goldstein  LLP,  independent  certified  public accountants, for the years ended
December  31, 2000, 1999 as previously restated and 1998, given on the authority
of  such  firms  as  experts  in  auditing  and  accounting.

     The  financial statements required by this Item 8 are included elsewhere in
this  Report  and  incorporated  herein  by  this  reference.

Changes  in  And  Disagreements  with  Accountants  on  Accounting and Financial
Disclosure
     As  of April 14, 2000, Arthur Andersen LLP, Independent Public Accountants,
the  independent  accountants  previously engaged as the principal accountant to
audit our financial statements was terminated.  We had elected to engage another
national  certified  public accounting firm to audit its financial statements on
an  ongoing basis.  As of April 12, 2000, the firm of Singer, Lewak Greenbaum  &
Goldstein  LLP  was  engaged  as  our independent accountant to provide services
after  April  14, 2000, the date of filing of our Annual Report on Form 10-K for
the  year  ended  December  31,  1999.

     Except  as set forth below, the audit reports of Arthur Andersen LLP on our
financial  statements  as  of  and  for  the  years  ended  December 31, 1999 as
restated,  1998,  and  1997 did not contain any adverse opinion or disclaimer of
opinion,  nor  were  they  qualified or modified as to audit scope or accounting
principles.

     Our  financial  statements for the year ended December 31, 1999 as restated
contain a statement that losses from operations, a working capital deficit and a
retained  deficit,  raise  substantial  doubt about our ability to continue as a
going  concern.   The  notes  to  the financial statements describe management's
plan  to  address  these  concerns,  which  include:

-    Our  raising  $3,000,000  through  a private placement of our securities in
     January  2000,
-    Our  raising  $2,100,000  through  a private placement of our securities in
     March  2000,
-    The receipt by us of a commitment from the January 2000 investor to provide
     an  additional  $2,000,000  in  private placement funding contingent on our
     achieving  certain  sales  benchmarks  for  the first two quarters of 2000;
-    Our  currently negotiating to raise an additional $15,000,000 via a private
     placement with a plan to pay off the Company's term loan with the proceeds;
-    Our having received a waiver from our credit facility lender for violations
     of  certain  covenants  included  in  the  loan  agreement;
-    Our  reducing  portions of our fixed overhead expenses, including executive
     salary  reductions  of  $1,300,000;
-    Our  management  having  revised its marketing strategy and plans to reduce
     advertising  expenditures;  and
-    Our  management  intends  to focus additional efforts toward developing its
     e-commerce  operations  to  generate  additional  revenues.

     The  notes  to  our  financial  statements  further state that there are no
assurances that the capital already raised by us in conjunction with the expense
reductions  will be sufficient to fund our operations through 2000; there are no
assurances  that  we  will  be able to successfully achieve the sales benchmarks
necessary  to  raise  the  additional  $2,000,000  or  successfully  raise other
additional  private  placement  funds; there is no assurance that our management
will  be able to successfully enter the e-commerce marketplace; and  our failure
to  successfully  achieve  one  or  all  of  the  above  items  will  have  a
material  impact  on  our  financial  position  and  results  of  operations.

     In  connection  with their audits of our financial statements for the years
ended  December  31, 1998 and December 31, 1999 as restated, Arthur Andersen LLP
reported  to  our Board of Directors certain conditions that they believed to be
material weaknesses in our system of internal accounting and financial controls.
In  response,  management began to identify measures to improve these systems of
internal  controls,  including  implementing  more  rigorous internal accounting
policies,  procedures  and  controls.

     In  May  1999, we filed the March 31, 1999 Quarter Report on Form 10-Q with
the  Securities  and  Exchange  Commission without resolving the issue raised by
Arthur  Andersen  LLP regarding a potential adjustment.  We resolved this matter
when  we filed our report on Form 10-Q/A for the quarter ended March 31, 1999 on
June  9,  1999.

     Material  adjustments  to  our  books were identified during the 1999 audit
process  and such adjustments were recorded in our financial statements included
in  our Annual Report on Form 10-K for the year ended December 31, 1999.  Arthur
Andersen  LLP  recommended  that  our  management  review  the  effect  of  such
adjustments  on  interim  periods  within  the  year ended December 31, 1999 and
determine  whether  Quarterly  Reports on Form 10-Q filed during 1999 need to be
amended.

     Subsequently,  on July 14, 2000, we filed amendments to our Reports on Form
10-Q/A  for  the  quarter  ended June 30, 1999, September 30, 1999 and March 31,
2000, and our Annual Report on Form 10-Q/A for the year ended December 31, 1999.
The  purpose  of  said  amendment  was  to  restate  our financial statements to
allocate  revenues  for  allowances  and  to  adjust  revenues for products with
"guaranteed"  sales.

     The  decision  to change accountants was approved by our board of directors
on  April  12,  2000.  Other than as set forth above, during our two most recent
fiscal  years and any subsequent interim period preceding the change, there were
no  disagreements  with  the  former  accountants  on  any  matter of accounting
principles  or  practices,  financial statement disclosure, or auditing scope or
procedure,  which  disagreements,  if  not  resolved  to the satisfaction of the
former  accountants,  would  have  caused  them to make reference to the subject
matter  of the disagreements in connection with their report. We have provided a
copy  of  this  disclosure to our former accountants, and we have requested that
our  former  accountants furnish us with letters addressed to the Securities and
Exchange  Commission  stating whether they agree with the statements made by us,
and,  if  not,  stating  the  respects  in  which  they  do  not  agree.

     As  of  April 12, 2000, we engaged Singer, Lewak, and Greenbaum & Goldstein
LLP,  as  our  independent  public  accountant. Prior to engaging Singer, Lewak,
Greenbaum & Goldstein LLP, neither we nor anyone on our behalf consulted Singer,
Lewak,  Greenbaum  &  Goldstein  LLP  regarding  the  application  of accounting
principles to a specified transaction, either completed or proposed, or the type
of  audit  opinion  that might be rendered on our financial statements. Since no
disagreements  were  reported  between  us  and  our  former  independent public
accountant,  Singer,  Lewak, Greenbaum & Goldstein LLP has not been consulted on
any  matter that was either the subject of a disagreement or a reportable event.



                                    PART III

Directors  and  Executive  Officers  of  Registrant

<TABLE>
<CAPTION>
                        DIRECTORS AND EXECUTIVE OFFICERS

THE  FOLLOWING  TABLE SETS FORTH INFORMATION REGARDING OUR CURRENT DIRECTORS AND
EXECUTIVE  OFFICERS:

NAME                     AGE              POSITION
-----------------------  ---  ---------------------------------
<S>                      <C>  <C>

Mr. Andrew Vollero, Jr.   63  Chairman of the Board
-----------------------  ---  ---------------------------------
Mr. Klee Irwin            35  Chief Executive Officer, Director
-----------------------  ---  ---------------------------------
Mr. Thomas Aarts          42  Director
-----------------------  ---  ---------------------------------
Ms. Rebecca Pearman       33  Director
-----------------------  ---  ---------------------------------
Mr. Thomas Baker          59  Vice President Finance
-----------------------  ---  ---------------------------------
</TABLE>


     MR.  ANDREW  VOLLERO, JR.  Mr. Vollero became Chairman of the Board of Omni
Nutraceuticals  on  March 12, 2000 and has served as a Director since 1999.  Mr.
Vollero  is  an  independent  general management consultant and private investor
specializing  in  the  small  business area since 1970.  During that period, Mr.
Vollero  has  worked  with  over  100  companies,  mostly  privately held and in
non-high  tech  industries. Since 1994, Mr. Vollero has served as a Board member
of  AC International, A.C. Vroman, Inc., Vroman Real Estate Ventures, Magnum Air
and  Rahn  Industries.  Mr.  Vollero  is a graduate of Yale and Harvard Business
School.

     MR.  KLEE  IRWIN.  Mr.  Irwin  served  as the President and Chief Executive
Officer of Omni Nutraceuticals from June 30, 1998 until April 20, 1999. Prior to
June  30, 1998, Mr. Irwin served as the President and Chief Executive Officer of
Irwin  Naturals,  which  he  founded  in 1995. Prior to his involvement in Irwin
Naturals,  beginning  in 1989, Mr. Irwin served as a vice president of sales and
marketing and general manager of Helsneva Labs, a division of Pantron I Corp., a
privately  held  consumer  products  company.  Mr.  Irwin  served  as  the Chief
Executive  Officer  and  a  Director of HealthZone.com, the Company's e-commerce
subsidiary  in 1999 and rejoined us as the Chief Executive Officer and President
in  March  2000.Nutraceuticals  on  March 12, 2000, and has served as a Director
since  1999.

     MR.  THOMAS  AARTS.  Mr.  Aarts  was  elected  to our board of directors on
November  15, 2000.  Mr. Aarts is Co-Founder and President of Nutrition Business
International  and  Executive  Editor  of  Nutrition Business Journal.  Prior to
starting  NBI,  he  was  Director  of  New  Ventures  and  a project manager for
Environmental  Business  International  .  Prior  to  coming  to EBI, Tom was an
assistant  to  the CEO of Browning-Ferris Industries.  Mr. Aarts also worked for
Mercer  Management  Consulting  and  for  Johnson  &  Johnson.

     MS.  REBECCA  PEARMAN.  Ms. Pearman has worked for Omni Nutraceuticals or a
predecessor  or  affiliated  business for at least the last five years.  She was
elected  to our board of directors on January 31, 2001 and appointed to serve as
President  of  our  Irwin Naturals division on February 1, 2001.   She served as
General  Manager for Irwin Naturals from its inception in 1994 until leaving for
the UK in 1996 to start Applied Nutrition, UK LLC, a division of Irwin Naturals.
She returned to the US in 1997 to become Vice President of the Applied Nutrition
Division  of  Irwin  Naturals.  Ms.  Pearman  is  also  the  General  Manager/VP
operations  of  American  Brand  Labs,  a  company  owned  by  an  affiliate.

     MR. THOMAS BAKER. Mr. Baker joined Omni Nutraceuticals on February 26, 2001
as  vice  president of finance. Prior to joining Omni Mr. Baker was a consultant
to  companies  from January 2000. From April 1997 to December 1999 Mr. Baker was
vice  president  and chief financial officer of Eos Corporation and from October
1994 to April 1997 was vice president and chief financial officer of NetVantage,
Inc.

     The  Board  of  Directors  met  19  times  during 1999 for regular Board of
Directors  meetings.  All  directors  attended  100% of the aggregate of (i) the
total  number of meetings of the Board of Directors held while they were members
and  (ii)  the  total  number of meetings held by all Committees of the Board of
Directors  on  which  they served as members. In addition, on several occasions,
the  Board of Directors gave their unanimous written consent on issues involving
normal  corporate  business.  The  Board  of  Directors  has  three  standing
committees,  the  Audit Committee, the Compensation Committee, and the Long-Term
Stock  Incentive  Plan  Administration  Committee,  or  the LTSIP Administration
Committee.  During  1999,  the  Audit  Committee  and  the  LTSIP Administration
Committee  were  composed  of  Messrs.  Diamond  and  Jeffs. The Audit and LTSIP
Administration  Committees  did  not  meet  during  1999,  the functions of such
committees  being  performed by the Board of Directors as a whole.  During 1999,
the  Compensation  Committee  was  composed  of  Messrs.  Duncan  and Irwin. The
Compensation  Committee  met  once  in  1999.  The primary responsibility of the
Compensation  Committee  is  to  establish and review our compensation policies,
including  those  for  executives.  During  1999,  we  did not have a nominating
committee,  the  functions  of  such a committee being performed by the Board of
Directors  as  a  whole.

Executive  Compensation

SUMMARY  COMPENSATION  TABLE

     The  following table shows, for the years ended December 31, 2000, 1999 and
1998  the  cash compensation paid, as well as certain other compensation paid or
accrued for the year, to our four most highly compensated executive officers, or
the  Named  Individuals  during  2000:

<TABLE>
<CAPTION>
                                                 SUMMARY COMPENSATION TABLE

                                                                               Long Term
                                         Annual                               Compensation
                                      Compensation                               Awards             Payouts
                ------------------------------------------------------  -------------------------  ---------
                                                             Other                     Securities
                                                             Annual      Restricted    Underlying                  All
Name and                                        Bonus     Compensation      Stock       Options      LTSIP        Other
Position            Year        Salary ($)       ($)          ($)          Awards       SARs (#)    Payouts   Compensation
--------------  ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------
<S>             <C>           <C>             <C>        <C>             <C>          <C>           <C>       <C>

R. Lindsey
Duncan (2)              2000  $       47,596             $    1,720,000  $         0  $          0  $      0  $           0
--------------  ------------  --------------             --------------  -----------  ------------  --------  -------------
                        1999         225,000  $  50,000               0            0             0         0              0
                ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------
                        1998         192,219          0               0            0        50,000         0              0
                ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------


Klee Irwin (1)          2000         350,000          0               0            0             0         0              0
--------------  ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------
                        1999         259,808          0               0            0             0         0              0
                ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------
                        1998         455,000          0               0            0        50,000         0              0
                ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------


Louis
Mancini (3)             2000          80,337          0           1,600            0             0         0              0
--------------  ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------
                        1999         284,615          0         350,000            0     1,600,000         0              0
                ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------
                        1998          48,077          0               0            0             0         0              0
                ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------


Rockwell
Schutjer (4)            1999          51,923          0               0            0             0         0              0
--------------  ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------
                        1998         122,163          0               0            0             0         0              0
                ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------


Steven
Beldner (5)             2000         136,421          0               0            0             0         0              0
--------------  ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------


Christoff
Ballin (6)              2000         105,769          0               0            0     1,075,000         0              0
--------------  ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------


Herm
Rosenman (7)            2000         101,346          0               0            0       500,000         0              0
--------------  ------------  --------------  ---------  --------------  -----------  ------------  --------  -------------
</TABLE>


(1)  Mr.  Irwin's  employment  ceased  on  April  20, 1999, and his options have
     expired  unexercised.  Mr.  Irwin was re-employed on March, 12, 2000 as our
     President  &  CEO.
(2)  Mr.  Duncan  's  other  compensation  includes the value of shares received
     pursuant  to  the  Withdrawal Agreement, dated March 12, 2000, by and among
     Mr.  Duncan,  his  spouse,  Cheryl  Wheeler  and  the  Company.
(3)  Mr.  Mancini's  options were cancelled pursuant to a Termination Agreement.
     Other  compensation  consists  of  a  car  allowance.
(4)  Mr. Schutjer's employment with Omni Nutraceuticals ceased on July 15, 1999.
     Mr.  Schutjer's  options  have  expired  unexercised.
(5)  Mr.  Beldner's compensation shown includes sales commissions he receives as
     our  International  Division  Manager.
(6)  Mr. Ballin's employment ceased on January 19, 2001, at which time all stock
     options  shown  were  cancelled.
(7)  Mr. Rosenman's employment ceased on March 22, 2001, and his options will be
     cancelled  on  May  23,  2001.


<TABLE>
<CAPTION>
                                  OPTION GRANTS

The  following table presents information with respect to the Named Individuals concerning the exercise of options
during  2000  and  unexercised  options  held  as  of  March  31,  2001.

                                                                                               Potential Realizable
                                                                                                 Value at Assumed
                                                                                                  Annual Rate of
                                                                                             Stock Price Appreciation
                               Individual Grants                                               For Option Term (1)
(a)                          (b)               (c)            (d)                  (e)              (f)      (g)
--------------------  ------------------  -------------  -------------  ------------------------- -------  -------
                          Number of        % of Total
                          Securities      Options/SARs
                          Underlying       Granted to     Exercise Or
                         Options/SARs     Employees In    Base Price           Expiration
Name                     Granted (#)       Fiscal Year   ($/Share) (*)           Date(*)           5% ($)  10% ($)
<S>                   <C>                 <C>            <C>            <C>                        <C>     <C>

Christoff Ballin (1)        1,075,000       57.5            2.07                 4-9/2010          (3)      (3)
Herm Rosenman (2)             500,000       26.6.           4.12                   5/2010          (3)      (3)
</TABLE>


*This  chart  assumes  a market price of $0.20 for the common stock, the closing
price  for  the  common  stock in the Over-The-Counter Market as of December 31,
2000,  as  the  assumed  market  price  for  the  common  stock  with respect to
determining  the  "potential  realizable  value"  of  the shares of common stock
underlying the options described in the chart, as reduced by any lesser exercise
price  for  such  options.  Further, the chart assumes the annual compounding of
such  assumed  market  price over the relevant periods, without giving effect to
commissions  or  other  costs  or  expenses  relating to potential sales of such
securities.  The  common stock has a very limited trading history.  These values
are  not intended to forecast the possible future appreciation, if any, price or
value  of  the  common  stock.
(1)  These  options  have  been  cancelled.
(2)  These  options  will  be  cancelled  on  May  23,  2001.
(3)  The  exercise  price  of  the  options  exceeded  the  assumed market price
     compounded  annually over the relevant periods, and, therefore, there is no
     potential  realizable  value  for  the options, for purposes of this chart.


<TABLE>
<CAPTION>
                          OPTION EXERCISES AND HOLDINGS

The  following table presents information with respect to the Named Individuals concerning the exercise of options during 2000 and
unexercised  options  held  as  of  March  31,  2001:
                                                              Number of Securities
                                                             Underlying Unexercised                  Value of Unexercised In The
                                                                  Options at                               Money Options at
                                                              December 31, 2000                          December 31, 2000(2)
                         Shares
                      Acquired On      Value
Name                  Exercise (#)  Realized (1)       Exercisable               Unexercisable          Exercisable  Unexercisable
                                                  ----------------------  ----------------------------               -------------
<S>                   <C>           <C>           <C>                     <C>                           <C>          <C>
R. Lindsey Duncan             0             0                 434,584                     1,001,251
Christoff Ballin (2)          0             0                  75,000                     1,050,000            0              0
Herm Rosenman(2)              0             0                  65,000                             0            0              0
Klee Irwin                    0             0                                                                  0              0
Steven Beldner(2)             0             0                   2,500                        12,500            0              0
Louis Mancini(2)              0             0
</TABLE>


(1)  Represents  an  amount  equal  to  the  number of options multiplied by the
     difference  between the average of the closing bid and asked prices for the
     common  stock  in the then existing market for the common stock on the date
     of  exercise  and  any  lesser  exercise  price.
(2)  Represents  an  amount  equal  to  the  number of options multiplied by the
     difference  between the average of the closing bid and asked prices for the
     common  stock  in  the Over-The-Counter market on December 31, 2000 ($0.203
     per  share)  and  any  lesser  exercise  price.

BOARD  COMMITTEES

AUDIT  COMMITTEE
     The  members of the audit committee are responsible for recommending to the
Board  of  Directors  the  engagement  of our outside auditors and reviewing our
accounting  controls  and  the  results  and  scope of audits and other services
provided  by our auditors. Our audit committee is currently comprised of Messrs.
Aarts  and  Vollero.  The  audit  committee  has discussed the audited financial
statements  with  management  and  our  auditors. It has also discussed with the
auditors the matters required to be discussed by SAS 61. The audit committee has
received  the  written disclosures and letter required by Independence Standards
Board  Standard No.1. Based on the review and discussions referred to above, the
audit committee recommended to the Board of Directors that the audited financial
statements  as of March 31, 2001 and for the years ended December 31, 1998, 1999
and 2000, be included in our Annual Report on Form 10-K for the last fiscal year
for  filing  with  the  Commission.

COMPENSATION  COMMITTEE
     The members of the compensation committee will be responsible for approving
or  recommending  to the board of directors the amount and type of consideration
to  be  paid  to  senior  management,  administering  our stock option plans and
establishing  and  reviewing  general  policies  relating  to  compensation  and
benefits of employees.  The compensation committee currently consists of Messrs.
Irwin  and  Vollero.

LTSIP  COMMITTEE
     The  LTSIP  administration Committee oversees the Long-Term Stock Incentive
Plan, or the LTSIP, including, subject to the express terms of the LTSIP, making
awards,  interpreting  the LTSIP, amending and rescinding rules and other duties
related  to  the  proper  implementation  of  the  LTSIP.  Our  LTSIP  committee
currently  is  comprised  of  Messrs.  Vollero  and  Aarts.

DIRECTOR  COMPENSATION
     We  reimburse  our  non-employee  directors  for their expenses incurred in
connection  with  attending board and committee meetings but do not provide cash
compensation  for  their  services  as board or committee members. Directors are
eligible  to participate in our LTSIP.  Subject to shareholder approval, each of
our  non-employee directors will receive a one-time stock grant of 15,000 shares
and  a  one-time option grant of 75,000 shares vesting annually over three years
upon joining the board.  The exercise price for each of these option grants will
be  equal  to the fair market value of the underlying shares of our common stock
on  the  date  of  grant.

     In  1999,  the  LTSIP provided that upon assuming office, each non-employee
director  would  be  granted  a non-qualified option to acquire 10,000 shares of
Common  stock at an exercise price equal to 100% of the fair market value on the
date  of grant.  One-half of the grants shall become exercisable upon completion
of  one  year of service as a director and the remaining balance upon completion
of  two  years of service as a director. All options have a five-year expiration
term.

     In  December  1999, the LTSIP was amended to grant 75,000 options at market
price  at  the  time  of  grant  over  three  years  to  new  directors.

     During  the  year  ended  December  31, 2000, we issued 1,780,500 shares of
common  stock  at  a  weighted  average  exercise  price of $2.38 per share, and
options to purchase approximately 1,925,000 shares of common stock to certain of
our  directors,  executive  officers  and  consultants.

EMPLOYMENT  ARRANGEMENTS
     There  are  no  employment agreements currently in existence, including any
for  the  current  executive  management  group.

COMPENSATION  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION
     R.  Lindsey  Duncan,  and Klee Irwin, the Company's current Chief Executive
Officer,  served  on the Compensation Committee of the Board of Directors during
2000.

BENEFIT  PLANS

LONG  TERM  STOCK  INCENTIVE  PLAN
     The  following  is a description of the principal features of the Long Term
Stock  Incentive Plan or LTSIP, as amended. This description is qualified in its
entirety  by  reference to the LTSIP, which is incorporated herein by reference.
The  Board  of  Directors  will  be  recommending  revisions to the LTSIP to the
shareholders  at the next annual or special shareholders meeting.  The revisions
are  described  below.

     The  LTSIP authorizes the LTSIP Administration Committee to grant incentive
stock  options  or ISO and non-qualified stock options or NSOs, including reload
options  (i.e.,  the granting of additional options, where an employee exercises
an option with previously owned stock, covering the number of shares tendered as
part  of  the  exercise  price),  restricted  stock  awards or RSAs (i.e., stock
awarded to an employee that is subject to forfeiture in the event of a premature
termination  of  employment,  failure  of  Omni  Nutraceuticals  to meet certain
performance  objectives,  or  other conditions), performance units or PUs (i.e.,
share-denominated  units  credited  to  the  employee's  account for delivery or
cash-out at some future date based upon performance criteria to be determined by
the  LTSIP  Administration  Committee),  and  "tax withholding" (i.e., where the
employee  has the option of having us withhold shares on exercise of an award to
satisfy  tax  withholding  requirements).

     The  LTSIP  also  provides  for  one-time  grants  of NSO's to non-employee
directors,  upon  taking office, vesting one-half upon completion of one year of
service and one-half upon the completion of two years of service, exercisable at
100%  of  the  fair  market  value  of  the  Common  stock on the date of grant.

     The  LTSIP Administration Committee develops administration guidelines from
time  to  time,  which  define  eligibility  criteria,  the  types  of awards to
employees, and the value of such awards. Specific terms of each award, including
minimum  performance  criteria,  which  must  be met to receive payment, will be
provided  in  individual  award  agreements  granted  each  award recipient. Key
employees and other individuals who the LTSIP Administration Committee deems may
provide  a  valuable contribution to our success will be eligible to participate
under  the  LTSIP.  Award  agreements  will  also  contain  change-in-control
provisions.

     Under  the  LTSIP,  the  LTSIP Administration Committee shall determine the
option  price  of all NSOs and ISOs; provided, however, in the case of ISOs, the
option price shall not be less than the fair market value of the Common stock on
the  date  of grant. Such "fair market value" is the average of the high and low
prices  of  a share of the Common stock traded on the relevant date, as reported
on  a  national  securities  exchange  or an automated quotation system on which
Common stock is then traded, or, in the event such Common stock is not listed on
an  exchange  or  quoted  on  an  automated quotation system, the average of the
highest  bid  and the lowest asked price quoted by a member firm of the National
Association  of  Securities  Dealers,  Inc.

COMPLIANCE  WITH  SECTION  16  OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934
     Section  16(a)  of  the Securities Exchange Act of 1934, as amended, or the
Exchange  Act,  requires  our  directors  and  executive officers and beneficial
holders of more than 10% of our common stock to file with the Commission initial
reports  of ownership and reports of changes in ownership and reports of changes
in  ownership  of  our  common stock.  As of the date of this Report, except for
reports  that  have  not  been timely filed for Thomas Aarts and Andrew Vollero,
Jr.,  we believe that all reports needed to be filed have been filed in a timely
manner  for  the  year  ended  December  31,  2000.

Security  Ownership  of  Certain  Beneficial  Owners  and  Management

     The  following  table sets forth information regarding beneficial ownership
of  our  common  stock  as  of  March  31,  2001:
-    each  stockholder  who is known by us to own beneficially 5% or more of our
     common  stock;
-    each  of  our  directors  named in "Management" section of this report; and
-    all  of  our  directors  and  executive  officers  as  a  group.


<TABLE>
<CAPTION>
                                                                                  PERCENTAGE OF SHARES
                                                   NUMBER OF SHARES BENEFICIALLY   BENEFICIALLY OWNED
NAME AND ADDRESS OF BENEFICIAL OWNER (1)                       OWNED                       (1)
<S>                                                <C>                            <C>

R. Lindsey Duncan(2)
1570 Chastain Parkway
Pacific Palisades, CA 90044                                            6,408,383                  18.2%
-------------------------------------------------  -----------------------------  ---------------------
Klee and Margareth Irwin (3)(4)                                       18,206,950                  45.1%
-------------------------------------------------  -----------------------------  ---------------------
Andrew Vollero, Jr. (4)(8)                                               350,000                   0.9%
-------------------------------------------------  -----------------------------  ---------------------
Thomas Aarts (4)(7)                                                       75,000                     *
-------------------------------------------------  -----------------------------  ---------------------
Rebecca Perman (4)(5)                                                    600,000                   0.7%
-------------------------------------------------  -----------------------------  ---------------------
American Equities LLC(6)
3172 Abington Drive
Beverly Hills, CA 90210                                                1,740,575                   5.1%
-------------------------------------------------  -----------------------------  ---------------------
All directors and officers as a group (5 persons)
* Less than 1%                                                        25,540,733
-------------------------------------------------  -----------------------------
</TABLE>


(1)  Beneficial  ownership  is  determined  in  accordance with the rules of the
     Commission. Shares of common stock subject to options or warrants currently
     exercisable  or  exercisable  within  60  days of April 10, 2001 are deemed
     outstanding  for  computing  the  percentage  ownership  of the stockholder
     holding  the  options  or  warrants,  but  are  not  deemed outstanding for
     computing  the  percentage  ownership  of  any  other  stockholder.  Unless
     otherwise indicated in the footnotes to this table, we believe stockholders
     named  in the table have sole voting and sole investment power with respect
     to  the shares set forth opposite such stockholder's name. Unless otherwise
     indicated,  the  officers, directors and stockholders can be reached at our
     principal offices. Percentage of ownership is based on 34,106,032 shares of
     common  stock  outstanding  as  of  April  11,  2001. All share numbers and
     percentages  assume no exercise of the underwriters' over-allotment option.
(2)  Includes 2,264,503 shares held in the Duncan Family Trust, to which Lindsey
     Duncan  disclaims  beneficial  ownership  and options to purchase 1,001,281
     shares  of  our  common  stock.
(3)  Includes  options  to  purchase  2,200,000  shares  of our common stock and
     voting  power  over  the  1,740,575  shares owned or controlled by American
     Equities  LLC.
(4)  The  address  for  each  of  these  persons  is  5310 Beethoven Street, Los
     Angeles,  California  90066.
(5)  Includes options to purchase 100,000 shares of common stock from Klee Irwin
     at  an  exercise  price  of $1.21 per share and options to purchase 500,000
     shares  of  common  stock.
(6)  On  September  25,  2000,  American  Equities  LLC  granted to Mr. Irwin an
     irrevocable  proxy  to  vote  the  1,740,575 shares of common stock held or
     controlled  by it. The proxy will terminate upon the sale of such shares to
     any  unaffiliated  third  party.
(7)  Includes  options  to  purchase  75,000  shares  of  common  stock.
(8)  Includes  options  to  purchase  325,000  shares  of  common  stock

ITEM  12.          CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

STOCK  REDEMPTIONS  AND  LOAN  REPAYMENTS  WITH  STOCKHOLDERS
     In  October  1999, our then Chief Executive Officer fully repaid an 8% loan
in the amount of $322,000.  In the first quarter of 2000, we forgave all amounts
owed  by our then current President pursuant to a loan in the original principal
amount  of  $350,000,  bearing  interest at 8% per annum, in connection with the
termination  of  his  employment.  The  amounts  forgiven  totaled  $175,000.

TRANSACTIONS  WITH  AFFILIATES
     American  Brand  Labs,  or ABL, is owned in the majority by Klee Irwin, our
Chief  Executive Officer, and 7.5% by Rebecca Pearman, a director of our company
and  General  Manager/Vice  President  of  operations  of ABL.  ABL is a current
customer  of  our  company.

     Ms.  Pearman  and  Klee Irwin are parties to a verbal agreement pursuant to
which  Ms.  Pearman  was  granted the option of purchasing, at any time, 100,000
shares  of  common stock of Omni from Mr. Irwin at a per share purchase price of
$1.21.  This  agreement  terminates  March  15,  2011.

     During the year ended December 31, 1999, a bonus of $50,000 was paid to Mr.
Lindsey  Duncan,  Chairman  of  the  Board.

     On October 8, 1999, Mr. Klee Irwin entered into a settlement agreement with
us  in order to resolve certain mutual claims that had arisen between Mr. Irwin.
And  us.  Subsequent  to  December  31,  1999,  the Settlement Agreement and all
ancillary  agreements thereto, including the voting agreement between Mr. Duncan
and  Mr.  Irwin,  were terminated.  In connection with the settlement agreement,
Mr.  Irwin  made a capital contribution of $305,000, and returned 941,436 shares
of  our  common  stock.

     We believe that all such transactions with our affiliates have been entered
into  on  terms  no  less  favorable  to  us  than could have been obtained from
independent  third  parties.  We  intend  that  any  transactions and loans with
officers,  directors  and 5% or greater stockholders, following the date of this
Report,  will  be  on  terms no less favorable to us than could be obtained from
independent third parties and will be approved by a majority of our independent,
disinterested  directors.


                                     PART IV
                        Exhibits and Reports on Form 8-K

     Financial  Statements
     ---------------------
     Consolidated balance sheet of Omni Nutraceuticals, Inc. and subsidiaries as
of  December  31,  2000  and  1999  as  previously  restated,  and  the  related
consolidated  statements of operations, stockholders' investment, and cash flows
for  each  of  the  years  in  the  3-year  period  ended  December  31,  2000.

     Financial  Statement  Schedules
     -------------------------------
All  other  schedules  have  been  omitted  because  they  are not required, not
applicable,  or  the  information  is  otherwise  set  forth  in  the  financial
statements  or  notes  thereto.

     Reports  on  Form  8-K
     ----------------------
     We  did  not  file any Current Reports on Form 8-K during the quarter ended
December  31,  2000.

     Other  Exhibits
     ---------------

2.01 Agreement  and Plan of Merger dated April 10, 1996, by and between 4health,
     Inc.  and Surgical Technologies, Inc. as amended June 4, 1996. Incorporated
     by  Reference,  (4)
2.04 Amended  and Restated Agreement and Plan of Merger dated December 24, 1997,
     signed  January 7, 1998, by and between 4Health, Inc. and Irwin Naturals as
     amended  April  2,  1998.  Incorporated  by  Reference  (7)
2.05 Agreement  to  Purchase  Asset of Inholtra Naturals Limited Incorporated by
     Reference  (17)
2.06 Agreement  &  Plan  of  Merger  with  Health & Vitamin Express Inc. ("HVE")
     Incorporated  by  Reference  (17)
3.01 Articles of Incorporation of Surgical Subsidiary, Inc., a Utah Corporation,
     now  known  as  Surgical  Technologies,  Inc.  Irwin Naturals/4Health, Inc.
     Incorporated  by  Reference  (5)
3.02 Articles  of  Merger  and related Plan of Merger. Incorporated by Reference
     (5)
3.03 Bylaws  Incorporated  by  Reference  (5)
3.04 Articles of Merger and related Plan of Merger Incorporated by Reference (4)
3.05 Form  of  Articles  of  Merger  and  related Plan of Merger Incorporated by
     Reference  (7)
3.06 Bylaws--Change  to  By-Laws  Eliminating  Executive  Committee  Approved by
     Shareholders in December 1999 to Proxy Statement. Incorporated by Reference
     (15)
3.07 Form of Articles of Merger and related Plan of Merger Amendment to Articles
     Changing  Name  and  Authorizing  the  Series  A  Preferred  Stock  to  8K
     Incorporated  by  Reference  (14)
4.01 Form  of  Warrant Agreement between 4Health, Inc. and Zion's First National
     Bank  with  related  form  of  Warrant  Incorporated  by  Reference  (4)
4.02 Form of Sale Restriction Agreement respecting shareholders of both Surgical
     Technologies,  Inc.,  and  4Health,  Inc.  Incorporated  by  Reference  (4)
4.03 Form  of  Consent,  Approval,  and  Irrevocable  Proxy  respecting  certain
     Surgical  stockholders  with related schedule Incorporated by Reference (4)
4.04 Form of Consent, Approval, and Irrevocable Proxy respecting certain 4Health
     stockholders  with  related  schedule  Incorporated  by  Reference  (4)
4.05 Specimen  Common  Stock  Certificate  Incorporated  by  Reference  (4)
4.06 Specimen  Warrant  Certificate  Incorporated  by  Reference  (4)
4.07 Warrant certificates between 4Health and Allen & Company Incorporated dated
     April  15,  1997  Incorporated  by  Reference  (6)
4.08 Warrant  certificates  between  American  Equities  and Corporate Financial
     Enterprises  Incorporated  by  Reference  (6)
4.09 Registration  Rights  Agreements  with  American  Equities  and  Corporate
     Financial  Enterprises.  Incorporated  by  Reference  (4)
4.10 Lindsey  Duncan  Withdrawal  Agreement  Incorporated  by  Reference  (4)
4.11 Voting  Agreement  Between  Lindsey  Duncan  and Klee Irwin Incorporated by
     Reference  (4)
5.01 Summary  of  Revolving Line of Credit Agreement between 4Health and Norwest
     Business  Credit,  Inc.  Incorporated  by  Reference  (1)
10.01  1996  Long-Term  Stock  Incentive  Plan  Incorporated  by  Reference  (4)
10.02  10  Form  of  Option  granted  to  Rockwell  D.  Schutjer Incorporated by
     Reference  (4)
10.03  10  Form  of  Proprietary  Information,  Inventions,  and Non-Competition
     Agreement between 4 Health and R. Lindsey Duncan. Incorporated by Reference
     (4)
10.04  Form  of  Employment  Agreement  between  the  Surviving  Corporation and
     Rockwell  Schutjer.  Incorporated  by  Reference  (4)
10.05  Deed  of  Trust  Note  and  related  Deed  of Trust, Assignment of Rents,
     Security  Agreement,  and  Fixture  Filing, dated February 20, 1997, in the
     principal amount of $1,350,000 due Standard Insurance Company. Incorporated
     by  Reference  (3)
10.06  Form  of  Non-Negotiable  Promissory  Note  Incorporated by Reference (7)
10.07  Promissory  Note  to  issued  into  Inholtra  Naturals  Limited
10.10 Settlement Agreement; Indemnity Agreement with Lindsey Duncan; Lou Mancini
     Termination  Agreement;  Andrew  Vollero,  Jr.  Stock  Option  Agreement
     incorporated  by  Reference  (18)
10.11  Indemnity Agreement with Klee Irwin dated April 19, 1999. Incorporated by
     Reference  (10)
10.12  Secured  Credit  Agreement  by  and  among  Irwin Naturals4Health, Inc as
     Borrower,  and  First Source Financial LLP, as Agent and Lender dated as of
     June  10,  1999.  Incorporated  by  Reference  (11)
10.13 10 Settlement Agreement dated October 8, 1999 between Omni Nutraceuticals,
     Inc,  and  Klee  Irwin.  Incorporated  by  Reference  (12)
10.14 Tax Indemnification and Allocation Agreement dated October 8, 1999 between
     Omni  Nutraceuticals,  Inc  and  Klee Irwin. Incorporated by Reference (12)
10.15  Voting  Agreement  dated  October  8,  19999  by and among Klee Irwin and
     Margareth  Irwin  and  R.  Lindsey  Duncan.  Incorporated by Reference (12)
10.16  Escrow  Agreement  dated  October  8, 1999 by and among Klee Irwin, Wells
     Fargo  Bank  as  the  Escrow Agent and Omni Nutraceuticals. Incorporated by
     Reference  (12)
10.17  Amendment No.1 to Settlement Agreement dated October 8, 1999 between Omni
     Nutraceuticals,  Inc.  and  Klee  Irwin.  Incorporated  by  Reference  (14)
10.18  Consulting  Agreement  by  and  between  Omni  Nutraceuticals,  Inc.  and
     corporate  financial  Enterprises,  Inc  dated  as  of  January  24,  2000.
     Incorporated  by  Reference  (14)
10.19 Consulting Agreement by and between Omni Nutraceuticals, Inc. and Montfort
     Investments  dated  as  of January 24, 2000. Incorporated by Reference (14)
10.20  Lock  up  Agreement  by Klee Irwin and R. Lindsey Duncan. Incorporated by
     Reference  (14)
10.21  Indemnity  Agreement between Omni Nutraceuticals, Inc. and Reid Breitman.
     Incorporated  by  Reference  (14)
10.22  Agreement  dated March 11, 20000 among the company, R. Lindsey Duncan and
     Cheryl  Wheeler.  Incorporated  by  Reference  (15)
10.23  Indemnity  Agreement  dated  March  11,  20000 between the Company and R.
     Lindsey  Duncan.  Incorporated  by  Reference  (15)
10.24  Term  Sheet  dated  March  11,  22000  between  the  Company and American
     Equities,  LLC.  Incorporated  by  Reference  (15)
10.25  Registration  Rights Agreement dated March 11, 2000 among the Company, R.
     Lindsey  Duncan  and  Cheryl  Wheeler.  Incorporated  by  Reference  (15)
10.26  Consulting  Agreement  between  the  Company  and  Liviakis  Financial
     Communications,  Inc.  Incorporated  by  Reference  (15)
10.27  Termination Agreement between the company and Louis Mancini. Incorporated
     by  Reference  (15)
16.1 Letter  re:  Change  in  Certifying  Accountant  (19)
20.01  Notice  of change of transfer and warrant agent Incorporated by Reference
     (2)
22.1 List  of  subsidiaries  of  the  Company
23.1 Consent  of  Singer,  Lewak,  Greenbaum  &  Goldstein  LLP


(1)  Incorporated  by  reference  from  4Health's  report  on  Form 10-Q for the
     quarter  ended  September  30,  1997.
(2)  Incorporated  by  reference  from  4Health's  report  on  Form 10-Q for the
     quarter  ended  March  31,  1997.
(3)  Incorporated  by  reference from 4Health's report on Form 10-K for the year
     ended  December  31,  1996.
(4)  Incorporate by reference from Surgical's registration statement on Form S-4
     filed  with  the  Commission,  SEC  file  number  33-03243.
(5)  Incorporated  by reference from Surgical's report on Form 10-K for the year
     ended  March  31,  1994.
(6)  Incorporated  by  reference  from Schedule 13D filed with the Commission by
     Allen  &  Company  Incorporated  on  April  18,  1997.
(7)  Proxy  Statement  of  4Health,  Inc.  dated  June,  1998.
(8)  Incorporated  by  reference  from  Irwin Naturals/4/Health Annual Report on
     Form  10-K  for  the  year  ended  December  31,  1998.
(9)  Incorporated  by  reference  from the Company's report on Form 10-K for the
     year  ended  December  31,  1998.
(10) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     June  7,  1999.
(11) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     July  22,  1999.
(12) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     October  28,  1999.
(13) Incorporated  by  reference  from  the  Company's  proxy statement filed on
     December  10,  1999.
(14) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     January  31,  2000.
(15) Incorporated  by  reference  from the Company's report on Form 8-K filed on
     April  14,  2000.
(16) Incorporated  by reference from the Company's report on Form 10-K filed for
     December  31,  1999.
(17) Incorporated  by  reference from the Company's report on Form 10-K/A, dated
     August  20,  1999,  for  the  year  ended  December  31,  1998.
(18) Incorporated  by  reference  from  the  Company's  report on Form 8-K dated
     August  25,  1999.
(19) Incorporated by reference from the Company's report on Form 8-K dated April
     20,  2000.

                       DOCUMENTS INCORPORATED BY REFERENCE
     We  are a reporting company and file annual, quarterly and special reports,
proxy statements and other information with the Commission.  You may inspect and
copy  these  materials at the Public Reference Room maintained by the Commission
at  Room  1024, 450 Fifth Street, N.W., Washington, D.C. 20549.  Please call the
Commission  at 1-800-SEC-0330 for more information on the Public Reference Room.
You  can  also  find  our  Commission  filings  at  the  Commission's website at
www.sec.gov.  You  may  also inspect reports and other information concerning us
at  the  offices  of the NASDAQ Stock Market at 1735 K Street, N.W., Washington,
D.C.  20006.  We  intend  to  furnish  our  stockholders  with  annual  reports
containing  audited  financial  statements and such other periodic reports as we
may  determine  to  be  appropriate  or  as  may  be  required  by  law.
Certain  documents  listed above in Part IV, Item 12 of this Report, as exhibits
to  this Report on Form 10-K, are incorporated by reference from other documents
previously  filed  by  us  with  the  Commission.

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

     OMNI  NUTRACEUTICALS,  INC.


Date:  April  __,  2001     By:   /s/  Klee  Irwin
                                 -----------------
          Klee  Irwin
          President,  Chief  Executive  Officer
          and  Director

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



Signature                          Capacity in Which Signed              Date
--------------------------  --------------------------------------  --------------
<S>                         <C>                                     <C>
                            President, Chief Executive Officer and
/s/ Klee Irwin              Director                                April 16, 2001
--------------------------
Klee Irwin
--------------------------
/s/ Thomas Baker            Vice President Finance                  April 16, 2001
Thomas Baker
--------------------------
/s/Thomas Aarts             Director                                April 16, 2001
Thomas Aarts
--------------------------
/s/ Rebecca Pearman         Director                                April 16, 2001
Rebecca Pearman
--------------------------
/s/ Andrew S. Vollero, Jr.  Director                                April 16, 2001
Andrew S. Vollero, Jr.
--------------------------
</TABLE>




                        CONSOLIDATED FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report  of  Independent  Certified  Public  Accountants

Consolidated  Balance  Sheets  as  of  December  31,  2000  and  1999

Consolidated  Statements  of  Operations  for  each  of  the  three years in the
period  ended  December  31,  2000

Consolidated  Statements  of  Shareholders'  Investment  for  each  of the three
years  in  the  period  ended  December  31,  2000

Consolidated  Statements  of  Cash  Flows  for  each  of  the  three  years
in  the  period  ended  December  31,  2000

Notes  to  Consolidated  Financial  Statements


REPORT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS

To  the  Board  of  Directors
Omni  Nutraceuticals,  Inc.  and  subsidiary

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Omni
Nutraceuticals,  Inc.  as  of December 31, 2000 and 1999 as previously restated,
and the related consolidated statements of operations, shareholders' investment,
and  cash  flows  for  each  of the three years in the period ended December 31,
2000.  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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Omni Nutraceuticals,
Inc. and subsidiary as of December 31, 2000 and 1999 as previously restated, and
the  consolidated  results  of their operations and their cash flows for each of
the  three  years  in  the  period  ended  December  31, 2000 in conformity with
generally  accepted  accounting  principles.

The  accompanying  consolidated financial statements have been prepared assuming
that  the  Company  will continue as a going concern.  As discussed in Note 1 to
the  consolidated financial statements, the Company incurred a loss from current
operations  of  $13,472,000  for  the  year  ended  December  31,  2000,  has an
a retained  deficit of $41,358,000 as of December 31, 2000, and it had negative
cash  flows  from operations of $4,129,000 for the year ended December 31, 2000.
Additionally, the Company has current debt service requirements in excess of its
historical  ability  to generate cash flows from operations.  The Company is the
subject  of  a  significant  number  of  lawsuits,  claims  and  an  informal
investigation  by  the  Securities  and  Exchange Commission .  In addition, the
Company  has  been  de-listed  from  the  NASDAQ  national  market system. These
factors,  among  others,  as  discussed  in Note 1 to the consolidated financial
statements, raise substantial doubt about the Company's ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in  Note 1. The consolidated financial statements do not include any adjustments
that  might  result  from  the  outcome  of  this  uncertainty.


SINGER  LEWAK  GREENBAUM  &  GOLDSTEIN  LLP

Los  Angeles,  California

March  28,  2001


<TABLE>
<CAPTION>
OMNI NUTRACEUTICALS INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31
                                                                                2000             1999
                                                                                            (as previously
                                                                                              restated)
                                                                           --------------   ---------------
<S>                                                                         <C>            <C>
ASSETS
CURRENT ASSETS
Cash                                                                        $    199,000
Accounts receivable, net of reserves and allowances of
3,829,000 and $3,460,000, respectively                                         2,566,000   $     2,685,000
Inventories, net of reserves of $796,000 and $540,000,
respectively                                                                   2,871,000         7,869,000
Prepaid expenses and other                                                       519,000           539,000
Current portion of note receivable                                                                  11,000

     Total Current Assets                                                      6,155,000        11,104,000
                                                                            -------------  ----------------

Property and equipment, net                                                    1,253,000         1,516,000
Trademarks, net of accumulated amortization of
1,627,000 and $726,000, respectively                                          11,897,000        12,798,000
Goodwill, net of accumulated amortization of $484,000                                            2,422,000
Other assets, net of accumulated amortization of
492,000 and $110,000, respectively                                               872,000         1,693,000
Assets held for sale                                                           7,128,000
                                                                            ------------   ---------------
Total Assets                                                                $ 27,305,000   $    29,533,000
                                                                            ============   ===============
LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES
Cash overdraft                                                                             $       165,000
Line of credit                                                                 5,511,000         6,436,000
Current portion of term loan                                                   2,917,000         2,332,000
Current portion of notes payable                                                  23,000           176,000
Accounts payable                                                            $  6,003,000         7,176,000
Accrued liabilities                                                            2,392,000         2,875,000
Income taxes payable                                                                                52,000
Customer deposits                                                                450,000           450,000

Total current liabilities                                                     17,296,000        19,662,000
                                                                            -------------  ----------------

Term loan, net of current portion                                              7,361,000        10,085,000
Notes payable, net of current portion                                             79,000           102,000

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' INVESTMENT
Shares issuable under legal settlement                                                           1,200,000
Preferred stock; $1 par value; 5,000,000 shares
authorized; issued and outstanding, 3,000 at 2000, none
at 1999                                                                            3,000
Common Stock; $.01 par value; 50,000,000 shares
authorized; issued - 34,110,269 at 2000 and 27,352,009
at 1999; Outstanding - 34,019,379 at 2000 and
27,261,119 at 1999                                                               341,000           274,000
Additional paid-in capital                                                    43,633,000        18,008,000
Treasury stock, 90,890 shares at cost                                            (50,000)          (50,000)
Retained deficit                                                             (41,358,000)      (19,748,000)
                                                                            -------------  ----------------
TOTAL SHAREHOLDERS' INVESTMENT                                                 2,569,000          (316,000)

TOTAL LIABILITIES AND SHAREHOLDERS'                                         -------------  ----------------
INVESTMENT                                                                  $ 27,305,000   $    29,533,000
                                                                            =============  ================
The accompanying notes are an integral part of these financial statements
</TABLE>


<TABLE>
<CAPTION>
OMNI NUTRACEUTICALS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31
                                                                                2000                 1999                 1998
                                                                                           (as previously restated)
                                                                            ------------  -------------------------   -----------
<S>                                                                         <C>            <C>                        <C>
Net Sales                                                                   $ 29,609,000   $             30,922,000   $30,547,000
Cost of Sales                                                                 19,386,000                 15,988,000    12,540,000

Gross profit                                                                  10,223,000                 14,934,000    18,007,000

Costs and Expenses:
  Selling, general and  administrative                                        23,695,000                 23,211,000    16,180,000
  Loss on write-off of intangibles                                                                          390,000
  Legal settlement                                                                                        1,200,000

Total costs and expenses                                                      23,695,000                 24,801,000    16,180,000
                                                                            -------------  -------------------------  ------------

Income (loss) from operations                                                (13,472,000)                (9,867,000)    1,827,000

Other Income (Expense):
  Interest income                                                                 23,000                     32,000        10,000
  Interest expense                                                            (1,887,000)                (1,339,000)     (163,000)
  Other                                                                                                     478,000       (56,000)
                                                                            -------------  -------------------------  ------------
                                                                              (1,864,000)                  (829,000)     (209,000)
Income (loss) before provision (benefit) for income
taxes and loss from discontinued operations                                  (15,336,000)               (10,696,000)    1,618,000
                                                                            -------------  -------------------------  ------------
Provision (benefit) for income taxes                                               1,000                   (274,000)      600,000

Income (loss) before loss from discontinued operations                       (15,337,000)               (10,422,000)    1,018,000
                                                                            -------------  -------------------------  ------------
Discontinued operations:
  Loss on operations of discontinued e-commerce
divison, net of taxes of $0                                                   (1,155,000)                  (633,000)
Net income (loss)                                                            (16,492,000)               (11,055,000)    1,018,000
                                                                            -------------  -------------------------  ------------
Preferred Stock Dividends                                                     (5,118,000)
                                                                            -------------  -------------------------  ------------
Net Income (Loss) Available to Common Shareholders                          $(21,610,000)  $            (11,055,000)  $ 1,018,000
                                                                            =============  =========================  ============

Earnings (loss) per common share
  Basic - historical                                                        $      (0.71)  $                  (0.39)  $      0.04
  Diluted - historical                                                      $      (0.71)  $                  (0.39)  $      0.04

Weighted Average Shares Outstanding
  Basic - historical                                                          30,640,000                 28,177,000    27,747,000
  Diluted - historical                                                        30,640,000                 28,177,000    28,221,000

The accompanying notes are an integral part of these financial statements
</TABLE>


<TABLE>
<CAPTION>
OMNI NUTRACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
                                                                               2000             1999            1998
                                                                                           (as previously
                                                                                             restated)
                                                                           -------------  ----------------  -----------
<S>                                                                        <C>            <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) available to common shareholders                         $(21,610,000)  $   (11,055,000)  $ 1,018,000
Adjustments to reconcile net income (loss) available to common
shareholders to net cash provided by (used in) operating activities:
  Depreciation and amortization                                               3,149,000         1,892,000       550,000
  Provision for reserves and allowances                                         369,000         3,450,000     2,116,000
  (Gain) loss on disposal of building, property and equipment                                    (478,000)       10,000
  Loss on write-off of intangibles                                                                390,000
  Legal settlement in exchange for common stock                                                 1,200,000
  Issuance of warrants and options as compensation for services               1,104,000           832,000       394,000
  Common stock for services                                                   3,275,000           175,000
  Common Stock issued for payables                                            1,431,000
  Write-off of notes receivable                                                                   389,000
  Imputed Preferred Dividends                                                 5,118,000
  (Increase) decrease in:
    Accounts receivable                                                        (250,000)         (112,000)   (3,239,000)
    Inventory                                                                 4,998,000        (5,014,000)     (693,000)
    Prepaid and other                                                           160,000          (405,000)      119,000
   Increase (decrease) in:
    Cash overdraft                                                             (165,000)          165,000
    Accounts payable                                                         (1,173,000)        4,539,000       583,000
    Accrued liabilities                                                        (483,000)        1,933,000      (375,000)
    Income taxes payable                                                        (52,000)         (386,000)      377,000
    Deferred income taxes                                                                                       184,000
                                                                           -------------  ----------------   -----------
Net cash provided by (used in) operating activities                          (4,129,000)       (2,485,000)    1,044,000
                                                                           -------------  ----------------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
 Purchases of property and equipment                                           (224,000)       (1,396,000)     (350,000)
 Net proceeds from disposition of building, property and equipment                                494,000
 Net cash paid for purchase of Inholtra and HVE                                               (13,493,000)
 Collections on note receivable                                                 450,000            68,000        14,000
 Other assets                                                                                    (265,000)
 Receivables from officers and shareholders                                                       322,000      (672,000)
 Investment in e-commerce businesses                                           (718,000)
                                                                           -------------  ----------------   -----------
Net cash provided by (used in) investing activities                            (492,000)      (14,270,000)   (1,008,000)
                                                                           -------------  ----------------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of options                                               340,000            85,000       173,000
Proceeds from issuance of common stock in a private placement                 2,100,000
Net proceeds from issuance of Preferred Stock                                 5,620,000
Net borrowings (repayments) under the line of credit                           (925,000)        5,436,000       259,000
Borrowings  under term loan                                                                    13,000,000
Payments under term loan                                                     (2,139,000)         (583,000)
Borrowings under notes payable                                                                 10,000,000       592,000
Repayments of notes payable                                                    (176,000)      (10,870,000)     (168,000)
Capital contribution from shareholder                                                             305,000
Costs incurred with debt financing                                                             (1,044,000)
Distributions to shareholders                                                                                (1,103,000)
                                                                           -------------  ----------------   -----------
Net cash provided by (used in) financing activities                           4,820,000        16,329,000      (247,000)
                                                                           -------------  ----------------   -----------

Net (decrease) in cash                                                          199,000          (426,000)     (211,000)

Cash at beginning of year                                                             -           426,000       637,000

Cash at end of year                                                        $    199,000   $             -   $   426,000
                                                                           ============   ===============   ============
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid during the year for:                                                     2000              1999          1998
                                                                           -------------  ----------------  ------------
  Interest                                                                 $  2,189,000   $     1,326,000   $   148,000
                                                                           ============   ===============   ============
  Income taxes                                                             $          -   $        40,000   $    24,000
                                                                           =============  ================  ============
The accompanying notes are an integral part of these financial statements
</TABLE>


SUPPLEMENTAL  DISCLOSURES  OF  NON-CASH  INVESTING  AND  FINANCING  ACTIVITIES

During  the  year  ended  December  31,  2000,  several  of  the Company's trade
creditors  agreed  to convert $1,431,000 of debt in exchange for common stock of
the  Company.

During  the  year  ended  December 31, 2000, the Company issued common stock and
other  equity  instruments  valued  at  $5,448,000  to  acquire  three  separate
businesses.

During  the  year  ended  December 31, 2000, the Company issued warrants with an
aggregate  value  of  $1,104,000  to  vendors  for  services  rendered.

During  the  year  ended  December  31,  2000 the Company issued common stock to
directors  for  compensation.  The  value  of  the  shares  was  $72,000.

During  the  year  ended  December  31,  2000,the Company issued common stock to
vendors,  consultants  and  employees valued at $1,563,000 for services rendered
during  the  year.

On  March  12,  2000 the Company forgave a note due from a former officer in the
amount  of  $175,000.

During  the  year  ended  December 31, 1999,  in connection with the sale of the
Company's facility in Boulder, Colorado,  (i)  a  note  receivable  of  $450,000
was  received  from  the  buyer,  and (ii) $1,300,000 of debt was assumed by the
buyer.

During the year ended December 31, 1999,  in  connection with the acquisition of
Health  and Vitamin Express Inc.,  the  Company  (i)  issued  363,636  shares of
the  Company's  common  stock valued at $2,273,000, and (ii) assumed $571,000 of
debt.

During  the  year  ended  December  31,1999,  the  Company acquired property and
equipment  totaling  $126,000  under  capital  lease  obligations.

    The accompanying notes are an integral part of these financial statements


<TABLE>
<CAPTION>
Omni Nutraceuticals, Inc. Consolidated Statements of Shareholder's Investment
For Each of the Three Years in the Period Ended December 31, 2000

                                                      PREFERRED                   COMMON                          TREASURY
                                                       STOCK                      STOCK                            STOCK
                                                       -----                      -----                            -----
                                   SHARES
                               ISSUABLE UNDER                                                      ADDITIONAL
                                   LEGAL                                                             PAID IN
                                 SETTLEMENT       SHARES        AMOUNT       SHARES      AMOUNT      CAPITAL    SHARES   AMOUNT
                              ----------------  -----------  ------------  -----------  ---------  -----------  ------  ---------
<S>                           <C>               <C>          <C>           <C>          <C>        <C>          <C>     <C>
BALANCE, JANUARY 1,
1998                                                                       27,818,798   $278,000   $11,656,000  90,890  $(50,000)
Issuance of common stock
in connection with
exercise of stock options                                                      38,341      1,000       172,000
Compensation expense
incurred in connection with
issuance of options                                                                                      6,000
Compensation expense in
connection with issuance
of warrants for services                                                                               388,000
Distributions
Effect of Irwin Naturals
termination of its "S"
Corporation election                                                                                 2,111,000
Net Income
                              ----------------  -----------  ------------  -----------  ---------  -----------  ------  ---------
BALANCE, DECEMBER 31, 1998                  -            -             -   27,857,139    279,000    14,333,000  90,890   (50,000)
                              ----------------  -----------  ------------  -----------  ---------  -----------  ------  ---------
Issuance of common stock
in connection with HVE
acquisition                                                                   363,636      4,000     2,269,000
Issuance of common stock
in connection with
exercise of stock options                                                      19,670                   85,000
Issuance of common stock
for services                                                                   53,000      1,000       174,000
Compensation expense in
connection with issuance
warrants and options for
services                                                                                               832,000
363,636 shares issuable
under legal settlement        $     1,200,000
Capital contribution and
return of shares                                                             (941,436)   (10,000)      315,000
Net loss
BALANCE, DECEMBER
31, 1999, AS PREVIOUSLY       ----------------  -----------  ------------  -----------  ---------  -----------  ------  ---------
RESTATED                            1,200,000            -             -   27,352,009    274,000    18,008,000  90,890   (50,000)
                              ----------------  -----------  ------------  -----------  ---------  -----------  ------  ---------
Preferred stock issuance,
net of expenses of
101,000 and warrants of
100,000                                         2,000,000     2,799,000                               100,000
Shares issued to officer
and directors                                                                  55,000                   72,000
Issuance of warrants for
services                                                                                             1,104,000
Issuance of common stock
in connection with
exercise of stock options                                                      98,830      1,000       339,000
Shares issued for services                                                    925,500      9,000     1,534,000
Shares issued in private
placement                                                                   1,500,000     15,000     2,085,000
Value of shares
transferred in connection
with termination
settlement                                                                                           1,720,000
Shares of common stock
issued on conversion of
preferred stock                                 (2,000,000)   (2,799,000)   2,016,438     20,000     4,729,000
Shares issued in
connection with legal
settlement                         (1,200,000)                                363,636      4,000     1,196,000
Shares issued in
connection with
conversion of accounts
payable                                                                       599,905      6,000     1,425,000
Series A Preferred Stock
issued, net of costs of
280,000                                             3,000         3,000                             2,717,000
Preferential dividend on
preferred stock                                                                                      3,168,000
Shares issued in
Acquisitions                                                                1,198,951     12,000     5,436,000
Net loss

BALANCE, DECEMBER            ----------------  -----------  ------------  -----------  ---------   -----------  ------  ---------
31, 2000                      $             -        3,000   $     3,000   34,110,269   $341,000   $43,633,000  90,890  $(50,000)
                             ================  ===========  ============  ===========  =========   ===========  ======  =========

                                RETAINED
                                 DEFICIT         TOTAL
                              -------------  -------------
<S>                           <C>            <C>
BALANCE, JANUARY 1,
1998                          $ (6,497,000)  $  5,387,000
Issuance of common stock
in connection with
exercise of stock options                         173,000
Compensation expense
incurred in connection with
issuance of options                                 6,000
Compensation expense in
connection with issuance
of warrants for services                          388,000
Distributions                   (1,103,000)    (1,103,000)
Effect of Irwin Naturals
termination of its "S"
Corporation election            (2,111,000)             -
Net Income                       1,018,000      1,018,000
                              -------------  -------------
BALANCE, DECEMBER 31, 1998      (8,693,000)     5,869,000
                              -------------  -------------
Issuance of common stock
in connection with HVE
acquisition                                     2,273,000
Issuance of common stock
in connection with
exercise of stock options                          85,000
Issuance of common stock
for services                                      175,000
Compensation expense in
connection with issuance
warrants and options for
services                                          832,000
363,636 shares issuable
under legal settlement                          1,200,000
Capital contribution and
return of shares                                  305,000
Net loss                       (11,055,000)   (11,055,000)
                              -------------  -------------
BALANCE, DECEMBER
31, 1999, AS PREVIOUSLY
RESTATED                       (19,748,000)      (316,000)
                              -------------  -------------
Preferred stock issuance,
net of expenses of
101,000 and warrants of
100,000                                        2,899,000
Shares issued to officer
and directors                                      72,000
Issuance of warrants for
services                                        1,104,000
Issuance of common stock
in connection with
exercise of stock options                         340,000
Shares issued for services                      1,543,000
Shares issued in private
placement                                       2,100,000
Value of shares
transferred in connection
with termination
settlement                                      1,720,000
Shares of common stock
issued on conversion of
preferred stock                 (1,950,000)             -
Shares issued in
connection with legal
settlement                                              -
Shares issued in
connection with
conversion of accounts
payable                                         1,431,000
Series A Preferred Stock
issued, net of costs of
280,000                                        2,720,000
Preferential dividend on
preferred stock                 (3,168,000)             -
Shares issued in
Acquisitions                                    5,448,000
Net loss                       (16,492,000)   (16,492,000)
                                                        -
BALANCE, DECEMBER             -------------  -------------
31, 2000                      $(41,358,000)  $  2,569,000
                              =============  =============
</TABLE>

The  accompanying  notes  are  an  integral  part  of these financial statements


                            OMNI NUTRACEUTICALS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


1.     BUSINESSES

BUSINESS  AND  ORGANIZATION

Omni  Nutraceuticals,  Inc.  (the  "Company"  or  "Omni")  is  a  formulator and
supplier  of branded natural health, herbal and nutritional supplement products.
The  Company's  products are sold through mass retail, specialty natural health,
nutrition  and  food  distributors  and retail  stores  and  via  the  Internet.

Omni  is  a  Utah  corporation,  and  was  formerly  known  as  Irwin
Naturals/4Health  Inc,  which  was  formerly known as 4Health, Inc.  Omni is the
surviving  corporation  of  a  merger  (the  "Merger")  of 4Health, Inc., a Utah
corporation  ("4Health"),  with  Irwin  Naturals,  Inc.,  a  California
corporation  ("IN"), consummated  June  30,  1998. Pursuant to the Merger, which
was  accounted  for  as  a  pooling  of  interests,  4Health  issued  15,750,000
shares  of common stock in exchange  for  all  the  outstanding  shares of Irwin
Naturals.  The  accompanying  financial  statements  for  1998  have  been
restated  to  include  the financial position and results of operations for both
companies  as  if  the  Merger was  consummated  at the beginning of all periods
presented.  In  August  1999,  the  Company  changed  its  name  to  Omni
Nutraceuticals,  Inc.

Net  sales  and  net income individually and for the combining companies for the
year  ended  December  31,  1998,  was  as  follows:

<TABLE>
<CAPTION>
Net  Sales:
<S>                                          <C>
4Health (Pre-merger, unaudited)              $ 6,373,000
Irwin Naturals (Pre-merger, unaudited)         9,291,000
Combined companies (Post-meger, unuaudited)   14,883,000
                                             -----------
   Total                                     $30,547,000
                                             ===========
</TABLE>


<TABLE>
<CAPTION>
Net  (Loss)  Income
<S>                                          <C>
4Health (Pre-merger, unaudited)              $ (900,000)
Irwin Naturals (Pre-merger, unaudited)        1,070,000
Combined companies (Post-meger, unuaudited)     848,000
                                             -----------
   Total                                     $1,018,000
                                             ===========
</TABLE>


LIQUIDITY/GOING  CONCERN

The  accompanying  consolidated financial statements have been prepared assuming
that  the  Company will continue as a going concern. The Company incurred a loss
from current operations of $13,472,000 for the year ended December 31, 2000, has
a retained  deficit  of  $41,358,000  as  of  December 31, 2000, and it had
negative  cash  flows  from operations of $4,129,000 for the year ended December
31,  2000.  Additionally,  the  Company has current debt service requirements in
excess  of  its  historical ability to generate cash flows from operations.  The
Company  is  the  subject  of  a  significant  number of lawsuits, claims and an
informal  investigation by the Securities and Exchange Commission.  In addition,
the Company has been de-listed from the NASDAQ national market system.  Further,
the  Company's  secured  credit facility requires a payment of $1,750,000 due on
June 15, 2001 and requires subsequent payments of $195,000 monthly.  The Company
currently does not have the resources to make these payments.  Failure to secure
an  extension  of  the  obligation  may  have  a  material adverse impact on the
Company's ability to continue to operate.  At December 31, 2000, the Company had
borrowed  $5,511,000  out  of  a  maximum of $7,000,000 under its line of credit
facility,  which has been drawn on to fund on going cash requirements subsequent
to  December  31.  At  March  28,  2001,  the  available balance on the line was
$870,000.  These  factors raise substantial doubt about the Company's ability to
continue  as  a  going  concern.  The  consolidated  financial statements do not
include  any adjustments that might result from the outcome of this uncertainty.

Management's  plans  in  regard  to  these  items  include  the  following:

-    The  Company  has  received  a  waiver  from its credit facility lender for
     violations  of  certain  covenants  included  in  the loan agreement and an
     amendment  to  the  credit  facility  with a deferral of the maturity dates
     including principal payments that resume on June 15, 2001. The company will
     continue  to seek additional extensions and waivers of its credit facility.
-    The  Company  has  reduced  and  continues  to reduce portions of its fixed
     overhead  expenses,  including  significant  executive  salary  reductions.
-    Management  has  revised  its  marketing  strategy, has reduced advertising
     expenditures  and  plans  to  introduce  a  new product line in May 2001 or
     sooner.

There  are  no  assurances  that  the amount available from the Company's credit
facility, in conjunction with the expense reductions, will be sufficient to fund
the  Company's  continuing  operations,  or  that  lawsuits,  claims  and  the
investigation  that  the company is involved with will be successfully resolved.
Furthermore,  there  is  no  assurance that the Company will be able to have its
common  stock  re-listed  by  NASDAQ,  limiting  the  Company's ability to raise
additional  equity  financing.  There are no assurances that the Company will be
able  to  successfully  raise  other additional debt or equity funds, or receive
extensions  or waivers on its current debt facility.  The failure of the Company
to  successfully  achieve  one  or  all  of the above items will have a material
impact  on  the  Company's  financial  position.  Additionally, in the event the
Company  is  unsuccessful  in  its  plans with its new product, it may adversely
affect  the  realizability  of  its  Inholtra  trademark asset and significantly
impact  its  results  of  operations.

PREVIOUS  RESTATEMENT  OF  1999  FINANCIAL  STATEMENTS

Starting  in  July  2000, one of the Company's large customers started deducting
significant amounts from cash remittances. In addition, certain of the Company's
other  customers  began  taking deductions against cash remittances that were in
excess  of  historical amounts experienced. In August 2000, the Company launched
an  investigation of its 1999 and 2000 sales practices and determined that sales
to  certain  customers  were  made  with  rights  of  return and "guarantees" of
sell-through  to  consumers.  As part of its investigation, substantially all of
the  customer  deductions taken in 2000 were reviewed and it was determined that
certain  amounts  related  not  only  to  "guaranteed"  sales, but also to other
customer  allowances  and  concessions  granted by prior management in the first
quarter  of  2000 prior to the original issuance of the Company's 1999 financial
statements.  Substantially  all of these arrangements were previously unknown to
the  current  management  team.

The  Company  determined the effect of these deductions on its previously issued
financial  statements and restated their financial statements for the year ended
December  31,  1999.  Under  the  restatement,  revenues  from any products with
"guaranteed"  sales  were  deferred until the sell through of the product at the
customer  level  and  the related product was treated as consigned inventory. In
situations  in  which  allowances  and  concessions  related  to 1999 sales were
granted  early  in  2000,  prior  to the original issuance of the Company's 1999
financial  statements,  the  reserves  for  such allowances and concessions were
increased  as  of  December  31,  1999.

The  effect  of  the  previous restatement on the originally reported net sales,
cost  of sales, gross profit, net loss, basic and diluted loss per common share,
accounts  receivable  and  inventories as of and for the year ended December 31,
1999,  net of the effects of the retroactive restatement related to discontinued
operations,  as  discussed  in  Note  3,  is  as  follows:

<TABLE>
<CAPTION>
                         As Originally
                           Reported       Restatement    As previously restated
                        ===============  -------------  ------------------------
<S>                     <C>              <C>            <C>

Net Sales               $   35,013,000   $ (4,091,000)  $            30,922,000
----------------------  ---------------  -------------  ------------------------
Cost of Sales               17,885,000     (1,087,000)               15,988,000
----------------------  ---------------  -------------  ------------------------
Gross Profit                17,128,000     (2,194,000)               14,934,000
----------------------  ---------------  -------------  ------------------------
Net Loss                    (8,861,000)    (2,194,000)              (11,055,000)
----------------------  ---------------  -------------  ------------------------
Basic and diluted loss
per share                        (0.31)         (0.08)                    (0.39)
----------------------  ---------------  -------------  ------------------------
Accounts Receivable          2,446,171     (4,091,000)                2,685,000
----------------------  ---------------  -------------  ------------------------
Inventories                  5,972,000      1,897,000                 7,869,000
----------------------  ---------------  -------------  ------------------------
</TABLE>


In  addition,  in  the  originally filed financial statements and footnotes, the
Company  did  not account for and disclose two stock option grants to employees.
The  first grant for 100,000 options was on February 15, 1999. The second grant,
also  for  100,000 options, was on January 10, 2000. These option grants did not
impact  the Company's statement of operations; however, the footnote disclosures
related  to  stock  options  were  revised  to  reflect  these  grants.

2.      SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

REVENUE  RECOGNITION

The Company recognizes revenue at the time products are shipped unless sales are
made  under  "guaranteed"  sales  arrangements.  Revenue for guaranteed sales is
deferred  until  the  product  has  been  sold  at  the  retail level.  Based on
historical  experience,  reserves  are established for sales returns, allowances
and  discounts  for  sales  made  without  guarantees at the time such sales are
recorded.  During  the years ended December 31, 2000, 1999 and 1998, the Company
provided  $7,720,000,  $3,702,000 and  $2,116,000, respectively, for returns and
allowances,  including  allowances  for  doubtful accounts, and incurred related
write-offs  of $6,880,000, $1,121,000 and  $1,426,000, respectively.  Provisions
for  doubtful  accounts  (bad  debts)  were  $100,000,  $202,000  and  $268,000,
respectively.

STRAIGHT-LINE  RENT

One  of  the  Company's  operating  leases includes scheduled increasing monthly
payments.  In  accordance  with  accounting principles generally accepted in the
United  States, the Company has accounted for the lease to provide straight-line
charges  to  operations  over  the  life  of  the  lease.

INVENTORIES

Inventories are valued at the lower of cost, determined on a first-in, first-out
basis,  or  market.  Inventories at December 31, 2000 and 1999 are summarized as
follows:

<TABLE>
<CAPTION>
                December 31, 2000   December 31, 1999
                ------------------  ------------------
<S>             <C>                 <C>
Raw Materials   $        1,194,000  $        2,135,000
Finished Goods           1,677,000           5,734,000
                ------------------  ------------------
                $        2,871,000  $        7,869,000
                ==================  ==================
</TABLE>


PROPERTY  AND  EQUIPMENT

Property  and  equipment  are  stated at cost. Depreciation and amortization are
provided  using  the straight-line method over the estimated useful lives of the
assets,  which  range  from  three  to ten years.  Depreciation and amortization
expenses  are  included  in  selling, general and administrative expenses in the
accompanying  statements  of  operations.

When an asset is sold or otherwise disposed of, the cost and related accumulated
depreciation  are  removed  from the accounts and any resulting gain or loss are
included  in  results  of  operations.  Repairs  and  maintenance are charged to
expense  as  incurred  and  major  replacements  or betterments are capitalized.

LONG-LIVED  ASSETS

The  Company  follows  Financial  Accounting  Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be  Disposed  of," which requires impairment losses to be recorded on long-lived
assets  used  in  operation  when  indicators  of  impairment  are  present.

FINANCING  FEES

Financing  fees  incurred  with the acquisition of the Company's existing credit
facility  and  fees  charged  for  related amendments have been deferred and are
being  amortized  over  the  life  of  the  debt.

PATENTS  AND  TRADEMARKS

Costs  associated  with  the  establishment  and defense of trademarks have been
capitalized  and  are  being  amortized  over periods of fifteen years using the
straight-line  method.

RECLASSIFICATIONS

Certain  amounts in prior years have been reclassified to conform to the current
year's  presentation.

ADVERTISING

The  Company  expenses  advertising  costs  as  incurred.  These  costs  include
promotional literature, direct mailing brochures, telemarketing and trade shows.
Costs incurred relating to the production of television commercials are deferred
until  the commercial has aired.  The Company incurred $3,435,000 $3,191,000 and
$1,920,000  for  advertising  expenses  in  2000,  1999  and 1998, respectively.

STOCK-BASED  COMPENSATION

The  Company  adopted Statement of Financial Accounting Standards (SFAS) No.123,
"Accounting for Stock Based Compensation" (SFAS 123) in fiscal 1996.  As allowed
by  SFAS  123,  the Company has elected to continue to measure compensation cost
under  Accounting  Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees"  (APB 25) and comply with the pro forma disclosure requirements of
the  new  standard.

INCOME  TAXES

The  Company  accounts  for  income  taxes  under the provisions of Statement of
Financial  Accounting  Standards  (SFAS)  No.  109. Under SFAS No. 109, deferred
income  tax assets or liabilities are computed based on the temporary difference
between  the  financial statement and income tax bases of assets and liabilities
using  the  current  marginal  income  tax rate. Deferred income tax expenses or
credits  are  based  on  the  changes  in  the  deferred  income  tax  assets or
liabilities  from  period  to  period.

Deferred tax assets may be recognized for temporary differences that will result
in  deductible amounts in future periods and for loss carryforwards. A valuation
allowance  is  recognized  if,  based on the weight of available evidence, it is
more likely than not that some portion or all of the deferred tax asset will not
be  realized.

EARNINGS  PER  SHARE

Earnings  per  share calculations are in accordance with SFAS No. 128, "Earnings
per Share." "Basic" earnings per share is computed by dividing net income (loss)
by  the  weighted  average  number  of  common  shares outstanding for the year.
"Diluted" earnings (loss) per share is computed by dividing net income (loss) by
the  total  of  weighted  average  number  of common shares outstanding plus the
dilutive effect of outstanding stock options and warrants (applying the treasury
stock  method).  For  the  years ended December 31, 2000 and 1999, the effect of
stock  options  and  warrants  were  not  included  as  the  results  would  be
antidilutive.

A  reconciliation  of  the  "basic"  weighted  average  number  of common shares
outstanding  to  the  "diluted"  weighted  average  number  of  common  shares
outstanding  for  each  of the three years in the period ended December 31, 2000
follows:

<TABLE>
<CAPTION>
                                                            Years Ended December 31,
                                                        2000               1999        1998
                                              ------------------------  ----------  ----------
<S>                                           <C>                       <C>         <C>
Weighted average number of common
shares outstanding - Basic                                  30,640,000  28,177,000  27,747,000

Dilutive effect of outstanding stock options                                    --     474,000
                                              ------------------------  ----------  ----------
Weighted average number of common
shares outstanding - Dilutive                               30,640,000  28,177,000  28,221,000
                                              ========================  ==========  ==========
</TABLE>


For  the  year  ended December 31, 1998, 497,000 options have been excluded from
the  calculation  of  dilutive shares applying the treasury stock method, as the
option  exercise  prices  were greater than average market price for the period,
and  therefore  the  options  were  anti-dilutive.

USE  OF  ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted  in  the United States requires management to make estimates
and  assumptions  that affect the reported amounts of assets and liabilities and
the 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.

FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  AND  CONCENTRATION  OF  CREDIT  RISK

The  Company's  financial  instruments  consist  of  cash,  short-term  trade
receivables  and payables and short-term and long-term debt. The carrying values
for  all  such  instruments,  considering  the  terms, approximate fair value at
December  31,  2000,  1999  and  1998.

Financial  instruments that potentially subject the Company to concentrations of
credit  risk  consist  primarily  of  cash  and  accounts  receivable.  Accounts
receivable  are subject to credit limits, ongoing credit evaluations and account
monitoring  procedures  to  minimize  the  risk  of loss.  In certain instances,
customer  deposits  are  obtained  which  would  also  reduce  the risk of loss.
Collateral  is  generally  not  required.

The  Company  sells  the  majority  of  its  products  and  services  to various
customers,  which  include  a  variety  of  large  companies  and  distributors
throughout  the  United  States, and to a limited extent, foreign customers.  In
2000,  1999  and 1998, shipments to the Company's largest customer accounted for
18.4%,  11.6%, and 13.3%, respectively, of the total.  At December 31, 2000, two
customers  represented  31.7%  of accounts receivable.  At December 31, 1998 one
customer represented 36.4% of accounts receivable. No customers represented more
than  10%  of  accounts receivable at December 31, 1999. In 2000, 1999 and 1998,
net  sales  to  foreign  customers  accounted  for  23.2%,  8.5%,  and  10.0%,
respectively,  of  net  sales.

During  2000,  approximately  42% of the Company's total purchases were from two
suppliers.  Management  believes that if the Company were unable to make further
purchases  from  these suppliers, it would be able to find alternative suppliers
with  terms  and  quality  levels  similar  to  those  currently  in  place.

COMPREHENSIVE  INCOME

For  the  year  ended  December  31,  2000,  the  Company  adopted SFAS No. 130,
"Reporting  Comprehensive  Income."  This  statement  establishes  standards for
reporting  comprehensive  income  and  its  components in a financial statement.
Comprehensive  income  as  defined  includes  all changes in equity (net assets)
during  a  period  from  non-owner sources.  Examples of items to be included in
comprehensive  income,  which  are  excluded  from  net  income, include foreign
currency  translation  adjustments  and  unrealized  gains  and  losses  on
available-for-sale  securities.  Comprehensive  income  is  not presented in the
Company's  financial  statements since the Company did not have any of the items
of  comprehensive  income  in  any  period  presented.

STATEMENTS  OF  CASH  FLOWS

The  Company  prepares its statements of cash flows using the indirect method as
prescribed  by  Statement  of Financial Accounting Standards (SFAS) No. 95.  The
Company  considers  all  highly  liquid investments with an original maturity of
three  months  or  less  to  be  cash  equivalents.

NEW  AUTHORITATIVE  PRONOUNCEMENTS

In  June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS No.
136,  "Transfer  of  Assets to a Not-for-Profit Organization or Charitable Trust
that  Raises  or  Holds  Contributions  for  Others."  This  statement  is  not
applicable  to  the  Company.

In  June  1998  and  June  1999, the Financial Accounting Standards Board (FASB)
issued  Statement  of Financial Accounting Standards (SFAS) No. 133, "Accounting
for  Derivative  Investments  and  Hedging  Activities," and SFAS No. 137, which
delayed  the  effective  date  of  SFAS  No. 133.  We will adopt the standard in
January  2001.  Management does not expect the adoption of this standard to have
a  material  impact  on  our  financial  position  or  results  of  operations.

In  December  1999,  the  SEC staff released Staff Accounting Bulletin (SAB) No.
101,  Revenue  Recognition, to provide guidance on the recognition, presentation
and  disclosure  of  revenue  in financial statements.  Changes in accounting to
apply the guidance in SAB No. 101 may be accounted for as a change in accounting
principle effective January 1, 2000. SAB No.  101, has not had a material effect
on  the  Company's  revenue  recognition  and  results  of  operations.

In  March  2000,  the  Financial Accounting Standards Board ("FASB") issued FASB
Interpretation  No.  44,  "Accounting  for  Certain Transactions Involving Stock
Compensation,"  (an Interpretation of Accounting Principles Bulletin Opinion No.
25  ("APB  25")) ("FIN 44").  FIN 44 provides guidance on the application of APB
25, particularly as it relates to options.  The effective date of FIN 44 is July
1,  2000,  and  the  Company  has  adopted  FIN  44  as  of  that  date.

In  June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Instruments
and  Certain  Hedging  Activities."  This  statement  is  not  applicable to the
Company.

In June 2000, the FASB issued SFAS No. 139, "Rescission of FASB Statement No. 53
and  Amendments  to  Statements  No.  63,  89,  and 121."  This statement is not
applicable  to  the  Company.

In  September  2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing  of Financial Assets and Extinguishments of Liabilities, a replacement
of  FASB  Statement  No. 125."  This statement is not applicable to the Company.


3.     ACQUISITIONS  AND  DIVESTITURE  OF  E-COMMERCE  OPERATIONS

ACQUISITIONS

Vitamin  Connection  Discount,  Inc.,  SmartBasics,  Inc.  and  Health  Shop.com
--------------------------------------------------------------------------------

On  October  27,  2000,  the  Company  entered into an agreement to purchase the
assets  of  Vitamin Discount Connection for 190,000 shares of Omni common stock,
which  was valued at $277,000, the fair market value of the common stock on that
day  and  the  assumptions  of  approximately  $115,000  of  Vitamin  Discount's
liabilities.

On  May  25,  2000  the  Company  acquired  SmartBasics,  Inc.,  pursuant  to  a
re-organization and merger agreement, for 170,000 shares of common stock, valued
at  $510,000.

On  May  28,  2000, the Company acquired the assets of HealthShop.com, an online
vitamin  retail business.  The Company issued 838,951 shares of common stock for
all  the  assets  of  the  business.  The  shares were valued at $3,500,000.  In
addition  to  the shares issued, the agreement stated that the stockholders were
entitled  to  purchase  up  to  an  additional  $2,500,000  in common stock.  In
connection  to  this,  the  Company  recorded  an  additional  purchase price of
$289,000,  which was the fair market value of the option.  Also in connection to
the  Healthshop.com  acquisition,  the  Company  granted an aggregate of 250,000
options to purchase the Company's common stock to three of the previous officers
of HealthShop.com.  The options were valued at $872,000, under the Black Scholes
valuation  method.  The  aggregate  purchase  price  of  HealthShop.com  was
$4,661,000.

All  of  the  acquisitions  have  been  accounted for under the purchase method,
whereby  the excess of the purchase price over the fair market value at the date
of  the acquisition has been allocated to goodwill and is being amortized over 5
years.

Health  and  Vitamin  Express
-----------------------------

On  February  15,  1999  in  exchange for 363,636 shares of the Company's common
stock  valued  at $2,273,000 and the assumption of $571,000 of debt; the Company
acquired substantially all of the outstanding common stock of Health and Vitamin
Express,  Inc.  ("HVE"),  whose name was subsequently changed to HealthZone.com.
The  excess  of  the  purchase  price,  which aggregated to $2,906,000 including
costs,  over  the  fair  market  value  of  the  acquired assets is allocated to
goodwill  and  is  being  amortized  over  five  years.

In  addition  to  the  363,636  shares  issued upon acquisition, the Company may
contingently  issue  to  the  sellers  of  HVE  (i)  up to 272,727 shares of the
Company's  common  stock  based  upon  certain revenue thresholds and (ii) up to
90,909  shares  of  the  Company's  common  stock  based  upon  certain  profit
thresholds.  The  Company additionally had certain repurchase rights pursuant to
the  agreement.  The  Company  has  granted  to  the  Sellers  certain  "demand
registration  rights"  and  "piggyback  registration rights" on these shares, if
issued,  in  the  event  the  Company undertakes a sale of its securities to the
public.

The  former  shareholders  of  HVE filed a lawsuit against the Company asserting
certain  claims  under  this  agreement. The Company settled the lawsuit and has
recorded  certain settlement expenses related to this contingency (See Note 11).

DIVESTITURE

In  the  fourth quarter of 2000 the Company made the determination to dispose of
its  E-commerce  business  segment.  The  results of operations of this business
segment  have  been  retroactively  reported  separately  on  the  accompanying
statement  of  operations  as  a  Loss  on operations of discontinued e-commerce
segment.  The  net  assets  of  the  e-commerce  segments  have been reported as
"Assets  held  for  sale" at December 31, 2000.  The Company expects to record a
gain  on  the  ultimate disposal of the business assets, and, in accordance with
generally accepted accounting principals, to the extent there are expected gains
on disposal, will defer the costs associated with the on-going operations during
the  phase  out  period,  until  the  gain  is  realized.

The  assets  held  for  sale consist primarily of intangible assets and goodwill
related  to  the following subsidiaries and acquisitons: (1) HealthZone.com, (2)
HealthShop.com,  (3)  SmartBasics.com  and  (4) Vitamin Discount Connection. and
were  as  follows:

Net  book  value  of  assets  related  to:

<TABLE>
<CAPTION>
<S>                                   <C>
HealthZone.com                             2,971,000
Vitamin Discount Connection                  522,000
Smartbasics.com                              521,000
HealthShop.com                             4,783,000
Accumulated amortization on goodwill      (1,669,000)
                                      -----------------
   Total                              $    7,128,000
                                      =================
</TABLE>


     On  February  2, 2001, the Company entered into and simultaneously closed a
Purchase  Agreement with vitacost.com, Inc. ("Vitacost"), an on-line marketer of
vitamins  and  nutritional products, whereby Vitacost acquired substantially all
of  the  operating  assets  of  the  Company's combined E-commerce operations in
exchange  for  6,800,000 shares of Vitacost common stock. The Vitacost stock has
been  valued  at  $7,000,000  (See  Note  15).

4.     SIGNIFICANT  FOURTH  QUARTER  ADJUSTMENTS

During  the  fourth  quarter  of  the  year ended December 31, 2000, the Company
recorded  the  following  significant  adjustments:

-    An adjustment to reflect the issuance of 710,000 shares of its common stock
     for  consulting  fees.  The  amount  of  the  adjustment  was approximately
     $1,169,000,  which  was  charged  to  operations.
-    An  adjustment  to  record  professional fees incurred during the year. The
     amount  of  the  adjustment  was  approximately  $200,000.

5.     INHOLTRA  TRADEMARK

On  March  10, 1999, the Company purchased for $13,250,000 certain net assets of
Inholtra  Investment  Holdings  and Trading, N.V., Inholtra, Inc., and  Inholtra
Natural,  Ltd.  (collectively  the  Sellers).  The  purchase  price consisted of
the  payment of $3,250,000 in cash at closing, and the issuance of a $10,000,000
promissory  note. The promissory note was repaid on June 10, 1999 in  connection
with the Company's new banking facility (see Note 7). The Company has  accounted
for  the  acquisition  as  a purchase. The purchase price has been allocated  to
the  patents  and  trademarks associated with the Inholtra product, and is being
amortized over a fifteen-year period.  Accumulated amortization on the trademark
at  December  31,  2000  and  1999  was  $1,604,000  and $709,000, respectively.

6.     PROPERTY  AND  EQUIPMENT  AND  SALE  OF  BUILDING

Property  and  equipment
------------------------
Property  and  equipment  consists  of  the  following:


<TABLE>
<CAPTION>
                                      December 31,    December 31,
                                     --------------  --------------
                                          2000            1999
                                     --------------  --------------
<S>                                  <C>             <C>
Machinery and equipment              $     205,000   $     303,000
Furniture and equipment                    719,000       1,438,000
Leasehold improvements                     796,000         910,000
                                         1,720,000       2,651,000
                                     --------------  --------------

Less - Accumulated depreciation and       (467,000)     (1,135,000)
amortization
                                     $   1,253,000   $   1,516,000
                                     ==============  ==============
</TABLE>


During  the  year  ended  December  31,  2000,  the company retired property and
equipment  with  an  original  cost basis of $1,040,000, these assets were fully
depreciated,  and  no  gain  or  loss  on  disposal  was  recorded.

Sale  of  Building
------------------

On  March  25,  1999, the Company completed the sale of its former 4Health, Inc.
corporate  facility  located  in  Boulder, Colorado (the "Property").  The sales
price  for  the  property  was $2,350,000, which consisted of $600,000 cash, the
assumption  of  a  $1,300,000 existing mortgage and the receipt of $450,000 note
receivable  secured  by  a deed on the property.  The Company recorded a gain on
the  sale  of the property of $481,000, which is included in other income on the
accompanying  consolidated  financial  statements.
The note was to be paid in monthly installments of $4,000, including interest at
a  rate of 7   % per annum, until March 1, 2002.  During the year ended December
31,  2000,  the  note  was  paid  off  in  full.

7.     CREDIT  FACILITY

As  of  December  31, 1998, the Company had outstanding borrowings of $1,000,000
under  a  revolving  line  of  credit with a bank. In February 1999  the Company
obtained a new line of credit with a different bank which was amended to provide
for  maximum  borrowings  up to $5,000,000 based on eligible accounts receivable
and  inventories.

On June 10, 1999, the Company secured a new loan from a lending institution that
provide up to $20 million dollars of financing. The credit facility, as amended,
consists  of  a  $13  million  term  loan  ("Term  Loan") and up to a $7 million
revolving  loan  ("Revolving  Loan"), subject to borrowing base availability and
compliance  with  certain  financial  and  other  covenants  and agreements.  At
closing,  $10,000,000  was  disbursed  to  repay  the  promissory note issued in
connection  with  the  acquisition  of  the  assets  of  Inholtra Naturals, Ltd.
(see  Note  5).

The  loans under the credit facility are secured by substantially all the assets
of  the Company.  Borrowings under the Term Loan bear interest at an annual rate
of  prime  plus  2.25  percent are paid monthly.  Borrowings under the Revolving
Loan  currently  bear interest at an annual rate of prime plus 1.75 percent, and
are  paid  monthly.  The  rates  are  subject to decrease based upon the Company
satisfying  certain  operating performance levels. The credit facility agreement
contains  certain  financial  and other covenants or restrictions, including the
maintenance  of  certain  financial ratios, limitations on capital expenditures,
restrictions  on acquisitions, limitations on the incurrence of indebtedness and
restrictions  on  dividends  paid  by  the  Company.

The  $13,000,000  Term  Loan,  as amended is payable in installments as follows:
$1,750,000  due  June 15, 2001, monthly payments of $194,000 commencing July 15,
2001  and  ending  July  15, 2002 and a final payment of $6,000,000 due July 30,
2002.  Mandatory  prepayments are required in the event the Company receives any
net  proceeds  from  insurance  claims,  assets  sales  and/or debt sales. Under
certain  circumstances  there  are  mandatory  prepayments  required from equity
sales.

Selected  information  regarding  borrowings under line of credit agreements for
the  years  ended  December  31,  2000,  1999  and  1998  follows:

<TABLE>
<CAPTION>
                                              2000         1999
                                           -----------  -----------
<S>                                        <C>          <C>
Average amount outstanding                 $5,341,000   $3,967,000
Maximum amount outstanding                 $6,353,000   $6,436,000
Weighted average interest rate during the
   Period                                        10.9%         9.1%
</TABLE>


Future  annual  payments  under  the Term Loan, as revised, are as follows as of
December  31:

<TABLE>
<CAPTION>
Year ended
December 31,               Amount
----------------------  ------------
<S>                     <C>
2001                    $ 2,917,000
2002                      7,361,000
                        ------------
                         10,278,000
Less - current portion   (2,917,000)
                        ------------
                        $ 7,361,000
                        ============
</TABLE>


8.     NOTES  PAYABLE

Notes  payable  consists  of  the  following:

<TABLE>
<CAPTION>
                                                                           Years ended December 31,
                                                                           2000                1999
                                                                --------------------------  ----------
<S>                                                             <C>                         <C>
Notes payable to three individuals, unsecured, bearing
interest at an annual rate of 6.0 percent, payable in monthly
 installments of principal and interest of approximately
 $26,000, due June 2000                                         $                      --   $ 155,000
Capital lease obligation (see Note 12)                                            102,000     123,000
                                                                --------------------------  ----------
                                                                                  102,000     278,000
                                                                --------------------------  ----------
Less current portion                                                              (23,000)   (176,000)

                                                                $                  79,000   $ 102,000
                                                                =========================   ==========
</TABLE>


Future annual payments under the notes payable and capital lease obligations are
as  follows  as  of  December  31,  2000:

<TABLE>
<CAPTION>
Year ended
December 31,   Amount
------------  --------
<S>           <C>
2001          $ 23,000
2002            26,000
2003            30,000
2004            23,000
              --------
              $102,000
              ========
</TABLE>


9.     WRITE-OFF  OF  INTANGIBLES

The  Company  acquired  ID  Technology  in  connection with a merger in 1996. ID
Technology  is used in angioplasty procedures. In the third quarter of 1999, the
Company  determined  that  the  value  of  such  technology  was  impaired  and,
therefore,  wrote-off  the  remaining  unamortized  balance  of  $390,000.  In
addition,  the  Company  wrote-off  $250,000  of  inventories  related  to  this
technology.  Total  charges  in  connection  with this impairment were $640,000.

10.      INCOME  TAXES

The  components  of the deferred income tax assets (liabilities) are as follows:

<TABLE>
<CAPTION>
                                     2000           1999
                                 -------------  ------------
<S>                              <C>            <C>
Allowance for doubtful accounts  $  1,722,000   $ 1,384,000
Inventory tax adjustment              114,000       484,000
Inventory reserve                     318,000       216,000
Warrants                              943,000       373,000
Accrued liabilities                   176,000       588,000
NOL carry forwards                 10,553,000     4,618,000
Other                                                    --
                                   13,826,000     7,663,000
                                 -------------  ------------
Valuation Allowance               (13,826,000)   (7,663,000)
                                 -------------  ------------
                                 $        -0-   $       -0-
                                 =============  ============
</TABLE>


At  December  31, 2000, the Company has federal net operating loss carryforwards
of approximately $28,600,000, expiring at various dates through 2019. Future use
of  these  net  operating  loss carry forwards may be limited subject to certain
provisions  of  the  Internal  Revenue  Code.

The  components  of the provision (benefit) for income taxes for the years ended
December  31,  2000,  1999  and  1998  are  as  follows:


<TABLE>
<CAPTION>
                                                     Years ended December 31,
                                                2000                1999       1998
                                      -------------------------  ----------  --------
<S>                                   <C>                        <C>         <C>
Current
  Federal                             $                      --  $(275,000)  $287,000
  State                                                   1,000      1,000    131,000
                                                          1,000   (274,000)   418,000
                                      -------------------------  ----------  --------
Deferred                                                     --         --    182,000
                                      -------------------------  ----------  --------
Provision (benefit) for income taxes  $                   1,000  $(274,000)  $600,000
                                      =========================  ==========  ========
</TABLE>


Differences  between  the  provision  for  income  taxes and income taxes at the
statutory  federal  income  tax  rate  are  as  follows:


<TABLE>
<CAPTION>
                                       December 31, 2000             December 31, 1999             December 31, 1998
                                      -------------------           -------------------           -------------------
<S>                                   <C>                  <C>      <C>                  <C>      <C>                  <C>
Income tax at statutory federal rate  $       (5,266,000)  (34.0%)  $       (3,852,000)  (34.0%)  $          550,000    34.0%

State income taxes                              (828,000)     5.0             (657,000)    (6.0)             131,000     8.1
S corporation income not taxed at C
corporation rates                                     --       --                   --       --             (374,000)  (23.1)
Permanent differences                            442,000      2.0              407,000      3.6              156,000     9.6
Use of net operating loss
 carryforwards                                        --       --                   --       --             (332,000)  (20.5)
hange in valuation  allowance                  6,027,000     38.9            3,835,000     34.0              469,000    29.0
Current losses not benefited                     405,000      2.6              690,000      6.1                   --      --
Reversal of 1998 excess provision                              --             (274,000)    (2.4)                  --      --
Other items, net                                (779,000)    (5.0)            (423,000)    (3.7)                  --      --
                                      -------------------  -------  -------------------  -------  -------------------  ------
                                      $            1,000    (0.0%)  $         (274,000)   (2.4)%  $          600,000    37.1%
                                      ===================  =======  ===================  =======  ===================  ======
</TABLE>


11.     COMMITMENTS  AND  CONTINGENCIES

CAPITAL  AND  OPERATING  LEASE  OBLIGATIONS  PAYABLE

The  Company  leases  its  facility  and  certain  property  and equipment under
long-term  operating  leases expiring at various dates through 2004. The Company
also  leases property and equipment under a capital lease.  Included in property
and  equipment  is  $132,000,  at  cost,  related  to  capital  leases.

The  future  minimum  lease  payments  at  December  31,  2000 under capital and
operating  leases  are  as  follows:


<TABLE>
<CAPTION>
                                               Capital     Operating
                                                Leases      Leases      Total
                                               =========  ==========  ==========
<S>                                            <C>        <C>         <C>
2001                                           $ 35,000   $  661,000  $  696,000
2002                                             35,000      640,000     675,000
2003                                             35,000      620,000     655,000
2004                                             23,000      269,000     292,000

Total future minimum lease payments             128,000   $2,190,000  $2,318,000

Less - amount representing interest at 12%      (26,000)
Present value of minimum capital lease pymts    102,000
                                               ---------
Less - current portion                          (23,000)
                                               $ 79,000
                                               =========
</TABLE>


Total  rental  expense  for the years ended December 31, 2000, 1999 and 1998 was
approximately  $674,000,  $588,000  and  $557,000,  respectively.

EMPLOYMENT  CONTRACTS

Upon  the  consummation  of  the Merger, both Mr. R. Lindsey Duncan and Mr. Klee
Irwin  entered  into substantially similar three-year employment agreements with
the  Company.  Mr.  Duncan was employed as Chairman of the Board and as a member
of  the  Executive  Committee  with  all  duties  and  responsibilities normally
associated  with  this  position.  Mr. Irwin was employed as the Chief Executive
Officer  and  as  a  member  of  the  Executive  Committee  with  all duties and
responsibilities normally associated with this position until April 20, 1999. On
that date, Mr. Irwin resigned, as Chief Executive Officer of Omni Nutraceuticals
and  his  employment  agreement  was  terminated  effective  April  20, 1999. In
connection  with  his resignation, the Board of Directors appointed him as Chief
Executive  Officer  of  HealthZone.com,  the  Company's  wholly owned subsidiary
("HealthZone").  In  October  of  1998  (as  revised  in June 1999), the Company
entered  into  an  agreement  to  hire  Mr. Louis Mancini as President and Chief
Operating  Officer  and,  subsequently,  Chief  Executive  Officer.

These  employment  agreements provided for: (i) annual salaries of $225,000, and
$300,000  for  Messrs.  Duncan and Mancini, respectively; (ii) the right for Mr.
Duncan  and  Mr. Mancini to receive an annual bonus based on certain performance
incentives.

On  March  12,  2000, Mr. Duncan agreed to resign from the Board of Directors of
the  Company and agreed to terminate his employment agreement. Also on March 12,
2000,  the  Board  of  Directors terminated Mr. Mancini's employment. Klee Irwin
replaced  Mr.  Mancini  as  President  and  Chief  Executive  Officer.

As a result of the March 12, 2000 employment realignments, the Company agreed to
extend  the exercise date of Lindsey Duncan's stock options to March 2007 and to
forgive  a  note  due  to  the  Company  from  Louis  Mancini  for  $175,000.

LITIGATION  AND  SETTLEMENTS

On  March  28,  2001  the  Company was notified that the Securities and Exchange
Commission  was  conducting  an  informal  inquiry  into  matters concerning the
Company for fiscal years ended  December 31, 1998 to 2000. The Company is unable
to  predict  at  this  time  the  outcome  of  this  informal  inquiry.

On January 23, 2001, the Labor Commissioner of the State of California entered a
judgment  against the Company in the amount of approximately $42,000 in a matter
entitled  Richard  F.  Lynch  v.  Omni Nutraceuticals, Inc., Labor Commissioner,
State of California, State Case No. 05-19487 1 CC.  The Company filed an appeal,
which  required posting a bond in the amount of the judgment, in the Los Angeles
County, California, Superior Court on February 14, 2001.  The appeal is entitled
In  the Matter of the Appeal of Omni Nutraceuticals, Inc, of the Order, Decision
or  Award  of  the Labor Commissioner, Richard F. Lynch, Real Party in Interest,
Case  No. BS067765.  The appeal involves a retrial of the matter in the Superior
Court.  The Company denies that any sums are due to Lynch.  The final outcome of
this case is uncertain, but appears unlikely that it will have a material impact
on  the  Company.

On  December  8,  2000,  the Company was sued in a case entitled Media Networks,
Inc.  v.  Omni Nutraceuticals, Inc., in Los Angeles County, California, Superior
Court,  Case  No.  BC  241503,  for amounts due on an open account, and services
rendered  pursuant  to  agreement.  The complaint seeks a total of approximately
$437,000, interest, attorneys fees, and collection and other costs.  The Company
has  filed  a  responsive  pleading denying liability.  Based on the information
currently  available,  the  Company  is  unable to evaluate the likelihood of an
unfavorable  outcome.

The  Company  received  a  demand  letter  dated February 20, 2001, from counsel
representing  the  majority  of  the  former  owners  of  Smart Basics, Inc., an
E-commerce  retailer  that  was  acquired on May 25, 2000, claiming, among other
things, misrepresentations in connection with the transaction in which the Smart
Basics'  shareholders exchanged their ownership interest in Smart Basics for the
Company's  common  stock.  The demand letter seeks unspecified relief or, in the
alternative,  rescission  of the transaction.  The letter threatens legal action
unless  the  matter  is  otherwise  resolved.  The  Company is investigating its
rights and obligations with respect thereto.  Based on the information currently
available,  the  Company is unable to determine the likelihood of an unfavorable
outcome  to  this  matter.  Smart  Basics,  together  with  the  Company's other
E-commerce  operations,  was  sold  to  Vitacost.com  on  February  2,  2001.

The  Company received an inquiry from the Los Angeles County and Alameda County,
California,  District  Attorney's  Offices  with respect to labeling of our "151
Bars"  and "Diet System 6 Bars."  Discussions and an exchange of information are
taking place with respect thereto.  The Company is hopeful that a resolution can
be  reached  without  litigation,  although  no  assurance  can  be  given.  If
settlement  is  not  reached,  an  action for false advertising, unfair business
practices  and other claims may be filed against the Company.  The Company is no
longer  selling  the  "Diet  System  6  Bars" that are a subject of the inquiry.
Based  on the information currently available, the Company is unable to evaluate
the  likelihood  of  an  unfavorable  outcome.

A complaint was filed against the Company on May 25, 2000, in an action entitled
Copelco  Capital,  Inc.  v.  Omni  Nutraceuticals,  Inc., in Los Angeles County,
California,  Superior  Court,  Case  No.  BC230578.  The  suit seeks recovery of
principal of $67,000, interest, taxes, fees, liens and late charges according to
proof,  attorney's fees and costs in connection with the Company's alleged lease
of  copier  equipment.  The  Company  has  filed  a  responsive pleading denying
liability  and raising affirmative defenses.  Based on the information currently
available,  the  Company  is unable to evaluate the likelihood of an unfavorable
outcome.

A  complaint  for  breach  of  contract  and common counts was filed against the
Company  on  November  30, 2000, in a case entitled Puretek Corporation vs. Omni
Nutraceuticals,  Inc.,  filed in Los Angeles County, California, Superior Court,
Case  No.  241059.  It  seeks recovery of $78,000, interest, attorney's fees and
costs.  The  Company  has  filed  a  responsive  pleading  denying liability and
raising affirmative defenses.  On December 28, 2000, the court granted Puretek's
Application  for  Right  to Attach Order and Writ of Attachment in the amount of
$68,000.  Based on the information currently available, the Company is unable to
evaluate  the  likelihood  of  an  unfavorable  outcome.

The  Company  has been sued in the Circuit Court for Baltimore County, Maryland.
The  title  of the case filed on October 6, 2000, is Gain, Inc., d/b/a/ American
Medtech  v.  Maryland  Urology  Group,  Inc.,  Veromax  International, LLC, Omni
Nutraceuticals,  Inc.,  Blackstone  International, LLC, Melvin J. Duckett, M.D.,
Larry  L.  Parks and Kyle P. Moore, Civil No. 03-C-00-010409.  The First Amended
Complaint filed November 6, 2000, alleges that the other defendants granted Gain
exclusive  rights  to  market  and  sell Veromax  to all U.S. pharmacy and chain
stores  with  greater  than twenty stores and that these defendants subsequently
assigned rights to the Company to market and sell Veromax  that were contrary to
the  rights  previously  granted  Gain.  It  claims  that the Company tortiously
interfered  with  Gain's  prospective  economic  advantage,  and published false
information to Gain's customers that disparaged its rights to distribute Veromax
, in the Company's efforts to market and sell Veromax  and seeks $250,000,000 in
compensatory  damages,  $25,000,000 in punitive damages, interest and costs.  It
also  seeks  injunctive  relief  prohibiting  the  Company from interfering with
Gain's  marketing  efforts  by  selling  or offering to sell Veromax  to certain
identified  pharmacy  chains  and  to  account for sales made to said identified
pharmacy  chains.  The Company has filed a responsive pleading denying liability
and  raising  affirmative defenses and intends to vigorously defend this action.
Based  on the information currently available, the Company is unable to evaluate
the  likelihood  of  an  unfavorable  outcome.

Pursuant  to  a Settlement, Termination and Mutual Release Agreement dated April
13, 2000, 363,636 additional shares were issued in settlement of a lawsuit filed
on  December  23,  1999  by  the  former  owners of HVE.  In connection with the
settlement, all other rights and obligations that existed under the February 15,
1999  Merger  Agreement  were  terminated.  The  fair  value of these additional
shares ($1,200,000 based on the fair value at the time of the shares issued) has
been  recorded as an expense in the accompanying statement of operations for the
year  ended December 31, 1999.  Due to the issuance of these shares in 2000, the
Company  then  reclassified the contingent shares to additional paid in capital.

In March 2000, pursuant to a termination and settlement agreement, the new Chief
Executive  Officer  transferred  1,000,000  shares of his personally held common
stock  to  an  ex-officer of the Company.  The shares were valued at $1,720,000,
which  was  the  fair  value  of  the  stock  at  the  date  of  the  agreement.

OTHER  LITIGATION

From  time  to time the Company may become a party to legal proceedings that are
routine  litigation  incidental  to its business.  The Company believes that the
likely outcome of such litigation will not have a material adverse effect on its
business  or  results  of  operations.

12.     SHAREHOLDERS'  INVESTMENT

PREFERRED  STOCK

The  Company has authorized 5,000,000 shares of Preferred Stock. Under the terms
of  the  Articles  of  Incorporation, the Board of Directors may issue Preferred
Stock for any proper corporate purpose. In approving any issuance, the Board has
broad  authority  to  determine  the  rights, privileges, and preferences of the
Preferred  Stock,  which  may  be  issued  as one or more classes or series. The
rights,  privileges  and  preferences  may include voting, dividend, conversion,
redemption, participation and liquidation rights. As of December 31, 2000, 3,000
shares  of Series A Convertible Preferred Stock were outstanding; as of December
31,  1999  and  1998,  no  Preferred  Stock  was  issued  or  outstanding.

On  October  27,  2000, the Company entered into a Securities Purchase Agreement
with  several  "accredited  investors" ("Holders") whereby the Holders purchased
3,000  shares of the Company's newly-issued Series A Convertible Preferred Stock
resulting  in  gross  proceeds  of  $3,000,000  to the Company. In addition, the
Buyers  received warrants to purchase up to 600,000 shares of common stock at an
exercise  price  of  approximately  $0.96  per  share.  The Company received net
proceeds  from this transaction of $2,720,000, after fees, costs and expenses of
issuance.  An  additional  50,000 warrants were issued to an intermediary on the
same  terms  as  were  granted to the Buyers. The Preferred Stock is convertible
into  common  stock on the following basis: The number of shares of common stock
to  be  issued is equal to the stated value of the number of shares of Preferred
Stock  being  converted,  together  with  any accrued dividends (the "Additional
Amount")  thereon,  divided  by  the "Conversion Price". The Conversion Price is
equal  to  the  lesser  of  (i) 115% of the average of the two lowest bid prices
quoted on the exchange where the Company's common stock is traded during the ten
days  preceding  the  closing  or, (ii) 80% of the average of the two lowest bid
prices of the common stock.  Related to this issuance of the Company's preferred
stock,  the  Company  recorded an imputed, preferred dividend, which represented
the  difference  between the trading price of the Company's common stock and the
conversion  rate  most beneficial to the preferred stock holder, at the date the
preferred  stock  was  issued.  The  dividend  amounted  to $3,168,000, which is
reflected as an increase in the net loss available to common shareholders on the
accompanying  statement  of  operations.

The preferred stock may be redeemed by the Company at any time after closing, at
a  price  per share equal to the greater of (a) $1,400 plus an additional amount
defined  as 6% of the face amount of the stock being redeemed, multiplied by the
number  of  days  since  closing, divided by 365; or (b) the market price of the
common  stock  into which the preferred stock could be converted, as of the date
of  the  redemption.  On  the fourth anniversary of the issue date, any existing
preferred  stock  must  be  redeemed  or converted into common stock, subject to
certain  provisions.

Pursuant  to  the preferred stock securities purchase agreement, the Company was
required  (a)  not  to have any suspension of trading of its common stock on the
NASDAQ,  and  (b)  file,  within  30  days  of the closing of the transaction, a
registration  statement  to  cover  the  underlying shares and warrants and such
shares  issuable  pursuant  to the anti-dilution provisions of the agreement and
certain  other  requirements.  The Company is currently in default of several of
these  provisions.

On  January  24,  2000,  the Company completed an equity transaction whereby the
Company  issued  2,000,000  shares of a 5% Convertible Preferred Stock and seven
year  warrants  to purchase up to an aggregate of 775,000 shares of common stock
at  an  exercise  price of $2.25 per share, subject to adjustment. The aggregate
purchase  price  for the Preferred Shares and warrants was $3,000,000, including
$100,000  allocated  to  the  purchase  of  the warrant. In connection with this
financing,  HealthZone  also  issued  222,222  shares  of  its  common  stock,
representing  approximately  10% of the then outstanding number of shares, and a
seven-year  warrant  to  purchase  up  to  37,000 shares of its common stock for
$1,000,000.  On  March  24,  2000,  all  of  these  issued Preferred Shares were
converted  into  2,016,438  shares of common stock.  Related to the issuance and
conversion  of  the  Company's  preferred stock, the Company recorded an imputed
preferred  dividend,  which represented the difference between the trading price
of  the  Company's  common stock and the conversion rate of the preferred stock.
The  dividend  amounted  to $1,950,000, which is reflected as an increase in the
net  loss  available  to  common  shareholders  on the accompanying statement of
operations.

COMMON  STOCK

On  October  30,  2000  the Company entered into an agreement with an investment
banking  firm  to serve as a financial consultant to the Company.  The agreement
calls  for  the consultant to provide certain services to the Company related to
the location and raising of up to $20,000,000 through the placement of preferred
stock.  As  compensation  for  entering  into  the agreement, the Company issued
150,000  shares  of  its  common  stock  and  recorded a charge to operations of
$205,000.  The  agreement  requires that the Company pay to the consultant a fee
of  10%  of  the gross proceeds of any monies raised by the consultant, and a 2%
non-accountable expense allowance to be paid in common stock.  Additionally, the
consultant  is  to  receive  warrants equal to 10% of the securities sold in the
offering,  exercisable  at  100%  of  the  offering  price.

During  the year ended December 31, 2000, as compensation, the Company issued to
officers  and  directors  and  one  former  director a total of 55,000 shares of
common  stock. The accompanying financial statements include a charge of $72,000
to  reflect  this  issue  of  shares.

On  March  12, 2000, the Company entered into a two year agreement with Liviakis
Financial  Communications, Inc. ("LFC") and, in connection therewith, authorized
the  issuance  of  1,200,000  restricted  shares  of  common  stock  to  LFC  in
consideration  of,  and  as  a  retainer  and prepayment for, the services to be
rendered  to  the Company.  Under the terms of the agreement, the Company issued
800,000  shares, the balance of 400,000 shares will be due and payable in fiscal
year 2001 depending on whether the Company continues to retain LFC. On March 27,
2000,  the  Company  completed  a  private  placement  of its securities through
investors  provided  by LFC whereby 700,000 shares of common stock were sold for
an  aggregate  purchase  price  of $2,100,000. The original shares issued to LFC
have  been considered issued in connection with this placement, and the proceeds
allocated  to  the  aggregate  shares  issued.

During  the  year  ended  December  31,  2000,  the Company issued an additional
215,500  shares  of  common stock to various vendors for services rendered.  The
aggregate  value  recorded  by  the  Company  was  approximately $378,000, which
represents either the fair market value of the shares, or the services rendered,
whichever  was  more  readily  determinable.  These  amounts  were recognized as
expenses  as  the  services  were  performed.

In  separate  agreements,  several  of  the  Company's trade creditors agreed to
convert  a portion of their debt in exchange for common stock of the Company and
to accept a substantially reduced cash payment for the balance of the obligation
of  the Company. During the year ended December 31, 2000, $1,431,000 of accounts
payable  was  converted  in  exchange for 599,905 shares of common stock.  These
conversions  were  performed  at a rate consistent with the trading price of the
Company's  common  stock  at  the  date  of  the  conversion.

On January 24, 2000 the Company executed a consulting agreement with a financial
consulting  firm  to assist the Company in marketing its common stock in Europe.
The  agreement  was a one-year agreement that called for the issuance of 560,000
shares  of  common  stock.  The fair value of the stock on the day the agreement
was  executed  was  approximately  $960,000,  which was charged to operations as
consulting  expense.

In  August  1999,  the  Company  entered  into  a  three-year  agreement with an
individual  to  be  the spokesperson for its Inholtra product line.  The Company
issued  15,000  shares  of  common stock and recorded compensation of $36,000 in
connection  with the issuance of these shares.  In addition, the Company granted
this  individual  an  option  to  purchase  75,000  shares  of  common  stock.
In  October  1999,  the  Company  issued  13,000  shares  of common stock to its
previous  facility  landlord  in  lieu  of  cash  for one month's rent due.  The
Company  recorded  expense  of  $19,000 in connection with the issuance of these
shares.

In  October  1999,  a  former  Chief  Executive  Officer  and shareholder of the
Company  returned  941,436  shares  to  the Company as a contribution to capital

WARRANTS

On April 20, 2000, the Company entered into a one year consulting agreement with
a financial advisor. The agreement calls for the issuance of options to purchase
30,000  shares of common stock at $3.86 per share. The options vest 7,500 at the
end  of  each  three months after the initiation of the contract. Related to the
agreement,  the  Company has recorded $78,000 of consulting fees, which is being
amortized  as  consulting expense over the term the services are being provided.

On  June  28,  2000  the  Company  entered  into  a consulting agreement with an
investment  banking  firm  to perform certain financial consulting services. The
agreement  called  for the issuance of 300,000 options to purchase the Company's
common  stock  at $4.00 per share and covered a term of six months.  The options
were  valued  at $747,000 and were amortized as consulting expense over the term
of  the  agreement.

In  1997,  the  Company  entered  into a three year consulting agreement with an
investment  banking  firm.  In  consideration  for  the consulting services, the
Company issued the investment banking firm warrants to purchase 1,000,000 shares
of  the  Company's  common  stock  at  an  exercise price of $6.00 per share and
additional  warrants  to  purchase 250,000 shares of common stock at an exercise
price  of  $4.00 per share. The warrants are exercisable for five years from the
date  of  issuance.  The  Company  recorded  professional  services  expense  of
$194,000,  $388,000  and  $275,000  the  years ended December 31, 2000, 1999 and
1998,  respectively,  in connection  with the fair value of these warrants based
upon  the  Black  Scholes  pricing model.  As of December 31, 2000, all warrants
were  still  outstanding.

During  the  year  ended  December  31,  1999,  the  Company  entered  into  a
consulting  agreement  with  an  advisor.  In  consideration  of  the consulting
services,  the Company issued to the advisor warrants to purchase 250,000 shares
of  the  Company's  common  stock  at  an exercise price of $4.75 per share. The
Company  recorded  professional services expense of $415,000 in the year 1999 in
connection  with  the  fair  value  of  these  warrants  based  upon  the  Black
Scholes  pricing  model.  These  warrants  were  cancelled  subsequent  to
year-end.

OPTIONS

In  1996,  the  Company  adopted  the  Long-Term  Stock  Incentive Plan (LTSIP).
This  plan  was amended on December 22, 1999.  Under the terms of the LTSIP, the
Company  is authorized to issue incentive and non-qualified stock options to its
directors,  officers,  key  employees  and  consultants totaling up to 4,500,000
shares  of  common stock. At December 31, 1999, 553,402 shares are available for
future  grant  under this plan. Options are generally granted at exercise prices
not  less than the fair market value on the date of grant and expire from two to
seven  years  after the date of grant. Options granted under this plan vest over
varying  terms  ranging  from  immediate  vesting  to  seven  years.

In  November 1998, the Company's Board of Directors approved a stock option pool
authorizing management of the Company to make discretionary grants up to 500,000
shares.

A  summary  of  the  Company's  outstanding  options  and  activity  follows:


<TABLE>
<CAPTION>
                                                        EXERCISABLE
                                                        -----------
                                         WEIGHTED                WEIGHTED
                                          AVERAGE                 AVERAGE
                             NUMBER OF   EXERCISE   NUMBER  OF   EXERCISE
                              OPTIONS      PRICE      OPTIONS      PRICE
                            -----------  ---------  -----------  ---------
<S>                         <C>          <C>        <C>          <C>

Balance, January 1, 1998       742,643   $    4.57      585,516  $    4.24
--------------------------  -----------  ---------  -----------  ---------


Granted                      1,853,860   $    5.22
--------------------------  -----------  ---------
Exercised                     ( 38,341)  $    4.51
--------------------------  -----------  ---------
Cancelled                     (111,991)  $    5.46
--------------------------  -----------  ---------
Balance, December 31, 1998   2,446,171   $    5.01      675,253  $    4.49
--------------------------  -----------  ---------  -----------  ---------


Granted                      3,267,500   $    2.27
--------------------------  -----------  ---------
Exercised                      (19,670)  $    4.33
--------------------------  -----------  ---------
Cancelled                   (1,747,403)  $    5.03
--------------------------  -----------  ---------
Balance, December 31, 1999   3,946,598   $    3.58    1,991,904  $    3.34
--------------------------  -----------  ---------  -----------  ---------

Granted                      3,542,499   $    2.20
--------------------------  -----------  ---------
Exercised                      (98,830)  $    2.92
--------------------------  -----------  ---------
Cancelled                   (3,351,115)  $    2.87
--------------------------  -----------  ---------
Balance, December 31, 2000   4,039,152   $    3.01    1,923,394  $    3.19
--------------------------  ===========  =========   ==========  =========

</TABLE>


Weighted  average  fair  value  of  all  options  granted during the years ended
December  31, 2000, 1999 and   1998  were $2.90, $1.23, and $1.99, respectively.

The  following  table  summarizes  information  about the options outstanding at
December  31,  2000:


<TABLE>
<CAPTION>

                            Weighted   Weighted                Weighted
Range of         Number      Average    Average                 Average
Exercise       Outstanding  Exercise   Remaining  Exercisable  Exercise
Prices         at 12/31/00    Price      Life     at 12/31/00    Price
-------------  -----------  ---------  ---------  -----------  ---------
<S>            <C>          <C>        <C>        <C>          <C>
1.00 - $1.99      100,000  $    1.53  9.1 years      100,000  $    1.53
-------------  -----------  ---------                          ---------
2.00 - $2.99    2,027,999  $    2.07  9.4 years      830,200  $    2.11
3.00 - $3.99      851,688  $    3.43  8.8 years      539,646  $    3.68
4.00 -$4.99       783,109  $    4.27  9.3 years      265,192  $    4.56
5.00 -$7.25       256,356  $    5.75  8.3 years      186,356  $    5.55
               -----------  ---------             -----------  ---------
                4,039,152  $    3.01               1,921,394  $    3.19
               ==========   =========             ===========  =========
</TABLE>


The  Company  has  elected  to  continue  to  measure  compensation  costs
associated  with  its  stock option plan under APB No. 25, "Accounting for Stock
Issued  to  Employees"  and comply with the pro forma disclosure requirements of
SFAS No. 123. Had the Company applied the fair value based method of accounting,
which  is  not required, to all grants of stock options, under SFAS No. 123, the
Company  would  have  recorded  additional  compensation  expense  and  computed
proforma  net  income  (loss)  and  pro  forma earnings (loss) per share amounts
as  follows  for  the  years  ended  December  31,  2000,  1999,  and  1998  as
follows:

<TABLE>
<CAPTION>
                                                       Years ended December 31,
                                                  2000                 1999         1998
                                       --------------------------  -------------  --------
<S>                                    <C>                         <C>            <C>
Additional compensation expense        $                 143,000   $  3,128,000   $672,000
Pro forma net income (loss)                          (21,753,000)   (14,183,000)   346,000
                                       ==========================  =============  ========
Pro forma earnings (loss) per share:
   Basic                               $                   (0.71)  $      (0.50)  $   0.01
   Diluted                             $                   (0.71)  $      (0.50)  $   0.01
</TABLE>


These  pro  forma  amounts  were  determined by computing the fair value of each
option  on  its grant date using the Black-Scholes option-pricing model with the
following  assumptions:


<TABLE>
<CAPTION>
                                         Years Ended December 31,
                                    2000               1999        1998
                         -------------------------  --------  -------------
<S>                      <C>                        <C>       <C>
Risk free interest rate              6.00%          6.03%     4.34% - 5.55%
Expected life                      1-2 years       4 years      2-7 years
Volatility                          100.00%         90.00%       60.00%
Expected dividend yield  None                       None          None
</TABLE>


13.     RELATED  PARTY  TRANSACTIONS

During  the  year  ended  December  31, 1999, a bonus of $50,000 was paid to Mr.
Lindsey  Duncan,  Chairman  of  the  Board.

On  October  8,  1999,  the  Company  and  Mr.  Klee  Irwin  entered  into  a
settlement  agreement  (the  'Settlement Agreement') in order to resolve certain
mutual  claims  that had arisen between the Company and Mr. Irwin. Subsequent to
December  31, 1999,  the  Settlement  Agreement  and  all  ancillary  agreements
were  terminated.

On  or about October 8, 1999, Mr. Irwin made a capital contribution of $305,000,
and  returned 941,436 shares of Omni Nutraceuticals common stock to the Company.

14.     SUBSEQUENT  EVENTS

Vitacost  purchase  agreement
-----------------------------

On  February  2,  2001,  the  Company  entered  into and simultaneously closed a
Purchase  Agreement  with Vitacost.com, Inc ("Vitacost"), an on-line marketer of
vitamins  and  nutritional products, whereby Vitacost acquired substantially all
of  the  operating  assets  of  the  Company's combined E-commerce operations in
exchange  for  6,800,000 shares of Vitacost common stock. The agreement contains
an  optional  repurchase  right giving the Company, at any time after four years
from  the  closing,  the  right  to  demand  Vitacost repurchase their stock for
$3,400,000  in cash or, at their option, a 60 month note requiring equal monthly
payments  of$57,000.  The  agreement also contains an optional redemption right,
giving  Vitacost  the  right to redeem their stock, at any time up to four years
from  the closing. If this option is exercised between the closing and the first
anniversary thereof, the price is $7,000,000, which compounds at the rate of 10%
for  each  year  up  to  $9,317,000 on the fourth anniversary of the closing. In
addition, the Purchase Agreement provides Vitacost with a right of first refusal
in  the event that the Company desires to transfer the shares of Vitacost common
stock,  other  than  to  an  affiliate,  or  in connection with a liquidation or
spin-off  distribution  to  our  stockholders,  or  an  initial public offering.

Further,  in  connection with the Purchase Agreement, the Company entered into a
non-competition  agreement  with  Vitacost,  whereby  the  Company agreed not to
compete with Vitacost in the business of reselling other companies' vitamins and
supplements on a retail basis via the internet and mail order catalogues for the
period  beginning on the date of the non-competition agreement and ending on the
last to occur of: (i) the one-year anniversary of the non-competition agreement;
or  (ii) the date that is six months after the Company's resignation, removal or
other  termination  from  Vitacost's  board  of  directors.  The non-competition
agreement does not preclude the Company from engaging in the business of selling
its  own  products  including,  but  not  limited  to,  vitamins and supplements
manufactured  by  the  Company through any means, including, without limitation,
via  the  internet  and  mail  order  catalogues.

The  stock  the  Company  received  represents  approximately 19.9% of the total
Vitacost  common  stock  outstanding  and,  accordingly,  the Company intends to
record  this  investment  on the cost basis. As long as the Company continues to
hold  at  least  a 10% interest, the Company will have one of the five available
seats on the Vitacost Board. Additionally, the Company has certain anti-dilution
rights  in  the  event  Vitacost  raises  additional  equity.