As filed with the Securities and Exchange Commission on December 20, 2004

                                                     Registration No. 333-118044
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                           AMENDMENT NO.1 TO FORM SB-2

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933



                                                                               
                   DELAWARE                         NUWAVE TECHNOLOGIES, INC.                          22-3387630
(State or Other Jurisdiction of Incorporation       (Name of Registrant in Our            (I.R.S. Employer Identification No.)
               or Organization)                              Charter)

                                                               3663
        1416 MORRIS AVENUE, SUITE 207              (Primary Standard Industrial              1416 MORRIS AVENUE, SUITE 207
           UNION, NEW JERSEY 07083                 Classification Code Number)                  UNION, NEW JERSEY 07083
  (Address and telephone number of Principal                                                         (908) 851-2470
   Executive Offices and Principal Place of                                           (Name, address and telephone number of agent
                  Business)                                                                            for service)


      Approximate  date of commencement of proposed sale to the public:  AS SOON
AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.

      If any of the securities  being  registered on this Form are to be offered
on a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act
of 1933 check the following box. |X|

      If this Form is filed to register  additional  securities  for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering. |_|

      If this Form is a  post-effective  amendment filed pursuant to Rule 462(c)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering. |_|

      If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|



                                        CALCULATION OF REGISTRATION FEE
======================================================================================================================
                                                                                       PROPOSED
                                                                                       MAXIMUM
                                                                  PROPOSED MAXIMUM     AGGREGATE        AMOUNT OF
         TITLE OF EACH CLASS OF              AMOUNT TO BE          OFFERING PRICE      OFFERING        REGISTRATION
       SECURITIES TO BE REGISTERED            REGISTERED            PER SHARE(1)       PRICE(1)           FEE(2)
----------------------------------------------------------------------------------------------------------------------
                                                                                           
Common stock                                  130,690,033                $0.085       $11,108,653        $1,407.47
----------------------------------------------------------------------------------------------------------------------



(1)   Estimated  solely for the  purpose of  calculating  the  registration  fee
      pursuant to Rule 457(c) under the Securities Act of 1933. For the purposes
      of this  table,  we have used the  average  of the  closing  bid and asked
      prices  as of the  date  the fee  was  paid  and  first  submitted  to the
      Commission.


(2)   Fee previously paid.



      THE REGISTRANT HEREBY AMENDS THIS  REGISTRATION  STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER  AMENDMENT  WHICH  SPECIFICALLY  STATES  THAT  THIS  REGISTRATION
STATEMENT SHALL  THEREAFTER  BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES  ACT OF 1933 OR UNTIL THIS  REGISTRATION  STATEMENT  SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION,  ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.





                                  Subject to completion, dated December 20, 2004


                            NUWAVE TECHNOLOGIES, INC.

                       130,690,033 SHARES OF COMMON STOCKS

         This  prospectus  relates  to the sale of up to  130,690,033  shares of
NuWave's common stock by certain persons who are or will become  stockholders of
NuWave. Please refer to "Selling  Stockholders"  beginning on page 12. NuWave is
not selling any shares of common stock in this offering and  therefore  will not
receive any proceeds from this offering. We will, however, receive proceeds from
the sale of common stock under the Standby Equity  Distribution  Agreement.  All
costs associated with this registration will be borne by us

         The  shares of  common  stock  are  being  offered  for sale on a "best
efforts"  basis  by  the  selling  stockholders  at  prices  established  on the
Over-the-Counter  Bulletin Board during the term of this offering.  There are no
minimum purchase  requirements.  These prices will fluctuate based on the demand
for the shares of common stock.


         Our  common  stock is quoted  on the  Over-the-Counter  Bulletin  Board
maintained by the NASD under the symbol  "NUWV." On November 22, 2004,  the last
reported sale price of our common stock was $0.065 per share.


         THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.

         PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 7.

         THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES  REGULATORS
HAVE NOT APPROVED OR  DISAPPROVED  OF THESE  SECURITIES,  OR  DETERMINED IF THIS
PROSPECTUS  IS TRUTHFUL OR  COMPLETE.  ANY  REPRESENTATION  TO THE CONTRARY IS A
CRIMINAL OFFENSE.

              The date of this prospectus is ___________ ___, 2004.




                                TABLE OF CONTENTS




                                                                                              
PROSPECTUS SUMMARY................................................................................2
THE OFFERING......................................................................................4
SUMMARY CONSOLIDATED FINANCIAL INFORMATION........................................................5
RISK FACTORS......................................................................................7
FORWARD-LOOKING STATEMENTS.......................................................................11
SELLING STOCKHOLDERS.............................................................................12
USE OF PROCEEDS..................................................................................15
DILUTION.........................................................................................16
STANDBY EQUITY DISTRIBUTION AGREEMENT............................................................18
PLAN OF DISTRIBUTION.............................................................................20
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........................................22
DESCRIPTION OF BUSINESS..........................................................................33
MANAGEMENT.......................................................................................36
DESCRIPTION OF PROPERTY..........................................................................39
LEGAL PROCEEDINGS................................................................................41
PRINCIPAL STOCKHOLDERS...........................................................................42
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................43
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER SHAREHOLDER MATTERS....44
DESCRIPTION OF SECURITIES........................................................................45
EXPERTS..........................................................................................46
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.......................................................................................46
LEGAL MATTERS....................................................................................47
HOW TO GET MORE INFORMATION......................................................................47
FINANCIAL STATEMENTS............................................................................F-1




         We intend to distribute to our stockholders  annual reports  containing
audited financial statements.  Our audited consolidated financial statements for
the year December 31, 2003, were contained in our Annual Report on Form 10-KSB.


                                       i


                               PROSPECTUS SUMMARY

                                    OVERVIEW


         Since its  formation  in 1995,  NuWave has been a  technology  company,
focused upon the development and marketing of technology and technology products
related to enhancing image and video output. Over the last three years, NuWave's
annual sales have declined from $505,000 in 2001, to $286,000 in 2002 to $20,000
in 2003 and no sales in the nine month period ended  September  30, 2004,  as it
has  had  difficulty securing  buyers  for  its  technology  products  in a very
competitive  market  environment.  NuWave has incurred net losses of $4,273,000,
$2,674,000,  $790,000  and  $949,000  in 2001,  2002 and 2003,  and for the nine
months ended September 30, 2004, respectively.

         During  2003,  in  conjunction  with a  restructuring  with the primary
lender, all of NuWave's officers and employees  resigned or were terminated.  On
September  10, 2003,  NuWave  entered into an agreement  with a lender,  Cornell
Capital  Partners,  L.P.,  to settle a default on  indebtedness  owed to Cornell
Capital  Partners,  L.P.  This  indebtedness,  consisting  of notes  payable  of
$484,000 and accrued interest of approximately  $93,000, was settled in full for
the net sum of $460,000 on September 10, 2004.


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

         NuWave intends to broaden its base of products and investments in order
to diversify the product  portfolio  into a broad  spectrum of industries and to
improve  profitability.  In 2003 and in the first quarter of 2004, NuWave formed
new  subsidiaries for the purpose of acquiring and holding real estate and other
assets.  On  December  22,  2003,  NuWave,  through a wholly  owned  subsidiary,
acquired  vacant land that it intends to develop into a community  for residents
over  the  age of 55.  On  April  30,  2004,  NuWave,  through  a  wholly  owned
subsidiary,  purchased  a  parcel  of  residential  real  estate  for  $122,000,
utilizing  approximately  $113,000  in cash and the  application  of deposits of
approximately  $9,000.  NuWave  intends  to  redevelop  and then later sell this
property.

                                  GOING CONCERN


         NuWave did not have any revenues in the nine months ended September 30,
2004.  NuWave  incurred  a net loss of  approximately  $949,000  during the nine
months ended  September  30, 2004,  resulting in a  stockholders  deficiency  of
approximately  $1,999,000.  These matters raise substantial doubt about NuWave's
ability to continue as a going concern. The accompanying  consolidated financial
statements have been prepared on a going concern basis,  which  contemplates the
realization  of assets and  satisfaction  of liabilities in the normal course of
business. These consolidated financial statements do not include any adjustments
relating to the recovery of the  recorded  assets or the  classification  of the
liabilities  that might be  necessary  should  NuWave be unable to continue as a
going concern.

          Management has taken a number of actions to lower costs and to improve
NuWave's liquidity.  NuWave has substantially reduced its cash flow requirements
through significant  reductions in payroll and various other operating expenses.
NuWave intends to remain in the technology business.

           In August 2004,  NuWave raised  $1,783,549  through the issuance of a
convertible  debenture  related to  NuWave's  largest  real estate  holding.  In
November 2004,  NuWave repaid $298,000 of the $1,783,549  proceeds received from
this convertible debenture. In September 2004, NuWave repaid in full for the net
sum of $460,000 to Cornell  Capital  Partners,  L.P. its  indebtedness  of notes
payable - related  party,  consisting  of  principal of $484,000 and interest of
$93,000 through the repayment date. In addition,  management's plans include the
raising of cash  through the  issuance of debt or equity  although  there are no
assurances that NuWave will be successful.  NuWave  continues to require funding
by and the  financial  support  of Cornell  Capital  Partners,  L.P.  Management
intends to monitor  spending toward  development of the land holdings  carefully
until such time as all required new funding is secured.



                                       2


                                    ABOUT US

         Our  principal  office is located  at 1416  Morris  Avenue,  Suite 207,
Union, New Jersey 07083. Our telephone number is (908) 851-2470.



                                       2



                                  THE OFFERING

         This  offering  relates to the sale of common stock by certain  persons
who are stockholders of NuWave.

         Pursuant to the Standby Equity Distribution  Agreement,  we may, at our
discretion, periodically issue and sell to Cornell Capital Partners, L.P. shares
of common stock for a total purchase price of up to $30 million. Note that at an
assumed price of $0.065 per share we would receive gross  proceeds of $3,978,500
or  $26,021,500  less than is available  under the Standby  Equity  Distribution
Agreement.  In order to have  access  to the full  amount  available  under  the
Standby  Equity  Distribution  Agreement,  our stock  price  would  have to rise
substantially to approximately  $0.45 per share or we would need to register and
issue an additional approximately 400 million shares of common stock.

         Cornell Capital Partners,  L.P. may purchase the shares of common stock
for a 1%  discount to the lowest  volume  weighted  average  price of our common
stock for the 5 days  immediately  following  the notice date.  Cornell  Capital
Partners,  L.P.  intends to sell any shares  purchased  under the Standby Equity
Distribution  Agreement at the then prevailing market price. Among other things,
this  prospectus  relates to the shares of common  stock to be issued  under the
Standby Equity Distribution Agreement.


COMMON STOCK OFFERED                            130,690,033  shares  by  selling
                                                stockholders.  This would  equal
                                                98.4% of our outstanding  common
                                                stock on the date hereof, if all
                                                of  these   shares  were  to  be
                                                issued.

OFFERING PRICE                                  Market price

COMMON STOCK OUTSTANDING BEFORE THE OFFERING    2,062,013 shares

USE OF PROCEEDS                                 We will not receive any proceeds
                                                of  the  shares  offered  by the
                                                selling    stockholders.     Any
                                                proceeds  we  receive  from  the
                                                sale of common  stock  under the
                                                Standby   Equity    Distribution
                                                Agreement  will be used for real
                                                estate  development   activities
                                                and  general   working   capital
                                                purposes. See "Use of Proceeds."

RISK FACTORS                                    The  securities  offered  hereby
                                                involve  a high  degree  of risk
                                                and    immediate     substantial
                                                dilution. See "Risk Factors" and
                                                "Dilution."

OVER-THE-COUNTER BULLETIN BOARD SYMBOL          NUWV



                                       4



                   SUMMARY CONSOLIDATED FINANCIAL INFORMATION
                ($ in thousands, except share and per share data)



                                               YEAR ENDED DECEMBER 31,   NINE MONTHS ENDED SEPTEMBER 30,
                                                 2003           2002           2004           2003
                                             -----------    -----------    -----------    -----------
STATEMENTS OF OPERATION DATA:                                                     (unaudited)

                                                                              
Net sales                                    $        20    $       286    $        --    $        19
Cost of sales                                          5            390             --              5
                                             -----------    -----------    -----------    -----------
    Gross profit (loss)                               15           (104)            --             14
Operating expenses:

    General and administrative                       958          2,071            572            631
    Research and development                         134            681             --            127
                                             -----------    -----------    -----------    -----------
Total operating expenses                           1,092          2,752            572            758
    Loss from operations                          (1,077)        (2,856)          (572)          (744)
Gain on forgiveness of debt                          347             --             --            265
Interest income                                       --              5             --             --
Interest expense                                     (55)            (5)          (377)           (21)
                                             -----------    -----------    -----------    -----------
Loss before (provision for) benefit from
    income taxes                                    (785)        (2,856)          (949)          (500)
    (Provision for) benefit from income
       taxes                                          (5)           182             --             --
                                             -----------    -----------    -----------    -----------
    Net loss                                 $      (790)   $    (2,674)   $      (949)   $      (500)
Deemed dividend - redemption premium on
    convertible preferred stock                      (19)            --             --             --
                                             -----------    -----------    -----------    -----------
Net loss applicable to common stockholders   $      (809)   $    (2,674)   $      (949)   $      (500)
                                             ===========    ===========    ===========    ===========
Weighted average number of common shares
    outstanding                                1,455,365        285,315      1,961,240      1,267,079
                                             ===========    ===========    ===========    ===========
    Basic and diluted net loss per common
      share                                  $     (0.56)   $     (9.37)   $     (0.48)   $     (0.39)
                                             ===========    ===========    ===========    ===========
Comprehensive loss:

Net loss                                     $      (809)   $    (2,674)   $      (949)   $      (500)
Other comprehensive loss net of income
    taxes:

    Unrealized losses on marketable
      securities                                      --             --            (45)            --
                                             -----------    -----------    -----------    -----------
Comprehensive loss                           $      (809)   $    (2,674)   $      (994)   $      (500)
                                             ===========    ===========    ===========    ===========



                                       5


                   SUMMARY CONSOLIDATED FINANCIAL INFORMATION
                                ($ in thousands)




                                            SEPTEMBER 30, 2004 DECEMBER 31, 2003
                                                -----------      -----------
                                                (unaudited)
                                                           
CONSOLIDATED BALANCE SHEET DATA:

Cash and cash equivalents                       $       822      $       119
Marketable securities - available-for-sale               85               --
Inventory                                                 1                1
                                                -----------      -----------
    Total current assets                                908              120
Property and equipment, net                              22                4
Land held for development and sale                    3,328            2,970
Deferred tax asset                                       --              225
                                                -----------      -----------
    Total assets                                $     4,258      $     3,319
                                                ===========      ===========
Accounts payable, accrued interest and
    accrued liabilities                         $       101      $       170
Current portion of note payable-related
    party                                               198               --
                                                -----------      -----------
    Total current liabilities                           299              170
                                                -----------      -----------
Notes payable - related party                            --              484
Note payable - related party                          1,202            1,400
Convertible debentures - related party,
    net of unamortized discounts of $697
    and $866, respectively                            2,603            2,634
Convertible debentures, net of unamortized
    discounts of $574 and $109,
    respectively                                      1,945              336
Accrued interest - non-current (including
    related party of $182)                              208               --
                                                -----------      -----------
    Total non-current liabilities                     5,958            4,854
                                                -----------      -----------
    Total liabilities                                 6,257            5,024
Series A Convertible Preferred Stock                     --               --
Preferred Stock                                          --               --
Common stock                                              2                2
Additional paid-in capital                           26,916           26,216
Accumulated other comprehensive loss                    (45)              --
Accumulated deficit                                 (28,872)         (27,923)
                                                -----------      -----------
    Total stockholders' deficiency                   (1,999)          (1,705)
                                                -----------      -----------
    Total liabilities and stockholders'
        deficiency                              $     4,258      $     3,319
                                                ===========      ===========



                                       6


                                  RISK FACTORS

      NuWave is subject to various risks that may materially  harm our business,
financial condition and results of operations. YOU SHOULD CAREFULLY CONSIDER THE
RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS FILING
BEFORE  DECIDING  TO  PURCHASE  OUR  COMMON  STOCK.  IF ANY OF  THESE  RISKS  OR
UNCERTAINTIES  ACTUALLY OCCURS, OUR BUSINESS,  FINANCIAL  CONDITION OR OPERATING
RESULTS  COULD BE  MATERIALLY  HARMED.  IN THAT CASE,  THE TRADING  PRICE OF OUR
COMMON STOCK COULD DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.

                          RISKS RELATED TO OUR BUSINESS

WE HAVE HISTORICALLY INCURRED LOSSES AND LOSSES MAY CONTINUE IN THE FUTURE


      We have historically  incurred losses.  NuWave has experienced losses from
operations  as a result of its  investment  necessary  to achieve its  operating
plan,  which is  long-range  in nature.  In the nine months ended  September 30,
2004, we had a net loss applicable to common  stockholders  of $949,000.  In the
years ended  December 31, 2003 and 2002, we had net losses  applicable to common
shareholders of $809,000 and $2,674,000,  respectively. Future losses are likely
to occur.  Accordingly,  we may experience  significant  liquidity and cash flow
problems  because  historically  our  operations  have not been  profitable.  No
assurances  can be given that we will be successful  in reaching or  maintaining
profitable operations.


WE MAY NEED TO RAISE ADDITIONAL CAPITAL TO FINANCE OPERATIONS

      We have relied on  significant  external  financing to fund our operations
and  expect to rely on  external  financing  for the  foreseeable  future.  Such
financing has  historically  come from a combination  of borrowings  and sale of
common stock from third parties.  We cannot assure you that  financing,  whether
from  external  sources or related  parties,  will be  available if needed or on
favorable  terms. We have sufficient  funds to continue  operations for one year
but will  require  additional  capital to complete  our real estate  development
projects.  Our inability to obtain adequate financing will result in the need to
curtail business operations.  Any of these events would be materially harmful to
our  business  and may  result  in a lower  stock  price.  We will need to raise
additional capital to fund our anticipated future expansion. Among other things,
external financing may be required to cover our operating costs.

THE STANDBY EQUITY  DISTRIBUTION  AGREEMENT AND CONVERTIBLE  DEBENTURES  CONTAIN
CERTAIN  COVENANTS  PROHIBITING US FROM RAISING  CAPITAL AT LESS THAN THE MARKET
PRICE OR PLEDGING ASSETS TO OTHER LENDERS

      The Standby  Equity  Distribution  Agreement  and  Convertible  Debentures
contain covenants that restrict the following activities:

      o     Raising  capital  from  the  sale  of  stock  or  other   securities
            convertible  into  stock at a price  less than the  market  price of
            NuWave's common stock on the date of issuance; or

      o     Granting a security  interest in  NuWave's  assets,  which  security
            interest may be needed in order to obtain borrowings or capital from
            a lender.

      The existence of these  covenants may severely limit  NuWave's  ability to
borrow money or raise capital from the sale of stock or  convertible  securities
because any  potential  lender will likely  require  collateral in the form of a
security  interest on  NuWave's  assets to secure a loan and  purchasers  of our
stock or  convertible  securities may want to pay a discount to the market price
of our stock.

WE HAVE  BEEN THE  SUBJECT  OF A GOING  CONCERN  OPINION  FROM  OUR  INDEPENDENT
REGISTERED  PUBLIC  ACCOUNTING  FIRMS,  WHICH  MEANS  THAT WE MAY NOT BE ABLE TO
CONTINUE OPERATIONS UNLESS WE OBTAIN ADDITIONAL FUNDING

      Our  independent   registered   public  accounting  firms  have  added  an
explanatory  paragraph to their audit  opinions  issued in  connection  with the
financial  statements  for the years ended  December  31,  2003 and 2002,  which
states that  NuWave's  ability to continue as a going  concern  depends upon its
ability to secure  financing and attain  profitable  operations.  Our ability to
obtain  additional  funding  will  determine  our ability to continue as a going
concern.  Our  financial  statements do not include any  adjustments  that might
result from the outcome of this uncertainty.


                                       7


OUR COMMON  STOCK MAY BE AFFECTED BY LIMITED  TRADING  VOLUME AND MAY  FLUCTUATE
SIGNIFICANTLY

      There has been a limited  public market for our common stock and there can
be no assurance that an active trading market for our common stock will develop.
An absence of an active trading market could adversely affect our  shareholders'
ability to sell our common stock in short time periods,  or possibly at all. Our
common  stock  has  experienced,  and is  likely to  experience  in the  future,
significant price and volume fluctuations that could adversely affect the market
price of our  common  stock  without  regard to our  operating  performance.  In
addition,  we  believe  that  factors  such  as  quarterly  fluctuations  in our
financial  results and changes in the overall  economy or the  condition  of the
financial  markets  could  cause  the  price of our  common  stock to  fluctuate
substantially.

OUR COMMON STOCK IS DEEMED TO BE "PENNY STOCK," WHICH MAY MAKE IT MORE DIFFICULT
FOR INVESTORS TO SELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS

      Our common stock is deemed to be "penny  stock" as that term is defined in
Rule  3a51-1  promulgated  under  the  Securities  Exchange  Act of 1934.  These
requirements  may reduce the  potential  market for our common stock by reducing
the number of potential investors. This may make it more difficult for investors
in our common stock to sell shares to third  parties or to otherwise  dispose of
them. This could cause our stock price to decline. Penny stocks are stock:

      o     With a price of less than $5.00 per share;

      o     That are not traded on a "recognized" national exchange;

      o     Whose prices are not quoted on the NASDAQ automated quotation system
            (NASDAQ  listed stock must still have a price of not less than $5.00
            per share); or

      o     In issuers with net  tangible  assets less than $2.0 million (if the
            issuer has been in continuous operation for at least three years) or
            $5.0 million (if in continuous operation for less than three years),
            or with  average  revenues  of less than $6.0  million  for the last
            three years.

      Broker-dealers  dealing in penny stocks are required to provide  potential
investors  with a  document  disclosing  the  risks of penny  stocks.  Moreover,
broker-dealers  are required to determine whether an investment in a penny stock
is a suitable investment for a prospective investor.

                         RISKS RELATED TO THIS OFFERING

Future Sales By Our  Stockholders  May Adversely  Affect Our Stock Price And Our
Ability To Raise Funds In New Stock Offerings


      Sales of our common stock in the public  market  following  this  offering
could lower the market  price of our common  stock.  Sales may also make it more
difficult for us to sell equity securities or  equity-related  securities in the
future at a time and price that our  management  deems  acceptable or at all. Of
the  2,062,013  shares of common  stock  outstanding  as of November  29,  2004,
1,805,148  shares are, or will be, freely tradable without  restriction,  unless
held by our  "affiliates."  The remaining 256,865 shares of common stock held by
existing  stockholders  are  "restricted  securities"  and may be  resold in the
public market only if registered or pursuant to an exemption from  registration.
Some of these shares may be resold under Rule 144.


EXISTING  STOCKHOLDERS  WILL  EXPERIENCE  SIGNIFICANT  DILUTION FROM OUR SALE OF
SHARES UNDER THE STANDBY EQUITY DISTRIBUTION AGREEMENT

      The sale of shares pursuant to the Standby Equity  Distribution  Agreement
will have a dilutive impact on our stockholders. As a result, our net income per
share could decrease in future periods, and the market price of our common stock
could  decline.  In  addition,  the lower our stock price is, the more shares of
common  stock we will  have to  issue  under  the  Standby  Equity  Distribution
Agreement  to draw down the full amount.  If our stock price is lower,  then our
existing stockholders would experience greater dilution.


                                       8


THE INVESTOR UNDER THE STANDBY  EQUITY  DISTRIBUTION  AGREEMENT AND  CONVERTIBLE
DEBENTURES  WILL PAY LESS THAN THE  THEN-PREVAILING  MARKET  PRICE OF OUR COMMON
STOCK

      The  common  stock to be issued  under  the  Standby  Equity  Distribution
Agreement will be issued at a 1% discount to the volume  weighted  average price
for the 5 days  immediately  following  the  notice  date of an  advance.  These
discounted sales could cause the price of our common stock to decline.

      In addition,  Cornell Capital Partners,  L.P. holds debentures convertible
into  NuWave's  Common Stock at a price equal to the lower of either (a) 120% of
the  closing  bid price on the  closing  date or (b) an  amount  equal to eighty
percent (80%) of the average  weighted average price of the common stock for the
5 trading days  immediately  preceding the conversion date. There is essentially
no limit on the number of shares that Cornell Capital Partners, L.P. may acquire
upon conversion of these debentures because Cornell Capital Partners,  L.P. will
be entitled to a greater number of shares as the stock price falls.

THE  NUMBER  OF  SHARES  TO BE  ISSUED  UPON  CONVERSION  OF THE  DEBENTURES  IS
ESSENTIALLY  LIMITLESS BECAUSE WE ARE REQUIRED TO ISSUE MORE SHARES AS OUR STOCK
PRICE DECLINES

      Cornell Capital Partners,  L.P. holds debentures convertible into NuWave's
Common Stock at a price equal to the lower of either (a) 120% of the closing bid
price on the closing date or (b) an amount equal to eighty  percent (80%) of the
average  weighted  average  price of the  Common  Stock for the 5  trading  days
immediately  preceding the conversion date. This means that the conversion price
of the  debentures  will  decline  as the price of our  common  stock  declines.
Accordingly,  NuWave would be  obligated to issue a greater  number of shares of
Common Stock as the stock price declines. For example, NuWave would be obligated
to issue the number of shares of Common Stock set forth below for the  indicated
stock prices.

         Stock Price                           No. of Shares
         -----------                           -------------
         $0.065                                  461,538,000
         $0.0325                                 923,077,000
         $0.01625                              1,846,154,000


THE  SELLING  STOCKHOLDERS  INTEND TO SELL THEIR  SHARES OF COMMON  STOCK IN THE
MARKET, WHICH SALES MAY CAUSE OUR STOCK PRICE TO DECLINE

      The selling stockholders intend to sell in the public market the shares of
common  stock  being  registered  in  this  offering.  That  means  that  up  to
130,690,033  shares of common  stock,  the number of shares being  registered in
this offering, may be sold. Such sales may cause our stock price to decline.

THE SALE OF OUR STOCK  UNDER OUR STANDBY  EQUITY  DISTRIBUTION  AGREEMENT  COULD
ENCOURAGE  SHORT SALES BY THIRD  PARTIES,  WHICH COULD  CONTRIBUTE TO THE FUTURE
DECLINE OF OUR STOCK PRICE

      The significant  downward pressure on the price of our common stock caused
by the sale of  material  amounts  of  common  stock  under the  Standby  Equity
Distribution  Agreement could encourage short sales by third parties. In a short
sale, a prospective  seller borrows stock from a shareholder or broker and sells
the  borrowed  stock.  The  prospective  seller  hopes that the stock price will
decline,  at which time the seller can purchase shares at a lower price to repay
the  lender.  The seller  profits  when the stock price  declines  because it is
purchasing  shares at a price lower than the sale price of the  borrowed  stock.
Such sales  could  place  further  downward  pressure on the price of our common
stock by increasing the number of shares being sold.

OUR COMMON STOCK HAS BEEN  RELATIVELY  THINLY  TRADED AND WE CANNOT  PREDICT THE
EXTENT TO WHICH A TRADING MARKET WILL DEVELOP

      Before this offering,  our common stock has traded on the Over-the-Counter
Bulletin Board. Our common stock is thinly traded compared to larger more widely


                                       9


known companies in our industry. Thinly traded common stock can be more volatile
than common stock  trading in an active  public  market.  We cannot  predict the
extent to which an active  public market for the common stock will develop or be
sustained after this offering.

THE PRICE YOU PAY IN THIS  OFFERING  WILL  FLUCTUATE  AND MAY BE HIGHER OR LOWER
THAN THE PRICES PAID BY OTHER PEOPLE PARTICIPATING IN THIS OFFERING

      The price in this offering will fluctuate  based on the prevailing  market
price of the common stock on the Over-the-Counter  Bulletin Board.  Accordingly,
the price you pay in this  offering  may be higher or lower than the prices paid
by other people participating in this offering.

WE MAY  NOT BE  ABLE  TO  ACCESS  SUFFICIENT  FUNDS  UNDER  THE  STANDBY  EQUITY
DISTRIBUTION AGREEMENT WHEN NEEDED

      We are  dependent  on  external  financing  to fund  our  operations.  Our
financing needs are expected to be provided from the Standby Equity Distribution
Agreement, in large part. No assurances can be given that such financing will be
available  in  sufficient  amounts or at all when needed,  in part,  because the
amount of financing  available  will  fluctuate with the price and volume of our
common  stock.  As the price and volume  decline,  then the amount of  financing
available under the Standby Equity Distribution Agreement will decline.


      There are additional restrictions on our ability to request advances under
the Standby Equity Distribution  Agreement.  For example, our ability to request
an advance is conditioned  upon us  registering  the shares of common stock with
the SEC.  Further,  we may not  request  advances  if the shares to be issued in
connection  with such advances would result in Cornell  Capital  Partners,  L.P.
owning  more than  9.9% of our  outstanding  common  stock.  Even if we  request
advances  the  amount of each  advance  is  limited  to a  maximum  draw down of
$1,000,000 every 7 trading days.



                                       10


                           FORWARD-LOOKING STATEMENTS

Forward-Looking Statements

      Information  included or  incorporated by reference in this prospectus may
contain  forward-looking  statements.  This  information  may involve  known and
unknown  risks,  uncertainties  and other  factors  which  may cause our  actual
results,  performance or achievements to be materially different from the future
results, performance or achievements expressed or implied by any forward-looking
statements.  Forward-looking statements,  which involve assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the  words  "may,"  "will,"  "should,"  "expect,"  "anticipate,"  "estimate,"
"believe,"  "intend"  or  "project"  or the  negative  of  these  words or other
variations on these words or comparable terminology.

      This prospectus contains forward-looking statements,  including statements
regarding,  among other things, (a) our projected sales and  profitability,  (b)
our growth strategies,  (c) anticipated  trends in our industry,  (d) our future
financing  plans  and (e) our  anticipated  needs  for  working  capital.  These
statements may be found under  "Management's  Discussion and Analysis or Plan of
Operations"  and  "Business," as well as in this  prospectus  generally.  Actual
events or results may differ materially from those discussed in  forward-looking
statements as a result of various factors,  including,  without limitation,  the
risks  outlined under "Risk  Factors" and matters  described in this  prospectus
generally. In light of these risks and uncertainties,  there can be no assurance
that the  forward-looking  statements  contained in this prospectus will in fact
occur.



                                       11


                              SELLING STOCKHOLDERS

      The   following   table   presents   information   regarding  the  selling
stockholders. A description of each selling shareholder's relationship to NuWave
and how each selling shareholder  acquired or will acquire the shares to be sold
in this  offering is  detailed in the  information  immediately  following  this
table.




                                                                            PERCENTAGE
                                                                                OF
                                                                            OUTSTANDING
                                                                             SHARES TO
                                                             SHARES TO BE       BE
                                            PERCENTAGE OF      ACQUIRED      ACQUIRED                      PERCENTAGE
                                             OUTSTANDING      UNDER THE      UNDER THE                      OF SHARES
                               SHARES          SHARES          STANDBY        STANDBY                      BENEFICIALLY
                            BENEFICIALLY    BENEFICIALLY        EQUITY        EQUITY       SHARES TO BE       OWNED
                            OWNED BEFORE    OWNED BEFORE     DISTRIBUTION   DISTRIBUTION    SOLD IN THE       AFTER
  SELLING STOCKHOLDER         OFFERING      OFFERING (1)      AGREEMENT      AGREEMENT       OFFERING      OFFERING(1)
-------------------------   -------------  --------------   -------------  -------------   ------------    ------------
                                                                                             
Cornell Capital Partners,
  L.P.                         226,615(2)          9.9%      61,208,092        97.0%       120,122,191         0.0%
Gerald Holland                 226,615(2)          9.9%              --           --         3,209,764         0.0%
David Kesselbrenner            226,615(2)          9.9%              --           --           445,800         0.0%
Sarah Kesselbrenner            226,615(2)          9.9%              --           --           445,800         0.0%
Joseph Kesselbrenner           226,615(2)          9.9%              --           --           534,961         0.0%
Louis Kesselbrenner            226,615(2)          9.9%              --           --           445,800         0.0%
Joanna Saporito                226,615(2)          9.9%              --           --         1,783,202         0.0%
Michael Kesselbrenner          226,615(2)          9.9%              --           --         1,783,202         0.0%
Mary-Ellen Viola               226,615(2)          9.9%              --           --         1,783.202         0.0%
NextGen Associates                 25,000          1.2%              --           --            25,000         0.0%
Newbridge Securities
  Corporation                     111,111          5.1%              --           --           111,111         0.0%
                                                            -----------                    -----------        -----
TOTAL                                                        61,208,092                    130,690,033         0.0%
                                                            ===========                    ===========        =====



-------------
     *   Less than 1%.

(1)   Applicable  percentage of ownership is based on 2,062,013 shares of common
      stock  outstanding  as of November  29,  2004,  together  with  securities
      exercisable or  convertible  into shares of common stock within 60 days of
      November 29, 2004.  Beneficial  ownership is determined in accordance with
      the rules of the Securities and Exchange Commission and generally includes
      voting or investment  power with respect to  securities.  Shares of common
      stock  subject to securities  exercisable  or  convertible  into shares of
      common stock that are currently  exercisable or exercisable within 60 days
      of  November  29, 2004 are deemed to be  beneficially  owned by the person
      holding such  securities  for the purpose of computing  the  percentage of
      ownership  of such  person,  but are not  treated as  outstanding  for the
      purpose of computing the percentage ownership of any other person.


(2)   These represent the approximate  number of shares  underlying  convertible
      debentures at an assumed price of $0.052 per share (i.e.,  80% of a recent
      price $0.065 per share),  subject to a limitation of 9.9% contained in the
      convertible debentures.  Because the conversion price will fluctuate based
      on the market price of our stock, the actual number of shares to be issued
      upon  conversion  of the  debentures  may be higher  or  lower.  NuWave is
      registering the number of shares  indicated in the column entitled "Shares
      to be Sold in the  Offering,"  which number  reflects  NuWave's good faith
      estimate  of the  number  of  shares  that  will  need to be  issued  upon
      conversion  of the  debentures.  The  number of  shares in such  column is
      higher  than the  number  of  shares  beneficially  owned by each  selling
      stockholder  because the number of shares in such column is not subject to
      the 9.9% limitation.  Each selling  stockholder is permitted to convert up
      to the 9.9% limit and sell the underlying stock on more than one occasion.
      As such, each selling  stockholder could convert and sell in the aggregate
      more shares than is indicated in the beneficial ownership column.


                                       12


      The  following   information   contains  a  description   of  the  selling
shareholders'  relationship to NuWave and how the selling shareholders  acquired
the  shares  to be sold in this  offering.  No  selling  shareholder  has held a
position or office, or had any other material relationship,  with NuWave, except
as follows:

SHARES ACQUIRED IN FINANCING TRANSACTION WITH NUWAVE

      o     CORNELL CAPITAL PARTNERS, L.P. Cornell Capital Partners, L.P. is the
            investor  under the Standby  Equity  Distribution  Agreement and the
            holder  of  convertible  debentures.  All  investment  decisions  of
            Cornell  Capital  Partners,  L.P.  are made by its general  partner,
            Yorkville  Advisors,  LLC.  Mark  Angelo,  the  managing  member  of
            Yorkville Advisors, LLC, makes the investment decisions on behalf of
            Yorkville Advisors LLC. Cornell Capital Partners,  L.P. acquired all
            shares being  registered in this offering in financing  transactions
            with NuWave. Those transactions are explained below:

            STANDBY EQUITY DISTRIBUTION  AGREEMENT.  In May 2004, NuWave entered
            into a Standby Equity  Distribution  Agreement with Cornell  Capital
            Partners,   L.P.   Pursuant  to  the  Standby  Equity   Distribution
            Agreement,  we may, at our discretion,  periodically sell to Cornell
            Capital  Partners,  L.P. shares of common stock for a total purchase
            price of up to $30 million. For each share of common stock purchased
            under the Standby Equity  Distribution  Agreement,  Cornell  Capital
            Partners,  L.P. will pay NuWave 99% of the volume  weighted  average
            price on the  Over-the-Counter  Bulletin  Board  or other  principal
            market  on  which  our  common  stock  is  traded  for  the  5  days
            immediately  following  the notice date.  Further,  Cornell  Capital
            Partners,  L.P.  will retain a fee of 10% of each advance  under the
            Standby Equity Distribution Agreement. We are registering 61,208,092
            shares in this offering that may be issued under the Standby  Equity
            Distribution Agreement.


            CONVERTIBLE DEBENTURES.  During October 2003, NuWave raised $200,000
            through the issuance of a convertible  debenture to Cornell  Capital
            Partners,  L.P. On September  10, 2004,  this  $200,000  convertible
            debenture was redeemed in full. On December 22, 2003,  NuWave issued
            a convertible  debenture for $3,300,000 to Cornell Capital Partners,
            L.P. in connection with the acquisition of land held for development
            and sale which is secured through a first mortgage lien on the land.
            This  debenture  bears  interest  at a rate  of 5% per  annum,  with
            interest due at maturity or upon conversion.  This debenture matures
            in December  2008. At the option of NuWave,  upon the maturity date,
            this  convertible  debenture  and accrued  interest may be converted
            into NuWave's Common Stock. At the option of the holder, at any time
            prior to maturity,  any portion of this  convertible  debenture  and
            accrued  interest may be converted  into Common Stock.  The value of
            principal and accrued interest is convertible at the per share price
            equal to the lesser of (a) 120% of the closing bid price, or (b) 80%
            of the lowest daily volume weighted  average price for the five days
            immediately  preceding the conversion date. In addition,  NuWave may
            redeem a  portion  or all of this  debenture  at 120% of the  dollar
            value of the  amount  redeemed  plus  accrued  interest.  Under  the
            conversion  limitation  for the  debenture,  NuWave may issue shares
            under  conversion only so long as, at conversion,  the holder has no
            more than 9.9% of NuWave's outstanding shares. NuWave is registering
            in this offering  58,914,099  shares of common stock underlying this
            convertible debenture.

      o     INDIVIDUAL SELLING STOCKHOLDERS. The individual selling stockholders
            are all holders of convertible  debentures.  These debentures,  with
            the  exception  of the  debenture  held  by  Mary-Ellen  Viola,  are
            convertible  at the  holder's  option any time up to  maturity  at a
            conversion price equal to the lower of (i) 120% of the lowest volume
            weighted average price of the common stock as of the closing date or
            (ii) 80% of the lowest volume  weighted  average price of the common
            stock for the 5 trading days  immediately  preceding the  conversion
            date. Prior to maturity,  NuWave has the option to redeem at 110% of
            the amount redeemed, plus accrued interest. At maturity,  NuWave has
            the  option to  either  pay the  holder  the  outstanding  principal
            balance  and  accrued  interest  or to convert  the  debentures  and
            accrued  interest into shares of common stock at a conversion  price
            equal to the lower of (i) 120% of the lowest volume weighted average
            price of the common  stock as of the closing date or (ii) 80% of the
            lowest volume  weighted  average price of the common stock for the 5
            trading  days   immediately   preceding  the  conversion  date.  The
            convertible debentures are secured by all of NuWave's assets. NuWave
            is  registering  in this offering  8,648,529  shares of common stock
            underlying the convertible debentures.

            With respect to the debenture held Mary-Ellen  Viola,  the debenture
            is convertible  at the holder's  option any time up to maturity at a
            conversion  price  equal  to the  lower  of (i)  120% of the  lowest
            closing  bid price of the common  stock as of the closing  date,  or
            (ii) 80% of the lowest closing bid price of the common stock for the



                                       13



            5 trading days  immediately  preceding the conversion date. Prior to
            maturity,  NuWave  has the  option to  redeem at 120% of the  amount
            redeemed, plus accrued interest. At maturity,  NuWave has the option
            to either pay the  holder  the  outstanding  principal  balance  and
            accrued  interest or to convert the debentures and accrued  interest
            into shares of common stock at a conversion price equal to the lower
            of (i) 120% of the lowest  closing bid price of the common  stock as
            of the closing  date or (ii) 80% of the lowest  closing bid price of
            the common stock for the 5 trading days  immediately  preceding  the
            conversion  date.  NuWave is registering in this offering  1,783.202
            shares of common stock underlying this convertible debenture.

      o     NEXTGEN  ASSOCIATES.  NextGen  Associates  received  the  shares for
            services provided to NuWave. Stanley J. Chayka,  President and Chief
            Executive  Officer,  makes  the  investment  decisions  on behalf of
            NextGen Associates.  NuWave is registering 25,000 of these shares in
            this offering.


      o     NEWBRIDGE SECURITIES  CORPORATION.  Newbridge Securities Corporation
            is a  registered  broker-dealer  that we  engaged  to  advise  us in
            connection with the Standby Equity Distribution Agreement. Guy Amico
            makes the  investment  decisions on behalf of  Newbridge  Securities
            Corporation.  We  paid  Newbridge  Securities  Corporation  a fee of
            111,111  shares of common stock.  NuWave is  registering  111,111 of
            these shares in this offering.

THERE ARE CERTAIN RISKS RELATED TO SALES BY CORNELL CAPITAL PARTNERS, L.P.

      There are  certain  risks  related to sales by Cornell  Capital  Partners,
L.P., including:

      o     The shares will be issued based on a discount to the market rate. As
            a result,  the lower the stock price around the time Cornell Capital
            Partners,  L.P. is issued  shares,  the greater  chance that Cornell
            Capital  Partners,  L.P.  gets more  shares.  This  could  result in
            substantial  dilution to the  interests  of other  holders of common
            stock.

      o     To the extent Cornell Capital Partners, L.P. sells its common stock,
            the common stock price may decrease due to the additional  shares in
            the market. This could allow Cornell Capital Partners,  L.P. to sell
            greater  amounts of common  stock,  the sales of which would further
            depress the stock price.

      o     The significant  downward  pressure on the price of the common stock
            as Cornell Capital  Partners,  L.P. sells material amounts of common
            stocks could encourage short sales by others to the extent permitted
            by applicable law. This could place further downward pressure on the
            price of the common stock.



                                       14


                                 USE OF PROCEEDS

      This prospectus  relates to shares of our common stock that may be offered
and sold from time to time by  certain  selling  stockholders.  There will be no
proceeds  to us from the  sale of  shares  of  common  stock  in this  offering.
However,  we may receive the proceeds from the sale of shares of common stock to
Cornell Capital Partners,  L.P. under the Standby Equity Distribution Agreement.
The purchase price of the shares purchased under the Standby Equity Distribution
Agreement  will be  equal to 99% of the  volume  weighted  average  price of our
common stock on the  Over-the-Counter  Bulletin Board for the 5 days immediately
following the notice date.


      For illustrative purposes,  NuWave has set forth below its intended use of
proceeds for the range of net proceeds  indicated below to be received under the
Standby Equity  Distribution  Agreement.  The table assumes  estimated  offering
expenses of $100,000 and  commitment  fees of 10% of the gross  proceeds  raised
under the Standby Equity Distribution Agreement.



USE OF PROCEEDS:                  AMOUNT            AMOUNT             AMOUNT            AMOUNT             AMOUNT
-------------------------- ---------------- ----------------- ------------------ ----------------- ------------------

                                                                                                  
Gross Proceeds                  $2,500,000        $5,000,000        $10,000,000       $20,000,000        $30,000,000

Net Proceeds                    $2,150,000        $4,400,000         $8,900,000       $17,900,000        $26,900,000

Real Estate Development         $1,150,000        $3,200,000         $7,400,000       $16,150,000        $24,900,000

General Working Capital
(including the repayment of
outstanding or future debt)     $1,000,000        $1,200,000         $1,500,000        $1,750,000         $2,000,000
                               -----------       -----------        -----------      ------------       ------------

Total                           $2,150,000        $4,400,000         $8,900,000       $17,900,000        $26,900,000
                               ===========       ===========        ===========      ============       ============



                                       15


                                    DILUTION


         The net  tangible  book value of NuWave as of  September  30,  2004 was
($1,999,000) or ($0.9694) per share of common stock. Net tangible book value per
share is  determined  by  dividing  the  tangible  book  value of NuWave  (total
tangible assets less total  liabilities) by the number of outstanding  shares of
our common  stock.  Since this  offering  is being  made  solely by the  selling
stockholders  and none of the proceeds will be paid to NuWave,  our net tangible
book value will be unaffected by this offering.  Our net tangible book value per
share,  however,  will be  impacted by the common  stock to be issued  under the
Standby Equity Distribution Agreement. The amount of dilution will depend on the
offering  price and  number of shares  to be  issued  under the  Standby  Equity
Distribution  Agreement.  The  following  example  shows  the  dilution  to  new
investors at an offering price of $0.065 per share.

         If we assume that NuWave had issued  61,208,092  shares of common stock
under the Standby Equity Distribution  Agreement at an assumed offering price of
$0.065 per share (i.e., the number of shares being registered in this offering),
less  commitment fees of $397,853 and $100,000 of other offering  expenses,  our
net tangible book value as of September  30, 2004 would have been  $1,481,673 or
$0.02340  per share.  Note that at an assumed  price of $0.065 per share  NuWave
would receive gross proceeds of  approximately  $3,978,500 or  $26,021,500  less
than  is  available  under  the  Standby  Equity  Distribution  Agreement.  This
represents  an  immediate  increase  in net  tangible  book  value  to  existing
stockholders  of $0.9928 per share and an immediate  dilution to Cornell Capital
Partners,  L.P. of $0.0416 per share.  The following  table  illustrates the per
share dilution:

Assumed public offering price per share                                $  0.0650
Net tangible book value per share before this offering     (0.9694)
Increase attributable to new investors                      0.9928
Net tangible book value per share after this offering                  $ 0.02340
                                                                       ---------
Dilution per share to Cornell Capital Partners, L.P.                   $  0.0416
                                                                       =========


         The offering  price of our common  stock is based on the  then-existing
market price.  In order to give Cornell  Capital  Partners,  L.P. an idea of the
dilution per share they may  experience,  we have prepared the  following  table
showing the dilution per share at various assumed offering prices:


                                                         DILUTION PER SHARE TO
              ASSUMED            NO. OF SHARES TO BE        CORNELL CAPITAL
          OFFERING PRICE              ISSUED(1)             PARTNERS, L.P.
          --------------         -------------------     ---------------------
             $0.0650                 61,208,092                 $0.0416
             $0.0490                 61,208,092                 $0.0395
             $0.0330                 61,208,092                 $0.0374
             $0.0160                 61,208,092                 $0.0353


------------
(1)      This  represents  the  number of shares  of common  stock  that will be
         registered hereunder in connection with the Standby Equity Distribution
         Agreement.


                                       16


         Nuwave's  convertible  debenture holders will experience  dilution upon
the conversion of the Convertible Debentures. The following table is intended to
give the holders of the Convertible Debentures an idea of the dilution per share
they may experience in connection with the outstanding Convertible Debentures.


                                                        DILUTION PER SHARE TO
             ASSUMED            NO. OF SHARES TO BE     CONVERTIBLE DEBENTURE
      CONVERSION PRICE (1)           ISSUED(2)                 HOLDERS
      --------------------      -------------------     ---------------------
             $0.052                 69,345,830                 $0.0295
             $0.039                 69,345,830                 $0.0291
             $0.026                 69,345,830                 $0.0287
             $0.013                 69,345,830                 $0.0284


----------


(1) The  Assumed  Offering  Price is  calculated  by  multiplying  the  discount
contained in the  Convertible  Debentures by an assumed  market price of $0.065,
$0.049,  $0.0325  and  $0.01625  per share.  The  discount is 20% for all of the
Convertible Debentures.


(2) This represents the number of shares of common stock that will be registered
hereunder in connection with the Convertible Debentures.



                                       17


                      STANDBY EQUITY DISTRIBUTION AGREEMENT

         SUMMARY.  In May 2004,  we entered into a Standby  Equity  Distribution
Agreement with Cornell  Capital  Partners,  L.P.  Pursuant to the Standby Equity
Distribution Agreement, we may, at our discretion,  periodically sell to Cornell
Capital  Partners,  L.P. shares of common stock for a total purchase price of up
to $30.0  million.  For each share of common stock  purchased  under the Standby
Equity Distribution  Agreement,  Cornell Capital Partners,  L.P. will pay 99% of
the lowest volume weighted average price on the Over-the-Counter  Bulletin Board
or other  principal  market on which our  common  stock is traded for the 5 days
immediately  following  the notice date.  The volume  weighted  average price is
calculated  automatically  by  Bloomberg,  LLC,  a  reporting  service,  and  is
calculated by multiplying  the number of NuWave's  shares sold on a given day by
the actual sales prices, adding up the totals and then dividing by the number of
shares sold.  Cornell Capital  Partners,  L.P. is a private limited  partnership
whose business  operations are conducted through its general partner,  Yorkville
Advisors, LLC. Further,  Cornell Capital Partners, L.P. will retain a fee of 10%
of each advance under the Standby Equity Distribution Agreement. In addition, we
engaged Newbridge Securities Corporation, a registered broker-dealer,  to advise
us in  connection  with  the  Standby  Equity  Distribution  Agreement.  For its
services,  Newbridge Securities  Corporation received a fee of 111,111 shares of
our common stock.  NuWave is registering  61,208,092  shares of common stock for
the  Standby  Equity  Distribution   Agreement  pursuant  to  this  registration
statement.  The costs  associated  with this  registration  will be borne by us.
There are no other  significant  closing  conditions  to draws under the Standby
Equity Distribution Agreement.

         STANDBY  EQUITY  DISTRIBUTION  AGREEMENT  EXPLAINED.  Pursuant  to  the
Standby Equity Distribution Agreement, we may periodically sell shares of common
stock to Cornell  Capital  Partners,  L.P. to raise  capital to fund our working
capital and real estate  development needs. The periodic sale of shares is known
as an advance. We may request an advance every 7 trading days. A closing will be
held 1 trading  day after the end of each  pricing  period at which time we will
deliver shares of common stock and Cornell Capital  Partners,  L.P. will pay the
advance amount.

         We may request advances under the Standby Equity Distribution Agreement
once the  underlying  shares are  registered  with the  Securities  and Exchange
Commission.  Thereafter,  we may  continue  to request  advances  until  Cornell
Capital  Partners,  L.P.  has  advanced  $30.0  million  or 24 months  after the
effective date of the  accompanying  registration  statement,  whichever  occurs
first.

         The  amount  of each  advance  is  limited  to a  maximum  draw down of
$1,000,000  every 7 trading  days up to a maximum  of  $4,000,000  in any 30-day
period. The amount available under the Standby Equity Distribution  Agreement is
not dependent on the price or volume of our common stock. Our ability to request
advances are conditioned upon us registering the shares of common stock with the
SEC.  In  addition,  we may not  request  advances if the shares to be issued in
connection  with such advances would result in Cornell  Capital  Partners,  L.P.
owning  more  than  9.9% of our  outstanding  common  stock.  We do not have any
agreements with Cornell Capital  Partners,  L.P.  regarding the  distribution of
such stock,  although  Cornell  Capital  Partners,  L.P. has  indicated  that it
intends  to  promptly  sell  any  stock   received   under  the  Standby  Equity
Distribution Agreement.

      There are  certain  conditions  to  NuWave's  right to request an advance.
These conditions include:

      o     Maintaining   NuWave's    authorization   for   quotation   on   the
            Over-the-Counter Bulletin Board,

      o     Having an effective  registration  statement related to the stock to
            be issued,

      o     The absence of a stop order or other action adversely  affecting the
            registration statement,

      o     No events shall have occurred  that would  require  NuWave to file a
            post-effective  amendment to the effective  registration  statement,
            and


      o     The  advance  will not  cause  Cornell  Capital  Partners,  L.P.  to
            beneficially  own more  than  9.9% of  NuWave's  outstanding  common
            stock.

         Cornell  Capital  Partners,  L.P. is permitted to terminate the Standby
Equity Distribution  Agreement if (i) there is a stop order or suspension of the
effectiveness of this registration  statement for 50 trading days or (ii) NuWave
fails to materially comply with certain covenants, which include the following:


      o     Maintaining a quotation of the common stock on the  Over-the-Counter
            Bulletin Board,


                                       18



      o     Maintaining  NuWave's status as a public company under Section 12(g)
            of the Securities Act of 1934,


      o     Delivering  instructions  to the  transfer  agent to issue shares in
            connection with an advance notice,


      o     Failing to notify Cornell Capital Partners, L.P. of events impacting
            the  registration of the stock to be issued,  including the issuance
            of a stop order,


      o     Issuing  stock or  convertible  securities  at a price less than the
            market price of NuWave's common stock on the date of issuance, or

      o     Merging or  consolidating  NuWave  with  another  company  where the
            acquiring  entity  does not assume  NuWave's  obligations  under the
            Standby Equity Distribution Agreement.

         We cannot predict the actual number of shares of common stock that will
be issued  pursuant  to the  Standby  Equity  Distribution  Agreement,  in part,
because the  purchase  price of the shares will  fluctuate  based on  prevailing
market  conditions  and we have not  determined  the total amount of advances we
intend to draw. Nonetheless,  we can estimate the number of shares of our common
stock that will be issued  using  certain  assumptions.  Assuming  we issued the
number  of  shares  of  common  stock  being   registered  in  the  accompanying
registration  statement  at a recent  price of $0.065 per share,  we would issue
61,208,092  shares of common stock to Cornell Capital  Partners,  L.P. for gross
proceeds of $3,978,500 or $26,021,500  less than is available  under the Standby
Equity  Distribution  Agreement.  These  shares  would  represent  97.0%  of our
outstanding common stock upon issuance.

         Proceeds used under the Standby Equity  Distribution  Agreement will be
used  in the  manner  set  forth  in the  "Use  of  Proceeds"  section  of  this
prospectus.  We cannot predict the total amount of proceeds to be raised in this
transaction  because we have not  determined the total amount of the advances we
intend to draw.


         We expect to incur  expenses of  approximately  $100,000 in  connection
with this registration,  consisting primarily of professional fees. In addition,
we issued 111,111 shares of common stock to Newbridge Securities Corporation,  a
registered broker-dealer, as a placement agent fee.



                                       19


                              PLAN OF DISTRIBUTION

            The  selling  stockholders  and any of  their  respective  pledgees,
assignees and other  successors-in-interest  may, from time to time, sell any or
all of their  shares of common  stock on any stock  exchange,  market or trading
facility on which the shares are traded or in private transactions.  These sales
may be at fixed or negotiated prices.  The selling  stockholders may use any one
or more of the following methods when selling shares:

      --    ordinary  brokerage  transactions  and  transactions  in  which  the
            broker-dealer solicits the purchaser;

      --    block  trades in which the  broker-dealer  will  attempt to sell the
            shares as agent but may  position  and resell a portion of the block
            as principal to facilitate the transaction;

      --    purchases  by  a  broker-dealer  as  principal  and  resale  by  the
            broker-dealer for its account;

      --    an  exchange  distribution  in  accordance  with  the  rules  of the
            applicable exchange;

      --    privately-negotiated transactions;

      --    broker-dealers  may agree with the  selling  stockholders  to sell a
            specified number of such shares at a stipulated price per share;

      --    through the writing of options on the shares;

      --    a combination of any such methods of sale; and

      --    any other method permitted pursuant to applicable law.

      The selling  stockholders shall have the sole and absolute  discretion not
to  accept  any  purchase  offer  or make any sale of  shares  if they  deem the
purchase price to be unsatisfactory at any particular time.

      The selling  stockholders  may pledge their shares to their  brokers under
the margin provisions of customer agreements.  If a selling stockholder defaults
on a margin loan, the broker may, from time to time,  offer and sell the pledged
shares.


      The selling stockholders or their respective pledges, transferees or other
successors  in  interest,  may also sell the shares  directly  to market  makers
acting as principals  and/or  broker-dealers  acting as agents for themselves or
their customers.  Such  broker-dealers  may receive  compensation in the form of
discounts,  concessions or commissions from the selling  stockholders and/or the
purchasers of shares for whom such  broker-dealers  may act as agents or to whom
they  sell  as  principal  or  both,  which  compensation  as  to  a  particular
broker-dealer  might be in excess of customary  commissions.  Market  makers and
block  purchasers  purchasing the shares will do so for their own account and at
their own risk. It is possible that a selling  stockholders will attempt to sell
shares  of  common  stock  in  block  transactions  to  market  makers  or other
purchasers  at a price per share which may be below the then market  price.  The
selling stockholders cannot assure that all or any of the shares offered in this
prospectus  will be issued to, or sold by,  the  selling  stockholders.  Cornell
Capital Partners,  L.P. and any brokers,  dealers or agents,  upon effecting the
sale of any of the shares offered in this prospectus,  are deemed "underwriters"
as that term is defined under the  Securities  Act of 1933,  as amended,  or the
Securities  Exchange Act of 1934, as amended, or the rules and regulations under
such acts. In such event,  any commissions  received by such  broker-dealers  or
agents  and any  profit on the  resale of the  shares  purchased  by them may be
deemed to be  underwriting  commissions or discounts  under the Securities  Act,
including any untrue  statement of a material fact contained in this  prospectus
or an omission to state any material  fact  necessary to make the  statements in
this prospectus not misleading.


      The selling stockholders,  alternatively,  may sell all or any part of the
shares offered in this prospectus through an underwriter. No selling stockholder
has entered into any agreement  with a prospective  underwriter  and there is no
assurance that any such agreement will be entered into.

      If a selling stockholder notifies us that they have a material arrangement
with a  broker-dealer  for the  resale  of the  common  stock,  then we would be
required to amend the registration statement of which this prospectus is a part,
and file a prospectus  supplement to describe the agreements between the selling
stockholder and the broker-dealer.

      INDEMNIFICATION.  We have agreed to indemnify the selling stockholder,  or
their  transferees  or  assignees,   against  certain   liabilities,   including
liabilities  under the Securities  Act of 1933, as amended,  or to contribute to
payments the selling  stockholder or their respective  pledgees,  transferees or


                                       20


other  successors  in  interest,  may be  required  to make in  respect  of such
liabilities.  The  selling  stockholders  have  agreed to  indemnify  us against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.

      Insofar as  indemnification  for liabilities  arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
NuWave pursuant to the foregoing, or otherwise,  NuWave has been advised that in
the  opinion  of the SEC  such  indemnification  is  against  public  policy  as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.


      STATUTORY UNDERWRITER.  Cornell Capital Partners, L.P. is an "underwriter"
within the meaning of the Securities Act of 1933 in connection  with the sale of
common stock under the Standby  Equity  Distribution  Agreement.  For so long as
Cornell Capital Partners,  L.P. is an  "underwriter,"  Cornell Capital Partners,
L.P. may not sell shares by relying on Rule 144. Cornell Capital Partners,  L.P.
will pay us 99% of the lowest volume weighted  average price of our common stock
on the  Over-the-Counter  Bulletin  Board or other  principal  trading market on
which  our  common  stock is traded  for the 5 days  immediately  following  the
advance date. In addition, Cornell Capital Partners, L.P. will retain 10% of the
proceeds received by us under the Standby Equity Distribution Agreement.  The 1%
discount and the 10%  retention  are  underwriting  discounts.  In addition,  we
engaged Newbridge Securities Corporation, a registered broker-dealer,  to advise
us in  connection  with  the  Standby  Equity  Distribution  Agreement.  For its
services, Newbridge Securities Corporation received 111,111 shares of our common
stock.


      Cornell Capital  Partners,  L.P. was formed in February 2000 as a Delaware
limited partnership.  Cornell Capital Partners, L.P. is a domestic hedge fund in
the business of investing in and financing  public  companies.  Cornell  Capital
Partners,  L.P.  does not  intend to make a market in our stock or to  otherwise
engage in stabilizing or other  transactions  intended to help support the stock
price. Prospective investors should take these factors into consideration before
purchasing our common stock.

      BLUE SKY LAWS. Under the securities laws of certain states,  the shares of
common  stock may be sold in such states  only  through  registered  or licensed
brokers or  dealers.  The  selling  stockholders  are advised to ensure that any
underwriters, brokers, dealers or agents effecting transactions on behalf of the
selling  stockholders are registered to sell securities in all fifty states.  In
addition,  in certain  states the shares of common  stock may not be sold unless
the  shares  have been  registered  or  qualified  for sale in such  state or an
exemption from registration or qualification is available and is complied with.


      COSTS OF  REGISTRATION.  We will pay all of the  expenses  incident to the
registration,  offering  and sale of the  shares of common  stock to the  public
hereunder other than commissions,  fees and discounts of underwriters,  brokers,
dealers and agents. We have agreed to indemnify  Cornell Capital Partners,  L.P.
and its controlling persons against certain liabilities,  including  liabilities
under the  Securities  Act. We estimate  that the expenses of the offering to be
borne by us will be approximately  $100,000. The offering expenses consist of: a
SEC registration fee of $1,407, printing expenses of $1,500,  accounting fees of
$65,000, legal fees of $25,000 and miscellaneous expenses of $7,093. We will not
receive any  proceeds  from the sale of any of the shares of common stock by the
selling stockholders. We will, however, receive proceeds from the sale of common
stock under the Standby Equity Distribution Agreement.


      REGULATION  M.  The  selling   stockholders   should  be  aware  that  the
anti-manipulation  provisions  of Regulation M under the Exchange Act will apply
to purchases  and sales of shares of common  stock by the selling  stockholders,
and that there are restrictions on  market-making  activities by persons engaged
in  the  distribution  of  the  shares.   Under   Registration  M,  the  selling
stockholders or their agents may not bid for, purchase, or attempt to induce any
person to bid for or  purchase,  shares of our common  stock while such  selling
stockholders  are distributing  shares covered by this  prospectus.  The selling
stockholders  are not permitted to cover short sales by purchasing  shares while
the distribution is taking place. The selling stockholders are advised that if a
particular offer of common stock is to be made on terms  constituting a material
change  from  the  information  set  forth  above  with  respect  to the Plan of
Distribution,  then, to the extent required,  a post-effective  amendment to the
accompanying  registration  statement  must be  filed  with the  Securities  and
Exchange Commission.


                                       21


            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      The  following   information  should  be  read  in  conjunction  with  the
consolidated  financial  statements  of NuWave and the notes  thereto  appearing
elsewhere  in this  filing.  Statements  in  this  Management's  Discussion  and
Analysis or Plan of  Operation  and  elsewhere in this  prospectus  that are not
statements   of   historical   or  current  fact   constitute   "forward-looking
statements."

GENERAL

      Our mission is to profitably  exploit our proprietary  imaging  technology
and to identify and develop other  business  opportunities  that will  diversify
NuWave's  operations.  We have diversified NuWave's operations by acquiring land
for  development  and sale. We also have been focusing on technology  related to
image and video  enhancement  designed to enrich  picture and video  output with
clearer, more defined detail in texture,  color, contrast and tone, at low cost.
We have  developed  and are  currently  marketing  the  NuWave  Video  Processor
Technology.

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


         OVERALL FINANCIAL PERFORMANCE FOR NINE MONTHS ENDED SEPTEMBER 30, 2004

         Nine Months Ended  September 30, 2004 Compared to the Nine Months Ended
September 30, 2003.  For the nine months ended  September 30, 2004,  the Company
reported a net loss of $949,000  as  compared to a net loss of $500,000  for the
nine months ended  September 30, 2003. This  represented a $449,000  increase in
the Company's net loss. This increase in the net loss was primarily attributable
to an increase in interest expense.

         General and  administrative  expenses  for the overall  Company for the
nine months ended September 30, 2004 were $572,000,  as compared to $631,000 for
the nine months  ended  September  30,  2003,  a decrease of $59,000 or 9%. This
decrease was the result of reductions in salaries of $148,000 resulting from the
resignation  of all  management  and employees  with only a new CEO in September
2003 and one other administrative employee hired on November 1, 2003. There were
also  decreases in insurance  of $195,000 and  depreciation  expense of $39,000.
There were  increases  in  accounting  fees of  $116,000,  financial  consulting
$76,000, and legal fees of $65,000. These professional fees increased on account
of the  Company  having to rely on  consultants  to  perform  functions  such as
accounting and reporting,  that previously were performed by employees,  as well
as to support the Company's  efforts to prepare for its registration  filing and
other financing  programs.  Real estate taxes increased by $46,000 on account of
the Company's  December 2003 investment in a real estate parcel for development.
The Company allocated approximately $224,000 of these general and administrative
expenses to the video and image technology segment and approximately $348,000 to
the real estate segment, for the nine months ended September 30, 2004.


         RESULTS OF OPERATIONS - TECHNOLOGY BUSINESS


         Nine Months Ended  September 30, 2004 Compared to the Nine Months Ended
September 30, 2003. The Company  continues to have difficulty  selling its video
and image technology products.  The market for the Company's technology products
continues to be adversely  affected by strong  competition and price compression
in the imaging and video  electronics  markets.  There were no revenues  for the
nine month period ended  September  30, 2004, as compared to revenues of $19,000
for the nine month period ended September 30, 2003.  These 2003 revenues related
to the  Company's  sale of its  inventory  of its retail line of products to its
former exclusive licensee.

         Research and  development  expenses for the nine months ended September
30, 2004 were $0, as compared to expenses of $127,000  for the nine months ended
September  30,  2003.  These  expenses  have  decreased  because the Company has
terminated  all  research and  development  employees  and  research  consulting
agreements  during 2003. The decrease in research and development  expenses were
primarily in engineering  salaries of $79,000,  research and development fees of
$9,000 and $9,000 in laboratory supplies and laboratory operating expenses.

         General and administrative expenses for the technology business for the
nine months ended September 30, 2004 were $224,000,  as compared to $631,000 for
the nine months ended  September  30, 2003, a decrease of $407,000 or 65%.  This
decrease was the result of a reduction in the  allocation of the overall  NuWave
general and  administrative  expenses  to the  technology  activities.  Interest
expense for non real estate  operations  increased  $141,000 on account of notes



                                       22



payable and convertible  debenture  obligations entered into during 2003 and the
first  nine  months  of the year 2004 to  provide  liquidity  for the  Company's
operations.  The notes  payable,  along with  accrued  interest  at the  default
penalty rate of 24% per annum were repaid in  September  2004.  The  convertible
debenture  obligations  applied  to the  technology  operations  bear a weighted
average annual interest rate of approximately 20%.

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

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


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


         NuWave recorded a consolidated  net loss of $790,000 for the year ended
December 31, 2003.  After  subtracting  the loss associated with the real estate
operations (which are discussed in the plan of operation, below) NuWave incurred
a net loss for technology operations of $764,000. This compares favorably to the
$2,674,000  loss incurred in the year ended December 31, 2002.  This decrease in
loss of $1,910,000 is primarily  attributable to NuWave-wide cost cutting, which
occurred during 2003, as discussed above.  These decreases in operating expenses
were offset by the decrease in NuWave's benefit from income tax of $187,000.


         PLAN OF OPERATION - REAL ESTATE ACTIVITIES


          Nine Months Ended September 30, 2004 Compared to the Nine Months Ended
September 30, 2004. The Company's first real estate investment, of land held for
development and sale, acquired through its wholly owned subsidiary,  was made on
December 22, 2003.  On April 30, 2004,  the Company,  through a separate  wholly
owned  subsidiary,  purchased a parcel of residential  real estate for $122,000,
utilizing  approximately  $113,000  in cash and the  application  of deposits of
approximately $9,000.

         NuWave  intends to develop the land held for  development  and sale. To
date, there are no revenues from the sale of developed properties. Revenues from
development activities are not projected to be realized until mid to late 2005.

         During the nine months ended  September 30, 2004, the Company  incurred
general and administrative expenses of approximately  $348,000,  which consisted
of real estate taxes and maintenance  expenses of  approximately  $49,000 and an
allocation  of  other  general  and  administrative  expenses  of  approximately



                                       23



$299,000.  Interest  expense for the nine months  ended  September  30, 2004 was
$215,000.  In addition,  during the nine months ended September 30, 2004,  costs
for legal  expenses  regarding the  development  plan of $27,000 and interest of
$209,000 has been  capitalized to the cost of the land held for  development and
sale. Accordingly, the Company recorded a net loss on the real estate segment of
approximately $572,000.


         NuWave follows SFAS No. 34,  "Capitalization of Interest Costs",  which
provides for the  capitalization  of interest as part of the historical  cost of
acquiring  certain  assets.  Interest is  capitalized  on assets that  require a
period of time to get them ready for their  intended  use,  such as real  estate
development projects.  Interest is capitalized from the period activities begin,
such as planning  and  permitting,  until such time as the project is  complete.
Interest costs include interest recognized on obligations having explicit rates,
as well as the  amortization of discounts that result from imputing  interest on
convertible debentures over the life of the obligation.  Interest is capitalized
on only the net book  value of the land and  improvements,  net of the  discount
recorded  on the  acquisition  of the  land.  Interest  on  specific  borrowings
associated  with the land, that are in excess of its net book value are expensed
as incurred.


         During July 2004 and August 2004, the Company entered into an Agreement
of Sale and a Convertible Debenture,  respectively, related to its transfer of a
20% fee simple interest in its land held for development and sale as a tenant in
common.  During  November  2004,  the  Agreement  of Sale  and  the  Convertible
Debenture  were  terminated and rescinded in their entirety and replaced with an
Amended and  Restated  Agreement of Sale issued in November  2004,  as described
below.

         The  terms of the July  2004  Agreement  of Sale  and the  August  2004
Convertible Debenture are outlined below.

         The  Company  sold a 20% fee  simple  interest  in its  land  held  for
development and sale as a tenant in common to an entity which is a related party
to a current holder of the Company's  convertible  debentures  ("Investor")  and
received cash proceeds of $1,783,549.

         The Company may  reacquire  an  interest  in the  property  ("Company's
Option"). At any time after closing and upon 15 days advance written notice, the
Company may repurchase all or a portion of the interest sold at a purchase price
computed at 120% of the price, or portion  thereof,  paid by the Investor on the
effective date.

         The  Investor,  at any time  after  closing  and  upon 15 days  advance
written notice,  may sell back to the Company all or any portion of its interest
in the property ("Investor's  Option"). The Investor may sell this property back
to the Company through exercise rights under a convertible  debenture agreement,
discussed  below.  The  Investors  Option  expires on August 1, 2007,  and shall
thereupon be exercised  automatically  for any portion of the property  interest
not already reacquired by the Company.

         In  addition,  the  Investor  has  provided the Company with a right of
first offer to reacquire the Company's interest in the property. If, at any time
prior to August 1, 2007,  the  Investor  wishes to sell its  interest to a third
party,  it must first  notify the Company.  Upon such  notice,  the Company may,
within 30 days,  repurchase all of the remaining  property  interest for a price
equal to a pro-rata  portion of the  original  price paid by the Investor at the
effective date ($1,783,549).  If the Company fails to exercise this offer within
the 30 day period,  then the Investor  shall be allowed 90 days in which to sell
all of its interests in the property to a third party.

         In conjunction with this transaction,  the Company issued a convertible
debenture in favor of the Investor for $1,783,549.  This  convertible  debenture
bears  interest from July 14, 2004 at 10% per annum,  with the interest  payable
monthly,  starting  September 1, 2004.  This  convertible  debenture  matures on
August 1, 2007.

         Under  the  terms of the  convertible  debenture,  an  exercise  of the
Company's  Option to reacquire its former interest in the property is treated as
a  redemption  of all or a portion  of its  obligations  under  the  convertible
debenture. The Company's purchase price in this case is a premium of 120% of the
price,  or portion  thereof,  paid by the  Investor on the  effective  date,  as
discussed above.

         An exercise of the  Investor's  Option to sell its interest in the land
back to the Company is accomplished  through the Investor's right to convert the
amount  outstanding  under the convertible  debenture into the Company's  common
stock.  The aggregate amount of principal and any unpaid interest is convertible
at the per share  price equal to the lesser of (a) 120% of the closing bid price
at August 20, 2004, or (b) 80% of the lowest closing bid price for the five days
immediately  preceding the conversion  date.  Upon such  conversion,  a pro-rata
portion of the interest in the  property is sold back to the  Company.  Upon the
maturity of the convertible debenture,  the Investor's Option terminates and any
remaining amount of the convertible  debenture is  automatically  converted into
the Company's common stock.  Upon such conversion,  the remaining portion of the
interest in the property is sold back to the Company.


                                       24


         The Company's  reacquisition of its interests in the property under the
terms of the rights of first  offer,  as  described  above,  shall  represent  a
satisfaction of its obligations at face value under the convertible debenture.

         Upon the  Investor's  sale of the  property  to a third party under the
terms of the rights of first offer, as described  above,  all obligations of the
Company under the convertible debenture shall immediately terminate.

         In accordance with the provisions a SFAS No. 66,  "Accounting for Sales
of Real Estate," the Company has accounted for this  transaction  as a financing
transaction.  Under  the  provisions  of SFAS No.  66,  when the  seller  has an
obligation to repurchase the property, or the terms of the transaction allow the
buyer to compel the seller to  repurchase  the  property or  interest,  then the
transaction  shall be accounted  for as a financing  transaction,  rather than a
sale. Under the terms of this  transaction,  the Investor's  Option requires the
Investor to sell the property back to the Company. This sale back to the Company
will be satisfied  through the conversion of the  Investor's  interest under the
convertible debenture into the Company's common stock.

         Upon the  Investor's  sale of the  property  interest  to a third party
under the terms of the rights of first offer, as described above, this financing
transaction  shall be deemed to have  terminated and the Company shall thereupon
account for the  proceeds  received as a sale of its  interest in the  property,
with any gain or loss on such sale to be recognized accordingly at that time.

         During  November  2004,  the July 2004 Agreement of Sale and the August
2004 Convertible  Debenture were rescinded and terminated pursuant to an Amended
and  Restated  Agreement of Sale.  Under this Amended and Restated  Agreement of
Sale, for a selling price of  approximately  $1,427,000,  the Company has sold a
20% fee simple interest in its land held for development and sale as a tenant in
common  to an  entity  which is a  related  party  to a  current  holder  of the
Company's  convertible  debentures.  The Company has applied the $1,427,000 sale
amount  against the proceeds  from the  convertible  debenture  and has incurred
interest expense of $38,000 for the three month period ended September 30, 2004,
$30,000 of which has been paid to the buyer  through  September  30,  2004.  The
Company has incurred  additional interest expense of $20,000 through the date of
termination.  On November 29, 2004,  NuWave paid  approximately  $326,000 to the
buyer,  representing  approximately  $28,000 in accrued interest and $298,000 in
refunded proceeds.

         NuWave's  tentative  plans for the land held for  development  and sale
acquired  in 2003 call for the  development  of  approximately  100  residential
dwelling units.  NuWave has engaged an architectural  consultant during 2004 for
the purpose of preparing  drawings  that  support the  approval  and  permitting
process.  Once the approvals and permits are in place, NuWave will contract with
a developer to build out the property.  Land development and construction  costs
are roughly estimated to be $8,000,000 to $10,000,000. NuWave will have to raise
additional funds to finance construction.  Such financing may come from the sale
of securities or through bank or other debt financing.


         Regarding  the  residential  property  acquired in April  2004,  NuWave
intends to redevelop and then sell this property.

         Year Ended  December 31, 2003  Compared to December  31,  2002.  During
2003,  NuWave  diversified  its  business by  investing  in real estate and real
estate  development.  NuWave's first real estate investment was made on December
22, 2003.  At that time,  NuWave  acquired a parcel of  undeveloped  acreage for
$4,950,000. NuWave obtained an appraisal which valued the acreage at $4,950,000.

         There are no  revenues  from real estate  activities.  Revenues in real
estate are not  projected to be realized  until mid to late 2005.  NuWave's real
estate  related  operating  costs include  primarily  real estate taxes.  NuWave
recorded a net loss on real estate  operations of  approximately  $26,000 during
the year ended December 31, 2003.

         NuWave's  tentative plans call for the development of approximately 100
residential  dwelling units. NuWave intends to engage an architect during mid to
late 2004 for the purpose of drawing up specifications and establishing  budgets
for costs for the project.  Once the  architectural  plans are in place,  NuWave
will interview and contract with a developer to build out the property.

         Land  development and  construction  costs are roughly  estimated to be
$8,000,000 to $10,000,000. NuWave will have to raise additional funds to finance
construction,  from  the  sale of  securities  or  through  bank or  other  debt
financing.


                                       25


LIQUIDITY AND CAPITAL RESOURCES


         The Company had cash  balances on hand of $822,000  and  $119,000 as of
September  30, 2004 and  December 31, 2003,  respectively.  During  August 2004,
NuWave  received  proceeds of  approximately  $1,783,000  from the issuance of a
convertible  debenture  related to its transfer of a 20% fee simple  interest in
NuWave's  land  held  for  development  and  sale.  During  November  2004,  the
convertible  debenture was terminated and rescinded in its entirety and replaced
with an Amended and Restated  Agreement of Sale dated November 2004.  Under this
Amended and Restated  agreement of sale,  for a selling  price of  approximately
$1,427,000,  the Company has sold a 20% fee simple interest in its land held for
development and sale as a tenant in common to an entity which is a related party
to a current  holder of the Company's  convertible  debentures.  The Company has
applied the  $1,427,000  sale amount  against the proceeds from the  convertible
debenture  and has  incurred  interest  expense of $38,000  for the three  month
period ended  September  30,  2004,  $30,000 of which has been paid to the buyer
through September 30, 2004. The Company has incurred additional interest expense
of $20,000  through the date of  termination.  On November  29, 2004 NuWave paid
approximately  $326,000  to the  buyer,  representing  approximately  $28,000 in
accrued interest and $298,000 in refunded proceeds.

          A  portion  of  the  proceeds  from  the  Company's   receipt  of  the
convertible  debenture  was  applied to repay  obligations  consisting  of notes
payable to Cornell Capital Partners, L.P. of approximately $460,000; convertible
debentures payable to Cornell Capital Partners, L.P. of $200,000 and convertible
debentures  of  four  other  debenture  holders  of an  aggregate  approximating
$79,000.  These funds will provide the Company with current working capital. The
Company's  future cash funding sources  continue to be uncertain.  The Company's
primary cash needs are to fund ongoing  operations  and real estate  development
activities.  The  Company  will  defer  any land  development  and  construction
expenditures  until after it has arranged adequate  funding.  In order to obtain
funding  during the next twelve  months,  the Company  intends to seek financing
through a combination of sources.  These sources might include  funding  through
the sale of securities or loans.


         In seeking sources of liquidity,  NuWave intends to continue to rely on
the sale of  securities  or loans for near term working  capital  needs.  NuWave
expects to satisfy  most of its  funding  needs in 2005  pursuant to the Standby
Equity  Distribution  Agreement that is being  registered in this  offering.  In
addition,  NuWave  will seek  outside  mortgage  financing  for  certain  of the
properties  that  it  might  acquire  in  the  future,  as  well  as to  finance
development and  construction of the dwelling units on the undeveloped  acreage.
The cost cutting has reduced cash  requirements  at NuWave.  In their reports on
the audit of NuWave's  financial  statements  for the years ended  December  31,
2003, and 2002 our independent  registered  public  accounting firms included an
explanatory  paragraph in their reports because of the uncertainty that we could
continue in business as a going concern. In the event we are unable to raise the
anticipated operating capital needs through the sale of securities or some other
form of  financing or receive  cash from sales of our  products,  there would be
substantial doubt about our ability to continue as a going concern.


         During the nine month period ended  September 30, 2004, the Company had
a net increase in cash and cash equivalents of $703,000.  The Company's  sources
and uses of funds were as follows:

         CASH  USED  IN  OPERATING  ACTIVITIES.   Net  cash  used  in  operating
activities was $410,000. This was primarily driven by a consolidated net loss of
$949,000, offset by the receipt of proceeds of $225,000 from the sale of certain
of the Company's state net operating losses.

         CASH USED IN INVESTING ACTIVITIES. The Company purchased $21,000 of new
computer  and  office  equipment.  The  Company  acquired  a parcel  of land for
$122,000. The Company purchased marketable securities - available-for-sale,  for
approximately  $130,000.  Also,  the  Company  incurred  $27,000 for legal costs
toward development of the land held for development and sale.

         CASH PROVIDED BY FINANCING ACTIVITIES. The Company raised $2,143,000 in
funds  through the issuance of  convertible  debentures.  This was offset by the
repayment  in  September  2004 of notes and  convertible  debentures  to Cornell
Capital Partners, L.P. of $460,000 and $200,000, respectively; and repayments of
other convertible debentures of approximately $70,000.

         At September 30, 2004, the Company had positive net working  capital of
approximately  $609,000. The Company intends to monitor spending carefully until
such time that new funding is arranged.

         In October  2004,  NuWave  raised  $100,000  through the  issuance of a
convertible debenture.

         During November 2004,  NuWave redeemed a convertible  debentures with a
face amount of $250,000 and accrued interest through redemption of approximately
$12,000.  The unamortized  discount of  approximately  $63,000 at redemption has
been recorded as interest expense.


                                       26


         In May 2004, NuWave entered into a five year sublease agreement for the
rental of 3,580 square feet of corporate  office tower space in Jersey City, New
Jersey.  This rental  agreement is effective July 1, 2004 and requires NuWave to
pay rent of  approximately  $7,000 and  approximately  $3,000 in shared building
operating  expenses,  each month.  NuWave  subleases one half of this space to a
subtenant, for approximately $5,000 per month.


         In October  2004,  NuWave  received  $100,000  upon the  issuance  of a
convertible debenture.  In November 2004, NuWave redeemed a $250,000 convertible
debenture and related accrued interest and redemption premium, utilizing cash of
approximately $287,000.


CRITICAL ACCOUNTING POLICIES

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


         Our  significant  accounting  policies are  summarized in Note 3 of our
consolidated  financial  statements  at  December  31,  2003.  While  all  these
significant  accounting  policies impact its financial  condition and results of
operations,  NuWave  views  certain  of these  policies  as  critical.  Policies
determined  to be critical  are those  policies  that have the most  significant
impact on NuWave's  consolidated  financial statements and require management to
use a greater degree of judgment and  estimates.  Actual results may differ from
those  estimates.   Our  management   believes  that  given  current  facts  and
circumstances,  it is unlikely that applying any other  reasonable  judgments or
estimate methodologies would cause a material effect on our consolidated results
of operations, financial position or liquidity for the periods presented in this
report.

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

         During July 2004 and August 2004, the Company entered into an Agreement
of Sale and a Convertible Debenture,  respectively, related to its transfer of a
20% fee simple interest in its land held for development and sale as a tenant in
common.  During  November  2004,  the  Agreement  of Sale  and  the  Convertible
Debenture  were  terminated and rescinded in their entirety and replaced with an
Amended and  Restated  Agreement of Sale issued in November  2004,  as described
below.

         The  terms of the July  2004  Agreement  of Sale  and the  August  2004
Convertible Debenture are outlined below.

         The  Company  sold a 20% fee  simple  interest  in its  land  held  for
development and sale as a tenant in common to an entity which is a related party
to a current holder of the Company's  convertible  debentures  ("Investor")  and
received cash proceeds of $1,783,549.

         The Company may  reacquire  an  interest  in the  property  ("Company's
Option"). At any time after closing and upon 15 days advance written notice, the
Company may repurchase all or a portion of the interest sold at a purchase price
computed at 120% of the price, or portion  thereof,  paid by the Investor on the
effective date.

         The  Investor,  at any time  after  closing  and  upon 15 days  advance
written notice,  may sell back to the Company all or any portion of its interest
in the property ("Investor's  Option"). The Investor may sell this property back
to the Company through exercise rights under a convertible  debenture agreement,
discussed  below.  The  Investors  Option  expires on August 1, 2007,  and shall
thereupon be exercised  automatically  for any portion of the property  interest
not already reacquired by the Company.


                                       27


         In  addition,  the  Investor  has  provided the Company with a right of
first offer to reacquire the Company's interest in the property. If, at any time
prior to August 1, 2007,  the  Investor  wishes to sell its  interest to a third
party,  it must first  notify the Company.  Upon such  notice,  the Company may,
within 30 days,  repurchase all of the remaining  property  interest for a price
equal to a pro-rata  portion of the  original  price paid by the Investor at the
effective date ($1,783,549).  If the Company fails to exercise this offer within
the 30 day period,  then the Investor  shall be allowed 90 days in which to sell
all of its interests in the property to a third party.

         In conjunction with this transaction,  the Company issued a convertible
debenture in favor of the Investor for $1,783,549.  This  convertible  debenture
bears  interest from July 14, 2004 at 10% per annum,  with the interest  payable
monthly,  starting  September 1, 2004.  This  convertible  debenture  matures on
August 1, 2007.

         Under  the  terms of the  convertible  debenture,  an  exercise  of the
Company's  Option to reacquire its former interest in the property is treated as
a  redemption  of all or a portion  of its  obligations  under  the  convertible
debenture. The Company's purchase price in this case is a premium of 120% of the
price,  or portion  thereof,  paid by the  Investor on the  effective  date,  as
discussed above.

         An exercise of the  Investor's  Option to sell its interest in the land
back to the Company is accomplished  through the Investor's right to convert the
amount  outstanding  under the convertible  debenture into the Company's  common
stock.  The aggregate amount of principal and any unpaid interest is convertible
at the per share  price equal to the lesser of (a) 120% of the closing bid price
at August 20, 2004, or (b) 80% of the lowest closing bid price for the five days
immediately  preceding the conversion  date.  Upon such  conversion,  a pro-rata
portion of the interest in the  property is sold back to the  Company.  Upon the
maturity of the convertible debenture,  the Investor's Option terminates and any
remaining amount of the convertible  debenture is  automatically  converted into
the Company's common stock.  Upon such conversion,  the remaining portion of the
interest in the property is sold back to the Company.

         The Company's  reacquisition of its interests in the property under the
terms of the rights of first  offer,  as  described  above,  shall  represent  a
satisfaction of its obligations at face value under the convertible debenture.

         Upon the  Investor's  sale of the  property  to a third party under the
terms of the rights of first offer, as described  above,  all obligations of the
Company under the convertible debenture shall immediately terminate.

         In accordance with the provisions a SFAS No. 66,  "Accounting for Sales
of Real Estate," the Company has accounted for this  transaction  as a financing
transaction.  Under  the  provisions  of SFAS No.  66,  when the  seller  has an
obligation to repurchase the property, or the terms of the transaction allow the
buyer to compel the seller to  repurchase  the  property or  interest,  then the
transaction  shall be accounted  for as a financing  transaction,  rather than a
sale. Under the terms of this  transaction,  the Investor's  Option requires the
Investor to sell the property back to the Company. This sale back to the Company
will be satisfied  through the conversion of the  Investor's  interest under the
convertible debenture into the Company's common stock.

         Upon the  Investor's  sale of the  property  interest  to a third party
under the terms of the rights of first offer, as described above, this financing
transaction  shall be deemed to have  terminated and the Company shall thereupon
account for the  proceeds  received as a sale of its  interest in the  property,
with any gain or loss on such sale to be recognized accordingly at that time.

         During  November  2004,  the July 2004 Agreement of Sale and the August
2004 Convertible  Debenture were rescinded and terminated pursuant to an Amended
and  Restated  Agreement of Sale.  Under this Amended and Restated  Agreement of
Sale, for a selling price of  approximately  $1,427,000,  the Company has sold a
20% fee simple interest in its land held for development and sale as a tenant in
common  to an  entity  which is a  related  party  to a  current  holder  of the
Company's  convertible  debentures.  The Company has applied the $1,427,000 sale
amount  against the proceeds  from the  convertible  debenture  and has incurred
interest expense of $38,000 for the three month period ended September 30, 2004,
$30,000 of which has been paid to the buyer  through  September  30,  2004.  The
Company has incurred  additional interest expense of $20,000 through the date of
termination.  On November  29, 2004  NuWave paid  approximately  $326,000 to the
buyer,  representing  approximately  $28,000 in accrued interest and $298,000 in
refunded proceeds.



                                       28


EFFECTS OF ACCOUNTING PRONOUNCEMENTS

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

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

RECENT SALES OF UNREGISTERED SECURITIES

         Standby Equity Distribution Agreement

         In May 2004, we entered into a Standby  Equity  Distribution  Agreement
with Cornell Capital Partners,  L.P. Pursuant to the Standby Equity Distribution
Agreement,  we may,  at our  discretion,  periodically  sell to Cornell  Capital
Partners,  L.P.  shares of common stock for a total  purchase price of up to $30
million.  For each share of common  stock  purchased  under the  Standby  Equity
Distribution  Agreement,  Cornell Capital Partners,  L.P. will pay NuWave 99% of
the volume  weighted  average price on the  Over-the-Counter  Bulletin  Board or
other  principal  market on which  our  common  stock is  traded  for the 5 days
immediately following the notice date. Further,  Cornell Capital Partners,  L.P.
will retain a fee of 10% of each advance under the Standby  Equity  Distribution
Agreement. In connection with the Standby Equity Distribution Agreement, we paid
Newbridge Securities Corporation a fee of 111,111 shares of common stock.

         Convertible Debenture


         During August 2004, the Company raised approximately $1,783,000 through
the  issuance  of a  convertible  debenture  to a  party  related  to a  current
convertible  debenture  holder.  This  debenture bore interest at 10% per annum,
with interest  payable  monthly and was secured  through an interest in the land
held for  development  and sale.  This debenture  matured in August 2007. At the
option of the holder or the Company,  at any time,  this  convertible  debenture
could be converted into the Company's  Common Stock.  The value of principal and
accrued  interest was  convertible at the per share price equal to the lesser of
(a) 120% of the closing bid price at August 20,  2004,  or (b) 80% of the lowest
closing bid price for the five days  immediately  preceding the conversion date.
In  connection  with the  issuance  of this  convertible  debenture  the Company
transferred a 20% fee simple interest in its land held for development and sale.
In addition,  the Company and the transferee each have the option to effectively
void all or a portion  of the  transfer.  In the event  that  neither  option is
exercised  within three years,  the 20% fee simple  interest  will revert to the
Company upon settlement of the convertible  debenture.  Upon issuance NuWave has
recorded a debt discount of $446,000,  for the August 2004 debenture.  This debt
discount was recorded to reflect the value of the beneficial  conversion feature
related to the  convertible  debentures.  Accordingly,  NuWave has  recorded the
value of the beneficial conversion feature as a reduction to the carrying amount
of the convertible debt and as an addition to additional  paid-in capital.  This
debt discount was being amortized over the term of the related debentures, which
was 36 months,  and the  amortization  of such discount was recorded as interest
expense on the accompanying  condensed  consolidated statement of operations for
the nine months ended September 30, 2004.

         During  November  2004,  the July 2004 Agreement of Sale and the August
2004 Convertible  Debenture were rescinded and terminated pursuant to an Amended
and  Restated  Agreement of Sale.  Under this Amended and Restated  Agreement of
Sale, for a selling price of  approximately  $1,427,000,  the Company has sold a
20% fee simple interest in its land held for development and sale as a tenant in
common  to an  entity  which is a  related  party  to a  current  holder  of the
Company's  convertible  debentures.  The Company has applied the $1,427,000 sale
amount  against the proceeds  from the  convertible  debenture  and has incurred
interest expense of $38,000 for the three month period ended September 30, 2004,
$30,000 of which has been paid to the buyer  through  September  30,  2004.  The
Company has incurred  additional interest expense of $20,000 through the date of
termination.  On November  29, 2004  NuWave paid  approximately  $326,000 to the
buyer,  representing  approximately  $28,000 in accrued interest and $298,000 in
refunded proceeds.



                                       29


         Convertible Debentures


         During October 2004, NuWave issued $100,000 in a convertible debenture.
This debenture  bears  interest at a rate of 5% per annum,  with interest due at
maturity or upon conversion.  This debenture matures in October 2006. NuWave has
recorded a debt discount of $25,000 at issuance of this convertible debenture to
reflect  the  value  of  the  beneficial   conversion  feature  related  to  the
convertible  debenture.  Accordingly,  NuWave  has  recorded  the  value  of the
beneficial  conversion  feature as a  reduction  to the  carrying  amount of the
convertible  debt and as an addition to additional  paid-in  capital.  This debt
discount is being amortized over the term of the related debenture,  which is 24
months,  and such  amortization  will be  recorded  as  interest  expense in the
consolidated statement of operations. At the option of NuWave, upon the maturity
date, this convertible debenture may be converted into NuWave's Common Stock. At
the option of the  holder,  at any time prior to  maturity,  any portion of this
convertible debenture may be converted into Common Stock. The value of principal
and accrued  interest is  convertible at the per share price equal to the lesser
of (a) 120% of the closing bid price, or (b) 80% of the lowest closing bid price
for the five days immediately preceding the conversion date. In addition, NuWave
may redeem,  with 15 days advance notice,  a portion or all of this  outstanding
debenture  at 110% of the  dollar  value of the  amount  redeemed  plus  accrued
interest.

         In June 2004, NuWave issued $250,000 in a convertible  debenture.  This
debenture  bears  interest  at a rate of 10% per  annum,  with  interest  due at
maturity or upon conversion and matures in June 2006. NuWave has recorded a debt
discount  of $83,000 at issuance of this  convertible  debenture  to reflect the
value of the beneficial conversion feature related to the convertible debenture.
At the option of NuWave, upon the maturity date, this convertible  debenture may
be converted  into NuWave's  Common Stock.  At the option of the holder,  at any
time  prior to  maturity,  any  portion  of this  convertible  debenture  may be
converted  into Common  Stock.  The value of principal  and accrued  interest is
convertible  at the per  share  price  equal  to the  lesser  of (a) 120% of the
closing bid price on April 26, 2004, or (b) 75% of the lowest  closing bid price
for the five days immediately preceding the conversion date. In addition, NuWave
may redeem,  with 15 days advance notice, a portion or all of these  outstanding
debentures  at 125% of the dollar  value of the  amount  redeemed  plus  accrued
interest.


         During January 2004, NuWave issued $110,000 in convertible  debentures.
These  debentures bear interest at a rate of 5% per annum,  with interest due at
maturity or upon conversion. These debentures mature in January 2006. NuWave has
recorded a debt discount of $27,000 at issuance of these convertible  debentures
to  reflect  the  value of the  beneficial  conversion  feature  related  to the
convertible  debentures.  Accordingly,  NuWave  has  recorded  the  value of the
beneficial  conversion  feature as a  reduction  to the  carrying  amount of the
convertible  debt and as an addition to additional  paid-in  capital.  This debt
discount is being amortized over the term of the related debentures, which is 24
months,   and  such  amortization  was  recorded  as  interest  expense  on  the
accompanying condensed  consolidated  statement of operations.  At the option of
NuWave,  upon the maturity date, these  convertible  debentures may be converted
into NuWave's  Common Stock.  At the option of the holder,  at any time prior to
maturity,  any portion of these  convertible  debentures  may be converted  into
Common Stock.  The value of principal and accrued interest is convertible at the
per share price equal to the lesser of (a) 120% of the closing bid price, or (b)
80% of the  lowest  daily  volume  weighted  average  price  for the  five  days
immediately preceding the conversion date. In addition,  NuWave may redeem, with
15 days advance notice, a portion or all of these outstanding debentures at 110%
of the dollar value of the amount redeemed plus accrued interest.


         During October 2003,  NuWave raised $200,000  through the issuance of a
convertible  debenture to Cornell  Capital  Partners,  L.P. In addition,  during
December  2003,  NuWave  raised  $195,000  through the  issuance of  convertible
debentures to various  unrelated  parties.  In September 2004, NuWave redeemed a
$200,000 convertible  debenture with Cornell Capital Partners,  L.P. and $70,000
of the  convertible  debentures  issued in December  2003 and January  2004.  On
December 22, 2003,  NuWave  issued a  convertible  debenture  for  $3,300,000 to
Cornell Capital  Partners,  L.P. and $250,000 to unrelated parties in connection
with the  acquisition  of land held for  development  and sale  which is secured
through a first mortgage lien on the land. All of these debentures bear interest
at a rate of 5% per annum,  with  interest  due at maturity or upon  conversion.
These  debentures  mature at various  dates  ranging  from  October 2005 through
December  2008.  At  the  option  of  NuWave,  upon  the  maturity  date,  these
convertible  debentures  and accrued  interest  may be converted  into  NuWave's
Common Stock.  At the option of the holder,  at any time prior to maturity,  any
portion of these convertible  debentures may be converted into Common Stock. The
value of principal and accrued  interest is  convertible  at the per share price
equal to the  lesser of (a) 120% of the  closing  bid  price,  or (b) 80% of the
lowest  daily  volume  weighted  average  price  for the five  days  immediately
preceding the conversion  date. In addition,  NuWave may redeem a portion or all
of these  outstanding  debentures  at 110% (120% for Cornell  Capital  Partners,
L.P.) of the dollar value of the amount  redeemed plus accrued  interest.  Under
the  conversion  limitation  for the  debentures,  NuWave may issue shares under
conversion  only so long as, at conversion,  the holder has no more than 9.9% of
NuWave's outstanding shares.



                                       30


         Note Payable - Related Party

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

         Warrants

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

         Equity Line of Credit

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

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

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

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


         On March  27,  2004,  the  $200,000  loan  matured  and was not  repaid
according to its terms. On April 5, 2004, Cornell Capital Partners,  L.P. agreed
to extend the due dates of the $284,000 of loans and the $200,000  loan to April
15, 2005. On May 11, 2004,  Cornell  Capital  Partners,  L.P.  agreed to further
extend the due dates of these  $484,000 in loans to August 1, 2005.  On July 20,
2004,  Cornell Capital Partners,  L.P. agreed to further extend the due dates of
these  $484,000 in loans to  December 5, 2005.  While in default and through the
extended  maturity  date,  the  $284,000 of loans and the  $200,000  loan accrue
interest  from the default  dates at a rate of 24% per annum.  On September  10,
2004, NuWave paid off in full its obligations for principal and accrued interest
related to its $484,000 in loans to Cornell Capital Partners, L.P.


         Convertible Preferred Stock

         During May 2003,  NuWave entered into a Securities  Purchase  Agreement
with several  independent  buyers  whereby  NuWave issued and sold to the buyers
67,000  shares of Series A  Preferred  Stock at $1 per share.  The  buyers  were


                                       31


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

         Shares issued for services

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

         Effective June 1, 2004,  NuWave issued 75,000 shares of common stock to
George Kanakis, its President,  under the terms of his employment contract.  Mr.
Kanakis is also entitled to options to purchase  100,000  shares of common stock
at some future  date.  NuWave has not yet adopted a stock  option  plan,  and as
such, no options have been granted to Mr. Kanakis.

         Increase in Authorized Shares, Reduction in Par Value and Reverse Stock
         Split

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

         Issuance of Common Stock

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

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

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

         All of the above  offerings  and sales were  deemed to be exempt  under
Rule 506 of Regulation D and Section 4(2) of the Securities  Act. No advertising
or general  solicitation was employed in offering the securities.  The offerings
and sales were made to a limited number of persons,  all of whom were accredited
investors,  business  associates of NuWave or executive  officers of NuWave, and
transfer was  restricted by NuWave in accordance  with the  requirements  of the
Securities Act of 1933. In addition to representations  by the  above-referenced
persons,   we   have   made   independent   determinations   that   all  of  the
above-referenced  persons were accredited or sophisticated  investors,  and that
they were capable of  analyzing  the merits and risks of their  investment,  and
that they understood the speculative  nature of their  investment.  Furthermore,
all of the above-referenced  persons were provided with access to our Securities
and Exchange Commission filings.


                                       32


                             DESCRIPTION OF BUSINESS

GENERAL

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

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

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

         During  2003,  in  conjunction  with a  restructuring  with the primary
lender,  NuWave  terminated all of its officers and employees.  On September 10,
2003, NuWave entered into an Agreement with a lender,  Cornell Capital Partners,
L.P., to settle a default on its indebtedness  owed to Cornell Capital Partners,
L.P. Pursuant to the Agreement, Cornell Capital Partners, L.P. and NuWave agreed
to the following:


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

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


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

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


         NuWave intends to broaden its base of products and investments in order
to diversify the product  portfolio  into a broad  spectrum of industries and to
improve  profitability.  In 2003 and  during the first  quarter of 2004,  NuWave
formed new subsidiaries for the purpose of acquiring and holding real estate and
other assets. As of September 30, 2004, NuWave holds two real estate properties.



                                       33


         On  December  22,  2003,  NuWave,  through a wholly  owned  subsidiary,
acquired  vacant land that it intends to develop into a community  for residents
over  the  age of 55.  On  April  30,  2004,  NuWave,  through  a  wholly  owned
subsidiary,  purchased  a  parcel  of  residential  real  estate  for  $122,000,
utilizing  approximately  $113,000  in cash and the  application  of deposits of
approximately  $9,000.  NuWave  intends  to  redevelop  and then later sell this
property.

OTHER POTENTIAL PRODUCTS

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

RESEARCH AND DEVELOPMENT

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

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

MARKETING AND SALES


         In its technology  business,  NuWave is currently exploring how best to
market its NuWave Video Processor technology. NuWave's contract with a sales and
marketing  agent  expired on October 31, 2004.  NuWave  currently is  evaluating
whether to renew its agreement  with that agent or whether to engage a new agent
to assist NuWave in marketing its technology.


MANUFACTURING

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

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

PATENTS; PROPRIETARY INFORMATION

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

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


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


         NuWave  historically  sold  its  technology  and  products  in  foreign
markets.  As such, it has filed for foreign  patent  protection in the countries
forming the European  Common  Union,  Japan and Korea.  The patent laws of other


                                       34


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

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

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

COMPETITION

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

EMPLOYEES

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



                                       35


                                   MANAGEMENT

         NuWave's present directors and executive officers are as follows:

        NAME                     AGE      POSITION
        ----------------------   ----     --------

        George D. Kanakis         32      President, Chief Executive Officer,
                                          Chief Financial Officer and Director

        Robert B. Legnosky (1)    31      Director

        Gary H. Giannantonio      32      Director


        (1) Robert B. Legnosky  resigned from the Board of Directors  effective
            August 26, 2004.


         The following is a brief description of the background of the directors
and executive officers of NuWave.

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

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

         Gary H.  Giannantonio  became  a  Director  on May 17,  2004.  He is an
associate at the law firm of Kalebic,  McDonnell & Miller,  P.C. in  Hackensack,
New Jersey.  Mr.  Giannantonio's  primary  experience  involves  residential and
commercial real estate  transactions.  He also has experience  handling  general
civil  litigation,  collections,  landlord/tenant,  matrimonial,  and bankruptcy
matters. Mr. Giannantonio is also an Assistant Municipal Prosecutor in Palisades
Park,  New Jersey.  He received his Juris Doctor degree from New York Law School
in  1998  and a  Bachelor  of Arts  Degree  in  Political  Science  from  Boston
University  in 1994.  He is licensed to practice in New Jersey  State  Courts as
well as the United States District Court for the District of New Jersey.

COMMITTEES

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

CODE OF ETHICS

         On March 30, 2004,  the Board of Directors of NuWave  adopted a written
Code of Ethics  designed  to deter  wrongdoing  and  promote  honest and ethical
conduct,  full,  fair and  accurate  disclosure,  compliance  with laws,  prompt
internal reporting and accountability to adherence to the Code of Ethics.


                                       36


ITEM 10. EXECUTIVE COMPENSATION

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

                           SUMMARY COMPENSATION TABLE



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

Gerald Zarin
Former President and Chief
Executive Officer                2003     $ 117,000        --          --              --              --
                                 2002     $ 155,000   $ 30,000         --              --              --
                                 2001     $ 144,000        --          --             200,000          --


Note:  Effective June 1, 2004, George D. Kanakis' annual salary was $125,000.

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

STOCK OPTIONS

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

         On January 12, 2003,  the former  executive  Officers of NuWave and all
employees  voluntarily and  irrevocably  surrendered all options granted to them
through that date. As such, no options  remain  outstanding as of this date. All
stock option plans have been terminated.

DIRECTORS' COMPENSATION

         Directors  who are not  employees  of NuWave are  entitled  to a fee of
$2,500 per quarter for serving on the Board of Directors.  Each director is also
reimbursed for expenses  incurred in connection  with  attendance at meetings of
the Board of Directors.

       EMPLOYMENT AGREEMENT

         Effective  June 1, 2004,  NuWave  entered  into a five year  employment
contract with George Kanakis.  Pursuant to the contract, Mr. Kanakis is employed
as President  and Chief  Executive  Officer at an annual  salary of $125,000 per
year, subject to increases at the Board of Directors' discretion. Mr. Kanakis is
also entitled to a bonus equal to 12.5% of the net income  attributable  to each
NuWave  subsidiary,  plus a  discretionary  bonus as  determined by the Board of
Directors.  Mr.  Kanakis is also  entitled to 75,000  shares of common stock and
options to purchase  100,000 shares of common stock at some future date.  NuWave
has not yet  adopted a stock  option  plan.  Accordingly,  no options  have been
issued to Mr. Kanakis.


                                       37


         Until  September 29, 2003,  NuWave had employment  agreements  with its
former President and CEO, Mr. Gerald Zarin and its Chief Financial Officer,  Mr.
Jeremiah F. O'Brien.  These  agreements  terminated  upon the September 29, 2003
resignations of these two former officers.



                                       38


                             DESCRIPTION OF PROPERTY

         NuWave  maintains it headquarters in Union,  New Jersey, a shared space
for which NuWave pays $500 per month,  on a  month-to-month  basis. In addition,
NuWave  maintains  approximately  1,000 square feet of lab and storage  space in
Fairfield,  New Jersey. NuWave pays $1,200 per month, on a month-to-month basis.
Effective  July  2004,  NuWave  entered  into a five year  lease  agreement  for
approximately  3,500  square  feet of office  tower  space in Jersey  City,  New
Jersey.  NuWave  incurs a net cost of  approximately  $5,000  per month for this
space,  when  combining  the rent and other costs such as  utilities,  taxes and
maintenance.   This  net  cost   reflects  the  benefit  of  NuWave   subleasing
approximately 50% of the space to a subtenant.

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

         NuWave  may  invest  in most  any  property,  including,  for  example,
undeveloped  acreage,  shopping  centers,  single family  residential and office
buildings. NuWave intends to finance the acquisition of these properties through
a combination  of debt and equity  financing.  NuWave intends to hold and manage
properties for only the duration which will facilitate the sale for the possible
capital gain.

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

         In April 2004,  NuWave,  through a wholly owned  subsidiary,  purchased
residential  property  consisting of land and a  residential  building in Jersey
City, New Jersey for a total  purchase price of $122,000.  The purchase was paid
with $113,000 in cash and $9,000 in the application of a deposit. NuWave intends
to redevelop and then later sell this property.

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


         During July 2004 and August 2004, the Company entered into an Agreement
of Sale and a Convertible Debenture,  respectively, related to its transfer of a
20% fee simple interest in its land held for development and sale as a tenant in
common.  During  November  2004,  the  Agreement  of Sale  and  the  Convertible
Debenture  were  terminated and rescinded in their entirety and replaced with an
Amended and  Restated  Agreement of Sale issued in November  2004,  as described
below.

         The  terms of the July  2004  Agreement  of Sale  and the  August  2004
Convertible Debenture are outlined below.

         The  Company  sold a 20% fee  simple  interest  in its  land  held  for
development and sale as a tenant in common to an entity which is a related party
to a current holder of the Company's  convertible  debentures  ("Investor")  and
received cash proceeds of $1,783,549.


                                       39



         The Company may  reacquire  an  interest  in the  property  ("Company's
Option"). At any time after closing and upon 15 days advance written notice, the
Company may repurchase all or a portion of the interest sold at a purchase price
computed at 120% of the price, or portion  thereof,  paid by the Investor on the
effective date.

         The  Investor,  at any time  after  closing  and  upon 15 days  advance
written notice,  may sell back to the Company all or any portion of its interest
in the property ("Investor's  Option"). The Investor may sell this property back
to the Company through exercise rights under a convertible  debenture agreement,
discussed  below.  The  Investors  Option  expires on August 1, 2007,  and shall
thereupon be exercised  automatically  for any portion of the property  interest
not already reacquired by the Company.

         In  addition,  the  Investor  has  provided the Company with a right of
first offer to reacquire the Company's interest in the property. If, at any time
prior to August 1, 2007,  the  Investor  wishes to sell its  interest to a third
party,  it must first  notify the Company.  Upon such  notice,  the Company may,
within 30 days,  repurchase all of the remaining  property  interest for a price
equal to a pro-rata  portion of the  original  price paid by the Investor at the
effective date ($1,783,549).  If the Company fails to exercise this offer within
the 30 day period,  then the Investor  shall be allowed 90 days in which to sell
all of its interests in the property to a third party.

         In conjunction with this transaction,  the Company issued a convertible
debenture in favor of the Investor for $1,783,549.  This  convertible  debenture
bears  interest from July 14, 2004 at 10% per annum,  with the interest  payable
monthly,  starting  September 1, 2004.  This  convertible  debenture  matures on
August 1, 2007.

         Under  the  terms of the  convertible  debenture,  an  exercise  of the
Company's  Option to reacquire its former interest in the property is treated as
a  redemption  of all or a portion  of its  obligations  under  the  convertible
debenture. The Company's purchase price in this case is a premium of 120% of the
price,  or portion  thereof,  paid by the  Investor on the  effective  date,  as
discussed above.

         An exercise of the  Investor's  Option to sell its interest in the land
back to the Company is accomplished  through the Investor's right to convert the
amount  outstanding  under the convertible  debenture into the Company's  common
stock.  The aggregate amount of principal and any unpaid interest is convertible
at the per share  price equal to the lesser of (a) 120% of the closing bid price
at August 20, 2004, or (b) 80% of the lowest closing bid price for the five days
immediately  preceding the conversion  date.  Upon such  conversion,  a pro-rata
portion of the interest in the  property is sold back to the  Company.  Upon the
maturity of the convertible debenture,  the Investor's Option terminates and any
remaining amount of the convertible  debenture is  automatically  converted into
the Company's common stock.  Upon such conversion,  the remaining portion of the
interest in the property is sold back to the Company.

         The Company's  reacquisition of its interests in the property under the
terms of the rights of first  offer,  as  described  above,  shall  represent  a
satisfaction of its obligations at face value under the convertible debenture.

         Upon the  Investor's  sale of the  property  to a third party under the
terms of the rights of first offer, as described  above,  all obligations of the
Company under the convertible debenture shall immediately terminate.

         In accordance with the provisions a SFAS No. 66,  "Accounting for Sales
of Real Estate," the Company has accounted for this  transaction  as a financing
transaction.  Under  the  provisions  of SFAS No.  66,  when the  seller  has an
obligation to repurchase the property, or the terms of the transaction allow the
buyer to compel the seller to  repurchase  the  property or  interest,  then the
transaction  shall be accounted  for as a financing  transaction,  rather than a
sale. Under the terms of this  transaction,  the Investor's  Option requires the
Investor to sell the property back to the Company. This sale back to the Company
will be satisfied  through the conversion of the  Investor's  interest under the
convertible debenture into the Company's common stock.

         Upon the  Investor's  sale of the  property  interest  to a third party
under the terms of the rights of first offer, as described above, this financing
transaction  shall be deemed to have  terminated and the Company shall thereupon
account for the  proceeds  received as a sale of its  interest in the  property,
with any gain or loss on such sale to be recognized accordingly at that time.

         During  November  2004,  the July 2004 Agreement of Sale and the August
2004 Convertible  Debenture were rescinded and terminated pursuant to an Amended
and  Restated  Agreement of Sale.  Under this Amended and Restated  Agreement of
Sale, for a selling price of  approximately  $1,427,000,  the Company has sold a
20% fee simple interest in its land held for development and sale as a tenant in
common  to an  entity  which is a  related  party  to a  current  holder  of the


                                       40


Company's  convertible  debentures.  The Company has applied the $1,427,000 sale
amount  against the proceeds  from the  convertible  debenture  and has incurred
interest expense of $38,000 for the three month period ended September 30, 2004,
$30,000 of which has been paid to the buyer  through  September  30,  2004.  The
Company has incurred  additional interest expense of $20,000 through the date of
termination.  On November  29, 2004  NuWave paid  approximately  $326,000 to the
buyer,  representing  approximately  $28,000 in accrued interest and $298,000 in
refunded proceeds.


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

         NuWave  maintains  adequate  liability  insurance  on  the  undeveloped
acreage.

                                LEGAL PROCEEDINGS

         We are not aware of any pending legal actions against us.


                                       41


                             PRINCIPAL STOCKHOLDERS

Voting Securities And Principal Holders Thereof


         The following  table sets forth,  as of November 29, 2004,  information
with  respect to the  beneficial  ownership  of our common  stock by (i) persons
known by us to  beneficially  own more  than  five  percent  of the  outstanding
shares, (ii) each director,  (iii) each executive officer and (iv) all directors
and executive officers as a group.


                                                         COMMON STOCK
                                                      BENEFICIALLY OWNED
                                            -----------------------------------

NAME/ADDRESS                                  NUMBER                PERCENT(1)
-------------------------------             ------------           ------------
George Kanakis                                75,000(2)                  3.6%

Robert Legnosky (4)                                  --                    --

Gary H. Giannantonio                                 --                    --

All Officers and Directors                       75,000                  3.6%

Cornell Capital Partners, L.P.               226,615(3)                  9.9%
101 Hudson Street
Jersey City, NJ 07302


-----------------------
     *   Less than 1%.


(1)      Applicable  percentage  of ownership  is based on  2,062,013  shares of
         common stock outstanding as of November 29, 2004.  Beneficial ownership
         is  determined  in  accordance  with the  rules of the  Commission  and
         generally   includes  voting  or  investment   power  with  respect  to
         securities.  Shares  of  common  stock  subject  to  options  that  are
         currently  exercisable  or  exercisable  within 60 days of November 29,
         2004 are deemed to be  beneficially  owned by the person  holding  such
         options for the purpose of  computing  the  percentage  of ownership of
         such  person,  but are not  treated as  outstanding  for the purpose of
         computing  the  percentage  ownership of any other  person.  The common
         stock is the only outstanding class of equity securities of NuWave.

(2)      Includes 75,000 shares of common stock.


(3)      Cornell  Capital   Partners,   L.P.  holds  $3,300,000  of  convertible
         debentures in NuWave.  NuWave may exercise  conversion of the debenture
         into common stock,  so long as after the  conversion,  NuWave holds not
         more than 9.9% of NuWave's outstanding common stock.

(4)      Robert B. Legnosky has resigned from the Board of Directors,  effective
         August 26, 2004.


                                       42


                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


         Lehigh  acquired a parcel of land in New Jersey for $4,950,000  that it
intends  to  develop  and then  sell.  Lehigh  based  its  purchase  price on an
independent commercial appraisal. This land was acquired from Stone Street Asset
Management LLC ("Stone Street"), a Company under common ownership and control as
Cornell Capital Partners,  L.P. In connection with this purchase of land, NuWave
incurred debt obligations  consisting of a $3,300,000  convertible  debenture to
Cornell Capital Partners,  L.P., $250,000 of convertible debentures to unrelated
parties  and a  $1,400,000  note  payable  to Stone  Street  (see  Note 7 to the
December 31, 2003 NuWave Consolidated  Financial Statements,  page number F-34).
As a result of Stone Street's relationship with Cornell Capital Partners,  L.P.,
NuWave  has  recorded  land at the  cost  basis  recorded  by  Stone  Street  of
approximately $2,915,000.


         Effective July 2004,  NuWave  entered into a five year lease  agreement
for  approximately  3,500 square feet of office tower space in Jersey City,  New
Jersey.  NuWave  incurs a net cost of  approximately  $5,000  per month for this
space,  when  combining  the rent and other costs such as  utilities,  taxes and
maintenance.   This  net  cost   reflects  the  benefit  of  NuWave   subleasing
approximately 50% of the space to a subtenant.  NuWave's  obligations under this
lease are  guaranteed  by  Yorkville  Advisors  Management,  LLC  ("Yorkville").
Yorkville  is related  to  Cornell  Capital  Partners,  L.P. a related  party to
NuWave.



                                       43


                MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
                   COMMON EQUITY AND OTHER SHAREHOLDER MATTERS

         NuWave's Common Stock,  par value $0.001 per share ("Common  Stock") is
traded on the OTC bulletin board (OTCBB) Market under the symbol NUWV. The OTCBB
is a regulated  quotation  service that  displays  real-time  quotes,  last-sale
prices and volume information in over-the-counter (OTC) equity securities. Prior
to August 13, 2002, the stock had been traded on the NASDAQ SmallCap Market. The
following table sets forth the range of high and low closing sale prices for the
Common Stock as reported on the NASDAQ  SmallCap Stock Market during each of the
quarters  presented until August 12, 2002 and the OTCBB subsequent to August 12,
2002. The quotations set forth below are inter-dealer quotations, without retail
mark-ups,  mark-downs or commissions  and do not  necessarily  represent  actual
transactions.  On July 21, 2003,  NuWave affected a 1:50 reverse stock split, as
previously  approved by  stockholders.  All closing sales prices below have been
restated retroactively for the effect of the reverse stock split.

                                                        BID PRICE PER SHARE
                                                        -------------------
                                                         HIGH          LOW
                                                        ------       ------
        Three Months Ended March 31, 2002               $52.50       $29.50
        Three Months Ended June 30, 2002                $36.50       $15.00
        Three Months Ended September 30, 2002           $20.50        $3.50
        Three Months Ended December 31, 2002             $7.00        $0.50

        Three Months Ended March 31, 2003                $8.00        $0.18
        Three Months Ended June 30, 2003                 $0.45        $0.10
        Three Months Ended September 30, 2003            $0.60        $0.10
        Three Months Ended December 31, 2003             $0.31        $0.10

        Three Months Ended March 31, 2004                $0.18        $0.10
        Three Months Ended June 30, 2004                 $0.17        $0.04
        Three Months Ended September 30, 2004            $0.085       $0.065


         As of November 29, 2004, there were approximately 195 holders of record
of NuWave's Common Stock. This number does not include  beneficial owners of the
Common  Stock whose  shares are held in the names of various  dealers,  clearing
agencies, banks, brokers and other fiduciaries.


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

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


                                       44


                            DESCRIPTION OF SECURITIES

Capital Stock


         The authorized  capital stock of NuWave consists of 140,000,000  shares
of common  stock,  par value $0.001 per share.  As of November 29, 2004,  we had
2,062,013 shares of our common stock outstanding. The following description is a
summary of the capital  stock of NuWave and contains  the material  terms of the
capital  stock.  Additional  information  can be found in  NuWave's  Articles of
Incorporation and Bylaws.


         Common  Stock.  Each share of common  stock  entitles the holder to one
vote on each  matter  submitted  to a vote of our  stockholders,  including  the
election of directors.  There is no cumulative  voting.  Subject to  preferences
that may be applicable to any  outstanding  preferred  stock,  stockholders  are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors.  Stockholders have no preemptive,  conversion
or other subscription rights. There are no redemption or sinking fund provisions
related to the common stock. In the event of liquidation, dissolution or winding
up of NuWave, stockholders are entitled to share ratably in all assets remaining
after payment of liabilities,  subject to prior distribution rights of preferred
stock, if any, then outstanding.

WARRANTS


         NuWave has outstanding  warrants, as of November 29, 2004 to purchase a
total of 217,600 shares of common stock. Warrants for 200,000 of these are at an
exercise  price of $1.00 per share.  The remaining  17,600  warrants to purchase
common stock are at a weighted average exercise price of $63.15 per share.


Limitation Of Liability: Indemnification

         Our Bylaws  include an  indemnification  provision  under which we have
agreed to indemnify  directors and officers of NuWave to fullest extent possible
from and  against  any and all  claims of any type  arising  from or  related to
future acts or omissions as a director or officer of NuWave.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
NuWave pursuant to the foregoing, or otherwise,  NuWave has been advised that in
the  opinion  of the SEC  such  indemnification  is  against  public  policy  as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.

Anti-Takeover Effects Of Provisions Of The Articles Of Incorporation

         AUTHORIZED AND UNISSUED  STOCK.  The authorized but unissued  shares of
our common and preferred  stock are available  for future  issuance  without our
shareholders' approval. These additional shares may be utilized for a variety of
corporate  purposes  including  but not  limited  to  future  public  or  direct
offerings  to raise  additional  capital,  corporate  acquisitions  and employee
incentive  plans.  The  issuance  of such  shares  may  also be used to  deter a
potential takeover of NuWave that may otherwise be beneficial to shareholders by
diluting  the  shares  held  by  a  potential  suitor  or  issuing  shares  to a
shareholder  that will vote in accordance  with the desires of NuWave's Board of
Directors.  A takeover may be beneficial to  shareholders  because,  among other
reasons, a potential suitor may offer shareholders a premium for their shares of
stock compared to the then-existing market price.


                                       45


                                     EXPERTS

         The consolidated  financial  statements for the year ended December 31,
2003  included in the  Prospectus  have been  audited by Marcum & Kliegman  LLP,
independent  registered  public accounting firm to the extent and for the period
set forth in their report (which  contains an  explanatory  paragraph  regarding
NuWave's ability to continue as a going concern) appearing  elsewhere herein and
are included in reliance  upon such report given upon the authority of said firm
as experts in auditing and accounting.

         The financial  statements for the year ended December 31, 2002 included
in the Prospectus have been audited by Eisner LLP, independent registered public
accounting  firm to the extent  and for the  periods  set forth in their  report
(which contains an explanatory  paragraph regarding NuWave's ability to continue
as a going concern) appearing elsewhere herein and are included in reliance upon
such report  given upon the  authority  of said firm as experts in auditing  and
accounting.

    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                                   DISCLOSURE

         On July 2, 2004,  NuWave  Technologies,  Inc. engaged Weiser LLP as its
principal accountant to audit NuWave Technologies's financial statements. NuWave
did not consult  Weiser LLP on any matters  described in paragraph  (a)(2)(i) or
(ii) of Item 304 of  Regulation  S-B during  the  Registrant's  two most  recent
fiscal years or any subsequent interim period prior to engaging Weiser LLP.

         Effective on June 30, 2004, NuWave Technologies,  Inc. dismissed Marcum
& Kliegman LLP as its independent registered public accounting firm.

         Marcum & Kliegman LLP's report on NuWave's financial statements for the
past fiscal year did not contain an adverse  opinion or a disclaimer  of opinion
and was not qualified as to uncertainty,  audit scope, or accounting principles;
however,  the report was modified to include an  explanatory  paragraph  wherein
Marcum & Kliegman LLP  expressed  substantial  doubt about  NuWave's  ability to
continue as a going concern.

         Marcum & Kliegman  LLP's  dismissal  was  recommended  and  approved by
NuWave's Board of Directors.

         During  NuWave's  most recent  fiscal year,  as well as the  subsequent
interim period through June 30, 2004,  there were no disagreements on any matter
of accounting  principles  or  practices,  financial  statement  disclosure,  or
auditing  scope or  procedures,  which  disagreements  if not  resolved to their
satisfaction  would have caused them to make reference in connection  with their
opinion to the subject matter of the disagreement. Marcum & Kliegman LLP did not
advise NuWave  Technologies,  Inc. of any of the matters identified in paragraph
(a)(1)(B), (a) (1) (C), (D) or (E) of Item 304 of Regulation S-B.

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

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

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

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

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


                                       46


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

                                  LEGAL MATTERS

Troy J. Rillo, Esquire will pass upon the validity of the shares of common stock
offered hereby for us. In addition to his law practice, Mr. Rillo is employed by
Yorkville Advisors  Management,  LLC, which is the investment manager of Cornell
Capital Partners, LP.

                           HOW TO GET MORE INFORMATION

         We  have  filed  with  the   Securities   and  Exchange   Commission  a
registration statement on Form SB-2 under the Securities Act with respect to the
securities  offered by this prospectus.  This prospectus,  which forms a part of
the  registration  statement,  does not contain all the information set forth in
the  registration  statement,  as permitted by the rules and  regulations of the
Commission.  For  further  information  with  respect  to us and the  securities
offered by this  prospectus,  reference is made to the  registration  statement.
Statements  contained in this  prospectus  as to the contents of any contract or
other  document that we have filed as an exhibit to the  registration  statement
are  qualified  in their  entirety by  reference  to the to the  exhibits  for a
complete statement of their terms and conditions. The registration statement and
other  information may be read and copied at the  Commission's  Public Reference
Room at 450 Fifth Street N.W.,  Washington,  D.C.  20549.  The public may obtain
information  on the  operation  of the  Public  Reference  Room by  calling  the
Commission  at   1-800-SEC-0330.   The  Commission   maintains  a  web  site  at
http://www.sec.gov that contains reports, proxy and information statements,  and
other  information   regarding  issuers  that  file   electronically   with  the
Commission.


                                       47


                   NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARIES

                                    FORM SB-2

                              FINANCIAL STATEMENTS

                                TABLE OF CONTENTS


                                                                            Page
                                                                            ----


CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2004 AND 2003

Balance Sheet as of September 30, 2004 (unaudited) and December 31, 2003     F-2

Statements of Operations and Comprehensive Income (Loss) for the three 
and nine month periods ended September 30, 2004 (unaudited) and 2003 
(unaudited)                                                                  F-3

Statements of Cash Flows for the nine month periods ended
September 30, 2004 (unaudited) and 2003 (unaudited)                          F-4


Notes to Financial Statements                                                F-6

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31,
2003 AND 2002

Report of Independent Registered Public Accounting Firm -
Marcum & Kliegman LLP                                                       F-19

Report of Independent Registered Public Accounting Firm - Eisner LLP        F-20

Balance Sheet as of December 31, 2003                                       F-21

Statements of Operations for the years ended December 31, 2003 and 2002     F-22

Statements of Stockholders' Equity (Deficiency) for the years ended
December 31, 2003 and 2002                                                  F-23

Statements of Cash Flows for the years ended December 31, 2003 and 2002     F-24

Notes to Financial Statements                                               F-26



                                      F-1


                   NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARIES

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

                                     ASSETS



                                                                           September 30,    December 31,
                                                                               2004            2003
                                                                           -----------------------------
                                                                           (unaudited)
                                                                                        
Current assets:
     Cash and cash equivalents                                               $    822         $    119
     Marketable securities - available-for-sale                                    85               --
     Inventory                                                                      1                1
                                                                             -------------------------
                      Total current assets                                        908              120

Property and equipment, net                                                        22                4
Land held for development and sale                                              3,328            2,970
Deferred tax asset                                                                 --              225
                                                                             -------------------------
                      Total assets                                           $  4,258         $  3,319
                                                                             =========================

                  LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:
     Accounts payable, accrued interest and accrued liabilities              $    101         $    170
     Current portion of note payable - related party                              198               --
                                                                             -------------------------
                      Total current liabilities                                   299              170
                                                                             -------------------------
Non-current liabilities:
     Notes payable - related party                                                 --              484
     Note payable - related party, net of current portion                       1,202            1,400
     Convertible debentures - related party,
       net of unamortized discounts of $697 and $866, respectively              2,603            2,634
     Convertible debentures,
       net of unamortized discounts of $574 and $109, respectively              1,945              336
     Accrued interest - non-current                                               208               --
                                                                             -------------------------
                      Total non-current liabilities                             5,958            4,854
                                                                             -------------------------
                      Total liabilities                                         6,257            5,024
                                                                             -------------------------
Stockholders' deficiency:
     Series A Convertible Preferred Stock, noncumulative,
       $.01 par value; authorized 400,000 shares; none issued                      --               --
     Preferred stock, $.01 par value; authorized 1,600,000
       shares; none issued - (preferences and
       rights to be designated by the Board of Directors)                          --               --
     Common stock, $.001 par value; authorized 140,000,000 shares;
       2,062,013 shares issued and outstanding at September 30, 2004                2                2
       and 1,875,902 shares issued and outstanding at December 31, 2003
     Additional paid-in capital                                                26,916           26,216
     Accumulated other comprehensive loss                                         (45)              --
     Accumulated deficit                                                      (28,872)         (27,923)
                                                                             -------------------------
                      Total stockholders' deficiency                           (1,999)          (1,705)
                                                                             -------------------------
                      Total liabilties and stockholders' deficiency          $  4,258         $  3,319
                                                                             =========================


See accompanying notes to these condensed consolidated financial statements.

                                      F-2


                   NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                         AND COMPREHENSIVE INCOME (LOSS)
                 (In thousands, except share and per share data)



                                                               Three Months Ended            Nine Months Ended
                                                                  September 30,                 September 30,
                                                          --------------------------    --------------------------
                                                              2004           2003           2004           2003
                                                          -----------    -----------    -----------    -----------
                                                          (unaudited)    (unaudited)    (unaudited)    (unaudited)

                                                                                           
Net sales                                                 $        --    $         4    $        --    $        19
Cost of sales                                                      --              2             --              5
                                                          -----------    -----------    -----------    -----------
             Gross profit                                          --              2             --             14
                                                          -----------    -----------    -----------    -----------
Operating expenses:
     General and administrative                                   280             59            572            631
     Research and development                                      --              1             --            127
                                                          -----------    -----------    -----------    -----------
         Total operating expenses                                 280             60            572            758
                                                          -----------    -----------    -----------    -----------

             Loss from operations                                (280)           (58)          (572)          (744)

Other income (expense):
   Gain on forgiveness of debt                                     --            265             --            265
   Interest expense                                              (202)           (14)          (377)           (21)
                                                          -----------    -----------    -----------    -----------
             Net income (loss)                            $      (482)   $       193    $      (949)   $      (500)
                                                          ===========    ===========    ===========    ===========
             Weighted average number of
                 common shares outstanding                  2,062,013      1,866,788      1,961,240      1,267,079
                                                          ===========    ===========    ===========    ===========
             Basic and diluted net income (loss)
                 per common share                         $     (0.23)   $      0.10    $     (0.48)   $     (0.39)
                                                          ===========    ===========    ===========    ===========
Comprehensive loss:

Net income (loss)                                         $      (482)   $       193    $      (949)   $      (500)

Other comprehensive (loss) net of income taxes:

             Unrealized losses on marketable securities           (45)            --            (45)            --
                                                          -----------    -----------    -----------    -----------
Comprehensive income (loss)                               $      (527)   $       193    $      (994)   $      (500)
                                                          ===========    ===========    ===========    ===========



See accompanying notes to these condensed consolidated financial statements.

                                      F-3



                   NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARIES

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



                                                                         Nine Months Ended September 30,
                                                                         -------------------------------
                                                                               2004           2003
                                                                           -----------    -----------
                                                                           (unaudited)    (unaudited)
                                                                                    
Cash flows from operating activities:
      Net loss                                                             $      (949)   $      (500)
                                                                           -----------    -----------
          Adjustments to reconcile net loss to net cash used in
              operating activities:
              Depreciation                                                           3             42
              Provision for bad debt expense                                        --             11
              Gain on forgiveness of debt                                           --           (265)
              Amortization of debt discount                                        170             --
              Issuance of stock options and warrants for                            18             27
                  consulting services
          Decrease in operating assets:
              Inventory                                                             --             24
              Prepaid expenses and other current assets                             --            159
              Other assets                                                          --             20
              Deferred tax asset                                                   225             --
          Increase (decrease) in operating liabilities:
              Accounts payable, accrued liabilities and accrued interest           123           (237)
                                                                           -----------    -----------
                    Total adjustments                                              539           (219)
                                                                           -----------    -----------
                    Net cash used in
                      operating activities                                        (410)          (719)
                                                                           -----------    -----------
Cash flows from investing activities:
      Purchase of marketable securities                                           (130)            --
      Purchase of property and equipment                                           (21)            --
      Land acquisition and land development costs                                 (149)            --
                                                                           -----------    -----------
                    Net cash used in investing activities                         (300)            --
                                                                           -----------    -----------


                                  (continued)

See accompanying notes to these condensed consolidated financial statements.

                                      F-4

                   NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARIES

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





                                                                         Nine Months Ended September 30,
                                                                         -------------------------------
                                                                               2004           2003
                                                                           -----------    -----------
                                                                           (unaudited)    (unaudited)
                                                                                    
                                                                           -----------    -----------
Cash flows from financing activities:
      Proceeds from issuance of notes payable - related party                       --            557
      Proceeds from issuance of convertible debentures                           2,143             --
      Proceeds from equity offerings                                                --            122
      Repayment of note payable to officer/stockholder                              --           (115)
      Repayment of notes payable - related party                                  (460)            --
      Repayment of convertible debentures                                         (270)            --
      Costs incurred for equity offerings and warrants                              --            (15)
                                                                           -----------    -----------
          Net cash provided by financing activities                              1,413            549
                                                                           -----------    -----------

Net increase (decrease) in cash and cash equivalents                               703           (170)
Cash and cash equivalents - beginning of the period                                119            174
                                                                           -----------    -----------
Cash and cash equivalents - end of the period                              $       822    $         4
                                                                           ===========    ===========
Supplemental disclosure of cash flow information:
      Interest paid during the period                                      $         3    $        12
                                                                           ===========    ===========

Supplemental disclosures of non-cash investing and financing activities:
      Recording of debt discount                                           $       556    $        --
                                                                           ===========    ===========
      Issuance of 1,151,489 shares of
      common stock in settlement of notes payable                          $        --    $       273
                                                                           ===========    ===========
      Recording of interest payable and amortization of
      debt discount that is capitalized as an addition to
      the cost of the land held for development and sale                   $       209    $        --
                                                                           ===========    ===========
      Gain on related party forgiveness of debt credited to
      additional paid-in capital                                           $       126    $        --
                                                                           ===========    ===========


See accompanying notes to these condensed consolidated financial statements.

                                      F-5



                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.       BASIS OF INTERIM FINANCIAL STATEMENT PREPARATION

         The accompanying  unaudited condensed consolidated financial statements
have been prepared in conformity with accounting  principles  generally accepted
in the United States of America for interim  information.  Accordingly,  they do
not  include  all  of the  information  and  footnotes  required  by  accounting
principles  generally  accepted  in the United  States of America  for  complete
financial statements. The results of operations for the interim periods shown in
this report are not  necessarily  indicative of expected  results for any future
interim  period or for the entire fiscal year.  NUWAVE  Technologies,  Inc. (the
"Company"  or  "NUWAVE"),  believes  that the  quarterly  information  presented
includes all  adjustments  (consisting  only of normal,  recurring  adjustments)
necessary for a fair  presentation  in  accordance  with  accounting  principles
generally accepted in the United States of America.  The accompanying  condensed
consolidated  financial  statements  should  be read  in  conjunction  with  the
Company's Annual Report on Form 10-KSB as filed with the Securities and Exchange
Commission ("SEC") on April 15, 2004.

2.       GOING CONCERN AND MANAGEMENT'S PLANS

         Over the last three years,  the  Company's  annual sales have  declined
from  approximately  $505,000  in  2001  to  approximately  $286,000  in 2002 to
approximately  $20,000 in 2003 and no sales in the three and nine month  periods
ended September 30, 2004, as the Company has had difficulty  securing buyers for
its  technology  products  in a very  competitive  environment.  The Company has
incurred annual net losses of approximately $4,273,000,  $2,674,000, $790,000 in
2001,  2002 and  2003,  respectively.  As shown  in the  accompanying  condensed
consolidated   financial  statements,   the  Company  incurred  a  net  loss  of
approximately  $482,000  and  $949,000  during the three and nine  months  ended
September 30, 2004,  respectively,  resulting in a  stockholders'  deficiency of
approximately  $1,999,000  at  September  30,  2004.  For the nine months  ended
September 30, 2004, the Company has net cash used in operations of approximately
$410,000,  resulting primarily from a net loss of approximately $949,000, offset
by  amortization  of debt  discount of $170,000  and the receipt of the proceeds
from the sale of  certain  state  net tax  operating  losses of  $225,000.  This
represents a decrease of $309,000 over the Company's net use of cash of $719,000
for the  corresponding  nine month period  ended  September  30, 2003.  Net cash
provided  by  financing  activities  increased  by  approximately   $864,000  to
$1,413,000,   primarily  through  the  issuance  of  convertible  debentures  of
$2,143,000. These matters raise substantial doubt about the Company's ability to
continue as a going concern. The accompanying  condensed  consolidated financial
statements have been prepared on a going concern basis,  which  contemplates the
realization  of assets and  satisfaction  of liabilities in the normal course of
business.  These condensed  consolidated financial statements do not include any
adjustments   relating  to  the   recovery  of  the   recorded   assets  or  the
classification  of the liabilities that might be necessary should the Company be
unable to continue as a going concern.


                                      F-6


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2.       GOING CONCERN AND MANAGEMENT'S PLANS - CONTINUED

         Management  has taken a number of actions to lower costs and to improve
the Company's  liquidity.  The Company has  substantially  reduced its cash flow
requirements  through  significant  reductions  in  payroll  and  various  other
operating expenses. The Company has raised approximately  $1,783,000 through the
issuance  of a  convertible  debenture  related to the  Company's  land held for
development  and  sale.  In  November  2004,  this  convertible   debenture  was
terminated and rescinded and a significant  portion of the proceeds  retained by
the Company  and were  applied  toward the sale of an interest in the  Company's
land held for  development  and sale (see Note 12).  The current net proceeds of
approximately  $1,783,000 from this convertible debenture has provided cash flow
for  operating  expenses and for repayment of certain  obligations.  The Company
applied  approximately  $460,000  of  these  funds  to pay off in  full  certain
obligations to Cornell Capital Partners,  L.P. ("Cornell") totaling $484,000. In
addition,  the Company paid off convertible debenture obligations to Cornell and
others  with a face value of $200,000  and  $70,000,  respectively.  The Company
intends to remain in the technology business. The Company has found it difficult
to generate revenues through its technology business.

       In addition,  Management's  plans include the raising of cash through the
issuance of debt or equity  although  there are no  assurances  that the Company
will  be  successful.  The  Company  continues  to  require  funding  by and the
financial  support of Cornell.  In May 2004, the Company  entered into a Standby
Equity Distribution Agreement ("SEDA") with Cornell (see Note 9).

         On  August  9,  2004,  the  Company  filed  a  Form  SB-2  Registration
Statement,  with the Securities and Exchange Commission.  The Company is seeking
to register 130,690,033 shares of its common stock.

       Management  does not intend to expend  any  additional  funds  toward the
development  of the land held for  development  and sale  until such time as new
funding is secured.

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         PRINCIPLES OF CONSOLIDATION

         The consolidated  financial  statements  include the accounts of NuWave
and  its  wholly-owned  subsidiaries  Lehigh  Acquisition  Corp  ("Lehigh"),  WH
Acquisition   Corp,   Harwood   Acquisition   Corp  and  JK   Acquisition   Corp
(collectively,   the  "Company").  All  significant  intercompany  accounts  and
transactions have been eliminated in consolidation.


                                      F-7


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

         STOCK-BASED COMPENSATION

          On June 1, 2004,  the Company  granted  75,000  shares of stock to its
President and CEO under his employment agreement and recorded an earnings charge
of $7,500 (see Note 8). In addition,  for the three months and nine months ended
September  30,  2004  and  2003,   there  was  no  other  stock  based  employee
compensation   expense  as  determined   under  the  fair  value  based  method.
Accordingly,  for these  periods,  there are no  differences  between  basic and
diluted net income (loss) per share as reported and pro forma net income (loss).

         REVENUE RECOGNITION

         In regard to the technology operations,  income is recorded when orders
are  shipped and the Company has no further  involvement  with the  product.  In
regard to real estate  operations,  income from sales of real estate is recorded
when title is conveyed to the buyer, adequate cash payment has been received and
there is no continued involvement.

         EARNINGS (LOSS) PER SHARE

         The  Company  follows  Statement  of  Financial   Accounting  Standards
("SFAS") No. 128,  "Earnings Per Share",  which provides for the  calculation of
"basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share
includes no dilution and is computed by dividing  earnings  (loss)  available to
common stockholders by the weighted-average  number of common shares outstanding
for the period.  Diluted earnings per share reflects the potential dilution that
could occur  through the effect of common  shares  issuable upon the exercise of
stock  options and warrants and  convertible  securities.  For the periods ended
September 30, 2004 and 2003,  potential  common shares amount to 80,198,409  and
220,230 shares, respectively.  For the three and nine months ended September 30,
2004 and the nine months ended September 30, 2003, such potential  common shares
have not been  included in the  computation  of diluted loss per share since the
effect would be antidilutive. For the three months ended September 30, 2003, the
potential common shares were warrants that were out of the money.

         MARKETABLE SECURITIES

         The Company  evaluates  its  investment  policies  and the  appropriate
classification  of securities at the time of purchase  consistent with Statement
of Financial  Accounting  Standards  ("SFAS") No. 115,  "Accounting  for Certain
Investments  in Debt and  Equity  Securities,"  at each  balance  sheet date and
determined  that  all of its  investment  securities  are  to be  classified  as
available-for-sale.  Available-for-sale  securities  are  carried at fair value,
with the unrealized gains and losses reported in Stockholders'  Deficiency under
the caption  "Accumulated Other  Comprehensive  Loss." Realized gains and losses
and declines in value judged to be  other-than-temporary  on  available-for-sale
securities  are  included in general and  administrative  expenses.  The cost of
securities  sold is based on the specific  identification  method.  Interest and
dividends  on  securities  classified  as  available-for-sale  are  included  in
interest and dividend income.


                                      F-8


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

         INTEREST CAPITALIZATION

         The Company follows SFAS No. 34,  "Capitalization  of Interest  Costs",
which provides for the capitalization of interest as part of the historical cost
of acquiring  certain  assets.  Interest is capitalized on assets that require a
period of time to get them ready for their  intended  use,  such as real  estate
development projects.  Interest is capitalized from the period activities begin,
such as planning  and  permitting,  until such time as the project is  complete.
Interest costs include interest recognized on obligations having explicit rates,
as well as the  amortization of discounts that result from imputing  interest on
convertible debentures over the life of the obligation.  Interest is capitalized
on only the net book  value of the land and  improvements,  net of the  discount
recorded  on the  acquisition  of the  land.  Interest  on  specific  borrowings
associated  with the land, that are in excess of its net book value are expensed
as incurred.

         EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

         In January 2003, the FASB issued  Interpretation No. 46, "Consolidation
of Variable  Interest  Entities" ("FIN 46"),  which clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements." FIN 46
requires  certain variable  interest  entities to be consolidated by the primary
beneficiary of the entity if the equity  investors in the entity do not have the
characteristics of a controlling financial interest or do not provide sufficient
equity at risk for the entity to support its  activities.  In December 2003, the
FASB revised certain elements of FIN 46 ("FIN 46-R"). The FASB also modified the
effective date of FIN 46. This  interpretation  applies  immediately to variable
interest  entities created after January 31, 2003 and variable interest entities
in which the Company  obtains an interest  after January 31, 2003.  For variable
interest  entities in which a company  obtained an interest  before  February 1,
2003, the interpretation  applies to periods ending after December 15, 2004. The
adoption of FIN 46 is not expected to have a material impact on the consolidated
financial statements.

         In May 2003,  the FASB  issued SFAS No.  150,  "Accounting  for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS
No. 150 establishes  standards for how an issuer classifies and measures certain
financial  instruments with characteristics of both liabilities and equity. SFAS
No. 150 requires that an issuer  classify a financial  instrument that is within
its scope as a liability  (or an asset in some  circumstances).  SFAS No. 150 is
effective for financial  instruments entered into or modified after May 31, 2003
and,  otherwise,  is effective  at the  beginning  of the first  interim  period
beginning  after June 15,  2003.  The Company  adopted SFAS No. 150 in the third
quarter of 2003.  The  adoption  has not had,  and is not  expected  to have,  a
material impact on the Company's  consolidated  financial position or results of
operations.


                                      F-9


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4.       LAND HELD FOR DEVELOPMENT AND SALE

         During April 2004, WH Acquisition Corp.  purchased real estate property
consisting of land and a residential  building in Jersey City,  New Jersey for a
total  purchase  price of $122,000.  The purchase was paid with $113,000 in cash
and $9,000 in the application of a deposit. The Company intends to redevelop and
then later sell this property. On December 22, 2003, Lehigh acquired a parcel of
land in New Jersey  that it intends to develop  and then sell.  During the three
and nine month  periods  ended  September  30,  2004,  the  Company  capitalized
approximately  $68,000 and $209,000 of interest  relating to the financing costs
incurred for the portion of Lehigh land that was  capitalized  in December  2003
and $12,000 and $27,000 in legal fees, respectively.

         During  August 2004,  the Company  received  proceeds of  approximately
$1,783,000  through the  issuance  of a  convertible  debenture  that is secured
through an interest in the  Company's  land held for  development  and sale (see
Note 12).

5.       NOTES PAYABLE - RELATED PARTY

                  On September 10, 2004, the Company repaid in full the $484,000
balance of the notes payable - related party,  and related  accrued  interest of
approximately   $93,000,  for  the  net  sum  of  $460,000.   Such  forgiveness,
aggregating   approximately  $117,000  has  been  recorded  as  an  addition  to
additional  paid-in capital.  Funds for this repayment were provided through the
proceeds  received from the convertible  debenture  related to the land held for
development and sale (see Note 4).

6.       CONVERTIBLE DEBENTURES

         During August 2004, the Company raised approximately $1,783,000 through
the  issuance  of a  convertible  debenture  to a  party  related  to a  current
convertible  debenture  holder.  This debenture bears interest at 10% per annum,
with  interest  payable  monthly and is secured  through an interest in the land
held for  development and sale. This debenture was to mature in August 2007 (see
Note 12).

         On September 14, 2004, the Company redeemed convertible debentures with
a face amount of $70,000 for approximately $80,000, including the 10% redemption
fee and  accrued  interest  through  the  date of  redemption.  The  unamortized
discount  aggregating  approximately  $11,000  at  September  14,  2004 has been
recorded as interest  expense.  On September  10, 2004,  the Company  redeemed a
convertible  debenture - related  party with a balance of  $200,000  and accrued
interest of approximately $9,000 at redemption for the net sum of $200,000.  The
lender waived receipt of the accrued  interest.  Such  forgiveness,  aggregating
approximately  $9,000 has been  recorded as an addition  to  additional  paid-in
capital. The unamortized discount of approximately $28,000 at September 10, 2004
has been recorded as interest expense.

         During June 2004, the Company raised $250,000 through the issuance of a
convertible  debenture to an unrelated  party.  This debenture bears interest at
10% per annum, with interest due at maturity or upon conversion.  This debenture
matures in June 2006.  During January 2004, the Company raised $110,000  through
the  issuance  of  convertible   debentures  to  two  unrelated  parties.  These
debentures  bear  interest  at a rate  of 5% per  annum,  with  interest  due at
maturity or upon conversion. These debentures mature in January 2006.


                                      F-10


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6.       CONVERTIBLE DEBENTURES - CONTINUED

         For the convertible  debenture  issued in August 2004, at the option of
the holder or the Company,  at any time, this  convertible  debenture could have
been  converted  into the  Company's  Common  Stock.  The value of principal and
accrued  interest was  convertible at the per share price equal to the lesser of
(a) 120% of the closing bid price at August 20,  2004,  or (b) 80% of the lowest
closing bid price for the five days  immediately  preceding the conversion date.
In  connection  with the  issuance  of this  convertible  debenture  the Company
transferred a 20% fee simple interest in its land held for development and sale.
In addition,  the Company and the transferee  each had the option to effectively
void all or a portion  of the  transfer.  In the event that  neither  option was
exercised  within three years,  the 20% fee simple  interest would revert to the
Company upon settlement of the convertible debenture. This convertible debenture
was terminated and rescinded during November 2004 (see Note 12).

         Upon the issuance of the convertible  debenture  issued in August 2004,
the Company has  recorded a debt  discount of $446,000.  This debt  discount was
recorded to reflect the value of the beneficial  conversion  feature  related to
the convertible  debenture.  Accordingly,  the Company has recorded the value of
the beneficial  conversion  feature as a reduction to the carrying amount of the
convertible  debt and as an addition to additional  paid-in  capital.  This debt
discount was being amortized over the term of the related  debenture,  which was
36 months, and amortization of such discount was recorded as interest expense on
the accompanying condensed consolidated statement of operations (see Note 12).

         For the convertible debenture issued in June 2004, at the option of the
Company,  upon the maturity date,  this  convertible  debenture may be converted
into the Company's Common Stock. At the option of the holder,  at any time prior
to maturity, any portion of this convertible debenture may be converted into the
Company's  Common  Stock.  The  value  of  principal  and  accrued  interest  is
convertible  at the per  share  price  equal  to the  lesser  of (a) 120% of the
closing bid price at April 26, 2004, or (b) 75% of the lowest  closing bid price
for the five days immediately  preceding the conversion  date. In addition,  the
Company  may  redeem,  with 15 days  advance  notice,  a portion or all of these
outstanding  debentures at 125% of the dollar value of the amount  redeemed plus
accrued interest.

         For the convertible debentures issued in January 2004, at the option of
the  Company,  upon the  maturity  date,  these  convertible  debentures  may be
converted into the Company's  Common Stock. At the option of the holder,  at any
time prior to  maturity,  any  portion of these  convertible  debentures  may be
converted  into the Company's  common stock.  The value of principal and accrued
interest is  convertible  at the per share price equal to the lesser of (a) 120%
of the closing bid price, or (b) 80% of the lowest daily volume weighted average
price for the five days immediately  preceding the conversion date. In addition,
the Company may redeem,  with 15 days advance notice,  a portion or all of these
outstanding  debentures at 110% of the dollar value of the amount  redeemed plus
accrued interest.


                                      F-11


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6.       CONVERTIBLE DEBENTURES - CONTINUED



         Upon the issuance of the convertible debentures issued in June 2004 and
January 2004,  the Company has recorded  debt  discounts of $83,000 and $27,000,
respectively.  These debt  discounts  are  recorded  to reflect the value of the
beneficial   conversion   feature   related  to  the   convertible   debentures.
Accordingly,  the Company has  recorded the value of the  beneficial  conversion
features as a reduction to the carrying amount of the convertible debt and as an
addition to additional  paid-in  capital.  This debt discount is being amortized
over the term of the related debentures, which is 24 months, and amortization of
such discounts were recorded as interest expense on the  accompanying  condensed
consolidated statement of operations.

7.       OTHER NON-CURRENT LIABILITIES

         The Company accrues  interest  payable on all of its debt  obligations.
For the  convertible  debenture  issued in August 2004,  the interest is payable
monthly.  For  the  convertible   debentures  -  related  party  and  the  other
convertible  debentures,  the interest is payable at maturity or redemption,  if
earlier, and such interest will be converted to common stock upon the conversion
of the  convertible  debentures.  For  the  August  2004  convertible  debenture
obligation,  the  corresponding  accrued  interest  payable is  classified  as a
current  liability.  The remaining  obligations  and the  corresponding  accrued
interest  obligations  thereon are classified as non-current  obligations on the
condensed consolidated balance sheet at September 30, 2004.

         Under  the  terms of the note  payable -  related  party,  the  Company
accrues interest from the date of issue, December 22, 2003, through December 31,
2004.  Pursuant  to the terms of the note,  effective  on January  1, 2005,  the
accrued interest will be added to the principal  balance of the obligation.  The
Company will then begin making 60 equal payments of $27,740,  including interest
at 5% per annum,  which will fully repay the outstanding  obligations  under the
note by January 2010.  The accrued  interest on this note  payable,  aggregating
approximately  $54,000 at September 30, 2004, is reflected in accrued interest -
non-current  in the  condensed  consolidated  balance  sheet as of September 30,
2004.


                                      F-12


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8.       EMPLOYMENT AGREEMENT

         Effective  June 1, 2004,  NuWave  entered  into a five year  employment
contract with its President and Chief Executive Officer,  George Kanakis,  at an
annual  salary  of  $125,000  per year,  subject  to  increases  at the Board of
Directors' discretion. Mr. Kanakis is also entitled to a bonus equal to 12.5% of
the net income  attributable  to each NuWave  subsidiary,  plus a  discretionary
bonus as  determined  by the Board of Directors.  In addition,  Mr.  Kanakis was
issued 75,000 shares of common stock.  Under the contract,  at some future date,
Mr.  Kanakis will be entitled to receive  options to purchase  100,000 shares of
common  stock.  The Company has not yet adopted a stock option plan and as such,
no options have yet been issued to Mr. Kanakis. The Company recorded an earnings
charge of $7,500 in connection  with the issuance of the 75,000 shares of common
stock.

9.       STANDBY EQUITY DISTRIBUTION AGREEMENT

         In  May  2004,  NuWave  entered  into  a  Standby  Equity  Distribution
Agreement with Cornell.  Pursuant to the Standby Equity Distribution  Agreement,
the Company  may, at its  discretion,  periodically  sell to Cornell  registered
shares of common stock for a total purchase price of up to $30 million. For each
share of common stock purchased under the Standby Equity Distribution Agreement,
Cornell  will  pay  NuWave  99% of the  volume  weighted  average  price  on the
Over-the-Counter  Bulletin Board or other  principal  market on which its common
stock is traded for the 5 days immediately  following the notice date.  Further,
Cornell  will  retain a fee of 10% of each  advance  under  the  Standby  Equity
Distribution   Agreement.   Pursuant  to  the  terms  of  this  Standby   Equity
Distribution Agreement,  the Company is restricted from raising capital from the
sale of securities at a price less than the market price of the Company's  stock
on the  date of  issuance  or  granting  additional  security  interests  in the
Company's  assets.  The Company intends to register  67,000,000 shares of common
stock in conjunction with this Standby Equity Distribution Agreement. On May 25,
2004,  the Company  issued  111,111  shares to the  placement  agent  engaged in
association with this agreement, and recorded an earnings charge of $10,000.

         The  amount  of each  advance  is  limited  to a  maximum  draw down of
$1,000,000  every 7 trading  days up to a maximum  of  $4,000,000  in any 30-day
period. The amount available under the Standby Equity Distribution  Agreement is
not  dependent  on the  price or  volume  of the  Company's  common  stock.  The
Company's   ability  to  request   advances  is  conditioned  upon  the  Company
registering  the shares of common stock with the SEC. In  addition,  the Company
may not  request  advances  if the shares to be issued in  connection  with such
advances would result in Cornell Capital Partners, L.P. owning more than 9.9% of
the Company's outstanding common stock.


                                      F-13


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10.      SEGMENT DATA

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

         Summarized  financial  information  for the three and nine months ended
September 30, 2004 concerning the Company's  reportable segments is shown in the
following table:

                                         THREE MONTHS ENDED SEPTEMBER 30, 2004
                                                     (IN THOUSANDS)

                                                        REAL ESTATE
                                       VIDEO & IMAGE    DEVELOPMENT
                                        TECHNOLOGY        AND SALE      TOTAL
                                        -----------     -----------   ---------
    Net revenues from customers         $        --     $        --   $      --
                                        ===========     ===========   =========
    Loss from operations                $       (79)    $      (201)  $    (280)
                                        ===========     ===========   =========

    Interest expense                    $        86     $       116   $     202
                                        ===========     ===========   =========

    Total identifiable assets           $         5     $     4,253   $   4,258
                                        ===========     ===========   =========
    Capital expenditures, including
    capitalized interest                $        --     $        86   $      86
                                        ===========     ===========   =========


                                          NINE MONTHS ENDED SEPTEMBER 30, 2004
                                                    (IN THOUSANDS)

                                                        REAL ESTATE
                                       VIDEO & IMAGE    DEVELOPMENT
                                        TECHNOLOGY        AND SALE      TOTAL
                                        -----------     -----------   ---------
    Net revenues from customers         $        --     $        --   $      --
                                        ===========     ===========   =========
    Loss from operations                $      (224)    $      (348)  $    (572)
                                        ===========     ===========   =========

    Interest expense                    $       162     $       215   $     377
                                        ===========     ===========   =========

    Total identifiable assets           $         5     $     4,253   $   4,258
                                        ===========     ===========   =========
    Capital expenditures, including
    capitalized interest                $        --     $       379   $     379
                                        ===========     ===========   =========


                                      F-14


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11.      LEASE COMMITMENT

         In May 2004,  the Company  entered into a five year sublease  agreement
for the rental of 3,580  square feet of  corporate  office tower space in Jersey
City, New Jersey.  This rental  agreement is effective July 1, 2004 and requires
the  Company to pay rent of  approximately  $7,000 and  approximately  $3,000 in
shared building operating  expenses,  each month. The Company subleases one half
of this space to a subtenant,  for approximately $5,000 per month. The Company's
obligations  under this lease are guaranteed by Yorkville  Advisors  Management,
LLC  ("Yorkville").  Yorkville  is  related  to  Cornell a related  party to the
Company.

         The  approximate  future  minimum  lease  payments  under the Company's
non-cancellable  operating  lease in effect at  September  30,  2004,  offset by
projected proceeds to be received for subtenant rentals, are as follows:


                                             Projected
                        Minimum Lease      Proceeds To Be       Minimum Lease
                        Payments Under     Received Under      Payments, Net of
          Year         Operating Lease   Sub-tenant Rentals   Sub-tenant Rentals
          ----         ---------------   ------------------   ------------------
          2004             $ 20,000           $ 10,000            $ 10,000
          2005               78,000             39,000              39,000
          2006               78,000             39,000              39,000
          2007               78,000             39,000              39,000
          2008               78,000             39,000              39,000
          2009               40,000             20,000              20,000
                           --------           --------            --------
          Total            $372,000           $186,000            $186,000
                           ========           ========            ========




                                      F-15


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12.      SUBSEQUENT EVENTS

         REDEMPTION OF CONVERTIBLE DEBENTURE

         During November 2004,  NuWave redeemed a Convertible  debentures with a
face amount of  $250,000  for  approximately  $287,000,  including a  redemption
premium of $25,000 and accrued  interest  through  redemption  of  approximately
$12,000.  The unamortized  discount of  approximately  $63,000 at redemption has
been recorded as interest expense.

         ISSUANCE OF CONVERTIBLE DEBENTURE

         During October 2004, NuWave issued $100,000 in a convertible debenture.
This debenture  bears  interest at a rate of 5% per annum,  with interest due at
maturity or upon conversion.  This debenture matures in October 2006. NuWave has
recorded a debt discount of $25,000 at issuance of this convertible debenture to
reflect  the  value  of  the  beneficial   conversion  feature  related  to  the
convertible  debenture.  Accordingly,  NuWave  has  recorded  the  value  of the
beneficial  conversion  feature as a  reduction  to the  carrying  amount of the
convertible  debt and as an addition to additional  paid-in  capital.  This debt
discount is being amortized over the term of the related debenture,  which is 24
months,  and such  amortization  will be  recorded  as  interest  expense on the
condensed  consolidated  statement of operations.  At the option of NuWave, upon
the maturity  date,  this  convertible  debenture may be converted into NuWave's
Common Stock.  At the option of the holder,  at any time prior to maturity,  any
portion of this  convertible  debenture may be converted into Common Stock.  The
value of principal and accrued  interest is  convertible  at the per share price
equal to the  lesser of (a) 120% of the  closing  bid  price,  or (b) 80% of the
lowest closing bid price for the five days immediately  preceding the conversion
date. In addition,  NuWave may redeem, with 15 days advance notice, a portion or
all of this  outstanding  debenture  at 110% of the  dollar  value of the amount
redeemed plus accrued interest.

         TERMINATION  AND  RESCISSION OF JULY 2004  AGREEMENT OF SALE AND AUGUST
2004  CONVERTIBLE  DEBENTURE AND  RECOGNITION OF THE SALE OF AN INTEREST IN LAND
HELD FOR DEVELOPMENT AND SALE

         During July 2004 and August 2004, the Company entered into an Agreement
of Sale and a Convertible Debenture,  respectively, related to its transfer of a
20% fee simple interest in its land held for development and sale as a tenant in
common.  During  November  2004,  the  Agreement  of Sale  and  the  Convertible
Debenture  were  terminated and rescinded in their entirety and replaced with an
Amended and Restated Agreement of Sale issued in November 2004.

         The  terms of the July  2004  Agreement  of Sale  and the  August  2004
Convertible Debenture are outlined below.


                                      F-16


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12.      SUBSEQUENT EVENTS  - CONTINUED

         The  Company  sold a 20% fee  simple  interest  in its  land  held  for
development and sale as a tenant in common to an entity which is a related party
to a current holder of the Company's  convertible  debentures  ("Investor")  and
received cash proceeds of $1,783,549.

         The Company may  reacquire  an  interest  in the  property  ("Company's
Option"). At any time after closing and upon 15 days advance written notice, the
Company may repurchase all or a portion of the interest sold at a purchase price
computed at 120% of the price, or portion  thereof,  paid by the Investor on the
effective date.

         The  Investor,  at any time  after  closing  and  upon 15 days  advance
written notice,  may sell back to the Company all or any portion of its interest
in the property ("Investor's  Option"). The Investor may sell this property back
to the Company through exercise rights under a convertible  debenture agreement,
discussed  below.  The  Investor's  Option  expires on August 1, 2007, and shall
thereupon be exercised  automatically  for any portion of the property  interest
not already reacquired by the Company.

         In  addition,  the  Investor  has  provided the Company with a right of
first offer to reacquire the Company's interest in the property. If, at any time
prior to August 1, 2007,  the  Investor  wishes to sell its  interest to a third
party,  it must first  notify the Company.  Upon such  notice,  the Company may,
within 30 days,  repurchase all of the remaining  property  interest for a price
equal to a pro-rata  portion of the  original  price paid by the Investor at the
effective date ($1,783,549).  If the Company fails to exercise this offer within
the 30 day period,  then the Investor  shall be allowed 90 days in which to sell
all of its interests in the property to a third party.

         In conjunction with this transaction,  the Company issued a convertible
debenture in favor of the Investor for $1,783,549.  This  convertible  debenture
bears  interest from July 14, 2004 at 10% per annum,  with the interest  payable
monthly,  starting  September 1, 2004.  This  convertible  debenture  matures on
August 1, 2007.

         Under  the  terms of the  convertible  debenture,  an  exercise  of the
Company's  Option to reacquire its former interest in the property is treated as
a  redemption  of all or a portion  of its  obligations  under  the  convertible
debenture. The Company's purchase price in this case is a premium of 120% of the
price,  or portion  thereof,  paid by the  Investor on the  effective  date,  as
discussed above.

         An exercise of the  Investor's  Option to sell its interest in the land
back to the Company is accomplished  through the Investor's right to convert the
amount  outstanding  under the convertible  debenture into the Company's  common
stock.  The aggregate amount of principal and any unpaid interest is convertible
at the per share  price equal to the lesser of (a) 120% of the closing bid price
at August 20, 2004, or (b) 80% of the lowest closing bid price for the five days
immediately  preceding the conversion  date.  Upon such  conversion,  a pro-rata
portion of the interest in the  property is sold back to the  Company.  Upon the
maturity of the convertible debenture,  the Investor's Option terminates and any
remaining amount of the convertible  debenture is  automatically  converted into
the Company's common stock.  Upon such conversion,  the remaining portion of the
interest in the property is sold back to the Company.


                                      F-17


                           NUWAVE TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12.      SUBSEQUENT EVENTS  - CONTINUED

         The Company's  reacquisition of its interests in the property under the
terms of the rights of first  offer,  as  described  above,  shall  represent  a
satisfaction of its obligations at face value under the convertible debenture.

         Upon the  Investor's  sale of the  property  to a third party under the
terms of the rights of first offer, as described  above,  all obligations of the
Company under the convertible debenture shall immediately terminate.

         In accordance with the provisions a SFAS No. 66,  "Accounting for Sales
of Real Estate," the Company has accounted for this  transaction  as a financing
transaction.  Under  the  provisions  of SFAS No.  66,  when the  seller  has an
obligation to repurchase the property, or the terms of the transaction allow the
buyer to compel the seller to  repurchase  the  property or  interest,  then the
transaction  shall be accounted  for as a financing  transaction,  rather than a
sale. Under the terms of this  transaction,  the Investor's  Option requires the
Investor to sell the property back to the Company. This sale back to the Company
will be satisfied  through the conversion of the  Investor's  interest under the
convertible debenture into the Company's common stock.

         Upon the  Investor's  sale of the  property  interest  to a third party
under the terms of the rights of first offer, as described above, this financing
transaction  shall be deemed to have  terminated and the Company shall thereupon
account for the  proceeds  received as a sale of its  interest in the  property,
with any gain or loss on such sale to be recognized accordingly at that time.

         During  November  2004,  the July 2004 Agreement of Sale and the August
2004 Convertible  Debenture were rescinded and terminated pursuant to an Amended
and  Restated  Agreement of Sale.  Under this Amended and Restated  Agreement of
Sale, for a selling price of  approximately  $1,427,000,  the Company has sold a
20% fee simple interest in its land held for development and sale as a tenant in
common  to an  entity  which is a  related  party  to a  current  holder  of the
Company's  convertible  debentures.  The Company has applied the $1,427,000 sale
amount  against the proceeds  from the  convertible  debenture  and has incurred
interest expense of $38,000 for the three month period ended September 30, 2004,
$30,000 of which has been paid to the buyer  through  September  30,  2004.  The
Company has incurred  additional interest expense of $20,000 through the date of
termination.  On November 29, 2004, the Company paid  approximately  $326,000 to
the buyer,  representing  approximately $28,000 in accrued interest and $298,000
in refunded proceeds.


                                      F-18


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of NuWave
Technologies,  Inc. and Subsidiary as of December 31, 2003, and the consolidated
results of their  operations  and their cash flows for the year then  ended,  in
conformity with U.S. generally accepted accounting principles.

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

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

April 9, 2004
New York, New York


                                      F-19


            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the  statements of  operations,  stockholders'  equity  (capital
deficit),  and cash  flows  of  NUWAVE  Technologies,  Inc.  for the year  ended
December 31, 2002.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  results  of  operations  and cash flows of NUWAVE
Technologies,  Inc. for the year ended  December 31, 2002,  in  conformity  with
accounting priciples generally accepted in the United States of America.

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


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


Florham Park, New Jersey
March 28, 2003


                                      F-20


                     NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

                           Consolidated Balance Sheet

                   (In thousands, except share and per share data)


                                     ASSETS


                                                                    December 31,
                                                                        2003
                                                                    ------------
Current assets:
     Cash and cash equivalents                                       $    119
     Inventory                                                              1
                                                                     --------

                     Total current assets                                 120

Property and equipment, net                                                 4
Land held for development and sale                                      2,970
Deferred tax asset                                                        225
                                                                     --------
                     Total assets                                    $  3,319
                                                                     ========

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current liabilities:

     Accounts payable and accrued liabilities                        $    170
                                                                     --------

                     Total current liabilities                            170

Long-term liabilities:
     Notes payable - related party                                        484
     Secured note payable - related party                               1,400
     Convertible debentures - related party,                            
       net of unamortized discount of $866                              2,634
     Convertible debentures, net of unamortized discount of $109          336
                                                                     --------
                     Total long-term liabilities                        4,854
                                                                     --------
                     Total liabilities                                  5,024
                                                                     --------
Stockholders' deficiency:
     Series A Convertible Preferred Stock, noncumulative,
       $.01 par value; authorized 400,000 shares; none issued              --
     Preferred stock, $.01 par value; authorized 1,600,000
       shares; none issued - (preferences and
       rights to be designated by the Board of Directors)                  --
     Common stock, $.001 par value; authorized 140,000,000 shares;
       1,875,902 shares issued and outstanding                              2
     Additional paid-in capital                                        26,216
     Accumulated deficit                                              (27,923)
                                                                     --------
                     Total stockholders' deficiency                    (1,705)
                                                                     --------
                     Total liabilties and stockholders' deficiency   $  3,319
                                                                     ========


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


                                      F-21


                    NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

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



                                                               For the Years ended December 31,
                                                                ----------------------------
                                                                    2003             2002
                                                                -----------      -----------
                                                                           
Net sales                                                       $        20      $       286
Cost of sales                                                             5              390
                                                                -----------      -----------
                Gross profit (loss)                                      15             (104)
                                                                -----------      -----------

Operating expenses:
     General and administrative                                         958            2,071
     Research and development                                           134              681
                                                                -----------      -----------
         Total operating expenses                                     1,092            2,752
                                                                -----------      -----------
                Loss from operations                                 (1,077)          (2,856)
                                                                -----------      -----------

Other income (expense):
    Gain on forgiveness of debt                                         347               --
    Interest income                                                      --                5
    Interest expense                                                    (55)              (5)
                                                                -----------      -----------
                Other income, net                                       292               --
                                                                -----------      -----------

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

                (Provision for) benefit from income taxes                (5)             182
                                                                -----------      -----------
                Net loss                                               (790)          (2,674)

                Deemed dividend - Redemption premium on
                convertible preferred stock                             (19)              --
                                                                -----------      -----------
                Net loss applicable to common stockholders      $      (809)     $    (2,674)
                                                                ===========      ===========
Basic and diluted net loss per common share:
                Weighted average number of
                    common shares outstanding                     1,455,365          285,315
                                                                ===========      ===========
                Basic and diluted net loss per common share     $     (0.56)     $     (9.37)
                                                                ===========      ===========



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


                                      F-22

                    NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                        (IN THOUSANDS, EXCEPT SHARE DATA)




                                                                     CONVERTIBLE                                      TOTAL
                                          COMMON STOCK             PREFERRED STOCK      ADDITIONAL                STOCKHOLDERS'
                                      ---------------------    ----------------------     PAID-IN    ACCUMULATED     EQUITY
                                        SHARES      AMOUNT       SHARES       AMOUNT      CAPITAL      DEFICIT    (DEFICIENCY)
                                      ---------   ---------    ---------    ---------    ---------    ---------    ---------
                                                                                              
Balance, January 1, 2002                228,053   $       2           --    $      --    $  25,725    $ (24,440)   $   1,287

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

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

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

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

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

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

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

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

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

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

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

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

Redemption of convertible

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

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

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

Net loss                                     --          --           --           --           --         (790)        (790)
                                      ---------   ---------    ---------    ---------    ---------    ---------    ---------
Balance, December 31, 2003            1,875,902   $       2           --    $      --    $  26,216    $ (27,923)   $  (1,705)
                                      =========   =========    =========    =========    =========    =========    =========



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

                                      F-23


                    NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)



                                                                       For the Years ended
                                                                           December 31,
                                                                     ----------------------
                                                                        2003         2002
                                                                     ---------    ---------
                                                                                   
Cash flows from operating activities:
      Net loss                                                       $    (790)   $  (2,674)
                                                                     ---------    ---------

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

              Bad debt expense                                              11           --
              Deferred income taxes                                          5           --
              Depreciation                                                  42           32
              Loss on disposal of equipment                                 --            7
              Amortization of debt discount                                 11           --
              Issuance of stock and warrants for services                   27          200
              Gain on forgiveness of debt                                 (347)          --

          Decrease in operating assets:
              Decrease in accounts receivable                               --          127
              Decrease in inventory                                         24          388
              Decrease in prepaid expenses and other
                  current assets                                           159           20
              Decrease in other assets                                      20           10
              Decrease in deferred tax asset                                --           50

          Decrease in operating liabilities:
              Decrease in accounts payable and accrued liabilities         (20)        (309)
                                                                     ---------    ---------
                    Total adjustments                                      (68)         525
                                                                     ---------    ---------
                    Net cash used in operating activities                 (858)      (2,149)
                                                                     ---------    ---------
Cash flows from investing activities:

      Purchase of property and equipment                                    --           (7)
      Land development costs                                               (55)          --
      Proceeds from sale of equipment                                        1            3
                                                                     ---------    ---------
                    Net cash used in investing activities            $     (54)   $      (4)
                                                                     ---------    ---------


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


                                      F-24



                    NUWAVE TECHNOLOGIES, INC. AND SUBSIDIARY

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




                                                                     For the Years ended
                                                                         December 31,
                                                                 --------------------------
                                                                   2003               2002
                                                                 -----------    -----------
                                                                          
Cash flows from financing activities:

      Proceeds from issuance of notes payable - related party            557             --
      Proceeds from issuance of notes payable                             --            640
      Proceeds from issuance of convertible debentures                   395             --
      Repayment of note payable to officer/stockholder                  (115)            --
      Proceeds from issuance of common stock
        under Equity Line of Credit                                       39            850
      Proceeds from issuance of convertible preferred stock               67             --
      Costs incurred for equity offerings and warrants                    --           (174)
      Redemption of convertible preferred stock (inclusive of
          redemption premium of $19)                                     (86)            --
                                                                 -----------    -----------
          Net cash provided by financing activities                      857          1,316
                                                                 -----------    -----------

Net decrease in cash and cash equivalents                                (55)          (837)
Cash and cash equivalents - beginning of the year                        174          1,011
                                                                 -----------    -----------

Cash and cash equivalents - end of the year                      $       119    $       174
                                                                 ===========    ===========
Supplemental disclosure of cash flow information:

      Cash paid during the year for interest                     $        25    $         5
                                                                 ===========    ===========
Supplemental disclosures of non-cash investing and
   financing activities:

      Recording of debt discount                                 $       986    $        --
                                                                 ===========    ===========
      Issuance of 1,151,490 and 187,374 shares of
      common stock in settlement of notes payable                $       273    $       325
                                                                 ===========    ===========

      On December 22, 2003, the Company acquired
      a parcel of land through the
      assumption of debt as follows:

          Land held for development and sale                     $     2,915
          Note payable - Related party - Stone Street
              Asset Management , LLC                                  (1,400)
          Convertible debenture - Related party - Cornell
              Capital Partners, LP                                    (3,300)
          Convertible debentures                                        (250)
                                                                 -----------
          Additional paid-in capital - adjustment
            to record acquired land at the seller's
            historical cost basis                                $    (2,035)
                                                                 ===========



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


                                      F-25



                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       ORGANIZATION AND NATURE OF OPERATIONS

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

2.       GOING CONCERN AND MANAGEMENT'S PLAN


         The  Company  incurred  a  net  loss  of  approximately   $790,000  and
$2,674,000 during the years ended December 31, 2003 and 2002, respectively,  and
at December  31, 2003 has  stockholders'  and working  capital  deficiencies  of
approximately $1,705,000 and $50,000,  respectively and at December 31, 2002 had
stockholders'  and working  capital  deficiencies of  approximately  $27,000 and
$283,000, respectively, that raise substantial doubt about the Company's ability
to continue as a going concern.


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

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

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


                                      F-26


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         PRINCIPLES OF CONSOLIDATION

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

         USE OF ESTIMATES

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

         CASH AND CASH EQUIVALENTS

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

         INVENTORY

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

         PROPERTY AND EQUIPMENT

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

         LAND HELD FOR DEVELOPMENT AND SALE

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

         IMPAIRMENT OF LONG-LIVED ASSETS

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


                                      F-27


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         REVENUE RECOGNITION

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

         RESEARCH AND DEVELOPMENT COSTS

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

         ADVERTISING COSTS

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

         INCOME TAXES

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

         STOCK-BASED COMPENSATION

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

         The following table summarizes the effect on net loss as if the Company
has applied the fair value recognition provisions of SFAS No. 123 to stock-based
employee compensation. Since certain option grants awarded during 2001 vest over
several  years,  the  pro  forma  results  noted  below  are  not  likely  to be
representative  of  the  effects  on  future  years  of the  application  of the
fair-value-based method.


                                      F-28


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         STOCK-BASED COMPENSATION, CONTINUED



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

Less:  Total stock based employee compensation
  expense determined under the fair value based
  method for all awards                                      --           (28,000)
                                                    -----------       -----------

Pro forma net loss                                  $  (809,000)      $(2,702,000)
                                                    ===========       ===========

Basic and diluted net loss per share, as reported   $      (.56)      $     (9.37)
                                                    ===========       -----------

Pro forma basic and diluted net loss per share      $      (.56)      $     (9.47)
                                                    ===========       ===========



         For the purpose of the above pro forma  information,  the fair value of
these options was estimated at the date of grant using the Black-Scholes  option
pricing   model.   Options  were  last  issued  by  the  Company  in  2001.  The
weighted-average  fair value of the options granted during 2001 was $39.00.  The
following weighted-average  assumptions were used in computing the fair value of
option grants for 2001:  weighted-average  risk-free  interest rates ranged from
5.09% to 5.39%; zero dividend yield; volatility of the Company's Common Stock of
110%; and an expected life of the options of ten years.


         LOSS PER SHARE

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

         CONCENTRATION OF CREDIT RISK - CASH

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


                                      F-29


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

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

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

         EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS

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

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


                                      F-30


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.       PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:

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

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

5.       LAND HELD FOR DEVELOPMENT AND SALE

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

6.       ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

         Accounts payable and accrued liabilities consist of the following:

                                                                DECEMBER 31,
                                                                    2003
                                                                ------------
Accounting and legal fees                                       $   51,000
Interest - related parties                                          31,000
Interest                                                             1,000
Consulting fees                                                     37,000
Automobile lease termination fee                                    22,000
Miscellaneous                                                       28,000
                                                                ----------
                                                                $  170,000
                                                                ==========


                                      F-31


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.       NOTES PAYABLE AND CONVERTIBLE DEBENTURES

         NOTE PAYABLE OFFICER/STOCKHOLDER

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

         NOTES PAYABLE

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

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

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

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

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


                                      F-32


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.       NOTES PAYABLE AND CONVERTIBLE DEBENTURES, CONTINUED

         NOTES PAYABLE - RELATED PARTY, CONTINUED


          o    The Agreement was consummated on September 29, 2003 and effective
               with the closing and the resignations of the Board members.  As a
               result of reaching  settlements  to satisfy  certain  outstanding
               obligations  of the Company,  including  trade  payables,  unpaid
               wages,  and  settlement  of  employment  agreements,  the Company
               realized a gain on forgiveness of debt of approximately  $347,000
               during the year ended December 31, 2003.


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

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

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

         CONVERTIBLE DEBENTURES

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

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


                                      F-33


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.       NOTES PAYABLE AND CONVERTIBLE DEBENTURES, CONTINUED

         CONVERTIBLE DEBENTURES, CONTINUED

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

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

         SECURED NOTE PAYABLE - RELATED PARTY

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

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

        Year Ending December 31,                       Amount
        ------------------------                    -----------
                2004                                $        --
                2005                                  1,122,000
                2006                                    273,000
                2007                                    287,000
                2008                                  3,802,000
                Thereafter                              345,000
                                                     ----------

        Total notes payable and convertible
        debentures                                    5,829,000

        Less: unamortized debt discount                 975,000

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


                                      F-34


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.       STOCKHOLDERS' DEFICIENCY

         CONVERTIBLE PREFERRED STOCK

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

         COMMON STOCK AND WARRANTS

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

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

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


                                      F-35


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.       STOCKHOLDERS' DEFICIENCY, CONTINUED

         COMMON STOCK AND WARRANTS, CONTINUED

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

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

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

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

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



                                      F-36


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.       STOCKHOLDERS' DEFICIENCY, CONTINUED

         COMMON STOCK AND WARRANTS, CONTINUED

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

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

          NUMBER OF                         WEIGHTED
        COMMON SHARES                       AVERAGE
          UNDERLYING      EXERCISE PRICE    EXERCISE      EXPIRATION
           WARRANTS      RANGE PER SHARE     PRICE          DATES
        -------------    ---------------    --------   ----------------
             3,130       $53.50 - $70.00     $66.78    November 2004 to
                                                         December 2004
            12,000       $37.50 - $100.00    $68.79    February 2005 to
                                                         November 2005
             3,100        $5.00 - $50.00     $38.39     January 2007 to
                                                         October 2007
           200,000            $1.00           $1.00     September 2008
          --------
          218,230
          =======


         STOCK OPTIONS

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

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


                                      F-37


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.       STOCKHOLDERS' DEFICIENCY, CONTINUED

         STOCK OPTIONS, CONTINUED

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



                                                                     WEIGHTED
                                    NUMBER OF                        AVERAGE     NUMBER OF
                                     COMMON       EXERCISE PRICE     EXERCISE     SHARES
                                     SHARES      RANGE PER SHARE      PRICE     EXERCISABLE
                                    ----------   ----------------    --------   -----------
                                                                      
Outstanding at January 1, 2002        32,560     $30.50 - $344.00    $126.00      29,843
                                                                                  ======
Cancelled                              5,203     $36.50 - $344.00    $190.00
                                     -------
Outstanding at December 31, 2002      27,357     $30.50 - $337.50    $114.50      26,991
                                                                                  ======
Forfeited                             27,357     $30.50 - $337.50    $114.50
                                     -------
Outstanding at December 31, 2003          --                                          --
                                     =======                                      ======



         PERFORMANCE INCENTIVE STOCK OPTION PLAN

On January 31, 1996, the Company  adopted its 1996  Performance  Incentive Stock
Option Plan (the  "Plan").  Under the Plan,  incentive  and  nonqualified  stock
options,  stock appreciation rights and restricted stock could be granted to key
employees  and  consultants  (the   "Participants")  by  certain   disinterested
directors of the Board of Directors. Any incentive option granted under the Plan
would have an exercise  price of not less than 100% of the fair market  value of
the  shares on the date on which  such  option is  granted.  With  respect to an
incentive  option  granted to a Participant  who owns more than 10% of the total
combined  voting  stock of the  Company  or of any parent or  subsidiary  of the
Company,  the exercise  price for such option would be at least 110% of the fair
market value of the shares subject to the option on the date on which the option
is granted.  A nonqualified  option  granted under the Plan (i.e.,  an option to
purchase  the  common  stock  that  does not meet the  Internal  Revenue  Code's
requirements for incentive options) would have an exercise price of at least the
par value of the common  stock.  Stock  appreciation  rights could be granted in
conjunction with the grant of an incentive or nonqualified option under the Plan
or independently of any such stock option. The directors  determined the vesting
of the options under the Plan at the date of grant.  A maximum of 24,100 options
could be awarded  under the Plan (as  amended  May 26,  1998).  No options  were
issued during the years ended  December 31, 2003 and 2002 under the  Performance
Incentive Stock Option Plan. This plan was terminated by the Company on December
31, 2003.


                                      F-38


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.   STOCKHOLDERS' DEFICIENCY, CONTINUED

         STOCK OPTIONS, CONTINUED

         NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

         On November 25, 1996, the Company  established a Non-Employee  Director
Stock Option Plan (the  "Director's  Plan").  The Director's  Plan provided that
each member of the Board of Directors (an "Eligible Director") who otherwise (1)
was not currently an employee of the Company,  or (2) was not a former  employee
still  receiving  compensation  for prior services  (other than benefits under a
tax-qualified  pension  plan) would be eligible  for the grant of stock  options
under the Director's Plan. Each Eligible Director at the time of his election to
the Board of Directors,  would be granted an option to purchase 60 shares of the
Company's  common  stock at an  exercise  price  equal to closing  price of such
common stock at close of business at the date of such grant, such option to vest
immediately and to expire five years from the date of such grant.

         Beginning  with the annual meeting of the  stockholders  of the Company
held on May 29, 1997 and provided  that a sufficient  number of shares  remained
available under the Director's Plan, each year immediately following the date of
the annual meeting of the Company there  automatically  would be granted to each
Eligible  Director  who was then  serving on the Board an option to purchase 100
shares of the Company's common stock.  The first 20 options vested  immediately,
the remainder vested equally over the next four years from the date of grant and
were exercisable at the closing price of such shares of common stock at the date
of grant.  Such options expired five years from the date of vesting.  No options
were  issued  during  the  years  ended  December  31,  2003 and 2002  under the
Director's Plan. This plan was terminated by the Company on December 31, 2003.

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

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

9.       EMPLOYEE BENEFIT PLAN

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


                                      F-39


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.      INCOME TAXES

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

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

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

                                                               2003       2002
                                                              ------     ------
         Tax at federal statutory rate                         34.0%      34.0%
         State income tax benefit (expense) net of federal
           tax effect                                          (0.2)%      4.2%
         Increase in valuation allowance  aaallowance         (37.0)%    (33.9)%
         Miscellaneous                                          2.6%       2.1%
                                                              ------     ------
         Effective income tax rate                              0.6%       6.4%
                                                              ======     ======


         The tax effect of temporary differences consists of the following:

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

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


                                      F-40


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.      INCOME TAXES, CONTINUED

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

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

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

11.      SEGMENT DATA

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

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


                                      F-41


                           NUWAVE TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.      SEGMENT DATA, CONTINUED

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

                                                   (IN THOUSANDS)

                                                     REAL ESTATE
                                   VIDEO & IMAGE     DEVELOPMENT
                                    TECHNOLOGY        AND SALE         TOTAL
                                     ----------      ----------       -------
    Net revenues from customers      $       20      $       --       $    20
                                     ==========      ==========       =======
    Loss from operations             $   (1,062)     $      (15)      $(1,077)
                                     ==========      ==========       =======
    Total identifiable assets        $      349      $    2,970       $ 3,319
                                     ==========      ==========       =======
    Gain on forgiveness of debt      $      347      $       --       $   347
                                     ==========      ==========       =======
    Interest expense                 $       53      $        2       $    55
                                     ==========      ==========       =======

    Depreciation                     $       42      $       --       $    42
                                     ==========      ==========       =======
    Capital expenditures             $       --      $    2,970       $ 2,970
                                     ==========      ==========       =======


12.      MAJOR CUSTOMERS

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

13.      SALES AND MARKETING AGREEMENT

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

14.      SUBSEQUENT EVENTS

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


                                      F-42



WE  HAVE  NOT   AUTHORIZED  ANY  DEALER,
SALESPERSON  OR OTHER  PERSON TO PROVIDE
ANY     INFORMATION    OR    MAKE    ANY
REPRESENTATIONS       ABOUT       NUWAVE
TECHNOLOGIES,     INC.     EXCEPT    THE
INFORMATION OR REPRESENTATIONS CONTAINED
IN THIS PROSPECTUS.  YOU SHOULD NOT RELY
ON   ANY   ADDITIONAL   INFORMATION   OR
REPRESENTATIONS IF MADE.

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

This  prospectus  does not constitute an            ----------------------
offer to sell, or a  solicitation  of an
offer to buy any securities:                              PROSPECTUS

     O    except   the   common    stock             ---------------------
          offered by this prospectus;

     O    in any  jurisdiction  in which
          the offer or  solicitation  is
          not authorized;                     130,690,033 Shares of Common Stock

     O    in any jurisdiction  where the           NuWave Technologies, Inc.
          dealer or other salesperson is
          not   qualified  to  make  the             ___________ __, 2004
          offer or solicitation;

     O    to any  person  to  whom it is
          unlawful  to make the offer or
          solicitation; or

     O    to  any  person  who  is not a
          United States  resident or who
          is outside the jurisdiction of
          the United States.

The delivery of this  prospectus  or any
accompanying sale does not imply that:

     O    there  have been no changes in
          the    affairs    of    NuWave
          Technologies,  Inc.  after the
          date of this prospectus; or

     O    the  information  contained in
          this   prospectus  is  correct
          after   the   date   of   this
          prospectus.

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

Until  __________,   2004,  all  dealers
effecting transactions in the registered
securities, whether or not participating
in this distribution, may be required to
deliver   a   prospectus.   This  is  in
addition to the obligation of dealers to
deliver  a  prospectus  when  acting  as
underwriters.




                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

         NuWave's bylaws provide that we have the power to indemnify any officer
or director  against  damages if such person acted in good faith and in a manner
the person  reasonably  believed to be in the best interests of our Company.  No
indemnification  may be made (i) if a person is adjudged  liable  unless a Court
determines  that such  person is  entitled  to such  indemnification,  (ii) with
respect to amounts paid in settlement  without court  approval or (iii) expenses
incurred in defending any action without court approval.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

         The  following  table  sets forth  estimated  expenses  expected  to be
incurred in  connection  with the issuance and  distribution  of the  securities
being registered. All expenses will be paid by NuWave.


          Securities and Exchange Commission Registration Fee    $     1,407
          Printing and Engraving Expenses                              1,500
          Accounting Fees and Expenses                                65,000
          Legal Fees and Expenses                                     25,000
          Miscellaneous                                                7,093
                                                                 -----------
          TOTAL                                                  $   100,000
                                                                 ===========


ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

Standby Equity Distribution Agreement

         In May 2004, we entered into a Standby  Equity  Distribution  Agreement
with Cornell Capital Partners,  L.P. Pursuant to the Standby Equity Distribution
Agreement,  we may,  at our  discretion,  periodically  sell to Cornell  Capital
Partners,  L.P.  shares of common stock for a total  purchase price of up to $30
million.  For each share of common  stock  purchased  under the  Standby  Equity
Distribution  Agreement,  Cornell Capital Partners,  L.P. will pay NuWave 99% of
the volume  weighted  average price on the  Over-the-Counter  Bulletin  Board or
other  principal  market on which  our  common  stock is  traded  for the 5 days
immediately following the notice date. Further,  Cornell Capital Partners,  L.P.
will retain a fee of 10% of each advance under the Standby  Equity  Distribution
Agreement. In connection with the Standby Equity Distribution Agreement, we paid
Newbridge Securities Corporation a fee of 111,111 shares of common stock.

Convertible Debenture


         During August 2004, the Company raised approximately $1,783,000 through
the  issuance  of a  convertible  debenture  to a  party  related  to a  current
convertible  debenture  holder.  This  debenture bore interest at 10% per annum,
with interest  payable  monthly and was secured  through an interest in the land
held for  development  and sale.  This debenture  matured in August 2007. At the
option of the holder or the Company,  at any time,  this  convertible  debenture
could be converted into the Company's  Common Stock.  The value of principal and
accrued  interest was  convertible at the per share price equal to the lesser of
(a) 120% of the closing bid price at August 20,  2004,  or (b) 80% of the lowest
closing bid price for the five days  immediately  preceding the conversion date.
In  connection  with the  issuance  of this  convertible  debenture  the Company
transferred a 20% fee simple interest in its land held for development and sale.
In addition,  the Company and the transferee each have the option to effectively
void all or a portion  of the  transfer.  In the event  that  neither  option is
exercised  within three years,  the 20% fee simple  interest  will revert to the
Company upon settlement of the convertible  debenture.  Upon issuance NuWave has
recorded a debt discount of $446,000,  for the August 2004 debenture.  This debt
discount was recorded to reflect the value of the beneficial  conversion feature
related to the  convertible  debentures.  Accordingly,  NuWave has  recorded the
value of the beneficial conversion feature as a reduction to the carrying amount
of the convertible debt and as an addition to additional  paid-in capital.  This
debt discount was being amortized over the term of the related debentures, which
was 36 months,  and the  amortization  of such discount was recorded as interest
expense on the accompanying condensed consolidated statement of operations.


                                      II-1


         During  November  2004,  the July 2004 Agreement of Sale and the August
2004 Convertible  Debenture were rescinded and terminated pursuant to an Amended
and  Restated  Agreement of Sale.  Under this Amended and Restated  Agreement of
Sale, for a selling price of  approximately  $1,427,000,  the Company has sold a
20% fee simple interest in its land held for development and sale as a tenant in
common  to an  entity  which is a  related  party  to a  current  holder  of the
Company's  convertible  debentures.  The Company has applied the $1,427,000 sale
amount  against the proceeds  from the  convertible  debenture  and has incurred
interest expense of $38,000 for the three month period ended September 30, 2004,
$30,000 of which has been paid to the buyer  through  September  30,  2004.  The
Company has incurred  additional interest expense of $20,000 through the date of
termination.  On November  29, 2004  NuWave paid  approximately  $326,000 to the
buyer,  representing  approximately  $28,000 in accrued interest and $298,000 in
refunded proceeds.


         Convertible Debentures


         During October 2004, NuWave issued $100,000 in a convertible debenture.
This debenture  bears  interest at a rate of 5% per annum,  with interest due at
maturity or upon conversion.  This debenture matures in October 2006. NuWave has
recorded a debt discount of $25,000 at issuance of this convertible debenture to
reflect  the  value  of  the  beneficial   conversion  feature  related  to  the
convertible  debenture.  Accordingly,  NuWave  has  recorded  the  value  of the
beneficial  conversion  feature as a  reduction  to the  carrying  amount of the
convertible  debt and as an addition to additional  paid-in  capital.  This debt
discount is being amortized over the term of the related debenture,  which is 24
months,  and such  amortization  will be  recorded  as  interest  expense on the
consolidated statement of operations. At the option of NuWave, upon the maturity
date, this convertible debenture may be converted into NuWave's Common Stock. At
the option of the  holder,  at any time prior to  maturity,  any portion of this
convertible debenture may be converted into Common Stock. The value of principal
and accrued  interest is  convertible at the per share price equal to the lesser
of (a) 120% of the closing bid price, or (b) 80% of the lowest closing bid price
for the five days immediately preceding the conversion date. In addition, NuWave
may redeem,  with 15 days advance notice,  a portion or all of this  outstanding
debenture  at 110% of the  dollar  value of the  amount  redeemed  plus  accrued
interest.

         In June 2004, NuWave issued $250,000 in a convertible  debenture.  This
debenture  bears  interest  at a rate of 10% per  annum,  with  interest  due at
maturity or upon conversion and matures in June 2006. NuWave has recorded a debt
discount of $83,000 at issuance of these  convertible  debentures to reflect the
value of the beneficial conversion feature related to the convertible debenture.
At the option of NuWave, upon the maturity date, this convertible debentures may
be converted  into NuWave's  Common Stock.  At the option of the holder,  at any
time  prior to  maturity,  any  portion  of this  convertible  debenture  may be
converted  into Common  Stock.  The value of principal  and accrued  interest is
convertible  at the per  share  price  equal  to the  lesser  of (a) 120% of the
closing bid price on April 26, 2004, or (b) 75% of the lowest  closing bid price
for the five days immediately preceding the conversion date. In addition, NuWave
may redeem,  with 15 days advance notice, a portion or all of these  outstanding
debentures  at 125% of the dollar  value of the  amount  redeemed  plus  accrued
interest. This convertible debenture was redeemed by NuWave in November 2004.


         During January 2004, NuWave issued $110,000 in convertible  debentures.
These  debentures bear interest at a rate of 5% per annum,  with interest due at
maturity or upon conversion. These debentures mature in January 2006. NuWave has
recorded a debt discount of $27,000 at issuance of these convertible  debentures
to  reflect  the  value of the  beneficial  conversion  feature  related  to the
convertible  debentures.  Accordingly,  NuWave  has  recorded  the  value of the
beneficial  conversion  features as a reduction  to the  carrying  amount of the
convertible  debt and as an addition to additional  paid-in  capital.  This debt
discount is being amortized over the term of the related debentures, which is 24
months,   and  such  amortization  was  recorded  as  interest  expense  on  the
accompanying condensed  consolidated  statement of operations.  At the option of
NuWave,  upon the maturity date, these  convertible  debentures may be converted
into NuWave's  Common Stock.  At the option of the holder,  at any time prior to
maturity,  any portion of these  convertible  debentures  may be converted  into
Common Stock.  The value of principal and accrued interest is convertible at the
per share price equal to the lesser of (a) 120% of the closing bid price, or (b)
80% of the  lowest  daily  volume  weighted  average  price  for the  five  days
immediately preceding the conversion date. In addition,  NuWave may redeem, with
15 days advance notice, a portion or all of these outstanding debentures at 110%
of the dollar value of the amount redeemed plus accrued interest.

         During October 2003,  NuWave raised $200,000  through the issuance of a
convertible  debenture to Cornell  Capital  Partners,  L.P. In addition,  during
December  2003,  NuWave  raised  $195,000  through the  issuance of  convertible
debentures to various unrelated parties.  In September 2004, NuWave redeemed the
$200,000 convertible  debenture with Cornell Capital Partners,  L.P. and $70,000
of the  convertible  debentures  issued in December  2003. On December 22, 2003,
NuWave  issued  a  convertible  debenture  for  $3,300,000  to  Cornell  Capital
Partners,  L.P.  and  $250,000  to  unrelated  parties  in  connection  with the
acquisition  of land held for  development  and sale which is secured  through a
first mortgage lien on the land. All of these debentures bear interest at a rate
of 5% per  annum,  with  interest  due at  maturity  or upon  conversion.  These
debentures  mature at various dates  ranging from October 2005 through  December
2008.  At the  option of  NuWave,  upon the  maturity  date,  these  convertible


                                      II-2


debentures and accrued  interest may be converted into NuWave's Common Stock. At
the option of the holder,  at any time prior to  maturity,  any portion of these
convertible  debentures  may be  converted  into  Common  Stock.  The  value  of
principal and accrued  interest is  convertible  at the per share price equal to
the lesser of (a) 120% of the closing bid price,  or (b) 80% of the lowest daily
volume  weighted  average  price for the five  days  immediately  preceding  the
conversion  date.  In  addition,  NuWave  may  redeem a portion  or all of these
outstanding debentures at 110% (120% for Cornell Capital Partners,  L.P.) of the
dollar value of the amount redeemed plus accrued interest.  Under the conversion
limitation for the debentures,  NuWave may issue shares under conversion only so
long as, at conversion, the holder has no more than 9.9% of NuWave's outstanding
shares.

         Note Payable - Related Party

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

         Warrants

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

         Equity Line of Credit

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

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

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


         The balance of these loans as of  September  2003,  totaling  $284,000,
were not repaid within their term and were in default.  During  September  2003,
NuWave entered into an Agreement with Cornell Capital  Partners,  L.P. to settle
the default on these loans. In connection  therewith,  Cornell Capital Partners,
L.P. agreed not to foreclose on its outstanding indebtedness of $284,000 owed by
NuWave.  In addition,  on September 29, 2003,  Cornell  Capital  Partners,  L.P.
entered  into a new loan  agreement  with NuWave for $200,000 to be deposited in
escrow  to be  used  to  satisfy  certain  outstanding  obligations  of  NuWave,
including trade payables, unpaid wages, and settlement of employment agreements.
The loan was  non-interest  bearing for its original term of 180 days.  Also see
Note 7 to the consolidated financial statements at December 31, 2003.


         On March  27,  2004,  the  $200,000  loan  matured  and was not  repaid
according to its terms. On April 5, 2004, Cornell Capital Partners,  L.P. agreed
to extend the due dates of the $284,000 of loans and the $200,000  loan to April
15, 2005. On May 11, 2004,  Cornell  Capital  Partners,  L.P.  agreed to further
extend the due dates of these  $484,000 in loans to August 1, 2005.  On July 20,


                                      II-3


2004,  Cornell Capital Partners,  L.P. agreed to further extend the due dates of
these  $484,000 in loans to  December 5, 2005.  While in default and through the
extended  maturity  date,  the  $284,000 of loans and the  $200,000  loan accrue
interest  from the default  dates at a rate of 24% per annum.  On September  10,
2004, NuWave paid off in full its obligations for principal and accrued interest
related to its $484,000 in loans.

         Convertible Preferred Stock

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

         Shares issued for services

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

         Effective June 1, 2004,  NuWave issued 75,000 shares of common stock to
George Kanakis, its President, under the terms of his employment contract. Under
his  employment  agreement,  Mr. Kanakis is also entitled to options to purchase
100,000 shares of common stock at some future date. NuWave has not yet adopted a
stock option plan.  Accordingly,  these  options have not yet been issued to Mr.
Kanakis.

         Increase in Authorized Shares, Reduction in Par Value and Reverse Stock
         Split

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

         Issuance of Common Stock

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

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

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

         All of the above  offerings  and sales were  deemed to be exempt  under
Rule 506 of Regulation D and Section 4(2) of the Securities  Act. No advertising
or general  solicitation was employed in offering the securities.  The offerings


                                      II-4


and sales were made to a limited number of persons,  all of whom were accredited
investors,  business  associates of NuWave or executive  officers of NuWave, and
transfer was  restricted by NuWave in accordance  with the  requirements  of the
Securities Act of 1933. In addition to representations  by the  above-referenced
persons,   we   have   made   independent   determinations   that   all  of  the
above-referenced  persons were accredited or sophisticated  investors,  and that
they were capable of  analyzing  the merits and risks of their  investment,  and
that they understood the speculative  nature of their  investment.  Furthermore,
all of the above-referenced  persons were provided with access to our Securities
and Exchange Commission filings.



                                      II-5


ITEM 27. EXHIBITS

         (a) The  following  exhibits  are  filed  as part of this  registration
statement:



EXHIBIT NO. DESCRIPTION                                              LOCATION
----------  -----------------------------------------------------    ----------------------------------------------
                                                               
3.1         Articles of Incorporation of NuWave (Delaware)           Incorporated by reference to Exhibit 3.1(a) to
                                                                     Registration Statement on Form SB-2 filed with
                                                                     the Securities and Exchange Commission on
                                                                     April 2, 1996

3.2         Certificate of Amendment to Articles of Incorporation    Incorporated by reference to Exhibit 3.1(b) to
            of NuWave (Delaware)                                     Registration Statement on Form SB-2 filed with
                                                                     the Securities and Exchange Commission on
                                                                     April 2, 1996

3.3         Certificate of Authority (New Jersey)                    Incorporated by reference to Exhibit 3.1(c) to
                                                                     Registration Statement on Form SB-2 filed with
                                                                     the Securities and Exchange Commission on
                                                                     April 2, 1996

3.4         Amended Certificate of Authority (New Jersey)            Incorporated by reference to Exhibit 3.1(d) to
                                                                     Registration Statement on Form SB-2 filed with
                                                                     the Securities and Exchange Commission on
                                                                     April 2, 1996

3.5         Certificate of Amendment to Articles of Incorporation    Incorporated by reference to Exhibit 3.1(e) to
            of NuWave (Delaware)                                     Registration Statement on Form SB-2 filed with
                                                                     the Securities and Exchange Commission on
                                                                     April 2, 1996

3.6         By-Laws of NuWave                                        Incorporated by reference to Exhibit 3.2 to
                                                                     Registration Statement on Form SB-2 filed with
                                                                     the Securities and Exchange Commission on
                                                                     April 2, 1996

4.1         Form of Common Stock Certificate                         Incorporated by reference to Exhibit 4.1 to
                                                                     Amendment No. 2 to Registration Statement on
                                                                     Form SB-2 filed with the Securities and
                                                                     Exchange Commission on July 3, 1996

4.2         Form of Public Warrant Agreement between NuWave,         Incorporated by reference to Exhibit 4.2 to
            American Stock Transfer & Trust Company and Rickel &     Amendment No. 1 to Registration Statement on
            Associates, Inc.                                         Form SB-2 filed with the Securities and
                                                                     Exchange Commission on May 22, 1996

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

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

5.1         Opinion re: Legality                                     Incorporated by reference to Form SB-2 filed
                                                                     with the Securities and Exchange Commission on
                                                                     August 9, 2004

10.1        Form of Stock Purchase Agreement, dated as of June       Incorporated by reference to Exhibit 10.45 to
            2002, between NuWave Technologies, Inc. and certain      Registration Statement on Form SB-2, filed
            investors                                                with the Securities and Exchange Commission on
                                                                     July 11, 2002

10.2        Form of Selling Stockholders Agreement, dated as of      Incorporated by reference to Exhibit 10.46 to
            July 2002 among NuWave and the Purchasers.               Registration Statement on Form SB-2, filed
                                                                     with the Securities and Exchange Commission on
                                                                     July 11, 2002



                                      II-6




EXHIBIT NO. DESCRIPTION                                              LOCATION
----------  -----------------------------------------------------    ----------------------------------------------
                                                               
10.3        Revolving Line of Credit Secured Demand Promissory       Incorporated by reference to Exhibit 10.47 to
            Note, dated December 10, 2002, to Gerald Zarin by        Registration Statement on SB-2 filed with the
            NuWave Technologies, Inc.                                Securities and Exchange Commission on December
                                                                     27, 2002

10.4        Agreement with Cornell Capital Partners LP, dated        Incorporated by reference to Exhibit 10.1 to
            September 10, 2003                                       Form 8-K, filed with the Securities and
                                                                     Exchange Commission on September 10, 2003

10.5        Convertible Debenture dated December 22, 2003, between   Incorporated by reference to Form 10-KSB filed
            Cornell Capital Partners, L.P. and NuWave                with the Securities and Exchange Commission on
                                                                     April 15, 2004

10.6        Secured Note Payable Agreement dated December 22,        Incorporated by reference to Form 10-KSB filed
            2003, between Stone Street Asset Management, LLC and     with the Securities and Exchange Commission on
            NuWave                                                   April 15, 2004

10.7        Form of convertible debenture, dated as of December      Incorporated by reference to Form 10-KSB filed
            2003, between NuWave and certain investors               with the Securities and Exchange Commission on
                                                                     April 15, 2004

10.8        Independent Sales Agent Agreement between Nextgen        Incorporated by reference to Form 10-KSB filed
            Associates, Inc. and NuWave dated October 31, 2003       with the Securities and Exchange Commission on
                                                                     April 15, 2004

10.9        Standby Equity Distribution Agreement dated as of May    Incorporated by reference to Form SB-2 filed
            2003 between NuWave and Cornell Capital Partners, L.P.   with the Securities and Exchange Commission on
                                                                     August 9, 2004

10.10       Placement Agent Agreement dated as of May 2003 between   Incorporated by reference to Form SB-2 filed
            NuWave, Newbridge and Cornell Capital Partners, L.P.     with the Securities and Exchange Commission on
                                                                     August 9, 2004

10.11       Registration Rights Agreement dated as of May 2003       Incorporated by reference to Form SB-2 filed
            between NuWave and Cornell Capital Partners, L.P.        with the Securities and Exchange Commission on
                                                                     August 9, 2004

10.12       Employment Agreement dated June 1, 2004 between NuWave   Incorporated by reference to Form SB-2 filed
            and George Kanakis                                       with the Securities and Exchange Commission on
                                                                     August 9, 2004


10.13       Agreement of sale between 24 West 96th Street Realty     Incorporated by reference to Form 10-QSB filed
            Corp. and Lehigh Acquisition Corp dated July 1, 2004     with the Securities and Exchange Commission on
                                                                     November 22, 2004

10.14       Convertible Debenture agreement between 24 West 96th     Incorporated by reference to Form 10-QSB filed
            Street Realty Corp. and NuWave dated August 20, 2004     with the Securities and Exchange Commission on
                                                                     November 22, 2004

10.15       Amended and restated Agreement of sale between 24 West   Incorporated by reference to Form 10-QSB filed
            96th Street Realty Corp. and Lehigh Acquisition Corp     with the Securities and Exchange Commission on
            dated November 10, 2004                                  November 22, 2004

14.1        Code of Ethics                                           Incorporated by reference to Form 10-KSB filed
                                                                     with the Securities and Exchange Commission on
                                                                     April 15, 2004

23.1        Consent of Marcum & Kliegman LLP                         Provided herewith

23.2        Consent of Eisner LLP                                    Provided herewith

23.3        Consent of Legal Counsel                                 Incorporated by reference to Exhibit 5.1 filed
                                                                     herewith




                                      II-7


                    ITEM 28. UNDERTAKINGS

         The undersigned registrant hereby undertakes:

                  (1) To file,  during  any  period  in which it offers or sells
securities, a post-effective amendment to this registration statement to:

                           (i)    Include  any  prospectus  required by Sections
10(a)(3) of the Securities Act of 1933 (the "Act");

                           (ii)  Reflect in the  prospectus  any facts or events
arising  after the  effective  date of the  Registration  Statement (or the most
recent  post-effective   amendment  thereof)  which,   individually  or  in  the
aggregate,  represent a fundamental  change in the  information set forth in the
Registration Statement.  Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was  registered)  and any deviation  from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus  filed  with  the  Commission  pursuant  to Rule  424(b)  if,  in the
aggregate,  the  changes in volume and price  represent  no more than 20 percent
change in the maximum aggregate  offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;

                           (iii)  Include  any  additional  or changed  material
information on the plan of distribution;

                  (2) That, for the purpose of determining  any liability  under
the  Act,  each  such  post-effective  amendment  shall  be  deemed  to be a new
registration  statement  relating to the  securities  offered  therein,  and the
offering  of such  securities  at that time  shall be deemed to be the bona fide
offering thereof.

                  (3) To remove from  registration by means of a  post-effective
amendment any of the securities that remain unsold at the end of the offering.

         Insofar as indemnification for liabilities arising under the Act may be
permitted to directors,  officers and controlling  persons of the small business
issuer pursuant to the foregoing  provisions,  or otherwise,  the small business
issuer has been  advised  that in the  opinion of the  Securities  and  Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the small business issuer of
expenses  incurred or paid by a director,  officer or controlling  person of the
small  business  issuer  in the  successful  defense  of  any  action,  suit  or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered, the small business issuer will,
unless in the opinion of its counsel the matter has been settled by  controlling
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.


                                      II-8


                                   SIGNATURES


         In accordance with the  requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the  requirements  for filing on Form SB-2 and authorized  this  registration
statement  to be signed on our behalf by the  undersigned,  as of  December  20,
2004.


                                       NUWAVE TECHNOLOGIES, INC.

                                       By: /s/ George Kanakis
                                           -------------------------------------
                                       Name:  George Kanakis
                                       Title: President, Chief Executive Officer

                                              (Principal Executive Officer),
                                              Chief Financial Officer (Principal
                                              Accounting Officer) and Director


         Pursuant  to the  requirements  of the  Securities  Act of  1933,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates stated.


SIGNATURE                  TITLE                                DATE
---------                  -----                               ----

/s/ George Kanakis         President, Chief Executive          December 20, 2004
------------------------   Officer (Principal Executive
George Kanakis             Officer), Chief Financial Officer
                           (Principal Accounting Officer)
                           and Director


/s/ Gary H. Giannantonio   Director                            December 20, 2004
------------------------
Gary H. Giannantonio



                                      II-9