COMPARE GENERIKS INC, SB-2, 1996-06-11

COMPARE GENERIKS INC
SB-2, 1996-06-11
PHARMACEUTICAL PREPARATIONS

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<PAGE>

As filed with the Securities and Exchange Commission on ____________
Registration No. __________

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.

----------

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------

COMPARE GENERIKS, INC.
(Name of small business issuer in its charter)

Delaware 2833 11-3289396
- ------------------------ ---------------------------- -------------------
(State or other juris- (Primary Standard Industrial (I.R.S. Employer
diction of organization) Classification Code No.) Identification No.)

300 Oser Avenue
Hauppauge, New York 11788
(800) 342-6555
(Address and telephone number
of principal executive offices and principal place of business)

Thomas Keith
Chief Executive Officer
300 Oser Avenue
Hauppauge, New York 11788
(800) 342-6555
(Name, address and telephone number of agent for service)

Copies to:

Steven F. Wasserman, Esq.
Bernstein & Wasserman, LLP
950 Third Avenue
New York, NY 10022
(212) 826-0730
(212) 371-4730 (Fax)

Approximate date of proposed sale to the public: As soon as reasonably
practicable after the effective date of this Registration Statement.

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 ]

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continued overleaf

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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. [ ]

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------
Title of Each Class of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Per Aggregate Offering Registration Fee
Security (1) Price
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.0001 1,700,000 $7.75 $13,175,000 $4,542.74
per share
- ------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.0001 100,000 $5.00 $500,000 $172.42
per share, underlying Options
- ------------------------------------------------------------------------------------------------------------------------
TOTAL $13,675,000 $4,715.16
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for purposes of calculating registration fee pursuant to
Rule 457 under the Securities Act of 1933.

<PAGE>

COMPARE GENERIKS, INC.

CROSS REFERENCE SHEET
(Showing Location in the Prospectus of Information
Required by Items 1 through 23, Part I, of Form SB-2)

Item in Form SB-2 Prospectus Caption
----------------- ------------------

1. Front of Registration
Statement and Outside Front
Cover of Prospectus................ Facing Page of Registration
Statement; Outside Front
Page of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus.......... Inside Front Cover Page of
Prospectus; Outside Back Cover
Page of Prospectus
3. Summary Information and Risk
Factors............................ Prospectus Summary; Risk Factors

4. Use of Proceeds.................... Use of Proceeds

5. Determination of Offering Price.... Outside Front Cover Page of
Prospectus; Underwriting;
Risk Factors

6. Dilution........................... Dilution; Risk Factors

7. Selling Securityholders........... Description of Securities; Selling
Securityholders

8. Plan of Distribution............... Outside Front Cover Page of
Prospectus; Risk Factors;
Underwriting

9. Legal Proceedings.................. Business-Litigation

10. Directors, Executive Officers,
Promoters and Control Persons...... Management

11. Security Ownership of Certain
Beneficial Owners and Management... Principal Stockholders

i
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Item in Form SB-2 Prospectus Caption
----------------- ------------------

12. Description of Securities.......... Description of Securities;
Underwriting

13. Interest of Named Experts and
Counsel............................ Experts; Legal Matters

14. Disclosure of Commission Position
on Indemnification for
Securities Act Liabilities......... Underwriting; Certain Transactions

15. Organization Within Last 5 Years... Prospectus Summary; The Company;
Business

16. Description of Business............ Business; Risk Factors

17. Management's Discussion and Analysis
or Plan of Operation............... Management's Discussion and
Analysis of Financial Condition
and Results of Operations

18. Description of Property............ Business - Facilities

19. Certain Relationships and
Related Transactions............... Certain Transactions

20. Market for Common Equity and
Related Stockholder Matters........ Outside Front Cover Page of
Prospectus; Prospectus Summary;
Description of Securities;
Underwriting

21. Executive Compensation............. Management - Executive
Compensation

22. Financial Statements............... Selected Financial Data;
Financial Statements
23. Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosures.......... *

<PAGE>

* Omitted because Item is not applicable.

iii

<PAGE>

PROSPECTUS

SUBJECT TO COMPLETION, DATED__________________, 1996

COMPARE GENERIKS, INC.

1,800,000 shares of Common Stock

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

This Prospectus relates to the sale of 1,800,000 shares of Common Stock,
1,500,000 of which are held by Walpac, Inc. ("Walpac"), a company controlled by
David Waldman, one of the Company's directors, 200,000 shares which are held by
Superior Supplements, Inc. ("SSI"), a supplier of the Company and 100,000 shares
on behalf of Thomas Keith, the CEO and President of the Company,which are
issuable upon the exercise of 100,000 Options granted to him pursuant to his
employment contract with the Company, as amended, dated October 31, 1995.
Walpac, SSI and Mr. Keith are hereinafter referred to as the "Selling
Securityholders." The Company will not receive any of the proceeds on the sale
of the securities by the Selling Securityholders. Walpac owned 38.5% of the
outstanding shares of Common Stock of the Company prior to the Offering. The
resale of the securities of the Selling Securityholders is subject to Prospectus
delivery and other requirements of the Securities Act of 1933, as amended (the
"Act"). Sales of such securities or the potential of such sales at any time may
have an adverse effect on the market prices of the securities offered hereby.
See "Selling Securityholders."

The Common Stock offered by this Prospectus may be sold from time to time
by the Selling Securityholders, or by its transferees. No underwriting
arrangements have been entered into by the Selling Securityholders. The
distribution of the securities by the Selling Securityholders may be effected in
one or more transactions that may take place on the over-the-counter market
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more dealers for resale of such shares as principals at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with sales of such securities.

The Selling Securityholders and intermediaries through whom such securities
may be sold may be deemed "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Act"), with respect to the securities offered and
any profits realized or commissions received may be deemed underwriting
compensation. The Company has agreed to indemnify the Selling Securityholders
against certain liabilities, including liabilities under the Act.

<PAGE>

The Company will not receive any of the proceeds from the sale of the
securities by the Selling Securityholders. All costs incurred in the
registration of the securities of the Selling Securityholders are being borne by
the Company. See "Selling Securityholder."

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK
OFFERED HEREBY AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS
OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES

The date of this Prospectus is ______________,1996

<PAGE>

AVAILABLE INFORMATION

The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith will file reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained at the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, DC 20549. Copies of such material can be obtained upon
written request addressed to the Commission, Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company has filed
with the Commission a registration statement on Form SB-2 (herein together with
all amendments and exhibits referred to as the "Registration Statement") under
the Act of which this Prospectus forms a part. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which have been omitted in accordance with the rules and regulations of the
Commission. For further information reference is made to the Registration
Statement.

ALTHOUGH IT HAS NO OBLIGATION TO DO SO, THE UNDERWRITERS FOR THE COMPANY'S
INITIAL PUBLIC OFFERING MAY FROM TIME TO TIME ACT AS A MARKET MAKER AND
OTHERWISE EFFECT TRANSACTIONS IN THE COMPANY'S SECURITIES. THE UNDERWRITERS, IF
IT PARTICIPATES IN THE MARKET, MAY BECOME A DOMINATING INFLUENCE IN THE MARKET
FOR THE UNITS OR THE COMMON STOCK AND CLASS A WARRANTS CONTAINED THEREIN.
HOWEVER, THERE IS NO ASSURANCE THAT THE UNDERWRITERS WILL OR WILL NOT CONTINUE
TO BE A DOMINATING INFLUENCE. THE PRICES AND LIQUIDITY OF THE SECURITIES OFFERED
HEREUNDER MAY BE SIGNIFICANTLY AFFECTED BY THE DEGREE, IF ANY, OF THE
UNDERWRITERS' PARTICIPATION IN SUCH MARKET. SEE "RISK FACTORS - LACK OF PRIOR
MARKET FOR UNITS, COMMON STOCK AND CLASS A WARRANTS; NO ASSURANCE OF PUBLIC
TRADING MARKET." THE UNDERWRITERS MAY DISCONTINUE SUCH ACTIVITIES AT ANY TIME OR

FROM TIME TO TIME.

<PAGE>

PROSPECTUS SUMMARY

The following is a summary of certain information (including financial
statements and notes thereto) contained in this Prospectus and is qualified in
its entirety by the more detailed information appearing elsewhere herein. In
addition, unless otherwise indicated to the contrary, all information appearing
herein (i) does not give effect to (a) 345,000 shares of Common Stock issuable
upon exercise of the Class A Warrants; (b) 60,000 shares of Common Stock
issuable upon exercise of the Underwriter's Unit Purchase Option; (c) 30,000
shares of Common Stock issuable upon exercise of the Class A Warrants included
in the Underwriter's Unit Purchase Option; (d) 3,000,000 warrants held by the
Former Selling Securityholders and (e) employee stock options and (ii) does give
effect to a forward split of Common Stock to change each share of common stock,
no par value, into two thousand (2,000) shares of common stock, par value
$.0001, effected on December 14, 1995. See "Description of Securities," "Certain
Transactions" " and "Management - Stock Option Plans and Agreements." Each
prospective investor is urged to read this Prospectus in its entirety.

THE COMPANY

Compare Generiks, Inc., a Delaware corporation (the "Company" or "CGI"),
was formed on April 25, 1995 with the name Lesser Paul, Inc. ("LPI"). LPI
changed its name to CGI on November 13, 1995. The Company is engaged in the
distribution, marketing and sale of dietary supplements and over-the-counter
nonprescription pharmaceuticals ("OTCS"). The Company distributes its products
under Company owned trademarks through direct sales to major wholesalers,
particularly those that service convenience stores, drug stores, discount
department stores, wholesale clubs, petroleum marketers, hospital gift shops and
airport gift shops supported by a sophisticated broker network.

The Company focuses its marketing efforts on a gravity fed display (for
which it has a patent application pending) containing the Compare Generiks label
products which are comparable to the thirteen (13) top national brand
nonprescription products sold in the market today. A gravity fed display is
designed to restock the shelf display automatically as each unit of product is
removed. These products contain active ingredients which are identical to those
in nonprescription products sold by other nationally advertised brand name
products. For instance, the Company's acetaminophen tablets and capsules are
similar to Tylenol(R); its ibuprofen tablets are similar to Motrin(R) and
Advil(R); its antihistamine-decongestant products are similar to Actifed(R) and
Sudafed(R); and its effervescent tablets are similar to Alka-Seltzer(R).

On October 31, 1995, the Company acquired from PDK Labs Inc., a New York
corporation ("PDK"), certain assets and rights relating to the "Energex Plus"
product line ("Energex Plus") including all interest in the Energex Plus market,

customer list, trade secrets, trademarks and tradenames, including the use of
the tradename "Energex Plus(R)" (the "Energex Assets"). In addition, on October
31, 1995, the Company also acquired from PDK all of the assets and rights
relating to the "Compare Generiks" product line ("Compare Generiks") which was
developed by PDK, except for such rights relating to sales by direct mail (the
"Compare Generiks Assets"). The Compare Generiks Assets include customer lists,
trade secrets, trademarks and tradenames, including the use of the tradename
"Compare Generiks(R)" and a mechanical device for which there is a patent
application pending for a display unit. The Energex Assets and the Compare
Generiks Assets and all of PDK's rights relating thereto, except in

<PAGE>

relation to sales by direct mail of the Compare Generiks product line, form the
core of the Company's business. On March 6, 1996, the Company completed an
underwritten offering of its securities by selling 345,000 units ("units") which
are comprised of 690,000 shares of Common Stock and 345,000 Class A Warrants to
purchase an additional 345,000 shares of Common Stock. Simultaneously with the
Company's initial public offering of securities, certain securityholders (the
"Former Securityholders") also completed an offering of securities by selling
(i) 3,000,000 Class A Warrants issuable upon conversion of certain convertible
Bridgenotes (ii) 1,500,000 shares of Common Stock. The Company did not receive
any of the proceeds of the Sale of Securities by the Selling Securityholders.

The Company will not receive any of the proceeds from this Offering.

The Company maintains its executive offices at 300 Oser Avenue, Hauppauge,
New York 11788, telephone number (800) 342-6555.

See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating the Company and its business.

<PAGE>

THE OFFERING

Securities Offered
by the Selling
Securityholders (1).......... 1,800,000 Shares of Common Stock at a price of
$_______ per share. See "Description of
Securities."

Securities Outstanding Prior
to the Offering:

Common Stock (3)........... 3,890,000 Shares
Series A Preferred Stock... 5,000,000 Shares

Series B Preferred Stock... 500,000 Shares
Class A Warrants .......... 3,345,000 Warrants

Securities Outstanding
Subsequent to
the Offering:

Common Stock (3)............. 3,990,000 Shares
Series A Preferred Stock..... 5,000,000 Shares
Series B Preferred Stock..... 500,000 Shares
Class A Warrants............. 3,345,000 Warrants

Use of Proceeds.............. The Company will receive no proceeds from the
sale of the 1,800,000 shares of Common Stock
offered hereby.

Risk Factors................. Development Stage Enterprise; Limited
Operating History, No Assurance that the
Company will Successfully Continue Business;
Dependence on Company's initial public
offering Proceeds; Possible Need for Additional
Financing; Possible Adverse Effect on the
Market of Shares Owned by Selling
Securityholders; Significant Industry
Competition; Conflicts of Interest;
Governmental Regulation; Dependence on PDK and
Superior Supplements, Inc.; Dependence on Key
Personnel;Control by Walpac; Risks Attendant
to Expansion; Trademark and Servicemark
Protection and Mechanical Patent; Product
Liability Risks; Limited Prior Market for
Units, Common

<PAGE>

Stock and Class A Warrants; No Assurance of
Public Trading Market; No Secondary Trading in
New Jersey; Impact on Market of Warrant
Exercise; Underwriter's Unit Purchase Option;
Possible Adverse Effects of Ownership of
Preferred Stock by Walpac; "Penny Stock"
Regulations May Impose Certain Restrictions on
Marketability of Securities; No Dividends;
Limitation on Director Liability; Limited
Number of Management Personnel; Anti-Takeover
Effect of General Corporation Law of Delaware;
See "Risk Factors."

Nasdaq Small-Cap

Market Symbol (2)............. Units - COGEU
Common Stock - COGE
Class A Warrants - COGEW

- ----------
(1) Prior to this Offering, the Company completed the public offering of (i)
345,000 Units consisting of 690,000 shares of Common Stock and 345,000
Class A Warrants to purchase an additional 345,000 shares of Common Stock
(ii) 1,500,000 shares of Common Stock on behalf of certain Former Selling
Securityholders, and (iii) 3,000,000 Class A Warrants issuable upon
conversion of the Convertible Bridge Notes. See "Former Selling
Securityholders" and "Certain Transactions."

(2) Although the Company's Units, Common Stock and Class A Warrants are listed
on The Nasdaq Small Cap Market, there can be no assurance that the
Company's securities will continue to be included for quotation, or that
the Company will be able to continue to meet the requirements for continued
quotation, or that a public trading market will be sustained. See "Risk
Factors - Limited Market for Units, Common Stock and Class A Warrants" and
"No Assurance of Public Trading Market."

(3) Assumes the exercise of options for 100,000 shares of Common Stock held by
Mr. Keith.

7
<PAGE>

SUMMARY FINANCIAL INFORMATION

The selected historical financial data presented below are derived from
financial statements of the Company, which have been audited by Holtz Rubenstein
& Co., LLP, independent accountants, whose reports are included elsewhere
herein. The data set forth below should be read in conjunction with and is
qualified in its entirety by the Company's financial statements, related notes
and Management's Discussion and Analysis of Financial Condition and Results of
Operations. See "Financial Statements," and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The following
summary financial information has been summarized from the Company's financial
statements included elsewhere in this Prospectus. The information should be read
in conjunction with the financial statements and the related notes thereto. See
"Financial Statements."

SUMMARY STATEMENT OF OPERATIONS

Period April 25, 1995
(Inception) to March 31, 1996
--------------------------------
Pro forma
Historical as adjusted(2)
---------- --------------

Revenues $ 545,670 $ 545,670

Gross Profit $ 290,994 $ 290,994

Operating (Loss) $ (199,607) $ (219,322)

Net (Loss) $ (214,177) $ (233,892)

Net (Loss)
Per Share $ (.07) $ (.07)

Weighted Average
Number of Common Shares
Outstanding 3,036,529 3,336,529
----------- -----------

SUMMARY BALANCE SHEET DATA
March 31, 1996
-----------------------------
Pro Forma
March 31, 1996 Pro Forma(1) as Adjusted(2)
-------------- ------------- --------------

Working Capital $ 2,282,758 $ 2,682,758 $ 2,663,043

Total Assets $ 4,325,475 $ 5,875,475 $ 5,855,760

Total Liabilities $ 320,369 $ 320,369 $ 320,369

Deficit Accumulated during
Development Stage $ (214,177) $ (214,177) $ (233,892)

8
<PAGE>

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(1) Gives effect to (i) issuance of 200,000 shares of Common Stock (valued at
$1,150,000) and $100,000 to Superior Supplements, Inc. ("SSI") in
exchange for 500,000 shares of SSI's Common Stock and (ii) the 100,000
shares of Common Stock issuable upon the exercise of 100,000 options
granted to Mr. Keith.

(2) Reflects costs incurred in connection with the 1,800,000 shares offered
hereby.

<PAGE>

RISK FACTORS

An investment in the securities offered hereby is speculative and involves

a high degree of risk and substantial dilution and should only be purchased by
investors who can afford to lose their entire investment. Prospective
purchasers, prior to making an investment, should carefully consider the
following risks and speculative factors, as well as other information set forth
elsewhere in this Prospectus, associated with this Offering, including the
information contained in the Financial Statements herein.

1. Development Stage Enterprise; No Assurance that the Company will be able
to Successfully Continue Operations. The Company is a development stage
enterprise that has devoted substantially all its efforts since inception to
establishing its business and has generated limited revenues. Its planned
operations have just commenced. The likelihood of success must be considered in
light of the problems, experiences, difficulties, complications and delays
frequently encountered in various degrees in connection with the operation and
development of new businesses. The Company must develop and continue to
implement systems, standards and procedures for every aspect of its operation as
well as implementing the Company's advertising and marketing campaigns. There
can be no assurance that the Company will be able to complete all of these items
in a timely manner, or at all, in order to allow the Company to continue
operations. See "Business."

2. Limited Operating History, No Assurance that the Company will
Successfully Continue Business. The Company was organized on April 25, 1995 and
is a development stage operation. The Company's core business consists of the
Energex Assets and the Compare Generiks Assets acquired from PDK. The Company's
prospects must be considered in light of the risks, expenses, and difficulties
frequently encountered by a small business in a highly competitive industry.
During the time the Company's Energex Assets were owned and operated by PDK
(March 1, 1995 through October 30, 1995), they generated revenues of $368,532.
As of March 31, 1996, the Company had stockholder's equity of $4,005,000 and
working capital of $2,283,000. The Company's operating expenses can be expected
to increase significantly as a result of the Company's proposed expansion of its
marketing and sales efforts. Since the Company has a limited operating history
as a separate corporation, it is impossible to determine whether its operations
will be profitable or that it will ever generate sufficient revenues to meet its
expenses and support its anticipated activities. Like any relatively new
business enterprise operating in a specialized and intensely competitive market,
the Company is subject to many business risks which include, but are not limited
to, unforeseen marketing and promotional expenses, unforeseen negative
publicity, competition, product liability and lack of operating experience. Many
of the risks may be unforeseeable or beyond the control of the Company. There
can be no assurance that the Company will successfully implement its business
plan in a timely or effective manner, or that management of the Company will be
able to market and sell enough products to generate sufficient revenues and
continue as a going concern. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations,"

<PAGE>

"Business," "Certain Transactions" and "Financial Statements."

3. Dependence on Company's Initial Public Offering Proceeds; Possible Need
for Additional Financing. The Company's cash requirements will be significant.
The Company remains dependent on the proceeds from the Company's Initial Public
Offering ("IPO") to generate cash for the expansion of its product lines and
marketing efforts. The Company anticipates, based on its currently proposed
plans, that the proceeds of that IPO, will be sufficient to satisfy its
anticipated cash requirements for the next twelve (12) months. In the event that
these plans change, or the costs of development of operations prove greater than
anticipated, the Company could be required to modify its operations, curtail its
expansion or seek additional financing sooner than currently anticipated. The
Company believes that its operations would be restricted absent expansion. The
Company has no current arrangements with respect to such additional financing
and there can be no assurance that such additional financing, if available, will
be on terms acceptable to the Company.

4. Possible Adverse Effect on the Market of Shares Owned by Selling
Securityholders. The registration statement of which this Prospectus forms a
part covers the Offering of 1,500,000 shares of Common Stock owned by Walpac,
200,000 shares of Common Stock owned by Superior Supplements, Inc. and 100,000
shares issuable upon the exercise of options held by Thomas Keith, the Company's
President and CEO. Sales of such Common Stock in the future, however, may have
an adverse effect on the market price of the Company's Common Stock in any
market which may develop for such shares.

5. Significant Industry Competition. The market for dietary supplements and
over-the-counter pharmaceutical products is highly competitive in each of the
Company's existing and anticipated product lines and methods of distribution.
Numerous manufacturers and distributors compete for customers throughout the
United States and internationally. Many of the Company's competitors are
substantially larger and more experienced than the Company, have longer
operating histories and have materially greater financial and other resources
than the Company. The Company's significant competitors include Perrigo Company
and Rexall Sundown, Inc. There can be no assurance that the Company will be able
to compete successfully with its more established and better capitalized
competitors.

6. Conflicts of Interest. After completing this Offering, Walpac will own
none of the Company's outstanding shares of Common Stock and 100% of the shares
of Series A Preferred Stock of the Company, par value $.0001 per share (the
"Series A Preferred Stock"). In addition, at present, PDK and Superior
Supplements, Inc.("SSI") supply all of the Company's products as well as certain
management and administrative facilities and personnel. It is anticipated that
PDK and SSI will continue to supply a significant percentage of the Company's
products, at or near present levels. The Company will continue to operate its
executive offices, distribution and packaging at facilities leased and managed
by PDK. In addition, Walpac's sole director, David Waldman, and a member of
PDK's Board of Directors, Hartley T. Bernstein, are also members of the
Company's Board of Directors, and Thomas Keith and Raymond Aiken

<PAGE>

formerly held management positions with PDK. Because of Walpac's ownership
interest in the Company, the identity of certain management and PDK's and SSI's
roles as significant suppliers to the Company, certain conflicts of interest may
occur between the Company and Walpac, PDK or SSI. In such instances, members of
the Board of Directors who are also members of the Walpac Board of Directors or
the PDK Board of Directors may be precluded from participating in corporate
decisions. Although the Board of Directors of the Company has not adopted any
written policy on this matter, the Delaware Corporation Law contains specific
provisions governing such conflicts.

7. Governmental Regulation. The processing, formulation, packaging,
labeling and advertising of the Company's products are subject to regulation by
one or more federal agencies, including the Food and Drug Administration
("FDA"), the Federal Trade Commission ("FTC"), the Consumer Product Safety
Commission and the United States Department of Agriculture, as well as various
agencies of the states and localities in which the Company's products are sold.

The FTC regulates all advertising for food and over-the-counter drug
products. The FDA, in particular, regulates the advertising, labeling and sales
of prescription drugs and those vitamin and mineral supplements which the FDA
determines are unapproved drugs or food additives rather than food supplements.

Following the enactment of the Nutrition Labeling and Education Act of 1990
(the "NLEA"), the FDA, in November 1991, issued proposed regulations designed to
amend its food labeling regulations, establish standards for nutrients and food
components and establish procedures for FDA approval of health claim messages.
Final regulations on dietary supplements were published on January 4, 1994, and
became effective on July 1, 1995.

In addition, on June 18, 1993, the FDA issued proposed regulations and on
December 30, 1993 it adopted final regulations concerning the labeling of, and
use of health claims on, dietary supplements. The regulations require, effective
July 5, 1995, nutrition labeling on all dietary supplements and, effective July
1, 1994, prohibit the use of any health claim on a dietary supplement unless the
supplement is consumed as a food, its components have been demonstrated to be
safe, and the health claim is supported by significant scientific agreement and
approved by the FDA. Presently, the FDA has approved only the use of health
claims for calcium in connection with osteoporosis, and folic acid in connection
with neural tube defects. Accordingly, most dietary supplements will be
precluded from bearing most health claims. The Company cannot determine at this
time the effect of the new regulations on its future operation although it
believes they will not have a material adverse effect.

On June 18, 1993, the FDA published an Advance Notice of Proposed
Rulemaking ("ANPR") soliciting comments on the concept of the overall regulatory
strategy to assure the safety of vitamins, minerals, herbs, amino acids and
other supplements. This follows a study by an internal FDA committee on the
current regulatory framework for dietary supplements and an FDA commissioned
study by the Federation of American Societies for Experimental Biology

<PAGE>

("FASEB") on the safety of amino acids. Although the internal FDA report has not
yet been issued, agency representatives have indicated that it will include a
recommendation that certain manufactured amino acids be available by
prescription only. The FASEB report, published in September 1992, concluded that
there was insufficient research and information on amino acids to allow them to
assert that single or incomplete mixtures of amino acids were safe and,
therefore, recommended that further research be conducted. The internal FDA
report, issued in conjunction with the publication of the ANPR, contains
recommendations concerning the possible regulation of dietary supplements by
category, including the regulation of single and incomplete mixtures of amino
acids either as drugs, "food additives" or "generally recognized as safe"
substances with potencies low enough to ensure safety. The ANPR has requested
input and comments from interested parties. Sales by PDK of such products did
not constitute more than 5% of PDK's sales during PDK's period of ownership of
the Energex Assets and the Compare Generiks Assets. Whether regulations will or
will not be recommended and adopted and, if adopted, on what dietary
supplements, is presently unclear. Implementation of an ANPR normally involves
longer time periods than those cited above in connection with the proposed NLEA
regulations. The legislation sponsored by the dietary supplement industry would
impact the FDA's ability to issue and implement any such regulations. See
"Business-Government Regulation" for a description of the legislation.

The Company cannot determine what effect this proposed rule-making, or
other governmental regulations or administrative orders, when and if
promulgated, would have on its business in the future. They could, however,
require the reformulation of certain products to meet new standards, require the
recall or discontinuance of certain products not capable of reformulation, or
impose additional recordkeeping, expanded documentation of the properties of
certain products, expanded or different labeling, and scientific substantiation.
Any or all of such requirements could adversely affect the Company's operations
and its financial condition. See "Business - Government Regulations."

8. Dependence on PDK and Superior Supplements, Inc.. The Company's core
business consists of assets acquired from PDK in October, 1995. The Company has
purchased all of its products and product supplies from both PDK and Superior
Supplements, Inc. ("SSI"). Although the Company believes that other sources are
available for such products, there can be no assurance that the Company would be
able to replace these products, or obtain new suppliers, in the event the
Company was no longer able to obtain products from PDK and/or SSI. Even if the
Company is able to develop alternative product sources, there can be no
assurance that it can do so without material delay or on a cost effective basis
at prices similar to those paid to PDK and SSI. As a result, any interruption or
discontinuance of supplies from PDK and/or SSI could result in considerable
expense, delay the Company's operations and ability to deliver products, and
have a material adverse effect on the Company.

9. Dependence on Key Personnel. The Company is substantially dependent on
the continued services of Thomas Keith, the Company's Chief Executive Officer
and Raymond Aiken, the Company's Vice President-Sales. The Company has entered
into one (1) year

<PAGE>

employment agreements with Messrs. Keith and Aiken. Should Messrs. Keith and/or
Aiken not be able to continue as officers of the Company, its prospects could be
adversely affected and as a result the loss of either of these officers could
materially adversely affect the Company's operations. The Company currently does
not maintain key personnel life insurance for any of its employees. See
"Management."

10. Control by Walpac. Prior to this Offering, Walpac owned 1,500,000
shares of the Company's issued and outstanding Common Stock and 5,000,000 shares
of the Company's Preferred Stock, representing 69.2% of the Company's
outstanding securities. After this offering, Walpac will own none of the
outstanding Common Stock and 90.9% of the outstanding preferred stock
representing a combined percentage of the total combined vote after the Offering
of 53.2%. See "Principal Stockholders." Since holders of Common Stock do not
have any cumulative voting rights and directors are elected by a majority vote,
Walpac is in a position to control the election of directors and officers as
well as the affairs of the Company. In addition, David Waldman, a member of the
Company's Board of Directors is also the sole member of Walpac's Board of
Directors. Such control could also preclude an unsolicited acquisition of the
Company and consequently, adversely affect the market price of the Common Stock.
See "Description of Securities."

11. Risks Attendant to Expansion. The Company intends to utilize a
significant portion of the net proceeds of its prior Offering to expand its
business. In this regard, the Company has allocated a significant portion of the
proceeds to market and advertise the Company's products, and for general
administrative costs. Many of the risks of expansion may be unforeseeable or
beyond the control of management. There can be no assurance that the Company
will successfully implement its business plan in a timely or effective manner,
or that management of the Company will be able to generate sufficient revenue to
continue as a going concern.

12. Trademark and Servicemark Protection and Mechanical Patent. The
trademark "Energex Plus" and the trademark "Compare Generiks" have been
registered with the United States Patent and Trademark Office ("PTO"). A patent
application has been filed to register a mechanical patent to protect the
Compare Generiks tablet display and dispenser. To the Company's knowledge, the
Company has the common law right to use such dispenser with, and such trademarks
on, its products and in the marketing of its services. The Company has retained
trademark counsel and presently intends to make all appropriate filings and
registrations and take all other actions necessary, to protect all of its
intellectual property rights. There can be no assurance, however, that the
Company will be able to effectively protect such property rights. The failure by
the Company to protect such rights from unlawful and improper appropriation may
have a material adverse effect on the Company. Although to date no claims have
been brought against the Company alleging that it infringes on the intellectual
property rights of others, there can be no assurance that such claims will not
be brought against the Company in the future, or that if made, such claims will
not be successful. In addition to any potential monetary liability for damage,
the Company could be required to obtain a license in order to continue to use
the

<PAGE>

trademarks in question or could be enjoined from using such trademarks if such
license were not made available on acceptable terms. If the Company becomes
involved in such litigation, it may divert significant Company resources, which
could have a material adverse effect on the Company and its results or
operations, and, if such a claim were successful, the Company's business could
be materially adversely affected. See "Business- Products; Trademarks and
Servicemarks."

13. Product Liability Risks. In view of the nature of its business, the
Company is subject to the inherent risk of products liability claims in the
event that, among other things, the use or ingestion of its products results in
injury. The Company has no product liability insurance and relies on its main
supplier to provide it with product liability insurance in the amount of
$8,000,000, which management deems adequate to cover risks associated with such
use; however, there can be no assurance that existing or future insurance
coverage will be sufficient to cover any possible product liability risks or
that such insurance will continue to be available to the Company on economically
feasible terms. See "Business - Liability Insurance."

14. Limited Prior Market for Units, Common Stock and Class A Warrants; No
Assurance of Public Trading Market. Prior to this Offering, a limited public
trading market existed for the Units, Common Stock and Warrants. There can be no
assurances that a public trading market for the Units, Common Stock and Warrants
will be sustained. Although the Units, Common Stock and Warrants are included on
The Nasdaq Small Cap Market, no assurance can be given that the Units, Common
Stock and Warrants will satisfy continued listing criteria in the future. If for
any reason the Units, Common Stock and Warrants do not retain their listing on
The Nasdaq Small Cap Market, purchasers of the Units, Common Stock and Warrants
may have difficulty in selling their securities should they desire to do so. In
any event, because certain restrictions may be placed upon the sale of
securities at prices under $5.00, unless such securities qualify for an
exemption from the "penny stock" rules, such as a listing on The Nasdaq Small
Cap Market, some brokerage firms will not effect transactions in the Company's
securities and it is unlikely that any bank or financial institution will accept
such securities as collateral, which could have an adverse effect in developing
or sustaining any market for the Units, Common Stock and Warrants. See "Risk
Factors - Penny Stock Regulations May Impose Certain Restrictions on
Marketability of Securities."

Under prevailing rules of the National Association of Securities Dealers,
Inc ("NASD"), in order to qualify for continued listing on The Nasdaq Small Cap
Market, a company, among other things, must have $2,000,000 in total assets,
$1,000,000 in total capital and surplus, $1,000,000 in market value of public
float and a minimum bid price of $1.00 per share. If the Company is unable to
satisfy the requirements for quotation on The Nasdaq Small Cap Market, trading,
if any, in the Units, Common Stock and Class A Warrants would be conducted in
the over-the-counter market in what are commonly referred to as the "pink
sheets" or on the NASD OTC Electronic Bulletin Board. As a result, an investor

may find it more difficult to dispose of, or to obtain accurate quotations as to
the price of, the securities offered hereby. The above-described rules may
materially adversely affect the liquidity of the market for the Company's
securities.

<PAGE>

15. No Secondary Trading in New Jersey. The Units Common Stock, Class A
Warrants and other securities of the Company have been qualified for sale
pursuant to certain state securities laws. The Company has not applied for
registration of its securities in certain jurisdictions and has withdrawn its
application in others by reason of specific provisions contained in their state
securities laws, among them New Jersey. The Company has also consented to the
denial of secondary trading in its securities in the State of New Jersey. As a
result of this latter action, current stockholders of the Company will not be
able to sell their shares of Common Stock through a broker-dealer whose office
is located in New Jersey or to any New Jersey resident, whether through a
broker-dealer or not, nor will New Jersey residents be able to purchase Common
Stock in this offering.

16. Impact on Market of Warrant Exercise. In the event of the exercise of a
substantial number of the Company's Class A Warrants, within a reasonably short
period of time after their right to exercise commences, the resulting increase
in the amount of Common Stock of the Company in the trading market could
substantially affect the market price of the Common Stock. See "Description of
Securities - Class A Warrants."

17. Underwriter's Unit Purchase Option. In connection with the Company's
IPO, the Company sold to the Underwriters, for nominal consideration, an option
to purchase an aggregate of 30,000 Units (the "Underwriters' Unit Purchase
Option"). The Underwriters' Unit Purchase Option will be exercisable commencing
one year from the Effective Date of the Company's prior Offering and ending four
(4) years from such date, at an exercise price of $12.00 per Underwriter's unit
(the "Underwriters' Units") subject to certain adjustment with the underlying
warrants (the "Underwriters' Warrants") exercisable at $4.00 per share. The
holders of the Underwriters' Unit Purchase Option will have the opportunity to
profit from a rise in the market price of the Units, Warrants and/or the Common
Stock, if any, without assuming the risk of ownership. The Company may find it
more difficult to raise additional equity capital if it should be needed for the
business of the Company while the Underwriters' Unit Purchase Option is
outstanding. At any time when the holders thereof might be expected to exercise
them, the Company would probably be able to obtain additional capital on terms
more favorable than those provided by the Underwriters' Unit Purchase Option.

18. Possible Adverse Effects of Ownership of Preferred Stock by Walpac. The
Company's Certificate of Incorporation, as amended, authorizes the issuance of a
maximum of 10,000,000 shares of Preferred Stock on terms that may be fixed by
the Company's Board of Directors without further stockholder action. Prior to
this Offering, 5,000,000 shares of Preferred Stock have been issued by the
Company to Walpac. Pursuant to the Certificate of Designation each share of
stock possesses one vote on all matters upon which common shareholders are

entitled to vote. Although the Preferred Stock does not possess any dividend
rights, ownership of the Preferred Stock will continue to afford Walpac voting
control over the affairs of the Company since Walpac will hold a majority of all
outstanding voting shares of the Company. Any transfer of the Preferred Stock by
Walpac could result in a change of control of the

<PAGE>

Company. See "Description of Securities -Preferred Stock."

19. "Penny Stock" Regulations May Impose Certain Restrictions on
Marketability of Securities. The Securities and Exchange Commission (the
"Commission") has adopted regulations which generally define"penny stock" to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. If the securities offered hereby are removed from listing by The
Nasdaq Small Cap Market at any time, the Company's securities may become subject
to the Penny Stock Rules, Rules 15g-1 through 15g-9 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). For transactions covered
by these rules, the broker-dealer must make a special suitability determination
for the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a risk disclosure document mandated by
the Commission relating to the penny stock market. The broker-dealer must also
disclose the commission payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Consequently, the
"penny stock" rules may restrict the ability of broker-dealers to sell the
Company's securities and may affect the ability of purchasers in this Offering
to sell the Company's securities in the secondary market and the price at which
such purchasers can sell any such securities. Rule 15g-9 under the Exchange Act
imposes additional sales practice requirements on broker-dealers who sell such
securities except in transactions exempted by such Rules, including transactions
meeting the requirements of Rule 505 or 506 of Regulation D under the Securities
Act and transactions in which the purchaser is an institutional accredited
investor (as defined) or an established customer (as defined) of the broker or
dealer.

20. No Dividends. The Company has not paid any dividends on its Common
Stock since its inception and does not intend to pay dividends on its Common
Stock in the foreseeable future. Any earnings which the Company may realize in
the foreseeable future will be retained to finance the growth of the Company.
See "Dividend Policy."

21. Limitation on Director Liability. As permitted by Delaware corporation
law, the Company's Certificate of Incorporation limits the liability of
Directors to the Company or its stockholders to monetary damages for breach of a

Director's fiduciary duty except for liability in certain instances. As a result
of the Company's charter provision and Delaware law, stockholders may have a
more limited right to recover against Directors for breach of their fiduciary
duty other than as existed prior to the enactment of the law. See "Description
of Securities - Limitation on Liability of Directors."

22. Limited Number of Management Personnel. There are currently only two
(2) executive officers of the Company. Following this Offering, there can be no
assurance that, if

<PAGE>
the Company grows, the current management team will be able to continue to
properly manage the Company's affairs. Further, there can be no assurance that
the Company will be able to identify additional qualified managers on terms
economically feasible to the Company.

23. Anti-Takeover Effect of General Corporation Law of Delaware. The
Company is governed by the provisions of Section 203 of the General Corporation
Law of Delaware, an anti-takeover law enacted in 1988. As a result of Section
203, potential acquirors of the Company may be discouraged from attempting to
effect acquisition transactions with the Company, thereby possibly depriving
holders of the Company's securities of certain opportunities to sell or
otherwise dispose of such securities at above-market prices pursuant to such
transactions. See "Description of Securities."

18
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1996 and as adjusted gives effect to (i) the issuance of 200,000
shares of Common Stock on May 31, 1996 in connection with the Company's
investment in Superior Supplements, Inc and (ii) the issuance of 100,000 shares
of Common Stock upon the exercise of 100,000 options granted to Mr. Keith. See
"Certain Transactions" . The table is not adjusted to give effect to the
exercise of the Class A Warrants, the Underwriter's Unit Purchase Option or any
other outstanding warrants or options. This table should be read in conjunction
with the Financial Statements of the Company, including the notes thereto,
appearing elsewhere in this Prospectus.

Pro Forma
Actual Pro Forma(1) Adjusted(2)
----------- ----------- -----------
Stockholders' equity:

Common Stock, $.0001
par value per share,
25,000,000 shares

authorized, 3,690,000
issued and outstanding
and (3,990,000 shares
outstanding as
adjusted) ...................... $ 369 $ 399 $ 399

Preferred Stock, $.0001
par value per share,
10,000,000 shares
authorized
Series A, 5,000,000
issued and
outstanding .................... 500 500 500

Series B, 500,000 issued
and outstanding ................ 50 50 50

Additional paid-in
capital ........................ 4,223,364 5,773,334 5,773,334

Deficit Accumulated
During the Development
Stage .......................... (214,177) (214,177) (233,892)

<PAGE>

LESS: Stock
Subcription
Receivable ............... (5000) (5000) (5000)

TOTAL
STOCKHOLDERS'
EQUITY ......................... 4,005,106 5,555,106 5,555,106
----------- ----------- -----------
TOTAL
CAPITALIZATION ................. $ 4,005,106 $ 5,555,106 $ 5,555,106
=========== =========== ===========

- ----------
(1) Gives effect to (ii) issuance of 200,000 shares of Common Stock (valued
at $1,150,000) and $100,000 to Superior Supplements, Inc. ("SSI") in
exchange for 500,000 shares of SSI's Common Stock and (ii) the 100,000
shares of Common Stock issuable upon the exercise of 100,000 options
granted to Mr. Keith. See "Certain Transactions."

(2) The Company will receive no proceeds from the sale of the 1,800,000 shares
of Common Stock offered hereby. Costs in connection with the offering
($19,715) will be charged to operations.

20
<PAGE>

DIVIDEND POLICY

Holders of the Company's Preferred Stock or Common Stock are entitled to
dividends when, as and if declared by the Board of Directors out of funds
legally available therefore. The Company has not in the past and does not
currently anticipate the declaration or payment of any dividends in the
foreseeable future. The Company intends to retain earnings, if any, to finance
the development and expansion of its business. Future dividend policy will be
subject to the discretion of the Board of Directors and will be contingent upon
future earnings, if any, the Company's financial condition, capital
requirements, general business conditions and other factors. Therefore, there
can be no assurance that any dividends of any kind will ever be paid.

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Results of Operations

On October 31, 1995, the Company acquired from PDK Labs, Inc. ("PDK")
certain assets and rights relating to the Energex Plus product line, including
all interest in the Energex Plus Market, customer lists, trade secrets, trade
marks and trade names. In addition, the Company also acquired from PDK certain
of the assets and rights (except for such rights relating to sales by direct
mail to consumers) relating to Compare Generiks product lines including customer
lists, trade secrets, trade marks and trade names and a mechanical patent for a
display unit.

The Company's operations commenced on November 1, 1995. During the four
months ended March 31, 1996, the Company generated sales of approximately $
546,000. Selling, general and administrative expenses approximated $ 491,000 or
90% of sales. Selling, general and administrative expenses incurred represent
start-up costs, selling and marketing expenses and the amortization of
intangible assets disporportionate to sales generated during the period.

On October 31, 1995, the Company entered into a five year Supply Agreement
with PDK, which provides for PDK to supply the Company with certain
non-prescription pharmaceutical products at a price equal to PDK's material
costs plus 100 percent.

On May 31, 1996, the Company entered into a three year Supply Agreement
with Superior Supplements, Inc. ("SSI") which provides for SSI to supply the

Company with certain vitamin products at a price equal to SSI's material cost
plus 15 percent.

Management believes that inflation did not have a material effect on
operations or financial condition in 1996. Management also believes that its
business is not seasonal; however, significant promotional activities can have a
direct impact on sales volume in any given quarter.

Plan of Operation

During the next twelve months of operations, the Company will adopt an
aggressive marketing campaign in order to obtain valuable shelf space in retail
chains across the nation. Aggressive pricing for a fixed period and free product
programs will be offered in exchange for premium shelf space in retail chains
for a term of not less than one year. The Company intends to enter into
contracts with brokers for distribution of its Compare Generiks product line.
The Company will establish national broker networks pursuing large distributors
and retail chains. In addition, the Company will conduct market research studies
and develop new products and prototypes for new display units for introduction
to the market.

<PAGE>

The Company intends to expend substantial sums on promotional materials,
trade shows and advertising through consumer and trade magazines, newspapers,
radio and distributor catalogs.

As of May 31, 1996, the Company employed 4 people on a full-time basis and
has leased 10,000 square foot executive offices, a distribution center and
warehouse space. The number of employees and the amount of space that the
Company will need will vary according to the progress made in the marketing and
distribution of its products. The Company intends to expand its sales force and
hire additional administrative and warehouse employees. In addition, the Company
intends to install a detailed Management Information System in order to
effectively service its customer base.

Liquidity and Capital Resources

The Company had working capital of approximately $2,283,000 at March 31,
1996.

The Company's statement of cash flows reflects cash used in operating
activities of approximately $280,000 which reflects increases in operating
assets during the start up of operations.

The statement also reflects cash used in investing activities of
approximately $142,000 representing the acquisition of intangible assets.

Cash provided by financing activities reflects proceeds from the issuance
of common stock of approximately $2,440,000.

On March 12, 1996, the Company closed its initial public offering. Pursuant
to such offering, the Company sold 345,000 units at $10.00 per unit for net
proceeds of $2,440,000. A unit consists of two shares of common stock and one
Class A Warrant.

On May 31, 1996, the Company issued 200,000 shares of Common Stock pursuant
to a subscription agreement between the Company and Superior Supplements, Inc.
("SSI"), whereby the Company received 500,000 shares of SSI's Common Stock in
exchange for 200,000 shares of the Company's Common Stock and $100,000.

The Company expects to incur substantial expenditures over the next twelve
months to implement its sales and marketing plans. The Company's management
believes that the net proceeds of the initial public offering will be sufficient
to fund its liquidity needs for at least the next twelve months.

<PAGE>

BUSINESS

General

On October 31, 1995, the Company acquired from PDK Labs Inc., a New York

corporation ("PDK"), certain assets and rights relating to the "Energex Plus"
product line ("Energex Plus") including all interest in the Energex Plus market,
customer list, trade secrets, trademarks and trade names, including the use of
the trade name "Energex Plus(R)" (the "Energex Assets"). In addition, on October
31, 1995, the Company also acquired from PDK all of the assets and rights
relating to the "Compare Generiks" product line ("Compare Generiks") which was
developed by PDK, except for such rights relating to sales by direct mail (the
"Compare Generiks Assets"). The Compare Generiks Assets include customer lists,
trade secrets, trademarks and trade names, including the use of the trade name
"Compare Generiks(R)" and a mechanical patent for a display unit. The Energex
Assets and the Compare Generiks Assets and all of PDK's rights relating thereto,
except in relation to sales by direct mail of the Compare Generiks product line,
form the core of the Company's business.

On March 6, 1996, the Company completed an underwritten public offering
(the "Offering") of its securities by selling 345,000 units (the "units") which
are comprised of 690,000 shares of Common Stock and 345,000 Class A Warrants to
purchase an additional 345,000 Shares of Common Stock. Simultaneously, with the
Company's offering, certain securityholders (the

<PAGE>

"Former Securityholders") also completed an offering of securities by selling
(i) 3,000,000 Class A Warrants issuable upon conversion of certain Convertible
Bridge Notes and (ii) 1,500,000 Shares of Common Stock. The Company did not
receive any of the proceeds of the sale of securities by the Former
Securityholders.

The Company will not receive any of the proceeds from this offering.

The Company maintains its executive offices at 300 Oser Avenue, Hauppauge,
New York 11788, telephone number (800) 342-6555.

Industry Overview

Based on industry sources, the Company believes that the annual retail
market for OTCs was approximately $40 billion in the United States in 1993,
which was an increase of approximately $5 billion from 1992. The Company
believes that this market will continue to expand as patent protection on
existing drugs expires and the "prescription only" status of certain drugs is
changed to over-the-counter status. Also, the Company believes that more
consumers are practicing preventative health care. The Company believes that
during 1993 the market for branded OTCs was approximately 88% of total domestic
OTCs sales and the market for private label OTCs was approximately 12% of such
sales, as compared to 91% and 9% respectively, in 1992.

Private label OTCs have been in increasing demand in recent years, from
both retailers and consumers. The cost to the retailer of private label OTCs is
significantly lower than that of nationally advertised OTCs. Accordingly the
retailer can price a private label OTC significantly below the competing
national brand OTC while still realizing a higher profit margin on its private

label OTCs. Generally, the retailers' dollar profit per unit of private label
OTCs is higher than the dollar profit per unit of the comparable national brand
OTCs. The Company's private label OTCs offer a lower-priced, comparable quality
alternative to nationally advertised brand name OTCs. This comparable quality is
possible because the Company's products are manufactured using ingredients,
formulas and processes equivalent to those of national brand OTCs, except the
formula is changed in the case of patented products to avoid infringement of the
patent.

The Company is engaged in the distribution, marketing and sale of dietary
supplements and OTCs. The Company distributes its products under Company owned
trademarks through direct sales to major wholesalers and distributors,
particularly those that service convenience stores, drug stores, discount
department stores, wholesale clubs, petroleum marketers, hospital gift shops,
and airport gift shops supported by a sophisticated broker network.

The Company focuses its marketing efforts on a gravity fed display (for
which it has filed a patent application) containing the Compare Generiks label
products which are comparable to the thirteen (13) top national brand
nonprescription products sold in the market today. These products contain active
ingredients which are identical to those in nonprescription products sold by
other

<PAGE>

nationally advertised brand name products. For instance, the Company's
acetaminophen tablets and capsules are similar to Tylenol(R); its ibuprofen
tablets are similar to Motrin(R) and Advil(R); its antihistamine-decongestant
products are similar to Actifed(R) and Sudafed(R); and its effervescent tablets
are similar to Alka-Seltzer(R).

In contrast to the national brand manufacturers which focus on the
consumer, the Company has established close relationships with the retailers,
distributors and wholesalers who are its customers. CGI offers marketing support
programs for its product lines. Working in tandem with CGI's sales force, the
Company's graphic arts department provides customer support by designing
packaging displays and point of purchase materials as well as labels and
cartons.

Products and Development

The Company develops and sells products for its own Energex Plus and
Compare Generiks lines. Its products include dietary supplements and OTCs. Each
product category contains numerous different dosage sizes and various and unique
combinations of ingredients. These product groups include Acti-Tab, Non-Aspirin
Extra Strength, Ibuprofen, Non-Aspirin (325 mg), Micro Coated Aspirin (325 mg),
Adult Strength Pain Reliever, Non-Aspirin Sinus Relief, Nasal Decongestant,
Night Cough Relief, Day Cough Relief, Multi-Symptom Cold Formula, Seltzer Relief
and Seltzer Relief Plus Cold.

The Company markets its nonprescription products under its Compare Generiks
brand name. These products contain active ingredients which are identical to
those contained in nonprescription products sold under national and regional
brand names, private label brands, local and regional products sold by other
national and regional direct mail markets. For instance, the Company's tablets
and capsules are similar to Actifed(R), Tylenol Extra Strength(R), Advil(R),
Tylenol Regular Strength(R), Bayer (325 mg)(R), Anacin(R), Tylenol Sinus
Formula(R), Sudafed (30 mg)(R), Nyquil(R), Dayquil(R), Comtrex(R), Alka
Seltzer(R) & Alka Seltzer Plus(R).

The Company only sells over-the-counter products which have been proven to
be generally recognized to be safe and effective for the intended uses. Proposed
rules issued by the Food and Drug Administration have established, after an
expanded review of all over-the-counter products, those over-the-counter drugs
that will be generally recognized as safe and effective and not misbranded. See
"Business - Government Regulations."

For its sales of vitamins and nutritional supplements to retailers, the
Company employs a multi-brand strategy and associated marketing efforts designed
to access several different classes of trade. The Company's marketing strategy
with respect to each of its brands is directed at the ultimate retail consumer,
with an emphasis on the educated consumer. The Company provides a wide product
selection for the consumer, attractive price points, clear and informative
labeling, safety-conscious packaging and thoughtful shelf organization for
easier product selection. The Company works closely with retailers to help them
optimize the performance of their dietary supplement products and
over-the-counter pharmaceutical departments, including providing

<PAGE>

retailers with various types of merchandising assistance to maintain the
inventory and appearance of the dietary supplement products and over-the-counter
pharmaceutical sections of their stores, sophisticated plan-o-grams which map
out the shelf displays and shelf marketing strategies, point-of-sale displays
and topical informational materials.

The Company will introduce new products in response to anticipated consumer
trends. Product concepts are generally developed by the Company's management,
key employees and consultants. Since the Company acquired the Energex Assets and
the Compare Generiks Assets, the Company has not incurred any expenses which
have been allocated to such research and development.

Marketing and Advertising

The Company markets its products to retail and wholesale customers through
in-store demonstrations, point of purchase displays, promotional literature,
direct salespersons, sales agents and manufacturer's representatives.
Advertising is through trade magazines, newspapers, in-store flyers, radio and
distributors catalogs. The Company offers placement allowances and quarterly
rebates which insure continued placement and reorders.

Manufacturing and Suppliers

The Company has purchased all of its products from PDK and Superior
Supplements, Inc. ("SSI") pursuant to Supply Agreements between the Company and
both PDK and SSI, dated October 31, 1995 and May 31, 1996, respectively.
Although the Company believes that other sources are available for such
products, there can be no assurance that the Company would be able to replace
these products, or obtain new suppliers, in the event the Company was no longer
able to obtain products from PDK and SSI. Even if the Company is able to develop
alternative product sources, there can be no assurance that it can do so without
material delay or on a cost effective basis at prices similar to those paid to
PDK and SSI. As a result, any interruption or discontinuance of supplies from
PDK and SSI could result in considerable expense, delay the Company's operations
and ability to deliver products, and have a material adverse effect on the
Company.

Competition

The market for dietary supplements and over-the-counter pharmaceutical
products is highly competitive in each of the Company's existing and anticipated
product lines and methods of distribution. Numerous manufacturers and
distributors compete with the Company for customers throughout the United States
and internationally in the packaged dietary supplement and over-the-counter
pharmaceutical industry selling products to retailers, such as mass
merchandisers, drug store chains, independent drug stores and health food
stores. Many of the Company's competitors

<PAGE>

are substantially larger and more experienced than the Company, have longer
operating histories and have materially greater financial and other resources
than the Company. Many of these competitors are private companies, and
therefore, the Company cannot compare its revenues with respect to the sales
volume of each competitor. The Company's significant competitors include Perrigo
Company and Rexall Sundown, Inc. both of whom have longer operating histories
and materially greater financial and other resources than the Company (although
no implication is intended hereby regarding the Company's industry ranking in
comparison to such competitors). There can be no assurance that the Company will
be able to compete successfully with its more established and better capitalized
competitors.

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

Trademarks and Service Marks

The trademarks Energex Plus and Compare Generiks and an application for a
mechanical patent for the Compare Generiks tablet display and dispenser are the
property of the Company and have been assigned to the Company by PDK. The
trademarks have been registered and a patent application filed with the United
States Patent and Trademark Office ("PTO"). To the Company's knowledge, the
Company has the common law right to use such trademarks on, and the mechanical
patent with, its products and in the marketing of its services. The Company has
retained trademark counsel and a patent agent and presently intends to make all
appropriate filings and registrations and take all other actions necessary, to
protect all of its intellectual property rights.

Management and Employees

As of May 31, 1996, the Company employed a total of four (4) employees on a
full time basis three (3) employees in sales and marketing and one (1) person in
administration and finances). See "Management" and "Executive Compensation."

The Company has experienced no work stoppages and considers its employee
relations to be satisfactory. The Company's employees are not represented by a
labor union.

Government Regulation

The Company's products and/or its business operations are subject to
regulation by one or more federal agencies, including The United States Postal
Service, the Federal Trade Commission ("FTC"), the Food and Drug Administration
("FDA") and the Consumer Product

<PAGE>

Safety Commission and the United States Department of Agriculture. The FDA in
particular, is primarily responsible for regulation of the labeling, manufacture
and sale of vitamins and mineral supplements which the FDA believes to be
unapproved drugs or food additives rather than food supplements. The Company's
activities are also regulated by various agencies of the states and localities
in which the Company's products are sold.

The Company markets vitamins, minerals, herbs, amino acids and other
similar nutritional substances ("dietary supplements"), and over-the-counter
("OTC") drug products. These products are primarily regulated by the FDA under
the auspices of the Federal Food, Drug and Cosmetic Act (the "FFDCA"). Under the
FFDCA, most dietary supplements are currently regulated as foods, which require
no approval from the FDA prior to marketing. Therefore, the regulation of
dietary supplements is far less restrictive than that imposed upon manufacturers
and distributors of prescription drugs. Dietary supplements, however, must be
labeled correctly to avoid being misbranded under the FFDCA. Health claims made
by vitamin and dietary supplement companies with respect to their products are
specifically regulated by the FDA. If such products make unapproved health
claims, the FDA may consider them to be unapproved drugs, which require approval
by the FDA prior to marketing.

Some of the products marketed by the Company are classified as OTC drugs.
Under the FFDCA, drugs are deemed by the FDA either to be drugs which require
approval by the FDA prior to marketing ("new drugs"), or drugs which do not
require approval by the FDA prior to marketing because they are generally
recognized as safe and effective ("old drugs"). Old drugs must conform to
monographs developed by the FDA to be lawfully marketed. Most OTC drugs are old
drugs. Therefore, the regulation of OTC drugs is less restrictive than that
imposed upon manufacturers and distributors of new drugs.

To the extent the Company establishes its own manufacturing facilities in
the future and produces products deemed by the FDA now or in the future to be a
drug, the operation of the Company's manufacturing facilities will be subject to
regulation by the FDA as a drug manufacturing facility and to compliance with
good drug manufacturing practices. Although the Company does not anticipate any
difficulties in complying with the necessary good drug manufacturing practices,
any such difficulties that are encountered could have a material adverse effect
on the Company.

Marketing misbranded or adulterated food or drugs, or unapproved new drugs
or food additives, can result in civil or criminal penalties, including, but not
limited to, product seizure, injunction and fines.

On January 4, 1994, the FDA issued final regulations concerning dietary
supplements. It did so partially in response to the Nutritional Labeling and
Education Act of 1990 ("NLEA") and the Dietary Supplement Act of 1992 in order
to amend its food labeling regulations, setting forth specific regulations for
the nutrition labeling of vitamins and mineral supplements, establish up to date

reference standards for nutrients and food components and establish procedures
for

<PAGE>

FDA approval of health claim messages. The regulations subject dietary
supplement labels to the same standards as food labels under the Nutrition
Labeling and Education Act with regard to health claim messages and nutrition
labeling information. The regulations concerning health claim messages went into
effect on July 1, 1994 and the regulations concerning nutrition labeling went
into effect on July 5, 1995.

The regulations prohibit the use of any health claim on a dietary
supplement unless the health claim is supported by significant scientific
agreement and is pre-approved by the FDA. To date, the FDA has approved the use
of health claims only in connection with calcium products and osteoporosis, and
folic acid and neural tube defects. Accordingly, most dietary supplements will
be precluded from bearing most health claims. The Company's products include
multivitamins and minerals and specialty formulas. The Company cannot determine
at this time whether the new regulations will have any adverse effect on its
operations, although it believes that they will not have a material adverse
effect.

In addition, the FDA issued an Advanced Notice of Proposed Rulemaking on
June 18, 1993 ("ANPR") requesting comments on the general regulation of certain
dietary supplements, such as herbs, fish and plant oils, fatty acids, fibers and
vegetable gums, carnitine and amino acids. Some of these substances are sold by
the Company. In connection therewith, the FDA commissioned the Federation of
American Societies for Experimental Biology ("FASEB") to conduct a study of the
safety of amino acids. The FASEB report published in September 1992 concluded
that there was insufficient research and information on amino acids to conclude
that added, manufactured, or incomplete mixtures of amino acids are safe and,
therefore, recommended that further research be conducted. The internal FASEB
report issued in connection with the ANPR contains recommendations concerning
the possible regulation of dietary supplements by category.

The Company cannot determine whether separate regulations will be issued
for these substances, or what effect any new regulations for such governmental
regulations or administrative orders concerning such substances, when and if
promulgated, could require the reformulation of certain products to meet new
standards or require the recall or discontinuance of certain products not
capable of reformulation.

The Dietary Supplement Act of 1992 requires that the Comptroller General of
the United States and the Director of the Office of Technology Assessment
undertake separate studies of FDA regulation of dietary supplements and make
recommendations in Congress which would reduce or modify the FDA's authority to
regulate dietary supplements. While these bills have not been enacted as law,
there is a strong likelihood that Congress will again consider such legislation.
There is no assurance, however, that these bills will ultimately be passed and
signed into law.

Any such legislation reducing the FDA's authority to modify dietary
supplements could result in the Company being subject to fewer regulatory
requirements and would, therefore, have no adverse impact on the Company. Any
modification which increases the FDA's regulatory

<PAGE>

authority could subject the Company to additional expenses in order to comply
with more stringent requirements and could have a materially adverse impact on
the Company by limiting products or causing the Company to incur additional
expenses in order to comply with these regulations.

Conflict of Interests

After this Offering, Walpac will own none of the Company's outstanding
shares of Common Stock and 90.9% of the Preferred Stock. In addition, at
present, PDK and Superior Supplements, Inc.("SSI") supply all of the Company's
products as well as certain management and administrative facilities and
personnel. It is anticipated that PDK and SSI will continue to supply a
significant percentage of the Company's products, at or near present levels. The
Company will continue to operate its executive offices, distribution and
packaging at facilities leased and managed by PDK. In addition, Walpac's sole
director, David Waldman, and a member of PDK's Board of Directors, Hartley T.
Bernstein, are also members of the Company's Board of Directors. Because of
Walpac's ownership interest in the Company, the identity of certain management
and PDK's and SSI's roles as significant suppliers to the Company, certain
conflicts of interest may occur between the Company and Walpac, or SSI or PDK.
In such instances, members of the Board of Directors who are also members of the
Walpac Board of Directors or the PDK Board of Directors may be precluded from
participating in corporate decisions. Although the Board of Directors of the
company has not adopted any written policy on this matter, the Delaware
Corporation Law contains specific provisions governing such conflicts.

Liability Insurance

The Company, like other manufacturers of products that are ingested, faces
inherent risk of exposure to product liability claims if, among other things,
the use of its products results in an injury. With respect to product liability
coverage, the Company through its main supplier, currently has coverage under a
product liability insurance policy in the amount of $8,000,000. There is no
assurance that any judgment against the Company will not exceed liability
coverage. A judgment significantly in excess of the amount of insurance coverage
would have a material adverse effect on the Company.

Facilities

On October 31, 1995, the Company entered into a one (1) year lease with PDK
for its 10,000 square foot executive offices, distribution center and warehouse
space at 300 Oser Avenue, Hauppauge, NY 11788 at a monthly rent of $5,000. In
the judgment of management, the lease with PDK reflects a rent at current fair

market value.

Litigation

There is no material litigation pending or threatened against the Company
nor are there

<PAGE>

any such proceedings to which the Company is a party.

<PAGE>

MANAGEMENT

Directors and Executive Officers

The names and ages of the directors, executive officers and significant
employees, and promoters of the Company are set forth below.

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

David Waldman 48 Director

Dr. Daniel Durchslag 52 Director

Hartley T. Bernstein 45 Director

Thomas A. Keith 36 President, Chief Executive Officer
and Chief Financial Officer

Raymond A. Aiken 42 Vice President-Sales and Secretary

Background of Executive Officers and Directors

David J. Waldman, M.D. has been a Director of the Company since April 25, 1995.
Dr. Waldman is a graduate of Lafayette College, Easton, PA, Class of 1967. He
received an M.D. degree from the New York Medical College in 1972. Dr. Waldman
completed residency training at the Mayo Clinic and UCLA in both Pediatric
Medicine and Allergy. He currently resides in Palm Springs, CA, where he
maintains an active Allergy practice, and substantial business and real estate
interests. Dr. Waldman also serves as the sole director of Walpac.

Dr. Daniel Durchslag, DDS. has been a Director of the Company since October 2,
1995 and has practiced General Cosmetic and Sports Dentistry in Beverly Hills,
California since 1980. From 1973 until 1979, he was an Associate Professor and

Director of Clinics at the University of Southern California School of
Dentistry. He is a graduate of the University of Wisconsin and Loyola
University/Chicago College of Dental Surgery. He is presently team dentist for
the Oakland Raiders.

Hartley T. Bernstein has been a Director of the Company since October 31, 1995
and is a member of the law firm of Bernstein & Wasserman specializing in
corporate and securities law. He was associated with the firm of Parker Chapin
Flattau & Klimpl from 1976-1977, served as an Assistant District Attorney for
New York County from 1977-1979 and was associated with the law firm of
Guggenheimer & Untermyer from 1979-1982. In 1982, Mr. Bernstein formed his own
law practice which subsequently merged with his present firm. Mr. Bernstein also
serves as a director of PDK, Futurebiotics, Inc. and Bev-Tyme, Inc. Mr.
Bernstein is a member of the

<PAGE>

adjunct faculty of Yale Law School where he teaches a course in corporate
negotiations and has served previously on the adjunct faculties of New York Law
School and Mercy College. He is also an instructor at the National Institute of
Trial Advocacy and a member of the Boards of Arbitration of the National
Association of Securities Dealers and the New York Stock Exchange. Mr. Bernstein
graduated from Columbia University with a B.A. and received his J.D. from New
York University School of Law.

Thomas A. Keith has been the President of the Company since October 31, 1995.
Prior to joining the Company, from December 1990 to October 1995, Mr. Keith was
Vice President of Sales & Marketing of PDK Labs Inc., a company which is engaged
in the manufacture and distribution of nutritional supplements, vitamins and
OTCs. From 1983 to 1990, Mr. Keith was President and Chief Financial Officer of
Executive Adjustment Bureau, Inc., a company which was engaged in the sales of
various insurance services. Mr. Keith will continue to devote substantially all
of his business time to the Company.

Raymond A. Aiken has been the Vice President of Sales of the Company since
October 31, 1995. Prior to joining the Company, from November 1992 to October
1995, Mr. Aiken served as National Sales Manager for PDK Labs Inc., a company
which is engaged in the manufacture and distribution of nutritional supplements,
vitamins and OTCs. From September 1986 to November 1992, Mr. Aiken was Director
of Purchasing for Rack Service Co., Inc., a company whose primary business was
the distribution and marketing of OTCs. Mr. Aiken will continue to devote
substantially all of his business time to the Company.

There are no family relationships between the officers and directors of the
Company.

Executive Compensation

<TABLE>
<CAPTION>
Summary Compensation Table

Long Term Compensation
-------------------------------
Annual Compensation Awards Payouts
---------------------------------- ------- -------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted All
Other Stock LTIP Other

Annual Awards Options/ Payouts Compensation
Name and Principal Position Year Salary($) Bonus Compensation($) ($) SARs(#) ($) ($)
- ---------------------------- ---- --------- ----- ---------------- ----------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Thomas Keith, CEO 1996 $57,000 $ -0- $ -0- $ -0- 100,000(1) $ -0- $ -0-

Raymond Aiken, VP of 1996 $25,000 $ -0- $ -0- $ -0- 100,000(1) $ -0- $ -0-
Sales
</TABLE>

(1) Represents issuance of options to acquire 100,000 shares of common stock at
$5.00 per share.

<PAGE>

<TABLE>
<CAPTION>
Option/SAR Grants -
Individual Grants
- ---------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities % of Total
Underlying Options/SARs
Options/ Granted to
SARS Employees in Exercise or Base Expiration
Name Granted (#) Fiscal Year Price ($/Sh) Date
- ---- ----------- ----------- ------------ ----
<S> <C> <C> <C> <C>
Thomas Keith, CEO 100,000 50% $5.00 January 26, 2001
Raymond Aiken, VP of 100,000 50% $5.00 January 26, 2001
Sales
</TABLE>

<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises -
and FY-End Option/SAR Values
- ---------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of

Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ---- --------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C>
Thomas Keith, CEO -0- -0- 100,000 $412,500(2)
Raymond Aiken, VP of -0- -0- 100,000 $412,500(2)
Sales
</TABLE>

(2) Represents the difference between the fair market value of the common
stock underlying the options and the exercise price of the options at
March 31, 1996.

Employment Agreements

As of October 31, 1995, the Company entered into a one (1) year employment
agreement with Thomas A. Keith, pursuant to which Mr. Keith serves as the
Company's President. The agreement, as amended, provides for Mr. Keith to
receive a salary of $135,000 per annum. In addition, Mr. Keith has been
granted an option to purchase 100,000 shares of the outstanding Common Stock
of the Company exercisable (i) at an exercise price equal to the public
offering price of the shares of Common Stock of the Company offered for sale
in its prior Offering, and (ii) only at a time when Mr. Keith is employed by
the Company. The agreement can be terminated by the

<PAGE>

Company, with or without cause, upon ninety (90) days' notice and contains
prohibitions on the disclosure of confidential information and covenants not to
compete with the Company which survive any such termination.

As of October 31, 1995, the Company entered into a one (1) year employment
agreement with Raymond Aiken, pursuant to which Mr. Aiken serves as the
Company's Vice President of Sales. The agreement, as amended, provides for
Mr. Aiken to receive a salary of $70,000 per annum. In addition, Mr. Aiken has
been granted an option to purchase 100,000 shares of the outstanding Common
Stock of the Company exercisable (i) at an exercise price equal to the public
offering price of the shares of Common Stock of the Company offered for sale
in this Offering, and (ii) only at a time when Mr. Aiken is employed by the
Company. The agreement can be terminated by the Company, with or without
cause, upon ninety (90) days' notice and contains prohibitions on the
disclosure of confidential information and covenants not to compete with the
Company which survive any such termination.

1995 Stock Plan

In December 1995, the Board of Directors of the Company adopted, and the
stockholders of the Company approved the adoption of, the 1995 Stock Plan
(hereinafter called the "1995 Plan"). The purpose of the 1995 Plan is to provide
an incentive and reward for those executive officers and other key employees in
a position to contribute substantially to the progress and success of the
Company, to closely align the interests of such employees with the interests of
stockholders of the Company by linking benefits to stock performance and to
retain the services of such employees, as well as to attract new key employees.
In furtherance of that purpose, the 1995 Plan authorizes the grant to executives
and other key employees of the Company and its subsidiaries of stock options,
restricted stock, deferred stock, bonus shares, performance awards, dividend
equivalent rights, limited stock appreciation rights and other stock-based
awards, or any combination thereof. The 1995 Plan is expected to provide
flexibility to the Company's compensation methods, after giving due
consideration to competitive conditions and the impact of federal tax laws. The
Company anticipates that the stockholders will be requested to approve the
adoption of the 1995 Plan in the near future.

The maximum number of shares of Common Stock with respect to which awards
may be granted pursuant to the 1995 Plan is initially 2,000,000 shares. Shares
issuable under the 1995 Plan may be either treasury shares or authorized but
unissued shares. The number of shares available for issuance will be subject to
adjustment to prevent dilution in the event of stock splits, stock dividends or
other changes in the capitalization of the Company.

The 1995 Plan will be administered by a committee consisting of not less
than two (2) members of the Board of Directors who are "disinterested" within
the meaning of Rule 16b-3 promulgated under the Exchange Act and "outside
directors" within the meaning of Section 162(m) of the Code (including persons
who may be deemed outside directors by virtue of any transitional rule which may
be adopted by the Internal Revenue Service implementing such Section). The Board

<PAGE>

will determine the persons to whom awards will be granted, the type of award
and, if applicable, the number of shares to be covered by the award. During any
calendar year, no person may be granted under the 1995 Plan awards aggregating
more than 100,000 shares (which number shall be subject to adjustment to prevent
dilution in the event of stock splits, stock dividends or other changes in
capitalization of the Company).

Types of Awards

Stock Options. Options granted under the 1995 Plan may be "incentive stock
options" ("Incentive Options") within the meaning of Section 422 of the Code or
stock options which are not incentive stock options ("Non-Incentive Options"
and, collectively with Incentive Options, hereinafter referred to as "Options").
The persons to whom Options will be granted, the number of shares subject to
each Option granted, the prices at which Options may be exercised (which shall
not be less than the fair market value of shares of Common Stock on the date of
grant), whether an Option will be an Incentive Option or a Non-Incentive Option,

the time or times and the extent to which Options may be exercised and all other
terms and conditions of Options will be determined by the Committee.

Each Incentive Option shall terminate no later than ten (10) years from the
date of grant, except as provided below with respect to Incentive Options
granted to 10% Stockholders (as hereinafter defined). No Incentive Option may be
granted at any time after October 2005. Each Non-Incentive Option shall
terminate not later than fifteen (15) years from the date of grant. The exercise
price at which the shares may be purchased may not be less than the Fair Market
Value of shares of Common Stock at the time the Option is granted, except as
provided below with respect to Incentive Options granted to 10% Stockholders.
Options granted to executive officers may not be exercised at any time prior to
six (6) months after the date of grant.

The exercise price of an Incentive Option granted to a person possessing
more than 10% of the total combined voting power of all shares of stock of the
Company or a parent or subsidiary of the Company ("10% Stockholder") shall in no
event be less than 110% of the Fair Market Value of the shares of the Common
Stock at the time the Incentive Option is granted. The term of an Incentive
Option granted to a 10% Stockholder shall not exceed five (5) years from the
date of grant.

The exercise price of the shares to be purchased pursuant to each Option
shall be paid (i) in full in cash, (ii) by delivery (i.e., surrender) of shares
of the Company's Common Stock owned by the optionee at the time of the exercise
of the Option, (iii) in installments, payable in cash, if permitted by the
Committee or (iv) any combination of the foregoing. The stock-for-stock payment
method permits an optionee to deliver one (1) or more shares of previously owned
Common Stock of the Company in satisfaction of the exercise price of subsequent
Options. The optionee may use the shares obtained on each exercise to purchase a
larger number of shares on the next exercise. (The foregoing assumes an
appreciation in value of previously acquired shares). The result of the
stock-for-stock payment method is that the optionee can generally avoid
immediate tax liability with respect to any appreciation in the value of the
stock utilized to exercise the Option.

<PAGE>

Shares received by an optionee upon exercise of a Non-Incentive Option may
not be sold or otherwise disposed of for a period determined by the Board upon
grant of the Option, which period shall be not less than six (6) months nor more
than three (3) years from the date of acquisition of the shares (the "Restricted
Period"), except that, during the Restricted Period (i) the optionee may offer
the shares to the Company and the Company may, in its discretion, purchase up to
all the shares offered at the exercise price and (ii) if the optionee's
employment terminates during the Restricted Period (except in limited
instances), the optionee, upon written request of the Company, must offer to
sell the shares to the Company at the exercise price within seven (7) business
days. The Restricted Period shall terminate in the event of a Change in Control
of the Company (as defined), or at the discretion of the Board. After the

Restricted Period, an optionee wishing to sell must first offer such shares to
the Company at the Fair Market Value.

Limited Stock Appreciation Rights. The Committee is authorized, in
connection with any Option granted under the 1995 Plan, to grant the holder of
such Option a limited stock appreciation right ("LSAR"), entitling the holder to
receive, within sixty (60) days following a Change in Control, an amount in cash
equal to the difference between the exercise price of the Option and the market
value of the Common Stock on the effective date of the Change in Control. The
LSAR may be granted in tandem with an Option or subsequent to grant of the
Option. The LSAR will only be exercisable to the extent the related Option is
exercisable and will terminate if and when the Option is exercised.

Restricted and Deferred Stock. An award of restricted stock or deferred
stock may be granted under the 1995 Plan. Restricted stock is subject to
restrictions on transferability and other restrictions as may be imposed by the
Committee at the time of grant. In the event that the holder of restricted stock
ceases to be employed by the Company during the applicable restrictive period,
restricted stock that is at the time subject to restrictions shall be forfeited
and reacquired by the Company. Except as otherwise provided by the Committee at
the time of grant, a holder of restricted stock shall have all the rights of a
stockholder including, without limitation, the right to vote restricted stock
and the right to recover dividends thereon. An award of deferred stock is an
award that provides for the issuance of stock upon expiration of a deferral
period established by the Committee. Except as otherwise determined by the
Committee, upon termination of employment of the recipient of the award during
the applicable deferral period, all stock that is at the time subject to
deferral shall be forfeited. Until such time as the stock which is the subject
of the award is issued, the recipient of the award has no rights as a
stockholder.

Dividend Equivalent Awards. A dividend equivalent gives the recipient the
right to receive cash or other property equal in value to the dividends that
would be paid if the recipient held a specified number of shares of Common
Stock. A dividend equivalent right may be granted as a component of another
award or as a free standing award.

Bonus Shares and other Share Based Awards. The 1995 Plan authorizes the
Committee to grant shares as a bonus, or to grant shares or other awards in lieu
of obligations of the Company to pay cash under other plans or compensatory
arrangements, upon such terms as shall be determined by the Committee. The 1995
Plan also authorizes the Committee to grant other forms of awards

<PAGE>

based upon, payable in, or otherwise related in whole or in part to, Common
Stock, including, without limitation, convertible or exchangeable debentures or
other debt securities, other rights convertible or exchangeable into shares,
purchase rights for shares, awards contingent upon performance of the Company,
and awards valued by reference to the book value of shares of Common Stock or
awards determined by reference to the value of securities of, or the performance

of, specified subsidiaries.

<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth information as of the date of this
Prospectus with respect to the beneficial ownership of the outstanding shares of
the Company's Common Stock by (i) any holder of more than five percent (5%) of
the outstanding shares; (ii) the Company's officers and directors; (iii) the
Selling Securityholders; and (iv) the directors and officers of the Company as a
group:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Percentage Percentage Percentage
(%) of (%) of (%) of Total
Shares of Common Common Shares of Combined
Common Stock Before Stock After Preferred Vote Before
Stock Owned Offering Offering Stock Offering
----------- -------- -------- ----- --------
- ----------------------------------------------------------------------------------------------------------------
Name and Address of
Beneficial Owner
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Walpac, Inc.(1) 1,500,000 38.5% 0.0 5,000,000 69.2%
- ----------------------------------------------------------------------------------------------------------------
David Waldman(2) 1,500,000(5) 38.5% 0.0 5,000,000(5) 69.2%
- ----------------------------------------------------------------------------------------------------------------
PDK Labs Inc.(3) 0.0 0.0 0.0 500,000 5.3%
- ----------------------------------------------------------------------------------------------------------------
Daniel Durchslag(2) 0.0 0.0 0.0 0.0 0.0
- ----------------------------------------------------------------------------------------------------------------
Hartley T. Bernstein(4) 0.0 0.0 0.0 0.0 0.0
- ----------------------------------------------------------------------------------------------------------------
Thomas A. Keith(2)(6) 100,000 2.6% 0.0 0.0 1.0%
- ----------------------------------------------------------------------------------------------------------------
Raymond Aiken(2) 0.0 0.0% 0.0% 0.0 0.0%
- ----------------------------------------------------------------------------------------------------------------
All officers and
directors as a group
(five (5) persons) 1,600,000 41.1% 0.0 5,500,000 75.6%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

- ----------
(1) The address of Walpac, Inc. is 555 Desert West Drive, Rancho Mirage, CA
92270.

(2) The address of each stockholder shown above is c/o Compare Generiks, Inc.,
300 Oser Avenue, Hauppauge, NY 11788.

(3) The address of PDK Labs Inc. is 145 Ricefield Lane, Hauppauge, NY 11788.

(4) The address of Hartley T. Bernstein is 950 Third Avenue, New York, NY
10022. Mr. Bernstein is a partner in the firm of Bernstein & Wasserman,
LLP, which firm is passing upon certain legal matters in connection with
this Offering for the Company.

(5) Includes 1,500,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock held by Walpac, Inc., a company controlled by Mr. Waldman.

(6) Includes 100,000 shares of Common Stock underlying Stockoptions granted to
Mr. Keith pursuant to his employment agreement, as amended, with the
Company. See "Executive Compensation."

<PAGE>

CERTAIN TRANSACTIONS

On April 3, 1995, PDK entered into a binding agreement with International
Sales Association, Inc. ("ISA") appointing ISA as the exclusive sales agent for
sales of Energex Plus to grocery, drug, discount department stores, department
stores, variety stores, and U.S. government/military sales (the "ISA
Agreement"). PDK agreed to pay ISA (i) a commission of ten percent (10%) of the
net amount of goods shipped pursuant to the ISA Agreement, and (ii) an
additional two percent (2%) for marketing services through February 28, 1997.
PDK agreed not to hire any of ISA's employees or sales associates for the term
of the ISA Agreement and for a further two (2) year period thereafter. ISA and
ISA's founder and controlling shareholder, Patrick Higgins, agreed not to
represent any competing product for the term of the ISA Agreement and for a
further one (1) year period thereafter.

On April 25, 1995, the Company was formed in the State of Delaware under
the name Lesser Paul, Inc.

On April 28, 1995, Walpac, Inc. acquired 2,500,000 shares of Common Stock
of the Company, par value $.0001 per share, for a cash consideration of $50,000.

On October 31, 1995, all of the Energex Assets and the Compare Generiks
Assets were transferred from PDK to the Company for a purchase price of
approximately $1,700,000. In exchange (i) PDK was issued 500,000 shares of
Common Stock of the Company representing $1,200,000 of the purchase price ($2.40
per share), (ii) the Company delivered to PDK a promissory note in the aggregate
principal amount of $500,000 together with interest at the rate of eight percent

(8%) per annum, payable to PDK on October 31, 1996, and (iii) the Company agreed
to purchase PDK's Energex Plus inventory at the cost specified in the Supply
Agreement (defined and referred to below). The Company agreed to assume certain
liabilities associated with the Energex Assets, including PDK's obligations to
(a) Nu-Tek Laboratories, Inc. ("Nu-Tek") pursuant to a promissory note in the
aggregate principal amount of $100,000, of which $50,000 remains outstanding,
delivered by PDK to Nu-Tek as part consideration for PDK's acquisition of the
Energex Assets and (b) ISA, pursuant to the ISA Agreement. In addition, the
Company agreed to pay to Nu-Tek a thirteen percent (13%) royalty on all "net
sales" (as defined in the agreement between Nu-Tek and PDK) for the period from
March 1, 1995 through February 28, 1997.

On October 31, 1995, the Company leased 10,000 square feet of executive
offices, a distribution center and warehouse space at 300 Oser Avenue,
Hauppauge, NY 11788 from PDK for a period of one (1) year at a monthly rent of
$5,000.

Since October 31, 1995, the Company has purchased essentially all of its
products and materials from PDK at PDK's cost, plus one hundred (100%) percent,
pursuant to a supply agreement between PDK and the Company (the "Supply
Agreement") and, in addition, has paid the royalty described

<PAGE>

above to Nu-Tek. The term of the Supply Agreement is for a period of five (5)
years, automatically renewable for successive one (1) year terms.

As of October 31, 1995, the Company entered into a one (1) year employment
agreement with Thomas A. Keith, pursuant to which Mr. Keith serves as the
Company's President. The agreement, as amended, provides for Mr. Keith to
receive a salary of $135,000 per annum. In addition, Mr. Keith has been granted
an option to purchase 100,000 shares of the outstanding Common Stock of the
Company exercisable (i) at an exercise price equal to the public offering price
of the shares of Common Stock of the Company offered for sale in this Offering,
and (ii) only at a time when Mr. Keith is employed by the Company. The agreement
can be terminated by the Company, with or without cause, upon ninety (90) days'
notice and contains prohibitions on the disclosure of confidential information
and covenants not to compete with the Company which survive any such
termination.

As of October 31, 1995, the Company entered into a one (1) year employment
agreement with Raymond Aiken, pursuant to which Mr. Aiken serves as the
Company's Vice President of Sales. The agreement, as amended, provides for Mr.
Aiken to receive a salary of $70,000 per annum. In addition, Mr. Aiken has been
granted an option to purchase 100,000 shares of the outstanding Common Stock of
the Company exercisable (i) at an exercise price equal to the public offering
price of the shares of Common Stock of the Company offered for sale in this
Offering, and (ii) only at a time when Mr. Aiken is employed by the Company. The
agreement can be terminated by the Company, with or without cause, upon ninety
(90) days' notice and contains prohibitions on the disclosure of confidential
information and covenants not to compete with the Company which survive any such

termination.

On November 13, 1995, the Company's name was changed from Lesser Paul, Inc.
to Compare Generiks, Inc.

In December, 1995, the Company borrowed an aggregate of $300,000 from four
(4) unaffiliated lenders (the "Bridge Lenders"). In exchange for making loans to
the Company, each Bridge Lender received two promissory notes (the "Bridge
Notes"). In February, 1996, one of the Bridge Lenders assigned all of his right,
title and interest in the aggregate principal amount of $20,000 of Bridge Notes
held by him to one of the other Bridge Lenders in consideration for the payment
of $20,000. Certain of the Bridge Notes are in the aggregate principal amount of
$270,000 (the "Principal Bridge Notes") and the other Bridge Notes are in the
aggregate principal amount equal to $30,000 (the "Convertible Bridge Notes").
Each of the Bridge Notes bears interest at the rate of eight percent (8%) per
annum. The Bridge Notes were due and payable upon the earlier of (i) October 31,
1996 or (ii) the closing of the initial underwritten public offering of the
Company's securities. In addition, each Bridge Lender has the right to convert a
Convertible Bridge Note into a number of Class A Warrants equal to one hundred
(100) times the principal amount of such Convertible Bridge Note. The Company
entered into the bridge financing transactions because it required additional
financing and no other sources of financing were available to the Company at
that time. Further, the Company agreed to register the Class A Warrants issuable
upon conversion of the Convertible Bridge Notes, as well as the shares of

<PAGE>

Common Stock issuable upon exercise of the Class A Warrants in the first
registration statement filed by the Company following the date of the loan. See
"Selling Securityholders" and "Bridge Financings."

On December 14, 1995, Walpac, Inc. acquired 5,000,000 shares of Series A
Preferred Stock of the Company, for a cash consideration of $5,000. The Series A
Preferred Stock has no dividend rights and has a liquidation right of $.02 per
share. Each share of Series A Preferred Stock shall be entitled to one (1) vote
per share on all matters presented to stockholders of the Company. See
"Description of Securities."

On January 30, 1996, the $500,000 promissory note payable to PDK in
connection with the business acquisition was converted to 500,000 shares of
Series B Preferred Stock. The Series B Preferred Stock earns cumulative award
dividends of 12% or $.12 per share and is redeemable by the Company after one
year from the date of issuance. The Series B Preferred Stock has a liquidation
right of $1 per share. Each share of Series B Preferred Stock shall be entitled
to one (1) vote per share on all matters presented to Stockholders of the
Company. See "Description of Securities."

On March 6, 1996, the Company completed an underwritten public offering
(the "offering") of its securities by selling 345,000 units (the "units") which
are comprised of 690,000 shares of Common Stock and 345,000 Class A Warrants to
purchase an additional 345,000 shares of Common Stock (without giving effect to

the Over-Allotment Option granted to the Underwriter of the Offering).
Simultaneously with the Company's Offering, certain Selling Securityholders(the
"Selling Securityholders") also completed the offering of securities by selling
(i) 3,000,000 Class A Warrants issuable upon conversion of certain Convertible
Bridge Notes and (ii) 1,500,000 shares of Common Stock. The Company did not
receive any of the proceeds of the sale of securities by the Selling
Securityholders.

On March 12, 1996, the Company utilized a portion of its proceeds from its
initial public offering to satisfy the outstanding principal Bridge Notes. An
aggregate of $ 275,385 was paid to the Bridge Lenders in satisfaction of the
outstanding principal and accrued interest.

On May 31, 1996, the Company entered into an exclusive Supply Agreement
with Superior Supplements, Inc. ("SSI") whereby the Company agreed to purchase
from SSI all vitamins which the Company shall distribute, market and/or sell for
a term of three years. Additionally, pursuant to a subscription agreement of the
same date, the Company acquired 500,000 shares of Common Stock of SSI in
exchange for payment of one hundred thousand dollars ($100,000) and two hundred
thousand (200,000) shares of the Company's Common Stock.

<PAGE>

DESCRIPTION OF SECURITIES

The Selling Securityholders are offering 1,800,000 shares of Common Stock,
par value $.0001 per share.

Common Stock

The Company is authorized to issue up to 25,000,000 shares of Common Stock,
of which 3,990,000 shares will be issued and outstanding as of the date of this
Prospectus. All of the issued and outstanding shares of Common Stock will be
fully paid, validly issued and non-assessable.

Subject to the rights of holders of Preferred Stock, if any, holders of
shares of Common Stock of the Company are entitled to share equally on a per
share basis in such dividends as may be declared by the Board of Directors out
of funds legally available therefor. There are presently no plans to pay
dividends with respect to the shares of Common Stock. See "Dividend Policy."
Upon liquidation, dissolution or winding up of the Company, after payment of
creditors and the holders of any senior securities of the Company, including
Preferred Stock, if any, the assets of the Company will be divided pro rata on a
per share basis among the holders of the shares of Common Stock. The Common
Stock is not subject to any liability for further assessments. There are no
conversion or redemption privileges nor any sinking fund provisions with respect
to the Common Stock and the Common Stock is not subject to call. The holders of
Common Stock do not have any pre-emptive or other subscription rights.

Holders of shares of Common Stock are entitled to cast one (1) vote for

each share held at all stockholders' meetings including the annual meeting, for
all purposes, including the election of directors. The Common Stock does not
have cumulative voting rights.

Preferred Stock

The Company's Certificate of Incorporation authorizes 10,000,000 shares of
"blank check" Preferred Stock, whereby the Board of Directors of the Company
shall have the authority, without further action by the holders of the
outstanding Common Stock, to issue shares of Preferred Stock from time to time
in one or more classes or series, to fix the number of shares constituting any
class or series and the stated value thereof, if different from the par value,
and to fix the term of any such series or class, including dividend rights,
dividend rates, conversion or exchange rights, voting rights, rights and terms
of redemption (including sinking fund provisions), the redemption price and the
liquidation preference of such class or series. As of the date of this
Prospectus, there are 5,000,000 shares of Series A Preferred Stock and 500,000
shares of Series B Preferred Stock issued and outstanding. The Company has
agreed with its Underwriters that it will not issue any additional shares of
preferred stock for a period of twelve (12) months from the date of this
Prospectus without the prior written consent of the Underwriters.

<PAGE>

Series A Preferred Stock

Designation and Amount; Par Value. The shares of such series are designated
as Series A Preferred Stock and the number of shares constituting such series is
5,000,000, 5,000,000 of which are issued and outstanding. The Series A Preferred
Stock has $.0001 par value per share.

Dividends. Holders of the Series A Preferred Stock do not have any right to
the payment of any dividend.

Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, the shares
of Series A Preferred Stock do not have a liquidation preference.

Voting Rights. Each holder of Series A Preferred Stock shall be entitled to
one (1) vote per share on all matters presented to the stockholders of the
Company.

Rank. The shares of Series A Preferred Stock rank senior to all series of
preferred stock (except for the series B Preferred Stock) and the Common Stock
in all respects.

Series B Preferred Stock

Designation and Amount; Par Value. The shares of such series are designated
as Series B Preferred Stock and the number of Shares constituting such series is
500,000 all of which are issued and outstanding. The Series B Preferred Stock

has $.0001 par value per share.

Dividends. Holders of the Series B Preferred Stock have the right to a
cumulative annual dividend of 12% or $.12 per share.

Liquidation Rights. In the event of any voluntary or involuntary
liquidations, dissolution or winding up of the affairs of the Company, the
shares of Series B Preferred Stock shall have a liquidation preference in the
aggregate amount of $500,000 or $1.00 per share of Series B Preferred Stock.

Voting Rights. Each holder of Series B Preferred Stock shall be entitled to
one (1) vote per share on all matters presented to the stockholders of the
Company.

Rank. The shares of Series B Preferred Stock rank senior to all series of
preferred stock and the Common Stock in all respects.

Class A Warrants

<PAGE>

Each Class A Warrant entitles the holder to purchase one (1) share of
Common Stock at a price of $4.00 per share for a period of four (4) years
commencing one (1) year from the Effective Date of the Company's initial public
offering. Each Class A Warrant is redeemable by the Company for $.05 per Class A
Warrant, at any time after March 5, 1997, upon thirty (30) days' prior written
notice, if the closing price of the Common Stock, as reported by the principal
exchange on which the Common Stock is traded, The Nasdaq Small Cap Market or the
National Quotation Bureau Incorporated, as the case may be, exceeds $10.00 per
share for twenty (20) consecutive trading days prior to the date of the notice
of redemption. Upon thirty (30) days' written notice to all holders of Class A
Warrants, the Company shall have the right, subject to compliance with Rule
13E-4 under the Securities Exchange Act of 1934 and the filing of Schedule 13E-4
and, if required, a post-effective amendment to the Company's original
registration statement, to reduce the exercise price and/or extend the term of
the Class A Warrants.

The Class A Warrants can only be exercised when there is a current
effective registration statement covering the shares of Common Stock underlying
the Class A Warrants. If the Company does not or is unable to maintain a current
effective registration statement, the holders of Class A Warrant certificates
will be unable to exercise the Class A Warrants and the Class A Warrants may
become valueless. Moreover, if the shares of Common Stock underlying the Class A
Warrants are not registered or qualified for sale in the state in which a holder
of Class A Warrant certificates resides, such holder might not be permitted to
exercise the Warrants. See "Risk Factors - Current Prospectus and State Blue Sky
Registration in Connection with the Exercise of the Warrants."

Each Class A Warrant may be exercised by surrendering the Warrant
certificate, with the form of election to purchase on the reverse side of the

Class A Warrant certificate properly completed and executed, together with
payment of the exercise price, or $4.00 per share, to the Transfer Agent. The
Class A Warrants may be exercised in whole or from time to time in part. If less
than all of the Class A Warrants evidenced by a Warrant certificate are
exercised, a new Class A Warrant certificate will be issued for the remaining
number of Class A Warrants.

Holders of the Class A Warrants are protected against dilution of the
equity interest represented by the underlying shares of Common Stock upon the
occurrence of certain events, including, but not limited to, issuance of stock
dividends. If the Company merges, reorganizes or is acquired in such a way as to
terminate the Class A Warrants, the Class A Warrants may be exercised
immediately prior to such action. In the event of liquidation, dissolution or
winding up of the Company, holders of the Class A Warrants are not entitled to
participate in the Company's assets.

For the life of the Class A Warrants, the holders thereof are given the
opportunity, at nominal cost, to profit from a rise in the market price of the
Common Stock. The exercise of the Class A Warrants will result in the dilution
of the then book value of the Common Stock of the Company held by the public
investors and would result in a dilution of their percentage ownership of the
Company.

<PAGE>

Delaware Anti-Takeover Law

The Company is governed by the provisions of Section 203 of the General
Corporation Law of Delaware, an anti-takeover law enacted in 1988. In general,
the law prohibits a Delaware public corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three (3) years
after the date of the transaction in which the person became an interested
stockholder, unless it is approved in a prescribed manner. As a result of
Section 203, potential acquirors of the Company may be discouraged from
attempting to effect acquisition transactions with the Company, thereby possibly
depriving holders of the Company's securities of certain opportunities to sell
or otherwise dispose of such securities at above-market prices pursuant to such
transactions

Limitation on Liability of Directors

Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of the performance of their duties as directors and
officers provided that this provision shall not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
arising under Section 174 of the Delaware General Corporation Law, or (iv) for
any transaction from which the director derived an improper personal benefit.

The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of stockholders or otherwise.

Article Ninth of the Company's Certificate of Incorporation eliminates the
personal liability of directors to the fullest extent permitted by Section 102
of the Delaware General Corporation Law.

The effect of the foregoing is to require the Company to the extent
permitted by law to indemnify the officers and directors of the Company for any
claim arising against such persons in their official capacities if such person
acted in good faith and in a manner that he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore

<PAGE>

unenforceable.

The Company does not currently have any liability insurance coverage for
its officers and directors.

Commission Policy

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and other agents of the Company, the Company
has been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.

Transfer Agent & Registrar

The transfer agent and registrar for the Company's securities is American
Stock Transfer & Trust Company (the "Transfer Agent").

<PAGE>

PRIOR COMPANY OFFERING

On March 6, 1996, a Registration Statement under the Act was declared
effective by the Securities and Exchange Commission ("SEC") with respect to (A)
an underwritten public offering (the "Offering") of 345,000 Units ("Units") by
the Company and (B) (i) 3,000,000 Class A Warrants issuable upon conversion of
the Convertible Bridge Notes and (ii) 1,500,000 shares of Common Stock, (a)
1,000,000 of which were held by Walpac, Inc. a company controlled by David
Waldman, one of the Company's directors and (b) 500,000 of which were held by
PDK, a shareholder, creditor and supplier of the Company and the Company sold
the Units offered thereby. The Units were comprised of 690,000 shares of Common
Stock and 345,000 Class A Warrants to purchase an additional 345,000 shares of
Common Stock. Sales of securities under this Prospectus by the Selling
Securityholders or even the potential of such sales may have an adverse effect
on the market price of the Company's securities.

SELLING SECURITYHOLDERS

On the date of this Prospectus, a Registration Statement under the Act with
respect to the sale of 1,500,000 shares of Common Stock by Walpac, Inc., a
company controlled by David Waldman, one of the Company's directors, 200,000
shares of Common Stock by Superior Supplements, Inc ("SSI")., and 100,000 shares
of Common Stock by Thomas Keith (hereinafter referred to as the "Selling
Securityholders") offered thereby, was declared effective by the Securities and
Exchange Commission ("SEC"), and the Selling Securityholders commenced the sale
of shares of Common Stock offered thereby. Prior to the Sale of the shares of
Common Stock offered thereby, Walpac owned 1,500,000 shares of Common Stock and
5,000,000 shares of Series A Preferred Stock; SSI owned 200,000 shares of Common
Stock and Mr. Keith owned 100,000 shares of Common Stock, issuable upon the
exercise of options. Following the sale of the Common Stock offered hereby, the
Selling Securityholders will own none of outstanding shares of Common Stock and
Walpac will own 90.9% of the outstanding Preferred Stock. Sales of the shares of
Common Stock under this prospectus by the Selling Securityholders or even the
potential of such Sales may have an adverse effect on the market price of the
Company's securities. See "Risk Factors - Shares Eligible for Future Sale may
Adversely Affect the Market." The Company will not receive any of the sale of
the shares of Common Stock by the Selling Securityholders. The resale of the
securities of the Selling Securityholders are subject to Prospectus delivery and
other requirements of the Securities Act of 1933, as amended (the "Act").

<PAGE>

Securityholders may be effected in one or more transactions that may take place
on the over-the-counter market, including ordinary broker's transactions,
privately-negotiated transactions or through sales to one or more broker-dealers
for resale of such shares as principals, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated

prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Securityholders in connection with such
sales of securities. The securities offered by the Selling Securityholders may
be sold by one or more of the following methods, without limitations: (a) a
block trade in which a broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus;
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and (d) face-to-face transactions between sellers and
purchasers without a broker-dealer. In effecting sales, brokers or dealers
engaged by the Selling Securityholders may arrange for other brokers or dealers
to participate. The Selling Securityholders and intermediaries through whom such
securities are sold may be deemed "underwriters" within the meaning of the Act
with respect to the securities offered, and any profits realized or commissions
received may be deemed underwriting compensation.

At the time a particular offer of securities is made by or on behalf of the
Selling Securityholders, to the extent required, a Prospectus will be
distributed which will set forth the number of shares being offered and the
terms of the Offering, including the name or names of any underwriters, dealers
or agents, if any, the purchase price paid by any underwriter for sales
purchased from the Selling Securityholders and any discounts, commissions or
concessions allowed or reallowed or paid to dealers and the proposed selling
price to the public.

Sales of securities by the Selling Securityholders or even the potential of
such sales would likely have an adverse effect on the market prices of the
securities offered hereby.

PLAN OF DISTRIBUTION

The securities offered hereby may be sold from time to time directly by the
Selling Securityholders. Alternatively, the Selling Securityholders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Securityholders may be effected in one
or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with such sales of securities. The securities
offered by the Selling Securityholders may be sold by one or more of the
following methods, without limitations: (a) a block trade in which a broker or
dealer so engaged will attempt

<PAGE>

to sell the shares as agent but may position and resell a portion of the block

as principal to facilitate the transaction; (b) purchases by a broker or dealer
as principal and resale by such broker or dealer for its account pursuant to
this Prospectus; (c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers, and (d) face-to-face transactions between
sellers and purchasers without a broker-dealer. In effecting sales, brokers or
dealers engaged by the Selling Securityholders may arrange for other brokers or
dealers to participate. The Selling Securityholders and intermediaries through
whom such securities are sold may be deemed "underwriters" within the meaning of
the Act with respect to the securities offered, and any profits realized or
commissions received may be deemed underwriting compensation.

LEGAL MATTERS

The validity of the securities being offered hereby will be passed upon for
the Company by Bernstein & Wasserman, LLP, 950 Third Avenue, New York, NY 10022.
Hartley T. Bernstein, a partner at Bernstein & Wasserman, LLP, is one of the
Directors of the Company. See "Management" and "Principal Stockholders."

EXPERTS

Certain of the financial statements of the Company included in this
Prospectus and elsewhere in the Registration Statement, to the extent and for
the periods indicated in their reports, have been examined by Holtz Rubenstein &
Co., LLP, independent certified public accountants, whose reports contain an
explanatory paragraph regarding uncertainties as to the ability of the Company
to continue as a going concern, which appear elsewhere herein and in the
Registration Statement.

ADDITIONAL INFORMATION

This Prospectus constitutes part of a Registration Statement on Form SB-2
filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act and omits certain information contained
in the Registration Statement. Reference is hereby made to the Registration
Statement and to its exhibits for further information with respect to the
Company and the Common Stock offered hereby. Statements contained herein
concerning

<PAGE>

provisions of documents are necessarily summaries of such documents, and each
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.

The Registration Statement, including the exhibits thereto, may be
inspected without charge at the public reference facilities maintained by the
Commission at: 450 Fifth Street, Washington, D.C. 20549; and at the offices of
the Commission located at 7 World Trade Center, New York, NY 10048; and copies
of such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, Washington, D.C. 20549 at prescribed rates.

<PAGE>
Draft #3 - W4308.AFS
5/21/96

COMPARE GENERIKS, INC.
(A Development Stage Company)

REPORT ON AUDIT OF FINANCIAL STATEMENTS

PERIOD APRIL 25, 1995 (INCEPTION)
TO MARCH 31, 1996

<PAGE>

INDEX TO FINANCIAL STATEMENTS

Page
----
Compare Generiks, Inc.

Report of Independent Certified Public Accountants F-1

Balance sheet as of March 31, 1996 F-2

Statement of operations for the period April 25, 1995
(inception) to March 31, 1996 F-3

Statement of stockholders' equity for the period April 25, 1995
(inception) to March 31, 1996 F-4

Statement of cash flows for the period April 25, 1995
(inception) to March 31, 1996 F-5

Notes to financial statements F-6-F-11

<PAGE>

Independent Auditors' Report

Board of Directors and Stockholders
Compare Generiks, Inc.
Hauppauge, New York

We have audited the balance sheet of Compare Generiks, Inc. (A Development Stage
Company) as of March 31, 1996, and the related statements of operations,
stockholders' equity and cash flows for the period April 25, 1995 (inception) to
March 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Compare Generiks, Inc. (A
Development Stage Company) as of March 31, 1996 and the results of its
operations and its cash flows for the period April 25, 1995 (inception) to March
31, 1996, in conformity with generally accepted accounting principles.

HOLTZ RUBENSTEIN & CO., LLP

Melville, New York
May 9, 1996

F-1

<PAGE>

COMPARE GENERIKS, INC.
(A Development Stage Company)

BALANCE SHEET

MARCH 31, 1996

ASSETS

CURRENT ASSETS:
Cash and cash equivalents $ 2,047,473
Accounts receivable, net of $10,000 allowance
for doubtful accounts 235,296
Inventories 162,403
Prepaid expenses and other current assets 157,955
-----------
Total current assets 2,603,127

INTANGIBLE ASSETS, net (Note 4) 1,644,612

FURNITURE AND FIXTURES, net 3,736

OTHER ASSETS 74,000
-----------

$ 4,325,475
===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 87,194
Due to affiliate 233,175
-----------
Total current liabilities 320,369
-----------

COMMITMENTS (Note 8)

STOCKHOLDERS' EQUITY: (Note 6)
Common stock, $.0001 par value; authorized 25,000,000
shares; 3,690,000 issued and outstanding 369
Preferred stock - Class A - $.0001 par value; authorized
10,000,000 shares; 5,000,000 issued and outstanding 500
Preferred stock - Class B - $.0001 par value; authorized
10,000,000 shares; 500,000 issued and outstanding 50
Additional paid-in capital 4,223,364
Deficit accumulated during the development stage (214,177)
-----------
4,010,106
Less stock subscription receivable (5,000)
-----------

4,005,106
-----------

$ 4,325,475
===========

See notes to financial statements

F-2

<PAGE>

COMPARE GENERIKS, INC.
(A Development Stage Company)

STATEMENT OF OPERATIONS

PERIOD APRIL 25, 1995 (INCEPTION) TO MARCH 31, 1996

REVENUE $ 545,670
-----------

COSTS AND EXPENSES:
Cost of sales 254,676
Selling, general and administrative 490,601
-----------

745,277
-----------

OPERATING LOSS (199,607)

INTEREST EXPENSE, net (14,570)
-----------

NET LOSS $ (214,177)
===========

NET LOSS PER SHARE $ (.07)
===========

WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING 3,036,529
===========

See notes to financial statements

F-3

<PAGE>

COMPARE GENERIKS, INC.
(A Development Stage Company)

STATEMENT OF STOCKHOLDERS' EQUITY

PERIOD APRIL 25, 1995 (INCEPTION) TO MARCH 31, 1996

<TABLE>
<CAPTION>
Preferred Stock Preferred Stock
Common Stock Class A Class B
25,000,000 Shares 10,000,000 Shares 10,000,000 Shares
$.0001 Par Value $.0001 Par Value $.0001 Par Value
------------------ ------------------ ------------------
Par Par Par
Shares Value Shares Value Shares Value
------ ----- ------ ----- ------ -----

<S> <C> <C> <C> <C> <C> <C>
Issuance of stock for cash at inception 2,500,000 $ 250 -- $ -- -- $ --

Issuance of founder stock -- -- 5,000,000 500 -- --

Issuance of stock in connection with
purchase of Energex/Compare Division 500,000 50 -- -- -- --

Conversion of note payable to stock -- -- -- -- 500,000 50

Public issuance of securities for cash, net 690,000 69 -- -- -- --

Conversion of bridge note to warrants -- -- -- -- -- --

Net loss -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------

Balance, March 31, 1996 3,690,000 $ 369 5,000,000 $ 500 500,000 $ 50
=========== =========== =========== =========== =========== ===========

<CAPTION>
Additional
Paid-in Subscription
Capital Deficit Receivable Total
------- ------- ---------- -----

<S> <C> <C> <C> <C>
Issuance of stock for cash at inception $ 49,750 $ -- $ -- $ 50,000

Issuance of founder stock 4,500 -- (5,000) --

Issuance of stock in connection with
purchase of Energex/Compare Division 1,199,950 -- -- 1,200,000

Conversion of note payable to stock 499,950 -- -- 500,000

Public issuance of securities for cash, net 2,439,214 -- -- 2,439,283

Conversion of bridge note to warrants 30,000 -- -- 30,000

Net loss -- (214,177) -- (214,177)
----------- ----------- ----------- -----------

Balance, March 31, 1996 $ 4,223,364 $ (214,177) $ (5,000) $ 4,005,106
=========== =========== =========== ===========

</TABLE>

See notes to financial statements

F-4

<PAGE>

COMPARE GENERIKS, INC.
(A Development Stage Company)

STATEMENT OF CASH FLOWS

PERIOD APRIL 25, 1995 (INCEPTION) TO MARCH 31, 1996

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (214,177)
-----------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 287
Amortization 130,850
Allowance for doubtful accounts 10,000
Changes in operating assets and liabilities:
Increase in assets:
Accounts receivable (245,296)
Inventories (162,403)
Prepaid expenses and other current assets (45,864)
Other assets (74,000)
Increase in liabilities:
Accounts payable and accrued expenses 87,194
Due to affiliate 233,175
-----------
Total adjustments (66,057)
-----------
Net cash used in operating activities (280,234)
-----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of furniture and fixtures (4,023)
Acquisition of intangible assets (137,553)
-----------
Net cash used in investing activities (141,576)
-----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock and securities 2,489,283
Repayment of note payable (50,000)
Proceeds of bridge loan 300,000
Repayment of bridge loan (270,000)
-----------
Net cash provided by financing activities 2,469,283
-----------

Net increase in cash and cash equivalents 2,047,473

CASH AND CASH EQUIVALENTS, beginning of period --
-----------

CASH AND CASH EQUIVALENTS, end of period $ 2,047,473
===========

See notes to financial statements

F-5

<PAGE>

COMPARE GENERIKS, INC.
(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

PERIOD APRIL 25, 1995 (INCEPTION) TO MARCH 31, 1996

1. Organization and Nature of Operations:

Compare Generiks, Inc., a Delaware Corporation (the "Company"), was formed
on April 25, 1995. The Company is engaged in the distribution, marketing and
sale of dietary supplements and over-the-counter nonprescription
pharmaceuticals.

The Company is in the development stage, as defined in Statement of
Financial Accounting Standard No. 7 (`FAS 7") and has incurred cumulative losses
of $214,000. Through March 31, 1996, the Company has devoted its efforts to
various organizational activities, including developing its business strategy,
raising capital, and undertaking preliminary activities for the commencement of
operations. As of March 31, 1996, cumulation from date of inception financial
data as required by FAS 7 would be identical to the amount presented at such
date; accordingly, this information has not been shown.

On October 31, 1995, the Company acquired certain assets and liabilities
and the ongoing business of Energex/Compare Division of PDK Labs Inc. (Note 3).

On March 12, 1996, the Company completed an initial public offering of its
securities (Note 6e).

2. Summary of Significant Accounting Policies:

a. Inventories

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

b. Depreciation and amortization

Depreciation is computed using the straight-line method over the
estimated useful lives of the related assets. Maintenance and repairs of
property and equipment are charged to operations and major improvements are
capitalized. Upon retirement, sale or other disposition of property and
equipment, the cost and accumulated depreciation are eliminated from the
accounts and gain or loss is included in operations.

Intangible assets arising from the acquisition discussed in Note 3 are
amortized using the straight-line method over the following periods:

Customer list 5 years
Covenant not to compete 4 years
Patents and trademarks 7 years
Goodwill 10 years
Other 3-5 years

Distribution rights 1-5 years

c. Income taxes

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

F-6

<PAGE>

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

d. Statement of cash flows

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

e. Net Loss Per Share

Net loss per share is computed using the weighted average number of
common and common equivalent shares outstanding during the period. Pursuant to
Securities and Exchange Commission Staff Accounting Bulletin, all common stock
issued by the Company during the twelve months preceding the offering date at
prices below the offering price have been included in the calculation of
weighted average shares outstanding as if they were outstanding for the entire
period.

Net loss per share attributable to common shareholders was computed as
follows:

Net loss $214,177
Dividends on preferred shares 10,000
--------

Net loss attributable to common shareholders $224,177
========

f. Estimates

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

g. Concentration of credit risk

Financial instruments which potentially expose the Company to credit
risk, as defined by Statement of Financial Accounting Standard No. 105 ("FAS

105"), consists primarily of trade accounts receivable. Wholesale distributors
of dietary supplements and over-the-counter pharmaceuticals account for a
substantial portion of trade receivables. The risk associated with this
concentration is limited due to the large number of distributors and their
geographic dispersion.

3. Business Combination:

On October 31, 1995, the Company acquired certain assets, liabilities and
the on-going business of the Energex/Compare Division ("Division") of PDK Labs
Inc. ("PDK") for approximately $1,700,000. The Division was engaged in the
business of distributing health supplement products. The acquisition consisted
of certain assets and rights relating to the "Energex Plus" and "Compare
Generiks" product lines, including customer lists, trade secrets, trademarks and
tradenames and the assumption of a $50,000 obligation under a promissory note.
The purchase price of $1,700,000 was based upon the appraised value of the
"Energex Plus" and "Compare Generiks" product lines. Consideration paid by the
Company consisted of (i) 500,000 shares of the Company's Common Stock and (ii) a
promissory note of $500,000. In addition, the Company purchased PDK's inventory
attributable to these product lines under terms consistent with the Supply
Agreement with PDK (Note 6c).

The above acquisition has been accounted for utilizing purchase accounting
principles, and as a result, the following was recorded:

F-7

<PAGE>

3. Business Combination: (Cont'd)

Customer lists $1,350,000
Covenant not to compete 41,667
Patents and trademarks 70,000
Goodwill 176,242
Other assets 112,091
----------
$1,750,000
==========

Notes payable $ 550,000
Common stock 50
Additional paid-in capital 1,199,950
----------
$1,750,000
==========

If the transaction had been consummated as of April 25, 1995 the pro forma
results for the period ended March 31, 1996 would have been as follows:

Revenue $ 914,202
=========
Net loss $(401,141)

=========
Loss per share $ (.13)
=========

4. Intangible Assets

Intangible assets consist of the following at March 31, 1996:

Customer lists $1,350,000
Covenant not to compete 41,667
Patents and trademarks 70,000
Goodwill 176,242
Distribution rights 107,253
Other 30,300
----------
1,775,462
Less accumulated amortization 130,850
----------
$1,644,612
==========

Amortization expense for the period ended March 31, 1996 was $130,850.

The Company has implemented a marketing program with select retail stores
and distributors in order to obtain premium shelf space. Contracts with
retailers and for a fixed period of not less than one year. Costs associated
with these distribution rights are being charged to operations ratably over the
lives of the agreements.

5. Income Taxes:

No current provision for taxes has been reflected since the Company has a
net operating loss carryforward of approximately $214,000 from its initial
period of operations. This operating loss carryforward can be utilized to reduce
future taxable income. The net deferred taxes, had no effect on net income and
was calculated as follows:

Net operating loss carryforward $90,000
Book and tax intangible life difference 5,500
-------
95,500
Valuation allowance (100%) 95,500
-------
Net deferred tax asset $ --
=======

F-8

<PAGE>

6. Stockholders' Equity:

a. Capitalization

Pursuant to an amendment of the Company's certificate of
incorporation, the Company has changed the number of authorized shares of common
stock to 25,000,000, Series A Preferred Shares to 10,000,000 and authorized
10,000,000 shares of Series B Preferred Shares. All stock has a $.0001 par
value. Each share of common and preferred has one vote in all matters.

The Series A Preferred Shares rank senior to all common stock, do not
have any right to the payment of any dividend, and in the event of any voluntary
or involuntary liquidation of the company each share shall have a liquidation
preference of $.02.

The Series B Preferred Stock earns cumulative annual dividends of 12%
or $.12 per share and is callable by the Company after one year from the date of
issuance. The Series B Preferred Stock ranks senior to all series of preferred
and common stock. In the event of any voluntary or involuntary liquidation of
the Company each share shall have a liquidation preference of $1.00.

b. Stock split

On December 14, 1995, the Company effected a 2000 for 1 stock split.
All references to number of shares and per share data in the financial
statements and accompanying notes have been restated to reflect the stock split.

c. Initial capitalization

In April 1995, the Company issued 2,500,000 shares of common stock for
$50,000 and agreed to issue, upon authorization, 5,000,000 shares of Series A
Preferred Stock for $5,000 ("Founders' Stock").

d. Reserved shares

At March, 1996, the Company has 5,635,000 shares of common stock
reserved for future issuances.

e. Public offering

In March 1996, the Company completed a public offering of 345,000
units at $10.00 per unit for an aggregate of $3,450,000. Each unit consists of
two shares of common stock and one Class A Warrant. Each Class A Warrant
entitles the holder to purchase one share of common stock at $4.00 per share.
The warrants are exercisable at any time during the four year period commencing
one year from the date of offering. The Class A Warrants are redeemable by the
Company, at any time after March 5, 1997, for $.05 per warrant, if the average
price of the common stock equal or exceeds $10.00 per share for any twenty
trading days within a period of thirty consecutive trading days ending five days
prior to the date of the notice of redemption.

Effective with the closing of the offering, the Company entered into a
two year consulting agreement with the underwriter. The consulting fee of
$72,000 is being charged to operations ratably over the term of the agreement.

f. Stock option plan

The Company has adopted, subject to shareholder approval, a Stock

Option Plan (the "Plan") covering 2,000,000 shares of common stock of the
Company. Options under the Plan are granted at terms set by the Board of
Directors at the time of issuance. To date, no options have been granted under
the Plan.

F-9

<PAGE>

6. Stockholders' Equity: (Cont'd)

g. Warrants

(i) Underwriters warrants

Pursuant to the Company's public offering, the Company issued to
the underwriter warrants to purchase an additional 30,000 Units at an exercise
price of $12.00 per unit. These warrants are exercisable for a period of four
years, commencing one year from the date of the public offering.

(ii) Bridge lender warrants

In March 1996, the Company issued 3,000,000 Class A Warrants in
connection with the conversion of $30,000 of convertible bridge notes. The value
of these notes has been recorded as additional-paid-in capital.

h. Conversion of note payable

On January 30, 1996, the $500,000 promissory note payable to PDK in
connection with the business acquisition described in Note 3 was converted to
500,000 shares of Series B Preferred Stock.

7. Fair Value of Financial Instruments:

The methods and assumptions used to estimate the fair value of the
following classes of financial instruments were:

Current Assets and Current Liabilities: The carrying amount of cash,
current receivables and payables and certain other short-term financial
instruments approximate their fair value.

8. Commitments:

a. Employment agreements

On October 31, 1995 the Company entered into one year employment
agreements with its president and vice president of sales. The agreements
provide for aggregate annual salaries of $205,000.

In addition, pursuant to the public offering of the Company's common
stock, each officer was granted options to purchase 100,000 shares of the
Company's common stock at an exercise price of $3.00 per share. The options are
exercisable only while the officers are employed by the Company.

b. Lease

On November 1, 1995 the Company entered into a one year lease
agreement with PDK for the leasing of 10,000 square feet of office and warehouse
space. The lease provides for monthly rental payments of $5,000. Rent expense
approximated $25,000 for the period ended March 31, 1996.

F-10

<PAGE>

8. Commitments: (Cont'd)

c. Supply agreement

On March 31, 1996 the Company entered into a five year "Supply
Agreement" with PDK, which provides for PDK to supply the Company certain
products at a price equal to PDK's material cost plus 100%. During the period
ended March 31, 1996 approximately $250,000 was purchased from PDK under the
supply agreement.

d. Royalty agreement

In connection with the acquisition of the Division, the Company agreed
to pay the obligation under a two year distribution royalty agreement. The
agreement requires the Company to pay a royalty fee of 13% of all "net sales"
during the period March 1, 1995 through February 28, 1997. The agreement
contemplates net sales aggregating $1,000,000 during the first Royalty Year. In
the event that net sales do not aggregate at least $1,000,000 during the first
Royalty Year, then the distributor shall return to the Company by April 1, 1996
an amount equal to 13% of the difference between $1,000,000 and the actual net
sales for the first Royalty Year. The Division paid an advance royalty of
$130,000 in March 1995, in connection with this agreement. Royalties earned by
the distributor through March 31, 1996 approximated $78,000.

e. Commission agreement

In connection with the acquisition of the Division, the Company agreed
to pay the obligation under a two year commission agreement with a sales agent.
The agreement provides for the Company to pay the agent a commission fee of 10%
of collected sales shipped into the agent's territory. Additionally, the Company
is to pay the agent a commission fee of 2% of net sales for marketing work
performed by the agent. Commission expense approximated $33,000 for the period
ended March 31, 1996.

F-11

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers.

Article Ninth of the Company's Certificate of Incorporation eliminates the
personal liability of directors to the fullest extent permitted by Section
102(b)(7) of the Delaware General Corporation Law.

The Company does not currently have any liability insurance coverage for
its officers and directors.

Items 25. Other Expenses of Issuance and Distribution.

The estimated expenses in connection with this Offering are as follows:

II-1

<PAGE>

SEC filing fee*.......................... $ 4,715.16

Accounting fees and expenses*............ $ 5,000.00
Legal fees and expenses*................. $ 7,500.00
Printing and engraving*.................. $ 1,500.00
Miscellaneous expenses*.................. $ 1,000.00

Total.................................... $ 19,715.16

- ----------------
* Estimated

Item 26. Recent Sales of Unregistered Securities.

The following information sets forth all securities of the Company sold by
it since inception, which securities were not registered under the Securities
Act of 1933, as amended:

In April, 1995, the Company issued 2,500,000 shares of Common Stock to
Walpac, Inc. a company controlled by David Waldman, the Company's Director for a
cash consideration of $50,000.

In October, 1995, the Company issued 500,000 shares of Common Stock to PDK
Labs Inc. pursuant to the terms of an Asset Purchase Agreement between PDK Labs
Inc. and the Company, representing a value of $1,200,000 or $2.40 per share.

In December, 1995, the Company borrowed an aggregate of $300,000 from four
(4) unaffiliated lenders (the "Bridge Lenders"). In exchange for making loans to
the Company, each Bridge Lender received two promissory notes (the "Bridge
Notes") In February, 1996, one of the Bridge Lenders assigned all of his right,
title and interest in the aggregate principal amount of $20,000 of Bridge Notes
held by him to one of the other Bridge Lenders in consideration for the payment
of $20,000. Certain of the Bridge Notes are in the aggregate principal amount of
$270,000 (the "Principal Bridge Notes") and the other Bridge Notes are in the
aggregate principal amount equal to $30,000 (the "Convertible Bridge Notes").
Each of the Bridge Note bears interest at the rate of eight percent (8%) per
annum. The Bridge Notes were due and payable upon the earlier of (i) October 31,
1996 and (ii) the closing of an initial underwritten public offering of the
Company's securities. The Company utilized a portion of the proceeds of its
initial public offering to repay its Bridge Lenders on March 12, 1996. The
Company repaid an aggregate of $ 275,385.20 to its Bridge Lenders. In addition,
each Bridge Lender has the right to convert a Convertible Bridge Note into a
number of Class A Warrants equal to one hundred (100) times the principal amount
of such Convertible Bridge Note. The Company entered into the bridge financing
transactions because it required additional financing and no other sources of

II-2

<PAGE>

financing were available to the Company at that time. Further, the Company
agreed to register the Class A Warrants issuable upon conversion of the

Convertible Bridge Notes, as well as the shares of Common Stock issuable upon
exercise of the Class A Warrants in the first registration statement filed by
the Company following the date of the loan.

In December, 1995, the Company issued 5,000,000 shares of Preferred Stock
to Walpac, Inc., a company controlled by David Waldman, a Director of the
Company, for a cash consideration of $5,000.

On January 30, 1996, the promissory note payable to PDK of $500,000, was
converted to 500,000 shares of Series B Preferred Stock, which earns cumulative
annual dividends of 12% or $.12 per share and is redeemable by the Company after
one year from the date of issuance.

On May 31, 1996 the Company issued 200,000 shares of Common Stock pursuant
to a Subscription Agreement between the Company and Superior Supplements, Inc.
("SSI"), whereby the Company received 500,000 shares of SSI.'s Common Stock in
exchange for 200,000 shares of Company Common Stock and a payment of an
additional $100,000. See "Selling Securityholders," "Certain Transactions," and
"Bridge Financing."

The Company has relied on Section 4(2) of the Securities Act of 1933, as
amended, for its private placement exemption, such that the sales of the
securities were transactions by an issuer not involving any public offering.

Reference is also made hereby to "Certain Transactions," "Principal
Stockholders" and "Description of Securities" in the Prospectus for more
information with respect to the previous issuance and sale of the Company's
securities.

All of the aforesaid securities have been appropriately marked with a
restricted legend and are "restricted securities" as defined in Rule 144 of the
rules and the regulations of the Securities and Exchange Commission, Washington
D.C. 20549. All of the aforesaid securities were issued for investment purposes
only and not with a view to redistribution, absent registration. All of the
aforesaid persons have been fully informed and advised concerning the
Registrant, its business, financial and other matters. Transactions by the
Registrant involving the sales of these securities set forth above were issued
pursuant to the "private placement" exemptions under the Securities Act of 1933,
as amended, as transactions by an issuer not involving any public offering. The
Registrant has been informed that each person is able to bear the economic risk
of his investment and is aware that the securities were not registered under the
Securities Act of 1933, as amended, and cannot be re-offered or re-sold until
they have been so registered or until the availability of an exemption
therefrom. The Transfer Agent and registrar of the Registrant will be instructed
to mark "stop transfer" on its ledgers to assure that these securities will not
be transferred absent registration or until the availability of an exemption
therefrom is determined.

II-3

<PAGE>

Item 27. Exhibits.
- -------- ---------

1.01* Form of Underwriting Agreement.

3.01* Certificate of Incorporation of the Company dated April 25,
1995.

3.02* Certificate of Amendment of Certificate of Incorporation of
the Company dated November 13, 1995.

3.03* Certificate of Amendment of Certificate of Incorporation of
the Company dated December 13, 1995.

3.04* Certificate of Amendment of Certificate of Incorporation of
the Company dated January 30, 1996.

3.05* By-Laws of the Company.

3.06* Form of Certificate of Designation of Series A Preferred
Stock.

3.07* Form of Certificate of Designation of Series B Preferred
Stock.

4.01* Specimen Certificate for shares of Common Stock.

4.02* Specimen Certificate for shares of Series A Preferred Stock.

4.03* Specimen Certificate for shares of Series B Preferred Stock.

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

4.05* Form of Warrant Agreement by and among the Company and
American Stock Transfer & Trust Company.

4.06* Form of Underwriter's Unit Purchase Option.

5.01 Opinion of Bernstein & Wasserman, counsel to the Company.

10.01* Asset Purchase Agreement between the Company and PDK dated as
of October 31, 1995.

10.02* Supply Agreement between the Company and PDK dated as of
October 31, 1995.

II-4

<PAGE>

10.03* Lease between the Company and PDK dated as of October 31,
1995.

10.04* Promissory Note of the Company, issued to PDK, dated as of
October 31 1995.

10.05* Employment Agreement between the Company and Thomas A. Keith
dated as of October 31, 1995, as amended.

10.06* Employment Agreement between the Company and Raymond A. Aiken
dated as of October 31, 1995, as amended.

10.07* Form of December, 1995 Bridge Loan Agreements.

10.08* Form of Selected Dealers' Agreement.

10.09* 1995 Stock Plan.

10.10* Sales Agency Agreement between PDK and International Sales
Association, Inc. dated as of April 3, 1995, as amended.

10.11 Supply Agreement between the Company and Superior Supplements,
Inc. dated as of May 31, 1996.

10.12 Subscription Agreement between the Company and Superior
Supplements, Inc. dated as of May 31, 1996.

23.01 Consent of Bernstein & Wasserman (to be included in Exhibit
5.01).

23.02 Consent of Holtz Rubenstein & Co., LLP

- ----------
* Previously filed on March 6, 1996 as an exhibit to the Company
Registration Statement on Form SB-2 and incorporated herein by reference.

Item 28. Undertakings.

(a) Rule 415 Offering

The undersigned Registrant will:

1. File, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to:

(i) Include any prospectus required by Section 10(a)(3) of the Act;

II-5

<PAGE>

(ii) Reflect in the prospectus any facts or events which, individually or
in the aggregate, represent a fundamental change in the information set forth in
the registration statement;

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

2. For determining liability under the Act, treat each such post-effective
amendment as a new registration statement of the securities offered, and the
Offering of such securities at that time shall be deemed to be the initial bona
fide offering.

3. File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the Offering.

(b) Equity Offerings of Nonreporting Small Business Issuers

The undersigned Registrant will provide to the Underwriter at the closing
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the Underwriter to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or controlling persons of the Registrant
pursuant to the provisions referred to in Item 22 of this Registration Statement
or otherwise, the Registrant 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 Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant 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 Registrant 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.

(d) Rule 430A

The undersigned Registrant will:

1. For determining any liability under the Act, treat the information
omitted from the form of Prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in the form of a prospectus filed by
the small business issuer under Rule 424(b)(1) or

II-6

<PAGE>

(4) or 497(h) under the Act as part of this Registration Statement as of the
time the Commission declared it effective.

2. For any liability under the Act, treat each post-effective amendment
that contains a form of prospectus as a new registration statement for the
securities offered in the Registration Statement, and that the Offering of the
securities at that time as the initial bona fide Offering of those securities.

II-7

<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, as
amended, the Registrant, certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned, in New
York, New York on ______________.

COMPARE GENERIKS, INC.

By: /s/Thomas A. Keith
--------------------------------------
Thomas A. Keith
President, Chief Executive Officer and
Chief Financial Officer

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

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

/s/ David Waldman Director
- --------------------------
David Waldman

/s/ Hartley T. Bernstein Director
- --------------------------
Hartley T. Bernstein

/s/ Dr. Daniel Durchslag Director
- --------------------------
Dr. Daniel Durchslag

II-8

<PAGE>

[LETTERHEAD OF BERNSTEIN & WASSERMAN]

June 7, 1996

Compare Generiks, Inc..
300 Oser Avenue
Hauppauge, NY 11788

Ladies and Gentlemen:

We have acted as counsel for Compare Generiks, Inc., a Delaware company
("Company"), in connection with a Registration Statement on Form SB-2
("Registration Statement") being filed contemporaneously herewith by the Company
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), covering an aggregate of 1,700,000 shares of the
Company's Common Stock, $.0001 par value ("Common Stock") (i) 1,500,000 shares
which are registered on behalf of Walpac, Inc. ("Walpac"), a company controlled
by David Waldman, one of the Company's directors, and (ii) 200,000 shares which
are being registered on behalf of Superior Supplements, Inc. ("SSI") pursuant to
a certain Supply Agreement dated May 31, 1996 between the Company and SSI (the
"Selling Securityholders Shares") and 100,000 shares of Common Stock which is
reserved for issuance upon the exercise of options heretofore granted pursuant
to a certain Employment Agreement dated October 31, 1995 between the Company and
Mr. Thomas Keith, the Company's CEO and President (the "Opton Shares").

In that connection, we have examined the Certificate of Incorporation, as
amended, and the Amended and Restated By-Laws of the Company, the Registration
Statement, the Employment Agreement, the Supply Agreement, corporate proceedings
of the Company relating to the issuance of the Common Stock pursuant to the
Employment and Supply Agreements, and such other instruments and documents as we
have deemed relevant under the circumstances.

In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us as original or photostatic copies. We have also assumed that the corporate
records of the Company include all corporate proceedings taken by the Company to
date.

Based upon and subject to the foregoing, we are of the opinion that the
Selling

<PAGE>

Securityholders Shares have been duly and validly authorized and issued and
Option Shares when paid for, will be duly and validly issued, fully paid and

nonassessable.

We hereby consent to the use of this opinion as herein set forth as an
exhibit to the Registration Statement.

Very truly yours,

BERNSTEIN & WASSERMAN

<PAGE>

EXCLUSIVE SUPPLY AGREEMENT

This Exclusive Supply Agreement (the "Agreement") is made and entered into
as of the 31st day of May, 1996 by and between Superior Supplements, Inc., a
Delaware corporation ("SSI"), and Compare Generiks, Inc., a Delaware corporation
("CGI").

WITNESSETH:

WHEREAS, SSI is engaged in the business of manufacturing and distributing
certain vitamins in bulk tablet form; and

WHEREAS, SSI owns and operates a factory for the manufacture of vitamins in
bulk tablet form; and

WHEREAS, CGI is engaged in the business of marketing and distributing
vitamin products.

NOW, THEREFORE, the parties for good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, agree as follows:

1. Exclusive Purchase and Sale of Products.

(a) During the term hereof (the "Term"), as defined at paragraph 3 hereof,
CGI, its successors, assigns, subsidiaries and affiliates (collectively, "CGI")
shall purchase from SSI, exclusively, all "Pills" (the "Pills") which CGI
distributes, markets or otherwise sells within the United States ("US"). For
purposes of this Agreement, the term "Pills" shall include all vitamins
manufactured in bulk tablet form, other than any vitamins now or hereafter sold
under the "Energex" trade mark or as part of the "Energex" product line, as set
forth on Schedule 1(a) attached hereto and as notified in writing by CGI to SSI
from time to time.

(b) SSI shall use its best efforts to fulfill all of CGI's orders on a
timely basis. SSI shall comply with applicable laws and regulations regarding
the manufacture and delivery of Pills for and on behalf of CGI.

<PAGE>

(c) SSI will supply all materials used in connection with the manufacture
of the Pills. All Pills shall meet CGI's specifications.

(d) All sales by SSI to CGI will be FOB, SSI's manufacturing facility in
Hauppauge, New York or such other manufacturing facility of SSI of SSI's choice.
Title to and risk of loss of the products shall pass from SSI to CGI upon
acceptance by the carrier of CGI's choice.

(e) Nothing herein shall restrict or limit in any manner the right of SSI
to sell Pills, or any other products, to any party other than CGI.

2. Purchase Price and Payment. CGI will pay for the Pills as follows:

(a) CGI will pay to SSI, SSI's material cost ("Material Cost") plus fifteen
percent (15%). For purposes of this agreement "Material Cost" shall mean SSI's
actual material expenses incurred in the manufacture of the Pills.

(b) SSI shall invoice CGI upon delivery of each order and all invoices
shall be paid by CGI within thirty (30) days of the date of shipment. CGI shall
pay all costs and expenses, including reasonable attorney's fees, reasonably
incurred by SSI in the collection of any sum payable hereunder by CGI to SSI. In
addition to paying the price in effect under this Agreement, CGI shall pay all
sales or use taxes applicable to the sale or delivery by SSI or the subsequent
use by CGI of any items delivered hereunder.

3. Term of Agreement.

(a) The term of this Agreement (the "Term") shall commence on the date
hereof (the "Effective Date") and shall continue for a period of three (3)
years, and thereafter will be automatically renewed for successive one (1) year
terms unless either party provides written notice of intent to terminate the
Agreement at least ninety (90) days prior to the end of any Agreement Year, as
defined below.

(b) For purposes of this Agreement, an "Agreement Year" shall commence on
the Effective Date and on each anniversary thereof and shall end on the day
before the first anniversary of each such Agreement Year.

<PAGE>

4. Placement and Acceptance of Orders; Delivery Schedule.

(a) Written Orders. CGI will place all orders for the purchase of Pills
from SSI, by written purchase order executed by an authorized agent of CGI, no
less than forty-five (45) days in advance. Such orders shall be filled by SSI,
within such forty-five (45) day period, unless an order is significantly in
excess of previous orders, in which case SSI will use its best efforts to
process the order, or a substantial portion thereof, within a forty-five (45)
day period or a reasonable time period (subject to raw material availability).

(b) Rejection of Orders. SSI shall not be obligated to manufacture or
distribute to CGI any item, and shall have the right to reject any order, in
whole or in part, based upon SSI's determination that such manufacture or
distribution might violate existing regulatory standards, requirements,
regulations, or concerns. In the event, SSI declines to manufacture any item
requested by CGI, or rejects any order placed by CGI, CGI shall have the right
to purchase such item or items, or fill such requested order or such portion of
an order, through another manufacturer or distributor.

(c) Resale of Products. CGI will not sell or distribute any product
purchased from SSI hereunder to any party or entity that CGI knows, or has
reason to know, will utilize such product in any manner that is inconsistent
with or contrary to prevailing federal and state regulations or laws, including
the rules and regulations of any state or federal regulatory organization.

(d) Obligation for Cost of Raw Materials. Upon placement of any order, CGI
shall become liable for all costs incurred by SSI in connection with the
purchase of raw materials to be used in fulfilling such order.

5. Force Majeure. SSI shall not be liable for any delay or failure to
perform in accordance with this Agreement if such delay or failure to perform is
a result of a strike, lock-out or other labor dispute; riot, insurrection, civil
disturbance or other hostility; embargo; inability or delay in obtaining fuel,
energy, equipment or power; inability or delay in obtaining labor or materials;
inability or delay in obtaining government approvals, permits or licenses;
inability or delay in obtaining transportation or other services; fire, flood,
lightning, storm, earthquake, or other Act of God; or is a result of causes
beyond SSI's reasonable control (each of the foregoing being hereinafter
referred to as an "Event of Force Majeure"). In

<PAGE>

such event, SSI's obligation to perform hereunder shall be suspended for the
duration of such Event of Force Majeure. SSI will use reasonable efforts to
promptly notify CGI, either orally or in writing, upon learning of the
occurrence or potential occurrence of such Event of Force Majeure. If any Event
of Force Majeure is not remedied by SSI within five (5) days of its occurrence,
CGI shall have the right to purchase Pills from another manufacturer or
distributor until such time as SSI can again fully meet CGI's needs and has
given CGI at least thirty (30) days written notice of such fact.

6. Exclusivity Provisions.

6.1 Exclusivity. This Agreement shall automatically terminate in the event
during any year of the Term CGI purchases Pills from any other parties in
violation of this Agreement.

6.2 Indemnification. CGI hereby agrees to indemnify and hold SSI, its
officers, directors, agents, servants, employees, subsidiaries and affiliates,
harmless from and against any and all claims, suits, demands, losses,
liabilities, damages, court costs, (including reasonable attorneys' fees),
whether based in contract or in tort, arising out of or related to, or as a
consequence of any act or omission of CGI relating to the Pills.

6.3 Termination of this Agreement.

(a) SSI shall have the right to terminate this Agreement at its sole
discretion, at any time, upon being advised that any regulatory authority
objects to the sale of the Pills by SSI to CGI.

(b) Upon the termination of this Agreement any then unpaid accounts
receivable fees shall accrue and become immediately due and payable.

7. Termination of Agreement.

(a) In the event of the occurrence of any of the following events: (i)

insolvency or the making by a party hereto of an assignment for the benefit of
creditors; (ii) the filing by or against a party hereto of, or the entry of an
order for relief against a party hereto in, a voluntary or involuntary
proceeding under any bankruptcy, insolvency, reorganization or receivership law;
(iii) the appointment

<PAGE>

of a receiver for all or a substantial portion of CGI's property; (iv) the
assumption of custody, attachment or sequestration by a court of competent
jurisdiction of all or a significant portion of a party's property; (v) a party
hereto or any principal thereof is charged with a felony or crime of moral
turpitude; (vi) notification to a party hereto from the United States Drug
Enforcement Administration, or any other federal or state regulatory agency,
that such party should discontinue business relations with the other party; or
(vii) fraudulent conduct by a party hereto in any of its dealings with the other
party, the non-defaulting party shall have the right to terminate this
Agreement, by written notice to the other party. No assignee for the benefit of
creditors, receiver, liquidator, trustee in bankruptcy, sheriff or any other
officer of the court or official charged with taking over custody of the assets
or business or a party shall have any right to continue performance of this
Agreement, and this Agreement may not be assigned by CGI by operation of law.

(b) Any failure by either party to terminate this Agreement by reason of
one or more of the foregoing acts or events shall not constitute a waiver of the
right to terminate this Agreement upon reoccurrence or continuance of such acts
or events.

8. Representations and Warranties of CGI. CGI (including all of its
subsidiaries and affiliates) represents and warrants to SSI as follows:

8.1 Organization and Qualification. CGI is a corporation validly existing
and in good standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to (a) own, lease and operate its
properties and assets as they are now owned, leased and operated and (b) carry
on its business as now presently conducted. CGI is duly qualified to do business
in each jurisdiction in which the nature of its business or properties makes
such qualification necessary, except where the failure to do so would not have a
material adverse effect on the business of CGI.

8.2 Subsidiaries and Affiliates. Except as set forth on Schedule 9.2
hereof, CGI has no subsidiaries or affiliates.

8.3 Validity and Execution of Agreement. CGI has the full legal right,
capacity and power and all requisite corporate authority and approval required
to enter into, execute and deliver this Agreement and any other agreement or
instrument contemplated hereby, and to perform fully its obligations hereunder
and

<PAGE>

thereunder. The stockholder and the board of directors of CGI has approved the
transactions contemplated pursuant to this Agreement. This Agreement has been
duly executed and delivered by CGI and constitutes the valid and binding
obligation of CGI enforceable against it in accordance with its terms.

8.4 No Conflict. Neither the execution and delivery of this Agreement nor
the performance by CGI of the transactions contemplated hereby will: violate or
conflict with (a) any of the provisions of the Certificate of Incorporation or
By-laws or other organizational documents of CGI; (b) result in the
acceleration of, or entitle any party to accelerate the maturity or the
cancellation of the performance of any obligation under, or result in the
creation or imposition of any lien in or upon their respective assets or
constitute a default (or an event which might, with the passage of time or the
giving of notice, or both, constitute a default) under any contract, (c) any
order, judgment, regulation or ruling of any governmental or regulatory body to
which CGI are a party or by which any of its property or assets may be bound or
affected or with any provision of any law, rule, regulation, order, judgment, or
ruling of any governmental or regulatory body applicable to CGI.

8.5 Licenses and Permits. CGI maintains all governmental permits, licenses,
registrations and other governmental consents (federal, state and local) which
are necessary in connection with its operations and properties, and no others
are required. All such permits, licenses, registrations and consents are in full
force and effect and in good standing and shall continue to be in full force and
effect and in good standing following the consummation of the transactions
contemplated by this Agreement.

8.6 Compliance with Laws. CGI has complied in all respects with all
applicable federal, state and local laws, regulations and ordinances or any
requirement of any governmental or regulatory body, court or arbitrator
affecting the business or the assets the failure to comply with which could have
a material adverse effect on the business of CGI.

8.7 Products. There are no statements, citations or decisions by any
governmental or regulatory body that any product marketed or distributed at any
time by CGI is defective or fails to meet in any material respect any standards
promulgated by any such governmental or regulatory body. There have been no
recalls ordered by any such governmental or regulatory body with respect to any
product. To the best knowledge of CGI, there is no (a) fact relating to any
product that may impose upon the Companies a duty to recall any product or a
duty to warn customers of a defect in any product, other than defects about
which CGI has

<PAGE>

issued appropriate and adequate warnings or (b) latent or overt design,
manufacturing or other defect in any product.

8.8 Survival. All of the representations and warranties of CGI contained
herein shall survive the date hereof until the date upon which the liabilty to
which any claim relating to any such representation or warranty is barred by all

applicable statutes of limitations.

9. Representations and Warranties of SSI.

9.1 Organization and Qualification. SSI is a corporation validly existing
and in good standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to (a) own, lease and operate its
properties and assets as they are now owned, leased and operated and (b) carry
on its business as now presently conducted. SSI is duly qualified to do business
in each jurisdiction in which the nature of its business or properties makes
such qualification necessary, except where the failure to do so would not have a
material adverse effect on the business of SSI.

9.2 Subsidiaries and Affiliates. Except as set forth on Schedule 10.2
hereof, SSI has no subsidiaries or affiliates.

9.3 Validity and Execution of Agreement. SSI has the full legal right,
capacity and power and all requisite corporate authority and approval required
to enter into, execute and deliver this Agreement and any other agreement or
instrument contemplated hereby, and to perform fully its obligations hereunder
and thereunder. The stockholders and the board of directors of SSI has approved
the transactions contemplated pursuant to this Agreement. This Agreement has
been duly executed and delivered by SSI and constitutes the valid and binding
obligation of SSI enforceable against it in accordance with its terms.

9.4 No Conflict. Neither the execution and delivery of this Agreement nor
the performance by SSI of the transactions contemplated hereby will: violate or
conflict with (a) any of the provisions of the Certificate of Incorporation or
By-laws or other organizational documents of SSI; (b) result in the acceleration
of, or entitle any party to accelerate the maturity or the cancellation of the
performance of any obligation under, or result in the creation or imposition of
any lien in or upon their respective assets or constitute a default (or an event
which might, with

<PAGE>

the passage of time or the giving of notice, or both, constitute a default)
under any contract, (c) any order, judgment, regulation or ruling of any
governmental or regulatory body to which SSI are a party or by which any of its
property or assets may be bound or affected or with any provision of any law,
rule, regulation, order, judgment, or ruling of any governmental or regulatory
body applicable to SSI.

9.5 Licenses and Permits. SSI maintains all governmental permits, licenses,
registrations and other governmental consents (federal, state and local) which
are necessary in connection with its operations and properties, and no others
are required. All such permits, licenses, registrations and consents are in full
force and effect and in good standing and shall continue to be in full force and
effect and in good standing following the consummation of the transactions
contemplated by this Agreement.

9.6 Compliance with Laws. SSI has complied in all respects with all

applicable federal, state and local laws, regulations and ordinances or any
requirement of any governmental or regulatory body, court or arbitrator
affecting the business or the assets the failure to comply with which could have
a material adverse effect on the business of SSI.

9.7 Products. To SSI's knowledge, there are no statements, citations or
decisions by any governmental or regulatory body that any product marketed or
distributed at any time by SSI is defective or fails to meet in any material
respect any standards promulgated by an governmental or regulatory body. There
have been no recalls ordered by any such governmental or regulatory body with
respect to any product. To the knowledge of SSI, there is no (a) fact relating
to any product that may impose upon SSI a duty to recall any product or a duty
to warn customers or a defect in any product, other than defects about which SSI
has issued appropriate and adequate warning, or (b) latent or overt design,
manufacturing or other defect in any product.

9.8 Survival. All of the representations and warranties of SSI contained
herein shall survive the date hereof until the date upon which the liability to
which any claim relating to any such representation or warranty is barred by all
applicable statutes of limitations.

10. Nondisclosure. Neither party, nor any person controlled by it, shall
for any reason other than fulfilling its obligations hereunder, directly or
indirectly,

<PAGE>

for itself or any other person, use or disclose any trade secrets or
confidential information, know-how or proprietary information relating to the
other party, except to the extent (i) within the public domain; or (ii) pursuant
to a subpoena, court order or applicable law.

11. Relationship of the Parties. The relationship of the parties created
hereby is that of independent contractors, and neither party shall have any
right or authority to create or assume any obligation of any kind on behalf of
the other.

12. Disclaimer of Warranties. SSI makes no other representations or
warranties except as set forth in this Agreement, and SSI expressly disclaims
any implied warranties of merchantability, fitness for use or fitness for a
particular purpose.

13. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
given personally, telegraphed, telefaxed, sent by facsimile transmission or sent
by prepaid air courier, same day or overnight messenger or certified, registered
or express mail, postage prepaid. Any such notice shall be deemed to have been
given (a) when received, if delivered in person, telegraphed, telexed, sent by
facsimile transmission and confirmed in writing within three (3) Business Days
thereafter or sent by prepaid air courier, same day or overnight messenger or
(b) three (3) Business Days following the mailing thereof, if mailed by
certified first class mail, postage prepaid, return receipt requested, in any

such case as follows (or to such other address or addresses as a party may have
advised the other in the manner provided in this Section 13):

If to SSI, to:

Superior Supplements, Inc.
270 Oser Avenue
Hauppauge, NY 11788
Attn: Larry Simon

with copy to:

Bernstein & Wassennan, LLP
950 Third Avenue, 10th Floor

<PAGE>

New York, NY 10022
Attn: Harley T. Bernstein

If to CGI, to:

Compare Generiks, Inc.
300 Oser Avenue
Hauppauge, NY 11788
Attn: Thomas A. Keith

14. Binding Effect; Assignment. This Agreement shall be binding upon and
insure to the benefit of the parties hereto and their respective successors and
assigns. Neither party shall assign any of its rights or delegate any of its
duties or obligations hereunder without the prior written consent of the other
party. Notwithstanding the foregoing, the parties hereto do not intend to create
hereby, and this Agreement shall not be read or construed to create or grant,
any rights or benefits in or for any person or entity other than the parties
hereto and any and all such third party rights or benefits are hereby expressly
disclaimed and denied.

15. Governing Laws. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without regard to
principles of conflicts of law, and the parties irrevocably agree to submit any
controversy or claim arising out of or relating to this Agreement to a court of
competent jurisdiction located in the State of New York. The parties agree that
any proceedings arising out of, relating to, or brought for the purpose of
enforcing this Agreement, or remedying any breach thereof shall be instituted in
the courts of the State of New York, and in no other jurisdiction.

16. Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same instrument.

17. Severability. The invalidity or unenforceability of any provision of

this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

18. Amendment. This Agreement may be amended only by a writing signed by
all parties hereto.

<PAGE>

19. Entire Agreement. This Agreement contains the entire understanding of
the parties hereto with respect to its subject matter and supersedes any prior
arrangements or understandings (written or otherwise) between them.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the first date written above.

SUPERIOR SUPPLEMENTS, INC.

By: /s/ Larry Simon
-----------------------

COMPARE GENERIKS, INC.

By: /s/ Thomas A. Keith
-----------------------

<PAGE>

Schedule 1(a)

"Energex" Vitamin Product Line

<PAGE>

Schedule 9.2

Subsidiaries and Affiliates of CGI

<PAGE>

Schedule 10.2

Subsidiaries and Affiliates of SSI

SUBSCRIPTION AGREEMENT

May 31, 1996

Superior Supplements, Inc.
Hauppauge, NY

Gentlemen:

1. Subscription. Subject to the terms and conditions of this Subscription
Agreement, the undersigned (the "Investor") hereby subscribes for and agrees to
acquire Five Hundred Thousand (500,000) newly issued shares of Common Stock (the
"Shares") of Superior Supplements, Inc. (the "Corporation"), at an aggregate
purchase price of (x) One Hundred Thousand Dollars ($100,000) and (y) the
issuance to the Corporation of Two Hundred Thousand (200,000) newly issued
shares of Common Stock of the Investor.

2. Acceptance. If the Investor's subscription is accepted, the Corporation
will return to the Investor one executed copy of this Subscription Agreement.

3. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Corporation as follows:

(a) The Investor is fully aware that the Shares have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or under
any applicable state securities laws. The Investor further understands that the
securities are being issued in reliance on the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof or
Regulation D promulgated under the Securities Act, and in reliance on exemptions
from the registration requirements of certain state Securities laws, on the
grounds that the offering involved has been made to a limited number of
potential investors.

(b) The Investor is acquiring the Shares for its own account as a principal
and not with a present view to resale or distribution.

(c) The Investor is able to bear the economic risk of the investment in the
Shares and has such knowledge and experience in financial and business matters,
and knowledge of the business of the Corporation.

(d) The Investor has received all information with respect to the
Corporation it has requested.

<PAGE>

(e) The Investor has been given the opportunity to ask questions of, and
receive answers from, officers of the Corporation concerning the terms and
conditions of the offering and to obtain such additional information which the
Corporation possesses or can acquire without unreasonable effort or expense that
is necessary to verify information that was otherwise provided.

(f) The Investor recognizes that investment in the Shares involves
substantial risks. In deciding whether to invest in the Shares, the Investor has

weighed these risks against the potential return. Considering all relevant
factors in its financial and personal circumstances, the Investor is able to
bear the economic risk of the investment. The Investor has adequate means of
providing for its current needs and possible personal contingencies and has no
need in the foreseeable future for liquidity of its investment in the Shares.

(g) The Investor has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
investment in the Shares.

(h) The Investor is aware that no Federal or state agency has (i) made any
finding or determination as to the fairness of any aspect of the investment in
the Shares or (ii) passed on or endorsed the merits of the offering of the
Shares.

(i) The Investor agrees not to sell, pledge, transfer or otherwise encumber
the Shares for a period of two years following the date hereof unless the Shares
are registered for sale to the public or an exemption from registration is
available to the holder of the Shares.

(j) The Investor has not retained any broker or finder in connection with
the transactions contemplated herein so as to give rise to any valid claim
against the Corporation or any of its subsidiaries for any broker's or finder's
fee, commission or similar compensation.

(k) Any information that such Investor has heretofore furnished to the
Corporation with respect to its respective financial position, and investment
experience is correct and complete as of the date of this Agreement and, if
there should be any material change in such information prior to the Closing,
such Investor will immediately furnish such revised or corrected information to
the Corporation.

(l) The Investor acknowledges that the Corporation has only recently been
organized and has no operating or financial history.

(m) The Investor has the full legal right and power and all authority and
approval required to enter into, execute and deliver this Subscription Agreement
and to perform fully its obligations hereunder. This Subscription Agreement has
been duly executed and delivered and is the valid and binding obligation of the
Investor, enforceable in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other such laws affecting the enforcement of creditors' rights
generally and by

<PAGE>

principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). The execution, delivery and performance of this
Subscription Agreement by such Investor will not: (i) require the approval or
consent of any Person or (ii) conflict with or result in any breach or violation
of any of the terms and conditions of, or constitute (or with notice or lapse of
time or both constitute) a default under, any statute, regulation, order,

judgment or decree of or applicable to the Investor, or any instrument, contract
or other agreement to which the Investor is a party or by or to which the
Investor is bound or subject.

(n) The Investor is neither a member of, affiliated with or employed by a
member of the National Association of Securities Dealers, nor is it employed by
or affiliated with a broker-dealer registered with the Securities and Exchange
Commission or with any state regulatory authority.

4. Representations and Warranties of the Corporation. The Corporation
hereby represents and warrants to the Investor as follows:

(a) The Corporation is fully aware that the Consideration Shares have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), or under any applicable state securities laws. The Corporation further
understands that the securities are being issued in reliance on the exemption
from the registration requirements of the Securities Act provided by Section
4(2) thereof or Regulation D promulgated under the Securities Act, and in
reliance on exemptions from the registration requirements of certain state
Securities laws, on the grounds that the offering involved has been made to a
limited number of potential investors.

(b) The Corporation is acquiring the Consideration Shares for its own
account as a principal and not with a present view to resale or distribution.

(c) The Corporation is able to bear the economic risk of the investment in
the Consideration Shares and has such knowledge and experience in financial and
business matters, and knowledge of the business of the Investor.

(d) The Corporation has received all information with respect to the
Investor it has requested.

(e) The Corporation has been given the opportunity to ask questions of, and
receive answers from, officers of the Investor concerning the terms and
conditions of the offering and to obtain such additional information which the
Investor possesses or can acquire without unreasonable effort or expense that is
necessary to verify information that was otherwise provided.

(f) The Corporation recognizes that investment in the Consideration Shares
involves substantial risks. In deciding whether to invest in the Consideration
Shares, the Corporation has weighted these risks against the potential return.
Considering all relevant factors in its financial

<PAGE>

and personal circumstances, the Corporation is able to bear the economic risk of
the investment. The Corporation has adequate means of providing for its current
needs and possible personal contingencies and has no need in the foreseeable
future for liquidity of its investment in the Consideration Shares.

(g) The Corporation has sought such accounting, legal and tax advice as it
has considered necessary to make an informed investment decision with respect to
its investment in the Consideration Shares.

(h) The Corporation is aware that no Federal or state agency has (i) made
any finding or determination as to the fairness of any aspect of the investment
in the Consideration Shares or (ii) passed on or endorsed the merits of the
offering of the Consideration Shares.

(i) The Corporation agrees not to sell, pledge, transfer or otherwise
encumber the Consideration Shares for a period of two years following the date
hereof unless the Consideration Shares are registered for sale to the public or
an exemption from registration is available to the holder of the Consideration
Shares.

(j) The Corporation has not retained any broker or finder in connection
with the transactions contemplated herein so as to give rise to any valid claim
against the Investor or any of its subsidiaries for any broker's or finder's
fee, commission or similar compensation.

(k) Any information that such Corporation has heretofore furnished to the
Investor with respect to its respective financial position, and investment
experience is correct and complete as of the date of this Agreement and, if
there should be any material change in such information prior to the Closing,
such Corporation will immediately furnish such revised or corrected information
to the Investor.

(l) The Corporation acknowledges that the Investor has only recently been
organized and has no operating or financial history.

(m) The Corporation has the full legal right and power and all authority
and approval required to enter into, execute and deliver this Subscription
Agreement and to perform fully its obligations hereunder. This Subscription
Agreement has been duly executed and delivered and is the valid and binding
obligation of the Corporation, enforceable in accordance with its terms, except
to the extent that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other such laws affecting the enforcement of
creditors' rights generally and by principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). The execution,
delivery and performance of this Subscription Agreement by such Corporation will
not: (i) require the approval or consent of any Person or (ii) conflict with or
result in any breach or violation of any of the terms and conditions of, or
constitute (or with notice or lapse of time or both constitute) a default under,
any statute, regulation, order, judgment or decree of or applicable to the
Corporation, or any instrument, contract or other agreement to

<PAGE>

which the Corporation is a party or by or to which the Corporation is bound or
subject.

(n) The Corporation is neither a member of, affiliated with or employed by
a member of the National Association of Securities Dealers, nor is it employed
by or affiliated with a broker-dealer registered with the Securities and
Exchange Commission or with any state regulatory authority.

5. Registration Rights of Investor. If, at any time after the date hereof
and from time to time thereafter, the Corporation proposes to register any of
its shares of Common Stock or other securities under the Securities Act in
connection with the public offering of such securities solely for cash (other
than a registration on Form S-8 or Form S-4, or any successor form), the
Corporation shall, at such time, promptly give the Investor written notice of
such registration. Upon the written request of the Investor given within twenty
(20) days after the giving of such notice by the Corporation, the Corporation
shall use its best efforts to effect the registration under the Securities Act
of all of the Shares that the Investor has requested to be registered subject to
reduction by the managing underwriter, if any. Whenever under this Section 5 the
Corporation is required to effect the registration of the Shares, the
Corporation shall bear and pay all expenses incurred in connection with any
registration, other than underwriting discounts and commissions relating to the
Shares and the fees of the Investor's counsel.

6. Modification. This Subscription Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof
and may not be modified, discharged or terminated except by a written instrument
duly executed by each party.

7. Binding Effect. The provisions of this Subscription Agreement shall be
binding upon the inure to the benefit of the parties hereto and their respective
successors and assigns.

8. Governing Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of law.

<PAGE>

IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of this 31st day of May, 1996.

COMPARE GENERIKS, INC.

By: /s/ Thomas A. Keith
------------------------------
Thomas A. Keith, President

Accepted and Agreed to as
of the date first above written:

SUPERIOR SUPPLEMENTS, INC.

By: /s/ Larry Simon
-----------------------------
Larry Simon, President

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We consent to the use in this Registration Statement of Compare Generiks, Inc.
on Form SB-2 of our report on Compare Generiks, Inc. dated May 9, 1996,
appearing in the Prospectus which is part of this Registration Statement.

We also consent to the reference to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.

/s/ HOLTZ RUBENSTEIN & CO., LLP
HOLTZ RUBENSTEIN & CO., LLP

Melville, New York
June 1996