UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
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(MARK ONE)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to ______________________
Commission file number 0-28606
NUWAVE TECHNOLOGIES, INC.
(name of small business issuer in its charter)
DELAWARE 22-3387630
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
ONE PASSAIC AVENUE
FAIRFIELD, NEW JERSEY 07004
(Address of principal executive offices)(Zip Code)
(973) 882-8810
(Issuer's telephone number, including area code)
---------------------
Securities registered under Section 12(b) of
the Exchange Act:
NONE
Securities registered under Section 12(g) of
the Exchange Act:
COMMON STOCK, $.01 PAR VALUE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days. Yes [XX] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained herein, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference to Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [XX]
<PAGE>
State issuer's revenues for its most recent fiscal year: $10,275
Aggregate market value of the voting stock held by non-affiliates based on the
last sale price for such stock at March 12, 1998: $23,507,750
The number of shares of Common Stock outstanding as of March 12, 1998: 5,601,819
Transitional Small Business Disclosure Format: Yes [ ] No [XX]
ii
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
EXHIBIT DESCRIPTION
- ------- -----------
1.1* Form of Underwriting Agreement (See Exhibit 1.1 to Registration
Statement on Form SB-2 filed with the Commission on April 2, 1996).
3.1* Articles of Incorporation of the Company (Delaware) (See
Exhibit 3.1(a) to Registration Statement on Form SB-2 filed
with the Commission on April 2, 1996).
3.2* Certificate of Amendment to Articles of Incorporation of the Company
(Delaware) (See Exhibit 3.1(b) to Registration Statement on Form SB-2
filed with the Commission on April 2, 1996).
3.3* Certificate of Authority (New Jersey) (See Exhibit 3.1(c) to
Registration Statement on Form SB-2 filed with the Commission on
April 2, 1996).
3.4* Amended Certificate of Authority (New Jersey) (See Exhibit
3.1(d) to Registration Statement on Form SB-2 filed with the
Commission on April 2, 1996).
3.5* Certificate of Amendment to Articles of Incorporation of the
Company (Delaware) (See Exhibit 3.1(e) to Registration Statement on
Form SB-2 filed with the Commission on April 2, 1996).
3.6* By-Laws of the Company (See Exhibit 3.2 to Registration Statement
on Form SB-2 filed with the Commission on April 2, 1996).
4.1* Form of Common Stock Certificate (See Exhibit 4.1 to Amendment No. 2 to
Registration Statement on Form SB-2 filed with the Commission on July
3, 1996).
4.2* Form of Public Warrant Agreement between the Company, American
Stock Transfer & Trust Company and Rickel & Associates, Inc. (See
Exhibit 4.2 to Amendment No. 1 to Registration Statement on Form SB-2
filed with the Commission on May 22, 1996).
4.3* Form of Public Warrant Certificate (See Exhibit 4.3 to Amendment
No. 2 to Registration Statement on Form SB-2 filed with the Commission
on July 3, 1996).
4.4* Form of Underwriter's Warrant Agreement (including Warrant Certificate)
between the Company and Rickel & Associates (See Exhibit 4.4 to
Amendment No. 1 to Registration Statement on Form SB-2 filed with the
Commission on May 22, 1996).
4.5* Selected Dealer Agreement among Rickel & Associates, Inc. and certain
underwriters (See Exhibit 4.5 to Amendment No. 2 to Registration
Statement on Form SB-2 filed with the Commission on July 3, 1996).
5.1* Opinion of counsel to the Company concerning the legality of the
securities offered in the Company's Initial Public Offering (See
Exhibit 5.1 to
<PAGE>
Amendment No. 2 to Registration Statement on Form SB-2 filed with the
Commission on July 3, 1996).
5.2* Opinion of Greenberg Taurig Hoffman Lipoff Rosen & Quentel, P.A. (See
Exhibit 5.1 to Registration Statement on Form S-8 filed with the
Commission on November 12, 1997).
5.3* Opinion of counsel to the Company concerning the legality of the
securities being offered (See Exhibit 5 to Registration Statement on
Form S-3 filed with the Commission on March 8, 1998).
10.1* Restated Employment Agreement dated as of July 20, 1995 between NUWAVE
Engineering, Inc. and Gerald Zarin (See Exhibit 10.1 to Registration
Statement on Form SB-2 filed with the Commission on April 2, 1996).
10.2* Employment Agreement dated as of September 11, 1995 between NUWAVE
Engineering, Inc. and Robert I. Webb (See Exhibit 10.2 to Registration
Statement on Form SB-2 filed with the Commission on April 2, 1996).
10.3* Consulting Agreement dated as of July 18, 1995 between NUWAVE
Engineering, Inc. and Corporate Builders, L.P. (See Exhibit 10.3 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
10.4* Letter Agreement dated as of November 22, 1995 between NUWAVE
Technologies, Inc. and Rickel & Associates, Inc. (See Exhibit 10.5 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
10.5* 1996 Performance Incentive Plan (See Exhibit 10.6 to Registration
Statement on Form SB-2 filed with the Commission on April 2, 1996).
10.6* Exclusive Worldwide License Agreement dated as of July 21, 1995 between
NUWAVE Engineering, Inc. and Rave Engineering Corporation (See Exhibit
10.7 to Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
10.7* Development Agreement dated as of July 21, 1995 between NUWAVE
Engineering, Inc. and Rave Engineering Corporation (See Exhibit 10.8 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
10.8* Exclusive Agency Agreement dated as of July 21, 1995 between NUWAVE
Engineering, Inc. and Prime Technology, Inc. (See Exhibit 10.9 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
10.9* Assignment dated as of July 21, 1995 between NUWAVE Engineering, Inc.,
Prime Technology, Inc. and Rave Engineering Corporation (See Exhibit
10.10 to Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
10.10* Shareholders' Agreement dated as of July 21, 1995 (See Exhibit 10.11 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
2
<PAGE>
10.11* Finder's Agreement dated as of September 1, 1995 among NUWAVE
Technologies, Inc., Prime Technology, Inc. and Harvest Technologies,
Inc. (See Exhibit 10.12 to Registration Statement on Form SB-2 filed
with the Commission on April 2, 1996).
10.12* Finder's Agreement dated as of January 16, 1996 among NUWAVE
Engineering, Inc., Prime Technology, Inc. and Jay Vahl (See Exhibit
10.13 to Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
10.13* Option Agreement for the Purchase of Common Stock dated as of July 17,
1995 between NUWAVE Engineering, Inc. and Jeremiah F. O'Brien (See
Exhibit 10.14 to Registration Statement on Form SB-2 filed with the
Commission on April 2, 1996).
10.14* Option Agreement for the Purchase of Common Stock dated as of September
11, 1995 between NUWAVE Engineering, Inc. and Robert I. Webb (See
Exhibit 10.15 to Registration Statement on Form SB-2 filed with the
Commission on April 2, 1996).
10.15* Option Agreement for the Purchase of Common Stock dated as of November
9, 1995 between NUWAVE Engineering, Inc. and Lyle E. Gramley (See
Exhibit 10.16 to Registration Statement on Form SB-2 filed with the
Commission on April 2, 1996).
10.16* Option Agreement for Purchase of Common Stock dated as of March 1, 1996
between NUWAVE Technologies, Inc. and Jeremiah F. O'Brien (See Exhibit
10.17 to Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
10.17* Option Agreement for Purchase of Common Stock dated as of July 20, 1995
between NUWAVE Technologies, Inc. and Gerald Zarin (See Exhibit 10.18
to Registration Statement on Form SB-2 filed with the Commission on
April 2, 1996).
10.18* Option Agreement for Purchase of Common Stock dated as of March 1, 1996
between NUWAVE Technologies, Inc. and Joseph A. Sarubbi (See Exhibit
10.19 to Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
10.19* Option Agreement for Purchase of Common Stock dated as of March 1, 1996
between NUWAVE Technologies, Inc. and Ed Bohn (See Exhibit 10.20 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
10.20* Shareholder's Agreement dated as of July 17, 1995 between NUWAVE
Engineering, Inc. and its Common Stockholders (See Exhibit 10.21 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
10.21* Form of Subscription Agreement between NUWAVE Engineering, Inc. and its
Series A Preferred Stockholders through August 1995 (See Exhibit 10.22
to Registration Statement on Form SB-2 filed with the Commission on
April 2, 1996).
3
<PAGE>
10.22* Loan and Stock Purchase Agreement dated as of December 15, 1995
between NUWAVE Engineering, Inc. and Helen Burgess (See Exhibit 10.23
to Registration Statement on Form SB-2 filed with the Commission on
April 2, 1996).
10.23* Form of Indemnification Agreement between the Company and its
directors, dated as of January 31, 1996 (See Exhibit 10.24 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
10.24* Form of Note entered into between the Company and the Initial Bridge
Investor relating to the Initial Bridge Financing (See Exhibit 10.25 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
10.25* Form of 10% Promissory Note delivered by the Company in connection with
the private placement of 80 Units (the "Private Placement Bridge"),
each unit consisting of an unsecured 10% non-negotiable promissory
note in the amount of $25,000 and 5,000 shares of Common Stock of the
Company, during February and March of 1996 (See Exhibit 10.26 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
10.26* Form of Securities Registration Rights Agreement entered into between
the Company and the purchasers of Common Stock in the Private Placement
(See Exhibit 10.27 to Registration Statement on Form SB-2 filed with
the Commission on April 2, 1996).
10.27* Form of Registration Rights Agreement entered into between Company and
the purchasers of its Series A Preferred Stock (See Exhibit 10.28 to
Registration Statement on Form SB-2 filed with the Commission on April
2, 1996).
10.28* Form of Lock-up letter between the Company and certain holders of its
Common Stock (See Exhibit 10.29 to Registration Statement on Form SB-2
filed with the Commission on April 2, 1996).
10.29* Lease Letter Agreement between the Company and Simon, Sarver &
Rosenberg dated July 28, 1995 (See Exhibit 10.30 to Registration
Statement on Form SB-2 filed with the Commission on April 2, 1996).
10.30* Guaranty executed by the Company as of October 13, 1995 in
connection with Standard Industrial Net Lease between Collins Tech RB
and Rave Engineering, Inc. (See Exhibit 10.31 to Registration Statement
on Form SB-2 filed with the Commission on April 2, 1996).
10.31* Amendment to Employment Agreement dated as of September 11, 1995
between NUWAVE Engineering, Inc. and Robert I. Webb dated June 3, 1996
(See Exhibit 10.32 to Amendment No. 2 to Registration Statement on Form
SB-2 filed with the Commission on July 3, 1996).
10.32* Financial Consulting Agreement between Prime Technology, Inc. and
Ernest Chu dated January 15, 1995 (See Exhibit 10.33 to Amendment No. 2
to Registration Statement on Form SB-2 filed with the Commission on
July 3, 1996).
4
<PAGE>
10.33* Letter Agreement concerning the Gaming Technology among the Company,
Rave Engineering Corp. and Prime Technology, Inc. dated March 24, 1997
(See Exhibit 10.34 to Annual Report filed with the Commission on April
30, 1997).
10.34* Non-Employee Director Stock Option Plan (See Exhibit 10.1 to Current
Report on Form 8-K filed with the Commission on June 6, 1997).
10.35* Form of Incentive Stock Option Agreement (See Exhibit 4.3 to
Registration Statement on Form S-8 filed with the Commission on
November 12, 1997).
10.36* Form of Non-Employee Director Stock Option Agreement (See Exhibit 4.4
to Registration Statement on Form S-8 filed with the Commission on
November 12, 1997).
10.37* Form of Non-Qualified Stock Option Agreement covering options not
granted under either the 1996 Performance Incentive Plan or the
Non-Employee Director Stock Option Plan (See Exhibit 4.5 to
Registration Statement on Form S-8 filed with the Commission on
November 12, 1997).
10.38* Registration Rights Agreement, dated February 6, 1998, between NuWave
Technologies, Inc. and ProFutures Special Equities Fund, L.P. (See
Exhibit 4.1 to Current Report on Form 8-K filed with the Commission on
February 18, 1998).
10.39* Private Securities Subscription Agreement, dated as of February 6,
1998, between NuWave Technologies, Inc. and ProFutures Special Equities
Fund, L.P. (See Exhibit 10.1 to Current Report on Form 8-K filed with
the Commission on February 18, 1998).
10.40* Warrant, dated February 6, 1998, executed by NuWave Technologies, Inc.
in favor of ProFutures Special Equities Fund, L.P., to purchase up to
50,000 shares of Common Stock, par value $.01 per share, of NuWave
Technologies, Inc. (See Exhibit 10.2 to Current Report on Form 8-K
filed with the Commission on February 18, 1998).
10.41* Component Purchase Agreement, dated December 31, 1997, between Thomson
Consumer Electronics, Inc. and NuWave Technologies, Inc. (See
Exhibit 10.41 to Annual Report on Form 10-KSB filed with the Commission
on March 25, 1998).
10.42* Letter Agreement, dated March 3, 1998, between NuWave Technologies,
Inc. and Janssen/Meyers Associates, L.P. (See Exhibit 10.42 to Annual
Report on Form 10-KSB filed with the Commission on March 25, 1998).
10.43* Warrant, dated March 3, 1998, executed by NuWave Technologies, Inc. in
favor of Janssen/Meyers Associates, L.P., to purchase up to 400,000
shares of Common Stock, par value $.01 per share, of NuWave
Technologies, Inc. (See Exhibit 10.43 to Annual Report on Form 10-KSB
filed with the Commission on March 25, 1998).
10.44** Letter Agreement, dated December 3, 1997, between NuWave Technologies,
Inc. and Lippert/Heilshorn & Associates, Inc.
10.45** Option Agreement, dated December 9, 1997, between NuWave Technologies,
Inc. and Lippert/Heilshorn & Associates, Inc.
10.46** First Amendment to Restated Employment Agreement, dated December 9,
1997, between NuWave Technologies, Inc. and Gerald Zarin.
16.1* Letter from Coopers & Lybrand L.L.P. to the Commission dated February
16, 1998 (See Exhibit 16.1 to Current Report on Form 8-K filed with the
Commission on February 18, 1998).
23.1* Consent of Coopers & Lybrand L.L.P. (See Exhibit 23.1 to Annual
Report on Form 10-KSB filed with the Commission on March 25, 1998).
23.2** Consent of Coopers & Lybrand L.L.P.
27.1* Financial Date Schedule (See Exhibit 27.1 to Annual Report on
Form 10-KSB filed with the Commission on March 25, 1998).
5
<PAGE>
* The exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such exhibits is a reference
to the copy of the exhibit heretofore filed with the Commission, to which
there have been no amendments or changes.
** Filed herewith.
(b) REPORTS ON FORM 8-K:
None.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized.
NUWAVE TECHNOLOGIES, INC.
(Registrant)
Date: April 2, 1998 By: /s/ Gerald Zarin
------------------------------------
Gerald Zarin
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this amended report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Gerald Zarin President, Chief Executive April 2, 1998
- ----------------------------
Gerald Zarin Officer and Chairman of
the Board (Principal
Executive Officer)
/s/ Jeremiah F. O'Brien Chief Financial Officer and April 2, 1998
- ----------------------------
Jeremiah F. O'Brien Secretary (Principal
Financial Officer and
Accounting Officer)
/s/ Ed Bohn Director April 2, 1998
- ----------------------------
Ed Bohn
/s/ Lyle Gramley Director April 2, 1998
- ----------------------------
Lyle Gramley
/s/ David Kwong Director April 2, 1998
- ----------------------------
David Kwong
/s/ Joseph A. Sarubbi Director April 2, 1998
- -----------------------------
Joseph A. Sarubbi
7
<PAGE>
EXHIBIT INDEX
Exhibit Page
Number Description Number
- ------ ----------- ------
1.1* Form of Underwriting Agreement (See Exhibit 1.1 to
Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
3.1* Articles of Incorporation of the Company (Delaware) (See
Exhibit 3.1(a) to Registration Statement on Form SB-2 filed
with the Commission on April 2, 1996).
3.2* Certificate of Amendment to Articles of Incorporation of the
Company (Delaware) (See Exhibit 3.1(b) to Registration
Statement on Form SB-2 filed with the Commission on April 2,
1996).
3.3* Certificate of Authority (New Jersey) (See Exhibit 3.1(c) to
Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
3.4* Amended Certificate of Authority (New Jersey) (See Exhibit
3.1(d) to Registration Statement on Form SB-2 filed with the
Commission on April 2, 1996).
3.5* Certificate of Amendment to Articles of Incorporation of the
Company (Delaware) (See Exhibit 3.1(e) to Registration
Statement on Form SB-2 filed with the Commission on April 2,
1996).
3.6* By-Laws of the Company (See Exhibit 3.2 to Registration
Statement on Form SB-2 filed with the Commission on April 2,
1996).
4.1* Form of Common Stock Certificate (See Exhibit 4.1 to
Amendment No. 2 to Registration Statement on Form SB-2 filed
with the Commission on July 3, 1996).
4.2* Form of Public Warrant Agreement between the Company,
American Stock Transfer & Trust Company and Rickel &
Associates, Inc. (See Exhibit 4.2 to Amendment No. 1 to
Registration Statement on Form SB-2 filed with the Commission
on May 22, 1996).
4.3* Form of Public Warrant Certificate (See Exhibit 4.3 to
Amendment No. 2 to Registration Statement on Form SB-2 filed
with the Commission on July 3, 1996).
4.4* Form of Underwriter's Warrant Agreement (including Warrant
Certificate) between the Company and Rickel & Associates (See
Exhibit 4.4 to Amendment No. 1 to Registration Statement on
Form SB-2 filed with the Commission on May 22, 1996).
4.5* Selected Dealer Agreement among Rickel & Associates, Inc. and
certain underwriters (See Exhibit 4.5 to Amendment No. 2 to
8
<PAGE>
Registration Statement on Form SB-2 filed with the Commission
on July 3, 1996).
5.1* Opinion of counsel to the Company concerning the legality of
the securities offered in the Company's Initial Public
Offering (See Exhibit 5.1 to Amendment No. 2 to Registration
Statement on Form SB-2 filed with the Commission on July 3,
1996).
5.2* Opinion of Greenberg Taurig Hoffman Lipoff Rosen & Quentel,
P.A. (See Exhibit 5.1 to Registration Statement on Form S-8
filed with the Commission on November 12, 1997).
5.3* Opinion of counsel to the Company concerning the legality of
the securities being offered (See Exhibit 5 to Registration
Statement on Form S-3 filed with the Commission on March 8,
1998).
10.1* Restated Employment Agreement dated as of July 20, 1995
between NUWAVE Engineering, Inc. and Gerald Zarin (See
Exhibit 10.1 to Registration Statement on Form SB-2 filed
with the Commission on April 2, 1996).
10.2* Employment Agreement dated as of September 11, 1995 between
NUWAVE Engineering, Inc. and Robert I. Webb (See Exhibit 10.2
to Registration Statement on Form SB-2 filed with the
Commission on April 2, 1996).
10.3* Consulting Agreement dated as of July 18, 1995 between NUWAVE
Engineering, Inc. and Corporate Builders, L.P. (See Exhibit
10.3 to Registration Statement on Form SB-2 filed with the
Commission on April 2, 1996).
10.4* Letter Agreement dated as of November 22, 1995 between NUWAVE
Technologies, Inc. and Rickel & Associates, Inc. (See Exhibit
10.5 to Registration Statement on Form SB-2 filed with the
Commission on April 2, 1996).
10.5* 1996 Performance Incentive Plan (See Exhibit 10.6 to
Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
10.6* Exclusive Worldwide License Agreement dated as of July 21,
1995 between NUWAVE Engineering, Inc. and Rave Engineering
Corporation (See Exhibit 10.7 to Registration Statement on
Form SB-2 filed with the Commission on April 2, 1996).
10.7* Development Agreement dated as of July 21, 1995 between
NUWAVE Engineering, Inc. and Rave Engineering Corporation
(See Exhibit 10.8 to Registration Statement on Form SB-2
filed with the Commission on April 2, 1996).
10.8* Exclusive Agency Agreement dated as of July 21, 1995 between
NUWAVE Engineering, Inc. and Prime Technology, Inc. (See
Exhibit 10.9 to Registration Statement on Form SB-2 filed
with the Commission on April 2, 1996).
9
<PAGE>
10.9* Assignment dated as of July 21, 1995 between NUWAVE
Engineering, Inc., Prime Technology, Inc. and Rave
Engineering Corporation (See Exhibit 10.10 to Registration
Statement on Form SB-2 filed with the Commission on April 2,
1996).
10.10* Shareholders' Agreement dated as of July 21, 1995 (See
Exhibit 10.11 to Registration Statement on Form SB-2 filed
with the Commission on April 2, 1996).
10.11* Finder's Agreement dated as of September 1, 1995 among NUWAVE
Technologies, Inc., Prime Technology, Inc. and Harvest
Technologies, Inc. (See Exhibit 10.12 to Registration
Statement on Form SB-2 filed with the Commission on April 2,
1996).
10.12* Finder's Agreement dated as of January 16, 1996 among NUWAVE
Engineering, Inc., Prime Technology, Inc. and Jay Vahl (See
Exhibit 10.13 to Registration Statement on Form SB-2 filed
with the Commission on April 2, 1996).
10.13* Option Agreement for the Purchase of Common Stock dated as of
July 17, 1995 between NUWAVE Engineering, Inc. and Jeremiah
F. O'Brien (See Exhibit 10.14 to Registration Statement on
Form SB-2 filed with the Commission on April 2, 1996).
10.14* Option Agreement for the Purchase of Common Stock dated as of
September 11, 1995 between NUWAVE Engineering, Inc. and
Robert I. Webb (See Exhibit 10.15 to Registration Statement
on Form SB-2 filed with the Commission on April 2, 1996).
10.15* Option Agreement for the Purchase of Common Stock dated as of
November 9, 1995 between NUWAVE Engineering, Inc. and Lyle E.
Gramley (See Exhibit 10.16 to Registration Statement on Form
SB-2 filed with the Commission on April 2, 1996).
10.16* Option Agreement for Purchase of Common Stock dated as of
March 1, 1996 between NUWAVE Technologies, Inc. and Jeremiah
F. O'Brien (See Exhibit 10.17 to Registration Statement on
Form SB-2 filed with the Commission on April 2, 1996).
10.17* Option Agreement for Purchase of Common Stock dated as of
July 20, 1995 between NUWAVE Technologies, Inc. and Gerald
Zarin (See Exhibit 10.18 to Registration Statement on Form
SB-2 filed with the Commission on April 2, 1996).
10.18* Option Agreement for Purchase of Common Stock dated as of
March 1, 1996 between NUWAVE Technologies, Inc. and Joseph A.
Sarubbi (See Exhibit 10.19 to Registration Statement on Form
SB-2 filed with the Commission on April 2, 1996).
10.19* Option Agreement for Purchase of Common Stock dated as of
March 1, 1996 between NUWAVE Technologies, Inc. and Ed Bohn
(See Exhibit 10.20 to Registration Statement on Form SB-2
filed with the Commission on April 2, 1996).
10
<PAGE>
10.20* Shareholder's Agreement dated as of July 17, 1995 between
NUWAVE Engineering, Inc. and its Common Stockholders (See
Exhibit 10.21 to Registration Statement on Form SB-2 filed
with the Commission on April 2, 1996).
10.21* Form of Subscription Agreement between NUWAVE Engineering,
Inc. and its Series A Preferred Stockholders through August
1995 (See Exhibit 10.22 to Registration Statement on Form
SB-2 filed with the Commission on April 2, 1996).
10.22* Loan and Stock Purchase Agreement dated as of December 15,
1995 between NUWAVE Engineering, Inc. and Helen Burgess (See
Exhibit 10.23 to Registration Statement on Form SB-2 filed
with the Commission on April 2, 1996).
10.23* Form of Indemnification Agreement between the Company and its
directors, dated as of January 31, 1996 (See Exhibit 10.24 to
Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
10.24* Form of Note entered into between the Company and the Initial
Bridge Investor relating to the Initial Bridge Financing (See
Exhibit 10.25 to Registration Statement on Form SB-2 filed
with the Commission on April 2, 1996).
10.25* Form of 10% Promissory Note delivered by the Company in
connection with the private placement of 80 Units (the
"Private Placement Bridge"), each unit consisting of an
unsecured 10% non- negotiable promissory note in the amount
of $25,000 and 5,000 shares of Common Stock of the Company,
during February and March of 1996 (See Exhibit 10.26 to
Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
10.26* Form of Securities Registration Rights Agreement entered into
between the Company and the purchasers of Common Stock in the
Private Placement (See Exhibit 10.27 to Registration
Statement on Form SB-2 filed with the Commission on April 2,
1996).
10.27* Form of Registration Rights Agreement entered into between
Company and the purchasers of its Series A Preferred Stock
(See Exhibit 10.28 to Registration Statement on Form SB-2
filed with the Commission on April 2, 1996).
10.28* Form of Lock-up letter between the Company and certain
holders of its Common Stock (See Exhibit 10.29 to
Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
10.29* Lease Letter Agreement between the Company and Simon, Sarver
& Rosenberg dated July 28, 1995 (See Exhibit 10.30 to
Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
11
<PAGE>
10.30* Guaranty executed by the Company as of October 13, 1995 in
connection with Standard Industrial Net Lease between Collins
Tech RB and Rave Engineering, Inc. (See Exhibit 10.31 to
Registration Statement on Form SB-2 filed with the Commission
on April 2, 1996).
10.31* Amendment to Employment Agreement dated as of September 11,
1995 between NUWAVE Engineering, Inc. and Robert I. Webb
dated June 3, 1996 (See Exhibit 10.32 to Amendment No. 2 to
Registration Statement on Form SB-2 filed with the Commission
on July 3, 1996).
10.32* Financial Consulting Agreement between Prime Technology, Inc.
and Ernest Chu dated January 15, 1995 (See Exhibit 10.33 to
Amendment No. 2 to Registration Statement on Form SB-2 filed
with the Commission on July 3, 1996).
10.33* Letter Agreement concerning the Gaming Technology among the
Company, Rave Engineering Corp. and Prime Technology, Inc.
dated March 24, 1997 (See Exhibit 10.34 to Annual Report
filed with the Commission on April 30, 1997).
10.34* Non-Employee Director Stock Option Plan (See Exhibit 10.1 to
Current Report on Form 8-K filed with the Commission on June
6, 1997). 10.35* Form of Incentive Stock Option Agreement
(See Exhibit 4.3 to Registration Statement on Form S-8 filed
with the Commission on November 12, 1997).
10.36* Form of Non-Employee Director Stock Option Agreement (See
Exhibit 4.4 to Registration Statement on Form S-8 filed with
the Commission on November 12, 1997).
10.37* Form of Non-Qualified Stock Option Agreement covering options
not granted under either the 1996 Performance Incentive Plan
or the Non-Employee Director Stock Option Plan (See Exhibit
4.5 to Registration Statement on Form S-8 filed with the
Commission on November 12, 1997).
10.38* Registration Rights Agreement, dated February 6, 1998,
between NuWave Technologies, Inc. and ProFutures Special
Equities Fund, L.P. (See Exhibit 4.1 to Current Report on
Form 8-K filed with the Commission on February 18, 1998).
10.39* Private Securities Subscription Agreement, dated as of
February 6, 1998, between NuWave Technologies, Inc. and
ProFutures Special Equities Fund, L.P. (See Exhibit 10.1 to
Current Report on Form 8-K filed with the Commission on
February 18, 1998).
10.40* Warrant, dated February 6, 1998, executed by NuWave
Technologies, Inc. in favor of ProFutures Special Equities
Fund, L.P., to purchase up to 50,000 shares of Common Stock,
par value $.01 per share, of NuWave Technologies, Inc. (See
Exhibit
12
<PAGE>
10.2 to Current Report on Form 8-K filed with the Commission
on February 18, 1998).
10.41* Component Purchase Agreement, dated December 31, 1997,
between Thomson Consumer Electronics, Inc. and NuWave
Technologies, Inc. (See Exhibit 10.41 to Annual
Report on Form 10-KSB filed with the Commission on March 25, 1998).
10.42* Letter Agreement, dated March 3, 1998, between NuWave
Technologies, Inc. and Janssen/Meyers Associates, L.P.
(See Exhibit 10.42 to Annual Report on Form 10-KSB filed with the
Commission on March 25, 1998).
10.43* Warrant, dated March 3, 1998, executed by NuWave
Technologies, Inc. in favor of Janssen/Meyers Associates,
L.P., to purchase up to 400,000 shares of Common Stock, par
value $.01 per share, of NuWave Technologies, Inc. (See Exhibit 10.43
to Annual Report on Form 10-KSB filed with the Commission on
March 25, 1998).
10.44** Letter Agreement, dated December 3, 1997, between NuWave Technologies,
Inc. and Lippert/Heilshorn & Associates, Inc.
10.45** Option Agreement, dated December 9, 1997, between NuWave Technologies,
Inc. and Lippert/Heilshorn & Associates, Inc.
10.46** First Amendment to Restated Employment Agreement, dated December 9,
1997, between NuWave Technologies, Inc. and Gerald Zarin.
16.1* Letter from Coopers & Lybrand L.L.P. to the Commission dated
February 16, 1998 (See Exhibit 16.1 to Current Report on Form
8-K filed with the Commission on February 18, 1998).
23.1* Consent of Coopers & Lybrand L.L.P. (See Exhibit 23.1 to Annual
Report on Form 10-KSB filed with the Commission on March 25, 1998).
23.2** Consent of Coopers & Lybrand L.L.P.
27.1* Financial Date Schedule (See Exhibit 27.1 to Annual
Report on Form 10-KSB filed with the Commission on March 25, 1998).
* The exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such exhibits is a reference
to the copy of the exhibit heretofore filed with the Commission, to which
there have been no amendments or changes.
** Filed herewith.
13
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A Development Stage Enterprise)
Index to Financial Statements
Page(s)
-------
Report of Independent Accountants................................... F-2-F-3
Balance Sheet as of December 31, 1997............................... F-4
Statements of Operations for the years ended December 31, 1996
and December 31, 1997 and for the cumulative period
from July 17, 1995 (inception) to December 31, 1997............ F-5
Statements of Stockholders' Equity for cumulative period from
July 17, 1995 (inception) to December 31, 1997.................. F-6-F-7
Statements of Cash Flows for the years ended December 31, 1996
and December 31, 1997 and for the cumulative period from
July 17, 1995 (inception) to December 31, 1997................. F-8-F-9
Notes to Financial Statements....................................... F-10-F-23
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders
NUWAVE Technologies, Inc.
Fairfield, New Jersey
We have audited the accompanying balance sheet of NUWAVE Technologies,
Inc. (a development stage enterprise) as at December 31, 1997, and the related
statements of operations, changes in stockholders' equity and cash flows for the
year ended December 31, 1997 and the amounts for such year included in the
period from July 17, 1995 (inception) to December 31, 1997. 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 enumerated above present
fairly, in all material respects, the financial position of NUWAVE Technolgies,
Inc. at December 31, 1997, and the results of its operations and its cash
flows for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ Richard A. Eisner & Company, LLP
Richard A. Eisner & Company, LLP
Florham Park, New Jersey
March 3, 1998
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
NUWAVE Technologies, Inc.
We have audited the accompanying statement of operations, stockholder's equity
and cash flows of NUWAVE Technologies, Inc. (a development Stage enterprise) for
the period from July 17, 1995 (inception) to December 31, 1997, and for the year
ended December 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts or disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of NUWAVE
Technologies, Inc. for the period from July 17, 1995 (inception) to December 31,
1997 and for the year ended December 31, 1996 included in the cumulative amounts
for the period from July 17, 1995 (inception) to December 31, 1997, and for the
year ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand LLP
New York, New York
March 26, 1997
F-3
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A Development Stage Enterprise)
Balance Sheet
ASSETS
December 31,
1997
--------------
Current assets:
Cash and cash equivalents $ 1,692,788
Inventory 59,818
Prepaid expenses and other current assets 111,005
--------------
Total current assets 1,863,611
Property and equipment 103,471
Restricted Cash 221,481
Other assets 82,200
--------------
Total assets $ 2,270,763
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 153,623
--------------
Commitments and contingencies
Stockholders' equity:
Series A Convertible Preferred Stock, noncumulative,
$.01 par value; authorized 400,000 shares; issued and
outstanding -none
Preferred stock, $.01 par value; authorized 1,000,000
shares; issued and oustanding - none (such
preferences and rights to be designated by the
Board of Directors)
Common stock, $.01 par value; authorized 20,000,000
shares: issued and outstanding 5,348,334 shares 53,483
Additional paid in capital 11,253,213
Deficit accumulated during the development stage (9,189,556)
--------------
Total stockholders' equity 2,117,140
--------------
Total liabilties and stockholders' equity $ 2,270,763
==============
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
NUWAVE TECHNOLOGIES, INC
(A Development Stage Enterprise)
Statements of Operations
Cumulative from
July 17, 1995
Year Year (inception)
ended ended to
December 31 December 31 December 31
1996 1997 1997
------------- ------------- ----------------
Net sales $ 10,275 $ 10,275
Cost of Sales (4,214) (4,214)
------------- ----------------
6,061 6,061
------------- ----------------
Operating expenses:
Research and development
expenses $ (1,620,594) (1,697,084) (3,808,800)
General and administrative
expenses (1,808,567) (2,336,000) (4,562,231)
------------ ------------- ----------------
(3,429,161) (4,033,084) (8,371,031)
------------ ------------- ----------------
Loss from operations (3,429,161) (4,027,023) (8,364,970)
------------ ------------- ----------------
Other income (expense):
Interest income 172,539 178,707 355,116
Interest expense (325,867) (331,542)
------------ ------------- ----------------
Total other income (expense) (153,328) 178,707 23,574
------------ ------------- ----------------
Loss before extraordinary item (3,582,489) (3,848,316) (8,341,396)
Extraordinary item (848,160) (848,160)
------------ ------------- ----------------
Net loss $(4,430,649) $(3,848,316) $(9,189,556)
============= ============= ================
Basic and diluted loss per share:
Weighted average
number of common
shares outstanding 3,767,403 5,343,348
============= ============
Basic and diluted
loss per share before
extraordinary item $ (0.95) $ (0.72)
Basic and diluted
loss per share on
extraordinary item $ (0.23) $ -
------------- ------------
Basic and diluted
loss per share $ (1.18) $ (0.72)
============= ============
The accompanying notes are an integral part of these fnancal statments
F-5
<PAGE>
<TABLE>
NUWAVE TECHNOLOGIES, INC.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
<CAPTION>
Deficit
Series A Accumulated
Convertible Additional Deferred During the
Preferred Stock Common Stock Paid-in Equity Development
------------------- -----------------------
Shares Amount Shares Amount Capital Costs Stage Total
--------- -------- ----------- ---------- ----------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common shares issued in
connection with the
formation of the
company......................... 2,060,000 $ 20,600 $ 20,600
Common shares returned
and retired without
consideration................... (125,000) (1,250) $ 1,250
Sale of Series A convertible
preferred stock for
cash of $1.50 per share......... 600,000 $ 6,000 894,000 900,000
Common shares issued with
initial bridge notes
payable for cash of
$1.50 per share................. 70,000 700 104,300 105,000
Costs incurred in
connection with
equity financing................ $ (38,400) (38,400)
Net loss for the period
from July 17, 1995
(inception) to
December 31, 1995............... $ (910,591) (910,591)
-------- ------- --------- -------- -------- ---------- ----------- ----------
Balance at December 31, 1995....... 600,000 6,000 2,005,000 20,050 999,550 (38,400) (910,591) 76,609
Common shares issued
in connection with the
exchange of the initial
bridge notes for 14
bridge units..................... 70,000 700 139,300 140,000
Common shares issued
with bridge notes
payable for cash
of $2.00 per share.............. 330,000 3,300 656,700 660,000
Costs incurred in
connection with the
private placement
offering relating to
the equity financing............ (134,000) $ 13,400) (120,600)
Common shares issued
in connection with
the initial public
offering for cash of
$5.00 per share................. 2,300,000 23,000 11,477,000 11,500,000
2,530,000 common stock
purchase warrants issued
in connection with the
initial public offering
for cash of $0.10 per
warrant......................... 253,000 253,000
220,000 common stock
purchase warrants and
220,000 redeemable
warrants issued to
the underwriter in
connection with the
initial public offering
for cash of $10.00.............. 10 10
Conversion of 600,000
preferred shares into
600,000 common shares in
connection with the initial
public offering................. (600,000) (6,000) 600,000 6,000 -
The accompanying notes are an integral part of these financial statements
F-6
</TABLE>
<PAGE>
<TABLE>
NUWAVE TECHNOLOGIES, INC.
(A Development Stage Enterprise)
Statement of Stockholders' Equity
<CAPTION>
Deficit
Series A Accumulated
Convertible Additional Deferred During the
Preferred Stock Common Stock Paid-in Equity Development
------------------- -----------------------
Shares Amount Shares Amount Capital Costs Stage Total
--------- -------- ----------- ---------- ----------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Costs incurred in
connection with the
initial public offering..... (2,214,582) 25,000 (2,189,582)
Common shares issued
in connection with the
exercise of 20,000
stock options for cash
of $1.50 per share.......... 20,000 200 29,800 30,000
Net loss for the
year ended
December 31, 1996........... (4,430,649) (4,430,649)
---------- --------- ----------- ---------- ----------- ------------ ------------ -----------
Balance at December 31, 1996... $ - 5,325,000 $ 53,250 $11,206,778 $ - $(5,341,240) $ 5,918,788
Common shares issued in
connection with the
exercise of 23,334
stock options for
cash of $2.00 per
share....................... 23,334 233 46,435 46,668
Net loss for the year ended
December 31, 1997........... (3,848,316) (3,848,316)
========== ========= =========== ========== =========== ========= ============= ===========
Balance at December 31, 1997... - $ - 5,348,334 $ 53,483 $11,253,213 $ - $ (9,189,556) $ 2,117,140
========== ========= =========== ========== =========== ========= ============= ===========
The accompanying notes are an integral part of these financial statements
F-7
</TABLE>
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A Development Stage Enterprise)
Statements of Cash Flows
Increase (decrease) in cash and cash equivalents
<TABLE>
<CAPTION>
Cumulative
from
July 17, 1995
Year Year (inception)
ended ended to
December 31, December 31, December 31,
1996 1997 1997
-------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (4,430,649) $ (3,848,316) $ (9,189,556)
Adjustments to reconcile net loss to net cash
used in operating activities:
Extraordinary item 848,160 848,160
Depreciation expense 18,856 42,354 62,070
Amortization of unamortized debt discount 163,103 168,778
Amortization of deferred financing costs 89,062 89,062
Issuance of common stock for services rendered 20,600
Increase in inventory (59,818) (59,818)
Increase in prepaid expenses and other
current assets (70,218) (19,096) (111,005)
Increase (decrease) in accounts payable and
accrued liabilities 274,066 (219,487) 153,623
Increase in other assets (68,275) (9,925) (82,200)
-------------- -------------- --------------
Net cash used in operating activities (3,175,895) (4,114,288) (8,100,286)
-------------- -------------- --------------
Cash flows from investing activities:
Purchase of property and equipment (80,892) (76,052) (165,541)
-------------- -------------- --------------
Net cash used in investing activities (80,892) (76,052) (165,541)
-------------- -------------- --------------
Cash flows from financing activities:
Proceeds from sales of Series A Convertible
Preferred Stock 900,000
Proceeds from issuance of initial bridge units 350,000
Proceeds from issuance of bridge units, net of
exchange of initial bridge notes 1,650,000 1,650,000
The accmpanying notes are an integral part of these financial statements
F-8
</TABLE>
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A Development Stage Enterprise)
Statements of Cash Flows
Increase (decrease) in cash and cash equivalents
<TABLE>
<CAPTION>
Cumulative
from
July 17, 1995
Year Year (inception)
ended ended to
December 31, December 31, December 31,
1996 1997 1997
-------------- -------------- --------------
<S> <C> <C> <C> <C>
Proceeds from IPO 11,753,010 11,753,010
Repayment of notes issued in connection with
initial bridge notes (2,000,000) (2,000,000)
Costs incurred for equity offerings (2,310,182) (2,348,582)
Issuance of common stock in connection with
exercise of stock options 30,000 46,668 76,668
Increase in restricted cash (221,481) (221,481)
Deferred financing costs (180,900) (201,000)
-------------- -------------- --------------
Net cash provided (used in) by financing activities 8,941,928 (174,813) 9,958,615
-------------- -------------- --------------
Net increase (decrease) in cash and cash equivalents 5,685,141 (4,365,153) 1,692,788
Cash and cash equivalents at the beginning of the period 372,800 6,057,941 -
-------------- -------------- --------------
Cash and cash equivalents at the end of the period $ 6,057,941 $ 1,692,788 $ 1,692,788
============== ============== ==============
Supplemental disclosure of cash flow information:
Interest paid during the period $ 73,702 $ 73,702
============== ==============
Supplemental disclosure of non cash investing and
financing activities:
Deferred financing costs incurred in connection with the
exchange of the initial bridge notes for 14 bridge units $ 140,000 $ 140,000
============== ==============
Deferred equity costs charged to additional paid in
capital in connection with the PPO $ 13,400 $ 13,400
============== ==============
Deferred financing costs charged to additional paid-in capital in
connection with the IPO $ 25,000 $ 25,000
============== ==============
600,000 Series A Convertible Preferred Stock converted
into Common Stock $ 6,000 $ 6,000
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements
F-9
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND BUSINESS:
NUWAVE Technologies, Inc. (the "Company"), a development stage enterprise,
was incorporated in Delaware on July 17, 1995. It was formed to develop,
manufacture and market products which improve picture quality in set-top boxes,
televisions, VCR's, camcorders and other video devices by enhancing and
manipulating video signals, and facilitate the production of sophisticated
consumer and professional videos. It has had only a limited operating history
and has had only limited sales of its products to date. Since its inception in
July 1995, the Company has been engaged primarily in raising funds, directing,
supervising and coordinating Rave Engineering Corporation ("Rave") and its own
Advanced Engineering Group in the continuing development of its products,
pre-marketing activities, the commencement of comprehensive marketing of the
NUWAVE Video processor and the recruitment of management and technical
personnel, including members of the Advanced Engineering Group. The Company
conducts its operations primarily in the United States.
There is no assurance that the Company's research and development and
marketing efforts will be successful, that the Company will ever have
commercially accepted products, or that the Company will achieve significant
sales of any such products. The Company has incurred net losses and negative
cash flows from operations since its inception. In addition, the Company
operates in an environment of rapid change in technology and is dependent upon
the services of its employees and its consultants. If the Company is unable to
successfully market its NUWAVE Video Processor and related products it is
unlikely that the Company could continue its business. The Company has the
ability to substantially reduce costs.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amount of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenue and expenses during the reporting period. The
most significant estimates relate to the valuation allowance in connection with
deferred tax assets. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include all cash balances, money market
instruments, and other highly liquid investments with insignificant interest
rate risk and original maturities of three months or less.
Inventory
Inventory is stated at the lower of cost (first-in, first-out method) or
market.
F-10
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Property and Equipment
Property and equipment are recorded at cost. The cost of maintenance and
repairs is charged against results of operations as incurred.
Depreciation is charged against results of operations by an accelerated
method over the estimated useful lives of the related assets.
Sales and retirements of depreciable property are recorded by removing the
related cost and accumulated depreciation from the accounts. Gains or losses on
sales and retirements of property and equipment are reflected in the results of
operations.
Research and Development Expenses
Expenditures for research and development are expensed as incurred.
Advertising Expenses
The Company expenses advertising costs which consist primarily of
promotional items and print media. Advertising and promotional expenses charged
to operations for the cumulative period from July 17, 1995 (inception) to
December 31, 1997 amounted to $421,124 and for the years ended December 31, 1997
and December 31, 1996 amounted to $289,892 and $131,232, respectively.
Concentration of Credit Risk
The Company's financial instruments that are exposed to concentrations of
credit risk consist of cash and cash equivalents. The Company places its cash
and cash equivalents in a commercial bank with three types of accounts, 1) an
operating account where the cash balance is in excess of the FDIC insurance
limit, 2) a money market fund which invests only in U.S. Government securities,
3) Certificates of Deposit.
Per Share Data
The Company has adopted the standards set by the Financial Accounting
Standards Board and computes earnings per share data in accordance with SFAS No.
128 "Earnings per Share". The basic per share data has been computed on the
basis of the loss for the period divided by the historic weighted average number
of shares of common stock outstanding. All potentially dilutive securities have
been excluded from the computations since they would be antidilutive (See note
6).
Income Taxes
The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined on the basis of the differences between the tax basis of
assets and liabilities and their respective financial reporting amounts
("temporary differences") at enacted tax rates in effect for the years in which
the differences are expected to reverse.
F-11
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. INVENTORY
Inventory consists of the following:
December 31,
1997
------------
Finished goods . . . . . . . $ 46,316
Work in process . . . . . 13,502
------------
$ 59,818
============
4. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
Useful Lives December 31,
in Years 1997
-------------- ------------
Furniture and Fixtures . . 10 $ 4,323
Computers . . . . . . . . 5 100,954
Equipment . . . . . . . . 5 60,264
------------
$165,541
Less, accumulated
depreciation . . . . 62,070
------------
$103,471
============
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
Accounts payable and accrued liabilities consist of the following:
December 31,
1997
------------
Accounts payable . . . . $ 36,964
Legal and accounting
fees . . . . . . . . 90,908
Accrued payroll. . . . . 18,399
Payroll taxes payable. . 7,352
------------
$153,623
============
6. CAPITAL TRANSACTIONS:
Common Stock
On July 17, 1995, the Company issued 2,060,000 shares of common stock for a
fair market value of $.01 per share as consideration for services rendered in
connection with the formation of the Company, as follows:
F-12
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
o 1,090,000 shares to Prime Technologies, Inc. ("Prime"). Rave and two
members of the Company's Board of Directors have ownership interests in
Prime of 22%, 22% and 16%, respectively;
o 450,000 shares to the Company's President;
o 450,000 shares to three entities affiliated with an individual who was
a member of the Company's Board of Directors (125,000 of such shares
were subsequently returned and retired without consideration); and
o 70,000 shares to individuals who were either employees of, or consultants
to, the Company.
On April 30, 1996, the board of directors and the Company's stockholders
authorized the increase in the shares of common stock to 20,000,000 common
shares, par value $.01 per share.
In July 1996 the Company completed an IPO in which it sold 2,300,000 common
shares and 2,530,000 Redeemable Common Stock Purchase Warrants (the "Warrants")
to purchase an additional 2,530,000 common shares. The Warrants are exercisable
at $5.50 per share commencing on July 3, 1997, and have an expiration date of
July 3, 2001. The Warrants are redeemable by the Company at any time commencing
twelve months after date of the IPO on not less than 30 days prior written
notice to the holders of the Warrants, provided the average closing bid
quotation of the Common Stock as reported on the NASDAQ Stock Market, if traded
thereon, or if not traded thereon, the average closing sale price of the Common
Stock if listed on a national securities exchange (or other reporting system
that provides last sale prices), has been at least 150% of the then current
exercise price of the Warrants (initially, $8.25 per share), for a period of 20
consecutive trading days ending on the third day prior to the date on which the
Company gives notice of redemption. The Warrants will be exercisable until the
close of business on the day immediately preceding the date fixed for
redemption. The Underwriter will receive from the Company a Warrant Solicitation
fee of five percent (5%) of the aggregate exercise price of the Warrants if the
market price of the Common Stock is greater than the exercise price of the
Warrants on the date of exercise.
Also in connection with the IPO, the Company issued to the Underwriter, for
an aggregate purchase price of $10.00, 220,000 warrants to purchase Common Stock
and 220,000 Redeemable Warrants to purchase 220,000 Redeemable Warrants (the
"Underwriter's Warrants"). Thereafter, for a period of four years, the
Underwriter's Warrants will be exercisable at an amount of 165% above the
offering price of the Common Stock and Warrants. The warrants expire five years
after the date of issue.
Preferred Stock
During July and August 1995, the Company sold 600,000 shares of Series A
Convertible Preferred Stock for $900,000 to several investors, one of whom was
the purchaser of the initial bridge notes. The preferred
F-13
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
shares were convertible into common shares on a one-for-one basis, either at the
option of each holder or automatically upon the effective date of an IPO.
On April 30, 1996, the board of directors and the Company's stockholders
authorized an additional 1,000,000 shares of preferred stock, $.01 par value,
which may have such preferences and rights as the board of directors may
designate.
On July 3, 1996, the effective date of the IPO, the Series A Convertible
Preferred Stock consisting of 600,000 shares was converted to common shares on a
one for one basis.
Bridge Units
On December 15, 1995, the Company issued to a Series A Convertible
Preferred stockholder 14 initial bridge units, each unit consisting of the
Company's unsecured initial bridge notes in the principal amount of $25,000 with
a stated interest rate of 10% per annum and 5,000 shares of the Company's common
stock with a fair market value of $1.50 per share for proceeds of $350,000.
After giving effect to the amortization of the initial bridge notes debt
discount, the effective interest rate of the initial bridge notes was 33% per
annum.
On March 1, 1996, based upon an offer from the Company, the initial bridge
noteholder elected to exchange the 14 initial bridge units for 14 bridge units.
On March 1 and March 27, 1996, the Company sold and exchanged to accredited
investors an accumulative total of 80 units (the "bridge units") respectively,
in its PPO. Each bridge unit consisted of (i) a senior subordinated
non-negotiable promissory note ("Bridge Notes") in the principal amount of
$25,000, with a stated interest rate of 10% per annum, and (ii) 5,000 shares of
common stock with a fair market value of $2.00 per share. After giving effect to
the amortization of the Bridge Notes debt discount, the effective interest rate
of the Bridge Notes was 49%.
On July 9, 1996, the aggregate principal amount of the Bridge Notes of
$2,000,000 and accrued interest of $73,652 was repaid upon the consummation, and
out of the proceeds, of the IPO.
Stock Options
The accompanying financial position and results of operations of the
Company have been prepared in accordance with Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees ("APB No. 25"). Under
APB No. 25, generally, no compensation expense is recognized in the accompanying
financial statements in connection with the awarding of stock option grants to
employees provided that, as of the grant date, all terms associated with the
award are fixed and the quoted market price of the Company's stock, as of the
grant date, is not more than the amount an employee must pay to acquire the
stock as defined; however, to the extent that stock options are granted to non
employees, for goods or services, the fair value of these options are included
in operating results as an expense.
F-14
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
A summary of the Company's stock option activity, and related information, is
as follows:
Number Exercise Weighted -
of Price Average Number of
Common Range per Exercise Shares
Shares Share Price Exercisable
------------------------------------------------------------
Outstanding at
December 31, 1995 315,000 $ 1.50 $ 1.50 260,714
=======
Granted 67,000 $ 2.00 - $ 5.75 $ 2.67
Exercised (20,000) $ 1.50 $ 1.50
--------
Outstanding at
December 31, 1996 362,000 $ 1.50 - $ 5.75 $ 1.72 311,524
=======
Granted 192,500 $ 5.78 - $ 6.88 $ 6.54
Exercised (23,334) $ 2.00 $ 2.00
Cancelled (25,000) $ 6.38 - $6.81 $ 6.64
---------
Outstanding at
December 31, 1997 506,166 $ 1.50 - $6.88 $ 2.92 401,000
========= =======
During 1995, the Company granted options to purchase 315,000 shares of
Common Stock , exercisable at $1.50 per share. The options vested as follows:
260,714 at date of grant, 27,143 in 1996 and 27,143 in 1997. The options expire
as follows: 240,714 in 2000, 27,143 in 2001 and 27,143 in 2002.
During 1996, the Company granted options to purchase 55,000 shares of
Common Stock , exercisable at $2.00 per share. The options vested as follows:
31,667 at date of grant, 11,667 in 1997 at 11,666 in 1998. The options expire as
follows: 8,333 in 2001, 11,667 in 2002 and 11,666 in 2003.
Performance Incentive Stock Option Plan
On January 31, 1996, the Company adopted its 1996 Performance Incentive
Stock Option Plan (the "Plan"). Under the Plan, incentive and nonqualified stock
options, stock appreciation rights and restricted stock may be granted to key
employees and consultants (the "Participants") by certain disinterested
directors of the Board of Directors. Any incentive option granted under the Plan
will have an exercise price of not less than 100% of the fair market value of
the shares on the date on which such option is granted. With respect to an
incentive option granted to a Participant who owns more than 10% of the total
combined voting stock of the Company or of any parent or
F-15
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
subsidiary of the Company, the exercise price for such option must be at least
110% of the fair market value of the shares subject to the option on the date on
which the option is granted. A nonqualified option granted under the Plan (i.e.,
an option to purchase the common stock that does not meet the Internal Revenue
Code's requirements for incentive options) must have an exercise price of at
least the par value of the stock. Stock appreciation rights may be granted in
conjunction with the grant of an incentive or nonqualified option under the Plan
or independently of any such stock option. The directors determine the vesting
of the options under the Plan at the date of grant. A maximum of 260,000 options
can be awarded under the Plan. As of December 31, 1996 no options had been
issued. During 1997, 172,500 options were granted and 25,000 options were
cancelled under the plan.
Non-Employee Director Stock Option Plan
On November 25, 1996, the Company established a Non-Employee Director
Stock Option Plan (the "Director's Plan"). The Director's Plan provides that
each member of the Board of Directors (an "Eligible Director") who otherwise (1)
is not currently an employee of the Company, or (2) is not a former employee
still receiving compensation for prior services (other than benefits under a
tax-qualified pension plan) shall be eligible for the grant of stock options
under the Director's Plan. Each Eligible Director at the time of his election to
the Board of Directors, shall be granted an option to purchase 3,000 shares of
the Company's common stock at an exercise price equal to closing price of such
common stock at close of business at the date of such grant, such option to vest
immediately and to expire five years from the date of such grant.
Beginning with the annual meeting of the stockholders of the Company held
on May 29,1997 and provided that a sufficient number of shares remain available
under the Director's Plan, each year immediately following the date of the
annual meeting of the Company there automatically will be granted to each
Eligible Director who is then serving on the Board an option to purchase 5,000
shares of the Company Common Stock. The first 1,000 options vest immediately,
the remainder vest equally over the next four years from the date of grant and
are exercisable at the closing price of such shares of common stock at the date
of grant. Such options expire five years from the date of vesting.
On November 25, 1996, four Eligible Directors were each granted 3,000 stock
options at an exercise price of $5.75 per share. On May 29, 1997, four Eligible
Directors were each granted 5,000 stock options at an exercise price of $6.75
per share. The maximum number of shares of Common Stock with respect to which
options may be granted under the Director's Plan is 80,000 shares. As of
December 31, 1997, there are 48,000 stock options reserved for issuance in the
Director's Plan.
Disclosures required by Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation ("SFAS No. 123"), including pro
forma operating results had the Company prepared its financial statements in
accordance with the fair value based method of accounting for stock-based
compensation are shown below.
Exercise prices and weighted-average contractual lives for stock options
outstanding as of December 31, 1997 are as follows:
F-16
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Options Outstanding Options Exercisable
--------------------------------------- -------------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
- -------- ----------- ----------- -------- ----------- -----------
$ 1.50 -
$ 2.00 326,666 3.4 $ 1.55 315,000 $ 1.53
$ 5.75 -
$ 6.88 179,500 5.6 $ 6.47 86,000 $ 6.16
The following table summarizes the pro forma operating results of the
Company had compensation costs for the stock options granted been determined in
accordance with the fair value based method of accounting for stock based
compensation as prescribed by SFAS No. 123. Since certain option grants awarded
during 1996 and 1997 vest over several years and additional awards are expected
to be issued in the future, the pro forma results noted below are not likely to
be representative of the effects on future years of the application of the fair
value based method.
1996 1997
------------- --------------
Pro forma net loss $ (4,496,349) $ (4,029,183)
Pro forma basic and
Diluted loss per share $ (1.19) $ (.75)
For the purpose of the above pro forma information, the fair value of these
options was estimated at the date of grant using the Black-Scholes option
pricing model. The weighted-average fair value of the options granted during
1996 and 1997 was $.84 and $1.75, respectively. The following weighted-average
assumptions were used in computing the fair value of option grants for 1996 and
1997: weighted-average risk-free interest rates of 5.32% for 1996 and 5.64% for
1997; zero dividend yields for both years; volatility of the Company's Common
Stock of 50% for both years; and an expected life of the options of two years
for 1996 and 1997, respectively.
7. INCOME TAXES
There is no provision for federal, state or local income taxes for the
years ended December 31, 1997 and December 31, 1996, since the Company has
incurred operating losses. In addition, the Company has fully reserved the net
potential future tax benefits resulting from its organization costs and a net
operating loss carryforwards.
F-17
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The tax effect of temporary differences consists of the following:
December 31,
1997
-----------
Deferred tax assets:
Startup costs . . . . . . . . . . . $ 2,130,610
Property and equipment . . . . . . . 24,828
Net operating loss carryforward. . . 1,504,585
-----------
3,660,023
Valuation allowance. . . . . . . . . 3,660,023
-----------
$ --
-----------
Certain costs in the statement of operations have been capitalized under
Internal Revenue Code and will be amortized over five years commencing with the
date the Company begins its trade or business, as defined by Internal Revenue
Service regulations. The valuation allowance offsets all of the deferred tax
assets as of December 31, 1997.
As of December 31, 1997, the Company has unused net operating loss
carryforwards of $3,761,463 available for income tax purposes. The unused net
operating loss carryforwards expire in various years from 2010 to 2012. The
Company, in the future, may be subject to limitations on the use of its NOL's as
provided under Section 382 of the Internal Revenue Code.
8. COMMITMENTS AND CONTINGENCIES:
License and Development agreements
Pursuant to the terms of the License Agreement dated July 21, 1995, the
Company is obligated to pay to Rave royalties ("Royalties") of (i) 2 1/2 % of
net sales ("Sales Royalties"), as defined, of products sold by the Company
utilizing Rave's technology and (ii) 25% of any sublicensing fees received by
the Company from sublicenses of the products and technology covered by the
License Agreement. Payments of Sales Royalties will commence upon the earlier of
(i) accumulated net sales of licensed products and technology sold by the
Company or its future sublicensees reaching an aggregate of $50,000,000, or (ii)
the Company's aggregate net profits from sales of licensed products and
technology equaling $5,000,000, whichever comes first.
In March 1997 the Company agreed with Rave to exclude from the License
Agreement certain video transmission technology which Rave may develop for
application in the video game industry ("the Video Game Technology") In return,
Rave agreed to pay the Company 2.5% of net sales of products using the Video
Game Technology and 25% of any fees it receives from licensing such technology.
The Video Game Technology is not used in any of the Company's current products,
and the Company has no current plans to develop it.
The License Agreement became effective on July 21, 1995 and continues in
force until either (1) the expiration of the last patent rights or (2) July 21,
2012, whichever is later.
F-18
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Company has entered into a development agreement (the "Development
Agreement") with Rave, pursuant to which the Company has formulated a
development plan (the "Development Plan") extending through October 1998, with
annual renewals, subject to one year's written notice. The Development Plan
focuses principally on the development of the products, as defined, and will be
revised from time to time to provide for the development of additional related
products. The Development Agreement provides for the payment to Rave of a
monthly fee which, when aggregated with the Royalties provided for in the
License Agreement, must equal at least $65,000 per month. The Development Plan
is to be revised by October 2, 1998 and on each anniversary thereafter for each
year the Development Agreement remains in effect. The Development Agreement
terminates on October 2, 1998. The Development Agreement also provides for Rave
to receive additional payments under certain conditions aggregating $850,000 to
purchase or lease equipment for use in developing the Licensed Products and
Technology. The payments were originally to be made in monthly installments not
to exceed $23,611 with a lump sum payment of $283,336 due in March 1998, if
certain conditions were met. In this regard, on April 22, 1997, the Company
deposited $300,000 into a certificate of deposit. The certificate of deposit has
been pledged as collateral for an irrevocable standby letter of credit opened by
the Company to guarantee monthly equipment lease payments (not to exceed $23,611
per month) to be made by the Company on behalf of Rave pursuant to the
Development Agreement. The balance of the standby letter of credit will be
reduced by any payments made and any cash restriction on the certificate of
deposit is limited to the balance of the standby letter of credit. Through
December 31, 1997, the Company had made payments of $386,657 under this
agreement and at that date had $221,481 pledged as collateral to guarantee the
monthly payments.
The Rave research and development expenses charged to the statement of
operations for the cumulative period from July 17, 1995 (inception) to December
31, 1997 amounted to $2,657,355; and for the years ended December 31, 1997 and
December 31, 1996 amounted to $1,096,903 and $1,143,825, respectively.
Agency Agreement
In order to assist it in obtaining sublicensing revenue, the Company has
entered into an Agency Agreement (the "Agency Agreement") with Prime. The Agency
Agreement provides that Prime will be the Company's exclusive agent for entering
into sublicenses with respect to the licensed products and technology. Because
its products are not fully developed, the Company has not developed a licensing
program, established proposed royalties, or otherwise determined the terms or
conditions of the arrangements it may want to make with proposed licensees or
others. These programs will be developed in conjunction with product research
and development, and with Prime pursuant to the Agency Agreement. For its
services, with respect to the first $50,000,000 of aggregate net sales of the
Company's licensees and sublicensees, after subtracting the payments to Rave and
licensing expenses, Prime will receive 35% of net sublicense fees received by
the Company, and thereafter 45%. Because the Company has retained the right
F-19
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
to enter into licenses and sublicenses independently, payments to Prime are to
be made regardless of whether the relevant sublicenses are entered into through
Prime's efforts or by the Company itself. Prime will receive an additional
agency fee of up to $1,500,000, of which (i) $400,000 has been paid (ii)
$400,000 is payable out of the Company's first sublicensing royalties and (iii)
$700,000 is payable out of the Company's portion of sublicensing royalties when
net sublicensing sales exceed $200,000,000. The Agency Agreement provides that
Prime will contribute its royalty participation to pay Rave in any month in
which the Company, after making reasonable commercial effort, is unable to make
the $65,000 Rave Minimum Payment necessary to maintain the License Agreement on
an exclusive basis with such amounts to be repaid by the Company to Prime out of
the Company's next available royalty payment or 12 months from the date of such
advance.
The Agency Agreement terminates upon the termination of the License
Agreement or upon a default, as defined in the Agency Agreement.
The agency fee charged to operations for the cumulative period from July
17, 1995 (inception) to December 31, 1997 amounted to $400,000 and for the years
ended December 31, 1997 and December 31, 1996 amounted to $70,000 and $330,000,
respectively.
The minimum annual commitments under the Rave License and Development
Agreements, and the Agency Agreement, as of December 31, 1997 are as follows:
For the Year Royalty and
Ending Development Consulting Equipment
December 31, Fees Fees Financing Total
- ------------ ------------ ------------ ----------- ------------
1998 $650,000 $35,000 $463,342 $1,148,342
============= ============ =========== ============
Employment Agreements
The Company entered into an employment agreement with its President
originally expiring December 31, 2000. In December 1997, the agreement was
extended for two years to December 31, 2002. The employment agreement provides
for a minimum annual salary, and bonus incentives, based upon the Company
meeting profit levels to be set by the Board of Directors. The agreement also
provides for termination payments to the President under certain circumstances.
The minimum annual salary commitment as of December 31, 1996 and December 31,
1997, excluding bonus arrangements, amounted to $120,000 per annum.
On February 10, 1997, the Company entered into an employment agreement with
its Vice President - Sales. As part of the agreement, the Company granted to
this individual, under the Company's Plan, options to purchase 60,000 shares of
common stock at $6.875 per share, the underlying value of the Company's common
stock at the date of grant. 5,000 options vested immediately; 5,000 options vest
on June 10, 1997; 20,000 options vest on February 10, 1998; 30,000 options vest
on February 10, 1999.
F-20
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Consulting and Representative Agreements
The Company has a consulting agreement with a Limited Partnership (the
"Consultant") rendering business advice. One of the general partners of the
Consultant is a former member of the Company's Board of Directors. In addition,
this general partner was a partner in two other affiliated entities. Together
the Consultant and the two other affiliated entities (which also provided
services to the Company) received 450,000 shares of the Company's common stock
for an aggregate consideration of $4,500 (see Note 6). The term of the agreement
was initially for two years and has been orally extended for one additional year
to June 30,1998. The Consultant received fees of $7,500 per month until the
completion of the IPO. Once the IPO was completed, the fee was reduced to $5,000
per month until the agreement terminates. The total consulting fee per the
consulting agreement charged to the statement of operations for the cumulative
period from July 17, 1995 (inception) to December 31, 1997 amounted to $175,000
plus out-of-pocket expenses; and for the years ended December 31, 1997 and
December 31, 1996 amounted to $60,000 and $77,500 plus out of pocket expenses,
respectively. The total aggregate consideration charged to operations in
connection with the services rendered by the principal of the Consultant and his
affiliated entities for the cumulative period from July 17, 1995 (inception) to
December 31, 1997 amounted to $264,998; and for the years ended December 31,
1997 and December 31, 1996 amounted to $66,329 and $110,367, respectively.
Effective August 1,1995, the Company entered into an agreement with a
consultant whereby the consultant provided to the Company on a non-exclusive
basis, certain services, among others: evaluation of the Company's technologies
and products, assistance in product development and the development of a
marketing strategy and plan, and the recommendation of candidates for marketing
and sales positions. On April 7, 1997, the Company entered into a Representative
Agreement with this same consultant whereby the consultant was appointed as an
exclusive sales representative for selected accounts, identified in the
agreement, to obtain Strategic Alliance Contracts for the Company and to sell
Products during the term of the Agreement. The term of the Agreement was from
April 7, 1997 to November 30,1997. Under the terms of the Agreement, the
consultant or his designees will receive options to purchase shares of common
stock of the Company for each Strategic Alliance Contract the Company enters
into through the efforts of the Representative and/or his designees. For options
granted, the options price is equal to the fair market value as of the date of
the grant and will expire five years after the date of grant. In addition, the
Company shall pay the Representative a commission on net sales of all products
sold by the Company solely through the efforts of the Representative and/or his
designees if the Representative and/or his designees made substantial efforts to
sell the Products to the purchaser during the term of this Agreement. The
commission rate is based on the type of sale and timing of the sale. For all
purchase orders accepted by the company during the period April 7,1997 to
November 15, 2001, the Company will also pay to the Representative a commission
of three percent of net sales of active and/or passive presets and device
drivers whether or not the representative made any effort to sell these items.
As of December 31, 1997, no commissions had been earned and 45,000 options had
been granted pursuant to this Agreement. Since inception to December 31, 1997
the Company has incurred $376,122; and for the years ended December 31,1997 and
December 31, 1996, $143,657 and $195,968, respectively, of
F-21
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
consulting fees and out of pocket expenses for this consultant which have been
charged to operations.
On November 12,1997, the Company contracted with Adaptive Miro-Ware, Inc to
work with TEC (see below) in the design and development of a custom integrated
circuit ("ASIC") in accordance with the Company's specifications. The total cost
of the project was estimated to be $179,550 to be paid in intervals based upon
milestones. The contract is expected to be completed during the first half of
1998. At December 31,1997 $17,500 had been paid under the terms of the contract.
On November 14,1997, the Company contracted with The Engineering Consortium
("TEC") to design and develop a custom integrated circuit ("ASIC") in accordance
with the Company's specifications. The total cost of the project was estimated
to be $130,000 to be paid in intervals based upon milestones. The contract is
expected to be completed during the first half of 1998. At December 31,1997 no
payments had been made under the terms the contract.
On December 3, 1997, the company contracted with Lippert/Heilshorn &
Associates, Inc. ("LHA") to provide various Investor Relations and Public
Relations services for the Company. In return for such services the Company
granted to the LHA 30,000 options for the purchase of the Company's common stock
at $5.78 per share (market price on date of grant. In addition the Company
agreed to pay LHA a fee of $7,500 per month plus normal business expenses. The
contract terminates on March 31,1998, at which time the contract will continue
on a month-to-month basis. However, the Company may terminate the agreement at
any time after March 31,1998 upon 60 days notice to LHA.
The Company has entered into numerous sales representation agreements with
various organizations whereby the Company will pay to the representative
organization commissions based on the type of sale and timing of sale. The
commission rates vary from 2% to 16%. No commissions had been earned through
December 31,1997 pursuant to these agreements.
Leases
The Company leases shared office space on a month-to-month basis for a
monthly rental of $5,400. Rent expense incurred for the cumulative period from
July 17, 1995 (inception) to December 31, 1997 amounted to $122,348; and for the
years ended December 31, 1997 and December 31, 1996 amounted to $78,496 and
$37,452,respectively. In addition, the Company is a guarantor on lease payments
of $4284 per month regarding Rave's facility. The lease expires on June 14,1998.
9. EXTRAORDINARY ITEM
The terms of the Bridge Notes of the Company contained early repayment
provisions in the event the Company completed an IPO. As a result of the
Company's completing an IPO in July 1996, the Bridge Notes were repaid and the
unamortized financing costs of $251,938 and the unamortized debt discount of
$596,222 as of that date, totaling $848,160, were written off and recorded as an
extraordinary item for the year ended December 31, 1996.
F-22
<PAGE>
NUWAVE TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
10. SUBSEQUENT EVENT
On February 6, 1998, the Company entered into a two-year agreement with an
investor whereby the Company issued 253,485 shares of the Company's Common Stock
for an aggregate purchase price of $1,000,000. In addition, subject to certain
conditions, the agreement provides that, from time to time over the life of the
agreement the Company shall issue "Puts" to the investor whereby the Company
shall issue for each Put and the investor shall purchase, at the Company's
option, shares of the Company's Common Stock for a minimum of $250,000 and a
maximum of $750,000. The total aggregate value of the Puts over the life of the
agreement must be a minimum of $1,000,000 and cannot exceed $5,000,000. The
purchase price of the stock will be at 88% of the fair market value of the stock
at the time of the Put. The following restrictions apply beginning with the
second Put: 1) there must be 20 business days between Puts; 2) the average daily
trading volume in the Company's Common Stock for the 30 trading days prior to
the Put date must be at least 20,000 shares; 3) The minimum bid price for the
Company's Common Stock on the trading day immediately preceding the put date
must be at least $2.50; 4) unless the investor agrees otherwise, no put can be
made which cause the investor to own more than 9.9% of the Company's then
outstanding stock.
In connection with the agreement the Company issued to the investor
warrants to purchase an aggregate of 50,000 shares of Common Stock at a purchase
price of $6.41 per share. The warrants may be exercised at any time beginning
August 6,1998 and ending three years thereafter. Also, in the event that the
market price as of the effective date of the registration statement filed with
the Securities and Exchange Commission on March 3,1998 regarding the resale of
the underlying securities is less than $3.95, then the Company will issue to the
investor a supplemental warrant to purchase 50,000 shares of Common stock at a
stick price of $3.95. The supplemental warrant may be exercised at any time
beginning 5 days after the effective date and ending 5 years thereafter.
On March 3,1998, the Company entered into a consulting agreement with an
organization (the "Consultant") whereby the Consultant will perform consulting
services relating to corporate finance and other financial services matters. As
compensation for such services, the Company shall pay the consultant $5,000 per
month during an initial term ending September 3,1999 subject to automatic
one-year terms unless either the Company or the Consultant shall have given
written notice at least 30 days prior to the end of the initial or subsequent
terms.
In connection with this agreement, the Company issued to the Consultant
400,000 common stock purchase warrants. The warrants The warrants have an
exercise price of $4 and are exercisable after September 3,1999. The warrants
expire on March 3, 2003.
F-23
EXHIBIT 10.44
December 3, 1997
Mr. Gerald Zarin
Chairman, President & CEO
NUWAVE TECHNOLOGIES INC.
One Passaic Avenue
Fairfield, NJ 07004
Dear Mr. Zarin:
This letter agreement is between NUWAVE TECHNOLOGIES INC. ("Company")
and Lippert/Heilshorn & Associates, Inc. ("LHA") and in that regard, the parties
agree as follows:
1. LHA's fee (the "Fee") for implementation of its Comprehensive Business
Communications Program that includes Investor Relations and Public Relations for
$7,500.00 per month plus a total of 30,000 options at the present price, plus
normal business expenses (i.e., production costs, etc.).
2. In consideration of the Fee, LHA will perform the following services for
Company; however, such services will be subject to Company's written or oral
approval:
A. Arrange an initial Conference to discuss the Program including
Company's goals and objectives.
B. Prepare a Corporate Factsheet, a document that encapsulates Company
information and its most recent financial results. The Corporate Factsheet will
be sent to targeted investment professionals with a response card/fax sheet as
an initial screening tool to determine the recipient's interest in meeting
Company. All individuals responding to this mailing will be entered in LHA's
Company specific database (the "Mailing List") in order that Company information
may be furnished to them in the future.
C. Compile a "Due Diligence Kit" including: the Corporate Factsheet,
press releases, press clippings, annual report and/or brochure, recent SEC
documents and other materials regarding Company.
D. Upon completion of the foregoing, LHA will review and critique
Management's intended presentations to the financial community.
E. Prepare and distribute letters to shareholders.
F. Establish lines of communications with NASDAQ market makers
informing them of recent Company developments.
<PAGE>
G. Arrange periodic meetings with interested buy side and sell side
analysts, retail brokers, fund managers and investment advisors, including
extensive telephone and written follow ups.
H. Prepare and disseminate material press releases to the financial
cornmunity and press to ensure full and timely disclosure, including
telemarketing releases to investment professionals with serious interest in
Company. Prior to press release issuance, LHA requires a signed-off
(initialized) copy of the release faxed to the account team leader. The release
must be signed-off by the Company's authorized investor relations contact to
ensure authorization of release. It is the company's responsibility to obtain
all necessary clearances and approvals (including legal) prior to issuance of
all releases.
I. Coordinate conference calls between Management and key investment
professionals after earnings releases or other releases, which require
explanation. Prior to those calls, LHA will consult with Management and prepare
an outline covering the subjects to be discussed and/or questions that might
arise.
J. Administer all telephone and/or written financial inquiries
regarding Company and supply those persons with a Company-approved Due Diligence
Kit, or calls from LHA account executives.
K. Provide written quarterly reports reviewing activities initiated by
LHA on Company's behalf and anticipated for the following quarter.
L. Formulate quarterly strategic plan that updates Company on
activities initiated by LHA on Company's behalf, including an outline of LHA's
future activities, (i.e., meetings, targeted brokers, analysts or trades). This
plan will also identify outstanding issues and/or suggested solutions.
M. Company will be included in LHA's Quarterly Client Roster.
N. Company will be included in LHA's Monthly Client List sent to all
investment professionals who request information on any client Company.
3. LHA's activities on Company's behalf will also include:
o Building the Mailing List from various research sources.
o Furnishing various financial services (i.e., o Standard &
Poor's and Moody's) with updated Company information for
inclusion in their listings and reports.
o Revisions of the Mailing List, including separate
divisions for brokers, analysts, fund managers,
shareholders and reference points.
4. Conceive and manage a comprehensive public relations program that stresses
proactive, ongoing media relations. In the initial stages, this involves
consultation to establish overall strategy and timing of tactical initiatives,
preparation of a press kit, identification and analysis of target media that
will have the greatest impact on constituencies, shaping messages to each media,
2
<PAGE>
developing beneficial relationships with key reporters, editors and producers,
consistently generating news that supports the company's objectives, re-cycling
publicity to support sales and recognition efforts.
A. Components of the ongoing public relations program: media training,
media interview preparation - including research and analysis, public relations
strategies and initiatives to support acquisitions and divestitures and new
products, services, new offices and executive moves, new media strategies to
optimize public relations, publicity initiatives to support joint marketing and
promotional efforts with partners, consultation to optimize public relations
tie-ins with marketing communications and advertising, consultation with
investor relations representative to further public relations strategy.
B. You will receive a separate monthly written status report detailing
ongoing public relations initiatives, development of strategy and schedule of
activities to further the program.
5. Should the Company require additional financing, LHA has relationships with
merchant and investment bankers, private placement professionals and other
intermediaries available to the Company for solicitation of funds. LHA will be
entitled to additional compensation from the Company, in the event that an
introduction from LHA is successful in assisting the Company in raising capital
of an amount to be determined prior to Company receipt of funds.
6. If Company requests, LHA will spearhead Company's annual reports (i.e.,
Writing President's letter, overseeing outlay of report, arranging graphics,
etc.). However, that service is not included in the Fee and if Company requests
that assistance, LHA will receive a negotiated fee from Company, depending upon
the quantity of this work.
7. In order for LHA to commence work for Company, LHA will require a two-month
advance retainer plus $2,000.00 for expenses.
8. This letter agreement will commence on December 1, 1997 and terminate (120
days) four months thereafter, at which time the contract will continue on a
month-to-month basis. However, Company may terminate this letter agreement at
any time provided that any such termination after the first four- (4) months of
the term will require sixty- (60) days prior written notice to LHA. In that
regard, _unless all amounts due hereunder are paid up-to-date then LHA shall be
entitled to retain the Mailing List.
9. LHA's invoice will be dated the first of each month and payment should be
remitted within 30 days.
10. In disseminating Company information and/or materials, LHA will rely upon
Company's assurances that such information is complete and accurate. Prior to
dissemination of such information and/or materials, LHA will submit it to
Company for approval.
11. In performing the activities described in this letter agreement, LHA and
Company's actions will comply with all SEC and applicable State laws, rules and
regulations.
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12. Company will indemnify and defend LHA against all claims, proceedings,
suits or other matters that might be asserted against LHA with respect to LHA's
activities by reason of this letter agreement and Company will pay LHA's
reasonable attorney's fees and expenses in connection with such matters;
however, Company's indemnity is conditioned upon the following:
a) LHA must act within the scope of this letter agreement;
b) LHA must act in accordance with Company instructions; and
c) LHA is not negligent.
13. If LHA breaches any of the requirements of Paragraph 12(a), (b), or (c)
above, LHA will indemnify and defend Company against all claims, proceedings,
suits or other matters asserted against, Company on account of LHA's actions,
and LHA will pay Company's reasonable attorney's fees and expenses in connection
with such matters.
14. If any litigation is commenced regarding this letter agreement, in addition
to such other relief as may be granted, the prevailing party will be entitled to
reimbursement from the other party for the prevailing party's reasonable
attorney's fees and expenses in such litigation, the amount to be determined by
the Court hearing such litigation.
15. This letter agreement will be governed by the laws of the State of New York
applicable to contracts made and to be performed in that State.
If the foregoing correctly states our understandings, please execute
the enclosed copies of this letter in the space provided below and return a
duplicate to the undersigned. We look forward to a long and mutually successful
relationship and to our association with your exciting company.
Very truly yours,
LIPPERT/HEILSHORN & ASSOCIATES, INC.
By: /s/ Keith L. Lippert
---------------------------------
Keith L. Lippert
By: /s/ John W. Heilshorn, Jr.
---------------------------------
John W. Heilshorn, Jr.
Agreed to and Approved
This day of 1997
----- ------------
NUWAVE TECHONOLOGIES INC.
By: /s/ Gerald Zarin
-------------------------------
Title: President
----------------------------
EXHIBIT 10.45
OPTION AGREEMENT
Agreement dated as of December 9, 1997 between NUWAVE Technologies,
Inc., a Delaware corporation (the "Company"), and Lippert/Heilshorn &
Associates, Inc. ("LHA") (the "Option Agreement").
Preliminary Statement
This Option Agreement sets forth the terms pursuant to which LHA shall
have the right to purchase from the Company (the "Option") a total of 30,000
shares of common stock of the Company, $.01 par value (the "Common Stock"). This
Option Agreement is entered into pursuant to the NUWAVE Technologies, Inc. 1996
Stock Incentive Plan For Employees and Consultants (the "Plan"), a copy of which
has previously been delivered to LHA. The Option is a Non-qualified Option as
defined in the Plan.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties to this Option Agreement agree as
follows:
1. Definitions. As used in this Option Agreement, the following terms
shall have the following respective meanings:
(a) Act shall mean the Securities Act of 1933, as amended.
(b) Exercise Period shall mean the period between June 9, 1998 and
December 9, 2000.
(c) Expiration Date, with respect to any Optioned Shares, shall
mean 5 p.m. Eastern Standard Time on December 9, 2000.
(d) Optioned Stock or Optioned Shares shall mean the shares of
Common Stock of the Company which LHA may purchase pursuant to the terms of this
Option Agreement.
(e) Purchase Price shall mean $5.61 for each share of Common
Stock.
(f) SEC shall mean the Securities and Exchange Commission.
2. Grant of Option to LHA. Simultaneously with the execution and
delivery of this Option Agreement, LHA is granted the Option to purchase the
Optioned Stock for the Purchase Price, upon the terms and conditions set forth
in this Option Agreement.
<PAGE>
3. Exercise of Option. The Option provided for in this Option Agreement
may be exercised in accordance with its terms, but only by LHA and only with
respect to any Optioned Shares. It may be exercised in whole or in part from
time to time during the Exercise Period. No fractional shares of Common Stock
will be issued. LHA may exercise this purchase right by giving written notice of
such exercise at the general corporate offices of the Company located at One
Passaic Avenue, Fairfield, New Jersey 07004 (or at such other agency or office
of the Company as it may designate by notice in writing to LHA) and by payment
to the Company of the Purchase Price in cash or by check for each Optioned Share
being purchased. In the event of any exercise of the Options provided for in
this Option Agreement, certificates for the shares of Common Stock so purchased,
registered in the name of the person entitled to receive the same, shall be
delivered to LHA within a reasonable time, not exceeding ten days after the
Option shall have been so exercised. The entity in whose name any certificates
for shares of Common Stock is issued upon exercise of any Option shall for all
purposes be deemed to have become the holder of record of such shares on the
date on which the Option was exercised and payment of the Purchase Price made,
irrespective of the date of delivery of such certificate, except that, if the
date of such exercise and payment is a date when the stock transfer books of the
Company are closed, such entity shall be deemed to have become the holder of
record of such shares at the close of business on the next succeeding date on
which the stock transfer books are open.
4. Adjustment of Number of Optioned Shares.
(a) If, at any time after the date of this Option Agreement, the
number of shares of Common Stock outstanding is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, following the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend, subdivision or
split-up, the Purchase Price shall be appropriately decreased and the number of
shares of Optioned Stock thereafter issuable on exercise of the Option shall be
increased in proportion to such increase in outstanding shares.
(b) If, at any time after the date of this Option Agreement, the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date for such
combination, the Purchase Price shall be appropriately increased and the number
of shares of Common Stock issuable on exercise of this Option shall be decreased
in proportion to such decrease in outstanding shares.
5. Representations, Warranties and Agreements of LHA with respect to
registration of the sale of the Optioned Stock. If at the time LHA elects to
exercise this Option, the issuance of the underlying shares of Optioned Stock
has not been registered under the Act, LHA agrees that such Optioned Stock may
only be issued if such issuance is a transaction exempt from the registration
requirements of the Act and that the Optioned Stock must be held indefinitely
unless a subsequent disposition thereof is registered under the Act or the
transaction is exempt from registration. If the transaction is not exempt from
the provisions of the Act, in connection with any such sale, LHA also agrees
that the issuance of all or any portion of the
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Optioned Stock or its transfer, as the case may be, is subject to the receipt by
the Company at the time of its issuance or transfer of an opinion of its counsel
that the issuance of such shares is exempt from registration pursuant to an
exemption provided for in the Act, and that the Company will not be liable for
any damages incurred by LHA in the event such an opinion cannot reasonably be
obtained.
6. This Option Agreement shall not entitle LHA to any voting rights or
other rights as a stockholder of the Company.
7. Legends. Unless issued pursuant to an effective registration
statement filed pursuant to the provisions of the Act, all stock certificates
representing Optioned Stock issued to LHA shall have affixed thereto a legend
substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT. THE SALE, TRANSFER,
ASSIGNMENT, PLEDGE OR ENCUMBRANCE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF AN OPTION AGREEMENT FOR THE PURCHASE OF
RESTRICTED STOCK BETWEEN NUWAVE TECHNOLOGIES, INC. AND
LIPPERT/HEILSHORN & ASSOCIATES, INC. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
NUWAVE TECHNOLOGIES, INC."
8. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by air courier or first class or certified mail addressed as follows:
If to LHA: Lippert/Heilshorn & Associates
800 Third Avenue
Suite 1701
New York, New York 10022
If to the Company: NUWAVE Technologies, Inc.
One Passaic Avenue
Fairfield, New Jersey 07004
Attn: President
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<PAGE>
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All notices and
other communications given to any party hereto in accordance with the provisions
of this Option Agreement shall be deemed to have been given on the date of
delivery if personally delivered; on the business day after the date when sent
if sent by air courier; and on the third business day after the date when sent
if sent by mail, in each case addressed to such party as provided in this
Section or in accordance with the latest unrevoked direction from such party.
9. Governing Law. This Option Agreement shall be governed by, and
construed in accordance with, (a) the laws of the State of New Jersey applicable
to contracts made and to be performed wholly therein and (b) the laws of the
State of Delaware applicable to corporations organized under the laws of such
state.
10. Entire Agreement. This Option Agreement contains the entire
agreement between the parties hereto with respect to the transactions
contemplated herein and supersedes all previously written or oral negotiations,
commitments, representations and agreements.
11. Counterparts. This Option Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
12. Amendments. This Option Agreement, or any provisions hereof, may
not be amended, changed or modified without the prior written consent of each of
the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Option
Agreement to be executed and delivered as of the date first above written.
NUWAVE TECHNOLOGIES, INC.
By: /s/ Gerald Zarin
----------------------------
Name: Gerald Zarin
Title: President
ACCEPTED AND AGREED TO:
LIPPERT/HEILSHORN & ASSOCIATES, INC.
By: /s/ Keith L. Lippert
--------------------------------
Name: Keith L. Lippert
Title: President
EXHIBIT 10.46
FIRST AMENDMENT
TO
RESTATED EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO RESTATED EMPLOYMENT AGREEMENT (this
"Amendment") is by and between NUWAVE Technologies, Inc., a Delaware corporation
(formerly NUWave Engineering, Inc.) (the "Company") and Gerald Zarin, residing
at 36 Troy Drive, Short Hills, New Jersey 07078 ("Zarin").
WHEREAS, the Company and Zarin entered into a Restated Employment
Agreement dated as of July 20, 1995 (as may be further modified, amended,
supplemented or restated from time to time, the "Employment Agreement"); and
WHEREAS, the parties have mutually agreed to extend Zarin's term of
employment for two years.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. The date "December 31, 2000" in Section 2 of the Employment
Agreement shall be replaced with "December 31, 2002".
2. Except as specifically amended above, the Employment Agreement
is and shall continue to be in full force and effect and is hereby in all
respects ratified and confirmed.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on December 9, 1997.
NUWAVE TECHNOLOGIES, INC.
By: /s/ Jeremiah F. O'Brien
-------------------------
Authorized Signatory
/s/ Gerald Zarin
-------------------------
GERALD ZARIN
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this annual report on
Form 10-KSB/A of our report dated March 26, 1997, on our audits of the
statements of operations, stockholders' equity and cash flows of NuWave
Technologies, Inc. (a development stage company) for the period from July 17,
1995 (inception) to December 31, 1996 included in the cumulative amounts for the
period from July 17, 1995 (inception) to December 31, 1997, and for the year
ended December 31, 1996, appearing in the registration statement on Form S-3
(File No. 0-28606) of NuWave Technologies, Inc. filed with the Securities and
Exchange Commission pursuant to the Securities Act of 1933.
/s/ Coopers & Lybrand L.L.P.
New York, New York
April 1, 1998.
