NUWAVE TECHNOLOGIES INC
DEF 14A, 1999-02-18
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT
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                                  SCHEDULE 14A
                                 (Rule 14a-101)
                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

                    PROXY STATEMENT PURSUANT TO SECTION 14(A)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant                     [X]
Filed by a party other than the registrant  [ ]

Check the appropriate box:
[ ]  Preliminary proxy statement
[ ]  Confidential,  For  Use  of  the  Commission  Only  (as  permitted  by Rule
     14a-6(e)(2))  
[X]  Definitive  proxy  statement
[ ]  Definitive  additional materials
[ ]  Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

                            NUWAVE TECHNOLOGIES, INC.
                 ---------------------------------------------- 
                (Name of Registrant as Specified in Its Charter)


       ------------------------------------------------------------------
      (Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of filing fee (Check the appropriate box):

[X]  No fee required
[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    
     (1)  Title of each class of securities to which transaction applies:

          ----------------------------------------------------------------------
     (2)  Aggregate number of securities to which transaction applies:

          ----------------------------------------------------------------------
     (3)  Per unit  price  or other  underlying  value of  transaction  computed
          pursuant to Exchange  Act Rule 0-11 (Set forth the amount on which the
          filing fee is calculated and state how it was determined):

          ----------------------------------------------------------------------
     (4)  Proposed maximum aggregate value of transaction:

          ----------------------------------------------------------------------
     (5)  Total fee paid:

          ----------------------------------------------------------------------
[ ]  Fee paid previously with preliminary materials.

[ ]  Check box  if  any part of the fee is offset as provided  by  Exchange  Act
     Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was
     paid  previously.  Identify the previous filing by  registration  statement
     number, or the Form or Schedule and the date of its filing.

     (1)  Amount previously paid:

          ----------------------------------------------------------------------
     (2)  Form, Schedule or Registration Statement No.:

          ----------------------------------------------------------------------
     (3)  Filing party:

          ----------------------------------------------------------------------
     (4)  Date filed:

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

<PAGE>


                            NUWAVE TECHNOLOGIES, INC.

                               ONE PASSAIC AVENUE
                           FAIRFIELD, NEW JERSEY 07004

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

                    NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
                          TO BE HELD ON MARCH 19, 1999

TO THE STOCKHOLDERS OF NUWAVE TECHNOLOGIES, INC.:

     NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Special
Meeting") of NUWAVE Technologies,  Inc., a Delaware corporation (the "Company"),
will be held on March 19, 1999 at the law offices of Dechert Price & Rhoads,  30
Rockefeller Plaza, 23rd Floor, New York, New York, at 10:00 a.m., local time, to
consider and act upon the following matters:

     1. To ratify the Company's private  placement (the "Private  Placement") of
equity  securities  between May 19, 1998 and June 9, 1998  pursuant to which the
following equity securities were issued:

     (a)  2,742,904 shares of Common Stock;

     (b)  2,057,207  Class A  Redeemable  Warrants  of the  Company to  purchase
          2,057,207 shares of Common Stock; and

     (c)  18.2 Unit  Warrants of the Company to purchase  (i) 688,084  shares of
          Common Stock and (ii) 516,068 Class A Redeemable  Warrants to purchase
          516,068 shares of Common Stock.

     2. To transact such other  business as may properly come before the Special
Meeting and any adjournments or postponements thereof.

     The Board of  Directors  of the  Company has fixed the close of business on
February 3, 1999 as the record date for  determination  of the holders of Common
Stock  entitled  to  notice  of  and  to  vote  at the  Special  Meeting  or any
adjournments or postponements thereof. Only holders of record of Common Stock of
the Company at the close of business on such date (the "Stockholders")  shall be
entitled  receive  notice  of and  to  vote  at  the  Special  Meeting  and  any
adjournments or  postponements  thereof.  In connection with the ratification of
the Private Placement, the Board of Directors of the Company has determined that
the affirmative  vote of the holders of a majority of the shares of Common Stock
represented at the meeting and entitled to vote,  excluding the shares of Common
Stock  issued in the Private  Placement  or issuable  upon  exercise of warrants
issued in the Private Placement ("Private  Placement Shares"),  will be required
to ratify the Private  Placement.  Such voting  requirement  affords  holders of
non-Private Placement Shares the opportunity for post effective  ratification of
the  Private  Placement.  A  complete  list  of  Stockholders  is  open  to  the
examination of any Stockholder  for any purpose  germane to the meeting,  during
ordinary  business  hours,  at the offices of the Company located at One Passaic
Avenue, Fairfield, New Jersey 07004.


<PAGE>


     All Stockholders are cordially invited to attend the Special Meeting.

                                       By Order of the Board of Directors,


Fairfield, New Jersey                  Gerald Zarin
February 18, 1999                      President and Chief Executive Officer


     WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING,  PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED  PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED  ENVELOPE IN ORDER
TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY
IS MAILED IN THE UNITED STATES.

                                       2

<PAGE>


                            NUWAVE TECHNOLOGIES, INC.

                               ONE PASSAIC AVENUE
                           FAIRFIELD, NEW JERSEY 07004
                                  973-882-8810

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

                                 PROXY STATEMENT

                         SPECIAL MEETING OF STOCKHOLDERS
                          TO BE HELD ON MARCH 19, 1999

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

TO THE STOCKHOLDERS:                                         February 18, 1999

     This Proxy  Statement  has been  prepared  and is furnished by the Board of
Directors of NUWAVE Technologies,  Inc., a Delaware corporation (the "Company"),
in  connection  with the  solicitation  of  proxies  for a  Special  Meeting  of
Stockholders  (including any adjournments or postponements thereof, the "Special
Meeting")  of the  Company  to be held on March 19,  1999 at the law  offices of
Dechert Price & Rhoads, 30 Rockefeller Plaza, 23rd Floor, New York, New York, at
10:00 a.m., local time.

     It is anticipated  that this Proxy Statement and the  accompanying  form of
proxy  will be  mailed  to the  Stockholders  (as  defined  below)  on or  about
February 20, 1999.

     Only holders of record (the  "Stockholders") of the Company's common stock,
$.01 par value (the "Common Stock"), on the books of the Company at the close of
business  on February 3, 1999 (the  "Record  Date") are  entitled to vote at the
Special Meeting and any  adjournments or  postponements  thereof.  On that date,
there were 8,356,389  issued and outstanding  shares of Common Stock entitled to
vote at the Special  Meeting.  Each Stockholder is entitled to one vote for each
share of  Common  Stock  registered  in that  person's  name on the books of the
Company on the Record Date on all  business to come before the Special  Meeting.
With respect to the proposal for ratification of the Private Placement,  holders
of shares issued in the Private  Placement or issuable upon exercise of warrants
issued  in the  Private  Placement  ("Private  Placement  Shares")  shall not be
entitled to vote such Private  Placement  Shares.  Because the Company's  Common
Stock is listed on the NASDAQ  SmallCap  Market,  the  Company is subject to The
Nasdaq Stock Market,  Inc.'s ("Nasdaq")  corporate  governance rules,  including
Marketplace  Rule  4310(c)(25)(H)  (the "Nasdaq  Rule").  In connection with the
Private  Placement,  the  Company  retained  counsel  to  advise it on the legal
aspects of the Private  Placement,  including the regulatory  requirements under
the Nasdaq rules. The Company was not advised and was therefore  unaware that it
was required to obtain  stockholder  approval of the Private  Placement prior to
the  issuance  of  securities  in the Private  Placement,  as is required by the
Nasdaq  Rule.  Because the Nasdaq Rule  requires  prior  approval of the Private
Placement,  proper  ratification  can only be obtained if the Private  Placement
Shares  are not  entitled  to vote.  As such,  only  holders  of  record  of the
5,613,485  shares  of  Common  Stock  which  were  issued  prior to the  Private
Placement shall be entitled to vote with respect to the proposal. If the Company
does not obtain  shareholder  ratification,  the  Nasdaq  will issue a notice of
delisting  and a hearing may be held to determine  whether to delist the Company
from the Nasdaq SmallCap Market.

     If a Stockholder  cannot be present in person at the Special  Meeting,  the
Board of  Directors  of the Company  requests  such  Stockholder  to execute and
return the enclosed  proxy as soon as  possible.  The person who signs the proxy
must be either (i) the registered  Stockholder of such shares of Common Stock or
(ii) a trustee, executor, administrator, guardian, attorney-in-fact,  officer of
a  corporation  or any other  person  acting in a  fiduciary  or  representative
capacity on behalf of such registered Stockholder. A Stockholder who has given a
proxy may  revoke it at any time  before it is voted at the  Special  Meeting by
giving  written  notice  of  revocation  to the  Secretary  of the  Company,  by
submitting a proxy bearing a later date, or by attending the Special Meeting and
voting in person.  Any such notice or subsequent  proxy should be sent to NUWAVE
Technologies,  Inc., One Passaic 

                                       3

<PAGE>

Avenue,  Fairfield,  New Jersey 07004; Attention:  Secretary.  Attendance at the
Special Meeting will not by itself constitute revocation of a proxy.

     The Company is paying all costs of the  solicitation of proxies,  including
the expenses of printing and mailing to the  Stockholders  this Proxy Statement,
the  accompanying  Notice of Special  Meeting of  Stockholders  and the enclosed
proxy.  The Company has retained  Innisfree M&A  Incorporated  ("Innisfree")  to
solicit proxies in connection with the Special Meeting.  For such services,  the
Company  has  agreed  to pay  Innisfree  a fee of  $9,500.00.  In  addition,  if
Innisfree  is  requested  to make calls to, or receive  calls  from,  individual
record  holders  or  non-objecting  beneficial  owners,  the  Company  will  pay
Innisfree  $5.50 per each such call.  The Company  has also agreed to  reimburse
Innisfree for costs and expenses  incurred in connection  with the  distribution
and mailing of solicitation materials

     The Company  will also  reimburse  brokerage  houses and other  custodians,
nominees and fiduciaries for their expenses,  in accordance with the regulations
of the Securities and Exchange Commission (the "Commission"), in sending proxies
and proxy  materials to the  beneficial  owners of the  Company's  Common Stock.
Officers or employees of the Company may also solicit  proxies in person,  or by
mail,  telegram or telephone,  but such persons will receive no compensation for
such work, other than their normal compensation as such officers or employees.

                                       4

<PAGE>

                         PURPOSE OF THE SPECIAL MEETING

     At the Special Meeting, the Stockholders will consider and vote upon:

     (1) the  ratification  of the  Company's  private  placement  (the "Private
Placement") of equity securities  between May 19, 1998 and June 9, 1998 pursuant
to which the following equity securities were issued:

     (a)  2,742,904 shares of Common Stock;

     (b)  2,057,207  Class A  Redeemable  Warrants  of the  Company to  purchase
          2,057,207 shares of Common Stock; and

     (c)  18.2 Unit  Warrants of the Company to purchase  (i) 688,084  shares of
          Common Stock and (ii) 516,068 Class A Redeemable  Warrants to purchase
          516,068 shares of Common Stock; and

     (2) such other matters as may properly come before the Special  Meeting and
any adjournments or postponements thereof.

                             VOTE REQUIRED; PROXIES

     The  presence  in person or by proxy of holders of a majority of the shares
of  Common  Stock  outstanding  and  entitled  to  vote as of the  Record  Date,
excluding the Private  Placement Shares, is required for a quorum at the Special
Meeting. For purposes of ratifying the Private Placement, the Board of Directors
of the Company has determined that, if a quorum is present, the affirmative vote
of the holders of a majority of the shares of Common  Stock  represented  at the
meeting and entitled to vote,  excluding the Private Placement  Shares,  will be
required to ratify the Private  Placement.  The Board of Directors believes that
such voting  requirement  affords  holders of non-Private  Placement  Shares the
opportunity for post effective  ratification of the Private  Placement.  For all
other matters submitted to the Stockholders at the Special Meeting,  if a quorum
is  present,  the  affirmative  vote of the  holders of a majority of the shares
represented  at the meeting  and  entitled  to vote is  required  for  approval.
Abstention  votes will have the effect of a vote  against  such above  described
matters.

     Shares of Common Stock which are represented by properly  executed proxies,
unless such proxies shall have previously been properly  revoked,  will be voted
in accordance with the  instructions  indicated in such proxies.  If no contrary
instructions  are indicated,  such shares will be voted (1) FOR the ratification
of the Private  Placement and (2) in the  discretion of the persons named in the
proxies as proxy appointees as to any other matter that may properly come before
the Special Meeting.

     Shares  held by  brokers  and other  Stockholder  nominees  may be voted on
certain matters but not others. This can occur, for example,  when the broker or
nominee does not have the discretionary authority to vote shares of Common Stock
and is instructed by the beneficial owner thereof to vote on a particular matter
but is not instructed on other matters.  These are known as "non-voted"  shares.
Non-voted shares will be counted for purposes of determining  whether there is a
quorum at the  meeting,  but with  respect  to the  matters as to which they are
"non-voted," they will have no effect upon the outcome of the vote thereon.

     You are requested, regardless of the number of shares you hold, to sign the
proxy and return it promptly in the enclosed envelope.

                                       5

<PAGE>

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The table below is based on  information  obtained  from the persons  named
below with  respect  to the shares of Common  Stock  beneficially  owned,  as of
December  31, 1998  (except as noted  below),  by (i) each  person  known by the
Company  to be the  owner of more  than 5% of the  outstanding  shares of Common
Stock,  (ii) each director of the Company,  (iii) each executive  officer of the
Company and (iv) all executive officers and directors of the Company as a group.

<TABLE>
<CAPTION>
                                             AMOUNT AND NATURE OF           PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER        BENEFICIAL OWNERSHIP(1)   OUTSTANDING SHARES OWNED(2)
- -----------------------------------------   -----------------------   ---------------------------

<S>                                                <C>                          <C> 
Gerald Zarin                                       781,334                       9.0%
       36 Troy Drive
       Short Hills, NJ 07078(3)

Edward Bohn                                         46,833                          *
       322 Broadway
       Pompton Lakes, NJ 07442(4)

Lyle Gramley                                        33,334                          *
       12901 Three Sisters Road
       Potomac, MD 20854(5)

Joseph A. Sarubbi                                   48,334                          *
       3221 S. Ocean Blvd., Suite 908
       Highland Beach, FL 33487(5)

Don Legato                                          76,667                          *
       2 West Close Street
       Moorestown, NJ 08057(6)

Jeremiah F. O'Brien                                 62,500                          *
       525 W. 236th St., #5-F
       Riverdale, NY 10463(7)

Robert Webb                                         83,334                          *
       298 Stanton Mountain Rd.
       Lebanon, NJ 08833(8)

Helen Burgess                                      577,854                       6.9%
       40 E. 30th St., 10th Fl.
       New York, NY 10016

David Kwong                                        459,718                       5.5%
       13694 Fremont Pines Road
       Los Altos, CA 94022(5), (9), (10)

                                       6

<PAGE>

Bruce Meyers                                     1,335,013                      15.1%
       17 State Street
       New York, NY 10004(11), (12), (13)

Peter Janssen                                    1,132,311                      12.9%
       17 State Street
       New York, NY 10004(14), (15), (16)

Janssen-Meyers Associates, L.P.                    562,042                       6.3%
       17 State Street
       New York, NY 10004(17)

All executive officers and directors as a        1,132,336                      12.6%
group (7 persons)(18)
</TABLE>

* Less than 1%.

(1)  The number of shares of Common Stock  beneficially  owned by each person is
     determined  in  accordance  with  the  rules  of the  Commission,  and  the
     information is not necessarily  indicative of beneficial  ownership for any
     other purpose.  Under such rules,  beneficial ownership includes any shares
     as to which the  individual  has sole or shared  voting power or investment
     power and also any  shares of Common  Stock  which the  individual  has the
     right to  acquire  within 60 days  after  December  31,  1998  through  the
     exercise of any stock option or other right.  The  inclusion  herein of any
     shares of Common Stock deemed  beneficially  owned does not  constitute  an
     admission  of  beneficial  ownership  of  those  shares.  Unless  otherwise
     indicated,  the persons named in the table have sole voting and  investment
     power  with  respect to all shares of Common  Stock  shown as  beneficially
     owned by them.

(2)  The number of shares deemed  outstanding  includes shares outstanding as of
     December 31, 1998 plus any shares  subject to options and warrants  held by
     the person in question that are currently  exercisable within 60 days after
     December 31, 1998.

(3)  Includes  328,334 shares that may be acquired within 60 days after December
     31, 1998, upon the exercise of outstanding options.

(4)  Includes  41,833 shares that may be acquired  within 60 days after December
     31, 1998, upon the exercise of outstanding options.

(5)  Includes  13,334 shares that may be acquired  within 60 days after December
     31, 1998, upon the exercise of outstanding options.

(6)  Includes  76,667 shares that may be acquired  within 60 days after December
     31, 1998, upon the exercise of outstanding options.

(7)  Includes  55,000 shares that may be acquired  within 60 days after December
     31, 1998,  upon the exercise of  outstanding  options.  Also includes 2,500
     shares that may be acquired  within 60 days after  December 31, 1998,  upon
     the exercise of  outstanding  warrants  held by Mr.  O'Brien's  wife. As to
     these 2,500 shares, Mr. O'Brien disclaims beneficial interest.

(8)  Includes  83,334 shares that may be acquired  within 60 days after December
     31, 1998, upon the exercise of outstanding options.

(9)  David Kwong, a former director of the Company,  owns approximately 21.6% of
     Prime's  stock.  Mr.  Kwong is a director  of Prime.  Mr.  Kwong  disclaims
     beneficial interest in the Company's Common Stock owned by Prime.

                                       7

<PAGE>

(10) Includes 231,117 shares of the Company's Common Stock owned by Prime, as to
     which Mr. Kwong disclaims beneficial interest. See footnote 9 above.

(11) Includes  (i)  202,703  shares  that may be  acquired  within 60 days after
     December 31, 1998, upon the exercise of Class A Redeemable  Warrants,  (ii)
     171,  427 shares that may be  acquired  within 60 days after  December  31,
     1998,  upon the exercise of Unit Warrants and (iii) 128,571 shares that may
     be acquired  within 60 days after  December 31, 1998,  upon the exercise of
     the Class A Redeemable Warrants which underlie the Unit Warrants.

(12) Bruce  Meyers  is a  principal  of  Janssen-Meyers.  Mr.  Meyers  disclaims
     beneficial  interest in the Company's  Common Stock  beneficially  owned by
     Janssen-Meyers.

(13) Includes 562,042 shares of the Company's Common Stock beneficially owned by
     Janssen-Meyers,  as to which Mr. Meyers disclaims beneficial interest.  See
     footnote (12) above and footnote (17) below.

(14) Includes  (i)  115,831  shares  that may be  acquired  within 60 days after
     December 31, 1998, upon the exercise of Class A Redeemable  Warrants,  (ii)
     171,  427 shares that may be  acquired  within 60 days after  December  31,
     1998,  upon the exercise of Unit Warrants and (iii) 128,571 shares that may
     be acquired  within 60 days after  December 31, 1998,  upon the exercise of
     the Class A Redeemable Warrants which underlie the Unit Warrants.

(15) Peter  Janssen is a principal  of  Janssen-Meyers.  Mr.  Janssen  disclaims
     beneficial  interest in the Company's  Common Stock  beneficially  owned by
     Janssen-Meyers.

(16) Includes 562,042 shares of the Company's Common Stock beneficially owned by
     Janssen-Meyers,  as to which Mr. Janssen disclaims beneficial interest. See
     footnote (15) above and footnote (17) below.

(17) Includes  (i)  321,165  shares  that may be  acquired  within 60 days after
     December  31,  1998,  upon the  exercise of Unit  Warrants and (ii) 240,877
     shares that may be acquired  within 60 days after  December 31, 1998,  upon
     the exercise of the Class A  Redeemable  Warrants  which  underlie the Unit
     Warrants.

(18) See footnotes (1) through (8) above.

                                       8

<PAGE>

                                  THE PROPOSAL

                      RATIFICATION OF THE PRIVATE PLACEMENT

     The Board of  Directors  unanimously  recommends  the  ratification  of the
Company's Private  Placement of equity securities  between May 19, 1998 and June
9, 1998 pursuant to which the following equity securities were issued:

     (a)  2,742,904 shares of Common Stock;

     (b)  2,057,207  Class A  Redeemable  Warrants  of the  Company to  purchase
          2,057,207 shares of Common Stock; and

     (c)  18.2 Unit  Warrants of the Company to purchase  (i) 688,084  shares of
          Common Stock and (ii) 516,068 Class A Redeemable  Warrants to purchase
          516,068 shares of Common Stock.

THE PRIVATE PLACEMENT

     On May 11, 1998, the Company entered into a placement agency agreement (the
"Placement   Agency   Agreement")   with   Janssen-Meyers    Associates,    L.P.
("Janssen-Meyers")  pursuant  to  which  Janssen-Meyers  agreed  to  act  as the
Company's  placement  agent  in  a  private  placement  to  certain  "accredited
investors," as defined under  Regulation D as  promulgated  under the Securities
Act of 1933,  as amended (the  "Act"),  of not less than 25 and not more than 70
Units (as defined  below) of the Company,  as such maximum number of Units could
be increased by the Chief Executive  Officer or Chief  Financial  Officer of the
Company.  Each Unit was to  consist  of (i) a number  of shares of Common  Stock
determined  by dividing  the  purchase  price per Unit of  $100,000  by, for the
initial  closing of the  Private  Placement,  $2.59,  and,  for each  subsequent
closing,  the lesser of (x) $3.20 and (y) 80% of the  Average  Closing Bid Price
(as  defined  below),   and  (ii)  Class  A  Redeemable   Warrants  to  purchase
seventy-five percent (75%) of the number of shares of Common Stock determined in
(i) above at an exercise price of $3.235. The "Average Closing Bid Price" was to
be the average closing bid price for the Common Stock for the eight  consecutive
trading  days  immediately  preceding  the  date  of a  closing  of the  Private
Placement.

     Under  the  Placement  Agency  Agreement,  the  Company  agreed  to  pay to
Janssen-Meyers,  for  its  services  as the  placement  agent  of the  Units,  a
commission of 10% of the gross proceeds from the sale of the Units, as well as a
3%  non-accountable   expense  allowance  and  reimbursement  for  other  costs,
including legal expenses related to the Private Placement, subject to receipt by
the Company of  appropriate  documentation.  The Company also agreed to grant to
Janssen-Meyers  Unit Warrants to purchase 25% of the number of Units sold in the
Private Placement,  exercisable until May 11, 2003, at a price per Unit equal to
the offering price per Unit of $100,000.

     On May 19, 1998 the initial  closing of the Private  Placement  took place.
The aggregate  subscription  amount was  $5,070,483.41  resulting in the sale of
50.7 Units. The per share purchase price for the Common Stock was $2.59. A total
of 1,957,727  shares of Common Stock and 1,468,318  Class A Redeemable  Warrants
were issued. The net proceeds to the Company were $4,347,831.57.

     On May 21, 1998 the second closing of the Private Placement took place. The
aggregate  subscription  amount was  $783,713.07  resulting in the sale of 7.837
Units.  The per share  purchase price for the Common Stock was $3.06. A total of
256,120  shares of Common  Stock and 192,093  Class A Redeemable  Warrants  were
issued. The net proceeds to the Company were $681,831.37.

     On May 27, 1998 the third closing of the Private  Placement took place. The
aggregate subscription amount was $625,900 resulting in the sale of 6.259 Units.
The per share purchase price for the Common Stock was $2.903. A total of 215,613
shares of Common Stock and 161,713 Class A Redeemable  Warrants were issued. The
net proceeds to the Company were $535,896.75.

     On June 1, 1998 the fourth closing of the Private Placement took place. The
aggregate  subscription

                                       9

<PAGE>

amount  was  $273,750.00  resulting  in the sale of 2.738  Units.  The per share
purchase  price for the  Common  Stock was $2.61.  A total of 104,890  shares of
Common  Stock and  78,667  Class A  Redeemable  Warrants  were  issued.  The net
proceeds to the Company were $237,389.50.

     On June 4, 1998 the fifth closing of the Private  Placement took place. The
aggregate  subscription  amount was  $201,700.00  resulting in the sale of 2.017
Units.  The per share  purchase price for the Common Stock was $2.50. A total of
81,101  shares of Common  Stock and  60,826  Class A  Redeemable  Warrants  were
issued. The net proceeds to the Company were $175,480.00.

     On June 9, 1998 the sixth and final closing of the Private  Placement  took
place. The aggregate  subscription  amount was $325,000 resulting in the sale of
3.25 Units. The per share purchase price for the Common Stock was $2.55. A total
of 127,453  shares of Common Stock and 95,590 Class A Redeemable  Warrants  were
issued. The net proceeds to the Company were $278,474.65.

     The  aggregate  amount  of the  subscriptions  for  all  six  closings  was
$7,280,546.48,  resulting in the sale of 72.801 units. In the aggregate, a total
of 2,742,904  shares of Common Stock and 2,057,207  Class A Redeemable  Warrants
were  issued.  The  aggregate  net  proceeds to the Company  were  approximately
$6,112,950.  The  Company  is  using  such net  proceeds  for  working  capital,
including research and development.

     The aggregate amount which the Company paid to  Janssen-Meyers  for all six
closings,  pursuant  to the  Placement  Agency  Agreement,  was  $728,054.65  as
commission and $218,416.39 as non-accountable  expense  allowance.  In addition,
pursuant  to  the   Placement   Agency   Agreement,   the  Company   granted  to
Janssen-Meyers,  in the  aggregate,  18.2 Unit  Warrants to purchase (i) 688,084
shares of Common Stock and (ii) 516,068 Class A Redeemable  Warrants to purchase
516,068 shares of Common Stock.

COMPLIANCE WITH NASDAQ CORPORATE GOVERNANCE RULES

     Because the Company's Common Stock is listed on the NASDAQ SmallCap Market,
the Company is subject to Nasdaq's  corporate  governance  rules,  including the
Nasdaq  Rule which  provides,  among other  things,  that in  connection  with a
transaction  other than a public  offering,  an issuer must  obtain  stockholder
approval  for the sale or issuance of common  stock (or  securities  convertible
into or  exercisable  for common stock) equal to 20% or more of the common stock
outstanding  before  the  issuance  for less than the  greater of book or market
value of the stock.  Because the  securities  offered in the  Private  Placement
represented greater than 20% of the common stock outstanding before the issuance
and they were  issued at a price  lower  than  market  value,  the  Company  was
required to obtain stockholder approval prior to such issuance.

     In connection with the Private  Placement,  the Company retained counsel to
advise it on the legal aspects of the Private Placement including the regulatory
requirements  under the  Nasdaq  rules.  The  Company  was not  advised  and was
therefore  unaware  that it was required to obtain  stockholder  approval of the
Private Placement, as is required by the Nasdaq Rule. Consequently,  the Private
Placement was effected in violation of the Nasdaq Rule. On December 2, 1998, the
Company  received a letter from  Nasdaq  ("Nasdaq's  December  2, 1998  Letter")
informing  the  Company of its  violation  of the Nasdaq Rule and  requesting  a
proposal to remedy the  violation.  On December 4, 1998,  December  11, 1998 and
December 17, 1998,  the Company  responded by stating,  among other things,  the
following:  First, the Company's failure to obtain  stockholder  approval of the
Private Placement was unintentional and inadvertent.  The Company was simply not
aware of such stockholder approval  requirement.  Second, the Board of Directors
of the  Company  has  always  been  scrupulous  in  following  proper  corporate
governance  procedures.  The Board would not have gone  forward with the Private
Placement  without  stockholder  approval  had it  known  that  the  absence  of
stockholder  approval would violate the Nasdaq Rule. Third,  without being aware
of the need for stockholder approval, the Board of the Directors of the Company,
the majority of which are independent,  approved the Private  Placement  because
the proceeds from the Private  Placement  were an integral part of the Company's
ability to implement its business  plans.  Without the proceeds from the Private
Placement,  the Company  would not have had  sufficient  funds to implement  its
business plans.  Fourth, the Company disclosed the issuance of the securities in
the Private  Placement and other material matters relating thereto in its public
filings with the Commission, namely its Current Report on Form 8-K filed on June
11,  1998 and its Proxy

                                       10

<PAGE>

Statement on Schedule 14A filed on June 8, 1998.  In addition,  on May 21, 1998,
the Company issued a press release relating to the Private  Placement.  Finally,
to remedy the  violation  of the Nasdaq  Rule,  the  Company  proposed to call a
special meeting of its stockholders as soon as practicable to ratify the Private
Placement.

     The Special  Meeting  will be held on March 19,  1999 and this  proposal to
ratify the  Private  Placement  is being  made in order to remedy the  Company's
violation of the Nasdaq Rule.

     On January  25,  1999,  the  Company  received a letter  from  Nasdaq  (the
"Nasdaq's  January 25, 1999  Letter"),  informing  the  Company  that  obtaining
stockholder  ratification of the Private  Placement is necessary for the Company
to avoid the  delisting of the  Company's  securities  from the Nasdaq  SmallCap
Market. In addition, such ratification will show that the Company's stockholders
agree with the Company that the Private  Placement was necessary for the Company
to  implement  its business  plans and that it was in the best  interests of the
Company's  then  existing  stockholders.  Without the proceeds  from the Private
Placement,  the Company  would not have had  sufficient  funds to implement  its
business plans.

     Nasdaq's  January 25, 1999 Letter indicates that should the Company fail to
obtain stockholder  ratification of the Private  Placement,  the Company will be
sent a formal delisting  letter.  In such case, the Company intends to request a
delisting hearing and vigorously oppose the delisting of its securities from the
Nasdaq SmallCap Market. However, there is no assurance that the Company would be
successful in such hearing.  The Company  believes  that if its  securities  are
delisted,  the market liquidity for its securities,  including the Common Stock,
would  be  severely  affected  and a  significant  diminution  in the  value  of
stockholder investment would necessarily follow. This, in turn, could materially
adversely affect the Company's ability to realize its long term objectives.



          FOR THE ABOVE REASONS, THE BOARD OF DIRECTORS RECOMMENDS THAT
       STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE PRIVATE PLACEMENT

                                       11

<PAGE>

                            DESCRIPTION OF SECURITIES

General

     The Company is authorized by its Articles of Incorporation,  as amended, to
issue 20,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock,
par value $.01 per share (the "Preferred  Stock"),  which Preferred Stock may be
issued with such rights,  designations  and privileges as the Board of Directors
may from time to time  determine.  As of the date hereof,  there were  8,356,389
shares of Common Stock issued and  outstanding  and no shares of Preferred Stock
outstanding.

     The following summary descriptions are, to the extent applicable, qualified
in their entirety by reference to the Company's  Articles of  Incorporation,  as
amended.

Common Stock

     The holders of Common Stock are entitled to one vote for each share held of
record on all  matters to be voted on by  stockholders.  There is no  cumulative
voting  with  respect to the  election  of  directors,  with the result that the
holders of more than 50% of the shares  voting for the election of directors can
elect all of the directors then up for election. The holders of Common Stock are
entitled to receive ratably such dividends when, as and if declared by the Board
of  Directors  out  of  funds  legally  available  therefor.  In  the  event  of
liquidation,  dissolution  or winding up of the  Company,  the holders of Common
Stock are entitled to share ratably in all assets  remaining which are available
for  distribution  to them after payment of liabilities  and after provision has
been made for each class of stock,  if any,  having  preference  over the Common
Stock. Holders of Common Stock, as such, have no conversion, preemptive or other
subscription  rights, and there are no redemption  provisions  applicable to the
Common Stock. All of the outstanding  shares of Common Stock are validly issued,
fully paid and nonassessable.

Class A Redeemable Warrants

     The following  discussion  is a summary of certain terms and  provisions of
the Class A Redeemable  Warrants contained in the Warrant  Agreement,  dated May
15, 1998,  between the Company and American  Stock Transfer & Trust Company (the
"Warrant  Agreement").  As such, it is qualified in its entirety by reference to
the Warrant  Agreement which was filed as Exhibit 10.3 to the Company's  Current
Report on Form 8-K filed with the Commission on June 11, 1998.

     Each Class A Redeemable  Warrant  entitles the holder to purchase one share
of Common  Stock at any time until May 11,  2003 at an  exercise  price of $3.24
(the  "Exercise  Price"),  subject to  adjustment  in certain  circumstances  to
prevent dilution.  The Class A Redeemable  Warrants may be exercised in whole or
in part,  at any time and from time to time until May 11, 2003 through a cash or
cashless  exercise.  Unless  exercised,  the Class A  Redeemable  Warrants  will
automatically expire on May 11, 2003.

     Under the Warrant  Agreement,  the Company agreed to use its best effort to
file a registration  statement under the Securities Act, registering the Class A
Redeemable  Warrants  and the  shares of  Common  Stock  underlying  the Class A
Redeemable  Warrants,  upon  demand,  after  December 9, 1998,  and use its best
efforts to have the registration  statement declared effective by the Commission
as  soon as  possible  thereafter  (the  "Effective  Date").  In the  event  the
registration  statement is not declared  effective within 60 days after a demand
for  registration,  the then  number  of Class A  Redeemable  Warrants  shall be
increased by two percent (2%), effective as of the end of such 60 day period and
by an  additional  two percent  (2%) on each one month  anniversary  thereafter,
until such time that the number of Class A Redeemable Warrants should equal 120%
of the original  number of Class A Redeemable  Warrants.  The Company  agrees to
keep the  registration  statement  effective  until  expiration  of the  Class A
Redeemable Warrants.

     The Class A Redeemable Warrants are subject to redemption by the Company at
$.01 per Class A Redeemable  Warrant at any time  commencing 12 months after the
Effective Date, or earlier with the prior written consent of Janssen-Meyers,  on
not less  than 30 days  prior  written  notice  to the  holders  of the  Class A
Redeemable  Warrants,  provided the average  closing bid quotation of the Common
Stock as reported on the Nasdaq SmallCap

                                       12

<PAGE>

Market,  if traded thereon,  or, if not traded thereon,  the average closing bid
quotation  of the Common Stock if listed on a national  securities  exchange (or
other reporting  system that provides last sale prices),  has been at least 250%
of the then current  Exercise  Price of the Class A Redeemable  Warrants,  for a
period of 30  consecutive  trading  days  ending on the day prior to the date on
which the Company gives notice of  redemption.  The Class A Redeemable  Warrants
will be exercisable until the close of business on the day immediately preceding
the date fixed for redemption.

     The Class A Redeemable Warrants were originally issued between May 19, 1998
and June 9, 1998 in  connection  with the Company's  Private  Placement in which
Janssen-Meyers acted as the Company's placement agent.

Unit Warrants

     The following  discussion  is a summary of certain terms and  provisions of
the Unit  Warrants  contained in the  Placement  Agent's Unit  Purchase  Warrant
Agreement, dated as of May 19, 1998, between the Company and Janssen-Meyers (the
"Unit Purchase Warrant Agreement").  As such, it is qualified in its entirety by
reference to the Unit Purchase Warrant Agreement which was filed as Exhibit 10.5
to the Company's  Current  Report on Form 8-K filed with the  Commission on June
11, 1998.

     Each Unit  Warrant  entitles  the holder to  purchase  one Unit (as defined
below) at any time until May 11, 2003 at an exercise price of $100,000,  subject
to adjustment in certain circumstances to prevent dilution. Each Unit consist of
shares of Common Stock and Class A Redeemable Warrants. The Unit Warrants may be
exercised  in whole or in part,  at any time and from time to time until May 11,
2003 through a cash or cashless  exercise.  Unless exercised,  the Unit Warrants
will automatically expire on May 11, 2003.

     Under the Unit Purchase  Warrant  Agreement,  the Company  agreed to file a
registration  statement under the Securities Act as  expeditiously  as possible,
upon  demand  after  December  9,  1998,  but in any event no later than 60 days
following receipt of such demand, to register the following securities:  (i) the
Unit Warrants,  (ii) the Common Stock  underlying  the Unit Warrants,  (iii) the
Class A Redeemable  Warrants  underlying  the Unit  Warrants and (iv) the Common
Stock  underlying  the  Class A  Redeemable  Warrants  which  underlie  the Unit
Warrants.  The Company  agreed to use its best efforts to have the  registration
statement  declared  effective at the earliest  possible time. In addition,  all
registered  holders  of  the  above  described  securities  have  the  right  to
participate,  or "piggyback," in certain registrations initiated by the Company.
The Unit Warrants are not redeemable by the Company.

     The Unit Warrants were  originally  issued between May 19, 1998 and June 9,
1998 in connection with the Company's Private Placement in which  Janssen-Meyers
acted as the Company's placement agent.

Dividends

     To date,  the Company has not declared or paid any  dividends on its Common
Stock. The payment by the Company of dividends, if any, is within the discretion
of the Board of Directors and will depend on the Company's earnings, if any, its
capital requirements and financial condition, as well as other relevant factors.
The  Board  of  Directors  does not  intend  to  declare  any  dividends  in the
foreseeable  future,  but  instead  intends  to retain  earnings  for use in the
Company's business operations.

Transfer Agent and Warrant Agent

     The transfer  agent for the Common Stock is, and the warrant  agent for the
Class A Redeemable Warrants is, American Stock Transfer & Trust Company, 40 Wall
Street, New York, New York.

                                       13

<PAGE>

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The following  discussion  should be read in conjunction with the financial
statements  and related notes,  and the other  financial  information,  included
elsewhere in this Proxy Statement.

General

     The Company is a development  stage enterprise  organized in July 1995. The
Company  develops and intends to manufacture  and market  products which improve
picture  quality in set-top boxes,  televisions,  VCR's,  DVD's,  camcorders and
other video devices by enhancing and manipulating  video signals.  In July 1996,
the Company completed an initial public offering ("IPO") of its Common Stock and
public  warrants  ("Public  Warrants")  from which it received  net  proceeds of
$9,538,428 and repaid $2,000,000  principal amount of promissory notes issued in
a previous financing. On February 11, 1998, the Company received net proceeds of
$859,347  for  issuance  of  253,485  shares of its Common  Stock to  Profutures
Special Equities Fund, L.P. ("Profutures").  The Company also issued warrants to
purchase up to 100,000  shares of its Common Stock to  Profutures.  In addition,
the  Company  may issue  "Puts" to  Profutures  over a two year  period  whereby
Profutures  shall purchase a minimum of $1,000,000 up to a maximum of $5,000,000
of the Company's Common Stock (valued at 88% of the market value thereof).  Puts
are  for  a  minimum  of  $250,000  and  a  maximum  of  $750,000  with  certain
restrictions  applying  beginning  with the second  Put.  On May 11,  1998,  the
Company entered into the Placement Agency Agreement with  Janssen-Meyers  to act
as the  Company's  placement  agent in a private  equity  placement  whereby the
Company  issued  2,742,904  shares of its  Common  Stock and  2,057,207  Class A
Redeemable  Warrants  between May 19, 1998 and June 9, 1998 for net  proceeds of
$6,112,950.   See   "Management's   Discussion   and   Analysis   or   Plan   of
Operation--Liquidity and Capital Resources."

     At the time of the initial public offering of the Company's Common Stock in
July 1996,  the  Company  had  produced  and tested  fully  operational  working
prototypes of the following (together, the "Initial Products"):

o    an operational  prototype of an analog video processor which  significantly
     enhances video picture quality;

o    an operational prototype of another video enhancement device which combined
     the analog video processor with digitally based frame  extrapolation  video
     noise reduction circuits for use in national  television  standard codes or
     phase alternate lines;

o    an operational  prototype of a time base corrector  providing for analog to
     digital conversion and the synchronization of up to 3 video sources; and

o    an initial prototype of a video editing "studio" mounted on printed circuit
     boards.

     Subsequent  to the IPO, the Company  established  the Advanced  Engineering
Group  to  support  the  continuing  development  of its  products  and  related
technology,  and the identification of additional sources of new technology. The
Advanced  Engineering  Group is made up of the Company's own employees and third
party  consultants who work with the Company on a project by project basis.  The
Advanced  Engineering  Group  operates under the direction of the Company's Vice
President-Engineering  (prior to September 1998, it operated under the direction
of the Company's Vice  President-Marketing/Technical  Development).  The Company
utilizes  its  Advanced  Engineering  Group to create  products  and  technology
independent of the "Licensed  Product" and "Licensed Process" as outlined in the
Exclusive  Worldwide  License  Agreement,  dated  July 21,  1995  (the  "License
Agreement")  that the Company  entered  into with Rave  Engineering  Corporation
("Rave").  These  independently  developed  products and technology  include the
NUWAVE Video Processor ("NVP"), a significant amount of the software included in
each of its  products and new  circuitry to allow  certain of the products to be
produced as application  specific  integrated  circuit  ("ASICs").  The Advanced
Engineering  Group also  developed a software  product called  "Softsets"  which
provides end users and manufacturers who use the NUWAVE Video Processor in their
products  with an option to manipulate  the  attributes of video images to their
own tastes or standards.  Utilizing this  technology,  the Company has developed
the  ProWave  NVP 2.2, a product  for the  professional  video  market,

                                       14

<PAGE>

that is currently  available as a stand-alone  unit or a PC board with software.
The Advanced  Engineering Group is also currently  developing a commercial video
retail product also utilizing the NVP technology.

     The  Company  intends  to  produce  the NVP in the form of an ASIC  chip in
accordance with a customer's specific application requirements supported by firm
commitments rather than producing and inventorying ASIC chips in anticipation of
applications  required by customers in the future.  In this regard,  the Company
contracted  with Adaptive  Micro-Wave  Inc.  ("Adaptive"),  an engineering  firm
specializing in engineering product  management,  to provide necessary technical
support and manage this process under the Company's direction.  The Company also
contracted  with  The  Engineering  Consortium  ("TEC"),  a  specialized  design
engineering  group,  to  complete  the design  work  necessary  to  convert  the
Company's current NVP PC board design to ASIC specifications and contracted with
Zentrum  Mikroelectronik  Dresden GmbH ("ZMD"), a fabricator and manufacturer of
integrated circuits,  for production of the ASIC. The Company recently completed
the final  design  layout of the ASIC chip and sent it to the foundry at ZMD and
expects production of such ASIC chip to begin in the Spring of 1999.

     The Company has significantly scaled back its research and development, and
marketing and related  activities with respect to all other existing or proposed
products in order to concentrate its resources on the continued  development and
marketing of its Softsets  and NVP  products  (i.e.,  ASIC chip for the original
equipment  manufacturers  ("OEM") market, the ProWave NVP 2.2 in the stand alone
unit and PC board  version for the  professional  video  market and the consumer
video retail version).  The Company believes this product strategy will allow it
to take full advantage of the growth opportunity presented by the converging PC,
television, HDTV and telecommunication markets, which the Company believes to be
quite significant.  The Company  anticipates this strategy will also allow it to
conserve its  resources and at the same time maximize the benefits to be derived
from introducing these products into these converging and expanding markets.

     As of September 30, 1998 the Company had  accumulated a deficit  during the
development  stage of $12,160,360  which includes a net loss for the nine months
ended September 30, 1998 of $2,970,804. The Company has had limited sales of its
products to date  ($19,941  cumulative  through  September  30, 1998,  primarily
representing sales of the Company's  products for demonstration  purposes ). The
loss for the nine months ended September 30, 1998 included $1,799,078 in general
and administrative expenses,  representing a decrease of $54,393 compared to the
nine-month  period ended September 30, 1997. This decrease  included a reduction
in sales and  marketing  costs of  $364,027  discussed  more  fully  below and a
$70,000 decrease in payments made to Prime Technologies, Inc. ("Prime") pursuant
to the Exclusive Agency Agreement ("Agency  Agreement")  between the Company and
Prime dated July 21, 1995. See "Management's  Discussion and Analysis or Plan of
Operation--Liquidity  and Capital  Resources." Such decreases were substantially
offset by increases  resulting  from the Company's  planned growth and expansion
including  increased  personnel and payroll costs  ($16,840),  professional  and
legal  services  ($175,650),   insurance  costs  ($29,747),  investor  relations
($73,870),  travel and  entertainment  costs  ($23,140),  office rent ($12,547),
recruiting costs ($40,000) and other ($7,840).  Although the Company anticipates
deriving some revenue from the sale of its proprietary  software  (Softsets) and
the NVP products during 1999, no assurance can be given that these products will
be successfully  marketed during such period. Even if revenues are produced from
the sale of such products,  the Company  expects to continue to incur losses for
at least the next 12 months.  See "Management's  Discussion and Analysis or Plan
of Operation--Liquidity and Capital Resources."

Marketing and Sales

     In  anticipation  of production of its NVP ASIC chip,  the Company has been
conducting  sales  presentations  of the NVP and  Softsets  to  prospective  OEM
customers world wide (i.e.,  original equipment  manufacturers of set top boxes,
televisions,  VCR's, DVD's and other video output devices).  The availability of
the completed ASIC chip is directly related to the Company's ability to generate
OEM  orders.  Although  the Company is unable to predict  whether its  marketing
efforts  will be  successful,  it  believes  that its  products  have  been well
received.  In 1998, the Company entered into a multi-year  supply agreement with
Thomson Consumer Electronics  ("Thomson") for the purchase of its NVP ASIC chip.
Thomson has recently  informed the Company that their

                                       15

<PAGE>

development  of the  product  expected  to utilize the NVP ASIC chip has not yet
been completed and therefore orders are not expected to begin until 2000.

     During  the  second  quarter  of  1998,  the  Company  opened  a sales  and
engineering  office in Osaka,  Japan to maintain on-going  discussions,  provide
in-person demonstrations of the Company's technology and directly participate in
technical due diligence sessions with potential customers who are evaluating the
Company's  technology.  During the third quarter of 1998,  the Company  opened a
sales and engineering  office in Beijing,  China for its products and technology
to be sold into the Chinese domestic market,  which is equal in size to the U.S.
market.

     The Company is currently  developing retail products for consumers who have
TV's and do not have a NUWAVE  enabled  product  but want to improve the picture
quality of their home viewing.  The Company's  CWave  Division will market these
products.  The Company has  determined  that the most effective way to introduce
this  product  into  the  retail  marketplace  during  1999 is to  work  through
distributors  who will  manufacture and sell to retailers,  including those with
whom they are  currently  doing  business.  The  Company  is in the  process  of
identifying a qualified  distributor with whom it hopes to establish a strategic
partnership  to help  expedite the  introduction  of the retail  products to the
market in 1999.  During 1997, the Company formed its ProWave  Division for sales
and  marketing of the ProWave NVP 2.2 and related  products to the  professional
video market (e.g.,  security  surveillance  systems) and began selling  limited
quantities  (primarily  for  demonstration  purposes  until  the  ASIC  chip  is
available  to  replace  the more  expensive  PC board)  of its first  commercial
product, the ProWave NVP 2.2.

     During 1997, the Company  contracted with professional sales consultants to
establish the  development of the Company's  sales  organization  managed by the
Vice  President  of Sales.  In this  regard,  the  Company has  contracted  with
Competitive  Technologies,  Inc.  ("CTI") to assist it in the development of the
Company's OEM business. CTI, for over twenty six years, has been in the business
of  taking  R&D and  technology  companies  and  introducing  them to the  major
companies  specializing  in  their  respective  markets.  The  Company  also has
contracts  with  several  individuals  and  organizations  that  will  act  in a
commissioned sales representation capacity regarding the Company's products.

     During  1997,  the Company had  contracted  with a  professional  marketing
communications firm to assist in the development and implementation of a program
to develop market awareness and commercialization of its products.  This program
included  development of Company and product  brochures and press kits,  product
specification  sheets,  development  of a Company  booth for use at trade shows,
attendance at key trade shows,  mailers,  the production of corporate videos for
use at sales  presentations,  development of and placement of  advertisements in
key industry journals,  etc. The developmental  costs relating to these programs
were  substantially  incurred during 1997 and as a result such  expenditures for
the first nine months of 1998 were reduced by approximately $364,027 compared to
the first nine months of 1997.  During the nine-month period ended September 30,
1998 costs included  $21,204 for  professional  sales and marketing  consultants
compared to $218,887 for the nine-month period ended September 30, 1997; $99,853
for  advertising and public  relations  compared to $298,014 for the nine months
ended  September  30, 1997;  $8,283 for trade shows  compared to $53,761 for the
nine months ended  September  30, 1997;  and $77,294  relating to the offices in
Japan and China opened in 1998. The Company is  continually  reviewing its needs
with a view to maximizing efficiency while conserving its resources.

Research and Development

     For a  discussion  of the  Company's  research and  development  activities
carried out by its Advanced Engineering Group, see "Management's  Discussion and
Analysis or Plan of Operation--General."

     Research and  development  activity with respect to the  Company's  Initial
Products was carried out by Rave prior to July 21, 1995, the date upon which the
Company  and  Rave  entered  into  the  License  Agreement  and the  Development
Agreement,  dated July 21, 1995 (the  "Development  Agreement").  The  Company's
Initial  Products  were  based on  technology  originated  by Rave  prior to the
Company's  organization  and  licensed  to the  Company by 

                                       16

<PAGE>

Rave pursuant to the License Agreement.  Although it was the Company's intention
to utilize Rave as its primary source for research and  development  activities,
the  Company  has  become   dissatisfied  with  Rave's   performance  under  the
Development  Agreement  and has  found it  necessary  to  utilize  its  Advanced
Engineering  Group as its primary means for product  development.  On October 1,
1998 the three year term of the  Development  Agreement  between the Company and
Rave  expired.  The  Company  paid  Rave  an  aggregate  of (i)  $2,731,906  for
development  services  ("Development  Service  Payments"),   (ii)  $507,012  for
equipment which was supposed to be used in conjunction with development services
which were  required and (iii) $125,  913 for  materials  intended to be used in
conjunction  with the development  services.  The Company has also guaranteed an
additional  $109,632 for related  equipment  lease payments to be made on Rave's
behalf.

     Concurrent  with the research and  development  undertaken  by the Advanced
Engineering  Group,  the Company  retained patent counsel in 1996 to prosecute a
patent  application  on the video clarity  circuit  provided by Rave ( the "Rave
Clarity Circuit"), which, of the Initial Products, the Company had identified as
the most likely candidate for immediate commercial exploitation. The Company was
informed in January,  1998, that (a) such application had been rejected, and (b)
such  initial  rejections  by the  United  States  Patent and  Trademark  Office
("Patent office") are not uncommon.  The claims in the application were modified
and the application was resubmitted  twice.  Both times it was again rejected by
the Patent Office on the grounds that the Rave Clarity  Circuit was identical to
a circuit that was the subject of a prior United States patent issued to a third
party (the "Prior Art").  The Company has determined not to proceed with further
prosecution of the patent  application on the Rave Clarity Circuit.  The Company
acquired the exclusive rights to the Prior Art in August 1998.

     In July 1998, the Company's  representatives  conducted a "Technical Audit"
of the  consulting  and  development  services  (not limited to the Rave Clarity
Circuit)  that Rave was to have  performed  under the License  Agreement and the
Development  Agreement.  The Company  concluded,  on the basis of the  Technical
Audit and the  information  regarding the Prior Art, that Rave had not performed
the required  services and misled the Company about its ability to perform them,
and about Rave's ownership of the technology licensed to the Company.

     The  Development  Service  Payments also  satisfied  the Company's  payment
obligations  under the License Agreement between the Company and Rave which gave
the Company  exclusive rights to the "Licensed  Product" and "Licensed  Process"
(each as defined therein) for the three year term of the Development  Agreement.
Commencing October 1, 1998, the Company did not pay Rave $65,000 per month under
the License  Agreement  thereby giving Rave the right,  which was exercisable by
giving notice to the Company prior to November 2, 1998, to convert the Company's
rights  to  the  "Licensed  Product"  and  "Licensed  Process"  into  that  of a
non-exclusive  licensee.  Rave failed to give such notice in the specified  time
and the Company believes it retains  exclusive rights to the "Licensed  Product"
and "Licensed Process."

     On November 13, 1998,  pursuant to the provisions of the License  Agreement
and the Development  Agreement,  the Company commenced an arbitration proceeding
under the American  Arbitration  Association Rules of Patent Arbitration against
Rave and Randy Burnworth.  Such proceeding seeks (a) damages for the injuries to
the Company caused by Rave's and Burnworth's  breaches of their  contractual and
common  law  obligations  to the  Company,  including  but not  limited to those
referred to above, and (b) a declaration  that, among other things,  Rave is not
entitled  to any  royalties  or other  payments  with  respect to the  Company's
technology and that the Company  continues to have  exclusive  license rights to
the "Licensed Product" and "Licensed Process" under the License Agreement.

     Rave has informed the Company that the Company is obligated to pay Rave (a)
$65,000 per month under the License  Agreement for at least the 12-month  period
ending September 30, 1999 and (b) $380,000 for purchases and leases of equipment
under the  Development  Agreement.  Management  believes  that these  claims are
without  merit and will  vigorously  contest  them;  accordingly,  no additional
liability has been recorded for such claims. However, there can be no assurances
that such claims will not result in the Company incurring a liability.

                                       17

<PAGE>

Manufacturing

     The Company does not contemplate  that it will directly  manufacture any of
its  products.  It intends to contract  with third  parties to  manufacture  its
proposed NVP and  Softsets.  It also may license to third  parties the rights to
manufacture the products,  either through direct licensing,  OEM arrangements or
otherwise.

     The  Company  intends to  produce  the NVP ASIC chip in  accordance  with a
customer's  specific  application  requirements  supported  by firm  commitments
rather  than  producing  and   inventorying   ASIC  chips  in   anticipation  of
applications  required by customers in the future.  In this regard,  the Company
contracted with Adaptive to provide necessary  technical support and manage this
process  under the  Company's  direction,  contracted  with TEC to complete  the
design work  necessary to convert the  Company's  current NVP PC board design to
ASIC  specifications  and  contracted  with ZMD for  production of the ASIC. The
Company anticipates producing the initial ASIC in the Spring of 1999.

Employees

     The Company has ten  full-time  employees  and,  depending  on its level of
business activity,  expects to hire additional  employees in the next 12 months,
as needed,  to support  marketing  and sales,  manufacturing  and  research  and
development.

Liquidity and Capital Resources

     From its inception until the IPO, the Company relied for all of its funding
($2,900,000 in cash plus the  cancellation of the notes in the principal  amount
of  $350,000)  on  private  sales of its debt and  equity  securities  ("Private
Financings").  In July 1996,  the Company  completed  its IPO and  received  net
proceeds of $9,538,428.  The Company used  $2,073,652 of the net proceeds of the
IPO to repay the  principal  and  interest on the  outstanding  notes  issued to
investors in connection with the Private Financings.

     On February 6, 1998,  the Company  entered into a two-year  agreement  with
Profutures  whereby the Company issued 253,485 shares of its 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  Profutures  whereby the Company
shall issue for each Put and Profutures 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 Common  Stock will be at 88% of the fair market value of the Common Stock
at the  time  of the  Put.  The  following  restrictions,  among  others,  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; and 4) unless  Profutures  agrees
otherwise,  no Put can be made which causes  Profutures to own more than 9.9% of
the Company's then outstanding Common Stock.

     In connection with the agreement, the Company issued to Profutures warrants
to purchase an aggregate of 50,000 shares of Common Stock at a purchase price of
$6.41 per share and  supplemental  warrants to purchase an  aggregate  of 50,000
shares of Common Stock at a purchase price of $3.95 per share.  The warrants may
be exercised at any time beginning August 6, 1998 and ending 3 years thereafter.
The supplemental  warrants may be exercised at any time beginning April 19, 1998
and ending 5 years thereafter.

     On May 11, 1998, the Company  entered into the Placement  Agency  Agreement
with  Janssen-Meyers to act as the Company's placement agent in a private equity
placement whereby the Company issued to certain accredited investors, as defined
under  Regulation D as promulgated  under the Securities Act of 1933, as amended
(the  "Securities  Act"),  2,742,904  shares of the  Company's  Common Stock and
2,057,207 Class A Redeemable  Warrants between May 19, 1998 and June 9, 1998 for
an aggregate  purchase  price of  $7,280,546.  Each Class A  Redeemable  Warrant
entitles the holder thereof to purchase one share of Common Stock at an exercise
price per share of $3.24,  subject to adjustment  upon the occurrence of certain
events to prevent dilution,  at any time during

                                       18

<PAGE>

the period  commencing on June 9, 1998 and expiring on May 11, 2003. The Class A
Redeemable Warrants are subject to redemption by the Company at $.01 per warrant
12 months after the  effective  date of a  registration  statement  covering the
Class A Redeemable Warrants on not less than 30 days prior written notice to the
holders of the Class A Redeemable  Warrants,  provided  the average  closing bid
price of the Common  Stock has been at least 250% of the then  current  exercise
price of the Class A  Redeemable  Warrants  for a period  of thirty  consecutive
trading  days  ending  on the day prior to the day on which  the  Company  gives
notice of redemption.  The Class A Redeemable Warrants will be exercisable until
the  close of  business  on the day  immediately  preceding  the date  fixed for
redemption.

     Janssen-Meyers  received for acting as placement  agent a commission of 10%
($728,055)  of the gross  proceeds from the sale of the Common Stock and Class A
Redeemable  Warrants,  as  well  as  a  3%  non-accountable   expense  allowance
($218,416) and  reimbursement of other costs,  including legal expenses relating
to the offering ($77,171).  In addition,  Janssen-Meyers received as part of its
compensation  Unit Warrants,  exercisable  until May 11, 2003, to purchase up to
(i) 688,084  shares of the  Company's  Common Stock at a price per share ranging
from $2.50 to $3.06 and (ii) 516,068 Class A Redeemable  Warrants to purchase up
to 516,068 shares of the Company's Common Stock at a price per share of $3.24.

     As indicated  earlier,  the Company has developed  products and  technology
independent  of the  "Licensed  Product" and "Licensed  Process"  covered by the
License  Agreement  with Rave and  believes  that a  substantial  portion of its
future  sales  will not  include  "Licensed  Product"  and  "Licensed  Process."
Pursuant  to the terms of the Agency  Agreement  between  the Company and Prime,
Prime will  receive 35% of net  sublicensing  fees  received by the Company with
respect to the first  $50,000,000 of aggregate net sales of "Licensed  Product,"
"Licensed  Process" and "Results of Development"  (as defined in the Development
Agreement)  made by the Company's  sublicensees,  after  subtracting any royalty
payments made to Rave pursuant to the License Agreement, and any other licensing
expenses,  and  thereafter  45%.  Prime will also  receive  up to an  additional
$1,500,000 of which (i) $400,000 has been paid in  accordance  with the terms of
the Agency  Agreement,  (ii)  $400,000  is payable  out of the  Company's  first
sublicensing  fees of  "Licensed  Product,"  "Licensed  Process" and "Results of
Development,"  and (iii)  $700,000  is payable out of the  Company's  portion of
sublicensing  royalties  when  net  sublicensing  sales of  "Licensed  Product,"
"Licensed Process" and "Results of Development" exceed $200,000,000.

     The  Company  has  determined  to  concentrate  its  resources  and product
strategy on the sale of its Softsets and NVP products and  therefore the Company
anticipates   that  its  available  cash  will  be  sufficient  to  satisfy  its
contemplated cash requirements for at least through the next twelve months.

Plan of Operation

     The Company's plan of operation  over the next 12 months focuses  primarily
on the final phase of the  development of its ASIC chip,  marketing and sales of
its Softsets and NVP products in the OEM,  professional video and retail markets
and the continued  effort  necessary to support the sales and marketing of these
products.

     The  Company   anticipates,   based  on  its  current  proposed  plans  and
assumptions  relating to its operations,  that it has sufficient cash to satisfy
the estimated cash  requirements  of the Company for the next 12 months.  In the
event of  unanticipated  expenses,  delays or other problems beyond this period,
the Company might be required to seek additional  funding . In addition,  in the
event that the  Company  receives a larger  than  anticipated  number of initial
purchase  orders upon  introduction  of Softsets  and the NVP  products,  it may
require  resources  greater  than  its  available  cash  or than  are  otherwise
available  to the Company.  In such event,  the Company may be required to raise
additional capital.  There can be no assurance that such additional capital will
be available to the Company if needed,  on commercially  reasonable  terms or at
all.

     The Company's  future  performance  will be subject to a number of business
factors,  including  those  beyond  the  Company's  control,  such  as  economic
downturns and evolving  industry needs and preferences,  as well as the level of
competition and the ability of the Company to  successfully  market its products
and  technology.  There can be no  assurance  that the  Company  will be able to
successfully  implement a marketing strategy,  generate  significant revenues or
achieve  profitable  operations.  In addition,  because the Company has had only
limited

                                       19

<PAGE>

operations to date,  there can be no assurance  that its estimates will prove to
be accurate or that unforeseen events will not occur.

Year 2000

     The Company  recognizes  the need to ensure that its operations and systems
(including   information   technology  ("IT")  and  non-information   technology
("non-IT")  systems)  will not be adversely  affected by year 2000  hardware and
software issues.  The year 2000 problem is the result of computer programs being
written using two digits (rather than four) to define the applicable  years. Any
of the company's  programs that have  time-sensitive  software may recognize the
date using "00" as the year 1900 rather than the year 2000,  which could  result
in  miscalculations  or system  failures.  The Year  2000  problem  affects  the
Company's installed computer systems,  software  applications and other business
systems that have time sensitive programs.

     The Company has conducted a review of its IT and non-IT systems to identify
those systems that could be affected by the Year 2000 problem.  Modifications to
the Company's  systems as a result of the findings have been completed.  Testing
of these modifications was completed January 31, 1999. In addition,  the Company
has contacted its major supplier (the  fabricator/manufacturer of its ASIC chip)
to verify that the systems that the major supplier uses are or will be Year 2000
compliant.  If the Company's major supplier or others with whom the Company does
business  experience  problems  related to the Year 2000  issue,  the  Company's
business,  financial  condition  or results of  operations  could be  materially
adversely  affected.  Based on its current  estimates and information  currently
available,  the Company does not anticipate that the costs  associated with Year
2000 compliance issues will be material to the Company's  financial  position or
results of operations.

     The Company  believes  that its Year 2000  project will allow it to be Year
2000 compliant in a timely manner. There can be no assurances, however, that the
Company's  information  systems or those of a third  party on which the  Company
relies will be year 2000  compliant  by the year 2000.  An  interruption  of the
Company's  ability to conduct its business due to a Year 2000 readiness  problem
could have a material  adverse affect on the Company's  business,  operations or
financial  condition.  There can be no guarantee  that the  Company's  Year 2000
goals or expense estimates will be achieved, and actual results could differ.

Recent Accounting Pronouncements

     In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 131,  "Disclosures about Segments of an Enterprise and Related  Information"
("SFAS No. 131"),  which establishes  standards for reporting  information about
operating segments in annual financial statements. It also establishes standards
for related disclosures about products and services,  geographic areas and major
customers.  SFAS No. 131 was adopted by the Company on December  31,  1998.  The
Company  does not expect the  adoption  of SFAS No. 131 to have an impact on the
presentation of the Company's results of operations,  financial position or cash
flows.

     In February 1998, FASB issued SFAS No. 132,  "Employees'  Disclosures about
Pension and Other  Postretirement  Benefits"  ("SFAS No.  132"),  which  revises
employers'  disclosures  about pension and other  postretirement  benefit plans.
SFAS No. 132 does not change the measurement or recognition of those plans. SFAS
No. 132 is effective for fiscal years  beginning  after  December 15, 1997.  The
Company  does not expect the  adoption  of SFAS No. 132 to have an impact on the
Company's results of operations, financial position or cash flows.

     In March 1998,  the  American  Institute of  Certified  Public  Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1
is effective for financial  statements  for years  beginning  after December 15,
1998. SOP 98-1 provides guidance over accounting for computer software developed
or obtained for internal uses including the requirement to capitalize  specified
costs and  amortization of such costs.  The Company does not expect the adoption
of this  standard  to have a  material  effect on the  Company's  capitalization
policy.

                                       20

<PAGE>

     In April 1998,  AICPA issued SOP 98-5,  "Reporting on the Costs of Start-up
Activities"  ("SOP  98-5").  SOP  98-5,  which is  effective  for  fiscal  years
beginning after December 15, 1998,  provides guidance on the financial reporting
of  start-up  costs  and  organization  costs.  It  requires  costs  of start up
activities and organization costs to be expensed as incurred. As the Company has
expensed these costs historically, the adoption of this standard is not expected
to have a significant  impact on the Company's results of operations,  financial
position or cash flows.

     In June 1998,  FASB issued SFAS No. 133,  "Accounting  for  Derivatives and
Hedging  Activities"  ("SFAS 133"),  which establishes  accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts,  (collectively  referred to as derivatives) and for
hedging activities.  SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. The Company does not expect the adoption of
this  statement  to  have a  significant  impact  on the  Company's  results  of
operations, financial position or cash flows.

                                       21

<PAGE>

                         INDEPENDENT PUBLIC ACCOUNTANTS

     On  February  11,  1998,   PricewaterhouseCoopers,   LLP  ("Coopers"),  the
independent accounting firm that audited the financial statements of the Company
during fiscal year 1996,  was dismissed by the Company.  Coopers'  report on the
Company's financial  statements for either of the past two years did not contain
an adverse  opinion or a disclaimer  of opinion,  and was neither  qualified nor
modified as to uncertainty,  audit scope or accounting principles.  In addition,
during the  Company's two most recent  fiscal years and any  subsequent  interim
period preceding such dismissal, there were no disagreements with Coopers on any
matter of accounting principles or practices,  financial statement disclosure or
auditing  scope or  procedure,  which  disagreement(s),  if not  resolved to the
satisfaction  of Coopers,  would have caused it to make reference to the subject
matter of the disagreement(s) in connection with its report.

     Effective  February 11, 1998,  the Company has engaged  Richard A. Eisner &
Company,  LLP ("Eisner & Company") as its new  independent  accountants  for the
fiscal year 1998.  Eisner & Company audited the Company's  financial  statements
for the fiscal year 1997. The decision to change accountants was approved by the
Board of  Directors of the Company at a meeting of the Board of Directors of the
Company on February 4, 1998.

     Representatives of Eisner & Company  ("Representatives") are expected to be
present at the Special Meeting. The Representatives will have the opportunity to
make a  statement,  although  they are  currently  not  expected  to do so.  The
Representatives   are  expected  to  be  available  to  respond  to  appropriate
questions.

                                       22

<PAGE>

                              STOCKHOLDER PROPOSALS

     The next annual  meeting of  stockholders  of the Company is expected to be
held in August,  1999.  Any  stockholder  who  wishes to present a proposal  for
action at such meeting must comply with the applicable  rules and regulations of
the  Commission  then in effect and the Company's  By-Laws.  In accordance  with
regulations  issued  by  the  Commission,  stockholder  proposals  intended  for
presentation at the next annual meeting of stockholders  must be received by the
Secretary of the Company no later than May 31, 1999 if such  proposals are to be
considered  for inclusion in the Company's  proxy  statement for the next annual
meeting of stockholders.

                                  OTHER MATTERS

     The Board of  Directors  is not aware of any matters to be presented at the
Special Meeting other than the matters  described  herein and does not intend to
bring any other matters before the meeting. However, if any other matters should
come before the meeting,  or any  adjournments  or  postponements  thereof,  the
persons  named in the  proxies  will have  discretionary  authority  to vote all
proxies in accordance with their best judgment.

                                           NUWAVE TECHNOLOGIES, INC.



                                           By GERALD ZARIN,
                                           President and Chief Executive Officer


IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY.  THEREFORE,  STOCKHOLDERS
WHO DO NOT  EXPECT TO ATTEND THE  MEETING IN PERSON ARE URGED TO FILL IN,  SIGN,
DATE AND RETURN THE ENCLOSED PROXY.

                                       23

<PAGE>


                            NUWAVE TECHNOLOGIES, INC.

                  PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
                            TO BE HELD MARCH 19, 1999

           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
                                 OF THE COMPANY

     The undersigned, revoking all prior proxies, hereby appoint(s) Gerald Zarin
and Jeremiah F. O'Brien,  and each of them, with full power of substitution,  as
proxies to represent and vote, as designated herein, all shares of common stock,
par value $0.01 per share, of NUWAVE TECHNOLOGIES,  INC. (the "Company"),  which
the undersigned  would be entitled to vote if personally  present at the Special
Meeting of  Stockholders of the Company to be held at the law offices of Dechert
Price & Rhoads, 30 Rockefeller Plaza, 23rd Floor, New York, New York, on Friday,
March 19, 1999 at 10:00 a.m., local time, and at any adjournment or postponement
thereof (the "Meeting").

     In their  discretion,  the proxies are  authorized  to vote upon such other
matters as may  properly  come  before  the  meeting  or at any  adjournment  or
postponement thereof.

     This proxy,  when properly  executed,  will be voted in the manner directed
herein by the undersigned stockholder. If no direction is given, this proxy will
be voted FOR all proposals.  Attendance of the  undersigned at the Meeting or at
any adjournment or postponement thereof, will not be deemed to revoke this proxy
unless the  undersigned  shall  revoke this proxy in writing or shall  deliver a
subsequently dated proxy to the Secretary of the Company or shall vote in person
at the Meeting.

                 PLEASE FILL IN, DATE, SIGN AND MAIL THIS PROXY
                  IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE.

1.   To ratify the Private  Placement  Agency of the Company's  securities which
     occurred between May 19, 1998 and June 9, 1998.

     [  ]  FOR    [  ]  AGAINST     [  ]   ABSTAIN




Dated: _______________ , 1999                      -----------------------------
                                                   Signature


                                                   -----------------------------
                                                   Signature if held jointly

Please sign exactly as name appears  hereon.  If the stock is  registered in the
names of two or more  persons,  each  should  sign.  Executors,  administrators,
trustees, guardians, attorneys and corporate officers should add their titles.

                                       24



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