TLG LABORATORIES HOLDING CORP, S-1/A, 1996-06-07

TLG LABORATORIES HOLDING CORP
S-1/A, 1996-06-07
MEDICINAL CHEMICALS & BOTANICAL PRODUCTS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 7, 1996

REGISTRATION NO. 333-0591
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 1

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

TLG LABORATORIES HOLDING CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 2833 11-3317986
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)

2120 SMITHTOWN AVENUE
RONKONKOMA, NEW YORK 11779
(516) 467-3140
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

PHILIP M. KAZIN, ESQ. COPY TO: HOWARD A. SOBEL,
GENERAL COUNSEL ESQ. NICHOLAS P. SAGGESE,
TLG LABORATORIES HOLDING KRAMER, LEVIN, NAFTALIS & ESQ.
CORP. FRANKEL MARK C. SMITH, ESQ.
2120 SMITHTOWN AVENUE 919 THIRD AVENUE SKADDEN, ARPS, SLATE,
RONKONKOMA, NEW YORK 11779 NEW YORK, NEW YORK 10022 MEAGHER & FLOM
(516) 467-3140 (212) 715-9100 300 SOUTH GRAND
AVENUE
(NAME, ADDRESS, INCLUDING ZIP LOS ANGELES,
CODE, AND TELEPHONE NUMBER, CALIFORNIA 90017
INCLUDING AREA CODE, OF AGENT (213) 687-5000
FOR SERVICE)

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

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

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

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

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

CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF SECURITIES OFFERING REGISTRATION
TO BE REGISTERED PRICE(1) FEE(2)
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<S> <C> <C>
Common Stock, $1.00 par value.................. $130,000,000 $44,828.00(3)
</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee.
(2) Calculated pursuant to Rule 457(o) under the Securities Act of 1933.

(3) Includes $44,828.00 previously paid.

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

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<PAGE>

TLG LABORATORIES HOLDING CORP.

CROSS REFERENCE SHEET

PURSUANT TO ITEM 501(b) OF REGULATION S-K SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS IN PART I OF FORM S-1

<TABLE>
<CAPTION>
ITEM NO. LOCATION IN PROSPECTUS
-------- ----------------------
<C> <S>
1.Forepart of the Registration State-
ment and
Outside Front Cover Page of Pro-
spectus............................ Facing Page; Outside Front Cover
Page
2.Inside Front and Outside Back Cover
Pages of Prospectus................ Inside Front Cover Page, Outside
Back Cover Page
3.Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges. Prospectus Summary; Risk Factors
4.Use of Proceeds...................... Prospectus Summary; Use of Proceeds
5.Determination of Offering Price...... Outside Front Cover Page; Risk
Factors; Underwriting
6.Dilution............................. Risk Factors; Dilution
7.Selling Security Holders............. Not Applicable
8.Plan of Distribution................. Outside Cover Page; Underwriting
9.Description of Securities to be Reg-
istered ........................... Outside Cover Page; Prospectus
Summary; Risk Factors; Dividend
Policy; Capitalization;
Description of Capital Stock;
Shares Eligible for Future Sale
10.Interests of Named Experts and Coun-
sel ............................... Experts; Legal Matters
11.Information with Respect to the Reg-
istrant ........................... Outside Cover Page; Prospectus
Summary; Risk Factors; Dividend
Policy; Dilution; Selected
Historical Financial Data;
Management's Discussion and
Analysis of Financial Condition
and Results of Operations;
Business; Management; Certain
Relationships and Related
Transactions; Principal
Stockholders; Description of
Certain Indebtedness; Description
of Notes; Description of Capital
Stock; Shares Eligible for Future
Sale; Consolidated Financial
Statements
12.Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................ Not Applicable
</TABLE>
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED JUNE 7, 1996

PROSPECTUS
, 1996

SHARES
TLG LABORATORIES HOLDING CORP.
COMMON STOCK

All of the shares of common stock, $1.00 par value per share (the "Common
Stock"), offered hereby are being sold by TLG Laboratories Holding Corp.
("Holding" or the "Company"). Of the shares of Common Stock offered
by the Company, shares are being offered for sale in the United
States and Canada by the U.S. Underwriters (the "U.S. Offering") and
shares are being offered for sale outside the United States and Canada in a
concurrent offering by the International Managers (the "International Offering"
and, together with the U.S. Offering, the "Offerings"), subject to transfers
between the U.S. Underwriters and the International Managers. See
"Underwriting."

Prior to the Offerings, there has been no public market for the Common Stock.
It is currently estimated that the initial public offering price will be
between $ and $ per share. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price.

The Company intends to apply for listing of the Common Stock on the New York
Stock Exchange, Inc. under the symbol " ."

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN THE COMMON STOCK.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS
PRICE TO DISCOUNTS AND TO THE
THE PUBLIC COMMISSIONS (1) COMPANY (2)
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<S> <C> <C> <C>
Per Share.............................. $ $ $
Total (3).............................. $ $ $
</TABLE>
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(1) The Company has agreed to indemnify the several U.S. Underwriters and the
International Managers (collectively, the "Underwriters") against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted to the U.S. Underwriters a 30-day option to
purchase up to an aggregate of additional shares of Common Stock on the
same terms as set forth above solely for the purpose of covering over-
allotments, if any. If such option is exercised in full, the total Price to
the Public, Underwriting Discounts and Commissions, and Proceeds to the
Company will be $ , $ , and $ , respectively. See "Underwriting."

The shares of Common Stock are being offered by the several Underwriters,
when, as and if delivered to and accepted by the Underwriters against payment
therefor and subject to various prior conditions, including their right to
reject orders in whole or in part. It is expected that delivery of the
certificates representing the shares will be made in New York, New York, on or
about , 1996.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE>

[COMPANY PRODUCTS]
<PAGE>

IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, INC. OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C. a Registration Statement on Form S-1 (the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. As used herein, the term "Registration Statement" means
the initial Registration Statement and any and all amendments thereto. This
Prospectus omits certain information contained in the Registration Statement
as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits
thereto. Statements herein concerning the contents of any contract or other
document are not necessarily complete and in each instance reference is made
to such contract or other document filed with the Commission as an exhibit to
the Registration Statement, each such statement being qualified by and subject
to such reference in all respects.

As a result of the Offerings, the Company will become subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and in accordance therewith will file reports and other information with the
Commission. Reports, registration statements, proxy statements and other
information filed by the Company with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at the Commission's Regional Offices: 500 West Madison Avenue, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such materials can be obtained at prescribed rates from
the Public Reference Section of the Commission, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549.

The Company intends to furnish holders of the Common Stock with annual
reports containing among other information, audited financial statements
certified by an independent public accounting firm and quarterly reports
containing unaudited condensed financial information for the first three
quarters of each fiscal year. The Company also intends to furnish such other
reports as it may determine or as may be required by law.

3
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. As used in
this Prospectus, the term "Continuing Stockholders" collectively refers to
Brian, Dean, Neil, Ross and Steve Blechman and Stephen Welling, and the term
"Stockholders" collectively refers to the Continuing Stockholders together with
David and Jean Blechman. Unless the context otherwise requires, the term
"Company" refers to (a) Holding and, as applicable, its direct and indirect
subsidiaries, Twin Laboratories Inc. and Advanced Research Press, Inc. ("ARP"),
when used with respect to information about events occurring upon completion of
or after the Acquisition (as defined herein) or when giving pro forma effect
thereto and (b) collectively Natur-Pharma Inc., Twin Laboratories Inc., Alvita
Products, Inc., Twinlab Export Corp., Twinlab Specialty Corporation, B. Bros.
Realty Corporation and Advanced Research Press, Inc., all of which were
affiliated entities, as such entities existed prior to the consummation of the
Acquisition, when used with respect to historical information contained herein.
Except where otherwise indicated, the information in this Prospectus (i)
assumes that the over-allotment option granted to the Underwriters will not be
exercised and (ii) gives effect to a for 1 stock split with respect to the
Common Stock which will be effected prior to the consummation of the Offerings.

THE COMPANY

The Company is the leading manufacturer and marketer of brand name
nutritional supplements sold through domestic independent health food stores.
Since the Company's founding in 1968 by David and Jean Blechman, the Company
has emphasized the development and introduction of high-quality, unique
products in response to emerging trends in the nutritional supplement industry.
The Company produces a full line of nutritional supplements and offers the
broadest product line in the industry with more than 800 products and 1,500
stockkeeping units (SKU's). The Company's product line includes vitamins,
minerals, amino acids, fish and marine oils, sports nutrition products and
special formulas marketed under the TWINLAB (R) trademark and a full line of
herbal supplements and phytonutrients and herb teas marketed under the Nature's
Herbs (R) and Alvita (R) trademarks, respectively. None of the Company's
products individually accounted for more than 7% of total net sales in 1995.
The Company's broad product line, strong history of new product introductions
and innovations, superior marketing and advertising programs and premium
product quality have established TWINLAB, Nature's Herbs and Alvita as leading
brands in the nutritional supplement industry.

Under the management of Mr. and Mrs. Blechman's five sons, the Company has
diversified its product line through internal growth, product development and
selected acquisitions, including the acquisition in 1989 of Natur-Pharma Inc.,
a leading manufacturer and marketer of herbal supplements and phytonutrients
under the Nature's Herbs brand name, and the acquisition in 1991 of Alvita
Products, Inc., a leading marketer of herb teas. The Company has achieved
increased net sales and income from operations every year since 1990. In
particular, during the three year period from 1993 through 1995, the Company
achieved a compound annual growth rate in net sales and income from operations
of 22.0% and 37.8%, respectively. For the fiscal year ended December 31, 1995,
the Company achieved net sales growth of 26.8% to $148.7 million and growth in
income from operations of 31.3% to $31.6 million, as compared to fiscal year
1994. For the quarter ended March 31, 1996, the Company achieved net sales of
$44.0 million and income from operations of $10.3 million, representing an
increase of 21.7% and 59.6%, respectively, as compared to the quarter ended
March 31, 1995.

4
<PAGE>

90% of the health food stores in the United States. The health food store
channel of distribution has expanded significantly in recent years and is
expected to grow further as national chains such as General Nutrition
Companies, Inc. ("GNC"), Whole Foods Market, Wild Oats Markets, Fresh Fields
and other industry participants continue to add stores in new and existing
markets. The health food store market differs significantly from the mass
market for vitamin and other nutritional supplements where price and
convenience constitute the primary bases of competition. The nutritional
supplement products sold in grocery stores, drug stores and mass merchandisers
are typically manufactured by large pharmaceutical companies and private label
manufacturers. The Company's products are also offered in Europe, Asia, South
America and other international markets through arrangements with overseas
distributors.

The Company believes it is well positioned to capitalize on the growth of the
nutritional supplement market. Based on estimates in a 1994 survey conducted by
Packaged Facts (the "Packaged Facts Survey"), an independent consumer market
research firm, the retail market for vitamins, minerals and other nutritional
supplements has grown at a compound annual rate of greater than 12% from $3.3
billion in 1991 to over $4.6 billion in 1994. Furthermore, the Company's rate
of sales growth has exceeded the industry's growth rate for each year during
this period. Packaged Facts forecasts approximately 7% annual industry growth
through the end of the decade in vitamins, minerals and other supplements,
which management believes will be fueled by (i) favorable demographic trends
towards older Americans, who are more likely to consume nutritional
supplements; (ii) product introductions in response to new scientific research
findings; (iii) the nationwide trend toward preventive medicine in response to
rising health care costs; and (iv) the heightened understanding and awareness
of the connection between diet and health. Moreover, although the industry has
grown dramatically in recent years, there is still a large untapped domestic
market as only an estimated 50% of Americans currently consume vitamins,
minerals and herbal supplements on a regular basis.

BUSINESS STRATEGY

The Company's strategy is to continue to enhance its leadership position in
the domestic sale of vitamins, minerals and other nutritional supplements in
health food stores and to increase its market share and sales while continuing
to improve its overall operating efficiency and financial performance. The
Company intends to capitalize on the TWINLAB brand name by growing market share
domestically, increasing penetration of the Company's other brands, continuing
to introduce new products and product extensions, and expanding
internationally. Specifically, the Company seeks to:

Capitalize on Powerful Brand Name Recognition. The Company's recognized
product quality, broad product line, strong history of new product
introductions and innovations, and superior marketing and advertising programs
have established TWINLAB, Nature's Herbs and Alvita as leading brands in the
nutritional supplement industry. Each of the Company's product categories,
including vitamins, minerals and amino acids; sports nutrition; special
formulas; herbal supplements and phytonutrients; and herb teas, have posted
double digit sales growth in each of the last three years. The Company's
extensive marketing and advertising programs have been critical components of
its products' strong brand name recognition, and management believes that the
Company offers its customers the strongest marketing and advertising support
programs in the industry. In fiscal 1995, the Company invested $11.1 million,
an increase of 27% over fiscal 1994, in marketing and advertising to promote
its products. Furthermore, since quality is a critical factor in consumer
purchase decisions, the Company believes that its premium quality ingredients,
modern manufacturing facilities and comprehensive quality control procedures
have enabled the Company to establish a competitive advantage based on the
quality of its products.

5
<PAGE>

brand name recognition of the Company's products positions it to increase its
penetration of shelf space as health food retailers seek to align themselves
with companies who possess strong brand names, offer a wide range of products,
demonstrate continued marketing and advertising support and provide
consistently high levels of customer service. Since Nature's Herbs and Alvita
products currently are available in only an estimated 60% and 50%,
respectively, of domestic health food stores, compared to an estimated 90% for
TWINLAB products, the Company believes that it will be able to capitalize on
health food retailers' success with the TWINLAB product line in order to
significantly increase shelf space for the Company's herbal supplements,
phytonutrients and herb teas.

Continue to Introduce New Products and Product Innovations. A cornerstone of
the Company's success has been its ability to rapidly utilize recent scientific
and medical findings in its new product development efforts. The Company has
consistently been among the first in its industry to introduce new products and
product innovations which anticipate and meet customer demands for newly
identified nutritional supplement benefits. Furthermore, the Company's
geographically diverse network of more than 60 distributors allows the Company
to achieve immediate and broad distribution for new product launches. As part
of its ongoing research and development effort, the Company maintains an
extensive database and actively researches and monitors a wide variety of
publications containing scientific and medical research. From 1991 through
1995, the Company introduced over 350 products, with over 90 new products
introduced in 1995 alone. Gross sales during 1995 from new products introduced
in 1995 were $18.4 million, or approximately 11% of gross sales. The Company
intends to build upon its historical success by continuing to introduce new and
innovative products not previously available in health food stores.

Build Upon Established Customer Relationships. The Company's established
relationships with distributors and health food store retailers are based upon
the Company's long-standing commitment to a high level of customer service. In
order to ensure that its customers receive prompt and reliable service, the
Company has designed a flexible and responsive manufacturing process and has
achieved a 98% fill rate for customer orders. In addition, the Company's sales
force consists of 30 dedicated sales professionals who operate in sales
territories which cover the entire continental United States and Alaska. The
primary functions of the Company's sales force are to gain better placement and
additional shelf space for the Company's products and to stay abreast of
customer needs. The sales force personnel work with direct accounts,
distributors and individual retailers to enhance knowledge of TWINLAB, Nature's
Herbs and Alvita products and to achieve maximum exposure for these products.

Increase Penetration of Foreign Markets. Management believes that there are
substantial opportunities for the Company to expand its presence in foreign
markets. The Company has a department, headed by a senior sales professional,
dedicated to increasing sales in such markets. The Company's foreign marketing
effort is primarily focused on establishing additional relationships with
leading overseas distributor organizations as a cost-effective method of
increasing international sales. The Company presently has distribution
agreements covering over 45 foreign countries and has agreements for another
seven countries currently in negotiation. In 1995, the Company had net sales of
$8.3 million to foreign markets.

Supplement Internal Growth Through Strategic Acquisitions. As the nutritional
supplement industry is highly fragmented with many companies producing only a
single product line or single product, the Company believes that it is
strategically positioned to participate in the consolidation of the industry
due to its established brand name, broad distribution capabilities and proven
ability to generate sales of its products through successful marketing
programs. Since 1989 the Company has acquired two businesses, Natur-Pharma Inc.
(Nature's Herbs) and Alvita Products, Inc. (Alvita), and in each case has
embarked on successful expansion programs which resulted in substantially
higher sales and income from operations for the acquired companies. Net sales
for Natur-Pharma Inc. increased from $5.2 million in 1990 (the first full year
after its acquisition) to $17.9 million in 1995, and net sales for Alvita
Products, Inc. increased from $1.7 million in 1992 (the first full year after
its acquisition) to $5.6 million in 1995. The Company regularly evaluates
acquisition opportunities, including product line acquisitions, that complement
its existing products or are compatible with its business philosophy and
strategic goals.

6
<PAGE>

THE ACQUISITION

The Stockholders, Holding, Natur-Pharma Inc. and Green Equity Investors II,
L.P. ("GEI") entered into a Stock Purchase and Sale Agreement, dated as of
March 5, 1996 (the "Acquisition Agreement"), pursuant to which, among other
things, on May 7, 1996 (i) GEI acquired 48% of the Common Stock of Holding for
aggregate consideration of $4.8 million and shares of non-voting junior
redeemable preferred stock of Holding (the "Junior Preferred Stock") for
aggregate consideration of $37.0 million, (ii) certain other investors acquired
7% of the Common Stock of Holding for aggregate consideration of $0.7 million
and shares of non-voting senior redeemable preferred stock of Holding (the
"Senior Preferred Stock," and, together with the Junior Preferred Stock, the
"Preferred Stock") for aggregate consideration of $30.0 million, (iii) the
Continuing Stockholders exchanged certain of their shares of common stock of
Natur-Pharma Inc. for 45% of the outstanding shares of Common Stock of Holding,
valued at $4.5 million, (iv) Holding purchased all of the remaining shares of
common stock of Natur-Pharma Inc. from the Stockholders for cash, resulting in
Natur-Pharma Inc. becoming a wholly owned subsidiary of Holding, (v) Twin
Laboratories Inc., Alvita Products, Inc., Twinlab Export Corp., Twinlab
Specialty Corporation and B. Bros. Realty Corporation merged into Natur-Pharma
Inc. (the "Natur-Pharma Merger"); and Advanced Research Press, Inc. merged with
Natur-Pharma II Inc., a wholly owned subsidiary of Natur-Pharma Inc. (the
surviving entity in such merger is referred to herein as "ARP"), and (vi) in
connection with such mergers the Stockholders received cash in consideration
for all of their shares of capital stock of Twin Laboratories Inc., Alvita
Products, Inc., Twinlab Export Corp., Twinlab Specialty Corporation, B. Bros.
Realty Corporation and Advanced Research Press, Inc. The total cash
consideration that the Stockholders received was approximately $212.5 million,
the majority of which was paid to David and Jean Blechman. Of the total cash
consideration to the Stockholders, approximately $15 million represented
consideration for the Non-Competition Agreements (as defined herein). See
"Management--Employment Agreements." The transactions described above are
hereinafter referred to as the "Acquisition." Concurrently with the
consummation of the Acquisition, the Company entered into the New Credit
Facility (which provides for a term facility in the amount of $53.0 million and
a revolving credit facility in the amount of $15.0 million) (the "New Credit
Facility") and issued $100.0 million principal amount of 10 1/4% Senior
Subordinated Notes due 2006 (the "Note Offering; and collectively with the
Acquisition and the New Credit Facility, the "Transactions"), the net cash
proceeds of the Note Offering were used, together with borrowings under the New
Credit Facility, the proceeds from the issuance of the Common Stock and
Preferred Stock of Holding and available cash of the Company, to finance the
Acquisition, to refinance approximately $7.9 million aggregate principal amount
of debt of the Company and to pay related fees and expenses. See "Description
of Certain Indebtedness" and "Description of Capital Stock." In connection with
the Acquisition, Natur-Pharma Inc.'s name was changed to Twin Laboratories Inc.

7
<PAGE>

THE OFFERINGS

Common Stock offered by
the Company

U.S. Offering........... shares

International........... shares

Common Stock to be
outstanding after the
Offerings.............. shares

Use of Proceeds ........
The net proceeds of the Offerings will be used to
redeem all of the outstanding shares of Senior
Preferred Stock and all of the outstanding shares of
Junior Preferred Stock, which together have an
aggregate liquidation preference of $67.0 million
(plus accrued and unpaid dividends thereon) and to
prepay in full the $50.0 million of outstanding
indebtedness under the term loan facility contained
in the New Credit Facility, plus accrued and unpaid
interest thereon. Subsequent to the Transactions, the
Company repaid approximately $3.0 million of
outstanding indebtedness under the term loan facility
contained in the New Credit Facility. The balance of
the net proceeds of the Offerings will be used for
general corporate purposes. See "Use of Proceeds."

Proposed New York Stock
Exchange symbol........

8
<PAGE>

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The summary information below presents historical consolidated financial data
and unaudited pro forma condensed consolidated financial data for the periods
indicated which have been derived from audited and unaudited financial
statements of the Company. The results for the interim periods are not
necessarily indicative of the results for the full fiscal year. The summary
unaudited pro forma condensed consolidated operating data for the year ended
December 31, 1995, the three months ended March 31, 1995 and 1996 and the
latest twelve months ("LTM") ended March 31, 1996 give effect to (i) the Note
Offering and the New Credit Facility and the application of the net proceeds
therefrom, (ii) the Acquisition (including the Company's conversion of tax
status from an "S" corporation to a "C" corporation and other tax consequences
related to the Acquisition) and related transactions, and (iii) the Offerings
and the application of the net proceeds therefrom, as if each of the
Transactions and the Offering had been consummated as of January 1, 1995. The
pro forma balance sheet data give effect to the Transactions and the Offerings
as if each of the Transactions and the Offerings had been consummated on March
31, 1996. See "Unaudited Pro Forma Condensed Consolidated Financial Data" and
the notes thereto. The pro forma financial data set forth below may not
necessarily be indicative of the results that would have been achieved had the
Transactions and the Offerings been consummated as of the dates indicated or
that may be achieved in the future. The summary historical and pro forma
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Selected
Historical Financial Data" and the Consolidated Financial Statements of the
Company and the notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
OPERATING DATA:
Net sales.............. $70,165 $83,014 $99,897 $117,342 $148,735 $36,128 $43,984
Gross profit........... 25,501 31,800 37,766 47,095 58,803 13,970 17,622
Operating expenses..... 14,570 17,463 21,125 23,022 27,191 7,501 7,299
Income from operations. 10,931 14,337 16,641 24,073 31,612 6,469 10,323
Net income............. 10,162 13,435 16,676 21,693 30,224 6,338 9,779
PRO FORMA:(A)
Historical income be-
fore provision for in-
come taxes............ $10,331 $14,010 $16,906 $ 21,938 $ 30,464 $ 6,388 $ 9,865
Pro forma provision for
income taxes.......... 4,017 5,436 6,644 9,087 12,060 2,529 3,906
------- ------- ------- -------- -------- ------- -------
Pro forma net income... $ 6,314 $ 8,574 $10,262 $ 12,851 $ 18,404 $ 3,859 $ 5,959
======= ======= ======= ======== ======== ======= =======
Pro forma net income
per share............. $ 14.75 $ 19.40 $ 22.80 $ 28.56 $ 40.90 $ 8.58 $ 13.24
======= ======= ======= ======== ======== ======= =======
Weighted average shares
outstanding........... 428 442 450 450 450 450 450
======= ======= ======= ======== ======== ======= =======
OTHER DATA:
Capital expenditures... $ 1,472 $ 1,304 $ 4,904 $ 1,786 $ 2,641 $ 489 $ 224
Net sales growth....... 17.4% 18.3% 20.3% 17.5% 26.8% -- 21.7%
Net income growth...... 24.9 32.2 24.1 30.1 39.3 -- 54.3
Income from operations
margin(b)............. 15.6 17.3 16.7 20.5 21.3 17.9% 23.5
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
YEAR ENDED --------------- LTM ENDED
DECEMBER 31, 1995 1995 1996 MARCH 31, 1996
----------------- ------- ------- --------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
PRO FORMA DATA:
Net sales.................... $148,735 $36,128 $43,984 $156,591
Income from operations....... 31,212 6,369 10,223 35,066
Net income................... 12,082 2,146 4,472 14,408
Net income per share.........
Weighted average shares
outstanding.................
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
------------------------------------
PRO FORMA
FOR THE
PRO FORMA TRANSACTIONS
FOR THE AND THE
HISTORICAL TRANSACTIONS OFFERINGS
---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents and marketable
securities.............................. $15,273 $ 4,429 $ 4,629
Net working capital (excluding cash and
cash equivalents, marketable securities
and current debt) ...................... 39,236 42,703 42,703
Total assets............................. 85,151 140,626 137,729
Total debt (including current debt)...... 8,673 153,773 100,773
Shareholders' equity (deficit)........... 62,456 (95,733) 21,370
</TABLE>
- -------
(a) The Company consisted of S corporations and, accordingly, federal and state
taxes were generally paid at the shareholder level only. Upon consummation of
the Transactions, the Company eliminated its S corporation status and,
accordingly, became subject to federal and state income taxes.
(b) Income from operations margin equals income from operations as a percentage
of net sales.

9
<PAGE>

RISK FACTORS

Prospective purchasers of the Common Stock should carefully consider the
following risk factors, as well as the other information contained, and
incorporated by reference, in this Prospectus before making an investment in
the Common Stock. Information contained or incorporated by reference in this
Prospectus contains "forward-looking statements" which can be identified by
the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "should" or "anticipates" or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy. See, e.g.,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Prospectus Summary--Business Strategy," and "Business--Business
Strategy." No assurance can be given that the future results covered by the
forward-looking statements will be achieved. The following matters constitute
cautionary statements identifying important factors with respect to such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to vary materially from the future results covered
in such forward-looking statements. Other factors could also cause actual
results to vary materially from the future results covered in such forward-
looking statements.

DEPENDENCE ON KEY PERSONNEL

The Company believes that its continued success depends to a significant
extent on the management and other skills of Brian Blechman, Dean Blechman,
Neil Blechman, Ross Blechman and Steve Blechman (the "Blechman Brothers"), as
well as its ability to retain other key employees and to attract skilled
personnel in the future to manage the growth of the Company. The loss or
unavailability of the services of one or more of the Blechman Brothers could
have a material adverse effect on the Company. The Company has entered into
long-term employment agreements with each of the Blechman Brothers and upon
completion of the Offerings each of the Blechman Brothers will own
approximately % of the outstanding Common Stock. See "Management" and
"Prospectus Summary--The Acquisition."

LEGAL MATTERS

The Company, like other retailers, distributors and manufacturers of
products that are ingested, faces an inherent risk of exposure to product
liability claims in the event that the use of its products results in injury.
The Company currently has $75 million of product liability insurance (which
does not cover matters relating to L-Tryptophan) with a $25,000 self-insurance
retention per occurrence and $100,000 self-insurance retention in the
aggregate. However, there can be no assurance that such insurance will
continue to be available at a reasonable cost or if available will be adequate
to cover liabilities.

Twin Laboratories Inc. and other encapsulators, and various manufacturers,
distributors, suppliers, importers and retailers of manufactured L-Tryptophan
or products containing manufactured L-Tryptophan are or were defendants in
various legal actions brought in federal and state courts seeking compensatory
and, in some cases, punitive damages for alleged personal injuries resulting
from the ingestion of certain products containing manufactured L-Tryptophan.
As of June 1, 1996, Twin Laboratories Inc. was a named defendant in three of
these actions. Although the Company believes that few new lawsuits are likely
to be brought because of applicable statutes of limitations, the possibility
of future such actions cannot be excluded. Twin Laboratories Inc. and certain
other companies in the industry (the "Indemnified Group") have each entered
into a Defense and Indemnification Agreement with Showa Denko America, Inc.
("SDA") (the "Indemnification Agreement"), under which SDA has agreed to
assume the defense of all claims against any of the Indemnified Group arising
out of the ingestion of L-Tryptophan products and to pay all legal fees
incurred and indemnify the Company against liability in any action if it is
determined that a proximate cause of the injury sustained by the plaintiff was
a constituent of the raw material sold by SDA to Twin Laboratories Inc. or was
a factor for which SDA or any of its affiliates was responsible, except to the
extent that action by Twin Laboratories Inc. proximately contributed to the
injury, and except for certain claims relating to punitive damages. SDA
appears to have been the supplier of all of the allegedly contaminated L-
Tryptophan. SDA has posted a revolving irrevocable letter of credit for the
benefit of the Indemnified Group if SDA is unable or unwilling to satisfy any
claims or judgments. Showa Denko, K.K. ("SDK"), the Japanese parent of SDA and
manufacturer of the relevant L-Tryptophan, has unconditionally guaranteed the
payment obligations of SDA under the Indemnification Agreement. As of June 1,
1996, 129 lawsuits in which the Company was a named defendant had been
dismissed or settled by SDA at no cost to the Company.

10
<PAGE>

The total of all damages alleged in the L-Tryptophan actions, if fully
awarded against the Company alone and ignoring the existence of the
Indemnification Agreement, would exceed the Company's available product
liability insurance coverage of $3 million for L-Tryptophan matters in respect
of claims made prior to December 31, 1993, and would have a material adverse
effect on the Company's results of operations and financial condition.
However, the Indemnification Agreement, the defense and resolution to date of
numerous lawsuits by SDA without cost to the Company, the multitude of
defendants and the possibility that liability could be assessed against or
paid by other parties or by insurance carriers have led management of the
Company, after consultation with outside legal counsel, to believe that the
prospect for a material adverse effect on the Company's results of operations
or financial condition is remote and no provision in the Company's financial
statements has been made for any loss that may result from these actions.

The Company and others are defendants in a wrongful death action originally
commenced in July 1995 with respect to one of the Company's products
containing Ma Huang and with respect to a product that does not contain Ma
Huang manufactured by another defendant. See "--Government Regulation" and
"Business--Regulatory Matters."

The Company is presently engaged in various other legal actions, and,
although ultimate liability cannot be determined at the present time, the
Company is currently of the opinion that the amount of any such liability from
these other actions and the lawsuit described in the preceding paragraph,
after taking into consideration the Company's insurance coverage, will not
have a material adverse effect on its results of operations and financial
condition.

GOVERNMENT REGULATION

The manufacturing, processing, formulating, packaging, labeling and
advertising of the Company's products are subject to regulation by one or more
federal agencies, including the United States Food and Drug Administration
(the "FDA"), the Federal Trade Commission (the "FTC"), the Consumer Product
Safety Commission (the "CPSC"), the United States Department of Agriculture
(the "USDA") and the Environmental Protection Agency (the "EPA"). The
Company's activities are also regulated by various agencies of the states,
localities and foreign countries to which the Company distributes its products
and in which the Company's products are sold.

On October 25, 1994, the President signed into law the Dietary Supplement
Health and Education Act of 1994 ("DSHEA"). This new law revises the
provisions of the Federal Food, Drug, and Cosmetic Act ("FFDC Act") concerning
the composition and labeling of dietary supplements and, in the judgment of
the Company, is favorable to the dietary supplement industry. The legislation
creates a new statutory class of "dietary supplements." This new class
includes vitamins, minerals, herbs, amino acids and other dietary substances
for human use to supplement the diet, and the legislation grandfathers, with
certain limitations, dietary ingredients on the market before October 15,
1994. A dietary supplement which contains a new dietary ingredient, one not on
the market before October 15, 1994, will require evidence of a history of use
or other evidence of safety establishing that it will reasonably be expected
to be safe, such evidence to be provided by the manufacturer or distributor to
the FDA before it may be marketed. The DSHEA also invalidates the FDA's prior
enforcement theory that dietary supplements are food additives requiring pre-
market approval.

The Nutrition Labeling and Education Act of 1990 ("NLEA") prohibits the use
of any health claim for foods, including dietary supplements, unless the
health claim is supported by significant scientific agreement and is pre-
approved by the FDA. To date, the FDA has approved the use of health claims
for dietary supplements only in connection with calcium for osteoporosis, and
folic acid for neural tube defects. However, among other things, the DSHEA
amends, for dietary supplements, the NLEA by providing that "statements of
nutritional support" may be used in labeling for dietary supplements without
FDA pre-approval if certain requirements, including prominent disclosure on
the label of the lack of FDA review of the relevant statement, possession by
the marketer of substantiating evidence for the statement and post-use
notification to the FDA are met. Such statements may describe how particular
nutritional supplements affect the structure, function or general well-being
of the body (e.g. "promotes your cardiovascular health").

11
<PAGE>

In December 1995, the FDA issued proposed regulations to govern the labeling
of dietary supplements. These regulations, which are subject to revision in
response to comments from interested parties, are expected to become final
later in 1996 and would require the Company to revise the labels for all of
its dietary supplement products before 1997. The FDA has proposed, subject to
its receipt of comments from the public, to withhold enforcement of the
relabeling regulations until January 1, 1998.

In 1989, Twin Laboratories Inc. received an informal inquiry from the New
York Regional Office of the FTC seeking substantiation for certain advertising
claims made for a segment of its "Fuel" bodybuilding/sports nutrition lines of
products. In response, Twin Laboratories Inc. submitted scientific
substantiation and financial information to the FTC. The Company is currently
negotiating this matter with the FTC and has received from the FTC a revised
proposed Complaint and Consent Decree (the "Decree") seeking, among other
things, injunctive relief restricting certain muscle building, fat loss and
other marketing claims in connection with the sale of the Company's weight
control, bodybuilding and sports nutrition products. In addition, the Decree
seeks payment of $200,000. The Company believes that it has adequate
scientific substantiation for the claims at issue and intends to vigorously
defend the matter if a settlement is not reached. There can be no assurance
that the injunctive provisions of any eventual resolution of this matter will
not have a material adverse effect on the Company or that any eventual
monetary payment will be limited to the amount sought in the Decree.

Certain of the Company's products include a Chinese herb known as "Ma
Huang," which contains naturally-occurring ephedrine. Ma Huang has been the
subject of certain adverse publicity in the United States and other countries
relating to alleged harmful effects, including the deaths of several
individuals. To the Company's knowledge, a number of states and local
governmental entities have instituted bans on sales of Ma Huang-containing
products that are portrayed as apparent alternatives to illegal street drugs.
There are also proposals in other states and local jurisdictions to broaden
the regulation of, or otherwise limit or prohibit, the sale of products
containing ephedrine. Ma Huang is also subject to laws or regulation in
certain states and foreign jurisdictions which limit ephedrine levels and
require appropriate warnings on product labels or which prohibit the sales of
products which contain Ma Huang other than by licensed pharmacists. On April
10, 1996, the FDA issued a statement warning consumers not to purchase or
consume dietary supplements containing ephedrine with labels that portray the
products as apparent alternatives to illegal street drugs because these
products pose significant health risks to consumers. None of the Company's
products which contain Ma Huang are marketed for such purpose. The FDA,
through a National Food Advisory Committee, is currently considering whether
the FDA should prohibit, limit potencies or place other restrictions on the
sale of products containing Ma Huang. There can be no assurance that the FDA
will not seek to impose additional regulations on products which contain Ma
Huang, including those marketed by the Company.

There is a risk that the Company's products containing Ma Huang may become
subject to further federal, state, local or foreign laws or regulation, which
could require the Company to: (i) reformulate its products with reduced
ephedrine levels or with a substitute for Ma Huang and/or (ii) relabel its
products with different warnings or revised directions for use. Even in the
absence of further laws or regulation, the Company may elect to reformulate
and/or relabel its products which contain Ma Huang. While the Company believes
that its Ma Huang products could be reformulated and relabeled, there can be
no assurance in that regard or that reformulation and/or relabeling would not
have an adverse effect on sales of such products. The Company and others are
defendants in a wrongful death action originally commenced in July 1995 with
respect to one of the Company's products containing Ma Huang and with respect
to a product that does not contain Ma Huang manufactured by another defendant.
There can be no assurance that the Company will not be subject to further
private civil actions with respect to its products which contain Ma Huang.

Governmental regulations in foreign countries where the Company plans to
commence or expand sales may prevent or delay entry into the market or prevent
or delay the introduction, or require the reformulation, of certain of the
Company's products. Compliance with such foreign governmental regulations is
generally the responsibility of the Company's distributors for those
countries. These distributors are independent contractors over whom the
Company has limited control.

12
<PAGE>

reformulation of certain products to meet new standards, the recall or
discontinuance of certain products not able to be reformulated, additional
recordkeeping, expanded documentation of the properties of certain products,
expanded or different labeling and/or scientific substantiation. Any or all of
such requirements could have a material adverse effect on the Company's
results of operations and financial condition.

LEVERAGE

The Company is highly leveraged. On a pro forma basis after giving effect to
the Transactions and the Offerings, as of March 31, 1996, the Company would
have had (i) approximately $100.8 million of outstanding debt and (ii)
shareholders' equity of $21.4 million. See "Capitalization." This leverage,
together with restrictions in the New Credit Facility and the Indenture (as
defined herein), may limit the Company's ability to obtain additional debt
financing in the future and to respond to changing business and economic
conditions and could adversely affect its ability to effect its business
strategies. See "Description of Certain Indebtedness." Required payments of
principal and interest on the Company's long-term debt are expected to be
financed from operating cash flow, thus limiting the availability of such cash
flow for other corporate purposes. The Company's ability to generate
sufficient cash to meet its obligations is subject to many factors, certain of
which are beyond its control, including economic conditions, regulatory
factors and competition. While the Company believes that, based on current
levels of operations and anticipated growth, its cash flow from operations,
together with other sources of liquidity, will be adequate to meet its
obligations, there can be no assurance that its actual cash flow will in fact
be sufficient to service its debt. The Company's ability to grow is dependent
on prevailing economic conditions and financial, business and other factors
beyond its control. In the event the Company's operating cash flow and working
capital are not sufficient to fund the Company's expenditures or to service
its debt, the Company would be required to raise additional funds through
capital contributions, the refinancing of all or part of its debt or the sale
of assets. There can be no assurance that any of these sources of funds would
be available in amounts sufficient for the Company to meet its obligations.

RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS

The Indenture and the New Credit Facility impose upon the Company certain
financial and operating covenants, including, among others, requirements that
the Company maintain certain financial ratios and satisfy certain financial
tests, limitations on capital expenditures and restrictions on the ability of
the Company to incur debt, pay dividends or take certain other corporate
actions, all of which may restrict the Company's ability to expand or to
pursue its business strategies. Changes in economic or business conditions,
results of operations or other factors could in the future cause a violation
of one or more covenants in the Company's debt instruments. See "Description
of Certain Indebtedness."

COMPETITION

The business of developing, manufacturing and selling vitamins, minerals,
sports nutrition products and other nutritional supplements is highly
competitive. Certain of the Company's competitors are substantially larger and
have greater financial resources than the Company. See "Business--
Competition."

ABSENCE OF CLINICAL STUDIES AND SCIENTIFIC REVIEW; EFFECT OF PUBLICITY

The Company generally does not conduct or sponsor clinical studies on its
products. The Company's products consist of vitamins, minerals, herbs and
other ingredients that the Company regards as safe when taken as suggested by
the Company. However, because the Company is highly dependent upon consumers'
perception of the safety and quality of its products as well as similar
products distributed by other companies (which may not adhere to the same
quality standards as the Company), the Company could be adversely affected in
the event any of the Company's products or any similar products distributed by
other companies should prove or be asserted to be harmful to consumers. In
addition, because of the Company's dependence upon consumer perceptions,
adverse publicity associated with illness or other adverse effects resulting
from consumers' failure to consume the Company's products as suggested by the
Company or other misuse or abuse of the Company's products or any similar
products distributed by other companies could have a material adverse effect
on the Company's results of operations and financial condition.

13
<PAGE>

Furthermore, the Company believes the recent growth experienced by the
nutritional supplement market is based in part on national media attention
regarding recent scientific research suggesting potential health benefits from
regular consumption of certain vitamins and other nutritional products. Such
research has been described in major medical journals, magazines, newspapers
and television programs. The scientific research to date is preliminary, and
there can be no assurance of future favorable scientific results and media
attention or of the absence of unfavorable or inconsistent findings.

DEPENDENCE ON DISTRIBUTORS AND SIGNIFICANT CUSTOMER

The Company's success depends in part upon its ability to attract, retain
and motivate a large base of distributors, and its ability to maintain a
satisfactory relationship with GNC. Tree of Life, the Company's largest
distributor, and GNC accounted for approximately 28% and 22%, respectively, of
the Company's net sales in 1995. The loss of Tree of Life as a distributor or
GNC as a customer, or the loss of a significant number of other distributors,
or a significant reduction in purchase volume by Tree of Life, GNC or such
other distributors, for any reason, would have a material adverse effect on
the Company's results of operations and financial condition. See "Business--
Sales and Distribution."

AVAILABILITY OF RAW MATERIALS

Substantially all of the Company's herbal supplements and herb teas contain
ingredients that are harvested by and obtained from third-party suppliers, and
many of those ingredients are harvested internationally and only once per year
or on a seasonal basis. An unexpected interruption of supply, such as a
harvest failure, could cause the Company's results of operations derived from
such products to be adversely affected. Although the Company has generally
been able to raise its prices in response to significant increases in the cost
of such ingredients, the Company has not always in the past been, and may not
in the future always be, able to raise prices quickly enough to offset the
effects of such increased raw material costs.

INTELLECTUAL PROPERTY PROTECTION

The Company's trademarks are valuable assets which are very important to the
marketing of its products. The Company's policy is to pursue registrations for
all of the trademarks associated with its key products. The Company has
approximately 250 trademark registrations with the United States Patent and
Trademark Office. The Company relies on common law trademark rights to protect
its unregistered trademarks. Common law trademark rights do not provide the
Company with the same level of protection as would U.S. federal registered
trademarks. In addition, common law trademark rights extend only to the
geographic area in which the trademark is actually used, while U.S. federal
registration prohibits the use of the trademark by any third party anywhere in
the United States.

CONTROL BY PRINCIPAL STOCKHOLDERS

Upon completion of the Offerings, GEI will own % and the Continuing
Stockholders will own %, of the Common Stock of Holding. As a result, GEI and
the Continuing Stockholders will have significant influence over all matters
requiring approval by the Company's stockholders without the approval of
minority stockholders. In addition, if they choose to act together, GEI and
the Continuing Stockholders will be able to elect all of the members of the
Board of Directors of the Company, thereby significantly controlling the
affairs and management of the Company. Such control could adversely affect the
market price of the Common Stock or delay or prevent a change in control of
the Company. See "Principal Stockholders."

ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offerings, there has been no public market for the Common
Stock. Consequently, the initial public offering price per share of the Common
Stock has been determined by negotiations among management of the Company and
the representative of the Underwriters (the "Representative"). See
"Underwriting" for factors considered in determining the initial public
offering price per share. There can be no assurance that an active trading
market will develop and be sustained subsequent to the Offerings. The Common
Stock may be subject to wide fluctuations in price in response to variations
in quarterly operating results and other factors, including acquisitions and
general economic or market conditions. In addition, broad market trading and

14
<PAGE>

valuation fluctuations have adversely affected the valuation of industry
participants and may adversely affect the market price of the Common Stock.
See "Underwriting."

IMMEDIATE AND SUBSTANTIAL DILUTION

The initial public offering price per share of Common Stock is substantially
higher than the net tangible book value per share of the Common Stock.
Purchasers of shares of Common Stock in the Offerings will experience
immediate and substantial dilution of $ in the pro forma net tangible book
value per share of Common Stock (based on an assumed initial public offering
price of $ per share, the mid-point of the range shown on the cover page of
this Prospectus.) See "Dilution."

SHARES ELIGIBLE FOR FUTURE SALE

Immediately after completion of the Offerings, Holding will have shares
of Common Stock outstanding, of which the shares sold pursuant to the
Offerings will be freely tradeable without restriction or further registration
under the Securities Act of 1933, as amended (the "Securities Act"), except
those shares acquired by "affiliates" of the Company as that term is defined
under the Securities Act. Holders of the remaining shares will be eligible to
sell such shares pursuant to Rule 144 ("Rule 144") under the Securities Act at
prescribed times and subject to the manner of sale, volume, notice and
information restrictions of Rule 144. The Company has granted certain
institutional investors and their transferees, GEI and the Continuing
Stockholders certain demand and piggyback registration rights covering an
aggregate of shares of Common Stock. The Company, its officers, directors
and certain other stockholders who collectively are the beneficial holders of
an aggregate of shares of Common Stock, have agreed with the Underwriters
not to directly or indirectly, offer, sell, contract to sell, grant any option
to purchase or otherwise dispose of, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), any Common Stock,
or any securities convertible into or exchangeable or exercisable for, or
warrants, options or rights to purchase or acquire Common Stock or in any
other manner transfer all or a portion of the economic consequences associated
with the ownership of any Common Stock, or enter into any agreement to do any
of the foregoing, for a period of 180 days after the date of this Prospectus.
Upon the expiration of such 180 day period, such holders will in general be
entitled to dispose of their shares, although the shares of Common Stock held
by affiliates of the Company will continue to be subject to the restrictions
of Rule 144 under the Securities Act. Sales of substantial amounts of such
shares in the public market or the perception that such sales could occur
could adversely affect the market price of the shares of Common Stock and the
Company's ability to raise additional capital at a price favorable to the
Company. See "Shares Eligible for Future Sale" and "Underwriting."

ANTI-TAKEOVER PROVISIONS

Holding's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") and By-laws, as well as Delaware corporate
law, contain certain provisions that could have the effect of making it more
difficult for a third party to acquire, or discouraging a third party from
attempting to acquire, control of the Company. These provisions could limit
the price that certain investors might be willing to pay in the future for
shares of Common Stock. Certain of these provisions impose various procedural
and other requirements, including advance notice and other provisions, that
could make it more difficult for stockholders to effect certain corporate
actions. Furthermore, certain provisions of the New Credit Facility and the
Indenture provide for the acceleration of the indebtedness evidenced thereby
upon the occurrence of certain change in control events (as defined in such
debt instruments), which provisions could also tend to prevent or discourage
the acquisition of the Company by a third party.

HOLDING COMPANY STRUCTURE; RESTRICTIONS ON DIVIDENDS

Holding conducts its business through its direct and indirect subsidiaries
and has no operations of its own. The principal assets of Holding are the
capital stock of Twin Laboratories Inc. and ARP. Accordingly, Holding has no
independent means of generating revenues. As a holding company, Holding's
internal sources of funds to meet its cash needs, including payment of
expenses, are dividends and other permitted payments from its direct and
indirect subsidiaries. Financing arrangements to which Twin Laboratories Inc.
is the borrower restrict the payment of dividends and the making of loans,
advances or other distributions to Holding except in certain limited
circumstances. See "Dividend Policy" and "Description of Certain
Indebtedness."

15
<PAGE>

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the
shares of Common Stock offered hereby are estimated to be approximately $
million, assuming an initial public offering price of $ per share and after
deducting the estimated underwriting discounts and commissions and offering
expenses payable by the Company. Approximately $ million of such net
proceeds will be used to redeem all of the outstanding shares of Senior
Preferred Stock and all of the outstanding shares of Junior Preferred Stock
having an aggregate liquidation preference of $67.0 million, plus accrued and
unpaid dividends thereon. Approximately $50.0 million of such net proceeds
will be used to repay in full the Company's outstanding indebtedness under the
term loan facility contained in the New Credit Facility plus accrued and
unpaid interest thereon. Subsequent to the Transactions, the Company repaid
approximately $3.0 million of outstanding indebtedness under the term loan
facility contained in the New Credit Facility. The term loan facility
generally bears interest at alternative rates ranging from 2.5% over LIBOR to
1.25% over the ABR (as defined herein) and matures on May 7, 2002. The
borrowings under the term loan facility were used to effect the Acquisition.
The balance of the net proceeds of the Offerings will be used for general
corporate purposes. Affiliates of DLJ own $7.5 million in aggregate
liquidation preference of the Senior Preferred Stock and will receive
approximately $7.5 million of the net proceeds of the Offering in connection
with the redemption of such shares. See "Use of Proceeds." See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources," "Description of Certain Indebtedness" and
"Description of Capital Stock."

DIVIDEND POLICY

From 1993 until the consummation of the Acquisition, the Company consisted
solely of "S" corporations. While maintaining such status, the Company
periodically declared and paid dividends to its shareholders in amounts
sufficient for its shareholders to pay their income taxes on the earnings of
the Company that were treated as having been earned by the Company's
shareholders. The Company terminated its "S" corporation status in connection
with the consummation of the Acquisition.

The Company currently intends to retain earnings to finance its operations
and future growth and does not anticipate paying any cash dividends in the
foreseeable future. Holding conducts its business through its direct and
indirect subsidiaries and has no operations of its own. The principal assets
of Holding are the capital stock of Twin Laboratories Inc. and ARP.
Accordingly, Holding has no independent means of generating revenues. As a
holding company, Holding's internal sources of funds to meet its cash needs,
including payment of expenses, are dividends and other permitted payments from
its direct and indirect subsidiaries. Financing arrangements to which Twin
Laboratories Inc. is the borrower restrict the payment of dividends and the
making of loans, advances or other distributions to Holding except in certain
limited circumstances. See "Description of Certain Indebtedness." The payment
of cash dividends in the future will depend upon, among other things, the
Company's results of operations, financial condition, cash requirements and
other factors deemed relevant by the Company's Board of Directors.

16
<PAGE>

DILUTION

After giving effect to the consummation of the Transactions, as of March 31,
1996, Holding's pro forma deficit in net tangible book value was $ or
$ per share. Pro forma net tangible book value per share represents the
amount of Holding's total pro forma tangible assets less Holding's pro forma
total liabilities and pro forma preferred stock, divided by the pro forma
number of shares of Common Stock outstanding. Without taking into account any
other changes in pro forma net tangible book value after March 31, 1996, other
than to give effect to the sale of shares of Common Stock offered by the
Company at an assumed initial public offering price of $ per share (the
assumed mid-point of the range shown on the cover page of this Prospectus), the
receipt of the proceeds therefrom after deducting underwriting discounts and
commissions and the estimated expenses of the Offerings, the adjusted pro forma
net tangible book value of Holding on March 31, 1996 would have been $ or
$ per share. This amount represents an immediate increase in pro forma net
tangible book value of approximately $ per share to the existing
stockholders and an immediate dilution of $ per share to purchasers of the
Common Stock. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share.............................. $
Pro forma deficit in net tangible book value per share after giving
effect to the consummation of the Transactions as of March 31,
1996.............................................................. $
Increase in pro forma net tangible book value per share
attributable to new investors.....................................
---
Adjusted pro forma net tangible book value per share after giving
effect to the consummation of the Transactions and the Offerings....
----
Dilution in net tangible book value per share to new investors(a).... $
====
</TABLE>
(a) If the Underwriters' over-allotment option is exercised in full, the pro
forma net tangible book value per share will be $ , resulting in dilution to
new investors in the Offerings of $ per share. See "Underwriting."

17
<PAGE>

The following table summarizes, on a pro forma basis as of March 31, 1996,
after giving effect to the consummation of the Transactions, the number of
shares of capital stock purchased from the Company and the total consideration
paid and the average price paid per share by existing stockholders and new
investors at the assumed initial public offering price of $ per share.

<TABLE>
<CAPTION>
SHARES TOTAL
PURCHASED CONSIDERATION AVERAGE
-------------- -------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders...................
New investors...........................
---- --- ---- --- ---
Total.................................
==== === ==== === ===
</TABLE>

CAPITALIZATION

The following table sets forth (i) the actual capitalization of the Company
as of March 31, 1996, (ii) the pro forma capitalization of the Company as of
March 31, 1996 after giving effect to the consummation of the Transactions,
and (iii) the pro forma capitalization of the Company as of March 31, 1996 as
further adjusted to reflect the Offerings and the application of the net
proceeds therefrom at an assumed initial public offering price of $ per
share. The capitalization of the Company should be read in conjunction with
the Company's Consolidated Financial Statements and the notes thereto and the
"Unaudited Pro Forma Condensed Consolidated Financial Data" included elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
---------------------------------
PRO FORMA
FOR THE
PRO FORMA TRANSACTIONS
FOR THE AND THE
ACTUAL TRANSACTIONS OFFERINGS
------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents and marketable se- $15,273 $ 4,429 $ 4,629
curities.................................... ======= ========= =========
Long-term debt (including current portion)
New Credit Facility........................ $ -- $ 53,000 $ --
Notes...................................... -- 100,000 100,000
Existing debt.............................. 8,267 367 367
Capital lease obligations.................. 406 406 406
------- --------- ---------
Total long-term debt..................... 8,673 153,773 100,773
------- --------- ---------
Senior redeemable cumulative preferred stock. -- 30,000 --
------- --------- ---------
Junior redeemable cumulative preferred stock. -- 37,000 --
------- --------- ---------
Shareholders' equity (deficit)
Common Stock............................... 450 1,000 1,000
Additional paid-in capital................. 68 82,063 202,263
Retained earnings (deficit)................ 61,938 (178,796) (181,893)
------- --------- ---------
Total shareholders' equity (deficit)..... 62,456 (95,733) 21,370
------- --------- ---------
Total capitalization..................... $71,129 $ 125,040 $ 122,143
======= ========= =========
</TABLE>

18
<PAGE>

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA

The following unaudited pro forma financial data have been prepared by the
Company's management from the Consolidated Financial Statements of the Company
and the notes thereto included elsewhere in this Prospectus. The unaudited pro
forma condensed consolidated statements of income for the year ended December
31, 1995, the three months ended March 31, 1995 and 1996 and the latest twelve
months ended March 31, 1996 reflect adjustments as if the Transactions and the
Offerings had been consummated and were effective as of January 1, 1995. The
unaudited pro forma condensed consolidated balance sheet as of March 31, 1996
gives effect to the Transactions and the Offerings as if each had occurred on
such date. See "Prospectus Summary--The Acquisition."

The financial effects of the Transactions and the Offerings as presented in
the pro forma financial data are not necessarily indicative of either the
Company's financial position or the results of its operations which would have
been obtained had the Transactions and the Offerings actually occurred on the
dates described above, nor are they necessarily indicative of the results of
future operations. The pro forma financial data should be read in conjunction
with the notes thereto, which are an integral part thereof, and with the
Consolidated Financial Statements of the Company and the notes thereto
included elsewhere in this Prospectus.

19
<PAGE>

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME

LATEST TWELVE MONTHS ENDED MARCH 31, 1996

<TABLE>
<CAPTION>
PRO FORMA
FOR THE
ADJUSTMENTS PRO FORMA ADJUSTMENTS TRANSACTIONS
RELATED TO THE FOR THE RELATED TO THE AND THE
HISTORICAL TRANSACTIONS TRANSACTIONS OFFERINGS OFFERINGS
---------- -------------- ------------ -------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales............... $156,591 $ -- $156,591 $ -- $156,591
Cost of sales........... 94,136 -- 94,136 -- 94,136
-------- -------- -------- ------- --------
Gross profit............ 62,455 -- 62,455 -- 62,455
Operating expenses...... 26,989 400 (a) 27,389 -- 27,389
-------- -------- -------- ------- --------
Income from operations.. 35,466 (400) 35,066 -- 35,066
-------- -------- -------- ------- --------
Other (expense) income:
Interest income....... 398 (398)(b) -- -- --
Interest expense...... (922) (15,086)(c) (16,008) 4,756 (d) (11,252)
Transaction expenses.. (1,056) 1,056 (e) -- -- --
Other................. 55 -- 55 -- 55
-------- -------- -------- ------- --------
(1,525) (14,428) (15,953) 4,756 (11,197)
-------- -------- -------- ------- --------
Income before provision
for income taxes....... 33,941 (14,828) 19,113 4,756 23,869
Provision for income 276 7,300 (f) 7,576 1,885 (g) 9,461
taxes.................. -------- -------- -------- ------- --------
Net Income.............. 33,665 (22,128) 11,537 2,871 14,408
Preferred stock divi- -- (8,767)(h) (8,767) 8,767 (i) --
dends.................. -------- -------- -------- ------- --------
Net income available for $ 33,665 $(30,895) $ 2,770 $11,638 $ 14,408
common shareholders.... ======== ======== ======== ======= ========
Net income per common
share..................
========
Weighted average common
shares outstanding.....
========

YEAR ENDED DECEMBER 31, 1995

<CAPTION>
PRO FORMA
FOR THE
ADJUSTMENTS PRO FORMA ADJUSTMENTS TRANSACTIONS
RELATED TO THE FOR THE RELATED TO THE AND THE
HISTORICAL TRANSACTIONS TRANSACTIONS OFFERINGS OFFERINGS
---------- -------------- ------------ -------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales............... $148,735 $ -- $148,735 $ -- $148,735
Cost of sales........... 89,932 -- 89,932 -- 89,932
-------- -------- -------- ------- --------
Gross profit............ 58,803 -- 58,803 -- 58,803
Operating expenses...... 27,191 400 (a) 27,591 -- 27,591
-------- -------- -------- ------- --------
Income from operations.. 31,612 (400) 31,212 -- 31,212
-------- -------- -------- ------- --------
Other (expense) income:
Interest income....... 313 (313)(b) -- -- --
Interest expense...... (866) (15,144)(c) (16,010) 4,756 (d) (11,254)
Transaction expenses.. (656) 656 (e) -- -- --
Other................. 61 -- 61 -- 61
-------- -------- -------- ------- --------
(1,148) (14,801) (15,949) 4,756 (11,193)
-------- -------- -------- ------- --------
Income before provision
for income taxes....... 30,464 (15,201) 15,263 4,756 20,019
Provision for income
taxes.................. 240 5,812 (f) 6,052 1,885 (g) 7,937
-------- -------- -------- ------- --------
Net income.............. 30,224 (21,013) 9,211 2,871 12,082
Preferred stock divi- -- (8,767)(h) (8,767) 8,767 (i) --
dends.................. -------- -------- -------- ------- --------
Net income available for $ 30,224 $(29,780) $ 444 $11,638 $ 12,082
common shareholders.... ======== ======== ======== ======= ========
Net income per common
share.................. ========
Weighted average common
shares outstanding..... ========
</TABLE>

20
<PAGE>

THREE MONTHS ENDED MARCH 31, 1996

<TABLE>
<CAPTION>
PRO FORMA
FOR THE
ADJUSTMENTS PRO FORMA ADJUSTMENTS TRANSACTIONS
RELATED TO THE FOR THE RELATED TO THE AND THE
HISTORICAL TRANSACTIONS TRANSACTIONS OFFERINGS OFFERINGS
---------- -------------- ------------ -------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales............... $43,984 $ -- $43,984 $ -- $43,984
Cost of sales........... 26,362 -- 26,362 -- 26,362
------- ------- ------- ------ -------
Gross profit............ 17,622 -- 17,622 -- 17,622
Operating expenses...... 7,299 100 (a) 7,399 -- 7,399
------- ------- ------- ------ -------
Income from operations.. 10,323 (100) 10,223 -- 10,223
------- ------- ------- ------ -------
Other (expense) income:
Interest income....... 167 (167)(b) -- -- --
Interest expense...... (224) (3,778)(c) (4,002) 1,189 (d) (2,813)
Transaction expenses.. (400) 400 (e) -- -- --
Other................. (1) -- (1) -- (1)
------- ------- ------- ------ -------
(458) (3,545) (4,003) 1,189 (2,814)
------- ------- ------- ------ -------
Income before provision
for income taxes....... 9,865 (3,645) 6,220 1,189 7,409
Provision for income
taxes.................. 86 2,380 (f) 2,466 471 (g) 2,937
------- ------- ------- ------ -------
Net income.............. 9,779 (6,025) 3,754 718 4,472
Preferred stock
dividends.............. -- (2,091)(h) (2,091) 2,091 (i) --
------- ------- ------- ------ -------
Net income available for
common shareholders.... $ 9,779 $(8,116) $ 1,663 $2,809 $ 4,472
======= ======= ======= ====== =======
Net income per common
share ................. =======
Weighted average common
shares outstanding..... =======
</TABLE>

THREE MONTHS ENDED MARCH 31, 1995

<TABLE>
<CAPTION>
PRO FORMA
FOR THE
ADJUSTMENTS PRO FORMA ADJUSTMENTS TRANSACTIONS
RELATED TO THE FOR THE RELATED TO THE AND THE
HISTORICAL TRANSACTIONS TRANSACTIONS OFFERINGS OFFERINGS
---------- -------------- ------------ -------------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales............... $36,128 $ -- $36,128 $ -- $36,128
Cost of sales........... 22,158 -- 22,158 -- 22,158
------- ------- ------- ------ -------
Gross profit............ 13,970 -- 13,970 -- 13,970
Operating expenses...... 7,501 100 (a) 7,601 -- 7,601
------- ------- ------- ------ -------
Income from operations.. 6,469 (100) 6,369 -- 6,369
------- ------- ------- ------ -------
Other (expense) income:
Interest income....... 82 (82)(b) -- -- --
Interest expense...... (168) (3,836)(c) (4,004) 1,189 (d) (2,815)
Other................. 5 -- 5 -- 5
------- ------- ------- ------ -------
(81) (3,918) (3,999) 1,189 (2,810)
------- ------- ------- ------ -------
Income before provision
for income taxes....... 6,388 (4,018) 2,370 1,189 3,559
Provision for income
taxes.................. 50 892 (f) 942 471 (g) 1,413
------- ------- ------- ------ -------
Net income.............. 6,338 (4,910) 1,428 718 2,146
Preferred stock
dividends.............. -- (2,091)(h) (2,091) 2,091 (i) --
------- ------- ------- ------ -------
Net income available for
common shareholders.... $ 6,338 $(7,001) $ (663) $2,809 $ 2,146
======= ======= ======= ====== =======
Net income per common
share..................
=======
Weighted average common
shares outstanding.....
=======
</TABLE>

21
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF INCOME

(a) Represents the LGP Management Fee (as defined herein). See "Certain
Relationships and Related Transactions--Transactions with LGP."

(b) Represents a reduction in interest income on cash and cash equivalents.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH
YEAR ENDED 31, LTM ENDED
DECEMBER 31, -------------- MARCH 31,
1995 1995 1996 1996
------------ ------ ------ ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest expense on the Notes
and the New Credit Facility at
a composite interest rate of
9.5%, including revolving
credit commitment and
administration fees............ $14,676 $3,669 $3,669 $14,676
Interest expense on refinanced
debt........................... (807) (152) (210) (865)
------- ------ ------ -------
13,869 3,517 3,459 13,811
Amortization of deferred
financing costs................ 1,275 319 319 1,275
------- ------ ------ -------
Interest expense adjustment..... $15,144 $3,836 $3,778 $15,086
======= ====== ====== =======
</TABLE>

(d) The interest expense adjustment relating to the Offerings is as follows:

<TABLE>
<CAPTION>
THREE MONTHS LTM
YEAR ENDED ENDED MARCH 31, ENDED
DECEMBER 31, --------------- MARCH 31,
1995 1995 1996 1996
------------ ------- ------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest expense relating to
$53,000 of New Credit Facility
repaid........................... $4,240 $ 1,060 $ 1,060 $4,240
Amortization of deferred financing
costs relating to $53,000 of New
Credit Facility repaid........... 516 129 129 516
------ ------- ------- ------
Interest expense adjustment....... $4,756 $ 1,189 $ 1,189 $4,756
====== ======= ======= ======
</TABLE>

(e) Represents a reduction in nonrecurring expenses incurred which are
directly attributable to the Transactions.

(f) Reflects (i) the net increase in the provision for income taxes assuming
the Company was a "C" corporation, and (ii) the increase in net expenses
described in notes a, b, c and e above.

(g) Represents an increase in the provision for income taxes as a result of
the decrease in interest expense described in note (d).

(h) Represents dividends paid on the Preferred Stock.

(i) Represents the elimination of the dividends paid on the Preferred Stock
due to the redemption of the Preferred Stock in connection with the
Offerings.

22
<PAGE>

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DATA

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
----------------------------------------------------------
PRO FORMA
ADJUSTMENTS ADJUSTMENTS FOR THE
RELATING TO PRO FORMA RELATING TO TRANSACTIONS
THE FOR THE THE AND THE
ACTUAL TRANSACTIONS TRANSACTIONS OFFERINGS OFFERINGS
------- ------------ ------------ ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.......... $15,049 $ (10,844) $ 4,205 $ 200 $ 4,405
Marketable securities. 224 -- 224 -- 224
Accounts receivable,
net of allowance for
bad debts............ 23,669 -- 23,669 -- 23,669
Inventories........... 28,110 -- 28,110 -- 28,110
Prepaid expenses and
other current assets. 1,479 -- 1,479 -- 1,479
Deferred tax assets... -- 5,031 5,031 -- 5,031
------- --------- --------- ------- --------
Total current
assets............. 68,531 (5,813) 62,718 200 62,918
Property, plant and
equipment, net......... 12,989 -- 12,989 -- 12,989
Deferred tax assets..... -- 52,969 52,969 -- 52,969
Other assets............ 3,631 8,319 11,950 (3,097) 8,853
------- --------- --------- ------- --------
Total assets............ $85,151 $ 55,475 $ 140,626 $(2,897) $137,729
======= ========= ========= ======= ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Current portion of
term loan facility... $ -- $ 2,915 $ 2,915 $(2,915) $ --
Current portion of
long-term debt....... 1,471 (1,384) 87 -- 87
Current portion of
capital lease
obligations.......... 138 -- 138 -- 138
Loan payable--bank.... 660 (660) -- -- --
Notes payable--
shareholders......... 846 (846) -- -- --
Accounts payable...... 9,814 -- 9,814 -- 9,814
Accrued expenses and
other current
liabilities.......... 4,208 1,564 5,772 -- 5,772
------- --------- --------- ------- --------
Total current
liabilities........ 17,137 1,589 18,726 (2,915) 15,811
Term loan facility...... -- 50,085 50,085 (50,085) --
Notes................... -- 100,000 100,000 -- 100,000
Long-term debt, less
current portion........ 5,290 (5,010) 280 -- 280
Capital lease
obligations, less
current portion........ 268 -- 268 -- 268
------- --------- --------- ------- --------
Total liabilities... 22,695 146,664 169,359 (53,000) 116,359
------- --------- --------- ------- --------
Senior redeemable
cumulative Preferred -- 30,000 30,000 (30,000) --
Stock.................. ------- --------- --------- ------- --------
Junior redeemable
cumulative Preferred -- 37,000 37,000 (37,000) --
Stock.................. ------- --------- --------- ------- --------
Shareholders' equity
(deficit):
Common stock.......... 450 550 1,000 -- 1,000
Additional paid-in
capital.............. 68 81,995 82,063 120,200 202,263
Retained earnings
(deficit)............ 61,938 (240,734) (178,796) (3,097) (181,893)
------- --------- --------- ------- --------
Total shareholders'
equity (deficit)... 62,456 (158,189) (95,733) 117,103 21,370
------- --------- --------- ------- --------
Total liabilities and
shareholders' equity
(deficit).............. $85,151 $ 55,475 $ 140,626 $(2,897) $137,729
======= ========= ========= ======= ========
</TABLE>

23
<PAGE>

NOTES TO UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET DATA

Pro forma adjustments to the Unaudited Pro Forma Consolidated Balance Sheet
Data are summarized (in thousands) in the following table and are fully
described in the notes that follow:

<TABLE>
<CAPTION>
ADJUSTMENTS RELATING TO THE TRANSACTIONS
-----------------------------------------------------------------------------------
REPURCHASE
OF THE
STOCK- NET NET
HOLDERS' PAYMENT CONVERSION ADJUST- ADJUST-
COMMON OF OF TAX TERMI- MENTS MENTS
STOCK AND TRANS- STATUS FROM NATION OF RELATED RELATED
DEBT RECAPITALI- ACTION INCOME "S" TO "C" INSURANCE TO THE TO THE
FINANCING REFINANCED ZATION FEES TAXES CORPORATION POLICY TRANS- OFFERINGS
(a) (b) (c) (d) (e) (f) (g) ACTIONS (h)
--------- ---------- ----------- -------- ------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and cash
equivalents............ $225,500 $(7,900) $(212,500) $(12,330) $(5,400) $1,786 $ (10,844) $ 200
Current deferred tax
asset.................. 5,031 5,031
Long-term deferred tax
assets................. 52,969 52,969
Other assets............ 10,105 (1,786) 8,319 (3,097)
Current portion of term
loan facility.......... 2,915 2,915 (2,915)
Current portion of long-
term debt.............. (1,384) (1,384)
Loan payable--bank...... (660) (660)
Notes payable--
shareholders........... (846) (846)
Accrued expenses and
other current
liabilities............ 500 (236) 1,300 1,564
Term loan facility...... 50,085 50,085 (50,085)
Senior subordinated
notes.................. 100,000 100,000
Long-term debt, less
current portion........ (5,010) (5,010)
Senior redeemable
cumulative preferred
stock.................. 30,000 30,000 (30,000)
Junior redeemable
cumulative preferred
stock.................. 37,000 37,000 (37,000)
Common stock............ 550 550
Additional paid-in
capital................ 4,950 (27,380) (1,989) 56,700 $49,714 81,995 120,200
Retained earnings....... (185,620) (5,400) (49,714) (240,734) (3,097)
</TABLE>
- --------

(a) The sources of financing to effect the Acquisition were as follows:
<TABLE>
<S> <C>
Gross proceeds of the Note Offering........................... $100,000
Borrowings under the New Credit Facility...................... 53,000
Issuance of Preferred Stock................................... 67,000
Issuance of Common Stock...................................... 5,500
--------
Total sources of financing.................................... $225,500
========
</TABLE>

(b) Represents the amount of debt refinanced by the Company in connection with
the Transactions.

(c) Represents the purchase price for the Stockholders' common stock in the
Company. The total purchase price includes approximately $15,000,
representing consideration for the Non-Competition Agreements, which was
recognized as a non-recurring expense upon the consummation of the
Acquisition.

(d) Represents allocation of fees paid in connection with the issuance of the
Notes, the New Credit Facility and the issuance of the Preferred Stock and
the Common Stock of Holding.

24
<PAGE>

(e) The Natur-Pharma Merger was treated as taxable asset purchases for federal
and state income tax purposes and as a recapitalization for financial
accounting purposes. For federal and state income tax purposes, the
purchase price was allocated among the various corporations and their
respective assets and liabilities based on the respective fair values as
of the closing of the Acquisition. This resulted in different book and tax
asset bases for the assets of these companies, which will result in
deferred tax assets of approximately $58,000. The calculation of the
deferred tax asset and the classification of such asset between current
and long-term are preliminary and subject to change based upon the final
determination of fair values as of the closing of the Acquisition.

As the Natur-Pharma Merger was treated as taxable asset purchases for
federal and state income tax purposes, New York State imposes an entity-
level tax on the related gain. Such tax, which is estimated to be $1,300,
will be paid by the Company.

Also represents a distribution of approximately $5,400 to the Stockholders
for income taxes paid for "S" corporation earnings through March 31, 1996.

(f) Represents a constructive distribution of undistributed "S" corporation
earnings and subsequent contribution to the capital of the Company in
connection with the termination of "S" corporation status.

(g) Represents the termination of the split dollar life insurance policy on
the lives of certain of the Stockholders and collection of the receivable
from the trust related thereto.

(h) Represents a $120,200 increase to common stock and additional paid-in
capital relating to the net proceeds of the Offerings, and the application
of such net proceeds to redeem $30,000 of Senior Preferred Stock and
$37,000 of Junior Preferred Stock, and to repay $53,000 of the term loan
facility of the New Credit Facility. Also represents a $3,097 decrease in
other assets relating to the elimination of deferred financing costs
associated with the partial repayment of the New Credit Facility.

25
<PAGE>

SELECTED HISTORICAL FINANCIAL DATA

The following selected consolidated financial data as of December 31, 1991
and for the year then ended and as of March 31, 1995 and 1996 and for the
three month periods ended March 31, 1995 and 1996 are derived from the
unaudited consolidated financial statements of the Company. In the opinion of
management, the unaudited consolidated financial statements have been prepared
on the same basis as the audited consolidated financial statements and include
all adjustments, consisting only of normal recurring adjustments, necessary
for a fair presentation of the financial position and results of operations
for such periods. The results for the interim periods are not necessarily
indicative of the results for the related full fiscal year. The selected
consolidated financial data as of December 31, 1994 and 1995 and for each of
the three years in the period ended December 31, 1995 has been derived from
the audited consolidated financial statements of the Company. The report of
Deloitte & Touche LLP, independent auditors, on the consolidated financial
statements as of December 31, 1994 and 1995, and for each of the three years
in the period ended December 31, 1995 is included elsewhere herein. The
selected consolidated financial data should be read in conjunction with, and
is qualified in its entirety by, the Consolidated Financial Statements of the
Company and the notes thereto and the other financial information included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
STATEMENT OF INCOME DA-
TA: (IN THOUSANDS, EXCEPT PER SHARE DATA)
Net sales.............. $70,165 $83,014 $99,897 $117,342 $148,735 $36,128 $43,984
Cost of sales.......... 44,664 51,214 62,131 70,247 89,932 22,158 26,362
------- ------- ------- -------- -------- ------- -------
Gross profit........... 25,501 31,800 37,766 47,095 58,803 13,970 17,622
Operating expenses..... 14,570 17,463 21,125 23,022 27,191 7,501 7,299
------- ------- ------- -------- -------- ------- -------
Income from operations. 10,931 14,337 16,641 24,073 31,612 6,469 10,323
------- ------- ------- -------- -------- ------- -------
Other (expense) income:
Interest income....... 375 302 242 254 313 82 167
Interest expense...... (461) (494) (487) (761) (866) (168) (224)
Transaction expenses.. -- -- -- -- (656) -- (400)
Other................. (514) (135) 510 354 61 5 (1)
------- ------- ------- -------- -------- ------- -------
(600) (327) 265 (153) (1,148) (81) (458)
------- ------- ------- -------- -------- ------- -------
Income before unusual
item, provision for
income taxes and
extraordinary item.... 10,331 14,010 16,906 23,920 30,464 6,388 9,865
Unusual item--
nonrecurring charge
for prior years'
income tax assessment. -- -- -- 1,982 -- -- --
Provision for income 169 651 230 245 240 50 86
taxes................. ------- ------- ------- -------- -------- ------- -------
Income before
extraordinary item.... 10,162 13,359 16,676 21,693 30,224 6,338 9,779
Extraordinary item..... -- 76 -- -- -- -- --
------- ------- ------- -------- -------- ------- -------
Net income............. $10,162 $13,435 $16,676 $ 21,693 $ 30,224 $ 6,338 $ 9,779
======= ======= ======= ======== ======== ======= =======
PRO FORMA: (A)
Historical income
before provision for
income taxes.......... $10,331 $14,010 $16,906 $ 21,938 $ 30,464 $ 6,388 $ 9,865
Pro forma provision for
income taxes.......... 4,017 5,436 6,644 9,087 12,060 2,529 3,906
------- ------- ------- -------- -------- ------- -------
Pro forma net income... $ 6,314 $ 8,574 $10,262 $ 12,851 $ 18,404 $ 3,859 $ 5,959
======= ======= ======= ======== ======== ======= =======
Pro forma net income
per share............. $ 14.75 $ 19.40 $ 22.80 $ 28.56 $ 40.90 $ 8.58 $ 13.24
======= ======= ======= ======== ======== ======= =======
Weighted average shares
outstanding........... 428 442 450 450 450 450 450
======= ======= ======= ======== ======== ======= =======
OTHER DATA:
Capital expenditures... $ 1,472 $ 1,304 $ 4,904 $ 1,786 $ 2,641 $ 489 $ 224
Depreciation........... 783 806 710 851 909 194 271
Amortization........... 20 86 95 99 102 21 31
Net sales growth....... 17.4% 18.3% 20.3% 17.5% 26.8% -- 21.7%
Net income growth...... 24.9 32.2 24.1 30.1 39.3 -- 54.3
Income from operations
margins (b)........... 15.6 17.3 16.7 20.5 21.3 17.9% 23.5
</TABLE>

(continued on following page)

26
<PAGE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
--------------------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net working capital
(excluding cash and
cash equivalents,
marketable securities
and current debt)..... $14,097 $18,575 $25,437 $35,056 $39,405 $32,019 $39,236
Property, plant and
equipment, net........ 7,645 7,863 10,732 12,071 13,036 12,367 12,989
Total assets........... 36,878 44,368 55,587 64,706 75,309 66,711 85,151
Total debt (including
current debt)......... 6,100 6,066 8,039 9,288 8,792 8,674 8,673
Shareholders' equity... 26,587 33,180 40,543 48,671 55,405 47,816 62,456
</TABLE>
- ---------------------
(a) The Company consisted of S corporations and, accordingly, federal and
state taxes were generally paid at the shareholder level only. Upon
consummation of the Transactions, the Company eliminated its S corporation
status and, accordingly, will be subject to federal and state income taxes.
(b) Income from operations margin equals income from operations as a
percentage of net sales.

27
<PAGE>

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

RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
"Selected Historical Financial Data" and the audited Consolidated Financial
Statements of the Company and the notes thereto included elsewhere in this
Prospectus. The Company consisted of "S" corporations for the three months
ended March 31, 1996 and years ended December 31, 1995, 1994 and 1993.
Accordingly, federal and state taxes were generally paid at the shareholder
level only. The provision for income taxes for the three months ended March
31, 1996 and years ended December 31, 1995, 1994 and 1993 represented state
taxes for New York, which imposes a corporate tax for all income in excess of
$0.2 million. Upon consummation of the Transactions, the Company eliminated
its "S" corporation status and, accordingly, is subject to federal and state
income taxes.

The following table sets forth, for the periods indicated, certain
historical income statement and other data for the Company and also sets forth
certain of such data as a percentage of net sales.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------ --------------------------
1993 1994 1995 1995 1996
------------ ------------- ------------- ------------ ------------
$ % $ % $ % $ % $ %
----- ----- ------ ----- ------ ----- ----- ----- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Vitamins, Minerals &
Amino Acids............ $29.1 29.1% $ 32.3 27.5% $ 37.1 24.9% $ 9.8 27.1% $10.1 23.0%
Sports Nutrition........ 34.7 34.7 39.9 34.0 53.9 36.2 11.8 32.7 14.5 32.9
Special Formulas........ 23.6 23.7 31.0 26.4 41.2 27.7 8.8 24.5 12.4 28.1
Herbal Supplements &
Phytonutrients......... 12.0 12.0 14.5 12.3 19.8 13.3 4.9 13.6 6.6 15.0
Herb Teas............... 3.0 3.0 4.2 3.6 5.8 3.9 2.1 5.7 2.2 5.0
Publishing.............. 2.7 2.7 3.4 3.0 4.8 3.3 1.2 3.3 1.3 3.0
----- ----- ------ ----- ------ ----- ----- ----- ----- -----
Gross Sales............ 105.1 105.2 125.3 106.8 162.6 109.3 38.6 106.9 47.1 107.0
Discounts & Allowances. (5.2) (5.2) (8.0) (6.8) (13.9) (9.3) (2.5) (6.9) (3.1) (7.0)
----- ----- ------ ----- ------ ----- ----- ----- ----- -----
Net Sales.............. $99.9 100.0% $117.3 100.0% $148.7 100.0% $36.1 100.0% $44.0 100.0%
Gross Profit............ 37.8 37.8 47.1 40.1 58.8 39.5 14.0 38.7 17.6 40.1
Operating Expenses...... 21.1 21.1 23.0 19.6 27.2 18.3 7.5 20.8 7.3 16.6
Income From Operations.. 16.6 16.7 24.1 20.5 31.6 21.3 6.5 17.9 10.3 23.5
</TABLE>

THREE MONTHS ENDED MARCH 31, 1996 ("FIRST QUARTER 1996") COMPARED TO THREE
MONTHS ENDED MARCH 31, 1995 ("FIRST QUARTER 1995")

Net Sales. Net sales for first quarter 1996 was $44.0 million, an increase
of $7.9 million, or 21.7%, as compared to net sales of $36.1 million in first
quarter 1995. The 21.7% increase was attributable to increases in gross sales
in each of the Company's six product categories, partially offset by an
increase in discounts and allowances which was due to the Company's increased
sales volume. Vitamins, minerals and amino acids contributed $10.1 million, an
increase of $0.3 million, or 3.1%, as compared to $9.8 million in first
quarter 1995. The increase in gross sales of vitamins, minerals and amino
acids was primarily due to continued strong consumer interest in these
products. Sports nutrition products contributed $14.5 million, an increase of
$2.7 million, or 22.3%, as compared to $11.8 million in first quarter 1995,
primarily due to the increased demand for a variety of these products. Special
formulas contributed $12.4 million, an increase of $3.6 million, or 40.1%, as
compared to $8.8 million in first quarter 1995. The increase in gross sales of
special formulas was primarily due to the successful introduction of a variety
of new product formulations. Herbal supplements and phytonutrients contributed
$6.6 million, an increase of $1.7 million, or 34.1%, as compared to $4.9
million in first quarter 1995, and herb teas contributed $2.2 million, an
increase of $0.1 million, or 7.0%, as compared to $2.1 million in first

28
<PAGE>

quarter 1995. The gross sales increase in both herbal supplements and
phytonutrients and herb teas is primarily due to new product introductions,
continued strong consumer interest in existing products and increased
penetration of Nature's Herbs and Alvita products into domestic health food
stores. Publishing contributed $1.3 million, an increase of $0.1 million, or
9.5%, as compared to $1.2 million in first quarter 1995.

Gross Profit. Gross profit for first quarter 1996 was $17.6 million, which
represented an increase of $3.6 million, or 26.1%, as compared to $14.0
million for first quarter 1995. Gross profit margin was 40.1% for first
quarter 1996 as compared to 38.7% for first quarter 1995. The overall increase
in gross profit dollars was attributable to the Company's higher sales volume
in first quarter 1996. The increase in gross profit margin in first quarter
1996 as compared to first quarter 1995 was due primarily to a more favorable
product mix and to higher gross profit margins on recently introduced new
product formulations and product line extensions.

Operating Expenses. Operating expenses were $7.3 million for first quarter
1996, representing a decrease of $0.2 million, or 2.7%, as compared to $7.5
million for first quarter 1995. As a percent of net sales, operating expenses
declined from 20.8% in first quarter 1995 to 16.6% in first quarter 1996. The
decrease in operating expenses was primarily attributable to advertising
expenses which were lower by approximately $1.0 million than the Company's
advertising expenses in first quarter 1995 due to reduced television
advertising pending completion of new television commercials and reduced print
advertising. The Company expects that its advertising expenses in respect of
fiscal 1996 will exceed its advertising expenditures in fiscal 1995. The
decline in operating expenses as a percent of net sales is due to the
Company's ability to maintain its expenditures at approximately the same level
as in first quarter 1995, while substantially increasing the Company's sales
volume.

Income from Operations. Income from operations was $10.3 million in first
quarter 1996, representing an increase of $3.8 million, or 59.6%, as compared
to $6.5 million for first quarter 1995. Income from operations margin
increased to 23.5% of net sales in first quarter 1996, as compared to 17.9% of
net sales in first quarter 1995. The increase in income from operations and
income from operations margin was primarily due to the Company's higher sales
volume in first quarter 1996 and a reduction in the Company's operating
expenses as a percent of net sales.

FISCAL 1995 COMPARED TO FISCAL 1994

Net Sales. Net sales for fiscal 1995 was $148.7 million, an increase of
$31.4 million, or 26.8%, as compared to net sales of $117.3 million in fiscal
1994. The 26.8% increase was attributable to increases in gross sales in each
of the Company's six product categories, partially offset by an increase in
discounts and allowances due to the Company's increased sales volume.
Vitamins, minerals and amino acids contributed $37.1 million, an increase of
$4.8 million, or 14.7%, as compared to $32.3 million in fiscal 1994, primarily
due to continued strong consumer interest in these products. Sports nutrition
contributed $53.9 million, an increase of $14.0 million, or 34.9%, as compared
to $39.9 million in fiscal 1994, primarily due to the increased demand for a
variety of these products. Special formulas contributed $41.2 million, an
increase of $10.2 million, or 33.2%, as compared to $31.0 million in fiscal
1994, primarily due to the successful introduction of new product formulations
and strong growth in existing product lines. Herbal supplements and
phytonutrients contributed $19.8 million, an increase of $5.3 million, or
37.2%, as compared to $14.5 million in fiscal 1994, and herb teas contributed
$5.8 million, an increase of $1.6 million, or 37.4%, as compared to $4.2
million in fiscal 1994. The gross sales increase in both herbal supplements
and phytonutrients and herb teas is primarily due to new product
introductions, continued strong consumer interest in existing products and
increased penetration of Alvita and Nature's Herbs products into domestic
health food stores. Publishing contributed $4.8 million, an increase of $1.4
million, or 39.1%, as compared to $3.4 million in fiscal 1994.

Gross Profit. Gross profit for fiscal 1995 was $58.8 million, which
represented an increase of $11.7 million or 24.9%, as compared to $47.1
million for fiscal 1994. Gross margin was 39.5% for fiscal 1995 as compared to
40.1% for fiscal 1994. The overall increase in gross profit dollars was
attributable to the Company's higher sales volume in fiscal 1995. The decrease
in gross margin for fiscal 1995 as compared to fiscal 1994 was due primarily
to lower gross margins on the Company's Nature's Herbs products due to certain
raw materials price increases and an increase in sales discounts and
allowances offered on certain TWINLAB and Nature's

29
<PAGE>

Herbs products under certain sales incentive programs introduced in 1995,
which programs are expected to be continued in 1996. Such decreases in gross
margin were partially offset by increased sales from a more favorable product
mix and increases in the Company's gross margins for TWINLAB sports nutrition
products, special formulas and Alvita herb tea products.

Operating Expenses. Operating expenses were $27.2 million for fiscal 1995,
representing an increase of $4.2 million, as compared to $23.0 million for
fiscal 1994. As a percent of net sales, operating expenses declined from 19.6%
in fiscal 1994 to 18.3% in fiscal 1995. The increase in operating expenses was
primarily attributable to increased selling and advertising expenses and
higher operating expenses resulting from the Company's increased level of
sales in fiscal 1995. The decline in operating expenses as a percent of net
sales is due to the Company's ability to maintain its expenditures for
research and development and certain general and administrative functions at
approximately the same level as in fiscal 1994, while substantially increasing
the Company's sales volume.

Income from Operations. Income from operations was $31.6 million in fiscal
1995, representing an increase of $7.5 million, or 31.3%, as compared to $24.1
million for fiscal 1994. Income from operations margin increased to 21.3% of
net sales in fiscal 1995, as compared to 20.5% of net sales in fiscal 1994.
The increase in income from operations and income from operations margin was
primarily due to the Company's higher sales volume in fiscal 1995 and a
reduction in the Company's operating expenses as a percent of net sales, which
was partially offset by a reduction in gross margin as discussed above.

FISCAL 1994 COMPARED TO FISCAL 1993

Net Sales. Net sales for fiscal 1994 was $117.3 million, an increase of
$17.4 million, or 17.5%, as compared to net sales of $99.9 million in fiscal
1993. The 17.5% increase was attributable to increases in gross sales in each
of the Company's six product categories, partially offset by an increase in
discounts and allowances due to the Company's increased sales volume.
Vitamins, minerals and amino acids contributed $32.3 million, an increase of
$3.2 million, or 11.2%, as compared to $29.1 million in fiscal 1993, primarily
due to continued strong consumer interest in these products. Sports nutrition
contributed $39.9 million, an increase of $5.2 million, or 15.2%, as compared
to $34.7 million in fiscal 1993, primarily due to the increased demand for a
variety of these products. Special formulas contributed $31.0 million, an
increase of $7.4 million, or 30.9%, as compared to $23.6 million in fiscal
1993, primarily due to the successful introduction of 18 new product
formulations and strong growth of existing product lines. Herbal supplements
and phytonutrients contributed $14.5 million, an increase of $2.5 million, or
20.8%, as compared to $12.0 million in fiscal 1993 and herb teas contributed
$4.2 million, an increase of $1.2 million, or 40.6%, as compared to $3.0
million in fiscal 1993. The gross sales increase in both herbal supplements
and phytonutrients and herb teas is primarily due to new product
introductions, continued strong consumer interest in existing products and
increased penetration of Nature's Herbs and Alvita products into domestic
health food stores. Publishing contributed $3.4 million, an increase of $0.7
million, or 27.4%, as compared to $2.7 million in fiscal 1993.

Gross Profit. Gross profit for fiscal 1994 was $47.1 million compared to
$37.8 million in fiscal 1993. As a percent of net sales, gross profit was
40.1% for fiscal 1994 compared to 37.8% for fiscal 1993. The gross profit
dollar increase in fiscal 1994 compared to fiscal 1993 was due to the
Company's higher sales volumes and higher gross margins in fiscal 1994. The
increase in gross margin in fiscal 1994 compared to fiscal 1993 was
attributable to a more favorable product sales mix and higher gross margins on
certain of the Company's TWINLAB vitamins, minerals, amino acids, sports
nutrition products and special formulas. This increase in gross margin was
partially offset by lower gross margins for certain of the Company's Alvita
herb tea products, which was due to the relocation of Alvita Products, Inc.'s
operations from Ronkonkoma, New York to American Fork, Utah.

Operating Expenses. Operating expenses increased by $1.9 million, or 9.0%,
from $21.1 million in fiscal 1993 to $23.0 million in fiscal 1994. As a
percent of net sales, operating expenses declined to 19.6% in fiscal 1994 from
21.1% in fiscal 1993. The dollar increase in operating expenses is primarily
due to higher selling, advertising and delivery expenses. The decline in
operating expenses as a percent of net sales is due partially to the Company's
ability to limit the increase in general and administrative expenses while
achieving a higher level of sales volume.

30
<PAGE>

Income from Operations. Income from operations was $24.1 million in fiscal
1994, an increase of $7.5 million, or 44.7%, as compared to $16.6 million for
fiscal 1993. Income from operations margin increased to 20.5% of net sales in
1994, as compared to 16.7% of net sales in fiscal 1993. The increase in income
from operations and income from operations margin was due to increased sales
volumes together with higher gross margins and lower operating expenses as a
percent of net sales.

LIQUIDITY AND CAPITAL RESOURCES

For first quarter 1996, cash provided by operating activities was $10.3
million, and during fiscal 1995 cash provided by operating activities was
$26.8 million, compared to $12.9 million in fiscal 1994 and $10.6 million in
fiscal 1993. The increase in fiscal 1995 compared to fiscal 1994 and fiscal
1993 was primarily due to higher net income and reflects higher levels of
accounts payable and accrued liabilities, partially offset by higher accounts
receivable and inventory balances due to higher levels of sales volume at the
Company. Cash used in financing activities was $2.8 million in first quarter
1996, $24.0 million in fiscal 1995, $13.0 million in fiscal 1994 and $7.3
million in fiscal 1993 and primarily consisted of distributions to
shareholders of $2.7 million, $23.5 million, $13.6 million and $9.4 million
for first quarter 1996, fiscal 1995, fiscal 1994 and fiscal 1993,
respectively.

Capital expenditures, including purchases under capital leases, were $0.2
million, $2.6 million, $2.5 million and $4.9 million for first quarter 1996,
fiscal 1995, fiscal 1994 and fiscal 1993, respectively. The higher level of
capital expenditures in fiscal 1993 reflects the construction of the Company's
manufacturing facility in American Fork, Utah, which commenced operations in
the last quarter of fiscal 1993. Historical capital expenditures were
primarily used to purchase production equipment, expand capacity and improve
manufacturing efficiency. Capital expenditures are expected to be
approximately $3.4 million in fiscal 1996 and will be used to purchase
manufacturing equipment and fund plant expansion to support the Company's
future growth. The Company estimates that its historical level of maintenance
capital expenditures has been approximately $0.5 million per fiscal year. See
"Business."

Management believes that, following the consummation of the Offerings, the
Company will have adequate capital resources and liquidity to meet its
borrowing obligations, fund all required capital expenditures and pursue its
business strategy. The Company's capital resources and liquidity are expected
to be provided by the Company's cash flow from operations and borrowings under
the revolving credit facility contained in the New Credit Facility. In
connection with the Acquisition, the Company entered into a New Credit
Facility. Approximately $50.0 million of the net proceeds will be used to
repay the Company's outstanding indebtedness under the term loan facility. See
"Use of Proceeds."

From time to time, the Company evaluates acquisitions which complement the
business of the Company. Depending on the cash requirements of potential
transactions, the Company may finance transactions with its cash flow from
operations, or the Company may raise additional funds by pursuing various
financing vehicles such as additional bank financing or offerings of the
Company's securities. The Company, however, has no present understanding,
commitment or agreement with respect to any acquisition, and there can be no
assurance that funds to finance an acquisition will be available or permitted
under the Company's financing instruments. See "Description of Certain
Indebtedness."

IMPACT OF INFLATION

Generally, the Company has been able to pass on inflation-related cost
increases; consequently, inflation has not had a material impact on the
Company's historical operations or profitability.

RECENT FINANCIAL ACCOUNTING STANDARDS BOARD STATEMENTS

Recent pronouncements of the Financial Accounting Standards Board, which are
not required to be adopted at this date, include Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting For the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of" and SFAS No. 123,
"Accounting for Stock Based Compensation." These pronouncements are not
expected to have a material impact on the Company's financial statements.

31
<PAGE>

BUSINESS

GENERAL

The Company is the leading manufacturer and marketer of brand name
nutritional supplements sold through domestic independent health food stores.
Since the Company's founding in 1968 by David and Jean Blechman, the Company
has emphasized the development and introduction of high-quality, unique
products in response to emerging trends in the nutritional supplement
industry. The Company produces a full line of nutritional supplements and
offers the broadest product line in the industry with more than 800 products
and 1,500 SKU's. The Company's product line includes vitamins, minerals, amino
acids, fish and marine oils, sports nutrition products and special formulas
marketed under the TWINLAB (R) trademark and a full line of herbal supplements
and phytonutrients and herb teas marketed under the Nature's Herbs (R) and
Alvita (R) trademarks, respectively. None of the Company's products
individually accounted for more than 7% of total net sales in 1995. The
Company's broad product line, strong history of new product introductions and
innovations, superior marketing and advertising programs and premium product
quality have established TWINLAB, Nature's Herbs and Alvita as leading brands
in the nutritional supplement industry.

The Company's products target consumers who utilize nutritional supplements
in their daily diet and who demand premium quality ingredients in a broad
variety of dosages and delivery methods. The Company's products compete
primarily in the health food store market, where the dominant competitive
factors include product attributes such as quality, potency and the uniqueness
of the product formulation. The Company sells its products domestically
through a network of approximately 60 distributors, who service approximately
11,000 health food stores and other selected retail outlets. The Company
believes that its products are available in over 90% of the health food stores
in the United States. The health food store channel of distribution has
expanded significantly in recent years and is expected to grow further as
national chains such as GNC, Whole Foods Market, Wild Oats Markets, Fresh
Fields and other industry participants continue to add stores in new and
existing markets. The health food store market differs significantly from the
mass market for vitamin and other nutritional supplements where price and
convenience constitute the primary bases of competition. The nutritional
supplement products sold in grocery stores, drug stores and mass merchandisers
are typically manufactured by large pharmaceutical companies and private label
manufacturers. The Company's products are also offered in Europe, Asia, South
America and other international markets through arrangements with overseas
distributors.

The Company believes it is well positioned to capitalize on the growth of
the nutritional supplement market. Based on estimates contained in the
Packaged Facts Survey, the retail market for vitamins, minerals and other
nutritional supplements has grown at a compound annual rate of greater than
12% from $3.3 billion in 1991 to over $4.6 billion in 1994. Furthermore, the
Company's rate of sales growth has exceeded the industry's growth rate for
each year during this period. Packaged Facts forecasts approximately 7% annual
industry growth through the end of the decade in vitamins, minerals and
supplements, which management believes will be fueled by (i) favorable
demographic trends towards older Americans, who are more likely to consume
nutritional supplements; (ii) product introductions in response to new
scientific research findings; (iii) the nationwide trend toward preventive
medicine in response to rising health care costs; and (iv) the heightened
understanding and awareness

32
<PAGE>

of the connection between diet and health. Moreover, although the industry has
grown dramatically in recent years, there is still a large untapped domestic
market as only an estimated 50% of Americans currently consume vitamins,
minerals and herbal supplements on a regular basis.

Holding was incorporated under the laws of the State of Delaware in 1996 and
maintains its principal executive offices at 2120 Smithtown Avenue, Ronkonkoma,
New York 11779. Its telephone number is (516) 467-3140.

BUSINESS STRATEGY

Capitalize on Powerful Brand Name Recognition. The Company's recognized
product quality, broad product line, strong history of new product
introductions and innovations, and superior marketing and advertising programs
have established TWINLAB, Nature's Herbs and Alvita as leading brands in the
nutritional supplement industry. Each of the Company's product categories,
including vitamins, minerals and amino acids; sports nutrition; special
formulas; herbal supplements and phytonutrients; and herb teas, have posted
double digit sales growth in each of the last three years. The Company's
extensive marketing and advertising programs have been critical components of
its products' strong brand name recognition, and management believes that the
Company offers its customers the strongest marketing and advertising support
programs in the industry. In fiscal 1995 the Company invested $11.1 million, an
increase of 27% over fiscal 1994, in marketing and advertising to promote its
products. Furthermore, since quality is a critical factor in consumer purchase
decisions, the Company believes that its premium quality ingredients, modern
manufacturing facilities and comprehensive quality control procedures have
enabled the Company to establish a competitive advantage based on the quality
of its products.

Increase Penetration in the Growing Health Food Market. Management believes
that the expansion of retail distribution channels and the strong growth
characteristics of the nutritional supplement industry provide the Company with
significant opportunities to increase sales. Management further believes that
the established brand name recognition of the Company's products positions it
to increase its penetration of shelf space as health food retailers seek to
align themselves with companies who possess strong brand names, offer a wide
range of products, demonstrate continued marketing and advertising support and
provide consistently high levels of customer service. Since Nature's Herbs and
Alvita products currently are available in only an estimated 60% and 50%,
respectively, of domestic health food stores, compared to an estimated 90% for
TWINLAB products, the Company believes that it will be able to capitalize on
health food retailers' success with the TWINLAB product line in order to
significantly increase shelf space for the Company's herbal supplements,
phytonutrients and herb teas.

33
<PAGE>

Build Upon Established Customer Relationships. The Company's established
relationships with distributors and health food store retailers are based upon
the Company's long-standing commitment to a high level of customer service. In
order to ensure that its customers receive prompt and reliable service, the
Company has designed a flexible and responsive manufacturing process and has
achieved a 98% fill rate for customer orders. In addition, the Company's sales
force consists of 30 dedicated sales professionals who operate in sales
territories which cover the entire continental United States and Alaska. The
primary functions of the Company's sales force are to gain better placement
and additional shelf space for the Company's products and to stay abreast of
customer needs. The sales force personnel work with direct accounts,
distributors and individual retailers to enhance knowledge of TWINLAB,
Nature's Herbs and Alvita products and to achieve maximum exposure for these
products.

Supplement Internal Growth Through Strategic Acquisitions. As the
nutritional supplement industry is highly fragmented with many companies
producing only a single product line or single product, the Company believes
that it is strategically positioned to participate in the consolidation of the
industry due to its established brand name, broad distribution capabilities
and proven ability to generate sales of its products through successful
marketing programs. Since 1989 the Company has acquired two businesses, Natur-
Pharma Inc. (Nature's Herbs) and Alvita Products, Inc., and in each case has
embarked on successful expansion programs which resulted in substantially
higher sales and income from operations for the acquired companies. Net sales
for Natur-Pharma Inc. increased from $5.2 million in 1990 (the first full year
after its acquisition) to $17.9 million in 1995, and net sales for Alvita
Products, Inc. increased from $1.7 million in 1992 (the first full year after
its acquisition) to $5.6 million in 1995. The Company regularly evaluates
acquisition opportunities, including product line acquisitions, that
complement its existing products or are compatible with its business
philosophy and strategic goals.

INDUSTRY

Based on estimates in the Packaged Facts Survey, the retail market for
vitamins, minerals and other supplements has grown over 12% annually from $3.3
billion in 1991 to $4.6 billion in 1994. The herbal supplements and herb tea
market has grown at a compound annual growth rate of over 10% since 1991 to
approximately $1.1 billion in 1995. Sports nutrition products have grown 9%
annually since 1991 to over $1.2 billion in 1994. The Company believes that
these market segments will continue to experience strong growth due to recent
scientific research suggesting potential health benefits from regular
consumption of vitamins and other nutritional supplement products, increasing
national interest in preventive health measures and favorable demographic
trends that indicate increased usage of vitamins and other nutritional
supplements. Packaged Facts estimates compound annual growth rates in the
market for vitamins, minerals and other supplements of approximately 7% from
1994 through 1999. The market for herbal supplements and herb teas is
projected to grow over 11% annually from 1994 through 1999, while sports
nutrition sales are projected to increase 8% annually from 1994 through 1999.

The Company expects that the aging of the United States population, together
with a corresponding increased focus on preventive health measures, will
result in increased demand for nutritional supplement products. According to
Congressional findings that accompanied the Dietary Supplement Health and
Education Act of 1994, national surveys reveal that almost 50% of Americans
regularly consume vitamins, minerals and herbal supplements. The 35-and-older
age group of consumers, which represent 78% of regular users of vitamin and
mineral supplements, is expected to grow dramatically over the next two
decades. Specifically, based on

34
<PAGE>

data provided by the U.S. Bureau of the Census, from 1990 to 2010, the 35-44
and 45-and-older age groups are projected to grow at rates 175% and 225%
faster than the general U.S. population, respectively. In addition, the "baby
boom echo" (the children of baby boomers) is projected to result in
substantial growth in the 16-21 age group, the largest segment of consumers of
sports nutrition products. The Company expects that growth in this age group
will result in increased demand for its sports nutrition products.

Vitamins and other nutritional supplements are sold primarily through six
channels of distribution: health food stores, drug stores, supermarkets and
other grocery stores, discount stores, mail order and direct sales
organizations. Mass market retailers (drug stores, grocery stores and discount
stores) account for approximately 60% of sales, while health food stores, mail
order and direct selling account for approximately 40% of sales.

The United States health food store market is comprised of approximately
11,000 stores, which are generally either independently owned or associated
with one of several regional or national chains, including GNC and Whole Foods
Market. According to a 1994 retail survey, nutritional supplements account for
over 41% of a typical health food store's sales. Moreover, 54% of health food
retailers state that these products are their primary product. The health food
store channel of distribution has grown significantly in recent years and is
expected to continue to grow as GNC, Whole Foods Market, Wild Oats Markets,
Fresh Fields and other industry participants continue to add stores in new and
existing markets. The growth in the health food channel of distribution is
partially attributable to the general growth in natural product sales. Natural
products are defined as products that are minimally processed, environmentally
friendly, largely or wholly free from artificial chemicals and, in general, as
close to their natural states as possible. Natural product industry sales have
consistently grown at nearly 10% per year since 1988, even during the
recession of the early 1990s. During 1994, natural products industry sales
rose 23% to $7.6 billion. The rate of growth accelerated from 7% in 1990 to
10%, 14% and 18% in 1991, 1992 and 1993, respectively.

PRODUCTS

The Company has a highly diversified array of products and product
categories, each of which achieves strong gross margins. The Company
manufactures and markets over 800 products and over 1,500 SKU's in five
product categories: vitamins, minerals and amino acids; sports nutrition;
special formulas; herbal supplements and phytonutrients; and herb teas. The
Company also operates a subsidiary which publishes health, fitness and
nutrition-related publications.

The following table sets forth certain information concerning each of the
Company's product categories in fiscal 1995.
<TABLE>
<CAPTION>
THREE-YEAR
COMPOUND ANNUAL
NUMBER OF PERCENTAGE OF GROSS SALES
PRODUCT CATEGORY SKU'S TOTAL GROSS SALES GROWTH
---------------- --------- ----------------- ---------------
<S> <C> <C> <C>
Vitamins, Minerals and Amino
Acids........................ 315 22.8% 12.9%
Sports Nutrition.............. 285 33.1 24.6
Special Formulas.............. 309 25.4 32.0
Herbal Supplements and
Phytonutrients............... 465 12.2 28.7
Herb Teas..................... 143 3.5 39.0
Publishing.................... N/A 3.0 33.1
----- ----- ----
1,517 100.0% 24.4%
===== ===== ====
</TABLE>

Vitamins, Minerals and Amino Acids. The vitamins, minerals and amino acids
category is comprised of a complete line of vitamins, minerals and amino acids
marketed under the TWINLAB brand name, including multivitamins and single-
entity vitamins (such as B-complex, C and E), minerals (such as calcium and
magnesium) and amino acids (such as glutamine and carnitine). These products
are available in a variety of delivery forms, including liquid, powder,
capsule and tablet to accommodate a variety of consumer preferences.

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<PAGE>

This category targets a broad array of health conscious consumers, with
particular emphasis on consumers who utilize nutritional supplements in their
daily diet and who demand premium quality ingredients in a broad variety of
dosages and delivery methods.

Sports Nutrition. The sports nutrition category includes a wide variety of
nutritional supplements designed for and targeted to athletes. Sports
nutrition products include Hydra Fuel and Ultra Fuel drinks, which replenish
glucose and electrolytes depleted during strenuous exercise; and DietFuel,
RxFuel, and Ripped Fuel, which are marketed, as part of a low fat diet and
exercise program, for the preservation of lean body mass and the building of
muscle mass. The Company's sports nutrition products are utilized by both
amateur and professional athletes in a variety of competitive sports. The
Company believes that its strong sports nutrition business serves to increase
the Company's brand awareness among customers who, as they grow older, will
shift their buying patterns to include vitamins, minerals and herbal products,
and who, based on their positive experiences with the Company's brand name,
are more likely to purchase products from the Company's other product
categories.

Special Formulas. The special formulas category consists of a broad
assortment of products formulated with specific health conditions or
objectives in mind. Special formulas are primarily targeted to sophisticated
users of health related products, including regular customers of health food
stores. Examples include OcuGuard, which is formulated for nutritional support
of the eyes, MaxiLIFE, which offers an advanced antioxidant formula, and
Coenzyme Q/1//0/, which is designed for cardiovascular health. In addition,
the Company sells a variety of fish and marine oils in a number of different
delivery forms which offer a multitude of nutritional benefits, including
favorable effects on cardiovascular health.

Herbal Supplements and Phytonutrients. Herbal supplements and phytonutrients
(nutrients from botanical sources that are considered to have medicinal
properties) have become increasingly important categories in health food
stores. Through its Nature's Herbs product line, the Company produces a full
line of herbal supplements and phytonutrients which offer natural alternatives
to over-the-counter ("OTC") medications. The Company manufactures and markets
approximately 400 herbal and botanical supplements which are produced at
Natur-Pharma Inc.'s modern FDA registered manufacturing facility in American
Fork, Utah and sold under the Nature's Herbs brand name. Nature's Herbs
products include single herbs, such as saw palmetto, garlic, gingko, ginseng
and golden seal; traditional combinations, such as echinacea-golden seal;
standardized extracts, such as Bilberry Power and Milk Thistle Power sold
under the POWER HERBS(R) brand name; and natural HealthCare product
formulations, such as Allerin and Coldrin. Nature's Herbs products are
packaged using the innovative FRESH CARE(R) System developed by the Company.
The FRESH CARE System is the first all-glass and antioxidant-protected herbal
packaging system that helps remove oxygen while locking out air, moisture and
light in order to maintain potency and to extend freshness. Management
believes that the association of the Nature's Herbs product line with
TWINLAB's strong name brand recognition and reputation for premium quality and
service, combined with the increased penetration of herbal supplements and
phytonutrients in the growing health food store channel of distribution, have
contributed to the rapid growth experienced by this product line.

Herb Teas. Through its Alvita Products, Inc. ("Alvita") product line, the
Company offers approximately 100 herb teas in both single use bags and bulk.
Alvita is a leading brand of herb teas and is one of the most recognizable tea
brands sold through health food stores. Alvita was founded in 1922 and is one
of the nation's oldest herb tea companies. Alvita purchases tea in bulk form,
formulates blends of natural herb teas and designs the packaging for its
products. Alvita's teas are currently blended and packaged by an independent
contractor. Representative Alvita teas include Peppermint Leaf, Chamomile,
Echinacea, Golden Seal, Ginger and Senna Leaf, as well as new-age blends such
as Chinese Green Tea, available in a choice of citrus flavors, and TrimTime
Thermogenic Diet Tea. Alvita markets its products with an environmentally
conscious theme by packaging bulk tea and tea bags in paper and by not
utilizing shrink wrap for either its outer boxes or tea bags. Alvita recently
launched a new line of herbal tea blends named Herbal Remeteas, including
Highland Lullaby, Manchurian Brain Blend, Jamaica Digesti Brew, and Canadian
Natur-Tussin. The Company believes that significant opportunities for product
line expansion exist in combining Alvita teas and other nutritional
supplements to create a new delivery form for traditional herbal supplements
and phytonutrients.

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<PAGE>

Publishing. Through Advanced Research Press, Inc., the Company publishes
Muscular Development, Fitness & Health, a high-quality bodybuilding and
fitness magazine featuring a scientific advisory board and contributors
considered to be among the most accomplished and knowledgeable in their
respective fields. The magazine covers recent developments and provides
innovative information in the fields of training and nutrition research,
supplements, health, fitness and diet. This publication serves as a useful
vehicle to increase public awareness of the Company's products and as an
outlet for a portion of the Company's advertising program. Muscular
Development, Fitness & Health currently has a monthly paid circulation of
approximately 113,000 readers. The Company also publishes health and fitness
related books and is exploring the introduction of new health and fitness
related products.

PRODUCT DEVELOPMENT

The Company is recognized as an industry leader in new product development.
The Company closely monitors consumer trends and scientific research, and has
consistently introduced innovative products and programs in response thereto.
The Company's product development staff regularly studies over 50 different
health and nutrition periodicals, including the New England Journal of
Medicine and the Journal of the American Medical Association, in order to
generate ideas for new product formulations. Management believes that the
Company's introduction of new products has increased market share for both the
Company and its retail customers, and the Company intends to continue
developing new products and programs in the future. The Company was the first
major nutritional supplement manufacturer to introduce such industry-wide
innovations as: an all-capsule vitamin and mineral line that is well tolerated
by allergy-prone individuals; a complete line of amino acids and fish and
marine oils; the most advanced and complete array of antioxidants, including
beta carotene, L-glutathione, L-cysteine, N-acetyl cysteine (NAC) and an
entirely new class of antioxidants, including polyphenols, flavonoids and
isoflavones; concentrated Coenzyme Q/1//0/; high potency phosphatidyl choline
and patented GTF Chromium; pioneering thermogenic products; standardized
herbal extracts guaranteeing potency (Certified Potency); the FRESH CARE
packaging system, designed to preserve potency and freshness; a full line of
Ayurvedic Indian herbal products; and a complete line of herb teas in single
use bag and bulk form. From 1991 through 1995, the Company introduced over 350
products with over 90 new products introduced in 1995 alone.

The Company's research and development expenses were $1.1 million in 1995,
$1.0 million in 1994 and $0.9 million in 1993, including the support of
scientific research at independent research centers located at major
universities and medical centers.

SALES AND DISTRIBUTION

The Company believes that its TWINLAB products are available in
approximately 90% of domestic health food stores. The Company sells its
products primarily through a network of approximately 60 distributors, which
service approximately 11,000 health food stores throughout the country and
selected retail outlets. Sales to domestic distributors represented
approximately 88% of the Company's gross sales in 1995. The Company's
distributor customers include GNC, Tree of Life, Cornucopia, Stow Mills,
Nature's Best and other distributors that supply retailers of vitamins,
minerals and other nutritional supplements. Management believes that it sells
its products to every major nutritional supplement distributor servicing
health food stores and is generally the largest independent supplier of
nutritional supplements to each such distributor. The Company is also
currently expanding distribution into domestic military exchanges.

Several of the Company's distributors, such as GNC, Cornucopia and Tree of
Life, are national in scope, but most are regional in nature and operate one
or more localized distribution centers. Generally, the Company enters into
nonexclusive area rights agreements with its domestic distributors, who are
also responsible for new account development. Retailers typically place orders
with and are supplied directly by the Company's distributors. In the past ten
years, the Company has not lost a major distributor customer other than
through consolidation with an existing customer of the Company. The breadth
and depth of the products manufactured

37
<PAGE>

and the ability to manufacture with minimal throughput times enables the
Company to maintain extremely high order fill rates, which management believes
are among the highest in the industry, with its customer base.

Tree of Life and GNC accounted for approximately 28% and 22%, respectively,
of the Company's net sales in 1995. No other single customer accounted for
more than 10% of the Company's net sales in 1995. The largest retail
organization which sells the Company's products is GNC, which operates
approximately 2,400 stores.

Approximately 6%, or $8.3 million, of the Company's net sales in 1995 were
derived from international sales which originate from overseas distributor
organizations. The Company presently has distribution agreements for fifteen
European countries, including Great Britain, The Benelux Countries and the
Scandinavian countries; fourteen Latin American countries, including Mexico,
Brazil and Paraguay; eight Middle Eastern countries, including Israel and
Saudi Arabia; and various other countries in the Far East and the Caribbean.
The Company also has agreements for another seven countries currently in
negotiation.

MARKETING AND CUSTOMER SALES SUPPORT

The Company's marketing strategy, which centers around an extensive
advertising and promotion program, together with the Company's customer sales
support services have been critical components of the Company's growth, strong
brand name recognition and leading position within the nutritional supplement
industry. Management believes that the levels of its advertising and
promotional support and of its customer service rank among the highest in the
industry.

The Company's marketing and advertising expenditures were approximately
$11.1 million in 1995, $8.7 million in 1994 and $7.1 million in 1993. Of the
Company's $8.4 million in 1995 advertising expenditures, approximately $5.5
million, or 65%, was spent on print advertising, approximately $2.0 million,
or 24%, was spent on television and radio advertising and approximately $0.9
million, or 11%, was spent on production of advertising materials. As the
Company's customers align themselves with fewer vendors of brand name
products, the Company believes that its strong commitment to advertising and
promotion will continue to constitute a significant competitive advantage. The
Company's advertising strategy stresses brand awareness of the Company's
various product segments in order to generate purchases by customers and also
communicates the points-of-difference between the Company's products and those
of its competitors.

A significant portion of the Company's advertising budget is focused on
advertisements in magazines. The Company regularly advertises in consumer
magazines such as Better Nutrition, Delicious, Vegetarian Times, Let's Live,
Natural Health, New Age Journal, Bicycling, VeloNews, Triathlete, Runner's
World, Muscle & Fitness, Flex, and Ironman, as well as trade magazines such as
Natural Foods Merchandiser, Vitamin Retailer, Nutrition Science News, Health
Foods Business and Whole Foods.

Other marketing and advertising programs conducted by the Company include
participation in or sponsorship of sporting events such as running
competitions, including the Boston Marathon and the Los Angeles Marathon, and
bodybuilding competitions, including the Arnold Classic and the NPC National
Bodybuilding Championships, and sponsorship of health-oriented television and
radio programs. In addition, the Company promotes its products at major
industry trade shows and through in-store point of sale materials. The Company
also engages elite athletes, including Shelly Beattie, Michael Mentzer and
John Romano, and nutritional experts such as Dr. James Duke, to communicate on
the Company's behalf with the trade and the public and to promote the
Company's products.

The Company's established customer relationships are based upon the
Company's long-standing commitment to a high level of customer service. The
Company's sales force currently consists of 30 dedicated sales professionals
whose primary functions are to gain better placement and additional shelf
space for TWINLAB, Nature's Herbs and Alvita products and to stay abreast of
customer needs. These sales representatives are assigned to specific
territories covering the entire continental United States and Alaska. These
personnel work with direct accounts, distributors and individual retailers to
enhance knowledge of the

38
<PAGE>

Company's products and to maximize exposure for TWINLAB, Nature's Herbs and
Alvita products. An additional three person sales and marketing staff supports
Nature's Herbs products and the servicing of customer needs. The Company also
designs and supplies marketing literature to help educate retailers and
consumers as to the benefits of the Company's products.

The Company operates an in-house customer service department to respond to
inquiries requesting information concerning product applications, background
data, ingredient compositions and the efficacy of products. The department is
currently staffed by three nutrition experts.

MANUFACTURING AND PRODUCT QUALITY

Virtually all of the Company's TWINLAB products are manufactured at the
Company's 80,000 square foot manufacturing facility located in Ronkonkoma, New
York. Herbal supplements and phytonutrients are manufactured at the Company's
48,000 square foot FDA registered manufacturing facility in American Fork,
Utah. Herb teas are currently packaged by an independent contractor and
warehoused at the American Fork, Utah, facility. The Company's two modern
manufacturing facilities provide the Company with the capability to meet
customers' sales demands with a prompt response time and to maintain the
highest level of quality control. The Company is continuously upgrading its
facilities and enhancing its manufacturing capabilities through new equipment
purchases and technological improvements. Management believes that the
Company's manufacturing facilities are among the most advanced in the
nutritional supplement industry. In 1995, the Company acquired additional
property adjacent to its American Fork, Utah, facility to provide additional
plant capacity for the operations of Natur-Pharma Inc. and Alvita Products,
Inc. The Company is constructing an 8,500 square foot addition to its Utah
facility at a cost of approximately $700,000. Management believes that the
Company's Utah facility will be sufficient to enable the Company to meet sales
demand for the foreseeable future and that its New York facility will be
sufficient to meet sales demand for TWINLAB products for approximately three
years. Management believes that it will have the option to lease additional
space or to construct a new facility at such time.

The Company's modern manufacturing operations feature pharmaceutical quality
blending, filling and packaging capabilities, which enable the Company to
offer quality and consistency in formulation and delivery. The Company
operates flexible manufacturing lines which enables it to efficiently and
effectively shift output among various products as dictated by customer
demand. The Company is capable of producing over 25 million capsules and
tablets, over 100,000 pounds of blended powder and up to 2,500 gallons of
liquid preparations per day. The Company has six high-speed capsule and tablet
packaging lines, two high-speed liquid filling lines, two powder filling lines
and one chewable tablet packaging line which are capable of operating
simultaneously, at its Ronkonkoma, New York, and American Fork, Utah,
facilities. The Company manufactures the powders used in its line of single-
serving sports drink products but utilizes a contract bottler for the
hydration and bottling of these products. The Company operates on a 24-hour
work day that includes two production shifts and a third shift dedicated
solely to cleaning, maintenance and equipment set-up.

The Company sources its raw material needs from over 200 different
suppliers, including some of the largest pharmaceutical and chemical companies
in the world. The Company's raw materials and packaging supplies are readily
available from multiple suppliers, and the Company is not dependent on any
single supplier for its needs. No single supplier accounted for more than 10%
of the Company's total purchases in 1995.

The Company's quality standards are a critical factor in consumer purchase
decisions, and the Company believes it has established a competitive advantage
based on the quality of its products. All of the Company's capsule and tablet
products are visually inspected before being packaged in virtually light-proof
amber glass for better product freshness and stability. Moreover, each of the
Company's products undergoes comprehensive quality control testing procedures
from the receipt of raw materials to the release of the packaged product. The
Company utilizes real-time computerized monitoring of its manufacturing
processes to ensure proper product weights and measures. In addition, the
Company maintains two in-house laboratories with state-of-the-art testing

39
<PAGE>

and analysis equipment where the Company performs most of its testing,
including stability tests, active component characterization utilizing thin-
layer and high-pressure liquid chromatography, and UV visible and infrared
spectrometry. The Company contracts with independent laboratories to perform
the balance of its testing requirements. A team of 50 full-time quality
assurance professionals regularly conducts a wide variety of visual and
scientific tests on all manufactured products, and samples of raw materials
and finished products are retained for quality control purposes for up to four
years.

The Company has a strong commitment to maintaining the quality of the
environment. All of the Company's plastic containers are recyclable and,
wherever possible, the Company uses recyclable glass. The Company was also one
of the first companies in the industry to use biodegradable starch pellets for
packing materials. In addition, the Company has removed most solvents from its
production processes (using natural, environmentally-safe alternatives) and
helped develop a special glue, for manufacturing purposes, that contains
virtually no harmful hydrocarbons. The Company believes it is in material
compliance with all applicable environmental regulations.

COMPETITION

Within the nutritional supplement industry, suppliers can be divided into
three major categories: specialty firms, like the Company, which focus on
vitamins, minerals and other nutritional supplements targeted to health food
store retailers; major pharmaceutical companies and private label contractors,
which sell vitamins and other nutritional supplements that are targeted to
mass market retailers; and direct sale and mail order companies.

The domestic nutritional supplement industry that targets products to the
health food store market is highly fragmented, with a number of small
competitors involved in manufacturing and marketing vitamin and other
nutritional supplement products to health food retailers and distributors.
Most of these companies are relatively small businesses operating on a local
or regional level. Although most companies are privately held, resulting in
the Company's inability to precisely assess the size of its competitors,
management believes that the Company is substantially larger than the next
largest firm that targets independently-owned health food stores and that,
among competitors which sell through independent distributors, it is the
largest company which manufactures a majority of its own products.

The Company's principal competitors in the health food store market include
Nutraceuticals, Weider/Schiff, Nature's Way, Solgar and Nature's Plus. Private
label products of the Company's customers also provide competition to the
Company's products. For example, a substantial portion of GNC's vitamin and
mineral supplement offerings are products offered under GNC's own brand names.
Many of the Company's competitors in markets other than the health food store
market, including the major pharmaceutical companies, have substantially
greater financial and other resources than the Company.

The Company believes that the growing number of health food retailers are
increasingly likely to align themselves with those companies which offer a
wide variety of high quality products, have a loyal customer base, support
their brands with strong marketing and advertising programs and provide
consistently high levels of customer service. The Company believes that it
competes favorably with other nutritional supplement companies because of its
comprehensive line of products, premium brand names, commitment to quality,
ability to rapidly introduce innovative products, competitive pricing, high
customer-order fill rate, strong and effective sales force and distribution
network, and sophisticated advertising and promotional support. The wide
variety and diversity of the forms, potencies and categories of the Company's
products are important points of differentiation between the Company and many
of its competitors.

REGULATORY MATTERS

The manufacturing, processing, formulating, packaging, labeling and
advertising of the Company's products are subject to regulation by one or more
federal agencies, including the FDA, the FTC, the CPSC, the USDA and the EPA.
These activities are also regulated by various agencies of the states,
localities and foreign countries

40
<PAGE>

to which the Company distributes its products and in which the Company's
products are sold. The FDA, in particular, regulates the formulation,
manufacture, and labeling of vitamin and other nutritional supplements.

On October 25, 1994, the President signed into law the DSHEA. This new law
revises the provisions of the FFDC Act concerning the composition and labeling
of dietary supplements and, in the judgment of the Company, is favorable to
the dietary supplement industry. The legislation creates a new statutory class
of "dietary supplements." This new class includes vitamins, minerals, herbs,
amino acids and other dietary substances for human use to supplement the diet,
and the legislation grandfathers, with certain limitations, dietary
ingredients on the market before October 15, 1994. A dietary supplement which
contains a new dietary ingredient, one not on the market before October 15,
1994, will require evidence of a history of use or other evidence of safety
establishing that it will reasonably be expected to be safe, such evidence to
be provided by the manufacturer or distributor to the FDA before it may be
marketed. The DSHEA also invalidates the FDA's prior enforcement theory that
dietary supplements are food additives requiring pre-market approval.

The NLEA prohibits the use of any health claim for foods, including dietary
supplements, unless the health claim is supported by significant scientific
agreement and is pre-approved by the FDA. To date, the FDA has approved the
use of health claims for dietary supplements only in connection with calcium
for osteoporosis, and folic acid for neural tube defects. However, among other
things, the DSHEA amends, for dietary supplements, the NLEA by providing that
"statements of nutritional support" may be used in labeling for dietary
supplements without FDA pre-approval if certain requirements, including
prominent disclosure on the label of the lack of FDA review of the relevant
statement, possession by the marketer of substantiating evidence for the
statement and post-use notification to the FDA, are met. Such statements may
describe how particular nutritional supplements affect the structure, function
or general well-being of the body (e.g. "promotes your cardiovascular
health").

41
<PAGE>

labels that portray the products as apparent alternatives to illegal street
drugs because these products pose significant health risks to consumers. None
of the Company's products which contain Ma Huang are marketed for such
purpose. The FDA, through a National Food Advisory Committee, is currently
considering whether the FDA should prohibit, limit potencies or place other
restrictions on the sale of products containing Ma Huang. There can be no
assurance that the FDA will not seek to impose additional regulations on
products which contain Ma Huang, including those marketed by the Company.

As a result of the Company's efforts to comply with applicable statutes and
regulations, the Company has from time to time reformulated, eliminated or
relabeled certain of its products and revised certain provisions of its sales
and marketing program. Compliance with the provisions of national, state and
local environmental laws and regulations has not had a material adverse effect
upon the capital expenditures, earnings, financial position, liquidity or
competitive position of the Company.

The Company cannot determine what effect additional governmental regulations
or administrative orders, when and if promulgated, would have on its business
in the future. They could, however, require the reformulation of certain
products to meet new standards, the recall or discontinuance of certain
products not capable of reformulation, additional recordkeeping, expanded
documentation of the properties of certain products, expanded or different
labeling, and/or scientific substantiation. Any or all of such requirements
could have a material adverse effect on the Company's results of operations
and financial condition.

The Company's American Fork, Utah, facility is registered by the FDA to
manufacture OTC drugs and is subject to periodic inspection by the FDA.

EMPLOYEES

At March 31, 1996, the Company employed 546 persons, of which 112 were
involved in executive, sales and administrative activities. The balance of the
Company's employees were engaged in production, packaging and shipping
activities. None of the Company's employees are covered by a collective
bargaining agreement, and management considers relations with its employees to
be good.

PROPERTIES

The Company owns a modern vitamin, mineral and nutritional supplement
manufacturing facility in Ronkonkoma, New York. This 80,000 square foot
facility also houses the Company's executive offices. The

42
<PAGE>

Company leases 26,300 square feet of warehouse space in Ronkonkoma, 50,000
square feet of warehouse space in Hauppauge, New York, and 5,000 square feet
of office space in Ronkonkoma. In addition, the Company owns a modern FDA-
registered 48,000 square foot manufacturing facility in American Fork, Utah.
This facility, which was constructed in 1993, houses office, manufacturing and
warehousing facilities for the operations of Natur-Pharma Inc. (Nature's
Herbs) and office and warehousing facilities for the operations of Alvita
Products, Inc.

The Company believes that its facilities and equipment generally are well
maintained and in good operating condition. In 1995, the Company acquired
additional property adjacent to its American Fork, Utah, facility to provide
additional plant capacity for the operations of Natur-Pharma Inc. and Alvita
Products, Inc. The Company is constructing an 8,500 square foot addition to
its Utah facility at a cost of approximately $700,000. Management believes
that the Company's Utah facility will be sufficient to enable the Company to
meet sales demand for the foreseeable future and that its New York facility
will be sufficient to meet sales demand for TWINLAB products for approximately
three years. Management believes that it will have the option to lease
additional space or to construct a new facility at such time.

TRADEMARKS

The Company owns trademarks registered with the United States Patent and
Trademark Office and/or similar regulatory authorities in many other countries
for its TWINLAB, Nature's Herbs, Alvita and Fuel family of trademarks, and has
rights to use other names material to its business. In addition, the Company
has obtained trademarks for various of its products and has approximately 250
trademark registrations with the United States Patent and Trademark Office for
TWINLAB, Nature's Herbs and Alvita brands. Federally registered trademarks
have perpetual life, provided they are renewed on a timely basis and used
properly as trademarks, subject to the rights of third parties to seek
cancellation of the marks. The Company regards its trademarks and other
proprietary rights as valuable assets and believes that they have significant
value in the marketing of its products. The Company vigorously protects its
trademarks against infringement.

LEGAL MATTERS

Twin Laboratories Inc. and other encapsulators, and various distributors,
manufacturers, and retailers of manufactured L-Tryptophan are defendants in
actions in federal and state courts seeking compensatory and, in some cases,
punitive damages for alleged personal injuries resulting from the ingestion of
products containing manufactured L-Tryptophan. As of June 1, 1996, Twin
Laboratories Inc. was a named defendant in three of these actions. The Company
believes that few new lawsuits are likely to be brought in view of the
statutes of limitations. Twin Laboratories Inc. has entered into the
Indemnification Agreement with SDA, a U.S. subsidiary of a Japanese
corporation, SDK. Under the Indemnification Agreement, SDA agrees to assume
the defense of all claims arising out of the ingestion of L-Tryptophan
products and to pay all legal fees and indemnify Twin Laboratories Inc.
against liability in any action if it is determined that a proximate cause of
the injury sustained by the plaintiff in the action was a constituent of the
raw material sold by SDA to Twin Laboratories Inc. or was a factor for which
SDA or any of its affiliates was responsible, except to the extent that action
by Twin Laboratories Inc. proximately contributed to the injury, and except
for certain claims relating to punitive damages. SDA appears to have been the
supplier of all the allegedly contaminated L-Tryptophan. SDA has posted a
revolving irrevocable letter of credit for the benefit of the Indemnified
Group if SDA is unable or unwilling to satisfy any claims or judgement. SDK
has unconditionally guaranteed the payment obligations of SDA under the
Indemnification Agreement. As of June 1, 1996, 129 suits in which the Company
was a named defendant have been dismissed or settled by SDA at no cost to the
Company.

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<PAGE>

SDA without cost to the Company, the multitude of defendants and the
possibility that liability could be assessed against or paid by other parties
or by insurance carriers, have led management of the Company, after
consultation with outside legal counsel, to believe that the prospect for a
material adverse effect on the Company's results of operations or financial
condition is remote and no provision in the Company's financial statements has
been made for any loss that may result from these actions.

The Company, like other retailers, distributors and manufacturers of
products that are ingested, faces an inherent risk of exposure to product
liability claims in the event that, among other things, the use of its
products results in injury. With respect to product liability insurance
coverage, the Company currently has $75 million of product liability insurance
(which does not cover matters relating to L-Tryptophan) with a $25,000 self
insurance retention per occurrence and $100,000 self insurance retention in
the aggregate. There can be no assurance that such insurance will continue to
be available at a reasonable cost, or if available will be adequate to cover
liabilities.

The Company and others are defendants in a wrongful death action originally
commenced in July 1995 with respect to one of the Company's products
containing Ma Huang and with respect to a product that does not contain Ma
Huang manufactured by another defendant. See "Risk Factors--Government
Regulation" and "--Regulatory Matters."

The Company is presently engaged in various other legal actions, and
although ultimate liability cannot be determined at the present time, the
Company is currently of the opinion that the amount of any such liability from
these other actions and the lawsuit described in the preceding paragraph,
after taking into consideration the Company's insurance coverage, will not
have a material adverse effect on its results of operations and financial
condition.

44
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning each of the
Company's directors and executive officers:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Brian Blechman................... 45 Executive Vice President, Treasurer and Director
Dean Blechman.................... 39 Executive Vice President and Director
Neil Blechman.................... 45 Executive Vice President, Secretary and Director
Ross Blechman.................... 43 Chairman of the Board, Chief Executive Officer
and President
Steve Blechman................... 43 Executive Vice President and Director; Chairman
of the Board, Chief Executive Officer and
President of ARP
Stephen Welling.................. 42 President of Natur-Pharma Division of
Twin Laboratories Inc.
John G. Danhakl.................. 40 Director
Jennifer Holden Dunbar........... 33 Director
Jonathan D. Sokoloff............. 38 Director
</TABLE>

Brian Blechman became an Executive Vice President of the Company upon
consummation of the Acquisition. Mr. Blechman joined Twin Laboratories Inc. in
1972 and served as Vice President, Purchasing & Quality Control of the Company
prior to the Acquisition. He is responsible for the purchasing of all raw
materials and has final responsibility for all quality control and management
of the plant facilities. He is also responsible for capital expenditures for
plant and equipment and for product formulations.

Dean Blechman became an Executive Vice President of the Company upon
consummation of the Acquisition. Mr. Blechman joined Twin Laboratories Inc. in
1979 and served as Vice President, Sales of the Company prior to the
Acquisition. He has responsibility for overseeing the national sales force and
distributor network. Mr. Blechman is on the board of directors of the National
Nutritional Foods Association, a leading trade organization that governs the
industry's retailers, distributors and manufacturers.

Neil Blechman became an Executive Vice President of the Company upon
consummation of the Acquisition. Mr. Blechman joined Twin Laboratories Inc. in
1972 and served as Vice President, Marketing & Advertising of the Company
prior to the Acquisition. He is primarily responsible for directing marketing
and advertising strategies, the design of product packaging and point of sale
materials, the production and creation of merchandising displays, advertising,
promotional activities and trade show activities.

Ross Blechman became Chairman of the Board, Chief Executive Officer and
President of the Company upon consummation of the Acquisition. Mr. Blechman
joined Twin Laboratories Inc. in 1974 and served as Vice President, Production
of the Company prior to the Acquisition. He is primarily responsible for plant
operations, shipping, warehouse management, and for assuring that quality
standards are maintained. He is also responsible for MIS and human resource
functions. Mr. Blechman also directs the operations of the Alvita Products
division of Twin Laboratories Inc.

Steve Blechman became an Executive Vice President of the Company and
Chairman of the Board, Chief Executive Officer and President of ARP upon
consummation of the Acquisition. Mr. Blechman joined Twin Laboratories Inc. in
1974 and served as Vice President, Product Development & Marketing of the
Company prior to the Acquisition. He is involved in product development and
marketing, and is primarily responsible for developing new products for the
TWINLAB, Nature's Herbs and Alvita brands. Mr. Blechman also directs the
operations of ARP and the customer service department of Twin Laboratories
Inc.

Stephen Welling became the President of the Natur-Pharma Division of Twin
Laboratories Inc. upon consummation of the Acquisition. Mr. Welling joined
Natur-Pharma Inc. in 1977 as the controller and served as President of Natur-
Pharma Inc. prior to the Acquisition. Prior to his promotion to President, Mr.
Welling

45
<PAGE>

served as Vice President of Operations of Natur-Pharma Inc. with
responsibility for manufacturing, personnel, quality management, legal affairs
and finance.

John G. Danhakl became a director of the Company upon consummation of the
Acquisition. He has been an executive officer and an equity owner of Leonard
Green & Partners, L.P. ("LGP"), a merchant banking firm which manages GEI,
since 1995. Mr. Danhakl had previously been a Managing Director at Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") and had been with DLJ since
1990. Prior to joining DLJ, Mr. Danhakl was a Vice President at Drexel Burnham
Lambert Incorporated. Mr. Danhakl is also a director of The Arden Group, Inc.
and Kash n' Karry Food Stores, Inc.

Jennifer Holden Dunbar has been a director of the Company since its
formation in February 1996. She joined Leonard Green & Associates, L.P.
("LGA"), a merchant banking firm, as an associate in 1989, became a principal
in 1993, and through a corporation became a partner in 1994. Since 1994, Ms.
Holden Dunbar has also been an executive officer and equity owner of LGP. Ms.
Holden Dunbar previously was an associate with the merchant banking firm of
Gibbons, Green, van Amerongen and a financial analyst in mergers and
acquisitions with Morgan Stanley & Co. Ms. Holden Dunbar is also a director of
Thrifty PayLess Holdings, Inc., Thrifty PayLess, Inc., Kash n' Karry Food
Stores, Inc. and several private companies.

Jonathan D. Sokoloff became a director of the Company upon consummation of
the Acquisition. He joined LGA as a partner in 1990. Mr. Sokoloff has also
been an executive officer and equity owner of LGP since its formation in 1994.
Mr. Sokoloff was previously a Managing Director at Drexel Burnham Lambert
Incorporated. Mr. Sokoloff is also a director of Thrifty PayLess Holdings,
Inc., Thrifty PayLess, Inc., Carr-Gottstein Foods Co. and several private
companies.

The Company's By-laws and Certificate of Incorporation provide for the
Company's Board of Directors to be comprised of between eight and eleven
members, as determined from time to time by the stockholders. The Board is
currently comprised of eight members. Each Director holds office until the
next annual meeting of stockholders and until his successor is duly elected
and qualified, or until his earlier death, resignation or removal.

All of the Company's current Directors were nominated and elected to the
Company's Board of Directors in accordance with the Stockholder Agreement (as
hereinafter defined) as designees of GEI and the Continuing Stockholders,
respectively. See "Principal Stockholders--Terms of the Stockholders
Agreement." Upon the closing of the Offerings, this provision of the
Stockholders Agreement will terminate and there will be no voting agreements
in effect regarding the election of Directors. Executive officers of the
Company are appointed by, and serve at the discretion of, the Board of
Directors. Except for the Blechman Brothers' familial relationships, there are
no family relationships among the executive officers or Directors of the
Company.

BOARD COMMITTEES

The Board of Directors intends to establish an audit committee and a
compensation committee at or prior to the consummation of the Offerings. The
audit committee, the members of which will be independent directors, will
oversee actions taken by the Company's independent auditors, recommend the
engagement of auditors and review the scope and results of the Company's
accounting and control procedures and the accuracy of its system of internal
accounting and control procedures. The compensation committee will review and
approve the compensation of executives of the Company and make recommendations
to the Board of Directors with respect to standards for setting compensation
levels.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company does not currently have a compensation committee, however as
stated above, the Company intends to establish a compensation committee at or
prior to the consummation of the Offerings.

46
<PAGE>

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table shows the compensation paid
by the Company during the year ended December 31, 1995 ("Fiscal Year 1995"),
to the five most highly compensated executive officers of the Company, who
collectively acted in a similar capacity to a chief executive officer, serving
as such at the end of Fiscal Year 1995 (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------
NAME AND PRINCIPAL FISCAL ALL OTHER
POSITION YEAR SALARY($) BONUS($)(a) COMPENSATION($)(b)
------------------ ------ --------- ----------- ------------------
<S> <C> <C> <C> <C>
Ross Blechman .......... 1995 402,461 368,145 9,527
Vice President
Brian Blechman ......... 1995 401,523 368,145 9,822
Vice President
Dean Blechman .......... 1995 402,545 368,145 9,235
Vice President
Neil Blechman .......... 1995 402,545 368,145 9,822
Vice President
Steve Blechman ......... 1995 402,548 368,145 9,527
Vice President
</TABLE>
- --------------------
(a) Bonuses are reported in the fiscal year earned and paid.
(b) (i) payment of premiums for term life insurance policies of $1,365 for
Ross Blechman; $1,660 for Brian Blechman; $1,073 for Dean Blechman; $1,660
for Neil Blechman; and $1,365 for Steve Blechman, for 1995; (ii) payment
of premiums for executive medical insurance policies for each of Ross
Blechman, Brian Blechman, Dean Blechman, Neil Blechman and Steve Blechman,
of $1,250 for 1995; and (iii) payments under Twin Laboratories Inc.'s
Profit Sharing Plan of $6,912 for each of Ross Blechman, Brian Blechman,
Dean Blechman, Neil Blechman and Steve Blechman, for 1995. The amount set
forth in this column does not include "S" corporation dividend
distributions sufficient to pay income taxes on the earnings of the
Company that were treated as having been earned by the individual as a
shareholder of the Company.

EMPLOYMENT AGREEMENTS

Upon consummation of the Acquisition, the Company entered into employment
agreements with each of the Blechman Brothers (each an "Employment
Agreement"). The Employment Agreement provides that, unless a Public Offering
Event (as defined below, see "Principal Stockholders--Terms of the
Stockholders Agreement") has occurred, the relevant individual will be
employed as an executive of the Company for a term of five years, renewable
for terms of one year thereafter. From and after the occurrence of a Public
Offering Event, the employment term is deemed to end on the third anniversary
of such event; provided that, the employment term will be automatically
extended so as to establish a three year remaining term of employment upon a
termination of employment for the purposes of the noncompetition and severance
provisions of the Employment Agreement. The Employment Agreement provides for
a base salary of $400,000 (as adjusted for inflation), in addition to other
customary perquisites and benefits. In addition to receiving a base salary,
the executive is also eligible to participate in the Holding Company's Bonus
Plan which entitles such individual to a bonus payment of up to 128% of his
base salary for the relevant calendar year based on annual increases in EBITDA
(as defined therein) realized by the Company for each year of the employment
term. The Employment Agreement also provides, subject to certain exceptions,
that upon a termination of the individual's employment during the term thereof
(other than for "cause" as defined therein), the Company is generally
obligated to pay the individual an amount equal to his base salary for the
remaining term under the Employment Agreement. The consummation of the
Offerings will constitute a Public Offering Event.

Upon consummation of the Acquisition, the Company entered into an employment
agreement with Stephen Welling to serve as President of the Natur-Pharma
Division of the Company (the "Division") (the "Welling Employment Agreement").
The Welling Employment Agreement provides that Mr. Welling will be employed

47
<PAGE>

as an executive of the Company for a term of three years, renewable for terms
of one year thereafter. The Welling Employment Agreement provides for a base
salary of $135,000 (as adjusted for inflation), in addition to other customary
perquisites and benefits. In addition to receiving a base salary, Mr. Welling
is also eligible to participate in the Division Bonus Plan which entitles him
to a bonus payment up to 202.5% of his base salary for the relevant calendar
year based on annual increases in EBITDA (as defined therein) realized by the
Division for each year of the employment term. The Welling Employment
Agreement also provides, subject to certain exceptions, that upon a
termination of Mr. Welling's employment during the term thereof (other than
for "cause" as defined therein), the Company is generally obligated to pay Mr.
Welling an amount equal to his base salary for the remaining term under the
Welling Employment Agreement.

Upon consummation of the Acquisition, the Company entered into consulting
agreements with each of David and Jean Blechman (each a "Consulting
Agreement"). The Consulting Agreement provides that the relevant individual be
engaged as an independent consultant to the Company for a term of five years.
As consideration for such consulting services, the Company is obligated to pay
the individual an annual consulting fee of $100,000, in addition to certain
limited perquisites and benefits.

Upon consummation of the Acquisition, the Company also entered into non-
competition agreements with each of the Stockholders (each a "Non-Competition
Agreement"). The term of the Non-Competition Agreement is equal to the initial
term of the relevant individual's employment or consulting agreement, as the
case may be. The Non-Competition Agreement generally prevents the individual
from participating in any manner in the management, operation and/or ownership
of any entity, anywhere in the world, which is engaged in similar lines of
business to those of the Company.

DIRECTOR COMPENSATION

Directors who are employees of the Company receive no compensation for
serving on the Board of Directors. Non-employee directors are reimbursed for
their out-of-pocket expenses in attending Board meetings. Messrs. Danhakl and
Sokoloff and Ms. Holden Dunbar receive no fees in their capacities as
directors, but see "Certain Relationships and Related Transactions--
Transactions with LGP" for a description of certain other arrangements
pursuant to which LGP, of which they (or corporations owned by them) are
partners, receives compensation from the Company.

48
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

THE ACQUISITION

The Acquisition Agreement contains provisions customary for transactions of
similar size and type, including representations and warranties, which
generally will expire at the end of the fourteenth month following the month
in which the Acquisition Agreement was consummated. However, those
representations and warranties that are related to tax and environmental
matters will expire, respectively, at the date on which the applicable statute
of limitations has expired and the third anniversary of the consummation of
the Acquisition Agreement. Subject to the limitations set forth in the
Acquisition Agreement (which include, subject to certain exceptions, a
$2,000,000 deductible on liability and a maximum liability of $25,000,000),
the Stockholders have agreed to indemnify GEI, its permitted assigns and the
Company against any liabilities arising out of the breach of such
representations and warranties while such representations and warranties are
still in effect. Pursuant to the Acquisition Agreement, the Stockholders
received, in addition to certain payments described elsewhere in this
Prospectus, a payment in respect of their estimated liability for taxes on the
Company's income prior to the consummation of the Transactions, when the
Company had "S" corporation status for federal income tax purposes. This
payment is subject to adjustment based on the actual tax liability as
calculated for the relevant period. In addition, certain fees, taxes and
expenses of parties to the Acquisition Agreement were or will be paid by the
Company in connection with the consummation of the Acquisition. See
"Prospectus Summary--The Acquisition."

EMPLOYMENT AND CONSULTING AGREEMENTS

Upon consummation of the Acquisition, the Company entered into employment
agreements with each of the Continuing Stockholders and consulting agreements
with each of David and Jean Blechman. See "Management--Employment Agreements."

TRANSACTIONS WITH DAVID BLECHMAN AND JEAN BLECHMAN

During the period from 1989 to 1992, Twin Laboratories Inc. assigned to
David and Jean Blechman certain promissory notes of Natur-Pharma, Inc.,
representing inter-company payables, in the aggregate principal amount of
$1,500,000. These promissory notes bore interest at a rate of 10% per annum,
and $1,000,000 of the principal was repaid in 1994 and the remainder was
repaid on May 2, 1996. In June and July of 1991, Alvita Products, Inc. issued
four promissory notes payable to David Blechman and Jean Blechman in the
aggregate principal amount of $250,000. Such promissory notes bore interest at
a rate of 9% per annum and were repaid in April 1994. In 1988 and 1989, ARP
borrowed funds from David Blechman and Jean Blechman in the aggregate
principal amount of $545,500. These loans were non-interest bearing, and
$200,000 of the principal was repaid in 1994 and the remainder was repaid on
May 3, 1996.

The Company believes that the transactions described above were on terms at
least as favorable to the Company as could be obtained in transactions with
independent third parties.

TRANSACTIONS WITH LGP

LGP is the investment advisor to and an affiliate of the general partner of
GEI, which after consummation of the Acquisition owns 48% of the outstanding
shares of Common Stock of Holding. Following consummation of the Acquisition,
Messrs. Danhakl and Sokoloff and Ms. Holden Dunbar, stockholders and directors
of the general partner of LGP, became directors of the Company. See
"Management--Directors and Executive Officers."

Upon the consummation of the Acquisition, LGP received a fee of $1 million
for its services in arranging and structuring the Acquisition, including,
among other things, structuring and negotiating the Acquisition Agreement and
the Stockholders Agreement, arranging and negotiating the terms of the New
Credit Facility and related documents, assistance with the Note Offering,
financial and market analyses, and other similar consulting and investment
banking services. The majority of such services were performed on behalf of
LGP by Messrs. Danhakl and Sokoloff and Ms. Holden Dunbar.

49
<PAGE>

In connection with the Acquisition, the Company entered into a Management
Services Agreement with LGP pursuant to which LGP will receive an annual
retainer fee of up to $400,000 plus reasonable expenses for providing certain
management, consulting and financial planning services (the "LGP Management
Fee"). The Company believes that the contacts and expertise provided by LGP in
these areas enhance the Company's opportunities and management's expertise in
these matters and that the fees to be paid to LGP fairly reflect the value of
the services to be provided by LGP. The specialized consulting services
provided by LGP overlap to some extent with the role of Messrs. Danhakl and
Sokoloff and Ms. Holden Dunbar as directors of the Company, for which they do
not receive any additional compensation. See "Management--Director
Compensation." In addition to the LGP Management Fee, the Management Services
Agreement provides that LGP may receive reasonable and customary fees and
reasonable expenses from time to time for providing financial advisory and
investment banking services in connection with major financial transactions
that may be undertaken in the future; provided, however, that if the
Continuing Stockholders maintain ownership of more than 30% of the shares of
Common Stock of Holding, then the retention of LGP in connection with such
major financial transactions is subject to the approval of a majority of the
Blechman Brothers then serving as directors of the Company. The Management
Services Agreement will terminate on the earlier of its seventh anniversary or
such time as GEI no longer owns two-thirds of the shares of Common Stock of
Holding issued to GEI pursuant to the Acquisition Agreement.

50
<PAGE>

PRINCIPAL STOCKHOLDERS

The information in the following table sets forth certain information with
respect to the beneficial ownership of the Common Stock of Holding as of May
31, 1996 by (i) each person who beneficially owns more than 5% of the
outstanding shares of Holding's Common Stock, (ii) each executive officer of
the Company, (iii) each director of the Company, and (iv) all directors and
executive officers of the Company as a group. Except as noted below, each
person or entity has sole voting and investment power with respect to the
shares shown.

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OWNERSHIP
--------- ----------
<S> <C> <C>
Green Equity Investors II, L.P. .......................... 480,000 48%
c/o Leonard Green & Partners, L.P.
333 South Grand Avenue, Suite 5400
Los Angeles, CA 90071
John G. Danhakl (a)....................................... 480,000 48%
c/o Leonard Green & Partners, L.P.
333 South Grand Avenue, Suite 5400
Los Angeles, CA 90071
Jennifer Holden Dunbar (a)................................ 480,000 48%
c/o Leonard Green & Partners, L.P.
333 South Grand Avenue, Suite 5400
Los Angeles, CA 90071
Jonathan D. Sokoloff (a).................................. 480,000 48%
c/o Leonard Green & Partners, L.P.
333 South Grand Avenue, Suite 5400
Los Angeles, CA 90071
Brian Blechman............................................ 89,689 9%
c/o Twin Laboratories Inc.
2120 Smithtown Avenue
Ronkonkoma, NY 11779
Dean Blechman............................................. 89,689 9%
c/o Twin Laboratories Inc.
2120 Smithtown Avenue
Ronkonkoma, NY 11779
Neil Blechman............................................. 89,689 9%
c/o Twin Laboratories Inc.
2120 Smithtown Avenue
Ronkonkoma, NY 11779
Ross Blechman............................................. 89,689 9%
c/o Twin Laboratories Inc.
2120 Smithtown Avenue
Ronkonkoma, NY 11779
Steve Blechman............................................ 89,689 9%
c/o Twin Laboratories Inc.
2120 Smithtown Avenue
Ronkonkoma, NY 11779
Stephen Welling........................................... 1,555 *
c/o Twin Laboratories Inc.
2120 Smithtown Avenue
Ronkonkoma, NY 11779
All directors and executive officers as a group (9 per-
sons) (b)................................................ 930,000 93%
</TABLE>

(footnotes on following page)

51
<PAGE>

- --------
(a) The shares shown as beneficially owned by Messrs. Danhakl and Sokoloff and
Ms. Holden Dunbar represent 480,000 shares owned of record by GEI. GEI is a
Delaware limited partnership managed by LGP, which is an affiliate of the
general partner of GEI. Each of Leonard I. Green, Jonathan D. Sokoloff, John
G. Danhakl, Gregory J. Annick and Jennifer Holden Dunbar, either directly
(whether through ownership interest or position) or through one or more
intermediaries, may be deemed to control LGP and such general partner. LGP
and such general partner may be deemed to control the voting and disposition
of the shares of Common Stock of Holding owned by GEI. As such, Messrs.
Sokoloff and Danhakl and Ms. Holden Dunbar may be deemed to have shared
voting and investment power with respect to all shares held by GEI. However,
such individuals disclaim beneficial ownership of the securities held by GEI
except to the extent of their respective pecuniary interests therein.
(b) Includes the shares referred to in Note a above.
*Less than 1%.

TERMS OF THE STOCKHOLDERS AGREEMENT

Upon consummation of the Acquisition, GEI, the Continuing Stockholders and
Holding entered into a Stockholders Agreement (the "Stockholders Agreement")
in respect of their holdings of shares of Common Stock of Holding. The
Stockholders Agreement contains certain transfer restrictions, pre-emptive
rights and voting provisions which will terminate on the date of this
Prospectus. Pursuant to the Stockholders Agreement, each of GEI and the
Continuing Stockholders is granted certain demand registration rights which
commence nine months after the Offerings. The Stockholders Agreement also
contains certain "piggyback" registration rights arising in the event that
Holding registers its securities under the Securities Act. Subject to the
early termination of certain provisions of the Stockholders Agreement upon the
occurrence of the Offerings, the Stockholders Agreement terminates on the
tenth anniversary of the date thereof.

Shares of common stock and Preferred Stock of Holding were issued to various
institutional investors (the "Senior Preferred Holders") pursuant to a Stock
Subscription Agreement among each such investor and Holding. Upon consummation
of the Acquisition, GEI, the Continuing Stockholders, the Senior Preferred
Holders and Holding entered into a secondary stockholders agreement (the
"Secondary Stockholders Agreement") in respect of their holdings of shares of
stock of Holding. Pursuant to such Secondary Stockholders Agreement, the
Senior Preferred Holders were granted certain rights of transfer of their
shares and certain rights of first refusal, which will terminate upon the
closing of the Offerings. In addition, commencing on the fifth anniversary of
the Secondary Stockholders Agreement, the Senior Preferred Holders will be
entitled to exercise one demand registration right with respect to their
shares of Common Stock of Holding. Finally, the Senior Preferred Holders will
have certain "piggyback" registration rights on other registrations of equity
securities of the Company. Subject to the early termination of certain
provisions of the Secondary Stockholders Agreement upon the occurrence of the
Offerings, the Secondary Stockholders Agreement terminates on the tenth
anniversary of the date thereof.

52
<PAGE>

DESCRIPTION OF CERTAIN INDEBTEDNESS

THE NEW CREDIT FACILITY

The New Credit Facility, agented by Chemical Bank ("Chemical") and The Bank
of New York, provides for (i) a six-year term loan facility, in the amount of
$53.0 million maturing on May 7, 2002 (the "Term Loan"), and (ii) a six year
revolving credit facility (the "Revolving Credit Facility") of $15.0 million
expiring on May 7, 2002. The Revolving Credit Facility and the Term Loan bear
interest at an annual rate, at the Company's option, equal to the "ABR plus
the Applicable Margin" ("ABR Loans") or the "Eurodollar Rate plus Applicable
Margin" ("Eurodollar Loans"). As used herein "ABR" means the highest of (i)
the rate of interest publicly announced by Chemical as its prime rate in
effect at its principal office in New York City, (ii) the secondary market
rate for certificates of deposit (grossed up for maximum statutory reserve
requirements) plus 1% and (iii) the federal funds effective rate from time to
time plus 0.5%. "Eurodollar Rate" means the rate (grossed up for maximum
statutory reserve requirements for eurocurrency liabilities) at which
eurodollar deposits for one, two, three or six months (as selected by the
Company) are offered to Chemical in the interbank eurodollar market in the
approximate amount of Chemical's share of the applicable loan. "Applicable
Margin" means (a) 1.25%, in the case of ABR Loans and (b) 2.50%, in the case
of Eurodollar Loans. Interest rates on the credit facilities are subject to
reduction in the event the Company meets certain financial tests.

The proceeds of the Term Loan were used, together with proceeds of the Note
Offering and the issuance of shares of Common Stock and Preferred Stock of
Holding and available cash of the Company, to finance the Acquisition, to
refinance certain debt of the Company and to pay related fees and expenses.
The proceeds of the Revolving Credit Facility can be used to provide for the
working capital requirements of the Company and for general corporate
purposes, including, without limitation, the payment of transaction fees and
tax adjustments.

The New Credit Facility is secured by first priority security interests in
all of the tangible and intangible assets of Twin Laboratories Inc. and its
direct and indirect subsidiaries. In addition, the loans under the New Credit
Facility are guaranteed by Holding, ARP and certain of Twin Laboratories
Inc.'s future subsidiaries. Additionally, the Company will be required to
apply 75% (subject to reduction to 50% if certain financial tests are met) of
excess cash flow (as defined in the New Credit Facility), 100% of the net
proceeds of certain dispositions of material assets (other than inventory in
the ordinary course of business), 50% of the net proceeds of the issuance or
sale of the first $60 million of equity by Holding and 100% of the net
proceeds of the incurrence of certain indebtedness, to the repayment of the
New Credit Facility.

The New Credit Facility contains certain financial and operating covenants
including a maximum leverage ratio, a minimum EBITDA and a minimum fixed
charge coverage ratio. In addition, the Company is limited in the amount of
annual capital expenditures and capital lease obligations it may incur.

The operating covenants of the New Credit Facility include limitations on
the ability of the Company to (i) incur additional indebtedness, other than
certain permitted indebtedness, (ii) permit additional liens or encumbrances,
other than certain permitted liens, (iii) make any investments in other
persons, other than certain permitted investments, (iv) become obligated with
respect to contingent obligations, other than certain permitted contingent
obligations, and (v) make restricted junior payments (including dividends on
its common stock). The operating covenants also include restrictions on
certain specified fundamental changes, such as mergers and asset sales,
transactions with shareholders and affiliates, and business outside the
ordinary course as currently conducted and certain extensions thereof,
amendments or waivers of certain specified agreements, and the issuance of
guarantees or other credit enhancements.

If for any reason the Company is unable to comply with the terms of the New
Credit Facility, including the covenants included therein, such noncompliance
would result in an event of default under the New Credit Facility and could
result in acceleration of the payment of the indebtedness outstanding under
the New Credit Facility.

DESCRIPTION OF NOTES

The 10 1/4% Senior Subordinated Notes due 2006 (the "Notes") were issued in
a transaction (the "Notes Offering") pursuant to which Twin Laboratories Inc.
issued an aggregate of $100,000,000 principal amount of

53
<PAGE>

the Notes to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and
Chase Securities Inc. (together with DLJ, the "Initial Notes Purchasers") on
May 7, 1996 (the "Note Offering Closing Date"). The Initial Notes Purchasers
subsequently resold the Notes in reliance on Rule 144A and certain other
exemptions under the Securities Act. The Company and the Initial Notes
Purchasers also entered into a Registration Rights Agreement, pursuant to
which the Company granted certain registration rights for the benefit of the
holders of the Notes. The Company intends to consummate a registered exchange
offer under the Securities Act for the Notes (the "Exchange Offer") to satisfy
certain of the Company's obligations under the Registration Rights Agreement
with respect to the Notes. If the Exchange Offer is not filed or consummated
within certain time periods specified in the Registration Rights Agreement (a
"Registration Default"), the Company is obligated to pay liquidated damages to
each holder of the Notes, with respect to the first 90-day period following
such default in an amount equal to $.05 per week per $1,000 principal amount
of Notes which will increase by an additional $.05 per week per $1,000
principal amount of Notes per Registration Default up to a maximum of $.30 per
week per $1,000 principal amount of Notes.

The Notes were issued under an indenture, dated as of the Note Offering
Closing Date (the "Indenture"), among Holding, Twin Laboratories Inc., ARP and
Fleet National Bank as trustee. The Notes are not redeemable, in whole or in
part, prior to May 15, 2001. Thereafter, the Notes are redeemable at the
redemption prices set forth in the Indenture, plus interest accrued thereon to
the redemption date. Notwithstanding the foregoing, at any time on or before
May 15, 1999, Twin Laboratories Inc. may redeem up to 35% of the original
aggregate principal amount of the Notes, in whole or in part, with the net
proceeds of one or more Equity Offerings (as defined therein) at a redemption
price equal to 109 1/2% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of redemption. Upon the occurrence of a
Change of Control (as defined therein), Twin Laboratories Inc. will be
required to make an offer to repurchase all outstanding Notes at 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any,
to the date of repurchase.

The Notes are general unsecured obligations of Twin Laboratories Inc.
subordinated in right of payment to all existing and future Senior Debt (as
defined therein) of Twin Laboratories Inc., including borrowings under the New
Credit Facility. The payment of the principal of, premium, if any, and
interest on the Notes are guaranteed (the "Guarantees") by Holding and ARP
(the "Guarantors"). The Guarantees are subordinated in right of payment to all
existing and future Senior Debt of the Guarantors. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources." The Indenture permits the Company to incur
additional indebtedness, including additional Senior Debt. The Indenture
contains certain covenants with respect to Twin Laboratories Inc. and the
Subsidiary Guarantors (as defined therein) that limit the ability of Twin
Laboratories Inc. and the Subsidiary Guarantors to, among other things, (i)
incur additional Indebtedness (as defined therein) and issue certain preferred
stock, (ii) pay dividends or make other distributions, (iii) layer
Indebtedness, (iv) create certain liens, (v) sell certain assets, (vi) enter
into certain transactions with affiliates, or (vii) enter into certain mergers
or consolidations involving Twin Laboratories Inc.

The form and terms of the notes to be issued under the Exchange Offer (the
"New Notes") will be identical in all material respects to the form and terms
of the Notes.

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<PAGE>

DESCRIPTION OF CAPITAL STOCK

Holding's Certificate of Incorporation authorizes Holding to issue
shares of Common Stock and shares of the Preferred Stock.

COMMON STOCK

Subject to the rights of the holders of any Preferred Stock which may be
outstanding, all shares of Common Stock will participate equally in dividends
payable to holders of Common Stock when, as and if declared by Holding's Board
of Directors and in net assets available for distribution to holders of Common
Stock on liquidation or dissolution, will have one vote per share on all
matters submitted to a vote of Holding's stockholders and will not have
cumulative voting rights in the election of directors. All issued and
outstanding shares of Common Stock will be fully paid and nonassessable, and
the holders thereof will not have preemptive rights, except as provided in the
Stockholders Agreement.

PREFERRED STOCK

The Certificate of Incorporation of Holding authorizes the issuance of
shares of Preferred Stock in two series, the Senior Preferred Stock and the
Junior Preferred Stock, and fixes for each such series the designations,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof. In connection with
the consummation of the Acquisition and the Note Offering, Holding's Board of
Directors authorized the issuance of Senior Preferred Stock and Junior
Preferred Stock, the terms of which are described below.

SENIOR PREFERRED STOCK

The Certificate of Incorporation limits the number of shares of Senior
Preferred Stock which can be issued to 30,000 plus additional shares of Senior
Preferred Stock which may be issued in payment of dividends on the Senior
Preferred Stock if Holding elects to pay dividends in additional shares of
Senior Preferred Stock. The aggregate liquidation preference of the Senior
Preferred Stock issued upon the consummation of the Acquisition was $30.0
million. Dividends on the Senior Preferred Stock accrue at the rate of 14% per
annum and will be payable quarterly when, as and if declared by the Board of
Directors. Dividends shall be paid in additional fully paid and non-assessable
shares of Senior Preferred Stock having an aggregate liquidation preference
equal to the amount of such dividends; provided, however, that Holding may, at
its option and upon a majority vote of directors not affiliated with LGP
("Unaffiliated Directors"), pay dividends in cash.

The Senior Preferred Stock is redeemable at any time, in whole or in part,
at the option of Holding and upon a majority vote of Unaffiliated Directors,
at the amount of the liquidation preference including accrued and unpaid
dividends, except that (i) no partial redemption is allowed unless full
cumulative dividends have been paid on all shares and (ii) no optional
redemption is allowed at any time when Holding is making or required to make
an offer to purchase Preferred Stock upon a change of control. The Senior
Preferred Stock will be subject to mandatory redemption at the amount of the
liquidation preference including accrued and unpaid dividends on May 1, 2007.

In the event of a Change of Control (as defined), Holding will be required
to make an offer to repurchase the outstanding Senior Preferred Stock at a
price equal to 101% of the liquidation preference thereof, plus accrued and
unpaid dividends.

The Senior Preferred Stock ranks junior in right of payment to all
liabilities of Holding and to any preferred stock senior in right of payment
to the Senior Preferred Stock (if consented to by holders of a majority of the
shares of Senior Preferred Stock) and ranks senior in right of payment to the
Junior Preferred Stock and Common Stock.

55
<PAGE>

Holders of the Senior Preferred Stock have no voting rights with respect to
general corporate matters except as provided by law or as set forth in the
Certificate of Incorporation. The Certificate of Incorporation provides that
the Senior Preferred Stock will have class voting rights with regard to, among
other things, (i) authorization or issuance of stock which is senior to or on
a parity with the Senior Preferred Stock as to dividends and distributions
upon liquidation; (ii) issuance of additional shares of Senior Preferred Stock
other than in payment of dividends on Senior Preferred Stock; (iii) changes to
the Certificate of Incorporation or By-laws of Holding so as to affect
adversely any of the preferences, rights, powers or privileges of the Senior
Preferred Stock or of the holders thereof as such; (iv) mergers,
consolidations or sales of all or substantially all of the assets of Holding
(or of Holding and its subsidiaries, taken as a whole) unless (a) the shares
of Senior Preferred Stock will be redeemed upon consummation of such
transaction or (b) certain other conditions are met; (v) certain transactions
with affiliates; and (vi) subject to certain exceptions (including exceptions
relating to the Junior Preferred Stock), payment of dividends on, or
redemption or repurchase of, junior securities. All shares of the Senior
Preferred Stock will be redeemed in connection with the Offerings.

JUNIOR PREFERRED STOCK

The Certificate of Incorporation limits the number of shares of Junior
Preferred Stock which can be issued to 37,000, plus additional shares of
Junior Preferred Stock which may be issued in payment of dividends on the
Junior Preferred Stock if Holding elects to pay dividends in additional shares
of Junior Preferred Stock. The aggregate liquidation preference of the Junior
Preferred Stock issued upon the consummation of the Acquisition was $37.0
million. Dividends on the Junior Preferred Stock accrue at the rate of 11.25%
per annum and will be payable quarterly when, as and if declared by the Board
of Directors. Dividends shall be paid in additional fully paid and non-
assessable shares of Junior Preferred Stock having an aggregate liquidation
preference equal to the amount of such dividends; provided, however, that if
dividends are then being paid in cash on the Senior Preferred Stock, Holding
may, at its option and upon a majority vote of Unaffiliated Directors, pay
dividends on the Junior Preferred Stock in cash.

The Junior Preferred Stock ranks junior in right of payment to all
liabilities of Holding and to the Senior Preferred Stock and any other
preferred stock senior in right of payment to the Junior Preferred Stock (if
consented to by holders of a majority of the shares of Junior Preferred Stock)
and ranks senior in right of payment to any additional preferred stock which
does not expressly provide that it ranks senior to or on a parity with the
Junior Preferred Stock and the Common Stock.

Other than as set forth above with respect to ranking, the powers, rights,
designations and preferences, and qualifications, restrictions and limitations
thereof, of the Junior Preferred Stock are substantially similar to those of
the Senior Preferred Stock. All shares of the Junior Preferred Stock will be
redeemed in connection with the Offerings.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings, Holding will have shares of Common
Stock outstanding. Of these shares, the shares sold in the Offerings will
be freely tradeable without restriction or further registration under the
Securities Act, except that any shares purchased by "affiliates" of the
Company, as that term is defined under the Securities Act ("Affiliates"), may
generally only be sold in compliance with the limitations of Rule 144
described below.

The remaining shares of Common Stock (the "Restricted Shares")
constitute restricted securities under Rule 144 and were issued by the Company
in private transactions in reliance upon one or more exemptions under the
Securities Act. Such restricted securities may be resold in a public
distribution only if registered under the Securities Act (which registration
is contemplated with respect to all of such restricted securities as described
below) or pursuant to an exemption therefrom, including Rule 144. The Company,
its officers, directors and certain other stockholders who collectively are
the beneficial owners of an aggregate of shares of common

56
<PAGE>

stock, have agreed with the Underwriters not to directly or indirectly without
the prior written consent of Donaldson, Lufkin & Jenrette Securities
Corporation offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of any Common Stock or any securities convertible into or
exchangeable or exercisable for, or warrants, options or rights to purchase or
acquire Common Stock or in any other manner transfer all or a portion of the
economic consequences associated with the ownership of any Common Stock, or
enter into any agreement to do any of the foregoing, for a period of 180 days
after the date of this Prospectus (the "Lock-Up Period"). Upon the expiration
of such 180 day period, such holders will in general be entitled to dispose of
their shares, although the shares of Common Stock held by affiliates of the
Company will continue to be subject to the restrictions of Rule 144 under the
Securities Act.

In general, under Rule 144 of the Securities Act as currently in effect,
beginning 90 days after the Offerings, a person (or persons whose shares are
aggregated) who has beneficially owned Restricted Shares for at least two
years, including a person who may be deemed an Affiliate of the Company, is
entitled to sell within any three-month period a number of shares of Common
Stock that does not exceed the greater of 1% of the then outstanding shares of
Common Stock (approximately shares after giving effect to the Offerings)
or the average weekly trading volume of the Common Stock as reported through
the during the four calendar weeks preceding such sale. Sales under
Rule 144 are subject to certain restrictions relating to manner of sale,
notice and the availability of current public information about the Company.
In addition, under Rule 144(k), a person who is not an Affiliate of the
Company at any time 90 days preceding a sale, and who has beneficially owned
shares for at least three years, would be entitled to sell such shares
immediately following the Offerings without regard to the volume limitations,
manner of sale provisions or notice or other requirements of Rule 144.

The Company has granted certain institutional investors and their
transferees certain demand and piggyback registration rights covering an
aggregate of shares. These registration rights will become exercisable on
May 7, 2001. The Company has also granted GEI and the Continuing Stockholders
certain demand and piggyback registration rights covering an aggregate of
shares. The demand registration rights for GEI and the Continuing Stockholders
are not exercisable until nine months from the date on which the Offerings is
consummated. When and as these rights are exercised, additional shares will
become available for sale upon the effectiveness of a registration statement
filed pursuant to exercise of such rights. See "Principal Stockholders--Terms
of the Stockholders Agreement."

Prior to the Offerings there has been no public market for the Common Stock
and any sale of substantial amounts of Common Stock in the open market may
adversely affect the market price of the Common Stock offered hereby.

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<PAGE>

CERTAIN UNITED STATES TAX CONSEQUENCES

TO NON-UNITED STATES HOLDERS

The following is a general discussion of certain United States federal
income and estate tax consequences of the purchase, ownership and disposition
of the Common Stock by a "Non-United States Holder." For the purpose of this
summary, a "Non-United States Holder" is any person or entity that is not (a)
a citizen or resident of the United States, (b) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof or (c) an estate or trust that is subject
to United States federal taxation on its income regardless of its source. This
summary does not deal with all aspects of United States federal income and
estate taxation that may be relevant to Non-United States Holders in light of
their personal circumstances and does not address foreign, state and local tax
consequences. Furthermore, this summary is based on current provisions of the
Internal Revenue Code existing, temporary and proposed regulations promulgated
thereunder and administrative and judicial interpretations, all of which are
subject to change, possibly with retroactive effect. Prospective foreign
investors are urged to consult their tax advisors regarding the United States
federal, state, local and non-United States income and other tax consequences
of purchasing, owning and disposing of the Common Stock.

DIVIDENDS

The Company does not expect to pay dividends on its Common Stock in the
foreseeable future. See "Dividend Policy." Generally, any dividends paid with
respect to the Common Stock to a Non-United States Holder will be subject to
withholding of United States federal income tax at a 30% tax rate (or such
lower tax rate as may be specified by an applicable income tax treaty).
Dividends received by a Non-United States Holder that are effectively
connected with a United States trade or business conducted by such Non-United
States Holder are exempt from such withholding tax. However, such effectively
connected dividends, net of certain deductions and credits, are taxed at the
same graduated rates applicable to United States persons. A Non-United States
Holder may claim exemption from withholding under the effectively connected
income exception by filing Form 4224 (Statement Claiming Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of
Business in the United States) with the Company or its paying agent. Under
current United States Treasury regulations, dividends paid to an address in a
foreign country are presumed to be paid to a resident of such country for
purposes of the withholding discussed above (unless the payor has knowledge to
the contrary) and, under the current interpretation of United States Treasury
regulations, for purposes of determining the applicability of a tax treaty
rate. Treasury regulations proposed to be effective for payments made after
December 31, 1997, which have not been finally adopted, however, would require
Non-United States Holders to file certain new forms to obtain the benefit of
any applicable tax treaty providing for a lower rate of withholding tax on
dividends. Such forms would contain the holder's name, address and certain
other information.

In addition to the graduated tax described above, dividends received by a
corporate Non-United States Holder that are effectively connected with a
United States trade or business of the corporate Non-United States Holder may
also be subject to a branch profits tax at a 30% tax rate (or such lower rate
as may be specified by an applicable income tax treaty).

DISPOSITION OF COMMON STOCK

A Non-United States Holder generally will not be subject to United States
federal income tax on any gain recognized upon the sale or other disposition
of Common Stock unless (i) such gain is effectively connected with a United
States trade or business of the Non-United States Holder, (ii) in the case of
a Non-United States Holder who is a non-resident alien individual and holds
the Common Stock as a capital asset, such holder is present in the United
States for 183 or more days in the taxable year of disposition and either (a)
has a "tax home" in the United States for United States federal income tax
purposes or (b) has an office or other fixed place of business in the United
States to which the gain is attributable (iii) the Non-United States Holder is
subject to tax pursuant to the provisions of United States federal income tax
laws applicable to certain expatriates or (iv) the Company is or has been a
"United States real property holding corporation" ("USRPHC") for federal
income tax purposes at any time within the shorter of the five-year period
preceding such disposition or

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<PAGE>

such Non-United States Holder's holding period and, provided that the Common
Stock continues to be "regularly traded on an established securities market"
for tax purposes, the Non-United States Holder held, directly or indirectly,
at any time during the five-year period ending on the date of disposition,
more than 5% of the outstanding Common Stock. The Company has determined that
it has not been and is not currently and does not believe that it will become,
a USRPHC for federal income tax purposes. If a Non-United States Holder falls
under clause (i) above, the holder will be taxed on the net gain derived from
the sale under regular graduated United States federal income tax rates (and,
with respect to corporate Non-United States Holders, may also be subject to
the branch profits tax described above). If an individual Non-United States
Holder falls under clause (ii) above, the holder generally will be subject to
a 30% tax on the gain derived from the sale, which gain may be offset by U.S.
capital losses recognized within the same taxable year of such sale or
disposition.

BACKUP WITHHOLDING AND INFORMATION REPORTING

In the event the Company decides, contrary to its present intention, to pay
dividends with respect to its Common Stock, the Company must report to the
United States Internal Revenue Service the amount of dividends paid, the name
and address of the recipient, and the amount, if any, of tax withheld. See
"Dividend Policy." The United States Internal Revenue Service may make such
reports available to tax authorities in the recipient's country of residence.

Dividends paid to a Non-United States Holder at an address within the United
States may be subject to backup withholding at a rate of 31% if the Non-United
States Holder fails to establish that it is entitled to an exemption or to
provide a correct taxpayer identification number and other information to the
payor.

The payment of the proceeds of the disposition of Common Stock by or through
the United States office of a broker is subject to information reporting and
backup withholding at a rate of 31% unless the holder certifies its non-United
States status under penalties of perjury or otherwise establishes an
exemption. Information reporting requirements (but not backup withholding)
will apply to a payment of disposition proceeds by or through a foreign office
of (a) a United States broker, (b) a foreign broker that is a controlled
foreign corporation for United States federal income tax purposes or (c) a
foreign broker 50% or more of whose gross income for certain periods is
effectively connected with the conduct of a trade or business, unless such
broker has documentary evidence in its files of the owner's foreign status and
has no actual knowledge to the contrary. Generally, United States information
reporting and backup withholding will not apply to a payment of disposition
proceeds if the payment is made outside the United States by or through a
foreign office of a non-U.S. broker.

Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the United
States Internal Revenue Service.

FEDERAL ESTATE TAXES

Common Stock owned or treated as owned by an individual who is not a citizen
or resident of the United States (as defined for United States federal estate
tax purposes) at the time of death will be included in such individual's gross
estate for United States federal estate tax purposes unless an applicable
estate tax treaty provides otherwise.

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<PAGE>

UNDERWRITING

Subject to the terms and conditions contained in the Underwriting Agreement
(the "Underwriting Agreement"), the United States Underwriters named below
(the "U.S. Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities
Corporation is acting as representative (the "U.S. Representative"), and the
international managers named below (the "International Managers" and, together
with the U.S. Underwriters, the "Underwriters"), for whom Donaldson, Lufkin &
Jenrette Securities Corporation is acting as representative (the
"International Representative" and, together with the U.S. Representative, the
"Representative"), have severally agreed to purchase from the Company an
aggregate of shares of Common Stock. The number of shares of Common Stock
that each Underwriter has agreed to purchase is set forth opposite its name
below:

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
----------------- ---------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation...................
---
U.S. Offering subtotal..............................................
---
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
---------------------- ---------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation...................
---
International Offering subtotal.....................................
---
Total.............................................................
===
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Common Stock
offered hereby are subject to approval of certain legal matters by counsel and
to certain other conditions. If any of the shares of Common Stock are
purchased by the Underwriters pursuant to the Underwriting Agreement, all such
Shares (other than those covered by the over-allotment option described below)
must be so purchased. The offering price and underwriting discounts and
commissions per share for the U.S. Offering and the International Offering are
identical.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments that the Underwriters may be required to make in respect thereof.

The Representative has advised the Company that the Underwriters propose to
offer the shares of Common Stock to the public initially at the price to the
public set forth on the cover page of this Prospectus and to certain dealers
(who may include the Underwriters) at such price, less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may re-
allow, discounts not in excess of $ per share to any other Underwriter and
certain other dealers. After the Offerings, the offering price and other
selling terms may be changed by the Underwriters.

The Company has granted to the U.S. Underwriters an option to purchase up to
an aggregate of additional shares of Common Stock, at the initial
public offering price less underwriting discounts and commissions, solely to
cover over-allotments. Such option may be exercised at any time until 30 days
after the date of this Prospectus. To the extent that the U.S. Representative
exercises such option, each of the U.S. Underwriters will be committed,
subject to certain conditions, to purchase a number of shares proportionate to
such U.S. Underwriter's initial commitment as indicated in the preceding
tables.

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<PAGE>

The Company, its officers, directors, and certain other stockholders, who
collectively are the beneficial owners of an aggregate of shares of
Common Stock, have agreed with the Underwriters not to, directly or
indirectly, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of, without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for, or warrants, options or
rights to purchase or acquire, Common Stock or in any other manner transfer
all or a portion of the economic consequences associated with the ownership of
any Common Stock, or enter into any agreement to do any of the foregoing, for
a period of 180 days after the date of this Prospectus. See "Shares Eligible
for Future Sale."

Pursuant to an Agreement Between U.S. Underwriters and International
Managers (the "Agreement Between U.S. Underwriters and International
Managers"), each U.S. Underwriter has represented and agreed that, with
respect to the shares included in the U.S. Offering and with certain
exceptions, (a) it is not purchasing any Common Stock for the account of
anyone other than a United States or Canadian Person (as defined below) and
(b) it has not offered or sold, and will not offer or sell, directly or
indirectly, any Common Stock or distribute this Prospectus outside of the
United States or Canada or to anyone other than a United States or Canadian
Person. Pursuant to the Agreement Between U.S. Underwriters and International
Managers, each International Manager has represented and agreed that, with
respect to the shares included in the International Offering and with certain
exceptions, (a) it is not purchasing any Common Stock for the account of any
United States or Canadian Person and (b) it has not offered or sold, and will
not offer or sell, directly or indirectly, any Common Stock or distribute this
Prospectus within the United States or Canada or to any United States or
Canadian Person. The foregoing limitations do not apply to stabilization
transactions and to certain other transactions among the International
Managers and the U.S. Underwriters. As used herein, "United States or Canadian
Person" means any national or resident of the United States or Canada or any
corporation, pension, profit-sharing or other trust or other entity organized
under the laws of the United States or Canada or of any political subdivision
thereof (other than a branch located outside the United States or Canada of
any United States or Canadian Person) and includes any United States or
Canadian branch of a person who is not otherwise a United States or Canadian
Person, and "United States" means the United States of America, its
territories, its possessions and all areas subject to its jurisdiction.

Pursuant to the Agreement Between U.S. Underwriters and International
Managers, sales may be made between the U.S. Underwriters and the
International Managers of any number of shares of Common Stock to be purchased
pursuant to the Underwriting Agreement as may be mutually agreed. The per
share price and currency of settlement of any shares so sold shall be the
public offering price set forth on the cover page hereof, in United States
dollars, less an amount not greater than the per share amount of the
concession to dealers set forth above.

Pursuant to the Agreement Between U.S. Underwriters and International
Managers, each U.S. Underwriter has represented that it has not offered or
sold, and has agreed not to offer or sell, any Common Stock, directly or
indirectly, in Canada in contravention of the securities laws of Canada or any
province or territory thereof and has represented that any offer of Common
Stock in Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the province or territory of Canada in
which such offer is made. Each U.S. Underwriter has further agreed to send any
dealer who purchases from it any Common Stock a notice stating in substance
that, by purchasing such Common Stock, such dealer represents and agrees that
it has not offered or sold, and will not offer or sell, directly or
indirectly, any of such Common Stock in Canada in contravention of the
securities laws of Canada or any province or territory thereof and that any
offer of Common Stock in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the province or territory of
Canada in which such offer is made, and that such dealer will deliver to any
other dealer to whom it sells any of such Common Stock a notice to the
foregoing effect.

Pursuant to the Agreement between U.S. Underwriters and International
Managers, each International Manager has represented and agreed that (i) it
has not offered or sold and during the period of six months from the date of
this Prospectus will not offer or sell any Common Stock to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as

61
<PAGE>

principal or agent) for the purposes of their businesses or otherwise in
circumstances which do not constitute an offer to the public in the United
Kingdom for the purposes of the Public Offers of Securities Regulations 1995
(the "Regulations"); (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 of Great Britain and the
Regulations with respect to anything done by it in relation to the Common
Stock in, from or otherwise involving the United Kingdom; and (iii) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document in connection with the issue or sale of the Common Stock to a
person who is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1995 of Great Britain
or is a person to whom the document may otherwise lawfully be issued or passed
on.

No action has been taken in any jurisdiction by the Company or the
Underwriters that would permit a public offering of the Common Stock offered
pursuant to the Offerings in any jurisdiction where action for that purpose is
required, other than the United States. The distribution of this Prospectus
and the offering or sale of the shares of Common Stock offered hereby in
certain jurisdictions may be restricted by law. Accordingly, the shares of
Common Stock offered hereby may not be offered or sold, directly or
indirectly, and neither this Prospectus nor any other offering material or
advertisements in connection with the Common Stock may be distributed or
published, in or from any jurisdiction, except under circumstances that will
result in compliance with applicable rules and regulations of any such
jurisdiction. Such restrictions may be set out in applicable Prospectus
supplements. Persons into whose possession this Prospectus comes are required
by the Company and the Underwriters to inform themselves about and to observe
any applicable restrictions. This Prospectus does not constitute an offer of,
or an invitation to subscribe for purchase of, any shares of Common Stock and
may not be used for the purpose of an offer to, or solicitation by, anyone in
any jurisdiction or in any circumstances in which such offer or solicitation
is not authorized or is unlawful.

The Representative has informed the Company that the Underwriters do not
expect sales to discretionary accounts to exceed five percent of the total
number of shares of Common Stock offered by them and the sales to
discretionary accounts by the Representative will be less than one percent of
the total number of shares of Common Stock offered by them.

Prior to the Offerings, there has been no public market for the shares of
Common Stock. The initial public offering price has been negotiated among the
Company and the Representative. Among the factors considered in determining
the initial public offering price of the Common Stock, in addition to
prevailing market conditions, were the Company's historical performance,
estimates of the business potential and earnings prospects of the Company, an
assessment of the Company's management and the consideration of the above
factors in relation to market valuation of companies in related businesses.

Donaldson, Lufkin & Jenrette Securities Corporation has in the past
provided, and may in the future provide, investment banking services for LGP
and its affiliates. Affiliates of Donaldson, Lufkin & Jenrette Securities
Corporation own 1.61% of the limited partnership interest in GEI. Affiliates
of Donaldson, Lufkin & Jenrette Securities Corporation own $7.5 million in
aggregate liquidation preference of the Senior Preferred Stock and will
receive approximately $7.5 million of the net proceeds of the Offerings in
connection with the redemption of such shares. See "Use of Proceeds."

Application will be made to have the shares of Common Stock listed on the
New York Stock Exchange under the symbol " ."

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<PAGE>

LEGAL MATTERS

The validity of the Shares offered hereby will be passed upon for the
Company by Kramer, Levin, Naftalis & Frankel, New York, New York. Certain
legal matters will be passed upon for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom, New York, New York.

EXPERTS

The consolidated financial statements of TLG Laboratories Holding Corp. as
of December 31, 1994 and 1995 and for each of the three years in the period
ended December 31, 1995 included in this Prospectus and the related financial
statement schedule included elsewhere in the Registration Statement, have been
audited by Deloitte & Touche llp, independent auditors, as stated in their
reports appearing herein and elsewhere in the Registration Statement and have
been so included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.

63
<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Financial Statements
Consolidated Balance Sheets as of December 31, 1994 and 1995 and March
31, 1996 (unaudited)................................................... F-3
Consolidated Statements of Income for the Years Ended December 31, 1993,
1994 and 1995 and the Three Months Ended March 31, 1995 (unaudited) and
1996 (unaudited)....................................................... F-4
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1993, 1994 and 1995 and the Three Months Ended March 31,
1996 (unaudited)....................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1993, 1994 and 1995 and the Three Months Ended March 31, 1995
(unaudited) and 1996 (unaudited)....................................... F-6
Notes to Consolidated Financial Statements.............................. F-7
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Shareholders of
TLG Laboratories Holding Corp.
Ronkonkoma, New York

We have audited the accompanying consolidated balance sheets of TLG
Laboratories Holding Corp. and subsidiaries as of December 31, 1994 and 1995,
and the related consolidated statements of income, shareholders' equity and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the Company as
of December 31, 1994 and 1995, and the results of their consolidated
operations and their consolidated cash flows for each of the three years in
the period ended December 31, 1995 in conformity with generally accepted
accounting principles.

Deloitte & Touche LLP

Jericho, New York
February 9, 1996
(May 7, 1996 as to Notes 1 and 16)

F-2
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------- MARCH 31,
1994 1995 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 7)............... $ 5,735 $ 7,945 $15,049
Marketable securities (Note 2)................... 1,178 201 224
Accounts receivable, net of allowance for bad
debts of $63, $177 and $244, respectively (Notes
7 and 15)....................................... 17,892 24,372 23,669
Inventories (Notes 3 and 7)...................... 22,732 25,273 28,110
Prepaid expenses and other current assets........ 1,179 872 1,479
------- ------- -------
Total current assets........................... 48,716 58,663 68,531
Marketable securities (Note 2)..................... 201 -- --
Property, plant and equipment, net (Notes 4, 8 and
9)................................................ 12,071 13,036 12,989
Other assets (Note 5).............................. 3,718 3,610 3,631
------- ------- -------
Total.............................................. $64,706 $75,309 $85,151
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (Note 8)....... $ 1,101 $ 1,479 $ 1,471
Current portion of capital lease obligations
(Note 9)........................................ 126 136 138
Loan payable--bank (Note 7)...................... 660 660 660
Notes payable--shareholders (Note 14)............ 1,846 846 846
Accounts payable................................. 3,612 6,854 9,814
Accrued expenses and other current liabilities
(Note 6)........................................ 3,135 4,258 4,208
------- ------- -------
Total current liabilities...................... 10,480 14,233 17,137
Long-term debt, less current portion (Note 8)...... 5,116 5,367 5,290
Capital lease obligations, less current portion
(Note 9).......................................... 439 304 268
------- ------- -------
Total liabilities.............................. 16,035 19,904 22,695
------- ------- -------
Commitments and contingencies (Notes 12 and 13)
Shareholders' equity:
Common stock, $1 par value; 1,000,000 shares
authorized; 450,000 shares issued and
outstanding..................................... 450 450 450
Additional paid-in capital....................... 68 68 68
Retained earnings................................ 48,153 54,887 61,938
------- ------- -------
Total shareholders' equity..................... 48,671 55,405 62,456
------- ------- -------
Total.............................................. $64,706 $75,309 $85,151
======= ======= =======
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
--------------------------- ----------------
1993 1994 1995 1995 1996
------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales (Note 15)........ $99,897 $117,342 $148,735 $36,128 $43,984
Cost of sales.............. 62,131 70,247 89,932 22,158 26,362
------- -------- -------- ------- -------
Gross profit............... 37,766 47,095 58,803 13,970 17,622
Operating expenses......... 21,125 23,022 27,191 7,501 7,299
------- -------- -------- ------- -------
Income from operations..... 16,641 24,073 31,612 6,469 10,323
------- -------- -------- ------- -------
Other (expense) income:
Interest income.......... 242 254 313 82 167
Interest expense......... (487) (761) (866) (168) (224)
Transaction expenses
(Note 1)................ -- -- (656) -- (400)
Other.................... 510 354 61 5 (1)
------- -------- -------- ------- -------
265 (153) (1,148) (81) (458)
------- -------- -------- ------- -------
Income before unusual item
and provision for income
taxes..................... 16,906 23,920 30,464 6,388 9,865
Unusual item--nonrecurring
charge for prior years'
income tax assessment
(Note 13)................. -- 1,982 -- -- --
Provision for income taxes
(Note 10)................. 230 245 240 50 86
------- -------- -------- ------- -------
Net income................. $16,676 $ 21,693 $ 30,224 $ 6,338 $ 9,779
======= ======== ======== ======= =======
Pro forma (Note 1)
Historical income before
provision for income
taxes..................... $16,906 $ 21,938 $ 30,464 $ 6,388 $ 9,865
Pro forma provision for
income taxes.............. 6,644 9,087 12,060 2,529 3,906
------- -------- -------- ------- -------
Pro forma net income....... $10,262 $ 12,851 $ 18,404 $ 3,859 $ 5,959
======= ======== ======== ======= =======
Pro forma net income per $22.80 $28.56 $40.90 $8.58 $13.24
share..................... ======= ======== ======== ======= =======
Weighted average shares 450,000 450,000 450,000 450,000 450,000
outstanding (Note 2)...... ======= ======== ======== ======= =======
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ---------- -------- --------
<S> <C> <C> <C> <C>
Balance at January 1, 1993............... $442 $ 1 $ 32,737 $ 33,180
Issuance of capital stock--B. Bros....... 8 67 -- 75
Net income............................... -- -- 16,676 16,676
Distributions to shareholders............ -- -- (9,388) (9,388)
---- --- -------- --------
Balance at December 31, 1993............. 450 68 40,025 40,543
Net income............................... -- -- 21,693 21,693
Distributions to shareholders............ -- -- (13,565) (13,565)
---- --- -------- --------
Balance at December 31, 1994............. 450 68 48,153 48,671
Net income............................... -- -- 30,224 30,224
Distributions to shareholders............ -- -- (23,490) (23,490)
---- --- -------- --------
Balance at December 31, 1995............. 450 68 54,887 55,405
Net income (unaudited)................... -- -- 9,779 9,779
Distributions to shareholders
(unaudited)............................. -- -- (2,728) (2,728)
---- --- -------- --------
Balance at March 31, 1996 (unaudited).... $450 $68 $ 61,938 $ 62,456
==== === ======== ========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED MARCH
DECEMBER 31, 31,
------------------------- ---------------
1993 1994 1995 1995 1996
------- ------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income...................... $16,676 $21,693 $30,224 $6,338 $ 9,779
Adjustment to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization. 805 950 1,011 215 302
Gain on sale of equipment..... (35) (153) (58) -- --
Bad debt expense.............. -- (59) 169 (2) 144
Other......................... 8 1 -- -- --
Changes in operating assets
and liabilities:
Accounts receivable......... (3,817) (5,880) (6,649) 2,680 559
Inventories................. (4,381) (3,717) (2,541) (2,751) (2,837)
Prepaid expenses and other
current assets............. (547) 295 307 (364) (607)
Accounts payable............ 2,354 (752) 3,242 2,587 2,960
Accrued expenses and other
current liabilities........ (471) 494 1,123 887 (50)
------- ------- ------- ------ -------
Net cash provided by
operating activities..... 10,592 12,872 26,828 9,590 10,250
------- ------- ------- ------ -------
Cash flows from investing
activities:
Maturities of marketable
securities..................... 1,163 1,120 1,178 345 --
Purchases of marketable
securities..................... (1,767) -- -- -- (23)
Proceeds from sales of property,
plant and equipment............ 1,358 435 825 -- --
Acquisition of property, plant
and equipment.................. (4,904) (1,786) (2,641) (489) (224)
Decrease (increase) in other
assets......................... (283) (519) 6 69 (52)
------- ------- ------- ------ -------
Net cash used in investing
activities............... (4,433) (750) (632) (75) (299)
------- ------- ------- ------ -------
Cash flows from financing
activities:
Proceeds from issuance of debt.. 2,758 6,073 4,685 -- --
Distributions to shareholders... (9,388) (13,565) (23,490) (7,194) (2,728)
Payments of debt................ (785) (5,389) (5,056) (572) (85)
Issuance of capital stock--B.
Bros........................... 75 -- -- -- --
Principal payments of capital
lease obligations.............. -- (121) (125) (41) (34)
------- ------- ------- ------ -------
Net cash used in financing
activities............... (7,340) (13,002) (23,986) (7,807) (2,847)
------- ------- ------- ------ -------
Net (decrease) increase in cash
and cash equivalents............. (1,181) (880) 2,210 1,708 7,104
Cash and cash equivalents at
beginning of period.............. 7,796 6,615 5,735 5,735 7,945
------- ------- ------- ------ -------
Cash and cash equivalents at end
of period........................ $ 6,615 $ 5,735 $ 7,945 $7,443 $15,049
======= ======= ======= ====== =======
Supplemental disclosures of cash
flow information:
Cash paid during the periods
for:
Interest...................... $ 466 $ 780 $ 853 $ 190 $ 224
======= ======= ======= ====== =======
Income taxes.................. $ 248 $ 267 $ 216 $ 61 $ 80
======= ======= ======= ====== =======
Supplemental disclosure of non-
cash investing activities--
Assets acquired under capital
lease obligations................ $ -- $ 686 $ -- $ -- $ --
======= ======= ======= ====== =======
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996

(INFORMATION AS IT RELATES TO THE THREE MONTHS ENDED MARCH 31, 1995 AND 1996
IS UNAUDITED)
(DOLLAR AMOUNTS ARE IN THOUSANDS OF DOLLARS)

1. DESCRIPTION OF ENTITY AND BASIS OF PRESENTATION

Prior to May 7, 1996, Twin Laboratories Inc. ("Twin") and its affiliates,
Twinlab Export Corp. ("Export"), Twinlab Specialty Corporation ("Specialty"),
Alvita Products, Inc. ("Alvita"), Natur-Pharma, Inc. ("Natur-Pharma"), B.
Bros. Realty Corporation ("B Bros.") and Advanced Research Press, Inc. ("ARP")
(collectively the "Companies") operated as separate corporations, all of which
were wholly-owned by the same individuals (with some companies having
different ownership percentages among such individuals) except for Natur-
Pharma and B. Bros. which were only ninety-seven percent owned by such
individuals.

In July 1995, the shareholders of the Companies signed a non-binding letter
of intent to sell an interest in the Companies and subsequently entered into a
stock purchase and sale agreement (the "Acquisition Agreement") (see Note 16).
In connection with the transactions contemplated by the Acquisition Agreement,
the Companies incurred $656 of professional expenses as of December 31, 1995
(the "Transaction Expenses").

On February 27, 1996, TLG Laboratories Holding Corp. ("TLG") was
incorporated in contemplation of the Acquisition Agreement. The accompanying
consolidated financial statements include the accounts of TLG and subsidiary
(the "Company") after giving retroactive effect, in a manner similar to a
pooling of interests, to the merger of the Companies pursuant to the
Acquisition Agreement.

The Company's product line includes vitamins, minerals, amino acids, fish
and marine oils, sports nutrition products and special formulas marketed under
the TWINLAB trademark and a full line of herbal supplements and phytonutrients
and herb teas marketed under the Nature's Herbs and Alvita trademarks,
respectively. The Company sells its products through a network of
approximately 60 distributors, who service approximately 11,000 health food
stores and other selected retail outlets.

Twin manufactures and markets complete lines in two product categories:
vitamins, minerals and amino acids; and sports nutrition, consisting of a
total of over 400 products.

Export sells Twin's products outside the United States. Specialty markets
innovative and special nutritional supplements, some in unique dosage form.
Alvita Products, Inc., under the brand Alvita, markets over 100 natural single
herb teas and blends in both teabag and bulk form. Natur-Pharma manufactures
and markets approximately 400 herbal and botanical supplements under the
Nature's Herbs brand. Natur-Pharma operates a manufacturing facility
registered with the Food and Drug Administration (FDA).

B. Bros. was incorporated for the purpose of constructing a building to
serve as Natur-Pharma's new office, warehouse and production facility.

ARP is a publisher of sports nutrition books and a body building and fitness
magazine entitled "Muscular Development, Fitness & Health."

The Companies had been S Corporations, pursuant to the Internal Revenue
Code, during the years ended December 31, 1993, 1994 and 1995. Upon completion
of the Acquisition Agreement, the Companies terminated their S Corporation
status. The pro forma income statement information reflects adjustments to the
historical net income had the Companies not elected S Corporation status for
income tax purposes for all periods presented.

F-7
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Principles of combination--All material intercompany accounts and
transactions have been eliminated.

b. Cash equivalents--Investments with original maturities of three months or
less are considered cash equivalents and consist primarily of money market
funds.

c. Marketable securities--The Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" during the year ended December 31, 1994, which
requires changes in the accounting and reporting of investments in debt and
equity securities. The effect of adopting SFAS No. 115 on the Company's
consolidated financial statements was not material.

The marketable securities portfolio primarily consists of investments in
tax-exempt municipal bonds. Marketable securities are stated at amortized cost
as the Company has the intent and ability to hold these securities to
maturity. The aggregate fair value of the current marketable securities as of
December 31, 1994 and 1995 was $1,170 and $201, respectively. The aggregate
fair value of the noncurrent marketable securities was $196 as of December 31,
1994.

d. Inventories--Inventories are stated at the lower of cost (first-in,
first-out method) or market value.

e. Property, plant and equipment--Depreciation is computed using the
straight-line method based upon the estimated useful lives of the related
assets which range from three to forty years. Amortization of leasehold
improvements is computed by the straight-line method over the shorter of the
estimated useful lives of the related assets or lease term.

f. Intangible assets--Trademarks are being amortized on the straight-line
method over their expected lives, not to exceed forty years. Goodwill, which
represents the excess of purchase price over fair value of net assets
acquired, is being amortized on the straight-line method over forty years.
Covenants not to compete are being amortized on the straight-line method over
five years.

g. Income taxes--In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes", which required significant changes in
accounting for income taxes, including an asset and liability approach to
income taxes. The Company adopted SFAS No. 109 in the year ended December 31,
1993. There was no cumulative effect to the consolidated financial statements
as a result of the change in accounting, nor did SFAS No. 109 have a material
effect on the amount of income taxes provided in the year ended December 31,
1993.

h. Research and development expenses--The Company charges research and
development expenses to operations as incurred. Research and development
expenses were $861, $1,030 and $1,140 for the years ended December 31, 1993,
1994 and 1995, respectively.

i. Pro forma net income per share--Pro forma net income per share has been
computed by dividing pro forma net income for each of the periods presented by
450,000 shares, which represents the number of equivalent shares outstanding
after giving retroactive effect to the issuance of TLG common shares to the
Continuing Shareholders pursuant to the Acquisition Agreement (see Note 16).

j. Fair value of financial instruments--The following methods and
assumptions were used to estimate the fair value of each class of financial
instruments:

1) Cash and cash equivalents--The carrying amounts approximate fair value
because of the short maturity of these instruments.

F-8
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2) Marketable securities--Fair value approximates quoted market value.

3) Receivables--The carrying amount approximates fair value because of
the short maturity of these instruments.

4) Debt--The carrying amounts approximate fair value based on borrowing
rates currently available to the Company for bank loans with similar terms.

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

l. Unaudited interim financial statements--In the opinion of management, the
unaudited consolidated financial statements for the three months ended March
31, 1995 and 1996 are presented on a basis consistent with the audited
consolidated financial statements and reflect all adjustments, consisting of
only normal recurring adjustments, necessary for a fair presentation of the
results thereof. The results of operation for interim periods are not
necessarily indicative of the results to be expected for the entire year.

m. Reclassifications--Certain prior year balances have been reclassified to
conform with current year classifications.

3. INVENTORIES

<TABLE>
<CAPTION>
DECEMBER 31,
--------------- MARCH 31,
1994 1995 1996
------- ------- ---------
<S> <C> <C> <C>
Inventories consist of the following:
Raw materials................................ $10,183 $11,006 $12,062
Work in process.............................. 4,720 4,550 6,433
Finished goods............................... 7,829 9,717 9,615
------- ------- -------
Total...................................... $22,732 $25,273 $28,110
======= ======= =======

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

<CAPTION>
DECEMBER 31,
-----------------
1994 1995
------- ---------
<S> <C> <C>
Land, building and leasehold improvements...... $10,039 $11,204
Plant equipment................................ 5,883 6,097
Office equipment............................... 1,776 1,942
Automobiles.................................... 70 56
------- -------
17,768 19,299
Less: accumulated depreciation and
amortization.................................. 5,697 6,263
------- -------
Property, plant and equipment--net........... $12,071 $13,036
------- -------
Depreciation and amortization expense........ $ 851 $ 909
======= =======
</TABLE>

F-9
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. OTHER ASSETS

Other assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1994 1995
------ ------
<S> <C> <C>
Due from related trust (a)............................. $1,640 $1,786
Trademarks, net of accumulated amortization of $128 and
$157, respectively.................................... 948 1,063
Goodwill, net of accumulated amortization of $96 and
$114, respectively.................................... 607 590
Other.................................................. 523 171
------ ------
Total.............................................. $3,718 $3,610
====== ======
</TABLE>
- ---------------------
(a) The Company has advanced, to a related party trust, payments for premiums
on a split dollar life insurance policy on the lives of the principal
shareholders. The amounts advanced will be repaid from the benefits or
cash value of the policy and are collateralized by the cash surrender
value of the policy. The principal shareholders are covered by a "second
to die" policy in the face amount of $10,000.

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1994 1995
------ ------
<S> <C> <C>
Accrued salaries, employee benefits and payroll taxes............ $ 839 $ 935
Deferred revenue................................................. 689 787
Accrued professional fees........................................ 134 700
Other............................................................ 1,473 1,836
------ ------
Total........................................................ $3,135 $4,258
====== ======
</TABLE>

7. LOAN PAYABLE--BANK

Natur-Pharma has a revolving line of credit arrangement with a bank. A
maximum of $1,000 is available to Natur-Pharma with interest payable monthly
at the bank's variable base rate (8.5 percent at December 31, 1995). Terms of
the agreement include maintaining a $75 compensating balance, achieving
quarterly net income of at least $50 and limitations on repayment of notes
payable to shareholders. Borrowings are secured by inventories, accounts
receivable and a guarantee by Twin. The credit arrangement matures on June 1,
1996 and is subject to annual review by the bank. Borrowings against such line
of credit aggregated $660 at December 31, 1994 and 1995.

Twin entered into a line of credit arrangement with a bank which is
cancelable by either party at any time and expires on May 31, 1996. A maximum
amount of $10,000 is available with interest charged at the Alternate Base
Rate of the bank, which is the higher of the prime rate (8.5 percent at
December 31, 1995) or the Federal Funds rate (6.0 percent at December 31,
1995) plus 1/2 percent. There were no borrowings against such line of credit
at December 31, 1994 and 1995.

F-10
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------
1994 1995
------ ------
<S> <C> <C>
Mortgage payable to a bank collateralized by land and building,
payable in monthly installments of $22, including interest at
9.5 percent plus a $1,737 balloon payment due May 1, 2002....... $2,282 $2,228
Mortgage payable to a bank collateralized by land and building,
payable in monthly installments of $24, including interest at
9.9 percent, maturing August 2006............................... 2,171 2,104
Loan payable to a bank, payable in monthly installments of $14,
inclusive of interest at the prime rate plus .5 percent with the
balance due on June 1, 1996..................................... -- 1,121
Note payable to a bank collateralized by equipment, payable in
monthly installments of $10, including interest at 8.43 percent,
maturing August 31, 2001........................................ 584 516
Note payable to a bank, unsecured, payable in monthly
installments of $8, including interest at 7.7 percent, maturing
July 1, 2002.................................................... -- 506
Note payable to a power authority, payable in monthly
installments of $2, including interest at 6.38 percent, maturing
February 2011................................................... 296 289
Loan payable to a bank due on August 1, 1995..................... 792 --
Other............................................................ 92 82
------ ------
6,217 6,846
Less: current portion............................................ 1,101 1,479
------ ------
Total........................................................ $5,116 $5,367
====== ======
</TABLE>

The mortgages payable to banks provide, among other things, for the
maintenance by certain of the companies of a minimum tangible net worth
balance, certain financial ratios and limitations on additional borrowings.

Maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1996............................................................ $1,479
1997............................................................ 315
1998............................................................ 335
1999............................................................ 366
2000............................................................ 396
Thereafter...................................................... 3,955
------
Total.......................................................... $6,846
======
</TABLE>

9. CAPITAL LEASE OBLIGATIONS

The Company is obligated under leases for equipment, which are treated as
capital leases for financial reporting purposes due to certain provisions in
the lease agreements. Included in plant equipment at December 31, 1994 and
1995 are assets held under capital leases with a net carrying value of $652
and $583, respectively. Accumulated amortization on these assets at December
31, 1994 and 1995 was $34 and $103, respectively.

F-11
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The future minimum lease payments, by year and in the aggregate, and the
present value of the future minimum lease payments at December 31, 1995 are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1996............................................................ $164
1997............................................................ 164
1998............................................................ 164
----
Total........................................................... 492
Amount representing interest.................................... 52
----
Present value of the future minimum lease payments (including
$136 payable currently)........................................ $440
====
</TABLE>

10. INCOME TAXES

Prior to the consummation of the Acquisition Agreement, all of the Companies
were "S" corporations and as such Federal and state taxes were generally paid
at the shareholder level only. However, when corporate taxable income of any
company exceed $200, such company was required to pay New York State corporate
income taxes equal to the difference between the personal and the corporate
tax rate (approximately 2 percent at December 31, 1995) for all taxable income
in excess of $200, except for Natur-Pharma, Alvita and B. Bros., which are
subject to the tax laws of the State of Utah.

Some of the companies were not "S" corporations since inception. The
following table sets forth the effective date each company elected "S"
corporation status and the "C" corporation retained earnings at the time of
"S" corporation election:

<TABLE>
<CAPTION>
"C" CORPORATION
EFFECTIVE DATE OF "S" RETAINED
COMPANY CORPORATION ELECTION EARNINGS
------- --------------------- ---------------
<S> <C> <C>
Twin................................ January 1, 1987 $6,299
Export.............................. At inception None
Specialty........................... At inception None
Alvita.............................. January 1, 1992 $ 39
Natur-Pharma........................ January 1, 1993 $ 575
B. Bros. ........................... At inception None
ARP................................. January 1, 1989 $ (89)
</TABLE>

The provision for income taxes for the years ended December 31, 1993, 1994
and 1995 represents state taxes.

Twin is undergoing a routine audit of its Federal income tax return for the
year ended December 31, 1993. Management believes that any amounts which might
be assessed will not have a material effect on the consolidated financial
statements.

11. EMPLOYEE BENEFIT PLANS

Twin provides a profit sharing plan for all full-time employees who have
satisfied length of service and minimum age requirements. Profit sharing
expense related to Twin's plan was $250 for the years ended December 31, 1993,
1994 and 1995.

Under the Natur-Pharma, Inc. Employee Savings Plan, eligible participating
employees may elect to contribute up to twenty-five percent of their salaries
to an investment trust. Natur-Pharma may, at its sole

F-12
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
discretion, contribute to the plan. Participants are fully vested in their own
contributions and vest in Natur-Pharma's contributions at a rate of 20 percent
per year beginning one year after the date of contribution. Natur-Pharma
contributed and charged to expense $7, $11 and $37 under this plan for the
years ended December 31, 1993, 1994 and 1995, respectively.

12. COMMITMENTS AND CONTINGENCIES

a. Leases--The Company leases certain warehouse space and equipment under
operating leases. Generally, the leases carry renewal provisions and require
the payment of maintenance costs. Rental payments may be adjusted for
increases in taxes and other costs above specific amounts. Rental expense
charged to operations for the years ended December 31, 1993, 1994 and 1995 was
approximately $1,254, $1,281 and $1,370, respectively.

Future minimum payments under noncancellable operating leases with initial
or remaining terms of more than one year, are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1996........................................................... $1,269
1997........................................................... 981
1998........................................................... 866
1999........................................................... 764
2000........................................................... 829
------
Total...................................................... $4,709
======
</TABLE>

b. Legal matters--Twin and other encapsulators, and various manufacturers,
distributors, suppliers, importers and retailers of manufactured L-Tryptophan
or products containing manufactured L-Tryptophan are or were defendants in
various legal actions brought in federal and state courts seeking compensatory
and, in some cases, punitive damages for alleged personal injuries resulting
from the ingestion of certain products containing manufactured L-Tryptophan.
As of January 31, 1996, Twin was a named defendant in three of these actions.
Although Twin believes that few new lawsuits are likely to be brought because
of applicable statutes of limitations, the possibility of future such actions
cannot be excluded. Twin and certain other companies in the industry (the
"Indemnified Group") have each entered into a Defense and Indemnification
Agreement with Showa Denko America, Inc. ("SDA") (the "Indemnification
Agreement"), under which SDA has agreed to assume the defense of all claims
against any of the Indemnified Group arising out of the ingestion of
L-Tryptophan products and to pay all legal fees incurred and indemnify Twin
against liability in any action if it is determined that a proximate cause of
the injury sustained by the plaintiff was a constituent of the raw material
sold by SDA to Twin or was a factor for which SDA or any of its affiliates was
responsible, except to the extent that action by Twin proximately contributed
to the injury, and except for certain claims relating to punitive damages. SDA
appears to have been the supplier of all of the allegedly contaminated L-
Tryptophan. SDA has posted a revolving irrevocable letter of credit for the
benefit of the Indemnified Group if SDA is unable or unwilling to satisfy any
claims or judgments. Showa Denko, K.K. ("SDK"), the Japanese parent of SDA and
manufacturer of the relevant L-Tryptophan, has unconditionally guaranteed the
payment obligations of SDA under the Indemnification Agreement. As of January
31, 1996, 128 lawsuits in which Twin was a named defendant had been dismissed
or settled by SDA at no cost to Twin.

The total of all damages alleged in the L-Tryptophan actions, if fully
awarded against Twin alone and ignoring the existence of the Indemnification
Agreement, would exceed Twin's available product liability insurance coverage
of $3 million for L-Tryptophan matters in respect of claims made prior to
December 31, 1993, and would have a material adverse effect on the Company's
results of operations and financial condition. However, the Indemnification
Agreement, the defense and resolution to date of numerous lawsuits by SDA

F-13
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
without cost to Twin, the multitude of defendants and the possibility that
liability could be assessed against or paid by other parties or by insurance
carriers have led management, after consultation with outside legal counsel,
to believe that the prospect for a material adverse effect on the Company's
consolidated financial condition or results of operations is remote and no
provision in the consolidated financial statements has been made for any loss
that may result from these actions. During the year ended December 31, 1993,
SDA reimbursed Twin approximately $461 primarily for unsalable L-Tryptophan
related merchandise.

In 1989, Twin received an informal inquiry from the New York Regional Office
of the Federal Trade Commission ("FTC") seeking substantiation for certain
advertising claims made for a segment of its "Fuel" bodybuilding/sports
nutrition line of products. In response, Twin submitted scientific
substantiation and financial information to the FTC. Twin is currently
negotiating this matter with the FTC and has received from the FTC a revised
proposed Complaint and Consent Decree (the "Decree") seeking, among other
things, injunctive relief restricting certain muscle building, fat loss and
other marketing claims in connection with the sale of Twin's weight control,
bodybuilding and sports nutrition products. In addition, the Decree seeks
payment of $200. The Company believes that it has adequate scientific
substantiation for the claims at issue, and it intends to vigorously defend
the matter if a settlement is not reached. The Company has reserved $200 for
this matter.

The Company is also engaged in various other litigation in the ordinary
course of business. Management is of the opinion that the amounts which may be
awarded or assessed in connection with these matters, if any, will not have a
material effect on the consolidated financial statements.

13. INVESTMENT IN LIMITED PARTNERSHIP

As a result of investments in certain limited partnerships, Hambrose 3 and 4
("Partnerships"), Twin entered into an agreement with the Partnerships wherein
Twin subscribed to additional limited interests in the Partnerships. Twin also
agreed to contribute a total of $360 as "Additional Capital Contribution" to
the Partnerships, which consists of a nonrecourse note of $240 and another
noninterest-bearing note due in the year 2010 in the amount of $120. In lieu
of making the Additional Capital Contribution in cash or subscription note,
Twin has assigned 100 percent of certain distribution rights until such time
as the assignee has recovered the full amount of the Additional Capital
Contribution. Twin is contingently liable to the Partnerships in the amount of
approximately $3,450. Management is of the opinion that there will be
sufficient income generated from the Partnerships' leasing operations to repay
all the debt due and Twin will not be required to make any further cash
payments. These investments have not been assigned any value on the
accompanying consolidated balance sheets.

The Hambrose 3 limited partnership has been audited by the Internal Revenue
Service ("IRS") for the years ended December 31, 1985 and 1986, at which time
Twin was a "C" corporation. A settlement was reached during 1995 in which Twin
paid approximately $2,082, including interest. In addition, Twin was
responsible for additional state taxes, inclusive of interest of approximately
$28. Twin recorded an estimated settlement amount during 1994 totaling $1,982
which was reflected as a nonrecurring charge to operations. An additional $128
of interest was recorded in 1995, and was included in operating expenses in
the accompanying consolidated statement of income.

14. RELATED PARTY TRANSACTIONS

Natur-Pharma had outstanding notes payable to certain shareholders totaling
$1,500 and $500 as of December 31, 1994 and 1995, respectively. Such notes
bear interest at ten percent per annum, which is payable semi-annually.
Interest expense on such notes was approximately $179, $150 and $100 for the
years ended December 31, 1993, 1994 and 1995, respectively. Alvita had
outstanding notes payable to certain shareholders

F-14
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
totaling $250 as of December 31, 1993. Such notes were repaid in the year
ended December 31, 1994. Interest expense on such notes was approximately $23
and $5 for the years ended December 31, 1993 and 1994, respectively. ARP had
outstanding notes payable to certain shareholders totaling $346 as of December
31, 1994 and 1995. Such notes are non-interest bearing.

15. MAJOR CUSTOMERS AND CREDIT CONCENTRATIONS

The Company has two significant customers which accounted for approximately
27 and 19 percent, respectively, of net sales for 1993; 28 and 20 percent,
respectively, of net sales for 1994; and 28 and 22 percent, respectively, of
net sales for 1995. No other customer accounted for more than 10 percent of
net sales in any of the three years ended December 31, 1995.

The Company's customers are primarily large independent distributors of
health food products. At December 31, 1994 and 1995, approximately 69 and 73
percent, respectively, of accounts receivable related to two customers.

16. SUBSEQUENT EVENT

The shareholders of the Companies entered into the Acquisition Agreement,
which is dated as of March 5, 1996 and which was consummated on May 7, 1996,
pursuant to which, among other things, (i) TLG acquired all of the outstanding
capital stock of Natur-Pharma, (ii) Green Equity Investors II L.P. ("GEI")
acquired 480,000 shares (48%) of the common stock of TLG for aggregate
consideration of $4,800, and shares of non-voting junior redeemable preferred
stock of TLG for aggregate consideration of $37,000, (iii) certain other
investors acquired 70,000 shares (7%) of the common stock of TLG (however,
each of these other investors own less than 5% of the common stock of TLG) for
aggregate consideration of $700 and shares of non-voting senior redeemable
preferred stock of TLG for aggregate consideration of $30,000, (iv) certain of
the shareholders of the Companies (the "Continuing Shareholders") received
from TLG, in exchange for certain of their shares of common stock of Natur-
Pharma, 450,000 shares (45%) of the outstanding shares of common stock of TLG,
valued at $4,500, and (v) the shareholders of the Companies received a total
of $212,500 in consideration of the balance of their shares of common stock of
Natur-Pharma and for all of their shares of capital stock of Twin, Alvita,
Export, Specialty, B. Bros., and ARP. Of the total cash consideration to the
shareholders, approximately $15,000 represented consideration for non-
competition agreements entered into by the shareholders of the Companies,
which was recognized as a non-recurring expense upon the consummation of the
Acquisition Agreement.

Pursuant to the terms of the Acquisition Agreement, Twin, Alvita, Export,
Specialty, and B. Bros. were merged into Natur-Pharma. ARP was merged with
Natur-Pharma II, Inc., a wholly owned subsidiary of Natur-Pharma, and Natur-
Pharma became a wholly owned subsidiary of TLG. Natur-Pharma changed its name
to Twin Laboratories Inc. ("New Twin"). TLG's initial board of directors
consists of five of the Continuing Shareholders and three designees of GEI. A
majority of TLG's shareholders have the ability to elect a majority of its
directors. However, regardless of the composition of the board of directors,
pursuant to the terms of the TLG shareholders agreement, a wide range of
actions to be taken by TLG require the affirmative approval of both a majority
of the Continuing Shareholder directors and a majority of the GEI designee
directors. These actions include, but are not limited to, payment of certain
dividends, engagement in new businesses, acquisition of other businesses,
entering certain contracts, incurring certain debt or obligations, making
certain investments, relocation of executive offices, selection of location
and date of the annual shareholders meeting, termination or material
modification of any employee benefit plan, selection of auditors or legal
counsel, adoption or amendment of strategic plans or operating budgets, and
election or termination of any executive officers. In addition, certain
fundamental corporate actions, including but not limited to, amendments to the
certificate of incorporation, the

F-15
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
sale of substantially all of the assets of the Company, and the merger or
combination of the Company with another entity additionally require an
affirmative vote of holders of at least 80% of the issued and outstanding
stock of TLG. Such voting rights are generally effective until such time as
the common stock of TLG is publicly held. Because the transactions
contemplated by the Acquisition Agreement do not result in a change in control
as defined in Emerging Issues Task Force Issue No. 88-16, "Basis in Leveraged
Buyout Transactions" ("EITF 88-16"), the transactions were accounted for as a
recapitalization under the guidance of EITF 88-16 and the Companies'
historical basis of accounting were applied to the consolidated financial
statements of TLG. Upon consummation of the Acquisition Agreement, the
Companies terminated their S Corporation status.

Cumulative dividends on the preferred stock accrue at a rate of 14% per
annum (in the case of the senior preferred stock) and 11.25% per annum (in the
case of the junior preferred stock) and are payable quarterly, if declared by
the board of directors. Such dividends are payable in additional shares of
preferred stock (valued at the liquidation preference of $1,000 per share plus
accrued and unpaid dividends) unless the board of directors, upon a majority
vote of directors not affiliated with Leonard Green & Partners, L.P.,
determines that any such dividends will be paid in cash.

The redemption price of the preferred stock, as well as the liquidation
preference, is $1,000 per share plus accrued and unpaid dividends. The
preferred stock may be redeemed, in whole or in part, by TLG at any time,
except that (1) no partial redemption can be made by TLG unless all cumulative
dividends have been paid on all shares, (2) TLG may not redeem shares of
preferred stock at any time when it is making, or is required to make, an
offer to purchase preferred stock upon a change of control and (3) so long as
any shares of senior preferred stock are outstanding, no shares of junior
preferred stock may be redeemed without the consent of the holders of a
majority of the outstanding shares of senior preferred stock.

The preferred stock is subject to mandatory redemption, at the redemption
price, including accrued and unpaid dividends, eleven years after the issuance
thereof (in the case of the senior preferred stock) or twelve years after the
issuance thereof (in the case of the junior preferred stock). In addition,
upon a change in control TLG is required to offer to purchase the preferred
stock at 101 percent of the liquidation preference thereof, plus accrued and
unpaid dividends.

New Twin obtained additional financing necessary to effect the transactions
contemplated by the Acquisition Agreement, repay certain existing indebtedness
of the Company, and pay the fees and expenses incurred in connection with the
Acquisition Agreement through the incurrence of debt which totalled $153,000.
Such debt included: (1) borrowings of $53,000 under a term loan credit
facility provided by certain banks, financial institutions and other entities,
and (2) gross proceeds of $100,000 from the private placement of subordinated
debt. A six-year $15,000 revolving credit facility was also obtained from the
term loan lenders, to provide for working capital requirements.

The term loan is payable in defined percentages over a six-year period.
Borrowings under the term loan and revolving credit facilities bear interest,
at the borrower's discretion, at either the Alternative Base Rate, as defined,
plus a margin of 1.25 percent, or at the Eurodollar Rate, as defined, plus a
margin of 2.5 percent. Such margins are subject to reduction based upon the
achievement of certain performance targets, as defined. New Twin also must pay
a commitment fee of .5 percent per annum (subject to reduction based on the
achievement of certain performance targets, as defined) on the average daily
unused portion of the revolving credit facility. These credit facilities are
secured by all tangible and intangible assets of New Twin and are subject to
certain restrictive covenants including, among other things, the maintenance
of defined levels of earnings and certain debt coverage rates, as well as
restrictions on additional indebtedness, dividends, investments and certain
other significant transactions.

F-16
<PAGE>

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
The subordinated debt matures in ten years and bears interest at a rate of
10 1/4% per annum. The subordinated debt is callable after five years at a
premium to par which will decline to par after eight years. During the first
three years, New Twin has the option to redeem up to 35 percent of the
subordinated debt with the proceeds of a public offering at a redemption price
of 109 1/2%. Upon a change of control, as defined, New Twin is required to
offer to redeem the subordinated debt at 101 percent of the principal amount
plus accrued and unpaid interest. Restrictive covenants on the subordinated
debt include, among other things, limitations on additional indebtedness,
investments and certain other significant transactions.

The subordinated debt is guaranteed by TLG and ARP. TLG had no assets or
liabilities until the consummation of the Acquisition Agreement. Summarized
financial information of ARP is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Net sales....................................... $3,188 $ 3,930 $ 5,200
Net income (loss)............................... (94) 466 (128)
Total assets.................................... 936 1,507 1,434
Total shareholders' equity (deficit)............ (116) 350 222
</TABLE>

The following unaudited pro forma results of operations assume the
transactions contemplated by the Acquisition Agreement occurred as of January
1, 1995. The pro forma operations data has been prepared for comparative
purposes only and does not purport to represent what the Company's actual
results of operations would have been had the transactions contemplated by the
Acquisition Agreement in fact occurred at January 1, 1995.

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1995 MARCH 31, 1996
----------------- ------------------
<S> <C> <C>
Net sales............................ $148,735 $43,984
Interest expense..................... 16,010 4,002
Net income........................... 9,211 3,754
</TABLE>

Unauditd pro forma debt, preferred stock and shareholder's deficit at March
31, 1996 after giving effect to the transactions contemplated by the
Acquisition Agreement as if they had occurred on March 31, 1996 would be as
follows:

<TABLE>
<S> <C>
Total current portion of long-term debt and capital lease ob-
ligations................................................... $ 3,140
=========
Total long-term debt and capital lease obligations........... $ 150,633
=========
Senior redeemable cumulative Preferred Stock................. $ 30,000
=========
Junior redeemable cumulative Preferred Stock................. $ 37,000
=========
Shareholders' deficit:
Common stock............................................... $ 1,000
Additional paid-in capital................................. 82,063
Accumulated deficit........................................ (178,796)
---------
Total shareholders' deficit.............................. $ (95,733)
=========
</TABLE>

F-17
<PAGE>

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDER-
WRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITA-
TION OF AN OFFER TO BUY THE SHARES OFFERED HEREBY BY ANYONE IN ANY JURISDIC-
TION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IM-
PLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUB-
SEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Additional Information.................................................... 3
Prospectus Summary........................................................ 4
Risk Factors.............................................................. 10
Use of Proceeds........................................................... 16
Dividend Policy........................................................... 16
Dilution.................................................................. 17
Capitalization............................................................ 18
Unaudited Pro Forma Condensed Consolidated
Financial Data........................................................... 19
Selected Historical Financial Data........................................ 26
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 28
Business.................................................................. 32
Management................................................................ 45
Certain Relationships and Related Transactions............................ 49
Principal Stockholders.................................................... 51
Description of Certain Indebtedness....................................... 53
Description of Capital Stock.............................................. 55
Shares Eligible for Future Sale........................................... 56
Certain United States Tax Consequences to Non-United States Holders....... 58
Underwriting ............................................................. 60
Legal Matters............................................................. 63
Experts................................................................... 63
Index to Consolidated Financial Statements................................ F-1
</TABLE>

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

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EF-
FECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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

TLG LABORATORIES
HOLDING CORP.

COMMON STOCK

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

PROSPECTUS

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

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

, 1996

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

SUBJECT TO COMPLETION, DATED JUNE 7, 1996

PROSPECTUS
, 1996

SHARES
TLG LABORATORIES HOLDING CORP.
COMMON STOCK

All of the shares of common stock, $1.00 par value per share (the "Common
Stock"), offered hereby are being sold by TLG Laboratories Holding Corp.
("Holding" or the "Company"). Of the shares of Common Stock offered
by the Company, shares are initially being offered for sale outside
the United States and Canada by the International Managers (the "International
Offering") and shares are initially being offered for sale in the
United States and Canada in a concurrent offering by the U.S. Underwriters (the
"U.S. Offering," and together with the International Offering, the
"Offerings"), subject to transfers between the International Managers and the
U.S. Underwriters. See "Underwriting."

The Company intends to apply for listing of the Common Stock on the New York
Stock Exchange, Inc. under the symbol " ."

SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN THE COMMON STOCK.

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS
PRICE TO DISCOUNTS AND TO THE
THE PUBLIC COMMISSIONS (1) COMPANY (2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.............................. $ $ $
Total (3).............................. $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the International Managers and the U.S.
Underwriters (collectively, the "Underwriters") against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted to the U.S. Underwriters a 30-day option to
purchase up to an aggregate of additional shares of Common Stock on the
same terms as set forth above solely for the purpose of covering over-
allotments, if any. If such option is exercised in full, the total Price to
the Public, Underwriting Discounts and Commissions, and Proceeds to the
Company will be $ , $ , and $ , respectively. See "Underwriting."

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE>

[ALTERNATE INTERNATIONAL BACK COVER PAGE]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRIT-
ERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY THE SHARES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAK-
ING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.

THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF THE COMMON STOCK OFFERED
HEREBY IN THE UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL SERV-
ICES ACT 1986 AND THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995 WITH RESPECT
TO ANYTHING DONE BY ANY PERSON IN RELATION TO THE COMMON STOCK IN, FROM OR OTH-
ERWISE INVOLVING THE UNITED KINGDOM MUST BE COMPLIED WITH. SEE "UNDERWRITING."

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Additional Information.................................................... 3
Prospectus Summary........................................................ 4
Risk Factors.............................................................. 10
Use of Proceeds........................................................... 16
Dividend Policy........................................................... 16
Dilution.................................................................. 17
Capitalization............................................................ 18
Unaudited Pro Forma Condensed Consolidated
Financial Data........................................................... 19
Selected Historical Financial Data........................................ 26
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 28
Business.................................................................. 32
Management................................................................ 45
Certain Relationships and Related Transactions............................ 49
Principal Stockholders.................................................... 51
Description of Certain Indebtedness....................................... 53
Description of Capital Stock.............................................. 55
Shares Eligible for Future Sale........................................... 56
Certain United States Tax Consequences to Non-United States............... 58
Underwriting ............................................................. 60
Legal Matters............................................................. 63
Experts................................................................... 63
Index to Consolidated Financial Statements................................ F-1
</TABLE>

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

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

TLG LABORATORIES
HOLDING CORP.

COMMON STOCK

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

PROSPECTUS

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

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The Registrant estimates that expenses payable by the Registrant in
connection with the offering described in this Registration Statement (other
than the underwriting discounts and commissions) will be as follows:

<TABLE>
<CAPTION>
TOTAL
-------
<S> <C>
SEC registration fee (actual)....................................... $44,828
NASD filing fee (actual)............................................ 13,500
NYSE filing fee (actual)............................................ *
Blue Sky fees and expenses (including counsel fees)................. *
Accounting fees and expenses........................................ *
Legal fees and expenses............................................. *
Printing and engraving expenses..................................... *
Transfer Agent and Registrar fees and expenses...................... *
Miscellaneous expenses.............................................. *
-------
Total............................................................. $ *
=======
</TABLE>
- --------
* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL"), which permits a corporation in its certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty,
except (i) for any breach of the director's fiduciary duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions), or
(iv) for any transaction from which the director derived an improper personal
benefit. The Registrant's Amended and Restated Certificate of Incorporation
contains provisions permitted by Section 102(b)(7) of the DGCL.

Reference is made to Section 145 of the DGCL which provides that a
corporation may indemnify any persons, including directors and officers, who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
such corporation), by reason of the fact that such person is or was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent
of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding, provided such director, officer, employee or agent
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests and, with respect to any criminal
actions or proceedings, had no reasonable cause to believe that his conduct
was unlawful. A Delaware corporation may indemnify directors and/or officers
in an action or suit by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the director or officer is adjudged to be liable to the
corporation. Where a director or officer is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him or her against the expenses which such director or officer
actually and reasonably incurred.

The Registrant's Amended and Restated Certificate of Incorporation and its
By-laws filed as Exhibit 3.1 and 3.2 respectively, to this Registration
Statement provide for the indemnification of directors and officers of the
Registrant to the fullest extent permitted by the DGCL.

II-1
<PAGE>

Pursuant to the Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement, the Underwriters have agreed to indemnify the
directors, officers and controlling persons of the Registrant against certain
civil liabilities that may be incurred in connection with the Offering,
including certain liabilities under the Securities Act of 1933, as amended
(the "Securities Act").

The Registrant may provide liability insurance for each director and officer
for certain losses arising from claims or charges made against them while
acting in their capacities as directors or officers of the Registrant.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On May 7, 1996, the Company sold $100,000,000 aggregate principal amount of
its 10 1/4% Senior Subordinated Notes due 2006 (the "Old Notes") to Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ") and Chase Securities Inc.
("Chase," collectively the "Initial Notes Purchasers") for $100,000,000 in
cash (less the Initial Notes Purchasers' discount of $3,000,000). Of the total
amount sold, DLJ purchased $60,000,000 aggregate principal amount of the Old
Notes and Chase purchased $40,000,000 aggregate principal amount of the Old
Notes. Such securities were sold in a transaction that was exempt from
registration under Section 4(2) of the Securities Act.

On May 7, 1996, Holding sold an aggregate of 30,000 shares of its 14% Non-
Voting Senior Cumulative Preferred Stock to five investors (the "Initial
Senior Preferred Stock Purchasers") for $30,000,000 in cash. Such securities
were sold in a transaction that was exempt from registration under Section
4(2) of the Securities Act.

On May 7, 1996, Holding sold 37,000 shares of its 11.25% Non-Voting Junior
Cumulative Preferred Stock to Green Equity Investors II, L.P. ("GEI II") for
$37,000,000 in cash. Such securities were sold in a transaction that was
exempt from registration under Section 4(2) of the Securities Act.

On May 7, 1996, Holding sold 70,000 shares of its Common Stock to the
Initial Senior Preferred Stock Purchasers for $700,000 in cash. Such
securities were sold in a transaction that was exempt from registration under
Section 4(2) of the Securities Act.

On May 7, 1996, Holding sold 480,000 shares of its Common Stock to GEI II
for an aggregate of $4,800,000 in cash. Such securities were sold in a
transaction that was exempt from registration under Section 4(2) of the
Securities Act.

On May 7, 1996, Holding sold an aggregate of 450,000 shares of its Common
Stock valued at $4,500,000 to certain members of its senior management in
exchange for certain of their shares of Common Stock of Natur-Pharma Inc. Such
securities were sold in transactions that were exempt from registration under
Section 4(2) of the Securities Act promulgated thereunder.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
4.1 Specimen form of stock certificate for Common Stock.***
4.2 Indenture, dated May 7, 1996, among Twin Laboratories Inc. ("Twin"),
Advanced Research Press, Inc. ("ARP"), the Registrant (together with
ARP, the "Guarantors") and Fleet National Bank, as Trustee,
Registrar, Paying Agent and Securities Agent, regarding Twin's 10
1/4% Senior Subordinated Notes due 2006.*
4.3 Form of Credit and Guarantee Agreement, dated May 7, 1996, among
Twin, the Registrant, the financial institutions named therein,
Chemical Bank as Administrative Agent and The Bank of New York as
Documentation Agent.*
5.1 Opinion re Legality of Kramer, Levin, Naftalis & Frankel.***
10.1 Form of Guarantee and Collateral Agreement, dated May 7, 1996, among
the Registrant, Twin, and ARP in favor of Chemical Bank, as
Administrative Agent.*
10.2 Form of Term Note.*
10.3 Form of Revolving Credit Note.*
10.4 Form of Swing Line Note.*
10.5 Form of Mortgage and Security Agreement, dated May 7, 1996, from the
Registrant to Chemical Bank, as Administrative Agent.*
10.6 Form of Deed of Trust, dated May 7, 1996, from Twin to First
American Title Company of Utah, Trustee for the use and benefit of
Chemical Bank, as Administrative Agent, Beneficiary.*
10.8 Stockholders Agreement, dated May 7, 1996, among Brian Blechman,
Neil Blechman, Ross Blechman, Steve Blechman, Dean Blechman and
Stephen Welling, the Registrant and GEI.*
10.9 Secondary Stockholders Agreement among Brian Blechman, Neil
Blechman, Ross Blechman, Steve Blechman, Dean Blechman and Stephen
Welling, the Registrant, GEI, DLJ Investment Funding, Inc., DLJ
Investment Partners, L.P., Chase Equity Associates, L.P., PMI
Mezzanine Fund, L.P. and State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees' Retirement
System, State Employees' Retirement System, Michigan State Police
Retirement System, and Michigan Judges Retirement System.*
10.10 Employment Agreement, dated May 7, 1996, between Twin and Brian
Blechman.*
10.11 Employment Agreement, dated May 7, 1996, between Twin and Neil
Blechman.*
10.12 Employment Agreement, dated May 7, 1996, between Twin and Ross
Blechman.*
10.13 Employment Agreement, dated May 7, 1996, between Twin and Steve
Blechman.*
10.14 Employment Agreement, dated May 7, 1996, between Twin and Dean
Blechman.*
10.15 Employment Agreement, dated May 7, 1996, between Twin and Stephen
Welling.*
10.16 Consulting Agreement, dated May 7, 1996, between Twin and David
Blechman.*
10.17 Consulting Agreement, dated May 7, 1996, between Twin and Jean
Blechman.*
10.18 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and David Blechman.*
10.19 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Jean Blechman.*
10.20 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Brian Blechman.***
10.21 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Neil Blechman.***
10.22 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Ross Blechman.***
10.23 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Steve Blechman.***
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.24 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and
Dean Blechman.***
10.25 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and
Stephen Welling.***
10.26 Management Services Agreement, dated May 7, 1996, between Twin and
Leonard Green & Partners, L.P.***
10.27 Registration Rights Agreement, dated May 7, 1996, among Twin,
Donaldson, Lufkin & Jenrette Securities Corporation and Chase
Securities Inc.***
21.1 List of Registrant's Subsidiaries.***
23.1 Consent of Deloitte & Touche LLP.**
23.4 Consent of Kramer, Levin, Naftalis & Frankel (to be contained in the
opinion to be filed as Exhibit 5.1 hereto).
27 Financial Data Schedule.**
</TABLE>
- --------

* Previously filed.

** Filed herewith.

*** To be filed by Amendment.

(b) Financial Statement Schedule

(i) Schedule II--Valuation and Qualifying Accounts

All other schedules are omitted because the required information is not
present or is not present in amounts sufficient to require submission of the
schedule or because the information required is included in the consolidated
financial statements or notes therein.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to provisions described in Item 14 above, or otherwise,
the Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the Common Stock covered hereby, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.

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

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

II-4
<PAGE>

SIGNATURES

IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THERETO DULY AUTHORIZED, IN THE CITY
OF NEW YORK, NEW YORK, ON JUNE 7, 1996.

TLG LABORATORIES HOLDING CORP.

/s/ Ross Blechman
By: _________________________________
ROSS BLECHMAN CHAIRMAN OF THE
BOARD, CHIEF EXECUTIVE OFFICER AND
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment has been signed by the following persons
in the capacities and on the dates indicated.

SIGNATURE TITLE(S) DATE

/s/ Ross Blechman Chairman of the
- ------------------------------------- Board, Chief June 7, 1996
ROSS BLECHMAN Executive Officer,
President and
Director (Principal
Executive Officer)

/s/ Neil Blechman Executive Vice
- ------------------------------------- President and June 7, 1996
NEIL BLECHMAN Director

/s/ Brian Blechman Executive Vice
- ------------------------------------- President and June 7, 1996
BRIAN BLECHMAN Director (Principal
Financial and
Accounting Officer)

/s/ Steve Blechman Executive Vice
- ------------------------------------- President and June 7, 1996
STEVE BLECHMAN Director

/s/ Dean Blechman Executive Vice
- ------------------------------------- President and June 7, 1996
DEAN BLECHMAN Director

/s/ Jonathan D. Sokoloff Director
- ------------------------------------- June 7, 1996
JONATHAN D. SOKOLOFF

/s/ John G. Danhakl Director
- ------------------------------------- June 7, 1996
JOHN G. DANHAKL

/s/ Jennifer Holden Dunbar Director
- ------------------------------------- June 7, 1996
JENNIFER HOLDEN DUNBAR

II-5
<PAGE>

SCHEDULE II

TLG LABORATORIES HOLDING CORP. AND SUBSIDIARIES

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- --------------------- ---------- ---------
ADDITIONS
---------------------
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE
BEGINNING COST AND ACCOUNTS DEDUCTIONS AT END OF
DESCRIPTIONS OF PERIOD EXPENSES - DESCRIBE - DESCRIBE PERIOD
------------ ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1995:
Allowance for bad debts.. $ 63 $169 $-- $ 55(1) $177
==== ==== === ==== ====
Reserve for excess and $100 $415 $-- $ -- $515
slow moving inventory... ==== ==== === ==== ====
YEAR ENDED DECEMBER 31,
1994:
Allowance for bad debts.. $123 $(59) $-- $ 1(1) $ 63
==== ==== === ==== ====
Reserve for excess and $-- $100 $-- $ -- $100
slow moving inventory... ==== ==== === ==== ====
YEAR ENDED DECEMBER 31,
1993:
Allowance for bad debts.. $126 $-- $-- $ 3(1) $123
==== ==== === ==== ====
Reserve for excess and $-- $-- $-- $-- $--
slow moving inventory... ==== ==== === ==== ====
</TABLE>
- --------
(1) Amounts written off.

S-1
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.***
2.1 Form of Stock Purchase and Sale Agreement, dated as of March 5,
1996, among David Blechman, Jean Blechman, Brian Blechman, Neil
Blechman, Ross Blechman, Steve Blechman, Dean Blechman, Stephen
Welling, the Registrant, Natur-Pharma Inc. and Green Equity
Investors II, L.P. ("GEI II") (the "Stock Purchase and Sale
Agreement").*
2.1.1 Form of Amendment to the Stock Purchase and Sale Agreement, dated
May 7, 1996.*
3.1 Form of Amended and Restated Certificate of Incorporation of the
Registrant.*
3.2 Form of By-laws of the Registrant.*
4.1 Specimen form of stock certificate for Common Stock.***
4.2 Indenture, dated May 7, 1996, among Twin Laboratories Inc. ("Twin"),
Advanced Research Press, Inc. ("ARP"), the Registrant (together with
ARP, the "Guarantors") and Fleet National Bank, as Trustee,
Registrar, Paying Agent and Securities Agent, regarding Twin's 10
1/4% Senior Subordinated Notes due 2006.*
4.3 Form of Credit and Guarantee Agreement, dated May 7, 1996, among
Twin, the Registrant, the financial institutions named therein,
Chemical Bank as Administrative Agent and The Bank of New York as
Documentation Agent.*
5.1 Opinion re Legality of Kramer, Levin, Naftalis & Frankel.***
10.1 Form of Guarantee and Collateral Agreement, dated May 7, 1996, among
the Registrant, Twin, and ARP in favor of Chemical Bank, as
Administrative Agent.*
10.2 Form of Term Note.*
10.3 Form of Revolving Credit Note.*
10.4 Form of Saving Line Note.*
10.5 Form of Mortgage and Security Agreement, dated May 7, 1996, from the
Registrant to Chemical Bank, as Administrative Agent.*
10.6 Form of Deed of Trust, dated May 7, 1996, from Twin to First
American Title Company of Utah, Trustee for the use and benefit of
Chemical Bank, as Administrative Agent, Beneficiary.*
10.8 Stockholders Agreement, dated May 7, 1996, among Brian Blechman,
Neil Blechman, Ross Blechman, Steve Blechman, Dean Blechman and
Stephen Welling, the Registrant and GEI.*
10.9 Secondary Stockholders Agreement among Brian Blechman, Neil
Blechman, Ross Blechman, Steve Blechman, Dean Blechman and Stephen
Welling, the Registrant, GEI, DLJ Investment Funding, Inc., DLJ
Investment Partners, L.P., Chase Equity Associates, L.P., PMI
Mezzanine Fund, L.P. and State Treasurer of the State of Michigan,
Custodian of the Michigan Public School Employees' Retirement
System, State Employees' Retirement System, Michigan State Police
Retirement System, and Michigan Judges Retirement System.*
10.10 Employment Agreement, dated May 7, 1996, between Twin and Brian
Blechman.*
10.11 Employment Agreement, dated May 7, 1996, between Twin and Neil
Blechman.*
10.12 Employment Agreement, dated May 7, 1996, between Twin and Ross
Blechman.*
10.13 Employment Agreement, dated May 7, 1996, between Twin and Steve
Blechman.*
10.14 Employment Agreement, dated May 7, 1996, between Twin and Dean
Blechman.*
10.15 Employment Agreement, dated May 7, 1996, between Twin and Stephen
Welling.*
10.16 Consulting Agreement, dated May 7, 1996, between Twin and David
Blechman.*
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
10.17 Consulting Agreement, dated May 7, 1996, between Twin and Jean
Blechman.*
10.18 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and David Blechman.*
10.19 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Jean Blechman.*
10.20 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Brian Blechman.***
10.21 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Neil Blechman.***
10.22 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Ross Blechman.***
10.23 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Steve Blechman.***
10.24 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Dean Blechman.***
10.25 Noncompetition Agreement, dated May 7, 1996, between the Registrant
and Stephen Welling.***
10.26 Management Services Agreement, dated May 7, 1996, between Twin and
Leonard Green & Partners, L.P.***
10.27 Registration Rights Agreement, dated May 7, 1996, among Twin,
Donaldson, Lufkin & Jenrette Securities Corporation and Chase
Securities Inc.**
21.1 List of Registrant's Subsidiaries.***
23.1 Consent of Deloitte & Touche LLP.**
23.4 Consent of Kramer, Levin, Naftalis & Frankel (to be contained in the
opinion to be filed as Exhibit 5.1 hereto).
27 Financial Data Schedule.**
</TABLE>
- --------

* Previously filed.

** Filed herewith.
** To be filed by Amendment.

<PAGE>

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE

TLG Laboratories Holding Corp.
Ronkonkoma, New York

We consent to the use in this Amendment No. 1 to Registration Statement No.
333-0591 of TLG Laboratories Holding Corp. on Form S-1 of our report dated
February 9, 1996 (May 7, 1996 as to Notes 1 and 16), appearing in the
Prospectus, which is a part of such Registration Statement, and to the
references to us under the heading "Selected Historical Financial Data" and
"Experts" in such Prospectus.

Our audits of the financial statements referred to in our aforementioned
report also included the financial statement schedule of TLG Laboratories
Holding Corp. listed in Part II at Item 16(b). This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

DELOITTE & TOUCHE LLP

Jericho, New York

June 3, 1996

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TLG
LABORATORIES HOLDING CORP. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 MAR-31-1996
<CASH> 7,945 15,049
<SECURITIES> 201 224
<RECEIVABLES> 24,372 23,669
<ALLOWANCES> 177 244
<INVENTORY> 25,273 28,110
<CURRENT-ASSETS> 58,663 68,531
<PP&E> 13,036 12,989
<DEPRECIATION> 6,263 0
<TOTAL-ASSETS> 75,309 85,151
<CURRENT-LIABILITIES> 14,233 17,137
<BONDS> 0 0
0 0
0 0
<COMMON> 450 450
<OTHER-SE> 54,955 62,006
<TOTAL-LIABILITY-AND-EQUITY> 75,309 85,151
<SALES> 148,735 43,984
<TOTAL-REVENUES> 148,735 43,984
<CGS> 89,932 26,362
<TOTAL-COSTS> 89,932 26,362
<OTHER-EXPENSES> 61 (1)
<LOSS-PROVISION> 169 144
<INTEREST-EXPENSE> 866 224
<INCOME-PRETAX> 30,464 9,865
<INCOME-TAX> 240 86
<INCOME-CONTINUING> 30,224 9,779
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 30,224 9,779
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0

</TABLE>