NU WAVE HEALTH PRODUCTS INC, 10SB12G/A, 1998-07-22

NU WAVE HEALTH PRODUCTS INC
10SB12G/A, 1998-07-22
CATALOG & MAIL-ORDER HOUSES

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<PAGE> 1
AMENDED
FORM 10-SB

GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-23031

NU-WAVE HEALTH PRODUCTS, INC., successor to and formerly Directly Rx, Inc.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in its charter)

Florida 34-1711778
- ----------------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

5905-A Hampton Oaks Parkway
Tampa, Florida 33610
- ----------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)

Issuers's telephone number 813-628-0804
-------------------------------------------

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which
to be so registered Each class is to be registered

None
- --------------------------------- ----------------------------------

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

Securities registered pursuant to Section 12(g) of the Act:

Common Capital Stock
- --------------------------------------------------------------------------------
(Title of Class)

- --------------------------------------------------------------------------------
(Title of Class)

<PAGE> 2

TABLE OF CONTENTS

PART I

<TABLE>
<S> <C> <C>
ITEM 1. DESCRIPTION OF BUSINESS................................................4

A. Company...........................................................4
B. History of Company and Business...................................4
1. Direct Rx................................................4
2. Old Nu-Wave..............................................4
3. Mergers and Restructure..................................5
C. Present Company and Business......................................6
1. Business.................................................6
2. Quality Control..........................................7
3. Government Regulation....................................7
D. Industry Segments.................................................8
E. Employees.........................................................8
F. Risk Factors......................................................9
G. Recent Acquisitions...............................................9
1. Dynamic..................................................9
2. Becan...................................................10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS...........10

A. Results of Operations and Fiscal Year 1998
Compared to Fiscal Year 1997 ....................................10
B. Liquidity and Capital Resources..................................11

ITEM 3. DESCRIPTION OF PROPERTY..............................................12

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT................................................12

A. Security Ownership of Certain beneficial Owners
and Management...................................................12
B. Outstanding Options and Conversion Rights........................14

ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS..................................................14

A. Directors and Executive Officers.................................14
B. Summary of Background and Experience
of Executive Officers and Key Personnel..........................15

ITEM 6. EXECUTIVE COMPENSATION...............................................16

A. Directors........................................................16
B. Executive Officers...............................................16

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................16

ITEM 8. DESCRIPTION OF SECURITIES............................................17
</TABLE>

<PAGE> 3

PART II

<TABLE>
<S> <C> <C>
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED SHAREHOLDER MATTERS........................18

ITEM 2. LEGAL PROCEEDINGS....................................................18

ITEM 3. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS
AND FINANCIAL DISCLOSURE.............................................18

ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES..............................18

ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS............................21

PART F/S

Financial Statements..........................................................21

PART III

Item 1. Index to Exhibits....................................................21

Item 2. Description of Exhibits..............................................22

Signatures....................................................................22
</TABLE>

<PAGE> 4

PART I

Item 1. DESCRIPTION OF BUSINESS

A. COMPANY

Nu-Wave Health Products, Inc. ("Company"), a Florida corporation, successor to
and formerly Direct Rx, Inc., was incorporated January 29, 1998. Currently, the
Company is engaged in the mail order business of diabetic equipment and supplies
and in the business of creating, manufacturing and packaging of non-prescription
medications and health products on an international basis. The Company is a
"small business issuer" for purposes of disclosure and filings under the
Securities Act of 1933 and the Securities Exchange Act of 1934. The Company 's
fiscal year begins on April 1 and ends on March 31 of each year.

The principal office of the Company is currently located at 5905-A Hampton Oaks
Parkway, Tampa, Florida.

Direct Rx filed its initial Form 10-SB with the United States Securities and
Exchange Commission ("SEC") on August 25, 1997, which was deemed effective
October 25, 1997. Since that time, it has filed all required reports with the
SEC. However, no market developed for the common capital stock of Direct Rx, and
there is currently no market for the common capital stock of the Company.

B. HISTORY OF COMPANY AND BUSINESS

1. DIRECT RX

Direct Rx, Inc. ("Direct Rx"), an Ohio corporation, was incorporated on June 30,
1992. It was originally formed to pursue business opportunities in the sale of
pharmaceuticals, drug items and medications both from a retail pharmacy and from
orders obtained by mail or phone and delivered directly to consumers.

In August, 1992, the Company purchased the assets of Vern's Pharmacy, Inc.
("Pharmacy") and was engaged in the retail pharmacy business. Due to negative
competitive conditions, the retail pharmacy business was discontinued on April
30, 1995, and sold on August 15, 1995. In December, 1992, the Company acquired
Diabetes Supplies of Texas, Inc., a Houston, Texas based provider of diabetic
products through mail order sales. Direct Rx continued to and the Company is
currently providing a broad range of equipment and supplies to diabetics on a
mail order basis.

The principal office of Direct Rx. and its wholly-owned subsidiary were located
at 5905-A Hampton Oaks Parkway, Tampa, Florida, the same location at which the
offices of the Company are located. See"A.2. Old Nu-Wave" below. The mail order
Diabetic Supplies business of Direct Rx was operated and still is operated out
of its offices located at 275 Curry Hollow Road, Pittsburgh, Pennsylvania.

Since April, 1995, when Direct Rx discontinued the retail pharmacy business, the
principal business of Direct Rx, other than the business of its wholly-owned
subsidiary, was the mail-order sale of diabetic supplies and equipment for use
in measuring and controlling blood sugar levels. The primary products were
testing meters and strips. Direct Rx also sold a variety of associated products,
such as transfer pipets, glucose tablets and specially prepared food items for
diabetics.

2. OLD NU-WAVE

The original Nu-Wave Health Products, Inc. ("Old Nu-Wave") was a wholly-owned
subsidiary corporation of the Direct Rx. Old Nu-Wave was incorporated on May 1,
1995, as a Florida corporation under the name of Solstice, Inc. Pursuant to
amended Articles of Incorporation, its name was changed to the original Nu-Wave
Health Products, Inc. on September 25, 1995. Old Nu-wave had no significant
business operations until September, 1995.

<PAGE> 5

In September, 1995, the Direct Rx acquired 80% of the issued and outstanding
common capital stock of Old Nu-Wave in consideration of the payment of $.10 per
share, the same consideration contributed by the other 20% shareholders, and on
September 15, 1995, Old Nu-Wave purchased the assets of Ayur, Inc., a non-
prescription health product manufacturer, for $32,700, $16,700 in cash, provided
by Direct Rx in the form of a loan, and $16,000 pursuant to an unsecured
promissory note. This promissory note has been paid in full.

As of July 15, 1997, Direct Rx issued 100,000 shares of its common capital
stock, valued at $.10 per share, to the other four (4) shareholders of Old
Nu-Wave in exchange for the 20 shares of common capital stock of Old Nu-Wave,
which constituted the remaining 20% of the issued and outstanding common capital
stock of Old Nu-Wave, resulting in Direct Rx then owning 100% of Nu-Wave. Of
this 100,000 shares, 55,000 were issued to Kotha S. Sekharam, then the President
of Direct Rx and Old Nu-Wave and now the President of the Company.

Old Nu-Wave was and the Company still is in the business of creating,
manufacturing and packaging of non-prescription medications and health products
on an international basis.

The principal office of Old Nu-Wave also was located at 5905-A Hampton Oaks
Parkway, Tampa, Florida.

3. MERGERS AND RESTRUCTURE

It was determined by Management that it would be in the best interest of Direct
Rx to change the domicile of or reincorporate Direct Rx to the State of Florida,
where its executive offices were located and a substantial portion of its
business was located, through its wholly-owned subsidiary, Old Nu-Wave. It was
further determined to consolidate the operations of the Direct Rx and Old
Nu-Wave and to change the name of Direct Rx to Nu-Wave Health Products, Inc.,
which has significant name recognition with the Company's market. The above was
accomplished through two merger transactions approved by the various Boards of
Directors and Management as controlling shareholders of Direct Rx and Old
Nu-Wave.

First, a new wholly owned subsidiary of Direct Rx was formed as a Florida
corporation on January 27, 1998, under the name of Direct Rx Healthcare, Inc.
("Direct Healthcare"). Direct Rx was then merged into Direct Healthcare on March
19, 1998, with Direct Healthcare as the surviving corporation. The outstanding
common capital stock and all outstanding options or rights of conversion were
exchanged for the common capital stock and option and conversion rights of
Direct Healthcare on a one to one basis. See "Part II, Item 4. Recent Sales of
Unregistered Securities."

Subsequently, Old Nu-Wave, the already existing subsidiary of Direct Rx, was
merged into Direct Healthcare, with Direct Healthcare as the surviving
corporation, and its Articles of Incorporation were amended to change the name
of the corporation to Nu-Wave Health Products, Inc. ("Company"), effective April
1, 1998.

As a result of the foregoing, the Company and its operations as of April 1,
1998, are operating as one Florida corporation under the new name of Nu-Wave
Health Products, Inc. and its executive offices continue to be located at 5905-A
Hampton Oaks Parkway, Tampa, Florida 33610, telephone number (813) 628-0804.

The Directors of the Company are the same as the former Directors of Direct Rx,
Inc. and the officers of the Company are the same as the former Officers of
Direct Rx, Inc. See "Part I, Item 5. Directors, Officers, Promoters and Control
Persons."

<PAGE> 6

C. PRESENT COMPANY AND BUSINESS

1. BUSINESS

The Company continues the same business of Direct Rx and Old Nu-Wave and is
engaged in the business of creating, manufacturing and packaging of a wide
variety of non-prescription medications and health products for companies that
sell through numerous channels of distribution, on an international basis. These
products include nutritional supplements, over-the-counter pharmaceuticals,
cosmetics, extracts, lotions, creams, gets, liquids, powders, capsules and
tablets. Depending upon the specific needs of the customer, the products are
manufactured in bulk or packaged under private label. Although the Company has
customers on an international basis, the highest concentration of its customer
base is currently located in the in the United States. The international
business constitutes less than 10% of the total sales and revenues of the
Company.

The Company manufactures and packages approximately 99% of its non-prescription
medications and health products. The Company's manufacturing processes are
specifically designed to insure the highest quality control. Substantially all
of the Company's products are manufactured from readily available raw material.
Significant difficulties have not been encountered in purchasing supplies of
principal raw material or finished goods.

The Company markets its manufactured products to companies, which sell through
numerous different channels of distribution, including health food, drug,
convenience and mass market stores, through direct salespersons, brokers,
manufacturer representatives, distributors, and through marketing companies. The
industry in which the Company is engaged is characterized by intense
competition. The Company competes against established pharmaceutical and
consumer product companies that currently market products which have identical
active ingredients or are equivalent or functionally similar to or in
competition with those which the Company manufactures. In addition, numerous
companies are developing or may, in the future, engage in the development of
products competitive with those manufactured by the Company. The Company
believes it competes effectively against its competitors on the basis of its
ability to develop new products, the quality of products, competitive pricing,
and service.

Additional manufacturing and/or packaging equipment has been purchased during
fiscal year 1998 and subsequently to fiscal year end, to help meet the expanded
capacity requirements of its current and future business.

The Diabetes Supplies division, formerly the business of Direct Rx, has been
engaged in the mail-order sale of diabetic supplies and equipment for use in
measuring and controlling blood sugar levels. The primary products are testing
meters and strips. The Company also sells a variety of associated products, such
as transfer pipets and glucose tablets for diabetics. The Diabetes Supplies
division of the Company markets its products of diabetic supplies and equipment
to customers through print media and manufacturer referral.

The industry in which the Diabetes Supplies division of the Company is engaged
is characterized by intense competition. The Company competes against
established pharmaceutical and consumer product companies that currently market
products which have identical active ingredients or are equivalent or
functionally similar to or in competition with those which the Diabetes Supplies
division markets. The Company believes it competes effectively against its
competitors on the basis of price and service.

The mail-order Diabetes Supplies division is a small portion of the business of
the Company. The Company is currently considering various options of divesting
the Diabetes Supplies division in order that it may concentrate its efforts on
its manufacturing operations.

During fiscal 1998, the Company entered into a joint venture agreement to form
21st Century Health Care Products, LLC ("21st Century"), an Ohio limited
liability company. Under the terms of the agreement, the Company will have a 50%
ownership and will share profits and losses equally. 21st Century was
specifically formed to develop and distribute a children's multivitamin and
vegetable supplement product, "Jungle Jerry's Gummy Pals". The written agreement
between the parties has not been finalized. The other 50% interest is owned by
an independent party

<PAGE> 7

who is not affiliated with the Company or with any person or entity with which
the Company is affiliated. During fiscal 1998, the Company had invested $5,000
in this joint venture.

During fiscal 1998, the Company began manufacturing products for J.Labs, Inc.
("J.Labs"). J.Labs is a company which holds patents for various products which
the Company manufactures. The Company pays royalty/brokerage fees for each unit
of product sold for which J.Labs holds a patent. J.Labs is a corporation owned
by Manju Taneja (the spouse of Jugal Taneja), Mandeep Taneja (the son of Jugal
Taneja), Mihir Taneja (the son of Jugal Taneja), Kotha Sekharam, and Madhavi
Sekharam (the wife of Kotha Sekharam). The Company is presently considering
acquiring J.Labs.

As of June 15, 1998, the Company is also in the business of manufacturing and
distributing food supplements and health/diet products in the form of capsules,
tablets, powders, liquids and creams. See "G. Recent Acquisitions, 1.
Dynamic" below.

As of June 26, 1998, the Company is also in the wholesale business of
distributing pharmaceuticals and health and beauty products to independent
pharmacies, regional and national chain drug stores, alternate care facilities,
mail order facilities, mass merchandisers, deep discounters and brokers. See "G.
Recent Acquisitions, 2. Becan" below.

The principal office of the Company and its manufacturing facility is currently
located at 5905-A Hampton Oaks Parkway, Tampa, Florida. The Diabetes Supplies
division of the Company is operated out of its offices located at 275 Curry
Hollow Road, Pittsburgh, Pennsylvania.

The business or any of the segments of the business of the Company is not
seasonal and the business or any of the segments of the business of the Company
are not in any material way dependent upon any patents, trademarks, licenses,
franchises or concessions.

2. QUALITY CONTROL

The manufacture of the Company's products is in accordance with the Good
Manufacturing Practices prescribed by the FDA, all other applicable regulatory
standards, and the Company's own rigorous quality control procedures. The
Company places special emphasis on quality control. The Company has formal
written quality control procedures that outline specific procedures to be
followed from the acceptance of raw materials, production processes, inspections
during the manufacturing, labeling, and packaging process, through the testing
of finished products. See "Present Company and Business - Government Regulation"
below.

The Company maintains a modem well-equipped manufacturing facility, that has the
capability of adhering to any current and anticipated regulatory requirements.
Raw materials when received, are initially held in quarantine during which time
the Company's quality assurance department confirms the product against the
manufacturer's certificate of analysis. Once cleared, a lot number is assigned,
required samples are retained, and the material is processed by formulating,
blending, and encapsulating when required.

3. GOVERNMENT REGULATION

The Company is subject to regulation by one or more federal agencies in
processing, formulation, packaging, labeling and advertising of the Company's
products including the United States Food and Drug Administration ("FDA"), the
Federal Trade Commission, the Consumer Product Safety Commission, the United
States Postal Service, the United States Department of Agriculture and the
Environmental Protection Agency. Activities of the Company are also regulated by
various agencies of the states and localities in which the Company's products
are sold.

The Company manufactures vitamins, minerals, herbs, and other similar
nutritional substances ("dietary supplements") and over-the-counter drug
products. The FDA is primarily responsible for regulation of the

<PAGE> 8

manufacture, labeling, and sale of vitamins and mineral supplements. The Dietary
Supplement Health and Education Act of 1994 ("DSHEA") was signed into law in
October 1994. This law, which amends the Federal Food, Drug and Cosmetic Act,
defines dietary supplements as a separate and distinct entity, and not as food
additives. Vitamins, minerals, herbs and other nutritional substances are
included in this definition. It provides for the use of third party scientific
literature which shall not be regulated as labeling by the FDA, so long as it is
not false or misleading. The DSHEA also delayed the FDA's requirements for
extensive product label changes which were to be applied to products
manufactured after July 1, 1995. It directs the FDA to publish new label
regulations for supplements with a mandatory effective date of December 31,
1996, and provides a set of different label requirements for ingredient content
information. No modifications were made on the requirements and proscriptions
regarding health claims for dietary supplements. The DSHEA also introduced the
concept of Good Manufacturing Practices to the industry of dietary supplement
manufacturers. Thus far, the Company has not incurred additional expenses in
order to comply with FDA requirements.

The Company provides in-house training to all applicable employees and safety
meetings are frequently held to insure compliance with regulations. The record
keeping and reporting requirements of the FDA have been complied with by the
Company. The Company believes that it is in compliance with all environmental
regulations affecting the Company.

D. INDUSTRY SEGMENTS

As of March 31, 1998, and for the twelve months then ended, the Company had the
following revenues from the mail- order diabetic supply business and from the
health products manufacturing business:

<TABLE>
<CAPTION>
Revenues as Gross Profit As
Revenues A Percentage A Percentage
March 31, 1998 Of Total Gross Of Total
(12 months) Revenues Profit Revenues
----------- -------- ------ ---------------

<S> <C> <C> <C> <C>
Mail-order diabetic
supply business $ 461,349 19% $ 23,500 1%
Health products
manufacturing business 1,906,936 81% 518,120 22%
</TABLE>

E. EMPLOYEES

As of March 31, 1998, the Company had twenty (20) employees (deemed leased
employees) and a consultant in connection with its health products manufacturing
operation, all of which are located in the Tampa, Florida office. The employees
at the Tampa location are deemed leased employees pursuant to a Service
Agreement by and between the Company and Nations Staffing, Inc. ("NSI"), with
offices at II 701 Belcher Road, Suite 116, Largo, Florida. Pursuant to the
agreement, NSI pays all payroll and salaries of the employees and provides
workers' compensation insurance and hospital and medical benefits. The Company
had one (1) full-time and one (1) part-time employee in connection with the
mail-order Diabetes Supplies division, all of which are located in the
Pittsburgh, Pennsylvania office.

Employee leasing was initially instituted as the most economical method to
manage start-up operations and to eliminate the potential liability involved in
timely and proper accounting for and reporting of employee payroll withholdings.
To the best knowledge of the Company's management, there have been and are no
consequences of this arrangement that were or are negative or adverse to the
Company. The Company, however, is presently considering eliminating this leased
employee concept and the Service Agreement in the near future.

NSI is not affiliated with the Company or with any officer or director of the
Company or any other person or entity with which the Company is affiliated.

<PAGE> 9

At the present time, the Company has no profit sharing or pension plan or any
other form of retirement plan for its employees, including executive officers.
The Company considers its employee relations to be satisfactory and has
experienced no work stoppages. Employees of the Company are not represented by a
labor union.

F. RISK FACTORS

If any source of a product's ingredients becomes unavailable, the Company
believes that alternative sources of supply are available at comparable prices.
In the event the Company was unable to find alternate sources at competitive
prices on a timely basis for its principal products, the Company could be
materially adversely affected.

As of March 31, 1998, four (4) customers represented approximately 67% of
consolidated revenues in fiscal 1997. The loss of one or more of these customers
in all likelihood would have a material adverse effect on the financial
condition of the Company, at least on a short term basis.

Any modifications to the FDA's regulatory authority could subject the Company to
additional expenses in order to comply with more stringent requirements or could
have a materially adverse impact on the Company if products were to become
limited.

G. RECENT ACQUISITIONS

1. DYNAMIC

In May, 1998, the Company entered into a non-binding letter of intent to provide
certain working capital financing to Energy Factors, Inc. ("EFI"), a
wholly-owned subsidiary of U.S. Diversified Technologies, Inc. , a Florida
corporation. Effective June 15, 1998, the Company acquired EFI. At the closing,
the Company acquired legal title to the net assets of the EFI. The Company will
account for the acquisition as a purchase.

The above acquisition has been accomplished through a series of transactions
approved by the various Boards of Directors and Management as controlling
shareholders of the Company and EFI. First, a new wholly-owned subsidiary of the
Company was formed as a Florida corporation under the name of Nu-Wave
Acquisition, Inc. (Nu-Wave Acquisition"). Next, Nu-Wave Acquisition was then
merged with and into EFI, with EFI as the surviving corporation, in order to
avoid the necessity of transfers of EFI's business. As a result of the merger,
EFI became a wholly-owned subsidiary of the Company. On the effective date of
the merger, the EFI changed its name to Dynamic Health Products, Inc.
("Dynamic").

It was determined by Management that it would be in the best interest of the
Company to acquire EFI to further certain of its business objectives, including
without limitation, providing expanded manufacturing facilities for the Company
and additional sales for Dynamic.

U.S. Diversified Technologies, Inc., the former parent of Dynamic, will receive
in exchange for its capital stock in the Dynamic, 400,000 share of Series A
Convertible Preferred Stock to be issued by the Company. Dynamic was valued by
the Board of Directors of the Company at $2,000,000 and The Series A Convertible
Preferred Stock will have a liquidation preference in that amount.

Dynamic is a manufacturer and distributor of food supplements and health/diet
products in the form of capsules, tablets, powders, liquids and creams, with a
well organized 40,000 square foot manufacturing facility, high speed processing
and packaging lines, and fully equipped laboratory. The Company intends to
continue such business.

<PAGE> 10

2. BECAN

The Becan shareholders will receive a total of 1,500,000 shares of common stock
of the Company upon the filing by the Company's Articles of Amendment to its
Articles of Incorporation which will effect a one for three reverse stock split.
The reverse stock split is expected to be effective in August, 1998, but no
record date has yet been established. The acquisition was accomplished in
accordance with the terms of an Agreement and Plan of Reorganization dated June
26, 1998, by and among the Company and the shareholders of Becan. The number of
shares of the common stock of the Company to be issued in consideration of the
shares of Becan common stock was determined based upon the relative estimated
value of each of the companies and was approved by unanimous vote of the Board
of Directors of the Company, including the members of the Board of Directors of
the Company who were not affiliated with Becan. Manju Taneja, the wife of Jugal
K. Taneja (the Chairman and Chief Executive Officer of the Company), and their
two sons, Mihir and Mandeep, collectively owned approximately 68% of the issued
and outstanding Becan common stock. See "Part I, Item 4. Security Ownership of
Certain Beneficial Owners" for information concerning the ownership interests of
these same persons in the Company. Jugal K. Taneja was and continues to be the
Chairman of the Board of both the Company and Becan. The Company will account
for the acquisition as a pooling of interests for accounting purposes.

Becan is engaged in the wholesale business of distributing pharmaceuticals and
health and beauty products to independent pharmacies, regional and national
chain drug stores, alternate care facilities, mail order facilities, mass
merchandisers, deep discounters and brokers. In addition, Becan has several
"branded" items as to which it has sole distribution and marketing rights. These
products are sold through the above mentioned trade channels.

It was determined by Management that it would be in the best interest of the
Company to acquire Becan to further certain of its business objectives,
including without limitation, providing additional sales and expanded marketing
and distribution channels for the Company.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and notes thereto which are attached
hereto ("Financial Statements").

The Company currently is engaged in two lines of business, the mail order
business of diabetic equipment and supplies and, through its wholly-owned
subsidiary, the business of creating, manufacturing and packaging of
non-prescription medications and health products. One of the original lines of
business, the Pharmacy was sold in August, 1995, and Nu-Wave, the wholly-owned
subsidiary of the Company, was acquired in September, 1995. See "Part I, Item 1.
Business".

A. RESULTS OF OPERATIONS AND FISCAL YEAR 1998
COMPARED TO FISCAL YEAR 1997

Net sales for fiscal year ended 1998 were $2,368,285 as compared to net sales in
1997 of $960,340. This represents a 147% increase over sales in 1997. The
increase is primarily attributable to increased volume in private label sales
resulting from continued expansion of marketing efforts and the introduction of
new products.

Gross profits amounted to $541,620 or 23% of sales in 1998 as compared with
$347,958 or 36% of sales in 1997. The decrease in the gross margin is
principally attributable to the offering of competitive pricing to attract new
customer, and an increase in raw material and other production expenses due to
certain inefficiencies resulting from growth, which such inefficiencies have now
been corrected. It is the opinion of management that this gross margin is now
increasing.

<PAGE> 11

Selling, general and administrative expenses were $527,609 in 1998 and $485,710
in 1997. As a percentage of sales, selling, general and administrative expenses
were 22% in 1998 and 51% in 1997. The overall decrease in the percentage of
selling, general and administrative expenses is primarily attributable to
increased management efficiency and maximum performance of existing personnel.

Interest expense, net of interest income, was $18,272 in 1998, as compared to
$13,859 in 1997. The increase in interest expense in 1998 is a result of greater
borrowings to finance the purchase of additional machinery and equipment, and to
make additional necessary plant modifications.

The Company had no income tax expense for the fiscal years 1998 and 1997.

Management believes that there was no material effect on operations or the
financial condition of the Company as a result of inflation in 1998 and 1997.
Management also believes that its business is not seasonal; however, significant
promotional activities can have a direct impact on sales volume in any given
quarter.

B. LIQUIDITY AND CAPITAL RESOURCES

The Company had working capital of $173,804 and ($172,473) at the end of 1998
and 1997, respectively.

The Company's statement of cash flows for 1998 reflects cash provided by
operating activities of $21,085. The provision of cash is primarily attributable
to an increase in accounts payable and accrued expenses of $213,695, and an
increase in unearned revenues of $15,341, offset by an increase in accounts
receivable ($90,561), an increase in prepaid expenses ($5,064), and an increase
in inventory ($171,964). The change in accounts payable, accounts receivable,
and inventory is a result of increased sales and operations as well as
anticipated future growth.

Net cash used in investing activities was $50,346 representing the purchase of
property and equipment ($37,147) and the acquisition of other assets ($13,199).

Net cash was also provided by financing activities of $238,633, representing
proceeds from related party borrowing of $20.000, and proceeds from long-term
debt of $240,200, offset by repayment of capital lease obligations ($9,321), and
repayment of principal borrowing ($12,246).

During fiscal year 1998, $156,146.40 of notes payable to related parties were
converted to 1,561,464 shares of common stock of the Company. Subsequent to
fiscal year end, on May 29, 1998, the remaining notes payable to related parties
of $81,331.80, including principal and unpaid accrued interest, were converted
to 813,318 shares of common stock of the Company.

The Company expects to meet its cash requirements from operations, current cash
reserves, and existing financial arrangements. In addition, the Company is
considering raising additional capital for acquisitions and working capital
either through private placement or a secondary public offering.

During March and April 1998, the Company received $250,000 from investors and
issued nonnegotiable promissory notes with stock warrants attached. The notes
bear interest at ten percent (10%) per annum, compounded annually. The due date
shall be the earlier of (i) April 30, 1999, or (ii) the closing of a minimum of
an additional $1,000,000 of equity financing, by private placement or other
non-public offering. The note may be prepaid at any time by the Company to the
payees without any penalty or premium. The attached stock warrant entitles the
payee to purchase common stock of the Company (based on one share for each one
dollar amount of the principal amount reflected in the note) at a purchase price
of $.50 per share. The stock warrant shall expire the earlier of, one year from
the closing of an additional $1,000,000 of equity financing, or December 31,
1999.

In May 1998, 100,000 shares of common stock of the Company were sold to a
non-affiliated third party investor at $.50 per share, for gross proceeds of
$50,000.

<PAGE> 12

On May 13, 1998, the Company loaned $100,000 to Energy Factors, Inc. (EFI), a
subsidiary of U.S. Diversified Technologies, Inc., for the purpose of assisting
EFI with its working capital needs. The note bears interest at 2% per annum
above the Prime Rate as periodically announced by The Wall Street Journal, and
is secured by a third mortgage on all real and personal property of EFI.

In June 1998, the Company established a bank line of credit. The principal
amount of the note is $200,000. The note bears interest at 4.08% per annum on
the unpaid outstanding principal of each advance, payable monthly. The due date
is June 3, 1999. The note or any portion thereof may be prepaid without penalty.
This line of credit is secured by $200,000 cash maintained in a Money Market
account with the bank.

Although, in the opinion of the management of the Company, the above data
reflects positive information concerning the present operations of the Company,
there can be no assurance that the Company's results of operations will continue
to the same extent or in the same manner as reflected above.

ITEM 3. DESCRIPTION OF PROPERTY

The Company does not own or hold any legal or equitable interest in any real
estate. The offices in Tampa, Florida are leased pursuant to a five year lease
that expires on November 30, 2000. The Company has an option to renew the lease
at the end of the five year term.. The rental under the lease is $7,032.50 per
month subject to yearly adjustment for shared property operating expenses. This
facility serves as the Company's corporate headquarters, manufacturing,
warehousing, and shipping facility. Management is currently seeking an
additional manufacturing facility to meet the increased capacity requirements of
growing customer demand. The Company uses offices in Pittsburgh, Pennsylvania of
one of its principal customers at no cost to the Company.

In January 1998, the Company leased a second property in Tampa, Florida which is
being utilized for additional storage and warehouse for its manufacturing
operations. This lease is for a term of two years that expires on December 30,
2000, a with an annual rental of $15,300.

In the opinion of the management of the Company, the leases described above
reflect rent at current fair market value.

As of March 31, 1998, the Company had furniture, equipment, and leasehold
improvements, net of accumulated depreciation, in the amount of $176,462.

ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

A. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information, as of June 1, 1998, with
respect to the beneficial ownership of the outstanding common stock of the
Company by (i) any holder of more than five (5%) percent; (ii) each of the
Company's officers and directors; and (iii) the directors and officers of the
Company as a group. An asterisk indicates beneficial ownership of less than 1%
of the outstanding common stock. Except as otherwise indicated, each of the
shareholders listed below has sole voting and investment power over the shares
beneficially owned.

<PAGE> 13

<TABLE>
<CAPTION>
Amount and
Nature of Approximate
Title of Name and Address Beneficial Percent
Class of Beneficial Owner Ownership of Class
- ----- ------------------- --------- --------

<S> <C> <C> <C>
Common Manju Taneja 1,964,553 (1) 51%
c/o Nu-Wave Health Products, Inc.
5905-A Hampton Oaks Parkway
Tampa, FL 33610

Common Jugal K. Taneja
c/o Nu-Wave Health Products, Inc. 484,229 (2) 13%
5905-A Hampton Oaks Parkway
Tampa, FL 33610

Common Kotha S. Sekharam 255,000 7%
c/o Nu-Wave Health Products, Inc.
5905-A Hampton Oaks Parkway
Tampa, FL 33610

Common Cani I. Shuman -0- -0-
c/o Nu-Wave Health Products, Inc.
5905-A Hampton Oaks Parkway
Tampa, FL 33610

Common Mihir K. Taneja 5,000 *
c/o Nu-Wave Health Products, Inc.
5905-A Hampton Oaks Parkway
Tampa, FL 33610

Common Martin A. Traber 30,000 *
Foley & Lardner
100 North Tampa Street
Tampa, FL 33602

Common All officers and directors as
a group (5 persons) 774,229 (3) 20%
</TABLE>

* Less than one percent (1%).

(1) Excludes beneficial ownership of (i) 59,000 shares of common stock owned by
Jugal Taneja, (ii) 210,229 shares of common stock owned by Carnegie Capital,
(iii) 210,000 shares of common stock owned by First Delhi Trust, (iv) 5,000
shares of common stock owned by Mandeep Taneja, and (vi) 5,000 shares of common
stock owned by Mihir Taneja, as to which Mrs. Taneja exercises no voting or
disposition rights.

(2) Includes beneficial ownership of (i) 210,229 shares of common stock owned by
Carnegie Capital, (ii) 210,000 shares of common stock owned by First Delhi
Trust, (iii) 5,000 shares of common stock owned by Mandeep Taneja. Excludes
1,964,553 shares beneficially owned by his wife, Manju Taneja, as to which Mr.
Taneja exercises no voting or disposition rights.

<PAGE> 14

(3) Includes shares beneficially owned by Jugal Taneja, Kotha Sekharam, Cani
Shuman, Mihir Taneja and Martin Traber.

Certain executive officers, directors and beneficial owners of the Company were
granted options to purchase common capital stock of the Company, but these
rights have expired. See "B. Outstanding Options and Conversion Rights" below.

B. OUTSTANDING OPTIONS, WARRANTS AND CONVERSION RIGHTS

During the fiscal year 1998, there were outstanding the following options to
purchase, warrants and conversion rights with respect to the common capital
stock of the Company:

1. Remaining stock conversion rights granted to Manju Taneja pursuant to the
terms of the promissory notes representing the indebtedness of the Company to
her. As of June 1, 1998, these conversion rights no longer exist. See "Part II,
Item 4. Recent Sales of Unregistered Securities".

2. Stock option rights granted to Dr. Kotha S. Sekharam, in connection with his
employment, whereby he was entitled to purchase 200,000 shares of common capital
stock of the Company at an option price of $.20 per share to be exercised on or
before December 31, 1997. These stock option rights have not been exercised and
have now expired.

3. Stock option rights granted to Stephen D. Kovalik, in connection with his
employment, whereby he was entitled to purchase 50,000 shares of common capital
stock of the Company at an option price of $.40 per share to be exercised on or
before March 31, 1998. These stock option rights have not been exercised and
have now expired.

4. Stock option rights granted to Mihir Taneja, in connection with his
employment, whereby he was entitled to purchase 50,000 shares of common capital
stock of the Company at an option price of $.40 per share to be exercised on or
before March 31, 1998. These stock option rights have not been exercised and
have now expired.

5. Stock option rights granted to Phillip J. Laird, in connection with his
employment, whereby he was entitled to purchase 300,000 shares of common capital
stock of the Company at an option price of $.20 per share if exercised with his
first year of employment. To the extent not exercised during that period, Mr.
Laird could purchase the remainder of such option shares for $.50 per share
during his second year of employment. Mr. Laird terminated his employment with
the Company on September 15, 1997. These stock option rights have not been
exercised and have now expired.

6. Stock warrants issued in connection with the financing of $250,000 in debt,
pursuant to non-negotiable promissory notes. The warrants entitle the holders
thereof to purchase in aggregate 250,000 shares of common capital stock of the
Company at a purchase price of $.50 per share. See "Part II, Item 4. Recent
Sales of Unregistered Securities.

ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

A. DIRECTORS AND EXECUTIVE OFFICERS

The following are the names and certain information regarding the current
Directors and Executive Officers of the Company:

<TABLE>
<CAPTION>
Name Age Position

<S> <C> <C>
Jugal K. Taneja 53 Chairman of the Board, Chief
Executive Officer,
Secretary, and Director

Kotha S. Sekharam 47 President, Treasurer, and
Director

Cani I. Shuman 41 Chief Financial Officer

Mihir K. Taneja 23 Vice President of Marketing,
Assistant Secretary

Martin A. Traber 51 Director
</TABLE>

14
<PAGE> 15

All directors hold office until the next annual meeting of stockholders and the
election and qualification of their successors. Officers are elected annually by
the Board of Directors and, subject to existing employment agreements, serve at
the discretion of the Board.

No director of the Company or Nu-Wave receives any compensation or other
remuneration for serving on the Board of Directors, except for the reimbursement
of any out-of-pocket expenses, if any, incurred by ANY director in connection
with attendance at a meeting of the Board of Directors.

B. SUMMARY OF BACKGROUND AND EXPERIENCE
OF EXECUTIVE OFFICERS AND KEY PERSONNEL

The following is a summary of the background and experience of the directors,
executive officers and key personnel of the Company :

JUGAL K. TANEJA, was the Chairman of the Board, Chief Executive Officer and a
Director of the Direct Rx and since its inception of the Company since October,
1991 and was the Chairman of the Board, Secretary and a Director of Old Nu-Wave
since September, 1995. Mr. Taneja also serves as Director, Chief Executive
Officer, and Secretary of NuMED Home Health Care Inc. Prior to his association
with the Company, Mr. Taneja served as Senior Vice President of Union Commerce
Bank and Huntington National Bank from 1979 to 1983 and as Executive Vice
President of Bancapital Corp. from 1983 to 1991. Although he devotes substantial
time to the operations and business of the Company, Mr. Taneja does not devote
his full time to the Company.

KOTHA S. SEKHARAM, was the Co-Founder, Director, President, and Treasurer of Old
Nu-Wave. He has a Ph.D in Food Sciences from Central Food Technological Research
Institute, Mysore, India (a United Nations University center) and over 17 years
experience in the manufacturing industry, covering foods, supplements,
pharmaceuticals, and cosmetics. Prior to Old Nu-Wave, he was the Director of
Research and Development at Energy Factors, Inc. a manufacturer of health
products.

CANI I. SHUMAN, holds B.S. degree in Accounting from the University of South
Florida and is a Certified Public Accountant. She is presently Chief Financial
Officer of the Company. Prior to her employment with the Company in January
1998, she was employed in public accounting for Hacker, Johnson, Cohen & Grieb,
PA, and Copeland and Company, CPAs. Prior to that, she held accounting positions
in private industry.

MIHIR K. TANEJA, holds B.A. degrees in Finance and Marketing from the
University of Miami. He is presently Vice President of Marketing for the
Company. Prior to his employment with Old Nu-Wave in June 1997, he was employed
in various accounting and financial functions for NuMED Home Health Care, Inc.,
AT Broad & Co., and Bancapital Corp.

MARTIN A. TRABER, is a partner in the Tampa, Florida office of Foley & Lardner,
a national law firm. He has practiced in the areas of corporate finance and
securities law for 25 years and is a director of numerous companies (including
several in the medical technology field). Mr. Traber graduated magna cum laude
in 1970 from Indiana University School of Law, where he was Associate Editor of
the Law Review.

<PAGE> 16

ITEM 6. EXECUTIVE COMPENSATION

A. DIRECTORS

No director of the Company or Nu-Wave receives any compensation or other
remuneration for serving as such director, except for the reimbursement of any
out-of-pocket expenses, if any, incurred by any director in connection with
attendance at a meeting of directors.

B. EXECUTIVE OFFICERS

There are no executive officers of the Company who received total compensation
and other remuneration in excess of $100,000. The following table sets forth the
names of the compensated executive officers who are either the president or
chief executive officer and a description and amount of any and all annual
compensation and remuneration received by them:

<TABLE>
<CAPTION>
Other Annual
Name and Principal Position Year Salary($) Bonus($) Compensation($)
- --------------------------- ---- --------- -------- ---------------

<S> <C> <C> <C> <C>
Jugal K. Taneja, CEO (1) 1998 $75,000 $5,414 $ -0-
1997 $ -0- $ -0- $ -0-

Dr. Kotha S. Sekharam, President (2) 1998 $75,000 $5,414 $ -0-
1997 $52,500 $ -0- $ -0-
</TABLE>

(1) Pursuant to an employment agreement dated July 15, 1997, Mr. Taneja is
entitled to a performance bonus based upon a percentage of net income, before
taxes, and a percentage of annual revenues. See "Exhibit 11".

(2) Pursuant to an employment agreement dated July 15, 1997, Dr. Sekharam is
entitled to a performance bonus based upon a percentage of net income, before
taxes, and a percentage of annual revenues. In addition, Dr. Sekharam was
granted a stock option for a total of 200,00 shares of common capital stock of
the Company. This stock option was not timely exercised and has now expired.
Also, Dr. Sekharam is eligible for stock options at such times and on such terms
as determined by the Company's Board of Directors. See "Exhibit 10" and "Part I,
Item 4. Security Ownership of Certain Beneficial Owners and Management"

All employees, including executive officers, except for employees of the
Diabetic Supplies division of the Company , are paid by the Company, but are
deemed leased employees, pursuant to a Service Agreement by and between Nu-Wave
and Nations Staffing, Inc. See "Part I, Item 1. Description of Business, E.
Employees". Employees of the Diabetic Supplies division of the Company are paid
directly by the Company.

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Direct Rx previously had an agreement with Bancapital Management Corporation,
which is owned and controlled by Jugal Taneja, a director, officer and
stockholder of the Company, to pay for accounting and management services. This
agreement was terminated effective May 13, 1996. Direct Rx paid approximately
$6,000 for such services during the year ended March 31, 1997.

Direct Rx had a Consulting Agreement with the former president of Direct Rx,
Judy Pickle, for a term of one year ending on March 31, 1995. Pursuant to this
agreement, Ms. Pickle was paid $18,000 during 1994 and 1995 for these services.
Also during 1994 and 1995, 18,000 shares of common stock of the Company held by
Ms. Pickle were redeemed at $1.00 per share in connection with the Consulting
Agreement.

<PAGE> 17

The Company had demand notes payable to Manju Taneja, the wife of Jugal Taneja,
in the principal amount of $210,000, and interest at the prime rate (8.5% at
March 31, 1998) payable quarterly. This indebtedness and unpaid accrued interest
was to be repaid in cash or, at the option of the holder, converted into common
capital stock of the Company at a conversion price of $.10 per share. During the
fiscal year 1998, the Company issued 1,561,464 shares of the common capital
stock of the Company to Manju Taneja (out of which 200,000 were sold to Dr.
Sekharam- see below) in exchange for and as a conversion of $156,146, principal
and accrued interest, of the indebtedness of the Company to Manju Taneja. The
remainder of the indebtedness, including unpaid accrued interest, in the amount
of $81,313.80 was converted into 813,318 common capital stock of the Company on
May 29, 1998. Therefore, as of June 1, 1998, this indebtedness has been paid in
full.

As of July 15, 1997, out of the converted shares referred to above, 200,000
shares were sold by Manju Taneja to Dr. Kotha S. Sekharam, the President and a
director of the Company, and previously of Direct Rx and Old Nu-Wave, for $.10
per share.

As of July 15, 1997, the Company issued 100,000 shares of its common capital
stock, valued at $.10 per share, to the other four (4) shareholders of Nu-Wave
in exchange for the 20 shares of common capital stock of Nu-Wave, which
constituted the remaining 20% of the issued and outstanding common capital stock
of Nu-Wave, resulting in the Company then owning 100% of Nu-Wave.

During fiscal 1998, the Company began manufacturing products for J. Labs, Inc.
("J. Labs"). J. Labs is a company which holds patents for various products which
the Company manufactures. The Company pays royalty/brokerage fees for each unit
of product sold for which J. Labs holds a patent. J. Labs is a corporation owned
by Manju Taneja (the spouse of Jugal Taneja), Mandeep Taneja (the son of Jugal
Taneja), Mihir Taneja (the son of Jugal Taneja), Kotha Sekharam, and Madhavi
Sekharam (the wife of Kotha Sekharam). The Company is presently considering
acquiring J.Labs.

ITEM 8. DESCRIPTION OF SECURITIES

The authorized capital stock of the Company consists of 10,000,000 shares of
capital stock, $.01 par value, 9,000,000 of common stock and 1,000,000 of
preferred stock. As of June 1, 1998, there were 3,823,547 shares of common stock
issued and outstanding. There were no shares of preferred stock issued and
outstanding at June 1, 1998.

The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Cumulative voting in
the election of directors is not permitted. Holders of common stock are entitled
to receive ratably such dividends as may be declared by the Board of Directors
out of funds legally available therefor and not otherwise restricted. In the
event of liquidation, dissolution or winding up of the Company, holders of
common stock are entitled to share ratably in all assets remaining after payment
of liabilities. A holder of common stock has no conversion, preemptive or other
rights per se to subscribe for additional shares or other securities, unless
otherwise granted, and there are no redemption or sinking fund provisions with
respect to such shares. All issued and outstanding common stock are fully paid
and non-assessable.

As of the date hereof, there are no outstanding warrants, options or other
rights of purchase or conversion with respect to any of the common capital stock
of the Company, except as set forth above under "Part I, Item 4. Security
Ownership of Certain Beneficial Owners and Management".

There is currently no public trading market for the common stock of the Company.

<PAGE> 18

PART II

ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS

There is currently no established trading market for the common stock of the
Company, and the shares are not presently listed. The Company has filed Form 15
(c) 2-11 with NASDAQ to list the common stock of the company on the OTC Bulletin
Board in order to create marketability for the stock.

As of June 1, 1998, there were approximately 400 stockholders, each holding
shares of the Company's common stock.

Historically, the Company has not paid dividends on its common stock and has no
present intention of paying dividends.

The Company has agreed to register pursuant to the filing of this Form 10-SB
total issued and outstanding shares of common capital stock of the Company in
the amount of 3,823,547 shares. See "Part II, Item 4. Recent Sales of
Unregistered Securities" and "Part I, Item 4. Security Ownership of Certain
Beneficial Owners and Management".

ITEM 2. LEGAL PROCEEDINGS

Neither the Company nor its predecessor companies, Direct Rx or Old Nu-Wave, are
parties to any legal proceedings or any claims or investigations involving any
governmental entities or agencies. Further, no director, executive officer,
affiliate, or any beneficial owner of more than 5% of the common capital stock
of the Company or its predecessor companies, Direct Rx or Old Nu-Wave, or any
associate of any such person, is a party to any proceeding adverse to the
Company.

ITEM 3. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE.

During the last two most recent fiscal years, the Company has not changed or had
any disagreements with its independent accountants engaged to audit the
Company's financial statements.

ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.

In 1992 and 1993, the Company instituted an offering of 200,000 Units at $1.00
per Unit, each Unit consisting of one (1) share of common capital stock of the
Company, together with common stock purchase warrants to purchase five (5)
shares at an exercise price of $1.00 per share, increasing up to $2.50 per share
over a specified period of time. This offering and the securities offered
thereby were not registered under the Securities Act of 1933 ("Act"), as
amended, and were offered and sold as an intra-state offering only to residents
of the State of Ohio in reliance upon the exemption provided in Section 3(a)(11)
of the Act and Rule 147 promulgated thereunder, and in compliance with
applicable Ohio securities laws.

In July, 1995, the Company executed an exchange offering which entitled each
shareholder to exchange all shares of common stock currently owned for an equal
number of newly issued shares of common stock. The purpose of the exchange
offering was to ensure that the outstanding shares of the Company's common stock
were freely transferable without restriction. This exchange offer was not
registered under the Securities Act of 1933 ("Act"), as amended, and was offered
and sold pursuant to an exemption provided in Section 3 (a)(9) of the Act and
/or to Rule 504 of Regulation D under the Act. In addition, the Company
initiated a warrant call which required warrant holders to convert their
outstanding warrants to common capital stock before October 16, 1995, at a ratio
of one share for each five warrants,. without any further payment or
consideration. As a result, 1,463,650 warrants were converted to 286,730 shares
of common capital stock. This exchange offer was not registered under the
Securities Act of 1933 ("Act"), as amended, and was offered and sold pursuant to
Rule 504 of Regulation D under the Act, and in compliance with applicable Ohio
securities laws.

<PAGE> 19

In August, 1995, the Company approved an agreement which allowed the President
of the Company (then Direct Rx) the option to purchase 10% of stock of the
Company at book value. Such an option was never exercised and this agreement is
no longer in effect.

As of July 15, 1997, the Company issued 100,000 shares of its common capital
stock, based on a value of $.10 per share, to the other four (4) shareholders of
Nu-Wave in exchange for the 20 shares of common capital stock of Nu-Wave, which
constituted the remaining 20% of the issued and outstanding common capital stock
of Nu-Wave, resulting in the Company then owning 100% of Nu-Wave. Of these
100,000 exchange shares, 55,000 were issued to Dr. Kotha S. Sekharam, the
President and a director of both the Company and Nu-Wave. The remaining 45,000
share were issued to Sandhya Kalindindi, Shanti Kalindindi and Dr. Umamaheswar
S. Prasad. This exchange was not registered under the Securities Act of 1933
("Act"), as amended, and was sold in reliance on an exemption provided in
Section 4(2) of the Act. All of the remaining shareholders were sophisticated
investors and, as either officers or persons involved with the Company, had
access to all information about the Company to make an informed investment
decision.

During the fiscal year 1998, the Company issued 1,561,464 shares of the common
capital stock of the Company to Manju Taneja in exchange for and as a conversion
of $156,146, principal and accrued interest, of the indebtedness of the Company
to Manju Taneja. Pursuant to the terms of the promissory notes, the principal
amount of $210,000 and any unpaid accrued interest, at the option of the holder,
may be converted into common capital stock of Company based on a price of $.10
per share. The remaining principal and accrued interest on this indebtedness of
$81,313.80 was converted into 813,318 share of common stock on May 29, 1998.
Therefore, this indebtedness has been paid in full. These conversions were not
registered under the Securities Act of 1933 ("Act"), as amended, and were
completed in reliance on an exemption provided in Section 4(2) of the Act. In
addition to being an accredited investor, Mrs. Taneja was a sophisticated
investor and had access to all information about the Company to make an informed
investment decision.

As of July 15, 1997, out of the converted shares referred to above, 200,000
shares were sold by Manju Taneja to Dr. Kotha S. Sekharam for $.10 per share.
This sale was not registered under the Securities Act of 1933 ("Act"), as
amended, and was sold in reliance on an exemption provided in Section 4(2) of
the Act. Dr. Kotha was a sophisticated investor and, as President of the
Company, had access to all information about the Company to make an informed
investment decision.

In connection with the merger of Direct Rx into the newly formed Direct
Healthcare, there was a stock exchange or conversion whereby the outstanding
common capital stock and all outstanding options or rights of conversion were
exchanged for the common capital stock and option and conversion rights of
Direct Healthcare on a one to one basis, i.e. each one (1) share of common
capital stock of Direct Rx was converted into and exchanged for one (1) share of
common capital stock of Direct Healthcare. As a result of this merger, each then
present shareholder of Direct Rx had the same number of shares of common capital
stock and the same percentage of equity in Direct Healthcare as such shareholder
had in Direct Rx prior to the merger, and each holder of any option or other
right to purchase or otherwise acquire common capital stock of Direct Rx had the
same rights to purchase or otherwise acquire the same number of shares of common
capital stock of Direct Healthcare, subject to the same terms and conditions as
previously existed. There was no monetary payment required to or from the
shareholders in connection with this merger. The sole purpose of the merger was
to redomicile Direct Rx to the State of Florida. This stock exchange or
conversion and the stock exchange or converted was not registered under the
Securities Act of 1933, as amended, in reliance on Rule 145, in that such an
exchange was not an "offer to sell", "offer for sale" or "sale".

During March and April, 1998, the Company received $250,000 from investors and
issued nonnegotiable promissory notes with stock warrants attached. The notes
bear interest at ten percent (10%) per annum, compounded annually. The due date
shall be the earlier of (i) April 30, 1999, or (ii) the closing of a minimum of
an additional $1,000,000 of equity financing, by private placement or other
non-public offering. The note may be prepaid at any time by the Company to the
payees without any penalty or premium. The attached stock warrant entitles the
payee to purchase common stock of the Company (based on one share for each one
dollar amount of the principal amount reflected in the note) at a purchase price
of $.50 per share. The stock warrant shall expire the earlier of, one year from
the closing of an additional $1,000,000 of equity financing, or December 31,
1999. In addition, in May, 1998, 100,000 shares of common stock of

<PAGE> 20

the Company were sold to a non-affiliated third party investor at $.50 per
share, for gross proceeds of $50,000. These sales were not registered under the
Securities Act of 1933 ("Act"), as amended, and were completed in reliance on an
exemption provided in Section 4(2) of the Act and Regulation D. In addition to
being accredited investors, all investors were sophisticated investors and had
access to all information about the Company to make an informed investment
decision.

Since the initial offerings, the above transactions reflect a then existing
effort to consistently set the value of the common stock of the Company at $.10
per share. The recent warrant price and sale price of $.50 per share in
connection with the March and April, 1998 transactions reflects an increased
value based on the performance of the Company.

Effective June 15, 1998, the Company acquired Energy Factors, Inc ("EFI"). The
above acquisition has been accomplished through a series of transactions
approved by the various Boards of Directors and Management as controlling
shareholders of the Company and EFI. First, a new wholly-owned subsidiary of the
Company was formed as a Florida corporation under the name of Nu-Wave
Acquisition, Inc. (Nu-Wave Acquisition"). Next, Nu-Wave Acquisition was then
merged with and into EFI, with EFI as the surviving corporation, in order to
avoid the necessity of transfers of EFI's business. As a result of the merger,
EFI became a wholly-owned subsidiary of the Company. On the effective date of
the merger, the EFI changed its name to Dynamic Health Products, Inc.
("Dynamic"). U.S. Diversified Technologies, Inc., the former parent of Dynamic,
will receive in exchange for its capital stock in the Dynamic, 400,000 share of
Series A Convertible Preferred Stock to be issued by the Company. Dynamic was
valued by the Board of Directors of the Company at $2,000,000 and The Series A
Convertible Preferred Stock will have a liquidation preference in that amount.
This exchange was not registered under the Securities Act of 1933 ("Act"), as
amended, and was sold in reliance on an exemption provided in Section 4(2) of
the Act. In addition, this transaction was a part of a total sale of a business.

Effective June 26, 1998, the Company acquired Becan Distributors, Inc., an Ohio
corporation ("Becan"). At the closing, The Company acquired all of the issued
and outstanding capital stock of Becan in exchange for common stock in The
Company. The Becan shareholders will receive a total of 1,500,000 shares of
common stock of the Company upon the filing by the Company's Articles of
Amendment to its Articles of Incorporation which will effect a one for three
reverse stock split. The reverse stock split is expected to be effective in
August, 1998, but no record date has yet been established. The acquisition was
accomplished in accordance with the terms of an Agreement and Plan of
Reorganization dated June 26, 1998, by and among the Company and the
shareholders of Becan. The number of shares of the common stock of the Company
to be issued in consideration of the shares of Becan common stock was determined
based upon the relative estimated value of each of the companies and was
approved by unanimous vote of the Board of Directors of the Company, including
the members of the Board of Directors of the Company who were not affiliated
with Becan. Manju Taneja, the wife of Jugal K. Taneja (the Chairman and Chief
Executive Officer of the Company), and their two sons, Mihir and Mandeep,
collectively owned approximately 68% of the issued and outstanding Becan common
stock. See "Part I, Item 4. Security Ownership of Certain Beneficial Owners" for
information concerning the ownership interests of these same persons in the
Company. Jugal K. Taneja was and continues to be the Chairman of the Board of
both the Company and Becan. This exchange was not registered under the
Securities Act of 1933 ("Act"), as amended, and was sold in reliance on an
exemption provided in Section 4(2) of the Act. All investors were sophisticated
investors and had access to all information about the Company to make an
informed investment decision. In addition, this transaction was a part of a
total sale of a business.

The Company has granted certain stock options for the purchase of common capital
stock of the Company in various amounts and for various option prices to certain
officers of the Company. These stock option rights have not been exercised and
have now expired. See "Part I, Item 4. Security Ownership of Certain Beneficial
Owners and Management".

<PAGE> 21

ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Articles of Incorporation and By-Laws provide and grant to any
person who is or was a director or officer of the Company ("Qualified
Indemnified Person"), and to their respective heirs, executors and
administrators, rights of indemnification as provided for in the provisions of
the Florida General Corporation Law.

Therefore, and pursuant to the provisions of the Florida General Corporation
Law, a Qualified Indemnified Person generally is indemnified as to any action,
suit, or proceeding, against expenses, including attorney fees, judgments, fines
and amounts paid in settlement, if such Qualified Indemnified Person acted in
good faith and in a manner reasonably believed by him or her to be in or not
opposed to the best interests of the Company.

The Company has been informed, however, that insofar as the above
indemnification may be deemed to cover any liabilities under the Securities Act
of 1933, in the opinion of the SEC, such indemnification is against public
policy and is therefore unenforceable.

PART F/S

Attached hereto and incorporated herein by reference are the following financial
statements:

Consolidated Balance Sheets for the two fiscal years ended March 31, 1998, the
related Consolidated Statements of Operations for the two fiscal years in the
period ended March 31, 1998, the related Consolidated Statements of
Shareholders' Equity (Deficit) for the two fiscal years in the period ended
March 31, 1998, and the related Consolidated Statements of Cash Flows for the
two fiscal years in the period ended March 31, 1998, audited by Kirkland, Russ,
Murphy & Tapp, independent auditors, as stated in their report appearing
therein.

PART III

ITEM 1. INDEX TO EXHIBITS.

Attached is the Index to the following exhibits:

<TABLE>
<CAPTION>
Exhibit Page
------- ----

<S> <C>
Exhibit 1- Audited financial statements for the two years
ended March 31, 1998(a)...................................................
Exhibit 2- Articles of Incorporation and Amendments of Direct Rx.....................
Exhibit 3- By-Laws of Direct Rx......................................................
Exhibit 4- Articles of Incorporation and Amendments of Old Nu-Wave...................
Exhibit 5- By-Laws of Old Nu-Wave....................................................
Exhibit 6- Articles of Amendment to the Articles of Incorporation
of Solstice, Inc..........................................................
Exhibit 7- Company Articles of Incorporation(a)......................................
Exhibit 8- Agreement of Merger-Direct Rx and Direct Rx Healthcare, Inc.(a)...........
Exhibit 9- Agreement of Merger-Direct Rx healthcare, Inc. and Old Nu-Wave(a)........
Exhibit 10- Dr. Sekharam Employment Agreement(a)......................................
Exhibit 11- Jugal Taneja Employment Agreement(a)......................................
Exhibit 12- Service Agreement between Company and Nations Staffing, Inc.(a)...........
Exhibit 13- Revolving Line of Credit Agreement between Company and Republic Bank(a)...
Exhibit 14- Promissory Note in favor of Company from Energy Factors, Inc(a)...........
</TABLE>

(a) Incorporated by Reference to the Company's Annual Report Form 10-KSB for
the fiscal year ended March 31, 1998, File number 0-23031, filed in
Washington D.C.

<PAGE> 22

ITEM 2. DESCRIPTION OF EXHIBITS.

The following is a brief description of each of the Exhibits:

<TABLE>
<CAPTION>
Exhibit Page
------- ----

(a) Incorporated by Reference to the Company's Annual Report Form 10-KSB for
the fiscal year ended March 31, 1998, File number 0-23031, filed in
Washington D.C.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
behalf of the undersigned, thereto duly authorized.

NU-WAVE HEALTH PRODUCTS, INC.
- --------------------------------------------------------------------------------
(Registrant)

Date July 1, 1998
-----------------------------------------
By Kotha S. Sekharam /s/
-----------------------------------------
President

By Cani I. Shuman /s/
-----------------------------------------
Chief Financial Officer

<PAGE> 1
Exhibit 2

ARTICLES OF INCORPORATION
OF
DIRECT RX, INC.

The undersigned, being an Ohio corporation and desiring to form a
corporation for profit under the General Corporation Law, Chapter 1701 of the
Ohio revised Code, does hereby certify:

FIRST: The name of the Corporation shall be DIRECT RX, INC.

SECOND: The place in Ohio where the principal office of the Corporation
is to be located is the City of Independence, County of
Cuyahoga.

THIRD: The purpose for which the Corporation is formed is to engage in
any lawful act of activity for which corporations may be formed
under Sections 1701.01 to 1701.98, inclusive, of the Ohio
Revised Code.

FOURTH: The number of shares which the Corporation is authorized to have
outstanding is Three Million (3,000,000), all of which are common
shares without par value.

FIFTH: The Corporation may, from time to time, pursuant to
authorization by its Directors and without action by the
shareholders, purchase or otherwise acquire shares of the
Corporation of any class or classes in such manner, upon such
terms and in such amounts as the Directors shall determine, to
the extent permitted by law; subject, however, to such limitation
or restriction, if any, as may be imposed by the terms or
provisions of any class of shares or other securities of the
Corporation outstanding at the time of the purchase or
acquisition in question.

SIXTH: The Corporation shall indemnify such persons as it is permitted
to indemnify by Section 1701.13(E) of the Ohio General
Corporation Law, and the heirs, executors, and administrators of
such persons, to the full extent permitted by, but in accordance
with

-1-
Articles of Incorporation
<PAGE> 2
the provisions of that Section. Reference to Section 1701.13(E) in the
previous sentence shall constitute a reference to any legislation hereafter
enacted by the Ohio Legislature on the same general subject as present Section
1701.31(E), whether by amendment of that Section or by substitution of
differently numbered material for it. Notwithstanding the foregoing, except as
otherwise required by Section 1701.31(E), a person who would be entitled to
indemnity only as an agent (a director, officer, employee or trustee not to be
considered an "agent" for purposes of this sentence) of the Corporation or only
as an agent of another entity, shall not be entitled to indemnity.

SEVENTH: Notwithstanding any provision of the Ohio Revised Code now or
hereafter in force requiring for any purpose the vote, consent, waiver,
approval, adoption or release of the holders of shares entitling them to
exercise two-thirds, or any other proportion, of the voting power of the
Corporation or any class of classes of shares thereof, such action, unless
otherwise expressly required by statute, may be taken by the vote, consent,
waiver, approval, adoption or release of the holders of shares entitling them
to exercise a majority of the voting power of the Corporation or of such class
or classes.

EIGHTH: No holder of any class of shares of the Corporation shall have
any preemptive or preferential right to subscribe to or purchase any shares of
any class of stock of the Corporation, whether now or hereafter authorized and
whether unissued or in the treasury, or any obligations convertible into shares
of any class of stock of the Corporation, at any time issued or sold, or any
right to subscribe to or purchase any thereof.

NINTH: A Director or officer of the Corporation shall not be
disqualified from dealing or contracting with the Corporation as vendor,
purchaser, employee, agent or otherwise; nor shall any transaction, contract,
or other act of the Corporation be void or voidable or in any way affected or
invalidated by the fact that any Director or officer or any firm in which such
Director or officer is a member, or any corporation of which such Director or
officer is a member, or any corporation of which such Director or officer is a
shareholder, director or officer is

-2-
Articles of Incorporation
<PAGE> 3
in any way interested in such transaction, contract, or other act, provided the
fact that such Director, officer, firm or corporation is so interested shall be
disclosed or shall be known to the Board of Directors or such members thereof
who shall be present at any meeting of the Board of Directors at which action
upon any such transaction, contract or other act shall be taken, nor shall any
such Corporation for or in respect of any such transaction, contract, or other
act of the Corporation or for any gains or profits realized by him by reason of
the fact that he or any firm of which he is a member or any corporation of
which he is a shareholder, director or officer is interested in such
transaction, contract, or other act; and any such Director at any meeting of
the Board of Directors of the Corporation which shall authorize to take action
in respect of any such transaction, contract, or other act, may vote thereat to
authorize, ratify, or approve any such transaction, contract or other act, with
like force and effect as if he or any firm of which he is a member, or any
corporation of which he is a shareholder, director or officer were not
interested in such transaction, contract or other act.

IN WITNESS WHEREOF, A&H Statutory Service Corp. has hereunto caused to be
subscribed its name this 25th day of June, 1992.

A&H Statutory Service Corp.

By William W. Tuft
-----------------------------
Vice President

INCORPORATOR

-3-
Articles of Incorporation

<PAGE> 1
Exhibit 3

CODE OF REGULATIONS

DIRECT RX, INC.

ARTICLE I

Shareholders

Section 1 -- Annual Meeting

The annual meeting of the shareholders shall be held at the principal
office of the Corporation in Independence, Ohio, or at such other place as the
Board of Directors may designate and cause to be stated in the notice of such
meeting given to shareholders at 10:00 A.M. Eastern Standard Time, on the first
Monday of the fourth month following the close of each fiscal year of the
Corporation, if not a legal holiday, and if a legal holiday, then on the next
successive business day, for the purpose of electing Directors and of
considering reports to be laid before said meeting. Upon due notice there may
also be considered and acted upon at an annual meeting any matter which could
properly be considered and acted upon at a special meeting, in which case and
for which purpose the annual meeting shall also be considered as, and shall be,
a special meeting. In the event the annual meeting is not held or if Directors
are not elected thereat, a special meeting may be called and held for that
purpose.

Section 2 -- Place of Meetings

Any meeting of the shareholders of the Corporation may be held within or
without the State of Ohio.

Section 3 -- Special Meetings

Special meetings of the shareholders may be called by the President of the
Corporation at any time, and the President shall call such a special meeting
when so requested in writing by the holders of not less than a majority of the
shares entitled to vote thereat. Special meetings shall be held at a time and
place designated by the President and shall be confined to the purpose and
transaction of business and specified in the call of the meeting and stated in
the notice thereof sent to the shareholders.
<PAGE> 2
ARTICLE II

Board of Directors

Section 1 -- Powers, Number and Term of Office

All the capacity of the Corporation shall be vested in and all its
authority, except as otherwise provided by law or by the Articles in regard to
action required to be taken, authorized or approved by shareholders, shall be
exercised by a Board of Directors of not less than three (3) persons; provided
that, where all shares of the Corporation are owned of record by one or two
shareholders, the number of directors may be less than three but not less than
the number of shareholders. The Board of Directors shall manage and conduct the
business of the Corporation. Directors shall be elected at the annual meeting of
the shareholders, or if not so elected, at a special meeting of the shareholders
called for that purpose, and shall hold office for one year or until their
successors are chosen and qualified, subject, however, to provisions of law, the
Articles and the Regulations as to removals and the creation of vacancies.

Section 2 -- Changes in Number of Directors

The number of Directors may be fixed or changed by resolution adopted by
the vote of the shareholders present in person or by proxy at a meeting called
to elect Directors, entitled to exercise a majority of the voting power of the
shares represented at such meeting and entitled to vote at such election but no
reduction of the number of directors shall have the effect of removing any
Director prior to the expiration of his term of office.

Section 3 -- Vacancies

The office of a Director shall become vacant if he dies or resigns.

The Board of Directors may remove any Director and thereby create a
vacancy in the Board if he be declared of unsound mind by any order.

Any vacancy in the Board of Directors may be filled for the unexpired term
by the remaining Director or Directors, though less than a majority of the
whole Board, by a vote of a majority of their number. Within the meaning of
this section, a vacancy or vacancies shall be deemed to exist in case the
shareholders shall increase the authorized number of Directors but shall fail at
the meeting at which such increase is authorized, or an adjournment thereof, to
elect the additional Directors so provided for, or in case the shareholders
fail at any time to elect the whole authorized number of Directors.

-2-
Code of Regulations
<PAGE> 3
Section 4 - Meetings

Meetings of the Board of Directors may be held at any time within or
without the State of Ohio.

Regular meetings of the Board of Directors shall be held immediately after
the annual meetings of the shareholders and at such other stated times as may be
fixed by the Board of Directors, and such regular meetings may be held without
further notice.

Special meetings of the Board of Directors may be called by the President
of the Corporation, or by not less than one-third of the Directors. Notice of
the time and place of such meetings shall be served upon or telephoned to each
Director at least twenty-four hours, or given by mail, telegram or cablegram to
each Director at his address as shown, by the books of the Corporation at least
forty-eight hours, prior to the time of the meeting. Such notice may be waived
in writing by any Director, either before or after the meeting. Attendance at
the meeting by a Director without protesting proper notice, shall constitute
waiver of such notice by such Director.

Section 5 - Quorum

A majority of the whole authorized number of Directors is necessary to
constitute a quorum for a meeting of the Directors, except that a majority of
the Directors in office constitutes a quorum for filling a vacancy in the Board.
The act of a majority of the Directors present at a meeting at which a quorum is
present is the act of the Board, unless the act of a greater number is required
by the Articles or these Regulations.

Section 6 - Committees

The Board of Directors may from time to time create an Executive Committee,
a Finance Committee and such other Committees as it may deem to be advisable and
may delegate to any such Committee any of the powers of the Board of Directors,
other than that of filling vacancies among the Directors or in any committee of
the Directors. Any such committee shall be composed of not less than three
members of the Board of Directors to serve until otherwise ordered by the Board
of Directors and shall act only in the interval between meetings of the Board of
Directors and shall be subject at all times to the control and direction of the
Board of Directors. The Board of Directors may appoint one or two more Directors
as alternate members of any such Committee, who may take the place of any absent
member or members at any meeting of such committee.

Any such Committee may act by a majority of its members at a meeting or by
a writing or writings signed by all its members.

-3-
Code of Regulations

<PAGE> 4
Any act or authorization of any act by any such Committee within the scope of
the powers delegated to it shall be as effective for all purposes as the act or
authorization of the Board of Directors.

ARTICLE III

Section 1 - Officers

The Corporation shall have a President (who shall be a member of the Board
of Directors), a Secretary and a Treasurer, who shall be elected by the Board
of Directors. The Corporation may also have one or more Vice Presidents. The
Corporation may have Assistant Secretaries, Assistant Treasurers, and such
other officers as the Board may deem advisable, all of whom shall be elected
for one year or until their successors are elected and qualified, unless
otherwise specified by the Board of Directors; provided, however, that any
officer shall be subject to removal, with or without cause, at any time by the
vote of a majority of the Board of Directors. The election of an officer for a
given term, or a general provision in the Articles or these Regulations with
respect to term of office, shall not be deemed to create contract rights.

Any two or more offices may be held by the same person, but no officer
shall execute, acknowledge or verify any instrument in more than one capacity
if such instrument is required by law or by the Articles or these Regulations
to be executed, acknowledged or verified by two or more officers.

Section 2 - The President

The President, when present, shall preside at all meetings of the
shareholders and of the Board of Directors. Subject to the direction of the
Board of Directors and the Executive Committee, he shall have general charge
and authority over the business of the Corporation. He shall from time to time
make such reports of the business of the Corporation as the Board of Directors
may require. The President shall perform such other duties and have such powers
as are assigned to or vested in him by the Board of Directors.

Section 3 - The Vice President

The Vice President, or, if there be more than one, the Vice Presidents, in
order of their seniority by designation (or if not designated, in order of
their seniority of election), shall perform the duties of the President in his
absence or during his disability to act. The Vice Presidents shall have such
other duties and powers as may be assigned to or vested in them by the Board of
Directors or the Executive Committee.

-4-
Code of Regulations
<PAGE> 5
Section 4 - The Secretary

The Secretary shall issue notices of all meetings for which notice is
required to be given, shall keep the minutes of all meetings, shall have charge
of the corporate seal and corporate record books, and have such other powers and
perform such other duties as are assigned to or vested in him by the Board of
Directors or the Executive Committee.

Section 5 - The Treasurer

The Treasurer shall be the financial officer of the Corporation. He shall
have the custody of all moneys and securities of the Corporation and shall keep
adequate and correct accounts of the Corporation's receipts and disbursements,
including records of customers' credits and collections. The funds of the
Corporation shall be deposited in the name of the Corporation by the Treasurer
in such depositories as the Board of Directors may from time to time designate.
He shall have such other powers and perform such other duties as are assigned to
or vested in him by the Board of Directors or the Executive Committee.

Section 6 - Other Officers

Other officers of the Corporation shall have such powers and duties as may
be assigned to or vested in them by the Board of Directors or the Executive
Committee.

Section 7 - Authority to Sign

Share certificates shall be signed as hereinafter in ARTICLE IV provided.
Except as otherwise specifically provided by the Board of Directors or the
Executive Committee of the Corporation, checks, notes, drafts, contracts or
other instruments authorized by the Board of Directors or the Executive
Committee may be executed and delivered on behalf of the Corporation by the
President or a Vice President and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer.

Section 8 - Duties of Officers may be Delegated

In case of the absence or disability of an officer of the Corporation, or
for any other reason that may seem sufficient to the Board, the Board of
Directors may, for the time being, delegate his powers and duties to any other
officer or to any Director.

Section 9 - Compensation, Salaries and Indemnity

(a) The Board of Directors may fix the pay of all officers. The Board may
also allow compensation to members of any committee.

-5-
Code of Regulations
<PAGE> 6
The Board may vote compensation to any Directors for attendance at meetings or
for any special services.

(b) Each person who is, has been, or shall hereafter be, a director or
officer of the Corporation, or who is serving, may have served, or shall serve
at its request as a director or officer of another corporation, shall be
indemnified by the Corporation to the full extent to which indemnification is
permitted by subsections E(1) through E(9) of Section 1701.13 of the Ohio
Revised Code.

The foregoing rights of indemnification shall inure to the benefit of the
personal representatives of such persons, and shall be in addition to any other
rights to which any such persons may be entitled to at law or agreement or
otherwise.

ARTICLE IV

Section 1 - Certificates

Each shareholder of the Corporation shall be entitled to a certificate
signed by the President or a Vice President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, evidencing the number and
class of paid-up shares held by him in the Corporation, but no certificate for
shares shall be executed or delivered until such shares are fully paid.

Such certificates shall be in such form as shall be approved by the Board
of Directors and shall contain such statements as are required by the Ohio
General Corporation Law.

Section 2 - Transfer and Registration

The Board of Directors shall have authority to make such rules and
regulations, not inconsistent with law, the Articles or these Regulations, as it
deems expedient concerning the execution, delivery, transfer and registration of
share certificates and may appoint incorporated transfer agents and registrars
thereof.

Transfer books may be kept in any state of the United States or in any
foreign country for the purpose of transferring shares issued by the
Corporation; but if no transfer agent is appointed to act in this State, the
Corporation shall keep an office in this State at which shares shall be
transferable; and at which it shall keep books in which shall be recorded the
names and addresses of all shareholders, and all transfers of shares.

-6-
Code of Regulations
<PAGE> 7
ARTICLE V

Section 1 - Voting Upon Stocks

Unless otherwise ordered by the Board of Directors, the President, a Vice
President, the Secretary or the Treasurer, of the Corporation, or a proxy
appointed by any such officer, shall have full power and authority on behalf of
the Corporation to attend, to act and to vote at any meeting of shareholders of
and to execute consents, waivers, and releases relating to the affairs of any
other corporation, domestic or foreign, for profit or nonprofit, in which the
Corporation may hold stock or membership, and at any such meeting shall possess
and may exercise any and all of the rights and powers incident to the ownership
of such stock and which as the owner thereof the Corporation would have
possessed and might have exercised if present. The Board of Directors by
resolution from time to time may confer like powers upon any other person or
persons.

ARTICLE VI

Section 1 - Amendments

The Regulations of the Corporation may be amended or added to by the
affirmative vote of the shareholders of record entitled to exercise a majority
of the voting power on such proposal or, without a meeting, by the written
consent of the shareholders of record entitled to exercise a majority of the
voting power on such proposal; provided, however, that if an amendment is
adopted by written consent without a meeting of the shareholders, it shall be
the duty of the Secretary to enter the amendment in the records of the
Corporation and to mail a copy of such amendment to each shareholder of record
who would be entitled to vote thereon and did not participate in the adoption
thereof.

-7-
Code of Regulations

<PAGE> 1
Exhibit 4

ARTICLES OF INCORPORATION
OF
SOLSTICE, INC.

THE UNDERSIGNED, acting as sole incorporator of SOLSTICE, INC.,
hereinafter the "Corporation", under the Florida Business Corporation Act,
Chapter 607 of the Florida Statutes, as hereafter amended and modified (the
"FBCA"), hereby adopts the following Articles of Incorporation for the
Corporation:

ARTICLE I. Name

The name of the Corporation is:

SOLSTICE, INC.

ARTICLE II. Business and Activities

The Corporation may, and is authorized to, engage in any activity or
business permitted under the laws of the United States and of the State of
Florida.

ARTICLE III. Shares

The total number of shares which the Corporation shall have the authority
to issue shall be One Thousand (1,000) shares, consisting of a single class
of common stock having a par value of $0.01 per share.

ARTICLE IV. Preemptive Rights

No shareholder of the Corporation shall have any preferential or preemptive
right to subscribe for or purchase from the Corporation any new or
additional shares of capital stock or securities convertible into shares of
capital stock, of the Corporation, whether now or hereafter authorized.

ARTICLE V. Principal Office

The address of the Principal Office of the Corporation is 6505 Rockside
Road, Suite 400, Independence, Ohio 44131. The location of the Principal
Office shall be subject to change as may be provided in bylaws duly adopted
by the Corporation.

ARTICLE VI. Mailing Address

The mailing address of the Corporation is 6505 Rockside Road, Suite 400,
Independence, Ohio 44131.

1
<PAGE> 2
ARTICLE VII. Initial Registered Office and Agent

The address of the initial Registered Office of the Corporation is 1200 S.
Pine Island Road, Plantation, Florida 33324, and the initial Registered
Agent at such address is CT Corporation System.

ARTICLE VIII. Initial Board of Directors

The number of Directors constituting the initial Board of Directors of the
Corporation is one (1). The number of Directors may be increased or
decreased from time to time, but in no event shall the number of Directors
be less than one (1).

ARTICLE IX. Incorporator

The name and address of the Incorporator of the Corporation is: Martin A.
Traber of Foley & Lardner, 100 North Tampa Street, Suite 2700, Tampa,
Florida 33502.

IN WITNESS WHEREOF, these Articles have been signed by the undersigned
incorporator this 27 day of April, 1995.
-- -----

FOLEY & LARDNER

By: /s/ MARTIN A. TRABER
---------------------------------
Martin A. Traber,
Incorporator

ACCEPTANCE OF APPOINTMENT BY INITIAL
REGISTERED AGENT

THE UNDERSIGNED, a corporation resident of the State of Florida, having
been named in Article VII of the foregoing Articles of Incorporation as initial
Registered Agent at the office designated therein, hereby accepts such
appointment and agrees to act in such capacity. The undersigned hereby states
that it is familiar with, and hereby accepts, the obligations set forth in
Section 607.0505, Florida Statutes, and the undersigned will further comply
with any other provisions of law made applicable to him as Registered Agent of
the corporation.

DATED, this 28th day of April, 1995.
-- -----

CT Corporation System

By: /s/ BARBARA A. BURKE
---------------------------------
Barbara A. Burke
Special Assistant Secretary

<PAGE> 1
Exhibit 5

BY-LAWS

SOLSTICE, INC.

ARTICLE I

OFFICES

SECTION 1 - PRINCIPAL OFFICE

The principal office of the Corporation shall be located in the City of
Independence, Ohio.

SECTION 2 - OTHER OFFICES OR PLACE OF BUSINESS

The Corporation also may have offices or places of business at such other
places, within or without the State of Ohio and Florida, where the Corporation
is qualified to do business, as the Board of Directors may designate or as the
business of the Corporation may require.

ARTICLE II

SHAREHOLDERS

SECTION 1 - ANNUAL MEETING

The annual meeting of the shareholders shall be held any time during the
second quarter of the Corporation's fiscal year, for the purpose of electing
officers and of considering reports presented to such meeting. Upon due notice
there also may be considered and acted upon at an annual meeting any matter
which could properly be considered and acted upon at a special meeting, in which
case and for which purpose the annual meeting also shall be considered as, and
shall be, a special meeting. In the event the annual meeting is not held, or if
Directors are not elected thereat, a special meeting may be called and held for
that purpose.

SECTION 2 - PLACE OF MEETINGS

Any meeting of the shareholders of the Corporation may be held within or
without the State of Ohio or Florida, or at such other place as the Board of
Directors may designate and cause to be stated in the notice of such meeting
given to shareholders.

<PAGE> 2
SECTION 3 -- SPECIAL MEETINGS

Special meetings of the shareholders of the Corporation shall be
called by the Chairman or, upon the written request of a majority of
the Directors, or by shareholders representing at least twenty-five
percent (25%) of the shares issued and entitled to vote. Calls for
special meetings shall specify the time, place and object or object
thereof, and no business other than that specified in the call
therefor shall be considered at any such meetings.

ARTICLE III
BOARD OF DIRECTORS

SECTION 1 -- POWERS, NUMBER, AND TERM OF OFFICE

All the capacity of the Corporation shall be vested in and all its
authority, except as otherwise provided by law or by the Articles of
Incorporation of the Corporation (the "Articles") relating to any action
required to be taken, authorized, or approved by shareholders, shall be
exercised by a Board of Directors of three (3) persons; provided that, where
all shares of the Corporation are owned of record by one or two shareholders,
the number of Directors may be less than three. The Board of Directors shall
manage and conduct the business of the Corporation. Directors shall be elected
at the annual meeting of the shareholders or, if not so elected, at a special
meeting of the shareholders called for that purpose, and shall hold office for
one year or until their successors are duly elected and qualified, subject,
however, to provisions of law, the Articles, and these By-laws as to removals or
the creation of vacancies.

SECTION 2 -- CHANGES IN NUMBER OF DIRECTORS

The number of Directors may be fixed or changed by resolution adopted by
action of the Board of Directors, or by a vote of the shareholders, present in
person or by proxy at a meeting called to elect Directors, entitled to
exercise two-thirds of the voting power of the shares represented at such
meeting and entitled to vote at such election, but no reduction of the number
of Directors shall have the effect of removing any Director prior to the
expiration of his term of office.

SECTION 3 -- VACANCIES

The office of a Director shall become vacant if a Director dies or
resigns.

2
<PAGE> 3
The Board of Directors may remove any Director and thereby create a
vacancy in the Board of Directors in the event a Director is declared of
unsound mind by any judicial order.

Any vacancy in the Board of Directors may be filled for the unexpired term
by the remaining Director or Directors, though less than a majority of the whole
Board of Directors, by a vote of a majority of their number. Within the meaning
of this Section 3, a vacancy or vacancies shall be deemed to exist in case the
shareholders shall increase the authorized number of Directors but shall fail
at the meeting at which such increase is authorized, or an adjournment thereof,
to elect the additional Directors so provided for, or in case the shareholders
fail at any time to elect the whole authorized number of Directors.

SECTION 4 -- MEETINGS

Meetings of the Board of Directors will be held immediately after the
annual meeting of the Shareholders, and at such other stated times as may be
fixed by the Board of Directors, and such regular meetings may be held without
further notice.

Special meetings of the Board of Directors may be called by the Chairman
of the Corporation, or by not less than two-thirds of the Directors. Notice of
the time and place of such meetings shall be served upon or telephoned to each
Director at least twenty-four hours, or given by mail, telegram, or cablegram to
each Director at his address as shown by the books of the Corporation at least
forty-eight hours prior to the time of the meeting. Such notice may be waived
in writing by any Director, either before or after the meeting. Attendance at
the meeting by a Director without protesting proper notice shall constitute
waiver of such notice by such Director.

SECTION 5 -- QUORUM

A majority of the whole authorized number of Directors is necessary to
constitute a quorum for a meeting of the Directors, except that a majority of
the Directors in office constitutes a quorum for filling a vacancy in the Board
of Directors. The act of a majority of the Directors present at a meeting at
which a quorum is present is the act of the Board of Directors unless the act
of a greater number is required by the Articles or these By-laws.

SECTION 6 -- COMMITTEES

The Board of Directors from time to time may create an Executive
Committee, a Finance Committee, and such other Committees as it may deem to be
advisable and may delegate to any such Committee any of the powers of the Board
of Directors, other than that of filling vacancies among the Directors or in
any Committee of the Directors. Any such Committee shall be composed of not less

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<PAGE> 4
than two members of the Board of Directors to serve until otherwise ordered by
the Board of Directors and shall act only in the interval between meetings of
the Board of Directors and shall be subject at all times to the control and
direction of the Board of Directors. The Board of Directors may appoint one or
two more Directors as alternate members of any such Committee, who may take the
place of any absent member or members at any meeting of such Committee.

Any such Committee may act by a majority of its members at a meeting or by
a writing or writings signed by all its members. Any act or authorization of an
act by any such Committee within the scope of the powers delegated to it shall
be as effective for all purposes as the act or authorization of the Board of
Directors.

ARTICLE IV
OFFICERS

SECTION 1 -- OFFICERS

The Corporation shall have a President, a Chief Executive Officer, a
Secretary or Assistant Secretary, and a Treasurer, who shall be elected by the
Board of Directors. The Corporation also may have one or more Vice Presidents,
Assistant Secretaries, Assistant Treasurers, and such other officers as the
Board of Directors may deem advisable, all of whom shall be elected for one
year or until their successors are duly elected and qualified, unless otherwise
specified by the Board of Directors; provided, however, that any officer shall
be subject to removal, with or without cause, at any time by the vote of a
majority of the Board of Directors. The election of an officer for a given
term, or a general provision in the Articles of these By-laws with respect to
term of office, shall not be deemed to create contract rights.

Any two or more offices may be held by the same person, but no officer
shall execute, acknowledge, or verify any instrument in more than one capacity
if such instrument is required by law or by the Articles or these By-laws to be
executed, acknowledged, or verified by two or more officers.

The officers of the Corporation shall have such powers, duties, and
responsibilities as may be assigned to or vested in them by the Board of
Directors. The powers, duties, and responsibilities of the officers will be
exercised or performed at the direction of the Board of Directors.

SECTION 2 -- AUTHORITY TO SIGN

Share Certificates shall be signed as described in ARTICLE V. Except as
otherwise specifically provided by the Board of Directors

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<PAGE> 5
or the Executive Committee of the Corporation, notes, contracts, or other
instruments authorized by the Board of Directors or the Executive Committee may
be executed and delivered on behalf of the Corporation by the President or the
Chief Executive Officer of the Corporation. Each officer of the Corporation is
authorized to execute checks under the amount of $1,000 for and on behalf of
the Corporation, while checks in an amount in excess of $1,000 require the
signatures of the President and the Chief Executive Officer.

SECTION 3 -- DUTIES OF OFFICERS MAY BE DELEGATED

In case of the absence or disability of an officer of the Corporation, or
for any other reason which may seem sufficient to the Board of Directors, the
Board of Directors may, for the time being, delegate the powers and duties of
the absent or disabled officer to any other officer or to any Director of the
Corporation.

SECTION 4 -- COMPENSATION, SALARIES, AND INDEMNITY

The Board of Directors may fix the compensation of all officers. The Board
also may allow compensation to members of any Committee. The Board may vote
compensation to any Directors for attendance at meetings or for any special
services.

Each person who is, has been, or hereafter shall be a Director or officer
of the Corporation, or who is serving, may have served, or shall serve at its
request as a director or officer of another corporation, shall be indemnified
by the Corporation to the fullest extent to which indemnification is permitted
by Florida corporation law.

ARTICLE V
SHARE CERTIFICATES

SECTION 1 -- CERTIFICATES

Each shareholder of the Corporation shall be entitled to a Certificate
signed by the President and by the Secretary or an Assistant Secretary,
evidencing the number and class of paid-up shares held by each such shareholder
in the Corporation, but no Certificate for Shares shall be executed or
delivered until such shares are fully paid.

Such Certificates shall be in such form as shall be approved

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by the Board of Directors and shall contain such statements as are required by
law.

SECTION 2 -- TRANSFER AND REGISTRATION

The Board of Directors shall have authority to make such rules and
regulations, not inconsistent with law, the Articles, or these By-laws, as it
deems expedient concerning the execution, delivery, transfer, and registration
of Share Certificates, and may appoint incorporated transfer agents and
registrars thereof.

Transfer books may be kept in any State of the United States or in any
foreign country for the purpose of transferring shares issued by the
Corporation; but if no transfer agent is appointed to act in this State, the
Corporation shall keep an office in this State at which shares shall be
transferable, and at which it shall keep books in which shall be recorded the
names and addresses of all shareholders and all transfers of shares.

ARTICLE VI

AMENDMENTS

SECTION 1 -- AMENDMENTS

The By-laws of the Corporation may be amended or added to by the
affirmative vote of the shareholders of record entitled to exercise a majority
of the voting power on such proposal or, without a meeting, by the unanimous
written consent of the shareholders of record entitled to vote on such proposal.
z

* * * * *

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<PAGE> 7
[State of Florida]

Department of State

I certify the attached is a true and correct copy of the Articles of
Incorporation of SOLSTICE, INC., a Florida corporation, filed on May 1, 1995,
as shown by the records of this office.

The document number of this corporation is P95000035951.

Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Eighth day of May, 1995

[SEAL] Sandra B. Mortham

Sandra B. Mortham
Secretary of State

<PAGE> 1
Exhibit 6

[SEAL]

FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State

October 3, 1995

WILLIAM LARION
6505 ROCKSIDE RD.
SUITE 325
INDEPENDENCE, OH 44131

Re: Document Number P95000035951

The Articles of Amendment to the Articles of Incorporation of SOLSTICE, INC.
which changed its name to NU-WAVE HEALTH PRODUCTS, INC., a Florida corporation,
were filed on September 25, 1995.

Should you have any questions regarding this matter, please telephone (904)
487-6050, the Amendment Filing Section.

Nancy Hendricks
Corporate Specialist
Division of Corporations Letter Number: 895A00044980

Division of Corporations - P.O. BOX 6327 - Tallahassee, Florida 32314

<PAGE> 2
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF

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

SOLSTICE, INC.

- --------------------------------------------------------------------------------
(present name)

Pursuant to the provisions of section 607.1006, Florida Statutes, this
corporation adopts the following articles of amendment to its articles of
incorporation:

FIRST: Amendment(s) adopted: (indicate article number(s) being amended, added or
deleted)

Change of Corporation's Name.

RESOLVED: That Article "First" of the Corporation's Articles of Incorporation
shall be deleted, and, in lieu thereof, the following be inserted:

FIRST: The name of the corporation is:
Nu-Wave Health Products, Inc.

No further business is transacted.

SECOND: If an amendment provides for an exchange, reclassification or
cancellation of issued shares, provisions for implementing the amendment if not
contained in the amendment itself, are as follows:

THIRD: The date of each amendment's adoption: September 15, 1995

<PAGE> 3
FOURTH: Adoption of Amendment(s) (CHECK ONE)

[X] The amendment(s) was/were approved by the shareholders. The number of votes
cast for the amendment(s) was/were sufficient for approval.

[ ] The amendment(s) was/were approved by the shareholders through voting
groups.

The following statement must be separately provided for each voting group
entitled to vote separately on the amendment(s):

"The number of votes cast for the amendment(s) was/were sufficient for
approval by ________________________________________."
voting group

[ ] The amendment(s) was/were adopted by the board of directors without
shareholder action and shareholder action was not required.

[ ] The amendment(s) was/were adopted by the incorporators without shareholder
action and shareholder action was not required.

Signed this day 20th of September, 1995.

Signature Wm. L. Larion, President
--------------------------------------------
(By the Chairman or Vice Chairman of the Board of Directors,
President or other officer if adopted by the shareholders)

(By a director if adopted by the directors)

(By an incorporator if adopted by the incorporators)

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Typed or printed name

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Title